Clinton's Health-Care Plan And the `Generation Gap'

Provisions for people who retire early and for `community rating' undermine health plan's fairness

AS Congress begins debating President Clinton's health-care plan, young Americans are running for cover. Rather than making the tough choices today, the Clinton administration proposes passing the health-care bill on to the future.

Mr. Clinton made no bones about this generational rip-off when he unveiled his plan before a joint-session of Congress last week. ``If you are a young, single person in your 20s and you are already insured, your rates may go up,'' he said. ``But I think that's fair because when the young get older, they will benefit from it.''

Don't bet on it. As it now stands, the president's health-care plan is both generationally unfair and fiscally unsound.

Two central components of the president's proposal will provide a short-term windfall for older Americans by sacrificing long-term fiscal responsibility. The first provision is ``community rating,'' which mandates that everybody - young and old, fit and unfit - pay the same health-insurance premiums. The second sock-it-to-the-future provision is an early-retirement subsidy that would pay 80 percent of the health-care premiums for people who retire between the ages of 55 and 64.

Clinton has proposed community rating as a way to equalize the costs of health care, thereby making it cost the same for everybody, regardless of age, healthy habits, or medical history. This may sound fine in theory, but in practice it forces the young, who have the least amount of disposable income, to subsidize the health care of the middle-aged, who are at the peak of their earning power.

This was made clear this year in New York State, which just instituted the country's most rigid community-rating plan. Most young New Yorkers saw their health-care premiums skyrocket. For example, before community rating, the average 30-year-old single male paid a premium of $1,200; after the change, his premium soared to $3,240, according to the New York Insurance Department. Likewise, young families saw their premiums nearly double.

The only age group that benefited from the changes in New York was the over-50 bracket. For example, the average 60-year-old male saw his annual premiums go from $5,880 to $3,240, a decrease of nearly 50 percent. But the cost of reducing the premiums for the wealthiest segment of the population was high: It put the price of health care out of reach for many young New Yorkers just entering the work force.

But younger Americans must brace for the much more far-reaching consequences of another provision of Clinton's health-care plan: the subsidy for early retirees.

Under Clinton's plan, the government will pay 80 percent of the health-care premiums for people who retire early. This amounts to another massive middle- and upper-class entitlement program. Is there any reason for taxpayers to subsidize the health care of executives who decide to get out of the office and onto the golf course a few years earlier?

The biggest problem with the early-retirement subsidy is that it will most likely be a budget buster, adding to the deficit and thereby forcing future generations to shoulder the costs. And the administration is not being honest about the costs of the plan.

Testifying before Congress, Hillary Rodham Clinton said the early-retirement subsidy would cost a hefty $4.5 billion a year, but Ira Magaziner, the president's top health adviser, later revised the estimate to $6 billion. More-honest assessments put the costs in excess of $10 billion a year. The early retirement subsidy will be especially costly as members of the Baby Boom generation approach retirement age, putting millions more on the government dole.

As Sen. Daniel Patrick Moynihan (D) of New York said, the proposed financing of Clinton's health-care plan is ``fantasy.''

The Clinton administration's health-care sales team has been quite candid about the reason for the early retirement provision: It is an effort to win the support of the American Association of Retired Persons, one of America's most powerful special-interest lobbies. The strategy is working. Association of American Retired Persons (AARP) has been quite supportive of the president's plan and launched a massive lobbying campaign to fight for its piece of the health-care pie. As AARP spokesman John Rother explained, ``It's a great deal.''

As for young Americans, politicians in both parties have concluded that their interests can be trampled upon because they are not an organized lobbying force. As Republican pollster Bill McInturff told The Wall Street Journal, ``People under 35 don't participate, they don't vote, and they're not well organized.''

Politicians may view young Americans as lazy and apathetic, but that is no reason to once again invoice future generations for today's irresponsibility. Universal health care may be a laudable goal, but it could be accomplished in a way that is both generationally fair and fiscally sound. The Opinion/Essay Page welcomes manuscripts. Authors of articles we accept will be notified by telephone. Authors of articles not accepted will be notified by postcard. Send manuscripts to Opinions/Essays, One Norway Street, Boston, MA 02115, by fax to 617 -450-2317, or by Internet E-mail to OPED@RACHELCSPS.COM.

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