Wednesday, September 8, 1993

Why Health Care Reform's Time Has Come

It is Labor Day, 1993. Over the weekend, senior Clinton Administration officials announced the broad outlines of their health care reform proposal which will be formally introduced later this month. The plan is nine months in the making, and has been painstakingly crafted by First Lady Hillary Rodham Clinton's 500-member Health Care Reform Task Force. It promises to extend a standard package of health insurance benefits to all Americans. The plan represents the single biggest government health care initiative since 1965, when Medicare became law as part of Lyndon Johnson's Great Society legislative program.

So how did the issue of health care reform reach this advanced stage? It is a top priority of the highest elected office in the land, with congressional action on the matter imminent. Newspapers and magazines are full of articles and commentary on the subject. Dozens of books have been published on the U.S. health care system in the past few years. Television devotes similar attention (through the limited newshole it has) to problems with health care and the Administration's proposed reforms. At this moment in time, health care reform is obviously very high on what we can call the "public agenda." But how did it get there? Why health care reform, and not any one of the other urgent, pressing problems our nation now faces?

The answer is that within the past few years, key events have occurred which created the necessary conditions for national health care reform to move to center stage. In the words of John Kingdon, a convergence of problem streams, policy streams, and political streams has recently occurred, thus opening a window of policy opportunity. If we understand these key events, we will understand why health care reform's time has come.

The issue of national health insurance was first placed on the public agenda by Harry Truman during his 1948 re- election campaign. It then endured decades of fruitless debate, with any proposed changes to the U.S. system of private medical practice promptly labeled as steps toward "socialized medicine." Gradually, the system evolved which exists today. U.S. doctors collect fees for services rendered to patients, mostly paid by medical insurers through an elaborate system of private, largely employer-provided medical insurance. Health care costs have skyrocketed, for several reasons.

"Doctors are rewarded for providing lots of services, even if unnecessary, to patients who don't mind because they only pay a fraction of the bill. And because patients choose their doctors, insurers are unable to negotiate treatment and fees." (NYT editorial, 6/15/91)

Workers who hold jobs with no health benefits and unemployed Americans together number more than 35 million people who lack any health insurance, and more than 60 million more Americans are underinsured.

"Tens of millions (more) are frozen into their jobs in order to retain existing benefits, and many cancer survivors, diabetics, AIDS patients, and others are classified as "uninsurable." Unionized retirees are finding their benefits unilaterally cancelled. And most people are struggling to meet the rising cost of deductibles and co-payments." (Mother Jones, May/June 93, p 18)

National health care reform briefly surfaced on the public agenda in the early seventies. Its leading proponent was Sen. Edward Kennedy (D-MA), who may have been in search of a "serious" issue to stake claim to, and thus deflect criticism that his only qualification as a perennial presidential aspirant was his last name. President Carter proposed fairly comprehensive health insurance reforms in 1978, but the package ultimately went nowhere, mainly due to Carter's inability to get along with the Democratic Congressional leadership. Health care reform again appeared as an issue in 1983, during debate over President Reagan's 1984 budget. This debate centered around Reagan Administration reform proposals that would have in part made Medicare and Medicaid patients pay more of the costs of their routine care. This "reform" plan also went nowhere.

A bipartisan commission was established by Congress in 1986 to explore the issue of health care reform. Known as the Pepper commission, it was led by former Iowa Gov. Robert Ray, a Republican, and former U.S. Rep. Paul Rogers (D-Florida). In early 1989, its findings were released, calling for a so-called "pay-or-play" system which would require employers to cover their own employees or pay into a fund to cover uninsured workers. Soon afterwards, this concept was embodied in the form of legislation introduced by Sen. Edward Kennedy (D-MA) and U.S. Rep Henry Waxman (D-CA), also in early 1989. The Kennedy-Waxman bill ultimately fell victim to public furor over another element of health care reform during the summer and fall of that year. Senior citizens mobilized to have Congress repeal legislation which increased Medicare taxes on the wealthiest retirees in order to pay for universal catastrophic illness coverage. In the wake of this largely unforeseen revolt, prospects for legislative action on other health-related measures was temporarily dimmed.

However, by 1991, health care reform was back on the Congressional agenda. In June, 1991, a retooled version of the "pay-or-play" Kennedy-Waxman bill, dubbed "AmeriCare," was introduced in the U.S. Senate by Kennedy and Senate Majority Leader George Mitchell (D-ME). Democrats were clearly looking to the upcoming 1992 Presidential race. Party leaders admitted freely that they saw health care reform as an issue with potentially broad appeal to middle class voters, now that increasing numbers of blue and even white collar workers were joining the ranks of the uninsured. One possible 1992 Presidential aspirant, Sen. Jay Rockefeller (D-W.V.), was attempting to make health care reform hisÿissue, and in doing so ensured wide mention of the arguments for reform in his press coverage at the time.

Undoubtedly, though, the biggest public push that health care reform received all year occurred on the morning of November 6, 1991. It was on this day that the country woke up to discover that Dick Thornburgh, the former Governor of Pennsylvania who had resigned as President Bush's Attorney General to run for former Sen. John Heinz' (R-PA) U.S. Senate seat in Pennsylvania, had lost by a 60-40 margin to a Democrat, a little known former college president named Harris Wofford.

Wofford had been appointed to fill the vacant Senate seat by current Pennsylvania Gov. Robert Casey, so he was technically the incumbent, and he was assisted in no small way by the efforts of his campaign manager, a political strategist named James Carville. But an anti-incumbent mood was blowing in the country, and Carville's political brilliance was still relatively unknown. The real significance that political observers and media pundits derived from Wofford's victory was the electoral potency of the health care issue. Wofford had campaigned aggressively in favor of reform, running commercials in which he said that "if criminals have the right to a lawyer, then every American ought to have the right to a doctor."

