Clinton Says All Firms Should Join Health Plan

President Clinton has decided that all companies, regardless of size, should be required to join the new national health program, according to senior White House officials.

The decision is a blow for those large corporations which had hoped to retain the power to structure health benefits for their workers. But the President has ruled that “nobody opts out,” said one high-ranking Administration source, because the White House wants a consistent set of benefits and rules for the national health program.

The effect of the President’s decision on individual workers who currently have company health insurance would vary widely, depending on how their existing plan compares to the proposed government standards, which have not yet been announced.

Under the plan, large employers would be permitted to operate as so-called health alliances, the basic building block of the Clinton plan. As an alliance, companies could offer health care for their workers but the actual providers--networks of doctors and hospitals--would have to follow strict standards requiring them to provide a government-defined minimum package of benefits.

Most alliances would be local organizations operating independently of employers. They might include hundreds of thousands, or even 1 million or more, of residents.

The alliances would negotiate with eight or 10 health plans in an area to provide physician and hospital services. Each plan would have to provide the minimum benefits package and would be free to offer levels of coverage exceeding that minimum. Individuals would then choose the plan they prefer, although Administration sources have said that they probably would have to pay taxes on any benefits they receive above the government minimum.

Administration health planners had considered giving large employers an exemption from the requirements placed on local alliances. Instead, under the Clinton plan, corporations would give up the option of offering their workers custom-designed benefit packages, such as so-called cafeteria plans that allow workers to vary the amounts of health insurance, life insurance, child care outlays and other benefits.

Companies could, however, retain the authority to select the various networks of doctors and hospitals their employees could use--in effect, functioning as an alliance, provided they “conform to all the other requirements of an alliance,” the source said.

Health plans now jointly operated by management and labor, such as the health insurance funds for carpenters, laborers and other workers in the construction trades, also would be allowed to call themselves health alliances. But, just as with large corporations, their autonomy would be curtailed to meet the federal standards.

“We want the companies that form their own health alliances to be sizable enough to really run serious alliances and to fulfill the same quality requirements: guaranteed benefits package and everything else,” the Administration source said.

“We’re not surprised, but we’re disappointed,” said Stephen Cook, coordinator of the Coalition to Preserve Health Benefits. His group’s membership includes some major corporations and some small and medium health insurance firms whose business would be sharply curtailed under the Clinton plan.

“They are seeking to create one standard of operations across the board but it would take the employer out of the equation entirely,” Cook said. Business firms “would just be a mechanism to collect money with no incentive to reduce costs or encourage innovation,” according to Cook.

The health policy director for a major business group, who asked not to be identified, also expressed disappointment and concern.

“Companies should be able to get the advantage of being superior managers of their health benefits programs. But they would no longer be able to do that,” she said.

Alliances, whether established for a geographic area, such as Los Angeles, or created by a single corporation for its workers, would negotiate with providers of health services--health plans like Kaiser, Blue Cross, Blue Shield and a variety of health maintenance organizations.

The money spent by local and corporate health alliances alike would come from businesses and their workers. The Administration is discussing a levy of 7% of payroll costs for companies and 3% of salary for employees. This method of financing would replace the current widely disparate system in which most firms offer coverage.

The Administration has not decided how large companies would have to be to operate as alliances, although it is considering proposals that would give firms with more than 1,000 workers a chance to be designated as independent units.

Some conservative Democrats in Congress who promote the idea of health alliances are skeptical of the Clinton plan. Congressional proposals would instead preserve a high degree of autonomy for firms in bargaining with insurance companies and with networks of hospitals and doctors, as well as designing health benefits packages for their workers.

The Clinton plan, in sharp contrast, would leave little authority and decision-making power to the firms.