Universal health care is proposed Insurers favor plan similar to Clinton's

December 03, 1992|By New York Times News Service

WASHINGTON -- In a sharp break from past practice, the health insurance industry called yesterday for a new federal law that would require coverage for all Americans, define a basic set of benefits and try to contain health-care costs by limiting tax breaks for the purchase of insurance.

The board of directors of the Health Insurance Association of America, representing 270 commercial insurers, adopted a policy statement yesterday arguing that "the insurance industry itself needs reform."

The industry has often been described as an obstacle to change in the nation's health-care system.

But with the new proposal, to be announced today, the industry signals its willingness to accept sweeping changes, many of them similar to those proposed by President-elect Bill Clinton.

Details of the insurers' proposal remain to be worked out. Many of the unresolved issues are contentious. But Democrats and Republicans as well as business executives and labor unions agree that the nation must do something to help the 35 million people who do not have health insurance.

Carl J. Schramm, president of the association, said the new TC proposal was in the long-term financial interest of insurance companies.

For more than a year, the insurers have been denouncing proposals for a government-run program of national health insurance that would minimize the role of private insurers.

"This is probably the only way you preserve the private health insurance industry," Mr. Schramm said. "It's plain-out enlightened self-interest."

The insurers, like Mr. Clinton, endorsed the idea of universal coverage, mandated by federal law, along with new measures to control costs, including a larger role for the government in supervising fees charged by doctors and hospitals.

But the insurers did not support Mr. Clinton's proposal for an annual limit on all health spending, public and private.

The Health Insurance Association is one of many business groups that have offered to cooperate with Mr. Clinton since his election.

Many of these groups previously opposed overhauling the health-care system, but now say they see major changes as inevitable and want to help shape the results to their liking.

In Little Rock, Ark., Judith Feder, health policy coordinator for the Clinton transition team, welcomed the new proposal and described it as "a major turnaround" for members of the health insurance industry.

The insurers' proposal may help break a logjam that has blocked congressional action on comprehensive health legislation for the last two years. Dozens of bills died earlier this year amid partisan squabbling in the election campaign.

The insurance industry's new position, unlike the old one, would require health insurance coverage for all Americans and limit the amount of tax-free health benefits that employees could get from their employers.

The proposal would require employees to pay a tax on the value of health insurance exceeding the standard package of benefits.

This proposal is noteworthy because companies rarely propose a new tax on their own goods and services.

Revenue from the health insurance tax would be used to help finance additional coverage for poor people.

Here are some of the elements of the insurance association's proposal:

* Through unspecified tax incentives for employers and tax penalties for consumers who do not purchase insurance, the government would require all Americans to buy "an essential package" of health benefits.

If the government fails to achieve universal coverage in this way, then "it may become necessary to require employers to help finance such coverage," the insurance industry said.

The government would help define the essential package of benefits. The package, though not described in detail, would go beyond minimum benefits and would meet "most of the needs of Americans" for doctors' services and hospital care. * If employers bought insurance covering more than the essential package of benefits for their employees, the premiums paid for that extra coverage would be treated as income to the employees, and they would have to pay income tax on it. The core benefits would still be tax-free. * The government would work with insurers and providers of care to reduce the immense variation in payments to doctors and hospitals.

Private insurers and government programs would eventually have to pay similar amounts for the same services in the same geographic area. Medicaid and Medicare, the programs for poor people and the elderly, now usually pay less than private insurers.

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