[NYTr] Why Hillary's Health Care Plan Really Failed

[All the News That Doesn't Fit]

Counterpunch - Nov 12, 2007
http://www.counterpunch.org/navarro11122007.html

Getting the Facts Right

Why Hillary's Health Care Plan Really Failed

By VICENTE NAVARRO

In his article "The Hillarycare Mythology" (The American Prospect,
October 2007, pp. 12-18), Paul Starr, a senior health policy advisor to
President Bill Clinton and a leading figure in Hillary Rodham Clinton's
White House task force on health care reform, analyzes the origins,
development, and final outcome of the Clinton administration's health
care reform--referred to by Republicans as "Hillarycare."

Starr dates the origins of Bill Clinton's commitment to health care
reform to the special congressional election held in Pennsylvania in
November 1991, when Harris Wofford won against all odds by making
reform of the health care sector a major campaign issue. According to
Starr, this event triggered a great deal of interest in health care
reform; even the American Medical Association (AMA) and the Health
Insurance Association of America (HIAA) supported some types of reform
such as an employer mandate to provide health benefits coverage. As
noted by the editor of JAMA, "there was an air of inevitability about
health care reform." It was this surge of interest that candidate, and
later President, Clinton tried to capitalize on by developing a
proposal to provide universal health care coverage for all Americans
(meaning all U.S. citizens and residents).

Once elected, Bill Clinton established the 500 member White House task
force, led by Mrs. Clinton, to work on the details of a proposal
developed within a framework defined by the President. According to
Starr, the proposal failed when President Clinton presented it to the
U.S. Senate after completion of, rather than before, the budget
discussions. The Senate did not support the proposal, because it would
require extra revenues (making senators susceptible to Republican
charges of fiscal irresponsibility) and particularly because--again,
according to Star--the proposed benefits coverage was too extensive and
too large for many senators to swallow. The final message of Starr's
article is that it was President Clinton's fault, rather than
Hillary's, that the reform proposal failed.

Starr reproduces a widely held interpretation of the failure of the
Clinton health care reform that (limiting the analysis to the
relationship between the President and Congress) attributes this
failure to a calendar error -­ bad timing--and to the excessive
generosity of the proposed health care benefits. I believe there is a
need to correct such an interpretation of the events that led to the
death of the reform proposal and to challenge the assumptions behind
the interpretation. This is important because we might face a similar
situation very soon. The majority of the U.S. population is
dissatisfied with the funding and organization of the health care
sector, and this dissatisfaction has reached unprecedented levels. Once
again, all indicators show that people want change. But we could face
another failure unless some major changes take place in the
U.S.--changes that, I admit, are unlikely to occur with the current
correlation of forces in the country and in the Democratic Party.

Let's start with some corrections to Starr's assumptions. The
commitment of the Democratic Party and candidate Bill Clinton to
universal health care coverage for all citizens and residents started
much earlier than Starr suggests. It began in the presidential primary
campaigns of 1988, when Jesse Jackson (for whom I was senior health
advisor), running for the Democratic nomination, made a commitment to
universal, comprehensive health care benefits coverage a central
component of his platform. This proposal was dismissed by the
Democratic Party establishment as "too radical," but it had already
mobilized large sectors of the party's grassroots (especially labor
unions and social movements) to support Jackson, with more than 40% of
the delegates at the Democratic Party Convention in Atlanta. This shook
the Democratic establishment and stimulated responses from Governor
Clinton, Senator Al Gore, and Congressman Richard Gephardt to block
this rise of the left in the Democratic Party, which they did by
establishing the Democratic Leadership Council, among other
interventions. (Gore and Gephardt have changed since then; Bill Clinton
hasn't.) (I describe these effects of Jackson's health proposals on the
Democratic Party in "The 1988 Presidential Election," in The Politics
of Health Policy: The U.S. Reforms 1980­1998, Blackwell, 1994. pp.
99-110.) To control this growth of the left, something had to be done.
And as liberals always have done when faced with the left, they
recycled its progressive proposals, adopting much of their narrative
but emptying them of their content. This is what Clinton did in his
1992 campaign. He used the title, narrative, and symbols of Jesse
Jackson's campaign, calling his platform "Putting People First" (the
title used by Jackson in 1988) and including the call for universal
health care benefits. As the perceptive Financial Times wrote, "Clinton
[has borrowed] extensively from Jesse Jackson 1988. He sounds like a
Swedish social democrat." While borrowing the language and the symbols,
however, Clinton changed the content dramatically.

