The Stealth Clinton Health Plans: A Guide to the House and Senate Bills


The Stealth Clinton Health Plans: A Guide to the House and Senate Bills

August 12, 1994 21 min read Download Report

Authors: Stuart Butler and John Liu

(Archived document, may contain errors)


August 12.1994


MMODUMON President Bill Clinton naninded. Americans at his ncent press conference that any fmal health cam legislation will be the product of conference negotmons between the House and the Senam 7bus, lawmakers nPlating their votes an the majority leadership bills in each chamber should remember diet the bill their chamber passes will become a vehicle for that conference bill. Hence they should examine the common elements of these bills. that these we the elements most likely to be in tho find conference, bill-and also that the White House and majority leadership will have the loudest voices in shaping conkrence decisions. Moreover, the common elements do not even have, to survive in both bills to become law. N the While House and its ED allies succeed in retaining a feature they dean in eidw version, the conference committee can keep it in die conhrence report. Given the likely makeup of do conference, this is very likely. And many h1wrals in the Senate also have, indicated that their s=W is to accept a bill without certain features they really want (such a an employer mandate or, still. a single-payer Adedicare Part C provision) with do expectation that some or all of them elements will be in a conference bill. It thus becomes clear why Pftsidew Clinton spoke so warmly of a Senate bill that May seem. to depart from mmy of his health can objectives, IU fact is that the leadership bills developed by Senator George Afacbell (D-ME) and -10sentative Richard Gephardt (13- MO) contain key common elements that an the some a the cential features of the original Clinan pbm. And ff they we not in both Ms. they are key eJemants in one. Despite protes- ted= ham the House and Senate majority leadersh#@-,snd even do White House-that do new hills we not merely A& -- . ftno of Clinton's increasingly unpopular plan, an examination of the bills shows otbawise. 71m coutcrence bill emerging from them Mmly would be much dour to the Clinton plan gm Mitchell and Cwqkw& seem prepared to admit.

In other words, the central, unpopular features of the Clinton plan are alive and well in the Mitchell and Gephardt bills. Among them: V Both bills contain employer mandates. In Gephardt's bill, an employer mandate goes into effect immediately. In Mitchell's, a mandate goes into effect if a virtually unattainable target percentage of coverage is not achieved voluntarily. V Both bills introduce a government-chosen standardized benefits package. Like the Clinton plan, the Gephardt bill places in statute the benefits each American and his employer will be forced to buy, leaving families to buy other services they need out of their own pockets with no tax relief. The Gephardt standard package, for in- stance, does not include protection for catastrophic medical expenses, so a family with the required standard plan could be wiped out by a serious medical problem. The Mitchell bill allows a commission to set the package within certain guidelines, so Americans will not know exactly what is covered until after the bill becomes law. Both bills pave the way for direct federal control of health care. Gephardt intro- duces a new Medicare Part C for those currently on welfare and for millions of work- ing Americans. The federal government will run this nationwide alliance, setting fees and budgets. In Mitchell, the approach is more subtle. The federal government estab- lishes an exclusive alliance for certain workers in areas where states do not create their own alliances. Rules governing this system would be drawn up by Washington. The New York Times, in a recent editorial, accurately described the implications of the new Medicare Part C program: Medicare Part C, unlike the program limited to the elderly, threatens to trigger an inevitable roll toward govenunent-run medicine for most Americans.I V Both bills introduce price or spending controls. Like the Clinton plan, both bills establish mechanisms to limit spending on health or to control prices, each of which would lead to government rationing. With the creation of a Medicare Part C program, the Gephardt bill means physicians and hospitals serving almost half the population would be subject to price controls and spending limits. Moreover, if health plans do not sharply reduce the growth of costs, "stand-by" federal price controls would be ap- plied to the entire health industry. The Mitchell bill, on the other hand, gives vague powers to a new National Health Cam Coverage and Cost Commission to recommend ways to hold down costs and re- quires Congress to vote on its recommen ons in an expedited up-and-down proc- ess. The Mitchell bill also claims to contain a'Iail-safe' provision to prevent any in- crease in the deficit due to new federal subsidy programs. But if the bill's sequester mechanism actually were invoked, observes the Congressional Budget Office, it "could make previously eligible people ineligible for subsidies and would reduce the 9,2 extent of health insurance coverage. It seems unlikely that Congress would permit such a fail-safe provision to go into effect if it consigned insured Americans to the ranks of the uninsured. V Both bills would discourage self-insurance. Like the Clinton plan, the Mitchell and Gephardt bills strongly discourage larger firms from designing self-insured plans that cater to their employees' specific needs. Both bills. for instance, contain excise taxes on self-insured plans, part of which would be passed through to employees. The Mitchell bill in addition places a 25 percent tax on the value of a plan above a govern- ment-specified target. This would hit the more generous plans common in unionized firms. The CBO points out that because the excise tax would not be a deductible ex- pense for employers, the effective rate would be as much as 38.5 percent.3The Gephardt bill, by including almost half the population under the price-controlled Medicare system, would trigger huge "cost-shifting" to private insurance and self-in- sured firms, pushing up the cost of such plans and making them far less attractive- an effect The New York Times describes as "devastating. Fees to private patients would skyrocket, driving premiums up ......4 Both bills create huge new bureaucracies and place unfunded mandates on the states. Like the Clinton plan, both bills would place many new requirements on states. In its analysis of the Senate Finance Committee bill, on which the Mitchell bill is based, the CBO notes that: states would bear the brunt of many of the responsibilities for implementation, and it is uncertain whether-and if so, how soon -some states would be ready to assume them.5 These responsibilities include determining eligibility for subsidies (which the CBO calls "an enormous [task] for states') providing wraparound Medicaid benefits, estab- lishing and running health alliances, and monitoring health plans. These new state obligations, as well as new responsibilities for the federal govern- ment, mean that the Mitchell bill would create dozens of new federal and state agen- cies. Summing up these new powers for government officials, 77w Washington Post comments:

