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What about health care?

Since January, Americans across the country have been writing to President Clinton regarding his health care reform interests. In fact, the Health Care Task Force headed by the First Lady Hillary Rodham Clinton has received over 100,000 letters, many relaying health care atrocities and making recommendations for change.

The Health Care Task Force, comprised of approximately 500 public and private sector representatives, has developed its final health care reform proposal, which now awaits its debut before Congress. Despite the long hours, enormous amount of public input and vast number of task force agents, Americans have only been able to catch a faint picture of the form the reform proposal will take.

How will health care reform provide and pay for the coverage which will be offered to approximately 37 million uninsured Americans? What benefits will the minimum package include? How will reform affect the bottom line of businesses, large and small? How will it affect employees? Will reform be a simple modification of our existing system or a comprehensive overhaul complete with government mandates, subsidies and taxes?

No one knows!

What we do know is that the introduction of the president's health care reform plan will represent only Act I, Scene I of a long, complicated and highly controversial play. As a constituent you will have an opportunity to communicate with your representatives as the proposal moves through the Congress. The play's directors, Dan Rostenkowski (D-IL), Chairman of the House Ways and Means Committee, and Senator Daniel Moynihan (D-NY), Chairman of the Senate Finance Committee, will set the stage for the 535 congressional actors and try to complete the production on time and under budget.

An Issue Fraught With Controversy

While many in Congress and the Clinton Administration firmly believe that health care reform is necessary, they do not necessarily believe that this is the correct time for reform. Rostenkowski and Leon Panetta, Director of the Office of Management and Budget, are among the strongest opponents of President Clinton's health care reform timing. Each continues to express considerable concern and apprehension over implementing health care reform while the nation's economic climate remains tenuous and while Congress considers the largest tax increase in the history of the United States.

The president is committed to a late May-early June presentation and seeks 1993 passage. To ensure that congressional committees are not wrestling with a major spending cut and a tax package simultaneously, the actual introduction of the legislation will not be sent to Congress until House committees have completed consideration of budget reconciliation legislation.

Clinton's Plan Combines Several Proposals

The health care task force has considered and reconsidered several variations of the following health care themes--finally coming to rest with the concept of managed care, a hybrid of each of the following approaches.

A "single-payer" system--every American is automatically covered and the Federal government uses tax dollars to pay all medical bills. This is the system used in Canada, where a lower percentage of GDP is spent on health care than in the United States.

An individual mandate--each person would be required to have insurance for themselves and their dependents. This approach would remove employer responsibility for providing health coverage. By limiting the amount of insurance that could be paid for with pre-tax dollars, it would make health care "consumers" acutely conscious of cost, discouraging too-rich insurance plans.

An employer mandate--employers would be responsible for finding and paying for insurance for all employees and their dependents. An employer mandate fails to address the problems of the unemployed. This proposal includes those businesses not currently offering health insurance.

Managed competition--considered the most viable concept, this program seeks to provide coverage to every individual, mandating that all employers provide no less than the minimum coverage established by the Federal government. Under this program, employers and employees would obtain insurance through established regional insurance-purchasing pools, either by contributing individually or through their employers. The government would act as the employer for all unemployed individuals, thus allowing them to opt into the same insurance-purchasing pools.

As we go to press, the basic plan is projected to include:

* establishment of a basic benefits package for all, allowing individuals to purchase additional coverage with after-tax dollars;

* development of pooled health insurance purchasing for small businesses and individuals (including the unemployed) through regional health insurance purchasing cooperatives;

* development of incentives that reward cost-effective health care and reward consumers for choosing such care;

* fostering of competition between health care providers based on price and quality;

* public availability of information on all providers of health care, including charges for services and their health care "track record;" and

* limiting long-term benefits to only chronic illness coverage and not custodial care coverage.

Where Will the Government Get the Money?

With a projected bill of $100 billion dollars, the Health Care Task Force has devoted considerable time to identifying viable financing mechanisms for their reform plan. Among the funding mechanisms under consideration are:

* Reducing by half the Federal subsidy to Medicare Part-B (which currently costs $40 billion), requiring higher income individuals to pay a larger part of their Medicare premiums;

* Capping the amount of tax-free employer-provided health insurance an employee can receive;

* Limiting the ability of employers to deduct health costs from taxes to only that of the standardized national package;

* Establishing a surcharge on large companies that do not participate in the regional insurance-purchasing pools;

* Allowing employees to pay premiums into employer-sponsored health care plans;

* Requiring employers to provide coverage for employees, determined on a state-by-state basis and related to their historical cost of providing health care benefits (paid for through a payroll percentage capped at 7%);

* Raising the excise tax on cigarettes and alcohol; and/or

* Introducing a co-payment rate and deductible for health care services.

Plan To Include Subsidies

Obviously, all businesses and individuals will not be able to afford the health insurance that the health care reform plan is expected to mandate. Thus, if everyone is to be "in the system," some government subsidies must be made available. The Clinton package is expected to include a subsidy for low-income individuals, though it is difficult to identify how big a subsidy until the administration establishes co-payment and deductible rates.

No Price Controls Expected

While the cost of health care is listed as one of the chief catalysts of the growing health care dilemma, it appears unlikely that the health care reform package will include mandatory price controls. Instead, President Clinton will apparently pursue "voluntary" controls--allowing hospitals and physicians one or two years to contain costs. Only then if the administration's cost-containment goals are not met would price control legislation be enacted.

Malpractice Reform Under Consideration

President Clinton is considering a proposal to rewrite the medical liability laws so doctors and hospitals cannot be sued for malpractice. Instead, health plans would be solely liable for damages. The concept, termed "enterprise liability," would transfer liability in malpractice cases to insurance companies, health maintenance organizations and other networks that provide the standard package of benefits the Clinton health plan is expected to propose. The intent is to reduce the costly practice of performing additional tests to protect against liability rather than performing the minimum tests necessary for accurate diagnosis.

No Small Business Recommendations Included

While our overview of the forthcoming plan is admittedly sketchy, we are concerned that there have been absolutely no indications that the following key small business considerations will be included:

* Altered tax policy so self-employed people can buy health insurance with pre-tax dollars as corporations already do;

* Established Federal standards to regulate and ensure fairness in insurance premiums;

* Fostered competition to reduce costs; and

* Established quality controls to guarantee that savings are not achieved by systemic underutilization.


This article is intended to bring you up-to-date on the health care reform plan as we currently understand it. As the plan is obviously still being refined by President Clinton, the final package may include a few variations on the basic themes mentioned in the preceding paragraphs.

NSPA will continue to closely monitor the health care reform plan and represent your interests on this important issue.
COPYRIGHT 1993 National Society of Public Accountants
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1993 Gale, Cengage Learning. All rights reserved.

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Title Annotation:Capital Corridors
Author:Barr, Dorothea
Publication:The National Public Accountant
Date:Jul 1, 1993
Previous Article:Publicizing legislative efforts.
Next Article:Doggone dangerous!

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