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The New Math Of Health Care Reform


Washington Outlook

THE NEW MATH OF HEALTH-CARE REFORM

In selling the sweeping health-care reform that he wants to be his monument, Bill Clinton always cites six guiding principles: security, simplicity, savings, quality, choice, and responsibility. But when the President and Hillary Rodham Clinton trekked to Capitol Hill on Oct. 27 to present computer disks bearing his 1.5-megabyte Health Security Act, a seventh theme was high on his list: credibility.

Stung by widespread criticism of the financing assumptions in its September draft, the White House has gone on the attack. Officials who balked at backing the draft's figures--including Treasury Secretary Lloyd M. Bentsen and Budget Director Leon E. Panetta--are trotting out to support the new projections. Slapping the lectern for emphasis, Panetta declared at an Oct. 26 briefing: "These numbers are credible, real--and we can defend them." Indeed, the Administration is gushing data, both to drown out doubters and to contrast with the sketchier outlines of competing congressional plans.

FANTASY? Unfortunately for Clinton, making the numbers add up is considerably less than half the battle. The revised plan still depends on heroic political and economic assumptions, including $124 billion in Medicare cuts and a rapid slowdown in medical inflation. And recent changes have done little to bolster the lukewarm congressional support for the Clinton proposal. So while Senate Finance Chairman Daniel P. Moynihan (D-N.Y.) dons his "Health Care That's Always There" button for Hillary Clinton's appearances, his initial label for the plan--"accurate fantasy"--still lingers.

The Administration has bolstered the credibility of its numbers. Answering critics' claims that the draft understated the cost of the standard benefit package, the Administration raised the estimate by up to 7%, to $4,360 a year for families and $1,932 for individuals. Projections of health spending use higher inflation forecasts--3.5% a year rather than 2.7%. Savings from Medicaid, which are strongly opposed by liberals, have shrunk from $114 billion to $65 billion over five years.

To underline their caution, numbers-crunchers added a $45 billion line item for "cushions." That's 15% of the anticipated $349 billion cost of premium subsidies for small businesses, low-income individuals, and early retirees. That reserve could cover the cost of a two-percentage-point rise in the jobless rate with room to spare, claims a health aide: "You would need unbelievable, extraordinary circumstances to use it up." Should that happen, the President would push Congress for extra funds or to change the subsidy scheme--his answer to charges that health reform creates another open-ended entitlement like Medicare.

Trouble is, a smidgen of fiscal responsibility doesn't buy many votes. Liberals charge that Clinton's cap on spending undercuts his promise to cover all Americans. And while the President has moved a bit to the right--by lessening the regulatory role of new health-purchasing cooperatives, for example--he's still a long way from the centrists led by Senator John H. Chafee (R-R.I.) and Representative Jim Cooper (D-Tenn.). The moderates don't like Clinton's price controls on insurance or his requirement that businesses pay 80% of premiums for all workers.

Clinton hopes that his new, more credible financing projections may eliminate the "numbers issue." But now that his legislation is on the Hill, the emphasis shifts to another numbers game--vote counting. Cooper and Chafee have about 80 co-sponsors, while liberals seeking a government-run system have 90. The fact that, after nine months of work, the President's struggle just to find 40 co-sponsors indicates just how hard he'll have to fight to realize his vision of universal health care.EDITED BY STEPHEN H. WILDSTROM Mike McNamee


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