Obama says economic recovery depends on healthcare

By Steve Holland and David Alexander

WASHINGTON (Reuters) - President Barack Obama said on Wednesday he realized Americans were skeptical about his healthcare overhaul, but that the country's economic recovery depended on implementing the $1 trillion plan.

Obama, insisting the "stars are aligned" for approval this year despite discord in Congress over the plan, warned inaction would undermine the economy, worsen the deficit and cripple millions of Americans financially.

"I understand people are feeling uncertain about this. They are feeling anxious," he said in a prime-time televised news conference.

But he said he was confident people would support it when they looked "at the cost of doing nothing."

The healthcare debate is reaching a critical juncture in the Democratic-controlled Congress. Obama wants both the House of Representatives and Senate to vote by early August but many lawmakers want more time to consider such an expansive set of proposals.

With the effort in danger of flagging and spilling into the autumn months where momentum could fade, Obama made his case for the overhaul and took on his critics.

Several polls show Obama's job approval rating dropping and that Americans are having doubts about his prescriptions for the economy and healthcare.

Obama said people were "understandably queasy" about government spending and the debt piling up, but argued the health of the economy depended on stemming healthcare costs, which account for 17.6 percent of gross domestic product.

"That is why I've said that even as we rescue this economy from a full-blown crisis, we must rebuild it stronger than before. And health insurance reform is central to that effort."

He also cited the ballooning costs of spending on government health programs for the poor and elderly, Medicare and Medicaid. He said that without a healthcare revamp, those costs would explode the budget deficit.

"So let me be clear: If we do not control these costs, we will not be able to control our deficit," he said.

He is to make his case for the revamp on Thursday in Cleveland, Ohio, a manufacturing state where a recent Quinnipiac University poll said his job approval rating had dropped from 62 percent to 49 percent.

Obama promoted a key goal of the overhaul: creation of a government health insurance option, an idea deeply opposed by Republicans who feel it would unfairly compete with private insurers.

He said competition from the government insurance plan can prevent private insurers from passing on health costs to By Steve Holland and David Alexander

WASHINGTON, July 22 (Reuters) - President Barack Obama said on Wednesday he realized Americans were skeptical about his healthcare overhaul, but that the country's economic recovery depended on implementing the $1 trillion plan.