Health plan aims to cut costs, insure all

In another sign that healthcare will return as a major issue when Democrats take over Congress next month, a prominent Democratic senator unveiled an ambitious proposal Wednesday to provide medical insurance for all Americans while reining in costs.

The plan by Sen. Ron Wyden of Oregon came a month after the health insurance industry offered its comprehensive proposal as politicians and the business community show new willingness to tackle a subject that has been off-limits since the mid-1990s collapse of President Clinton’s sweeping healthcare reform package.

Wyden, considered liberal on social issues and moderate on economic policy, combined elements of Democratic and Republican ideas in his plan. It would guarantee coverage for all, including nearly 47 million uninsured -- a Democratic objective. But it would also limit employers’ exposure to relentless cost increases and encourage workers to shop for cost-effective insurance plans -- GOP goals.

“The last time America tried to fix healthcare was in 1993 and 1994 -- since then, employer-based coverage has been melting away like a Popsicle in the sun,” Wyden said. “Business leaders in 1994 who said, ‘We can’t afford to reform healthcare,’ are now saying, ‘We can’t afford not to reform healthcare.’ ” He is a member of two Senate committees that are heavily involved in healthcare: finance and budget.

Americans spend more than $2 trillion a year on healthcare, more per capita than any other country. But the returns on that investment are uneven, with many insured patients getting less than optimal care and millions of workers unable to afford health coverage, which costs about $12,000 to $13,000 a year for a family plan.

Employers have traditionally provided coverage for workers and their families as part of overall compensation. Although most workers are still insured through their jobs, corporate leaders are increasingly questioning whether the system can be sustained in an era of global competition and steadily rising costs.

“Without some dramatic change, not only will the uninsured population continue to grow, but the American worker will become less competitive,” said Safeway supermarkets Chief Executive Steve Burd, who joined Wyden at a news conference.

Wyden’s plan would require employers to continue contributing toward the cost of health coverage, but it would get them out the business of directly providing insurance and limit their exposure to double-digit annual inflation in healthcare costs.

In the first two years of the plan, employers who now provide coverage would be required to directly pay workers what they were spending on insurance. Thereafter, most companies would pay the government a healthcare contribution that resembles a payroll tax.

Using the money from their employers, individuals would be required to purchase private insurance policies through state purchasing pools. Benefits would be keyed to the Blue Cross Blue Shield Standard Plan available to federal workers. Workers would not have to pay higher income taxes because of the employer contribution.

The uninsured would also have to buy coverage, but premiums for the poor would be fully subsidized by the government, and middle-class families with incomes up to $80,000 for a family of four would be eligible for help on a sliding scale.

Premiums from individuals and contributions from employers would be collected by the government through the tax system and distributed to insurers. Once enrolled, individuals would be covered until retirement. Seniors in the Medicare program would not have to make any changes.

An economic analysis by the Lewin Group consulting firm found that Wyden’s plan could be paid for with a little less than what the nation now spends on healthcare. In theory, the plan would hold down healthcare inflation because individuals would have to pay more out of their own pockets for plans with lavish benefits.

But Wyden’s proposal -- spelled out in a 166-page bill that he plans to introduce soon -- is complex, and such changes are not likely to be easily enacted. Most experts believe major healthcare reform will only be possible with the support of a president elected on a promise to tackle the problem. Nonetheless, Wyden won compliments for taking on a tough issue.

“We are very supportive of the goals Sen. Wyden has established,” said Ron Pollack, executive director of Families USA, a liberal advocacy group that will play a key role on health policy in the Democratic-led Congress. But he called the plan “a first step” and “a work in progress.”

Separately, two groups representing insurers who cover 200 million Americans unveiled a prototype of a personal Internet-based health record that they hoped would be in widespread use by 2008. Electronic records are considered superior to current paper ones because they can be more complete and are readily accessible. The model was developed by America’s Health Insurance Plans and the Blue Cross Blue Shield Assn. with the involvement of doctors and consumers. *

ricardo.alonso-zaldivar @latimes.com