A Triumph of Misinformation

Most of what everyone "knows" about the demise of health-care reform is probably wrong—and, more important, so are the vague impressions people have of what was really in Hillary Clinton's plan

By the time the Clinton health-care-reform plan was abandoned, in September, everyone knew how terrible it was. It had been hatched in secret by an egghead team that knew a lot about policy details but had no grasp of political reality. The Administration had wasted time and missed deadline after deadline for presenting the plan to Congress, causing the plan to miss its best opportunity for passage- during the President's brief honeymoon period, in 1993. The scheme was fatally overcomplicated. The proposed legislation, 1,342 pages long, was hard for congressmen to read and impossible for anyone except the plan's creators, Hillary Rodham Clinton and Ira C. Magaziner, to understand.

The Clinton plan would have imposed sweeping changes on one seventh of the national economy, with consequences far greater than Congress could possibly consider before casting a rushed vote. It represented a regulation-minded, top-down, centralized approach at a time when the world was moving toward decentralization and flexibility—and when the supposed health crisis was solving itself anyway. The more people learned about this plan, the less they liked it, and it finally died a natural and well-deserved death.

Or so goes the conventional wisdom, as relayed in countless newspaper and magazine postmortems of the health-care struggle. The critiques were usually accompanied by veiled jabs at Hillary Clinton—what will she do with her time now that health care's gone?—and outright ridicule of Magaziner, who was portrayed as the smartest person with the dumbest plan since Robert McNamara and the Vietnam War.

But suppose that what everyone knows is wrong. This happens all the time in politics. Barely a year ago, for example, everyone in Washington knew that Congress was absolutely certain to pass a health-care program by now. The leaders of the Administration's health-care-reform effort, Hillary Clinton and Magaziner, believe that everyone is wrong again now. I heard them elaborate this view in September and October, during a series of long background conversations. "Background" means that I agreed to check with them on any material I wanted to quote directly. The gist of their views, however, was on the record. It is no surprise that they view the reform plan as something other than an overcomplicated bureaucratic nightmare. The surprise is how much more convincing their version of reality is than the prevailing one.

These conversations began at Magaziner's suggestion. He and I were friends in graduate school, more than twenty years ago, and he was obviously betting that I'd listen to him more sympathetically than other reporters would. I am biased, in that I like and respect Magaziner. But until these meetings I had had no contact with him during his time as health czar, and I have not always agreed with his ideas. (His worst achievement: helping bring a no-requirements curriculum to Brown University, when he was the student-body president in 1969.) In this case the facts seem to be on his side.

Let's consider each count in the conventional bill of indictment against the Clinton Magaziner plan.

First count: The plan was hatched in secret. During the 1992 presidential campaign Bill Clinton talked frequently about his interest in health-care reform and gave a signal about the reform approach he preferred. In a speech in September he recommended "competition within a budget." To the health-care cognoscenti this indicated an approach different from the main Republican and Democratic proposals of the time.

The most familiar Democratic approaches were "single-payer" and "play-or-pay." Single-payer, which was endorsed during the 1992 Democratic primaries by Senator Robert Kerrey, of Nebraska, meant a Canadian-style or Medicare-style system. Private doctors and hospitals would provide care, but the government would take over all medical payments, financing them with a big new medical tax. All Americans would be covered. Play-or-pay, supported by many Democrats, required companies either to buy health insurance for their workers or to pay into a public fund, which would insure workers not covered by their companies. People who were not working would not be insured. An approach popular among Republicans relied on new tax breaks to encourage people to buy health insurance on their own. Some politicians from both parties endorsed a "managed competition" scheme, separate from all these.

Clinton's reference to "competition within a budget" fit a proposal laid out in the fall of 1992 by Paul Starr, a Princeton professor, in a short book called The Logic of Health Care Reform. This book came closer than any other document to anticipating the ultimate shape of the Clinton-Magaziner bill.

