GOP Health Plan Could Threaten Standard Benefits, Auditors Say

WASHINGTON — The health reform proposal offered by House Republican leaders could have the unintended consequence of raising the cost of standard insurance plans, threatening their very existence, the Congressional Budget Office said Monday.

House Republican Leader Robert H. Michel of Illinois is pressing Democrats to use his plan as the basis for congressional action now that House Speaker Thomas S. Foley (D-Wash.) has conceded that Congress is unlikely to pass the kind of broad-based plan proposed by President Clinton.

Michel proposes expanding the availability of catastrophic health insurance plans that pay for specified medical expenses exceeding $1,800 a year for an individual and $3,600 for a family. To cover out-of-pocket expenses, Michel would allow individuals to establish tax-sheltered medical savings accounts.

The CBO, in a 10-page analysis, said such a plan could prove attractive to relatively healthy individuals, who expect few out-of-pocket expenses but still want insurance in case they unexpectedly become severely ill.

If that happens, the people left in standard health plans will be relatively sicker and older, driving standard-plan premiums so high that even sick people will find it cheaper to opt for minimal-coverage catastrophic plans, the CBO said.

The agency said Michel’s plan would be good for the budget deficit, reducing red ink by $11.3 billion over 10 years. But it would do almost nothing to curb growing health care expenditures and little to expand insurance coverage, the CBO said. It said an additional 2% of the population could acquire coverage as a result of subsidies Michel proposes.