Clinton Unveils Health Reform : He Says U.S. Is at a ‘Magic Moment’ for Action : Medicine: The plan would provide insurance to all Americans for the first time. President tells Congress the current system is ‘badly broken and it is time to fix it.’

President Clinton, in a passionate call for action that drew repeated ovations from a joint session of Congress, Wednesday outlined a comprehensive plan for health care reform aimed at guaranteeing quality medical treatment for all Americans.

“At long last, after decades of false starts, we must make this our most urgent priority, giving every American health security--health care that can never be taken away, health care that is always there,” Clinton declared. “This health care system of ours is badly broken, and it is time to fix it.”

The President’s plan, about eight months in the making, mandates universal access to private-sector health insurance that meets minimum federal standards for quality and completeness. To achieve those goals without major tax increases, the plan would create new government mechanisms designed to promote competition and slash the waste, inefficiency and greed that Clinton said are rampant in the present system.

By drawing on market-oriented strategies favored by some Republicans and conservative Democrats, Clinton’s blueprint is designed to capitalize on bipartisan sentiment that the time has come to tackle one of the most sensitive and complex problems facing the country.

“The proposal that I describe tonight borrows many of the principles and ideas that have been embraced in plans introduced by both Republicans and Democrats in this Congress,” the President said. “For the first time in this century, leaders of both political parties have joined together around the principle of providing universal, comprehensive health care.”

“It is a magic moment, and we must seize it,” he said, as applause erupted from both sides of the aisle.

In his campaign for the White House and throughout the opening months of his presidency, Clinton had placed health care reform continually at the top of his agenda. As a result, the speech unveiling his plan had been widely viewed as a critical moment for his often-troubled Administration.

His performance Wednesday night was perhaps the strongest of his career. By turns expressing optimism about what can be achieved and indignation at the shortcomings of the present system, Clinton spoke in easily understood language designed to appeal to the ordinary Americans whose support he must mobilize in the months ahead.

So sensitive are the issues embodied in health care reform and so powerful are the interest groups affected by his proposals that the struggle Clinton faces in Congress is likely to stretch through the rest of this year and well into 1994.

Despite the unusual amount of bipartisan applause and the restrained nature of most of the immediate criticism of the plan, Democrats and Republicans have expressed serious reservations about it and are poised to push plans of their own. Details of the Clinton proposal are not expected to be sent to Capitol Hill in specific legislation for two to three weeks.

Some liberal Democrats plan to offer a “single-payer” proposal that would create a Canadian-style health system in which the government would pay all health bills and raise taxes to cover the costs. Moderate Republicans and some conservative Democrats have offered a plan that would bring about universal coverage more slowly than Clinton would and without the mandate that employers cover all workers.

More conservative Republicans have proposed a plan that would not achieve universal coverage but would make insurance easier to buy for small businesses.

Even before the President’s plan was announced, critics charged that the specified funding was inadequate for such sweeping reform, though Clinton said the whole package can be financed through savings and one broad new revenue measure--an unspecified increase in the tobacco tax.

The plan’s only other revenue measure, he said, would be the assessment of “a modest contribution” from giant corporations, employing more than 5,000 people, that opt out of the national plan and obtain coverage for their workers on their own. Such companies would probably be assessed an annual fee equal to 1% of their payrolls, Administration aides said.

“I believe as strongly as I can say that we can reform the costliest and most wasteful system on the face of the Earth without enacting new broad-based taxes,” Clinton said.

But he acknowledged in his 53-minute speech that, at least in the short term, his approach would impose higher costs on some Americans.

“Some will be asked to pay more. If you’re an employer and you aren’t insuring your workers at all, you’ll have to pay more. But if you’re a small business with fewer than 50 employees, you’ll get a subsidy. If you’re a firm that provides only very limited coverage, you may have to pay more. But some firms will pay the same or less for more coverage,” the President said.

