The Clinton Reducing Plan

By Dan Goodgame/Washington

Bill Clinton has never really hit it off with Daniel Patrick Moynihan, but now he needs him. That's why the President had to pick up the phone in the White House last Wednesday night and mend fences -- not for the first time -- with the brilliant and unpredictable New York Senator. Clinton called to deny news reports that he was "exasperated" with Moynihan's lack of movement on health-care legislation. Never mind that the reports were accurate and that Senate majority leader George Mitchell shared the President's frustration. Clinton recognizes that Moynihan's Finance Committee now represents the best hope for crafting a compromise, and the President can't afford to have the chairman in a sulk.

But Clinton did not stop there. Alarmed at the impasse over health-care reform, he broke with his strategy of remaining above the fray in Congress. On Thursday and Friday, Clinton engaged Finance Committee members of both parties in one-on-one meetings and phone calls, seeking to discover what sort of compromise might win majority support. That is normally the chairman's job. However, said a Clinton aide, "this let-them-write-it-themselves stuff did not seem to work too well."

The President felt he had to intervene now, his allies say, because the health-care fight is entering a crucial stage in which a compromise must be reached before the process loses momentum. His top domestic initiative hangs in the balance. Clinton faces the prospect that he not only might fail to get what he wants, but might get nothing at all this year.

The biggest obstacle to agreement, Clinton heard from the Senators, is the so-called employer mandate. That provision of the Clinton plan would require employers to pay about 80% of the cost of health insurance for their workers. This would help Clinton extend coverage to 35 million uninsured Americans without raising taxes on the 85% who already have insurance. "The mandate is vital," says Senator Jay Rockefeller, the West Virginia Democrat and main Clinton-plan backer in the Senate. "You don't get to universal coverage without it," he adds.

Owners of small businesses complain that the mandate would force them to cut wages and lay off employees. The White House until recently believed their opposition could be neutralized by support from their employees, as well as $ from big companies and unions, which would benefit from the Clinton plan. As a result, Hillary Rodham Clinton last year dismissed small-business plaints by saying, "I can't be expected to save every undercapitalized entrepreneur."

Both Clintons have since had their consciousness raised. Owners of small businesses -- 16 million strong, nearly equal to the ranks of union members -- last week showed their strength by blocking the employer mandate in key committees that are struggling to frame legislation on health-care reform. The Finance Committee's ranking Republican, Oregon Senator Bob Packwood, explained that big unionized "industries like autos and steel are significant in four or five states, but restaurants and retail outlets are everywhere."

Merchants say the Clinton mandate would require them to spend an extra $18 billion a year on health insurance. And confidential, computer-aided studies by the White House estimate that the mandate would reduce employment growth by 300,000 to 600,000 jobs. Robert Moffit, a health-care expert at the Heritage Foundation in Washington, calls mandates a "sham" and a "delusion." Says he: "The major game in health-care financing is to hide the costs by making sure that other people appear to be paying the bills. Well, any increase in employer mandates will be passed on to workers in the form of reduced compensation or job loss."

Moffit's group proposed expanding health coverage through an "individual mandate" like the one that requires drivers to carry liability insurance. It would require coverage only for medical bills in excess of $3,000 a year, which would make such insurance more affordable. The Heritage plan has attracted few sponsors in Congress, but Senator John Chafee, the Rhode Island Republican, calls for an individual mandate in his health-reform plan, which has drawn support as a vehicle for bipartisan compromise.

Majority leader Mitchell, after sitting through weeks of Moynihan's professorial perorations without seeing much legislative progress, has thrust himself into the leadership void. Among Mitchell's suggestions was a compromise that would combine an employer mandate for large firms (a face- saver for the Clintons, since most large firms already provide health insurance) and an individual mandate for workers in firms with fewer than, say, 10 on the payroll. Federal subsidies would help employees pay their premiums.

Meanwhile, other Senators last week argued that a plan to foster so-called & managed competition in health care should be given a chance to work, with little or no provision for mandates. The Congressional Budget Office estimated that this proposal, sponsored by Representative Jim Cooper of Tennessee and Senator John Breaux of Louisiana, would reduce the cost of insurance, in part through $30 billion in subsidies, enough to extend coverage to 91% of Americans. The Cooper-Breaux plan got another boost last week from a new study by Lewin-VHI, a respected consulting firm, which found that the 9% who would remain uninsured would be mainly young, healthy adults and others who consume little health care.

Clinton heard support for a variation on this approach last Thursday afternoon during a 45-minute private session in the Oval Office with Senator Dave Durenberger, a Minnesota Republican on the Finance Committee. To pass health reform, Durenberger told Clinton, "you have to start in the middle, even if that doesn't get you to universal coverage" immediately. Other Senators suggested that Clinton accept something less coercive, like Cooper- Breaux, but include a "trigger" that would impose a partial employer mandate if near universal coverage is not accomplished in a year or so. Though noncommittal, Clinton said he was willing to negotiate the definition and timing of universal coverage.

The new flexibility shown by Clinton and Senate Democrats, including such staunch liberals as Ted Kennedy, reflects a weakening of their political position. Polls show declining public support for expansive health-care-reform schemes. Republicans feel more free to oppose such schemes in favor of limited insurance reforms. Democrats, meanwhile, are growing reluctant to back Clinton in his vow to veto any bill that fails to ensure universal coverage. Says a congressional health-care analyst: "A lot of us are worried that the White House badly needs a reality check. Clinton and his people are out of touch with what the public will accept and what Congress will vote for." The message: unless Clinton can settle for a more modest health plan in '94, he might have to start thinking about '95.

With reporting by Laurence I. Barrett and Dick Thompson/Washington $