WASHINGTON - Treasury Department officials involved in tax-exempt bond policy were not shown President Bill Clinton's health-care reform plan and are beginning to raise concerns about its borrowing provisions, federal officials said yesterday.

In addition, some private analysts and federal officials warn that the plan could trigger an unprecedented spate of tax-exempt issuance and even result in a bond-financed bailout by the states of insolvent provider health groups, not unlike the savings and loan debacle.

White House officials and top Treasury Department officials involved in drafting the reform plan, which was scheduled to be officially unveiled by Clinton in a national address last night, were unavailable for comment yesterday.

The draft reform plan that the White House floated earlier this month does not appear to anticipate any disastrous effects from the borrowing provisions, and in fact discusses the borrowing features only briefly and with few details.

As outlined in the White House plan, about 200 regional health alliances designated by the states as state agencies or nonprofit corporations would receive short-term cash-flow borrowing powers to ensure they can pay health-care providers if their insurance premium receipts come up short.

The White House estimates that the combined cash flow of the regional alliances, which would collect the insurance premiums and combine the purchasing powers of nearly all U.S. citizens and businesses, would be as much as $750 billion a year.

In addition, the plan calls on the states to establish guarantee funds to protect against the possible bankruptcy of some groups of pooled doctors and hospitals - called "health plans" - that the states have certified to provide a guaranteed set of health benefits to all citizens for fixed premiums.

The guarantee funds would have the authority to issue long-term bonds to help finance the bailout of any insolvent health plans.

At first blush, the borrowings described in the plan would appear to fit easily with the tax laws already established for states and 501 (c)(30 organizations. But, warned one federal official, "Treasury's tax-exempt bond specialists have not been able to look at this and determine what the policy should be."

The Treasury is not only concerned that the new borrowers comply with its arbitrage earnings limits and hedge bond rules, the official said, but the department might, upon scrutiny, need to raise concern about the sheer volume of borrowings under the plan and the effect that would have on federal revenues.

"There could be quite a surge in muni supply," said one financial analyst, who asked not to be identified.

When they get a closer look at the plan, the congressional tax committees are likely to share the concerns about massive new issuance, the federal official said.

The official added that "I'm not sure if anybody at the Office of Management and Budget worked on this. They're usually attuned to the impact of tax-exempt bonds" on the federal budget.

Other Washington analysts agreed that bond specialists at the Treasury and OMB do not appear to have been involved in drafting the health reform plan or its borrowing provisions.

"I've checked with all the usual people at Treasury and OMB, and none of them seem to have even heard of this" until the recent leaks of the draft report, said the financial analyst.

Micah Green, executive vice president of the Public Securities Association, said he detected some "consternation" at the Treasury over the draft report. But he expects the Treasury to be fully involved in formulating the final details of the plan, which will be submitted in legislative form to Congress in the coming weeks.

"Everyone knows the process of drafting the proposal has been centralized at the White House. I would be surprised if Treasury doesn't have input from this point forward," he said.

Green described the reform plan as "an intriguing proposal that wants further study" and refinement. "We need to see more details. We don't want to have a knee-jerk reaction of supporting every new use of bonds," he said.

The financial analyst and the federal official warned, however, that the plan could lead to a deluge of new issuance that could hurt both the federal budget and the states.

The most disastrous scenario would occur, according to the financial analyst, if many of the provider health plans were to go belly up because of the enormous cost pressures they would be facing.

Under the reform plan, the provider groups would have to agree to provide a wide array of standard health benefits for fixed premiums that would be determined by the states and federal government. If they could not make ends meet under the fixed premiums, they would probably go bankrupt, the analyst said.

The states would then be required to step in and bail out the doctors and hospitals participating in the failed health plans, financing the bailout with tax-exempt bond issuances from their guarantee funds, the analyst said.

"Let's say a hospital goes bust. Even if you shut it down and pay off all the liabilities of the hospital, the physical plant and the people providing these services are still there and will probably be reorganized into some other health plan. Then they set up another health plan and that one goes bust," he said.

"How are we going to avoid a succession of bailouts," the analyst asked, adding: "This is exactly what happened in the savings and loan situation."

Green said he doubted the plan would lead to such an uncontrolled bailout scenario, but he and the federal official said the possibility should be studied and the legislation should be drafted to avoid the scenario.

Thomas Fahey, a bond attorney and partner at Coffield Ungaretti & Harris, of Chicago, said that the concept of state guarantee funds to protect providers from bankruptcy could be a "mixed blessing" for health-care providers and alliances.

The Clinton proposal essentially provides a "safety net" for health-care providers in the volatile post-reform environment, he explained.

However, he said the plan could pose a credit risk to the health-care alliances that would be required to pay the assessments to help finance the guarantee program.

But Troy Gerleman, a vice president of tax-exempt fixed-income research at Kemper Securities Inc., said the assessment costs could be passed through to health-care consumers.

Gerleman said Clinton's plan could place states at risk if the assessments do not cover outstanding insolvencies.

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