Key Points of Obama Health Plan

(Feb. 22) -- President Barack Obama's health care proposal aims to bring House and Senate Democrats together to achieve their party's biggest policy goal while addressing enough GOP concerns to try to draw Republicans into the debate.

As such, the $950 billion, 10-year plan is just a starting point for negotiations that officially kick off Thursday at a bipartisan meeting hosted by the president. But with last year's legislative work on the health care overhaul now subject to a political environment -- and Senate membership -- that has shifted rightward, the White House blueprint offers a guide to how a potential health bill will turn out. So here's a breakdown of key provisions in the White House proposal.

Insurance Premiums
The main objective of the proposal is to reduce medical costs while extending health care coverage to 31 million Americans who are currently uninsured. In a bid to keep insurance premiums down, Obama would create a federal Health Insurance Rate Authority that would help states with "rate review," the process of deciding when rate increases are unreasonable and unjustified. Like the House and Senate bills, the White House proposal would set limits for insurance premiums based on family incomes.

Obama would also include creation of insurance exchanges, competitive markets where insurers would vie for new consumer and small-business customers. And he would ban insurers from denying coverage to Americans because of pre-existing medical conditions.

Medicare 'Donut Hole'
The Obama plan uses the Senate bill as its template but adheres to the House version on at least one significant point for older Americans: a drug-benefit gap known as the "donut hole." The Medicare prescription drug benefit currently stops reimbursing patients after $2,830 is spent and doesn't resume until out-of-pocket spending tops $4,550. Obama would close that gap more than the Senate and faster than the House.

Curbing the 'Cadillac' Tax
One of Obama's biggest changes to the Senate bill affects a proposed tax on so-called "Cadillac" plans, high-cost insurance criticized by economists for increasing overall health spending. Labor unions have objected to the Cadillac tax as much as highly compensated CEOs. The White House would delay the start of this tax to 2018 from 2013. It would also raise the annual Cadillac threshold to plans that cost $10,200 for individuals and $27,500 for families from $8,500 and $23,000.

To make up for the lost revenue, the Obama proposal would apply Medicare taxes to the interest, dividends, annuities and other unearned income for individuals who make more than $200,000 and married couples who make more than $250,000 and jointly file tax returns. (Currently, Medicare tax is applied only to earned income.) And the administration would increase penalties on businesses that don't provide insurance for their employees while exempting companies with fewer than 50 workers.

Fraud, Waste and Cornhusks
The White House keeps an assortment of measures aimed at eliminating fraud and waste that are in the House and Senate bills, from creating a new database on health-industry malefactors and background checks for billing agencies to rules aimed at preventing drug companies from trying to keep generic competition off the market. The fraud provisions are cited as an area where the administration is reaching out to Republicans, but it wasn't clear if the president added anything new.

The White House would also eliminate what Republicans assailed as the "Cornhusker Kickback" -- a clause added in the Senate to win the support of Sen. Ben Nelson of Nebraska by paying that state's full cost of expanding Medicaid. Instead, the administration would provide additional federal funds to help all states pay for Medicaid expansion.

Dosing the Deficit
The White House claims the new plan would reduce the federal deficit by $100 billion in the coming 10 years and some $1 trillion in the decade that follows. The Congressional Budget Office, probably the most important arbiter of any health plan's costs and savings, hasn't yet had a chance to analyze the new proposal.