WASHINGTON - A combative President Barack Obama on Monday sought to regain the initiative on overhauling the U.S. healthcare system after legislation slowed down in the U.S. Congress while he was abroad last week.

Obama, just back from a week-long trip to Europe and Africa, used a Rose Garden ceremony to make his case for the healthcare revamp and to tell his critics they should not write him off too soon on the subject.

I just want to put everybody on notice, because there was a lot of chatter during the week that I was gone: We are going to get this done. Inaction is not an option.

For those naysayers and cynics who think that this is not going to happen, don't bet against us. We are going to make this thing happen, he said. Several lawmakers on Sunday talk shows said healthcare, Obama's number one priority, could not be finished by August amid controversy over how to pay for its $1 trillion cost over 10 years. House of Representatives Democrats set off a furor on Friday with a plan to tax the wealthy to pay for healthcare.

Senate Majority Leader Harry Reid said on Monday the goal was unchanged. We'd like to see these bills on the floor in July. And we hope our Republican colleagues will work with us to achieve that goal, he said on the Senate floor.

Earlier in the day, Obama predicted more debate in the days ahead as panels in both chambers consider various versions of the healthcare plan but said he would be successful in fulfilling his campaign pledge.

Even though we are close, I've got no illusions that it's going to be easy to get over the finish line. There are going to be more debates and more disagreements before all is said and done, but healthcare reform must be done, Obama said.

Obama was also scheduled to travel on Tuesday to Warren, Michigan, a state where closed factories and the highest unemployment rate in the country have left many without private health insurance and struggling to pay medical bills.

After top Democrats in both chambers went to the White House for a meeting with Obama, Senate Finance Committee Chairman Max Baucus told reporters: There was the strongest commitment yet ... from everyone there that we are all going to work together to get this passed.

Baucus, whose panel is crafting a major portion of the bill including how to pay for the overhaul, added, I got the sense that the urgency barometer is going up.

House Democrats are to formally unveil their plan on Tuesday. They touched off a storm on Friday with the announcement it would include a higher income tax on the wealthy.

Representative Charles Rangel, head of the House Ways and Means Committee, said the bill would include a tax on Americans earning more than $350,000 per year that would raise $540 billion over 10 years. The tax would begin in 2011 and have higher rates at the $500,000 and $1 million income levels.


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.

(Reporting by David Alexander, Steve Holland, Kim Dixon and Donna Smith; Editing by Jackie Frank and Vicki Allen)