Health insurance proposal questioned

September 18, 1993|By Robert Pear | Robert Pear,New York Times News Service

WASHINGTON -- The Congressional Budget Office warned yesterday that one of the most important elements of President Clinton's health plan, federal limits on private health insurance premiums, could harm consumers by forcing a reduction in valuable medical care and restricting access to new medical technology.

More than any other factor, it is the soaring cost that has ignited public interest in efforts to overhaul the nation's medical system. Mr. Clinton asserts that his proposal would control costs primarily by encouraging competition in the health care market.

But to guarantee savings, his plan calls for federal regulation of private health insurance premiums and a national limit on overall health spending, public and private.

In its report, the Congressional Budget Office said federal regulation of insurance premiums "could be difficult to design and costly to put in place."

"Experience with price controls in other sectors demonstrates just how difficult it is to anticipate all of the possible market responses to controls and take them into account in developing enforcement mechanisms," the report said.

The report was requested by Rep. Pete Stark, the California Democrat who heads the House Ways and Means Subcommittee on Health. He asked for the study in December, before Mr. Clinton's proposal crystallized. Several members of Congress, including Sen. Nancy Landon Kassebaum, a Kansas Republican, had already endorsed the idea of regulating premiums.

The questions raised yesterday by the CBO echo the concerns voiced by many economists. They say the government lacks the expertise to set an overall budget for health care, a rapidly changing industry that accounts for a seventh of the nation's economy.

The CBO said it was not analyzing any specific legislative proposal but was assessing the feasibility of regulating premiums in general. An administration official, asked about the report, said, "It is not relevant to the Clinton plan because our proposal includes many safeguards to ameliorate the problems described by CBO."

Moreover, the official, who spoke on the condition that he not be named, said the president's proposal for government regulation of insurance premiums "is not difficult to enforce." Health plans that charge more than the amount allowed by the government would have to pay a special assessment, he said.

But in an interview, Mr. Stark said: "I do not believe premium controls will work. If they did work, they might cause problems for patients and could adversely affect the quality of care."

Bill Gradison, president of the Health Insurance Association of America, said he, too, doubted that regulation would work.

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