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Will Uncle Sam make house calls?

In a session forecasting whether the federal government will enact minimum health care legislation in the near future, the consensus seemed to be that "panic buttons" are being pushed now. Kenneth F. Clarke, regional director of Godwins Inc., unequivocally forecasted government intervention in the form of a new delivery system, a general tax extending Medicare to the estimated 35 million uninsureds in America or legislation mandating coverage for all workers through their employers.

Two specific initiatives are being considered in Congress that address the issue of a national health care mandate. The Pepper Commission has proposed a legislative package that includes basic minimum benefits for employers with more than 100 employees, relief for commercial insurance companies from state benefit mandates and a phase-in period for small employers if a percentage of their workers are provided coverage in a prescribed time period.

"The initiative has received very high publicity," Mr. Clarke said. "The minimum benefits of the commission's proposal would have cost sharing limitations to provide truly basic and universal access to health care. Tax breaks would be available to small employers which would be subjected to the mandate. Unfortunately, the financing aspects are rather gray at this time."

Congress is also considering the Kennedy/Waxman plan, which would gradually expand Medicare so that by 1991 all uninsured people living below the poverty line would be covered. "B 1996 all those at 185 percent of the poverty line income or below would be covered," Mr. Clarke said. "And by 1999 all uninsured individuals not eligible for employment-based health insurance would be covered under Medicaid." Under the plan, a threshold of 17.5 hours or more per week would provide employees and their dependents coverage. In addition, the employer's premium contribution would be set at 80 percent, or in the case of employees who earn less than 125 percent of minimum wage, the employer would pay the entire premium.

According to Mr. Clarke funding for any national health plan has not been defined but may cost as much as $100 billion-three to four times higher than the estimate of the previous version of the Kennedy bill.

"Uncle Sam may not be making house calls yet," Mr. Clarke cautioned, "but he may have a group practice soon on a corner near you."

Escalating Costs a Root Cause

Government or state mandated health care plans can all be traced to a single root cause: the escalating cost of health care in the United States. According to Marsha Horton, second vice president of Lincoln National, the cost and financing of health care has become synonymous, particularly in the press, with high premiums.

"It is true that health care premiums and costs are rising significantly, but they are essentially a function of the cost of health care. The most significant issue is America's insatiable appetite to consume health care," she said.

Ms. Horton believes that Americans' reliance on having "the biggest and best" medical technology will continue to drive health care costs. In addition, she said more services will be consumed as the nation's work force ages. Add to that the fact that only about 40 percent of poor Americans have access to government programs, and that the programs are shrinking, especially under Medicaid, and the United States has a national health care crisis on its hands.

"The government reacts primarily to political forces, so I don't think it could effectively handle a national health care program," she said. In addition, Ms. Horton said a government-provided minimum health care plan would run into trouble in the rationing and assessment areas.

Ms. Horton supports a public and private partnership. "That way government won't evade its responsibility by shifting some people who need coverage to the private side and vice versa," she said. In her view, a renewed government/ private sector partnership will cost all participants something. "Medicare should cover the totally indigent 100 percent," she said. "The near-poor should be able to purchase a basic Medicaid package, and Medicaid should provide a contribution for the working near-poor to help them buy into a plan."

Other features outlined by Ms. Horton include a change in federal law that would allow the insurance industry to provide prototype plan coverage free of the encumbrance of state mandates. "Also, rating reforms would limit rate increases and differentials," she said. "Coverage gaps would be eliminated and we would develop a voluntary insurance mechanism that would help spread risk more broadly, thus moderating risk costs."

In the words of John Kirchbaum, division director of health policy development for the American Medical Association, "We feel that Uncle Sam has been in the business of making house calls for a number of years with Medicare and Medicaid. But those programs certainly aren't models for expansion. Medicare will be bankrupt by around the year 2004-that prognosis is from their own actuaries. Improvements need to be made.

"If costs continue to skyrocket, and it's everyone's bet they will," he added, "then at least part of those 'improvements' seem likely to come from Capitol Hill."
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Title Annotation:healthcare legislation
Author:Johnson, Tom
Publication:Risk Management
Date:Jun 1, 1990
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