HEALTH REFORM GAINS IN VOTE : SENATE REJECTS DOLE PROVISION BIPARTISAN HEALTH CARE BILL ADVANCES.

Byline: Chris Black The Boston Globe

The Senate, in a rebuke Thursday to Majority Leader Bob Dole, narrowly rejected his attempt to add medical savings accounts to a health insurance reform bill.

The vote on Dole's amendment cleared the way for bipartisan approval of the bill that will guarantee access to health insurance for those who lose or leave jobs or have what are called ``pre-existing'' medical conditions.

After deliberating late into the night, the Senate delayed voting on final passage until Tuesday.

President Clinton called for the insurance change in his State of the Union address in January. The Senate must resolve differences with the House, which approved an insurance bill last month.

The key vote took place late Thursday afternoon. It appeared likely to be so close that Vice President Al Gore came to the Capitol and slipped into the presiding officer's chair to cast a tie-breaking vote, if needed.

His vote was not necessary. The Senate voted 52-46 to back Sen. Nancy Kassebaum, the Kansas Republican and cosponsor with Sen. Edward M. Kennedy of the Health Insurance Reform Act, and strike medical savings accounts from a Republican leadership amendment proposed by Dole.

Six Republicans voted against Dole: Kassebaum, Christopher Bond of Missouri, John Chafee of Rhode Island, Slade Gorton of Washington and Mark Hatfield of Oregon. Every Democrat voted with Kassebaum and Kennedy.

Several months ago, Kennedy and Kassebaum agreed to resist any attempts to add provisions to their bill that could sabotage its chances of becoming law. While modest compared to the Clinton administration's comprehensive health care proposal in 1994, the Kassebaum-Kennedy effort delivers what consumer advocates and some insurance companies endorsed as needed changes in the industry.

Dole's action was an affront to his colleague from Kansas. Kassebaum is retiring from the Senate at the end of this year and she had hoped the bill would become law and part of her legislative legacy.

Dole, the likely GOP presidential nominee, argued that his 200-page amendment, which added $10 billion in tax breaks, including the IRA-like medical savings accounts, ``does improve this bill and does provide opportunity to many Americans who don't have health care.''

Kassebaum warned that medical savings accounts ``provide a false sense of security. I have serious reservations.''

Through medical savings accounts, consumers could make tax-free contributions that could be used to pay routine health care costs. Any leftover funds could be rolled over to the next year. The concept has been championed by the Golden Rule Insurance Co. of Indianapolis, a major marketer of catastrophic-care health insurance policies and whose former chief executive officer, Patrick Rooney, has contributed substantially to House Speaker Newt Gingrich's political causes.

After rejecting the medical savings accounts, the Senate unanimously endorsed the rest of Dole's amendment, which would allow the self-employed to deduct 80 percent of their health care costs by 2006 and give taxpayers a federal income tax deduction for long-term-care expenses and premiums.

Gore hailed the deletion of medical savings accounts from the bill, saying they would have damaged the Medicare system and benefited the healthiest and wealthiest at the expense of the sickest and poorest.

``Sen. Dole may technically have a majority of the Senate, but when the pressure builds and the people speak, a few senators of conscience can make up a new bipartisan majority,'' he said.

Sen. William V. Roth Jr., the Delaware Republican and Finance Committee chairman who co-sponsored the amendment with Dole, said, ``The real winners under MSAs are the millions of Americans who can grab control of their family's health care spending.''

After the Senate struck medical savings accounts from the Dole amendment, Kennedy said: ``That vote was the real test about whether the American people are going to get some relief from standards set by the insurance companies'' that deny coverage to those with pre-existing conditions.

Wary of adding too much to the bill because of the failure of Clinton's comprehensive approach two years ago, Kennedy and Kassebaum battled intensely behind the scenes Thursday to protect their bill.

Their bill prohibits insurance companies from denying coverage to those who have group coverage but switch jobs or are laid off. Also, it guarantees renewability of health insurance as long as the premiums are paid and allows employers and individuals to set up cooperatives to purchase health coverage together.

``The lessons of the past are clear,'' Kassebaum said. ``If you try to do too much, we will fail to do anything.''

Kennedy, a longtime proponent of national and comprehensive health coverage, signed on to this incremental strategy last year to improve the chances of reforming the most flagrant abuses in the current health insurance system.

``The only opposition comes from those who profit from abuses in the system,'' Kennedy said.

Amendments ``may serve the special interests, but they have no place in this bill. They will certainly kill this bill,'' Kennedy said.

The House already has passed a bill that includes many extra provisions, including the medical savings accounts. The House bill makes long-term-care expenses tax-deductible, allows the self-employed to deduct up to 50 percent of their health costs from their federal taxes, limits damages in medical malpractice cases and exempts from federal taxes the state-sponsored insurance programs that cover high-risk individuals.

Republican leaders have indicated that they will give up controversial elements to get a bill.

HEALTH BILLS AT A GLANCE Highlights of health insurance legislation.

SENATE BILL

Guarantees that workers covered by a group health insurance plan continue coverage uninterrupted when they change or lose their jobs, even if they have pre-existing health problems.

Prohibits health insurance companies from denying coverage to employers with two or more employees.

Helps employers and individuals form coalitions to buy health insurance as a group.

Allows self-employed people to deduct 80 percent of their health insurance costs from their taxes.

Allows tax deductions for long-term-care insurance and expenses.

Allows penalty-free IRA withdrawals for large medical expenses and for the unemployed to pay health insurance premiums.

Makes it possible for people suffering from chronic or terminal illnesses to receive tax-free life insurance proceeds.

Provides a tax exemption for state-sponsored, high-risk health insurance pools.

HOUSE BILL

?7 Guarantees that workers covered by a group health insurance plan continue coverage uninterrupted when they change or lose their jobs, even if they have pre-existing health problems.

Allows self-employed workers, sole proprietors or members of a partnership to gradually increase deductions for health care costs to 50 percent by 2003.

Extends the medical expenses deduction for long-term care to more services, including diagnostic, rehabilitative and personal care.

Exempts terminally ill patients from the tax on death benefits paid to them from their life insurance policies.

Allows trade associations, industry groups, chambers of commerce and certain other associations to provide health insurance, exempt from state insurance regulations. President Clinton opposes the provision, saying it takes too much power away from states.

Allows tax-exempt medical savings accounts for people under age 65. Money deposited in the account by the worker would be drawn out for routine medical expenses, but the insurance company holding the account would cover catastrophic health care needs. Clinton also opposes this provision, saying it would cost $1.8 billion over seven years, that it represents a tax break for the healthiest and wealthiest and would attract them out of the general health insurance market, potentially raising premiums for all other people.

Limits the amount patients can collect in medical malpractice cases. Clinton opposes this, too.

CAPTION(S):

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Box: Health bills at a glance (see text)