Something For Everyone Except Those Who Foot The Bill

Back in 1910, Montgomery Ward & Co. offered its workers one of the first group health-insurance policies--and helped launch a revolution. Employer-provided insurance now dominates American medicine: Companies pay more than $200 billion a year to buy care for 150 million workers and their dependents, or 60% of the population. The system worked just fine until medical costs exploded in the 1980s, forcing employers to tweak and trim benefits in a desperate attempt to cut their payouts.

The Clinton Administration's health-reform package is supposed to rein in those costs--but the solution may also cost business virtually all of its current role in health care. Under the blueprint sketched by top White House health aides on Apr. 9, employers would have just one job: paying the bill.

CASH PUMPS. Unlike today, employers would have little say about the benefits they fund. Health plans would meet federal guidelines. And benefits would not depend on having a job. Instead, consumers would sign up at local "health alliances," large purchasing groups set up by states to negotiate coverage with networks of providers. The new system could largely turn businesses into a "pumping station for money," says Princeton University economist Uwe E. Reinhardt.

Is this progress? It depends on who you ask. Clinton's reform team calls its plan "health security," ensuring that all Americans have consistent coverage. And the proposals are just fine with some big companies--especially those with older, unionized work forces--that are eager to dump burdensome health plans. "We're fairly sure that we'd benefit from putting our people into the alliances," says Walter B. Maher, Chrysler Corp.'s director of federal relations.

But some big employers say that they're already reining in costs and can do that better than the government. And, they say, they don't want their employees forced into "alliances" that haven't yet been tested. "It sounds like a lot of potentially damaging ideas are being floated," says Vance J. Anderson, assistant general counsel of AlliedSignal Inc. "If there's one area in health care that's working, it's the employer-sponsored plans."

Clintonites claim the changes will make the system fairer. Their reform model, called managed competition, would indeed provide a boost for small companies by pooling their workers with Medicaid recipients and others in a big buying group. Besides the enhanced buying clout, the pools would relieve small fry of the administrative costs and premium hikes they now face if they buy coverage.

But some big employers--who already have the muscle to win discounts--didn't expect the rules to apply to them. Now, White House aides say the scheme may require all companies to send workers to alliances. Even if some companies--probably those with 500 or more employees--can opt out of the alliances, the Administration would make it so tough that few would do so.

Clinton is betting that his pitch to consumers--secure coverage with lots of choices--can drown out business' complaints. "It's vintage Clinton--something for everyone," says Gordon Wheeler, director of federal affairs for the Health Insurance Association of America. Everyone, perhaps, except those who pay the bills.

By Mike McNamee in Washington