Illegal Immigrant Health Policy Told : Medicine: White House says hospitals will be paid to care for the undocumented. But draft of reform plan shows a separate fund would not cover costs.

Although illegal immigrants will not receive insurance under President Clinton’s health care reform package, hospitals will be paid to care for them with a separate pool of money set aside by the federal government, Administration officials confirmed Sunday.

But the amount of money initially in the pool appears to be woefully inadequate to meet state health care costs for illegal immigrants.

Only $1 billion is proposed nationwide for a fund that would include illegal-immigrant health care in 1995, according to a draft of the Clinton plan that began circulating in Congress last week. That is less than California alone will spend this year. The state is home to half of the nation’s estimated 3 million illegal immigrants.

Moreover, the fund could also be drawn on by states for general public health projects, according to Ira Magaziner, director of the Administration’s health care task force.

Nevertheless, Magaziner said the Administration intends to maintain the level of health care illegal immigrants currently receive under programs funded by Medicaid (called Medi-Cal in California) and by local communities.

“We don’t want to lessen care for undocumented people compared to what they receive today,” Magaziner said during a briefing for reporters.

However, he added, “we don’t feel we can give them a health security card,” which will guarantee coverage to all citizens.

Sunday’s briefing, one in a series of sessions attended by Magaziner and other planners, came as the Administration was putting the finishing touches on its sweeping proposal to overhaul the nation’s health care system and provide medical coverage for 37 million Americans who are now uninsured.

Clinton’s reform agenda calls for the creation of large insurance-purchasing alliances, made up of consumers, that shop for the best insurance plans on behalf of members.

It seeks to expand access to medical services, streamline paperwork, offer quality care and control runaway costs by setting a budget for the nation’s health care expenditures.

Although the plan would not provide coverage for illegal immigrants, other federal laws require hospitals and doctors to treat virtually anyone who is poor and seriously ill--a mandate that has enabled hundreds of thousands of immigrants to obtain free care, particularly in states like California that have large immigrant populations.

Thus, the Clinton plan poses a paradox: How can these hospitals treat large numbers of illegal immigrants, who lack insurance, and at the same time meet stringent spending requirements that will be imposed by insurers under federally mandated limits on premiums?

To avoid this financial squeeze, Magaziner said, the government will set up a “separate payment stream . . . that will not be constricted to the budget.”

The money, Magaziner said, would come from a special program designed to improve the public health. This public health initiative, which would begin by spending $1 billion a year in 1995 and increase to $4 billion by 1999, would concentrate on regional health priorities, such as preventing the spread of tuberculosis and AIDS, and stemming violence in the inner city.

Several questions remain unanswered, however, including how much money would be set aside to fund health care for illegal immigrants and whether this money would match what states currently spend.

In California, one recent study concluded that illegal immigrants accounted for the fastest-growing part of the Medi-Cal budget, rising from $299.4 million in fiscal 1990 to a projected $880 million this fiscal year. This does not include the many millions of dollars that counties have spent on medical care for illegal immigrants.

The net effect of Clinton’s separate funding arrangement is that illegal immigrants will continue to receive care as they always have, often in crowded public emergency rooms. But by declining to give them a health security card, the Administration will not appear to be sanctioning illegal immigration.

The plan does require employers to provide insurance for all their employees, whether they are here illegally or not. So it is conceivable that some undocumented workers would be covered. At the same time, the plan would protect these workers against deportation by preventing insurers from sharing information with the Immigration and Naturalization Service.

In the briefings and on television talk shows Sunday, Administration officials sounded both hopeful and ready to negotiate on the overall health care plan.

They trumpeted not only the benefits of reform but also their willingness to compromise with Republicans, who last week offered an alternative plan that found much common ground with the Clinton package.

Declaring that Congress and the White House are on the brink of an “historic breakthrough,” David Gergen, the President’s chief counselor, said: “We are on the verge of passing for the first time in our history a national health care bill that will provide universal coverage to all Americans.”

Yet at the same time, speaking on NBC-TV’s “Meet the Press,” Gergen said the White House is “open” to negotiations with members of Congress who hold different views. “It’s going to be a tough fight,” he said, but the Administration believes that enactment of comprehensive health reform is now “politically realistic.”

Clinton’s plan would require all employers to pay at least 80% of the cost of the health insurance premiums of every worker. The employee would have to pay the remainder. Speaking on CNN’s “Newsmaker Sunday,” Magaziner conceded that, under the plan, some consumers and business would have to pay more than they do now.

“People who are not now paying anything will certainly pay more. And their employers, who are not now paying anything, will certainly pay more,” he said, adding: “We think everybody should have responsibility and pay something for health care.”

Magaziner also expressed optimism about passage of health care reform, calling the Republican proposal--which strikes the requirement that employers pay for insurance--”a very constructive contribution” to that process.

On CBS-TV’s “Face the Nation,” Sen. John H. Chafee (R-R.I.), author of the GOP health care reform agenda, sounded a conciliatory note as well, saying that while Republicans dislike the employer mandate, their opposition to it will not be a “non-negotiable demand.”

That would not be “the proper way to go into negotiations,” Chafee said.

Times staff writers Robert A. Rosenblatt and Irene Wielawski contributed to this story.