The Lessons of '94

In the best of circumstances, presidential libraries are a strange combination of leftover campaign literature and newfound architectural ambition. Even so, the Clinton Presidential Library, in Little Rock, Ark., is notable for approaching its subject with all the depth of a coloring book. Eight years of policies, political battles, and world events are sorted into 20-odd "policy alcoves," each headlined by a slogan from the campaign. In the alcove labeled "Putting People First," behind reinforced glass tattooed with inspirational excerpts from Bill Clinton's speeches, the administration's entire record on social policy is condensed into a couple of blown-up photos and capsule summaries. And right there, between "Caring for Children" and "Welfare Reform," is the library's exhibit on the 1994 health care battle. It gets 144 words.

Uncharitable observers would sneer that this is all it deserves. They would be wrong. The 1994 health reform fight was a tremendous, courageous undertaking that the nascent Clinton administration approached seriously, substantively, and disastrously. Their defeat, which preceded an election in which the Democrats lost 52 House seats and control of Congress, inflicted an enormous psychic trauma on every level of the Democratic establishment -- the politicians, the political consultants, the advocacy community, and the hundreds of wonks and experts who participated in the plan's creation. It taught many that health care is simply too big, too complicated, too dangerous to touch. Since the drubbing, Democrats have been afraid, as former Sen. Bill Bradley put it, "to go back into that room where that bad thing happened."

For reformers, that attitude is the foremost impediment to change. Much talk centers around the specific contours of the ideal policy solution, but though important, such conversations are like agonizing over the wedding band before anyone's agreed to join you for dinner and a movie. For policy to matter, policy-makers must be willing to advocate it. But many remain timid, scarred by past failures and disappointments, certain that any attempt will end in electoral catastrophe.

The moment has, after all, looked propitious for change before, and failure has been all the harsher for it. Health care, which now comprises a full one-seventh of the economy, is notoriously difficult to reform. Harry Truman failed, as did Richard Nixon and Bill Clinton. Franklin D. Roosevelt didn't even try, believing any attempt would not only fall short, but take down Social Security, too.

And the system has only grown larger and more entrenched in the years since. Heath care is now a multi-trillion dollar industry that generates billions in profits for all manner of powerful actors. Medical coverage is a source of acute anxiety for Americans in general and voters in particular -- where about 84 percent of the population has health insurance, 94 percent of voters do, and they are deeply afraid of losing what they already possess. Finally, the arithmetic of the Senate remains unfriendly, with the creation of a 60-vote supermajority appearing the only way to move major legislation.

Together, these forces and factors doomed health reform in 1994. Or so goes the story. But the collapse of the Clinton reforms was also a product of bad timing, political misjudgment, and human error. The Clinton administration did not prioritize health reform upon entering office, and so lost whatever window of opportunity might have existed; they mistook good policy for good politics, and created a bill better suited to a Brookings seminar than the political process; and they failed to appreciate the need for a national strategy to sell the plan to the American people,

Luckily, today's reformers have one thing yesterday's didn't: The lessons of 1994. And the degree to which they've learnt them -- which increasingly appears considerable -- may decide whether the next president finally succeeds where so many others have failed.

Timing Is Everything

The Clinton health care bill did not fail in a vote, or slowly stumble off the front pages, like a drunk slinking out of a bar. The denouement of the Clinton plan was epic. It ended political careers and changed, at least temporarily, our politics. Indeed, it is almost impossible to appreciate the confluence of destructive forces and unexpected calamities that befell the effort. But we must begin somewhere, and the obvious place is when the effort began, and what came before it.

Health care reform really burst onto the scene in the spring of 1991, when a special election for the Pennsylvania Senate saw the little-known Harris Wofford close a 44-point gap with former Gov. Dick Thornburgh by running on the idea that if every American is guaranteed a lawyer, surely they should have access to a doctor, too. Wofford's remarkable campaign -- which was masterminded by James Carville and Paul Begala, who would go on to run Bill Clinton's presidential campaign -- came at a particular moment: The 1990-1991 recession.

The 1990-1991 recession was unique in that employment losses were much more broadly distributed than usual -- meaning the rot reached into formerly comfortable white-collar classes, not just the traditionally insecure. For the first time, the middle class had to consider the impermanence of their jobs, and wonder whether they really wanted their health coverage contingent on their employment. And the worse the economy looked, the less they approved of this linkage.

