Feds take a stab at health care reform.

Proposals for health care reform are proliferating at the federal level, but consensus seems elusive.

Despite the fact that in 1992 Americans are expected to spend more than $800 billion on health care--more than any other industrialized nation--the United States ranks near the bottom on world measures of public health. We are eighth in the world in life expectancy, 11th in maternal mortality, 18th in child mortality and 22nd in infant mortality.

"As lawmakers in this country search for answers to escalating health care costs and coverage for the numerous uninsured, other nations have addressed these problems more successfully by combining regulatory and free market approaches," says Lynn Wagner of Modern Health-care. According to a study by the General Accounting Office, France, Germany and Japan came out ahead of the United States in controlling costs and providing universal access to care.

Oregon and Hawaii passed legislation in the past few years to control health costs and expand coverage. More recently, states are doing everything from the Health Right package in Minnesota, designed to offer affordable health care to all the uninsured in the state, to cost containment measures requiring health care providers to operate under a "unified health care budget" in Vermont.

Former Colorado Governor Richard Lamm suggests that "rather than rush into a patchwork system slapped together by politicians in an election year, [we should] use individual states as experimental laboratories to find what works."

Congress, nevertheless, has seen more than 150 bills introduced his session dealing with health care reform, including 50 major proposals.

The discussion of the health care system continues to focus on three financing options: expanding the current employment-based insurance system, guaraneeing coverage through a single-payer, government-supported system, and reforming the private insurance market.

"Pay or Play"

The proposals to provide comprehensive access by building on the current, private system retain "the element of health insurance that is characteristically American--it is usually a job benefit," according to The New York Times. Under these proposals, called "pay or play," employers would be required to provide a package of health insurance to their employees and their dependents or pay a tax into a state-administered pool. The payroll tax would be used to provide health coverage for anyone not insured by an employer, as well as for unemployed and indigent, and sometimes to provide long-term care for the poor.

Currently, an estimated two-thirds of the nation's 39 million uninsured are workers and their dependents. In fact, the number of people with employment-based insurance dropped to 138.7 million in 1990--from 140.8 million in 1989.

Legislation introduced by Senate Majority Leader George Mitchell allows private companies to choose between providing coverage to employees and their families or making a contribution to an expanded public health plan. California Congressman Robert Matsui's plan requires employers to provide health insurance coverage for children and pregnant women.

Pay-or-play proponents claim that mandating employer-based insurance is the most direct path from the current system to one that offers universal access.

The "Health America" plan introduced by Senators George Mitchell (Maine), Edward Kennedy (Mass.) and Donald Riegle (Mich.) and bills authored by Represenatatives Henry Waxman (Calif.) and Dan Rostenkowski (Ill.) include elements of pay or play by building on the nation's current employment-basedd health insurance system and including strong cost containment measures. Those not insured through their jobs would be helped with tax incentives and insurance reform for small busnesses and an expanded governmen medical program to replace Medicaid.

Pay-or-play proposals have their opponents. "Relying on employers to manage health insurance," writes Congressman Harry Johnston of Florida in The New York Times, "has resulted in a piece-meal system of coverage that is inefficien and ineffective. With business affiliation providing the basis of forming insurance pools, private insurance companies have isolated pockets of our population that can be manipulated to generate a profit. There is no rationale why two individuals with the same health status may have drastically different insurance costs because of their business affiliation or lack of it."

Opponents also point out that small businesses, which employ more than half the workforce, wwill be the hardest hit by mandates. Some small companies have reported paying more than $3,000 per person per year for health care insurance. In fact, the average annual cost medically insuring an employee has risen from $2,160 four years ago to an expected $4,000 in 1992.

In a 1991 Louis Harris and Associates poll of 1,175 corporate executives, only 42 percent of big businesses and 33 percent of small businesses expressed willingness to pay a payroll tax to finance health care for the uninsured.

Universal Coverage

Controlling increasing health care costs with a single, publicly funded national health insurance program to replace the current system of multipayer financing is the strategy behind universal coverage. This alternative would eliminate the need for private or employer-sponsored health insurance coverage. The government, through income, payroll or other taxes and existing funds for Medicaid and the medically indigent would finance all health are services, giving providers a stable source of annual funding. These funds would pay for government-administered health insurance to cover everyone, regardless of income, age or health status.

