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Party Battles Looming Over Costly Old Issue: Health Care Coverage

By: Robin Toner
New York Times, January 11, 2002

WASHINGTON, Jan. 10 — As Congress and the Bush administration return to the domestic agenda, almost no issue will be harder, more expensive or more divisive to deal with than health care. But in an election year marked by a recession and rising health care costs, the issue will be very hard to ignore, political strategists and policy analysts say.

Federal officials confirmed this week that health care costs are climbing faster than they have in years, creating new strains on employers, individuals and government programs that cover the elderly and the poor.

The elderly are under particular pressure from the rising cost of prescription drugs, which are not covered by Medicare. The number of uninsured, just under 40 million a year ago, could begin to climb, some health analysts predict, as people lose jobs in the economic downturn and as the cost of coverage rises for employers and workers.

Governors in both parties, their budgets already squeezed by these trends, are pleading with the federal government to raise its contribution to the Medicaid program for the poor, which is jointly financed.

All of this sets the stage for the health care debate, which will be joined when President Bush releases his budget next month. His allies say the budget will demonstrate his commitment to the needs of older Americans and the uninsured, which they add will be part of his return to "compassionate conservatism" after an agenda driven by war.

His critics assert he has already shortchanged these domestic needs with his huge tax cut.

Some health analysts wonder where the president will find the money for major expansions in health benefits, given their immense costs, the return of the budget deficit, at least in the short term, and the array of other demands related to national security.

"They're going to want to address these issues because it's right and because of political reasons," said Drew Altman, president of the Kaiser Family Foundation, a health research group. "But the problem is coming up with the money to do something meaningful. The two big problems — prescription drugs and the uninsured — are big ticket items, and the surplus is gone."

This is not, as yet, a health care crisis on the scale of the early 1990's, in the last Bush presidency, many experts say. Nor does it loom that large in the public's mind.

"Back at the end of the 80's and the early part of the 90's, health care costs were rising at near double-digit rates, the number of uninsured was rising, the economy was weakening, and then it didn't really snap out of the recession with much vigor," said Robert Reischauer, president of the Urban Institute and an authority on health economics. "In the current situation, we are experiencing an increase in health care costs, but it hasn't gone on that long."

Still, the proportion of people who believe that "radical change" is needed in the health care system has risen, said the Republican pollster Bill McInturff. Moreover, the anxiety of many middle-class voters over the security of their health insurance — the critical ingredient for the uninsured to become a front-burner issue — could jump if the economic downturn persists.

For Mr. Bush, these issues must seem very familiar, having watched his father's struggles when the nation suddenly focused on domestic problems — particularly the economy and health care — in the fall of 1991. Unable to show the leadership at home that he had shown abroad, the senior Mr. Bush saw his towering approval ratings from the Persian Gulf war quickly crumple.

"His father was not very good at making that transition," said a House Republican strategist. "Bush has to do better, and that means credibility on health care and education."

Not surprisingly, administration officials insist that Mr. Bush will embrace, in his budget, a series of credible health care proposals not unlike what he offered last year — tax credits to help the uninsured buy coverage, particularly people recently laid off, and a new prescription drug proposal for the elderly, tied to an overhaul of Medicare.

"You'll find us pushing forward pretty aggressively," said Thomas A. Scully, who administers Medicare and Medicaid, although he added that no final budget decisions have been made.

Mark McClellan, a senior White House health care adviser and member of the Council of Economic Advisers, said: "The president's definitely been interested in rising costs. His direction to us has been, if anything, to redouble our efforts to find approaches to keeping coverage affordable."

Treasury Secretary Paul H. O'Neill, on "Meet the Press" on Sunday, took pains to highlight the administration's commitment to using tax credits to help the unemployed buy insurance.

That is certainly the hope among many Congressional Republicans, who often face a gender gap with voters who are women, a group that is particularly interested in health care. Representative Peter T. King, Republican of Long Island, said that he thought that Mr. Bush "wants to find a way to let the public know that Republicans do support health care, we do want to provide assistance, and we're not just going to go grudgingly along at the last minute with minimal amounts."

Still, as one administration official put it, "It doesn't take a rocket scientist to see the box we're in financially." A serious prescription drug benefit would cost hundreds of billions, many analysts say, noting that Democratic senators struggled and failed last year to produce an attractive package with $300 billion over 10 years. Democrats have already begun to warn that Mr. Bush will rely on cheaper, incremental approaches — like his idea for a drug discount card — to avoid spending the money a real drug benefit would cost.

All of this means that the health care numbers in Mr. Bush's budget will carry great political weight — and become a powerful symbol in the debate over whether the Republicans went too far with their tax cuts.

William Novelli, the new executive director of AARP, said his organization planned a major "voter education" campaign this year grading each proposal for prescription drugs, beginning with Mr. Bush's. "What we're asking for is at least as much money as Congress proposed last year — $300 billion," Mr. Novelli said. Mr. Bush proposed $153 billion over 10 years for prescription drug benefits and Medicare restructuring last year, which was widely denounced as insufficient.

The political anxiety among Congressional Republicans is especially high on the drug issue, given the power of older voters in a midterm election because of their higher turnout rate. "All off-year elections in the past 25 years have been about three things — presidential approval ratings, the status of the economy and issues of concern to seniors," Mr. McInturff said.

Moreover, Democrats see prescription drugs and other health issues as an important part of the "economic indictment" against the Republicans, an example of what the country is struggling to afford because of the Republicans' tax cuts. "Repealing the alternative minimum tax isn't going to help families pay their health care bills," said Geoffrey Garin, a Democratic pollster. "The Republicans have an economic plan that's irrelevant to the reality millions of Americans face."

Robert Blendon, an expert at Harvard on public opinion and health, predicts that the health care issue will loom large in this election year, but will be far more narrowly focused than it was in the 1992 election — for example, prescription drug coverage and help for the laid-off uninsured — not a wholesale restructuring of the health care system to create universal coverage. Part of the reason, Mr. Blendon said, was a lingering hangover from the last attempt to overhaul the system — the Clinton health care plan.