Budget Office Is Wary About Health ‘Alliances’ : Reform: The co-ops and the supervisory National Health Board are seen as facing nearly impossible tasks. The CBO study can find no guarantees.

All but lost in last week’s furor over the Congressional Budget Office’s analysis of President Clinton’s health care proposal was the most significant and troubling subtext of the study: No one can guarantee that the plan will actually work.

Clinton would create a variety of entities whose tasks, according to the CBO, would verge on the impossible. Chief among them are gigantic regional “alliances,” responsible for buying health care for most Americans, and a National Health Board to supervise the new system.

“New institutions will be required, and new responsibilities will be imposed on existing institutions,” the CBO report said. “Their abilities to perform will be in doubt.”

The CBO’s assessment is particularly important because of the credibility that the office has developed in nearly 20 years of analyzing the costs and benefits of government programs. Members of Congress who are looking for reasons to oppose Clinton’s approach to curbing health care costs and providing insurance for all Americans will find plenty of ammunition in the report.

The report made headlines for its determination that the Clinton plan is, in effect, a governmental takeover of health coverage and that it would cost billions of dollars more than the Administration has estimated.

But that is not all the 92-page report said.

“The central thing to know about this report is that it is the absolutely best-case scenario for a completely untested enterprise to be tried by people who have never gotten anything right,” said Lawrence O’Donnell, the Democratic chief of staff for the Senate Finance Committee, which has primary jurisdiction over the bill in the Senate.

For the system to work, according to the study, the new institutions created by Clinton’s plan would have to perform better than virtually any other public-sector agency ever has--and right from the start.

Cases in point are the alliances, the cooperative purchasing groups through which more than 70% of all Americans would be required to get their health insurance.

The basic idea is that by banding consumers together into large groups, the alliances can spread the health risks that have often made it impossible for individuals and small businesses to obtain coverage, as well as give them greater economic clout in the market for health coverage.

Yet in practice, the CBO report said, these alliances would have to combine the jobs of purchasing agents, contract negotiators, welfare agencies, financial intermediaries and premium collectors. They would have to keep track of who is moving in and out of their areas, which plans are signing up the sickest people, who is eligible for subsidies and a host of other constantly shifting conditions.

On top of that, they would also have to figure out how to live within the premium caps that would be dictated to them by the proposed National Health Board.

“Any one of these functions could be a major undertaking for an existing agency with some experience, let alone for a new agency that would have to perform them all,” the CBO report said. “Some regional alliances might succeed very well; others might be overwhelmed by these tasks, especially in their early years of operation.”

Some opponents of the Clinton plan have seized upon the whole idea of alliances as unworkable--and possibly a greater liability than the plan’s requirement that all employers provide coverage for their workers.

“I don’t see employer mandates as insurmountable problems. I’m not for them, but I don’t think they destroy the economy. I think health cooperatives do destroy the health care market,” said Sen. Phil Gramm (R-Tex.).

Even Clinton’s supporters say they are not wedded to the alliances. “We’re continuing to evaluate that. I’m not committed to the belief that that’s the only way to go, or even the best way to go,” said Rep. Henry A. Waxman (D-Los Angeles), chairman of the House Energy and Commerce subcommittee on health.

A different set of problems could confront the National Health Board, which would be charged with determining how much each alliance could spend on health care. To do that, it would need accurate and detailed information on health care costs, as well as how they should be adjusted for demographics and other factors.

The CBO report casts doubt, however, on whether the information that the proposed board would need to do its job would even be available.

“We don’t even have the data on the state level, let alone the sub-state level,” said Rep. Bill Thomas (R-Bakersfield), the ranking Republican on the House Ways and Means health subcommittee and a critic of the Clinton plan.

Even worse, some analysts have said, are the political problems that the board would face. What if, for instance, the board decided that people in Tuscaloosa, Ala., should be limited to paying no more than $3,000 a year in premiums, while those in Boston could spend $6,000?

If the people in Tuscaloosa and other low-premium areas perceive that their health choices are more limited or the quality of their care is lower as a result, the pressure to overrule the board might prove irresistible, some analysts said.

The basic goal of the CBO report was to produce a set of reliable numbers.

O’Donnell’s boss, Sen. Daniel Patrick Moynihan (D-N.Y.), has several times bluntly expressed doubts about the Administration’s economic projections. In a nationally televised interview several months ago, he flatly declared them “a fantasy.”

But the clear message of the CBO report was that any forecast--even its own--is highly suspect.

This is particularly true when looking far into the future. “Unfortunately, the uncertainty surrounding cost estimates increases significantly in the out years,” the report said.

What is most important, Waxman insisted, is the CBO’s assertion that Clinton’s basic goal of health care coverage for all Americans is achievable.

“I can’t deny the fact that when you deal with significant changes in a major part of the economy, there’s no absolute certainty,” he said. “We do know what we’re experiencing now with the present health care system, and I can’t see anybody defending that system.”