House Democrats Unveil Universal Health Measure : Reform: Gephardt stresses that bill is distinct from Clinton plan. It faces a brutal fight, uncertain future.

House Democratic leaders on Friday unveiled their formula for national health care reform, introducing legislation that satisfies President Clinton’s demand for universal coverage and calls on employers to pay up to 80% of their workers’ health premiums.

The House leadership described the battle that lies ahead in historic terms, comparing it to the monumental legislative struggles to enact Social Security and Medicare.

But they also took great pains to distinguish their initiative from “the Clinton bill,” because they are aware that anything carrying that label is drawing stiff opposition across the nation.

“As far as I’m concerned, the bill we are presenting today is a brand-new bill,” said Majority Leader Richard A. Gephardt (D-Mo.), the chief architect of the leadership measure.

Clinton also underscored the differences, saying that House leaders “chose a pragmatic and more moderate path.”

Republicans quickly ridiculed that representation, with House Minority Leader Robert H. Michel (R-Ill.) saying: “They may have rearranged a few parts, but the heart of the bill is Clinton and all the damaging things it would do to health care in America.”

And business groups seemed as adamantly opposed to the Democratic bill as they were to the earlier Clinton proposal. U.S. Chamber of Commerce Vice President Jeffrey Joseph called it a “Bride of Frankenstein.”

Many business organizations have resolutely opposed any requirement that they pay any amount for workers’ health premiums. Under the House Democrats’ bill, their contribution would vary according to the size of the firm and its average wage level.

For example, a firm of five employees earning an average of $11,000 a year would pay $1,275 per year--or 61 cents an hour--for each worker’s premium. By comparison, a 6,000-worker company with annual wages averaging $39,600 would pay the maximum $2,625, or about $1.26 per hour.

The share that individuals and families pay would vary according to their income level and which type of coverage they chose. A family of four earning less than $16,000 a year would be eligible for government subsidies that would reduce their premium cost to nothing, for example, while the same size family earning more than $38,400 would pay the full $1,134 a year for the same basic policy.

Democratic leaders said that their legislation offers less bureaucracy, milder price controls, fewer taxes and more choices to consumers than the White House plan.

But it also would create a vast new government program--called Medicare Part C--as its chief means of expanding coverage to those who do not have it now. By some estimates, more than half the population could wind up in a government-financed health program if the bill becomes law.

The battle on the House floor, which is expected to begin the week of Aug. 8, promises to be brutal, and the outcome is far from certain.

On the safe assumption that not a single Republican will vote with them, the leadership can afford to lose no more than 39 Democratic votes. The bill’s fate is likely to hinge on winning enough votes among Democratic moderates, many of whom are decidedly lukewarm to the proposal.

“I didn’t think that the President’s (plan) would fly and I don’t think this one will either,” said Rep. J. Roy Rowland (D-Ga.), who is attempting to build a bipartisan coalition for a scaled-back measure that would not reach Clinton’s goal of assuring that all Americans have coverage by a date certain.

Many House Democrats are looking warily at the Senate, insisting that they will not put their careers on the line by voting for an employer mandate if the Senate is not likely to do the same. Senate Majority Leader George J. Mitchell (D-Me.) is putting the finishing touches on his bill, which he expects to make public early next week.

The House Democratic bill, closely modeled on one passed last month by the Ways and Means Committee, retains the most controversial element of the Clinton plan, which is his requirement that employers pay 80% of their workers’ health insurance premium costs.

In the face of criticism that the so-called employer mandate would be too much for small businesses to pay, the bill includes tax credits for those with 50 or fewer workers, with the most relief being offered to those paying an average wage of $12,000 a year or less.

It also delays the onset of the mandate for small employers until 1999, which is two years later than the date that big companies would be required to pay it.

Subsidies would also be available to help those earning up to 240% of the federal poverty level--or $38,400 for a family of four--pay their share of their health benefits. Additional funds would also be available for children and pregnant women.

To answer criticism that the Clinton plan would rob consumers of the ability to choose their doctors and hospitals, the House Democrats’ bill requires employers to offer their workers a managed-care plan under which consumers are required to seek treatment within a network of providers; a traditional, higher-cost plan in which they would have unlimited choice and bare-bones catastrophic coverage.

The catastrophic coverage would be combined with a concept known as a “medical savings account” in which workers and their employers would set aside money to pay for health care and workers would be allowed to keep any part of their contributions that were not spent.

Deductibles under the traditional fee-for-services would be $500 for individuals and $750 for families in a year.

The legislation would reform insurance laws to guarantee that workers could take insurance with them if they changed jobs. It also contains provisions that would provide prescription drug benefits for the elderly who are now covered by Medicare and that would start a program of home- and community-based long-term care in the year 2000.

Additionally, firms with 100 or fewer workers would give their employees an opportunity to join Medicare Part C and the widely praised plan available to government workers, including members of Congress and the executive branch.

While only sketchy details of the plan’s benefits were released, other features of the bill include:

* A single guaranteed benefits package, which includes those now covered by Medicare, along with prescription drug coverage, preventive care and mental health and substance abuse benefits. For now, the bill would also cover abortion but that provision stands a good chance of being deleted on the House floor.

* The elimination of the Medicaid program. Beneficiaries instead would join the new Medicare Part C program. Rep. Henry A. Waxman (D-Los Angeles), a champion of the Medicaid program, said that the change would be “a real boost to people under Medicaid because it will allow them to get access to the doctors of their choice.”

