The blunt and somewhat embarrassing fact is that the administration has fallen well short of its hopes for unveiling a health-care plan this spring. That is partly because of the crush of pending business on Capitol Hill, and partly because the president, by his own admission, has spread himself too thin. “What I think we need to do, frankly, is get the focus back on the things I have been working on from the beginning,” Clinton conceded last week. To do that, the president approved a realignment of his White House staff. Among other changes, Roy Neel, one of Vice President Al Gore’s aides and a veteran of Beltway politics, was brought in as a deputy to Clinton’s softspoken and self-effacing chief of staff, Thomas F. (Mack) McLarty. The overall goal was to keep the administration and the president himself targeted on mega-issues like the deficit and health-care reform.
The delay may actually improve the health-care plan. The small army of consultants, bureaucrats and congressional staffers has been disbanded, and the president has joined his wife, staff director Ira Magaziner and other top administration officials in the quest for a final design. A White House official says the number of key decisions has been narrowed from 1,100 to about 25, each of which is tied to all the others, and all of which have huge economic and political implications. “You make three decisions, then come to the fourth and have to go back and look at the first three,” an aide explained. The whole process, of course, is secret-which is why Washington is now consumed by what one lobbyist calls the “trial balloon du jour” syndrome and why the news media cannot describe the plan with real precision. Still, the broad outlines of the decisions Bill and Hillary must make are becoming clear:
The heart of the Clinton plan is what is known as a “core-benefit package.” This part of the plan is essentially comparable to any health-insurance policy because it will specify the kinds of medical services that will be covered by the government or by private insurers-hospital care, doctors’ bills, diagnostic tests and so on. The Clinton plan will not prevent Americans or their employers from buying more expensive insurance, but it will establish a minimum standard for health coverage for everyone. Last week The New York Times published a detailed account of the administration’s internal debate that suggested the core-benefit package would be generous indeed.
As White House sources told it, the Clinton team is currently trying to decide among three different levels of coverage–an “austere” plan, a “medium” plan and a “generous” plan. All three would cover hospitalization, doctors’ services, prescription drugs, surgery and at least some level of mental-health benefits. The major differences were in the level of deductibles and copayments that would be charged to patients and their families. Under the “austere” variant, the maximum annual out-of-pocket cost for any individual would be $3,000, while the “generous” plan would cost the patient very little. But all three versions of the core-benefit package would provide health coverage whose dollar value appears to be somewhat higher than the current national average, slightly under $1,500 a year, for private medical insurance.
Universal health coverage-expanding the system to include the 37 million Americans who have no health insurance and the roughly 35 million with substandard insurance-remains a primary goal for the Clinton team. The administration also wants to broaden Medicare to help pay for prescription drugs for the elderly; provide some long-term nursing care; expand the nation’s public-health system, and provide comprehensive insurance benefits for the chronically mentally ill. The real issue is timing-how soon and how fast to expand these tax-subsidized programs. Doing it all right away could add as much as $150 billion a year to the nation’s health-care spending. Stretching it out, over a period of four to seven years, should hold the initial cost increase to $50 billion or less. The word last week, from administration sources, was that Clinton was leaning toward the cheaper, stretched-out version.
The big-bang theory of health reform inevitably means big bucks. Are Americans ready to pay another $100 billion a year to improve health care for all? Sure, the administration says–and if that sounds bad, just remember that the nation’s health costs are increasing by approximately $100 billion a year right now.
Nevertheless, the debate over health taxation is guaranteed to be hellacious. An administration trial balloon for a federal value-added tax, or VAT, was shot down in April. Last week the Clintonians tried again with a leaked proposal for a payroll tax of 7 to 9 percent-but that is hardly the bottom line. The administration is also contemplating sharp increases in “sin taxes” (on alcohol, cigarettes and, possibly, ammunition) that would raise about $10 billion a year. It might seek a new tax on health providers that would raise $35 billion a year. Or it could add 1 percent to the current payroll tax for Medicare, which would raise about $30 billion a year. The “austere” goal for new health taxes is about $50 billion a year. But this does not include $50 billion ill increased health costs for the private sector-and, given the Clinton team’s ambitious hopes for expanding the system, it is probably only the beginning.
Against all that, Bill Clinton is essentially betting his presidency on the possibility that reform will ultimately control the costs of health care for all Americans. Just how that would happen is a matter of considerable dispute on Capitol Hill; the administration plan, once it is revealed, should begin to answer the question. But the plan is fiendishly complicated-which means that once it is finalized, Hillary Clinton will face the selling job of her life.
Clinton’s health-reform plan will have a profound impact on many of the consumers and providers of medical care. Though the details have yet to be unveiled, here’s a likely prognosis for some groups based on what is known so far:
Generalists will get a boost under a new system that puts a premium on primary care.
Those who have relied on emergency rooms and clinics for their care will see big improvements-and pay relatively little.
Under reform, insurance plans will be required to accept all who apply.
These doctors will see incomes fall as much fee-for-service medicine is replaced by fixed contracts.
Those with goldplated coverage will pay more to retain their generous benefits.
Efficiently run hospitals will fill beds by reducing fees, but the less nimble will be forced out of business.
Limits on medical-practice liability and litigation will hurt litigators.
Small businesses that don’t insure employees will be hardest hit; those that do should see costs drop. Big businesses score fairly well overall.
