Business Leaders Reject Health Plan : Reforms: Key group of executives criticize Clinton proposal, endorse less sweeping rival measure. White House downplays move, but analysts see a severe blow.

In a major setback for President Clinton’s health care reform plan, the nation’s top business leaders Wednesday embraced a rival, less ambitious plan that has bipartisan congressional support.

The move by the influential Business Roundtable, composed of 225 heads of America’s largest corporations, came despite intense White House pressure on the executives to remain neutral.

In embracing the reform plan of Rep. Jim Cooper (D-Tenn.) as “the starting point” of the health care debate, the business chiefs signaled their intention to support decidedly less sweeping reforms than those proposed by the President.

The business group contended that the President’s plan would place too much control over the health care system in the hands of the federal government, according to Roundtable Chairman John D. Ong, head of B.F. Goodrich Corp.

Specifically, he said, members expressed fear that Clinton’s plan could create a vast and uncontrollable entitlement program.

But Ong also said business leaders would like to see some modifications in the Cooper plan as well. Cooper, in an interview, readily signaled his willingness to work with the Roundtable, conceding that his bill “isn’t perfect.”

While many analysts said the Roundtable’s endorsement of Cooper’s bill by a majority of the 65 members present is a blow to the Administration, the White House sought to minimize the effect.

“This is a serious, crippling blow, and it means that the Clinton bill will not be enacted in certain key respects: the big alliances, the caps on insurance premiums, the global budgets and the employer mandate,” said Deborah Steelman, a Washington health care industry lobbyist.

But senior Clinton adviser David Gergen said: “I don’t think we ever claimed that we have strong business support”

Other Administration officials conceded, however, that they have been surprised by the absence of broad business support for the President’s plan, especially because many large companies--but not all--are likely to see their health care spending go down if Clinton’s plan is enacted.

Administration officials dismissed the Roundtable vote as largely an attempt by big business to enhance its bargaining leverage.

Several Administration officials, as well as their congressional allies, also privately blamed the vote on what they called high-handed, behind-the-scenes maneuvering by insurance and drug company executives within the Roundtable health care task force.

But Ong disputed that characterization, noting that the group’s broad membership is not dominated by health care interests, which dislike much of Clinton’s proposals.

Of the 65 Roundtable members who voted Wednesday, only 17 represented health insurers, drug-makers or other health care concerns, according to Johanna Schneider, a Roundtable spokeswoman.

Roundtable members include the chief executives of companies such as Procter & Gamble, Pepsico, United Airlines, IBM, AT&T;, DuPont and Boeing.

In the wake of the Roundtable vote, some Administration allies blamed the White House for what they regarded as its belated and ultimately ineffective effort to derail growing support for the Cooper bill.

“We’re entering a new period now where every single thing counts,” said Sen. John D. (Jay) Rockefeller IV (D-W. Va.), a staunch Clinton ally.

White House lobbying of the Business Roundtable intensified after an informal poll of the group’s 85-member policy committee last month revealed support for Cooper’s bill by a 3-to-1 margin.

“That really spooked the White House,” said one knowledgeable health care analyst.

At the White House’s behest, the Roundtable’s policy-making body agreed to delay a formal vote until after the President’s State of the Union message.

In recent days, numerous CEOs were invited to White House meetings with senior Administration officials and, in some cases, with First Lady Hillary Rodham Clinton or the President himself.

In a statement Wednesday night, the White House called the Roundtable vote “a mistake,” adding: “A more accurate starting point would have been to express what they like and what they don’t like about the variety of plans and to move forward with a constructive dialogue.”

But Clinton will continue to work with the business community on his goal of providing all Americans with affordable health care coverage, said Jeff Eller, a White House spokesman.

“The President is a lot more concerned about how the process ends rather than how it begins,” he said.

The Cooper bill is attractive to many businesses because, unlike Clinton’s plan, it would not force employers to pay at least 80% of a full-time worker’s health insurance premiums. Rather, Cooper’s bill requires firms to make coverage accessible. Individuals would decide whether to buy it.

Cooper’s bill does not contain price controls, while the President’s would limit the growth of insurance premiums.

Clinton’s plan would require all firms with fewer than 5,000 employees to join regional health alliances; Cooper’s plan would require companies to participate only if they have fewer than 100 employees.

On Capitol Hill, meanwhile, Clinton’s congressional allies called attention to what they perceive to be the Cooper bill’s political weaknesses.

During a hearing at which Cooper and Rep. Fred Grandy (R-Iowa) were the principal defenders of the plan that they co-sponsor, Rep. Henry A. Waxman (D-Los Angeles), chairman of the House Energy and Commerce subcommittee on health and the environment, called it an “experiment of social engineering.”

Supporters of the Clinton plan focused much of their criticism on a provision of the Cooper plan that would limit the tax deductibility of employer contributions to workers’ health care coverage--an element also criticized by the Roundtable.

The proposal would allow companies to deduct only the cost of the lowest-priced plan available through their local health-purchasing cooperative.

Times staff writer Marlene Cimons contributed to this story.

Clinton Versus Cooper

A comparison of the health reform packages proposed by President Clinton and by Rep. Jim Cooper (D-Tenn.).

BASIC GOALS

* Clinton and Cooper: Both claim that their plans follow the theory of “managed competition”: They seek to give consumers more clout in the marketplace by banding them together in large purchasing groups, known as alliances.

COVERAGE

* Clinton: Plan would make coverage mandatory, primarily by requiring employers to provide health coverage for their workers. It advocates that the poor get help paying for their share of premiums.

* Cooper: Bill would make coverage voluntary through group-purchased plans. Like Clinton plan, it advocates that the poor get help paying for their share of premiums.

EMPLOYER’S ROLE

* Clinton: Plan would require that employers pay 80% of the average health care premiums for full-time workers and their families, and pro-rated shares for part-timers and their families.

* Cooper: No employer mandate.

BENEFITS

* Clinton: Plan spells out the health benefits to which every American would be entitled.

* Cooper: Benefits package would be put together by a commission, similar to the one that targeted military-base closures. Congress would be required to accept or reject the full benefits package.

COST CONTAINMENT

Both plans rely upon increasing competition in the health care market to put downward pressure on prices, but they add other features to hold down costs as well.

* Clinton: Plan includes limits on health care premiums--in essence, price controls. In the year 2004, it would also require that taxes be paid on employee health benefits more generous than those spelled out under the act.

* Cooper: Bill has no cost controls. It would limit the amount of health premium payments that employers may deduct for tax purposes.

Source: Times Washington Bureau