The Heritage Foundation

Backgrounder Update #212

February 9, 1994

February 9, 1994 | Backgrounder Update on

Why Americans Need to Know that Congress's Health Plan Is not Clinton's

(Archived document, may contain errors)

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ization or a plan considerably less generous, at less cost to them. Moreover, Members of Congress al- most always have refrained from legislating specific medical services in the FEHBP, realizing dud such mandates drive costs up for all federal employees and their families. The Clinton plan would require ordinary Americans, with their employers, to purchase a standardized package of benefits. Under the Clinton plan, the Congress would legislate these benefits-and even medical services-in meticulous detail. And a National Health Board, a powerful new gov- ernment agency, would add or subtract benefits, depending upon whether the Board determined them to be -medically necessary." Many families would be forced to buy benefits they did not want, but oftenthe package would not include benefits they did want. H they wanted benefits not included in the standard plan, families would have to buy extra insurance or pay out-of-pocket, in after-tax dollars. The FEHBP allows to consumer to decide whether a plan Is good value for money or If It Is too expensive. The Clinton plan empowers health alliances to decide if a plan is too costly, based on an alliance spend- ing target set by Washington. So a family may wish to pay for a certain plan that includes the stan- dardized benefits package requirement but the alliance may determine it unacceptable-in which case it would be illegal for the family to purchase it. The FEHBP allows federal workers to pick and keep their plans. The Clinton plan enables states to set up a single-payer, government-run system, thus eliminating pri- vate insurance plans altogether Alternatively, the Clinton plan also allows state health alliances to take a plan away from families if the alliance determines spending by members of the plan might exceed a budget target based on directives fromWashington. The alliance thus could drop the more expensive plan from a roster of statb-approved plans, forcing families who had been covered by that plan to choose coverage from among the remammg approved plans. The FEHBP Is voluntary. Federal worbre are not required to join L The Clinton plan is mandatory. It would be illegal for family not to purchase the comprehensive stan- dardized package through a health allianm (or a corporate alliance, in some cases). The FEHBP Is not burdened by premium caps or price controls. The Clinton plan imposes rigid premium caps on insurance and imposes a variety of price controls in the form of government or "regional alliance" fee schedules on health cam providers. Controlling the prices of doctors, hospitals, and even long-term care insurance in this way would lead many doctors to cut back on the time, they spend with patients. The FEW Is not burdened by a huge government bureaucracy. The 34-year-old law creating the FOOP is only 26 pages long, with 83 pages of rules in the Code ofFederal Regulafions, and an- other 93 pages of guidance in the Federal Personnel Manual. The program is run almost entirely by the private sector. The FEHBP central administrative staff at the Office of Personnel the agency responsible for the program, is relatively small: 144 people. The Clinton plan is outlined in 1,342 pages of legislative language creating now federal agencies and - - mious regulatory powers. Chief among them is a National Health Board functioning as a kind of "Supreme Court of Health@" plus a large number of panels, advisory boards, review boards, and commissions, staffed by an unspecified number of federal employees. Thousands of pages of regu- lations would be needed to set up the system and to enforce its provisions. On top of new federal agencies and panels, the Clinton Plan creates hundreds of -regional Wfiances:' non-competitive,sponsored health insurance cooperatives, staffed by as many as 50.000 bureaucmts, under the regulatory authority of both federal and state government agencies. For all of the White House thetoric th-1 the Clinton Plan resembles the arrangement currently enjoyed by Members of Congress and federal workers, the reality is very different. In fact, the White House knows very well that fedend workers and their representatives want to escape the Clinton Plan.3 And if federal workers am finally forced to join the system, they will have to accept dmstic changes in coverage. While the Clinton Plan is very different from the solid system the President holds up as the model for re- form, another bill before Congress is designed specifically to give ordinary Americans the same kind of choice and competition availableto Members of Congress and members of the Clinton Administration. This is the Consumer Choice Health Security Act (S. 1743, H.R. 3698), introduced in the Senate by Don Nickles (R-OK) and in the House by Cliff Steams (R-FL). The Senate version, with 25 co-sponsors, has more co-sponsors than any health bill other than the Ptesident's. The Nickles-Steams bill would, unli the President's legislation, give ordinary Amedcans a health sys- tem very much like that enjoyed by Members of Congress. Only it would be even better. Among other things, families would be permitted to pick the benefits they wanted in their health plan, provided the plan included at least catastrophic protection. Families would own the plans directly; they never could be taken away by a state governmenL a health alliance, or anyone else. President Clinton is right to draw attention to the excellent health cam system he and other public offi- cials take for granted. As ordinary Americans learn more about the system available to their representa- tives, many of them say they would like a saimil system. But President Clinton is grossly misleading the American people when he claims that his plan would deliver such a system.

Stuart M. Butler Vice President

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3 Set Sumt M. Buder,"Why do C&M AdminisuatimMU Be Exempt From ft Onton HWth Pln,"HeritW Fow"on F.wcudw Mmwrandum No. 369, November 9,1993; ud Robert EL Adoffit, "Wby Faderd UnWU WaW to ESCW the Ointm HeWth Fbm," Heritage Foundation Backgrounder No. 953. Augut 4. 1M.