Clinton's health plan covers all companies Big corporations couldn't opt out

July 02, 1993|By Los Angeles Times

WASHINGTON -- President Clinton has decided that all companies, regardless of size, should be required to join the new national health program, according to senior White House officials.

The decision is a blow for large corporations, which had hoped to retain the power to structure health benefits for their workers. But the president has ruled that "nobody opts out," says one high-ranking administration source, because the White House wants a consistent set of benefits and rules for the national health program.

The effect of the president's decision on individual workers who have company health insurance would vary widely, depending on how their existing plan compares to the proposed government standards, which have not been announced.

Under the plan, large employers would be permitted to operate as so-called health alliances, the basic building block of the Clinton plan.

As an alliance, companies could offer health care to their workers, but the actual providers -- networks of doctors and hospitals -- would have to follow strict standards requiring them to provide a government-defined uniform package of benefits.

Most alliances would be local organizations operating independently of employers. They might include hundreds of thousands, or even 1 million or more, residents.

The alliances would negotiate with many health plans in an area to provide physician and hospital services. Each of those plans would have to provide the uniform package of benefits. Individuals would then chose the plan they preferred and would use its doctors and hospitals exclusively. Going outside the network would require the patient to pay the full bill from his or her pocket.

Administration health planners had considered giving large employers an optional exemption from the requirements placed DTC on local alliances. Instead, under the Clinton plan, corporate management would give up the ability they now have to offer their workers custom-designed benefit packages, such as so-called cafeteria plans that allow workers to vary the amounts of health insurance, life insurance, child-care outlays and other benefits.

Companies could, however, retain the authority to select the various networks of doctors and hospitals their employees could use -- in effect, functioning as an alliance, provided they "conform to all the other requirements of an alliance," the source said.

Health plans now jointly operated by management and labor, such as the health insurance funds for carpenters, laborers and other workers in the construction trades, also would be allowed to call themselves health alliances. But, just as with large corporations, their autonomy would be strictly curtailed to meet the federal standards.

"We want the companies that form their own health alliances to be sizable enough to really run serious alliances and to fulfill the same quality requirements: guaranteed benefits package and everything else," the administration source said.

"We're not surprised, but we're disappointed," Stephen Cook, coordinator of the Coalition to Preserve Health Benefits, said yesterday. His group's membership includes some major corporations and some small and medium-sized health insurance companies whose business would be sharply curtailed under the Clinton plan.

"They are seeking to create one standard of operations across the board, but it would take the employer out of the equation entirely," Mr. Cook said.

Businesses "would just be a mechanism to collect money, with )) no incentive to reduce costs or encourage innovation," he said.

Alliances, whether established for a geographic area or created by a single corporation for its workers, would negotiate with providers of health services -- health plans like Kaiser, Blue Cross and Blue Shield, and a variety of health maintenance organizations.

The money spent by local and corporate health alliances alike would come from businesses and their workers. The administration is discussing a levy of 7 percent of payroll costs for companies and 3 percent of salary for employees. This method of financing would replace the widely disparate system in which companies now offer coverage.

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