WASHINGTON -- President Bill Clinton said yesterday that his health-care overhaul plan will aim at gaining control over the top budgetary problem for all levels of government -- spiraling medical costs.

"The hardest part of my job as governor of Arkansas was writing bigger checks each year for the same Medicaid program," Clinton said in a speech before the annual meeting of the National Governors' Association in Tulsa, Okla. He said he had hated fueling health care's double-digit inflation while other government programs were starving for funds.

Clinton reminded his audience that this year, for the first time, states are spending more on Medicaid than on higher education, even though the poor are not receiving significantly more services under the program.

"Our plan will enable state and local governments to regain control over their economic futures" by putting limits on such cost increases in the future, he said.

Clinton's speech hinted at the possibility of at least short-term price controls as the government phases in a universal health-care system, but provided no details. The plan is expected to be unveiled next month.

The speech represents the first time Clinton has said that health-care reform would not only reduce the federal deficit but also help state and local governments with what has become their number one budgetary problem.

The governors group greeted the speech with a pledge to push for health-care reform in Congress on a "bipartisan basis," and several governors applauded Clinton personally for trying to get a grasp on the complex problem.

Colorado Gov. Roy Romer, president of the association, praised Clinton for being "focused on the right issues." Not every governor will agree with all pieces" of the Clinton plan, the Democratic governor said, but "if we do not compromise, we will not see health-care reform."

Florida Gov. Lawton Chiles, also a Democrat, said that the mere threat of government price controls under the Clinton plan has motivated doctors and hospitals within his state to form cost-cutting arrangements, leading to no increases this year in the state's own employee health insurance premiums.

"A lot of this is because they know a federal plan is coming," said Chiles, who said he hopes the debate over health-care reform "will not shatter into a bipartisan fight."

Minnesota Gov. Arne Carlson said, "If we can sell the public on cost containment, the rest will fall in place." But Carlson, a Republican, warned that unless Congress speedily passes a comprehensive plan that forms a "meaningful partnership" with the states, the states will forge ahead with reforms of their own.

Besides controlling health-care costs nationwide, Clinton said, his plan will create a "framework" for guaranteeing coverage of 40 million currently uninsured citizens.

The states will be given a pivotal role in managing the plan, he said, and will have the freedom to form health-care networks that are best suited to serve the people within their borders.

"We know that what works in North Dakota may not work in New York," Clinton said.

Said Vermont Gov. Howard Dean: "This is the best deal we'll see proposed in Washington because it is a state-based system." Dean, a Democrat, said that the President and Hillary Rodman Clinton, who heads the administration's health reform task force, have been "extraordinarily responsive" to concerns raised by governors in drafting the overhaul plan.

At the federal level, Clinton said that growth in Medicare and Medicaid accounts for about 60% of the budget deficit's projected growth in the future. Other than retirement programs such as Social Security, he two programs are the only categories in the federal budget that are expected to rise in the next five years under the $500 billion deficit reduction bill he just signed into law, Clinton said.

"The federal deficit is in terrible shape because of health care," the President said. "The only way we can keep our commitment to restore control over this budget is to control health care. We cannot continue to do nothing."

Going beyond the pressing problem for government, Clinton said health-care costs now consume 14% of the gross domestic product, compared with 8% of GDP in both Japan and Germany, and 9% of GDP in Canada. The three countries have nationalized health-care systems.

At the current rate of growth, he said, health-care spending by all sectors will consume 19% of economic resources by the end of the century, more than twice the amount of any other nation.

"No matter what happens we'll be spending more on health care at the end of the decade," Clinton said. "It defies common sense to say we can't master the world's finest health-care system."

The unbridled growth is placing "enormous pressures on businesses," causing them to drop health insurance on about 100,000 employees a month and adding to the already vast pool of uninsured, he said.

The uninsured usually end up getting health care, but it often is provided too late or is too expensive because they waited too long to seek help, and the doctors and hospitals who treat them just shift the costs back onto the rest of the paying public, he said.

The principal obstacle to enacting health-care reform, besides the usual "rhetoric and air-filling bull we so often hear in the nation's capital," Clinton said, will be "fear of the unknown."

Critics, including a representative of the National Federation of Independent Businesses at the meeting, charge that the Clinton plan is untried and unproven, with enormous risks for the economy.

But Clinton said such criticism "ignores the experience" of many other nations as well as such states as Hawaii, which recently instituted and employer-paid mandatory health-care system.

"This is the problem America can't walk away from. We can stop wringing our hands and roll up our sleeves and solve this problem," he said.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.