I t was one year from euphoria to defeat. On the evening of September 23, 1993, I sat in the gallery of the House of Representatives for President Clinton's speech introducing the administration's Health Security plan. For those of us who had worked on it, this was the climax of a long, intense, and not always easy collaboration. I had been one of about ten people on the health policy team in the White House who had written and rewritten the plan after the cast of hundreds had left. Now the president had the nation's attention focused on ideas we deeply believed in, and he spoke with tremendous force.
At first it seemed Clinton would move the country. The next morning, Stanley Greenberg, the president's pollster, crowed that the overnight surveys showed we were winning two-thirds approval. Commentators were saying that no matter how the battle over details might work out, the president had established the right principles and challenged Americans to a great, historic mission. The principle of health coverage for all was an achievement, wrote A.M. Rosenthal of the New York Times, that Clinton could already nail to the wall.
A year later, almost to the day, Senate Majority Leader George Mitchell pronounced health care reform dead. The funeral was private; no crowds gathered in mourning. While opinion surveys continued to show strong support for the ingredients of reform, the complexity of the plans and onslaught of criticism had even left many supporters bewildered and uncertain. The opposition had focused attention on what those with good health care might lose. Commentators turned on the president. On the eve of the midterm election, Joe Klein told the CBS Evening News audience that the president had led the country into a blind alley with his grandiose reform plan.
Of course, not just the Clinton plan was defeated. Every other proposal--the Cooper, Chafee, Moynihan, Mitchell, Cooper and Grandy, and mainstream group plans, to mention only the most prominent, consensus-building efforts--died in Congress. The question is as much why the center failed as why the president did. Only a few weeks earlier Senator Bob Packwood had told his Republican colleagues that now that they had killed health care reform, they had to make sure their fingerprints weren't on it. Joe Klein's reaction was not unusual: The Republicans enjoyed a double triumph, killing reform and then watching jurors find the president guilty. It was the political equivalent of the perfect crime.
The collapse of health care reform in the first two years of the Clinton administration will go down as one of the great lost political opportunities in American history. It is a story of compromises that never happened, of deals that were never closed, of Republicans, moderate Democrats, and key interest groups that backpedaled from proposals they themselves had earlier co-sponsored or endorsed.
It is also a story of strategic miscalculation on the part of the president and those of us who advised him. In 1993, 23 Republican senators, including then-Minority Leader Robert Dole, cosponsored a bill introduced by Senator John Chafee that sought to achieve universal coverage through a mandate that is, a mandate on individuals to buy insurance. Nearly every major health care interest group had endorsed substantial reforms--grandiose ones, in fact. The American Medical Association (AMA) and Health Insurance Association of America (HIAA), the two great, historic bastions of opposition to compulsory health insurance, both went on record in support of an employer mandate and universal coverage. Even the U.S. Chamber of Commerce endorsed an employer mandate, as did many large corporations. Other groups came out variously for reform options that ran along a spectrum from Canadian-style, single-payer programs on the left to managed competition and medical savings accounts and radical changes in tax policy on the right. Under the circumstances, it was easy to believe the country was ready for substantial reform and that a market-oriented, consumer-choice approach to universal coverage, positioned in the center, could become a platform for consensus.
It was easy to believe, but it turned out to be wrong.
O n the political calendar, health care first gave way to other priorities. During the presidential transition and his initial year in office, Clinton concentrated on the economy and the budget. The battle of the budget dragged on into the summer of 1993 and threatened his presidency; he had little choice but to focus on winning it. This loss of time on health care, contrary to post-mortems in the media, had little, if anything, to do with the supposed circus of the health care task force and its 500-member working groups. The task force may well have misdirected administration energies, but it was legally dissolved at the end of May; the members of the working groups had dispersed weeks earlier, mostly to the federal agencies where they ordinarily worked. For months, the health policy team was forced to tread water, lest further leaks about health care finance alternatives like the trial balloon for a value-added tax, floated brilliantly on April 15 disturb budget negotiations under way.
