The Senate on Thursday passed a regulatory package containing the toughest restrictions on the financial industry since the Great Depression, an overhaul that President Obama praised as ushering in greater consumer protections and a stronger and safer financial system.

Final passage of the bill ended more than a year of wrangling over the shape of the landmark legislation. The focus now shifts to the monumental task of implementing the new regulations over the coming weeks and months.

The 60 to 39 vote came just before 3 p.m., only a few hours after Democrats cleared a final procedural hurdle by securing enough votes to break a GOP filibuster. The bill now goes to the White House for Obama’s signature.

Speaking to reporters in the White House Rose Garden after the vote, Obama vowed that as a result of the legislation, “there will be no more taxpayer-funded bailouts, period.”

But congressional Republicans wasted no time denouncing the overhaul, calling it a federal overreach, warning that it would stifle job growth and pledging to work for its repeal.

Obama said Wall Street would “never again put taxpayers on the hook” for its own mistakes and that the new law would force financial firms to “compete on price and quality, not on tricks and traps.”

He said the law “puts in place the strongest consumer financial protections in history” and creates a new consumer watchdog agency to enforce them.

“Unless your business model depends on cutting corners or bilking your customers, you have nothing to fear from this reform,” Obama said, addressing financial firms that he said he engaged in “massive lobbying” in an effort to defeat the bill.

He hailed three Republicans who voted for the package and chided GOP leaders who have already begun to call for repeal before it is signed into law. Americans “can’t afford to go backwards,” he said.

“We can’t simply rebuilt this economy on the same pile of sand,” Obama said. “We need to rebuild on a firmer, stronger foundation for economic growth.”

The three Republicans — Scott Brown of Massachusetts and Olympia J. Snowe and Susan Collins of Maine — joined 57 members of the Democratic caucus in supporting the bill. Sen. Russell Feingold of Wisconsin was the lone Democrat to oppose the measure, saying it failed to go far enough in reining in the financial recklessness and regulatory failures that led to the recent financial crisis.

The House passed the bill late last month, shortly after a House-Senate conference committee had merged earlier versions of the bill into a final, 2,300-page product.

Obama probably will sign the legislation into law next week, aides said, solidifying his second major legislative victory of the year behind the revamp of health care.

The massive Dodd-Frank bill is named after Sen. Christopher J. Dodd (D-Conn.) and Rep. Barney Frank (D-Mass.), who ushered it through the Congress. It creates an independent consumer bureau within the Federal Reserve to protect borrowers from lending abuses, establishes oversight of the vast derivatives market and gives the government power to seize and wind down large, troubled financial firms.

The legislation places much faith — and much authority — in regulators to spot brewing problems in the financial system and to prevent another crisis. It also calls for banks to hold more money in reserve to weather economic storms, but it leaves those details to regulators.

Dodd, months from retirement after three decades in the Senate, said he hopes that the bill that now bears his name is one that “will set our country on a course of financial stability and success in the years to come.”

Addressing Americans affected by the financial crisis, Dodd : “I regret I can’t give you your job back, restore that foreclosed home, put retirement monies back in your account. . . . What I can do is to see to it that we never, ever again go through what this nation has been through.”

Senate Majority Leader Harry M. Reid (D-Nev.) told reporters: “Never again, ever again, should we have to go through what we did in the fall of 2008, to ask the American taxpayer to write a check for $700 billion to bail out a handful of financial institutions that, frankly, in many cases, helped create the mess we are in.”

But Sen. Richard C. Shelby (Ala.), the top Republican on the Senate Banking Committee, called the 2,300-page bill a “legislative monster.” And Sen. Saxby Chambliss (R-Ga.) warned, “We’re going to be driving jobs and business overseas with this massive piece of legislation.”

House Minority Leader John A. Boehner (R-Ohio), speaking to reporters minutes after the bill passed, assailed the package as “ill-conceived” and said it “ought to be repealed.”

He added: “I think it’s going to make credit harder for the American people to get — clearly harder for businesses to get. And the fact that it’s going to punish every banker in America for the sins of a few on Wall Street, I think is unwise.”

