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Healthcare Reform: Then (1994) And Now (2009)

DrRich has been around long enough to remember the sequence of events that accompanied the collapse of healthcare reform under the Clintons in 1993 – 1994.  (Heck, he has been around long enough to remember Nixon’s plans for healthcare reform, which drowned in Watergate.) When President Clinton was inaugurated, everyone agreed that the American healthcare system was in a state of crisis (e.g., spending levels could not be sustained, there were too many uninsured, there was too much waste and inefficiency, etc., etc.), and that the time for fundamental reform had finally arrived. We had a fresh, dynamic, young President with new ideas and with a solid majority in both houses of Congress, and he was armed with polls showing that the people were in favor of fundamental reform.

Accordingly, when Mrs. Clinton put together her working groups to devise a reform plan, she initially had the enthusiastic participation of numerous interest groups within the healthcare industry – notably including the insurance companies, physician groups, and drug and medical device companies.

But when she finally produced her plan – a disturbingly heavy tome filled with frightening details – everybody was horrified with at least some of the stuff they found there. Most of the big interest groups turned on her – most notably, the insurance industry, which then launched the famous Harry and Louise commercials to scare the people about government healthcare. The people, now duly scared, called their congresspersons, who (despite the Democrat majority) ended up sending Mrs. Clinton’s healthcare reform to a crushing and humiliating defeat. And the Republicans were able to capitalize on the “near miss” of the Clinton’s brazen attempt at socialism, and in 1994 ushered in 12 years of a Republican majority in both houses of Congress.

Obviously, for those Republicans and other observers who abhor Mr. Obama’s plans for healthcare reform, it is relatively easy to see parallels between what happened in the early 1990s, and what appears to be shaping up now. Those parallels, and the subsequent ignominious defeat of the Clinton plan, are the only things keeping these sorry individuals from donning sackcloth, heaping ashes upon their heads, and engaging in public self-flagellation.

So, perhaps, for such outsiders the spectacle of the major private healthcare interests this week throwing in with the Obama administration will be seen as one more sign from the gods that the parallels of 1994 are falling into place.

But they are wrong.

There are at least three important differences between the enthusiastic participation of private interests in Mrs. Clinton’s working groups on healthcare reform, and the action taken this week by representatives of insurers, doctors, drug companies, hospitals, and medical device manufacturers to pledge their undying support for President Obama’s efforts at healthcare reform.

First, in 1993 the private interests were powerful and confident. They participated in the process because they felt they could control it. It turned out they were wrong, of course – the only one who has been able to out-maneuver the Clintons is Mr. Obama – and the plan Mrs. Clinton finally produced (despite all the “input” from diverse private interests) really was a blueprint for a full government takeover of healthcare, all spelled out and wrapped with a bow.  But because the private interests were powerful and confident in those days, once they figured out what the Clintons actually had in mind they were able to scuttle healthcare reform entirely.

In contrast, today the private interests have come to the table not out of strength, but out of weakness. They come not as partners in negotiation, but as vanquished foes. They come to Obama as the Carthaginians came to the Romans after the second Punic war, suing for peace, begging for terms, offering massive tribute (in this case, $2 trillion) in exchange for being permitted to eke out a meager survival, at the edge of the desert. (DrRich wonders whether the insurance companies and their friends remember the third Punic war.  Surely they must know that somewhere in Congress is another Cato the Elder, ending every speech with the words, “The insurance industry must be destroyed,” and that at some point their remaining, puny base of operation will be completely sacked, and their mission statements sown with salt.)

Second, whereas Mrs. Clinton was a major policy wonk who reveled in providing a fully-fleshed-out and exquisitely detailed set of plans for healthcare reform – thus giving her foes sufficient ammunition not only to defeat her reform plan, but also to banish the Democratic Party to the wilderness for three election cycles – Mr. Obama is not. His reform plan will be bare-bones – merely an outline, more-or-less a statement of principles. There will be nothing to attack, since there will be no details, and little will be spelled out. (Implementing the plan will be left to unelected bureaucrats and regulators, who are always happy to produce prodigious amounts of undecipherable and self-contradictory detail.) This time, at least prior to its actual implementation, critics of the reform plan will be left trying to attack a phantom.

And third, this time there is no Plan B.

In 1994, once the private interests had scuttled the Clinton healthcare plan, they immediately offered an alternative. They came to us and they said: “Citizens!  We have just now dodged a bullet! Thanks to us insurance companies, doctors, drug companies and other patriots, the frightening socialist machinations of the Clintons have been defeated, and the Evil Ones have been reduced to embracing our agenda of tax reform and welfare reform as if it were their own.  But where does this leave our healthcare system? We stand now between Scylla and Charybdis, between the spectre of socialized healthcare on one hand, and the continued profligacy of traditional fee-for-service on the other, and we cannot survive either.

“But here,” they continued, “is a third way. A painless way, an American way, based on the principles of managed care, open markets, and free enterprise. Let healthcare become a business, like any other business, and let the natural efficiencies of the marketplace find ways to cut costs and improve quality, and with minimal government intervention.”

And thus we were launched into an era of managed care run by HMOs and other similar creatures of the insurance industry. And over the past 15 years, while managed care has utterly failed to produce any of the things it promised, it has not been for a lack of trying. They indeed have tried numerous things to control spending, from the reasonable-sounding to the absurd to the frankly murderous, and despite all their strenuous efforts the healthcare system remains a morass of confusion, waste, and inefficiency, and its costs are many times what they were in 1994.

To say it another way, the private concerns, this time, have shot their wad. They are entirely bereft of ideas. They know not what to do.

And that’s why they have now fully abandoned their old allies, the Republicans (who are off somewhere – one knows not where – muttering to each other about the efficiencies of the marketplace, and wondering why nobody is listening to them). The last thing the insurance industry wants to hear today is that the burden of figuring out how to control healthcare costs belongs to them. They’ve tried everything they know and have failed, and they are desperately seeking terms for surrender.

So there is no Plan B this time. As of this week, the private interests have formally and publicly admitted they don’t have a clue. They’re throwing in with President Obama, despite the fact that they have no leverage with him whatsoever, not because they believe in his reform plans (which have not even been described in their most skeletal form), but because there is no place else for them to go.

And so, the last obstruction to healthcare reform has been removed. The path – the only path – is clear. If we fail to get comprehensive healthcare reform now, it can only be for one reason. It can only be because Mr. Obama and the Democrats, looking down that wide open road, will be unable to avoid seeing where it leads, and will decide that they do not want to be the administration or the party that finally has to begin saying the “R” word in public.

To turn away from healthcare reform now, when the way seems so clear, would be a crushing blow to them, and would likely not be politically survivable. But to go on will likely force them to begin speaking a truth – that rationing is unavoidable – whose name is more taboo than ever was the name of Yahweh. And every high priest of the ruling class knows that even hinting about healthcare rationing is political suicide.

But still, there it is. There is no Plan B.

Talk about Sylla and Charybdis.

*This blog post was originally published at The Covert Rationing Blog*


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