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 the Clinton plan
by James Fallows
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
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
Let's consider each count in the conventional bill of indictment against
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
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
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
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
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
"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,
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
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
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
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
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
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
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
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
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
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
"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.
Copyright © 1995 by The Atlantic Monthly Company. All rights
The Atlantic Monthly; January 1995; A Triumph of Misinformation.