Part of health reform called useless It doesn't address rising costs for small businesses, GAO says.

March 18, 1992|By Boston Globe

The piece of U.S. health-care reform most likely to pass Congress this year -- federal regulation of health insurance for small businesses -- will do nothing to control soaring medical costs and will make coverage more expensive for some Americans who have insurance, according to a new congressional analysis.

"The reform proposals neither stop nor reduce the rising cost of health care, the major reason small businesses give for not providing health benefits," analysts for the General Accounting Office said in a preliminary report yesterday. The GAO is an investigative arm of Congress,

Reform of the small-business health insurance market is a major component of President Bush's health reform plan -- and probably the only piece the administration will submit in 1992, according to administration sources.

"We are working on health-care legislation, with a priority on the stuff that's likely to move -- the small-market reforms," said Thomas Scully, associate director of the Office of Management and Budget and a leading architect of President Bush's health plan. "The president is very serious about health-care reform."

The new analysis warns that the proposed reforms "will cause those currently paying the lowest premiums to pay more in order to cover the high-cost individuals." This will occur because the reforms would require insurers to cover high-risk people they now exclude.

Rep. Ron Wyden, D-Ore., who commissioned the analysis with Rep. John D. Dingell, D-Mich., said he hopes the report "will cause members of Congress to be more cautious about small-market regulation alone."

While congressional analysts said small-market reforms would make insurance accessible to some Americans, they noted that similar efforts in 43 states had not resulted in a substantial increase in the number of insured workers.

By driving up health premiums for some unknown portion of the already insured, the report said, the proposals could result in no net gain in the number of insured Americans, and perhaps even a net loss. However, the analysts said they could not gauge the net impact.

Mr. Scully acknowledged last night that insurance reform would raise premiums for some, but said few people would actually lose coverage as a result.

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