Clinton Seeks First Lady’s Help on New Health Plan

President Clinton, disturbed that his health care advisers have not found an affordable way to expand medical care coverage to all Americans, is turning to his wife, Hillary, to help develop a plan that could lead to tough government price controls on doctors and hospitals, sources said Thursday.

Hillary Clinton’s emerging role in health care reform was disclosed to Judith Feder, Clinton’s assistant transition director for health policy, and her team during a three-hour meeting on Monday by Ira Magaziner, a longtime Clinton friend who is senior White House adviser for policy development.

Magaziner said he had been “asked by Hillary” to serve as coordinator of the health care reform agenda--and would work with her on the issue, sources said.

As another indication of Mrs. Clinton’s prominent role in the new Administration, she has taken an office in the White House West Wing, just upstairs from the Oval Office, in addition to the traditional First Lady’s office space in the White House East Wing. The White House social office and personal correspondence units will operate in the East Wing, but Mrs. Clinton will also have a staff working in the same areas as her husband’s aides.

Clinton turned to his wife for assistance with the health plan, sources said Thursday, after concluding that his transition health policy advisers were not entirely “in sync” with what he wants to propose.

That decision stems from a meeting Jan. 11 in Little Rock, Ark. At the meeting, Clinton was surprised to learn from his health care advisers that expanding heath insurance coverage while approaching reform through “managed competition,” a system in which the government uses incentives to encourage competition among networks of health care providers, might cost as much as $70 billion to $90 billion a year and would not appreciably slow national health spending for three to five years.

The plan put forth by the advisers would cover the 36 million uninsured people and help the elderly pay for prescription drugs, which are not included in Medicare.

Clinton responded by asking the advisers to consider combining managed competition with a system of strict price controls. He grew irritated, a transition source said, when the advisers replied that it was impossible to combine the two approaches because one depends on a free-market environment and the other on a government-imposed national health care budget.

Clinton, who has long said controlling health care costs was central to his deficit-reduction agenda, reacted by concluding that he could no longer entrust the development of his major reform plan to this group of advisers, sources said.

At one point during that meeting, according to one transition health adviser, Clinton said: “This isn’t what I want.” A second health policy transition adviser recalled Clinton as saying: “No. You don’t get it. I’m looking for something different.”

Mrs. Clinton’s press secretary, Lisa Caputo, confirmed that the First Lady would be serving as an adviser to the President, “as she was in Arkansas.”

“He called on her many times, and he’ll continue to call on her advice, on domestic policy issues, health care included,” Caputo said.

The $70-billion to $90-billion range is breathtakingly higher than the $12-billion to $27-billion estimate cited recently by the General Accounting Office as the potential cost of providing basic health coverage to uninsured Americans.

“Clinton’s basic problem is that he can’t afford a $70-billion to $90-billion program,” one transition health adviser said Thursday. “I’m not saying that was the price tag given to him, but one can conceivably see those figures getting there based on what he was given.”

The projections are so disparate because such estimates depend largely on the particulars of an overall reform proposal, the Clinton transition source said.

“There’s a huge range of what that could cost--depending on the generosity of the basic coverage package you offer, whether you cover prescription drugs for elderly and so on,” he said.

The President’s new enthusiasm for a combined system of competition and strict cost controls is shared by some influential members of Congress but is considered anathema to the medical profession and the hospital industry.

Clinton’s position on the need for federal controls moves him much closer to the views of Rep. Pete Stark (D-Oakland), chairman of a House subcommittee that will write the reform legislation. Stark has already introduced in the new Congress a legislative package that provides for a national budget to keep health care spending at the level of general inflation.

Stark and House Majority Leader Richard A. Gephardt (D-Mo.) introduced a similar bill last year.

“We need a budget here,” Stark said. “We do it in defense, in education, in every other walk of life.”

Some managed competition advocates say the money can be raised by taxing the value of benefits above a basic level. Workers now do not pay taxes on the value of health benefits provided by their companies.

But Stark regards the idea of taxing benefits as a political dead letter. “In 1985 we debated as part of Reagan’s tax reform the idea of removing the deduction for fringe benefits and we got into a tremendous fight,” Stark said. “We know the money is there. But it’s politically too sensitive.”

Times staff writer David Lauter contributed to this story.