Clinton’s Health Reform Effort Blasted : Insurance: Rep. Stark contends ‘managed competition’ is being used to delude public into thinking problems can be solved cheaply, painlessly.


The chairman of a key House subcommittee on Friday blasted the conceptual underpinning of the Clinton Administration’s health care reform effort as an attempt to delude Americans into thinking the nation’s health care problems can be solved cheaply and painlessly.

Rep. Pete Stark (D-Oakland) said at a news conference that those depending on the untested concept of “managed competition” favored by the Administration will be disappointed when it fails to live up to its promises.

“What I have trouble with is a program that suggests to me that we can save money, broaden access and provide better medical care and I can’t figure out what it costs, what hurts, what do we change,” said Stark, chairman of the House Ways and Means health subcommittee. “It’s somewhat akin to (religious broadcaster) Pat Robertson: If we just pray the right prayer to the right God, all our cares will go away.”


Managed competition relies on the premise that competition can rein in health care costs if consumers have more power in the market. The proposal Clinton is expected to produce would put individuals and employers into huge pools that presumably would be able to strike better bargains with insurers, hospitals, doctors and other providers.

To help make his point, Stark produced a letter from the head of the California Public Employees Retirement System. Through aggressive bargaining with health care providers, it has held premium increases to 1.5% this year, compared to 12% nationwide, and it often has been cited as proof that managed competition works.

But CALPERS President William Dale Crist pointed out that significant differences exist between his health program and the theoretical model of managed competition favored by the Clinton Administration.

One of the primary differences, he wrote, is that CALPERS negotiates strictly on behalf of the 887,000 public employees who belong to the organization.

In many models of managed competition, on the other hand, profit-oriented businesses and insurance companies would negotiate health care programs on behalf of consumers.

Under such a system, “it will be difficult to keep the foxes out of the chicken coop,” Crist warned.

Added Stark: “Employers are not necessarily interested in paying employee health care benefits at a level the employees would like.”

Crist also said that CALPERS strongly opposes higher taxes on employer-provided health benefits, a central part of most managed competition schemes.

In addition to doubting the claims of managed competition to cure the nation’s health care ills, liberals such as Stark have another concern: that in its drive toward cost-containment, the Administration may lose sight of the goal of providing health care for millions of uninsured Americans.

“There are 900 billion real dollars being spent on medical care in the United States and there are at least 40 million real Americans who don’t have access to that system in a reasonable way . . . " he said. “And I can tell you it’s probably going to cost $50 billion a year to provide for them.”

Separately, in an interview with Reuter news service, Leon E. Panetta, director of the White House Office of Management and Budget, said the Administration now expects Congress to take longer than anticipated to pass health care reform. Although Clinton has said he wants the plan enacted this year, “all of us understand that a health care proposal is huge and complex . . . and . . . is probably going to take more time,” Panetta said.