Lid on Health Costs Needed, Gore Says : Medicine: Controls are necessary to help business pay for coverage, vice president says at hearing on reforms. Parts of Administration package draw harsh criticism.

The White House Monday sent its strongest signal yet that it intends to impose short-term price controls on doctors, hospitals and other private sector medical providers as part of national health care reform.

In the first public meeting of the White House Task Force on National Health Care Reform, Vice President Al Gore, who chaired the meeting, said short-term cost controls are necessary to put a lid on the cost of insurance premiums, making it easier for businesses to furnish workers with health coverage under a government mandate.

His comments came during a spirited debate with Stephen Elmont, vice president of the National Restaurant Assn., who warned that many small businesses could not afford to provide health coverage.

“That’s why cost controls . . . represent such an important part of reform,” Gore replied.

Over the course of a 13-hour hearing, interrupted by only two 15-minute breaks, more than 60 interest groups and consumer representatives made their pleas to the Administration. The only points of agreement were the need to cut down on insurance red tape and to place greater emphasis on preventive care.

Like Elmont, many who testified Monday harshly criticized likely elements of the reform plan. Insurers argued against caps on premiums; doctors, hospitals and other providers expressed their distaste for mandatory price controls and small businesses voiced opposition to a government requirement that all employers pay a major part of every worker’s health insurance premiums.

In Orange County, word of possible federal price controls was criticized by some health care professionals as unworkable.

“I don’t think (price controls) work,” said Dr. Terence F. Maloy, president of the Orange County Medical Assn. “I remember what they were like when the Nixon Administration tried them, and they didn’t work then.”

Maloy said that in early the 1970s the Nixon Administration placed a temporary freeze on medical costs. “We couldn’t raise our costs, but landlords could, and our rents went up and our employee salaries went up, but not our income,” Maloy said. “Price control badly affected morale, and it just didn’t work.”

Other elements of the proposed reform package disclosed Monday included plans to provide coverage for long-term care and to give nurses and physician-assistants greater roles in health care as a way to hold down costs. Senior Administration officials also pledged to minimize disruptions in doctor-patient relationships.

In addition, to improve services to the underprivileged and others, the task force is exploring ways to eliminate Medicaid altogether, perhaps by gradually covering indigent persons under the same large health care cooperatives being contemplated for much of the general population.

The marathon hearing was largely an exercise in public relations, designed to demonstrate that the task force is reaching out broadly--even though much of its work is taking place behind closed doors. Many of those who testified already have met privately with White House officials and continue to be kept up to date by task force members.

The secretive nature of the health care reform work has led to a lawsuit as well as considerable public criticism, which prompted the White House last Friday to release the names of the more than 500 members of the task force.

Judging from questions posed by various Administration officials, the task force apparently has not yet settled on some of the basic elements of the reform agenda--including how to finance coverage for the 37 million uninsured Americans and the extent of coverage for long-term care, mental health and prescription drugs, each of which is costly.

Gore presided over much of the meeting, sitting in for Hillary Rodham Clinton, who heads the task force. The First Lady was still in Little Rock, Ark., with her father, who is in a hospital after suffering a stroke nearly two weeks ago.

Gore was joined off and on throughout the day by a stream of Cabinet officials and top White House advisers, including Treasury Secretary Lloyd Bentsen; Health and Human Services Secretary Donna Shalala; Atty. Gen. Janet Reno; Robert E. Rubin, head of the National Economic Council; Laura D’Andrea Tyson, who heads the White House Council of Economic Advisers; Carol H. Rasco, Clinton’s chief domestic policy adviser, and Ira Magaziner, the task force’s day-to-day manager.

Witnesses were grouped into 12 panels that represented consumers, small businesses, physicians, insurance companies, drug firms, hospitals and labor groups, among others. Each speaker was given three minutes, a limit that Gore diligently if good-naturedly enforced.

A number of small businesses vehemently argued against a government requirement that they pay for the health insurance of all workers, saying that would be a burden that many small firms cannot bear. The requirement would “sound the death knell” for many restaurants, Elmont said.

A government mandate to provide health coverage would cost small businesses at least $40 billion, according to Margaret Smith of National Small Business United.

As an alternative, Gary F. Petty of the Small Business Legislative Council, urged the Administration to institute a wage and price freeze on health care providers.

But G. Kirk Raab, president and CEO of Genentech Inc., a pioneering California-based high-tech firm, warned that such controls would “strangle investment” in the biotechnology industry.

Representatives of blacks, Latinos, American Indians and other minority groups reminded the Administration not to forget them, and Gore responded by saying that the reform agenda is being designed “with the special needs of the underserved very much in mind.”

Among those representing physicians was Raymond Scaletter, chairman of the American Medical Assn., who renewed the AMA’s request for relief from antitrust regulations so that its members can freely explore voluntary price constraints.

A more strident doctor’s voice came from Jane Orient, a Tucson practitioner and executive director of the American Assn. of Physicians and Surgeons. Orient railed about government regulation of doctors and warned that the Clinton Administration may “destroy the art and science of medicine.”

Howard Pearson, president of the American Academy of Pediatrics, urged the White House to permit physicians to join more than one health insurance purchasing cooperative so that patients stand a better chance of retaining their doctors should the patients change jobs.

In his opening statement, Gore pledged that the Administration’s plan will “guarantee health security for every American, bring down the rising costs of health care that threaten each of us, maintain the quality of care and people’s right to choose their doctors and simplify the system and cut through the paperwork.”

“We are convinced that the time for action is now,” Gore declared.

During a question-and-answer period, the vice president said that the Administration intends to include insurance coverage for long-term care, starting with services that are home- and community-based.

Among those who urged the Administration to incorporate long-term care was Daniel Schulder, legislative director of the National Council of Senior Citizens. “Comprehensive reform without long-term care is like a transportation system without roads,” he said.

Another long-term care advocate, Bill Keane of Doylestown, Pa., spoke on behalf of those who, like himself, take care of disabled family members. He said that his father died from the stress of caring for his mother, an Alzheimer’s patient, after 10 years without relief.

“Long-term care is a family issue that cuts across age,” Keane said.

Gore agreed with those who called for a greater emphasis on preventive medicine, adding at one point that “where possible” the Administration will seek to “empower non-physician providers.”

The vice president returned to the need for cost controls at the end of the evening, noting that otherwise medical costs may reach 20% of the gross domestic product, from the current 14%, by the year 2000.

“We have a very strong national interest in trying to sharply curtail” health care costs, Gore said.

“It is worth considering even difficult measures to stop that 1% per year increase in GDP while we put this system in place,” Gore said, adding that he was “just speaking personally.”

Magaziner revealed that one idea being debated is phasing out Medicaid, with beneficiaries possibly receiving government subsidies to join large, consumer purchasing cooperatives to buy group insurance.

The President’s reform agenda is expected to be based on such purchasing cooperatives, which theoretically would have the economic clout to obtain low prices for high quality service.

Throughout Monday’s hearing, it was clear from the statements of various Administration officials that the reforms also would bar insurers from refusing to cover people with pre-existing medical conditions. Similarly, the officials also made clear that the Administration will seek standard insurance claim forms to cut costs and save time--something that Mrs. Clinton has spoken about with passion.

To finance universal coverage, which could cost up to $90 billion a year, the task force is considering an array of tax increases. But officials said that no decisions have been made.

Times staff writer Bill Billiter in Orange County contributed to this story.