New Health Care Plan Blasted by Medical Industry

A new public health insurance system proposed by a business-labor coalition would cost $34 billion in new federal spending and cover as many as 70 million people, the sponsors said Tuesday.

The plan, offered by the National Leadership Coalition for Health Care Reform, would require all employers to offer health insurance or else pay a 7% tax into a special fund to finance the public plan, called Pro-Health. Workers at these firms would pay 1.75% of salary.

The “play or pay” insurance mandate for business would be combined with a tough system of cost controls, including uniform schedules of payments to doctors and hospitals, and an annual ceiling on health care outlays.

The proposal drew immediate and intense criticism from key elements in the health care industry--doctors, hospitals and the health insurance business.

American medicine “does not lend itself to cost controls and targets,” said a spokesman for the American Medical Assn. “We are a people used to pressing for technology on the cutting edge--if there is a chance a bone marrow transplant might benefit a cancer patient, we feel it should be available immediately. Americans expect and want high-tech medicine, and it is costly.”

The American Hospital Assn. expressed a similar view. “We would have serious problems with any plan that uses a single national budget and mandatory controls,” said AHA spokeswoman Dona DeSanctis. “Budget-driven health is not good health care. Deciding whether someone needs a transplant based on how much it costs is not good health care.”

James Dorsch, the Washington counsel for the Health Insurance Assn. of America, said forcing small companies to pay a new payroll tax will wipe out jobs.

The leadership coalition, whose membership includes Bethlehem Steel, Chrysler Corp. and Southern California Edison, insists that a mandatory system is the only way to give all Americans access to health care.

An estimated 34 million Americans now have no health insurance, while the nation as a whole spends far more on health care--an average of $2,354 per person--than any other industrialized nation in the world.

More than two dozen proposals to alter the health care system are circulating on Capitol Hill. The White House has indicated that it will come up with its own plan before next fall’s elections.

The coalition’s proposed plan would be financed partly with funds raised from the payroll tax on companies without coverage and their workers. The rest of the money would come from an additional tax of 0.5% on all companies and their workers, whether or not they already offer health insurance.

The $34 billion in new tax revenue would pay for health insurance for workers whose companies do not offer coverage, the unemployed, part-time employees and all Americans living in poverty. It would expand the range of the current Medicaid program for the poor (Medi-Cal in California) to cover additional people.

An estimated 60 million to 70 million Americans would participate in this public program, Dr. Henry Simmons, president of the leadership coalition, told a news conference. The public program would invite bids from private insurance firms to arrange the coverage.

The basic package of benefits suggested by the coalition for this program would include hospital and doctor services, mental health care and substance abuse coverage, routine physicals and broad care for children, including vision, dental and hearing services.

Individuals would pay the first $200 a year in costs, while the family deductible would be $400. The insurance would cover 80% of costs. An individual’s out-of-pocket spending for the year would be limited to $1,500, and the family limit would be $3,000. Any additional bills would be fully covered by insurance.