Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, May 28, 1993 TAG: 9305280145
SECTION: NATIONAL/INTERNATIONAL PAGE: A-6 EDITION: METRO
SOURCE: From the Los Angeles Times and The Associated Press
DATELINE: WASHINGTON LENGTH: Medium
The proposal, which analysts will recommend to the White House, also would exempt the first $10,000 of a company's payroll and the first $5,000 of a worker's salary, sources said. Administration analysts still are debating a limit on the amount of a worker's total earnings that would be subject to the levy, with the extremes ranging from $57,000 to $150,000.
The only other major new revenue source under serious consideration is a federal cigarette tax increase of at least $1 a pack - a four-fold increase that is sure to start an intense battle in Congress, the sources said.
The amount and type of taxes required for a new health care system loom as a critical issue as planning for the reforms enters its final stages. Administration officials estimate the proposed system will cost $30 billion to $90 billion, with much of money going to provide coverage for an estimated 37 million Americans who have no health insurance.
As President Clinton prepares to focus on his health care reform agenda this long weekend at Camp David, the administration's latest payroll deduction proposal calls for a levy averaging 7 percent for businesses and 1.5 percent or less for workers, sources said.
"That's one idea," a senior administration official said. "There are a lot of ideas."
Among the proposals is a formula calling for businesses with fewer than 10 employees to pay no more than 5.8 percent of their payroll, while businesses with fewer than five workers may have to pay no more than 5.2 percent, sources said.
The president, while not specifying that he has settled on a payroll premium, said during a Thursday morning Rose Garden town hall meeting that his analysts hope to "hit the national average, maybe even a little below the national average, of what employers are paying now" in premiums for workers' health insurance.
The final figures will depend largely on a series of intricately linked decisions that Clinton has yet to make, such as how quickly to phase in medical coverage for uninsured Americans and how extensive the government-designed standard benefits package will be.
The president said Thursday that he wants to phase in coverage gradually rather than giving Americans new benefits overnight that are "not worth a nickel."
He said his advisers are trying to decide how much all American businesses will be required to contribute toward workers' health insurance. But he said it will be a substitute for their current premiums, not "a tax over and above what people are paying now."
He acknowledged that his economic advisers had urged a go-slow approach to health reform and suggested he just provide "major medical coverage and protect people from disaster."
But Clinton said a health insurance policy with a $3,000 deductible would be worthless.
"What I want to do is phase in the coverage, but when you give it to people, give them something that's worth having," he said, rather than trying to "do it overnight but give them something that's not worth a nickel."
Clinton said he is still undecided whether to allow some companies to keep self-insuring their workers and stay out of the insurance-buying pools being created for most businesses and individuals.
Administration officials insist on calling the payroll levy a premium rather than a tax because, they argue, the money would go not to government coffers but to large, regional consumer "alliances" set up to buy insurance for members.
Most networks would offer members at least three types of health plans. Most people probably would have to pay a portion of their medical costs, with the neediest receiving government subsidies, a top official of the White House Task Force on National Health Care Reform said Thursday.
Analysts say that each percentage point in payroll premiums can raise $25 billion or more annually.
by CNB