At first, Clinton moved quickly to harness the moment. Less than a week after his inauguration in January of 1993, Bill Clinton created the Presidential Task Force on National Health Reform. But early speed was replaced by quick gridlock. The health care bill was finished and presented to Congress on November 20, 1993 -- almost 10 months later. By then, the economic anxieties had eased, the growth numbers had picked up, and the immediate impetus for reform had dissolved. And so the ground shifted. As the Clinton health care plan stalled in Congress and got battered by advertisements, op-eds, and business leaders, the American people found that they weren't feeling so scared anymore. Thus their status quo bias once again overtook their feelings of insecurity. The initial calculus of the Clinton plan was that Americans would be more afraid of their health coverage being changed by recession than reform. As the recession eased and unexpected economic changes looked less likely, reform grew scarier, and thus the "fierce urgency of now" that animated the 1991 discussion over health reform dissolved before a bill had even been presented.

If the economic moment necessary for reform had passed, the political capital required for such a bill had long been spent on such issues and incidents as gays in the military, the North American Free Trade Agreement, the Deficit Reduction Act, the beginning of Whitewater, the crisis in Haiti, and the massacre of American soldiers in Mogadishu. Some of these events were unavoidable, but all had an adverse impact on the administration's capability to pursue reform. Some, like the ill-fated battle over gays in the military, ended in defeat, diminishing the administration's momentum. Some, like the Deficit Reduction Act, were huge political lifts that required the administration to ask its congressional allies to make tough votes, risks they were not willing to repeat as the electoral storm clouds gathered. Some, like NAFTA, infuriated traditional allies within the liberal coalition, diminishing their willingness to fight for Clinton's future priorities. Some, like Haiti, simply consumed that scarcest of White House resources -- presidential attention.

"[Health care] never had the clear priority it needed," says Washington Post columnist David Broder. And without that priority, it missed its moment.

It's The Politics, Stupid

Timing was not the only problem bedeviling the Clinton administration's reform process. If the "when" was a problem, the "where" was an insult. Far too much of the process took place within the administration's various task forces and executive committees, and far too little of it within the halls of Congress.

The task force was widely derided for being famously secretive and sprawling, splintering into more than 30 working groups involving more than 500 participants. But its great sin was not its secrecy or its size, but its very existence. For the White House to construct a thousand-plus page health care bill and then present it, fully formed, to Congress, was a tremendous demonstration of arrogance and political naivete. Congress may not make the best policy, but it makes the most politically viable policy. Crafting the plan independent of the congressional process proved to be a disastrous decision.

Don't take it from me: "I was the biggest mistake of the Clinton health care bill," says Sara Rosenbaum, who sat in a hotel room with other policy experts and drafted the legislation. "It was a terrible error to have the President doing what Congress was supposed to do. It was a misuse of the relationship between the legislative branch and the executive branch. The executive branch is supposed to generate action and the committees are supposed to actually take the action. By sending a 1,300 page bill, you're writing a detailed blueprint for the policy rather than using the congressional process to create a consensus."

"It wasn't a political compromise," says political scientist Jacob Hacker, author of The Road to Nowhere: The Genesis of President Clinton's Plan for Health Security. "It was a policy compromise." The bill was exquisitely conceived. It retained the best of the private market, forcing insurers to compete on grounds of price, quality, and innovation. This was thought to appeal to the right. It offered universal coverage, total health security, system-wide integration, and cost containment, all traditional desires of the left. But because the hoped-for compromise was believed to lie within the ingenious structure of the bill itself, the legislation was actually exceedingly delicate, a finished product to be shepherded to implementation.

But this fundamentally misunderstood how the various players would approach the initial piece of legislation: Seeing a new bill, interest groups rushed in to add their priorities, their pet projects, their pork. "Everyone was fighting for their portion of a bill so strongly that it was hard to fight for something overall," says the AFL-CIO's Heather Booth, "and so we got nothing." As they'd not been able to participate in the legislation's construction, they hadn't had the opportunity to struggle for, and thus become invested in, parts of the bill before its completion. Instead, they saw the new legislation as something to fight over, not fight for.