“If you’re a young single person in your 20s and you’re already insured, your rates may go up somewhat because you’re going to go into a big pool with middle-aged people and older people. And we want to enable people to keep their insurance even when someone in their family gets sick. But I think that’s fair because when the young get older, they’ll benefit from it, first. And secondly, even those who pay a little more today will benefit four, five, six, seven years from now by our bringing health care costs closer to inflation.

“Over the long run, we can all win. But some will have to pay more in the short run. Nevertheless, the vast majority of the Americans watching this tonight will pay the same or less for health care coverage that will be the same or better than the coverage they have tonight. That is the central reality.”

Clinton cited what he called six “guiding stars” of his reform agenda: security, simplicity, savings, choice, quality and responsibility, and elaborated on each.

The foremost principle in health reform is guaranteeing lifetime insurance coverage with a comprehensive package of benefits, he said.

He brandished a red-white-and-blue “health security” card that would be issued to all Americans as a symbol of that guarantee.

“With this card, if you lose your job or you switch jobs, you’re covered. If you leave your job to start a small business, you’re covered. If you’re an early retiree, you’re covered. If someone in your family has unfortunately had an illness that qualifies as a pre- existing condition, you’re still covered,” Clinton said.

“If you get sick or a member of your family gets sick, even if it’s a life-threatening illness, you’re covered. And if the insurance company tries to drop you for any reason, you’ll still be covered because that will be illegal.”

Clinton noted that his proposals would grant the nation’s senior citizens, for the first time, prescription drug coverage and a start toward long-term care.

The President said a standardized insurance form will eliminate waste and red tape from a system that is “literally drowning in paperwork.” Administrative savings, he said, could reach “tens of billions of dollars.”

At this point, Clinton appeared outraged as he recalled a wrenching incident he learned about during a recent visit to a children’s hospital in Washington.

As the President told it, a nurse had to walk away from a child about to undergo chemotherapy for cancer. The child had asked the nurse to stay at his side, Clinton said, but “she had to walk away from that child because she had been instructed to go to yet another class to learn how to fill out another form for something that didn’t have a lick to do with the health care of the children she was helping.

“That is wrong and we can stop it and we ought to do it.”

Simplicity, Clinton said, also means relieving doctors and hospitals from burdensome government rules and regulations. “A doctor should not have to check with a bureaucrat in an office thousands of miles away before ordering a simple blood test,” Clinton said.

Under the President’s plan, consumers would form state and federally regulated regional alliances that shop on their behalf for the best insurance plans on the basis of price and quality. These purchasing cooperatives must offer an array of plans, including a traditional fee-for-service plan and a health maintenance organization.

Clinton said this “combination of private market forces and a sound public policy” will generate significant savings in the government’s Medicare and Medicaid programs, savings that he said would go a long way toward financing the reforms.

Moreover, there will be savings in the private sector, which almost certainly translate into higher wages or job creation, Clinton said.

The President said consumer choice of physicians, another of his guiding principles, will increase under his proposals. Under the current system, with companies increasingly offering their workers fewer and less generous insurance plans, Clinton said, “that power is slipping away.”

Under his proposal, Clinton said, consumers in each alliance will be able to choose from at least three different insurance plans. By the same token, he said, physicians also will be given a broader choice--the opportunity to participate in several health plans.

Consumers seeking more than the basic plan, especially if they elect to stay with a traditional fee-for-service program, would pay more than those who opt for managed care or an HMO.

The President also said his plan would improve the quality of medical care nationwide. Under a new system that would gather information on medical outcomes, he said, consumers would receive more effective care.

Lack of information, Clinton said, leads to situations in which the cost of a coronary bypass within the same state--he cited Pennsylvania--can vary from $21,000 to $84,000, with no difference in outcome.

His sixth principle is responsibility, and that would mean requiring all employers to offer their full-time employees health coverage.

“This is not a free system,” he declared.

