Best Health Care Could Be Limited to Wealthy : Insurance: Economists point to two-tier system. Low-wage workers could be confined to low-cost option.

As President Clinton describes it, his proposed national health security card would be a social leveler, giving every American the same health care choices and eliminating inequities that fall hardest on people with serious illnesses, workers who lose their jobs and the working poor.

“Forty years from now,” Clinton told Congress last week, “our grandchildren will find it unthinkable that there was a time in this country when hard-working families lost their homes, their savings, their businesses, lost everything, simply because their children got sick or because they had to change jobs.”

Yet while the President’s plan would end many glaring injustices, it would stop far short of establishing a system in which everyone is guaranteed to receive the same quality of care regardless of wealth or station in life. Under the proposal laid out in Clinton’s speech to Congress and the nation, those who have substantial financial resources could command levels of care that less affluent Americans might find beyond their reach.

Indeed, many economists say Clinton’s approach would institutionalize the current multi-tier system of health care.

“It recognizes the two-tier soul of this nation,” said Uwe Reinhardt, a health care expert at Princeton University. “ . . . To the extent that choice of doctors matters to people, there will be several tiers.”

Documents outlining the Clinton program plainly state that Americans would be offered a choice between two kinds of health care plans--the “low-cost option” open to everyone and the “high-cost option” available only to those who can afford to pay extra.

The low-cost option, requiring patients to make only a $10 co-payment when they go to the doctor, would be made up primarily of health maintenance organizations, which normally offer only a limited choice of doctors and impose strict cost-saving guidelines on treatment.

The high-cost option would embrace many features of the traditional fee-for-services system, which allows a person to see any doctor with fewer limitations on high-cost treatments. But the high-cost option, in addition to carrying a higher premium, would require patients to pay 20% of each bill instead of a fixed fee.

In theory, every American--except for those 65 and older, whose care would continue to be financed through Medicare--could choose the high-cost options.

In reality, welfare recipients, low-wage workers and many middle-class Americans would have little choice but to take the low-cost option. They simply could not afford the 20% co-insurance feature. As a practical reality, the high-cost option would be reserved for the wealthy and the upper middle class in most cases.

Of course, higher cost does not always mean higher quality. But for individual patients, a system that places fewer inhibitions on a doctor’s freedom to spend more time on a case, to conduct more thorough tests or to explore a wider array of treatment options may deliver higher quality than a system operating on something close to an assembly-line basis.

Despite the differences in prices between the low- and high-cost plans, said Cathy Hurwit, a health expert for the consumer group Citizen Action, Clinton’s plan envisions that everyone would receive the same standard package of benefits--”no matter whether you are on welfare or earning $200,000 a year.”

“But the question is, is your access to those benefits going to be equal?” she said. “I think that’s the weakness of the President’s plan. It’s hard to believe the high- and low-cost plans are going to have the same supply of doctors, hospital beds and resources in general.”

Americans would not be limited to just two types of health plan. Each regional health purchasing alliance, the yet-to-be-established clearinghouse through which most people would buy health insurance, would be required to offer at least three choices, representing three tiers of care:

* Welfare recipients and the working poor, experts say, would probably find themselves in the cheapest HMOs.

* The middle class would be concentrated in some of the more expensive HMOs or in so-called preferred provider plans--networks of independent doctors and hospitals who agree to charge discounted rates to people who joined their plans.

* The wealthy would still be able to select whatever doctor they wanted under expensive fee-for-services plans, provided that the premiums charged by the insurance carrier offering the plan were no more than 20% greater than the average premium of all other insurance plans in the same region.

“Clearly, there will be an income-and-class stratification,” said Robert Dreyfuss, Washington representative for Physicians for a National Health Program.

Nonetheless, from the standpoint of equity, Clinton’s plan improves substantially on the current system.

For the 37 million Americans who have no insurance--mostly low-wage workers whose employers offer no insurance and who are not poor enough to qualify for Medicaid--a low-cost plan looks better than none at all. Under Clinton’s plan, employers would be required to pay at least 80% of the average premium for all workers, and workers would be required to contribute the rest.

Welfare recipients now depend upon Medicaid, but many doctors refuse to treat them because government reimbursement is often lower than the true cost of care. Under Clinton’s plan, Medicaid recipients’ federally subsidized health care cards will look no different from those provided to privately insured people, which means they will not be as likely to be turned away by doctors.

Perhaps the biggest drawback of the Clinton plan for current Medicaid recipients, who now pay no out-of-pocket fees, is that he would require them to pay $10 for each visit to the doctor. Advocates for the poor argued that this co-payment might discourage poor people from getting care they need.

Middle-income Americans can expect to have a wide range of health care options, depending on how much they are willing to pay. Although employers must fund at least 80% of the average premium, workers will have to pay the difference between their employers’ contribution and the full premium of the insurance plan they chose.

Except in rare cases, middle-class citizens are expected to favor those managed-care options with the largest list of doctors and specialists and the least restrictive rules. These would be more expensive but not as costly as the straight fee-for-services insurance.

Doctors in wealthier communities will be able to restrict their practices to those who can afford the high cost, fee-for-services plan, according to health care analysts. Doctors in poor communities will have little option but to move toward the low-cost networks.

Because the Clinton plan also encourages the regional alliances to set strict fee schedules for doctors at the high end of the scale, some experts anticipate that a few doctors will begin to spurn insurance reimbursements altogether and accept only those patients who can pay out of their own pockets--or they may treat such patients part time.

Gail Shearer of Consumers Union noted that early drafts of the Clinton plan set a limit on the amount of money a worker could be expected to contribute to 1.9% of income. Although such a cap would have narrowed some of the differences between the high-cost and low-cost plans, it was dropped from the final draft.

Shearer said that consumer groups will lobby to restore the 1.9% limit in order to protect low-wage workers from being priced out of all but the most undesirable health insurance plans.

Although the President seems genuinely committed to providing similar care for all Americans, Reinhardt said, the plan could easily become more inequitable in the future if Congress decides to trim government subsidies in order to help reduce the federal deficit.

“You have to think what this system would look like in the future, if public subsidies for health care shrivel, which well they might,” Reinhardt said. “The rich will buy for themselves the health care they crave, but will they buy for the poor what they deserve?”

* THE ANSWER MAN: Clinton replied to concerns of those who say they have been hurt under current system. A7

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