NEWS ANALYSIS : Key Facets of Clinton’s Health Plan Still Intact : Medicine: Despite dire assessments, the White House sees developments so far as reasons to remain optimistic.

Weeks after independent-minded members of Congress began crafting their own health care reform plans, the key structural elements of President Clinton’s agenda remain very much alive--confounding critics who months ago pronounced them dead on arrival.

With growing confidence, the White House is counting on mandatory work-based health insurance, cost controls and the creation of insurance-purchasing alliances to become the foundations of a revamped health care system.

“As people try to pull our plan apart, they’ll see that you can’t achieve the goals that so many of us agree on--lifetime universal coverage with comprehensive benefits--without doing what the President has proposed,” one presidential adviser said.

The White House is leaving plenty of room for compromise. But rather than jettison any of the major elements, it is becoming clear that the President is willing to let Congress scale back, stretch out and even drastically alter the employer mandate, the cap on insurance premiums and the nature of the alliances.

There is also a distinct possibility that Clinton ultimately will agree to delay universal coverage beyond his stated goal of 1998 and to defer certain elements of a standard benefits package, especially coverage for mental health and long-term care.

Although Administration officials are loath to discuss areas of compromise publicly, they privately refer to such potential compromises as “transitional” instead of “structural”--a telling distinction underscoring that Clinton remains committed to the goal of universal coverage even if his proposed means are modified.

That view was validated recently as two House panels developed their own proposals and both contained the major principles in Clinton’s plan.

The legislative process, of course, is never entirely predictable, and that is all the more true in the attempted restructuring of one-seventh of the U.S. economy. As the President noted during a March 24 press conference: “There will be lots of twists and turns in the legislative process. . . .”

And with the bulk of the work still ahead, there is plenty of time for Clinton’s plan to come unglued. “I appreciate their desperation for hanging on. Otherwise, their plan truly falls apart,” said critic Gail Wilensky, a top health care adviser in the George Bush Administration.

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Still, for all the pronouncements by Republicans and even some Democrats that Clinton’s plan is dead, the key elements of his 1,342-page Health Security Act continue to dominate the public dialogue and set the congressional agenda.

Moreover, many of the President’s other proposals--a cigarette tax hike, administrative streamlining, abolition of discriminatory insurance practices, prescription drug coverage--are so widely embraced that they are barely even debated.

The centerpiece of Clinton’s overhaul agenda calls for employers to pay at least 80% of workers’ premiums, with employees paying the rest. No big firm would have to pay more than 7.9% of its payroll. Small companies with low-wage earners would receive subsidies while having their premium payments capped at 3.5% of payroll.

The President’s plan would also force companies with fewer than 5,000 workers to join the regional insurance-buying alliances, which pool consumers to enhance their purchasing power. The alliances would select from provider groups a variety of insurance plans from which consumers could choose annually.

To ensure that his experiment with “managed competition” slows the rate of growth in health care spending, Clinton would limit the amount that insurance premiums may grow. This may prove to be the most intractable element in Clinton’s agenda, for many members of Congress appear to be unalterably opposed to any price controls--just as the White House devoutly believes that controls are essential.

“That’s a tough one,” one senior Administration analyst said. “You need to control costs, or else providing universal coverage would be unaffordable. And we are unwilling to stake things on market forces.”

Still, there may be room for compromise--perhaps by setting “targets” rather than absolute caps.

On the employer mandate, there seems to be more leeway for compromise.

To lessen the burden to businesses, the President may well agree to reduce the employer requirement to, say, 70% of premiums instead of 80%--and perhaps even delay its implementation, especially as applied to small businesses.

But the lower the share paid by the employer, the greater the number of individuals who will need federal subsidies, warned Paul Starr, a Princeton University analyst who helped the Administration develop its proposals last year.

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Despite considerable business resistance to the mandate, Administration officials insist that no other politically feasible alternatives exist.

“While no one likes the idea of added employer responsibility, no one can come up with a better way of achieving the goal of universal coverage,” House Ways and Means Committee Chairman Dan Rostenkowski (D-Ill.) said recently.

“People have got to understand the trade-offs, and that’s just beginning to happen,” said John Rother, director of legislation, research and policy for the American Assn. of Retired Persons. “If you’re not going to have the employer mandate, then taxes have to be a lot higher.”

Clinton chose the mandate because it builds on the current system, in which most Americans get their insurance through the workplace. Moreover, an employer mandate would cover 80% of the 38 million uninsured who are already jobholders or dependents of jobholders.

On the health care alliances, the President has all but declared his willingness to allow them to become voluntary rather than mandatory cooperatives and to invest in them far fewer regulatory functions--which “can probably be done some other place,” as he told California Medical Assn. leaders during a satellite teleconference last month. Clinton also may agree to allow for competing alliances in the same regions.

“I think it’ll all be debated in Congress and I’m certainly flexible on it,” the President said, implying, nevertheless, that some alliance structure may be needed.

“Without alliances, there’s not a sufficient pooling mechanism to group people into large risk pools,” Rother said. “These things are not there just to look good. They are actually there to solve problems.”

Given the President’s bottom-line goal of universal coverage, the broad rationale of his complex proposal is beginning to dawn on members of Congress.

After divisive wrangling, the House Ways and Means health subcommittee produced a bill that contains an employer mandate and tough cost controls.

The bill would require all employers with more than 100 workers to provide insurance by Jan. 1, 1996. Firms with fewer than 100 employees would get a two-year grace period. The bill would also impose federal cost controls on the fees of private doctors, hospitals and insurance companies. And it contains a $1.25-per-pack increase in the federal cigarette tax, 50 cents more than Clinton’s proposal.

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A separate proposal, crafted by House Energy and Commerce Chairman John D. Dingell (D-Mich.), also would retain the employer mandate. It too eases the burden on small business by exempting firms with 10 or fewer workers. The plan also would scale back the minimum benefits package and make participation in alliances voluntary.

“The plan’s not bad, is it? Things are really getting interesting,” a top Clinton adviser said.

An Administration health analyst said: “I wouldn’t say it’s 80% of the President’s plan, but it’s close.”

Meanwhile, some moderate Democrats on the Ways and Means Committee are circulating a proposal that would give firms with fewer than 100 employees a chance to phase in the employer mandate over four years, starting with a 50% contribution and reaching 80% only by the fourth year.

Such transitional compromises may well win the support of small-business owners, as several of them said in testimony before the Senate Finance Committee last month.

With such encouraging words from the most implacable opponents of Clinton’s agenda to date, no wonder Clinton and his health care team are so upbeat. That became apparent on a recent spring afternoon as the President, First Lady Hillary Rodham Clinton, Vice President Al Gore and his wife, Tipper, spoke at a health care pep rally on the White House South Lawn.

Clinton clapped his hands in delight when Sister Bernice Coreil, a St. Louis hospital administrator, told him not to be discouraged by exaggerated reports of his plan’s demise.

“D.E.A.D.,” she said, “stands for ‘Don’t Expect A Defeat.’ ”