In his remarks in the Rose Garden, Obama noted Boehner’s remarks and said: “I would suggest that America can’t afford to go backwards, and I think that’s how most Americans feel, as well. We can’t afford another financial crisis, just as we’re digging out from the last one.”

He said the recession he inherited when he took office last year “was not the result of your typical economic downturn. It was the result of recklessness and irresponsibility in certain corners of Wall Street that infected the entire economy, irresponsibility that cost millions of Americans their jobs and millions more their hard-earned savings.”

By Brady Dennis and William Branigin, WashingtonPost.com

HOLLAND, Michigan, July 15 (Reuters) – The cost of the high-powered batteries needed for a coming wave of electric cars is projected to drop by as much as 70 percent over the next five years, according to a U.S. government forecast.

The forecast was released as President Barack Obama attended a groundbreaking ceremony for a battery plant being built in Holland, Michigan by a U.S. unit of South Korea’s LG Chem(051910.KS) and funded by the U.S. Department of Energy.

The Obama administration has provided more than $5 billion in grants and low-cost loans to battery manufacturers and auto companies to support projects intended to spur the development and sale of rechargeable electric cars and plug-in hybrids.

But the high cost of the lithium-ion batteries to power those vehicles has been seen as one of the biggest barriers to their widespread adoption.

The U.S. government had never set a target for the kinds of cost reductions it expected to see in the fast-developing industry it is attempting to jump-start with taxpayer funding.

“Because of advances in the manufacture of these batteries, their costs are expected to come down by nearly 70 percent in the next few years. That’s going to make electric and hybrid cars and trucks more affordable for more Americans,” Obama told an audience of politicians, business leaders and representatives of the 300 workers building the new plant.

The battery price declines projected by the Obama administration, which has set a target of putting 1 million plug-in hybrids on the road by 2015, run deeper and faster than most forecasts by outside analysts.

LG Chem Chief Executive Bahnsuk Kim told Reuters his company sees a 50 percent drop in battery prices by 2015, and he expected that would be enough to drive increased demand.

“In the next five years we see the prices in half. Our target is half,” Kim said on the sidelines of the Holland, Michigan event.

In the terms tracked by the emerging electric vehicle industry, the Department of Energy said it expected battery costs per kilowatt hour to drop from about $1,000 in 2009 to $300 in 2015 and $100 in 2030.

Major U.S. automakers have set a long-term target of reducing costs on that basis to near $250, a price that would be in line with the cost to produce batteries for laptops and cell phones.

The lithium-ion battery that powers Tesla Motors Inc’s (TSLA.O) $109,000 Roadster cost more than $33,000, according to the Department of Energy report.

The smaller battery LG Chem is supplying for the upcoming Chevrolet Volt from General Motors [GM.UL] cost $13,000 last year but will drop to $4,000 by 2015, the report said.

Both GM and Tesla have received Energy Department funding.

LG Chem’s Compact Power unit has won deals to supply batteries for the Chevy Volt and the upcoming all-electric version of the Ford Motor Co (F.N) Focus.

It said that it had also been selected to supply batteries for hybrid systems which Eaton Corp (ETN.N) is developing for commercial trucks and buses.

Compact Power’s Holland plant will have the capacity to supply batteries for up to 250,000 electric vehicles once completed and will employ 400 workers, the company said.

LG Chem and the U.S. Department of Energy split the costs of building the $303 million plant. The Korean chemical and battery maker invested $151.5 million and $151.4 million came from a U.S. government grant.

White House economists estimate that the United States accounted for 2 percent of global production of batteries for electric cars and hybrids in 2009. That share is expected to rise to 40 percent of global production by 2015.

(Reporting by Bernie Woodall, writing by Kevin Krolicki, editing by Leslie Gevirtz)

WASHINGTON — President Obama will bypass Congress and appoint Dr. Donald M. Berwick, a health policy expert, to run Medicare and Medicaid, the White House said Tuesday.

