Obama proposes $950 billion health bill

U.S. President Barack Obama waves to doctors in attendance from across the country after making remarks on the need for health insurance reform in the Rose Garden at the White House in Washington, October 5, 2009.

WASHINGTON (Reuters) - President Barack Obama made a last-ditch bid to revive his stalled healthcare overhaul on Monday with a plan to make insurance more affordable and to bolster government authority to regulate premium hikes.

Obama will push the proposal at a bipartisan healthcare summit on Thursday in an uphill effort to break an impasse in the U.S. Congress, but the White House signaled it was ready to proceed without Republicans if needed to pass a reform bill.

The proposal and summit came as Obama tried to rally support for a sweeping healthcare overhaul that would restrain costs, tighten regulations on insurers and expand health coverage to tens of millions of Americans.

"We view this as the opening bid for the health meeting," Dan Pfeiffer, White House communications director, said of the proposal. "Hopefully this will move the process forward."

But Republicans declared the effort dead on arrival, condemning the Democratic president's plan as a warmed-over version of the unpopular healthcare bills passed last year by the Democratic-controlled Senate and House of Representatives.

They renewed their calls to scrap the bills and said the proposal was a bad sign for Thursday's summit.

"This week's summit clearly has all the makings of a Democratic infomercial for continuing on a partisan course that relies on more backroom deals and parliamentary tricks," House Republican leader John Boehner said.

The White House said Obama's plan would make it easier to bypass Republicans if necessary and ram through legislation by a process requiring a simple majority in the 100-member Senate rather than the 60 votes needed to clear procedural hurdles.

Pfeiffer said no decision had been made on whether to follow that route in getting a final bill through Congress, but the president believed "the American people deserve an up-or-down vote on health reform."

"Our proposal is designed to give ourselves maximum flexibility to ensure we can get an up-or-down vote if the opposition decides they need the extraordinary step of filibustering health reform," Pfeiffer said, referring to a procedural tactic used to thwart legislation.

Democratic leaders have been scrambling to find a way to proceed on healthcare since losing their crucial 60th vote last month in a special U.S. Senate election in Massachusetts. The bills passed by the House and Senate must be merged into one and passed again before Obama can sign a plan into law.

HEALTH STOCKS SHRUG OFF PLAN

Health insurer stocks shrugged off the news after an initial wobble, with the Morgan Stanley Healthcare Payor index up 1.7 percent, buoyed by a better-than-expected announcement late on Friday on 2011 Medicare payment rates.

"I think people look at the prospects of passing a mega-healthcare bill as pretty minimal," said Tim Nelson, a healthcare analyst with First American Funds.

Insurers have underperformed the broad market this month as the Obama administration used the premium increases set by WellPoint Inc's Anthem Blue Cross unit in California to ratchet up attacks on the industry.

Wellpoint, one of three top insurers along with Aetna and UnitedHealth, will be the subject of a congressional hearing on Wednesday.

Obama's plan provides for U.S. government authority to review and block insurance premium increases that are deemed as unjustifiable by a new Health Insurance Rate Authority.

The proposal, based on the Senate bill, would cost $950 billion over 10 years -- up from the Senate bill's $871 billion price tag -- and reduce the deficit by about $100 billion over the same period, White House officials estimated.

But the Congressional Budget Office, the official budget scorekeeper for legislative proposals, said it could not analyze the plan without additional details.

"Preparing a cost estimate requires very detailed specifications of numerous provisions, and the materials that were released this morning do not provide sufficient detail on all of the provisions," CBO Director Douglas Elmendorf said in a blog posting on the agency's website.

Obama's plan offered several changes to the Senate bill to attract support from wavering Democrats but did not incorporate Republican ideas to limit medical malpractice lawsuits, an item of major emphasis for Republicans.

Obama's revised plan would expand tax credits for lower- and middle-income workers to make insurance more affordable and would extend taxes for Medicare, the federal health insurance program for the elderly and disabled, to unearned income.

It also eliminates a controversial Senate deal exempting the state of Nebraska from paying for Medicaid expansion costs, closes a "doughnut hole" gap in prescription drug coverage, and modifies a January deal on a tax on high-cost "Cadillac" health insurance plans to push back the start date and extend it to all plans, rather than just labor union plans.

The proposal provides more tax credits to small businesses and provides all states full federal funding for an expansion of Medicaid, the government health insurance program for the poor, for four years.

The Obama proposal would close the "doughnut hole" in prescription drug coverage under Medicare by imposing $10 billion more in fees on drugmakers, but it would delay them by one year.

Like the Senate bill, the proposal would not include a mandate on employers to offer insurance and would extend coverage to about 31 million uninsured Americans, but it would lower the penalty for Americans who do not purchase insurance.

The surprise victory by Massachusetts Republican Scott Brown in the U.S. Senate election last month ended negotiations on merging the House and Senate bills.

The most likely option for moving ahead now would require changes to the Senate bill through a budget process called reconciliation that requires only a simple majority -- 51 votes in the 100-member Senate -- and would bypass Republicans.

It is unclear if Democrats can muster even that many votes on the healthcare bill, with congressional Democrats anxious to turn to jobs issues ahead of November congressional elections in which Republicans may challenge for control of Congress.

House Speaker Nancy Pelosi was noncommittal on Obama's proposal, saying only that it contained "positive" elements of the House and Senate bills. House Democrats will meet on Monday night, with healthcare one of the items on the agenda.

(Additional reporting by Susan Heavey, Donna Smith, Lewis Krauskopf and Jeff Mason; editing by Howard Goller and Philip Barbara)