Administration officials debate financing of health plan, spending limits

August 30, 1993|By New York Times News Service

WASHINGTON -- Less than a month before President Clinton is to unveil his proposal for a national health insurance program, disputes have broken out among administration officials over how to finance it and how tightly to limit overall health spending.

Officials said that the White House, seeking to avoid new taxes, was seriously considering a proposal to squeeze more than $100 billion of additional savings from Medicare, the federal health program for the elderly, by holding down increases in the program through the year 2000. The savings, along with a possible increase in the tax on cigarettes, would help pay for Mr. Clinton's promise of guaranteed coverage for all Americans.

In addition, some White House officials have proposed setting tight limits on the growth of all health spending, public and

private, so that by 1997 it would grow no faster than the economy as a whole. Health spending is now growing more than twice that fast.

Under the Clinton plan, a new government agency, the National Health Board, would establish a limit on the average yearly health insurance premium to be paid by employers and workers.

The proposals have provoked fierce debate inside the administration, with some presidential appointees arguing that the swift imposition of such limits is politically unrealistic and economically unfeasible.

"It's not an ideological argument," one Cabinet officer said. "We agree on Clinton's general approach to health care reform. It's an argument about what is possible -- how fast we can pound down the growth of health spending, how tight the caps on such spending should be, how big the cuts in Medicare will be."

Ira C. Magaziner, who has coordinated development of the health plan, argues that substantial cutbacks in Medicare and the proposed limits on health spending are feasible and realistic.

But several Cabinet officials have challenged that conclusion, including Donna E. Shalala, secretary of Health and Human Services; Robert E. Rubin, assistant to the president for economic policy; Treasury Secretary Lloyd Bentsen; and Laura D'Andrea Tyson, chairwoman of the Council of Economic Advisers.

Mr. Clinton has promised that his plan will not require any new broad-based tax. This vow has forced him to intensify his search for other ways to pay for his proposals, whose exact cost is not yet known.

Medicare finances health care for 36 million elderly and disabled people. The budget bill signed by Mr. Clinton on Aug. 10 cuts $55.8 billion from the projected growth of Medicare over the next five years.

Health policy experts warn that further cutbacks could have unintended effects. Doctors and hospitals, they say, would try to offset the loss of Medicare income by raising prices to privately insured patients, thwarting Mr. Clinton's effort to restrain health spending -- unless the government prevents such cost shifting by enforcing limits on all health spending.

Most of Medicaid, the federal-state program for low-income people, would be folded into the new system under Clinton's plan.

The White House says Mr. Clinton intends to unveil his health plan before a joint session of Congress on Sept. 22 or a few days later. Administration officials have said that under the plan all Americans will be entitled to health benefits.

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