Whereas Jackson had called for a single-payer program similar to that
in Canada, Clinton chose the opposite pole of the political spectrum:
managed care competition. Managed care competition basically meant the
insurance companies exercised full control over health care providers,
with doctors working in group practices called Health Maintenance
Organizations (HMOs). As stated by Paul Elwood, a leading member of the
White House task force, "insurers-controlled HMOs, under managed care
competition will stimulate a course of change in the health care
industry that would have some of the classical aspects of the
industrial revolution--conversion to larger units of production,
technological innovation, division of labor, substitution of capital
for labor, vigorous competition and profitability as the mandatory
condition of survival" ("Heath Maintenance Strategy," Medical Care, 9
(1971), p. 291). This industrial revolution in medical care would
indeed have revolutionized the practice of medicine.

It is important to note that the idea of managed care competition was
first proposed as a solution to the irrationality of the U.S. health
care sector by Alain Enthoven, personal advisor to U.S. Secretary of
Defense Robert McNamara during the Vietnam War. Enthoven was in charge
of developing the "body count" as an indicator of military efficiency.
After the Vietnam fiasco, Enthoven retired to the Rand Corporation,
choosing to focus his intellectual efforts on the reform of U.S. health
care. A strong ideologue and market fundamentalist, and completely
ignorant of the mechanics of the medical care sector, Enthoven thought
the best way to control out-of-control costs in the health sector was
to increase competition in the sector, letting health insurance
companies compete for consumers--meaning patients--based on the price
of services. The problems with such a naïve and unrealistic scenario
are many. First, patients do not determine the cost or price of medical
care services. Second, patients have very little choice in the U.S.
health care sector: employers choose which plans are available to
employees. Third, the market does not exist in the health care sector.
Fourth, the insurance industry's financial viability depends on its
ability to discriminate against heavy care-users. I could go on and on
detailing just how wrong Enthoven's proposals were.

Not surprisingly, managed care was the proposal chosen by the insurance
industry and by employers. As Bill Link, Executive Vice President of
Prudential and one of the highest-paid CEOs in the country, stated:
"for Prudential, the best scenario for reform--preferably even to the
status quo--would be enactment of a managed competition proposal." Link
envisioned the corporatization of U.S. medicine, breaking the long
dominance of health care providers in the medical care sector. As
Enthoven wrote in an article co-authored with Richard Kronick, another
leader of the White House health care reform, "what about traditional
fee-for-services individual and single specialty group practices? We
doubt that they should generally be compatible with economic
efficiency. . . . Some would survive in private solo practice without
health plan contracts, serving the well-to-do." It could not have been
put more clearly: managed care competition was corporate assembly-line
capitalism for the masses and their health care providers, with free
choice and fee-for-service medicine for the elites.

This proposal was actively promoted in the White House task force by
the staff of Democratic Representative Cooper and members of the
so-called Jackson Hole Group, who even distributed the group's manuals
on implementing managed care competition to task force members. They
were particularly active in the Governance of the Health System
(chaired by Richard Curtis, who had been an official of the HIAA) and
Global Budgeting working groups. Outside the task force, managed care
competition was actively promoted by the insurance companies. Mr.
Weinstein, a disciple of Enthoven and a member of the editorial board
of the New York Times (a third of the Times board members then had
connections with insurance companies), wrote nine editorials in support
of managed care competition.

Paul Starr sold managed care to candidate Bill Clinton. Of course,
Starr and another leader of the White House task force, Walter Zelman,
were aware of some drawbacks of this scheme, and they modified it to
allow for some form of regulation of the ill-defined market
forces--without specifying, however, who would do the regulating. They
spoke of Health Alliances that would regulate the rate of growth of
premiums and would allow, in theory, for consumer choice of health
plans, with large employers operating on their own outside the
regulatory process but still within the framework of managed care
competition (with budget constraints); health insurers and health care
providers could be integrated in the same organization, or Health
Plans. While managed care competition was the proposal favored by
insurers and large employers, it was not favored by health care
providers. Providers had already had enough experience with insurance
companies to know that they could be more intrusive, abusive, and nasty
than government. And managed care was certainly not the choice of the
grassroots of the Democratic Party--labor unions and social movements.

