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Published: Thursday, 7/9/2009

Hospitals forfeit $155B in U.S. funds to limit cost of Obama health plan


WASHINGTON - The nation's hospitals agreed yesterday to give up $155 billion in government payments to help defray the cost of President Obama's health-care overhaul, even as Congress got bogged down trying to pay for the plan.

Vice President Joe Biden announced the agreement at the White House, with administration officials and hospital representatives at his side.

"Reform is coming. It is on track; it is coming. We have tried for decades to fix a broken system, and we have never, in my entire tenure in public life, been this close," Mr. Biden said.

The deal allowed hospitals to limit the damage to their budgets.

The Obama Administration agreed to forgo bigger cuts under discussion, the American Hospital Association said in a memo to members. Some of the $155 billion in projected savings touched off a controversy within the hospital industry.

About $50 billion would come from reducing federal payments hospitals receive for providing care to uninsured and low-income patients. Those payments are now made through the Medicare and Medicaid programs.

But public hospitals and children's hospitals said cuts would harm communities.

House Republican Leader John Boehner of Ohio criticized the hospital deal, saying it was negotiated out of public view.

"The administration and congressional Democrats are literally bullying health-care groups into cutting back-room deals to fund a government takeover of health care," Mr. Boehner said.

On Capitol Hill last night, an income tax surcharge on highly paid Americans emerged as the leading option as House Democrats sought ways to pay for health-care legislation the President favors, officials said.

As discussed in the tax-writing House Ways and Means Committee, the surtax would apply to individuals with adjusted gross income of more than $200,000 and couples of more than $250,000, officials said.

Key lawmakers are expected to call for a tax or fee equal to a percentage of a worker's salary on employers who do not offer health benefits.

Rep. Shelley Berkley (D., Nev.), a member of the panel, said the proposed surtax on high-income taxpayers appealed to her and others as a way to avoid a "nickel-and-dime" approach involving numerous smaller tax increases.

Ms. Berkley and others cautioned that no final decisions have been made.

The developments stood in contrast to the Senate, where Democrats edged away from their goal of passing ambitious health-care legislation by early August amid partisan controversy over tax increases and a proposed new government role in providing insurance to consumers.

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