Single-Payer Health Plan Touted as Best Around : Insurance: McDermott, Wellstone say their proposal offers better benefits than Clinton’s. Taxes would pay for universal coverage.


The Democratic authors of a Canadian-style health plan said Thursday that they could pay for health care for all Americans--and offer more generous benefits than President Clinton has proposed--through an 8.4% payroll tax on corporations and a 2.1% tax on individuals’ earnings.

“The President’s bill and ours are the only viable options” because they offer health coverage to every American, Rep. Jim McDermott (D-Wash.) said.

The program, known as a single-payer plan, would eliminate private health insurance. Instead, the money now paid in premiums by employers and workers would be collected in taxes by the federal government and distributed among the states. Each state would decide on the best way to deliver health services within its borders.

Every citizen would receive a plastic card that could be used to pay bills at hospitals, doctor’s offices, nursing homes or pharmacies.


This approach--making the federal government the collector and distributor of all health dollars--was rejected by Clinton during last year’s campaign. At that time, his advisers viewed it as politically suicidal, believing that opponents would attack the plan as a huge federal tax increase.

The single-payer plan was proposed by McDermott and Sen. Paul Wellstone (D-Minn.) and has 92 liberal sponsors in the House and five in the Senate.


Although it seems to have scant chance of enactment by Congress, its supporters have an important block of votes that the President must capture to get a health reform bill approved this year.


Its estimated $1.3-trillion price tag over three years would be paid by raising $1.2 trillion in taxes on businesses and individuals over the period. Another $59 billion would be generated by increasing the federal cigarette tax to $2 a pack from the current level of 24 cents and $1 billion would come from a new 50% excise tax on the sale of handguns and ammunition. There now is a 10% tax on the sales price of pistols and revolvers, and an 11% tax on ammunition.

Clinton’s plan, in contrast, would expand on the current system, in which most Americans are insured through the workplace. It would require all companies to offer insurance, with firms expected to pay 80% of the cost and workers the remaining 20%.

Both plans offer a comprehensive package of benefits. But the McDermott-Wellstone legislation promises more: full coverage of nursing home costs and prescription drugs, and no additional charges for visiting doctors or hospitals. Under the Clinton plan, a family could spend as much as $3,000 in out-of-pocket medical costs annually.

Wellstone said that his proposal “has a tremendous amount of common ground with” the Administration blueprint for health care reform. He and McDermott praised the President for making health care reform the top domestic issue and promised a close working alliance with the White House to develop a final legislative package.


The Congressional Budget Office has estimated that the single-payer bill could save as much as $100 billion a year from the nation’s current health tab of more than $900 billion.

The McDermott-Wellstone plan would apply an 8.4% payroll tax to firms with more than 75 workers. At smaller companies, the tax would be 4% a year. Individuals would pay 2.1% of their taxable income.