In Starr's plan, which was a variation on a managed-competition scheme, all Americans would be covered—even if they were out of work, even if they had "pre existing conditions." The cost of coverage would be paid mainly by companies, which would contribute to the insurance premiums for each of their workers. The government would subsidize coverage for those who were unemployed or worked for small firms. Private insurance companies would offer coverage, as they do now, but the government would "manage" the way they competed for business. Each company would come up with a list of standard benefits, which it would have to offer at the same price to all customers. That is, the insurers could not turn down people who were already sick, or charge fifty-five-year-old applicants more than thirty-year-olds. Each year people could compare the offers and choose the plan they liked best—including a fee-for-service plan that let them go to their family doctor. From the customer's point of view, the system would work like the "open enrollment" policy at many corporations, in which employees can choose a new health plan each year. The government would set an overall limit on the amount of money that could be spent on medical care each year, while giving insurance companies and health plans latitude to spend the money as they thought best. This limit was the "budget" in Clinton's reference to "competition within a budget."

With numerous changes of detail and emphasis, the plan that Starr explained in his book and that Clinton alluded to in his campaign became the plan the Clinton Magaziner task force unveiled in 1993. The most important difference lay in what was meant by "within a budget": the bill that Clinton presented would have limited total spending not directly, by fiat, but indirectly, by limiting the amount that insurance premiums could rise each year. The process of working out these details and emphases kept Magaziner and some 500 task-force members busy round the clock during the Administration's first few months.

According to today's conventional wisdom, these meetings doomed the reform effort before it really began, for it was here that Magaziner and his fellow nerds cooked up their unrealistic schemes. But did the process seem weird, secretive, and isolated at the time? Yes, but in only one limited and revealing way.

On matters of substance, the task force went out of its way to hear a variety of views. Most members of the task force were policy or budget officials borrowed from other parts of the government, but the group also included outside scholars and experts, plus several doctors and nurses. There were no representatives of organized outside interests—no delegate from the American Medical Association, no one from the Pharmaceutical Manufacturers of America—but the task force met frequently with outside groups and above all with senators, representatives, and their staffs. By early May, Congressional Quarterly reported, the task force had met with 572 separate organizations. "We had a couple of hundred meetings with the congressional leadership and individual members," Magaziner says now. "People were saying that it was the biggest outreach effort ever in laying the groundwork for a bill."

Indeed they were saying so. A Congressional Quarterly headline on May 22 read, "Clinton Task Force All Ears on the Subject of Overhaul." The article said, "Most members of Congress give the president high marks for laying the political groundwork necessary for his proposal to get the careful consideration of both parties. . . . Clinton has been playing the health-care issue with an eye to keeping everyone at the table, at least at the outset."

In late September of 1993, when Hillary Clinton appeared before five congressional committees in three days to explain the rationale behind the bill, not a single legislator complained about "closed" or "secretive" deliberations: not Robert Dole, not Robert Packwood, not John Danforth—Republican senators who all later came out against the bill. Senator John Breaux, of Louisiana, a conservative Democrat who supported a competing reform plan, praised Hillary Clinton for the "truly remarkable" consultations the task force had carried out.

So when did the task force become "secretive"? Complaints inevitably arose when Magaziner and his assistants stopped soliciting outside advice and started announcing decisions. Those who disagreed felt that they hadn't been listened to. "Some people say they were excluded because in this case we didn't agree with them," Hillary Clinton told me. "But I think that a fair assessment is that we listened to everybody—and then made recommendations based on what we thought made the most sense."

The larger problem was with the one group that truly was excluded from the deliberations—the Washington press and, by extension, the public in whose interest it is supposed to act. During the brusque early weeks of the Clinton Administration, when George Stephanopoulos was walling reporters out of the White House press office and the Administration thought it could use talk shows to take its message directly to the public, over the heads of the daily press, Magaziner was told by the White House communications office that he and his associates should not talk to reporters about what ideas they were considering for the new bill. Instead they were supposed to refer all queries to the communications office. This didn't stop leaks, of course, but it gave Magaziner a lasting reputation among reporters as a man who liked to operate in the dark. Hillary Clinton is known within the Administration for a combative attitude toward the press. But she now says that the news blackout on emerging details of the health bill was a major mistake.

