1994 Redux

Published April 2, 2008

National Review Online

In his 1994 State of the Union address, President Bill Clinton waved his pen at the Democratic-controlled Congress and said he would veto any health-care-reform bill that did not “guarantee” the right to health insurance for every American. The threat worked. Congress didn't send him a bill he would have to veto — or any reform bill at all, for that matter.

Then-First Lady Hillary Clinton, heading up her husband's health-care task force, undoubtedly had a hand in that disastrous 1994 line in the sand. Now that she is running for president, she says she has learned her lesson. But has she? It hasn't seemed so over the last two months on the campaign trail, as the take-no-prisoners rhetoric and finger-pointing ultimatums have returned with a vengeance.

The 1994 effort was a debacle of biblical proportions for the Democratic party. To win the presidency, everyone assumed Hillary Clinton would need to erase memories of her flawed leadership of that catastrophe. And doing so would mean showing voters she had the capacity for a different kind of leadership, one based on openness to the private sector, appreciation for the complexity of the task, and policy flexibility — not 1990's style war-rooms and the promised destruction of opponents with differing views.

For a time last fall, it seemed as if Clinton understood she had an image problem that needed correcting. In announcing her new plan for health care, she stressed choice and pluralism. She claimed — falsely — that under her plan no one would be forced to drop the coverage they have today if they were happy with it. She suggested the plan is built on general principles, not detailed legislative particulars, and she pledged to work with Congress to formulate a workable compromise. She even endorsed Republican-sounding tax credits to bolster her claimed support of more private health insurance options.

Conservatives, of course, never believed for a minute that her overall goal had changed, and rightly so. Her plan is cleverly drawn, but a careful reading shows it would lead to a government takeover. Still, there was no denying a change in salesmanship.

The only problem was that the new, seemingly more open-minded Clinton didn't work — politically, that is. She lost her frontrunner status for the Democratic presidential nomination and a slew of caucuses and primaries to Senator Barack Obama. It turns out that he, too, had a health-care plan he was touting, one that isn't all that different from hers. And he had already cornered the market of voters interested in promises of consensus-building leadership.

In recent weeks, in a last-ditch attempt to draw clearer distinctions with Obama, Clinton has done what comes naturally to her, promising, that if elected, she will again lead a no-holds-barred campaign to defeat any and all opponents who stand in her way on health care. And, just like her husband did in 1994, she has defined the fight as a struggle between those who support “universal coverage” and those who don't.

Of course, it is convenient, and not a coincidence, that Obama is on the wrong side in this fight, as Clinton describes it. He has refused to endorse the provision which Clinton argues is the non-negotiable foundation of Democratic health-care orthodoxy: mandatory enrollment by every American in government-approved health insurance. Clinton has virtually accused Obama of heresy for daring to defy a tenet of the universal-coverage church.

In response to Clinton's attacks, Obama has pointed out that such a mandate would hurt exactly those households a “universal” health-care plan is supposed to help — low-wage families who can't afford private coverage but who are ineligible for public programs. It would seem these families would be forced into a choice between bad and worse with the Clinton mandate. Either they pay premiums for coverage they cannot afford and forego other necessary goods and services for their family, or they pay a lesser financial penalty to save some money but still go without coverage. Either way, they are worse off financially than they are today.

But that's exactly the dilemma Clinton wants to force onto the public agenda. She understands that mandatory insurance enrollment would be the engine for a health-care train with many more cars attached to it, and these would inevitably shift the balance of political pressures toward a government-run system.

It's not difficult to see her logic. If the government requires everyone to have insurance, it will quickly become incumbent on politicians to make sure there are “affordable” options for everyone too, based on ability to pay. For a time, that might be accomplished with lavish new subsidies, which Clinton promises in her plan. But, if costs continue to escalate rapidly (as they would under her approach), pressure would build for predictable and reliable controls, as neither the government nor households could manage indefinitely with premium increases far exceeding wage gains. Inevitably, the federal government would respond to escalating costs the same way it has tried to reign in Medicare spending, with elaborate payment schedules, price setting, and heavy-handed regulation aimed at artificially lowering costs and limiting the supply of services.

Clinton has argued that her plan will slow cost escalation without price fixing. It would not. She proposes to invest in more widespread use of health information technology and fund research into what works and doesn't in health-care delivery. These proposals, which most Republicans also support, may result in some modest easing of cost pressures, but no credible expert believes they are a real answer to the larger problem, and certainly they would not be enough to offset the substantial new costs associated with a universal system of health-insurance subsidies.

To slow rapid cost escalation, there really are only two choices. The first would have the United States go the way of Europe and Canada, with all that would mean for reduced access, lower quality, and less innovation.

But there is a better way. A second option would have the government adopt policies that promote a functional marketplace, with cost-conscious consumers selecting from among numerous offerings of insurance and services based on price and quality competition. In time, such competition would increase productivity, improve the quality of services provided to patients, and ease cost pressure, making insurance more affordable for those who want coverage.

Clinton has made it abundantly clear which approach to cost control she favors. Her 1994 plan sought to impose “premium caps” on insurance, which would have quickly become price controls for hospitals, physicians, and products. She staunchly opposed the 2003 Medicare drug bill because it relies heavily on price competition and private insurance. And she frequently rails against “privatization schemes.” There should be no doubt that, once in power, she would couple her mandate to buy insurance with significant new government power to impose cost constraint.

Just like 1994, Clinton wants to frame the choice for the country as between universal coverage, or not. She failed last time because the country was presented with overwhelming evidence that the real choice was between a government-run system and one based on individual choice and competition. The lesson she appears to have learned from that episode is to do all she can to hide her true intentions.

— James C. Capretta is a fellow at the Ethics and Public Policy Center and a health policy and research consultant.


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