WASHINGTON -- Drawing sharp protests from consumer groups, the chairman of a powerful House committee has offered significant concessions to the health insurance industry in exchange for the industry's agreement to mute its attacks on health reform legislation.
The bargain struck by Rep. Dan Rostenkowski, chairman of the House Ways and Means Committee, with the Health Insurance Association of America -- a powerful force in the health care debate -- marks the first erosion of consumer protections included in most of the health bills under consideration.
Those protections, which include a guarantee that no one could be denied insurance on the basis of age or illness, are intended to end serious abuses committed by insurers. They represented the least that most lawmakers assumed Congress could achieve on health reform this year.
"It's not a good deal," said Rep. Benjamin L. Cardin, a Baltimore Democrat on the Ways and Means committee who seemed puzzled by Mr. Rostenkowski's action. "It doesn't pick him up any votes, and may have cost him one or two."
The White House also was mystified. "To be honest, we are somewhat perplexed," said a White House official who asked not to be identified.
Consumers Union and Citizen Action, consumer groups active in the health reform debate, sent Mr. Rostenkowski a letter saying the concessions would deprive some people of insurance and drive up premiums for sick people.
"Although Rep. Rostenkowski says he favors affordable, quality health care for every American, his reported accommodation with the enemies of reform would be blatantly anti-consumer," said Gail Shearer of Consumers Union.
Mr. Rostenkowski's willingness to make such a concession illustrates the difficulty he is having reaching consensus on health reform as his committee begins public discussion of the legislation this morning. The Illinois Democrat is stalling while working behind the scenes to produce a bill that can win the minimum 20 votes he needs.
Toward that end, Mr. Rostenkowski is calling on business and other groups generally supportive of health care reform to act as "cheerleaders" for the effort. But even concessions won't win the support of the Health Insurance Association of America, which ran the "Harry and Louise" TV ads that were credited with souring the public view of President Clinton's health reform legislation.
The group has agreed only to refrain from launching a new ad campaign against the bill while the Ways and Means Committee is working on it, according to the association's president, Willis Gradison, a former Republican congressman who formerly served on the committee. He said his group would oppose several features of the bill, such as a ceiling on insurance premium increases.
The agreement with Mr. Rostenkowski is intended to give the committee some "breathing space" free from constituent attacks that might be provoked by ads, according to another association official.
The deal with the insurance group came to light after Mr. Gradison outlined it in a memo reported yesterday by the Wall Street Journal.
A Rostenkowski aide yesterday described Mr. Gradison's account of the agreement as "overblown." And one Ways and Means committee member, Rep. Pete Stark, a California Democrat, said the deal sounded so bizarre that he did not believe it.
"The chairman has not lost his mind," said Mr. Stark, chairman of the subcommittee that passed the reform legislation that Mr. Rostenkowski would change as a result of the deal. "This is just Bill Gradison's dream."
Even so, Mr. Stark and Mr. Cardin said that they expected some easing of the insurance reforms in the bill passed by Mr. Stark's panel.
As outlined by Mr. Gradison, the concessions supported by Mr. Rostenkowski would permit insurers to:
* Serve only certain groups, instead of being required to offer policies to everyone.
* Charge different rates for different groups, based on each group's health risks. This undermines the Clinton administration's proposal to establish a system of "community rating" that would have people pay about the same price for insurance.
* Deny coverage for six months to consumers who have let their insurance lapse for more than three months. This would overturn a provision in the Stark bill to bar insurers from turning down people because of existing medical conditions. A Rostenkowski aide said, however, that a strict ban against denying coverage eventually would take effect.
* Consider age when setting premiums. Under the Clinton plan, rates would have to be set without reference to age, gender or medical history.
PTC Mr. Gradison said that the kind of insurance market reforms sought by Mr. Clinton and included in the bill approved by Mr. Stark's panel would work only in a system in which all Americans are insured. He said insurers fear that Congress won't pass a bill requiring universal coverage.
"Insurance reform only works if everyone is required to have coverage," he said. If young, healthy people can opt out, leaving insurance carriers to cover only those likely to have expensive medical bills, he said, the system would fall apart.