Big Firms May Have to Pay 75% of Health Plans

WASHINGTON —  The Clinton Administration is considering a proposal to require all businesses to provide health insurance for their employees and pay at least 75% of the premiums, with workers picking up the rest of the cost, according to White House working documents.

In addition, American wage earners may be hit with a new “health care unemployment insurance” tax, possibly in the form of a payroll deduction, to help finance universal health coverage for those who currently lack it, the documents suggest.

To ease the burden of mandatory coverage on small businesses, low-wage earners and the self-employed, the government would limit their outlays through a variety of subsidies, according to documents prepared for the White House Task Force on National Health Care Reform.

To help the poor buy insurance, the government would provide more generous subsidies that could offset all or part of their premium payments, “although a case can be made that all individuals should pay at least some token amount,” the documents say.

Given the complexity of the undertaking, the new system “almost inevitably” will be phased in gradually, starting with businesses and individuals that require little or no government subsidies, the documents say.

Some changes could come more rapidly. Medicaid, the federal-state health care program for the poor, conceivably “would be abolished--presumably quickly--and folded into the new system,” the working papers state.

Final decisions on these and other financing options have not been made by the task force, which is chaired by Hillary Rodham Clinton. Administration sources stressed Thursday that President Clinton is only now starting to consider the specifics of an overall health care reform agenda.

“It’s completely, totally undecided,” said Robert Boorstin, special assistant to the President for policy coordination and chief spokesman for the task force.

Nevertheless, the working papers provide insights into the deliberations of the presidential task force as it reaches the halfway point in designing a health care agenda that Clinton wants to introduce as legislation by early May.

In recent weeks, it has become clear that Clinton and his advisers have embraced “managed competition” as their model for health care reform. Under the concept, Washington would establish rules to encourage the creation of large health insurance purchasing pools.

These “health insurance purchasing cooperatives” would be staffed by professionals assigned to shop among doctors, hospitals, insurance companies and other providers to obtain quality coverage at reasonable prices.

The cooperatives would offer a menu of health plans to employers and individuals in the areas where they operate. In each case, the lowest-cost plan would be the basic or “core” benefits package available to those now uninsured.

Reflecting the sense of urgency attached to the process, the key working group assigned to come up with the core package of benefits has scheduled a critical meeting tonight, sources said.

The employer mandate outlined in the working papers would require all businesses to pay at least 75% of the cost of the basic benefits package. Until its specific contents are decided, the financial impact on businesses cannot be determined.

Earlier this week, Mrs. Clinton was said to have told members of the House Ways and Means Committee that the package “will not be bare-bones but it wouldn’t be a Cadillac.”

Most workers would be required to pay up to 25% of the cost of basic coverage and presumably more if they select more generous coverage options, according to task force documents. But needy Americans would not have to pay more than a certain, as-yet-unspecified percentage of their income to obtain coverage for themselves and their families.

Similarly, small businesses with, say, 25 or fewer employees, would not be required to spend more than a certain percentage of their payrolls or total receipts to obtain health insurance for employees. The government would make up the difference with subsidies or tax credits.

“Obviously, this credit could be extended to low-wage employers of larger size,” the working papers say, an option that could apply to fast-food chains, for instance.

The White House documents outline several alternatives for raising additional revenue to finance universal coverage, suggesting that one or more could be adopted if more money is needed.

For example, the health insurance premiums could be set at 5% to 10% above the cost of the least-expensive plan, “with the additional revenues (paid by both employers and employees) going to the government for subsidy purposes,” the documents say. If still more money is needed, worker contributions could be based on wages rather than on benefit costs, an approach that would force higher-paid employees to pay more for the same coverage.

It is not clear to what extent some of the suggested financing mechanisms would affect other potential revenue sources. Among these is the possible taxation of employees for employer-provided health benefits that go beyond the government-designed core package, a so-called “luxury tax.”

In a related development Thursday, a White House official confirmed that the chairman of one of the 15 committees working for the task force has stepped aside because of conflicts of interest between his government role and his business interests.

Thomas O. Pyle, chairman of a committee looking into such issues as medical malpractice and training of health professionals, was moved into a consulting role after it was determined that his positions with various health care organizations created a conflict, the official said.

Times staff writer David Lauter contributed to this story.