By handing over the bill's writing to the wonks, the Clinton administration got a bill that addressed the wonk's concerns. But accurately reflecting the anxieties of health economists and policy specialists does not mean you've sufficiently channeled the fears of voters. Where the 1990-1991 recession left most Americans terrified that they could lose the health care they had, the Clinton bill promised they would lose that care. The sort of comforting lines reformers offer today -- "if you like your current care, nothing will change," or "you'll get the same health care members of Congress have" -- couldn't be uttered because they weren't true. The line the Clinton campaign did use, "health security that can never be taken away," foundered because, before the plan offered that security, the health security that Americans currently trusted would be taken away.

"They couldn't defend it in simple terms," says Hacker, "because it actually meant a complex set of changes for most Americans." There was no concrete reference point, because the legislation was building something that didn't yet exist. The administration's argument, in essence, was "trust us." But when it comes to health care, it's one thing to make the system better. It's a whole other to remake it entirely. You can ask Americans to walk forward, slowly, knowing they can scramble back to the ledge if need be. You cannot ask them to jump.

"The [administration's] fixation on the plan missed the larger issue," continues Hacker. "This was, and always will be, about building the coalition." And here, too, the administration faltered. But it wasn't only the administration. The progressive movement as a whole exposed its unreadiness for battle -- an unreadiness that was both tactical and psychological. Reformers were still operating under the assumption that the rules of bipartisanship were still in effect and a collection of public-minded Senators would eventually come together to successfully complete the process. They were wrong.

The forces advocating reform weren't prepared for a Republican Party animated by William Kristol's famous memo, "Defeating President Clinton's Health Care Proposal," which darkly warned that a Democratic victory would save Clinton's political career, revive the politics of the welfare state, and ensure Democratic majorities far into the future. "Any Republican urge to negotiate a 'least bad' compromise with the Democrats, and thereby gain momentary public credit for helping the president 'do something' about health care, should be resisted," wrote Kristol. Republican pollster Bill McInturff advised Congressional Republicans that success in the 1994 midterm elections required "not having health care pass."

In other words, there would be no cooperation. There would be no Republican votes. The problem was compounded because Bob Dole, then the leader of the Senate Republicans and cosponsor of several versions of the health reform bill, was readying his run for the presidency, and knew that handing Clinton this victory would doom him in the Republican primaries. By the time the fight ground to its eventual close, Dole would, astonishingly, vote against multiple compromise bills that carried his name in the title.

And even aside from Republicans' newly combative spirit, the ground in the Senate was shifting rapidly -- partly because of decisions the Clinton administration made. "If you could go back and change one fact of the early Clinton years," says Mark Schmitt, then a staffer for Sen.Bill Bradley, "you don't take Lloyd Bentsen off the Senate Finance Committee." Bentsen was chair, an old dealmaker with lots of trust, good ties to business, and tight control of his committee. Clinton elevated him to Treasury Secretary for precisely these reasons. But with that promotion, he lost Bentsen's firm hand over Finance, which is the most relevant committee for health care reform.

His replacement, Sen. Patrick Moynihan, was a catastrophe. "Moynihan was a brilliant man," says a former adviser to the White House, "but the untold secret is he was not a strong chairman of the Finance Committee, didn't really care about health care, and didn't care much for the Clintons. We traded a very experienced chairman for an inexperienced one who was a better thinker than legislator." He refused to pass Clinton's plan out of committee, went on Meet the Press to say "there is no health care crisis" and accuse Clinton of using "fantasy numbers," and continued to believe he and Dole would end the stalemate with a compromise till long after that Dole's behavior showed that to be clearly untrue.

In the House, Rep. Dan Rostenkowski, the Chairman of the powerful Ways and Means committee, was indicted on 17 counts of fraud. He stepped down, and was replaced by Rep. Sam Gibbons, who lacked his experience and savvy. And amidst all that, there was no unity among the Democrats. Some, like Rep. Jim Cooper, were undercutting the Clinton plan with preemptive compromise proposals. Some, like Rep. Pete Stark, found Clinton's emphasis on managed care baffling and wrongheaded, and were shooting past him with more forthrightly liberal offers. And so the power brokers who could've held the Congress together were falling, leaving the Democrats a fractured, uncertain mass.

