WASHINGTON (AP) – President Barack Obama said Wednesday he wants at least $200 billion cut from Medicare and Medicaid spending over the next decade to help pay for overhauling the nation’s health care system and providing coverage to 50 million uninsured Americans.

The reductions in the programs would come on top of the $300 billion in cuts already proposed in his budget.

In a letter to senators Wednesday, Obama also said that if Congress ends up requiring individuals to purchase health insurance, people who can’t afford it and small businesses should be exempt. He also strongly reiterated his support for a new public health insurance plan to compete against private insurers.

The letter to Sens. Edward M. Kennedy, D-Mass., and Max Baucus, D-Mont., chairmen of the two committees writing health care bills, served as a marker for what the president wants to see in final legislation.

“The plans you are discussing embody my core belief that Americans should have better choices for health insurance, building on the principle that if they like the coverage they have now, they can keep it, while seeing their costs lowered as our reforms take hold,” Obama wrote in the letter.

Obama has asked the House and Senate each to finish legislation by early August, so that the two can combine their bills in time for him to sign a single, sweeping measure in October.

The president said he supports a new health insurance exchange that Congress is crafting – a sort of marketplace that would allow Americans to shop for different plans and compare prices. All the plans should offer a basic affordable package, and none should be allowed to deny coverage for pre-existing conditions, Obama said.

“I strongly believe that Americans should have the choice of a public health insurance option operating alongside private plans,” Obama wrote, weighing in firmly on one of the most controversial issues in the debate. “This will give them a better range of choices, make the health care market more competitive, and keep insurance companies honest.”

Republicans strongly oppose a public plan, as do private insurers, who contend it would drive them out of business.

The idea of what Obama called a “hardship waiver” for individual Americans too poor to buy care splits the difference between where he was during the presidential campaign and where Congress may be heading.

In the campaign, Obama did not support requiring everyone to buy insurance, putting him at odds with then Democratic rival Hillary Rodham Clinton. Congress is looking at doing so. The hardship waiver idea is under consideration by Baucus’ Finance Committee, while Kennedy and House Democrats are looking at giving subsidies to the poor to help them buy coverage.

The letter doesn’t address the issue of taxing health care benefits. Obama opposed that during his campaign but Congress is now considering it as a way to pay for extending coverage for 50 million uninsured Americans, something that could cost $1.5 trillion over 10 years.

AP-ES-06-03-09 1634EDT

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