Exorcising the Ghosts of 1994

Learning from Clinton's mistakes on health care reform:

This time, we want healthcare reform, by Ezra Klein, Commentary, LA Times: ...What a difference a decade makes. It wasn't so long ago that President Clinton's proposed [health care] reforms suffered a catastrophic defeat at the hands of moneyed interests and Republican opportunists, setting the stage for the Democratic Party's historic losses in the 1994 midterm elections. It was an enormous blow to ... the Democratic Party...

Such traumas leave scars, and for years afterward, Democrats ... shied away from fully reengaging the healthcare debate, even as the country's healthcare system continued its slow deterioration.

But the ghosts of 1994 have been largely exorcised from the Democratic psyche, and today, even the most hardened cynics are allowing themselves moments of hope. ... If Democrats are going to ... finally succeed, though, they are going to have to learn the lessons that 1994's failure can teach...

Everything that could go wrong did; everything that could be handled wrong was. Clinton decided to pursue the passage of NAFTA before healthcare reform, exhausting and angering his liberal allies (such as organized labor) immediately before he would most need their support and strength.

The initiative was placed under the control of Hillary Rodham Clinton and Ira Magaziner, whose primary health policy credentials came from a report on medical spending he'd written for the state of Rhode Island. Neither had the political experience to safely shepherd a reform of this magnitude, and it showed in their procedural missteps, which involved creating more than 30 closed-door task forces with more than 600 members but little to no representation from industry stakeholders such as the insurance industry or healthcare providers.

Worse, the Clinton administration was completely incoherent on how to handle those industry stakeholders and other interested parties, and thus it was unprepared to repel the all-out assault they mounted on the plan. ... There's a lot of money sloshing around, and quite a bit of profit to protect.

So, the first question for would-be reformers is how you handle the insurance industry, the pharmaceutical industry, the for-profit-hospital lobby and the businesses that don't want to begin offering comprehensive healthcare for their employees. And here, there is a choice to be made: Do you run over the industry interests that impede reform ..., or do you resign yourself to their involvement and invite them to the table?

In a classic worst-of-both-worlds compromise, Magaziner and Hillary Clinton did not initially include industry representatives in the process, but then constructed a plan whose famed complexity sprang mostly from their attempts to retain a place for these groups. Thus, they expected a certain degree of buy-in from the medical-industrial complex and were blindsided by the ferocious opposition they actually faced. Worse, their proposal didn't allow them to effectively counter the opposition. ...

And at the same time as the Clinton administration was floundering before the attacks ... (the insurance industry alone spent $50 million in ads, lobbying and organizing), the structural pressures pushing toward reform began to ease. As healthcare writer Matthew Holt has persuasively argued, President Clinton's initial mandate came in the context of the 1991-92 recession ... that left the middle class feeling particularly insecure...

But amid the lengthy dithering of the Clinton/Magaziner policy process, the recession lifted, the economy improved, the public's anxieties eased... Moreover, the promise of implementing managed care left the right with an alternative policy to organize around, one that didn't require government intervention or obvious turbulence.

Today, of course, it's clear that managed care has failed. After cost growth was effectively arrested in the mid-1990s, patients rebelled against being managed, and insurers decided that passing on the costs ... was less trouble than holding them down. Moreover, ... anxieties over spending growth and the precariousness of coverage ... are now constant companions, even in periods of economic expansion. ...

That may be why a recent New York Times/CBS poll found that 90% of Americans said they thought that the healthcare system needed either "fundamental changes" or to be "completely rebuilt." The last time the poll recorded such desire for reform was in January 1994. Indeed, according to the poll, 62% report themselves willing to pay higher taxes for universal coverage.

Such numbers have appeared before, and efforts at reform have failed before. There are differences this time, though. No change-minded president would be so naive about industry opposition, or slow to propose a plan, or secretive about its creation. The pressures that eased after the 1990-91 recession are now enduring.

The progressive coalition is much more mature and effective ..., and it aches to engage ... in a debate about how to best run the American healthcare system. Most telling of all, the American people regret passing up the Clinton plan. A 2005 ... poll found that 53% of respondents ... believe that they'd be better off had the Clinton plan passed, while only 28% believe that they'd be worse off. It may be that ghosts of the Clinton plan's failure have ceased scaring Democratic politicians and begun haunting voters, leaving them afraid not of change but of its absence.

Will it happen, or is reform politically impossible? If business comes solidly aboard I think there's a chance even if the medical industrial complex fights the effort vigorously. In any case, reform will depend upon the ability of the next president to build an effective coalition, a difficult task since serious reform will come at someone's expense and hence bring strong opposition from some groups.

There are signs that firms are realizing participating in reform is better than potentially having it forced upon them, so it's partly a matter of the type of reform business is willing to support and whether that will lead to a unified reform effort, or the splintered politics of the past that has blocked substantial change.

If anyone cares to weigh in, I'd be curious to hear how you see the current slate of presidential candidates in this regard, i.e. their ability to design an effective health care reform plan, and to forge the necessary coalition to put it into place, or any other thoughts you might have on the more general topic of what will be required to bring about major health care reform.