The Coalition That Wasn’t

As the months wore on, it became clear that the planned strategy for passing reform, a rapid, beltway-based approach centered around creating a bipartisan Congressional coalition, was doomed. A different strategy was necessary, one based around a national organizing campaign, broad-based efforts to ratchet up public support for the legislation, hard ads aimed at vulnerable Republican incumbents, and the relentless application of all the other tactics that could scare incumbents into voting "aye." Think how the Bush administration used the bully pulpit to cow Democrats into supporting the war in Iraq.

But the opposite happened. During the 10 months of silence when the Clinton administration was actually creating the policy, the opponents of reform were organizing to define the politics. "You had all that time where the opposition had a real opportunity to make headway in creating a different attitude towards health reform," says former Senate Majority Leader Tom Daschle. The Health Insurance Association of America's first ads went up in the spring of 1993, the National Federation of Independent Businesses began organizing against vulnerable Senators at about the same time. Come September -- two months before the legislation was finished -- the Harry and Louise commercials were blanketing the airwaves. "By the time [the bill] got to the House," says Stark, who chairs the Health Subcommittee, "we'd been beaten up for months on it, and we had already suffered the insults of the Harry and Louise ads, and I don't think any of my colleagues were ready to take more criticism."

And the Democratic strategy to aggressively sell the plan? There was none. Clinton asked the Democratic National Committee to create a grassroots campaign in favor of health care reform in the summer of 1993. But their effort fell apart amidst media scrutiny of their proposed "educational foundation" and after that stumble, never found the funding to seriously continue. In July of 1994, the administration sought to recapture momentum with a bus trek across America, the so-called "Reform Riders." At every stop, they were met by better-organized, better-funded conservative protesters. Enormous amounts of energy and time had gone into the construction of an ingenious health care plan. It's as if no one realized, though, that they'd still have to sell it.

Their allies, however, should have known better. Where was Labor, the progressive movement, AARP? Essentially, nowhere. "Labor was split because it wasn't single-payer, and they were mad because of NAFTA," says one insider deeply involved in the process. "They held back on any kind of dedicated resources or substantial commitment to defending health care in the fall of '93. They came in later, but we were already taking on a lot of water. And the progressive movement, because it wasn't single-payer, ended up not really embracing the bill, and that lack of support really contributed to a one-sided, White House versus the world, dynamic." AARP was little better -- they didn't even endorse the possible bills until late in 1994.

Most damning, however, was not the absence of the allies, but the absence of the business community. Managed care, the then-new theory of health insurance that Clinton based his plan on, had basically two constituencies: The New York Times editorial page, and the Jackson Hole Group, a business-based coalition of industry stakeholders, centrist academics, and corporate leaders. In December of 1992 when Clinton held his famed economic summit in Little Rock, Ford Motor Company CEO Harold Polling made the case for health reform. Within a few months, the Business Roundtable, the Chamber of Commerce, and the National Association of Manufacturers all went on the record supporting universal coverage and cost containment -- the twin pillars of the Clinton plan.

As the fight wore on, however, the community flipped under pressure from a minority of businesses that proved far more afraid of the reforms than the majority was enthused. Some in this group were small businesses, terrified they couldn't compete if they had to help pay for health insurance. Some were larger corporations, like PepsiCo, who derived a competitive advantage by offering low benefits to their workers. And some were insurance companies and pharmaceutical giants, who realized cost containment meant, for them, profit containment. As John Judis concluded in a 1995 American Prospect article on the dissolution of business support, "those businesses that sold health care or that didn't provide health insurance to their workers were able to outgun those like Ford or Bethlehem Steel that saw their interest in a universal health plan."

The Time Is Right

Fifteen years later, much has changed. All of the Democratic presidential frontrunners have promised to make health care reform the top domestic priority of their first term. And they will do so with the support of a community of advocates, analysts, organizers, and even Congressmen who are far savvier, and far more battle-hardened, than those of 1994. This time, the politics are coming first. And they are working within a system much closer to collapse, and much worse for business.

First, the moment is more amenable to reform -- in part because the reality has worsened. Fears abound that we are set to enter a deep recession, but even back when the macroeconomic indicators were fairly good, the health care numbers looked pretty bad. In 1994, 37 million Americans were uninsured. By 2007, that number had ballooned to 47 million. Between 1996 and 2007, the average employee's spending on health premiums for his family shot up 85 percent -- and incomes, of course, have not followed.