"Even though we had a process unlike any other that has drafted a bill," she told me, "—more open, more inclusive—we got labeled as being secretive because of . . . our failure to understand that we should be more available to the press along the way. That was something we didn't do well. . . . We were not aware of how significant it is to [shape] the inside story in Washington, in order to make the case . . . for whatever your policy is."

Secrecy toward reporters was stupid. But reporters are now acting as if it were something worse: closed-mindedness about ideas.

Second count: The plan was politically naive. Everyone now knows that the health care reformers drew up their master plan without taking the slightest interest in what most Americans thought or felt. In reality, though, the plan suffered because the Administration was too attentive to shifting political moods.

Even before Inauguration Day, Magaziner was churning out memos about the right way to pitch the plan to editorialists and interest groups, about the likely Republican arguments and how to rebut them, about the connection between a health-care bill and a re-election campaign in 1996. Week in and week out his memos to Bill and Hillary Clinton contained head counts of likely Senate and House votes—who was leaning, who could be pressured and pushed. In his conversations with me Magaziner seemed to spend half his time sizing up the legislators he had had to deal with: Senator X was in thrall to Bob Dole because of personal problems, Congressman Y had to start out opposing the bill because of donations from Interest Group Z.

Two fundamental decisions about the plan had much less to do with policy than with judgments of political reality. One involved handling the single-payer challenge. A Canadian-style single-payer system has two big virtues. It is simple to administer, since doctors, hospitals, and patients no longer have to worry about dozens of insurance companies with scores of different payment plans. The single payer approach also guarantees that everyone in the country has medical coverage. But Clinton was dead set against a single-payer plan, arguing that it would require sweeping new taxes and would, in effect, abolish the entire medical-insurance industry. This left the political problem of how to deal with the hundred or so members of the House who supported some kind of single-payer plan. Without them, no health bill of Clinton's could possibly pass.

Congress also contained a large number of supporters of market-reform and managed-competition plans. The main advantage of such plans is that they change the incentives of medical practice so that doctors, patients, and hospitals are more conscious of costs when making medical decisions. To get a plan passed, Clinton had to show that it would reform the medical market.

"We had to try to bridge the chasm" between these groups in drawing up the plan, Magaziner told me. "If we were serious about universal coverage, we felt, then the single-payer people would buy off even if they didn't like managed competition. We felt we were doing enough of the market reforms that the reform people would buy off too. And, by the way, we also thought that that was the best policy."

But by June of 1993 one of the main market-reform legislators, Representative Jim Cooper, of Tennessee, made clear that he wouldn't buy off. He recommended seeing to insurance reforms first and getting around to universal coverage in a few years. The single-payer group, of course, was not going to agree to that. "At that point," Magaziner said, "we knew that the only way we could try to bridge the chasm was to start a little bit left of center and try to negotiate toward the center."

"Left of center" meant proposing a benefits package a little more generous than what the Administration really wanted, setting the employer's share of total costs a little bit higher, making the limits on insurance premiums a little bit tighter. When the Republican Party lost interest in negotiating, this strategy became a liability, because it made the Clinton plan look more extreme than it was meant to be.

The other purely political calculation concerned sales strategy. Throughout his campaign Bill Clinton had emphasized the overall cost of medical care as a central evil of the U.S. system. Americans spend about twice as much money per capita on medical care as people in other developed nations, with results that are not twice as good. Whenever he was asked about cutting the budget deficit or taming the entitlements monster, Clinton said that the first and most important step was to control health-care costs. This approach won the support of business, since health insurance costs had for years been rising faster than any other business expense. (From 1948 to 1990, Paul Starr points out, business spending on health coverage rose by an average of 15.6 percent a year.) Through most of 1993, while the plan was being developed and unveiled, major business groups like the U.S. Chamber of Commerce and the National Association of Manufacturers supported its general outlines and accepted even its "employer mandates," which would require companies to pay most of the cost of coverage for their employees. But by the summer of 1994 the Administration was selling the plan mainly as a matter of fairness and security. Its slogan was "Health Care That's Always There."

