No Public Option in Obama Health Care Plan

Updated 11:45 a.m. ET

Making a last-ditch effort to save his health care overhaul, President Barack Obama on Monday put forward a nearly $1 trillion, 10-year compromise that would allow the government to deny or roll back egregious insurance premium increases that infuriated consumers.

Posted Monday morning on the White House Web site, the plan would provide coverage to more than 31 million Americans now uninsured without adding to the federal deficit. It comes just four days before Obama's one-of-a-kind, televised health care summit with Democrats and Republicans. (You can read the plan here)

Even with the latest changes, it's highly uncertain such an ambitious proposal can get through Congress. Republicans are virtually all opposed, and some Democrats who last year supported sweeping health care changes are having second thoughts in an election year. After a year in pursuit of what was once his top domestic priority, Obama may have to settle for a modest fallback.

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Weeks ago, the president and congressional Democrats were on the verge of an historic step - a long-sought remake of the nation's health care system after a half-century of unsuccessful attempts by scores of politicians. Then Republican Scott Brown stunned Washington with an upset win in the Massachusetts Senate race, denying Democrats their 60-seat majority and reversing any political momentum.

Determined to avoid facing voters empty-handed, Obama offered a fresh proposal based on Democratic-passed bills.

The plan conspicuously omits a government insurance plan sought by liberals and viewed as a non-starter by conservatives and some congressional moderates. It includes Senate-passed restrictions on federal funding for abortion adamantly opposed by abortion foes as well as abortion rights supporters.

The new White House plan would give the federal government the power to regulate the health insurance industry much like a public utility. The Health and Human Services Department - in conjunction with state authorities - would be able to deny egregious premium increases, limit them or demand rebates for consumers.

House Republican Leader John Boehner slammed the president's proposal after its release.

"The president has crippled the credibility of this week's summit by proposing the same massive government takeover of health care based on a partisan bill the American people have already rejected," he said. "This new Democrats-only backroom deal doubles down on the same failed approach that will drive up premiums, destroy jobs, raise taxes, and slash Medicare benefits."

Obama, who deferred to Congress on the specifics for more than a year, has finally put forward a detailed plan of his own. By and large, it follows the bill passed by Senate Democrats on Christmas Eve, with changes intended to make it acceptable to their House counterparts.

It would require most Americans to carry health insurance coverage, with federal subsidies to help many afford the premiums. Insurance companies would be barred from denying coverage to people with medical problems or charging them more.

The plan dramatically scales back a Senate tax on high-cost health insurance plans objected to by House Democrats - and labor unions. Instead of raising $150 billion over 10 years, it would bring in just $30 billion, the administration said. A Medicare payroll tax increase on upper-income earners would help plug the revenue gap. For the first time, Medicare taxes would be assessed on investment income, not just wages.

Like the Senate bill, the Obama plan would create competitive insurance markets in each state for small businesses and people buying their own coverage. But it would strip out special Medicaid deals the Senate bill granted to certain states, gradually close the Medicare prescription coverage gap, make newly available coverage for working families more affordable. Those changes move in the direction of the House bill.

Estimated to cost about $1 trillion over 10 years, Obama's plan would be paid for by a mix of Medicare cuts, tax increases and new fees on health care industries.

Oversight of insurance companies has traditionally been a state responsibility. Obama's proposal for a new federal role calls for setting up a seven-member Health Insurance Rate Authority to monitor insurance industry practices 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.

House Majority Whip James Clyburn, D-S.C., declined to say that House leaders have the votes now to pass the new plan, but said some of the concerns of House members were addressed by the changes Obama is proposing.

"So I do believe that there is more fertile soil today than when we first took this up," Clyburn said.

Senate Republican Minority Leader Mitch McConnell said Sunday he would participate in the health care summit, but insisted Mr. 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," McConnell said.

"They're (Republicans) definitely not going to go for that," former GOP strategist Ed Rollins told CBS' "The Early Show" Monday, calling the move "pure theater." (Read more from Rollins and former N.Y. Gov. Eliot Spitzer's appearance on "The Early Show.")

Democrats, who now hold 255 of the House's 435 seats, drew only one GOP ally when the House passed its health care bill, 220-215, last November. Since then, one Democrat who voted for the bill has resigned, one has died and a third plans to leave office Feb. 28.