President Makes His Pitch

Health Plan Cut to $900 Billion With Tax on Premium Coverage; GOP Unconvinced.
By JONATHAN WEISMAN and JANET ADAMY
http://online.wsj.com/article/SB125251148557696003.html#mod=WSJ_hpp_LEFTTopStories
WASHINGTON -- President Barack Obama gave an emotional, sometimes contentious address to Congress on Wednesday, combining tough talk to opponents with olive branches on policy in a bid to break the impasse on revamping the health-care system.

Calling the initiative "my plan," Mr. Obama set the size of a health-insurance plan at $900 billion over 10 years, a figure smaller than versions approved in the House and fully paid for, he said, by spending cuts and tax increases. Most individuals would be required to purchase health insurance, but the costs would be mitigated by generous tax credits. Large employers would also face a requirement to offer health coverage to employees or pay a fine, while most small businesses would be exempt.

The president pledged to tackle medical-malpractice lawsuits in an overture to Republicans. He singled out his former presidential rival, Sen. John McCain, in embracing one of the Arizona Republican's health-care proposals. And he promised new cost controls that could scale back his plan if health-care inflation isn't brought under control.

But Mr. Obama chastised Republican leaders who talked of death panels. The president called it "a lie, plain and simple." He warned, "I will not waste time with those who have made the calculation that it's better politics to kill this plan than improve it....If you misrepresent what's in the plan, we will call you out. And I will not accept the status quo as a solution, not this time, not now."

Republicans in turn held aloft copies of health-care bills they have drafted in a quiet rebuke to a president who has said they have offered nothing constructive. One, Rep. Joe Wilson of South Carolina, shouted "lie" when Mr. Obama said his plan wouldn't cover illegal immigrants, though the Democratic bills circulating in Congress do exclude illegal immigrants from eligibility for subsidies. Mr. Wilson late Wednesday issued a statement apologizing to Mr. Obama for "this lack of civility."

Overall, Mr. Obama tried to make the case to consumers that his plan would provide more stability for those who already have insurance, and coverage for those who don't. Republicans said the plan is too expensive and will lead to excessive government control.

Obama Speech 'Robust, Uncompromising'2:05Amid speculation he would present a less contentious health-care plan, WSJ's Jonathan Weisman and Janet Adamy say President Obama delivered a mostly uncompromising speech peppered with a few olive branches.

Mr. Obama embraced for the first time a proposal to impose a fee on insurers that sell high-end plans -- a concession that could hit not only lawyers and bankers but also unions that bargained for premium health plans.

And in an effort aimed at key Republican negotiators in the Senate, the White House outlined a new pilot program to move medical-malpractice cases out of the court system and put them before expert panels and arbitrators. White House officials say the program, first floated by President George W. Bush, would be instituted by executive order and wouldn't be included in the health-care legislation.

"I don't believe malpractice reform is a silver bullet," Mr. Obama said, "but I have talked to enough doctors to know that defensive medicine may be contributing to unnecessary costs."

It was one of the few areas of the plan that Republicans praised, and it won strong endorsement from doctors, who say the threat of lawsuits drives up medical costs by encouraging defensive medicine.

"We think this is just an excellent first step," said Rebecca Patchin, board chairman for the American Medical Association, the influential doctors' group.

The McCain initiative endorsed by Mr. Obama would allow high-risk individuals to join insurance pools that couldn't deny them coverage for pre-existing conditions. That would be in effect until 2013, when a broader, federally controlled insurance exchange would go into force.

That exchange should carry a government-run "public option" that would be self-sufficient and maintained by premiums, Mr. Obama said. He acknowledged alternative ideas by opponents of the public plan, such as nonprofit cooperatives, or a trigger mechanism that would start up the public plan only in states where health costs are not going down.

"But," he added to Democratic applause and Republican silence, "I will not back down on the basic principle that if Americans can't find affordable coverage, we will provide you with a choice."

