Image: Kathleen Sebelius
Charles Dharapak  /  AP
Health and Human Services Secretary Kathleen Sebelius tells a House Health subcommittee the president is open to good ideas about how to finance health reform, "But we are not open to deficit spending."
updated 7/22/2009 8:10:45 PM ET 2009-07-23T00:10:45

President Barack Obama left the door open to a new tax on health care benefits Wednesday, and officials said top lawmakers and the White House were seeking $150 billion in concessions from the nation’s hospitals as they sought support for legislation struggling to emerge in Congress.

“I don’t want to prejudge what they’re doing,” the president said, referring to proposals in the Senate to tax workers who get expensive insurance policies. Obama campaigned against the tax when he ran for president last year.

The chief executive also met with governors and arranged a prime-time, town hall at the White House, the latest in a string of events designed to bend public opinion toward his top domestic initiative to reduce health care costs while making insurance available to the nearly 50 million Americans who lack it.

Looking for progress before vacation
The flurry of activity extended to the Capitol, where the administration and its allies hoped for a prominent display of progress in the Senate before Congress begins a weeklong vacation on Friday.

Senate Finance Committee Chairman Max Baucus, D-Mont., labored in a daylong series of meetings to produce at least an outline of legislation that could command bipartisan support. Of the five House and Senate committees working on health care, Finance is the only one that appears to have a chance at such an agreement.

For their part, key Republicans pressed the White House for assurances that any concessions made now would not merely lead to additional demands at a later date. “We want to know the president is working in good faith along the way as we are,” said Sen. Olympia Snowe, R-Maine, after meeting with Nancy-Ann DeParle, the top White House official on the issue.

Baucus appeared especially eager to show progress before the exodus from the Capitol began.

To that end, several officials said he was negotiating with representatives of the nation’s hospitals, hoping to conclude an agreement that would build on an $80 billion weekend deal with the pharmaceutical industry.

Hospitals were being asked to accept a reduction of roughly $155 billion over the next decade in fees they are promised under government programs such as Medicare and Medicaid, according to numerous officials.

Officials at the American Hospital Association and the Federation of American Hospitals said they could not comment on any discussions.

Baucus is seeking similar concessions from nursing homes, insurance companies, medical device makers and possibly others, noting that any legislation would create a huge new pool of customers for industry providers.

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At its heart, any legislation is expected to require insurance companies to offer coverage to any applicant, without exclusions or higher premiums for pre-existing medical conditions.

Overall, Baucus has said he hopes to hold the size of any legislation to $1 trillion or less, and in private negotiations, there were discussions about further scaling back eligibility for insurance subsidies from the government.

Looking for ways to raise revenue
Additionally, Baucus was still searching for ways to cover the cost of his emerging legislation, and numerous officials said he appeared roughly $200 billion shy of achieving that goal. They added that a proposal to make it harder for taxpayers to itemize their medical expenses was drawing renewed interest among key senators as one way to raise revenue.

Video: Health care: Dems on their own? Current law allows those expenses to be itemized when they exceed 7.5 percent of adjusted gross income. The proposal under review would raise that to 10 percent, officials said.

At the White House, Obama sidestepped when asked if he was open to taxing health care benefits — a proposal he opposed vigorously in the campaign for the White House.

“I have identified the ways that I think we should finance this. I think Congress should adopt them. I’m going to wait and see what ideas ultimately they come up with,” he said on ABC’s “Good Morning America.”

“I don’t want to prejudge what they’re doing. We’ve put forward what we think is best.”

It was the latest in a series of signs of presidential flexibility. On Tuesday, he left open the possibility that he could sign legislation that does not contain an option for a government-run insurance plan. And he has said recently he could accept a requirement for individuals to buy insurance, a position he opposed in the campaign.

Baucus and many Republicans support taxing health care benefits, and officials have said discussions center on imposing the tax in cases in which premium costs exceed $17,000 combined in payments by the employer and worker. Democrats want to exempt union members covered by contracts, but Republicans are resisting.

Video: Sebelius: Health care spending an investment The officials who provided specifics on the negotiations in the Senate did so on condition of anonymity, saying they were not authorized to disclose private talks.

Despite months of efforts, Obama said in the ABC interview, “I think that we’re still early in the process. All these issues are getting worked through.”

Higher-than-expected costs
At the same time, some of the Democrats’ initial deadlines have slipped under the weight of higher-than-expected cost estimates from the Congressional Budget Office, internal disagreements and other difficulties.

Many Democrats insist on having an option for government-run insurance in the legislation so consumers can have a choice other than a plan from private insurers. Republicans are vehemently opposed, and compromise efforts have centered on a proposal for a nonprofit co-operative that would be initially funded by the federal government.

The U.S. Chamber of Commerce said Wednesday that the government-run option would “gut the private market.”

Additionally, Republicans and Democrats are at odds over calls for employers to offer insurance or else pay a penalty to the government to help subsidize the cost of insuring their workers.

ABC News was the lone network broadcasting Obama’s town hall — drawing criticism from Republicans who wanted equal time.

In defense, ABC News President David Westin said the show would “include a variety of perspectives coming from private individuals asking the president questions and taking issue with him, as they see fit.”

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

Video: Obama: 'Optimistic' on health reform

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