June 3, 2009 / 7:00 PM / 8 years ago

Obama yields on health insurance mandates

<p>U.S. President Barack Obama delivers remarks at the White House forum on health reform in Washington, March 5, 2009.Jason Reed</p>

WASHINGTON (Reuters) - President Barack Obama told Congress on Wednesday he was open to making mandatory health insurance part of an overhaul of the U.S. healthcare system but only with exemptions for the poor and for small businesses.

Obama, setting out requirements for a new national healthcare bill he hopes will be passed by October, tempered his early opposition to an insurance mandate, which is backed by the insurance industry.

Obama, in a letter to the heads of two Senate Committees working on the legislation, said he accepted they were likely to include a mandate but that it should include hardship waivers for those who cannot afford the premiums and exemptions for small business.

With insurance market reforms likely to require insurers to provide coverage regardless of medical condition, insurers are worried that without a mandate requiring coverage people will wait until they are sick to buy insurance.

The willingness of Obama and his fellow Democrats who control Congress to compromise on key provisions makes it more likely they will achieve his goal of enacting a far-reaching revamp of the $2.5 trillion healthcare system.

But there is still danger in the details, with the role of the government and the projected costs of the new program major stumbling blocks for fiscally conservative Republicans and Democrats already concerned over ballooning budget deficits.

"In 2009, health care reform is not a luxury," Obama wrote in the letter to Senators Edward Kennedy and Max Baucus who are taking a lead in writing the legislation.

Soaring healthcare costs are hurting the economy, forcing businesses to drop medical insurance for their workers and pushing many people with big out-of-pocket health expenses into bankruptcy, Obama said.

As part of the overhaul, Obama wants a new government health insurance plan that would compete with private insurers to cover an estimated 46 million uninsured people, setting up a clash with Republicans and the insurance industry as well as some conservative Democrats.

Obama said a public plan that would compete with private companies would give people more choices and "keep insurance companies honest."

<p>U.S. President Barack Obama boards Air Force One at Dulles International Airport in Virginia before departing to Saudi Arabia, June 2, 2009.Larry Downing</p>

BLUE DOGS HOWL

But a group of conservative Democrats in the U.S. House of Representatives, the so-called Blue Dog coalition, outlined their concerns about the proposed new government plan in a paper obtained by Reuters.

They want a public plan to be "triggered" only in the absence of adequate competition and cost containment by the private sector.

"The truth of the matter is that no one knows what the public option will or will not be able to achieve," Representative Mike Ross, who heads the Blue Dog healthcare task force, said in a statement. "Frankly, it's an experiment."

Such a "trigger" is being considered by the Senate Finance Committee headed by Baucus.

Republicans in Congress and insurance companies argue that a public insurance plan would drive many private insurers out of business and the government plan would become so big that it would effectively become a monopoly.

Obama also reiterated his proposals to finance the reform, specifically a limit on the value of itemized deductions for wealthy taxpayers.

Baucus has been considering limiting tax benefits for employer-provided health insurance, which Obama opposes, although he said on Monday that Obama might be open to discussing the issue.

Obama's letter said he was "committed to enacting appropriate proposals to generate additional revenues" through strategies such as improving technology and going after rocketing costs including unmanaged chronic diseases, duplicate tests and unnecessary hospital readmissions.

Obama also said he was committed to finding more cost savings in the Medicare and Medicaid government insurance plans for the elderly and poor than proposed in his budget.

Reporting by Donna Smith, Doug Palmer and Jeremy Pelofsky; Editing by Andrew Quinn and Cynthia Osterman

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