Hillary called to cure ills of US health system: Mrs Clinton faces a mammoth task: to cage a monster that threatens to wreck the economy, writes Rupert Cornwell

WHEN there's a big job to be done, as Americans say, you bring on the heavy hitters. The maxim applies perfectly to the daunting assignment that faces Hillary Clinton. In the firmament of power around Bill Clinton, there is no mightier hitter than his wife. And no bigger challenge faces his administration than the reform of the US health care system.

Forget the short-term package to boost growth; forget the designs to stimulate long-term investment; forget even the deep inroads into defence spending that the next few years will surely bring. No plan to correct the imbalances of the US economy can succeed unless the monster of runaway health-care spending is caged - once and for all.

Statistics tell the horrible story. Health care now consumes one dollar in every seven generated in this country. Projected spending in 1993 of dollars 939bn ( pounds 626bn) will exceed Britain's gross national product. It is growing at almost 12 per cent a year, three times the pace of inflation. But 36 million Americans, a seventh of the population, lack any cover; for them the prospect of serious illness is a financial nightmare.

And if nothing is done yet worse is in store. By the turn of the century the United States will be spending 16 per cent of its wealth on medical care. The relentless increase in mandatory federal health-care costs is the main reason why the budget deficit is stuck around dollars 300bn a year. For many companies, the cost of health cover for their employees is larger than their operating profits. 'Health care will bankrupt America,' said Bill Clinton. He was hardly exaggerating.

Charitably, it may be said that the US way of health care is a classic example of the best as enemy of the good. For the majority who enjoy it, the system is without peer: glossy hospitals equipped with state-of-the-art technology, a limitless choice of renowned specialists and drug companies with research budgets running into billions. But the anomalies are little short of obscene.

It is a system that prides itself on lavish treatment for obscure maladies, yet skimps on cheaper preventive medicine that would nip some of those maladies in the bud. Insurance schemes shell out millions of dollars to keep very premature babies and terminally ill octogenarians alive; yet the number of those with no cover - neither poor enough nor old enough to be protected by the federal schemes of Medicare and Medicaid - grows by 100,000 a month. Recessions come and go; but in the mad, mad world of US health care supply and demand rise, seemingly for ever.

The system encourages excess. Doctors prescribe what they like, and order the most expensive and exhaustive tests and treatments (not least to protect themselves from colossal liability lawsuits). Neither those who dispense health care nor those who receive it have much incentive to economise; the insurers will pay. This is an area where normal market pressures do not operate.

Such is the monster with which Mrs Clinton must do battle. 'I want it done - now,' said the President on Monday, and his wife has lost no time. That day, Mrs Clinton spent six hours on the phone to congressional leaders; a blueprint for reform is promised by mid-May.

Mr Clinton's goals are simple: to ensure guaranteed basic coverage for everyone and to cut the growth in health costs back in line with inflation. But how? For the time being, talk of the 'Canadian solution', a national health insurance scheme akin to that in force north of the border, has faded.

Instead, the President favours formation of a network of giant 'Health Maintenance Organisations', or HMOs, to replace today's myriad smaller insurers. The HMOs would have the muscle to bargain with doctors and hospitals for cheap packages. Companies which do not offer workers coverage would have to pay a 'health' tax to finance a federal insurance scheme. Most controversially, he muses aloud about a fixed ceiling for health costs; in other words, some form of mandatory price controls. The notion appals those who have prospered under the existing system - the country's 560,000 doctors, who earn an average dollars 170,000 a year, the hospitals, the drug companies, and of course the insurers (a quarter of all health-care costs go on administration).

But if costs are to be held down, the sacrifices urged by Mr Clinton will have to be made by all parties to the health-care debate. Doctors will perforce face slightly smaller rewards. Some of the 6,000 hospitals in the US will be obliged to close. Insurers will have to streamline their vast bureaucracies and the drug companies will see their profits trimmed. Patients must accept a smaller choice of services and physicians. Cuts in Medicare and Medicaid, at least for the wealthy, are hardly avoidable. And then the Clintons must square Capitol Hill, where dozens of powerful committees and congressmen have their own pet remedies.

But neither the public nor the economy can wait much longer. Any comprehensive reform must be approved by Congress; this is unlikely before 1994. In the meantime, the mere extension of coverage to those who do not have it will cost anywhere between dollars 35bn and dollars 123bn a year. If compensating cuts cannot be found, the outlook is dire indeed. An ageing population will require ever more care. If still nothing happens, financial pressures alone will force the US to go the Canadian road.

Even Mrs Clinton, the heavy hitter, will need every ounce of her formidable powers. 'This is a test of the national psyche,' wrote the New York Times of the unprecedented authority to be exercised by this most emancipated of first ladies. But a country's mental trauma over women and role- models will be a small price to pay if Mrs Clinton can help her husband to overhaul US health care. Were he to achieve nothing else in his presidency, posterity would deem it a success.

(Photograph omitted)