Health reform advocates scale back goal

The last time Americans had a full-scale debate on healthcare, in 1993, employer-provided medical insurance cost $5,200 a year for an average family, and 39 million people had no insurance. Today, as the issue returns to the political spotlight, premiums on such plans have risen much faster than inflation, to $11,500, and the ranks of the uninsured have grown to almost 47 million.

Even though problems with the healthcare system have worsened, the chances of doing something about it may actually have improved -- primarily because major corporations, labor unions, and other players who fought each other to a standstill last time are now united in believing it’s time to act.

The catch is that the solutions being suggested involve doing less, not more. And most of the proposals place greater burdens on individuals and families.

“In the 1990s, everybody talked about complete, comprehensive coverage for everybody. Now there is more discussion of a minimal or basic package,” said Robert Blendon, a public opinion expert at the Harvard School of Public Health. “Today, we are talking about requiring people to purchase insurance -- and in many cases pay a substantial share of the premium -- and that did not exist in the 1990s.”

What accounts for the change in outlook, as well as the nature of the proposals, is that many unions, liberals and public interest groups have moved away from their earlier insistence on comprehensive health insurance for everyone. These advocates also are modifying their position on who should pay, easing away from a demand that employers or the government foot all or most of the bill.

For workers and their families, change would bring new trade-offs. On the plus side, health insurance wouldn’t be a major factor in switching jobs or starting a business, since coverage would be readily available. On the minus side, people who now have generous employer benefits, with low co-payments and few restrictions, would probably have to pay more out of their own pockets.

The uninsured would come out ahead because they could get a plan, in many cases with government help. Self-employed people who now buy their own coverage would also be likely winners because the market for health insurance could become more stable.

To have any chance of passing, a new plan would have to avoid disruptions for most people who now have employer-sponsored benefits. But in future years, some people could be exposed to greater costs, and tax increases can’t be ruled out either.

Spiraling costs

What lies behind this rethinking of healthcare coverage is a common factor: increasing worries about spiraling costs. Many fear that the employer-based system created for the World War II generation and inherited by the baby boomers could collapse.

“Healthcare costs are rising unsustainably,” Wal-Mart Chief Executive H. Lee Scott Jr. declared on Feb. 7, echoing the sentiments of many business leaders. “Our nation’s economic competitiveness is being hurt.”

Perhaps surprisingly, Andy Stern, president of the Service Employees International Union, made the point even more forcefully. “I think it’s time to admit that the employer-based healthcare system is dead,” he said. “It’s a relic of an industrial system.”

Stern and Scott spoke on the same platform at a Washington news conference announcing a new business-labor coalition to push principles that would guarantee coverage for all but limit the scope of the coverage. Members of the coalition, like similar groups that have offered such proposals in recent weeks, say they want to turn the 2008 presidential election into a referendum on healthcare reform.

Providing insurance has become a handicap for American companies in a global economy, business leaders say. U.S. firms compete against rivals from countries that provide healthcare to their citizens through national systems, almost always at a lower cost, or, in some cases, provide little or no coverage from any source.

Asked what he thought about national health insurance in other countries where Wal-Mart does business, Scott responded: “I do like the fact that we are able to sell for less, and that healthcare is off the table. There are a number of these systems ... that are very effective. My guess is the end result would be something that takes the best of those and is uniquely American.”

When President Clinton tried to overhaul healthcare in 1993, many businesses big and small argued that private employers could do better than government. His wife, Hillary Rodham Clinton, now a senator from New York and a presidential candidate, played a leading role in designing the sweeping but ill-fated plan.

“What we’re seeing today is big business standing up and saying, ‘Look, we can’t manage,’ ” said John Podesta, President Clinton’s chief of staff.

Another reason the healthcare debate is moving away from the employer system is that it does not help the many people who are self-employed or working as independent contractors.

“A mandate on employers as the sole mechanism for coverage can’t work because too many workers are free agents,” said Carl T. Camden, chief executive of Kelly Services, which provides temporary staffing.

Public opinion in play

The current bright outlook for a solution could darken for a host of reasons.

One of the most important players, the voting public, has yet to make its feelings known. As the 2008 presidential campaign gathers steam and more attention is focused on healthcare, public opinion is likely to become a big factor.

If prospective Democratic voters, for instance, reject the move toward more limited health insurance plans, Democratic candidates could follow suit.

Sen. Edward M. Kennedy (D-Mass.), a longtime advocate of a government-run system for all, is already touting a new version of such a plan.

Similarly, business groups could go into opposition if the tide should turn toward big, government-based proposals. The result could be a repeat of the 1993 stalemate.

Most of the coverage strategies being offered envision that government and employers would continue to contribute to healthcare costs. But some would limit those contributions to the cost of a “standard” package that included hospitalization, doctor visits, prescriptions and other basic benefits but might offer limited choices of medications and curtail coverage in areas such as fertility treatment.

It would be up to individuals to deal with matters not covered, perhaps by buying supplemental insurance.

In many ways, these new approaches mirror the turn away from traditional pensions to 401(k) plans, which place greater responsibilities on individuals to accumulate enough money for retirement.

“Employers seem to be out of ideas,” said healthcare consultant John Sheils, a vice president of the Lewin Group. “More and more, we are seeing employers move toward a defined contribution model, where they give money to the workers and the workers go get coverage themselves. Employers really seem to want to get out of this thing.”

The new approach can work for relatively young and healthy workers and families who have only routine medical problems.

Getting adequate coverage on a limited budget becomes more difficult for those with chronic diseases such as diabetes, cancer or heart disease, which require expensive treatment and medications.

“The ideal of an individual mandate has been around for a long time as a way of talking about coverage that is a disguise for inadequate subsidies,” said Judith Feder, professor and dean of the Georgetown Public Policy Institute and a 2006 Democratic congressional candidate. “Any time you see it, you want to look at the context in which it is emerging.”

ricardo.alonso-zaldivar@latimes.com