Health Debate Heats Up: Jobs Lost or Gained?

The national debate over health care reform sharpened markedly and unexpectedly Monday as President Clinton and one of his harshest critics made separate but equally impassioned speeches about health care reform. In the simplest terms, the heart of both their messages was this: “It’s jobs, stupid.”

The President said that health care reform will lead to economic revival and widespread job creation. But John Motley, a leading advocate for small businesses, said that Clinton’s program would throw millions of people out of work and discourage the creation of new enterprises.

Nothing was settled, of course. But Clinton and Motley succeeded in highlighting what clearly will be a major point of contention in the coming debate: whether health care reform will hurt business or help it, stimulating job-creation or stifling it.

Much as “It’s the economy, stupid,” came to define the winning Clinton presidential campaign strategy, a watchword this time is likely to be “jobs.” Already, Republicans, along with other opponents of the health reform plan as it is emerging from the Clinton White House, are zeroing in on the issue.

In his speech Monday to the National Governors’ Assn., the President had intended only to articulate his rationale for seeking comprehensive health care reform. But as Clinton, waiting his turn to speak, watched Motley on a television monitor from a holding room, he became increasingly agitated with each charge Motley made.

“That’s not true,” the President said time and again, scribbling notes as he and First Lady Hillary Rodham Clinton conferred in hushed tones and two senior White House aides hovered nearby.

The President’s decision to rebut Motley also was a clear demonstration of the Administration’s new-found resolve not to let critics define the issue.

Clinton was less than half way through his own speech when White House aides began distributing a two-page rebuttal of Motley’s statements.

The President and Motley could not even agree on what percentage of small businesses provide health coverage to their employees. The White House estimated that 60% do, while Motley said the percentage, at best, is 45%.

Motley, vice president of the 600,000-member National Federation of Independent Businesses, was invited to speak on the same program as Clinton by South Carolina Republican Gov. Carroll A. Campbell Jr., the incoming head of the governors’ association and co-chairman of the association’s health care task force.

Motley, who spoke first and then left the gathering, wasted no time in lambasting the core of Clinton’s plan: a requirement that employers pay at least 80% of every full-time employee’s insurance premium.

He derided the so-called employer mandate as “an untried, unproven, untested” mechanism that most small business owners find “frightening.”

Moreover, Motley said, “there’s no doubt that such a mandate is going to increase payroll costs” and cause businesses to close.

“Most frightening is that fewer and fewer businesses are going to start,” he said, adding that 30% of new jobs are created by new businesses.

The mandate is designed as a way to finance medical coverage for the estimated 37 million uninsured Americans, Motley noted, adding: “We frankly think it’s a societal problem rather than an employers’ problem.”

After Motley’s remarks, Hawaii Gov. John Waihee, a Democrat, quickly came to Clinton’s defense, saying that Hawaii’s employment and business growth rates have risen markedly after two decades of living with a statewide employer mandate. “I have a hard time reconciling some of (Motley’s) predictions,” Waihee said.

But it was the President himself who offered the most spirited defense of his emerging plan, saying that an employer mandate makes sense because most employers already provide a part of their workers’ insurance. “It’s worked pretty well,” Clinton said.

The President said that the employer mandate, combined with an array of other reform measures taking shape in his agenda, will reduce health care costs significantly, leaving businesses with “more money they’re going to have to invest in creating new jobs. . . . “

Under the employer mandate, large employers would be required to provide at least 80% of a full-time worker’s health insurance premiums while the employees would be required to pay the remainder.

This mandate would not take effect for at least two years and even then it would be phased in gradually for small businesses, Ira Magaziner, senior adviser for policy development, said Monday.

In addition, small businesses and low-wage earners would receive as-yet unspecified “discounts” or subsidies to further help purchase their insurance.

To further minimize the burden of the employer mandate on businesses and individuals, White House officials said, the plan calls for a cap on the amount that they must pay in premiums--likely to be 7% of payroll for large companies, 3.5% for small businesses and 2% of annual income for individuals.

Clinton also noted that his plan would allow the self-employed to take a 100% tax deduction for the cost of their medical insurance. Employers of part-time workers would be required to pay a pro-rated amount.

In addition, insurers would be barred from refusing to cover entire groups perceived to be at high risk. And by cutting down on the proliferation of insurance claims forms, all businesses would stand to save millions of dollars on processing paper work, the White House estimates.

The President also said that business costs will be further reduced by his plan to incorporate the medical component of worker’s compensation into the new plan. “That might be the biggest thing we could do for small business,” he said.

“Health care reform will boost job creation in the private sector if it is done right,” the President added. “It just defies common sense to say that we can’t maintain the world’s finest health care system, stop all this cost shifting, bring our costs back at some competitive level, cover everybody and create jobs.”