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Push for Cost Controls on Health Takes a Back Seat : Debate: Issue is receding because of political pressure, negative connotation. Focus shifts to universal coverage.

August 11, 1994|KAREN TUMULTY | TIMES STAFF WRITER

As the realities of politics have taken the health care debate away from cost containment, no one is more dismayed than the leaders of the nation's biggest businesses. Their concerns over paying the skyrocketing health costs of their workers were a major impetus for embarking on the health reform effort. General Motors often notes, for instance, that it spends more on health insurance than it does on steel.

Now, "we could come out with legislation that could put us in worse shape than when we came in, in terms of costs," said Michael J. Rourke, senior vice president of the Great Atlantic & Pacific Tea Co. Inc., which owns the A&P Supermarket chain.

The chief executive of one of the nation's largest corporations said that he is rethinking his support for the President's health reform effort, because it is beginning to appear that no bill at all would be preferable. As things stand now, he said, he fears that Congress will pass legislation that perpetuates a system in which large companies continue to carry an undue share of an ever-increasing burden.

"Honestly, this is what scared me to death from day one and what scared all of us at this company, that this is exactly what would happen," said the CEO, who spoke on condition that he not be identified by name. "This is the only way that we could have been hurt by this bill. It's a shame that all of us who provide good health care are going to get clobbered again."

Essentially, there are only two ways of curbing health spending and neither is foolproof.

The first is to have the government do it. That was an element of what Clinton proposed, when he suggested limiting the growth of health premiums. A somewhat weaker version of the same approach is in the bill being offered by House Majority Leader Richard A. Gephardt (D-Mo.), which will be the center of debate in the House.

Under Gephardt's plan, if health spending in any state grew faster than other costs, a system of fee limits similar to those of the Medicare system would go into effect in the year 2000.

But any system of government-imposed cost controls raises the fears of rationing and a deterioration of quality. Moreover, history has never shown them to work over the long term.

As a result, Republicans and many Democrats argue instead for the second route, which is more a leap of faith: relying on the market.

Virtually every proposal before Congress includes provisions to make the market work better. Almost every one calls for the establishment of voluntary purchasing cooperatives, through which individuals and small firms could pool their purchasing power. They also aim to give consumers more information about providers, so they can comparison-shop for medical care the way they do for other purchases.

The Mitchell plan takes this more market-oriented tack, adding a 25% tax on the premiums of plans that grow faster than a target based on inflation.

In addition, the major health proposals include cuts in Medicare, which already pays only part of the costs of the services it covers.

"Already large employers are getting costs shifted from Medicare," said Southern California Edison Co. Vice President Margaret Jordan. "That's not going to help cost containment. That's just more cost shifting."

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