Dan Pfeiffer, the White House communications director, said the “recess appointment” was needed to carry out the new health care law. The law calls for huge changes in the two programs, which together insure nearly one-third of all Americans.

Mr. Pfeiffer said the president would appoint Dr. Berwick on Wednesday. Mr. Obama decided to act because “many Republicans in Congress have made it clear in recent weeks that they were going to stall the nomination as long as they could, solely to score political points,” Mr. Pfeiffer said.

As a recess appointee, Dr. Berwick will have all the powers of a permanent appointee. But under the Constitution, his appointment will expire at the end of the next session of Congress, in late 2011.

In April, Mr. Obama nominated Dr. Berwick to be administrator of the Centers for Medicare and Medicaid Services. The agency has been without a permanent administrator since October 2006.

The recess appointment was somewhat unusual because the Senate is in recess for less than two weeks and senators were still waiting for Dr. Berwick to submit responses to some of their requests for information. No confirmation hearing has been held or scheduled.

Although hospital executives who have worked with Dr. Berwick describe him as a visionary, inspiring leader, he would have faced a long, difficult struggle to win Senate confirmation.

The president’s action will give the administration a strong voice to defend provisions of the new law that have come under almost daily attack from Republicans in Congress and in political campaigns around the country.

Dr. Berwick, a pediatrician, is president and co-founder of the Institute for Healthcare Improvement, a nonprofit organization in Cambridge, Mass. He is also a professor at Harvard Medical School and the Harvard School of Public Health.

Republicans have used the nomination to revive their arguments against the new health care law, which they see as a potent issue in this fall’s elections.

In two decades as a professor of health policy and as a prolific writer, Dr. Berwick has championed the interests of patients and consumers. At the same time, he has spoken of the need to ration health care and cap spending, has supported efforts to “reduce the total supply of high-technology medical and surgical care” and has expressed great admiration for the British health care system.

Under the new law, Medicare will be a testing ground for many innovations that reward high-quality care and penalize providers of poor care. The law will expand Medicaid to cover 16 million more people with low incomes.

Senator Pat Roberts, Republican of Kansas, said that, far from trying to delay a confirmation hearing, Republicans had wanted a forum where Dr. Berwick could explain his views.

“This recess appointment proves the Obama administration did not have the support of a majority of Democrats and Republicans in the Senate and sought to evade a hearing,” Mr. Roberts said.

But Ronald F. Pollack, executive director of Families USA, a liberal-leaning consumer group, welcomed the appointment, saying “it augurs well for the implementation of health care reform.”

One of Dr. Berwick’s first tasks will be to work with Congress to avert a 21 percent cut in Medicare payments to doctors, scheduled to occur late this year.

The American Medical Association has praised Dr. Berwick, saying he is “widely known and respected” for his efforts to improve the quality and safety of care. But cuts in Medicare payments could damage the quality of care and prompt doctors to turn away new Medicare patients, doctors say.

By ROBERT PEAR, nytimes.com

(Reuters) – Political momentum was expected to carry a sweeping Wall Street reform bill to approval in the U.S. Congress, but the death of Senator Robert Byrd threatened to delay final action until mid-July.

Democratic backers of the bill scrambled on Monday to replace a crucial vote of support that was lost when Byrd, 92, passed away, with the bill’s fate turning on the views of a handful of swing-vote senators.

In the give-and-take of securing their support, reform advocates warned the bill could be further watered down.

“If they have to reopen the bill to make concessions to get additional votes … the bill will get weaker, not stronger,” said Barbara Roper, director of investor protection at the Consumer Federation of America, a watchdog group.

The bill is the biggest overhaul of financial regulation since the 1930s and a top priority of President Barack Obama following a severe banking crisis that slammed the economy.

It would force banks to reduce, but not cease, risky trading and investing; set up a new government process for liquidating troubled financial firms; and impose a $19 billion fee on the largest firms to pay for these and other changes.

The House of Representatives was on track to approve the legislation as early as Tuesday evening or Wednesday.

