The great health-care debate - President Clinton's Health Security Act proposal from a small-business perspective - Watchdog - Column

Home Office Computing, Jan, 1994 by Rob White

As it effects the self-employed, how would you summarize President Clinton's Health Security Act?

There are two basic scenarios:

* If you have no employees--regardless of whether or not you are incorporated, married, have a family, or are covered now--participation is mandated, with annual premiums subject to a maximum cost of 7.9 percent of your taxable income.

* If you have employees--regardless of whether or not you are incorporated-- you'll pay the employer share of their premiums (prorated for part-time employees) subject to a maximum cap on payroll that ranges from 3.5 percent to 7.9 percent. Plus, you'll pay both the employee and employer portions of premiums for your own individual or family coverage, also with a 7.9 percent cap.

Who will benefit the most?

The people who will benefit most from Clinton's plan are those who want but cannot afford coverage or who cannot get it now due to preexisting health conditions.

Who will most likely get hurt?

It appears that those most likely to pay more are those small businesses who aren't currently providing health insurance for their employees. Also, those people who don't carry insurance now will be forced to participate in the plan.

What isn't entirely clear yet about the impending reform?

Many unanswered questions remain, including how much a highly compensated person will pay. As things stand, there is also the issue of whether this plan would have a cap on how much you would pay to participate, regardless of income. No matter which camp you currently fall into, it would pay to be very cautious. Note, however, that none of the changes are likely to take effect until 1995 at the absolute earliest or 1998 at the outside, as the legislation wends its way through Washington.

ROB WHITE has worked in the insurance industry for more than 25 years. He currently runs a managed health-care research and consulting firm for doctors, hospitals, and insurers from his home office.