Payroll Tax for Health Plan a Possibility : Reform: Rostenkowski admits inclusion of such a levy would be difficult. He expects $1.25 cigarette tax will be cut back.

TIMES STAFF WRITER

Rep. Dan Rostenkowski (D-Ill.), chairman of the House Ways and Means Committee, offered more clues Saturday to the direction of health care reform legislation, saying a payroll tax might be needed to pay for the reforms while a proposed $1.25-per-pack cigarette tax almost surely will be scaled back.

Rostenkowski acknowledged that the payroll tax, considered and then abandoned by a Ways and Means subcommittee, would be highly controversial and difficult to pass.

"If there's going to be a need for (a payroll tax) and if I can get the votes for it--that's the big question--I could see a payroll tax. But there is a lot of apprehension about that," he said in a TV interview.

Rostenkowski also said that while he hopes his committee will design a health care bill that closely follows President Clinton's recommendations, he will insist only on universal coverage and cost containment as essential elements.

Noting that the President will have to rely almost entirely on Democrats in the House to get a health care reform bill approved, Rostenkowski said his chief aim will be to devise legislation to attract the needed 218 votes in the House. His committee is scheduled to begin work on health care reform next month.

While the Ways and Means Committee is only one of four panels drafting health care legislation, it has jurisdiction over taxes, Medicare and other key elements in the health care reform effort. Eventually, all the bills will have to be reconciled, but financing clearly will be crucial in determining the shape of the final bill put before Congress.

The powerful Ways and Means chairman, widely recognized as a master at the art of crafting legislation, has long been able to achieve a consensus among Democrats on his panel through close consultation and compromise--in return for unwavering support for the bill that finally emerges.

His remarks on health care legislation, made during an interview on CNN's "Evans & Novak" program, indicated that he will pursue the same strategy this time.

Within his committee, he said, he will take whatever course will gain the support of the Democratic members of the panel. He expressed doubt that Republicans would vote for any tax increase for health care.

Rep. Pete Stark (D-Hayward), chairman of the Ways and Means Committee's health subcommittee, dropped a proposal for a payroll tax from a health care bill when it became apparent it would not get enough Democratic support for passage by his panel.

"It remains to be seen" if such a plan could be revived in the full committee, Rostenkowski said. "It's going to be tough."

The Stark-backed bill, forwarded to the Ways and Means Committee on a 6-5 vote, embraced Clinton's proposal that every employer be required to contribute up to 80% of the cost of workers' health coverage.

"I'm going to try and retain as much of that as I possibly can," Rostenkowski said, but he added that it is uncertain whether even this fundamental part of the White House proposal could be saved.

Although it has long been clear that the President's proposal has virtually no chance of being passed in its entirety, Rostenkowski said that he is going to use it as a starting point.

"I think it's a good proposal," he said. "Now, you know, what I think is a good proposal isn't necessarily going to get enough people in my committee to agree with me."

Clinton's plan to deliver health care through government-organized purchasing cooperatives, called regional alliances, was rejected by Stark's subcommittee.

Rostenkowski indicated he might support the President's proposal for a 75-cents-a-pack increase in cigarette taxes over the present levy of 24 cents. But he cast some doubt on whether a proposed $1.25-a-pack increase, approved by Stark's subcommittee, would survive in the full committee.

"If I can secure revenues elsewhere . . . I'm trying to do that," he said.

Rostenkowski, who recently won renomination in a hard-fought primary election, said the President should expect substantial congressional changes in his original plan.

"If Bill Clinton, who I admire greatly, is going to (heed) the advice of Danny Rostenkowski, he's going to claim victory with whatever comes to the White House."

The President on Saturday advocated congressional action on his health care plan during his weekly radio address, which was delivered from a children's hospital in Dallas.

"I think we can do better simply by building on what works in the current system: using the workplace to guarantee private insurance for every American," Clinton said. "It is the foundation of our plan."

Referring to the Stark bill, Clinton said: "In spite of all the special interests and TV ads, the committee made an important statement. After 60 years of gridlock, the American people are being heard. They want us to take care of their important business, like health care reform, and now we're beginning to do that."

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