Clinton Health Plan Likely to Stir Controversy : Reform: Proposals are expected to closely follow campaign promises and rule out alternatives advocated by a variety of special interest groups.

Early this week, President-elect Bill Clinton will receive a memo from top advisers outlining a health care reform plan to provide coverage for every American, require all employers to insure their workers and reduce costs through government price controls and so-called managed competition, transition officials said Saturday.

While these recommendations are consistent with Clinton’s campaign promises, the memo is significant because it also rules out all other solutions advocated by some of his supporters, such as a Canadian-style national health insurance system.

The proposal will disappoint such special interest groups as doctors, insurers, hospitals, employers and consumer organizations that have pleaded with Clinton’s advisers for a reassessment of the health care plan laid out during the campaign. It contains many elements those groups strongly oppose.

Judith Feder, Clinton’s chief health care adviser and the person responsible for drafting the memo, said in an interview that her recommendations do not stray beyond the guidelines Clinton has previously suggested for reform. “Our charge,” she explained, “is simply to flesh out his options for achieving his campaign promises--nothing more.”

The memo, which Clinton is scheduled to receive Tuesday as part of a huge briefing book on economic issues, is the first step in what is expected to be a lengthy decision-making process leading up to introduction of a health care reform bill during the first 100 days of the Clinton Administration.

Transition officials said the proposal not only outlines a Clinton Administration plan, it also explores many issues the President-elect has yet to resolve. “There’s just a myriad of details and none of them have been solved yet,” said a transition aide, who declined to be identified.

Feder, who refused to discuss details of her recommendations, said she hopes that Clinton will decide many of the unresolved issues by early January.

Clearly, the biggest unanswered question is how the plan will be financed.

Clinton’s advisers are telling him he can receive some savings by simply reducing bureaucracy and unnecessary care under Medicare, but it is not clear whether they will recommend new taxes to help fund care for 35 million Americans who are currently uninsured.

Normally, presidents wait until they make their key appointments before developing major legislative proposals. But sources said Clinton’s health care plan is being written without regard to the new officials who will be involved in putting it into action.

Because health care reform was a centerpiece of Clinton’s election campaign, sources said, he has decided to control development of the policy personally. Asked during a closed-door House Democratic Caucus meeting last week to name the person who will serve as his health care czar, Clinton replied: “I will.”

Feder said the reform plan outlined in her memo has four basic elements:

--Universal coverage. All Americans would be guaranteed access to affordable health care, whether they are employed or unemployed, rich or poor.

Yet to be decided, according to transition sources, is whether Clinton will advocate universal coverage from the day the program goes into effect, or propose a lengthy phase-in period. One popular idea within the Clinton camp is to begin a phase-in period by first providing care for uninsured pregnant women and children.

--Employer mandate. Every employer would be required to offer health care coverage for workers. Smaller employers would receive tax breaks in the beginning to help them initiate coverage. Unemployed workers would be provided health insurance by the government through the same system used for small business employees. Among the issues to be resolved is how to deal with part-time workers.

--Managed competition. Health Industry Purchasing Cooperatives would be created to represent groups of people who are unemployed or work for small businesses.

Just as large employers do now, the cooperatives would bargain with so-called managed care networks of hospitals, doctors and insurers. Price competition between these managed care networks is supposed to help bring health care costs down and make it more affordable.

--Global budgeting. The President would appoint a national board made up of representatives of the different groups involved in health care--consumers, doctors, hospitals, employers, labor unions and the government--to set annual health budgets for public and private expenditures.

To enforce these budgets, states would set fee schedules for services and establish limits on how much money a managed care network could receive for treating an individual.

If Clinton adopts this recommended framework, as expected, he will be ruling out a number of options that have gained popularity in certain circles over the last few years: A national program in which all citizens can rely on government to pay all doctor bills; a “pay or play” system in which employers would have the option of providing coverage for their employers or paying into a health care fund, and a more modest set of proposals designed to rectify some of the current inequities in the private insurance system.

Proponents of a Canadian-style national health care system scheduled a three-hour “town meeting” Saturday in Little Rock, Ark., in an effort to gain Clinton’s attention. Although several Clinton advisers promised to attend, the President-elect declined.

Likewise, other interest groups in the health care debate, including insurers, doctors, hospitals and drug companies, have been energetically lobbying the Clinton transition team in recent weeks.

Feder said she has met and talked frequently with all interested groups, and she indicated that they have been persistent in pressing their views. “No one has been shy,” she said.

Of all the elements being recommended, global budgeting seems to have the most critics among special interest groups. While insurers, doctors and hospitals claim price controls will create market disruptions, Feders argues they are crucial to the success of the program.

How the global budgeting plan will work has yet to be determined, but special interests will be watching closely to see whether Clinton calls for strict price controls or a looser system. Another unresolved question is whether he would allow states the freedom to develop their own budgeting system.

If the special interest groups cannot persuade Clinton to alter his health reform plan to suit them, they have indicated they will seek modifications when the package goes to Capitol Hill. Although it is sure to be one of the liveliest legislative battles in recent history, Clinton’s supporters are counting on the new President to invest as much time and political capital as it takes to get these reforms enacted.

The part of the plan with the most potential for controversy is financing, and it has not yet been tackled by the President-elect.

While Clinton’s advisers have ruled out employer taxes to fund the program, they have not rejected the idea of taxing individuals for health benefits they receive in excess of a basic package prescribed by the government. Taxes such as these are part of the managed competition model from which Clinton has already borrowed liberally.

Taxes on benefits are especially unpopular with organized labor, which traditionally enjoys generous health benefits won through collective bargaining. Because it would be up to the government to fund the basic benefit package for poor people, the benchmark would not likely be as generous as union benefits or those currently offered by the nation’s biggest companies.

It also is an open question whether the savings that Clinton hopes to get from Medicare reforms will be applied toward expanding health coverage for those who currently do not have it. Transition officials predicted that Clinton’s economic advisers will be divided over whether to use these savings to fund health care reform or to reduce the deficit instead.

Transition insiders said the process of developing these options has been smooth, even though Clinton’s top health care advisers represent divergent views. Feder is known as an advocate of price controls, but Atul Gawande, who also has been involved in drafting the memo, is known to be opposed to global budgeting.

Feder, 45, who is likely to be appointed as chief health care analyst in the White House, is on leave from her job as co-director of the Center for Health Policy Studies at Georgetown University School of Medicine. She has previously held a number of government policy positions, most recently serving as staff director of the Pepper Commission, the bipartisan panel that recommended an overhaul of the health care system.

Gawande, 26, who formerly worked as a legislative aide in Vice President-elect Al Gore’s Senate office and also is destined to get a post in the new Administration, left Harvard Medical School last year to advise the Clinton campaign on health matters.