President Obama on Monday signaled his determination to forge ahead with a Democratic vision of a comprehensive health-care overhaul as he unveiled an ambitious proposal that would extend coverage to 31 million people, raise taxes on the wealthy and ratchet up regulations on insurers.
Like bills that have passed the Senate and House, the proposal would require almost everyone to obtain insurance or pay a fine; provide income-based subsidies to those who cannot afford it; expand Medicaid for the working poor; and impose new requirements on insurers who sell policies in a new "exchange," or marketplace, where those without employer-based benefits can buy coverage.
The president's proposal takes the more modest Senate bill as his framework, but, in what is perhaps his proposal's most notable feature, he scales back the Senate measure's main revenue source, a tax on high-cost insurance that he has supported strongly. Instead, he would impose a new tax on the unearned income of the wealthy.
He would expand subsidies to help working-class and middle-class families afford coverage. And in a bid at overcoming some of the strongest skeptics — seniors and state officials — the Medicare drug benefit for seniors and Medicaid assistance for states would expand.
There is no independent cost estimate, but the proposal's additions drive its price tag higher than the Senate's $871 billion bill. White House health-care czar Nancy-Ann DeParle estimated the increase at $75 billion over 10 years, which she said would be offset by bigger cuts in subsidies for private insurers who offer Medicare Advantage plans and higher fees on drug companies, among other sources. The proposal still would reduce the deficit by $100 billion over 10 years, the White House said.
The proposal arrives in advance of Obama's bipartisan health-care summit Thursday. But his approach is so aligned with congressional Democrats that it acknowledges the health-care overhaul will draw little to no Republican support. Indeed, leading Republicans quickly rejected the blueprint and suggested the summit may be in jeopardy.
"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," House Republican leader John Boehner of Ohio said in a statement.
His Senate counterpart, Sen. Mitch McConnell of Kentucky, echoed that assessment: "Our constituents don't want yet another partisan, backroom bill."
Because of the Democrats' loss of their 60th Senate seat, the overhaul's likeliest route is for the House to pass the Senate bill with the understanding that the Senate would pass agreed revisions using a maneuver called reconciliation, which requires only 51 votes and allows the chamber to sidestep a GOP filibuster. But for that to work, House Speaker Nancy Pelosi would need to retain Democrats who voted for the House bill as well as replace those who are opposed to the abortion language in the Senate bill.
The imperative of corralling House Democrats is apparent in the decision to scale back the tax on high-cost insurance plans. The White House had championed the so-called "Cadillac tax" as a cost-containment tool, but House Democrats and labor unions had argued it would hit middle-class families and be a target for Republicans. Instead, the House bill raised income taxes on couples earning $1 million.
The president's proposal scales back the tax on high-cost plans by raising the threshold of plans that would be taxed from $23,000 to $27,500 for family plans, and by delaying the tax until 2018, an exemption previously given only to unions. The proposal makes up the revenue by extending the Medicare tax so that it applies, at a 2.9 percent rate, to wealthy taxpayers' income from sources other than wages, such as interest and dividends.
The proposal adopts, with tweaks, the Senate's more lenient approach to fining large employers who do not provide coverage. It slightly increases the penalty for people without coverage. It does not include a "public option," the government-run plan in the House bill.
White House officials touted as the proposal's signature addition a new authority to review insurance rate increases, which is intended to prevent big rate hikes such as the 39 percent increase that Anthem Blue Cross of California is seeking for many individual policies.
In another bid at popular support, the proposal would go further than the Senate's legislation to fill the "doughnut hole" in the Medicare drug benefit, where patients who reach a certain level of spending on drugs must pay for it until they reach an extremely high amount. The Senate bill would fill the gap halfway, but the hole in coverage under the White House proposal would shrink over several years, disappearing in 2020, a year later than the House's version.
The proposal jettisons the special deal on Medicaid costs that Sen. Ben Nelson, D-Neb., secured for his state. Instead, it seeks to address cash-strapped states' concerns about the cost of expanding Medicaid by increasing the federal share of covering newly eligible people, to 100 percent of the cost for the first four years, 95 percent for the next two, and 90 percent after 2020.This could help win over governors and state legislators who until now have been ambivalent about the federal overhaul.