Obama Releases Updated Health Care Proposal, Which Includes Plan to Limit Rate Increases

President Barack Obama is now proposing a new idea that would allow the government to limit premium rate increases, in a attempt to necessitate his stalled health-care legislation.

Obama released a legislative proposal including the idea on Monday. This move comes ahead of the bipartisan health-care summit scheduled to start on Thursday.

The new White House proposal would cost $950 billion, an increase of $75 million over the previous Senate bill, over the first 10 years, and would increase the penalties levied on businesses that fail to provide insurance for workers and individuals who do not get insurance.

The new plan, which has used the Senate bill as a starting point, has added a number of changes that do not include any proposed by Republicans. Obama has said that he is open to adding ideas brought forward by Republicans.

The president has also proposed the idea of raising the threshold for the tax to plans valued at $27,500 per family. In the Senate bill the threshold was set at $23,000 per family.

In addition the proposal would increase the fees on brand-name drug companies by about $10 billion to pay for the additional Medicare drug benefit.

Administration officials have said that the proposal by Obama will be an attempt to bring the House and Senate closer to agreement based on the health bills passed by each part of Congress last year. The new idea for authority on premiums placed on insurers was not included in either bill and will likely face opposition from republicans as they will see too much power being given to the government.

The proposal, which is the most detailed yet to come from Obama who has left the drafting of the sweeping health care overhaul to the Democratic members of Congress, would curb hikes such as the recent 39 percent sought by WellPoint Inc. (NYSE: WLP) in California.

The plan is expected to require that most Americans have health care coverage, while the government will aid those who are unable to afford the premiums and not allowing insurance companies to deny coverage or raise rates for those with medical problems.

Republicans have and said that they will continue to oppose the legislation, as they want a more modest bill that will attempt to curb costs and help small businesses and help those who are unable to afford coverage.

The proposal would create a federal role for the oversight of the insurance companies, a responsibility that traditionally fell upon the state. There would be a new seven-member Health Insurance Authority that would watch the behavior of the insurance agencies while issuing an annual report.

The new plan would give those who purchase coverage on their own the greatest benefit as the big company plans would be exempt from the oversight of the state.

The new proposal will add Medicare tax to unearned income and will seek to close certain tax loopholes, including credits on certain liquid byproducts derived from processing paper or pulp known as "black liquor."

Despite the news, many health insurance companies are higher today. UnitedHealth Group Inc (NYSE: UNH) is up 2.7 percent, CIGNA Corp. (NYSE: CI) is up 1.8 percent and Aetna Inc. (NYSE: AET) is up 1.45 percent.

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