WASHINGTON_Senior House Democrats drafting health care legislation are considering slapping an unspecified financial penalty on anyone who refuses to purchase affordable health insurance, a key committee chairman said Monday.

In addition, officials said Democrats are considering a new tax on certain health insurance benefits as one of numerous options to help pay for expanding coverage to the uninsured. No details on the tax were immediately available, and no final decisions were expected until next week at the earliest.

These officials said drafters of the legislation will include a government-run insurance option as well as plans offered by private companies. The government option draws near-unanimous opposition from Republicans and provokes concerns among many Democrats, as well, although President Barack Obama has spoken out in favor of it.

Under the emerging House Democratic plan, individuals and small businesses would be able to purchase coverage from a "health exchange" and the government would require all plans to contain a minimum benefit, these officials added. No applicant could be rejected for pre-existing conditions, nor could they be charged a higher premium, they said.


House Democrats also are considering a wide-ranging change for Medicaid that would provide a uniform benefit across all 50 states and increase payments to health professionals, according to several officials. Medicaid is a state-federal program of health coverage for the poor.

The officials spoke on condition of anonymity, saying they did not want to pre-empt a presentation to rank-and-file Democrats on Tuesday.

At the same time, Rep. Charles Rangel, D-N.Y., chairman of the House Ways and Means Committee, confirmed the proposed penalty for those who refuse to purchase coverage they can afford, referring to it as "play or pay."

"There is no use having a mandate without a contribution," he said.

Waivers would be available for those who could not cover the cost of insurance.

The disclosures came as the pace of activity quickened in both the House and Senate on health insurance legislation, a top priority for the administration. Obama is scheduled to meet Tuesday afternoon at the White House with several Democrats.

Democratic leaders hope to pass legislation in both houses by the first few days of August, and complete work on a compromise measure in the fall for Obama's signature.

Obama has stepped up his own involvement in the issue in recent days, and there has been a flurry of negotiations involving outside interest groups who have pledged to take steps to achieve savings within the private insurance market.

Alongside those efforts, financing Obama's plan to spread coverage more widely carries a price tag estimated at higher than $1 trillion over a decade. House Democrats are considering cutting projected Medicare payments to home health care, pharmaceutical companies, insurance companies, hospitals and others to cover costs.

The option for taxing insurance benefits is also under consideration as part of legislation taking shape across the Capitol in the Senate Finance Committee.

Numerous options are possible, many involving either a tax levied according to the value of an individual's employer-provided health plan, or on the benefits received by upper-income taxpayers.

The issue poses multiple potential problems for Obama, who has pledged not to raise taxes on individuals making less than $250,000 and also ran commercials during the presidential campaign criticizing GOP rival Sen. John McCain's call for a tax on health benefits.

In recent weeks, the president and his aides have sought to straddle the issue, neither accepting it nor ruling it out.


Equally troublesome politically is the issue of a government insurance option. Critics argue it would render private companies unable to compete, and it has emerged as a key sticking point in the Democratic search for a bipartisan plan in the Senate.

All the Republicans on the Senate Finance Committee except one wrote Obama recently telling him he was making a mistake if he insisted on a government option. The exception was Sen. Olympia Snowe, R-Maine, who has been trying to find a compromise that would make a government plan available as a last resort if health insurance remains unaffordable for many families even after Congress overhauls the system.

Even before last fall's general election, health care was a key issue in the battle for the Democratic presidential nomination. Obama proposed requiring parents to buy health insurance for children, with a possible fine if parents refused. But he would not insist that all adults buy insurance.

Secretary of State Hillary Rodham Clinton, who was a New York senator at the time as well as a presidential candidate, said a mandate was essential. At one point, she said she was open to garnisheeing the wages of anyone who refused to comply.

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Associated Press writer Ricardo Alonso-Zaldivar contributed to this report.