Administration Is Reassessing Its Health Plan Strategy : Reform: Business group’s rejection calls for new tactics. Officials seek to win support from labor, advocates for elderly and congressional allies.

Stung by business rejection of their health proposal, Clinton Administration officials reassessed their strategy Thursday, hoping to regroup with support from labor, advocates for the elderly and their allies in Congress.

Throughout the health care debate, the President and his allies have been tugged between opposing strategies--either accommodating business in the hopes of gaining their support or building a coalition strong enough to force business to accommodate them.

Clinton, who worked with business leaders while governor of Arkansas, has often advocated the former path, hoping that if he worked with business leaders on issues of concern to them--such as last year’s debate over the North American Free Trade Agreement--they would work with him on such issues as health care.

Several top aides, including Chief of Staff Thomas (Mack) McLarty and Robert E. Rubin, chairman of the National Economic Council, have advocated that approach.

But in the wake of the rejection of his health plan by the Business Roundtable--an organization of the nation’s largest corporations--in favor of a competing, more conservative plan offered by Rep. Jim Cooper (D-Tenn.), officials admitted that their wooing of business so far has achieved relatively little. And they seemed to be preparing for a tack to the left.

Publicly, Clinton and his senior aides insisted that nothing has changed.

“I wouldn’t read too much into it. This is the beginning of what will be a protracted legislative discussion,” Clinton said, referring to the Business Roundtable vote and a separate statement Thursday by the Chamber of Commerce opposing Clinton’s plan.

“We’re going to work with everybody,” said Clinton’s senior adviser George Stephanopoulos. “This is just legislative jockeying,” he said.

But Stephanopoulos conceded that Clinton and his aides are “disappointed” that the Roundtable, many of whose members Clinton had courted last year during the long debate over NAFTA, had turned against the White House on health care.

Some of Clinton’s allies were far more blunt.

“There’s a special place in hell waiting for Bob Winters,” said Sen. John D. (Jay) Rockefeller IV (D-W. Va.), referring to the chief executive of Prudential Insurance Co., who drafted the business group’s resolution attacking Clinton’s plan.

Rockefeller has been one of Clinton’s chief allies in the health care battle and has sought to work with Prudential and other large insurance companies.

“The sadness,” said another senior official, “is that we really think health reform is in the interest of business, particularly the big businesses, most of whom provide health insurance for their workers. But it appears their reaction was more ideological than pragmatic.”

Other Democrats, including some within the White House, insisted that Clinton and his aides should have expected that sort of response and that the idea of gaining support from groups like the Roundtable was fundamentally flawed to begin with.

“It was a tactical error,” one aide said.

“It was an amazing idea to ever think they’d get the Business Roundtable to endorse their bill,” said Rep. Henry A. Waxman (D-Los Angeles), who is one of the key legislators on health issues. “These organizations are the mainstay of the Republican constituency.”

Some business leaders and conservative legislators suggested after the Roundtable’s vote that the White House should begin negotiations with Cooper and with moderate Republicans to forge a compromise bill. But Administration officials rejected that notion.

Instead, Clinton aides appear to be pinning considerable hopes on the ability of liberal Democrats in the House to defeat Cooper’s plan, allowing the Administration to negotiate later from a position of greater strength.

They noted that no congressional votes on the issue are expected for at least a month.

Others suggested that as attention increasingly focuses on Cooper’s plan, support for it will wane. “Cooper is the flavor of the month,” said an Administration official, “put it under the hot lights for a few weeks and watch it melt.”

Several Administration aides and advisers separately pointed to the battle over health reform in Washington state in 1992 as a model of what may be ahead. “They passed it without any business support,” one aide said.

Liberal Democrats, many of whom have long feared that Clinton was going too far to accommodate moderates, already have begun aiming their fire at Cooper’s proposal.

Cooper’s bill “cannot pass. It does not have the votes in my committee and will not have the votes in the House,” Waxman flatly predicted.

Among other problems, Waxman noted, a central feature of Cooper’s plan is to remove the tax deductibility of most health plans that companies give their workers, thus driving up the costs of health insurance for the great majority of Americans.

Cooper argues that step would give people incentive to choose cheaper health plans but such proposals have seldom been attractive in Congress.

Administration officials did their part Thursday to reduce support for Cooper’s plan. Bruce C. Vladeck, a senior official of the Health and Human Services Department, for example, spoke to the American Assn. of Retired Persons and warned that efforts in Congress to water down Clinton’s proposal would endanger prospects for government-provided long-term care and drug benefits.

Cooper, for his part, wooed the same group, suggesting that he might sweeten his plan by adding some sort of long-term care package.