The Bush Effect on 3 Key Sectors

When he takes office next month, President-elect George W. Bush will face a health-care system that is deeply fissured.

A growing number of hospitals and physician organizations are plunging into bankruptcy; the private sector Medicare managed-care system, which offers millions of seniors their only hope of affordable, comprehensive health care, is disintegrating.

At the same time, medical inflation is rising at such a rapid clip that many experts believe small and middle-sized employers will soon stop offering health insurance altogether, swelling the already bulging ranks of the nation’s uninsured.

Still, Bush, perhaps more than any president since Lyndon B. Johnson signed the bill creating Medicare, will take office uniquely poised to influence health care in this country.

His will be the administration that must enforce new regulations regarding patient privacy and insurance information on the Internet--regulations that are expected to cost hospitals and health plans hundreds of millions of dollars to implement over the next two years.

Given the all-but-even split between Democrats and Republicans in the new Congress, Bush will likely have cross his desk a powerful patients’ bill of rights that is staunchly opposed by the industry but supported by Democrats, moderate Republicans, consumer activists, patients and doctors.

Such a bill, in fact, is expected to top the next legislative session after being defeated by one vote earlier this year.

It is Bush who will be forced to pick up the pieces if the changes roiling the nation’s health maintenance organizations and other managed-care plans lead to national or even statewide meltdowns.

And it is Bush who will be forced to respond if smaller employers, as many expect, chafe under the burden of increased premiums and decide to abandon offering health coverage altogether. Such a move could swell the ranks of the uninsured from 42 million today to 48 million by 2009.

On Wall Street, investors seem to be giving Bush the benefit of the doubt--or at least they’re betting that he will leave many things alone, to the companies’ benefit: Stocks of drug makers, HMOs and other health-care companies have rallied sharply since September, in part anticipating a Bush victory, analysts say.

However, it has been Congress more than presidents who have driven changes in health-care policy. “There’s only been one president in history who tried to influence health care, and that president--Bill Clinton--failed miserably,” said Banc of America Securities analyst Todd Richter, referring to the Clinton administration’s botched 1993 effort to implement comprehensive health-care reform.

Bush has already said that he will make good on his campaign promise to help poor seniors pay for prescription drugs that are not covered by the Medicare program.

It is less clear, however, whether he will push legislation that would significantly affect the 42 million Americans who now lack health insurance.

While both Bush and Vice President Al Gore promised during the campaign to aid families who cannot afford health insurance, Bush’s proposal was modest, relying mostly on tax incentives to help families purchase insurance in the private market.

Chip Kahn, president of the Health Insurance Assn. of America, an industry trade group, said he believes that more aid to families who now lack health insurance is possible under a Bush administration, as long as proponents of such an effort avoid the pitfalls of the ill-fated Clinton plan.

Back in 1993, Kahn said, plans to expand insurance coverage got caught up in broader plans to overhaul the health-care system itself, something he said doomed it to failure amid the resultant bickering.

If health insurance is kept a separate issue, it is more likely to be concretely addressed, said Kahn, whose organization has joined with a consumer group to push a proposal that is a hybrid of plans enunciated by Gore, Bush and others during the campaign.

“I don’t think we’ll see anything dramatic,” said Walter Zelman, president of the California Assn. of Health Plans. “But there are some opportunities for modest steps.”