Radical Surgery

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When Ira Magaziner was still only a multimillionaire management consultant, General Electric asked him to figure out how to wring a profit from its giant TV-manufacturing unit. Many a hired gun might have sized up the problem by looking at production flow charts or pricing tables. Not Magaziner. He hit the shop floor and began taking apart TV sets with his bare hands, assessing the cost of the components, piece by piece. His conclusion: GE's profit margins could be found not in producing the set's electronic components but in building its plastic-and-wood casing and picture tube, a process that could be done most cheaply in the U.S. GE quickly shifted its TV-assembly plant from Japan to Indiana, a move that put the division in the black within two years. "Ira's not some hyperintellectual consultant who throws an incomprehensible leather-bound report on your desk," says Richard Miller, who oversaw Magaziner's work at GE. "He goes straight for the nuts and bolts, and examines every assumption from the ground up."

Magaziner is now putting that approach to work as the day-to-day manager of the Health Care Task Force, headed by Hillary Rodham Clinton, which is in the final stages of drawing a blueprint to overhaul an $800 billion industry. Last week, breaking the secrecy that has surrounded much of the task force's work, Administration officials disclosed details of the plan that they hope to unveil in mid-May. The White House proposal, which would provide basic benefits for all Americans, including the 37 million who lack coverage, emphasizes the ability of citizens to choose their own doctors. In fact, officials insist, many Americans would have more choices available to them than they have with their current coverage.

Under the plan, all Americans will be given a health-security card, which will guarantee them a standard package of benefits. Employers will be required to offer coverage to their workers and dependents, but employees will be able to select plans offered at work as well as choose options from "health alliances" that would be formed to buy coverage for local residents. "We're trying to make it a consumer-friendly system," said an official, "with much more consumer information that is understandable."

Everyone under the Clinton plan -- employers, workers and even the jobless -- will be required to have insurance and to pay something for medical coverage. People over 50 may be required to pay more, however, since they use more services. Psychiatric treatment and possibly long-term care for the elderly will be included in the plan; states that want to come up with their own health reforms will be allowed to do so. Higher taxes on a variety of products, including liquor and cigarettes, will be necessary to raise the $30 billion to $90 billion that universal coverage will cost, but politically unpopular levies on basic company-paid medical benefits seem unlikely. Insurance companies will no longer be free to deny policies to "high-risk" groups, a practice that has made it difficult for people with chronic illnesses to get coverage.