Health Plan Faces Several New Obstacles : Reform: The White House proposal is returning to center stage just as political opposition is growing and public enthusiasm is waning.

The health care debate--nearly dormant since President Clinton offered up his 1,342-page reform prescription last fall, is about to resume in earnest.

However, much has changed in the intervening months, and it is far from clear what form the health care revolution will take--or even if truly sweeping changes will occur at all.

Analysts say the new factors influencing the debate will include:

* The President’s plan--always a source of conflict between Republicans and Democrats on Capitol Hill--now faces growing opposition from members of both parties in Congress.

* The crisis atmosphere that prevailed through the 1992 presidential campaign and during most of Clinton’s first year in office--a sense that the health care system needed an immediate overhaul--has abated.

* Much of the business community is increasingly skeptical about many elements of Clinton’s complex reform agenda.

* Health care cost inflation has slowed dramatically, threatening to further sap the will for a wholesale restructuring of one-seventh of the nation’s economy.

“All this makes it a lot more difficult politically to get it done,” said a GOP congressional staff member involved in the issue.

Clinton could recapture the momentum, beginning with his State of the Union Address on Tuesday, and persuade Congress to enact some kind of major legislation before the congressional elections in November. But even in that event, there is virtual unanimity among those who follow the issue that the changes will fall short of those Clinton has proposed.

Many experts say they believe that at a minimum, Congress will prohibit insurance companies from refusing to cover people with pre-existing medical conditions and will require the firms to base their premiums on broad, community rates, rather than on the medical experiences of small groups or individuals.

So far, the Administration is holding firm on its proposal to require all employers to pay at least 80% of a full-time worker’s insurance premiums, with individuals picking up the remainder.

But the fate of many other key elements of Clinton’s plan are in considerable doubt, including the caps Clinton would like to set on the rate of insurance premium increases.

Administration officials are also sending strong signals that they may back away from the controversial linchpin of the plan--the creation of massive health-insurance purchasing alliances, which would be used as hammers to drive down costs as health care providers compete for their huge contracts.

As presently designed, Clinton’s plan would exempt a company from joining such an alliance only if it had a work force of 5,000 or more. Such companies would be allowed to set up their own alliances while paying a 1% payroll “assessment” to help provide subsidies to small businesses who would be required to join the standard alliances.

Now the Administration is thinking of eliminating the requirement, or keeping it but allowing companies with only a few hundred employees to set up their own alliances.

Either concession is likely to lessen resistance in the business community to Clinton’s overall agenda.

The chances that the Clinton plan would be scaled back increased dramatically after the President, facing a cacophony of competing proposals, offered that he was open to all alternatives.

That declaration may have emboldened opponents more than the White House had intended.

“It was a terrible mistake,” said Michael Bromberg, executive director of the Federation of American Health Systems and one of Washington’s leading health care lobbyists. “The President was cutting deals before the real bargaining starts.”

The upshot, according to Bromberg, will be “a total rewrite” of Clinton’s proposal by Congress.

Indeed, Sen. John H. Chafee (R-R.I.) and Rep. Jim Cooper (D-Tenn.), who seek less sweeping, more incremental reforms than Clinton, appear to be gaining supporters. “Most members now feel: ‘It’s our bill now and we can do what we want,’ ” one congressional health staffer said.

Elsewhere on Capitol Hill, Sen. Minority Leader Bob Dole (R-Kan.) is sounding far less accommodating than he did last year, when he made several high-profile appearances with the President and First Lady Hillary Rodham Clinton, the head of the Administration’s health care task force.

And key Democratic Sen. Daniel Patrick Moynihan of New York, chairman of the Senate Finance Committee, has declared there is no health care crisis.

Such statements, and a lack of clear direction from the White House, has created a sense of “panic on the Hill,” said Diane Rowland, vice president of the Kaiser Family Foundation, a Menlo Park-based health care think tank.

“People up there don’t know what to do. Very few people are solidly behind any one proposal,” said Rowland, who advised the presidential task force that developed the reform proposals.

Meanwhile, the health insurance industry, one of the most vociferous opponents of comprehensive reform, is continuing its attack.

“The real question is: Why are we throwing the whole system out?” said Linda Jenckes, vice president of the Health Insurance Industry of America.

Amid all this, the government’s own statistics show that both private and public spending on health care are moderating. Costs are still rising, but at the slowest rate in more than 20 years.

Earlier this month, one report said the government’s two biggest health programs, Medicare and Medicaid, will cost $45 billion less over the next five fiscal years than was predicted only last fall. Another report said health care prices rose by just 5.4% last year, the smallest increase in two decades--although that was still double the overall inflation rate.

Such trends could lessen the sense of urgency to undertake comprehensive reform. But most economists agree that health care inflation historically has moderated in the face of demands for reform, only to resume after the momentum has dissipated.

As Gene Sperling, a White House economic adviser, put it: “These numbers do not show that it’s morning in America. What they do show is that you can control prices without hurting quality.”

While the debate over the merits of health care reform heats up, one seemingly unrelated matter could have a profound effect on the outcome: the emerging Whitewater controversy, which is under investigation by a special counsel.

Because Hillary Clinton supervised the development of the White House health care proposal, any damage to her reputation from the Whitewater affair could deliver a fatal blow to health care reform, analysts said.