Where's the competition in the Clinton plan? - healthcare reform - From the Editor - Editorial

Let's face it. The president's proposal to reform the health care system basically calls for a single-payer plan. It's "Canada in drag," says Sean Sullivan, president of the National Business Coalition on Health, an organization in Washington representing more than 60 employer coalitions. The plan would stifle competition among health plans by ceding so much authority to the health alliances and by making it difficult for large employers and employer coalitions to form their own corporate alliances. Moreover, the plan leaves unanswered the question of whether large employers would be allowed to form private health alliances that would compete with the public health alliances.

Large employers seeking to form corporate alliances under the Clinton plan would do so at great financial risk, says the Washington Business Group on Health, a health policy organization in Washington that represents large employers. Such corporate alliances would be experience rated, community rated, or rated with what the plan calls adjusted community rating. "Corporate alliances must comply with most regulations imposed by the federal and state governments--including the option for states to add benefits--and they may not benefit from any government subsidies, including the 7.9% payroll cap," WBGH says in a recent newsletter. In other words, health insurance costs for corporate alliances would be higher. Their low-wage workers would not be eligible for federal subsidies, and they could be forced to pay new taxes to finance medical education and the cost of the uninsured, WBGH says. "Finally, the Clinton plan would amend ERISA to permit states to tax corporate alliances," the newsletter explains.

These requirements make the Clinton plan a nightmare for large employers and employer coalitions. But before you surrender to the nearest health alliance, consider the alternative. "Large companies that choose to purchase care through public alliances would be subject to the same rules as other employers in the alliance," the plan says. "Except: Their premiums would be adjusted for the risk profile of their workers for eight years. Risk would be measured based on the industry classification of the employer and the demographic characteristics of its workforce."

These rules are aimed at large old-line manufacturers that have thousands of retirees and are paying 15% or more of payroll for health care. If I were running a company with high retiree health costs, I'd join an alliance before you could say "ERISA waiver." But for most employers, the Clinton plan is a collection of onerous regulations that do not foster competition among health plans. Unless the Clinton plan is redrafted by senators and representatives who recognize what's working in the system, health care cost and quality management as we know it will cease to exist.

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