Healthcare reform is a key part of the Obama administration's agenda, and finding a way to pay for the cost is proving to be a major obstacle.
"There are going to be some tough negotiations in the days and weeks to come, but I'm confident that we're going to get it done," Obama said.
As Obama traveled abroad, his domestic agenda took some blows at home. In addition to the hiccup on his healthcare plan, Democrats on Thursday put off until September work on a bill to reduce greenhouse gases blamed for global warming.
And a political scrap broke out over the effectiveness of a $787 billion economic stimulus plan pushed through Congress by Democrats in February.
Republicans argued it has failed to stop the rising jobless rate while Democrats led by Vice President Joe Biden said it needs more time to work.
Obama wants Congress to send him a healthcare bill by October that will cut costs while providing medical insurance to most of the 46 million Americans who currently have no coverage.
OPPOSE PUBLIC OPTION
The conservative Democrats, known as the Blue Dog Democrats, also took aim at the president's proposal for a public insurance option to compete with private insurers in a marketplace that would provide plans for those who cannot buy coverage through their employers.
"A "Medicare-like" public option would negatively impact hospitals, doctors and patients," they wrote in a letter to House Speaker Nancy Pelosi, noting that payments to doctors through the government health plan for the elderly are 20 percent to 30 percent lower than private plans.
"Using Medicare's below-market rates would seriously weaken the financial stability of our local hospitals and doctors," the letter said.
Obama has called for a marketplace with rules that would create a level playing field for public and private insurers, but many conservatives fear the public plan would have an advantage that would ultimately drive the private plans out of business.
Obama says a public plan is necessary to create a truly competitive marketplace that will drive down costs. He reasserted his support for a public plan this week after his chief of staff suggested the proposal was negotiable.
Asked at Friday's news conference when he was going to get more involved in pushing the healthcare reform issue, Obama said, "We jumped in with both feet."
"My job is to make sure that I've set some clear parameters in terms of what I want to achieve," he said. "There are a whole host of things that I've put on the table that I want to see included."
He said the plan should be paid for without adding to the deficit and must slow the rising cost of healthcare.
"We're closer to that significant reform than at any time in recent history," Obama told reporters at a news conference in Italy. "That doesn't make it easy. It's hard. And we are having a whole series of constant negotiations."
Conservative Democrats are demanding significant changes before they will support a sweeping health care overhaul, forcing the House to join the Senate in stalling Obama's top domestic priority.
The "Blue Dog Democrats" group released a list of demands on the eve of House Democratic leaders' planned unveiling of their final bill Friday.
The bill release was pushed back to Monday at the earliest and Democratic leaders agreed to devote Friday to meetings with the fiscally conservative Blue Dogs to work through their concerns.
These include the need for more cost containment measures, protections for small businesses and a focus on rural health care.
"We cannot support a final product that fails to" address these issues, members of the group wrote to House Speaker Nancy Pelosi and Majority Leader Steny Hoyer. Opposition from the 52-member group could imperil House passage of a bill.
Before Thursday, delays and internal Democratic disputes over taxes and the role of government had seemed mostly confined to the Senate. A bipartisan deal emerging in the Senate Finance Committee was threatened this week when Senate Majority Leader Harry Reid indicated displeasure with the likely payment method, a new tax on health care benefits.
That has left Finance Committee members scrambling for alternative taxes to replace the $320 billion the benefits tax would have raised over a decade.
Democrats are considering raising taxes on wealthy investors instead, along with other options, according to officials who spoke on condition of anonymity to discuss private negotiations. The proposal to extend the current 1.45 percent Medicare payroll tax to capital gains earned by high-income taxpayers would bring in an estimated $100 billion over 10 years.
In the House, Democratic leaders had hoped to release an ambitious bill Friday that would achieve Obama's goals of holding down health care costs and extending insurance to the 50 million people who lack it. Insurers would have to cover all comers, employers would be required to offer insurance and individuals would be required to purchase it, with subsidies for the poor.
The tax-writing Ways and Means Committee met throughout the day Thursday to try to finalize plans on how to pay for the plan, with an income surcharge on high-earners of some 3 percent or more emerging as the leading option.
But the move by the Blue Dogs scrambled the equation. It was unclear whether Democratic leaders would be able to satisfy the group's demands since in some cases they're far apart from draft language produced by the three House committees writing health legislation.
Also unclear was whether the setbacks would amount to anything more than a brief delay for a bill of enormous complexity and controversy.
Hoyer sought to minimize the day's developments.
"Let me make it very clear that everybody in that room thinks we ought to pass health care reform," the Maryland Democrat said after he and Pelosi met for more than two hours Thursday evening with Blue Dog members.
But Hoyer said, "There's still some additional work that needs to be done."
One conservative Democrat, Rep. Mike Ross, D-Ark., said he believes no House vote should take place until September.
That is well past a midsummer informal deadline set by Pelosi, D-Calif.
"I promised the president that we would have legislation out of the House before we went on an August break," she said earlier in the day. "That is still my goal."
Among the Blue Dogs' concerns is the shape of a new public insurance plan that would compete with private insurers. House leaders envision making payment rates to providers in the plan some 5 percent higher than Medicare payment rates.
Blue Dogs say they can't support any link to Medicare rates, which they say pays well below market rates and varies unfairly around the country.
That puts House leaders in a tough spot since many liberal Democrats are insistent that a new public plan be linked to Medicare.