Costs come to the fore in health care debate

ON POLITICS

August 03, 1994|By JACK GERMOND & JULES WITCOVER

WASHINGTON -- After almost a year of ducking and dodging, the White House and Congress are finally being forced to confront the cost issue in health care reform. Whether they can resolve it is another question.

From the outset, there has been a conspicuous lack of candor on the issue of financing the reforms President Clinton has proposed. Even when he outlined his plan in some detail before Congress last Sept. 22, the president was short on details of how the expenses would be met.

But it also has been clear from the outset that there were going to be some serious costs. Any plan that even approaches Clinton's requirement for universal coverage involves somebody

paying the health insurance premiums of some 35 million Americans -- either employers, the workers themselves or taxpayers.

The bill being brought before the House of Representatives by House Majority Leader Richard Gephardt is the most direct in dealing with the cost issue. It would require employers to pay 80 percent of the cost of their workers' health insurance with some subsidies and other gimmicks to soften the impact on those small businesses for which there would be a particularly distressing impact.

But no one knowledgeable about internal congressional politics believes that plan, essentially the same formula Clinton has offered, will fly in the Senate. So Majority Leader George Mitchell is offering a kinder, gentler bill that would require employers to pay only 50 percent and only if coverage had not been extended to 95 percent of Americans.

Both proposals would phase in these requirements over time -- at least five years in the case of the House bill, seven years for the Senate. In other words, nobody would have to pay the piper until long after the 1996 presidential election.

There are, however, going to be huge -- but as yet undefined -- costs that cannot be met by employer payments because there are so many Americans who make up a significant and perhaps permanent underclass and who cannot be reached through conventional payrolls.

The financing methods are vague enough to raise serious questions. It is probably possible for Congress to pass a substantial increase in taxes on cigarettes, and there is some obvious logic to wringing money out of a product that contributes significantly to health care costs. But no one can predict at what point the higher tax rates will cut down cigarette smoking and thus the yield.

The other immediate way to meet the costs, we are being told by all sides, is by savings in the Medicaid and Medicare programs. And, to a degree, that also makes sense, particularly when applied to the Medicaid program that finances health care for the indigent. In this case, they are talking essentially about shifting existing funding from that program to a new one.

Both the president and his allies in Congress have made a persuasive case all along that ultimately a system of universal coverage would cost less than the 14 percent of the gross domestic product now devoted to health care. The theory is that larger and larger pools of purchasers would force down insurance premiums and medical costs by applying routine competitive pressures.

But neither the White House nor Congress has been direct about the way the interim costs will be met, although it is plain that some workers and employers alike are going to have to pay higher insurance premiums and that some form of higher taxes is likely to be required as well. There is no mystery about this failure of candor. Politicians recognize that raising taxes is the surest route to early retirement for themselves.

The president and his supporters draw some comfort from opinion polls that show most Americans favor both universal coverage and an employer payment. But these professional politicians are shrewd enough to know that those poll results might be reversed if the questions were qualified with the information that insurance premium costs might rise for those already covered.

It may be possible for the Senate and House Democrats to reach a final compromise on legislation that will seem politically safe enough to enlist a majority in each house. But at some point they are going to have to come clean on who's going to be paying what.

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