Obama: Tough talks ahead as health reform advances

WASHINGTON (Reuters) - House leaders worked on Friday to stem a Democratic rebellion over healthcare reform and President Barack Obama predicted tough negotiations ahead as lawmakers announced plans to move forward with the bill.

Committees in the House of Representatives planned to introduce the healthcare overhaul on Monday and consider amendments later in the week, even as they looked for new ways to cover the cost of the expected $1 trillion 10-year plan.

Representative Charlie Rangel, head of the House Ways and Means Committee, said the bill included a tax on Americans earning more than $350,000 per year that would raise $540 billion over 10 years. The tax would begin in 2011 and have higher rates at the $500,000 and $1 million income levels.

The United States spends more than $2 trillion annually on healthcare, twice any other nation, but it ranks worse than most developed countries on many measures of health, including life expectancy.

Some 46 million are uninsured and have little access to routine healthcare, relying instead on costly emergency room visits as need arises. Obama wants Congress to send him a healthcare bill by October that will cover the uninsured while lowering costs.

House leaders met with representatives of the fiscally conservative Blue Dog Democrat coalition on Friday, hoping to tamp down a rebellion after 40 members sent a letter expressing "strong reservations about the process and direction" of the healthcare plan.

While Democrats control the House, the loss of 40 of their own could put passage in jeopardy, as Republicans have not been involved in the talks and thus may not be cooperative when Democrats knock on their doors for votes.

The group warned the cost of the proposed reform was unsustainable and took aim at Obama's push for a public insurance plan to compete with private insurers, saying it would "seriously weaken the financial stability of our local hospitals and doctors."

Representative Charlie Melancon, co-chair of the Blue Dog coalition, said after the meeting the group believed reform was urgently needed but must be "fiscally responsible healthcare reform that provides real competition and consumer choice in the marketplace."

Asked about the letter at a G8 news conference in Italy, Obama said, "There are going to be some tough negotiations in the days and weeks to come, but I am confident that we're going to get it done."

OVERCOMING FEAR A CHALLENGE

He charged that special interests were trying to frighten Americans into believing that change would mean they would lose their doctors or their healthcare plans.

"Overcoming that fear -- fear that is often actively promoted by special interests who profit from the existing system -- is a challenge," he said.

Democrats said the public plan remained part of the bill being introduced on Monday. Representative Gerry Connolly, who expressed skepticism about the need for any tax increase to pay for the plan, said competition as a result of the public insurance option would save about $140 billion over 10 years.

"I think a lot of us are concerned that we are not successfully getting the word out that actually we have identified a lot of savings with which to finance healthcare reform and at the same time bring down the cost to the average American family," he said.

Representative James Clyburn, the third ranking Democrat in the House, said lawmakers were looking at some kind of trigger that would put the proposed millionaires' tax in place only if promised savings did not materialize.

Obama has said the healthcare overhaul must be paid for and cannot be allowed to add to the soaring U.S. deficit. His administration has negotiated deals with drug companies and hospitals to reduce costs by $80 billion and $155 billion respectively over 10 years.

Obama also has said he has identified nearly $950 billion in potential savings within the budget to help pay for reform.

(Additional reporting by Kim Dixon, editing by Eric Beech)