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Executive Summary

President-elect Clinton's "managed competition" health reform plan likely will be tied to government-set global budgets, transition team health policy director Judith Feder, PhD, indicated Dec. 17 during a briefing by several transition officials at the National Press Club. Throughout the briefing, when questioners referred to the managed competition approach to health care reform that has been favored by Clinton, Feder emphasized that the approach will be managed competition within the "discipline of global budgets." Feder indicated later that the health team will forward an initial outline of health reform options to the president-elect around Christmas. "It is in the next several days that we, like the economic team, will send the very broad budgetary options" to Clinton for review, she said. Asked whether the concepts of competition and global budgets might be contradictory, Feder acknowledged that "there are camps in that regard. What the strongest advocates, or purists, of managed competition ignore," she continued, "is that it is quite possible to establish the overall framework, essentially limiting the amount that people are able to spend from a variety of sources, public and private, and to have a structure in which insurance plans -- dramatically reformed plans -- compete for themselves. So essentially, you are setting the rubric and the terms" for competition. The Pharmaceutical Manufacturers Association, in its principles for health care reform, said it "opposes government- imposed price controls on health care. Such controls include 'global budgets' for total health care expenditures that would limit both the price and volume of care available to all Americans." Feder acknowledged that many specific aspects of the Clinton Administration's plan will be subject to some give-and-take in Congress. For example, after one questioner pointed out that the National Governors Association recently endorsed health expenditure "targets" but stopped short of backing global budgets, Feder replied: "That again is one of the major political issues that has to be addressed. There are differing views on that. On the one hand, there is the concern about whether targets are implementable or too tight or whatever. On the other hand, there's a tremendous achieve what inside the Beltway we call 'scoreable' savings, which requires an enforceable budget. So there are competing pressures and we have to deal with that reality." Feder, a health policy professor at Georgetown University, emphasized that the health transition team has not drafted specific details of a program for universal health coverage. Asked, for example, if the team has decided how to treat the issue of outpatient drug benefits, Feder advised: "We aren't yet to [the stage of drafting] proposals. We're looking at options the very broadest budgetary level. So the design issues are well ahead of us." In his presidential campaign, Clinton proposed that a "national board would define a [minimum] benefit package," Feder noted. "It would include a wide array of services, which would include prescription drugs and preventive services." During the briefing, Feder reiterated that the transition team does intend to meet Clinton's goal of transmitting a health care reform plan to Congress within the first 100 days of the new Administration. Feder noted that health care reform has moved to the policy forefront because health costs are now a "middle class economic issue." The link between health reform and economic recovery was solidified during discussions at Clinton's Dec. 14-15 economic conference in Little Rock. Industry representatives attending included Procter & Gamble Chairman Edwin Artzt; IVAX Chairman Philip Frost, MD; Johnson & Johnson Treasurer JoAnn Heisen; Genentech CEO Kirk Raab; Glaxo Chairman Charles Sanders, MD; Amgen Treasurer Kathleen Stafford; and Merck Chairman Roy Vagelos, MD.

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