To guarantee uninterrupted, lifetime coverage for all Americans, the President’s plan would require that all employees have health insurance. Employers would pay at least 80% of every full-time worker’s health insurance premium. The employee would have to pay the rest. Small businesses and low-wage earners would receive varying levels of government subsidies, and the unemployed would receive a full premium subsidy.

Part-time workers and their employers would pay under a prorated formula.

Many Republicans have criticized this so-called employer-employee mandate, but Clinton sought to defuse that issue Wednesday night by recalling that it was a Republican President, Richard Nixon, who first proposed the approach two decades ago.

Clinton called the mandate “the fairest way to achieve responsibility.”

Clinton’s plan mandates a relatively generous, government-designed “standard benefits package” that would set the minimum standard for all insurance plans. Plans could offer greater benefits but beneficiaries would have to pay more for the extra coverage.

The standard benefits package emphasizes primary and preventive services but it provides, for the first time, prescription drug coverage for all and a start toward long-term care.

The employer-employee mandate would go a long way toward achieving universal coverage because as many as 85% of the estimated 37 million uninsured Americans are employed.

Because the mandate would be burdensome to low-wage earners and small businesses, employers with fewer than 50 workers whose wages average less than $24,000 a year would be eligible for federally subsidized discounts.

In a meeting with small-business owners here last week, the President said he would consider extending some subsidies to firms with 50 to 100 workers. The amount companies would have to pay would be capped, probably at about 7.9% of payroll for large companies and as little as 3.5% for small employers. Individual workers probably would not have to pay more than about 2% of their salary.

Self-employed workers for the first time would be able to deduct the full cost of their health insurance from their taxes. Now, only 25% is deductible.

In his speech, Clinton acknowledged the extraordinary role First Lady Hillary Rodham Clinton had played in creating his plan.

“When I launched the nation on this journey to reform the health care system,” he said, “I knew we needed a talented navigator, someone with a rigorous mind, a steady compass, a caring heart. Luckily for me, and for our nation, I didn’t have to look very far.”

Applause erupted on both sides of the aisle as Republicans and Democrats turned to look up at a beaming Mrs. Clinton, who sat in the House gallery flanked by former Surgeon General C. Everett Koop and renowned pediatrician T. Berry Brazelton. Koop and Vermont Gov. Howard Dean, a physician and a leader of state health reform efforts, accompanied Clinton to the Capitol for the speech.

The First Lady stood, smiled and nodded in response.

“Over the last eight months,” Clinton said, “Hillary and those working with her have talked to literally thousands of Americans to understand the strengths and the frailties of this system of ours. They met with over 1,100 health care organizations.”

He said Mrs. Clinton and the hundreds of members of her task force had conferred with all types of health care providers, with people who have health insurance and with some of the 37 million Americans who do not, and they received more than 700,000 letters from ordinary citizens.

From all of that, he said, “we have learned a powerful truth. We have to preserve and strengthen what is right with the health care system but we have got to fix what is wrong with it.”

Times staff writers John Broder and David Lauter contributed to this story.

* UNCERTAIN FINANCING: Financing may be the most uncertain feature of Clinton health care package. A10

* RELATED STORIES, TEXT: A5-A15, D1

The President’s Health Care Pitch

* His goal: Extend health coverage to the 37 million uninsured while shrinking the nation’s massive medical bill.

* Key component: New institutions called health alliances that would act like buying clubs for consumers and oversee the industry.

* Consumer choices: Consumers would have a choice of HMO-type plans and traditional fee-for-service plan.

* Pocketbook issues: Employers and employees would split the cost of premiums for the basic plan on an 80-20 basis. An individual policy is expected to cost $1,800, a policy for an adult and children $3,700 and a family policy $4,200.

* Quote: “If we can look into our hearts, we will not be able to say that the greatest nation in the world is powerless to confront this crisis.”

* Next step: Clinton will send Congress a detailed proposal next month. Republicans and a group of Democrats are offering competing plans.