In theory the Administration could have kept stressing both aspects of its plan—that it would make individuals more secure while reducing the strain on business. The peculiar logic of health-care economics, as revealed in most other developed countries and in American group-care systems, is that when everyone is covered, it becomes easier to control overall costs.

The Administration's political experts, however, recommended a more streamlined sales approach. Clinton's pollster, Stanley Greenberg, produced results in 1993 showing that no one believed that a government health-care plan could ever save money. Although opinion polls taken through the end of 1993 showed that most people supported the idea behind Clinton's plan (once pollsters explained what the idea was), most people also believed that the plan would drive costs up, not down. Therefore the more the Administration emphasized its cost-control themes, the less believable it would become. "The polls showed that people will trust the government to guarantee them security," Magaziner told me. "They will not believe that the government can control costs."

As Republican opposition to the bill increased in 1994, Democratic strategists decided that "security" would be a more effective, partisan rallying theme. "You have to mobilize people, and it's hard to mobilize people around words like 'cost containment' or 'universal coverage,'" Hillary Clinton told me. "So if we didn't convince the middle class that universal coverage meant them, we wouldn't get the political support. . . . If you talked about how they could lose their job, how they are one divorce or one pre-existing condition away from losing coverage, then perhaps they would get engaged." By the end of the struggle this sales approach made the Administration even more vulnerable to Republican charges that it was putting out a bighearted, soft-headed, typically liberal plan.

One other enormously important, and almost purely political, decision sealed the fate of the bill. Magaziner and Hillary Clinton had hoped to present the bill to Congress a few months after the Inauguration, in the spring of 1993. Thanksgiving had nearly come before they were actually ready to present a finished bill. That delay had little or nothing to do with the nuances of policy. It had everything to do with political necessity—and of a sort that everyone knew was sensible at the time.

Third count: "The First Lady's whiz-kids wasted precious months." This was how The Economist stated the next objection. Rather than getting busy and presenting the plan when the Administration still had a dewy glow, the health team sat around until it was too late.

The Administration's original strategy was to rush the health plan through as part of its first budget-reconciliation bill. That would have meant having detailed health proposals ready by April at the latest, and the task force had been geared toward meeting that deadline. The genius of this approach, little noticed by the public, is that it would have allowed the health plan to pass with a simple majority vote.

Congressional politics has quietly moved into the "supermajority" system that Lani Guinier was widely denounced for seeming to recommend. In theory it takes fifty one votes to get a bill through the Senate. In reality it takes sixty votes to end a filibuster, so Bill Clinton knew that the Senate's forty-plus Republicans could stop nearly any legislation they chose.

They could not stop budget bills. These come to the floor under rules that limit debate, and with only a fifty-one-vote majority required for passage. So if the health care plan could be made part of the budget bill, the Administration could get it acted on quickly, with enough of its own party's votes to see it through.

The Senate's majority leader, George Mitchell, endorsed this strategy, but its de facto parliamentarian, Robert Byrd, objected, scuttling the plan. The Administration then decided that it would introduce the health-care plan as soon as the budget bill passed. But passage was the rub. The budget bill, with its big deficit-reduction package, was seen by everyone in Washington as a major early test of the Administration's strength. (The struggle over the bill is the subject of Bob Woodward's book The Agenda.)

The budget fight dragged on much longer than Bill Clinton had hoped or planned. As it became obvious that the final budget vote would be very close (on August 6 it finally passed the Senate 51-50, with Vice President Al Gore casting the deciding vote), the Administration wanted to avoid any extraneous controversy that might affect it. Clinton had been scheduled to make the final decisions about the health care plan in late May. Because of fears that leaks about his choices would complicate the budget vote, the decisions were put off—a delay that had ripple effects lasting the rest of the year. Without Clinton's decisions, the task force could not prepare detailed legislation; without legislation, it could not start negotiations with congressmen and their staffs. Without final choices on what would be in the package, it could not prepare budget estimates; without those estimates, the Treasury and the Congressional Budget Office could not vet the plan.

