WASHINGTON — President Obama made a detailed case on Tuesday for a new government-administered health insurance plan, but he did not rule out signing a bill that lacks such an option if he cannot win enough support from Democrats in Congress.
In a White House news conference, Mr. Obama dismissed as “not logical” the suggestion that a public plan, which is intended to create more competition and therefore act as a brake on the rise of health insurance costs, would undermine the private insurance market. He argued that a government-run plan competing with private insurers would be an “important tool to discipline insurance companies” and scoffed at complaints that it could drive some out of business.
“We have not drawn lines in the sand other than that reform has to control costs and that it has to provide relief to people who don’t have health insurance or are underinsured,” Mr. Obama said. “Those are the broad parameters that we’ve discussed.”
With an uncertain fate for the public plan, the president and insurance companies clashed sharply Tuesday. Two hours before Mr. Obama’s news conference, the insurance industry fired off a new broadside against proposals for a public insurance plan.
“We do not believe that it is possible to create a government plan that could operate on a level playing field,” read a letter to the Senate from Karen M. Ignagni, president of America’s Health Insurance Plans, and Scott P. Serota, president of the Blue Cross and Blue Shield Association. “Regardless of how it is initially structured, a government plan would use its built-in advantages to take over the health insurance market.”
Questions about a public plan are alive across Capitol Hill. The White House chief of staff, Rahm Emanuel, attended a closed-door meeting of senators on Tuesday evening in an effort to assuage concerns.
Some leading Democrats, like Senator Kent Conrad of North Dakota, are refining the idea of a nonprofit consumer-owned cooperative as an alternative to a new government health insurance plan. Other Democrats, including Senator Charles E. Schumer of New York, prefer a full-fledged government plan.
Mr. Obama sought to build support for his health care plan through the news conference, only his fourth since taking office. He also will hold town-hall-style meetings with voters, including an hourlong program to be broadcast Wednesday on ABC News from the White House.
Asked whether a public plan had to be in the bill if he were to sign it, he said: “It’s too early to say that. Right now, I will say that our position is that a public plan makes sense.”
He brushed aside concerns that a government plan would drive private insurers out of business.
“If private insurers say that the marketplace provides the best quality health care, if they tell us that they’re offering a good deal, then why is it that the government — which they say can’t run anything — suddenly is going to drive them out of business?” Mr. Obama said. “That’s not logical.”
As the White House urged lawmakers to keep an open mind on a public plan, a liberal advocacy group joined Republican senators on Tuesday in criticizing one of the leading Democratic proposals to finance coverage of the uninsured. Under the proposal, employers who do not offer “affordable” coverage to employees would have to help pay the cost of such benefits for their low-income workers.
Under the proposal, which was put forward by Senator Max Baucus, Democrat of Montana and chairman of the Finance Committee, employers would have to pay half the cost of providing Medicaid for any of their low-income employees in that program. Employers would also have to pay the full cost of subsidies for workers who buy coverage through a health insurance exchange and qualify for assistance because they have low incomes.
The Center on Budget and Policy Priorities, a liberal research and advocacy group, said this proposal “could unintentionally discourage the hiring of lower-income people,” by adding a new “health surcharge” to the cost of employing them. Under the proposal, it noted, “employers would not have to contribute to the health insurance costs of any other employees.”
The center’s concerns mirror those of Senator Orrin G. Hatch, Republican of Utah. Mr. Hatch said Tuesday that the Democratic proposal “would be a disaster, because it would create a disincentive for employers to hire lower-income people on Medicaid.”
Mr. Baucus and Mr. Conrad said the Finance Committee had made substantial progress in whittling down the cost of the bill. Senators were shocked when the Congressional Budget Office said an earlier version of the legislation would cost $1.6 trillion over 10 years.
“Costs have come down quite markedly,” Mr. Conrad said Tuesday. He said senators had cut the costs, in part, by reducing subsidies to help low-income people buy insurance.
Mr. Conrad said senators were “very actively negotiating” on whether to create a new government insurance plan or a consumer-owned nonprofit cooperative to compete with private insurers.
The co-op, as now envisioned, would get federal money to start up, but after that it would have to survive on premiums and investment income, as commercial insurers do.
Mr. Conrad has proposed an initial infusion of $3 billion to $4 billion for the co-op. Mr. Schumer said the new entity needed at least $10 billion. Mr. Schumer said a strong public plan was needed because “in many areas of the country, one or two private insurers have a stranglehold on the entire market.”
Mr. Obama concurred and suggested that a government-run plan could create savings throughout the health care system. “If it turns out that the public plan, for example, is able to reduce administrative costs significantly,” he said, “then I’d like the insurance companies to take note.”