"My personal index," says Len Nichols, director of the New America Foundation's health policy program, "is the ratio of family premiums to median family income. In 1987, it was 7 percent. Today it's 17 percent. That fundamental dynamic, that health care costs are growing so much faster than economic productivity, means that even though unemployment is so low and the macro-economic indicators are good, there's still intense, acute anxiety." In other words, the concerns that once appeared only during recessions are now an enduring fact of American life. The health care system is so expensive, so unwieldy, so unstable, that today's participants feel much like the victims of the early-'90s recession.

Business also seems exhausted by the ceaseless march of health care costs and ready for reform. In 1994, when managed care was just beginning to squeeze cost growth, health spending grew by a mere 4.1 percent. It looked like the private sector might prove able to control costs just fine. But the gains from managed care dissipated as the 1990s wore on, and in 2005, health spending grew by 7.2 percent. Much of that cost was borne by the business community.

"It's a global competitiveness issue," says Charles Kolb, president of the Committee for Economic Development, a business coalition. "And even if it weren't, it's a cost issue. Health care costs are growing at a rate that's simply not sustainable. [Our members] are in the business of business, not the business of health care."

Now, however, it's common to hear jokes about such-and-such business being a front for an insurance company. General Motors, it's often said, is a health care provider producing cars to defray costs. "Our first health care report came out in 2002," says Kolb. "We were trying to shore up the employer system. But now we're saying it's not fixable. Five years ago, we thought it was."

These realizations have led to some stunningly strange bedfellows. The Divided We Fail coalition, for instance, not only includes SEIU and AARP, but the Business Roundtable and, more surprisingly, the National Federation of Independent Business, which was militantly anti-reform in 1994. Indeed, the NFIB's president, Todd Stottlemeyer, writes, "things haven't gotten any better. In fact, they're getting worse. We must find a way to fundamentally alter the forces driving costs… We will do nothing less than commit every resource to fight for a health-care system that makes affordable, quality health care available to everyone."

It would be easy to dismiss this as pre-election year posturing, but an offhand comment by Sen. Wyden suggests Stottlemeyer may actually be at the table. "In 1993, the businesses said that said they couldn't survive health care reform are now saying they can’t survive without it," he told me "Now I talk to Todd Stottlemeyer, the president of the NFIB, once a week."

Congress in Front

That's not only interesting because it indicates Stottlemeyer's continued and constructive involvement with a key piece of legislation, but because those contacts, and this legislation, are happening as part of a Congress-centered process. Wyden's Healthy Americans Act is a universal coverage bill that opens up federal employee-style insurance menus to everyone in the country, subsidizes insurance up to 350 percent of the poverty line, and slows spending growth. Remarkably, Wyden's bill is cosponsored by six Republicans: Robert Bennett, Judd Gregg, Norm Coleman, Lamar Alexander, Mike Crapo, and Chuck Grassley. One of those Republicans is from Utah, the most conservative state in the union. Two are on the Finance Committee, where Wyden also serves. Only one is facing competitive election next year. And none are the traditional names you see attached to Democratic bills. "I think we're building the sort of coalition that can break 60 years of paralysis," says Wyden.

Whether or not that's true, this is exactly the sort of bipartisan legislative process that didn't occur in the run-up to the 1994 attempt at reform. And it's paying off. Democrats and Republicans are talking seriously about concrete health reform legislation for the first time in decades. "To grow a healthy crop, you have to prepare the soil," says Sen. Max Baucus, now the chair of the Senate Finance Committee. "The Finance Committee will hold an aggressive series of hearings next year on comprehensive health care reform. Conventional wisdom says that you can't get reform passed in an election year, but I prefer to see that state of play as an opportunity rather than a reason to rest. Next year can be a prime time for ideas, a time to lay the groundwork for immediate action when a new President and a fresh Congress take the field in 2009."

Additionally, the Democrats are acutely aware of the need to actually pass a bill, rather than simply fight for their own. "It will take full court press by the White House," says Stark, "and a lot of compromise, even from people like me. It can't be single-payer or raise a huge amount of taxes." Daschle, seeing all this, can only marvel. "I don't think there's any question that more and more members on the Democratic side are aware of, and committed to, the need for health reform," says Daschle. "It's a better legislative environment than we had before."