But both chambers must pass the bill before it can go to President Barack Obama to be signed into law. The White House has wanted a signing ceremony by July 4. That could still happen, but an aide indicated Senate action could slip until the week of July 12, after Congress takes a weeklong break.

“We expect this massive rewrite of U.S. banking law will pass the House this week, but the situation in the Senate is getting more complicated,” said Brian Gardner, policy analyst at investment firm Keefe Bruyette & Woods.

INVESTORS MOVING ON

While Democrats try to nail down enough votes to ensure final passage, investors and analysts were largely assuming the bill would become law.

The KBW Banks index closed down less than 1 percent on Monday in an otherwise largely flat stock market.

Final passage of the bill will alleviate some of the uncertainty that has weighed on bank stocks, but the long implementation period ahead presents many unknowns, said Goldman Sachs financial services industry analysts.

Two of the biggest question marks are appointments Obama must make. One will be the first director of a new Consumer Financial Protection Bureau called for by the bill. It would regulate mortgages, credit cards and other financial products.

Elizabeth Warren, a Harvard Law School professor, tops most short lists of contenders for the new job as the government’s top financial consumer watchdog. She now chairs a panel overseeing the $700 billion Wall Street bailout.

Obama must soon name a replacement for U.S. Comptroller of the Currency John Dugan, whose role as a top bank supervisor will be made more powerful by the bill. Dugan’s term expires in August. He has said he will step down then.

The biggest banks are expected to face constraints on their profits and growth after enactment of the Dodd-Frank bill, named for its chief authors, Senator Christopher Dodd and Representative Barney Frank, both Democrats.

But some of the sharpest edges were softened to secure support as a Senate-House panel wrapped up negotiations with a marathon, 21-hour session that ended early Friday morning.

Since Byrd’s passing, backers of the bill are one vote short of the 60 needed to clear a Republican procedural hurdle in the Senate. Democrats could wait for West Virginia’s governor, a Democrat, to appoint Byrd’s interim successor, who would likely be a Democrat, but that process could take weeks.

KEY SENATORS TARGETED

For now, Democrats were keenly focused on trying to gather and hold support among a handful of key lawmakers.

One of the biggest winners in the negotiating process was Senator Scott Brown, a moderate Republican who won major concessions for financial interests in his home state of Massachusetts and voted for the Senate version of the bill.

Brown, however, has threatened to withdraw his support due to a $19 billion industry tax that was inserted during the final negotiating session.

Senator Olympia Snowe, another moderate Republican who had previously supported the bill, also said she was concerned by the tax. “I would have preferred the bank tax not to be included,” she told reporters on Monday.

That tax was added to ensure that the bill does not add to the government’s ballooning budget deficit. The nonpartisan Congressional Budget Office estimated on Monday night that the $26.9 billion in additional spending over a 10-year period would be offset by $26.9 billion in new revenues.

Two Democratic senators, Russ Feingold and Maria Cantwell, who voted against the Senate bill last month, saying it was not tough enough, will face pressure to support it now.

Feingold said on Monday he would not change his position.

Cantwell is still studying the 2,000-page bill and has not decided whether to support it, a spokesman said.

“We believe that sheer guilt and momentum will unify all 58 Democrats. A phone call from Obama and every liberal on the planet … could well bring over Feingold and Cantwell,” said policy analysts Teddy Downey and Chris Krueger at investment firm Concept Capital.

They pointed out that 60 votes are needed to overcome the procedural hurdle in the Senate, but only 51 are needed for final passage, giving reluctant Democrats voting options.

Republican Senator Charles Grassley, who has backed the bill at stages in its journey through Congress, has not made up his mind on the final version, an aide said on Saturday.

By Kevin Drawbaugh and Andy Sullivan, Reuters
(Additional reporting by Jeff Mason, Kim Dixon and Thomas Ferraro)

The Obama administration on Monday unveiled a space policy that renounces the unilateral stance of the Bush administration and instead emphasizes international cooperation, including the possibility of an arms control treaty that would limit the development of space weapons.