By the fall the budget fight was over—but then NAFTA became the issue of the moment. Clinton had been scheduled to spend most of the month of October traveling and speaking about the health-care plan. As he was flying to his first event, a labor convention in California, news came that U.S. soldiers had been killed in Somalia. Clinton flew back to Washington after his speech and spent most of the month dealing with Somalia and NAFTA; he canceled all the other health care events.

Despite the delays and missteps, when the President finally unveiled the plan, in September of 1993, it seemed to have a good chance. "The reviews are in and the box office is terrific," the political analyst William Schneider wrote just after it was presented. "President Clinton's health care reform plan is a hit. . . . The more people read and hear about the plan, the more they seem to like it."

Six weeks after the Inauguration, Magaziner had written a memo to Bill and Hillary Clinton saying that if health-care-reform legislation was not presented and passed immediately, it probably could not be passed during "your first term." With Republican midterm gains in Congress, it now appears that this prediction will be borne out. But the delay was neither negligent nor intentional. It is a reminder of how quickly events spin out of a President's control, and how rare it is for him to be able to advance his own agenda rather than respond to someone else's emergency.

Fourth count: The plan had delusions of grandeur. Now we move to the substance of the plan, which has been described as a regulatory rat's nest, a nightmare of overambitious social engineering, and a sweeping solution where modest reforms would do.

The reality is that very little in this plan was new or unprecedented, and that it was barely more complex or comprehensive than most other plans.

When people complained that the plan was grandiose, they had three features in mind: universal coverage (everyone would be insured, whether working or not), community rating (everyone in a given region would pay the same premium for coverage, regardless of age or pre-existing conditions), and employer mandates (forcing businesses to cover much of the insurance cost).

All these ideas have been part of the health-care-reform debate for years. Universal coverage and community rating sound like bleeding-heart concepts, but they are based on tough economic reasoning. The idea behind both is that piecemeal reform of a health-care system can be worse than no reform at all.

The fairness argument for universal coverage is obvious. Even people who are poor deserve care when they are sick or hurt. This is why every developed nation except the United States offers universal care. The economic argument has become almost as familiar. Even people without health insurance ultimately receive treatment, when they show up in emergency wards; hospitals cover the cost by padding charges for everyone else. This backhanded form of coverage is neither economically efficient nor humane. As recently as the fall of 1993 Bob Dole was saying that universal coverage was a "non-negotiable goal of reform."

Community rating is a closely related idea. Every health-care-reform scheme in America is concerned with holding down costs. In most businesses market competition does the job, but competition in the health-insurance area often works in a perverse way. Insurance companies have tended to compete not by improving the incentives, habits, and nature of medical treatment—which in the long run is the only way to limit expenses—but by becoming choosier about whom they will insure. If they can limit their coverage to young, healthy people and rule out those who are already sick, then they can offer coverage at a lower price, without having done anything to improve the efficiency of care.

This is what has happened to the health-insurance business in the past generation. In the old days Blue Cross offered coverage to everyone in the same geographic area at the same price. Now younger, healthier people can get cheaper coverage—which many of them skip anyway, figuring they don't need it—while prices rise for those most likely to need care. Fewer of them can afford to buy it, more must take advantage of the cruel and inefficient fallback of emergency-room coverage, and overall costs keep going up. The young, healthy people eventually become old and sick, and are caught too.

This cycle is known as adverse selection, and it has been talked about in the health care-reform business for years. Community rating is the main response. It is designed to average each person's medical costs over the course of his or her whole life and to make sure that people have coverage at the times of their lives when it's most necessary. In proposing community rating the Clinton team was hardly making waves.

Even the part of the plan that sounded strangest and most radical, its "mandatory alliances," is already familiar to millions of Americans under a different name. Anyone who works for a big company or a state or federal agency knows about the open-enrollment system for selecting health insurance. The company or agency negotiates with HMOs, insurance companies, and local medical networks that want to offer coverage to its employees. Once a year employees choose which plan they want. The employer then deducts money from their paychecks, adds its own share, and passes the money on to the medical providers.

