The health of the GOP.

WITH THE Clinton healthcare plan in terminal condition on Capitol Hill there is every sign that less-ambitious reforms will be adopted this fall. The problem is that even a modest package could contain the seed of a massive new entitlement and further distort the workings of the health-care economy. Right now, Republican lawmakers risk having their fingerprints on injurious legislation because they are leery of arguing the straightforward case for a freemarket approach to health care. Yet, the short-term omens are propitious.

Hillary Clinton may fight it, but Bill Clinton will be forced away from major parts of the plan in the give-and-take of committee. Mandatory health alliances have already been targeted by Ways and Means health subcommittee chairman Representative Pete Stark (D., Calif.), a single-payer supporter who would like to Mr. Taylor is a reporter for The Evans & Novak Political Report. bring the service and quality of Medicare to every American.

The slow-spreading secret is--that once the mandatory alliances are gone, the Clinton plan's already-shaky claims to cost containment melt away. Congressional Budget Office (CBO) staffers privately concede that without the monopoly buying power of the alliances, CBO would have found the financing of the plan totally unworkable. Liberal House Democrats are willing to use that shortfall as an argument for an overt payroll tax.

House Republicans are well positioned to highlight how they differ from Democrats on these issues. They intend to get as many committee votes as possible on payroll taxes, government-set fee schedules, and mandatory alliances. In fact, in a break with procedure, they will ask for recorded votes on all committee amendments.

Republicans have largely succeeded in convincing the public that mandatory alliances and the government'determined benefits package of the Clinton plan mean the loss of freedom for patients. But the tolling fact is not everyone knows what is in the alternative bills they support. For example, one prominent conservative House member was surprised to learn the Nickles-Stearns bill relies on community rating to help guarantee universal coverage.

In town meetings and poll numbers, it has been clear that community rating is perceived as unfair once the public understands what it means. Much of the anger over rising medical costs is the perception that one person's money is being used to pay for other people's care. By leveling the differences between the health-conscious and the reckless, community rating has the effect of rewarding irresponsible behavior. For example, smokers and non-smokers pay the same premium. A particular irony is that the kinds of things which drive up health costs--drinking, smoking, drug use, promiscuous sex--are familiar targets for the GOP pro-family agenda. In addition to the political hazards of community rating, it robs a powerful incentive for staying healthy--lower insurance costs from the policy mix.

Even the fallback, basic-level GOP initiative--the Michel-Lott bill--includes elements that could be exploded once the Clinton bill crashes. In addition to reforms like medical savings accounts (MSAs) and tort reform, Michel-Lott includes limits on premium increases--another way to short-circuit the insurance market. Once having gone on record supporting the concept of price controls, it is difficult to see on what grounds GOP members can eventually back away from them when they appear in a Democratic bill or Clinton II.

With the issues of fairness and patient freedom so clearly favoring Republicans it would be a mistake to craft any bill behind closed doors. But it appears that approach has already started with a two-hour meeting February 22 at the White House which included Senate Minority Leader Robert Dole and Senators John Chafee (R., R.I.) and Don Nickles (R., Okla.). Democratic players from the Hill, Finance Committee Chairman Daniel Patrick Moynihan (D., N.Y.), Education and Labor Chairman Edward Kennedy (D., Mass.), and Majority Leader George Mitchell laid out the need for some flexibility to the White House triumvirate of Ira Magaziner, David Gergen, and George Stephanopoulos. By several accounts, there was broad agreement from all sides that universal coverage should be the outcome of legislation. The only difference was over what mix of mandates and tax increases to adopt to achieve it. "It sounds like they gave away the shop," observes Cato Institute analyst Michael Tanner.

On the dicey issue of mandates that require the purchase of insurance up. der the threat of fines and civil penalties, Republicans seem to be faced with a lose-lose situation. The job-destroying effects of an employer mandate are not hard to grasp; the Employment Policies Institute estimates a mandate of the type envisioned by the Clinton plan would cost 3.1 million jobs. But the individual mandate immediately raises the question of who will decide what kind of plan will satisfy the requirement and what will happen to those individuals who don't meet it. Republican dalliance with a mandate on individuals puts them in the cross-hairs of the potent Clinton class-warfare machine. Just as James Carville helped to demagogue a tax increase on upper-income taxpayers, the choice between a mandate on fat-cat employers and a requirement that Sally Lunchbucket pony up for a government-approved plan seems a political loser. Dole, who has found fault with the employer mandate, has signaled repeatedly that individual mandates are the proper GOP course. The danger of GOPers being identified with the employee-pay route has been diluted somewhat with congressional Democrats now exploring individual mandates as a way of exempting small business from a back-breaking requirement.

Having once threatened to bottle-up health care this year, Moynihan is now bringing his own agenda forward. He never accepted Hillary's promise of an end to health-care cost increases and is not eager to gamble both Medicare and Medicaid on the assumption that costs in this service sector will reverse course and fall. Mandatory alliances are out because of the straight jackets they would place on New York's teaching and research centers. Voluntary co-ops, however, are a more likely method of cost-containment. Concerns about making the reform bipartisan have led Moynihan to court Dole of late and his staff has spoken of Dole's inclusion as a necessary part of any legislation.

Dole, in little noticed remarks, has said he hopes the 1983 overhaul of Social Security can be a model for how the Finance Committee operates this year. Then, with Dole as chairman, the committee overwhelmingly opted for an increase in payroll taxes from 6.7 to 7.51 per cent. Payroll taxes do not now appear to be in the mix on the Senate side, but the specter of a Dole-Moynihan parley has House Democrats in a panic to lurch as far left as possible to ensure the conference committee will have a wide range of choices in crafting the final legislation. The outlines of a bidding war already are visible: GOP plans for portability are met with White House demands for a guarantee of guaranteed coverage, which liberals criticize as meaningless without affordability. Even if the more expansive scheme is beaten back, the notion that the solution lies in more government will be etched in stone.

Confusion on how to respond to calls for a larger government role in the delivery of health care is nothing new. Republicans have been uneasy on this terrain since Senator Harris Wofford's (D., Pa.) surprise win over former Bush Attorney General Dick Thornburgh in 1991. Thornburgh advisors initially dismissed Wofford's emphasis on national health care as a "flimsy issue," but closed the Wofford lead rapidly in the final weeks by asking hard questions about the idea. At an election post mortem, Wofford's chief strategist Carville said he was surprised it took so long for the aggressive approach to be taken.

Senator Phil Gramm (R., Tex.), who as Senate campaign-committee chairman was held responsible for the Thornburgh debacle by many, seems to carry with him the lesson that grandiose promises about health care must be shot out of the water as welfare-state pipe dreams, not trimmed at the edges. Gramm's initiatives, introduced in January, do not promise universal coverage. As a result, Gramm was not invited to the White House get-together. That should underscore the fact that Bill Clinton is willing to accept any plan that promises universal coverage.

Having evidently resolved to give Clinton what he desperately wants as their opening position, Republicans might want to consider what they get in return. Credit for helping to bring "health security" to all Americans or blame for playing midwife to an opening-ended entitlement that worms its way between doctors and patients? History will be the final judge, but a prominent place at a signing ceremony does not seem to be a fair trade for putting federal bureaucrats in charge of the nation's health care.

Mr. Taylor is a reporter for The Evans & Novak Political Report.