WASHINGTON — Efforts to pass sweeping health care legislation took a big step forward Wednesday as House Democratic leaders reached an agreement with fiscally conservative party members that would cut the bill's cost and exempt many small businesses from having to provide health benefits to workers.
The agreement, brokered by aides to President Barack Obama, overcame a 10-day impasse and would allow a pivotal House committee to resume work on the bill, with an expectation that the panel could approve it this week.
Under the deal, Democratic leaders promised to defer a vote by the full House until September, so lawmakers could test public sentiment on the measure, which could fundamentally restructure one-sixth of the nation's economy.
Elements of the agreement reflect priorities shared by centrist members of both parties who have been trying for months to forge a compromise in the Senate Finance Committee.
Under the House agreement, the federal government would still establish a public insurance plan to compete with private insurers, but the public plan would not use Medicare fee schedules to pay doctors and hospitals, as envisioned in the original House bill. Instead, the public plan would negotiate rates with health care providers, as private insurers often do.
Rep. Mike Ross of Arkansas, chief negotiator for the fiscally conservative Democrats known as Blue Dogs, said the changes were "a huge win for us."
Blue Dogs said the change reduced the likelihood that the government plan would compete unfairly with private insurers by forcing doctors and hospitals to accept below-market rates. As part of the deal, states could, in addition, set up nonprofit cooperatives to offer coverage to individuals, families and small businesses.
The Senate Finance Committee is coalescing around a similar idea, as an alternative to a government-run insurance plan, but it was not in the original House bill.
In addition, Ross said: "We have cut the cost of the bill substantially. We have delayed a floor vote until September. We have protected small business."
But some of the concessions to Blue Dogs set off a revolt among members of the Congressional Progressive Caucus, who said they feared that the public insurance plan was being weakened.
"We do not support this," said Rep. Lynn Woolsey, D-Calif., co-chairwoman of the progressive caucus. "It's a nonstarter."
In the Senate, negotiations in the Finance Committee were also moving forward. Senate Democratic leader Harry Reid of Nevada had said he expected the committee to approve a bill next week.
The Energy and Commerce Committee, the third of three House panels to take up the legislation, was to resume work today.
After marathon negotiations, four of seven Blue Dog holdouts on the Energy and Commerce Committee reached the agreement with the chairman of the panel, Rep. Henry A. Waxman, D-Calif.
The Congressional Budget Office said the bill would ultimately provide coverage to perhaps two-thirds of people who are uninsured. Ross said the Blue Dogs had won concessions that should bring the 10-year cost below $1 trillion, a goal shared by the Senate Finance Committee.
Sen. Max Baucus, D-Mont., the chairman of the committee, said the latest estimates from the budget office indicated that his bill would cost "under $900 billion."
The House negotiators, including Ross and aides to Waxman, said they had agreed to make these changes in the bill:
Most employers would still be required to provide health insurance to workers or pay a new federal excise tax, but more small businesses could qualify for the exemption, which would be available to businesses with annual payrolls of $500,000 or less, compared with a threshold of $250,000 in the original House bill. The maximum tax rate, 8 percent of wages, would apply to employers with payrolls exceeding $750,000, rather than the original threshold of $400,000.
Medicaid would be expanded, as under the original bill, but states would pay a small share of the additional costs, perhaps 7 percent. The federal government would have paid all the additional cost under the original bill.
People with low or moderate incomes could still get federal subsidies to help them buy insurance, but they might have to spend slightly more of their own income — a maximum of 12 percent, rather than 11 percent.
As he traveled to Raleigh, N.C., and Bristol, Va., Obama welcomed the agreement. "I'm especially grateful that so many members, including some Blue Dogs on the Energy and Commerce Committee, are working so hard to find common ground," he said. "Those efforts are extraordinarily constructive in strengthening this legislation and bringing down its cost."
The president's travels Wednesday were part of a White House sales pitch, as officials have been fretting that the script has been hijacked by critics who say that some of his proposals could hurt Americans who already have health insurance.
"These folks need to stop scaring everybody," Obama said.
In Raleigh, an elderly woman rose to say she worries that "the new system" would force a change in doctors and that "older citizens will just be put out to pasture."
"Say it isn't so," she asked.
Without pause, Obama answered: "It isn't so."
Information from the Washington Post was used in this report.