June 17 (Bloomberg) -- Former Senate majority leaders, including Democrat Tom Daschle and Republican Robert Dole, are promoting a health-care overhaul plan aimed at bridging differences between the two political parties and overcoming objections by doctors, hospitals and insurers.

Daschle, Dole and Republican Howard Baker released a bipartisan plan today that would tax some employer-provided health-insurance premiums, require individuals and large employers to buy health insurance, and create public insurance pools run by states instead of the federal government.

The proposals were put together over 15 months by the Washington-based Bipartisan Policy Center, which was started by Daschle, Dole, Baker and former Democratic Senate leader George Mitchell. Congress is drafting a bill to revamp health care, which President Barack Obama calls “the single most important thing we can do for America’s long-term fiscal health.”

Dole said the U.S. has a rare opportunity this year to enact a comprehensive health-care bill. “Let’s do it now,” he urged, saying it may be five years before lawmakers have a similar political opening.

That it took three former Senate leaders more than a year to reach a consensus underscores the challenge Congress faces in meeting Obama’s deadline for passing legislation by October. No fewer than five House and Senate committees are working out the details.

Possible Delay Seen

Senate Finance Committee Chairman Max Baucus said today his panel may delay consideration of a health-care bill until July as lawmakers work to bring the cost below $1 trillion and reach a bipartisan compromise.

Still, the Daschle-Dole-Baker proposal “shows that bipartisan agreement on a plan, with a way to pay for it, is doable,” said Drew Altman, president of the nonprofit Kaiser Family Foundation, a health-care policy group in Menlo Park, California.

Obama’s chief spokesman, Robert Gibbs, called the plan “a serious and detailed proposal” that reinforces the president’s health-care goals. “They have demonstrated what can be achieved with bipartisan effort,” Gibbs said.

Iowa Senator Charles Grassley, the top Republican on the Finance Committee, said that while he doesn’t agree with all the plan’s recommendations, it “should encourage” lawmakers “to find a compromise on even the most controversial health-care issues and demonstrate that bipartisan reform may be achievable.”

‘Historic Moment’

Health and Human Services Secretary Kathleen Sebelius said the Senate leaders’ report “gives me great hope that people are rolling up their sleeves” to find ways to “really use this historic moment” to revamp the health-care system. The U.S. should “finally tackle the challenges that we have put on the back burner for way too long,” Sebelius said at a Democratic Leadership Council policy forum in Washington.

While the plan seeks solutions to potential deal-breakers dividing Republicans and Democrats, Daschle, a former South Dakota senator, said in an interview that he doesn’t want to “overplay what it can do.”

Daschle was Obama’s first choice as health secretary before withdrawing after questions about errors on his federal taxes. Dole, a former senator from Kansas, was the Republican presidential nominee in 1996. Baker of Tennessee was also White House chief of staff under President Ronald Reagan.

Health-care expenditures now make up about 17 percent of the U.S. gross domestic product and would reach 34 percent by 2040, according to the White House Council of Economic Advisers.

Bypassing Federal Government

In a bid to blunt Republican opposition to setting up a government-run insurance plan for those without coverage, Dole, Baker and Daschle suggest giving states, instead of the federal government, the option of establishing insurance-purchasing pools. These pools would extend coverage to everyone regardless of their health status or ability to pay, Daschle said.

Under the group’s plan, taxes on employer-provided insurance premiums would vary according to regional differences in health-care costs.

The tax on benefits would generally start when annual premiums exceed about $15,000, using as a model the benefits packages of federal employees. Retirees and union members whose benefits are covered by existing contracts would be exempt.

Insurance Mandatory

The Dole-Baker-Daschle plan would require individuals to have health insurance and make large employers provide coverage for workers. The plan would exempt small businesses, with annual payrolls of less than $1 million, and provide government subsidies to low-income persons and families. Some small businesses also would receive tax credits for providing employee health benefits.

To enforce the coverage requirements, individuals without insurance would face tax penalties, and large companies that don’t provide the benefit would pay into a fund for providing policies to the uninsured.

Daschle estimated it would take as long as four years to attain universal coverage under the group’s approach, which includes a minimum benefits plan that caps annual out-of-pocket premiums at 15 percent of income.

The bipartisan plan recommends an Independent Health Care Council, appointed by Congress and the White House, to make recommendations on cutting costs, improving the quality of care and expanding insurance coverage. Its proposals would be sent to Congress under “fast-track” procedures that limit opportunities for amendments and delaying tactics.

‘Cross Some Lines’

With an eye on producing compromise legislation, Dole, Baker and Daschle, along with their advisers, consulted lawmakers, congressional aides, Obama administration officials and other interested groups.

“This problem can be solved if we’re willing to cross some lines and yet not make compromises that are fundamentally at odds with our philosophies and goals,” said Mark McClellan, who oversaw the Medicare and Medicaid health programs for the elderly and poor under former President George W. Bush and who worked on the bipartisan project.

The group’s recommendations will help “define what a middle-ground, pragmatic approach to health-care reform should look like,” said Charlie Cook, a Washington-based independent political analyst.

“The question is whether it will provide cover or an incentive for more than one or two Senate Republicans to break ranks and support any compromise that President Obama or Democrats try to offer,” Cook said.

To contact the reporter on this story: Edwin Chen in Washington at echen32@bloomberg.net.

Last Updated: June 17, 2009 17:23 EDT