Competing health plans take shape

THE BALTIMORE SUN

WASHINGTON -- You're probably among the majority of Americans when it comes to health reform, suffering from cerebral gridlock over the dizzying proliferation of plans.

Which one's best for you? The question is more timely than ever. After weeks of committee fighting, the congressional reform debate shifts to the full House and Senate, which hope to act before a recess in mid-August.

As confusing and complex as the plans are, some conclusions can be drawn:

* All the major plans would provide insurance subsidies to very poor people and bar insurers from denying coverage to those with health problems.

* People with good employer-paid insurance are unlikely to be helped in the short run by any reform plan; some might pay higher premiums at first. But, in the long run, each plan holds out hope of protecting the public from exorbitant premiums and loss insurance due to unemployment, illness or a change of jobs.

* Employers with no more than 50 workers would receive help from all plans -- either through subsidies or the chance to buy insurance through purchasing pools that negotiate with insurers.

Yet these generalizations gloss over striking differences among the plans. On the question of controlling rising health costs -- the reason why most uninsured people don't have coverage -- the plans offer solutions ranging from intensified competition among insurance companies to governmental caps on premium increases.

Some plans would have Congress or a national commission define benefits packages that all insurers would have to offer, to ensure minimum standards and make comparison shopping easier. But the plan put forward by Senate Republican leader Bob Dole would require insurers to offer a standardized package only to the poor.

The differences reflect the opposing philosophies behind the plans, which fall into two categories: (1) Do it now and (2) Go slow.

The "do it now" plans, like President Clinton's, would cost the most and guarantee all Americans insurance within a few years, with employers picking up most of the tab. The bills passed by the Democrat-controlled House Ways and Means and by the Senate Labor and Human Resources committees embody this aggressive approach, spelling out a right to health care the way Social Security guarantees retirement and disability income.

"Go slow" plans, such as the one drafted by Mr. Dole with the support of most GOP senators, take a less costly and more conservative tack. They emphasize the role of the marketplace over that of government. Such plans would subsidize insurance for low-income people and make it easier for other Americans to voluntarily buy and keep coverage, but without government guarantees.

Another "go slow" plan, developed last week by the long-deadlocked Senate Finance Committee, creates a commission that would recommend action if, by 2002, market reforms and subsidies for the poor haven't covered 95 percent of Americans.

Bitterly divided, proponents of each approach trash the alternatives. The National Federation of Independent Business, representing small employers, warns of a "damaging loss of jobs" if a Clinton-style plan is passed because of the cost to businesses. On the other side, the consumer advocacy group Families USA charges that any plan that doesn't guarantee universal coverage "sticks it to the middle class."

Differing opinions

Each view is colored by differing opinions of the status quo and the consequences of inaction.

The White House emphasizes that 15 percent of Americans have no insurance at all. Mr. Clinton criticized the Dole plan Thursday, saying, "It does a little bit for the poor; it leaves all the powerful vested-interest groups with everything they've got."

Mr. Dole, stressing that 85 percent of Americans already have some coverage, cautions against costly reforms that might do more economic harm than good. The GOP plan is a "gentle first step," said Sen. Bob Packwood, an Oregon Republican who helped write it.

Many Americans view health reform through the prism of personal experience, polls show. Those with good employer-paid benefits are warier of "do it now" plans than are people with poor coverage or no coverage. While surveys show support for universal coverage, they reveal diminished enthusiasm for the Clinton plan.

One reason why it's so hard to achieve consensus on reform is that no one knows for sure how each plan would affect consumers, employers and the federal budget deficit. Even a cautious plan such as Mr. Dole's is a leap into the unknown. As simple as it sounds, the plan could have unforeseen effects.

His proposed purchasing pools are a case in point. Hailed by proponents as the answer to premium inflation, they haven't been tested on a large scale and could fall short of their goals.

Some health economists say that pools -- the grouping of businesses and individuals to negotiate collectively for insurance work best when they're very large: The bigger the pool, the easier it is to absorb the high cost of caring for sick individuals. And bigger pools have more bargaining power in negotiating rates.

But Mr. Dole's pools would serve only businesses with no more than 50 workers.

Pools also can work better when there's universal coverage, some economists say. In a voluntary system envisioned by Mr. Dole, young, healthy people who are charged the least for insurance won't want to join groups that include older people with more medical problems. That would increase the likelihood that pools would become dominated by sicker people paying high insurance rates.

