Dingell Health Plan Exempts Small Firms

House Energy and Commerce Committee Chairman John D. Dingell (D-Mich.), struggling to find a health care reform bill that can pass his committee and ultimately the House, is circulating a plan that would exempt firms with 10 or fewer workers from President Clinton’s proposed requirement that they provide health insurance for their workers.

Dingell’s proposal, described by his staff in an eight-page draft that was obtained by The Times, would also scale back the minimum benefits package of the Clinton plan and discard the Administration’s requirement that most Americans join government-organized purchasing cooperatives.

It would meet Clinton’s goal of universal coverage by requiring workers in smaller firms to purchase their own health coverage if their employers did not. Government subsidies would be available to low-income people who could not afford their own insurance.

The plan is significant because the committee, with its heavy concentration of moderate to conservative Democrats, has been considered the most difficult proving ground for health reform in the House.

Among the three House committees with jurisdiction over the health issue, Energy and Commerce is also considered the most accurate gauge of overall House sentiment. The bill it approves is likely to carry the most weight when House Democratic leaders eventually attempt to meld the three committees’ bills into one.

Over the last few weeks, Dingell and his health subcommittee chairman, Henry A. Waxman (D-Los Angeles), have been consulting intensively with the Democrats who have raised the strongest objections to the Clinton plan. They want to begin voting on a proposal shortly after Easter.

“We’re hoping that this will produce the breakthrough that we need,” Waxman said.

Dingell and Waxman discussed the staff draft Monday with a number of committee members whose votes are considered crucial. Many committee members have complained that the Administration proposal is too costly and bureaucratic and puts an excessive financial burden on small business.

Initial reaction appeared to have been favorable.

“It’s a very positive step forward,” said Rep. Philip R. Sharp (D-Ind.), one of the committee members who met with Dingell. “Things are starting to pull together and really move. It represents a very strong starting point for the committee.”

Added Rep. Lynn Schenk (D-San Diego), another committee member: “It looks like it is beginning to address my concerns about small business.”

White House spokeswoman Lorrie McHugh said that the Administration is encouraged by the signs of progress but declined to comment on the specifics of the draft proposal. “The ball is in their court,” she said.

Where Clinton’s plan would require all businesses to pay up to 80% of the costs of their employees’ health insurance, Dingell’s approach would exempt firms with 10 or fewer workers. Those that chose not to provide benefits instead would pay a payroll tax--1% for companies with up to five employees, 2% for those with six to ten.

The committee staff estimated that under its proposal more than 75% of all businesses would be exempt from having to pay the employer share. Businesses generally would pay a lower percentage of health costs than under the Clinton plan, the staff added.

Committee staff members claimed that the draft proposal, unlike Clinton’s, would not add to the deficit. They trimmed costs primarily by requiring consumers to pay a greater share of their health bills through higher deductibles and co-payments. The bill would also provide catastrophic coverage only after a consumer’s health bill reached $2,500, which is $1,000 higher than the limit in the Clinton plan.

Like Clinton’s proposal, the draft contains controls on health costs but gives the states more power to administer them.

States also would organize purchasing cooperatives, similar to one that already exists in California, in an effort to give smaller health care purchasers more clout in the marketplace. However, no one would be forced to buy their insurance coverage from the so-called “alliances.” By comparison, the Clinton plan would give firms with fewer than 5,000 employees no other option.

Separately, the House Ways and Means health subcommittee, which has been considering its health care package for more than two weeks, narrowly adopted a controversial measure limiting to $350,000 the amount of awards for medical malpractice for non-economic damages.

The 6-5 vote, with two Democrats joining the committee’s four Republicans, foreshadows a titanic battle in Congress, pitting doctors and trial lawyers against each other.

The monetary cap on damages for pain and suffering is one for which the American Medical Assn. has been campaigning--and a chief reason that the nation’s largest physicians’ organization has refrained from backing President Clinton’s reform agenda.

Consumer groups were outraged by the subcommittee vote. “This is a black day for consumers,” said Gail Shearer of Consumers Union. “This is a serious blow to the most severely injured victims of doctor negligence.”

The subcommittee, chaired by Rep. Pete Stark (D-Oakland), is expected to finish drafting an alternative to the President’s prescription for reform this week, possibly as early as today.

In another vote, the panel supported a plan proposed by Clinton to encourage medical schools and teaching hospitals to produce and train more primary care doctors and fewer specialists. The panel also defeated a Republican proposal to phase in subsidies for the working poor more slowly.

Stark argued against the cap on non-economic damages, saying that such a limit would “shield” incompetent physicians while deterring attorneys from taking up cases that might otherwise be too costly to try.

The cap was proposed by Rep. Nancy L. Johnson (R-Conn.) and approved by the committee after a majority rejected many other provisions in her amendment, including the abolition of punitive damages against the maker of a medical product or device that has been approved by the Food and Drug Administration.

Initially, Johnson had sought a cap of $250,000 for non-economic damages, a limit that is already in place in California. Clinton’s plan does not limit damages.

Meanwhile, in Leesburg, Va., Senate Finance Committee members completed a two-day retreat on health care, having made no apparent progress toward an agreement but expressing a desire to produce a bill that could win support from both parties in the Senate.

In Hartford, Conn., a leading opponent of President Clinton’s health care plan, Rep. Jim Cooper (D-Tenn.), collected thousands of dollars in contributions from insurance industry executives at a fund-raiser Monday while protesters outside chanted, “Shame, shame, shame.”

Cooper, who is running for the Senate in Tennessee, is author of a proposal that the health and insurance industry like far better than the Clinton plan.

Times staff writer Sara Fritz in Hartford, Conn., contributed to this story.