House health-care reform bill to include public option

Senior Democratic House aides said the bill would likely include a version of the "public option" preferred by moderates and may raise Medicaid eligibility levels to 150 percent of the federal poverty level for all adults, a steeper increase than in earlier drafts.

The House legislation aims to provide health insurance of one form or another to almost all Americans at an expected cost just below $900 billion over 10 years, without increasing the federal budget deficit for at least 20 years, House Democrats said. Pelosi (D-Calif.) was awaiting official data Wednesday night from the nonpartisan Congressional Budget Office, but was aiming to release the legislation at an event Thursday morning.

Lacking the votes to pass it, House leaders abandoned an effort to include a public option backed by liberals that would establish reimbursement rates to providers based on Medicare. Rural Democrats strongly opposed that approach because of the potentially ruinous effect on doctors and hospitals in their districts, where Medicare rates are generally well below the national average.

Instead, Pelosi is expected to offer a more moderate alternative in which rates would be negotiated between providers and federal health officials, similar to the way in which private insurance operates.  Majority Leader Harry M. Reid (D-Nev.) said he would include a similar provision in the Senate bill, though with an "opt out" clause for states that don't want to participate.

A previous version of the House bill carried an estimated cost of $1.04 trillion over 10 years, but House negotiators were able to lower the price tag in part by expanding Medicaid coverage to a broader slice of the population, the equivalent of all individuals who earn about $16,200 per year. The original House legislation had sought an increase to 133 percent of the federal poverty level, or about $14,400 per year, the same level proposed in the Senate bill.

The adjustment reflects findings by congressional budget analysts that covering the poor through Medicaid -- which pays providers far less than Medicare -- is far more cost-effective than offering subsidies for private insurance policies, something the bill would provide to middle class individuals who lack access to affordable coverage through their employers.

The main revenue sources in the House bill include a surcharge on wealthy taxpayers and changes to Medicaid and Medicare worth about $500 billion in cost savings over 10 years, according to the CBO.

Democratic House aides said party leaders had yet to resolve long-standing disputes over provisions to prevent federal funds from being used to subsidize abortions and to block illegal immigrants from receiving benefits.