House health plan to boost taxes on rich

July 14, 2009 1:31:51 PM PDT
House Democrats unveiled ambitious legislation Tuesday to remake the nation's health care system and called on medical providers, businesses and the wealthiest Americans to pick up the tab for President Barack Obama's top domestic priority. "This bill is a starting point and a path to success," House Speaker Nancy Pelosi, D-Calif., told a news conference where she and other Democratic leaders promised to pass a bill before the August congressional recess.

Obama has pushed the House and Senate aggressively to stick to the timetable, in hopes of signing comprehensive legislation in October.

"We are going to accomplish what many people felt wouldn't happen in our lifetime," said Rep. Henry Waxman, D-Calif., chairman of one of three committees responsible for health care. Waxman, Pelosi and others stood before a banner that read: "Quality Affordable Health Care for the Middle Class."

The sweeping measure would imposes penalties on employers who fail to provide health insurance for their workers and on individuals who refuse to buy it.

The bill, to be debated in committee beginning later this week, also would require insurance companies to offer coverage, without exceptions or higher premiums in cases of pre-existing medical conditions. It also would allow the government to sell insurance in competition with private firms, a provision that has sparked objections from Republicans and even some Democrats.

The bill's release came one day after President Barack Obama met with key Democrats in a White House session in which he told a powerful Senate chairman he wants legislation by week's end in his committee.

In all, the draft House bill runs more than 1,000 pages, and is designed to fulfill Obama's call for legislation that will extend coverage to millions who lack it, as well as begin to slow the rate of growth in health care generally.

In a statement, Obama praised the proposal, saying it "will begin the process of fixing what's broken about our health care system, reducing costs for all, building on what works and covering an estimated 97 percent of all Americans. And by emphasizing prevention and wellness, it will also help improve the quality of health care for every American."

Key elements of the legislation include federal subsidies for poorer individuals and families to help them afford coverage.

Financing would come from a federal surtax on the upper income - up to 5.4 percent on the income of taxpayers making more than $1 million a year - as well as hundreds of billions of dollars in cuts in projected Medicare and Medicaid spending.

The new income tax on the wealthy is estimated to raise more than $500 billion over the next decade, and reductions in Medicaid and Medicare would account for nearly as much.

Democrats did not say in advance what the overall legislation would cost.

Numerous issues remain subject to change as the bill makes its way through committee. In particular, moderate to conservative Democrats have been negotiating for several days, asking for changes affecting rural health care as well as other issues.

Employers who do not offer coverage would be required to pay 8 percent of each uninsured worker's salary, with exemptions for smaller firms built into the legislation.

Individuals who refused to buy affordable coverage would be assessed as much as 2.5 percent of their adjusted gross income, up to the cost of an average health insurance plan, according to the legislation.

The legislation would set up a new government-run health insurance program to compete with private coverage. The plan's payments to medical providers such as hospitals and doctors would be keyed to the rates paid by Medicare, which are lower than what private insurers pay.

Eventually, all individuals and employers would be offered the option of joining the public plan. The insurance industry says that would drive many private insurers out of business.

As House leaders unveiled their bill, the business community sent a letter to lawmakers charging that parts of the legislation would damage the country's medical system and economy. They cited the proposed government-run insurance plan, a federal council that would make some decisions on benefits and a requirement that employers provide health coverage or pay a new tax.

"Exempting some micro-businesses will not prevent this provision from killing many jobs," the letter said. "Congress should allow market forces and employer autonomy to determine what benefits employers provide, rather than deciding by fiat."

Thirty-one major business groups signed the letter, including the U.S. Chamber of Commerce, the Business Roundtable representing top corporate CEOs and the National Retail Federation.

Across the Capitol, the Senate Health, Education, Labor and Pensions Committee slogged toward passage of its version of the bill on what is expected to be a party-line vote.

Because of jurisdictional issues, the Senate Finance Committee, a separate panel, retains control over the drafting of provisions paying for any legislation.

Obama told the committee's chairman, Sen. Max Baucus, on Monday at the White House he wants legislation by week's end, officials reported. The president did not say whether he prefers a bipartisan bill, which Baucus has been trying to piece together with Sen. Charles Grassley of Iowa, or a bill tailored more to Democratic specifications.

Obama has urged Congress to pass legislation through both houses before lawmakers leave the Capitol on a summer vacation.

While Pelosi and Senate Majority Leader Harry Reid, D-Nev., have both expressed support for the timetable, their efforts have been slowed in recent days by internal squabbling.

Additionally, some House Democrats have privately expressed concern that they will be required to vote on higher taxes, only to learn later that the Senate does not intend to follow through with legislation of its own. That would leave rank and file House Democrats in the uncomfortable situation of having to explain their vote on a costly bill that never reached Obama's desk or became law.

In the Finance Committee some controversial issues remain unresolved, including how to pay for the bill and a Democratic demand for the government to sell insurance in competition with private industry, a proposal Republicans oppose strongly. Finance members have been laboring to produce a bipartisan bill, but Grassley, the panel's top Republican, told The Associated Press on Tuesday it's "still up in the air" whether any bill produced this week would be bipartisan.

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Associated Press writers Ricardo Alonso-Zaldivar and Alan Fram contributed to this report.

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