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Clinton Health Plan Scales Back Long-Term Care

October 27, 1993|EDWIN CHEN and DAVID LAUTER | TIMES STAFF WRITERS

WASHINGTON — After a month of negotiating and fine-tuning, President Clinton plans to present his health care legislation to Congress today--some 1,350 pages of fine print that significantly scales back the original proposal for long-term care coverage, a highly popular new benefit.

The stretching out of the long-term care benefit was one of several changes Clinton approved in the last month in an effort to restrain costs and make the proposal more palatable to skeptical members of Congress.

Clinton and his wife, Hillary Rodham Clinton, plan to deliver the massive legislation personally to Congress today. The ceremonial gesture will officially kick off a contentious, yearlong drive to revamp a system widely regarded as in dire need of major reform.

Overall, Administration officials estimate that the plan would cost the federal government $331 billion between 1995 and the year 2000--primarily to subsidize the cost of insurance for small businesses and low-income individuals and to provide prescription drug coverage to the elderly.

The Administration would offset that cost with $389 billion in new revenues and spending cuts--primarily by cutting $124 billion from the projected cost of Medicare for the elderly and $65 billion from Medicaid for the poor and by levying $89 billion in new taxes on tobacco products and large corporations.

The Medicare cutbacks would include some politically controversial measures, such as excluding Americans who continue to work after 65 from Medicare coverage--requiring them to have insurance in the same way other workers do--and increasing premiums for upper-income Americans.

The net result, said Leon E. Panetta, director of the White House Office of Management and Budget, is that the plan would reduce the federal deficit during the first five-year period by $58 billion--considerably less than the $90 billion Clinton originally had projected.

To try to lock in those figures, the White House made another major change in its plan--imposing an overall annual cap on the amount of money the government could spend for health care benefits. If the costs of the program exceeded the cap--if, for example, a prolonged recession led to increased unemployment and higher costs to subsidize health care for people without jobs--Congress would be required to vote to raise taxes, to cut benefits or to explicitly waive the cap, Administration officials said.

"We have been chastened by experience," said Clinton's chief health care adviser, Ira Magaziner, noting that in past years the costs of health programs such as Medicare have "skyrocketed out of control."

"We don't want to rely on somebody's wish for cost control," Magaziner said. The goal, he added, is to provide universal health coverage but to do so in a way that would ensure "it doesn't bankrupt the economy."

Long-term care demonstrates the difficulty of that balance. The benefit is attractive to many elderly people and their families and Administration officials have expressed hope that expanding its availability would attract votes to the plan. But it is also potentially very expensive. Even in the scaled-back version of Clinton's plan, expanded long-term care benefits would cost $65 billion between 1995, when the plan would start, and 2000. The cost would be even higher in later years.

To hold the cost to that level, Clinton would delay full coverage for long-term care until 2003, and would require states to pay more in matching shares, according to sources familiar with the legislation.

The original formula called for the federal government to pay 70% to 90%, depending on the ability of states to pay, with the poorest paying the least. Now, states would pay several percentage points more.

Under the Administration plan, long-term care services would be available for persons who need help with at least three of five basic activities of daily living: using the toilet, getting in and out of bed, dressing, eating and bathing.

"It is a fairly limited benefit," said Alice Rivlin, Panetta's deputy at the OMB. "It's for the very severely disabled. It's not nursing homes or anything like that." Even so, Rivlin noted, estimating the cost of the new benefit has been particularly difficult.

To address another potential political problem in their plan, Administration officials also would require all health plans to offer what are called "point of service" options. Under those options, a person enrolled in a health maintenance organization or similar managed care program would be guaranteed the right to see a specialist outside the organization. Consumers who do so, however, would have to pay a higher share of the bill.

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