Portable Health Benefits Lose A Champion, Gain A Chance

Question: When does the sudden retirement of a bill's most powerful backer enhance prospects for the measure's passage? Answer: when the retiree is Senate Majority Leader Bob Dole and the legislation is an effort to assure that job-hoppers have health coverage.

Although Dole has been a prime mover behind health-insurance portability, the drive stalled as he jousted with President Clinton. Now, with the Kansan quitting the Senate to focus on his White House run, reformers will settle partisan differences more easily. Indeed, business lobbyists working to shape an acceptable version are now optimistic that Congress will send Clinton a bill he can sign.

Business' main worry is that the overhaul has been loaded up with costly goodies and political booby traps. Executives are focusing on the four Ms: medical savings accounts, malpractice reform, mental-health parity, and MEWAs (multiple-employer welfare arrangements)--insurance-purchasing cooperatives for small businesses.

"JOB LOCK." The core of the Senate bill has always been popular--and inexpensive. It would make it easier for workers to keep health insurance if they lose or switch jobs and would reduce disqualifications for preexisting medical conditions. Business likes the provision because it would eliminate "job lock," fear of losing health benefits by moving to a new job. The measure also would increase the current 30% health-insurance deduction for the self-employed to 50% in the House bill or 80% in the Senate bill.

Indeed, a grand compromise is slowly taking shape. Employers, insurers, and medical providers favor limits on medical malpractice lawsuits in the House bill. But with threats from Clinton to veto any legislation that stings plaintiff lawyers, even the American Medical Assn. is set to table malpractice reform for now. "We're willing to be patient on this one," says AMA spokesman James H. Stacey.

In turn, Clinton has quietly agreed to drop a threatened veto of medical savings accounts (MSAs), also contained in the House bill. A popular item with small businesses, MSAs would operate like IRAs, allowing employer contributions to tax-free accounts used by workers to purchase health-insurance coverage and to pay out-of-pocket medical expenses. Most likely, MSAs will pass as some sort of demonstration project or a temporary tax break. On the chopping block: provisions to expand MEWAs and exempt them from state regulation.

The biggest fight remains on the mental-health provisions, which prohibit insurers from setting stricter treatment limits on mental than on physical ailments. The National Association of Manufacturers, the U.S. Chamber of Commerce, and the Business Roundtable, among others, cite studies showing that the provisions would boost employer insurance costs by up to 11%. Likewise, the Congressional Budget Office estimates that 800,000 workers and dependents would lose coverage entirely as employers drop insurance and shed workers.

Opponents point out that the provision was hastily added in the Senate after an emotional appeal by Pete V. Domenici (R-N.M.), whose family has been touched by mental illness. In the face of the business-lobby assault, the final bill may simply call for a study or commission on mental-health parity.

That would clear the way for portability reform. Dole has promised retiring Senate Labor Committee Chairman Nancy L. Kassebaum (R-Kan.), the bill's co-sponsor along with Senator Edward M. Kennedy (D-Mass.), to get the legislation moving by the Majority Leader's June 11 departure from the Hill. Senate Democrats, who have been blocking progress, will likely support a compromise on the popular issue so long as they can claim some credit. If so, they all can thank Bob Dole for his parting gift.

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