Advocates of this kind of a system believe that a national health program would ensure equal access to care and minimize the complexity and expense of billing and aministration.

Single-payer plans are the most sweeping reform proposals and probably the most likely to meet defeat. Some are modeled after Canadian and Western European plans, in which the government pays for the medical care of individuals who continue to use their own private doctors. Others provide a mix of government-established services like the British National Health Service. Still others mix government and private financing by combining an expansion of Medicaid with mandated employer-provided insurance.

Representative Marty Russo of Illinois introduced the Universal Health Care Act of 1991, a comprehensive national insurance plan to replace all federal health programs and private insurance. Modeled after the Canadian system, the plan would cover all U. S. citizens for basic services, prescription drugs, long-term care, preventive care and limited home-and community-based services.

A national health trust fund would be financed by payroll taxes now going to Medicare and by increases in corporate and individual income taxes. States would contribute the amount now used to pay for Medicaid benefits, plus a set amount for each resident in the state.

The Health USA Act of 1991, introduced by Senator Bob Kerrey of Nebraska, is a variation on the single-payer theme. Health USA would provide coverage for the entire population for comprehensive medical and preventive health and long-term care services through a universal tax-funded financing system. The federal government would contribute an average of 87 percent of program costs to each state, which would establish, under federal guidelines, a state health program.

A study by the Economic and Social Research Institute indicated tha extending coverage to the uninsured and holding down health care spending through a national plan could save the nation $1.3 trillion over 10 years and businesses $3 trillion. According to Congressional Budget Office estimates, national health insurance would save $26.3 billion a year through reduction in administrative costs, including lower overhead costs stemming from the elimination of private insurance.

Opponents maintain that the financing of a single-payer system would be most costly for the government and would require increases in the corporate and personal income taxes. They contend that a public/private partnership is needed to control costs, as well as cut administrative costs, citing the problems of controls placed on doctors and hospitals and business concerns over losing the flexibility to determine the scope and size of health care benefit packages.

Insurance Reform

These proposals attempt to make coverage more accessible or affordable to individuals or employers who now find it unavailable or too costly because of the way private insurance works, especially for small employers. Supporters argue that these incremental approaches would put less pressure on the federal budget than more comprehensive proposals.

Fourteen percent of Americans under 65 don't have any health insurance, and another 30 percent have only minimal coverage. Some tax reform proposals would give small employers tax credits for buying insurance and let the self-employed deduct all their premiums. Businesses now can deduct health insurance premiums for employees from their before-tax profits; the self-employed can deduct 25 percent of theirs.

Senator Lloyd Bentsen of Texas and Representative Dan Rostenkowski have sponsored legislation--The Better Access to Affordable Health Care Act of 1991 and Health Insurance Reform and The Cost Control Act of 1991--that would make a standard benefits package available to all small business employees, control premiums for small group plans and prohibit insurance companies from denying coverage to employees with preexisting conditions.

Legislation introduced by Senator John Chafee of Rhode Island provides tax incentives to buy coverage and lowers premiums for small businesses. The bill also would reform malpractice law as a way to lower insurance rates, increase funding for community health centers and encourage greater reliance on managed care programs.

Several other proposals under discussion that would stimulate competition among providers and insurers within the health care industry are generally favored by Republicans. Democrats generally support incremental measures that leave open the possibility of broader reform in the future. These include encouraging development of experience-rated insurance policies and building the long-term care insurance market. Access would be expanded through changes to the small business insurance market and through expanding and improving public programs such as Medicaid.

Other options aim to improve access to health care and spur competition to control costs. Tax credits or vouchers would help individuals buy health insurance or serve as an incentive to employers to offer group health plans. These proposals would provide more choice of plans and encourage consumers to shop for the best medical bargains.

