Kennedy, Dodd health plan cost drops to $611 billion

WASHINGTON (Reuters) - Key Senate Democrats said on Thursday the cost of their plan to overhaul the U.S. healthcare system has dropped to $611 billion over a decade, a figure they hope will help draw wider bipartisan support in Congress.

Democratic Senators Edward Kennedy and Christopher Dodd, who are leading the Senate Health, Education Labor and Pension Committee's efforts to rewrite healthcare laws, unveiled a plan that includes a government healthcare option and fees that employers who do not offer insurance will have to pay.

Combined with other pieces of the healthcare overhaul being drafted by the Senate Finance Committee, 97 percent of Americans would have health insurance coverage, they said.

An earlier draft by Dodd and Kennedy, who has been absent from Washington while he fights brain cancer, fell short of covering the 46 million Americans who do not have any health insurance and had a $1 trillion price tag, drawing widespread criticism.

"We must not settle for legislation that merely gestures at reform," the two lawmakers said in a letter to committee members announcing the latest cost estimate and revised plans.

The senators said the lower cost estimate came from the non-partisan Congressional Budget Office after analysts there reviewed the entire package for the first time. The estimate for the Senate Finance Committee piece still being negotiated is $1 trillion.

President Barack Obama has called for Congress to send him legislation by October that would address universal coverage and rein in the soaring costs -- an attempt to deliver on one of his biggest presidential campaign pledges.

"Today the Senate HELP committee has produced legislation that lowers costs, protects choice of doctors and plans and assures quality and affordable health care for Americans," Obama said in a statement.

He has also demanded that the costs of any overhaul be covered and not add to the already enormous budget deficit.

The two senior Democrats circulated their new plan for a government healthcare option -- which many Republicans oppose -- run by the Department of Health and Human Services which would negotiate rates and premiums.

"A public option will represent an opportunity to access quality, affordable care," Kennedy and Dodd said in their letter. "And for the many Americans who have good coverage, nothing will change."

Republicans have heavily criticized creating a federal plan arguing that it would be tantamount to a government takeover of the healthcare system and would result in the rationing of services, charges Democrats have denied.

Kennedy and Dodd said that their revised plan would also "virtually eliminate" a key concern that employers would drop coverage for their employees.

Under their plan, employers who do not offer health insurance would have to pay $750 for full time workers and $375 for part-time employees. That would only apply to companies with 25 employees or more.

(Reporting by Jeremy Pelofsky, editing by Cynthia Osterman)