In recent years, both China and the United States have destroyed satellites in orbit, raising fears about the start of a costly arms race that might ultimately hurt the United States because it dominates the military use of space. China smashed a satellite in January 2007, and the United States did so in February 2008.

The new space policy explicitly says that Washington will “consider proposals and concepts for arms control measures if they are equitable, effectively verifiable and enhance the national security of the United States and its allies.”

The Bush administration, in the space policy it released in August 2006, said it “rejects any limitations on the fundamental right of the United States to operate in and acquire data from space,” a phrase that was interpreted as giving a green light to the development and use of antisatellite weapons.

The policy also stated that Washington would “oppose the development of new legal regimes or other restrictions that seek to prohibit or limit U.S. access or use of space,” a phrase that effectively ruled out arms control.

In secret, the Bush administration engaged in research that critics said could produce a powerful ground-based laser, among other potential weapons meant to shatter enemy satellites in orbit.

By contrast, the Obama policy underlines the need for international cooperation. “It is the shared interest of all nations to act responsibly in space to help prevent mishaps, misperceptions and mistrust,” the new policy says in its opening lines. “Space operations should be conducted in ways that emphasize openness and transparency.”

Peter Marquez, director of space policy at the White House National Security Council, told reporters on Monday that the policy was reverting to a less confrontational approach that the United States had championed in the past.

“The arms control language is bipartisan language that appeared in the Reagan policy and George H. W. Bush’s policy and the Clinton policy,” Mr. Marquez said in a White House briefing. “So we’re bringing it back to a bipartisan agreed-upon position.”

Jeff Abramson, a senior analyst at the Arms Control Association, a private group in Washington, said the new policy “sets the stage for progress in space arms control — without getting into specifics.”

For many years, diplomats from around the globe have gathered in Geneva to hammer out a treaty on the “prevention of an arms race in outer space,” which would ban space weapons. Arms control supporters say that China and Russia have backed the process, and that the United States during the Bush administration dragged its feet.

In 2006, John Mohanco, a State Department official, told the diplomats in Geneva that as long as attacks on satellites remained a threat, “our government will continue to consider the possible role that space-related weapons may play in protecting our assets.”

Now, the Obama administration has stopped the saber-rattling and started what might end in a new kind of peaceful accord — though with plenty of caveats and vague conditions.

Although the new policy calls on the United States to “lead in the enhancement of security, stability and responsible behavior in space,” it also says that any resulting arms treaties would have to be equitable, verifiable and enhance the security interests of the United States and its allies.

“Those are the gates,” Mr. Marquez told reporters, “that the arms control proposals must come through before we consider them.”

The White House said the State Department would make more details public in coming weeks.

President Obama said in a statement that the new policy was “designed to strengthen America’s leadership in space while fostering untold rewards here on Earth.”

On the civilian use of space, the policy, which is 14 pages long, puts renewed emphasis on the commercial space industry, reflecting the administration’s desire to get the National Aeronautics and Space Administration out of the business of launching astronauts.

Listed first among the administration’s space goals is to “energize domestic industries.” That contrasts with the top goal of the 2006 Bush administration policy, to “strengthen the nation’s space leadership,” and that of the 1996 Clinton administration policy, to “enhance the knowledge of the Earth, the solar system and the universe.”

The Bush policy asserted that the government would buy commercial services “to the maximum practical extent” and refrain from federal activities that would discourage or compete with commercial options.

The Obama policy retains those provisions and, in addition, calls on federal agencies to “actively explore the use of inventive, nontraditional arrangements” like creating public-private partnerships, flying government instruments on commercial spacecraft or buying data from commercial satellite operators.

The commercial space section of the Obama policy also includes provisions for promoting American commercial space industry in foreign markets.

In contrast, the Bush administration highlighted national security concerns, like preventing unfriendly countries from obtaining advanced technologies.

Critics of that approach said the same technologies could often be bought from other countries, adding that the limitations hurt American aerospace companies without improving the nation’s security.