And with that prioritization of progress over policy, the latest round of Democratic proposals have shown remarkable political savvy. Where, in 1992, Bob Kerrey was proposing single payer, and Paul Tsongas managed care, and Bill Clinton a synthesis, all the major Democrats currently campaigning have proposed similar health care plans based on three planks: Universal access, an expansion of something like the Federal Employees Health Benefits Program that includes a public insurance option, and the preservation of current insurance choices. This is not, from a policy standpoint, the best way forward. These plans do not fully integrate the system, and initially, they will not do enough to control costs.

But politically, it's close to the only way forward. Those three planks translate into three arguments that will undergird the case for reform: If you like your current health care coverage, nothing will change; if you're not satisfied with your current coverage, you can buy into the same health care plan that members of Congress use; and no matter what you decide, you will have more choices than you have now. That is how health care will be explained.

Building Support Beyond the Beltway

The renewed focus on the politics is evident in the early strategizing, too. The unions, for one, are on board early. SEIU is thinking about their election effort not as a mere battle for the presidency, but a fight for universal health care. And it will end when that succeeds. "We sometimes think about winning the election and not winning the contract," says SEIU President Andy Stern. "This time, we don't want to win the election and not get the contract. We're already thinking about how to keep the campaign going till we win health care, not just the election."

Heather Booth, who's coordinating the AFL-CIO's campaign, is similarly resolute. "Our forces are stronger, smarter, have learned our lessons, and understand the need to address the public's concerns from the start. At the same time, the rightwing is fracturing, less confident, and the public is more aware of their false solutions." The AFL-CIO is currently implementing a multistage plan to put over a million organizers on the ground and launch huge advertising campaigns against vulnerable Republicans.

And this time, they'll have allies that simply didn't exist in 1994. MoveOn.org, Campaign for America's Future, and the whole of the new progressive movement sees health care reform as a top priority. "One of the big problems with moving health care," says Eli Pariser of MoveOn.org, "is that there haven't been health care constituency organizations in the way there are on the environment, civil liberties, and so forth." But the new progressive groups are multi-issue, able to refocus quickly and in response to the demands of their members. And health care is a major issue for their members. That's why MoveOn partnered with SEIU, AFL-CIO, AFSCME, Americans United for Change, USAction, TrueMajority, and many others to force a major battle over the expansion of the State Children's Health Insurance Program (S-CHIP).

"The Bush years have taught progressives how to do political campaigns in a different way," continues Pariser. "It's not enough to state your argument and hope for the best. You have to get out into the country and build constituencies in key districts and have the apparatus and enforce discipline." Which they've done. House Democrats, unable to overwhelm the president's veto, haven't blinked on S-CHIP, haven't rushed to the table, haven't begged for compromise. And many are calling this "spring training" for universal health care. "The true story of S-CHIP won't be written until next fall," predicts Pariser, "when Republicans are facing their constituents and getting thrown out of office. If that's what happens in November, that's what sets the terms for the next fight."

Think of it as the Harris Wofford strategy in reverse. Where Wofford's victory taught politicians that there's a potential upside in supporting universal health care reform, the progressive movement is readying a massive campaign to teach the lesson that it's dangerous to oppose it. Internal polling by the Democratic Congressional Campaign Committee (leaked to Roll Call) offers support for this strategy. Polls conducted in Michigan's 9th District showed that advertisements criticizing Rep. Joe Knollenberg's vote on S-CHIP knocked him down 5 points in the polls, and that a push question underscoring his opposition to the program's expansion produced a 14-point swing towards the Democrat.

In economics, there's a famous dictum known as Stein's Law: It states that when something cannot go on forever; it will stop. Our health care system, as currently composed, cannot go on forever. It will wreck our economy, collapse our businesses, and render both private and public insurance unaffordable. And so, it will stop. Reform is not a question of if, but when, and how. In 1994, the opportunity for reform was foiled not by an absence of conviction and intelligence, not by impersonal and unchangeable forces, but by inexperience and naiveté. It was poorly timed and poorly executed. Those afraid of trying again are thinking too much of the mistakes of the past, and too little of its lessons.

This is an expanded version of an article that appeared in our Jan/Feb 2008 issue.

This article has been corrected--the famoux dictum is Stein's Law not Stern's Law.

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