Is Clinton's prescription good medicine for blacks?

When President Clinton unveiled his long-awaited proposal to over-haul the national healthcare system on Sept. 22, he was in a much stronger position than he was this past summer. At that time, he had to battle a contentious Congress to get his economic plan into legislation. This time, congressional skepticism of the health-care plan--developed by a team national health experts led by first lady Hillary Rodham Clinton--has been bipartisan. However, when all is said and done, America will have universal health coverage.

The President's primary battle will be to get agreement on who pays and how much they will pay, and to convince Americans that the entire nation will be better off when everyone is covered. Pressure and debate has come from all corners--from the self-employed to major corporations, from hospitals to insurers and from those with no health coverage to those who can afford the best care money can buy.

African-Americans have much at stake. They make up a significant portion of the nation's small-business owners and are too often among those Americans currently un-or underinsured. "Blacks would benefit immensely from universal coverage," explains BE Board of Economists member Andrew. F. Brimmer, "because most health insurance is now provided by firms as an employment benefit. And the fact that the plan is portable increases security; that element is going to be in whatever plan finally comes down the pike."

Upon closer examination, the Clinton proposal can be very confusing. In fact, the version that is finally approved by Congress may have only a passing resemblance to what Clinton described in his nationally televised announcement in September.

The plan calls for every American, including the estimated 37 million uninsured, to carry a "Health Security Card" (meant to conjure up visions of Social Security, the last sweeping change of national policy) guaranteeing basic medical coverage. It would continue Medicare, cover abortion and other "pregnancy-related services" and require raising $105 billion to help subsidize insurance for small businesses and low-wage workers.

Other key elements of the Clinton proposal:

* Employer mandated coverage. All employers would pay 80% of fulltime employees' health insurance and a prorated share for part-timers, with the employers' share not to exceed 7.9% of payroll. That percentage-of-payroll cap could be as low as 3.5% for companies with less that 50 workers.

* Health insurance premium limits. A linchpin of Clinton's goal of controlling health-care costs, his plan would establish a National Health Board limiting annual increases in premiums charged by health insurers.

* Doctors of choice. People will choose from a set of health plans, most with their own network of doctors. They will pay more to use out-of-network doctors or to participate in a fee-for-service plan providing access to more doctors.

Small-Business Anxiety

"I think health care reform is good," says Hamish Reed, a principal of Branches Medical Inc. a $4-million medical products distributor based in Lauderhill, Fla. "But trying to mandate employer contributions--I just don't agree with that."

Reed says his company currently pays the insurance premiums for its 13 employees. His workers pay for coverage of their spouses and other family members. "This plan will force small businesses to pick up the costs of health-care reform," he insists. "Clinton's health plan, in addition to the new taxes called for by his economic plan, places an unfair burden on small businesses."

Reed's concerns are echoed by many small-business owners and their advocates. Clinton has been stressing regulation of insurance premium increases in order to ease their anxiety. More importantly, the President says that caps on the percentage of payroll that must be spent on health care (as low as 3.5% for companies with less than 50 employees) should enable small businesses like Branches Medical to afford coverage.

In fact, according to data provided by the Employee Benefit Research Institute (EBRI) in Washington, D.C., the Clinton plan promises to significantly reduce the average percentage of payroll now paid by companies that offer health plans (see chart). According to EBRI figures, the amount contributed to employee health plans for a company the size of Branches Medical would drop from about 10% to as low as 3.5%.

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Clinton's strategy has been working. Small-business owners--perhaps resigned to the inevitability of change in health-care delivery--have slowly been coming over to the President's side. Evidence of this is offered by surveys of small-business owners conducted by the Northridge, Calif.-based Kessler Exchange, a small-business research firm. When the Kessler Exchange surveyed small-business owners in January, nearly 30% of those who did not currently offer insurance said they could foresee going out of business if they were required to provide it. By September, after hearing the details of the Clinton plan, only 11% of these entrepreneurs felt that way.

The Kessler Exchange offers a free kit to small businesses owners who want to take competitive advantage of health-care reform; for more information, call 800-I-CAN-DO-IT.

Unlike tax reform and deficit reduction issues, everyone agrees that health-care reform is necessary, and that there is enough consensus for this goal to be reached.