Another Blow to Clinton Health Plan

February 09, 1994

One day after President Clinton submitted his $1.5 trillion budget, the non-partisan Congressional Budget Office dealt a harsh blow to his embattled health care reform plan. It contended that the huge money flow associated with the health plan's mandatory insurance scheme should be included within the regular federal budget rather than as a separate "off-budget" operation.

At first this might seem an esoteric accounting matter. But it would dramatically inflate the stated costs of the program, making it that much more difficult to pass. For critics of the Clinton proposal to require employers or individuals to purchase standard benefits packages offered by governor-sponsored alliances, the CBO decision opens the way to charges that the mandates are just another form of taxation -- and a big one at that.

Leon Panetta, White House budget director, said he hoped the CBO ruling would not "torpedo" the president's plan. He argued that the federal government issues all sorts of mandates for payments that are not considered federal receipts.

But Robert Reischauer, the CBO director whose Democratic affiliation gives greater weight to his ruling, held that the Clinton health plan "establishes both a federal entitlement to health benefits and a system of mandatory payments to finance those benefits that represents an exercise of sovereign power." He did not call the receipts "taxes" -- a label sure to be heard -- but said because of their huge size they should be listed separately in the budget, as is the practice with Social Security.

With the business community in opposition, the CBO decision puts the White House on an uphill road in trying to make its approach the dominant legislative vehicle on Capitol Hill. A rival plan, sponsored by Rep. Jim Cooper, D-Tenn., would eliminate the mandatory element in health care financing and thus moot the argument over how to treat premium payments in the federal budget.

At the General Assembly in Annapolis, the governor and key legislative leaders are preparing bills designed to "grandfather in" an embellished version of Maryland's current health care system before it is subsumed by Washington. It would require employers to offer but not necessarily pay for affordable health care packages. It thus departs fundamentally from the president and edges closer to Mr. Cooper's approach.

Nationally, the Cooper plan, which has some GOP support, is gaining momentum. While we agree with Mr. Panetta that how the administration plan is handled in the budgetary process does not change its essential elements, including guaranteed private health insurance for all citizens, the politics of the situation are something else. By insisting on employer mandates and insurance purchasing alliances, the administration risks the emergence of a compromise that may look a lot more like the Cooper plan than the Clinton plan.

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