As the spring unfolded, we all had the sinking feeling that critical time was being lost. Senator Robert Byrd, custodian of Senate rules and traditions, foreclosed the option of moving health care reform into the budget reconciliation process (where it would have needed only 50 votes to pass). It was not until the early summer that a detailed draft of the health plan was actually committed to paper. Even after the president's speech in September and the introduction of the health care bill, NAFTA took priority. Some suggested this would help health care by earning the president support from business and opinion leaders, and in fact Clinton did end the year well, maintaining his reputation as a winner who comes from behind late in the game.
But for health care reform, the season of opportunity was ending. Nineteen ninety-four would begin with a Whitewater feeding frenzy in the press, undermining trust in the president. The opponents of reform were organizing their forces, concentrating first on groups with ideological affinities. After an internal insurrection, the Chamber of Commerce reversed its endorsement of a mandate; other business organizations likewise "defected," as one business representative put it to me at the time. The AMA qualified its endorsement of a mandate limiting it to firms with over 100 employees and thereby excluding most private doctors, the majority of whom do not cover their own employees. Senator Dole and other Republicans abandoned the Chafee bill and the individual mandate. Dole then cosponsored a bill with Packwood and within weeks abandoned that, too, saying that this the second bill he offered had "too much government."
Overconfident about the momentum of reform, we misjudged the health care politics of 1993 as a change in the climate when it was only a change in the weather. We wrongly assumed that the leading Republicans and key interest groups that had endorsed substantial reforms would at least maintain their positions and might be pulled closer to ours in a final bargain. But by spring 1994, they had no reason to accept a deal. Republicans were already anticipating big midterm election gains; killing reform in the 103rd Congress was rational ("Sight unseen, oppose it" was Republican strategist Bill Kristol's advice on Senator Mitchell's attempt to craft a compromise proposal). With unemployment down, Americans were worrying less about their jobs and health coverage and more about crime. As health care inflation eased primarily because inflation was generally under control, businesses worried less about health care cost containment and more about the political implications of an expansion of government authority. Under these conditions, the ideological and interest-group opponents of reform were able to change the subject. Instead of health care, the focus of debate became government, which was a debate we were sure to lose.
S o were people who had doubts about health reform from the start proved right by the way it ended? Was defeat inevitable? To some who were involved, this may be a comforting thought. If the odds were overwhelmingly against reform, those of us who were involved bear no responsibility for the outcome. Unfortunately, I do not believe that. We had a historic opportunity, and we blew it.
Perhaps the fateful choice was the decision to design a proposal inside the White House and put the Clinton name on it. Much criticism has focused on the secret deliberations of the White House task force; this is not what I have in mind. Every president works up proposals "behind closed doors" before presenting them. The real problem was that time was spent developing a plan that should have been spent negotiating it; congressional negotiations did not get under way until the midterm elections were within spitting distance. Those who felt shut out responded predictably. On health care, the administration ignored the first rule of political cooperation, "In on the takeoff, in on the landing," which underlay other quieter and more successful legislative initiatives.
By putting his personal signature on health care reform, moreover, Clinton gave the Republicans an incentive to defeat it and humiliate him rather than compromise. The Clinton label also led to confusion of public feelings about the president as a person with the entire issue of health care reform. The First Lady's role further muddied the issue. There is no logical connection between views on health care reform and, say, gays in the military or the role of women in society. But the identification of the Clintons with the reform of health care became so strong that sentiments crossed over. The Wall Street Journal reported showing the same description of a health reform plan to focus groups with and without the Clinton label. Without the label, the plan won more than 70 percent support; with the label, approval dropped 30 to 40 points. It seems likely, therefore, that when polls asked for opinions about the "Clinton health plan," they tapped general feelings of confidence in President Clinton rather than preferences about the specifics of health policy. Would different decisions on alliances, cost containment, and other provisions have attracted more public support? Elite opinion might well have been affected, but I am not sure it would have made any difference to the public at large. In fact, some survey evidence suggests that although public support for the president's approach fell, it remained higher than support for any other tested alternative.
