THE BLOG
09/21/2007 06:13 pm ET Updated May 25, 2011

Hillary's Turn: A Revised Health Plan for a New Debate -- And Why It Just Might Work

Hillary Clinton's health plan received a warm reception when it was released Monday. Ezra Klein of the American Prospect, Jon Cohn of The New Republic, and Paul Krugman of The New York Times each offered praise. Even resident Times conservative David Brooks opined that the plan was "a huge step forward from 1993. It's better than the GOP candidates' plans." Rich Lowry of National Review admitted, "She re-enters the health care debate from a position of strength."

To be sure, there was the expected grumbling from supporters of single-payer national health insurance, and the predictable overheated attacks from the Republican presidential contenders. All in all, however, the launch was about as successful as a policy debut could be, erasing for a moment the bad memories of the early 1990s reform debacle that has come to be seen as Senator Clinton's main legacy on the issue.

All this raises an obvious question: Why should we expect anything different this time? Is this moment more auspicious than when Clinton last battled for this issue? And if so, why?

Actually, the possibilities for reform are greater today. That's one reason I've spent much of the last few years promoting an approach similar in crucial respects to those embraced by John Edwards, Barack Obama, and Clinton.

For one, the context has changed. Not only are the problems in U.S. health insurance far worse, but there's also the prospect for a more effective reform coalition than we saw 14 years ago. This coalition would include not just unions but also business leaders -- or, at least, it wouldn't attract the unified opposition of business leaders. No less important, reformers have updated their strategies in important ways, and none more so than Hillary Clinton.

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Much looked good for health reform in 1993. For starters, the issue had been catapulted to the top of the political agenda by a national recession, growing corporate angst over rising medical costs, and the surprise victory of an unknown Democrat, Harris Wofford, in a special 1991 Senate election. In response, President George H. W. Bush had proposed a major plan, and leading Republicans, including Senate Minority Leader Bob Dole, had released their own alternatives. Meanwhile, Bill Clinton had run for president talking about this issue, and the 1992 election had ushered in unified Democratic government for the first time in 12 years. Lastly, polls showed great public interest in the issue, and at least superficial support for major change. No wonder so many believed the time had finally come for serious action.

So what went wrong? By my reckoning, four crucial factors doomed the Clinton plan, and ultimately any meaningful reform initiative. First, the recession lifted and health care costs moderated, encouraging many corporate leaders to back away from action. Second, and even more important, conservative Republicans, led by Newt Gingrich, mobilized to use the issue as the springboard for capturing Congress. To make matters worse, the Clinton administration made a series of crucial missteps--the third factor and one I'll discuss shortly. Fourth and finally, amid the growing controversy over what should be done, many Americans became fearful that, for all the problems with the current system, reform would hurt their present coverage.

None of these barriers has disappeared. Indeed, Republicans are, in general, further to the right on health care today than 1993. But the pressure for change is greater. Health costs have escalated dramatically since the mid-1990s, straining both private and public budgets and encouraging more and more employers and workers to forgo insurance. Personal bankruptcies caused by medical costs, rampant uninsurance and underinsurance, runaway medical debt, crippling benefit costs for employers -- all these problems have grown far more prevalent and troubling. In his speech before Congress in 1993, President Clinton said, "This health care system of ours is broken, and it's time to fix it." If it was time then, it is well past time today.

These problems are not just getting worse, they increasingly affect the middle-class. Again, this was true in the early 1990s, but it's more true today. Over a two year period, a shocking one out of three non-elderly Americans goes without coverage. A recent survey by Consumer Reports found that nearly half of adults younger than 65 -- most of them insured -- are "somewhat" or "completely" unprepared to cope with a costly medical emergency in the coming year. The median household income of underinsured respondents was almost $60,000, and nearly a quarter lived in households making more than $100,000. The recent census report that showed the number of Americans without health insurance setting a dubious new record in 2006 -- 47 million, up from 44.8 million in 2005 -- also showed most of that rise occurring among middle-class families. Coverage for the poor has expanded since the early 1990s, but the employment-based framework on which middle-class workers rely is crumbling. That means a politically crucial segment of the voting population is increasingly exposed to the hassles and anxieties of inadequate coverage and ruinous medical costs.

But American politics is never simply about solving agreed-upon problems, even when they affect large segment of the middle class. So two additional factors might hasten this reform. First, corporate America may well be ready to acquiesce to major changes. The last decade has seen business pull out every trick in its arsenal for controlling costs--to little avail. Now, the only surefire way to cut costs is to cut coverage and shift risks onto workers, which is not just unattractive to most businesses, but also likely to stoke public interest in major reform.

Second, those interested in reform have returned to their field of dreams with greater sensitivity to some of the political risks--particularly the fear of Americans that their current coverage, however substandard, will be hurt or taken away without something better taking its place.

It's worth emphasizing that Americans are--and were in 1993-94--eager to see our system reformed. Moreover, they're more supportive of government action than you might think. But the Achille's heel of reform efforts is that most Americans do have some source of insurance most of the time. Against this backdrop, the easiest way to kill reform is to say, "Oh yes, I support change, but this change will destroy what you have, this change will make you pay more for less."

***

All of which brings us to Senator Clinton's new plan. While clearly a work in progress, it is unmistakably the reflection of long and hard strategic thinking. (Full disclosure: I offered advice to the campaign, and was gratified by their responsiveness.) And though Clinton's plan is extremely ambitious relative to the Democratic presidential plans of the last two presidential elections, it is notably cautious relative to what President Clinton proposed in 1993.

Most journalists have described the essence of the Clinton plan as an "individual mandate," a requirement that everyone have health insurance. But the individual mandate is only one of three key elements. Revealingly, in her speech releasing the plan, Clinton talked about the new choices she'd provide and employers' responsibilities to help pay for coverage before she even got to the individual requirement.

