House Approves Broad Reforms in Health Care

The House approved a broad health care reform bill Thursday night that would enable tens of millions of Americans to keep their insurance after changing their jobs--even if they have an existing illness.

The broadest health care legislation approved by either house of Congress in decades, the measure would make insurance portable, generally barring insurers from denying coverage to new employees even if they have “pre-existing” medical problems.

The bill, approved 267 to 151, also would place limits on malpractice awards and provide for tax-exempt medical savings accounts. Its Republican sponsors said that those two features would encourage competition that would cut medical inflation, thus making insurance affordable for some of the 41 million uninsured Americans. One Republican voted against the measure and 38 Democrats voted for it.

The bill is the latest to emerge from a new burst of legislative activity by the Republican majority in Congress that is becoming increasingly wary of the perception that it has presided over a largely do-nothing Congress--heavy on ideology and partisan rhetoric but light on substance.

That is a message many Democrats are field-testing as the general election campaign nears and one that Senate Minority Leader Tom Daschle (D-S.D.) and House Minority Leader Richard A. Gephardt (D-Mo.) together invoked at a Capitol Hill press conference Thursday.

The health care debate also is focusing a spotlight on the rivals in the November presidential election: President Clinton and Senate Majority Leader Bob Dole (R-Kan.).

Independent analysts say that 25 million Americans a year could benefit from having portable health insurance, while as many as 80 million have medical conditions that could subject them to coverage exclusions based on “pre-existing condition” clauses. Consumers would have to pay the premiums, which the bill seeks to keep within prevailing market rates.

Still, the legislation faces a contentious battle in the Senate and the outcome is far from certain. Some critics in that chamber contend that the bill attempts to do too much while others argue that it does not go far enough to cure the ills of the nation’s health insurance financing system.

And lurking on the sidelines are the same array of powerful--and feuding--interest groups that played a large role in killing Clinton’s massive health care reform plan two years ago.

The Health Coverage Availability and Affordability Act also faces a probable Clinton veto unless it is stripped of the provisions on malpractice reform and medical savings accounts.

The measure would impose a limit of $250,000 on the amount that can be collected by a victim of malpractice for noneconomic damages, which also is sometimes defined as compensation for pain and suffering. Such limits have long been sought by physicians--but resisted by trial lawyers.

Medical savings accounts are tax-exempt funds that, like individual retirement accounts, anyone may set up and use to pay for out-of-pocket medical expenses. Those using the accounts would have to buy low-premium, high-deductible “catastrophic” illness policies.

Critics of medical savings accounts say that they are likely to be beyond the reach of the poor or even most people who currently have insurance. And the managed care industry believes that these accounts threaten their ability to control costs.

But proponents say that account users would become more cost-conscious in how their money is spent for routine medical services, while enjoying unrestricted choice of physicians.

In the Senate, a similar but less broad health care reform bill is to be taken up next month. But conservative Republican senators said this week that they intend to add to the measure malpractice reform and medical savings accounts. Critics of that approach, including Sen. Nancy Landon Kassebaum (R-Kan.), the bill’s chief author, said that those provisions are so controversial that they could cause the bill’s demise.

Across the aisle, Democrats are calling on Dole to persuade his fellow Republicans to abandon the more controversial elements so that Congress can enact a bill that stands a chance of being signed into law.

“This bill is a crucial test for the Republican standard-bearer,” Gephardt said. “Let’s face it: If Bob Dole can’t rein in the radicals of his own party, there is no way President Dole would be able to do so.”

Some Democrats also accused House Republicans of harboring a hidden agenda, saying that majority lawmakers have been adding controversial elements to the bill precisely to kill it.

Referring to Clinton’s gargantuan Health Security Act, Rep. Sam M. Gibbons (D-Fla.) told House Republicans: “Past efforts at reform have failed because they tried to do too much. You are heading down the same road and it makes one wonder if this isn’t a conscious effort to sabotage and sink the modest and relatively noncontroversial reforms.”

Republicans were miffed by the claims. “Totally ludicrous,” snapped Senate Majority Whip Trent Lott (R-Miss.) when asked about the Democratic charges.

“This is likely to be the only significant health care bill that will pass through the Congress,” added Rep. Bill Archer (R-Texas), chairman of the Ways and Means Committee. As a result, he said in an interview, it is the natural and only vehicle for other health care proposals, such as medical savings accounts and malpractice reform.

Indeed, many senators also are waiting to add their pet projects to the Senate bill when it comes up for action next month.

One is a proposal by Sen. James M. Jeffords (R-Vt.) to ban lifetime limits on health insurance policies. Another, by Sen. Paul Wellstone (D-Minn.), would include injuries from domestic violence as “pre-existing” conditions that no longer would be grounds for denying coverage. The House bill also contains this provision.

House Democrats accused Republicans of paying off big GOP contributors--namely the Golden Rule Insurance Co., an Indiana-based firm that has given more than $1 million to Republican causes and organizations in recent years. The company would be likely to benefit significantly from marketing medical savings accounts.

Before final passage, House Democrats offered an alternative bill--essentially the more modest Senate bill--but it was defeated by a vote of 226 to 192.

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The House Rx

The House bill, like the Senate measure, would ban health insurance companies from denying coverage to newcomers such as people entering new jobs even if the employees have “preexisting” medical problems. Other key provisions of the House-passed bill:

* Medical savings accounts: These are tax-exempt funds that, like individual retirement accounts, anyone may set up (with a $2,000 per person annual limit) and from which one may draw to pay for out-of-pocket medical expenses. Families may deposit up to $4,000 a year into such an account. Individuals using MSAs would be required to buy low-premium, high-deductible “catastrophic” policies. Unused funds may be carried over. There are tax penalties if the funds are used for non-medical purposes.

* Medical malpractice reform: Limit to $250,000 the amount that can be collected by a victim of malpractice for non-economic damages, which also is sometimes defined as compensation for pain and suffering.

* Individual deductability of insurance premiums: Increase from 30% to 50% by 2003 the deductibility of health insurance premiums paid by the self-employed. Most Americans typically receive their health insurance at the workplace--paid largely by their employers--and those benefits are not taxed. This provision is intended to redress in part that imbalance in tax treatment for the self-employed. The self-employed would be allowed to deduct 35% of their premiums in 1998; 40% in 1999-2001; 45% in 2002 and 50% in 2003.

* Long-term care insurance: Premiums generally would become tax deductible. Benefits also would be deductible up to $63,875 a year.

* Accelerated death benefits: Allow chronically or terminally ill people to receive their life insurance benefits before death without a tax penalty.

* Waste and fraud crackdown: Increase penalties for those who defraud the government through Medicare and Medicaid.

* Earned income tax credit: Deny this benefit to individuals not authorized to work in the U.S.

* Insurance pools: Enable small businesses to have more access to affordable coverage for employees by generally requiring insurers that sell policies in so-called small-group markets (under 50 employees) to offer group plans to all employers in that market.

Source: Times Washington Bureau