NEWS ANALYSIS : Health Reform Actions Likely to Be Minimal

While the air is filled with talk of sweeping reform of the nation’s staggeringly expensive health care system, political realities suggest that only small steps are likely to be taken this year by a Republican President and Democratic Congress focused on election campaigning.

The President on Thursday unveiled his plan, which offers tax credits and deductions to make it cheaper for the 34 million uninsured Americans to voluntarily obtain coverage.

But he stands across a deep ideological divide from the Democratic leadership in Congress,which wants the government to force all employers either to provide coverage or pay for a big, new public program for the uninsured.

Both sides avoid the dirty little secret of the debate: They do not know how to pay for health insurance for all Americans without spending lots of new money or reducing benefits for those who already have coverage.

Health care now costs more than $700 billion a year and accounts for about 12% of the nation’s entire output of goods and services.

At work, where most Americans’ health insurance is provided, medical coverage costs are soaring at a rate of 15% to 20% a year. Corporations have responded by trimming benefits, forcing their workers to pay a larger share of the medical bill. Cutbacks in insurance cause more strikes than any other single issue.

Nonetheless, the only significant reform that has a real chance of occurring this year is enactment of legislation that would help small businesses purchase insurance for employees and guarantee that Americans can move from one job to another without losing insurance protection.

These provisions are common to the Administration plan and proposals by two Democratic heavyweights, Senate Finance Committee Chairman Lloyd Bentsen (D-Tex.) and House Ways and Means Committee Chairman Dan Rostenkowski (D-Ill.).

But even this modest step probably would mean slightly higher insurance premiums for all those who now enjoy coverage. They would pay more because millions of people, including many with serious health problems, suddenly would be brought into the insurance system.

Administration officials say publicly that they look forward to working with Congress and suggest privately that a deal is possible with Bentsen and Rostenkowski.

“I’d say look to Lloyd (Bentsen) to see what can be done in 1992,” a Republican leader on health care, Sen. Dave Durenberger of Minnesota, said in an interview. “That’s the 1992 foundation for a larger solution.”

However, Democratic Party leaders insist that they want to do much more. At a Capitol Hill press conference, Senate Majority Leader George J. Mitchell of Maine called the Bush plan “woefully inadequate” and vowed that the Democrats will enact their own plan this year.

Mitchell is pushing a “play or pay” plan, in which employers would “play” by offering health insurance to all workers or pay a 7% payroll tax into a special new fund. The program would cover everyone who is not insured through his or her employer.

“Play or pay” is backed by some big corporations, including Chrysler, Dayton-Hudson and others already paying substantial amounts to insure their workers. Many unions also support the idea as a step on the road to their eventual goal of national health insurance.

Small business, bitterly opposed to mandated coverage and new taxes, joins the Bush Administration in fervent opposition to “play or pay.” They prefer a provision in Bush’s plan that would force insurance companies to permit small businesses to pool their resources, thereby improving their bargaining position in buying more affordable insurance.

Mitchell’s cost-control idea, a national commission of business, labor and government to provide guidelines for doctors and hospitals, would fail to hold down fees and charges, some critics say.

But Mitchell and other congressional Democrats counter by lambasting Bush for not proposing ways to finance his plan or to slow medical spending, clearly striving to paint the President as a big spender on the issue.

“The President’s proposals will drive costs right through the roof” because it “fails to meet the first and most important test of any plan--that of controlling costs,” Mitchell said.

The Bush tax credits for the uninsured could be financed with savings from slowing the growth of federal health programs, Medicare for those over 65 and Medicaid for the poor, according to the Administration--a solution that Sen. John D. (Jay) Rockefeller IV (D-W. Va.) called “robbing from a very poor Peter to pay an already poor Paul.”

If the federal government trims its payments to hospitals and doctors, who already complain that they are underpaid for serving Medicare and Medicaid patients, they are likely to shift the costs to patients covered under private insurance.

It probably was no accident that the Democrats on Thursday were clearly reaching out more to the middle class than the needy.

Numerous experts have said, and polls have confirmed, that there is much more concern about the skyrocketing cost of health care than there is about those who do not have insurance.

As Mitchell said: “The real issue here is an issue which the President never mentioned today. It’s peace of mind for American families. The problem isn’t just the uninsured. Some of the most anxious and fearful families in America are insured.”

Congressional Democrats are split several ways, with the leaders pushing “play or pay,” Rostenkowski and Bentsen promoting a modest change in insurance and a third faction actively pushing for a drastic change--a system like Canada’s, with universal coverage for all citizens and the government paying all bills.

Rep. Marty Russo (D-Ill.) has recruited more than 60 co-sponsors for a single-payer system that would abolish the insurance industry. Instead, the government would collect taxes from workers and companies, set a yearly budget for doctor and hospital bills, and pay the expenses.

Critics say, however, that such a drastic system of cost control would be unacceptable to Americans. In Canada, there are long lines for some types of elective surgery and the government is very slow to permit the installation of expensive new technology that is readily available across the border in the United States.

The division in Congress is paralleled by the split among Democratic presidential contenders. Nebraska Sen. Bob Kerrey and former California Gov. Edmund G. (Jerry) Brown Jr. essentially would create a single-payer system much like Canada’s and Kerrey specifically would abolish Medicare and Medicaid.

Former Massachusetts Sen. Paul E. Tsongas’ approach closely resembles the Mitchell’s “play or pay” bill. Iowa Sen. Tom Harkin and Arkansas Gov. Bill Clinton have been less specific but have said that they favor some form of universal coverage.

Because the Bush Administration proposals are so different from the Democratic plans, there is virtually no expectation that any major reforms will be enacted this year--and a senior White House official traveling with the President on Thursday conceded as much.

Rather, he said, the introduction of the President’s plan serves to begin a full-scale debate that likely will continue well beyond the November presidential election.

How Bush Plan Might Affect You

Bush’s health plan would maintain the current system of free-enterprise medicine while giving citizens some extra cash to pay for it. Here is how it would work in certain instances: Case No. 1--A family of four with an adjusted gross income of $50,000 whose employer contributes $1,000 for health insurance. A $2,750 deduction ($3,750 less employer’s $1,000). Case No. 2--An unmarried individual with intermittent minimum-wage income who is not eligible for Medicaid. A $1,250 tax credit for purchase of group insurance through a basic state health plan or other private source. Now this person would have to rely on hospital emergency rooms for unreimbursed care. Case No. 3--A family of four with an adjusted gross income of $17,000 with no employer coverage. A partial health tax credit (or a $3,750 deduction--whichever provides the greater benefit). Case No. 4--A mother with two children who was on welfare in the past but now has an $8,500 a year job with no health insurance. $3,750 tax credit to buy basic insurance through the state group health plan or other private plan. At present, a welfare mother who returns to work receives Medicaid for the first six months, then is charged 3% of her income, in this case $255, for another six months before Medicaid coverage stops altogether. Case No. 5--A family of four with an adjusted gross income of $60,000 whose employer does not provide health insurance. $3,750 tax deduction to help purchase health care insurance (a tax savings of $1,050). Family employer will provide information and arrange access to more affordable group coverage, such as Health Insurance Network, but is not required to contribute to the cost.