Blame for Health Plan’s Collapse Falls Everywhere : Legislation: The Administration task force, interest groups, Congress and public all had a hand in its failure.

Through the squalls and storms of the past few months, no one has been more doggedly upbeat about President Clinton’s ambitious plan for national health care reform than senior adviser Ira Magaziner and First Lady Hillary Rodham Clinton.

Magaziner, chief architect of Clinton’s health care plan, took great delight in calling attention to his office bookshelves. They were jammed with fat three-ring binders, nearly bursting with the multitude of options the Administration’s health care task force had considered and rejected. The data they contained, he declared, would make believers out of anyone who doubted the wisdom of the President’s reform formula.

“They’re going to serve us very well as we go through this process,” he would say.

Magaziner’s confidence remained intact through months of rancorous public debate over the Clinton plan. But it came crashing down a week or so ago, when he emerged briefly from the policy-making biosphere of Washington to visit his home in Rhode Island. There, according to one associate, he finally began to see--and understand--the true depth of the public rejection of the Administration approach to health reform.

For the first time, Magaziner realized the battle was lost. “It’s really sort of sent him into a blue funk,” the source said.

Hillary Clinton is also showing signs of the strain. The First Lady, who presided over lengthy task force deliberations and wowed five congressional committees with her mastery of health care minutiae, has been the Administration’s most resolute advocate of a sweeping, government-orchestrated restructuring of health care.

Though she still expresses unflagging commitment to reform, “you can pretty much see the fatigue whenever you see her these days,” a Capitol Hill source said. As congressional leaders work feverishly to salvage what they can of health care legislation, Hillary Clinton has assumed an uncharacteristically low profile, giving only occasional interviews and spending time with daughter Chelsea instead of stumping for reform.

Perhaps as much as the President himself, Magaziner and Hillary Clinton have come to embody the Administration’s effort to assemble and pass the largest package of social legislation in half a century, one that seemed to have everything going for it only 11 months ago.

The country was demanding big change; that was the message of the 1992 election. And when Clinton stood before a joint session of Congress brandishing the pen with which he vowed to veto anything that fell short of universal coverage, the words rang with a sense of authority and determination that made health reform seem inevitable.

Now, it appears that the very best the Administration can hope for is a far more modest measure that would alter insurance industry regulations but forgo any attempt to provide universal coverage. The debate now raging within the White House inner circle involves whether to call the effort off and start again from scratch next year, or to take whatever they can get from Congress this year and follow up with a broader bill in 1995.

No matter which course they choose, the President and his advisers will have to come to terms with the profound public ambivalence that Magaziner discovered too late to incorporate into the Administration’s calculations.

“I don’t think anybody cares. I don’t think anybody in the country cares. That’s the pathetic thing,” said one disillusioned Democratic congressional aide.

The fundamental questions are these: What went wrong with the Clinton health care plan? Why did a nation that enthusiastically endorsed the concept of reform reject the best plan that the Administration’s experts could devise? And who deserves the bulk of the blame?

At this point, everyone involved in the battle seems to offer different answers.

It is easy to blame the White House reform team for failing to capitalize on what appeared to be a historic opportunity, and for disregarding potential pitfalls that might have been readily apparent to those with more Washington experience. Some of the fault also lies with a squeamish Congress and an array of aggressive interest groups. Inevitably, one must also look to a public that seemed to believe the impossible: that Americans could get more and better health care without having to pay more for it.

Underlying it all was the enormous size and complexity of the endeavor itself. There is a reason, after all, that presidents from Harry S. Truman to Richard Nixon fell short in their efforts to accomplish the same goal.

The fate of the Clinton reform agenda will no doubt be debated for years. But even at this stage, it appears clear that several fundamental factors contributed to its collapse:

The Process

Virtually everyone involved, including Clinton himself, now admits that the White House task force headed by the First Lady and Magaziner botched the job.

For starters, Clinton had made a campaign promise to deliver a comprehensive health care reform plan within the first 100 days of his presidency. “It was a stupid deadline that had no purpose,” said one of Clinton’s congressional allies.

Predictably, the transition team failed to develop an action plan by Inauguration Day. So it was with a far greater sense of urgency than he let on that Clinton, five days into his presidency, announced the formation of a Cabinet-level task force to be led by his wife.

