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Two House committees approved a planfor the biggest overhaul of the U.S. health-care system in fourdecades today, including a surtax of as much as 5.4 percent onthe nations wealthiest households to pay for it.

Were very, very proud of what weve done, Ways andMeans Chairman Charles Rangel of New York said after the paneldebated the measure for 15 hours. We carried our weight.

The tax-writing Ways and Means Committee voted 23-18 infavor of its part of the legislation at about 1:30 a.m. TheEducation and Labor Committee did the same nine hours later, 26-22, with both votes largely along party lines.

Democrats touted the measure as a landmark initiative toexpand access to affordable health care to 46 million people wholack insurance while driving down costs. Republicans said itwould increase costs and force tens of millions Americans intogovernment-run care they said would be substandard.

The legislation must now be voted on by a third Housepanel, the Energy and Commerce Committee, which began debatetoday. House Democrats expect to win approval by the full Housebefore an August deadline set by President Barack Obama.

Democrats encountered a potential stumbling block when thehead of the Congressional Budget Office said yesterday theproposals he has seen in Congress would fail to rein inspending.

This is not some think-tank experiment, MichiganRepresentative David Camp, the top Republican on the Ways andMeans panel, said of the biggest health-care expansion since theestablishment of Medicare and Medicaid in 1965. These arepeoples lives, peoples jobs were talking about.

The House and Senate must each pass their own versions ofthe bill, then reconcile them before sending the legislation toObamas desk. The Senate health committee approved a plan thisweek, although the Finance Committee is struggling to reach abipartisan compromise.

Douglas Elmendorf, director of the nonpartisan agency,whose cost estimates can make or break legislation, told theSenate Budget Committee he doesnt see the sort of fundamentalchanges that would be necessary to reduce the trajectory offederal health spending.

The other side is trying to make people afraid, saidWashington Representative Jim McDermott, a senior Democrat onthe panel.

There was little bipartisanship on the Ways and Meanspanel. Democrats rejected a slew of Republican amendments thatwould have stripped a government-run plan from the legislation,prohibited rationing of health care and forced members ofCongress into the public plan. Three Democrats — Ron Kind ofWisconsin, Earl Pomeroy of North Dakota and John Tanner ofTennessee — voted with the Republicans against the measure.

Seventy-two percent of the American people want a publicoption, said Representative John Tierney, a MassachusettsDemocrat. Lets make it strong, lets make it good and put astop to the outrageous behavior of the insurance companies.

Three Democrats also defected in the House healthcommittee: Jason Altmire of Pennsylvania, Jared Polis ofColorado, and Dina Titus of Nevada. Democrats who supported themeasure say theyre determined to see it enacted.

The plan would cost about $1 trillion over 10 years andreduce the number of uninsured by roughly 37 million Americans,according to a preliminary analysis by the Congressional BudgetOffice. The nonpartisan agency said that by 2019 some 17 millionpeople, about half of them illegal immigrants, would lackcoverage.

The legislation would require companies to provide healthinsurance or pay an 8 percent payroll tax to help pay for theircoverage by the government plan. The House is also proposing amandate on Americans above a certain income level: People wouldbe penalized as much as 2.5 percent of their income for failureto buy health insurance.

House Ways and Means Committee members approved a series ofgraduated surtaxes that kick in on incomes above $280,000.

The question of how to pay for the overhaul is the biggestchallenge, and the idea of imposing surtaxes on the wealthiesthouseholds is drawing fire from Republicans and Democrats.Senator Ben Nelson of Nebraska has expressed skepticism, as haveHouse Democrats in the Blue Dog Coalition, a group thatadvocates spending restraint.

The legislation also contains several tax increases oncorporations, and a new provision to prohibit reimbursements forover-the-counter drug purchases using pretax health-spendingplans such as employer-administered Flexible Spending Accountsand individually owned health savings accounts.

The surtax would also place a 1.5 percent additional levyon couples with incomes between $500,000 and $1 million, and a 1percent surtax on incomes over $350,000. The measure is intendedto raise $544 billion over 10 years and calls for the taxes toincrease if the bill doesnt hit a target for cost savings.Capital gains as well as earned income would be subject to thesurtax.

The bill would prohibit insurance companies fromestablishing any lifetime or annual ceiling on benefits andlimit companies from charging higher rates due to health status,gender or other reasons. Premiums would only be allowed to varybased on age, geography and family size.

The bill creates a new national health exchange that wouldallow small-business employers and individuals to comparisonshop among insurers. The exchange would coordinate with stateinsurance departments to enforce regulations and administer thesliding-scale credits the bill would create to help low- andmiddle-income individuals and families buy coverage.

Democrats accepted a handful of amendments. One adopted inthe health committee would speed up access to health insurancefor people with pre-existing medical conditions.

Medicare would be overhauled to reward the efficiency ofhealth-care services, not the volume, as is the case now. Theso-called doughnut hole, or coverage gap in the Medicareprogram that provides drugs to seniors would be eliminated.

Another amendment would enable the secretary of health andhuman services to grant employers a waiver from the employermandate if the company can show that meeting the requirementwould lead to job losses or negatively impact the company or thecommunity in which it is located.

The House bill would stop insurers from denying coveragebecause of pre-existing conditions starting in 2012. Theamendment would move the implementation date up to six monthsafter the bill takes effect.

To contact the reporters on this story:Ryan J. Donmoyer in Washington at rdonmoyer@bloomberg.net Nicole Gaouette in Washington at ngaouette@bloomberg.net .

The committee also agreed to allow more small businesses toenter the health exchange, an option opposed by Americas HealthInsurance Plans, the trade group for insurers. RepresentativeDina Titus, the Nevada Democrat who brought the amendment, saidthat according to U.S. Census Bureau, these increases would makethe exchange open to an additional 428,000 firms in the firstyear and an additional 135,000 in the second year.