Source: U.S. Bureau of the Census health insurance tables, http://www.census .gov/hhes/www/hlthins/historic/hihistt1.html.
There was also another factor producing temporary relief just as Clinton was trying to sell his health plan: The mid-1990s were the golden age of HMOs. The original idea behind health maintenance organizations was that traditional fee-for-service insurance, in which insurance companies pay any doctor for an allowed procedure, leads to overspending: Doctors call for any procedure that might yield medical benefits, and patients go along since someone else pays. An HMO was supposed to replace this with “managed care,” in which doctors who were part of the HMO’s network had incentives to take cost into account, leading them to forgo expensive procedures with small expected medical benefits. People would accept these limits, the theory went, because they would lead to much cheaper insurance.
The overall idea of taking cost into account in medical decisions makes a lot of sense. Britain’s National Health Service, the one example of true socialized medicine among major advanced countries, has a limited budget. The medical professionals who run the system try to make the most of this budget by rating medical procedures in terms of the medical gain per pound spent, and limiting low-gain spending. In the United States, the Veterans Health Administration, which is a sort of miniature American version of the NHS, does much the same thing. And both the NHS and the VA system do remarkably well at providing effective health care despite having very limited resources.
HMOs, however, are private organizations run by businessmen, not public agencies run by doctors. At first they seemed to deliver on their promise of cost savings: as HMOs spread in the 1990s, the long-term rise in health care costs paused, a pause clearly visible in Table 8. And during the 1990s the combination of HMO cost savings and a booming economy led to the big but temporary improvement in the health insurance picture visible in Table 9.
But in the end HMOs failed to deliver sustained savings for one simple reason: People don’t trust them. Patients in Britain’s National Health Service are, on the whole, willing to accept some rationing of health care because they understand that the national health system has a limited budget and is run by doctors trying to make the most of that budget. American HMO members are much less willing to accept rationing because they know it’s driven by accountants who are trying to maximize a corporate bottom line. Because of this distrust and dissatisfaction, HMO enrollment as a share of the total peaked in the mid-1990s, although other, milder forms of managed care continued to grow. Moreover, a public outcry and congressional hearings have forced insurers to back away from aggressive attempts to hold down costs. As a result U.S. medical costs are once again rising rapidly, and employer-based insurance is again in decline.
All this implies that the case for health care reform is less fragile now than it was in 1993. Clinton had a short window of opportunity to achieve reform, before the public’s attention shifted to other things. This time it’s hard to envision anything that would diminish the public’s sense that something must be done, and let opponents claim that there isn’t a crisis.
Yet even in 1993 Clinton might have achieved health care reform if he hadn’t made several crucial mistakes.
Much has been written about the personalities involved in the Clinton health care plan and their shortcomings. I won’t try to add to all that. Instead let me focus on two things that Clinton clearly did wrong.
First, he just didn’t get started soon enough. Matthew Holt, a health care analyst whose blog on health policy has become must reading in the field, has offered a stark comparison between Clinton’s failed attempt at reform and LBJ’s successful push for Medicare. Johnson actually signed Medicare into law on July 30, 1965, less than nine months after his victory in the 1964 election. Clinton didn’t even make his first national speech on health care until September 23, 1993.[15]
The long delay was disastrous for several reasons. By the fall of 1993 any political momentum from the 1992 election had dissipated, and the Clinton administration was already bogged down in petty issues like the role of gays in the military, as well as various fake scandals manufactured by the movement conservative echo chamber. At the same time economic recovery was undermining the demand for health care reform.
Why didn’t Clinton move sooner? Partly it was a question of priorities: His initial preoccupation was with budget issues. The creation of the Clinton health plan was also an unwieldy process, involving a huge but secretive task force whose leadership managed to alienate many natural allies. Above all, however, Clinton just wasn’t ready. Medicare emerged from years of prior discussion; Clinton came in with a near-blank slate. His presidential campaign hadn’t offered any specifics on health care reform, nor had there been a national debate on the subject to prepare the ground.
When the Clinton plan finally emerged, it turned out to have another problem: It was all too easily portrayed as a plan that would deprive Americans of medical choice.
The Clinton plan embraced the theory behind managed care, that restricting spending on expensive but medically marginal procedures would lead to huge cost savings. It was a plan for universal coverage, but it was also a plan to, in effect, channel everyone into HMOs, which would engage in “managed competition.” Opponents of the plan quickly homed in on the managed care aspect: The first and most devastating of the “Harry and Louise” ads warned that “the government may force us to choose from a few health care plans designed by government officials.”[16]
In order to avoid repeating this unfortunate history, today’s health care reformers have to avoid these mistakes. They need to hit the ground running: If and when a progressive president and a progressive congressional majority take office, they must have at least the key elements of a universal health care plan already decided and widely discussed. Thus it’s a very good thing that health care reform has become a central issue in the current presidential campaign. They’ll also need to offer a plan that reassures Americans that they will retain some choice, that those who currently have good insurance won’t be forced into something worse.
When FDR created Social Security and unemployment insurance, he was entering uncharted territory. Such programs had never existed in America, and the welfare state programs of Germany and Britain were both limited and little known in the United States. Nobody could be sure how well the New Deal’s plans to protect Americans from risk would work in practice. By contrast, universal health care has existed for decades in most of the Western world, and we already have a very good idea of what works.
Ezra Klein has produced a very good survey of health care systems in other advanced countries, and his opening paragraphs are worth quoting in fulclass="underline"
Medicine may be hard, but health insurance is simple. The rest of the world’s industrialized nations have already figured it out, and done so without leaving 45 million of their countrymen uninsured and 16 million or so underinsured, and without letting costs spiral into the stratosphere and severely threaten their national economies.
Even better, these successes are not secret, and the mechanisms not unknown. Ask health researchers what should be done, and they will sigh and suggest something akin to what France or Germany does. Ask them what they think can be done, and their desperation to evade the opposition of the insurance industry and the pharmaceutical industry and conservatives and manufacturers and all the rest will leave them stammering out buzzwords and workarounds, regional purchasing alliances and health savings accounts. The subject’s famed complexity is a function of the forces protecting the status quo, not the issue itself.[17]
15.
Matthew Holt, http://www.thehealthcareblog.com/ the_health_care_blog/2005/ 07/policypoltics_w.html.
17.
Ezra Klein, “The Health of Nations,”