Recriminations, Left and Right
The defeat of reform has set off a festival of recriminations. Among the criticisms, one often hears two complementary I-told-you-so's. From the left: If only Clinton had endorsed single payer or an expansion of Medicare, he would have had a simpler plan, and by rallying the public against the insurance industry, he could have won. And then, from conservative Democrats: If only Clinton had endorsed the Cooper plan or some other more moderate proposal, we would have substantial reform today.
Since we cannot rerun history, these critics are safe from ever being disproved. However, no serious observer believes that Congress might have passed a national single-payer plan. Paul Wellstone, single-payer's leading advocate in the Senate, had only four cosponsors for his bill; reaching 50 votes, much less 60, was inconceivable. Some single-payer advocates acknowledged that congressional passage was implausible but thought the president should take the issue to the public in a populist campaign against special interests. However, the defeat of California's single-payer ballot initiative by a margin of 73 to 27 percent should put to rest the notion that a popular uprising against the insurance industry was ready to be awakened. The supporters of single payer enjoyed the illusion that their plan was simpler and more popular only because the Clinton plan was the lightning rod for criticism.
The harder question is whether President Clinton should have moved at the outset toward the conservative Democrats led by Representative Jim Cooper and the Senate Republicans who initially followed Chafee's lead. In retrospect, the president would clearly have done better to identify himself with the conservative Democrats and moderate Senate Republicans to lock in support for reform from when they were offering it. But the cross-pressures at the time were enormous, and support for these plans might well have dissipated if the president had embraced them and they had been subjected to the same intense public scrutiny that the president's plan received. In fact, the Chafee and Cooper plans lost support among their original backers as the implications of their financing provisions became clearer.
Strategy: Right, Left, Right
The Clinton strategy took three political turns or rather, it took two turns and then aborted the third. The first turn, a move to the center right, took place in August and September 1992. In the final stretch of the campaign, Clinton embraced managed competition "within a budget" as a framework for a program of universal health coverage. (I was one of those who advocated this shift.) Managed competition was heresy to many of the congressional Democrats on whom Clinton would later have to rely to pass his program, and Clinton's support for it was not mere campaign rhetoric. The principles adopted before the election guided work on his health plan after he became president.
The second turn--a move left--came in the period between January and October 1993, when the president sought to consolidate support among the many Democrats and constituency groups unhappy about his adoption of a market-oriented approach. One intense debate in the White House, for example, concerned the phasing in of reform and whether coverage would begin with a minimal, "barebones" benefit package or a comprehensive one. The president opted for comprehensive benefits (although the final benefit package was close to the median of private insurance policies today). At several key decision points, he went for the bolder option, such as more inclusive purchasing alliances (which I favored in part because they could offer more choices to families than employers do). The program would cover abortions, and it would include a number of expensive elements designed to appeal to older Americans: a prescription drug benefit to be added to Medicare, a new program of home-based long-termcare for the elderly and disabled, and generous health insurance subsidies for early retirees.
While the basic framework of the Clinton plan involved consumer choice among competing health plans under rules designed to increase sensitivity to cost, the Congressional Budget Office (CBO) was unwilling to count much savings from competition in its estimate of the future costs of any proposal--Cooper's and Chafee's as well as ours. CBO's "scoring" would have considerable political impact, and one of the president's highest priorities in health care reform was to assure that the budget deficit continued downward in the late 1990s. So to keep projected costs in line, the plan included tight caps on premium increases after reform was introduced. With the bigger program came tighter regulation--tighter than many of us had anticipated or wanted.