Most of Clinton’s allies still insist that putting the First Lady in charge was a good idea, noting that she has been the plan’s most forceful and effective advocate, both on Capitol Hill and with the public at large.

But her appointment robbed Clinton of the ability to distance himself from the proposal, and turned it into more of a referendum on his own popularity. That weakness would become evident as a series of setbacks, from the Whitewater controversy to foreign policy, chipped away at Clinton’s approval rating. In recent weeks, congressional leaders have gone to great lengths to distance their efforts from anything that might be characterized as “the Clinton bill.”

Magaziner has become an even bigger target for criticism than the First Lady. Self-assured and dismissive of those who disagreed with him, he rapidly made enemies on Capitol Hill, alienating many members who had been working for years to enact health care reform. Though his intellect was universally admired, lawmakers had little confidence in his ability to make accurate political soundings.

“The problem started when the initial decisions were made to hand the process to one expert named Ira Magaziner, who knew, No. 1, nothing about politics, and No. 2, nothing about health care,” said Rep. Jim McDermott (D-Wash.), the leader of a movement in the House to adopt a so-called single-payer health care system--in essence a government-financed system like Canada’s.

The task force’s role was greatly misunderstood, even by many of the 500-plus participants. Magaziner intended for the participants to merely test theories and do research. But most thought they were working virtually round the clock to make new policy. That misunderstanding would cause plenty of hurt feelings all around.

The group’s work got off to a rocky start from which it never fully recovered, and even Magaziner now concedes that the overnight creation of a task force and the crash development of a health care reform plan became an exercise in “managed chaos.”

Each morning, there were long lines of task force members trying to get clearance to enter the Old Executive Office Building, which is next to the White House. Once inside, many had no place but the floor to plant themselves and their overcoats. Desks, chairs, computers--even telephones--were scarce commodities.

A Draconian code of secrecy was imposed by Magaziner, shutting out the public, the press and even congressional leaders. Paperwork was to be kept to a minimum; even contact with task force members assigned to other work groups was discouraged.

“A lot of work had to be done without knowing what the context was,” complained one work group leader. “It was like trying to design a new national transportation system without knowing whether there will be trains, cars, airplanes or bicycles.”

Despite the frenetic pace, Clinton did not meet his self-imposed early May deadline for delivering a plan. In the spring, Hillary Clinton was absent for several weeks, attending to her dying father in Little Rock.

“The whole process froze,” Magaziner recalled.

Even after the First Lady’s return, health care remained on the back burner as the entire Administration focused on getting Clinton’s budget passed.

When finally produced, the plan was so complicated that even its drafters had trouble explaining it, a problem compounded by the fact that the task force had been composed of policy specialists who had little feel for the political dimension of their work.

The Interest Groups

In its complexity and its magnitude, the bill was an easy target, particularly in the highly charged atmosphere of modern interest-group politics.

That lesson was clearly weighing on Hillary Clinton’s mind earlier this month, as she told reporters: “It is more difficult in many ways today to advance a complex public policy issue than it was in the past because, if you look at our society in general, there are so many splintered voices of authority, and there is so much skepticism, even cynicism, about the political process. . . . It’s not like what it was even for Franklin Roosevelt, who had a tough time with Social Security.”

House Speaker Thomas S. Foley (D-Wash.) laments that on such complicated legislation, “people can just get away with saying anything about it, and it isn’t obvious that the information being given out about it is wrong.”

As the weaknesses of Clinton’s plan became apparent, virtually every big interest group backed away--even those that had been among the prime movers in getting the drive for health care reform going. Doctors, hospitals and companies big and small all scrambled to protect their own interests, fighting it out over the details of the plan even if it meant losing their larger goals.

Big companies are a case in point. The White House thought it could gain the support of those employing 5,000 workers or more by allowing them to self-insure while requiring smaller firms to join regional health insurance purchasing alliances.

As it turned out, few large firms were enthusiastic about remaining self-insured because they feared they would be out-muscled by the gigantic purchasing cooperatives proposed by the Administration; in addition, they would have faced a 1%-of-payroll “assessment” for opting out of the alliances.

