The Health Plan Could Stand A Dose Of Reality

While President Bill Clinton in his Sept. 22 speech reached for soaring rhetoric to rally the nation to his fight for health-care reform, his aides are more down-to-earth. Clinton's leading economic officials have signaled that they are willing to be flexible--supremely flexible--as the overhaul works its way across Capitol Hill.

They'll have to be. While employers, health interests, and politicians applaud Clinton's push for a secure and affordable health-care system, the details of his package are problematic. The complex blueprint too often depends on government controls--price caps on insurers--and on state bureaucracies. It undermines the progress that business and medicine have already made to contain costs. And the promise of coverage for all by 1998 isn't backed with the needed funding.

There are several better approaches. Indeed, Senate Republicans and House Democrats have put forward more realistic health-policy plans that sidestep the land mines that could explode Clinton's program--but still make economic and political sense.

In the end, after listening to business and industry lobbies and taking stock of alternatives, here's what Congress is likely to do:

--Rethink insurance reform. Remarkably, all interests agree on what should be done. Even insurers concede they must return to the business of covering sick people, not avoiding them. A basic package of insurance reforms--barring insurers from excluding consumers with preexisting conditions, requiring automatic policy renewals, and outlawing premiums that penalize the sick--could sail through Congress. Such reforms would relieve the health-insurance fears of many Americans and make insurance more affordable for small businesses.

--Take out the tax breaks that shield workers from the true cost of medicine. To encourage cost-conscious medical buying, lawmakers must cap the tax breaks for employer-paid insurance. Any plan more generous than a standard benefits package will have to be bought with aftertax dollars. Congress will delegate design of the standard benefits to a commission whose proposal would have to be either accepted whole or rejected. That would keep politicians from adding services to satisfy lobbyists.

--Let 1,000 HIPCs bloom. Large employers and medical groups are rapidly overhauling the U. S. health-care delivery system, pushing health-maintenance organizations and preferred-provider networks. States and local business groups are experimenting with health-insurance purchasing cooperatives (HIPCs) that make such innovations accessible to small firms. Clinton's plan would crush those efforts, rolling everyone into mandatory, state-run "health alliances." Congress most likely will encourage new groups to spring up voluntarily and will sweep away the antitrust barriers between providers.

--Let employers and workers figure out who should pay for insurance. Clinton's plan would require all employers to pay at least 80% of the cost of health coverage for every employee. To offset the expense--and economic disruption--he creates a complex system of subsidies for small companies and the poor. The Senate GOP plan takes a simpler approach: Phase in a requirement that Americans buy their own insurance and provide vouchers to help those who can't afford it. Most employers will still pick up the tab.

--Make sure promises don't outrun funding. Clinton vows to pay for his subsidies by slashing the Medicare and Medicaid growth rates, from double digits to 4.1% by the year 2000. Even if the cuts don't materialize, the subsidies will continue. GOP senators have set a more realistic target--a 7% Medicare growth rate--and won't spend the savings before they are realized. That may delay universal coverage, but in a debt-ridden economy, pay-as-you-go is the only sensible choice.

In upcoming weeks, Clinton will sell his plan as a uniquely American approach to health care. But it remains to be seen whether Americans will welcome this revolution in a matter as personal as health. An evolutionary approach is more likely to work for a nation that both wants and fears health reform.

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