Clinton-style plans have a downside, too, for some people, especially in the early years. These plans feature "community rating," whereby all people in a region are charged similar rates regardless of their health. While this may sound like a fine idea, it means younger people would pay higher rates than they otherwise would.

"Essentially, you're putting sick and healthy together, and you're charging an average cost," noted Bill Custer, research director of the Employee Benefit Research Institute, a nonpartisan Washington group.

Cost controls are another issue. The Dole and Finance Committee plans put faith in a more competitive marketplace that produces lower rates -- a long shot considering the history of skyrocketing insurance rate increases.

Clinton-style plans include back-up government controls over spending and prices. But, said Gail R. Wilensky, a Republican and former head of the Health Care Financing Administration, "Trying to contain spending with spending limits and price controls . . . has not worked historically in this country."

A third issue is called "cost shifting," in which some people and businesses pay the health care bills of others. Today, hospitals and doctors jack up rates for insured people to compensate for the cost of charity care and the lower fees paid by Medicare and Medicaid, the government health programs for the elderly and poor.

Similarly, employers with generous family health plans pay for workers' relatives who are employed by companies that don't provide insurance. Mr. Dole's plan doesn't respond to this problem, while Clinton-style plans do, by requiring all employers to pay something.

You might expect employers with generous plans to support the president. But, in a sign of the difficulty of deciding which is the "best" plan, most business groups oppose the president for fear of the impact of the requirement that employers pay 80 percent of employees' premiums.

No wonder consensus is so elusive. For many people, each plan is a mixed bag of benefits and costs, a conundrum of choices clouded by uncertainty over their effects. Ms. Wilensky suggests that Americans look beyond the details and answer a larger question:

"Do you want government to guarantee you something," as Mr. Clinton advocates, "or do you want to make sure barriers" to insurance "are broken down" in the marketplace, as Mr. Dole proposes?

K? "That is really the most fundamental question you can ask."

THE MAJOR HEALTH REFORM PLANS

President Clinton

Benefits and Coverage:

Universal coverage by 1998, with wide range of benefits, including guaranteed access to doctors and hospitals, preventive care, prescription drugs and limited mental health services. Adds prescription drugs to Medicare program.

Cost Control:

Combination of government caps on private health insurance premiums and "managed competition" -- regional alliances representing consumers and employers to negotiate prices with insurers.

Financing:

Employers pay 80 percent of employees' premiums. Small, low-wage companies pay less, with the government providing subsidies using: savings from Medicare and Medicaid, a 1 percent payroll tax on companies with more than 5,000 workers, and an increase in the tax on cigarettes, from 24 to 99 cents a pack.

Senate Finance Committee

Benefits and Coverage:

Cover at least 95 percent of Americans by 2002, with government subsidies for the poor. No guarantee of coverage. Create a commission to recommend further action if the 95 percent goal isn't achieved. No decision on benefits.

Cost Control:

Create voluntary purchasing groups to negotiate competitive insurance rates; tax insurance companies to discourage high-cost insurance plans.

Financing:

Raise $14 billion to $17 billion by taxing insurance companies. Other sources undetermined.

House Ways and Means Committee

Benefits and Coverage:

Universal coverage by 1998, with benefits comparable to those of the Clinton plan.

Cost Control:

Government sets annual state-by-state limits on health spending, ordering Medicare-like fee schedules for doctors and hospitals in states that exceed limits.

Financing:

Requires employers to pay 80 percent of workers' premiums. Creates addition to Medicare plan to insure unemployed, most people now on Medicaid, part-time and temporary workers. Paid for partly with cigarette tax increasing from 24 cents to 69 cents a pack by 1999.

Sen. Bob Dole

Benefits and Coverage:

Does not guarantee universal coverage. Would make insurance more affordable and accessible through voluntary purchasing groups and tax-sheltered medical savings accounts. Poor people would receive government subsidies. Small employers and self-insured could buy into the Federal Employees Health Benefit Program.

Cost Control:

Stimulate competition through purchasing groups. Encourage consumers to be more sensitive to medical costs, by creating medical savings accounts that give individuals incentive to buy cheaper insurance policies.

Financing:

8, Primarily Medicare and Medicaid savings.

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