Health Reform Backers Need to Enlist the ‘Haves’

WASHINGTON —  Phil Jones’ once-generous corporate health coverage has grown a bit tattered over the years. He’s paying more out of pocket, is using company-picked doctors and has grown a little uneasy about what the corporate accountants will take from his plan next.

Yet the Denver sales representative isn’t sure how he feels about surgery on the health system by the often-blunt scalpels of government policy-makers. “They never manage to do anything right,” he says.

For all his ambivalence, Phil Jones has become a powerful player in the health care reform debate. Winning the support of people like him who already have comprehensive coverage will be the most important--and perhaps the toughest--element of President Clinton’s crusade to sell major health reform.

As the battle over reform intensifies, it has become increasingly clear to the Administration that without the Phil Joneses of the nation pushing Congress for change, health care reform cannot succeed. Congress will be wary of alienating such a huge and powerful bloc of middle-class voters, and opponents of reform will be exceedingly well-organized, well-funded and pushing hard to stop change.

The White House, understanding the enormity of its task, has begun organizing a campaign that will try to convince roughly 170 million well-insured Americans that they should be willing to change a system that now provides them with relative comfort. The Administration hopes it can drown out critics who insist that its soon-to-be-announced plan will cost more and cover less--and that it can convince insured Americans that the reward for their sacrifice will be better and more secure coverage.

“These people are essential,” says Richard Celeste, the former Ohio governor who is leading the Democrats’ advocacy campaign. “We’ve got to have them.”

There is abundant evidence to show how difficult winning them over will be. A growing body of polling data indicates that insured Americans are increasingly insecure about their health care, fearing that job loss or a corporate whim could leave them without coverage. But they are not yet willing to pay much more or take too many risks in the name of reform.

And Clinton’s plan, due to be released in about three weeks, is likely to have a definite downside for a substantial share of America’s health “haves.”

Employees of newer companies are likely to pay more than they do now, while the plan almost certainly will reduce medical choices for many as it tries to steer them toward cost-cutting health providers.

And if its audacious effort to squeeze billions of dollars from the health care system doesn’t work, government may be forced to raise taxes or increase premiums to make the better-off companies and individuals subsidize their poorer neighbors.

Clinton’s plan would organize Americans into huge insurance purchasing groups called health alliances that presumably could use their bargaining power to negotiate lower rates from groups of doctors, hospitals and other health care providers. The underlying principle of the plan is that such competitive pressure will squeeze waste from the nation’s $900 billion-a-year health care system.

Phased in over five to seven years, the plan would require all employers to put up 80% of the average cost of a benefits package in a region, and employees the other 20%. These contributions would be capped at about 7.5% of the payroll for the largest companies, according to the latest thinking, but at about 3.5% for the smallest and lowest-wage ones.

Although the Clinton Administration plan is not complete, officials maintain that the new system will offer coverage equal to today’s typical private plans. Companies that want to give more can do so; the value of extra benefits will be taxable.

The focus of the President’s appeal to the insured has already become clear.

The Administration will argue that reform is necessary for economic growth and social justice. But above all, it will stress that only through reform can average Americans finally win true long-term health care security.

The reform advocates will stress how much the typical plans already have eroded. A decade ago, more than 95% of company plans offered unlimited blank-check coverage; now the figure is about 5%. The typical plan these days involves mounting employee deductibles and co-payments; it restricts physician choice and increasingly involves insurance overseers in health care decisions.

The reformers will also stress the uncertainty of continued coverage in an environment where the fortresses of American business--the IBMs, Eastman Kodaks and AT&Ts--are; shedding more and more employees, leaving many of them without any company-paid health care coverage.

To make its point, the Administration will present testimonials from Americans such as Jennifer Grondin, of Green Bay, Wis. Grondin and her two children have top-quality health coverage through the corporate plan of her husband, who works at IBM’s marketing division.

But if her husband were unexpectedly laid off amid IBM’s downsizing, it isn’t clear where the family would turn for health care, since her job running a local nonprofit organization offers no insurance. “If he were to lose his job, I don’t know what we would do,” she said.

Most experts agree that appeals to such anxieties are powerful, since Americans’ growing nervousness is what has made health care reform an urgent issue.

Despite their anxieties, most are satisfied with their coverage. Only half are willing to spend more to improve the system; and polls suggest even those who are willing to pony up more don’t want that added cost to exceed about $20 a month.

Their unwillingness to pay more grows in part from a belief that health costs are rising not from overuse of the system--as many experts contend--but through greed, fraud and malpractice litigation.

“It’s going to be pretty hard to get the middle class to pay more when they believe it is greed and waste that’s made costs so high to begin with,” says Robert E. Moffit, a Ronald Reagan Administration policy-maker who is now at the Heritage Foundation, a conservative Washington think-tank.

And whatever sympathies the insured have for the 37 million Americans who are without coverage, polls show that few are willing to sacrifice to help them if it means sharply higher costs or thinner coverage for their own families.

Advocates of the Clinton plan also have their work cut out for them in explaining the financial implications of reform, since both the current system and the new one include so many hidden costs.

For example, advocates insist that the cost-savings pressure generated by the plan will lower the price of insurance for most employees. If that proves true, the tax burden would not be much on employees who receive additional benefits beyond the guaranteed national level.

Still, employees of firms that have been able to negotiate lower insurance prices under the current system because they have young and healthy work forces may face sizable price increases.

Under the Clinton plan, premiums would be based on the average cost of health benefits in an area. That average would certainly include older and less healthy workers, whose coverage costs more. Some analysts predict that the system will engender new frictions between generations, since it would have companies with younger work forces, in effect, subsidizing those with older employees and more retirees.

Administration officials promise that the new system will not restrict choice of doctors and insist many provider groups will be available in any area.

Some health analysts, however, are skeptical--they argue that there are likely to be few low-cost health groups that can meet state and federal requirements under the system.

But the biggest question the insured need to consider is whether the President’s plan will succeed in its goal of squeezing out billions in savings to subsidize the cost of coverage for those who are uninsured and the employees of small businesses.

The Administration says it will be able to generate those savings by capping the growth of Medicare and Medicaid, cutting payments to hospitals for the uninsured and utilizing the tax windfall that will be generated for the Treasury as employers start increasingly compensating employees with taxable wages rather than with tax-exempt health insurance.