Doubts voiced on Clinton health plan Democrats attack 'health alliances'

October 21, 1993|By John Fairhall | John Fairhall,Washington Bureau

WASHINGTON -- Signaling trouble for a key part of President Clinton's health care reform plan, Democratic senators expressed strong doubts yesterday about "health alliances," the new organizations that would negotiate health coverage for consumers.

Members of the Senate Labor and Human Resources Committee said they feared the alliances would become monopolistic bureaucracies that stifle competition. "I think the American consumer is going to get the short end of the deal," warned Sen. Howard M. Metzenbaum, an Ohio Democrat who advocates health coverage for all Americans.

Other Democratic liberals who strongly support health reform, including Sens. Barbara A. Mikulski of Maryland and Harris Wofford of Pennsylvania, also raised questions. Their doubts show the White House has a long way to go to win congressional support for important details of its plan.

Although administration officials are willing to change parts of the plan to satisfy congressional concerns, they are reluctant to give much ground on the alliances. They are a "key building block for reform," Judith Feder, an architect of the Clinton plan, told the committee.

But Ms. Feder was unable to satisfy most of the senators' objections in her testimony, and she indicated some changes might be made in the reform legislation, which is expected to be presented to Congress next Wednesday. The legislation would guarantee universal coverage by the end of 1997 and be paid for largely by employers, employees and government, with the help of a 75-cent increase in the federal cigarette tax.

Under a draft of the Clinton plan released last month, states would create alliances to serve each area within their borders -- the Baltimore metropolitan area, for example. Alliances would collect premiums from employers and employees and bargain with health plans that agree to provide a federally determined benefits package that includes hospitalization and doctors' visits.

Alliances would send consumers a list of approved health plans once a year and ask them to choose one. There would be at least three plans, including a health maintenance organization and a traditional insurance plan that allows consumers freedom to select doctors and hospitals.

Companies with 5,000 or more workers could exempt themselves from the alliances so long as they provide the same package of benefits and obey the same regulations. Elderly people in the Medicare program would be exempt initially.

The Republican National Committee launched a television advertising attack yesterday on the alliances and other aspects of the Clinton plan, denouncing it as "Bill Clinton's government-run system."

Ms. Feder, a top official of the Department of Health and Human Services, testified that alliances would give consumers "purchasing clout," forcing health plans -- groups of insurers, doctors and hospitals -- to compete on the basis of price and quality.

This competition, reinforced by governmental premium caps if prices rise too rapidly, is the primary means by which President Clinton hopes to restrain health care spending and make universal coverage affordable.

But some senators were skeptical. Mr. Metzenbaum predicted some alliances "will become monolithic" and be taken over by the insurance and health industries. He said that alliances themselves should compete and that consumers, who have the freedom to switch health plans, should also be permitted to change alliances.

Ms. Feder said that would undermine a major goal of the Clinton plan: ending insurance discrimination based on health status and age. "If more than one alliance were established in a community, health plans would be able to select which neighborhoods to serve by selecting the alliance in which to do business," she said.

Senator Mikulski said she had "some apprehension" about the effects of alliance-driven competition on "mission-driven" hospitals like Johns Hopkins, Sinai and Mercy in Baltimore, which serve many poor patients. "My concern is we could come out with a health alliance that has a discount store mentality," she said.

Ms. Feder responded that the Clinton plan would benefit these hospitals because they would be guaranteed funding for all patients. Currently, such hospitals treat thousands of people who don't have insurance.

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