Health reform dealt hard blow by budget office


WASHINGTON -- In the most serious political blow to the White House health care proposal since it was unveiled, the nonpartisan Congressional Budget Office has ruled that the plan's mandatory health insurance premiums should be included in the federal budget, White House and congressional sources said yesterday.

The decision is likely to bolster critics' efforts to portray the premiums as a major new tax and the program as a huge governmental bureaucracy, although the budget office reportedly will call the premiums a "receipt" rather than a tax.

"You can call it anything you want . . . [but] it's beyond a problem; it's devastating," a congressional source said on condition of anonymity. "I've never seen anything like that. The legal evaluators of the bill have come out and said, 'It's not what you said it was' . . . It reopens every question you could possibly ask about health care."

The decision would increase the revenues and outlays in the federal budget by $1 trillion from 1998 to 2000 -- a prospect that White House officials conceded probably would create a new and difficult hurdle for their plan.

"It's a technicality that would distract everyone from the real debate, which is the right of all Americans to guaranteed private insurance that can never be taken away," an administration source said.

And the budget office decision comes on the heels of setbacks last week from the Business Roundtable, which voted to endorse a rival plan drafted by Rep. Jim Cooper, D-Tenn., and the U.S. Chamber of Commerce, which backed away from the Clinton plan. The National Association of Manufacturers also decided over the weekend not to endorse the Clinton plan.

Budget office director Robert Reischauer is scheduled to release its analysis of the cost and budget implications of the Clinton health plan today in testimony before the House Ways and Means Committee.

He was expected to announce that the office's analysis of spending and deficit reduction under the Clinton plan was within 10 percent of administration estimates, which would be a welcome reinforcement for the White House. Mr. Clinton's 1995 budget, unveiled yesterday, estimates that his health care plan will cut the deficit by $59 billion from 1995 to 2000.

Under the Clinton plan, employers would be required to pay 80 percent of premium costs and employees the other 20 percent to finance a mandated package of minimum benefits for health care.

"If he comes in and says it's a tax, people will walk off" the Clinton plan, House Republican Whip Newt Gingrich of Georgia said last week at a forum on health care. "The Clinton plan almost at that moment has to be radically altered."

Budget director Leon Panetta insisted yesterday, "I think we can probably work around whatever CBO decides." But he argued heatedly that "those premiums are paid to the (state-managed health care) alliances, which in turn pay them to the insurance companies, which in turn pay them to the providers -- none of those funds in any way are related to the federal treasury."

But the budget office apparently had decided to treat the mandatory alliances as a government-chartered agency something like the Federal Deposit Insurance Corp. or the Federal National Mortgage Association. Their financial dealings are included in the budget.

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