June 15 (Bloomberg) -- Senator Edward Kennedy’s plan to expand health-care coverage would cost about $1 trillion over 10 years and provide coverage to about 16 million more people, according to a preliminary analysis by the Congressional Budget Office.

The report today said about 39 million people would be able to buy health coverage through insurance “exchanges,” while the number of people getting coverage from employers and other sources would fall by 23 million.

The nonpartisan CBO said its initial analysis of the measure, introduced by Kennedy last week, is not a complete cost estimate because it focused only on the proposal’s major provisions. The analysis also doesn’t include the effects of expanding coverage for low-income Americans, which could be included in the proposal later.

Kennedy, a Massachusetts Democrat, is chairman of the Senate health committee, which plans to begin considering the legislation on June 17. Senator Christopher Dodd, a Connecticut Democrat, will manage the bill for Kennedy, who is battling brain cancer.

Kennedy’s plan would require all Americans to have health- insurance coverage and place certain restrictions on insurers, such as prohibiting them from refusing to cover pre-existing conditions.

He omitted two provisions he favors that are being negotiated with Republicans: the creation of a government-run program to compete with private insurers and a mandate that employers provide benefits to workers.

Online Exchanges

The legislation would establish online exchanges for individuals to purchase insurance and would require employers to provide health benefits to workers or pay a penalty.

In the House, Ways and Means Committee Chairman Charles Rangel, a New York Democrat, said last week that legislation being crafted by Democrats will cost more than $1 trillion over a decade.

That cost would include $600 billion in tax increases and $400 billion in cuts to Medicare and Medicaid, said Rangel. House Democrats plan to release their legislation this week.

President Barack Obama proposed $634 billion in his budget request to Congress as a 10-year down payment for a health-care overhaul.

Obama told the American Medical Association in Chicago today they should support his health-care overhaul because the current system is turning them into “bean-counters and paper- pushers” rather than healers.

To contact the reporter on this story: Catherine Dodge in Washington at cdodge1@bloomberg.net

Last Updated: June 15, 2009 18:34 EDT