House Democrats vow healthcare plan by August

WASHINGTON (Reuters) - U.S. President Barack Obama's plans to overhaul the $2.5 trillion healthcare industry got a boost on Tuesday in the House of Representatives where Democrats predicted passage on schedule by August.

House leaders from Obama's Democratic party were set to release the final proposal in the afternoon with a planned tax on the wealthy to raise an expected $540 billion over 10 years to help pay for expanded care.

Health insurance is a top priority for Obama, who took office in January. Millions of Americans are without health insurance, even though the country spends more on healthcare per capita than anywhere else.

"The president made it very clear that this was his Number One priority," and wanted it done prior to the congressional August break, House Democratic Leader Steny Hoyer told a weekly news conference.

"We believe this can be done," he said.

In the face of criticism from Republicans who typically oppose tax increases, House Democratic leaders said the tax on the wealthy was "only one option" to help lower costs and ensure coverage for more of the 46 million uninsured.

The proposal includes a government-run health insurance plan that will compete with private insurers and changes in the government's Medicare program for the elderly and seeks savings from drug companies, hospitals and health insurers.

Hoyer promised to address concerns of fiscally conservative Democrats about an expected $1 trillion cost and to ensure no increase in the federal deficit.

Democratic Representative Jason Altmire insisted: "This is not a government takeover of healthcare."

Obama has pressed lawmakers to work swiftly. Rapidly rising costs of care and coverage for the uninsured are the major forces behind the healthcare drive.

Government-paid programs account for about one-third of total U.S. spending on healthcare, which overall makes up nearly 17 percent of U.S. Gross Domestic Product.

The Senate Finance Committee is expected to debate its version next week, and once both bills clear the chambers, lawmakers aim for passage of a final compromise bill by October.

TAXES, MEDICARE

The income tax on the wealthy would be imposed on individuals whose income begins at $280,000 and for couples starting at $350,000, rising in two steps to $1 million, lawmakers have said.

Initially lawmakers were looking at taxes ranging from 1 percent to 3 percent, but congressional sources said the top rate for millionaires would be 5.4 percent.

The House committees' legislation is expected to include $500 billion in savings from the Medicare health program for the poor and elderly over 10 years, at the same time trying to improve care.

The bill will include a blue-ribbon commission through the U.S. Institute of Medicine that will have a year to recommend changes in Medicare reimbursement rates, said Representative Ron Kind of the House Ways and Means Committee, one of three committees writing the healthcare bill.

Lawmakers will look for additional ways to save money within the current healthcare system.

Studies have shown that costs of care vary in the United States, with little link to quality of care. Low-cost areas have been shown to have the same or better health outcomes from treatment than high-cost areas.

Drug companies, health insurers and hospitals have all been asked to commit to helping save money in government-run health programs.

(Additional reporting by Richard Cowan and Kim Dixon, writing by Jackie Frank, editing by Howard Goller)