updated 6/3/2009 7:05:10 PM ET 2009-06-03T23:05:10

President Barack Obama, providing the first real details on how he wants to reshape the nation's health care system, urged Congress on Wednesday toward a sweeping overhaul that would allow Americans to buy into a government insurance plan.

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In a letter to two senators leading the health care debate, Obama also moved toward accepting a requirement for every American to buy health insurance, as long as the plan provides a "hardship waiver" to exempt poor people from having to pay.

Obama opposed such an individual mandate during his campaign, but Congress increasingly is moving to embrace the idea.

Obama set out the goals in a letter to Sens. Edward Kennedy, D-Mass., and Max Baucus, D-Mont., chairmen of the two committees writing health care bills. It followed a meeting he held Tuesday with members of their committees, and amounted to a road map to keep Congress aligned with his goals.

"The plans you are discussing embody my core belief that Americans should have better choices for health insurance, building on the principle that if they like the coverage they have now, they can keep it, while seeing their costs lowered as our reforms take hold," Obama wrote.

Obama has asked the House and Senate each to finish legislation by early August, so that the two chambers can combine their bills in time for him to sign a single, sweeping measure in October.

Weighing an insurance marketplace
Covering 50 million uninsured Americans could cost as much as $1.5 trillion, and Obama took another stab at paying for it in his letter Wednesday, taking new aim at the ever-costlier Medicare and Medicaid government insurance programs for the elderly, disabled and poor.

The president said $200 billion to $300 billion should be cut from the programs over the next decade through such measures as better managing chronic diseases and avoiding unnecessary tests and hospitals readmissions. Savings from such measures are uncertain.

The president said he supports a new health insurance exchange that Congress is crafting, a sort of marketplace that would allow Americans to shop for different plans and compare prices.

All of the plans should offer a basic affordable package, and none should be allowed to deny coverage to people with pre-existing conditions, Obama said — big changes from how private insurance companies operate today.

"I strongly believe that Americans should have the choice of a public health insurance option operating alongside private plans," Obama wrote, weighing in firmly on one of the most controversial issues in the debate. "This will give them a better range of choices, make the health care market more competitive and keep insurance companies honest."

Voices of opposition
Republicans strongly oppose a public plan, as do private insurers, who contend it would drive them out of business.

"A government-run plan would set artificially-low prices that private insurers would have no way of competing with," Senate Minority Leader Mitch McConnell said Wednesday on the Senate floor.

The idea of what Obama called a "hardship waiver" for individual Americans too poor to buy care splits the difference between where he was during the presidential campaign and where Congress appears to be heading.

In the campaign, Obama did not support requiring everyone to buy insurance, putting him at odds with then Democratic rival Hillary Rodham Clinton. Congress is looking at doing so. The hardship waiver idea is under consideration by the Senate Finance Committee, which also is considering giving tax credits to certain individuals so they can afford health care. Kennedy and House Democrats are looking at giving subsidies to the poor to help them buy coverage.

The letter doesn't address the issue of taxing health care benefits. Obama opposed that during his campaign but Congress is now considering it.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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