Health Reform Analysis Finds Budget Benefits

By Pear, Robert | THE JOURNAL RECORD, December 1, 1993 | Go to article overview

Health Reform Analysis Finds Budget Benefits


Pear, Robert, THE JOURNAL RECORD


N.Y. Times News Service

WASHINGTON _ A comprehensive analysis of President Clinton's health plan finds that it would reduce the federal budget deficit, as Clinton said, but that the costs to government and business would be higher than advertised by the White House.

In the most complete independent analysis yet of Clinton's plan, Lewin-VHI, a respected nonpartisan consulting concern, said Wednesday that insurance premiums for the wide range of health benefits promised by Clinton would be higher than estimated by the White House. Under the Clinton plan, employers would pay at least 80 percent of such premiums, and consumers wound generally pay the remainder.

The study accepted Clinton's assumption that the federal government can slow the rate of increase in health care spending by regulating insurance premiums and by increasing competition among doctors and hospitals.

Using this assumption, Lawrence S. Lewin, chairman of Lewin-VHI, said: "The administration's cost estimates are overly optimistic, but the Clinton plan still reduces the federal budget deficit, and it holds together logically. It meets the president's requirement of providing universal coverage, and it does so without relying on an increase in broad-based income taxes."

The study is probably as authoritative as any by a private company and could set the tone for public debate until the Congressional Budget Office issues its analysis early next year.

John F. Sheils, chief author of the Lewin study, said that from 1995 to the year 2000 the Clinton proposal would cost the government $78 billion more than the administration's estimate of $286 billion. It would reduce the federal budget deficit by a cumulative total of $25 billion in that period, rather than the $103 billion predicted by the administration, he said.

Alice M. Rivlin, deputy director of the Office of Management and Budget, welcomed Lewin's report as a form of vindication. It "essentially verifies our estimates and the soundness of the financing of our proposal," she said. She asserted that Lewin's cost estimates were "roughly the same" as President Clinton's.

A major premise of Clinton's plan is that the government can save money by slowing medical inflation and by forcing employers to pay some costs now paid by Medicare and Medicaid, the programs for the elderly and the poor.

"Most people out there don't believe there will be any deficit reduction," said Kenneth E. Thorpe, a deputy assistant secretary of the Department of Health and Human Services. "The Lewin report shows the president's plan will indeed reduce the deficit by billions of dollars. Our numbers are conservative, and the Lewin study confirms that. …

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