The Proposed Health Security Act of 1994

Jonathan Cohn has a very nice piece on the Proposed Health Security Act of 1994, defending the policy proposals. I suspect that his heart isn't fully in it, however. Consider this:

TNR Online | Hillary was Right (1 of 2) (print): Hillary Clinton wants the world to know that... "both the process and the plan were flawed"... demonstrating a level of contrition more fitting for an Iraq war architect. "We were trying to do something that was very hard to do, and we made a lot of mistakes."...

The task force had included this [hard] cap [on what insurance companies could charge for health insurance] partly to satisfy the Congressional Budget Office (CBO), which, in its official estimates of the program's cost, wouldn't assume that having a bunch of insurance plans was likely to save money, as the Clintons insisted it would. Since CBO's projections would guide the debate, and since political moderates were likely to abandon the plan if it threatened to raise deficit spending or spark new taxes, the task force threw in the cap. But it was entirely possible premiums would not have exceeded the caps, at least not for a while: In fact, over the next few years, premium increases stayed under the limits set by the caps. And that was without a lot of the administrative savings that Hillarycare would have generated. Don't forget, too, that Congress always had the power to ease the caps if they really threatened to disrupt medical services--although the hope was always that limiting spending would ultimately push the health care system to be even more efficient...

Jonathan's argument is: the bad parts of the bill could have been fixed later on if they turned out to be really bad. But why not simply propose a good bill in the first place? The argument that it's a good bill because even though it's a bad bill you can pass a good bill later--that's not a very strong argument.

As I watched things in 1993 and 1994 from my perch at the Treasury Department, there were four relevant factions in the game: (1) there was a left-wing Democratic faction that would rather have no bill at all than a bill with a benefits package they regarded as insufficient, (2) there was a centrist faction that would not vote for a bill that increased the projected deficit, (3) there was a center-right Democratic-Republican faction that would not vote for a bill that contained explicit large tax increases, and (4) there was a faction that was strongly averse to anything that smelled of price controls and explicit rationing--and thus averse to hard premium caps. The support of all four of these factions was necessary to pass a bill.

The White House's task was to figure out which of these four factions to disappoint, and then to find some way to pressure them so that they would vote for the bill anyway.

The Treasury view--the Lloyd Bentsen view--was that the faction to pressure was faction (1) by saying: This is a very big step in the right direction, this is a very big improvement over what we have now. And this is not the last step America will take along this road.

The view that the White House adopted was that the faction to pressure was faction (4). In my view, this was the big political mistake: The problem was that the head of that faction was the Chair of the Senate Finance Committee, Daniel Patrick Moynihan, and that the rest of that faction was composed of moderate Republicans who were looking for a principled reason to justify knuckling under to Gingrich and the other crazies in their leadership.

I am told that Hillary Rodham Clinton rejects Jonathan Cohn's claim that she "was right the first time" and stands by her judgment that the process and the plan were flawed"... we made a lot of mistakes." I think that she is right--and that ability to learn is one of the many things that makes her an attractivce politician today--certainly infinitely more attractive than any of the Republicans on offer.

Comments

[bakho]

A massive PR by the insurance industry helped kill health care in 94 and it is the elephant in the room today. Poltiicians are treading carefully so they do not anger BigInsurance and unleash a barrage of negative ads by those parasites.

A combination of stealth proposals and building a coaltion of unions, corporate and small business interests will be needed. Politicians who accept money from insurance special interests will need to be attacked and shamed into doing the right thing.

[Ken Hirsch]

"My two cents' worth--and I think it is the two cents' worth of everybody who worked for the Clinton Administration health care reform effort of 1993-1994--is that Hillary Rodham Clinton needs to be kept very far away from the White House for the rest of her life. Heading up health-care reform was the only major administrative job she has ever tried to do. And she was a complete flop at it. She had neither the grasp of policy substance, the managerial skills, nor the political smarts to do the job she was then given. And she wasn't smart enough to realize that she was in over her head and had to get out of the Health Care Czar role quickly."

Brad DeLong
June, 2003

[Robert Waldmann]

You write

"Jonathan's argument is: the bad parts of the bill could have been fixed later on if they turned out to be really bad. But why not simply propose a good bill in the first place? The argument that it's a good bill because even though it's a bad bill you can pass a good bill later--that's not a very strong argument.

[big snip]

The Treasury view--the Lloyd Bentsen view-[snip]was [snip] this is not the last step America will take along this road."

I reply

"The argument that it's a good bill because even though it's a bad bill you can pass a good bill later--that's not a very strong argument."

I would have advised taking on group 3 by proposing that the bill be funded by soaking the rich (who were already 43% damp I concede). Clinton got his tax increase through with zero Republican support. That was just to balance the budget which voters don't care much about. It could have been done again for health care security. Just this time make sure that the top few percent don't pay 85% but rather 105%.

Update and correction "I would have advised" should be "The day I visited you at the Treasury, I advised". That was the day you told me that in 92 a plurality supported "raising the taxes on the rich to fund more waste fraud and abuse." I think it is that simple.

[Brad DeLong]

Touche...