Health Care Bill Travels Rugged Road of Reform

It was, Republicans declared, the right kind of health care reform: No big government. No price controls. No universal coverage.

They wanted simply to help hard-working Americans with medical conditions who are locked into dead-end jobs by the inability to transfer their health insurance to a new employer.

Pending in the Senate is a bill to ensure insurance portability and guaranteed renewal. A similar bill was first offered 18 months ago by 40 GOP senators as they were burying President Clinton’s massive health care reform agenda. The Republican proposal seemed so noncontroversial that passage was virtually a foregone conclusion, said Senate Majority Leader Bob Dole (R-Kan.).

Yet some of the same senators who professed support for these insurance reforms in 1994 now are blocking action on the measure--at the behest of the insurance industry.

The Health Insurance Reform Bill of 1996 is a case study of the enormous obstacles that confront Congress when it tries to reform even a small piece of a system that accounts for one-seventh of the U.S. economy.

The bill’s dim prospects also demonstrate how even narrowly focused efforts to improve the sprawling health care system can teeter because of potential ripple effects and unintended consequences, thus engendering a buzz saw of special-interest opposition, as the White House knows all too well.

Finally, the controversy is a sobering reminder that, for all the rhetoric about reforming health care, the only change enacted by Congress since 1992 is a paltry increase in the deductibility of individual insurance premiums, from 25% to 30%.

The failure of the Clinton administration to enact health care reform after a bruising two-year struggle may have sapped the political will to seriously revisit the issue, even as the number of uninsured Americans rose past 41 million, notes Princeton University political economist Uwe E. Reinhardt.

More ominous data surfaced last week in a report that employers’ health care costs rose again in 1995, despite the continued mass movement of employees and their families into managed-care systems.

The president himself issued a plea for passage of the insurance reform bill during his State of the Union address on Jan 23. House Speaker Newt Gingrich (R-Ga.) nodded in apparent agreement.

Clinton repeated his support for the measure in his weekly radio address Saturday, combining it with a call for Congress to pass legislation to raise the minimum wage from $4.25 to $5.15 an hour.

Still, the bill’s prospects remain murky. As its author, Sen. Nancy Landon Kassebaum (R-Kan.) noted, the presidential endorsement “could be a double-edged sword.”

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“Everybody thought this bill was a shoo-in deal,” said health care analyst Dave Durenberger, a former Republican senator from Minnesota.

“This shows that when you actually get down to the writing of legislation, sometimes things that sounded easy to accomplish prove much more difficult,” added Willis D. Gradison Jr., president of the Health Insurance Assn. of America and a former Ohio congressman.

Federal protection against losing medical insurance or being denied coverage because of a “preexisting” condition has long enjoyed strong public support. Clinton incorporated portability and guaranteed renewal into his bill to restructure the $1-trillion-a-year health care system. When his plan died in 1994, Dole and then-Sen. Bob Packwood (R-Ore.) offered a less sweeping bill, co-sponsored by 38 GOP colleagues, to end “job lock,” among other things.

When the bill languished, Kassebaum sought to reinvigorate the effort by sponsoring the Health Insurance Reform Bill of 1996 with Sen. Edward M. Kennedy (D-Mass.), the ranking Democrat on the Labor and Human Resources Committee, which Kassebaum chairs. On Aug. 2, the committee approved the bill, 16-0. Forty-two senators then signed up as co-sponsors.

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The bill, which is even more narrowly focused than the Dole-Packwood measure, bars insurers from denying coverage to people who leave their jobs and then seek to either join another group plan at their new workplace or to buy individual coverage after becoming self-employed.

The insurance industry does not object to a federal guarantee when a consumer goes from one group plan to another, typically in a job change, but it strongly opposes the provision requiring continued coverage for a person who goes from a group plan to an individual policy.

The latter practice, Gradison said, can result in premium increases of 10% or more for all individual policyholders. That’s because the industry assumes that many newcomers to the individual-policy market tend to have illnesses or conditions that lead to high costs. Such expenses would in turn force higher premiums for everyone--and thereby price some out of the market altogether.

“This is a very price-sensitive, fragile market,” said Gradison, who was the top Republican on the House Ways and Means health subcommittee before he resigned from Congress in 1993 to head the insurance industry group.

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Kassebaum allowed that the bill’s requirements could cause “modest” premium increases of perhaps 2%, but she said that was a worthwhile trade-off for “peace of mind.”

Gradison and his insurance allies were unable to persuade a single Labor Committee member to embrace their point of view. But the lobbyists have found more sympathetic ears in the full Senate.

There, to Kassebaum’s surprise, several of her Republican colleagues quietly put “holds” on the bill, a legislative ploy that prevents a measure from reaching the floor. Among them are Sens. Lauch Faircloth of North Carolina and Don Nickles of Oklahoma--both of whom in 1994 backed bills that contained similar insurance reforms.

Nickles said he has serious qualms about mandating coverage for consumers who go from group to individual policies.

Arguing for the bill, Kennedy said 25 million Americans a year would benefit from having portable health insurance. “Many others have to abandon the goal of starting their own business--because insurance will be unavailable or unaffordable,” he said.

As many as 81 million Americans have medical conditions that could subject them to coverage exclusions based on “preexisting condition” clauses, according to Kennedy.

In his own pitch for the bill, the president said in his annual address that “if working families are going to succeed in the new economy, they must be able to buy health insurance policies they don’t lose when they change jobs or when someone in their family gets sick.”

Behind-the-scenes negotiations are continuing in hopes of addressing Nickles’ concerns, which are shared by a dozen or more GOP senators, according to Sen. Bill Frist (R-Tenn.), a physician who backs the bill.

If the group-to-individual market provision is deleted from the measure, Gradison said, “we’d strongly support it.”

But if no resolution is reached, Kassebaum and Kennedy may offer the bill as an amendment to the first piece of unrelated legislation that is taken up by the Senate, aides hinted.

Even then, additional obstacles loom. Several senators intend to try to add to the Kassebaum-Kennedy bill their pet health care issues, moves that if successful could make the measure even more controversial.

For instance, Sen. Paul Wellstone (D-Minn.) wants to include any condition resulting from domestic violence among those that cannot be excluded from coverage by insurers. Sen. James M. Jeffords (R-Vt.) wants to eliminate lifetime limits on insurance policies. Sen. Pete V. Domenici (R-N.M.) wants insurers to cover mental health and physical health with parity.

“Everybody’s trying to pack their favorite pet project onto this bill, and it’s threatening to be a replay of the Clinton plan fiasco,” said Richard I. Smith, a health care analyst for the Assn. of Private Pension and Welfare Plans.

Last week, several large organizations that back the bill, including the National Assn. of Manufacturers and the Chamber of Commerce, said they would “vigorously oppose the bill in its entirety” if it is loaded up with costly, unrelated government mandates.

At the same time, the American Medical Assn. called on the Senate to move on the measure, saying: “The time to act is now.”

In the House, a similar bill has been introduced by Rep. Marge Roukema (R-N.J.). But it also faces strong opposition, including from Rep. Bill Thomas (R-Bakersfield), chairman of the House Ways and Means health subcommittee.

Thomas said he would like to pass a bill similar to the Kassebaum-Kennedy measure but without the requirement to insure people who move from group to individual policies.

The Senate measure, Thomas said, simply “covers too many issues in a single bill.”