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Senators Tackle $1T Health Care Challenge

Eye-popping new cost estimates for President Obama's plan to overhaul the U.S. health care system are forcing majority Democrats to scale back their plans to subsidize coverage for the uninsured.

The $1 trillion-plus estimates come as the Senate Health Committee prepares to meet Wednesday to begin crafting a bill around Mr. Obama's top legislative priority.

Big holes remain to be filled on the most controversial issues in the health care bill authored by the committee's chairman, Sen. Edward Kennedy, D-Mass.: a new public insurance plan to compete with the private market, and whether employers must provide health care for their workers.

Kennedy is suffering from brain cancer and was not expected to be present. But his deputy on health care, Sen. Christopher Dodd, D-Conn., said the committee would move forward anyway with a session to finalize and vote on a bill he said would provide "successful, affordable, quality health care."

The committee was scheduled to meet daily through next week.

Disagreements over costs and other issues hung up another key committee, the Senate Finance Committee, which has a more moderate makeup than Kennedy's panel and is considered Congress' best hope for producing a bipartisan bill.

The Finance Committee was supposed to produce a draft bill Wednesday. But Chairman Max Baucus, D-Mont., said that wouldn't happen and the bill would come out "when it's ready" - later this week or next. The Finance Committee was supposed to start voting next week.

Majority Democrats in the House could unveil their bill later this week, with committee votes after Congress returns from its July 4 recess.

Negotiations were roiled Monday by an analysis from the Congressional Budget Office that said Kennedy's bill would cost about $1 trillion over 10 years but leave 37 million people uninsured, compared with 50 million who are uninsured now.

Democrats called the numbers inconclusive, reported CBS News correspondent Wyatt Andrews, and even the CBO called its own report incomplete. But the sheer magnitude of what Congress is considering is undeniable.

"The news yesterday from the CBO is a turning point in the health-care debate," said Rep. Eric Cantor.

Also on Tuesday, a cost estimate for the Finance Committee bill became public: $1.6 trillion. Senators quickly huddled on ways to bring down costs, with Baucus insisting the final price tag on the Finance Committee bill would be around $1 trillion.

At the Senate Health panel, officials said that after penciling in subsidies for families with incomes as high as $110,000, or 500 percent of the federal poverty level, they would limit the help to families up to $88,000 in income, or 400 percent of the poverty level.

The emerging Finance Committee bill also cuts off subsidies to help people buy insurance at 400 percent of the poverty level, but Baucus told reporters a reduction was "a live option." There were indications the final cutoff would be closer to 300 percent of poverty - $66,000 for a four-person family.

Major cuts in Medicare and Medicaid will pay for some of the new costs but senators disagreed among themselves over whether to tax employer-provided health benefits - something Mr. Obama campaigned against.

Andrews reported that Mr. Obama believes he can raise $267 billion to partly fund the program by limiting tax deductions for high income wage earners, but the reality is that most of Congress opposes the idea.

"And if they're unwilling to do that, they're going to have to pick an option that has other political difficulties," Jonathan Oberlander, an associate professor of Social Medicine at University of North Carolina, told CBS News. "So the question is which kind of poison do they want to drink."

Also elusive was a compromise with Republicans on a new public insurance plan, which the GOP opposes.

The emerging bills envision a new insurance market "exchange" where people could go to shop for insurance coverage, helped by federal subsidies. Individuals will almost certainly be required to obtain coverage.

Business groups were working overtime to soften any requirement for employers to provide coverage for their employees or face fines. Most large employers already offer health care, but senators are looking at requiring certain levels of care, so businesses fear a scenario in which the government would force them to offer more or different coverage than they already do.

"We're concerned that the plan requirements will be so robust that our members' plans won't meet those requirements," said Jeri Kubicki, the National Association of Manufacturers' vice president for human resources policy.

Also Wednesday, four former Senate leaders - Democrats Tom Daschle and George Mitchell and Republicans Bob Dole and Howard Baker - were releasing a $1.2 trillion proposal that would cover everyone and be fully paid for with a combination of spending cuts and tax increases.

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