Health care reform tops Clinton agenda.

WASHINGTON'S most prominent new president, Bill Clinton, brings with him a dramatic new health care reform plan that could ultimately supplant fee-for-service reimbursement with a system that is based on capitated payments and provider-based utilization controls.

It appears President Clinton will be true to his campaign promises by introducing a reform proposal within the first 100 days of his administration. What remains to be seen is how much cooperation he can muster from a Congress reshaped by the largest membership turnover since 1948.

Some analysts consider health care reform the most important--and daunting--task facing the new administration. Clinton agrees that action is needed to attack problems such as the $4 trillion Federal deficit. At a post-election briefing on Capitol Hill, Clinton told reporters: "No one seriously believes we will ever get the deficit under control until we adopt a system that brings health care costs under control."

Ideologically, the nation appears to be at a crossroads on health care policy. Uwe Reinhardt, a noted professor of political economics at Princeton University, believes there are still two fundamentally different approaches from which to choose.

The first, which he characterizes as the "prairie ethic," treats health care as a social service like education and places all people on equal footing. The second treats health care like a private consumption good such as food or housing. The latter school maintains that no one should be without health care but recognizes that society allows its richer members access to more comprehensive services.

Reinhardt says that after an egalitarian streak in the 1970s, the Reagan-Bush era took the view of medicine as a private consumption good. It culminated, he believes, with the system of tax concessions for health insurance that Bush proposed during the campaign. Given the election results, "We're clearly moving back to the prairie vision," Reinhardt asserts. "The question is how fired up is Clinton and how quickly will he move."

* Managed competition. Clinton's plan is still a work in progress. Early in the election campaign, he appeared to favor the "play or pay" model presented by Senate Democratic leaders. That plan gives employers the option of providing basic health care benefits or paying into a public program supported by payroll taxes.

As the election drew close, however, Clinton shifted his support to the concept of "managed competition," an idea some observers have dubbed "play or else." In essence, managed competition is a system under which HMO-style health care plans structure standardized benefits and compete for the insurance dollars of businesses, Medicare enrollees, and other individuals.

The purchase of coverage would be mandatory for employers, who would be forced to pay 50% to 100% of the premium cost for the lowest-priced competing health plan in their area. The tax deduction for employer contributions would be capped at that level, creating estimated five-year Federal revenues of $120 billion that could be used to cover the uninsured.

Businesses or people who found coverage too expensive on their own could join a Government-run health insurance purchasing cooperative. The "HIPC" would pool volume and act as an insurance broker, selecting a competing medical plan.

As participants in competing health plans, providers would be left to their own devices and market forces for controlling medical costs. While prepaid, capitated payments would be the most common sort, plans could retain elements of fee for service, conceivably with the adoption of Medicare's reimbursement system for laboratories, hospitals, and physicians.

Managed competition is the intellectual handiwork of the so-called "Jackson Hole Group," an assortment of policy analysts who meet regularly at a resort in the foothills of Wyoming's Teton Mountains. Stanford University economist Alain Enthoven, one of the leaders of the group, suggests, "Much of the economic failure of the health care system can be ascribed to traditional fee for service, solo or small single-specialty group practice, and remote third-party payment." Managed competition, he says, is "a purchaser strategy based on informed consumer choice, designed to reward with more subscribers those organizations that do the best job of improving quality and cutting cost."

In an effort to refine the concept--and control its definition--Clinton's top health policy advisers have been gathering in Washington in a group they've dubbed "Jackson Hole East." One key player is Judith Feder, a codirector of health policy studies at Georgetown University and former director of the commission that developed the play-or-pay model. Another is Atul Gawande, a former Congressional staffer and key adviser on a managed competition variation introduced by conservative Democrats last year.

Clinton's team and its Congressional supporters are now discussing the finer points of managed competition. One of the main issues is whether to propose a system of global health care budgets for the public and private sectors. In such a system, a national commission would establish limits on overall health care spending and apportion shares among the states. This would give states the flexibility to decide how the delivery of services should be structured and how payments would be allocated.

* Prospects in Congress. The passage of any program may not come easily, as some analysts are already questioning the strength of Clinton's election mandate. Despite a winning bulge of 370 to 168 in the electoral college, Clinton captured only 43% of the popular vote. He is also the first Democratic President since John Kennedy to see his party lose seats in the House (a total of 11) as he was elected, although the Democrats have retained their majority in both the House and the Senate.

More striking than party affiliation is the number of new faces in Congress. There are 110 new Representatives and 11 new Senators; nearly three-fourths of the "freshman class" have previous experience in government or politics. The Senate adds four women and one Native American. The House will have 50% more minority members and 20 more women. Many believe those factors will greatly influence the legislative process.

Says Reinhardt, "Your typical new Congressmen come in full of ideas; they're going to go down there and revolutionize the place. Then they find out you can't really do it. But with this new crop of people, there are at least some who have power that most others don't, and that's the power of the press."

As a conduit of influence, the media will focus greater attention on the agendas of women and minorities, Reinhardt believes. But what will those agendas entail? "I think you'll find they will have a strong interest in issues of the safety net, issues that were neglected by the Reagan and Bush Administrations."

Inexperience on Capitol Hill does not necessarily mean that new members will come in poorly versed on important issues. They have, in fact, had numerous chances to take part in comprehensive orientation sessions. For example, conservative researchers at the Heritage Foundation organized policy briefings for new House members in addition to similar sessions hosted by Harvard University's Institute of Politics since 1972. The Congressional Black Caucus scheduled orientation meetings for a record 17 new members.

Certain other briefings took place behind closed doors. Shortly after the elections, six Democratic House leaders, including Speaker Thomas Foley of Washington State, took to the road for an unusual series of meetings with incoming members. The sessions in Los Angeles, Chicago, and Atlanta were held, Foley said, to discuss "opportunities" in Congress--particularly the choice committee assignments that opened up due to turnover.

Actually, many of the most powerful seats with health care oversight will be retained by incumbents. For example, House Energy and Commerce Chairman John Dingell gained reelection in Michigan, as did familiar subcommittee chairs Fortney "Pete" Stark and Henry Waxman, both of California.

Still, other significant vacancies remained to be filled as new members jockeyed for position. One spot on the Senate Finance Committee opened up when Idaho Republican Steve Symms retired, and it appeared another would be created by Chairman Lloyd Bentsen's departure. The Texas Democrat was a prime candidate for a top post in the Clinton Administration at this writing. Meanwhile, the political future of the Finance panel's ranking minority member, Robert Packwood of Oregon, became uncertain amid charges of sexual harassment.

Elsewhere in the Senate, the Appropriations Committee lost four members---one Democrat and three Republicans. The Labor and Human Resources Committee saw the departure of Wisconsin Democrat Brock Adams.

In the House, the Ways and Means Committee must fill 13 seats, 9 of which were previously held by Democrats. The Energy and Commerce panel lost 19 members, including 12 Democrats.

Health care reform is high profile, but it is certainly not the only front-burner issue in Washington. Others include term limits for members of Congress, campaign reform to decrease the influence of political action committees, and mandatory parental leave for workers.

Optimists in Washington believe that having one political party in control of the White House and both houses of Congress will break up the gridlock that has stalled the Federal government for much of the last decade. But almost everyone believes the Democrats are on a short leash: Failure to reform the health care system and revive the economy could engender the full wrath of voters next time around.