* A provision giving states the option of establishing a so-called “single-payer” system--in essence a government-financed health care system, similar to Canada’s.

* Widely agreed-upon reforms in the insurance market, including one preventing insurance companies from denying coverage to people with known illnesses such as cancer and AIDS.

* No coverage, beyond emergency services, for illegal immigrants.

In most respects, those features resemble the Clinton plan. However, the House leaders followed the lead of several congressional committees and jettisoned many other elements of the President’s proposal.

Gone, for instance, are the mandatory government-organized purchasing cooperatives through which most Americans would have been required to purchase coverage. Instead, “alliances” would be voluntary.

Where Clinton would have had the government impose limits on the growth of premiums, the House Democratic leaders’ bill would establish a commission to recommend cost-containment measures that could be rejected by Congress.

One of the most controversial parts of the bill is the Medicare Part C program, which would be available to part-time and seasonal workers, low-income people and those who work for small firms.

It probably would be about 20% cheaper than comparable private plans, which means that it would be an attractive option to all those groups. Yet critics called it another big-government approach to a social problem, carrying risks of out-of-control costs and inefficiencies.

Moreover, like Medicare, it could wind up paying providers less than their costs--forcing them to shift those excess costs onto their paying patients from the private sector.

Complicating the debate is the fact that, because Medicare Part C is an untested concept, it is almost impossible to get a reliable estimate of how many people would use the program and what it would cost.

Indeed, many of the financial details of the entire bill are yet to be estimated by the Congressional Budget Office.

To raise the money to pay for the bill, House leaders turned to a variety of sources. Among them:

* A 45-cent-a-pack increase in the cigarette tax, scaling back the 75-cent hike proposed by Clinton.

* A 2% excise tax on health insurance premiums. It would be dedicated to funding large teaching hospitals, biomedical research and public health programs. The tax, like other levies, might be passed along to the consumer in the form of higher costs or be borne by the worker through wages that are lower than they would otherwise be.

Comparing the Plans

First category shows where the debate started--what Clinton proposed. The second shows Gephardt’s proposal, and the third shows what the fights are likely to be about.

PAYING FOR UNIVERSAL COVERAGE

* Clinton: By 1998, require all companies to provide insurance to all workers. Employers to pay 80% of premiums, workers 20%. Increase cigarette tax by 75 cents per pack. Levy 1% tax on insurance premiums. End “tax saver” or “flexible spending” accounts that allow excluding a portion of pay from taxable income.

* Gephardt: By 1999, require all companies to provide insurance to all workers. Employers to pay 80% of premiums, workers 20%. Increase cigarette tax by 45 cents per pack. Levy 2% tax on insurance premiums. End “tax saver” or “flexible spending” accounts that allow workers to exclude a portion of their pay from their taxable income.

* Fights to Come: Proposals will be made to reduce the employer mandate to 50% of insurance premiums instead of 80%, and to lengthen the phase-in period. Others will try to eliminate the mandate entirely. Tobacco-state representatives may try to scale back the cigarette tax hike.

IMPACT ON MEDICARE

* Clinton: Would expand Medicare coverage to include prescription drugs. Begin new long-term care program for some elderly Americans. Would put new limits on payments to hospitals and doctors to rein in the rate of increase in Medicare costs.

* Gephardt: Same, except the long-term care program would be at the option of each state, and could be expanded to cover non-elderly severely disabled people.

* Fights to Come: Critics say that the prescription drug benefit and the long-term care program are too expensive, and will try to eliminate them. The efforts to scale back Medicare cost increases may face stiff opposition.

SUBSIDIES FOR SMALL BUSINESSES

* Clinton: Would provide subsidies to businesses, depending on size and average payroll.

* Gephardt: Would provide tax credits for companies with 50 or fewer workers. Subsidy amount varies by company size and average payroll. Would offer small businesses two options other than arranging for insurance on their own: Enroll workers in the new Medicare Part C program or let them buy into existing federal employees health program.

* Fights to Come: If opponents cannot eliminate the employer mandate altogether, they may move to exempt small business from mandatory participation.

REFORMING INSURANCE MARKETS

* Clinton: Would require all but the largest companies to buy insurance through purchasing pools called health alliances. Would forbid insurance companies from charging some customers more than others. Would eliminate pre-existing condition exclusions. Would require all insurance plans to offer at a minimum a nationally guaranteed package of benefits. Would give states the option to set up single-payer systems in which the government would pay all health bills.

* Gephardt: Would allow states to establish either voluntary or mandatory purchasing pools. Would forbid insurance companies from charging some customers more than others. Would eliminate pre-existing condition exclusions. Would require all insurance plans to offer a nationally guaranteed package of benefits. Would give states the option to set up single-payer systems.

* Fights to Come: Eliminating the pre-existing condition exclusion is widely popular. All other key provisions are controversial.

COST CONTAINMENT

* Clinton: Effective immediately, would establish standby federal price controls on insurance premiums.

* Gephardt: Effective in 2001, would authorize the government to establish standby price controls on insurance premiums if a national commission deemed them “necessary.” Congress could vote to reject the price controls.

* Fights to Come: Insurance companies strongly oppose any form of standby price controls.

ABORTION

* Clinton: Would include abortions in the national package.

* Gephardt: Would include abortions in the national package.

* Fights to Come: House leaders concede that they will have to water down abortion coverage, and perhaps eliminate it entirely, to win passage of a bill.

Source: Times Washington Bureau