Clinton weighs funding care by tax on hospitals Levy would recover part of 'windfall'

June 01, 1993|By New York Times News Service

WASHINGTON -- President Clinton is seriously considering a new tax on hospitals to help finance medical care for people who have no health insurance, administration officials said yesterday.

The officials said the proposal would be high on the agenda when Mr. Clinton meets this week with his advisers to review the design of his plan to guarantee health care for all Americans.

A senior White House official supervising the work of the president's Task Force on National Health Care Reform said many hospitals would get a financial "windfall" under Mr. Clinton's plan because all Americans would have insurance.

As a result, he said, hospitals would be paid for providing care to people who now pay little or nothing for such care.

The administration is considering a tax or some other type of assessment to recover some of that money, the official said.

But some hospital officials deny that a windfall would occur. They argue that hospitals would reduce their charges under the managed-competition plan being devised by the administration.

Asked if the administration was considering a charge on doctors, like the one being discussed for hospitals, a White House official said, "We do have some proposals on the table for that."

Mr. Clinton has repeatedly said that employers should help finance health care for their workers and that he would ask Congress to impose such a requirement. White House officials said yesterday that the requirement would be put into effect gradually.

Thus, the officials said, in the first years of the president's plan, such employers would have to pay a gradually increasing share of their employees' health costs. Under the proposal to be discussed this week, the government would subsidize the coverage with money raised from the tax on hospitals.

"Once you phase in universal coverage, you could expect a significant decline in uncompensated care," the senior White House official said. "I think nobody disputes that there will be a significant windfall for some hospitals."

The idea of a tax on hospitals arose soon after Mr. Clinton appointed the health-care task force in January, but it quickly faded from public view; White House officials assured hospital lobbyists early last month that the idea had been set aside. But the officials now say that Mr. Clinton's health-policy advisers have recommended such a tax and that the president is likely to propose it.

In addition, the administration is considering a proposal to finance care for the uninsured by taking money now earmarked for hospitals that serve disproportionate numbers of low-income patients under Medicare and Medicaid, the programs for the elderly and the poor. The administration says there would be less need for such payments if all Americans had health insurance.

The White House says Mr. Clinton will send his health-care proposals to Congress this month. Congress is sure to make many changes, but lawmakers from both parties predict that by the end of next year Congress will pass landmark legislation to overhaul the nation's health-care system.

Hospital executives said in interviews that the administration's logic was plausible, but they said a new tax would be unwarranted because the hospitals would not be reaping a windfall.

Dr. Spencer Foreman, president of Montefiore Medical Center in the Bronx, acknowledged that "universal coverage may reduce uncompensated care." But he said competitive market forces or government regulation "will remove that windfall by driving down prices."

The administration has not decided whether the proposed tax would be on a percentage of a hospital's revenues or on some other basis.

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