Health Reform May Reflect Bush Approach

TIMES STAFF WRITERS

Call it the George Herbert Walker Clinton Health Care Act.

In what may turn out to be the ultimate irony of Bill Clinton's presidency, it appears that any health care legislation that emerges from a yearlong battle on Capitol Hill will look more like George Bush's vision of reform than Clinton's.

Although Democratic leaders in the House and Senate may succeed in their struggle to reverse the political tide, momentum now appears to be building toward a consensus that would drastically scale back the role of government initially proposed by Clinton.

Instead of government, the still-evolving legislation appears likely to rely primarily on private businesses to bring health care costs under control. It probably will fall considerably short of Clinton's goal of making sure that all Americans who are now uninsured would be able to obtain coverage. And it would do little or nothing to distribute the health care burden more equitably by requiring employers to take part and by reducing rampant cost-shifting between different groups of patients and providers.

This more modest approach, which puts most of its faith in reforming the insurance market and giving government subsidies to those who cannot afford coverage, has a familiar ring.

"There's no question we are heading back to the Bush health plan. Absolutely," said Richard I. Smith, the top health care analyst at the Assn. of Private Pension and Welfare Plans, a consortium of large employers.

"Now that we've been starkly confronted with a dramatically different vision that arguably goes much too far, the clear trade-offs are apparent and the more modest approach looks better," he added.

Two House and two Senate panels have approved their own versions of health care reform. Although the bills still must clear the House and Senate floors, some outlines of what could be the ultimate legislation are coming into focus.

Already gone are Clinton's huge, government-organized "alliances" through which most Americans would have bought their health coverage. Instead, the congressional committees have opted for voluntary cooperatives--similar to the concept pioneered in California--through which small businesses and individuals could pool their purchasing power.

It is also fairly clear that government will not have as much power over health care costs as Clinton had proposed. Most of the committees weakened his provision to impose caps on increases in health insurance premiums, and there will be intense pressure on the floors of the House and Senate to water them down further or discard them entirely.

The most important question that remains is whether Clinton can hold to his goal of guaranteeing coverage for every American. House and Senate leaders insist that they will present legislation that does that, but no one has come up with a politically acceptable means of paying the bill.

Leon E. Panetta, the newly appointed White House chief of staff, reiterated Sunday that Clinton will fight for universal coverage in some form, which he said must be financed by a so-called employer mandate.

"What's alive is universal coverage, and to get to universal coverage you have to have some kind of mandate . . . ," Panetta said on CBS-TV's "Face the Nation."

Clinton would require employers to pay 80% of their workers' health premiums. Most outside analysts say they believe that Congress is likely to follow the lead of the Senate Finance Committee, which abandoned the employer mandate in the face of enormous opposition from the business community.

Instead, the committee voted in favor of a package of incentives and reforms that its sponsors predict will lead to the coverage of roughly 20 million of the more than 37 million Americans who now lack health insurance. Critics, however, say that projection is far too optimistic.

The winners in this monumental battle are likely to be employers--which is not a bad thing in the view of Paul Ellwood, a guru of the "managed competition" theory to which most in the health care debate now say they subscribe.

"I think the employers have been the most powerful influence in shaping whatever positive directions the health system is taking," Ellwood said. Corporations have been at the forefront in embracing such cost-saving approaches as managed care and are increasingly hard-nosed in bargaining down rates that hospitals and insurers can charge.

As a result, health care costs are moderating even without a government overhaul of the system.

Yet those benefits would largely miss the working poor and the middle-class uninsured, which means most of those who now lack coverage.

If anything, "the consequences of being without health insurance are becoming more extreme," as hospitals find it more difficult to shift the costs of providing charity care to those who pay, said Bill Custer, research director of the Employee Benefit Research Institute, a nonprofit public-policy research organization.

But, Custer added, "there's a fairly straightforward way to solve the problem of coverage, and that's just to throw money at it."

Under the approach now taking shape on Capitol Hill, the government would try a different strategy. It would give money or vouchers to those unable to afford health coverage--a variation on Bush's plan to provide $3,750 in tax credits to low-income families and the same amount in tax deductions for middle-income families.

However promising the idea may sound, it is far from clear that there will be enough money to do it. By most estimates, any meaningful subsidy program would cost tens of billions of dollars a year; none of the congressional committees has come up with a politically popular way of raising the money.