Two theories in favor of this bigger, tighter program had considerable influence within the administration. What I now think of as the "enthusiasm theory" held that since there would be fierce opponents of reform, we needed equally passionate supporters. We had to give ordinary people something worth fighting for. A minimal program of barebones insurance or a program that was only directed toward the poor would fail to appeal to the middle class that had elected Clinton. (Good managed care also requires a broad benefits package.) And to win the support of the elderly, the president had to include significant benefits for them--hence not only prescription drugs but also long-term care and early retiree benefits.
A second argument, which I now think of as the "bargaining chip" or "onion" theory, held that the administration should go to Congress with a big program intentionally including elements that we would have to bargain away later. In exchange for support, some benefits could be cut, the caps relaxed, the alliances scaled back or sacrificed entirely. Layers of the onion could be peeled off, but we would still retain the core of the program--universal coverage, consumer choice, and a backup system of cost containment. The paradigm was a complex negotiation: "You don't go into a negotiation with your final offer on the table." By proposing a comprehensive plan, Clinton would signal he appreciated the legitimate concerns of diverse groups; at the same time, he would indicate an open mind and a readiness to compromise.
The final lap would necessarily require a turn right; as I understood it, the question was only when this turn would come and how far it would go. There was simply no other way to pass a bill than to get conservative Democrats and moderate Republicans on board. However, besides the desire to have a strong program that could generate public enthusiasm, an immediate political rationale for delaying the right turn was that leading congressional Democrats did not want the administration to make premature concessions. To get past the gatekeepers in Congress, particularly Pete Stark, who dominated health care legislation on the House Ways and Means Committee, it was not at all obvious that the wisest approach would be to negotiate with a relatively junior congressman from Tennessee, Jim Cooper. So compromise would have to come in the later stages of congressional deliberation.
To say these judgments about strategy were mistaken is an understatement; they proved to be a disaster. Despite the comprehensive benefit package and the extras such as prescription drug coverage for the elderly, we did not receive passionate support from the groups we were counting on. We did succeed, however, in mobilizing the opposition. The scale of the program and its regulatory features also caused sympathetic groups in the business community and opinion leaders in the media to think twice about support for reform. Because we had failed to edit the plan down to its essentials and find familiar ways to convey it, many people couldn't understand what we were proposing. There were too many parts, too many new ideas, even for many policy experts to keep straight.
The original political impulse behind the managed competition strategy was to find common ground with moderates and conservatives. Instead, much of the rhetoric used to defend the president's plan made it sound almost as if it were a single-payer proposal. Although the administration repeatedly sought to link the Health Security plan to the concerns of the middle class, universal coverage became the one clear theme, suggesting a focus on the poor. The president had invested so much in the proposal that one might have expected more of an effort to defend it. But after Mrs. Clinton's bravura performance at the initial congressional hearings and the submission of the bill, the White House focused entirely on the principles of reform and made little effort to defend the parts of the proposal. The administration had gone to the trouble of writing a bill and then left it like a foundling on the doorstep of Congress.
The Failure of Congressional Compromise
In late 1992 and early 1993, there seemed to be the makings of a consensus around the principles of universal coverage and managed competition. The Clinton, Cooper, and Chafee proposals all called for consumer choice among competing health plans, the establishment of health insurance purchasing cooperatives, a standard benefit package set or interpreted by a national board, similar reforms of the insurance market, and premium subsidies for low-income families. The Chafee and Clinton plans included mandates to make them universal; Cooper saw that as a second step. By adopting a managed competition framework, it seemed, the president was laying the basis for eventual compromise with Cooper and Chafee. If the administration started out with a structurally similar plan, it would be much easier to split the difference on any number of provisions.
But the sharply partisan climate of 1994 and fear-mongering by the opposition were hardly conducive to splitting differences. Many people simply didn't want to see compromise succeed interest groups that preferred to see no legislation; Republicans that preferred to stymie progress on an issue that symbolized the president's agenda; Democrats who did not want to offend one or another constituency by supporting legislation that unavoidably alienated some supporters. After saying he was flexible on almost every aspect of reform, the president boxed himself into a corner by threatening to veto any bill that fell short of universal coverage.
