Clinton Faces Health Care's Fiscal Crunch

FOR Bill and Hillary Rodham Clinton, this is the main event.

The budget deficit, reinventing government, free trade with Mexico - these become just so much background chatter on ``Crossfire'' or ``The McLaughlin Group'' compared with health care.

Americans care in a very personal way about the health-care system, and at least 9 in 10, according to Gallup surveys, believe it is in crisis.

The crisis is not a health problem but a money problem.

Although some 37 million Americans have no health insurance at any given moment, most of those people have access to the most advanced, high-quality medical care in the world when they seek it. But seeking it without the right insurance coverage at the right moment can mean financial devastation.

As many as 1 in 5 Americans was uninsured at some point during the past year, and surveys indicate that an equal number would like to change jobs except for fear they would lose their health insurance. For most, health care is nearly synonymous with medical care, and the mortgage-busting size of medical bills makes insurance a lifeline.

The relentless escalation of health-care costs is the driving force behind other American problems as well.

The rising cost to employers of health benefits is credited as a major factor holding down cash wages for the past two decades.

The fastest growing costs behind the still out-of-control federal budget deficit are health-care costs under the Medicare and Medicaid programs. These programs are the main reason why the deficit is projected to continue rising ever higher after 1998.

Medicaid is also driving state budgets hard, abetted by prison-building, the second fastest-growing state budget drain.

Health care is also a growing weight on American businesses competing in world markets. Nearly $1 in $7 produced in this country supports the health-care system, and that share is rising toward $1 in $5 by the turn of the century, according to Congressional Budget Office forecasts.

Since much of that cost is paid by employers, it becomes a labor cost handicapping the competitiveness of American industry. Health-care costs as a share of gross domestic product are beginning to escalate in other advanced countries as well, but Americans pay at least a third more of their output than Canadians, who have the second-costliest system.

If the Clinton administration can make a noticeable dent in this problem, voters are apt to take notice.

So why are health-care costs so high in the United States?

* Many experts estimate that about half of the cost increases are due to crack new medical technologies, often very expensive to develop and to use.

* The health-care system thwarts some market forces that might hold down costs. Health benefits are tax-free to employers and employees, so the fiscal impact is softened. And the users of health care are seldom the payers of the bill. Individuals generally make health-care choices, while insurance companies pay the bills and employers pay the insurance premiums.

* Americans run up tremendous costs by trying to save everyone always. Technology is often employed to temporarily help very low birth-weight babies with little chance of survival or to add a few ultra-expensive months to the life of the aged and infirm. Most other countries make less heroic, and less expensive, choices as a matter of course.

* Finally, the US is unique among industrialized countries in the degree that its people's behavior causes medical problems. The homicide rate is five to seven times higher than in Europe, and for every fatal shooting, a hundred people with gunshot wounds enter emergency wards. Infant mortality is twice the rate of Japan - a phenomenon linked to poor prenatal care, unwed motherhood, and smoking.

The plan Mr. Clinton will propose next week addresses foremost the insecurity of individual Americans.

By 1998, health-insurance coverage will be universal under the Clinton proposal, guaranteeing a package of benefits equal to about the median package that Americans now hold.

The effort to control costs will come from several directions. Large geographical agencies will negotiate with insurers to offer consumers a range of choices. The clout of these health alliances is calculated to create efficiencies and force insurers to offer attractive deals. Consumers will pay 20 percent of the premium costs, giving them an inventive to shop. If that does not work, Clinton is also proposing to cap increases in insurance premiums, in effect controlling the spigot that feeds the entire system.