rnie new govenimmit agencies] would have untested authority to centralize, reorganize, monitor and enforce the way medical care is bought,sold and, to a lesser extent, practiced in this country.6 The Mitchell and Gephardt bills thus should be seen as two parallel legislative vehicles for enactment of the central elements of the Clinton plan. As lawmakers are courted by the majority leadership in each house, and even by the White House, with claims that their bill "is not the Clinton bill." they should not be fooled. Supporters of the Clinton plan are try- ing desperately to gain votes for bills which, in isolation and by careful reformulation, seem to differ significantly from the Clinton plan. They do not. A vote for either of the ma- jority leadership bills can best be described as a vote for the Clinton-Mitchell-Gephardt bill.

HOW EMPLOYERS WOULD FACE HEAVY MANDATES The House and Senate majority leadership bills both include an employer mandate. The House version would require all employers to pay for at least 80 percent of a standardized benefits package; the Senate version would include a 50 percent employer mandate if less than 95 percent of Americans are fully insured by 2000. It is a near certainty that this "hard trigger" would go into effect, partly because the modified community rating system for pre- miums means that younger Americans would face insurance costs that generally would be significantly higher than if they simply paid their medical bills themselves.7 Thus, many young employees, young self-employed individuals and employers with a young work- force would have little incentive to obtain insurance coverage. Moreover, even in Hawaii, a state which already has an employer mandate, only 93 percent of the population is cov- ered.8

So there is little doubt that there will be an employer mandate if the Senate bill becomes law-and equally little doubt that the conference bill will include a mandate if it survives in either bill. Proponents argue that since a majority of Americans already receive their health care insurance through their place of employment, it makes sense to provide cover- age to uninsured and "underinsured" Americans through a mandate on employers. In addi- tion, they maintain that requiring employers to pay part of the cost of coverage will reduce or even eliminate the burden on employees. Nothing could be further from the truth. The impression is given by proponents that an employer mandate is the proverbial "free lunelf '-that a payment by an employer imposes no cost on the employee. But the evi- dence suggests there can be large costs in terms of employment and wages. A health insurance mandate is an additional cost to employers of hiring or retaining workers. The Faufax, VuVma, econometrics firm Lewm-VHI recently estimated the un- pact on employees of the mandate in the original Clinton plan, which is quite similar to the Gephardt mandate. Lewin-VHI noted two effects. First, when an employer has to pay additional payroll taxes or mandated benefits for an employee, part of that cost is "passed through" to the employee in lower wages. As the CBO explains in a March 1994 report: An often overlooW point is that the employer share of the cost of employer provided health insurance is ultimately passed on to workers in the form of lower wages and reductions in fringe benefits other than health insurance .... Mhis study calls health insurance that employees receive at work "employment based" rather than "employer provided..9

Based on the economic literature, Lewin-VHI assumes that an average of 88 percent of a mandate's cost is passed on to employees in lower wages. Using this assumption, Lewin- VHI calculates that if the Clinton plan were enacted, the wages of employees not now re- ceiving insurance would decrease in 1998 by an average of approximately $1,243, or 6.1 percent (See Table 1). The avera ge wage cut, combining today's insured and uninsured workers, would be about $400.' An analysis of the Gephardt bill, using the same assumption and utilizing the simulation model of the Gephardt bill developed by The Heritage Foundation, reveals that the wages of all workers (combining insured and uninsured workers today) would fall by an average of $378.11 The second effect noted by Lewin-VE11 and other analysts is job loss. Low-wage work- ers are particularly vulnerable to layoffs if the cost of employing them rises because of a mandate on employers to provide insurance. Lewin-VE11 calculates that approximately 350,000 jobs would be lost under the eigployer manda in the Clinton plan. 12 Other stud- ies put the job loss as high as 850,000. 1 As the table by Lewin-VE11 indicates, job losses are concentrated in the services and re- tail trade industry, with approximately one-third coming from the service industry (See Ta- ble 2). Furthermore, losses are especially heavy among Americans earning less thazi $10,000 per annurn (See Table 3). 14 The impact of a mandate would vary by income (See Table 4)@15 Proponents of an employer mandate often point to Hawaii as the model of the benign ef- fects of an employer man . Hawaii is the only state which currently mandates all em- ployers to provide health insurance to most of their employees. Its health plan, enacted in 1974, requires employers to provide health insurance to their employees, with the em- ployee share limited to 1.5 percent of wages or 50 percent of the cost of the premiun% whichever is lower. This is much lower than the Gephardt requirement of 80 percent and roughly the same as the eventual mandate under h4itchell. Despite the mandate, however, Hawaii still has not achieved universal coverage. 16 The General Accounting Office notes that "[E]ven some residents with insurance encounter problems obtaining access to health services and need community health centers and other safety net programs." Even with a 50 percent mandate, let alone the 80 percent requirement in Gephardt, Ha- waii's employment experience is not encouraging, despite a traditionally tight labor market in the state. According to a 1993 Kaiser Foundation study of the experiences of Hawaiian businesses after the mandate was introduced: V 4 out of 10 employers had to reduce their workforce. I out of 10 hired part-time workers to avoid paying health insurance. 55 percent restricted wage increases. 33 percent restricted other employee benefits paid to workers. 17

AMERICANS WOUID HAVE TO BUY A STANDARD BENEFITS PACKAGE The Gephardt and hfitchell bills would require all working-age Americans who want health insurance to enroll in a plan that includes a comprehensive standard benefits pack- age. The package would be designed by Congress or by a commission under guidelines es- tablished by Congress. While the bills vary in the size and scope of the benefits mandated, each uses the Clinton package as its basis. The Clinton package has been said by the Administration to match or exceed that of the "average Fonune 500 company." While this may sound at- tractive at first, several questions need to be addressed: Does every household need or want such a generous package? Can every household afford such a generous package? Can the country afford to guarantee such a generous package, free of charge, to those below the poverty fine? By adopting a comprehensive standardized benefits package approach, rather than trying to assure that all Americans can obtain at least a basic catastrophic plan, the leadership has chosen to ignore the fact that millions of Americans, most notably younger and healthier individuals, may not want, and possibly cannot even afford, such a generous package. Fur- thermore, those who needed a service not included in the standardized benefit package would have to buy the service out of their own pockets or buy supplemental coverage- without any tax relief. Requiring all Americans to enroll in a comprehensive standard plan also makes it ex- tremely difficult to hold down the growth of health care spending without tight price con- trols or rationing. As the American Academy of Actuaries concludes in a recent study: Designing a guaranteed standard benefit package within a limited health cam budget is not an easy task. 7be ultimate design will depend upon the ability to balance the desire to provide affordable coverage to all with the reality of limited funding.19

The Academy points out that many Americans would prefer to purchase a leaner, lower- premium package with basic insurance coverage. 19 A comprehensive benefits package, on the other hand, covers the broad range of medical services that families might expect to need over time.20 With such a mandated package, households and employers would be re- quired to purchase an expensive package that likely would include services they did not want while including services they did want. Once a standard benefit package has been established, modifying and updating it be- comes a bureaucratic and political nightmare. Consider the Medicare program, which cov- ers over 35 million elderly and disabled Americans. This program establishes and excludes certain types of medical services from coverage. The Health Care Financing Adrmmstra tion (HCFA), the federal agency that admini the Medicare program, must endure a myriad of bureaucratic obstacles whenever it seeks to add or withdraw a benefit. Should HCFA decide to expand coverage for what might appear to be a promising medical tech- nology, for instance, it must request an evaluation from the Office of Health Technology Assessment (0HTA), a branch of the Agency for Health Care Policy and Research (AHCPR) within the Department of Health and Human Services. If an official were to pro- pose eliminating a benefit, that official would have to be prepared to do battle with Con- gress. Americans should be wary of allowing Congress or a commission to establish a compre- hensive benefits system for all plans, especially in an era where medical technology is im- proving and makin rapid advances. According to a recent study of the Medicare system by Senator David Durenberger (R-MN) and Susan Bartlett Foote, a congressional health policy analyst, Medicare technology evaluation has been underfunded because of compet- ing budgetary priorities, such as payment for a growing volume of medical services. Duren- berger and Foote note that the evaluation of medical technology has been hampered by questionable assessments of the cost-effectiveness of technology due in large part to the politicization of HCFA's decision-making process.21 What is true of Medicare's benefit changes is inevitable for a nationalized standard bene- fits package: only through organized political action will benefits be added or subtracted. According to Jeremy Rosner, a researcher with the Progressive Policy Institute and now a Clinton Administration official, 'The history of Medicare is replete with cases of organ- ized groups acting through Congress to add coverage for specific illnesses or procedures, or to affect changes in specific prices.'m The current campaigns to include specific bene- fits in the standard package, from abortion to chiropractic services, is an indication of how insurance coverage will be determined under a standardized benefits system.

In the Gephardt bill, the standardized benefit is established in statute by Congress, as it is in the Clinton plan. The Mitchell bill specifies the basic outline of the package, but gives the power to select specific benefits to a commission.

PRICE CONTROLS Average Annual Like the Clinton plan, the Gephardt bill would establish a Growth in Per Capita Health Expenciftures national spending target for health care. If this were ex- 1985-1991 ceeded, sweeping price controls would be applied to the (Adjusted for Inflation) health cam system. To meet the target, and thereby avoid Percentep the controls, the growth of health care spending would have Country Incruse to be reduced more rapidly thaii has been possible so far in (1985-1991) any industrial@ized nation-including those with govern- Turkey 9.61 ment controls on health care spending. Spain Leo Specifically, the Gephardt bill requires the Secretary of Italy 5.55 Health and Human Services to compute a baseline private Rniand 4.97 per capita estimate for 1995, based on 1993 data inflated Iceland 4.48 forward to 1995. The target rate of growth would be set in Norway 4.30 statute so that the rate of growth in private spending on jam 4.24 health care would be reduced by two percentage points in Belgium 3Z 1996 and by an additional one percentage point in each sub- United I(Ingdom 3.84 sequent year until the rate of growth is slowed to the five- Canada 3.58 year average per capita rate of growth in the gross domestic Francs 326 product (GDP). Such a severe limitation on how much Austria &05 health care expenditures may increase has never been tried Germany 2.05 in the Western world and is almost inconceivable without SwItZedend IJ12 tight price controls and severe rationing. Sweden 0A8 Gephardt target for To appreciate why the Gephardt target is so unrealistic, Vie United Stain consider the chart to the right, which shows the average an- oft 1"6 0 nual growth rate in health expenditures for Western coun- I Nwobm = &a percentage by wbich tries, adjusted for inflation and population growth, for the do inizaaw exceacis dw rate of inflation. years 1985-1991. a namorad by die GDP inflator. 2 F*m from See. GWl(cX2Xc)6 Ile budget impact of the Gephardt bill depends on keep- Connoinee on Ways od Mom Report ing the growth in health spending down to thew levels 103-601, Pm 1. p. 105. Sourcen. Orstnization of Economic which would be unprecedented in any industrialized coun- Coopetation and Developtutnt, 1904"1 try. If spending was not kept within thew targets. federal compatison; H.R. 36W as reported out of outlays on subsidies would sm. do Houn Committee na Wr.A and Meant.

GEPHARDT"S SINGLE-PAYER SYSTEM Liberals in the House and Senate who advocate a single-payer Canadian-style system succeeded in creating the for such a system within provisions in the House Ways and Means bill. These provisions are included in the House Majority Uader's bill and, if retained in the floor-passed version, easily could end up in conference version.

Gephardt creates a single-payer system for up to half the U.S. population by expanding one of the nation's largest entitlement programs, the Medicare system, to include millions of working Americans and the welfare population. The current Medicare program, re- stricted to Americans age 65 and over and certain disabled persons, already is the nation's largest health care program; in 1993, approximately 35 million Americans were enrolled at a cost of $134 biUion. The Gephardt bill would add as many as 60 million more Americans to this government-operated system by creating a new Medicare Part C. Most of the work- ing Americans in Part C would not be enrol1ed by choice, however, but because their em- ployers decided to put them in the program. In general, Medicare Part C is to be available to households headed by individuals who meet the foflowing requirements: They are a part-time, seasonal, or temporary employee. They are full-time employees in a business or organization with 100 or fewer employ- ees which opts to cover employees under Medicare Part C instead of under a govern- ment-approved private health plan. They are low-income employees of any business or organization. They are not employed. They are currently on Medicaid.

In addition:

Illegal aliens born in the United States and who are not enrolled or otherwise covered under a private qualified health plan at the time of birth would be deemed to have been enrolled under Medicare Part C at the time of birth. Costs and Benefits. Every man, woman, and child enrolled in the Medicare Part C pro- gram is to receive the same benefits in the government-defined and -approved standardized benefits package. The premium for the new program is to be based on the average cost of serving the eligible population. But this population will consist of the current Medicaid population, who will pay virtuaUy nothing for a generous package of benefits, and miHions, of Americans generally working in small firms, who wiff be responsible for 20 percent of the premium. This average premium wiU mean Imp extra payments by working Amed- cans and their employers to provide extra benefits to the welfare population. Doubtful Finances. The new program is to be financed only in part through premiums paid by enrollees and their employers into a new trust fund. The rest of the funding would come from various new taxes in the Gephardt bill. 7be design of the bill, and the experi- ence of the current Medicare system, suggests strongly that there will be huge funding shortfaIls in the new program. Among the reasons: Medicare's costs already are exploding. Placing Americans into the Medicare sys- tem is hardly a way to control costs. Over the last 20 years, Medicare costs have risen by an average annual rate of nearly 15 percent. Moreover, to the extent that Medicare Part C is able to control its costs at all, it will be by the same technique used in Medi- care today-transferring costs to other Americans with private insurance.

Premiums are likely to fall well below actual costs. In 1974, the Medicare Part B premium for physician coverage covered half the cost, but Congress flinched from raising the premium in future years to cover rising costs because of constituent anger. The result: premiums have been allowed to fall to a level where they cover only one- fifth of reimbursements-and because of cost shifting, reimbursements only cover a fraction of the real cost of services. Not surprisingly, this below-cost good deal for seniors has led to 97 percent of the eligible population choosing to buy the voluntary Part B coverage. There can be little doubt that the same pressure on Congress would lead to pre- mium revenue falling below costs, with resultant shortfalls in the trust ftind. Com- pounding this, as below-cost Part C premiums fell further below premiums for equiva- lent private insurance coverage (itself driven up due to cost-shifting ftorn Part C), more and more eligible Americans and their employers would choose Part C cover- age, and others would clamor to be given eligibility. Estimates of enrollment are likely to be too low. The most sensible way to figure the cost of Medicare Part C would include relying on actuaries and benefits experts to estimate potential enrollment in the new program. But in a remarkable provision in the Gephardt bill, the Secretary of HHS is required-by law-to use the assumption that exactly 75 percent of the eligible population would enroll in Medicare Part C and to base the cost of the premium on that arbitrary figure. Given this shaky but legally required assumption, it is highly likely that the deter- mination of a Medicare Part C premium will be inaccurate. Very probably, due in part to the below-cost premiums discussed above, the enrollment estimate will be on the low side-leading to potentially huge future cost overruns. New obligations for agencies and states. HHS is given the primary responsibility of enrolling all eligible individuals in Medicare Part C. but in reality the states would have to shoulder much of the burden of identifying the eligible population. Remarkably, the bill as- sumes that the new program can be established and open to enrollees and begin providing coverage by January 1, 1998. Price controls on providers. Physicians and hospitals will be reimbursed in the same way as they are today under Pan A and Part B of Medicare. That means the controlled fees and treatment reimbursements that are so unpopular with physicians today because of their mountains of paperwork and arcane regulations. Just as many physicians will not accept Medicare patients today, many no doubt will refuse to accept Medicare Part C patients un- less forced to do so. The Medicare payment system leads to huge costs being shifted to non-Medicare pa- tients and insurers. Thus, physicians and hospitals who treat Medicare Part C patients will be forced to spread the deficient rei among patients with private insurance, thereby raising their costs. In short, Americans who opt to stay in private insurance plans will be cmss-subsidizing and helping to pay for the care that Medicare Part C patients re- ceive.

THE HEAVY EXTRA BURDEN ON STATES The Clinton bill placed a wide array of new obligations on the states. The Mitchell and Gephardt bills also would place heavy responsibilities and costs on them. And according to CBO, behavior changes prompted by the incentives in the bills could trigger additional state costs in non-health programs. The Mitchell bill, for instance, requires states to oversee and enforce the complicated rules governing health plans under the new system. It would also require them to operate a "risk-adjustmenf' system designed to transfer billions of dollars from health plans primar- ily serving healthier families to those with an unusually high proportion of sicker Ameri- cans. States also would have to assemble vast amounts of insurance and health data and would be responsible for creating a network of Health Insurance Purchasing Cooperatives (HIPCs). The Gephardt bill contains different requirements of a similar scale, under which states also would have to figure out how to dismantle their Medicaid programs and transfer their welfare population to Medicare Part C. Both bills contain low-income subsidy programs, which states must operate, that would have unintended incentive effects that could rebound heavily on the states. For example, the Mitchell bill provides subsidies to cover the bA cost of standard coverage for low-in- come individuals and families below 100 percent of the federal poverty level, and the sub- sidies are phased out above that level and removed entirely at 200 percent of poverty. But if the woman in the low-income household becomes pregnant, the subsidy is for the full cost of coverage for a household income up to 185 percent of the poverty level (with the subsidy phased out at 300 percent of poverty). Thus, low-income household between 100 percent and 185 percent of poverty can obtain free insurance, as opposed to paying part of the cost, merely if the woman in the household becomes prepant-which in many states would trigger other benefits. The phaseout rules would have other unwelcome incentives. As the CBO points out, phasing out the health care subsidies for low-income families as their income rises "would implicitly tax their income from work," making it much less attractive to work harder-or to work at all in many instances. That would lead many families to decide to remain on the welfare rolls, or to limit their earnings from work, which in turn would impose unantici- pated outlays for welfare and other assistance on the states. Explains the CBO: In 2000, for example, the effective marginal levy on labor would increase by as much as 30 to 45 percentage points for low-mcome subsidies and 20 to 40 percentage points for workers in families choosing subsidies for pregnant women and low-income children. Moreover, these levies would be piled an top of the explicit and implicit marginal taxes that such workers already pay through the income tax, the payroll tax, the phaseout of do earned income tax credit, and the loss of eligibility for food stamps. In the end, some low-wage workers would keep as little as 10 cents of every additional dollar they earned.