The failure of congressional compromise also stemmed, however, from the weaknesses of the centrist proposals. While rejecting an employer mandate, the Cooper and Chafee plans included no other source of revenue capable of financing the broadened coverage each called for. The Cooper plan covered up its inadequate financing by forcing health plans to eat losses from unfunded subsidies for the poor. The Chafee plan had nowhere near enough revenue to pay for the subsidies it envisioned for households with incomes up to 240 percent of the poverty level. These inadequacies were typical of recent moderate and conservative proposals. The reform plan that President Bush presented in February 1992, for example, included no financing provisions at all. Dole backed out of the Chafee bill and later out of the bill he cosponsored with Packwood when he saw the fiscal difficulties they posed.
The financing provisions in the Chafee and Cooper plans also raised other objections. Studies showed that Chafee's individual mandate and subsidies would sharply increase costs for middle-class households; both the Chafee and Cooper plans created strong incentives against work. If the president had embraced either proposal, the spotlight would have fallen on these problems.
The employer mandate in the Clinton plan helped to resolve these objections but at the cost of raising others. If there is a simple answer to the question, "Why did universal coverage fail?" it is simply this: Congress would not enact the employer mandate in any form, and when the mandate failed, so did universal coverage, because there was no willingness to consider a broad-based tax. At the inception of the debate, the employer mandate enjoyed more interest-group support than ever before as well as approval by a wide margin in public opinion polls. It was by far the most plausible financing strategy for expanded coverage; after all, Richard Nixon had proposed it. But while groups like the AMA and the health insurers had accepted a mandate as preferable to a tax-financed system, they would never fight for it, nor would other interest groups. On the other hand, the National Federation of Independent Businesses (NFIB), the small-business lobby, fiercely resisted the mandate and targeted its efforts strategically to districts of swing members of key committees.
The Clinton plan anticipated opposition by small-business owners and limited their obligations under an approach that the Chamber of Commerce had suggested, but it was to no avail. The press almost always reported that employers would have to pay 80 percent of premiums; few small employers understood that this obligation was limited to a share of payroll, ranging from 3.2 to 7.9 percent, depending on the size and average wage of a firm. In fact, most small businesses that currently insure would have seen significant declines in cost under the Clinton plan. As in other areas, the plan's complexity impeded our ability to communicate it, but the misunderstandings may have made little difference. Business simply did not trust the administration. Subsidies, the small-business lobby argued, might be temporary, while the mandate would be forever. The lack of trust in the president and the government undermined every attempt to adjust the proposal to make it acceptable.
Article Continues >>
<< Previous Section
I had supposed that employer contributions were the kind of issue perfectly suited to bargaining. For example, instead of an 80 percent contribution, the level could be set at 50 percent. The smallest employers, with fewer than 10 or 20 employees, could be entirely exempt or pay a minimum rate of 2 or 3 percent of payroll. These were precisely the compromises that Senators Edward M. Kennedy, Daniel P. Moynihan, John Breaux, Mitchell, and others incorporated into their plans or floated as options. If Clinton had had ten more Democrats in the Senate, as Lyndon Johnson did when Medicare passed in 1965, a deal of this kind might have worked, but the Democratic margin was just too narrow. It was not simply southerners like Sam Nunn who opposed the mandate. Bob Kerrey (
see box
), Dianne Feinstein, and Joseph Lieberman--all running for re-election--would not vote for the mandate in any form.
Business groups did not become implacable opponents of the Clinton plan immediately after its release in October 1993. It took several months for them to resolve their own differences and uncertainties. By midwinter, they were decisively against the president's plan; by late spring, they wanted nothing to pass. In his effort to find a majority for a reduced program in August, Senator Mitchell gave up the premium caps, made the alliances voluntary, and deferred the possibility of an employer mandate (for 50 percent of premiums) until 2002. At that point, the mandate would be triggered only if two conditions were met--coverage hadn't reached 95 percent of the population in a state, and Congress had failed to do anything else to raise it.