What's more, a so-called fail-safe provision in the Senate Finance Committee bill would actually reduce the subsidies if overall health care spending rose faster under a revised health system than it would otherwise have increased under the current setup.

"There's no guarantee that the subsidies are going to be there. If costs get out of line, the subsidies are the first thing to get cut back," said Gail Shearer, manager of policy analysis for Consumers Union.

Further, the approach that is being shaped in Congress would change the problem of cost-shifting, but it would not end it, analysts said. People who now do not have coverage generally get health care when they most desperately need it. Hospitals and doctors then add the costs to the bills of their paying customers.

The same is true with the federal health insurance programs, Medicare and Medicaid, which do not compensate health providers fully. Some of the true costs of those programs also are being borne by private insurance customers.

The key proposals before Congress, including Clinton's, look to cuts in Medicare for some of the savings they need to fund other areas of the health care reform effort. "That could actually exaggerate the cost shifts to the private sector," Ellwood said.

Furthermore, Custer said, as corporations and health maintenance organizations strike tougher bargains with private hospitals, fewer of them will be willing to provide uncompensated care. That means the uninsured will increasingly find their way to public hospitals, putting a greater demand on local property taxes.

Yet if the bill that ultimately emerges from Congress seems modest in relation to the grand proposal unveiled last fall by the President, analysts insist that it should nonetheless be regarded as no small feat.

As Drew Altman, president of the Menlo Park, Calif.-based Kaiser Family Foundation, put it: "We are in a position where even the most conservative proposal, while far short of comprehensive reform and rapid universal coverage, would still in itself be the most significant piece of federal health legislation since Medicare and Medicaid."

Times staff writer Robert L. Jackson contributed to this story.

Health Care Progess Report

Here are the five main plans facing Congress. They are now in the hands of Senate and House leaders, who will blend the plans and send separate proposals to their respective floors.

SOURCE: Senate Finance Committee

WHO PAYS: No initial requirement that employers or individuals buy insurance. Subsidies for low-wage workers to help them get coverage.

WHO'S COVERED: Voluntary participation. No guarantee of universal coverage.

BENEFITS: Standard benefit package including hospitalization, preventive care and mental illness.

FINANCING: Tax hike on cigarettes and a new tax on high-cost health plans.

STATUS: Committee approved 12-8 on July 2.

*

SOURCE: House Way & Means Committee

WHO PAYS: Employers pay 80% of coverage cost; employees pay 20%. Government subsidies for smaller firms and low-wage employees.

WHO'S COVERED: Everyone except illegal immigrants and prisoners. A new federal program would cover Medicaid recipients.

BENEFITS: Comprehensive package with full payment for hospital service, prenatal care, infant care. Includes abortions.

FINANCING: Employers and workers pay most costs. 45-cent cigarette tax increase.

STATUS: Committee approved 20-8 on June 30.

*

SOURCE: Senate Labor and Human Resources Committee

WHO PAYS: Employers pay 80% of coverage cost; employees pay 20%. Businesses with fewer than 75 employees exempt from mandate but subject to payroll taxes ranging from 1% to 12%.

WHO'S COVERED: All legal residents.

BENEFITS: More generous package than most plans. Contains fallback system to trim benefits if costs exceed estimates.

FINANCING: $1.25 increase in cigarette tax.

STATUS: Committee approved 11-6 on June 9.

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SOURCE: House Education and Labor Committee

WHO PAYS: Employers pay 80%; employees 20%. Subsidies for smaller firms and low-wage workers. Larger companies would insure own work force.

WHO'S COVERED: All legal residents.

BENEFITS: The most generous package. Includes expanded mental health coverage, dental treatment for adults.

FINANCING: None specified except employer employee contributions.

STATUS: Committee approved 26-17 on June 23.

*

SOURCE: Senate GOP

WHO PAYS: No requirement for employers or individuals to buy insurance. Phased-in subsidies available to those without employer coverage.

WHO'S COVERED: Voluntary. No guarantee of universal coverage. Reforms to make coverage more accessible.

BENEFITS: No standard benefit package, except for the poor.

FINANCING: No new taxes. Costs offset with future savings from Medicare and Medicaid.

STATUS: Introduced recently. Not taken up in committee.

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