Clinton Pushes Limits In Bid to Expand Scope Of National Health Care

IN the search for a way to fulfill his campaign pledge to reform health care, President Clinton must navigate between two daunting figures: medical costs paid by the federal government that are expected to more than double - to $566 billion a year - by the end of the decade, and 37 million Americans who lack health-insurance coverage. Hovering not far away is a federal-budget deficit that will top $320 billion this year.

"It won't be easy and it can't be done overnight," Health and Human Services Secretary Donna Shalala said during her confirmation hearings.

The administration has set itself a May 1 deadline to present to Congress a health-care package. Heading up the research and consensus-building effort - which involves some 300 to 400 people in 28 working groups - is Hillary Rodham Clinton.

The president has taken several initial steps indicating the course he intends to follow. Last week, he called for $300 million in additional federal spending on vaccines for children, and he blasted drug companies for what he said are exorbitant prices. This week, the White House acknowledged that it is considering raising $30 billion to $90 billion in new taxes to pay for expanded health care - above any tax increases it calls for to reduce the deficit.

In a move that may have the greatest long-term effect on public health-care policy, the president recently ordered the Department of Health and Human Services to give states more flexibility in testing innovations and reforms in their Medicaid programs. "States very often believe that they can provide more services at lower costs if we didn't impose our rules and regulations on them," Mr. Clinton told a meeting of governors this month. Mandated medical services

Established in 1965, Medicaid is a federal-state program providing health-care services to certain categories of low-income residents. States, which administer the program, will spend an estimated $62.2 billion on Medicaid this year, while the federal government provides $82.5 billion in matching funds serving some 31 million United States citizens.

The problem, as many governors see it (and as Clinton learned as Arkansas governor), is that Congress continues to order states to provide more and more medical services to those eligible. Faced with the state constitutional requirement to balance their budgets, and the threatened loss of federal matching funds if they do not comply, governors and state lawmakers have lowered the eligibility level. The average Medicaid eligibility now is less than half the federal poverty level, which means that in some states a family of three earning more than $5,785 a year cannot receive health care under the government program.

The Oregon Health Plan, a controversial proposal currently awaiting approval by the Clinton administration, which must approve any waivers to Medicaid regulations, would provide Medicaid to all those living below the federal poverty level, most of whom are women and children. Some increased spending would be involved, but the element in the plan that has gotten most attention is what critics call the "rationing" of health-care services. Here, a commission of experts has established a list of 688 medical condition/treatment pairs that are ranked in priority from "essential" to "very important" to "valuable to certain individuals." Support for Oregon plan

Based on how much the governor and legislature agree to spend on Medicaid, a line is drawn through the list below the medical procedures not paid for by the state. Even so, notes Gov. Barbara Roberts, the plan covers "virtually all current Medicaid mandates ... and it offers these services to all Oregonians living in poverty." This includes some 120,000 poor people now ineligible.

The Oregon plan, which has wide bipartisan support in this state, requires that all employers provide health insurance to permanent employees and their families, or pay into a state insurance pool including a high-risk pool for those 20,000 people now uninsurable because of a preexisting health condition. Supporters say it will contain costs by emphasizing preventive care and by controlling the use of expensive technology.

Many states and some countries have expressed keen interest in the Oregon plan. As a presidential candidate, Clinton indicated general support for it, as has Ms. Shalala - even though the Children's Defense Fund, which she and Mrs. Clinton both headed at different times, has been opposed to it.

"We find [the support] encouraging," says Lynn Read, project director for the Medicaid portion of the Oregon Health Plan. "We are optimistic and hopeful that the decision [on the federal Medicaid waiver] will be a favorable one and will be made soon."