T hese concessions made no difference to the mandate's opponents; nothing would mollify them now. House Majority Leader Richard Gephardt had combined the two bills that passed House committees into legislation that was far more liberal than Mitchell's. Many Democrats made no secret of their desire to use the Mitchell bill as a stratagem to get the legislation into conference and then bring back a much stronger bill to the Senate. It is hard to imagine an approach better designed to increase distrust of Mitchell's proposal among conservative Democrats and moderate Republicans. But Gephardt's bill probably never had the slightest chance of passing the House. Rather than develop a compromise, Gephardt had largely accepted the bill that had emerged from the Ways and Means Committee. To business interests and conservative Democrats, this was even less palatable than the Clinton plan because it created a new Medicare Part C for the under-65 population, which they believed would screw down payment rates, shift costs to private insurance plans, and ultimately bring about a collapse of the private market. In fact, the only conceivable scenario for legislation by the summer was that the House would finally defer to a more conservative bill developed in the Senate. The unwillingness of House Democrats to acknowledge this reality was a premonition of coming disaster.
The final act was played out in the Senate and starred the "mainstream group," a bipartisan coalition of roughly 18 Senators, led by Chafee and Breaux. Of all the centrist proposals that included significantly broadened coverage, the mainstream plan was the only one that was fiscally defensible. It financed an extension of coverage up to 91 or 92 percent of the population by imposing a cigarette tax, a tax on high-cost health plans, and cuts in Medicare. Coverage of pregnant women and children would have been nearly universal. The proposal also included insurance market reforms and voluntary purchasing alliances along the lines of the Jackson Hole Group's version of managed competition. For all its flaws, the bill would have been a historic advance.
There was only one problem: It didn't have much public support. It was too big for conservatives, too little for liberals. Democrats in Congress who genuinely wanted a compromise found that hardly any organized constituencies would swallow the bitter pill the mainstream group was offering. The elderly saw the proposal as cutting Medicare without providing anything in return; unions saw it as taxing high-cost health plans--the kind some union members still enjoy--without the guarantee of coverage "that can't be taken away." The mainstream group and Mitchell might have overcome these problems and in a different political season secured a majority, but the clock ran out.
From the beginning, the proposals in the center had failed to generate any public excitement. Economists and conservative intellectuals may like the individual mandate in the Chafee plan and the cap on tax benefits that both the Chafee and Cooper plans originally included, but no one has built public support for these measures. Most of the initial business backing for the Cooper plan seems to have been expedient. Business interests backed Cooper when they feared worse; they lost interest when the feared alternatives evaporated.
During the spring and summer of 1993, in what may really have been the crucial shift, the nation's elites abandoned health care reform entirely. They had become impatient with its complexity and nervous about its cost. While there was a general swing in the national mood at the same time, elite views are particularly critical. In 1992 and 1993, the Jackson Hole Group and the New York Times editorial page seemed to be prodding the nation's establishment into assuming leadership in a restructuring of the health care market. The Senate mainstream group was this establishment's congressional incarnation. The effort might have actually succeeded if the debate had come to a head in the summer of 1993 instead of the summer of 1994. The moment has now been lost.
Divided We Fall
Before the 1992 elections, Democrats were split into several different factions on health care reform, and these divisions carried over into the Clinton administration and the Congress. Important figures in both the executive and legislative branches were never committed to comprehensive health care reform; they favored reforms of the insurance market and some limited expansion of access but not universal coverage. Another group strongly preferred reform on the Medicare model--that is, primarily based on fee-for-service medicine with price controls. A significant minority wanted a single-payer system.
The managed competition approach adopted by the president was supposed to bring these groups together, but this proved impossible. Constant in-fighting among the factions resulted in hostile leaks to the press from inside the administration and Congress, disparaging comments about the feasibility of different options or the integrity of cost estimates, and the proliferation of options until no mortal could keep them straight. The in-fighting helped mightily to confuse the public, slow the momentum of reform, and eventually kill it.
