Health Care Reform’s Sticking Point: Who Picks Up the Tab?

Of all the difficult questions that must be resolved before the nation can embark on health care reform, none is harder than the most basic.

Who pays?

Short of having the government take over the health care system, there are only two ways of reaching President Clinton’s bottom-line goal of assuring that every American has health coverage: Either employers will have to pay for it or individuals will.

The choice between the two is certain to be one of the most controversial aspects of the debate over transforming the nation’s health care system--a point made even clearer last week, when the American Medical Assn. backed away from its earlier endorsement of Clinton’s proposal to require employers to shoulder the lion’s share of the costs.

Clinton argues that his route will build on the current system, in which 80% of those who have private health insurance get it through their employers. An employer mandate already is in place in Hawaii, which boasts that 97% of its population has health coverage.

Clinton’s critics, however, contend that is a prescription for losing millions of jobs. They warn that many small businesses will not be able to shoulder the additional costs, even with the $161 billion in government subsidies that the President has proposed.

Instead, they say, the small businesses that now employ most of America’s uninsured will slash their payrolls--or go bankrupt.

As a result, some influential Republicans in the House and Senate are proposing that the responsibility for health coverage be shifted to individual Americans--much as they now are required to carry car insurance. Instead of giving subsidies to businesses, they would provide them directly to people who cannot afford health coverage.

(From the outset, Clinton rejected the idea of a Canadian-style, government-financed system, leaving only the other two options.)

Although both sides are entrenched in their positions, some experts say that it does not really matter which route the health care system takes.

“In the long run, there is little difference between an employer mandate and an individual mandate, in terms of their effects on the economy,” said Bill Custer, director of research for the Employee Benefits Research Institute.

The reason, he said, is that workers ultimately will pay the price of their benefits and reap the rewards of any health care savings from reform, no matter how the system is structured.

Corporations that end up paying more for health care will pass those costs along to their workers in the form of lower wages, while those that save will be compelled to share the gain, because their employees will demand it through collective bargaining or competitive pressures, Custer reasoned.

Still open is the question of how well either system can be enforced. Both sides claim that the other’s proposal still will allow many Americans to slip through the net and remain uninsured.

Rep. Bill Thomas (R-Bakersfield), who has introduced a version of legislation calling for individual mandates, said requiring employers to provide insurance would not only drive many out of business, but it also would require at least a $7-billion bureaucracy to enforce it.

Under his proposal, he said, employers who now provide health benefits would continue to do so, because that is what it takes to attract and retain skilled workers.

But to make that a business’ legal responsibility “creates a fiction through your employer that somebody else is paying for it,” Thomas said.

If consumers pay for health care costs more directly, he argued, they will become more conscientious about holding down wasteful spending.

Yet Rep. Henry A. Waxman (D-Los Angeles) argued that putting the burden for health care on individuals simply will not work.

His major concern, he said, is that subsidies would ultimately be insufficient to make insurance affordable to those who now cannot pay for it.

Waxman also warned that such a system could encourage businesses that now provide insurance for their employees to drop it “and let the employees fend for themselves.”