Key Senate Panel, in Blow to Clinton, OKs Its Health Bill : Legislation: Plan doesn’t ensure universal coverage, drops other contentious items contained in President’s version. Debate now shifts to floors of Congress.

The Senate Finance Committee on Saturday dealt a serious setback to President Clinton’s campaign to assure health coverage to everyone, approving a health care bill that falls short of that goal and rejects the most controversial elements of the Administration’s plan.

The Finance Committee was the last of five congressional committees to act on the health care issue, and its vote sets the stage for a debate on the floors of both houses that will consume the rest of the summer.

The committee’s version is widely regarded as the most important indicator of the shape of any eventual health care reform package. Its legislation is far more conservative--and more at variance with the Clinton plan--than those approved by the other committees.

Voting 12 to 8, the committee passed a bill to set a goal for coverage--95% of the population by the year 2002--but relies only on a combination of economic incentives, changes in insurance law and government subsidies to get there.

If voluntary efforts to expand the number of insured people missed the target, a commission would come up with a plan for making up the difference, and Congress would be compelled to accept, reject or modify it.

The bill had been shaped by a group within the committee consisting at various times of six to eight conservative Democrats and moderate Republicans. They had effectively seized control from Chairman Daniel Patrick Moynihan (D-N.Y.), whose ability and willingness to steer the Administration’s health care package through the panel had been in question.

The legislation “represents the type of health care reform that can pass this Congress and ultimately be signed into law by the President,” said Sen. John B. Breaux (D-La.), a leader of the bipartisan group. His comment swept aside Clinton’s vow to veto any bill that does not guarantee universal coverage.

Most of the President’s allies on the committee supported the legislation, but they did so after recognizing that their only other option was to send no bill to the Senate floor.

Clinton’s reaction reflected similar ambivalence. He lauded the panel’s action as “another step closer to final passage.”

But the President also noted: “I remain firmly committed to guaranteed health coverage for every American that can never be taken away. . . . I am confident that we will achieve the goal of guaranteed coverage for everyone this year, and I look forward to the debate in the full House and Senate.”

Two committees in the House and two in the Senate have passed health care bills, while one House committee has thrown in the towel.

Senate Majority Leader George J. Mitchell (D-Me.), a supporter of the President’s plan, hopes to recoup Saturday’s loss as he crafts a single piece of legislation from the Finance Committee version and one passed earlier by the Labor and Human Resources Committee. He insisted that the bill he produces for consideration by the full Senate “will have the central objectives--health insurance for all Americans, and cost containment.”

Suggesting that his best hope now may lie in “innovation,” Mitchell described the job before him as “an effort to meld the pending bills in a way that, first, makes sense for the country, and second, can gather sufficient political support.”

In early votes last week, the committee defeated even a watered-down version of Clinton’s proposal to require employers to pay 80% of their workers’ health benefits. That element had been the President’s chief means of achieving universal coverage and was also the most contentious item in his proposal.

Similarly, in dealing with the second most controversial issue--how to contain health care costs--the Finance Committee rejected caps on health insurance premiums, even in a weaker form proposed by Moynihan.

Instead, if health care costs rise more quickly under a reformed system than they would otherwise have done, the Finance Committee bill requires the government to make up the difference three ways: scaling back subsidies to help lower-income people buy health coverage, trimming tax breaks for the self-employed and raising the amounts that people in government-financed health care programs pay out-of-pocket.

But such measures would be so unpopular that many fear Congress would choose another unpleasant alternative: cut Medicare.

Sen. John D. (Jay) Rockefeller IV (Va.) noted that concern but suggested he was hemmed in by political reality. “I strongly oppose this, and I will vote for it, because it seems this is the only way we’re going to get to the floor,” he said.

The committee, foreshadowing what could be a bitter fight in the House and Senate, was also the first to significantly alter Clinton’s proposal that abortion be included in the bill’s basic package of benefits. It inserted a “conscience clause” allowing employers to offer plans that do not include abortion.

The chaotic race to pass the bill before Congress’ July 4 recess stood in marked contrast to the committee’s deliberations over the past few months, which proceeded at an excruciatingly slow pace.

At one point, amid a flurry of papers and the back-and-forth rush of Senate staffers to copy machines, Moynihan was asked the cost of a particular amendment, which was later defeated.

“I don’t believe we have the least idea,” he said.

The bill’s general approach is to make health insurance more affordable by pooling smaller purchasers--individuals and firms with few workers--into large, voluntary purchasing groups. It also would broaden tax breaks for individuals buying coverage and extend subsidies to people earning less than double the poverty level, which is now $14,764 in annual income for a family of four.

In addition, the legislation also would end widely condemned insurance-writing practices that have made it difficult for people with known illnesses to buy coverage and for people changing jobs to take their old policy with them while awaiting coverage under their new employer’s health plan.