The rise of managed care has produced a particularly deep rift among reformers. Those who favored the Clinton plan and other variants in Congress accept health maintenance organizations (HMOs) and other forms of managed care as a positive force or a necessary evil to carry out systemic reforms, control costs, and make universal coverage affordable. However, the rise of managed care has split off two wings of the reform coalition. Many progressives prefer a single-payer approach in part because they detest managed care and the insurance industry; the Clinton plan was not too little for them--it was unacceptable. This was also the view of many liberal physicians, notably specialists. At the same time, many in the business world who previously wanted more government intervention now think that managed care gives them the key to cost control. So if you hated managed care, you didn't want the Clinton plan (no matter that Clinton would require every alliance to offer fee-for-service plans); and if you were an employer and liked managed care, you probably didn't think the Clinton plan was necessary.
B ut how about the opposition of special interests, particularly the millions of dollars spent on the Harry and Louise commercials and other advertising, lobbying, and campaign contributions? No doubt these groups helped to create public anxiety and political paralysis, but their influence is easily exaggerated. Several of the key interest groups were actually less hostile to reform than in any prior battle over health insurance since the 1930s. The problem was not so much that the opponents had more resources, but that the supporters could not mobilize theirs. While the antagonists had great clarity of purpose, the groups backing reform suffered from multiple and complex fractures and were unable to unite.
At the outset, I thought we could overcome interest group opposition by offering a proposal that would attract, or at least not disturb, many of the key interest groups. After all, the large insurance companies could do well under a managed competition approach. The American Hospital Association and Catholic Health Association favored the same approach to reform as the Clinton plan. Major national organizations of physicians supported universal coverage; even the AMA was no longer dedicated simply to obstructing change. The administration did receive support from the American College of Physicians, the pediatricians, neurologists, and family practitioners, as well as the American Nursing Association, retail pharmacists, and other provider groups. But it failed to close the deal with the insurance companies. And by calling for major cuts in future Medicare spending growth, it lost the support of the hospital industry; for the same reason, the American Association of Retired Persons (AARP) decided not to endorse a specific plan until it was too late.
Many people have written about the politics of health reform on the basis of which groups would be "winners" and which "losers" under different approaches. We expect the losers to resist, and on health care reform they did; the winners, however, don't necessarily support change. They may instead focus on lesser provisions of a plan that hurt them or on the risk that the balance of effects will turn negative as legislation moves through Congress or in the future. During 1993 and early 1994, many winners focused their efforts on changing provisions that adversely affected them and devoted little energy to ensuring that reform would pass. Some winners opposed the Clinton plan outright. For example, the manufacturing sector which now "exports" insurance to spouses working in other sectors and carries a heavy load of older workers and early retirees would have seen its health insurance costs go down dramatically. But some provisions, like the generosity of the benefit package, would have raised employer costs; the early retiree provisions were unlikely to make it through Congress; and the expansion of government authority posed the risk of new burdens in the future. So although individual companies backed the Clinton plan, the National Association of Manufacturers came out against it.
While many groups sympathetic to reform were lobbying to win one provision or another in the reform plans, the health insurance and small-business lobbies were focused unambiguously on defeating change. The political advertising reflected this difference. Advertisements by groups supporting reform typically didn't back any particular legislation, just the general ideas. The opponents' advertisements, however, specifically attacked the Clinton plan, even after it was no longer an option.
The reform coalition suffered from a disease often fatal in politics: cross-cutting cleavages. Policy factions and interest groups could not put aside their differences. Perhaps if they had seen the change coming in the midterm elections, it would have concentrated their minds. Now they've lost their turn.
