Ready to Operate

(3 of 5)

Allow states flexibility in choosing various health-care plans. A state might, for example, implement a Canadian-style "single-payer" system, in which the state pays its residents' medical bills from tax revenues. Single- payer plans are expected to be popular in rural areas that have too few health-care providers to allow for the managed-competition approach.

Provide financial relief for companies that currently spend the most on health care. The employer contribution to workers' health insurance would be capped at 7.9% of payroll. This would represent a huge saving for big manufacturers with unionized workers, notably General Motors, which now spends 19%. It would also help the average company, which spends about 12%. Automakers and other unionized corporations would benefit from a new health- care subsidy for their employees who retire before age 62.

Subsidize the health-care premiums of small businesses that employ low- income workers. While big companies that save on health insurance are expected to create new jobs, internal White House studies predict that those gains would be more than offset by jobs lost among low-wage workers at small businesses. Many of these businesses do not now pay anything to insure their workers, and would be required to pay at least 3.5% of payroll under the Clinton plan -- a payment some could finance only by shedding workers. President Clinton recently approved new transitional subsidies for businesses with fewer than 50 employees and average wages of less than $12,000. Those subsidies are expected to avert some but not all of the net job losses caused by health-care reform.

Offer new benefits for mental-health care. Tipper Gore, the Vice President's wife, led those who wanted full coverage of mental-health care, including weekly therapy sessions. The White House judged that it could not afford to create another expensive subsidy for the middle class. Yet it proposed significant new mental-health benefits: for example, covering 30 visits a year for psychotherapy.

Provide new federal subsidies for prescription drugs. Patients treated in lower-cost group medical networks would pay only $4 a prescription. Those in more expensive health plans would be insured for 80% of the cost of prescriptions, after paying a $250 annual deductible.

Offer new benefits for long-term care for the elderly. Medical care at home (for example, by a visiting nurse) would be covered as an alternative to hospitalization. Long-term care, usually in a nursing home, would be covered for as many as 100 days a year.

The Clinton plan is surprisingly persuasive in supporting the longtime claim of the Clintons and their top health-care strategist, Ira Magaziner, that reform can be financed almost entirely from savings, without broad-based new taxes and with enough left over to reduce the federal budget deficit. Ever since the campaign, when Clinton first floated this claim, budget experts have derided it as a "free lunch" approach. But now the President has backed it up with tough choices on spending -- choices that might prove politically impractical or diminish the quality of health care, but which at least demonstrate his seriousness.