White House wants health plan in place by Dec. '97, but outsiders have doubts

September 03, 1993|By John Fairhall | John Fairhall,Washington Bureau

WASHINGTON -- The White House announced yesterday an ambitious "deadline" of December 1997 for achieving universal health insurance coverage, but a number of advocacy groups and economists expressed strong doubts yesterday that President Clinton's soon-to-be-unveiled health reform plan can achieve that goal.

"The bottom line is we're skeptical about this," said Gail Shearer, manager of policy analysis at Consumers Union, publisher of Consumer Reports magazine and a leading reform advocate.

Jack A. Meyer, president of the Economic and Social Research Institute, a nonpartisan research organization specializing in health issues, said: "I think it's going to be very difficult to pull off."

Questions revolve around whether the president's ideas for financing his plan are realistic, given the high cost of covering the more than 35 million Americans who currently lack insurance.

Yesterday's announcement -- a kind of interim report on the plan that is due to be formally released later this month -- reiterated that Mr. Clinton will not recommend a broad tax increase, although he probably will propose raising the federal cigarette tax. The statement also revealed that the White House has backed away from price controls on drugs, an idea the administration once seemed close to embracing.

Mr. Clinton's major financing tools include requiring firms to pay at least 80 percent of their workers' insurance costs, although businesses with fewer than 50 workers may receive a subsidy. He's also depending on saving as much as $40 billion a year in the Medicare and Medicaid programs, which provide health care to the elderly and poor.

The federal costs of health reform are expected to be at least $40 billion to $70 billion a year to cover unemployed people, subsidize premiums for small businesses and low-income workers, and to provide elderly Medicare enrollees with new prescription drug and long-term care benefits.

Most of the savings Mr. Clinton is counting on would come from slowing the soaring cost of Medicare, which in 1992 cost $129 billion, up from $70 billion in 1985.

But how the president would achieve these savings is unclear. A White House statement Wednesday suggested that an important mechanism would be a national health spending budget, allocated state by state, that would restrain spending in both private and public insurance programs.

The White House is also hoping to limit health care spending by imposing a ceiling on annual private insurance premium increases and by organizing insurance purchasing cooperatives in every state. But these mechanisms apply primarily to private insurance; Medicare beneficiaries would not be required to join the purchasing organizations.

Another problem for the administration is that it has decided against proposals to impose price controls. Mr. Clinton, responding to questions about the White House statement, insisted that he had never been "particularly hot on price controls."

Although he once castigated the pharmaceutical industry for profiteering, Mr. Clinton is now willing to take drug companies up on their offer to restrain price increases voluntarily. "I think they should be given the opportunity to adhere to the commitment that they've made," he said.

Health financing specialists and reform advocates say the presidential numbers -- revenues and cost cutting -- don't add up. To achieve universal access, he'll need other revenue sources, they say.

"I think most outside experts will feel there is some need for more revenue if their plan is to be put into effect," said Robert J. Blendon, chairman of the Department of Health Policy and Management at Harvard University's School of Public Health.

He noted that key cost containment features of Mr. Clinton's plan, like ceilings on insurance premium increases, haven't been tried before, making it difficult to predict their impact. "We just have no experience on how that will work out."

Gail R. Wilensky, who directed Medicare and Medicaid under President George Bush, scoffed at the financing scheme. Her advice to Mr. Clinton: "You ought to stop fooling yourself; you ought to stop fooling the public."

Mr. Meyer said the administration seems to be planning to finance reform "on the backs of the elderly and the Medicaid poor, which seems to me robbing Peter to pay Paul."

Even if substantial Medicare cuts were possible for the first three or four years, he said, the further costs of reform would require another source of revenue in the future. "In addition to being unfair, I think it's unstable," he said. "And I think this program deserves a secure, long-term funding base."

Sara Nichols, an attorney for Public Citizen, a Ralph Nader group that advocates a Canadian-style system in which the government acts as the nation's insurance company and pays all health bills, said the White House goal of universal coverage by the end of 1997 is "just a fantasy," given its financing.

With a Canadian-style system, her group maintains, there would be instant savings from the elimination of private insurance carriers, enough to assure universal coverage.

Mr. Clinton's plan also is stirring doubts among organizations representing the elderly, which fear that senior citizens will lose benefits or that doctors and hospitals will turn patients away because of government cuts in their fees.

"Medicare's just been cut $56 billion in the recent budget package," noted Fish Brown, a spokesman for the American Association of Retired Persons. "Medicare cannot be used as a piggy bank for all of health care reform."

At the American Hospital Association, Vice President Richard Wade warned against applying "an arbitrary chain saw to the Medicare and Medicaid programs." He said hospitals that treat many of these patients cannot readily absorb further cuts.

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