Concerned that managed care was not backed by the majority of the
progressive base of the Democratic Party, Jesse Jackson, Dennis Rivera
(then president of Local 1199, the foremost health care workers union),
and I went to see Hillary Clinton. We complained about the commitment
to managed care competition without due consideration of a single-payer
proposal supported by large sectors of the left in the Democratic
Party. We emphasized the need to include this proposal among those to
be considered by the task force. Mrs. Clinton responded by asking
Jackson and the Rainbow Coalition to appoint someone to the task force
with that point of view. And this is how I became a member of the White
House task force. I later found out that there was considerable
opposition from senior health advisors, including Starr and Zelman, to
my becoming part of the task force. According to a memo later made
public and published in David Brock's nasty book The Seduction of
Hillary Clinton, Starr and Zelman disapproved of my appointment
"because Navarro is a real left-winger and has extreme distaste for the
approach we are pursuing"­ which was fairly accurate about my feelings,
but I must stress that my disdain for managed competition and the
intellectuals who supported it did not interfere with my primary
objective: to make sure that the views of the single-payer community
would be heard in the task force. They were heard, but not heeded. I
was ostracized, and I had the feeling I was in the White House as a
token--although whether as a token left-winger, token radical, token
Hispanic, or token single-payer advocate, I cannot say. But I
definitely had the feeling I was a token something.

It was at a later date, when some trade unions and Public Citizen
mobilized to get more than 200,000 signatures in support of a
single-payer system, that President Clinton instructed the task force
to do something about single-payer. From then on the battle centered on
including a sentence in the proposed law that would allow states to
choose single-payer as an alternative if they so wished. In Canada,
after all, single-payer started in one province (Saskatchewan) and
later spread to the whole nation. I have to admit that I made that
proposal with considerable misgivings, since the insurance companies
can also be extremely influential at the state level. For example,
Governor Schaeffer (a Democrat) of Maryland had asked insurance
companies to interview the various candidates for state insurance
commissioner. Still, including this proposal was a step toward giving
single-payer a chance in the U.S.

It is interesting that in my debates with Alain Enthoven, he dismissed
my proposals with the comment that "the U.S. Political System is
incapable of forcing changes in such powerful constituencies as the
insurance industry." Such candid admission of the profoundly
undemocratic nature of the U.S. political system was refreshing. The
splendid opening of the U.S. Constitution, "We the people . . . ,"
should be amended with a footnote reading "and the insurance
companies." Actually, Enthoven's statement came very close to Marx and
Engels' Communist Manifesto, which defines democracy as a class
dictatorship in which the corporate class controls the state. Empirical
support in the U.S. for that statement is strong. But the statement is
not 100% accurate. I lived under a dictatorship in my youth (in
Franco's Spain) and I recognize a dictatorship when I see one. The U.S.
is not a dictatorship. People in the U.S. do have a voice. Marx and
Engels (and Enthoven) were not completely right: U.S. history shows
that people's mobilizations can win the day. But, while not a
dictatorship, U.S. democracy is profoundly undermined by the enormous
influence of the economic and corporate lobbies, components of the
corporate class. I documented this in Medicine Under Capitalism,
published in the 1970s. And things have become much worse during the
Reagan­Bush Sr.­Clinton­Bush Jr. era. The huge limitations of U.S.
democracy are evident in the difficulty with which the importance of
people's voice gets noticed. And this is why the Clinton proposal
failed. He did not include in his plans any effort to mobilize people
in support of the reform. Quite to the contrary. He allied himself with
the major forces responsible for the sorry state of the U.S. medical
care sector--the health insurance industry. The insurance companies
ultimately opposed the final proposal because of its regulatory
components, added by Starr and Zelman. But, apart from these
components, the insurance companies would have continued to manage the
health care system.