The Republicans' Turn
For the moment, the agenda for health care reform belongs to the Republicans. Whether Senate and House Republicans can agree on a single bill is as yet unclear; in the Senate, the differences on health care between Phil Gramm and John Chafee are enormous. But the Republicans in the new Congress are far more likely to reach agreement than were Democrats in the last.
Any bill that passes this Congress, however, is unlikely to do much to solve the problems of coverage or cost. Covering the uninsured requires credible financing. The Republicans are not likely to approve a tax increase for health care, and they will need Medicare and Medicaid savings to pay for promised tax cuts. A balanced-budget amendment, in fact, will require far deeper retrenchment in these programs than anyone has yet contemplated. Medicaid may well be eliminated as an entitlement program. A Republican health care bill will likely include some insurance market reforms (limiting the use of pre-existing condition exclusions for someone with prior insurance coverage); limits on damages in malpractice liability suits; measures to facilitate the automation of health care transactions; and individual medical savings accounts designed to encourage people to enroll in catastrophic health insurance plans that require them to pay the first $2,500 or $3,000 in medical expenses. Many of the healthy affluent will be attracted to such accounts. As a result, those who continue to enroll in conventional insurance plans with lower deductibles will be a poorer and sicker population, and their rates will go up, if plans of that type continue to be available at all.
If such a program were to pass, the most likely prognosis is that inequalities in health care would increase sharply. The supply of jobs that carry broad health and pension protection has been shrinking. The number of Americans without health insurance has risen over the past decade, but it would now be even higher if Congress had not expanded Medicaid in the 1980s to include more low-incomechildren and pregnant women. The Republicans are promising to eliminate the "unfunded mandates" on the states that brought about this expansion of Medicaid; they also want to reduce the number of families eligible for welfare. With both employment-based and government health coverage shrinking, we will almost certainly see an increase in the uninsured. At the same time, hospitals will find it more difficult to shift the costs of the uninsured to privately insured patients, as those patients increasingly belong to managed care plans that negotiate discounted rates. Thus, nonprofit hospitals are likely to offer less charity care, and public hospitals serving poor people are likely to be mired in financial difficulty.
Many conservatives also want to require managed care plans to contract with "any willing provider," which would limit the ability of HMOs to control their costs. The view of these conservatives seems to be, first, the private sector is solving the problem of cost containment and, second, it should be stopped from solving the problem. How "any willing provider" fits with the efforts of Republican governors to shift Medicaid to managed care is a mystery that only the magic of political rhetoric can resolve. It would be yet another irony of reform if a movement that began with liberal proposals to control costs and expand coverage ended up producing conservative legislation that raised costs and reduced coverage, but stranger things have happened.
I s there any way to avert this future? Yes, the Democrats have to recover their nerve in the wake of the elections and patiently explain why the Republican proposals will compound America's health care problems. According to exit polls, this is one issue on which even the voters in the 1994 elections still preferred Democrats. The president and Democrats in Congress need to rally around a smaller, defensible program perhaps focused on expanding subsidies to cover children and providing greater latitude for the states, particularly exemptions from ERISA, the federal law regulating employee benefit plans. The tobacco tax and employer contributions should remain as preferred methods of financing broader coverage, although the employer mandate should be reconceived as an increase in the minimum wage--perhaps to $4.25 plus a 50-cent- an-hour health insurance contribution. If the Republicans succeed in passing individual medical savings accounts (and this does seem likely), the minimum wage contribution and tax credits could create a base for covering the low-wage employed population that does not have health insurance today.
The lesson for next time in health reform is faster, smaller. We made the error of trying to do too much at once, took too long, and ended up achieving nothing. Oh, yes, I was thrilled when President Clinton waved his pen before Congress and threatened to veto anything less than universal coverage. Like many others who supported reform, I failed to appreciate the risk of losing everything. We were too confident that reform was inevitable, just as some are now too certain that defeat was inevitable. Strategy and speed matter in politics as in sports. But, in both, new seasons bring new lineups and new opportunities. Health care will remain in the center of our politics for a long time to come.
