Prescriptions for medical costs - Senate Democrats' proposal to require employers to pay for employees' insurance coverage - includes related article on effects on small business

Nation's Business, Sept, 1991 by Roger Thompson

The continuing escalation of medical costs and the lack of health insurance for 34 million Americans are certain to be key issues in next year's presidential election campaign. The outlines of the debate are only now emerging.

Although President Bush has not sent Congres legislation in those areas, Budget Director Richard Darman has said the administration probably will come up with a proposal before the 1992 election.

In Congress, Democratic and Republican leaders have been jockeying for media attention for their own proposals, and more than a dozen lawmakers have tossed their own reform ideas into the legislative hopper.

Here is what many insiders are saying about health-care issues:

* In the absence of broad agreement on solutions for health-care concerns, lawmakers will talk a lot about them but take no action this year.

* Few members of Congress advocate a Canadian-style national health-care system. Politically, such a plan would be too radical a departure from the current system of employer-sponsored health insurance.

* When the real fight comes, Republicans and Democrats will argue over whether to require business to provide health insurance for all workers. Democrats generally favor the idea, Republicans oppose it, and President Bush is likely to veto any bill containing such a mandate.

* Despite all the competing reform proposals, bipartisan consensus is building on a number of important matters, such as insurance market reforms aimed at small business, and pre-emption of state health-care mandates.

Clearly, Congress is under pressure to act. Opinion polls show health care at the top of the list of domestic concerns--and for good reason. The United States spent 12.2 percent of its gross national product, or $671 billion, on health car in 1990, up from 11.6 percent, or $604 billion, in 1989, according to the Office of National Health Statistics. The General Accounting Office estimates that the U.S. will spend $707 billion on health care this year. At the same time, an estimated 34 million Americans have no health insurance, and that number is growing.

Employers have borne the brunt of rising costs through rapidly rising health-insurance premiums for their workers. The average cost of a health plan per employee last year was $3,161, up 46.3 percent since 1988, when the average cost was $2,160 per worker, according to the Foster Higgins consulting firm.

While there is broad agreement that reforms should cut costs and extend access to health services for millions who are uninsured, there is no agreement on how this should be done.

Liberal Democrats and unions traditionally have favored a government-run national health-insurance plan supported by tax dollars. For example, Rep. Marty Russo, D-Ill., has introduced a bill that calls for a Canadian-style national health plan.

But advocates of a federal takeover have seen their idea go nowhere since it was first proposed over four decades ago.

Accordingly, key congressional proponents of this approach, notably Sen. Edward M. Kennedy, D-Mass, would now settle for requiring businesses to provide health insurance for their workers. But organized labor can't decide which approach to embrace. As a result, the Executive Council of the AFL-CIO has endorsed both the employer-mandate approach and Russo's national health plan.

Republicans oppose a government takeover of the health-insurance system, advocating instead a market-oriented approach to solving the nation's health-insurance problems. Nor do they embrace the idea of an employer mandate.

President Bush, whose support will be needed to pass any sweeping health reforms, has rejected the idea of federally mandated national medical care.

Nonetheless, Democrats regard health care as a potent domestic political issue, and four Senate leaders are attempting to shape the coming national debate by offering their own proposal to overhaul the system. They are Majority Leader George J. Mitchell of Maine; Kennedy of Massachusetts, chairman of the Labor and Human Resources Committee; and John D. Rockefeller IV of West Virginia and Donald W. Riegle Jr. of Michigan, chairmen of two Finance subcommittees that oversee health issues.

In unveiling their plan at a news conference, Mitchell said, "Access to affordable, quality health care should be a right for all Americans, not merely a luxury for those who have the economic means to purchase health insurance."

The legislation, if enacted, would establish a "play-or-play" system for all employers. They would have to provide full-time and part-time workers and their dependents with private health insurance or pay a payroll tax to fund a government program that would provide coverage. The exact tax rate would be set at a later date by the secretary of health and human services; it is estimated that it would be 7 to 8 percent.

The government program covering all individuals not included in employer-based health insurance would be called AmeriCare. It would provide core hospital and physician services as well as certain types of preventive care, such as prenatal checkups, well-child visits, mammograms, and Pap smears. In addition to covering the working uninsured, AmeriCare would replace Medicaid as the source of health insurance for the nation's poor.