President Obama's letter to Senate lawmakers yesterday saying a healthcare package must include a public option may have stalled progress on a bipartisan deal, Sen. Judd Gregg (R-N.H.) said Thursday.

Gregg said that the president's letter, which said a public option should be included in the legislation, stalled "significant progress" in negotiations.

"We were making great progress up until yesterday, in my opinion," Gregg said during an interview on CNBC. "There's a working group under Sen. Baucus that involves senior Republican and Senate senior members who are involved in the healthcare debate, and we were, I thought, making some fairly significant progress."

Gregg said that the president's late-day letter to Sens. Max Baucus (D-Mont.) and Edward Kennedy (D-Mass.) had thrown up a roadblock to garnering GOP support for a final deal.

"Then the president came out with his letter that said any package has to have a public plan," he said. "Well, the public plan's a non-starter for us, on our side of the aisle."

Gregg said that the relevant committees overseeing the reform legislation would start markup this month, though he said it was unclear whether or not the final bill would have bipartisan support. Done without a public option, Gregg said, a final deal could get as many as 80 votes in the Senate.

"The president laid down a fairly significant partisan marker when he said the proposal has to have a public plan," he said.

Gregg, ranking member of the Budget Committee, said that he'd be "surprised" if Democrats opted to use budget reconciliation to force through a healthcare deal, citing "procedural disadvantages" in the process.

"I can't believe that they would use it," he said.

Watch a video of the interview below: