It's now or never.
That's how most Washington insiders describe the prospects for comprehensive healthcare reform in 1994.
While no one can say with certainty that a bill will be enacted this year, most observers agree that if nothing significant happens, it could be years before Congress and the White House tackle the issue again.
Like Halley's comet, the political chemistry that could make comprehensive reform possible may only appear once in a lifetime. And the mixture that may make action possible is here now. The components:
|A president who's staked his political fortunes on the success of healthcare reform.
|A Congress up for re-election and facing a constituency that's increasingly jittery about the security of their health coverage.
|Nationwide alarm about rising healthcare costs.
However, it's far too soon to predict whether those political and fiscal imperatives will be strong enough to push a healthcare reform bill through Congress, observers said.
"This is going to be the toughest political fight that the president will face," said Henry Aaron, director of economic studies at the Brookings Institution, a Washington-based research organization.
The fate of health reform "is going to be in doubt until the eleventh hour," mainly because those with an economic or political stake "will fight unremittingly to achieve a satisfactory outcome or to kill the effort," he said.
Possible outcomes.With victories onthe budget and the North American Free Trade Agreement having boosted his political standing, the president has a "good shot" at getting a bill from Congress that would achieve universal coverage within a reasonable time frame. That would be "one of the great legislative achievements of the 20th century," Mr. Aaron said.
A lesser, though still significant, achievement would be to set in place an incremental process for reaching universal coverage and cost containment.
The third possible outcome-to
do nothing-would be a "national calamity," according to Mr. Aaron.
To achieve his reform goals, President Clinton will have to overcome deep partisan divisions,
particularly in the House of Representatives, as well as
divisions within in his own party. At one end of the political spectrum, conservative Democrats are advocating a marketplace-only approach to reform, while liberal Democrats are pressing for a single-payer approach. These rifts will spark ideological battles on nearly every aspect of the administration's plan, including the employer mandate and limits on premiums.
Many hospital representatives said they expect Congress to enact a major reform bill this year. At least part of what's pushing the industry's yearning for action is anxiety about even more radical change.
"The worst thing that could happen is that there's no bill. That would increase the chances for a single-payer plan," said Michael Bromberg, executive director of the Federation of American Health Systems. He echoed the fear many industry executives have that the worst-case scenario may occur.
Quick action|.|.|.|in Congress?Yet, toget a bill enacted this year will require congressional action of record speed, a feat viewed with skepticism by some veteran Capitol Hill watchers.
William Cox, Catholic Hospital Association vice president of
government services, said his own "cynicism suggests that since this is the largest domestic policy debate in the history of the United States, dealing with one-seventh of the economy, it's unlikely that something can be enacted this year."
On the other hand, Mr. Clinton's political skills shouldn't be underestimated. "It's been said that this president lobbies like he runs," he added. "It isn't very pretty to look at, but he reaches his goal."
The starting point for this year's reform effort will be the president's proposal, submitted to Congress in final form late this past November.
President Clinton is expected to make healthcare reform a central theme of this year's State of the Union address later this month. After the speech, a cascade of hearings will be conducted in Congress, with a final vote on a bill expected in August.
The president's plan would impose sweeping change on healthcare delivery and financing. Each of the bill's major elements promises to spawn bitter fights in Congress and among special interest groups.
Sticking points.A mandate foremployers to finance at least 80% of workers' health coverage as a means of achieving universal coverage and caps on private insurance premiums to curb costs probably will be the most bitterly fought elements of the plan. But other parts of the program also will be lightening rods for controversy and protracted debate, and each of them will compound the difficulty of enacting a bill.
They include $124 billion in Medicare spending reductions over five years to finance new long-term-care and prescription drug benefits as well as government subsidies for small businesses and the poor; the establishment of regional purchasing pools, called health alliances, to give buyers greater clout in the marketplace; and abortion coverage as part of the basic benefits package.
What makes the outcome of healthcare reform so difficult to predict is that "it's not just one bill, but several major bills in one," said John Rother, chief lobbyist for the American Association of Retired Persons and head of the Health Care Reform Project, a coalition of 30 organizations that will launch a multimillion dollar ad campaign next year to support the framework of the president's plan and attack its opponents.
In other words, each part of the health reform plan-the employer mandate, premium caps, Medicare cuts, the basic benefits package, etc.-would be deemed major pieces of legislation if they were introduced singly. To act on a comprehensive reform bill, Congress will have to grapple with several enormous policy decisions simultaneously.
Battle lines forming.A coalition orsome structure of support or opposition "is being developed for almost every major title of the bill," Mr. Rother said. The challenge for congressional leaders will be to "keep this from breaking apart."
Reflecting how high the stakes are in the outcome of reform, two recent reports have provided a glimpse of the severe economic pressure that the president's plan would impose on hospitals.
A study by Lewin-VHI, a research and consulting firm in Fairfax, Va., projected that in 1998, hospitals' revenue would be reduced by $23.8 billion to $495 billion. That would be 5.4% less than spending on hospital services would be without reform, the study said. The loss would stem from a combination of Medicare spending cuts, the impact of the growth of managed-care plans and restraints on private-sector health spending.
A report from the Prospective Payment Assessment predicted that, under the president's reform proposal, hospitals would have to keep their cost increases to an unprecedented low of 1.6 percentage points more than the rate of general inflation to keep their total profit margins steady at the current 4.3%.
For the first seven months of 1993, the industry cut its costs to only 2.7 percentage points above the rate of general inflation, mainly by reducing labor costs, the congressional advisory panel found. But even keeping costs at that level would result in a total profit margin of -1.0% by 2000, ProPAC said.
