‘Mainstream’ Senate Group Offers New Health Care Plan

Trying to fend off growing pressure to put off health care reform indefinitely, a bipartisan Senate group Friday offered a new plan that depends on major savings from Medicare and Medicaid for subsidies to help poor people buy health insurance.

The proposal--which avoids the controversial employer mandate supported by President Clinton and Democratic congressional leaders--was hammered out by the self-styled “mainstream” group after days of closed-door meetings aimed at breaking the partisan gridlock that has stalled action on the health care issue in the Senate.

“The best way to achieve health care reform is to take it step by step,” said Sen. Dianne Feinstein (D-Calif.), a new member of the mainstream group, at the press conference called to unveil principles of the group’s proposal, which relies on insurance reforms and other voluntary measures to expand coverage.

Feinstein and the others, a floating group of about 20 Democrats and Republicans, hope that their plan will become a rallying point. “One side wants too much, the other wants nothing,” Feinstein said in an interview. “Our aim is to bring the two leaders (Democratic and Republican) together and say: ‘We can do something now.’ ”

The top officials--Majority Leader George J. Mitchell (D-Me.) and Minority Leader Bob Dole (R-Kan.) listened to presentations by the group Friday but were carefully noncommittal. Mitchell’s plan, which includes mandated insurance by all employers in the year 2002 if 95% of Americans have not been covered as a result of voluntary measures by the end of the century, is still the bill being debated in the Senate.

Dole suggested that it may be desirable to give up the effort to reform the nation’s health care system and wait until next year. “I think it’s getting to be a little late in the process,” he said.

At a press conference Friday, President Clinton urged Congress to keep working on health care reform, but he seemed skeptical of the mainstream group’s approach. “The so-called ‘something less’ approach often does more harm than good. . . . When you just try to patchwork this, often you lead to more people without insurance and higher insurance rates,” he said. Nevertheless, he called for continued efforts to pass a bill this year.

“If we don’t move now, there’s a chance that it won’t happen at all,” Clinton said, reflecting the Administration’s concern that any remaining momentum for reform may subside if Democrats fare poorly in November’s congressional elections.

The mainstream group offered an eight-page statement of general principles and basic plans, but is awaiting detailed information about costs from the Congressional Budget Office.

But their proposal seems certain to stir up considerable opposition from senior citizens groups, hospitals and physicians. It would depend on $400 billion in savings during a 10-year period, with $260 billion from Medicare, the medical program for people over age 65 and the disabled, and $140 billion from Medicaid, the health program for the poor. These two programs are already criticized by doctors and hospitals for restrictive fee schedules.

The money saved from trimming Medicare and Medicaid growth would be used to provide subsidies to buy health insurance. Premiums would be free for people with incomes below the poverty line, which is now $14,800 for a family of four, and partial subsidies would be available for those with incomes up to 200% of the poverty level. For pregnant women and children under age 18, subsidies would be provided at incomes up to 240% of the poverty level.

All employers would be required to distribute information to workers and offer a choice of three health plans. Companies would not be required to pay for part of the premiums but could arrange for payroll deductions at a worker’s request. If a worker met income guidelines, he or she would be eligible for a subsidy. Otherwise, the cost of the premium could be fully tax-deductible for the workers.

A firm with fewer than 100 workers could join a voluntary purchasing cooperative instead of offering three plans.

Firms with more than 100 workers could continue to self-insure, a system now used by the vast majority of larger companies, which take the risk of paying their own health bills and use insurance companies as administrators to put together networks of doctors and hospitals. The mainstream plan, therefore, would mean minimal changes in the operations of health insurance plans for bigger companies that currently provide coverage.

The plan also calls for another $100 billion in revenues to be used for reduction of the federal budget deficit. This money would be raised by increasing the cigarette tax by 45 cents a pack, increasing the premium for Medicare Part B for individuals with incomes over $75,000 and couples with incomes over $100,000 and limiting businesses’ tax deductibility for higher-cost health plans. It also would extend the Medicare payroll tax, 1.45% of income, to all state and local workers.

The key insurance reform features would forbid insurers from denying or limiting coverage based on health status. Renewal would be guaranteed and workers could take insurance from one job to the next.

“When a woman has breast cancer, she is not canceled from her policy and she doesn’t have to sell her home for treatment,” Feinstein said.

Within hours of its unveiling, the mainstream effort was denounced Friday by Lane Kirkland, president of the AFL-CIO, who said any bill that “fails to provide universal coverage and an employer mandate . . . is not genuine reform and will not solve the critical and fundamental problems of our health care system.”

And earlier Friday, one of the group’s charter members, Sen. Bill Bradley (D-N.J.), defected, saying the emerging plan would not accomplish true reform because it shies away from expanding health coverage and lacks adequate cost-containment measures. But even as Bradley departed, he was replaced by a new member, Sen. Nancy Landon Kassebaum (R-Kan.), who said that the Democratic leadership bill is not worth amending.

The mainstream group emphasized its flexible and optimistic approach to one of the toughest and most complex issues faced by Congress. The proposal is “a bill that can pass this year,” predicted Sen. John H. Chafee (R-R.I.).