WASHINGTON (Reuters) - President Barack Obama said on Wednesday he realized Americans were skeptical about his healthcare overhaul, but that the country’s economic recovery depended on implementing the $1 trillion plan.

Obama, insisting the “stars are aligned” for approval this year despite discord in Congress over the plan, warned inaction would undermine the economy, worsen the deficit and cripple millions of Americans financially.

“I understand people are feeling uncertain about this. They are feeling anxious,” he said in a prime-time televised news conference.

But he said he was confident people would support it when they looked “at the cost of doing nothing.”

The healthcare debate is reaching a critical juncture in the Democratic-controlled Congress. Obama wants both the House of Representatives and Senate to vote by early August but many lawmakers want more time to consider such an expansive set of proposals.

With the effort in danger of flagging and spilling into the autumn months where momentum could fade, Obama made his case for the overhaul and took on his critics.

Several polls show Obama’s job approval rating dropping and that Americans are having doubts about his prescriptions for the economy and healthcare.

Obama said people were “understandably queasy” about government spending and the debt piling up, but argued the health of the economy depended on stemming healthcare costs, which account for 17.6 percent of gross domestic product.

“That is why I’ve said that even as we rescue this economy from a full-blown crisis, we must rebuild it stronger than before. And health insurance reform is central to that effort.”

He also cited the ballooning costs of spending on government health programs for the poor and elderly, Medicare and Medicaid. He said that without a healthcare revamp, those costs would explode the budget deficit.

“So let me be clear: If we do not control these costs, we will not be able to control our deficit,” he said.

He is to make his case for the revamp on Thursday in Cleveland, Ohio, a manufacturing state where a recent Quinnipiac University poll said his job approval rating had dropped from 62 percent to 49 percent.

Obama promoted a key goal of the overhaul: creation of a government health insurance option, an idea deeply opposed by Republicans who feel it would unfairly compete with private insurers.

He said competition from the government insurance plan can prevent private insurers from passing on health costs to By Steve Holland and David Alexander

WASHINGTON, July 22 (Reuters) - President Barack Obama said on Wednesday he realized Americans were skeptical about his healthcare overhaul, but that the country’s economic recovery depended on implementing the $1 trillion plan.

Obama, insisting the “stars are aligned” for approval this year despite discord in Congress over the plan, warned inaction would undermine the economy, worsen the deficit and cripple millions of Americans financially.

“I understand people are feeling uncertain about this. They are feeling anxious,” he said in a prime-time televised news conference.

But he said he was confident people would support it when they looked “at the cost of doing nothing.”

The healthcare debate is reaching a critical juncture in the Democratic-controlled Congress. Obama wants both the House of Representatives and Senate to vote by early August but many lawmakers want more time to consider such an expansive set of proposals.

With the effort in danger of flagging and spilling into the autumn months where momentum could fade, Obama made his case for the overhaul and took on his critics.

Several polls show Obama’s job approval rating dropping and that Americans are having doubts about his prescriptions for the economy and healthcare.

Obama said people were “understandably queasy” about government spending and the debt piling up, but argued the health of the economy depended on stemming healthcare costs, which account for 17.6 percent of gross domestic product.

“That is why I’ve said that even as we rescue this economy from a full-blown crisis, we must rebuild it stronger than before. And health insurance reform is central to that effort.”

He also cited the ballooning costs of spending on government health programs for the poor and elderly, Medicare and Medicaid. He said that without a healthcare revamp, those costs would explode the budget deficit.

“So let me be clear: If we do not control these costs, we will not be able to control our deficit,” he said.

Slideshow ( 9 images )

He is to make his case for the revamp on Thursday in Cleveland, Ohio, a manufacturing state where a recent Quinnipiac University poll said his job approval rating had dropped from 62 percent to 49 percent.

Obama promoted a key goal of the overhaul: creation of a government health insurance option, an idea deeply opposed by Republicans who feel it would unfairly compete with private insurers.

He said competition from the government insurance plan can prevent private insurers from passing on health costs to consumers. “Part of the reason we want to have a public option is just to help keep the insurance companies honest,” he said.

Obama, who had been careful not to comment on various proposals on Capitol Hill on how to pay for the overhaul, did offer support for a Democratic proposal to tax the rich.

He said a surcharge on families making more than $1 million a year “meets my principle” of not putting the burden of paying for healthcare reform on middle-class families.

He insisted there was momentum behind the healthcare effort, despite strains on Capitol Hill, and that lawmakers are closer to agreement on cost savings to the plan.

Slideshow ( 9 images )

“We are now seeing broad agreement thanks to the work that was done over the last few days. So even though we still have a few issues to work out, what’s remarkable at this point is not how far we have left to go -- it’s how far we have already come,” he said.

Obama promised he would not sign into law any healthcare legislation that would drive up the budget deficit, or fail to rein in rising healthcare costs.

Legislation pushed by House Democrats would increase budget deficits by more than $240 billion over 10 years, the non-partisan Congressional Budget Office estimated last week.

Although fellow Democrats are raising many questions about the plan, Obama went on the attack against Republicans, accusing them of wanting to kill his healthcare plans.

“The politics may dictate that they don’t vote for healthcare reform because they think it makes Obama more vulnerable,” he said. “But if they’ve got a good idea we’ll still take it.”

(Additional reporting by Matt Spetalnick and Richard Cowan; Editing by Simon Denyer and Chris Wilson) consumers. “Part of the reason we want to have a public option is just to help keep the insurance companies honest,” he said.

Obama, who had been careful not to comment on various proposals on Capitol Hill on how to pay for the overhaul, did offer support for a Democratic proposal to tax the rich.

He said a surcharge on families making more than $1 million a year “meets my principle” of not putting the burden of paying for healthcare reform on middle-class families.

He insisted there was momentum behind the healthcare effort, despite strains on Capitol Hill, and that lawmakers are closer to agreement on cost savings to the plan.

“We are now seeing broad agreement thanks to the work that was done over the last few days. So even though we still have a few issues to work out, what’s remarkable at this point is not how far we have left to go -- it’s how far we have already come,” he said.

Obama promised he would not sign into law any healthcare legislation that would drive up the budget deficit, or fail to rein in rising healthcare costs.

Legislation pushed by House Democrats would increase budget deficits by more than $240 billion over 10 years, the non-partisan Congressional Budget Office estimated last week.

Although fellow Democrats are raising many questions about the plan, Obama went on the attack against Republicans, accusing them of wanting to kill his healthcare plans.

“The politics may dictate that they don’t vote for healthcare reform because they think it makes Obama more vulnerable,” he said. “But if they’ve got a good idea we’ll still take it.”