Immediately, Democrats sensed that here was an issue they could win with. The Republicans sensed the same, for within days after the election, the Bush Administration had announced that its own plans for comprehensive health care reform were imminent. From this date on, the media debate over America's health care system ballooned. Health care reform did become an issue in the 1992 Presidential race, and voters' sentiments that a Clinton Administration would be more likely to propose real reform than any other undoubtedly played an important role in his ultimate victory.

It would be misleading, however, to suggest that average citizens' concern over more expensive, more elusive health care coverage and the resulting pressure they brought to bear on elected officials were the sole reasons that reform found its way onto the public agenda. After all, large numbers of Americans had been medically uninsured for decades, and time and time again, legislation had been proposed to remedy their situation. The final, and some would argue deciding factor which threw the current cycle of health care debate onto the public agenda has been the needs of big business.

By the late eighties and early nineties, large corporations essentially became fed up with paying for health care benefits for their employees. For example, General Motors is the largest private purchaser of health care in the U.S., spending $3.7 billion on care for its employees in 1992 alone. Because of rising health care costs, many companies scaled back such health benefits, increased the premiums paid by employees for plans, or canceled them altogether. Companies also began to abdicate responsibility for providing employees with health insurance by replacing more and more of their full time workforces with temporary employees who were not entitled to benefits.

Businesses began to realize, however, that the problem they faced was national in scope, and ultimately not responsive to individual, in-house corporate health benefits reform initiatives. In an April, 1991 Gallup survey of "chief executives of the nation's largest companies," conducted for the Robert Wood Johnson Foundation and duly reported in the New York Times, fully 91% of executives surveyed said that a "fundamental change or complete rebuilding of the nation's health care system" was needed.

A New York Times article of May 19, 1991 entitled "Demands to Fix U.S. Health Care Reach A Crescendo" provided an example of how even though the needs of business accelerated the consideration of health care reform onto the "public agenda," this element of the story was downplayed. The article begins by cataloguing the failures of the current health care system, as it affects most of the ordinary people who fall through its cracks.

"The American health care system is the most expensive in the world, but for those not in its mainstream, the care it offers is among the most unsatisfactory. Americans pay $700 billion a year for health care but 34 million of them remain uninsured. Life expectancy in the U.S. is shorter than in 15 other nations, and infant mortality is worse than in 22 other countries." (New York Times, 5/19/91, Sec 4, p 1)

Buried late in the same article are the complaints of business about the spiraling costs of health benefits.

"For businesses, tension is rising. Companies watch as health care spending devours ever larger portions of their profits. In the 1960s, businesses spent about 4 to 8 cents of each dollar of profits on health care. In 1990, it was 25 to 50 cents of each dollar." (New York Times, 5/19/91, Sec 4, p 1)

A legitimate complaint, certainly, but more revealing of just how important it had become by 1990-91 for large corporations to start lobbying in favor of some type of government reform of the current health care delivery system.

A final word about agenda control with regard to this issue. The U.S. industry with the most at stake over any type of health insurance reform plan is, of course, the medical insurance industry. There are two dozen large such insurance companies, and hundreds of smaller ones. The industry's worst nightmare is that popular confidence in and support for the current health care system might decline to the point where public pressure would build for what is known as a "single-payer" system. This is the health care system in place in Canada. Instead of billing insurance companies for services rendered to patients, doctors send their bills to just one payer - the government. This system is not "socialized medicine" as it exists in the U.K., where doctors work for a government health service. Physicians remain in private practice - the insurance middlemen are simply replaced by a government agency.

"In the U.S., twenty-two cents of every health-care dollar are spent on administrative costs, overhead, and insurance company profits; in Canada, that figure is ten cents. The twelve-cent difference could mean more than $90 billion in savings for the United States, enough to provide coverage for all uninsured Americans and tens of millions who are underinsured." (Mother Jones, May/June 93, p 21)

A single payer plan would also put the whole medical insurance industry out of business, because the government would collect monies that citizens would normally pay out as premiums in the form of taxes.

Polls done for Bill Clinton during the 1992 campaign revealed that approximately 33% of voters supported national health care reform along the lines of the Canadian system, and the more that other voters found out about it, the higher support levels went. The main tactic used by the insurance industry to prevent public support from building around a single-payer system has been to ensure that other, competing "reform" plans would be central to any health care reform agenda.

Consideration of a single-payer system was thus bumped off the table almost immediately as too unworkable and disruptive to the U.S. economy. It has also been alleged that the insurance industry has actively worked to discredit the Canadian system by feeding exaggerated stories to the U.S. media about the system's supposed deficiencies - waiting lines, lack of access to sophisticated technology, etc.

The centerpiece of the Clinton Administration's Health Care Reform Task Force proposal is "managed competition," a plan involving the formation of large, regional, managed-care health corporations similar to present HMO's but bigger. Managed competition preserves the role of the insurance industry in the health care system, and thus achieves the industry's main goal of ensuring its own survival through blocking public consideration of a single-payer plan.

The concept of managed competition itself dates to the mid-1970s, when it was designed by an informal think tank known as the Jackson Hole Group, essentially a group of insurance industry heavyweights and representatives from organizations like the American Hospital Association and the Pharmaceutical Manufacturers Association, looking to ensure a rosy future for their respective profit margins. President Clinton himself has stated his unswerving opposition to the concept of a single payer plan, saying that managed competition is the only option.

Thus ends the story of how health care "reform" has been added to the public agenda. With knowledge of how it got there and who its biggest backers currently are, I can't say I'm very confident about its eventual ability to improve the health of America.

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