Job Losses Expected in Health Care Reform : Employment: A White House study will show that jobless rate may climb in first few years, sources say. The analysis could raise stakes in fight for plan.

The first official analysis by the White House of the effect of President Clinton’s health care plan on employment is likely to show that it will cause substantially more job loss than job creation, leading to higher unemployment in the first few years, Administration sources said Friday.

The sources declined to reveal the scope of the potential job losses. They cautioned that the report is not yet complete and that the final numbers could show that the plan’s impact on jobs ultimately would be a wash, creating as many as it costs. They suggested, however, that the report is much more likely to show job losses.

The internal study seems certain to become the focus of heated debate and is likely to aggravate tensions between the Administration’s economic policy-makers and the President’s more upbeat health care advisers.

Its findings so far contrast with earlier statements by the Administration that Clinton’s health care package would have a positive effect on employment. Republicans and conservative business groups have warned that the Clinton plan could cost up to 3.1 million jobs. But just last week, President Clinton said that the plan would generate “hundreds of thousands” of jobs and lead to higher pay for many workers.

The study comes as the Administration’s economic policy-makers are under growing pressure from the President’s political and media advisers to accentuate the positive and downplay the potential negative effects of the health care reform plan. The White House hopes to avoid the kind of negative publicity and media coverage that it believes nearly sank Clinton’s budget package earlier this year.

Officials said that the health care plan would not begin to have a positive effect on jobs until several years after it is implemented, when it presumably would begin to ratchet down health care costs. Gradually, those lower health care costs would begin to improve American productivity and competitiveness, leading ultimately to higher employment.

Administration economic policy-makers are increasingly worried about the potential for job losses in small businesses that do not now provide insurance. The Administration has proposed new subsidies to help those small firms and their low-wage employees cover the costs of insurance. But they still would have to pay higher payroll costs.

At the same time, large firms, primarily in the retailing and fast-food industries, which provide little or no health insurance for their employees, would not qualify for the small-business subsidies. Such firms, like Wal-Mart and McDonald’s, could lay off thousands of low-wage workers to avoid higher health care costs.

Large, unionized firms that now provide good insurance, however, would be likely to benefit from the Clinton reforms. The insurance premiums to be paid by all large employers would be lower than the rates many of them now pay for private insurance.

The health care reform also would prompt a major structural shift in the nation’s economy and could lead to sharp employment losses in certain industries and regions of the country. Small and medium insurance companies, for example, could be forced out of business because of an inability to compete with the industry’s giants as health alliances are set up.

The Administration’s study, however, is likely to show job gains in the health care industry as a result of universal coverage, extending to the estimated 37 million Americans who are now uninsured. Many administrative jobs in health care could be eliminated as hospitals and other providers look for savings to meet the Clinton Administration’s cost targets. But those job losses likely would be outweighed by gains among health care providers.

Many health care economists, while dismissing the warnings of massive job losses from opponents of the plan, agreed that the Clinton reform effort is certain to lead to some job losses, at least in its first few years.

“It has to cost jobs, because of its effect on low-wage workers,” noted John Shields, a health care economist at Lewin-VHI, a medical consulting firm based in Fairfax, Va. Meanwhile, Regional Financial Associates, a Philadelphia economic consulting firm, plans to release a study Tuesday predicting that the Clinton plan will result in a net job loss, according to Mark Zandi, an economist with the group.

“It shouldn’t be enough to put us back in recession, but there will be job losses,” Zandi noted. He added that in later years, the plan will create jobs and spur economic growth if it “can achieve its stated purpose of reining in overall health costs.”