Rep. Earl Pomeroy, D-N.D., said he will not support a health care reform bill in his committee today because it could financially hurt North Dakota health care providers.

House lawmakers unveiled a first draft of their plan to reform the nation's health care system on Tuesday, with a public option that would pay health care providers at reimbursement rates used by Medicare, the government health program for Americans 65 and older.

Pomeroy, a member of the Ways and Means Committee, said that would hurt rural states, especially North Dakota, which has some of the lowest Medicare reimbursement rates in the nation - a common concern among North Dakota health care providers.

Pomeroy said officials at Blue Cross Blue Shield of North Dakota figured if a third of their North Dakota beneficiaries transferred their health insurance coverage to the proposed public plan, health care providers in the state would be poised to lose $131 million a year.

"There is no way we will sustain the availability of care � if our health care system was to take that big a hit," Pomeroy said, adding, "There's a very regional disparity in this bill. I'm highly annoyed by that inequity."

The Blues, the state's largest insurer, currently pay health care providers 152 percent of the Medicare reimbursement rate, Pomeroy said.

Three House committees are drafting health care policies and are expected to vote on them this week, Pomeroy said. More changes are expected if the legislation reaches the House floor, possibly before August.

Pomeroy said a public option should either pay at the average reimbursement rate or negotiate rates like other insurance companies.

He added that he prefers the proposals in the Senate Finance Committee, chaired by Montana Democrat Sen. Max Baucus with Sen. Kent Conrad, D-N.D., who has touted health care cooperatives over a government-run public option. The committee is still drafting its bill.

"I don't really care what you call it, as long as it plays fair," Pomeroy said. "Whatever presence is created in health reform, I want them to fairly compete and fairly pay hospitals."

But there are provisions in the current House bill that Pomeroy approves of, including a mandate on all Americans to get health insurance and employers to provide it, which would include a public assistance program that would help families earning $88,000 or less to pay for the coverage.

"The premium support will make a tremendous difference in a state like North Dakota where wages are relatively low," Pomeroy said.

The House bill also includes a new surtax for the top 1.3 percent of income earners in the country, which is estimated to pay for about half of the proposed $1 trillion health care reform.

Joint filers who earn $350,000 per year ($280,000 for single filers) would see a 1 percent surtax starting in 2011. Married couples filing $800,000 or more per year ($1 million for singles) would see a 3 percent tax. Those surtaxes also could grow in 2013 if additional money is needed, up to 2 percent of the lowest bracket and 5 percent for the highest.

About 1 percent of North Dakotans would be affected by the new surtax, according to Citizens for Tax Justice, a nonprofit, public interest research and advocacy group in Washington, D.C.

Nationally, about 5 percent of businesses would be affected by the tax, according to the CTJ.

David Flynn, an economist at the University of North Dakota, said the surtax proposal may pass the House, but will likely find some opposition in the Senate.

"If you're going to raise the taxes on the higher income earners for this purpose, that creates a series of problems for incentives to find loopholes," Flynn said. "It's an especially dangerous and difficult way to finance any kind of spending."

Pomeroy said the nation's health care system is in need of a reform, with an estimated 47 million uninsured Americans. He added that 10 percent of homeowners with foreclosures cite health care costs as a reason for their financial troubles.

"Something has to happen," Pomeroy said. "I believe the legislative opportunity to make meaningful health reform is the most significant in several decades."

Congress will have to find the money to pay for whatever proposal eventually emerges, said Mark Jendrysik, a political science professor at UND.

That could mean higher taxes for certain populations - namely the wealthy - and cost cutting on behalf of insurance companies and patients.

"It's going to be ugly; there's not a single constituency that's going to be happy about this," Jendrysik said. "Everyone's going to be burned by it."

(Reach reporter Brian Duggan at 223-8482 or brian.duggan@bismarcktribune.com.)