Don’t forget the lessons of ClintonCare

ON MARCH 24, EVERY MAJOR Democratic presidential candidate -- and a handful of minor ones -- gathered in Las Vegas to spend a long afternoon getting grilled on the precise details of their healthcare plans. The candidates were enthusiastic, confident and expansive. The mood was not friendly to half-measures and timid triangulations; the disagreements were not over how many Americans to cover but how quickly we would cover them all.

What a difference a decade makes. It wasn’t so long ago that President Clinton’s proposed reforms suffered a catastrophic defeat at the hands of moneyed interests and Republican opportunists, setting the stage for the Democratic Party’s historic losses in the 1994 midterm elections. It was an enormous blow to not only the Democratic Party but the thousands of policy wonks, political operatives and congressional staffers involved in the policy’s creation and present for its collapse.

Such traumas leave scars, and for years afterward, Democrats were afraid to reenter the bad room where the scary thing happened, and so they shied away from fully reengaging the healthcare debate, even as the country’s healthcare system continued its slow deterioration.

But the ghosts of 1994 have been largely exorcised from the Democratic psyche, and today, even the most hardened cynics are allowing themselves moments of hope. In the dispiriting years since the Clinton plan’s collapse, Washington’s would-be reformers have comforted themselves with the whispered refrain that healthcare reform was not a matter of if, but when -- and now, for the first time in a long time, many are saying that the moment has arrived.

If Democrats are going to muster the courage and unity to finally succeed, though, they are going to have to learn the lessons that 1994’s failure can teach and overcome the legacy of ClintonCare.

The story of the Clinton reforms would be comic were it not so tragic. Everything that could go wrong did; everything that could be handled wrong was. Clinton decided to pursue the passage of NAFTA before healthcare reform, exhausting and angering his liberal allies (such as organized labor) immediately before he would most need their support and strength.

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

Worse, the Clinton administration was completely incoherent on how to handle those industry stakeholders and other interested parties, and thus it was unprepared to repel the all-out assault they mounted on the plan. It’s worth saying here that although the U.S. has a very inefficient healthcare system when evaluated with traditional metrics such as the health outcomes of the populace or the costs of care, it is unquestionably the finest in the world at generating profits. There’s a lot of money sloshing around, and quite a bit of profit to protect.

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

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

And at the same time as the Clinton administration was floundering before the attacks unleashed by the forces of the status quo (the insurance industry alone spent $50 million in ads, lobbying and organizing), the structural pressures pushing toward reform began to ease. As healthcare writer Matthew Holt has persuasively argued, President Clinton’s initial mandate came in the context of the 1991-92 recession, a very deep economic downturn that left the middle class feeling particularly insecure and that marked only the second time in history that health costs rose much faster than economic growth.

But amid the lengthy dithering of the Clinton/Magaziner policy process, the recession lifted, the economy improved, the public’s anxieties eased and the Clinton administration’s inept response to the public relations campaign launched by its opponents left voters unimpressed with the plans for reform. Moreover, the promise of implementing managed care left the right with an alternative policy to organize around, one that didn’t require government intervention or obvious turbulence.

Today, of course, it’s clear that managed care has failed. After cost growth was effectively arrested in the mid-1990s, patients rebelled against being managed, and insurers decided that passing on the costs of unlimited care was less trouble than holding them down. Moreover, the same anxieties over spending growth and the precariousness of coverage that first burst onto the scene during the 1991-92 recession are now constant companions, even in periods of economic expansion. Since 2000, health premiums have shot up by 87%. Wages, of course, have not followed.

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

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

The progressive coalition is much more mature and effective than it was at the beginning of the Clinton presidency, and it aches to engage the insurers in a debate about how to best run the American healthcare system.

Most telling of all, the American people regret passing up the Clinton plan. A 2005 Democracy Corps poll found that 53% of respondents said they believe that they’d be better off had the Clinton plan passed, while only 28% believe that they’d be worse off. It may be that ghosts of the Clinton plan’s failure have ceased scaring Democratic politicians and begun haunting voters, leaving them afraid not of change but of its absence.