The Heritage Foundation

Executive Summary #1158es on Health Care

February 25, 1998

February 25, 1998 | Executive Summary on Health Care

Executive Summary: A Progress Report on the Clinton Health Plan

"Now, what I tried before [enactment of
the Clinton health plan] won't work.
Maybe we can do it in another way.
That's what we've tried to do, a step at a
time, until we finish this."

-President Bill Clinton,
speech to the Service Employees International Union,
Washington, D.C., September 15, 1997

Four years ago, Congress soundly rejected the Clinton health plan. Since then, however, it has quietly adopted many key elements of that plan. Now Congress is considering more elements.

It is time to take a different route. To ensure that its health care reform efforts meet the needs of the greatest number of Americans, Congress should measure the merits of proposals against a basic commonsense standard. Any plan that would create a new federal health care subsidy program, expand an existing program, or include mandated benefits or access should meet this overriding standard: It should empower individuals and families to decide for themselves which health care options to choose. They should not give that power to their employers or to the government-that would only help accomplish the vision of the original Clinton health plan.

The key step now is to end the bias in the tax code favoring employer-purchased health coverage at the expense of individual coverage.

Short of ending the tax exclusion for employer-provided health plans, there are several steps Congress can take to lay a solid foundation for a truly consumer-based health care system in America. Specifically, any new health care policy should:

  • Encourage employers to disclose the value of their health benefits plan to employees.

  • Allow individuals to opt out of their employer-provided health coverage. This could be done, for example, by requiring employers to give employees the chance to opt in or out of the employer-provided health plan when they are hired and giving employees who choose to opt out the same tax break they would have had under an employment-based plan, or by allowing individuals who do not like the employer-provided health plan to cash out the tax-free value of their employer-provided health benefits and use that money to buy a health plan of their choice.

  • Require that any health plan covering an employee who chooses to stay in the employer-provided health plan obtain the employee's signature on a contract agreeing to the terms and conditions of the plan.

  • Allow individuals who do not have health coverage through their place of employment to deduct the full cost of an individual health plan from their taxes.

  • Require that limitations on type, duration, and scope of the covered benefits and providers are specified clearly in contracts with individuals.

  • Allow individual workers in company-sponsored health care flexible spending accounts (FSAs) to roll over unused funds in these accounts, penalty-free, at the end of the year.

  • Remove or raise limits on individual contributions to FSAs.

Congress took nine months to air the intricate and confusing details of the original Clinton health plan, and a resounding plurality of Americans registered their opposition to it. They saw it as a dramatic attempt to shift private dollars and decision-making authority away from families and individuals to the federal government. Under pressure from the Clinton Administration, recent legislation implements central elements of the Clinton plan. It is time for Congress to take a different direction.

Carrie J. Gavora is the Health Care Policy Analyst at The Heritage Foundation.

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