Middle Class Losing Out in Health Care Debate : Reform: Proposals are favoring poorest, youngest and oldest Americans. Left behind are those in the middle.

WASHINGTON —  Suddenly, the fault lines of class and generation are opening up in the health care debate.

In the scramble to transform the nation’s health care system, the poorest, youngest and--to some extent--the oldest Americans are coming out ahead. Inevitably, some of their gain is coming at the expense of those in the middle.

And as Congress continues to pare back President Clinton’s original grandiose proposal, the divide is growing.

“The group that is most likely to be helped least--at least as the discussion stands now--is the working middle class . . . which is a little surprising, since it was the rise of middle-class concern that put this issue on the front burner in the first place,” said Drew Altman, president of the Kaiser Family Foundation, a private, nonprofit health care philanthropy.

Nor is the irony lost on Paul M. Ellwood Jr., the intellectual father of the “managed competition” theory that Clinton has said is the foundation of his own approach to health reform.

“The political driver of health care reform was not some new-found concern with the have-nots of society. The political driver was the fact that we had a very worried middle class,” Ellwood said, adding that some of those concerns “have fallen by the wayside.”

It is by now well known that working people of modest income account for the largest share of the uninsured. But it is becoming just as evident that Clinton’s chief proposal for covering them--a requirement that employers pay 80% of their health benefits--has virtually no chance of surviving intact.

If the so-called “employer mandate” materializes at all, it is not likely to happen until the early years of the next century. Even then, it seems certain to be pared back, possibly to 50%, shifting onto middle-class workers the burden--impossibly heavy for some--of paying thousands of dollars a year out of their own pockets.

House and Senate Democratic leaders hope to bridge the gap with billions of dollars in government spending, but for political as well as substantive reasons, middle-class people will be last in a long line to receive those subsidies. And it is far from certain how much money will actually be available.

Children and pregnant women appear certain to come first, followed by low-income adults.

Senate Majority Leader George J. Mitchell (D-Me.), in his plan which will serve as the vehicle for Senate debate, has proposed that the government pay the entire insurance premium for pregnant women and children with incomes up to 185% of the poverty level--or about $27,000 for a family of four. Up to 300% of poverty, or about $44,000 for the same-sized family, the government would pay at least part of the premium.

The payments for poor adults would be less generous, with full subsidies available only to those at poverty or under, and partial payments on a sliding scale up to 200% of poverty.

The program would begin in 1997, which means that all those groups would be assured some government help in meeting their health bills at least five years before the rest of the population is guaranteed coverage. The Mitchell bill calls for 95% of the country to be covered by the year 2000, imposing a 50% employer mandate in 2002 if voluntary measures fail to meet that target in individual states.

House Majority Leader Richard A. Gephardt (D-Mo.) also has proposed full subsidies for families below the poverty level and some government help for those earning 240% of that level, about $38,400 for a family of four. Benefits under his plan would begin in 1999.

To a large degree, these priorities reflect the scarcity of government resources available. “If you’re not going to be all-encompassing, you look then to the populations with greatest needs,” said Diane Rowland, the Kaiser Family Foundation’s executive vice president.

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But the provisions also have a political dimension. They amount to something of a consolation prize for congressional liberals, who are increasingly disquieted and dismayed by their leaders’ retreat from the more ambitious provisions of the Clinton plan.

Liberals form the core of the health bill’s support and House and Senate leaders cannot afford to lose their votes.

The relative immediacy of those provisions is a major selling point. Even if other parts of the bill were undone by a future Congress before going into effect, existing programs would be hard to dismantle.

“I’m going to be looking very carefully at this legislation to judge what it does right away, not just what it promises many years from now. We have a chance to make substantial gains covering more people--especially children and the elderly--almost as soon as this legislation is signed,” said Rep. Henry A. Waxman (D-Los Angeles), who chairs an important health subcommittee and is Congress’ most dogged champion of health coverage for the poor.

The benefits themselves are significantly more generous for children of all income groups. Under the Mitchell plan, those younger than 22 would be the only group assured coverage of vision, hearing and dental care in private health plans. Gephardt would provide the same group with preventive services without out-of-pocket cost.

“There are good parts of both of them (the Gephardt and Mitchell plans). We’re very supportive of what’s being done in both houses,” said Eileen Sweeney of the Children’s Defense Fund, a children’s advocacy group.

Elderly groups, however, have been somewhat reluctant to embrace the plans, primarily because they are still evaluating the reductions in Medicare growth that both envision.

Congressional leaders insist that the cuts will affect doctors and hospitals, not elderly beneficiaries. The Mitchell plan would reduce projected growth in Medicare by $54 billion over five years, about half as much as the Gephardt proposal. Both figures are lower than the $124 billion in cutbacks that Clinton proposed, a reflection of an intense lobbying campaign by elderly groups.

And older people, many of whom have had to decide all too often between buying food or life-sustaining drugs, have the most to gain from new Medicare coverage of prescription drugs. Under the Mitchell bill, the benefit would begin in 1999 and is estimated to be worth $100 billion. Beneficiaries would pay 20% of the costs of their drugs, up to $1,275 a year.

The elderly also are the chief beneficiaries of long-term care benefits that could keep them in their own homes, rather than in nursing homes. Under both the Gephardt and Mitchell bills, the federal government would give the states grants with which to establish such care programs.

Those drug and long-term care benefits in the House and Senate bills have been scaled back from the levels proposed by Clinton but still would represent “a big step forward,” Waxman said.

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Meanwhile, the group least likely to have insurance--healthy people in their 20s and early 30s--are likely to see the cost of buying it increase. This is because of a much-touted change, part of virtually every health reform proposal, that would curtail the insurance company practice of charging different rates to people on the basis of their age and their health.

Healthy young people thus would lose the price break they get now--which, by some estimates, could amount to a transfer of as much as $40 billion a year from those who are under 35 to those who are between 35 and 64.

What those under 35 would get in return, according to proponents of the idea, are less tangible, but nonetheless important benefits--such as the knowledge that they could never be denied coverage when they are sick and need it.

Indeed, the health debate has resounded with the heart-wrenching stories of those whose “pre-existing conditions” have made health coverage unobtainable. As recently as Wednesday night, Clinton used his nationally televised news conference to draw the attention of tens of millions of Americans to the plight of Daniel Lumley, a Seattle man who suffered severe injuries in a motorcycle accident and subsequently has been uninsured.

However, the Kaiser Foundation’s Altman said that such cases are “not as big a cause of being uninsured as the speeches would lead you to believe it is.” Most people in that situation, he added, can get at least partial coverage, excluding the problem condition.

“Insurance reform will have a modest, perhaps even negligible impact on the uninsured,” Altman said.