BILL FORGES PRECARIOUS PROGRESS : CONGRESS WRANGLES OVER HEALTH MEASURE.

Byline: Robert Pear The New York Times

What is it about the health insurance bill passed Thursday by the House that President Clinton so dislikes? And will Republicans alter or abandon those provisions to win his support for the bill, which offers new health insurance coverage to millions of Americans?

Those questions may be answered as the bill moves to the next phase of the legislative process, in the Senate. It was approved in the House by a vote of 267-151, with support from 38 Democrats.

At issue are several proposals put in the bill by House Republicans, over vehement protests by many Democrats.

One proposal would create tax incentives for people to establish savings accounts for medical expenses, as an alternative to standard health insurance. Another would limit damage awards for pain and suffering in medical malpractice cases. A third would establish special rules for health plans formed by groups of small businesses, exempting them from state insurance regulation.

In the closing moments of debate, Speaker Newt Gingrich struck a conciliatory note, saying Republicans might not insist on these proposals if they would sink the bill.

``If the president sends up a veto signal, maybe we'd have to back down, but we want a chance to convince him,'' the speaker said.

But if both sides stand firm, the resulting impasse could doom the first major measure to increase access to health insurance since the demise of Clinton's ambitious health plan in 1994.

Rep. Sander M. Levin, D-Mich., summarized his party's view this way: ``When the Republicans have a chance to do something good, they ruin it by overreaching. They simply cannot resist excess.''

Democrats can speak authoritatively about the perils of overreaching. Clinton's plan to redesign the nation's health care system failed in 1994 largely because it was perceived as conferring too much power on government, forcing almost everyone into the same type of insurance pool.

Democrats say that some of the Republican proposals go too far in the opposite direction, relaxing federal regulation, rewarding doctors and insurance companies, encouraging people to opt out of the common insurance pool, to the detriment of those who remain.

Clinton supports a simpler bipartisan health insurance bill sponsored by Sens. Nancy Kassebaum, R-Kan., and Edward M. Kennedy, D-Mass. Senate Republican leader Bob Dole of Kansas has praised that bill as ``a step in the right direction.'' But Dole has not indicated whether he will support Kassebaum and Kennedy in their effort to fend off all amendments when the Senate debates the legislation next month.

The debate in coming weeks will focus on three particular elements of the House bill, which are also supported by some conservative Republican senators.

MEDICAL SAVINGS ACCOUNTS. Under the House bill, people could take tax deductions for money they contribute to medical savings accounts, up to $2,000 a year for an individual and $4,000 for a family. People would pay routine medical expenses from their accounts and, as a result, Republicans say, they would have new reason to be cost-conscious. People with medical savings accounts would have to buy insurance to cover medical expenses above a certain level, but Republicans say the premiums would be lower than usual.

``Medical savings accounts are the only way to cut medical costs because they make each person the guardian of his own money,'' said Kristen K. Ardizzone, a lobbyist for Eagle Forum, which describes itself as a conservative pro-family organization. ``Each person has an incentive to shop around and save because you can keep what is left at the end of the year in a tax-sheltered account.''

But Rep. Frank Pallone Jr., D-N.J., said: ``The people who are going to take advantage of these accounts are people who have a lot of money or people who are healthy and figure they need only catastrophic coverage. The healthy and the wealthy will get out of the insurance risk pool and establish medical savings accounts. People who are sicker or do not have as much money will see their premiums go up, and health insurance will be less affordable.''

MALPRACTICE. Doctors have long sought limits on damages in malpractice lawsuits, and the House bill would establish them. Damages for pain and suffering could not exceed $250,000, and there would be a similar ceiling on punitive damages.

Republicans say that malpractice judgments drive up the cost of health care, in part because doctors and hospitals perform extra tests and procedures to protect themselves against lawsuits. Republicans say, then, that the proposed limits will help control health costs. ``The trial lawyers should not be ripping America off,'' Gingrich said.

But Gail E. Shearer, a health policy analyst at Consumers Union, said: ``This proposal would severely limit the ability of an injured person to seek compensation for negligent care. The malpractice crisis is really about negligent care, not about lawsuits filed by victims.''

HEALTH PLANS FOR SMALL BUSINESSES. Many of the nation's 40 million uninsured work for small companies. Lawmakers want to make it easier for them to buy health insurance. Under the House bill, businesses with fewer than 51 employees could band together, and if they met certain federal criteria, they could escape state insurance regulation.

Rep. Harris W. Fawell, R-Ill., said this provision would benefit ``millions of people in small businesses, the people who cut your hair, serve you at restaurants, repair your car, clean your clothes.''

But the Health Insurance Association of America, the Blue Cross and Blue Shield Association, the National Association of Insurance Commissioners and the National Conference of State Legislatures all object to it.

Edward Neuschler, assistant vice president of the Health Insurance Association, said: ``The new multiple employer health plans could bypass state consumer protection rules and solvency requirements. They would take premiums from employers, just like an insurance business, but would not have to meet the same standards.''

Rep. Benjamin L. Cardin, D-Md., said the proposal would undermine state efforts to improve access to health care, because millions of healthy employees could be removed from state-sponsored insurance pools.