Starr's explanation of why the reform failed is dramatically
insufficient. The failure had little to do with timing, with when and
where President Clinton presented the proposal. It had to do with how
the Clintons related to the progressive constituencies, including labor
and social movements. No universal, comprehensive coverage will ever be
achieved in the U.S. without an active mobilization of the population
(especially progressive forces) so as to balance and neutralize the
enormous resistance from some of the most important financial lobbies
in the nation. Starr's social engineering approach, lacking any
understanding of the dynamics of power, explains failure as a
consequence of problems of the electoral calendar or the types of
benefits offered.

In reality, the Clinton administration ignored the majority of the
country's progressive forces from the very beginning of its mandate.
President Clinton made his first priority a reduction of the federal
deficit (a policy not even included in his program), approved NAFTA
(against the opposition of the AFL-CIO, the social movements, and even
the majority of the Democratic Party), and committed himself to
perpetuation of the for-profit health insurance system--the primary
cause of the country's inhumane medical care system. When NAFTA was
approved, Clinton signed the death certificate for the health care
plan, and for the Democratic majority in Congress. The number of people
who voted Republican in 1994 was no larger than in 1990 (the previous
non-presidential congressional election year). The big difference was
in the Democratic vote. Abstention by working-class voters increased
dramatically in 1994 and was the primary reason why Democrats lost
their majority in Congress. This is a point that Starr ignores. The
Gingrich Revolution of 1994 was an outcome of voter abstention,
particularly among the working class, who were fed up with President
Clinton. But NAFTA was also the death knell for health care reform. One
could see this in the White House task force. NAFTA empowered the
right, and weakened and demoralized the left.

A continuing shift to the right (erroneously called the center) has
been the Democratic Party's strategy for the past 30 years, abandoning
any commitment to the New Deal and the establishment of universal
entitlements that make social rights a part of citizenship. David Brock
writes in his book "that Navarro had told Mrs. Clinton that if the
President went ahead with a managed care competition plan, it would
cost the election to the Democratic Party." Brock's credibility as a
reporter is extremely limited, but on that point he was right. I told
Mrs. Clinton that the only way of winning, and of neutralizing the
enormous power of the insurance industry and large employers, was for
the President and the Democratic Party leadership to make the issue one
of the people against the establishment. It was a class war strategy
that the Republicans most feared. My good friend David Himmelstein, a
founder of Physicians for a National Health Program, told Mrs. Clinton
the same thing. And as I judged by her response, she seemed to think we
did not understand how politics works in the U.S. The problem is, we
understood only too well how power operates.

This, then, is why the Clintons failed. And unfortunately, Hillary
Clinton will fail again if she lacks the courage to confront those
responsible for the predicament in the nation's health care system. The
insurance-controlled system imposes enormous pain on the population. It
is not just that 46 million people are now without health insurance,
but the system also fails the huge numbers of people who have
insufficient coverage and don't discover this until they need it. This
cruel system has been supported by large employers because it gives
them oppressive control of the labor force. When workers lose their
job, they lose not only their income but also health benefits
coverage--for themselves and their families. The alliance of two of the
most powerful forces in this country--insurance and large employers--is
at the root of the problem.

A final observation. Love of country is measured by the extent to which
one promotes policies that support the well-being and quality of life
of the population and, most particularly, the working and middle
classes that make up the vast majority of the population. Judged by
this standard, most super-patriotic, right-wing forces fail miserably
on the love-of-country front. People in this nation die due to lack of
health care. The estimates vary from 18,000 to 100,000 a year,
depending on how you measure preventable deaths. But even based on the
most conservative number of 18,000 (from the conservative Institute of
Medicine), this is six times the number of people killed on September
11, 2001, by Al Qaeda. And these deaths continue year after year. The
deaths on 9/11 are rightly seen as the result of enemy action. But why
do the 18,000 deaths each year go unnoticed? Why aren't they seen as
the outcome of hostile forces, whose love for their country is clearly
nil? Mark Twain said, "You cannot love people and then go to bed with
those who oppressed them." Why is it so difficult to understand such a
basic truth?

[Vicente Navarro is Professor of Health and Public Policy at the Johns
Hopkins University, U.S.A., and of Political Sciences in the Pompeu
Fabra University, Spain. His acclaimed essay on Salvador Dali and
Franco's Spain is included in Serpents in the Garden edited by
Alexander Cockburn and Jeffrey St. Clair.]