Top House Democrats have upped the ante over President Barack Obama’s healthcare reform with a new sweeping legislation that includes a highly controversial public health insurance option.

The nearly 2,000-page bill - a combination of three versions passed by House committees - unveiled Thursday would cost $894 billion over 10 years to extend insurance coverage to 36 million uncovered Americans, according to House Speaker Nancy Pelosi.

Mr. Obama praised House Democrats for forging “a strong consensus that represents a historic step forward”. But opposition Republicans tore into the bill, characterising it as a series of tax increases and new regulations that would destroy jobs while doing little to stop spiralling healthcare costs.

“This really is a government takeover of healthcare in America,” said Republican Mike Pence. “It appears for all of the world like a massive government-run insurance plan paid for with a freight train of mandates and taxes and bureaucracy.”

The bill’s total cost, including Medicare changes, is expected to be higher and could push the price tag over $1 trillion, according to a CNN analysis.

The bill guarantees that 96 per cent of Americans have coverage, Mr. Pelosi stated. The claim is based on an analysis by the non-partisan Congressional Budget Office.

Among other things, the bill would subsidise insurance for poorer Americans and create health insurance exchanges to make it easier for small groups and individuals to purchase coverage. It would also cap annual out-of-pocket expenses and prevent insurance companies from denying coverage for pre-existing conditions.

Mr. Pelosi’s office said the bill would cut the federal deficit by roughly $30 billion over the next decade. The measure is financed through a combination of a tax surcharge on wealthy Americans and spending constraints in Medicare and Medicaid.

Specifically, individuals with annual incomes over $500,000, as well as families earning more than $1 million, would face a 5.4 percent income tax surcharge. Medicare expenditures would be cut by 1.3 percent annually.

“Today, we are... laying the foundation for a brighter future for generations to come,” Mr. Pelosi said on Capitol Hill.

“For Americans struggling with the cost of health care, this is an urgently needed bill,” said House Majority Leader Steny Hoyer. “This is an idea whose time has come.”