The Political Interest

By Michael Kramer

Slowly but surely, Bill Clinton's health-care plan is headed for the triage unit. Joining the growing list of doctors, economists and business leaders voicing objections to Clinton's proposals is Pat Moynihan, the influential chairman of the Senate Finance Committee. The Senator is quick to qualify his recent bombshell -- "I regret having said there is no health-care crisis in America; there's a health-care insurance crisis" -- but his modified critique of Clinton's plan offers the President scant comfort.

Like Clinton, Moynihan wants a system that provides universal coverage, a scheme that will guarantee quality health care regardless of a person's income or employment status. The question is how to pay for it. "The linchpin is the employer mandate," says Deputy Treasury Secretary Roger Altman. "Without it you can't have universal coverage." Put simply, the Administration would force most employers to pay 80% of the cost of health insurance premiums. Workers would cover the rest. But small companies, and an increasing number of medium and large ones, contend that such mandates could bankrupt them. In an attempt to accommodate these concerns, the White House proposes 15 separate rates of medical-premium costs determined by company size and employee wages. These differences, Moynihan argues caustically, could cause a "massive shift" in U.S. employment patterns as companies replace full-time workers with part-timers and free-lancers, a tactic companies would embrace in order to shift a greater share of health-care costs to the government -- which couldn't afford it without significant tax increases.

"We don't envision any wide-scale switch away from full-time workers," counters Altman, "and trying to game the system by making full-timers independent contractors won't work. If you get 80% of your income from a single source, you can't qualify as an independent contractor under IRS rules, so you'd be covered for health care by the employer mandate." Yes, says Senate Finance Committee chief of staff Lawrence O'Donnell, "the IRS forbids tax dodging of any kind -- but taxes are avoided just the same. The Administration thinks its health plan outfoxes every conniving operator out there, but who can seriously believe that?"

. At the very least, the desire to foreclose the kind of outcome Moynihan fears virtually guarantees that universal coverage would be phased in slowly -- if it happens at all. "But we wouldn't cry about that," says a senior Administration official. "The President can still declare victory as long as universal coverage is promised at some point." Yet Clinton's plan could stall completely unless Moynihan's worries about the "collateral consequences" are addressed. Inexplicably, Moynihan and Ira Magaziner, the Administration's health-care guru, have yet to talk about employer mandates. "We want to get everything in order first," says a White House aide, who predicts the bipartisan Congressional Budget Office will "shortly endorse our financing assumptions" -- an optimism other Administration officials don't share. The problem, says Moynihan, is that "anyone who thinks ((the Clinton plan)) can work in the real world as presently written isn't living in it."

Where will it go from here? Moynihan seems charmed with a new approach being developed by Yale's James Tobin, a Nobel laureate in economics. No one will say what's coming, but "it can't be much," sniffs an Administration official. "Tobin's a great economist, but he doesn't know health care." Perhaps so, but it's the politicians who will fix America's health-care system, and dismissing someone Moynihan respects is a prescription for even more trouble than the President's plan already faces.

With reporting by Janice Castro/New York