It is unclear how far such measures would go toward providing coverage for the 15% of the population that is now uninsured.

Sen. John H. Chafee (R-R.I.), leader of the Finance Committee rump group that shaped the legislation, predicted that it would extend coverage to at least 20 million of the estimated 39 million Americans who now lack it.

However, that calculation assumes tens of billions of dollars a year would be available for subsidies to help buy insurance for people whose incomes are less than double the poverty level. The prospect of finding that money was called into question by a series of committee votes that added benefits, reduced the proposed cigarette tax, eliminated a 1% payroll tax on large firms and rejected an increase in the tax on handgun ammunition.

The handgun ammunition tax had been one of Moynihan’s most cherished provisions, and his committee’s 15-5 rejection of it marked an act of insubordination considered almost unthinkable under his recent predecessors as chairman.

To many on Capitol Hill, the vote underscored the degree to which Moynihan had lost control of the panel to the bipartisan group of committee members who called themselves the “Mainstream Coalition.”

Senate Minority Leader Bob Dole (R-Kan.) repeatedly expressed his disdain for the bloc by referring to it as “the midstream group,” and on one occasion, the “mid-crisis group.”

“I am disappointed with the outcome of the committee’s work, and doubt that the bill can pass in its present form,” Dole said in a statement released after the vote.

In another display of escalating political tension over health care, Dole and Clinton exchanged testy remarks Saturday over a health care proposal released by Dole last week, which is similar to the Finance Committee bill in many ways. The Dole plan claims no new taxes and rejects the idea of providing a single package of benefits.

The Dole bill could play a significant role in the Senate debate because it has 39 GOP co-sponsors, just two short of the number needed to launch a filibuster.

In his Saturday radio address, Clinton condemned the Dole bill as “politics as usual.”

“It requires no contribution from the interest groups that are making a great deal of money out of the health care system now, and no contribution from those who are not paying anything now into the system,” the President said.

Dole countered: “The President seems more concerned about politics than he is about finding a true bipartisan solution to health care reform.”

Another Prescription for Reform

Major features of the health care bill approved by the Senate Finance Committee:

COVERAGE

* No employer or individual would be forced to buy insurance although universal coverage is a national goal.

* If insurance reforms, subsidies and other measures fail to cover 95% of Americans by 2002, a national health commission would recommend action. Congress would have to consider its recommendations.

* A six-month limit on pre-existing condition exclusions. No exclusion if a person had been insured recently by another health plan.

* A one-time amnesty for people with pre-existing medical conditions to sign up for private insurance without any restrictions.

* Guaranteed coverage regardless of illness or change of jobs.

* Annual open enrollment periods for health plans.

* Community rating of insurance for individuals and those working for companies with fewer than 100 employees.

* Insurers could adjust premiums only by the rate in each community (250,000 people and larger), by family size and by age. Older workers could be charged up to twice younger workers’ rates.

* Companies with 100 or more workers could self-insure.

* All private plans in the Federal Employees Health Benefits Program would have to offer coverage to anyone in their local market area, at local community rates, not federal workers’ rates.

* The elderly would not get prescription drug coverage unless they joined or stayed in a health maintenance organization.

SUBSIDIES

* Subsidies starting in 1997 to help the poor buy private insurance, including those now on Medicaid.

* A 100% tax deduction for the self-employed and workers who pay their own premiums.

* But a pay-as-you-go mechanism would automatically curb the subsidies and tax breaks if they threatened to drive up the deficit.

BENEFITS

* Health plans would offer a standard benefit package comparable to a Blue Cross-Blue Shield standard family plan now available to federal workers, covering a broad range of services from hospital stays to prescription drugs.

* Consumers would get a choice between at least two standard plans, one with higher cost-sharing and/or fewer covered services.

* A catastrophic plan--paying only bills that exceed $5,000 per individual and $10,000 per family--would be available.

* Standard plans would include abortion, but any employer or health plan could refuse to buy or offer abortion coverage.

FINANCING

* Cigarette taxes would be raised by $1 a pack in 1995.

* A new tax on high-cost plans to raise $17 billion over 10 years. The most costly 40% of plans would pay a 25% tax on the difference between their premiums and the average premium in their area.

* A 1.75% tax on health insurance premiums and self-insured plans to help fund academic health centers and graduate medical education.

* Higher Medicare premiums for upper-income retirees (over $90,000 single, $115,000 couples).

* Make Medicare beneficiaries pay 20% co-payments for clinical laboratory services.

* Lower future Medicare increases in payments to physicians and hospitals.

* Repeal the tax break for so-called cafeteria plans that allow workers to avoid paying income taxes on premiums deducted from their wages.

Source: Associated Press