CONCLUSION The NEtchell and Gephardt bins differ far less from the original Clinton bill than their sponsors-or the White House-are prepared to admit to the American people. Like the Clinton plan, both bills would lead to onerous mandates on employers, which in turn would mean reductions in wages and job losses. Like Clinton, both bills would force Americans to enroll in a government-designed standardized benefits package. Like Clin- ton, both bills would increase the likelihood of a single-payer system in the near future. Like Clinton, both bills introduce spending caps or price controls. Like Clinton, both bills place unfunded mandates on the states. And like Clinton, the financing schemes in both bills are completely inadequate to fund their promised benefits. But worse still, nobody really knows how either bill, or a conference bill resulting from them, actually would work. For all its faults, the Clinton plan at least was examined care- fully for several months. Detailed studies were carried out on the bill. It was the subject of exhaustive investigations, simulations, and conference workshops. As it was studied, some of its many unintended side-effects became more evidem The more the American people became aware of what the Clinton bill probably would do to their health system, the less they liked it. The Gephardt and h4itchell bills have not been subjected to this close scrutiny. They are the results of back-room restructuring of the central elements of the Clinton bill, together with a collection of new provisions that have not been carefully assessed and are designed largely to win the votes of key lawmakers, not to produce good law. The result of the de- bate over these bills, under a timetable that is absurdly short for such momentous legisla- tion, is likely to be a costly disaster for most Americans. The near certainty of this merely underscores the need for Congress to slow down, evaluate these bills and others meticu- lously and without politically motivated deadlines, and try to produce good reforms that are what Americans want and that may actually work as intended. Stuart M. Butler Vice President and Director of Domestic and Economic Policy Studies

John C. Liu Policy Analyst

Editorial, "7be Failed House Ekalth Bill." 7he New York 71mes, My 30,1994, p. 18.

2 Congressional Budget Offim "A Preluninmy Analysis of the Health Security Act As Reported By the SenateCommittee an Finance," July 29,1994, p. 5.

3 CBO, "A Preliminary Analysis," p. 10.

4 "The Failed House Health BiU,N op. cit.

S CBO, "A Preliminary Analysis," p. 6.

6 Dana Ptiest, "Health BiUs May Have No Substitute for Bureaucracy."7he Washington Post, Augmt 7,19%, p. Al.

7 The hfitchell bill does allow premiums to be adjusted by ag% but it limits die variation to a ratio of 2: 1. which would still mean younger workers qpcally would be paying well above the actual cost of their care if they bought insurance. while older workers would be paying much less. a GAO ReportGAOMEHS-94-6

8, -Health Care in Hawaii. Implications for National Reform," February 1994, p. S.

9 Congressional Budget Office. The Tax 7WOwnt ofEmpk7ment-Based Health Insunnce, March 1994, Introduction.

10 Lawin-VEa, "ne Effects of the Health Security Act an EmployeeWages and A Comparison of the Effects of the Health Security Act and the Individual Tax Credit Program on Households," Much 9,1994, p. 19. See also Stuart M. Buda, "How the Clinton and Nicldes-Stearns Health Bills Would Affect American Workers." Heritage Foundation Issm Bulkdn No. 188. April 11. 1994.

11 Stuart M. Butler with David H. Winston and Christine L. Olson, "Health Cam DebateTalldng Points #1: Cost to Business of the Gephardt Bill," Heritage Foundation FYI No. 21, Updated August 9,1994.

12 Lewin-VEII, "The E&cts of the Health Security Act," p. 39.

13 Scott E. Daniels and William R. Mattox, Jr., "Job LASses and die Clinton Health Plan: A Family Impact Analysis," Family Research Council Insight, June 14,1994, p. 1. Estimates ofjob losses calculated by CONSAD, a Pittsburgh-based econometrics firm.

14 Lewin-Vffl, "7be Effects of the Health Security Act," p. 39.

15 Ibid. p. IS.

16 GAO "Health Care in Hawaii," P. 1.

17 IbAd cifn KniserAMuTis Survey of SmaU Business Owners in Hawaii, 1993, Preliminary Findings.

18 "Actuarial Issues Involved,in Evaluating a Guaranteed Benefit Standard Package Under Health Care Reform,- American Academy of Actunzies Monograph No. 5, March 1994, p. 13.

19 lbidi.

20 Robert E. Moffit, "A Guide to die Clinton Health Plan," Heritage Foundation Tailking Points, November 19, IM, p. 20.

21 See Moffit, "A Guide to the Clinton Health MW citing David Durenbew and Susan Bartlett Foote, "Medical Technology Meets Managed Competition," 77se Journal ofAmerkan Health Polky, May/June 1993, pp. 24-25.

22 Jeremy Rosner, "A Progressive Plan for Affordable, Universal Health Cam" in Will Marshall and Martin Schram, ads., Mandarefor Change (Washington, D.C.: 7be Progressive Policy Institute. 1993), p. 122.

23 CBO, "A Preliminary Analysis," p. 11.


Stuart Butler


John Liu

Senior Policy Analyst