By WILLIAM J. BROAD and KENNETH CHANG, nytimes.com

(Reuters) – President Barack Obama will confront his top Afghanistan commander on Wednesday before deciding whether to fire him over inflammatory comments that have angered the White House and threatened to undermine the war effort.

Summoned from Afghanistan to meet with Obama, Gen. Stanley McChrystal will be asked to explain remarks he and his aides made in a Rolling Stone magazine article that disparaged the president and mocked other senior civilian leaders.

The situation poses a tough dilemma for Obama, who faces the choice of either being seen as tolerating insubordination from the military or shaking up the chain of command at a perilous moment in the unpopular nine-year-old war.

Obama, described as furious about the article in private but speaking in measured tones in public, issued a stern rebuke to McChrystal and said he would talk directly to the general before making a final decision.

“I think it’s clear that the article in which he and his team appeared showed poor judgment,” Obama told reporters after a cabinet meeting on Tuesday.

U.S. officials said they expected McChrystal, the U.S. and NATO commander in Afghanistan and architect of Obama’s war strategy, to offer his resignation and allow the president to decide whether to accept it.

With his career on the line, the 55-year-old general has apologized. “It was a mistake reflecting poor judgment and should never have happened,” McChrystal said in a statement.

In the article entitled “The Runaway General” — here — McChrystal himself makes belittling remarks about Vice President Joe Biden and the U.S. special envoy to Afghanistan and Pakistan, Richard Holbrooke. His aides are quoted as calling one top Obama official a “clown” and another a “wounded animal.”

Afghanistan had slipped down Obama’s policy agenda recently as he focused on domestic challenges like high unemployment and the devastating BP Plc oil spill, seen as critical to avoiding big losses for his Democratic Party in November’s pivotal congressional elections.

But the furor surrounding McChrystal comes amid growing doubts in Congress and declining support among the public for the war effort in Afghanistan, where the Taliban is resurgent despite a troop buildup ordered by Obama six months ago.

Obama is mindful that success or failure in Afghanistan will be a major part of his foreign policy legacy.

CALLED ON THE CARPET

The article surfaced on the eve of Obama’s monthly meeting with his Afghan war council. McChrystal typically joins by teleconference but Obama ordered him to fly in and participate directly and also meet one-on-one in the Oval Office.

The broader meeting, including many of the Obama aides denigrated by McChrystal and his staff in the article, was scheduled for 11:35 a.m. EDT.

White House spokesman Robert Gibbs said McChrystal made a “profound” mistake and “all options were on the table” with regard to his fate.

Obama was more cautious, saying the success of the war effort in Afghanistan would be uppermost in any decision.

McChrystal’s departure would add to uncertainty about the course of the war. The controversy could also weaken Obama, making him look soft on insubordination if he lets McChrystal stay or irresponsible if he fires the top general assigned to implement his own strategy.

Lawmakers were split over whether McChrystal should go, but Afghan President Hamid Karzai fully backed the general.

Defense officials say they have confidence that a suitable replacement could be found if he is sacked. Possible successors include Lieutenant-General David Rodriguez, who is now McChrystal’s No. 2; Lieutenant-General William Caldwell, who runs the NATO training mission for Afghan forces; and General James Mattis, the commander of U.S. Joint Forces Command.

The article quotes a member of McChrystal’s team making jokes about Biden, who had favored a more limited counter-terrorism approach than the general wanted.

One of McChrystal’s aides called White House National Security Adviser Jim Jones a “clown” who was “stuck in 1985.”

The article also quoted an adviser to McChrystal dismissing an early meeting with Obama as a “10-minute photo op” and saying the general was “disappointed” that the president seemed disengaged.

The episode has evoked memories of military-civilian tensions when President Harry Truman stripped Gen. Douglas MacArthur of his Far East command in 1951 for flouting U.S. policy and openly advocating expansion of the Korean conflict to China.

