White House Discloses Outline of Health Plan

Senior White House aides outlined for the first time Friday the overall structure that they envision for a massive overhaul of the way in which Americans get and pay for medical care.

Although many major decisions still have not been made--most notably how much the national health care plan will cost and how it will be paid for--the description offered by three senior Administration officials provides the clearest information so far on where President Clinton and his advisers are heading as they begin making decisions on the shape of the plan.

The three officials spoke to a group of reporters on condition that they not be named--part of an Administration effort to begin selling the plan by describing key elements to the public in advance of the final decisions.

Clinton intends to make the final decisions in the next several weeks and unveil the reform plan in late May, aides said. Decisions about which new taxes will be proposed to finance the plan probably will be made last, once all of the other choices affecting the cost of the new system have been made, one of the senior officials said.

In a significant departure from previous descriptions of the new plan, officials stressed that it would preserve a major role for traditional “fee-for-service” medicine, in which doctors are paid separately for the procedures they perform.

Under the proposed new system, every American would be insured and guaranteed access to a nationally mandated package of benefits, probably determined by a national health care board acting within overall guidelines set by law.

The universal coverage would be phased in over a period of years, with the length of the phase-in period still the subject of intense debate within the Administration.

“This is a major change affecting one-seventh of the economy,” the senior official said. “You can’t turn that on a dime.” On the other hand, another official said, too lengthy a phase-in period could be “a nightmare” of conflicting coverage systems.

A central element of the Administration’s plan is a series of what officials call “health alliances” that would administer the health care system. In sparsely populated states such as Wyoming or North Dakota one health alliance might cover all residents. California, by contrast, would probably be divided into five to 10 geographical areas, each served by a single health alliance, a senior official said. The areas served by an alliance would be large--the entire Los Angeles metropolitan region would probably be covered by a single alliance, for example--to ensure that territories could not be segregated by race or economic status.

Within the territory served by a health alliance, all residents would be able to choose among the same health insurance plans. For any one plan, all people of the same age would pay the same insurance premium, regardless of current status or past medical history.

By contrast with the current system, insurance plans would be required to take all comers regardless of medical history.

“You cannot be dropped by a plan and they have to take you,” a senior official said.

In some states, particularly those that are sparsely populated and have too few doctors to establish an efficient network, the state may set up its own health plan--in effect replicating the “single payer” system of a country like Canada on a statewide basis. In most states, however, insurance will be left to private companies.

The overall idea, said one senior official is that the “government will set parameters and offer certain guarantees” of coverage and quality but “the delivery of health care remains largely in private hands.”

The government would also provide incentives to expand access to health care in inner cities and rural areas that are now underserved.

Older people, who use health services more than the young and who tend to have higher incomes, may be required to pay somewhat higher premiums than younger individuals. Those over 65 will continue to be covered by Medicare, but Medicaid (Medi-Cal in California) would disappear as low-income people are given the same choice of insurance plans offered to all others in their region.

Some plans probably would offer benefits that exceed the nationally mandated package in return for a somewhat higher premium, a senior official said. Administration planners, the official said, are trying to “strike a balance” that would “maximize consumer choice” on the one hand but on the other hand “not allow a two-tier system to develop” in which the wealthy would choose some plans while the poor would be shunted into others.

Individuals and employers would split the premiums for workers’ health insurance. While no decision has been made on how the costs will be divided, employers are expected to pay more than workers.

Companies that now offer their own insurance plans would be able to continue doing so, although Administration officials expect that many may drop their own plans in favor of relying on the health alliances. For the poor, the government would provide subsidies to make insurance premiums affordable.

Many health care economists have suggested that an overall reform of the health system should strive to shift most Americans into health maintenance organizations and similar institutional health care systems.

But “a lot of people prefer fee-for-service” relationships, a senior official said, and the Administration intends to structure its plan to allow those systems to continue. “It’s not at all clear,” the official added, that HMOs and similar systems actually deliver medical care more efficiently than a fee-for-service system can if it is properly structured, he added.

Doctors working under fee-for-service plans, however, would face significant constraints--in the form of an annual budget--on what they could charge for individual services.

Doctors who wish to continue offering fee-for-service practices would have to form loose networks with other doctors. The networks, in turn, would reach agreement with the regional health alliance that would include an annual budget, providing each doctor network an incentive to police its members to eliminate unnecessary procedures or over-billing. Officials argue that such a system would reduce the second-guessing that doctors now experience from insurance companies over individual treatment decisions.

Each health alliance would impose an overall budget on every health insurance plan it offers. The alliances, in turn, would work within overall state and national budgets designed to limit the total growth of health care spending.

Doctors who do not wish to join a network could continue to practice outside the health alliance system but would not receive any payments from insurance, officials said.

“There will be doctors in Beverly Hills who will find clients” and charge what they want, a senior official said. “Individuals who want to buy a service from other individuals can do so,” he added. “But most doctors, if they are going to be paid by insurance plans, are going to want to join up.”

How the New Health Plan Would Work

Here are the choices a patient would face under the health plan structure the Clinton Administration is considering:

1. Picking a plan: Patient has a choice of health plans, perhaps as many as 10 or more, depending on where he or she lives. The individual’s employer may also offer an independent plan. The individual picks a plan and is issued a health security card. 2. Premiums: The individual would pay a basic premium depending on which plan he or she picked. The amount would not be based on a pre-existing condition, such as heart disease, but may vary according to age. 3. The doctor visit: The patient visits a doctor or clinic covered by his or her plan. 4. The bill: The fee may involve some sort of co-payment or deductible on the patient’s part. But that has not been determined. 5. Medicare: The existing Medicare system for the elderly will remain in place. *

Q: Do I have to pick a plan my doctor belongs to? A: No. Each person or family will be able to pick any plan offered in their community. People ordinarily will be able to change plans at a set period, probably once a year.

Q: If someone doesn’t sign up or pay a premium, will they be treated? A: Yes, but the individual would automatically be enrolled in a plan at that moment. He or she would then be billed for premiums.

Q: Will all doctors belong to a plan? A: Nearly all will because those who do not will not be eligible to receive insurance payments. Some may choose to practice independently of a government plan, however, and their fee would come entirely out of a patient’s pocket.

Q: What happens to current health insurers? A: Some probably will drop out of the market. Others, however, would offer the various plans under overall budgets administered by each regional health alliance.

Q: Will my employer continue to offer a plan? A: Companies would not be required to offer their own insurance plan but some probably will continue to do so. Workers could chose to enroll in their company’s plan or chose any of the other plans available from their regional health alliance. All employers will be required to pay a portion of the health insurance premiums for their workers, although that requirement will be phased in over a period of years.

Sources: Clinton Administration, Times staff