First Lady Calls Health Industry ‘Rife With Fraud’

After weeks of courting big business, and failing, Hillary Rodham Clinton changed course Friday, denouncing insurance and drug companies, and a “private sector” health industry “rife with fraud, waste and abuse.”

“We’re confusing the fact that we have the finest physicians and hospitals in the world with the fact that we have the stupidest financing system for health care in the world,” she told an audience of 2,500 comprised mostly of health care professionals. “The financing system is becoming the tail that wags the dog. The insurance companies are in charge and pick and choose who they cover.”

“We are basically taking the billions and billion of dollars we spend on financing health care,” she continued, “and dropping it in a black hole as far as I’m concerned.”

The First Lady’s attack on the health care industry, a return to rhetoric employed but then dropped last year by the Administration, followed a week of bad news on the health care front delivered to the White House by the business community in one public announcement after another.

When it was rumored that the Business Roundtable, representing 200 of the country’s largest corporations, was about to endorse a plan sponsored by Rep. Jim Cooper (D-Tenn.), Hillary Clinton talked to a number of the nation’s most influential business leaders while President Clinton and Cabinet members told business groups and governors that the White House was open to changing its plan to meet their concerns.

But the Business Roundtable broke ranks with the Administration Wednesday night. The next day, the National Assn. of Manufacturers endorsed Cooper’s effort to find a middle ground with Republican alternatives. Then, in congressional testimony, the U.S. Chamber of Commerce backed away from the Clinton bill as well.

Cooper’s proposal attempts to use the leverage of the tax system and “managed competition” to lower the costs of health insurance, making it more accessible. It has won the support of some business leaders because it relies on the private market to lower spending. The Administration opposes Cooper’s bill because it does not guarantee universal health coverage.

When the White House was preparing its plan last year and seeking to generate public support, the President and the First Lady went on the attack against business. Late last year, they changed their tone, and appealed to industry to work with them to find solutions to the health care problem.

“It’s unclear what the White House strategy is, to cast blame and identify villains or to forge a bipartisan consensus,” said Pamela G. Bailey, president of the Healthcare Leadership Council. “We have very much seen mixed signals over the last few weeks.”

While Hillary Clinton is attacking the health insurance industry, the Administration’s plan to cut health costs relies on it. The Clinton health plan would push many more people into health maintenance organization-style managed care plans, many of which are owned by insurance companies.