Big companies also were put off by the tremendous flexibility that Clinton proposed giving the states. Multi-state firms feared having to operate under 50 different sets of rules.

Another example was the Catholic Health Assn., which operates more than 1,200 medical facilities and was one of the strongest advocates of universal coverage. But it also was one of the staunchest foes of including abortion coverage in a standard benefits package.

Other groups that had much to gain from the plan remained silent, hanging back and hoping to gain greater bargaining leverage.

The most notable was the American Assn. of Retired Persons, whose members would have benefited greatly from coverage for long-term care and outpatient prescription drugs, both proposed by Clinton.

But the AARP’s leadership was so mindful of the firestorm that followed congressional approval of catastrophic insurance legislation several years ago, it resisted repeated personal overtures from Clinton to support his plan. By the time the organization finally signed on, the effort was already on the brink of collapse.

In the words of one frustrated Democratic senator, many of the groups that were supposed to have supported the bill proved to be “a complete, miserable failure.”

But that was not true of the opponents.

The Health Insurance Assn. of America, many of whose members faced possible bankruptcy under a Clinton-type reform plan if alliances of business succeeded in squeezing them, launched a successful ad campaign that raised doubts about the President’s agenda. “Harry” and “Louise,” the characters in those ads, became the symbols of the opposition.

Ironically, the HIAA shared many of Clinton’s other goals, such as the employer mandate and universal coverage.

Congress

Congress itself proved to be a moving target. Last year, more than 20 Republican senators backed a bill that promised to achieve universal coverage by requiring people to buy it themselves if their employer did not. Among the co-sponsors was Senate Minority Leader Bob Dole (R-Kan.), who now supports significantly scaled-back legislation.

Clinton has repeatedly complained about Republican fickleness. And in an interview with reporters in August, Hillary Clinton fumed: “Every time this Administration and those members of Congress who really understand the health care reform debate have been willing to accept some modifications, the opposition has moved further away. . . . I think we’re still dealing with smoke and mirrors.”

But lawmakers also say the White House team had little feel for the intricacies of the congressional process, and a lousy sense of timing. Some second-guessers note, for instance, that Clinton might have had a deal with Dole if he had compromised earlier on his bottom-line demand of universal coverage.

Still others say that by offering such a detailed plan, the White House gave Congress little option but to dismantle it. It would have been far better, they say, to have followed the strategy embraced by Ronald Reagan in 1986 to secure passage of his sweeping tax-overhaul plan: Spell out broad goals, and let Congress figure out how to get there.

All sides also admit that they underestimated the degree to which the federal budget deficit would drive the debate in Congress.

The survival of every proposal hinged on winning a favorable assessment from the understaffed Congressional Budget Office. Not only did it slow down the process--indeed, both the House and Senate are still waiting on numbers--but it added a constraint that Roosevelt never had to face on Social Security, or Lyndon B. Johnson on Medicare.

Considering how much more expensive those programs have become, compared to how they were first imagined, there is a sound argument to be made for a thorough economic analysis before embarking on another one. At the same time, however, it raises questions about the extent to which economics can strangle any ambitious policy in the future.

“It’s the tail wagging the dog,” grumbled one Democratic senator.

The Country

Perhaps none of these obstacles would have mattered had public support for a comprehensive overhaul of the health care system remained strong. But the more people learned about the cost of change, the less certain they were that they wanted to make it.

Before Clinton discovered the issue, Sen. Bob Kerrey (D-Neb.) had made health care reform the centerpiece of his own unsuccessful 1992 presidential campaign. But he acknowledged: “There’s a price, and I think in part people are discovering that.”

An improving economy, moreover, made middle-class workers less fearful of losing their job and being thrust onto the street without health coverage. So what once was seen as a means of addressing the fears of everyone is now largely viewed as a program that will benefit America’s have-nots.

In that vein, Uwe Reinhardt, a Princeton University professor of political economics, has a harsh assessment: “Universal coverage is not in the soul of the American people, or at least in those who represent them.”

“We are a hardhearted nation. That’s what it is,” he added. “We have all this money for you and me . . . but we can’t help these low-income working stiffs. We’re writing off the lower middle class. That’s who we’re writing off. We’re basically telling them: ‘Take a walk.’ That’s hardhearted.”