Which is a good thing: Because an individual mandate by itself is neither a popular nor an effective route to affordable quality care for all. In isolation, an individual mandate is either cruel or chimerical, forcing many to buy coverage they really can't afford or failing to achieve its goal of universal insurance. An individual mandate works best as an auxiliary precaution, a way of encouraging people to obtain insurance after they have been provided with low-cost options and their employers have been required to share the cost with them. Thankfully, that's the role it plays in Clinton's new plan.

Rather than the individual mandate, the essence of Clinton's plan is a new menu of health plan choices--which, crucially, will include a new, comprehensive public insurance plan as well as private options. More than either Edwards or Obama, Clinton has revealed a dirty little secret of our current system: It provides few Americans with anything like the range of choices that our idealized image of private markets suggests. American health insurance is like a supermarket where the doors are closed to a substantial minority and the rest get to shop in only one aisle -- if they're lucky.

Clinton's plan would open the supermarket doors to all and expand the range of choices for many. The basic idea is that larger employers would be required to either offer good coverage or help finance coverage for their workers through a new national insurance framework, which Clinton is calling the "Health Choices Menu." Individuals without ties to the workforce could buy coverage through the Health Choices Menu as well. Though Clinton wouldn't require small businesses to cover their worker or help finance coverage, she would offer tax breaks to encourage them to offer insurance, and their workers would be able to sign up for highly subsidized coverage from the Health Choices Menu just like other workers

Perhaps the most welcome element of the Health Choices Menu is that it would include, alongside a range of private plans, a public insurance option modeled after Medicare. This is welcome because allowing people to choose a Medicare-like plan provides an option few Americans now have and because public insurance has some major virtues -- including low administrative costs, open choice of physicians and huge capacity to bargain for lower prices. It's also somewhat surprising that the Clinton campaign emphasized this idea, because while I have been promoting this approach and both Edwards and Obama have embraced it, it may provoke some conservative attacks. Moreover, this idea was explicitly rejected by President Clinton's advisers back in 1993--one of whom described providing a Medicare-style option as "an exceptionally clever way of undermining the entire strategy" embodied in the 1993 plan.

Yet, in this respect and others, Senator Clinton has departed from the approach she sought to sell to Congress nearly 15 years ago. Hillary Clinton circa 1993 was trying to convince politicians and the public that most workers should be getting their coverage through new regional organizations that would encourage people to switch to tightly managed HMOs and impose caps on how much health plans could charge. Hillary Clinton circa 2007 is talking about building on what works in the present system while fixing what doesn't, letting people have more choices, and providing new resources to make those choices affordable.

Both plans look big and ambitious. But, in a variety of respects, the new Clinton plan is more politically savvy and sensitive to the institutional barriers to reform than was the ill-fated 1993 initiative.

***

Will that be enough? The high-profile rollout suggests that Clinton is already looking toward the general election. And Clinton is the clear front-runner -- both for the Democratic nomination and for the presidency. But much can change in a year, and neither a Clinton victory nor a Democratic victory should be taken for granted.

Then there is the difficult task of building a reform coalition in Congress. It's clear that any reform plan will face the threat of a Senate filibuster, meaning it will need sixty Senate votes to succeed. And while there are ways around the filibuster--the budget process, reforming Senate rules--none is particularly attractive. In 1993, President Bill Clinton pursued a strategy that ended up alienating both congressional liberals and congressional conservatives. In 2010, President Hillary Clinton, or any other Democratic president, will have to do better to have any chance of success.

The main challenge is not to develop an even more detailed health plan--which could and should be left to Congress. In 1993, in part because President Clinton received advice to this effect from congressional Democratic leaders, the Clinton administration set up a massive internal process to refine the plan that had been decided upon during the campaign--a process that took up valuable time and short-circuited congressional and interest-group bargaining. Whatever Democratic leaders say, a new Democratic president should follow the route President Bush did on tax cuts in 2001: Develop the broad outlines, then leave it to Congress to broker the deals.

The real challenge is to bring Democrats together around a reform vision that can attract Republican moderates, and then to cross-pressure those moderates, and wavering Democrats, by mobilizing the support of the public and important allied groups. In uniting Democrats, Senator Clinton will inevitably have to clarify some aspects of her plan. She will also need to address the concerns it is likely to raise among more liberal members of the party - concerns that go to the heart of the plan's effectiveness and intent..

For example, is the exemption of small businesses from the requirement that they help finance coverage really consistent with affordable coverage for all? How will people sign up for coverage if their employer doesn't offer it? Will employers manage enrollment and withholding of premiums as they do now? Can workers whose employers offer good coverage be allowed to opt out of it and enroll in one of the new choices that the federal government will offer--which could wreak havoc with employment-based plans? Does it make sense to preserve separate health programs for low-income Americans at the state level, when a new national framework is in place? And will the Clinton approach really use the new public option to its fullest advantage, as means of improving quality and controlling costs--or merely treat it as an afterthought?

These may seem like dry policy questions, but they are politically crucial for assuaging the concerns not just of the public but also of the committed reformers who have tirelessly fought for the goal of universal coverage during the long years when that goal seemed out of reach.

A conceit of some commentators is that compromise means promoting a lowest-common denominator reform plan out of the box. But this is a grave mistake, and so far Clinton has resisted making this error. We have seen such grand compromises in the past: insurance portability, health insurance for poor kids, Medicare drug coverage that appeals to both the right and left. And if we have learned anything from these episodes, it is that while something is better than nothing, something that will truly achieve the broad goal of health security is much better than something that will spend precious financial and political capital to move us only haltingly in that direction.