News Channels Fail to Explain Clinton Health Care Plan Failure

With President Barack Obama launching his health care reform initiative last week with a White House summit, the news programs have, not surprisingly, been recalling the last major push for change. For those who missed it, that was in 1993 and 1994. Then President Bill Clinton, who, like President Obama, had campaigned with a pledge to change America’s health system, assigned then First Lady Hillary Clinton to spearhead his Administration’s effort to provide affordable health care for all.

In recalling this recent history the news channels make it sound like the only reason the Clinton effort failed was the opposition of special interests. But for the insurance industry’s Harry and Louise ads, some greedy doctors and uncooperative Republicans, the Clinton Administration’s reforms would have breezed through Congress ushering in a golden era of health care. This is far from what happened.

Yes, special interests campaigned hard against the Clinton reforms, but they had a lot to work with. As I’ve written before, the Clinton effort failed in part because it was fashioned behind closed doors and in part because it wasn’t a very good proposal.  The task force that helped the First Lady draft the proposal excluded input from many in Congress and shunned many stakeholders. So when it emerged from the inner sanctum it  lacked broad buy-in. The take-it-or-leave-it attitude of many in the task force didn’t help matters.

What they proposed was both complex and elegant. They sought to enact “managed competition.”  This approach would have forced most Americans to drop their existing coverage and instead obtain insurance from government run “purchasing pools.” The carriers offering coverage through the pools would offer only plans designed by the managing government agency and would be expected to use their clout to negotiate deep discounts from health care providers. There was a lot more to it — a lot more — but those were two of the key provisions.

It wasn’t just special interests (which the news channels identify as insurance companies, the business community and some doctors) who thought it was a bad idea poorly executed. So did many Democrats in Congress and liberal think tanks. The Clinton health care reforms were attacked and even ridiculed by, well, most everyone who wasn’t on  the task force. It’s not that these critics didn’t recognize the need for reform. They just believed the Clinton package was bad reform. 

Any proposal seeking massive changes to a system as complex as America’s health care system is going to be controversial. It is also highly likely to be seriously flawed. The purpose of the legislative process is to allow interest groups (special and otherwise) to debate the plan’s details, to identify the flaws, and to the extent possible, fix them.

Given the numerous flaws in the Clinton Administration’s plan and the take-it-or-leave-it attitude of its proponents, Congress decided to leave it. Did special interests play a role? Certainly. (Full disclosure: I testified on behalf of health insurance agents against the Clinton plan  at three Congressional committees hearings in 1993). But to credit its defeat solely to those interests is to overstate their strength and to absolve the authors of too much guilt. They were the ones, after all, who put forward a poorly designed package with a striking lack of political skill. A better plan more ably presented might have passed in 1993. We never got the chance to find out.  

In oversimplifying history, reducing what happened to a tag team bout between Bill and Hillary on one side and Harry and Louise on the other, the news channels are doing the country a disservice. Yes, special interests from across the political spectrum will protect their special interests (that’s why they’re called special interests). But the Obama Administration’s health care reforms will stand or fall on their merits, just as the Clinton Administration’s did.

That’s the way it should be. And that’s the way it should be reported.