CBO's Hard Choice on Health Package

THE meticulous, widely respected director of the Congressional Budget Office (CBO), Robert Reischauer, clearly did not seek to inflict political damage on the Clinton health-care plan this week.

He was careful to minimize the import of his differences with White House calculations. He was optimistic about its long-term prospect of cutting the deficit and its effect on jobs and the economy.

But in the end, Mr. Reischauer threw some formidable obstacles in the course that the health-care plan must run through Congress.

One new difficulty is bureaucratic. Since the Congressional Budget Office advised that the insurance premiums in the plan be considered part of the federal budget, the plan must follow the special rules for budget bills in the Senate.

``It significantly complicates passage,'' a Democratic Senate aide says. In the worst case for supporters of the plan, the rules could end up forcing the bill to be broken into separate pieces - some of them moving under budget-bill rules and some like normal bills.

The more fundamental difficulty is political. The Reischauer ruling lended weight and legitimacy to two arguments made by President Clinton's Republican opposition, says House GOP whip Newt Gingrich of Georgia.

* That the Clinton health-care plan means a 20 percent expansion in the size of government.

* That the plan amounts to the largest tax increase in history.

Reischauer and the CBO have lent this argument powerful new credibility with many moderate to conservative people, says Robert Blendon, a political scientist who studies public opinion on health care at the Harvard School of Public Health. ``It's enough to force [the White House] to find a new financing system,'' he says.

``Using his plan as the centerpiece for debate will be very difficult now.''

Mr. Clinton and the Democratic leadership dispute such grim assessments of Reischauer's effect on the plan.

The differences between the administration's estimate that the plan will cut $60 billion from the federal deficit from 1995 through 2000, and Reischauer's estimate that it would add more than $70 billion can be easily remedied, Clinton said Wednesday.

Reischauer himself testified that those differences were minor compared with the uncertainty surrounding any such projection.

More important to the Clinton team, Reischauer confirmed that the plan would bring both deficits and overall health-care costs down beginning in about 2000.

Furthermore, he foresaw no net loss of jobs due to the plan's requirement that employers pay 80 percent of health-plan costs, and no loss of American competitiveness against foreign businesses.

The concerns Reischauer raised about the plan, he pointed out in his analysis released Tuesday afternoon, would arise with any proposal attempting to restructure the health-care system - not just Clinton's.

Reischauer proposes that the transactions of the state-sponsored health alliances, through which nearly everyone would purchase health insurance under the Clinton plan, be treated in the budget similarly to Social Security. Insurance-premium payments would be counted as federal revenues, but be shown separately from other federal operations.

He never calls the mandated insurance payments a tax. But the Clinton plan, he writes, ``would establish both a federal entitlement to health benefits and a system of mandatory payments to finance those benefits that represent an exercise of sovereign power.'' The health alliances ``would operate primarily as agents of the federal government.''

The upshot of this argument is that the entire health-insurance system - meaning all the funding in the health care sector - counts officially as a government program.

Democratic leaders argue that the tax, not-a-tax ruling is a game of semantics of interest only inside the Washington Beltway.

``I think to get in all these weird, unimportant, theological discussions is serving us no purpose in addressing the main goal, which is to provide health insurance for every American,'' said House Energy Committee Chairman John Dingell (D) of Michigan.

The CBO is not the last word. Congress itself can decide whether it wants to treat the Clinton plan as part of the federal budget or not.

But Democratic staff members on Capitol Hill aver that, as a practical matter, Congress is likely to follow Reischauer's advice.