This, with small variations, is also how the task force's mandatory alliances would have worked. They would have taken bids from insurance companies, HMOs, and other health providers and then let each household choose the plan it liked best. Each provider would have been required to set a price for a standard benefits plan, so that customers could make easy price comparisons among the offerings. The alliances would not, as has often been assumed, have tried to provide medical care themselves, through big new government clinics.

The most ominous-sounding aspect of the new alliance system was its "mandatory" nature. Everyone would have been obliged to choose and buy a standard benefits plan from an alliance. (Contrary to repeated claims by opponents of the bill, people would have been free to buy any extra coverage they wanted, or get any additional treatment from any doctor they chose, as long as they did it with their own money. Employers would also have been free to offer additional coverage.) The health-care task force argued that the alliances had to be mandatory in order to create the community-rating effect. Otherwise, young, healthy people would stay out of the system, and the pernicious cycle of adverse selection would begin. An exception was made for employees of very large companies, who would still have been able to buy through their own firms' open-enrollment plans. The reasoning was that a General Motors or an AT&T had a work force large and diverse enough to constitute a community-rating pool all by itself. Everyone would have been forced into a pool one way or another.

Some health-care-reform plans have no mandatory component. Several versions of managed competition, for instance, would set up alliances like those in the Clinton bill but not require anyone to buy from them. It is virtually impossible, though, to achieve universal coverage without some element of compulsion. (Medicare offers universal coverage for those over sixty-five, but everyone who works is compelled to pay a Medicare tax.) Moreover, Magaziner argued, for most people the mandatory system would in practice mean more choice and freedom than they now enjoy.

When he ran a small business in Rhode Island, Magaziner said, he covered all health-insurance costs for his employees but could give them only two plans to choose from. Handling the bidding and paperwork for a broad range of plans would have been impossible. "If there had been an alliance, I could have paid my dues to the alliance and let people choose among all the plans." The alliances in the Clinton bill would have been required to offer customers a choice among all plans that met basic certification requirements. In big cities a dozen or more plans might be available. The minimum offering would be three kinds of coverage, including at least one fee-for-service plan that would permit a family to stay with the independent doctor it had been using.

After the plan was withdrawn, Uwe Reinhardt, an economist at Princeton University, told The New York Times, "No one understood this, but the average American patient would have had more choice under the Clinton plan than they now will. If you work for a particular company, your choice of HMOs is whatever that company offers you." Some critics argued that the Clinton plan would destroy the market for coverage beyond the plan's basic benefits, and that as a result people would find it difficult to buy as much coverage as they might like. But that is different from the widespread belief that extra coverage would be against the law- and for most people the range of choice would probably be broader under Clinton's plan.

Far from concocting a system that would look and feel radically different from what Americans were accustomed to, the task force believed that it was changing the surface of health care as little as possible while altering its underlying economic structure. The alliance system, despite its strange name, was meant to look familiar to people who already had coverage. The employer-mandate system of finance, in which companies would bear most of the health-insurance costs, reflected the fact that 90 percent of the people who now have insurance (excluding those on Medicare) get it through their employer. The employer mandate is a de facto tax but a well-established one, and a familiar concept in health-policy circles. Many Republicans, including Robert Packwood and Richard Nixon(!), have over the years endorsed employer-mandate plans.

Indeed, none of the individual elements of the Clinton plan was a shocking new entrant into the health-care debate. The plan's system for controlling expenditures, through premium caps that limited how fast the cost of basic coverage could rise, departed from Paul Starr's recommendations. But it closely resembled a plan offered by a group of congressional moderates that included the Republican senators John Danforth and Nancy Kassebaum.

To say that the resulting package of proposals was "too complex" is like saying that an airplane's blueprint is too complicated. The Medicare system is complex. So is every competing health-care-reform plan. Most of the 1,342 pages of Clinton's Health Security Act (which I have read) are either pure legal boilerplate or amendments to existing law. Conventional wisdom now holds that the sheer bulk of the bill guaranteed its failure. The Nafta bill was just as long, and so was the crime bill that passed last summer. If the health bill had been shorter and had not passed, everyone would know that any proposal so sketchy and incomplete never had a chance.

