New Obama Health Care Proposal Borrows Heavily From Senate Bill

WASHINGTON -- President Obama's newest proposal for health care reform includes much of the provisions of the Senate's bill that passed on Christmas Eve, but excludes the special deal arranged for Nebraska to have its Medicaid bills covered by the federal government.

Administration officials said Monday that the president's proposal does not include a so-called public option because that did not make it into final Senate language.

The latest plan is expected to require most Americans to carry health insurance coverage, with federal subsidies to help many afford the premiums. It would bar insurance companies from denying coverage to people with medical problems or charging them more.  The expected price tag is around $1 trillion over 10 years.

Linda Douglass, director of communications for the White House Office of Health Care Refom, said the White House is relying on previous Congressional Budget Office analyses and administration estimates for the costs. She said the plan will be deficit-neutral and the White House is committed to making any minor adjustments that would bring it back in line.

The entire plan is "offset," or pays for itself, Douglass said. She said changes to improve affordability and enhance coverage cost around $75 billion and are paid for by increasing health savings and the employer and individual responsibility payments.

More On This...

She added the proposal will be "more than paid for" by some increased Medicaid advantage savings.

Medicare hospital insurance and the Supplemental Medical Insurance Trust Fund will increase respectively by increasing the rate for "high-income households" -- $200,000 for singles and $250,000 for married couples filing jointly -- and by taxing unearned income like dividends, interest, annuities, rents and royalties.

Nancy Ann DeParle, director of the White House Office on Health Care Refom, said the plan will help more than 31 million Americans by setting up new competitive health care markets, giving participants the same choices as members of Congress have.

The proposals seek to improve consumer protections by setting up a new seven-member Health Insurance Rate Authority that would monitor insurance industry behavior and issue an annual report. States that beef up their consumer protection programs would be eligible for a share of $250 million in federal grants.

The provisions eliminate the "cornhusker kickback" -- the deal made to win support from Nebraska Sen. Ben Nelson -- and provide additional financing to all states for expansion of Medicaid. It also strengthens provisions to eliminate waste, fraud and abuse in Medicaid.

The plan closes the donut hole for prescription drug coverage, which will be paid by adding $10 billion in fees on branded pharmaceuticals, and increases the exemption rate for taxes on "Cadillac plans" held by high-risk workers from $23,000 per family to $27,500.

Language on abortion funding restrictions remain part of the bill, but more stringent language that passed the House on the urging of Democratic Rep. Bart Stupak did not make the cut.

Obama is also hoping to allow the government to deny or roll back egregious insurance premium increases that infuriate consumers.

Coming just days before a White House health care summit with congressional leaders of both parties, Obama's new legislative proposal represents the president's likely last chance to salvage his signature issue.

The insurance rate proposal would give the federal Health and Human Services Department -- in conjunction with state authorities -- the power to deny substantial premium increases, limit them, or demand rebates for consumers.

In this new initiative, the administration is seemingly playing on the same kind of public skepticism that has endangered the medical care system remake all along. Health care reform was a front-burner issue for Obama and majority Democrats in Congress until a little known Republican, Scott Brown, shocked the political establishment last month by defeating Massachusetts Democrat Martha Coakley in a special election to choose a successor for the late Sen. Edward Kennedy.

Recent premium hikes of as much as 39 percent sought by Anthem Blue Cross in California have given Obama a new argument for his sweeping health care remake, stalled in Congress since Democrats lost their 60th Senate seat in a special election last month in Massachusetts.

The proposal for tighter oversight of insurers is modeled on legislation proposed by Sen. Dianne Feinstein, D-Calif.

Republicans have already served notice they'll continue to oppose it. They want Obama to start over with the goal of producing a more modest bill that tries to curb costs and helps small businesses and people with health problems secure coverage.

The summit at Blair House, the White House guest residence, will be televised live on C-SPAN and perhaps on cable news networks. It represents a risky and unusual gamble by the administration that Obama can save his embattled overhaul through persuasion -- on live TV.

Senate Minority Leader Mitch McConnell said Sunday he would participate, but insisted Obama and congressional Democrats would be wrong to push the bills they wrote in the House and Senate.

"The fundamental point I want to make is the arrogance of all of this. You know, they are saying: 'Ignore the wishes of the American people. We know more about this than you do. And we're going to jam it down your throats no matter what.' That is why the public is so angry at this Congress and this administration over this issue," said McConnell, R-Ky, speaking on "Fox News Sunday."

Thursday's meeting will take place nearly a year after Obama launched his drive to remake health care -- a Democratic agenda item for decades -- at an earlier summit he infused with a bipartisan spirit. The president will point out that Republicans have supported individual elements of the Democratic bills.

People buying insurance coverage on their own would stand to gain the most, since big company plans are now exempt from state oversight.

Click here to read a summary of the plan (.pdf).

Click here to read the proposal on the White House Web site.

Fox News' Major Garrett and The Associated Press contributed to this report.