House Health Plan Raises Taxes for Rich

By DAVID ESPO and ERICA WERNER

posted: 3 HOURS 4 MINUTES AGO

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WASHINGTON (July 14) - House Democrats readied legislation Tuesday that imposes penalties on employers who fail to provide health insurance for their workers and on individuals who refuse to buy it, part of a sweeping effort to overhaul the nation's health care system.

The bill, to be debated in committee beginning later this week, 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.

House Speaker Nancy Pelosi, D-Calif., and other key Democrats arranged to unveil the legislation at an afternoon news conference. A copy of the legislation was obtained by The Associated Press.

Even before they did, the tax-writing House Ways and Means Committee announced it would vote on the proposal beginning on Thursday. The panel is one of three that must act before the bill can go to the full House, probably later in the month.

The developments occurred 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.

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 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 reporters Ricardo Alonso-Zaldivar and Alan Fram contributed to this story.

Copyright 2009 The Associated Press. The information contained in the AP news report may not be published, broadcast, rewritten or otherwise distributed without the prior written authority of The Associated Press. Active hyperlinks have been inserted by AOL.

2009-07-14 15:13:28