Fifth count: It was a coercive approach to one seventh of the economy—and to a problem that was solving itself.

Much of the problem for the plan seemed, at least in Washington, to come not even from mandatory alliances but from an article by Elizabeth McCaughey, then of the Manhattan Institute, published in The New Republic last February. The article's working premise was that McCaughey, with no ax to grind and no preconceptions about health care, sat down for a careful reading of the whole Clinton bill. Appalled at the hidden provisions she found, she felt it her duty to warn people about what the bill might mean. The title of her article was "No Exit," and the message was that Bill and Hillary Clinton had proposed a system that would lock people in to government-run care. "The law will prevent you from going outside the system to buy basic health coverage you think is better," McCaughey wrote in the first paragraph. "The doctor can be paid only by the plan, not by you."

George Will immediately picked up this warning, writing in Newsweek that "it would be illegal for doctors to accept money directly from patients, and there would be 15-year jail terms for people driven to bribery for care they feel they need but the government does not deem 'necessary.'" The "doctors in jail" concept soon turned up on talk shows and was echoed for the rest of the year.

These claims, McCaughey's and Will's, were simply false. McCaughey's pose of impartiality was undermined by her campaign as the Republican nominee for lieutenant governor of New York soon after her article was published. I was less impressed with her scholarly precision after I compared her article with the text of the Clinton bill. Her shocked claim that coverage would be available only for "necessary" and "appropriate" treatment suggested that she had not looked at any of today's insurance policies. In claiming that the bill would make it impossible to go outside the health plan or pay doctors on one's own, she had apparently skipped past practically the first provision of the bill (Sec. 1003), which said,

"Nothing in this Act shall be construed as prohibiting the following: (1) An individual from purchasing any health care services."

It didn't matter. The White House issued a point-by-point rebuttal, which The New Republic did not run. Instead it published a long piece by McCaughey attacking the White House statement. The idea of health policemen stuck.

So did the idea that one seventh of the national economy would be transformed overnight. Of the vast American commerce in health care, more than 40 percent is already paid for by the federal government, mainly through Medicare. Under the Clinton plan the rest of the money would still go through most of the insurance companies, HMOs, doctors, hospitals, and laboratories that are receiving it now.

The final element in the conventional wisdom is that this cumbersome, flawed plan was in any case unnecessary, because the health-care problem was going away. Medical costs rose by "only" 5.9 percent in 1993—yet that was more than twice as fast as wage growth and almost twice as fast as the overall inflation rate. Over the past several decades medical costs have risen about three percent faster than the overall inflation rate; in 1993 the gap was 2.9 percent.

"There is no persuasive evidence that we are in either a stabilized or an improving health-care-financing environment," Hillary Clinton told me. "In fact, many of the problems will only continue to get worse. The problems that middle-class Americans care the most about—like what doctor they can see—will likely become appreciably worse, because many will be forced into managed care over which they have no say. Employers will make those decisions. They will pay more for fewer benefits. How deeply this sinks in and how much it motivates political action, I don't know."

If this plan did not perish because it had been designed in intolerable secrecy, or because its designers knew nothing about politics, or because it was full of unacceptable new ideas, or because it was so much more complex than any predecessors, then what happened to it?

The Administration's view, for which, again, there is ample evidence, is that it went down because of two zero-sum games, one political and one economic. Health care reform became a battle in which some would win and others would lose—and Clinton lost.

Through most of 1993 the Republicans believed that a health-reform bill was inevitable, and they wanted to be on the winning side. Bob Dole said he was eager to work with the Administration and appeared at events side by side with Hillary Clinton to endorse universal coverage. Twenty-three Republicans said that universal coverage was a given in a new bill.

