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Obama puts forward last-effort health care reform plan

Monday, February 22, 2010 | 2:21 p.m. CST; updated 8:44 a.m. CST, Tuesday, February 23, 2010

WASHINGTON — Making a last-ditch effort to save his health care overhaul, President Barack Obama on Monday put forward a nearly $1 trillion, 10-year compromise that would allow the government to deny or roll back egregious insurance premium increases that infuriate consumers.

The White House immediately demanded an up-or-down vote in Congress on the plan, or something close to it. But it's highly uncertain that such sweeping legislation can pass. Republicans are virtually unanimous in opposing it, and some Democrats who previously supported a health care remake are having second thoughts in an election year. After a year in pursuit, Obama may have to settle for a modest fallback version of what once was his top domestic priority.

Release of the plan on the White House Web site comes just four days before Obama's one-of-a-kind, televised health care summit with Democrats and Republicans. The White House said the plan would provide coverage to more than 31 million Americans now uninsured without adding to the federal deficit.

By and large, Obama's proposal follows the bill passed by Senate Democrats on Christmas Eve, with changes intended to make it acceptable to their House counterparts.

It would require most Americans to carry health insurance coverage, with federal subsidies to help many afford the premiums. Insurance companies would be barred from denying coverage to people with medical problems or charging them more.

The plan dramatically scales back a Senate tax on high-cost health insurance plans objected to by House Democrats — and labor unions. Instead of raising $150 billion over 10 years, it would bring in just $30 billion, the administration said. A Medicare payroll tax increase on upper-income earners would help plug the revenue gap. For the first time, Medicare taxes would be assessed on investment income, not just wages.

Like the Senate bill, the Obama plan would create competitive insurance markets in each state for small businesses and people buying their own coverage. It would strip out a special Medicaid deal the Senate bill granted to Nebraska that drew public scorn as the "Cornhusker Kickback" but leaves in a special Medicaid deal for Louisiana. It also would gradually close the Medicare prescription coverage gap, making newly available coverage for working families more affordable. Those changes move in the direction of the House bill.

On Capitol Hill, Democrats cautiously welcomed the proposal, while Republicans gave a thumbs down.

House Speaker Nancy Pelosi, D-Calif., said in a statement she looks forward to reviewing the plan and discussing it at the summit. "We must pass comprehensive, affordable health insurance reform, and I am hopeful that Thursday's meeting will help us achieve this goal," she said, reaffirming her commitment.

House Republican Leader John Boehner of Ohio dismissed the proposal, saying, "the president has crippled the credibility of this week's summit by proposing the same massive government takeover of health care based on a partisan bill the American people have already rejected."

Senate Republican Leader Mitch McConnell of Kentucky said it was "disappointing that Democrats in Washington either aren't listening, or are completely ignoring what Americans across the country have been saying."

The plan is Obama's most detailed proposal since he took up the health care overhaul effort a year ago. At the time, he sought to avoid the problems former President Bill Clinton encountered when he issued Congress a detailed prescription in the 1990s, a plan that failed and contributed to the Democrats loss of Congress in 1994. Now Obama is being criticized for having been too deferential to lawmakers.

White House spokesman Dan Pfeiffer said the plan is an "opening bid" going into Thursday's summit. It would cover more Americans — but also includes a new tax on investment income that Republicans object to.

"The president is coming into the meeting with an open mind," said Pfeiffer. "If the Republicans do, too, our hope is that we can find some areas of agreement. If the Republicans bring good ideas to the table we will find ways — look for ways to incorporate those into our proposals."

Weeks ago, the president and congressional Democrats were on the verge of an historic step — a long-sought remake of the nation's health care system after a half-century of unsuccessful attempts by scores of politicians. Then, Republican Scott Brown stunned Washington with an upset win in the Massachusetts Senate race, denying Democrats their 60-seat majority and reversing any political momentum.

Now, Obama may have to settle for a scaled-down plan that smooths some of the rough edges from the current health insurance system, but stops well short of providing coverage for nearly all Americans. It could include ideas Democrats and Republicans have both supported, such as federal funding for high-risk pools that would extend coverage to people denied because of medical problems and a new insurance marketplace for small employers and individuals buying their own policies.

Determined not to abandon Democratic bills that took a year of arduous effort, Obama's plan builds on them. That's no guarantee that it won't run into problems.

The plan conspicuously omits a government insurance plan sought by liberals and viewed as a nonstarter by conservatives and some congressional moderates. It includes Senate-passed restrictions on federal funding for abortion that have been adamantly opposed by abortion foes as well as abortion rights supporters.

The new White House plan would give the federal government the power to regulate the health insurance industry much like a public utility. The Health and Human Services Department — in conjunction with state authorities — would be able to deny substantial premium increases, limit them or demand rebates for consumers.

Estimated to cost about $1 trillion over 10 years, Obama's plan would be paid for by a mix of Medicare cuts, tax increases and new fees on health care industries.

Oversight of insurance companies has traditionally been a state responsibility. Obama's proposal for a new federal role calls for setting up a seven-member Health Insurance Rate Authority to monitor insurance industry practices and issue an annual report. States that beef up their consumer protection programs would be eligible for a share of $250 million in federal grants.


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