WASHINGTON — Senator Max Baucus, the Montana Democrat, on Wednesday unveiled his plan to extend health coverage to more than 30 million uninsured Americans, providing a detailed look at a legislative proposal that meets many of the requirements that President Obama laid out in his address to Congress last week.
The proposal is the result of more than a year of preparation by Mr. Baucus, the chairman of the Finance Committee, and three months of intense talks among a small group of Democrats and Republicans. The three Republicans in that group are so far refusing to endorse the bill but negotiations will continue in the days ahead.
In a news release accompanying his 223-page proposal, Mr. Baucus said that he had pared the 10-year cost of the bill to $856 billion, the lowest of the major health care proposals advancing in Congress so far. Other plans had come in with price tags of $1 trillion or more, and the high cost was seen as an obstacle to public support.
The legislation would vastly reshape the $2.5 trillion-a-year health care industry, which accounts for roughly one-sixth of the American economy.
The White House issued a low-key statement characterizing the Baucus plan as a positive step. “Last week, the president laid out his plan to bring stability and security to Americans who have insurance, and high-quality, affordable coverage for those who don’t,” said Dan Pfeiffer, a White House spokesman. “The Senate Finance Committee mark released by Chairman Baucus is another boost of momentum for the president’s effort to reform the health system.”
It would extend benefits to millions of people who are uninsured by broadly expanding Medicaid, the state-federal insurance program for the poor, and by offering subsidies to individuals and families with modest incomes to help them buy insurance.
The proposal would also set limits on out-of-pocket health care expenses. It would cap at 13 percent of household income — not including cost-sharing such as co-payments and deductibles — the cost of insurance premiums for middle-class Americans who just miss qualifying for the new government subsidies.
Starting in 2013, it would require nearly all Americans to obtain coverage or face a penalty of up to $3,800 a year for families.
The bill would create new state insurance marketplaces, or exchanges, where consumers could shop for insurance and compare plans.
All of the plans offered through the exchange would have to meet strict new requirements. Insurance companies could not bar coverage based on pre-existing medical conditions, and could only increase the cost of premiums based on a few factors like age, tobacco use and whether a plan is for an individual or a family.
The Baucus plan calls for the creation of private, nonprofit health insurance cooperatives to compete with private insurers, a compromise aimed at bridging the gap between Democrats who want a government-run insurance plan and Republicans who adamantly oppose that idea.
As insurers, the cooperatives could offer their coverage plans on the exchanges.
And in a nod to the stiff Republican opposition, the proposal does not include a trigger calling for the creation of a public plan if the legislation fails to make affordable health insurance widely available, a compromise step that Mr. Obama has indicated he could accept.
Instead, Mr. Baucus seems to have left the public option to the alternate health care legislation developing in the House, where more liberal Democrats strongly support the idea and the House speaker, Nancy Pelosi, has called it crucial to getting a bill adopted in her chamber.
The federal subsidies in the Baucus plan would be available to individuals and families who earn too much to qualify for Medicaid, but less than 300 percent of the federal poverty limit, or $66,150 for a family of four. Those earning between 300 percent and 400 percent of poverty, up to $88,200 for a family four, would be protected by the cap on health insurance premium costs.
Senators in both parties, however, are questioning whether at the end of the day insurance will be affordable to the people who need it most.
To pay for the overhaul, which Mr. Baucus has said he will meet Mr. Obama’s requirement that it not add to the federal debt, the proposal would impose a new, 35 percent excise tax on the most expensive group insurance plans, those costing more than $8,000 for individuals and $21,000 for families.
In many cases, these would be plans offered through employers.
The proposal would also impose new fees or taxes on various sectors of the health insurance industry, including drug-makers, medical device makers and clinical laboratories. The proposal provides an exemption from some small businesses in these areas.
While Mr. Obama had strongly endorsed the broad outlines of the Baucus plan in his speech to a joint session of Congress last week, the proposal does not exactly give Democrats a unifying proposal to rally around.
The more liberal Democrats on the Senate Finance Committee have harshly criticized the plan, and some — like Senator John D. Rockefeller IV of West Virginia — have accused Mr. Baucus of sacrificing crucial Democratic priorities in pursuit of Republican votes.
At the same time, the three Republican negotiators who for months have worked closely with Mr. Baucus on the legislation, Senator Michael B. Enzi of Wyoming, Senator Charles E. Grassley of Iowa, and Senator Olympia J. Snowe of Maine, have balked at signing on to the proposal so far, saying it still does not meet their demands.