Not a perfect plan, but remarkably good

Robert Kuttner

September 28, 1993|By Robert Kuttner

MANY of us would have preferred a Canadian-style "single-payer" health system. A single-payer approach would put every citizen in one plan, free to choose any doctor. It would also reap more administrative savings and clamp down tighter on medical profiteering.

That said, political reality suggests that a tax-financed, single-payer system is a non-starter in 1993. Fewer than 100 members of the House of Representatives sponsor the single-payer bill, which would require a massive tax hike and would be opposed by a united front of the American Medical Association, the American Hospital Association, the insurance and drug lobbies and most other corporations.

One might imagine a splendid populist crusade against such a coalition -- the people versus the special interests. A Franklin D. Roosevelt could perhaps pull it off. But it is hard to imagine Bill Clinton, with his slim majorities and fiscal woes, winning such a bill.

Given this difficult context, President Clinton's health plan is remarkably good. Having decided against a single-payer approach, he has gotten the rest of the package just about right.

The Clinton plan would guarantee every American good health insurance by 1997, including long-term care. Nobody could be turned down or charged a higher premium because of medical condition, age, or employment status. People would still be free to spend their own money for enhanced coverage.

Mr. Clinton's approach requires employers to pay a basic payroll charge, which would finance 80 percent of the cost of insurance. Individuals would pay the rest, and would be free to shop among approved health plans. Large companies could sponsor their own plans, but would have to offer a choice of at least three. Small businesses would pay at a lower rate. The self-employed would get a tax deduction for their premium, and the poor would get free coverage.

This approach is not as simple as single-payer, but it does offer universal coverage. Annual increases in premiums would be capped. That cost discipline, in turn, would be passed through to health plans and doctors, who would be forced to set priorities within a fixed budget.

This discipline is a form of rationing, but so is the present system in which the rich get better care than the poor, and the middle class can be arbitrarily denied coverage on the basis of job loss or medical history. The Clinton plan is a better form of cost control than what now exists, in which insurance companies second-guess doctors procedure by procedure, and deny coverage to the sick.

Mr. Clinton has also maximized the politics of the situation, by building a coalition that can win. Its core is a middle class worried about the security and affordability of its own coverage. The coalition includes large companies paying escalating insurance costs, as well as union members that currently have good insurance, but see it rapidly eroding absent fundamental reform.

Mr. Clinton's coalition also includes large insurance companies that will still get to sponsor health plans under his approach, though they will fight him on some details. He can count on support from most doctors and hospitals, who prefer a streamlined and comprehensive system to the present patchwork.

The opposition will include the smaller, less efficient insurance companies who won't be able to compete, small businesses that would prefer to provide no coverage and drug companies and makers of medical devices that can expect limits on their profits.

But that opposition coalition is beatable. The Clinton bill also deftly divides the Republican Party from its big-business allies in the National Association of Manufacturers who now favor basic reform.

The Republican alternative bill is weak tea. It requires employers to have coverage available for their workers coverage -- but not to pay any of the cost. It prohibits denial of coverage based on medical history, but still allows discriminatory pricing of premiums. It has no serious mechanism of cost containment.

As this legislation works its way through Congress, opponents will seek to water it down. There will be efforts to delay or dilute benefits, which would make the plan far less attractive to the insured middle class.

The insurance, drug and medical-device lobbies will resist caps on premiums. But without this form of discipline, the only way to contain costs would be to reduce care.

Mr. Clinton hopes to pay for the additional coverage with "sin taxes" on tobacco and perhaps alcohol. Even these taxes have many opponents. At a recent strategy meeting of Democratic senators, Kentucky Sen. Wendell Ford announced, "Some of you may think that Kentucky is a tobacco state. That's a misconception. Kentucky is a tobacco and spirits state."

Any form of tax hike will be fought by many legislators, but without some increase in revenues, the arithmetic doesn't work. Cutting or delaying benefits would be worse.

Single-payer advocates can be disappointed this wasn't their choice. But they should now use their influence to hold the Clinton package to its promise of high-quality care, cost-containment and universal coverage, and seek fair taxes to finance it.

The plan isn't perfect, but these opportunities don't come round often.

Robert Kuttner writes a column on economic matters.

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