Senate Group Favors Minimal Health Reforms

Reacting to words of caution by a top budget expert, a bipartisan group of senators Thursday dramatically scaled back their “mainstream” health care reform proposal, embracing a minimalist approach that stresses deficit reduction and does not attempt to extend coverage to 39 million uninsured Americans.

By ducking that and other tough decisions, the group is promising far less than President Clinton has said he will accept. Still, its long-awaited plan is likely to rejuvenate the debate in a stalemated Senate where debate has droned on for more than a week as senators have considered the health reform plan of Senate Majority Leader George J. Mitchell (D-Me.).

The mainstream coalition’s plan--expected to be presented to the Senate leadership today--is likely to focus on insurance reform, which is similar to a proposal by Senate Minority Leader Bob Dole (R-Kan.).

The bipartisan plan, which is expected to try to strike a compromise between the Mitchell and Dole proposals, may significantly alter the dynamics of the debate, moving it more toward the GOP view. The 15 to 20 members of the coalition are considered to be the swing votes for any plan approved by the Senate.

Sen. John B. Breaux (D-La.), a coalition leader, called the mainstream plan “a good faith, last-ditch effort” to enact health care reform this year.

But it is far from clear that Senate liberals and other moderates will accept such a proposal. The still-uncompleted plan, as described late Thursday by senators involved in its drafting, is certain to incur the wrath of liberals, labor unions, the elderly and other groups that would lose an array of benefits promised by the President and his congressional allies in their plans.

The coalition’s abrupt change in direction came after a Thursday morning meeting with Robert D. Reischauer, director of the Congressional Budget Office. He indicated to the group that its original intention of expanding coverage through insurance reforms and government subsidies--without significant revenue-raising devices--would create a shortfall of several hundred billion dollars in the years ahead.

That sent grim-faced senators back to their drawing boards in the afternoon.

“It was a shock,” Sen. Mark Hatfield (R-Ore.) said after the Reischauer briefing. “We got a reality check,” added Breaux.

After they emerged Thursday evening, the coalition senators said they were ready to offer a bare-bones reform agenda that, above all, would reduce the deficit--even if that means little, if any, government subsidies to help the needy buy insurance. Details of how the plan would reduce the deficit were unclear Thursday night.

“We’re in the process of shrinking back to the basics,” said Sen. David L. Boren (D-Okla.), adding that the coalition was considering little more than insurance reforms that would ban discriminatory industry practices to broaden consumer access to insurance.

“It looks more and more like that’s the only thing we can do this year,” Boren said. “We all have sticker shock.”

Despite the opposition that it will engender, the coalition’s approach holds considerable political appeal. It would provide a convenient cover for senators who fear facing voters in November empty-handed.

“We’re trying to do something constructive in an atmosphere of fear,” Breaux said.

Another coalition member, who asked to remain anonymous, added: “It’s hard to tell who’s running for cover and who’s trying to get a bill.”

The “mainstream” approach is vulnerable to attack on a central point: Enactment of insurance market reforms without at the same time quickly extending coverage to all will worsen matters in the long run, many health analysts, economists and the President have asserted.

They say such “incremental” reforms in the absence of a universal coverage requirement will drive up rates for those with insurance. The rates would go up because the sick would have access to insurance and many healthy people likely would opt not to buy insurance, knowing that they could buy it if they became ill. In turn, the insurance pool would include sicker people and rates could go up enough to put insurance out of reach for many.

But “mainstream” coalition members were not conceding that point Thursday.

“Health care reform should reduce the deficit,” said Sen. Bob Kerrey (D-Neb.). “You may not cover as many as you’d like. . . . The problem is, this is expensive.”

Insurance market reforms, he added, could “dramatically” improve matters.

Breaux acknowledged that the group’s bill will have “less than what George Mitchell has, but more than what Bob Dole has.”

Mitchell’s plan aims for 95% coverage by the year 2000, relying also on voluntary measures and a variety of insurance reforms and subsidies to the needy. But it would trigger an employer mandate by 2002 in states that did not achieve 95% coverage, requiring large businesses to pay at least 50% of a worker’s premiums.

Dole’s bill would rely on voluntary measures and insurance reforms while offering less generous subsidies to help people buy insurance as a way to expand coverage.

The mainstream coalition’s bill will not contain any form of an employer mandate, according to Sen. John C. Danforth (R-Mo.), another group member.

Coalition members said that their plan would slowly phase in subsidies for the needy and that it will contain a “fail-safe” mechanism to ensure that subsidies are not so generous as to create unanticipated budget deficits.

“The fail-safe is the essential ingredient,” Breaux said. “You set a baseline and don’t go over it.”

Sen. John H. Chafee (R-R.I.), who once offered his own universal coverage plan and is now a leader of the coalition, said that the group’s plan would provide for “very, very basic but important changes to our health care system.”

The Senate began its health care debate last week. But as day after day passed with virtually no progress, the work of the mainstream group assumed increasing importance.

Many senators pinned their hopes on the group’s work as it became clear that Mitchell did not command sufficient support for passage of his plan, which is backed by the White House.

The coalition plan also is expected to considerably scale back the role of government and red tape in Mitchell’s proposal.

The coalition had not reached agreement Thursday night on the question of taxation, members said. One area still to be determined is the size of a tax on cigarettes, with discussions focused on a range between 45 cents to $1 per pack. Another was some variation of a 25% tax on health plans that exceed annual price-increase ceilings.

Potentially the most controversial part of the plan--a measure still under discussion--would be a tax on the health benefits that individuals receive from their employers.