How to control costs is a major obstacle to any reform proposal. Solutions include controlling access to health care services, controlling direct costs though spending targets, and strictly limiting the health care budget. Legislation introduced by Representative Henry Waxman would establish a system that uses Medicare reimbursement rates as the basis for all health care payments. Providers would be required to accept those rates as payment in full. Representative Rostenkowski would set Medicare-based rates for all services and would limit increases in total health care spending to the percentage rise in the gross national product. A number of sponsors of reform proposals are critical of using Medicare-based rates for all payments, citing questions of access to health care and the quality of care if providers are locked in to what many consider inadequate payment rates.

National health care reform will not be achieved easily. Republicans and Democrats, however, agree that there is one overriding issue to be addressed: how to pay for health care. In an analysis of congressional reform proposals, Jane Horvath, executive director of the American Public Welfare Association, explains that "most observes believe that broad health care financing reform is still several years in the future for a variety of reasons. Prime among them is a lack of federal funds to enact broad reform. Perhaps more important is he number of players who need to compromise and reach consensus in order for any legislation to pass--much less obtain the president's endorsement." She concludes that the consensus simply has not yet developed to make reform a reality.

Most experts agree that states are ahead of the federal governmen in trying to implement broad-based reform. In the end, national health care reform is likely to be made of many separate components modeled after successful state programs.

The Canadian System

No discussion of health care reform would be complete without a look at the Canadian national health plan. President Bush called it "a cure worse than the disease." But supporters say it is an "embarrassment to the United States" that right next door every citizen in Canada receives free medical and hospital care.

The 26-year-old Canadian Medicare program is financed with taxes. Doctors are paid by the government based on a standard fee schedule for services (set by provincial and federal governments with input from provincial medical associations). Canadians choose their own doctors. The government restricts the number of specialists, limits purchases of expensive equipment and restricts costly procedures to a few university hospitals.

Does it work? It depends on what you are measuring. On average, Canadians live longer than Americans, and they have a lower infant mortality rate. Doctors' charges are quite a bit lower than in the United States. And although Canada's system is the second-most expensive in the world, per capita spending is, on average, 30 percent lower than in the United States.

Health care is considered a social right. Every Canadian, rich or poor, is promised equal access to doctors and hospitals. No women go without prenatal care, and emergency rooms are not packed with people unable to afford family doctor. And public opinion polls show that Canadians like their system.

If you are measuring speed and availability of services and the amount of state-of-the-art, high-tech equipment and procedures, the picture is not as rosy. Emergency patients usually receive prompt attention, but there are waiting lists for elective surgery. Patients who want elective open-heart surgery can wait months and risk having another heart attack.

Because cost is a strong consideration, newer technologies and equipment are less available ans slower in coming to Canada than in the United States. For example, there are only 15 magnetic resonance imaging machines (MRIs) in all of Canada; the United States has 2,000. Although Toronto Hospital performs the most lung transplants in the world, it has not been able to afford a fiberoptic brochoscope, a device that many community hospitals in the United States have.

Along with waiting, patients needing special services might have to travel long distances to receive them. Certain procedures are centralized at only a few hospitals.

Because the waiting lists can sometimes be quite long, there have also been charges of faboritism--those with "influence and affluence" often jump to the top of the list. And Canadians who can afford it always have the option of coming to the States.

Should We Expand Medicaid?

Many reform proposals call for further expansions of Medicaid. Currently, Medicaid is the fastest-growing spending program in the United States. Federal and state governments spent $87 billion on Medicaid in 1991.

On average, states are spending between 12 percent and 14 percent of total general fund dollars on Medicaid. Medicaid and other health spending is second only to education in terms of total state general fund expenditures. By 1995, some states may allocate as much as 20 percent of their general fund to Medicaid.

Public Opinion

A national survey of 2,000 American adults conducted by Louis Harris and Associates for the Henry J. Kaiser Family Foundation and the Commonwealth Fund found that of the reform options being considered, no plan came out on top: "Pay or play" receive 33 percent support; a "single-payer" or universal system received 30 percent; and President Bush's tax credit plan received 27 percent. Four out of five respondents said there was no candidate or political leader whose reform plan they support, while 68 percent said they saw no different between Republicans' and Democrats' proposals.

Sheldan Harden covers health care issues for NCSL.