Shape of New Health Plan Is Emerging

WASHINGTON —  Shortly after President Clinton named her to lead the drive on health care reform, First Lady Hillary Rodham Clinton described the herculean task as a “march toward facing reality.”

This month, she and the President hit the painful homestretch.

Working day and night since Jan. 25, more than 500 analysts have assembled an exhaustive array of options. Now it’s time for the President and Hillary Clinton to begin trimming from that wish list, making the first of perhaps hundreds of decisions that will enable planners to put the finishing touches on a proposal expected to be as far-reaching as the Social Security Act of the Franklin D. Roosevelt era.

“It’s time to get serious, get down to brass tacks,” said one White House official.

Some fundamental choices still have not been made, and many key details will be left to the administrative rules-making process later, sources say.

“There’s still a tremendous amount of uncertainties, many different alternatives, many different points of view,” said Princeton University sociologist Paul Starr, a senior analyst with the White House Task Force on National Health Care Reform, chaired by the First Lady. “Things are far from being settled.”

Still, the broad outlines of the reform plan are emerging, making it possible to describe in general terms the kind of health care landscape Americans will encounter in years to come.

For many, the contrast will be startling.

At a fundamental level, the Clinton reform plan will create a new health care system and lay down a set of financial incentives aimed at steering people into health maintenance organizations, preferred provider organizations and other forms of provider networks designed to hold down costs.

While many such networks already exist, especially in California, most Americans are not familiar with how they operate.

Under them, consumers, rather than going to doctors on a fee-for-service basis, have a lower-cost alternative of visiting primary-care physicians who are members of the network. These general practitioners will also serve as “gatekeepers” whose authorization must be obtained before patients may go to more-expensive specialists.

The key to making this concept work nationally is the creation of government-certified regional health insurance purchasing cooperatives.

Most Americans would be grouped into the large cooperatives, with consumers able to choose from a variety of insurance networks--ranging from HMOs to traditional fee-for-service plans that allow the patient to choose any physician.

All the networks would have to provide a basic benefits package now being designed by the White House. Consumers who opt for the more generous plans, such as fee-for-service, are likely to pay significantly more to get it, and employers are unlikely to make up the difference, as many do now.

The idea is to create cooperatives that will represent consumers in bargaining with health networks “to make sure they get the best choices and the best deals,” Starr said.

In creating the cooperatives, the Administration intends to allow Americans to continue to use their current doctor after the physician moves into a new provider network, says Ira Magaziner, the task force’s day-to-day manager. Others may select new doctors and hospitals in the networks.

Further details of how such cooperatives will work--especially in rural areas--are still being developed behind closed doors in a “war room” at the Old Executive Office Building adjacent to the White House, where schedules are so busy that meetings have been known to start at 10 p.m.--even on weekends.

But other elements of the plan are known. Within the federal system, states will be given considerable latitude. In small states and rural states, where size rules out the existence of more than one provider network, states may be empowered to set statewide rates in an arrangement known as a single-payer system.

“This is not going to be as monolithic as people think,” said Sen. John D. (Jay) Rockefeller IV (D-W. Va.), a key White House confidante.

“There’s going to be great flexibility and autonomy at the state and local levels,” said Sen. Harris Wofford (D-Pa.), another key congressional voice on health policy.

Barring unexpected hitches, the Clinton plan also will:

* Guarantee that a uniform package of basic benefits will be available to everyone, although not all the uninsured will get this coverage right away. Among the basic benefits would be hospital and doctor services, including mental health care, and some prescription drug coverage.

* Create a standardized insurance form and bar insurers from refusing to cover people with pre-existing medical conditions, in order to enable people to change jobs--and insurers--without fear of losing coverage.

* Enact tort reforms to reduce medical malpractice litigation.

* Impose a price freeze on private-sector medical providers while the system of cooperatives is phased in, a process that could take three to five years.

* Phase in a requirement for employers to provide workers with health insurance, with government subsidies to help the smaller businesses.

Companies could operate their own health insurance programs, provided they offer the basic benefits package, Magaziner has said. Workers could choose their company plan or select a competing health network from those offered by the local purchasing cooperatives, and their company would pay most of the costs.

* Provide for long-term care, with phased-in coverage starting with less expensive forms of home care.

* Incorporate worker’s compensation programs into the new health care system.

Senior health policy analysts already have spent more than 20 hours briefing the President on these and other details.

But he put off making key decisions during Hillary Clinton’s absence from Washington. The First Lady flew back to the capital on Sunday, ending a 16-day vigil at the bedside of her father, Hugh Rodham, 82, who had a massive stroke and remains in critical condition in a Little Rock, Ark., hospital.

Because of Hillary Clinton’s prolonged absence, Administration officials concede, the President’s self-imposed May 3 deadline for introducing his health care reform agenda is likely to slip.

Also unclear is to what extent the President’s legislative proposals will contain key details. Debate is raging within the task force over what elements should be omitted from the plan and left instead to the administrative rule-making process once legislation is approved.

“Things are far, far from being settled,” Starr said.

For instance, the Clinton proposal will stipulate coverage for prescription drugs, but it may not address generic drugs, which are cheaper than brand-name products, leaving the issue for a new national health care board that Clinton has said he wants to create.

Clinton’s proposals may also require mental health coverage but leave it the board to set the level of benefits.

Also undecided are the makeup, tenure and precise duties of such a health care “supreme court,” including its authority to set and enforce national medical-spending budgets.

The biggest decision facing the President and Hillary Clinton is how to pay for the reforms. Administration analysts say it will cost between $30 billion and $90 billion to provide insurance coverage to the 37 million uninsured Americans.

And the faster the Clintons want to achieve universal coverage, the more money the plan will require in the beginning.

Task force planners will present some 20 financing options to the President and First Lady. Among them are an assortment of tax increases, including levies on alcohol, tobacco and guns; on hospitals and other medical providers, and on employer-provided health benefits that exceed those in the government-designed basic package.

Health benefits are now entirely tax-exempt. Task force members also are debating a value-added tax.

Complicating the task for the Clintons and their legions of analysts is the extraordinary degree to which even a small change in one element of the plan can skew every other element.

“It’s a complicated series of tough decisions,” said Health and Human Services Secretary Donna Shalala.

Each decision will have financial implications that may require a complete recalculation of the overall plan. “Every small change will have ripple effects across the board,” said a White House official.

“The devil’s in the details, and we struggle with those details,” Starr said.

For example, it’s one thing to dictate universal coverage, but what benefits will be in a basic insurance package that will be available to all? How quickly can universal coverage be phased in? Which groups will be brought in first--poor women and children, or uninsured middle-class workers?

The Administration also wants to broaden the role of primary-care physicians, nurses and physician-assistants, especially by diminishing the role of high-priced specialists. But no specific incentives have been decided on to achieve that goal.

And to try to ensure that the quality of medicine does not suffer, the Administration intends to draw up guidelines to help doctors and patients make better informed decisions about treatment alternatives. But just how to gather, judge and disseminate data on medical matters still needs to be worked out.

Also facing the President and Hillary Clinton are such weighty decisions as how quickly to phase out Medicaid and enroll its beneficiaries into the large consumer purchasing cooperatives.

“We’re looking at everything,” Starr said, “which isn’t to say we won’t leave some things the way they are.”

Rockefeller said he expects Clinton to deeply immerse himself in the debate over details, large and small. “The President operates on not just hearing various options but on hearing people argue it out,” he said.