Health Care: Calm Down and Get Back to Basic Principles

President Clinton and First Lady Hillary Rodham Clinton did what leaders are supposed to do. They took the risk of forcing the nation to face the reality that something is seriously wrong with the health care system.

For two years now the Clintons have brought the message home and pushed Congress to pass reform. A lot is at stake for the President--and for Senate Majority Leader George J. Mitchell (D-Me.), for whom health reform is the last big issue before he retires later this year. Some within the Republican Party would deny Clinton anything that would enhance his or other Democrats’ chances at the polls. Some legislators on both sides of the aisle, listening to a public that wants reform but is wary of government, are ambivalent. It’s an overheated political environment; not a good situation for making a major change in public policy.

None of this means there are not serious flaws in the health care system that must be corrected. There’s a momentum for action that should not be frittered away. But Congress, so far at least, has failed to come up with a plan that targets what’s worst about the system without creating potential new pitfalls.

MISSING THE TARGET: In their appropriate zeal to enact reforms this year, proponents lost sight of one of the key arts of effective lawmaking: setting priorities. There’s no question that the weaknesses of the health care system--37 million uninsured, spiraling medical costs--deserve a full response. But there’s also no question that when the health care system commandeers one-seventh of the U.S. economy, the proposed cures had better not exacerbate the ills. The stakes are just too large. Mitchell’s well-intentioned but omnibus bill is the result of trying so hard to placate the business, labor and medical lobbies. As currently written, it paints with too broad a brush; it’s a mammoth measure that proposes to gag on gnats and swallow camels.

Although 85% of Americans have health insurance, 15% go without coverage, and anyone who loses a job is vulnerable to joining the swelling ranks of the uninsured.

Among the employed, who is not covered by any health insurance? About 98% of employers with more than 100 employees provide health coverage. More than 70% of companies with more than 10 employees offer coverage, though not all pay for it. But among the 3.5 million smallest firms, 73% do not offer coverage. Hello, Congress, do you think maybe those small firms need your attention right away?

The Mitchell bill deserves clear credit for heeding what health professionals have been saying for years: Universal coverage, or coverage for virtually every American, is essential. Coverage for all is the only way to stop the insane cost-shifting and last-minute acute medical care that jack up the health care bill.

LOCATING THE TARGET: So the first goal should be to insure those who are not insured. The poorest Americans receive and should continue to get government help. The majority of those who are not insured work, full-time or part-time, typically for small firms. Small firms also happen to be the engine that drives growth in the California economy. How then do you get coverage for employees of small firms without crippling small employers?

Remember those politically reviled health insurance purchasing cooperatives (HIPCs) that originally were part of the Clinton proposal? They are thriving in voluntary form. The Health Insurance Plan of California, set up by the state but privately run, allows small employers to get better rates as a group; insurance premiums have been driven down 10% for members of the plan during the last year.

Small businesses, so many right on the edge of profitability, naturally do not want to be saddled with skyrocketing insurance rates, which is exactly what can happen when just one employee in a 10-employee firm becomes gravely ill. Small employers must band together for the same reason that universal coverage must be the nation’s goal--the more people in an insurance pool the more that risk is spread around and costs are contained. There seems no avoiding it: As a first step, small businesses that don’t offer insurance should be obliged to join HIPCs--private or public--so that they can offer their employees access to a range of reasonably priced insurance plans.

MOVING REFORM FORWARD: Employers wouldn’t have to pay for the insurance, only offer it; employees could then choose a plan they could afford. Tax deductions/credits could be offered to prompt employees to buy at least basic coverage. To encourage cost containment, favorable tax treatment could be limited to the cost of only the basic plan. It’s a start and, politically speaking, a start that’s doable now.

This approach, which has been endorsed by some Democrats and Republicans, would not get the nation to universal coverage but it would move things in the right direction. Most, including supporters of the Mitchell plan, agree now that absent a massive new tax program that Americans currently are unwilling to undertake, universal coverage must occur incrementally.

Getting a grip on total health care reform--involving issues of portable and catastrophic coverage, eliminating discrimination against the sick, cost containment--can be done in stages. The Consumer Price Index found that medical costs rose 5.4% in 1993; though it’s the lowest growth rate in 20 years, it is still double the inflation rate. Did the rate slow because the medical industry kept costs down in hopes of beating back feared government regulation? Or did the competitive pressures of the marketplace work naturally to slow the rise in costs? Probably both. A combination of government watchfulness and market forces can continue to shake up the system and make health care affordable and efficient. It is neither now.