States seek new health care powers

January 30, 1994|By New York Times News Service

WASHINGTON -- Uncertain whether Congress will adopt a national health insurance program this year, leaders of the National Governors' Association are seeking new power to tax ++ and regulate the health plans of large corporations so the states can forge ahead on their own if the federal government fails to act.

At a four-day meeting that began yesterday, the governors are expected to adopt the new policy, over strenuous objections from many business executives who say that such a move could subject their health plans to 50 different sets of regulations.

Raymond C. Scheppach, executive director of the association, said the governors still wanted Congress to pass "comprehensive health care reform, a national program with state flexibility." But he added, "If the federal government can't get its act together, we need to move forward at the state level."

Accordingly, the governors are seeking changes in a landmark 1974 law, the Employee Retirement Income Security Act, known as ERISA. It set broad requirements for employee benefit plans, including financial standards for private pension plans.

But the law, as interpreted by federal courts, has also severely limited the states' ability to regulate or tax the health benefits of companies that serve as their own insurers. Nearly half of all workers in private industry now have coverage through such self-insurance plans.

"We are not trying to undo the ERISA system. We understand why it was created. But in the narrow area of health care, we ought to be able to put in place our own programs at the state level," Gov. Howard Dean of Vermont, a doctor who is vice chairman of the governors' association.

At a news conference yesterday, Gov. Carroll A. Campbell Jr. of South Carolina, the chairman of the governors' association, said the federal government should establish a national framework, including uniform rules to make sure people do not lose health insurance when they switch jobs. But he said: "States must have flexibility. We have been very, very concerned that that flexibility might be taken away by federal mandates and controls."

About a dozen states, including Florida, Hawaii, Maryland, Minnesota, New York, Oregon, Vermont and Washington, have passed comprehensive laws to expand health insurance coverage.

Virtually every governor is working on some health care initiative this year. Mr. Scheppach predicted that "if 10 more states pass comprehensive health care reform, it will force the federal government to act."

The state efforts are consistent with the spirit of President Clinton's proposal, but differ in many details. These differences may cause political complications and technical difficulties for Congress.

As more states adopt health programs of their own, they gain leverage to demand special treatment from Congress to let them continue operating these programs.

Mr. Clinton will address the governors Tuesday. John P. Hart, a White House official in charge of relations with state and local governments, said, "We understand the governors' wanting to have ERISA amendments to provide them with flexibility." That, he said, is "a question properly before Congress," and the administration has no position on it at this time.

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