CBO report unleashes new pressure to scale back Clinton health care plan


WASHINGTON -- In the latest blow to President Clinton's health reform proposal, a nonpartisan congressional agency reported yesterday that the plan would produce a new, deficit-boosting government program -- not the private, less costly system promised by the White House.

The Congressional Budget Office analysis, coming on the heels of damaging criticism of the president's plan last week from leading business groups, increases pressure on the administration to scale back its plan.

White House officials had predicted that the CBO would treat the president's plan as nongovernmental, and thus not part of the federal budget. But the agency said the costs of the plan would have to be counted in the budget as a supplemental program, as Social Security is.

Agency analysts zeroed in on Mr. Clinton's proposal that all employers and workers pay insurance premiums to regional "health alliances," which would act as "agents of the federal government" and negotiate coverage with insurers. Given these and other elements of the plan, the agency concluded that it "would establish both a federal entitlement to health benefits and a system of mandatory payments to finance those benefits that represents an exercise of sovereign power."

The agency also disputed White House claims that its health plan would reduce the federal budget deficit, concluding that the plan would instead drive up the deficit in the first six years.

Worried White House officials discounted the damage caused by the long-awaited CBO report and played up the agency's conclusion that the president's plan could achieve coverage of all Americans without bankrupting the government.

The budget office's report will carry great weight in the debate over health reform and could help alternative plans that are less governmental, such as one proposed by Rep. Jim Cooper, a Tennessee Democrat. Because the Congressional Budget Office is nonpartisan and highly respected, lawmakers of both parties eagerly awaited the results of its study of the Clinton health plan.

Critics such as Rep. Bill Archer, a Texas Republican, seized on the report as proof that the president's plan "is not a market-driven solution," as Mr. Clinton has insisted. "It is a massive intervention by the federal government," Mr. Archer said.

Rep. Newt Gingrich of Georgia, the House minority whip, said the report was a death knell for the Clinton plan. "Congress has now got to get together and produce a common-sense approach," blending plans proposed by Mr. Cooper with Republican ideas on market reforms.

The report follows criticism of the president's proposal from leading business groups, including the National Association of Manufacturers, the U.S. Chamber of Commerce and the Business Roundtable, which charged that the plan was too costly and bureaucratic.

In its study, the congressional agency stopped short of classifying the Clinton plan's premium payments as taxes, as some Republicans have labeled them.

The report increases the likelihood that the health alliances proposed by the president will be stripped of most of their regulatory powers and perhaps transformed into voluntary insurance purchasing organizations for the benefit of small businesses. Even before yesterday's report, many Democrats sympathetic to the president's reform goals had predicted that the alliances would be significantly changed.

But compulsory participation in alliances is a fundamental part of the president's plan for guaranteeing health insurance for all Americans by 1998. Mr. Clinton would have employers pay 80 percent of premiums, with workers paying 20 percent. The government would subsidize coverage of poor people and small businesses with low-wage employees. Medicare would remain a separate program for the elderly.

The president has promised to be flexible, so long as the goal of universal coverage is met, but has not said how he might change his plan.

Mr. Clinton dismissed the CBO report when asked about it in Louisiana, where he was selling his health plan to workers at a General Motors Corp. truck plant. "That's not a problem," he said of the agency's conclusion that his health plan belongs in the federal budget. "No serious person out here in the real world will be too troubled by that."

Yet, in previous statements, Mr. Clinton and White House officials have praised the congressional agency and have not challenged its findings in budgetary matters.

White House officials and supportive Democrats in Congress quickly launched a counteroffensive, emphasizing all the positive findings of the congressional report.

The agency, rebutting criticism that the president's plan would destroy businesses and wreck the economy, said that in the long run, employers that now pay for insurance would pay less -- $20 billion less in the year 2000. The "overall economic impact" of the president's plan "might not be large," said the report, which nevertheless warned that making predictions is difficult given the sweeping scope of the plan.

The report buttressed the president's claims by saying his plan would slow the rate of health care spending, saving $30 billion in the year 2000 and more in later years.

But the agency challenged White House assertions that the plan would reduce the federal deficit by $60 billion over the next six years. Instead, the CBO said, the deficit would rise by $70 billion. It also said the White House underestimated what people would pay for insurance.

The CBO director, Robert D. Reischauer, took the unusual step of urging members of the House Ways and Means Committee, who received his report, not to seize on negative findings to impede health reform. "The American people, particularly those who are ill served by our current health care system, deserve a better fate than this," he said.

But even moderate Republicans -- whom the White House is counting on to support a health reform bill -- used the report to demand changes in the Clinton plan.

"He's going to have to find a better and a different way to subsidize access" to health insurance "for all Americans," said Sen. Dave Durenberger, a Minnesota Republican who characterized the report as "another reality test" for the president's plan.

Sen. Bob Packwood of Oregon, ranking Republican on the Finance Committee, predicted that "a fair portion" of the president's plan would be stripped out of the bill. But he said he is nonetheless convinced that legislation will pass and that "the president will declare victory and sign it."

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