In 1994 the Republicans became convinced that the President and his bill could be defeated. Their strategist, William Kristol, wrote a memo recommending a vote against any Administration health plan, "sight unseen." Three committees in the House and two in the Senate began considering the bill in earnest early in the year. Republicans on several committees had indicated that they would collaborate with Democrats on a bill; as the year wore on, Republicans dropped their support, one by one, for any health bill at all. Robert Packwood, who had supported employer mandates for twenty years, discovered that he opposed them in 1994. "[He] has assumed a prominent role in the campaign against a Democratic alternative that looks almost exactly like his own earlier policy prescriptions," the National Journal wrote. Early last summer conservative Democrats and moderate Republicans tried to put together a "mainstream coalition" supporting a plan without universal coverage, without employer mandates, and without other features that Republicans had opposed. In August, George Mitchell, the Democratic Party's Senate majority leader, announced a plan that was almost pure symbolism—no employer mandates, very little content except a long-term goal of universal coverage. Led by Bob Dole and Newt Gingrich, Republicans by September were opposing any plan. "Every time we moved toward them, they would move away," Hillary Clinton says.

"We always knew that in the end people's trust of the President and First Lady would be crucial," Ira Magaziner says. "The debate was going to be complicated, and that trust factor was very important." Whitewater eroded the trust factor. The President looked beatable, and he lost.

Economic factors counted too. Doctors had fought bitterly against Medicare in the early 1960s, but for the most part they sat this battle out. If they weren't controlled by the government, they would be controlled by insurance companies, which in some ways were worse. But other interest groups had more to lose. Health-insurance agents would be put out of business. Health-insurance companies could have their premiums capped. For-profit hospitals thought they would lose money. Manufacturers of medical equipment thought that market growth might slow. Large businesses that did not already offer health care for workers knew the employer mandate would cost them money. (These were mainly corporations like PepsiCo and General Mills, which own restaurant chains whose part-time workers are uninsured.)

During the 1992 campaign the Clinton war room excelled at answering negative charges immediately, before damaging impressions could set in. But even flatly untrue attacks on the health plan went unanswered—direct-mail campaigns saying that everyone would have to go to a government clinic, daily doses of misinformation from Rush Limbaugh, TV advertisements fanning McCaughey style fears of jail terms for people who wanted to stick with their family doctor. Last March The Wall Street Journal found that a panel of citizens preferred the provisions of the Clinton plan to the main alternatives—when each plan was described by its contents alone. But when pollsters explained that the preferred group of provisions was in fact "the Clinton plan," most members of the panel changed their minds and opposed it. They knew, after all, that Clinton's plan could never work.

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James Fallows is a national correspondent for The Atlantic and has written for the magazine since the late 1970s. He has reported extensively from outside the United States and once worked as President Carter's chief speechwriter. His latest book is China Airborne. More

James Fallows is based in Washington as a national correspondent for The Atlantic. He has worked for the magazine for nearly 30 years and in that time has also lived in Seattle, Berkeley, Austin, Tokyo, Kuala Lumpur, Shanghai, and Beijing. He was raised in Redlands, California, received his undergraduate degree in American history and literature from Harvard, and received a graduate degree in economics from Oxford as a Rhodes scholar. In addition to working for The Atlantic, he has spent two years as chief White House speechwriter for Jimmy Carter, two years as the editor of US News & World Report, and six months as a program designer at Microsoft. He is an instrument-rated private pilot. He is also now the chair in U.S. media at the U.S. Studies Centre at the University of Sydney, in Australia.

Fallows has been a finalist for the National Magazine Award five times and has won once; he has also won the American Book Award for nonfiction and a N.Y. Emmy award for the documentary series Doing Business in China. He was the founding chairman of the New America Foundation. His recent books Blind Into Baghdad (2006) and Postcards From Tomorrow Square (2009) are based on his writings for The Atlantic. His latest book is China Airborne. He is married to Deborah Fallows, author of the recent book Dreaming in Chinese. They have two married sons.

Fallows welcomes and frequently quotes from reader mail sent via the "Email" button below. Unless you specify otherwise, we consider any incoming mail available for possible quotation -- but not with the sender's real name unless you explicitly state that it may be used. If you are wondering why Fallows does not use a "Comments" field below his posts, please see previous explanations here and here.

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