Each of those forecasts is "seriously problematic," said CHA's Mr. Cox, whose organization largely supports the Clinton plan. But, he added, the trends and policy changes that would contribute to those predictions-mainly the growth of managed-care plans and the strong bipartisan support for massive Medicare cuts-already are under way and will continue with or without federal healthcare reform.
"The only thing the Clinton plan may do is accelerate that a bit," Mr. Cox said.
Richard Davidson, president of the American Hospital Association, agreed that the outcomes predicted by the reports would occur regardless of the fate of reform legislation.
"What you're going to see in 1994 is the dramatic emergence of a reconfiguration strategy," which began in the latter half of 1993, Mr. Davidson said. The mega-merger of Columbia Healthcare Corp., Hospital Corporation of American and Galen
Health Care, along with other high-profile deals, were "only the tip of the iceberg," he predicted.
"The whole nature of the payment system is going to be stood on its head, and that's what we're advocating," Mr. Davidson said.
The uphill climb.To reach his reformgoals, President Clinton may have to upend the entire political system, experts said. Despite universal agreement on the need for bipartisan support for reform, efforts could be frustrated by election-year politics. Election campaigns in 1994 for the entire House and one-third of the Senate inevitably will aggravate deep and long-standing partisan divisions on healthcare and other issues.
"Talking nonpartisanship in an election year is like the Cali cartel talking about drug control," said Brookings' Mr. Aaron.
Divisions within the president's own party also could hamper his reform push, particularly in the House, where a large faction of single-payer supporters have exhibited little enthusiasm for the blend of competition and regulation in the administration's reform plan. In another corner, a potent group of conservative Democrats has opposed several key elements of the president's plan, including the employer mandate and premium caps.
Breaking through intraparty divisions is viewed as a political imperative in the House, where Republican leaders, such as Minority Whip Newt Gingrich (R-Ga.), have labeled the president's reform plan socialized medicine and aren't expected to offer support for any major reform bill. As a result, the administration will need maximum support from House Democrats, while they rely on a faction of moderate Senate Republicans to provide the bulk of bipartisan cooperation.
Compromise ahead.To achieveeither of those ends, the Clinton administration must compromise.
"What the president has proposed is going to change a good bit," predicted AHA's Mr. Davidson.
According to Mr. Davidson, there's plenty of room for compromise on such features as premium caps, which the AHA opposes, and the structure of health alliances, which the organization believes are too large and regulatory. He believes there should be less bargaining on the employer mandate, however, because it's central to universal coverage, which he described as a "moral imperative" and "non-negotiable."
When the dealmaking begins in earnest this year, three major reform bills are expected to be focal points for compromise. Those are:
|The president's plan.
|A conservative Democratic proposal that's garnered bipartisan support in the Senate and House of Representatives, which would encourage managed competition and provide expanded public coverage for the poor without requiring employers to finance health insurance or imposing a cap on private insurance premiums.
|A Senate Republican plan requiring individuals to carry health insurance, shifting the burden from employers.
"When you strip away the ideology, there is a lot of common ground (among these proposals)," said Joshua Wiener, a senior fellow at the Brookings Institution
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Continued from p. 36who specializes in long-term care and who served on the White House task force that helped develop the administration's reform plan.
Interrelated components.Theproblem, many experts said, is that it will be difficult to compromise on any of the major pieces without unraveling the entire plan.
For example, eliminating or weakening the contentious premium caps would go a long way toward satisfying conservative Democrats and moderate Republicans. But without caps on private-sector spending, it would be impossible to retain the hefty Medicare cuts needed to finance much of the plan, AARP's Mr. Rother said. That's because many health reform advocates would argue that severe federal spending constraints without limits on private-sector expenditures would hamper access to poor and elderly Americans as well as perpetuate cost-shifting to private payers.
Furthermore, since the Congressional Budget Office-the official scorekeeper of costs and savings for the reform plan-won't recognize savings from managed competition, weakening the premium caps also lowers the savings available to finance the benefits and subsidies in the plan.
The basic benefits package could be curtailed to make universal coverage less expensive, but working people who already have health insurance wouldn't support a plan that would be less generous than the one they have now, Mr. Rother said.
At a recent breakfast meeting with reporters, several top congressional aides suggested that the premium caps, along with several other elements of the president's plan, would nevertheless have to be altered to strike a workable compromise.
"Premium caps have a real problem in that they are hated by the left, hated by the right, and I can't see anyone in the middle who's really excited about them," said one Democratic health aide.
Many observers believe the administration also will have to bend on the employer mandate because of waning congressional enthusiasm for it. A possible middle ground would be to lift the mandate for businesses with fewer than a certain number of employees, such as 100 workers. Workers in those exempt firms would then be required to purchase their own insurance, in accordance with the individual mandate advocated by moderate Senate Republicans.
"The political reality is that an employer mandate probably doesn't have enough votes to pass," said James Todd, M.D., executive vice president of the American Medical Association. The AMA, which represents about 300,000 physicians, recently voted to back off its support for the employer mandate in favor of a policy giving equal consideration to the individual mandate.
Passage still likely.When the dustsettles on the battlefield, though, many health experts believe that what's left standing will be a major healthcare reform bill.
"The end result is going to be that large groups, including Republicans and conservative Democrats, will protest and protest and protest, then vote for it (healthcare reform) at the end," said Mr. Wiener. The bottom line: "No one wants to be off this train. Everyone wants to claim credit for it," he said.