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UPDATE 1-US House health bill surtaxes, Medicare change

* Medicare commission rates would be in place for 2 years

* Public plan “not a government takeover of healthcare”

(Adds details)

WASHINGTON, July 14 (Reuters) - The U.S. House of Representatives healthcare overhaul bill expected to be unveiled on Tuesday will include surtaxes on the wealthy starting in 2011 and rising in 2013 if more money is needed to pay for its programs, Democratic Representative Ron Kind said.

The bill will include a blue-ribbon commission through the U.S. Institute of Medicine that will have one year to recommend changes in Medicare reimbursement rates, said Kind, a member of the House Ways and Means Committee that is one of three committees writing the healthcare bill.

The new rates would go into effect for two years with $8 billion set aside to pay for the changes, and Congress would then review the Medicare rates, Kind said after a healthcare meeting.

Rep. John Dingell, a Democrat, said the legislation would meet the House goal of holding the cost to $1 trillion over 10 years.

Lawmakers are under pressure to complete the overhaul of the $2 trillion U.S. healthcare industry by August, to give time for differences in the House and Senate versions to be resolved and have a final plan on President Barack Obama’s desk by October.

The House version will include a government-run public health insurance plan to compete with private insurers. But Democrat Rep. Jason Altmire said, “This is not a government takeover of healthcare.”

The goal of the healthcare overhaul is to hold down the rapidly rising costs of medical care and provide insurance coverage for the nearly 46 million Americans who lack it.

Kind outlined the surtax rates as 1 percent on $350,000 income, 2 percent on $500,000 income and 3 percent on $1 million. If more funds are needed, the rates will rise to 2 percent, 3 percent and 4 percent, respectively, in 2013.

However, he said as the legislation moves through the House panels, lawmakers will be looking for additional ways to save money within the current healthcare system.

The blue-ribbon Medicare commission will be looking to adjust rates paid to doctors and hospitals to provide incentives for better quality care at lower cost.

“Studies have shown that costs of care varies in the United States, with little link to quality of care. Low-cost areas have been shown to have the same or better health outcomes from treatment than high-cost areas.

Reporting by Donna Smith; Writing by Jackie Frank; Editing by Bill Trott

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