By Matt Spetalnick, Reuters
(Additional reporting by Phil Stewart, Adam Entous, Alister Bull, Will Dunham, Jeff Mason, Susan Cornwell and Deborah Charles in Washington, David Fox and Jonathon Burch in Kabul, editing by Jackie Frank)

WASHINGTON, June 22 (Reuters) – President Barack Obama warned U.S. insurance firms on Tuesday not to use his healthcare overhaul as an opportunity to push through big rate increases and said the federal government would work with states to monitor them.

“Insurance companies … shouldn’t see it as an opportunity to enact unjustifiable rate increases,” Obama said, after meeting with state officials and insurance company executives.

Obama’s caution to the multibillion dollar industry comes as Democrats prepare for a difficult battle to retain their majority in Congress ahead of the November mid-term elections. His warning also further put health insurance companies on the defensive and pressured their shares.

The chief executive officers from major insurers such as Aetna Inc (AET.N), Cigna Corp (CI.N) and WellPoint Inc (WLP.N) attended the roughly 90-minute meeting. Afterward, companies stressed that although they will follow the new rules, costs for consumers are likely to continue to rise.

“I think there was a recognition that consumers are going to get more. When you get more, you pay more,” Aetna’s CEO Ronald Williams told Reuters after the meeting.

Obama acknowledged that there are “genuine cost drivers that are not caused by insurance companies” but said companies must still publicly justify any rate increases on both the federal health website and their own.

He also pointed to states such as Maine, Pennsylvania and New York that are addressing sudden spikes in health insurance rates that he said underscored the need for the landmark healthcare reform legislation passed three months ago.

Pennsylvania is investigating the state’s nine largest health insurers over rate increases that Governor Edward Rendell called exorbitant while California officials have investigated WellPoint’s proposed increases of as much as 39 percent that the insurer later called a mistake.

Obama’s warning followed a Kaiser Family Foundation report that showed health insurers are raising prices by an average of 20 percent for working-age adults who buy their own policies.

His administration also released new regulations on Tuesday detailing consumer protections set to take effect in September. Obama said that “will put an end to some of the worst practices in the health insurance industry and put in place the strongest consumer protections in our history.”

The rules will protect children with preexisting conditions from being denied healthcare insurance, stop insurance companies from canceling coverage, except in some cases, and prohibit lifetime limits. Wider changes take effect in 2014.

PATIENTS BILL OF RIGHTS

Obama called the regulations a “Patient’s Bill of Rights,” but insurers said they may increase the price of healthcare.

“These rules have the potential to add costs to what we’re already experiencing today,” Blue Cross and Blue Shield Association President and CEO Scott Serota said in a statement.

U.S. Health Secretary Kathleen Sebelius said the administration estimates that premiums will rise by less than 1 percent on average as a result of the new regulations.

Three months ago, Congress passed an overhaul of health insurance intended to ensure that every American has access to healthcare and is expected to expand coverage to more than 30 million uninsured Americans over the next few years.

“While we want solvent insurance companies and we want to make sure that the private market is stable, we also want to make sure consumers are protected against excessive rate increases,” Sebelius said. She also urged state insurance commissioners to investigate premium problems and said her department would monitor them as well.

“We wanted to caution insurance companies that rate increases would be watched very closely,” she said.

Democrats and various consumer advocacy groups hailed the new rules to back the merits of the health care law, which Republicans have vowed to overturn as they campaign to win back more congressional seats.

Shares of health insurers, which have swung over the last 18 months alongside the volatile healthcare debate, underperformed the overall market after Obama’s remarks. Despite the new rules, some advocates and Wall Street analysts have said companies could eventually gain millions of new customers.

The Morgan Stanley Healthcare Payor Index .HMO and the S&P Managed Healthcare Index .GSPHMO closed down 2.5 percent and 2.2 percent respectively on Tuesday while the overall S&P 500 Index .SPX ended down just 1.6 percent.

By Lisa Lambert and Susan Heavey, Reuters
(Reporting by Lisa Lambert and Susan Heavey; additional reporting by Lisa Richwine, Patricia Zengerle and Jon Lentz in Washington, and Lewis Krauskopf in New York. Editing by Chris Wilson and Cynthia Osterman)