Paul Osgood (L) and David Quinly (R) stand among a group of picketers pushing for healthcare reform outside Senator Sam Brownback's office in Overland Park, Kansas, July 9, 2009. REUTERS/Carey Gillam

U.S. President Barack Obama's plans to overhaul the $2.5 trillion healthcare industry got a boost on Tuesday as Democrats in the House of Representatives offered sweeping legislation and predicted passage on schedule by August.

House Democratic leaders released their 1,000-page proposal which breaks new ground for the United States in healthcare by offering a government-paid insurance option that would compete with private insurers.

It aims to provide coverage for all Americans, control soaring medical costs and improve quality of care. It is partially paid for with a planned tax on the wealthy that would raise $544 billion over 10 years. Savings from changes in the government-run healthcare for the poor and elderly are to bring in several hundred billion dollars more.

Health insurance is considered central to the success of Obama's administration.

Healthcare reform failed in the previous Democratic administration of Bill Clinton. Since then millions of Americans have remained without health insurance, even though the country's spiraling per capita healthcare costs are higher than anywhere else.

Obama voiced support for the healthcare overhaul introduced by House Democrats. This proposal controls the skyrocketing cost of health care by rooting out waste and fraud and promoting quality and accountability, he said in a statement.

We, quite frankly, cannot go home for a recess unless the House and the Senate both pass bills to reform and restructure our healthcare system, Representative Henry Waxman, a driver of the health care overhaul, told reporters.

House Democratic Leader Steny Hoyer said the plan was on track for swift action before the August congressional break. We believe this can be done, he said.

The House Ways and Means Committee, one of three House panels writing the bill, planned to start debate and votes on Thursday.

In the face of criticism from Republicans who typically oppose tax increases, House Democratic leaders said the tax on the wealthy was only one option to help lower costs and ensure coverage for more of the 46 million uninsured.

Republicans immediately slammed the House Democrats' plan. We don't need to build on taxes during a recession and we certainly don't need a government-run healthcare plan, said Senator Richard Shelby, who said he hoped the Senate would take a different path.

Hoyer promised to address concerns of fiscally conservative Democrats on the expected $1 trillion cost and to ensure no increase in the federal deficit. Obama and Democrats had said their plan would not add to government red ink.

Obama has pressed lawmakers to work swiftly to maintain momentum on his priority domestic issue and land a bill on his desk by October.

Rapidly rising costs of care and coverage for the uninsured are the major forces behind the healthcare drive.

Government-paid programs account for about one-third of total U.S. spending on healthcare, which overall makes up nearly 17 percent of U.S. gross domestic product.

As Congress and the White House search for ways to pay for the healthcare overhaul, savings from within the health system, reduced prices and taxes are all on the table.

But labor leaders on Monday told the president they oppose any taxes on employer-paid health insurance, which is among the options being considered by the Senate Finance Committee. Employer payments for health insurance have not been considered taxable income.

The last thing working people can stand as they struggle with health costs is new taxes on their benefits - especially during these times of economic hardship, the labor leaders said in a statement after the White House meeting.

The House committees' legislation is expected to include $500 billion in savings from the Medicare health program for the poor and elderly over ten years, at the same trying to improve care.

We're trying to squeeze all the costs out of the system first, House Speaker Nancy Pelosi said.

Health insurers, drug companies and hospitals are all under pressure to help control the rapidly rising cost of U.S. healthcare.

Insurers were in talks with the Senate Finance Committee to reach savings in the federal Medicare program for the elderly and disabled of $100 billion over a decade, a source familiar with the talks said on Monday.

This followed the announcement of commitments for savings over ten years of $80 billion from the pharmaceutical industry and $155 billion from the hospital sector.

The insurers' discussions focus on subsidies for Medicare beneficiaries who get their coverage through private Medicare Advantage programs. These plans receive subsidies at a cost greater than through traditional government-run Medicare programs.