In an interview, Mr. McCain said he was glad to get a nod from the president, but said Mr. Obama must do more to win over Republicans. "I think the cost is still the key issue and how you pay for it," Mr. McCain said.

"I am not the first President to take up this cause, but I am determined to be the last."

In one of the speech's more emotional moments, Mr. Obama read excerpts from a letter that the late Democratic Sen. Edward Kennedy of Massachusetts asked to be delivered to the president upon his death.

Senior White House officials acknowledged the stakes for the speech were high, after heated town-hall meetings and other signs of public unease emerged this summer. Months ago, the president, who has long used his oratorical skills to get him out of political trouble, planned a speech to Congress or to the nation this fall to give health care a final push, but officials said the bruising summer had nudged that address forward.

Mr. Obama decried what he called a "partisan spectacle" that hardened "the disdain many Americans have toward their own government." He added that "the time for bickering is over. The time for games has passed. Now is the season for action."

Most of the proposals the president outlined in his speech were the same changes he has championed since he launched his effort to fix the health system in March. He proposed several steps similar to what congressional committees have already approved.

These include doing away with lifetime caps on coverage and "recissions," a practice used by insurers to drop customers once they get sick. Out-of-pocket expenses also would be capped. People who don't have insurance through their employer would be encouraged to buy plans on a federally operated policy exchange, and, if under a certain income, would be given tax credits to help them afford it.

Sen. Susan Collins, a Maine Republican the White House has hopes of winning over, complained the president didn't do enough to reach across party lines. "I understand his frustration with what had been some misrepresentations by both sides, but I thought that he could have been more conciliatory in his tone," she said.

Rank-and-file Republicans acknowledged the health-care system needs work. "It's clear the American people want health-care reform, but they want their elected leaders to get it right," Louisiana Rep. Charles Boustany, a cardiothoracic surgeon, said in his party's response to the president.

In an interview, Mr. Boustany acknowledged Republicans had done little to address the looming problems of health care when they controlled Washington. But the Democratic approach is too big, unfocused and fraught with potential dangers, Mr. Boustany said, and he predicted Mr. Obama's speech wouldn't change many minds.

Senate Finance Committee Chairman Max Baucus said he intends to bring a health-overhaul bill before his influential panel the week of Sept. 21. The Montana Democrat said he will continue to work toward winning Republican votes, but he made clear he intends to move forward with or without GOP backing. "This is our moment," he said.

Under the Obama malpractice initiative, states will be eligible for grants for experiments aimed at reducing lawsuits and promoting patient safety. One idea would encourage early disclosure of medical errors, rewarded by mediating claims rather than litigating. Another effort states could pursue would require individuals to obtain an affidavit issued by experts or panels of doctors stating that the case has merit before proceeding in court.

In endorsing a tax on generous health plans, Mr. Obama risks alienating organized labor, a key ally in the debate. While that tax would be levied on insurers, "our concern is that the costs would get passed onto people who aren't the Goldman Sachs executives," said Gerald Shea of the AFL-CIO

The two potential compromises on the public plan didn't alleviate the concerns of insurers, who have been its fiercest opponents. They fear health-care cooperatives -- which would offer coverage to compete with private insurers and receive federal backing to get started, but wouldn't be run by the government -- would be exempt from the fines and regulations facing private plans.

"Government controls a lot of the spending today" in health care, said Alissa Fox, a senior vice president at the BlueCross BlueShield Association, which represents 39 independent insurers. "We don't think the solution is more government spending."

But Democrats were happy Mr. Obama was starting to lead. "I think tonight is the opening salvo of the Democrats' counterattack," said Rep. Eliot Engel (D., N.Y.). "We have been on defensive in August; today, in September, we go on offensive."

—Greg Hitt and Naftali Bendavid contributed to this article.
Write to Jonathan Weisman at jonathan.weisman@wsj.com and Janet Adamy at janet.adamy@wsj.com

Printed in The Wall Street Journal, page A1