Many questions on financing, coverage remain unanswered CLINTON'S HEALTH PLAN

September 23, 1993|By John Fairhall | John Fairhall,Washington Bureau

WASHINGTON -- Even as President Clinton tries to sell Americans on his ambitious plan to reshape the health care system, many important questions remain unanswered.

Individuals haven't been given enough information to determine how it affects them personally, and Congress doesn't know enough about the plan's financing. Those details are lacking in the 239-page draft of the plan, which is the only major document released so far by the White House.

Clinton aides say it will be at least two weeks before legislation is presented to Congress. Until then, many people will not be able to determine what the plan would mean for their families and their pocketbooks.

For dual-income couples, there are really more questions than answers.

Take, for instance, a woman who works part-time for an employer, but also has self-employment income. Her husband works full-time for a company that supplies insurance covering both of them. The draft plan gives no clue how much they and their employers would pay for health coverage.

Instead the plan lays out principles, requiring interpretation to understand how they affect individuals. Administration officials say they're not yet in a position to do that on a mass scale, leaving many people confused.

Critics of the plan's financing feel much the same way. Last night, Republican lawmakers sported "Who Pays?" buttons to make that point.

Mr. Clinton's ambitious goal of insuring every citizen by 1997 would require $350 billion in new federal spending from 1995 through 2000. He maintains the government would raise $441 billion in the same period, including $238 billion in savings in the Medicare and Medicaid programs and $105 billion in new taxes, primarily on cigarettes.

In that equation, Mr. Clinton not only funds his plan, but has $91 billion left over to reduce the federal deficit.

Those numbers have come under attack by a wide range of economists, who say they are simply not realistic.

"I'm skeptical on a couple of fronts," said John Erb, a partner in the Higgins Foster benefits consulting firm. He raises doubts about Mr. Clinton's proposal to require employers to pay insurance, while limiting their contribution to no more than 7.9 percent of payroll.

"Current health plan costs total close to 11 percent -- that was 1992," Mr. Erb said. "And that will probably be 12 percent this year. So we're looking at a significant reduction in the cost of providing health benefits. . . . I don't know where those savings are going to come from."

He also suggests the administration is being overly optimistic in projecting that its plan, if it were in effect next year, would cost $4,200 for family coverage and $1,800 for an individual. Mr. Erb notes that currently, 2,500 employers surveyed by his firm are paying on average $5,294 for family coverage and $1,994 for individuals.

Administration officials are defending their numbers, saying that critics are wrong in suggesting that the plan will be financed mostly through savings. The major financing tool for achieving universal coverage, they say, is the requirement that all employers and employees pay for insurance.

But when top officials were asked Tuesday how much employers and workers would pay under the new system -- and who would come out ahead compared to the present system -- they wouldn't say.

"We will, during the course of the next several weeks, be developing exactly what you're talking about -- a sector-by-sector impact during that time period," said Kenneth Thorpe, an architect of the Clinton plan working at the Department of Health and Human Services.

Until then, administration officials are saying, in effect: Trust us. When asked what happens if their estimates are wrong, they say the estimates will be adjusted -- without any need to ask for more taxes, beyond the $105 billion Mr. Clinton hopes to raise from new "sin taxes" on tobacco and possibly alcohol.

"In other words," said Deputy Treasury Secretary Roger Altman, "if it turns out that people convince us that something we've estimated at 'X' will cost more than that, well, we'll reduce costs in some other area. What we will not do, beyond the sin tax proposal that will be made shortly . . . is to propose any further changes on the revenue-increasing side, on the tax side."

Other questions about the plan arise from its ambitious scope. Mr. Clinton proposes to redesign the system from top to bottom, incorporating features never tried before on a national scale.

He would impose annual health spending budgets for each state and enforce them with caps on insurance premiums. He would stimulate marketplace competition by creating huge insurance purchasing cooperatives of employers and employees. The result, he proclaims, will be lower costs, better quality and a simpler system.

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