Congress took its first stab at writing a comprehensive healthcare reform bill last week as a key panel began debating a proposal that would control health spending by setting national budgets and extending Medicare-type rates to all payers.
The proposal, drafted by House Ways and Means health subcommittee Chairman Rep. Fortney "Pete" Stark (D-Calif.), reflected healthcare providers' darkest fears of government-controlled prices. And while Mr. Stark's ability to win support for his plan on the subcommittee-which is expected to continue deliberations well into this week-is still highly uncertain, healthcare executives expressed concern that his brand of price controls could become an attractive option for lawmakers seeking an easy path to cost containment.
At a teleconference sponsored by the Washington-based Healthcare Leadership Council, Michael Bromberg, executive director of the Federation of American Health Systems, said the plan would "take a giant step, very shrewdly, toward a totally government-run plan."
Richard Davidson, president of the American Hospital Association, told reporters that Mr. Stark's plan-which would create a new $100 billion government health program-reflected the type of simple cost control Congress eventually would seize on if none of the other reform proposals was passed this year.
"The greatest nightmare we have is that nothing happens," he said.
Under Mr. Stark's plan, the federal government would set annual limits for all health spending and for categories of service, such as hospital and physician care. To enforce the limits, providers would be subject to maximum payment rates, designed with the same formula used to set Medicare rates. Those fees would only take effect when spending limits were breached. Annual budgets would be set so that the growth in health spending would slow to the same rate as the increase in gross domestic product by the year 2000.
The proposal took price controls a step further than President Clinton's plan, which would place limits on the growth of health insurance premiums.
Mr. Stark's proposal was not entirely dissimilar to the president's, though. It would achieve universal coverage, for example, by forcing employers to provide insurance. Businesses with more than 100 workers would have to finance at least 80% of health insurance costs for full-time workers by Jan. 1, 1995. Those with less than 100 employees would have until Jan. 1, 1997, to offer coverage.
Small businesses would have the option of buying private insurance or enrolling workers in a new government program, Medicare Part C, for which they would have to pay 80% of the premium cost.
The new federal plan would offer Medicare benefits, in addition to coverage for pregnant women and children and prescription drugs. It would cover the poor and unemployed as well as current Medicaid recipients. An estimated 60 million Americans would enroll in the program, at a cost of roughly $100 billion a year, according to subcommittee staff. To help finance it, all employers would pay a 0.8% payroll tax.
Mr. Stark's proposal is the first alternative to Mr. Clinton's health plan to be put to the legislative test.
Support appeared tepid for the measure last week. None of the subcommittee's four Republican members was expected to vote for it, and the six Democrats on the panel objected to several aspects of the plan, including its lack of mental health and long-term-care benefits and the absence of subsidies to help small businesses meet the cost of mandatory health insurance.
Before debate began, Mr. Stark told reporters he had "no idea" whether he could win over enough Democrats to get his plan through the panel and admitted the bill would need a lot of changes before it could garner the 218 votes needed for approval by the full House.
While many provider organizations opposed the Stark plan, it got conditional support from at least one critical group: John Rother, legislative director of the American Association of Retired Persons, said the plan could be "reassuring" for seniors, who know and like the Medicare program.
"I think we will see long-term-care and prescription drug benefits similar to those in the Clinton plan, and if we get them, the (Stark) plan is one we could support," he said.
From providers' perspective, similarity to Medicare is one of the chief dangers of the Stark plan. But Mr. Bromberg said members of Congress may not view the extension of Medicare rates to all payers as an onerous policy.
The AMA restated its opposition to price controls in a letter to Mr. Clinton and Congress designed to show a united physician front.
The letter, signed by 116 medical organizations, called for universal coverage, freedom of choice for patients and more physician involvement in restructuring the healthcare system. The message came in the wake of an endorsement of a single-payer system by the American College of Surgeons, a move that AMA leaders admitted had resulted in a jumbled message from organized medicine.
The odds that Congress will pass reform legislation, meanwhile, were at least complicated, if not diminished, by two major developments. One was the announcement by Senate Democratic leader George Mitchell of Maine, a key Clinton ally on healthcare reform, that he would not seek re-election, and the other was the sudden acceleration of the Whitewater scandal. Both events could dilute the strength of leadership in Congress and from the White House needed to enact reform, political observers said.
"If anyone was thinking we can wait until next year to do this, that has disappeared with Mitchell's announcement," Mr. Rother said.