The Welfarization of Health Care

Clinton Healthcare Reform

Magazine article

By: Richard K. Armey and

Newt Gingrich

Date: February 7, 1994

Source: Armey, Richard K. and Newt Gingrich. "The Welfarization of Health Care: Clinton Healthcare Reform." The National Review. February 7, 1994.

About the Author: Richard K. Armey is a former member of the United States House of Representatives. He was the Republican House Majority Leader from 1995 to 2003, beginning his tenure within two years after Newt Gingrich retired from that position. He was among the orchestrators of the so-called Republican Revolution that took place in the early 1990s in the United States Congress. He is the author of several books. Newt Gingrich was the Republican Speaker of the House of Representatives during the Presidency of Bill Clinton (term in office, 1993–2001), between 1995 and 1999. He was among the leaders of what has been called the Republican Revolution in the United States Congress, as he came into political power during a time when there was a shift in power away from the Democratic majority of four decades to a new Republican majority. It was a unique time in American political history as well for the fact that the Republican majority occurred during a democratic Presidency. Time magazine named Gingrich its "Man of the Year" for 1995 for his Congressional leadership role during that transitional period. He retired from public life in 1998, at the end of a period in which he was at the center of considerable professional and personal controversy. Since his retirement, he has begun a new career as a consultant and political analyst and has continued to write and publish works of both fiction and nonfiction, primarily in historical genres.

INTRODUCTION

One of the central tenets of President William Jefferson (Bill) Clinton's first administration was a commitment to implement major health care reform initiatives throughout the United States. Among the goals was creation of a system that would provide universal health care coverage. Clinton announced the health policy reforms, called the Health Security Plan, in a public speech delivered from the floor of the United States House of Representatives on the evening of September 23, 1993. The speech, and the plan outlined by the President, met with public approval, based on results of overnight public opinion polls reported to the media by the White House.

Clinton's Health Care Reform Policy was one among several competing health care reform bills and proposals, beginning with the Affordable Health Care Now Act (HR-3-80), sponsored by Senators Bob Michel and Trent Lott, and followed in short order by the Chafee Bill, the Gramm Bill, the Moynihan Bill, the Mitchell Bill, the McDermott Single-Payer Bill, the Cooper Managed Competition Bill, the Grandy Bill, and the Stearns-Nickles Plan. Ultimately, all were defeated, despite concentrated efforts at consensus-building.

It has been said by political pundits that the Clinton Health Care Reform plan was among the most large-scale strategic miscalculations by an American President in recent American history.

Prior to the introduction of the Clinton plan, viewed by many Democrats as a middle of the road approach when viewed in concert with the numerous health care reform propositions being proposed at the time, many politicians, as well as several large corporate interest groups—most notably the Health Insurance Association of America (HIAA) and the American Medical Association (AMA)—had made public statements endorsing universal health care coverage and sweeping health care reforms. Clinton and his cadre of advisors assumed, based upon available data, that the time was right for putting forth a plan that called for substantial health care reform embedded within a framework of consumer choice and within-market competition. Clinton initially planned to construct and launch the health care reform proposal early in his first year in office. Early economy budget battles forced a lengthy delay in the presentation of the plan. Although the plan was formally announced during the September speech, and the bill introduced shortly thereafter, it was assigned a low priority in the face of more pressing national and international concerns. By early 1994, momentum had begun to build among those who were in opposition of the plan, and the AMA had (partially) withdrawn its endorsement of some of the health care reforms proposed by the Administration.

PRIMARY SOURCE

Americans have three major concerns about health care: 1) gaining portability, or the ability to retain one's insurance upon changing jobs, 2) controlling the rising costs that have consistently outstripped inflation over the past decade, and 3) expanding access to the much-discussed 37 million uninsured.

Unfortunately, the Clinton Administration got sidetracked while crafting the health-care package. Rather than using what's right with American health care to fix what's wrong with American health care (to paraphrase President Clinton's inaugural address), the Clinton team opted for a grand experiment that threatens the quality of care for every American.

President Clinton's Health Security Act casts the entangling net of the welfare state ever wider, hauling America's great middle class into dependency. All Americans will have to rely on the government for health care, and the government will tell them what they can get, where they can get it, whom they can get it from, and how much they can spend for it. If you like the way the Federal Government runs public housing and the state government runs the Department of Motor Vehicles, you'll love health care under the Clinton Plan.

The Health Security Act would create 105 new bureaucracies, expand 47 others, make major changes in the tax laws, and promulgate more than 100 new federal regulations. The bills 1,364 pages are teeming with new quasi-governmental agencies, all overseen by a seven-member National Health board whose decisions would not be subject to judicial review. (It is vintage Bill Clinton that at the same time he is proposing the biggest new entitlement program in half a century, he is advocating the creation of a commission to recommend how to reduce federal entitlement spending.)

This plan is being sold with the slogan, "health care that's always there." It would more aptly be called "Government that's always there." The Clinton plan would include an individual health-security ID card that feeds personal medical information into centralized government data tanks; allotments for the number of medical students who may specialize in any given field; regional alliances carved with the precision of gerrymandered congressional districts; and a global budget capping how much can be spent on health care per year.

Two quotes reveal the very essence of the Clinton plan. The first came on September 22, the evening President Clinton unveiled his reform to a joint session of Congress. CBS News anchor Dan Rather lobbed a few softballs the Lady's way in an exclusive interview. In explaining why the President's government-run approach is better than market-based Republican approaches, Mrs. Clinton noted, "if individuals were required on their own, we wouldn't know quite how to keep track of all of them…The real bottom line is we want everybody in the system, we want everybody insured, and we want to spread that burden fairly so that every person has responsibility for their health care."

"The system." Without the Clinton plan there is no "system," just millions of people, many of whom never get a law degree (let alone a Rhodes Scholarship), making decisions as to what is best for themselves and their families. This simply cannot go on.

The second quote comes from the original draft plan sent to Capitol Hill: "A single benefit package that covers every eligible American eliminates confusion over coverage." That's right—government must decide for the befuddled masses. What ultimately will bring about the demise of the Clinton health-care plan is the utter arrogance that permeates the thing.

A close reading of the bill suggests it has as much to do with enacting unpopular liberal social policies through the back door as it does with providing health care to all Americans. The New Testament sets forth how people should live in about 180,000 words. The health-care bill does it in 260,000. It is a breathtaking display of social engineering, the scope of which has not been seen since the Great Society on the Sixties.

The Clinton plan is a Trojan horse for federally funded abortion, which was rejected by this congress as recently as June. At the same time, the bill denies funds for extended treatment of congenital conditions such as cystic fibrosis, cerebral palsy, and spina bifida.

Robert Reich told the House Energy and Commerce Committee (October 28, 1993) that the new federal entitlement for early retirees would induce early retirement, "opening up all kinds of job opportunities for younger people."

Rural and suburban areas will be lumped into regional alliances with inner cities so that billions of dollars can be siphoned into urban hospitals for treatment of drug addiction, gunshot wounds, and AIDS.

Productive, innovative, entrepreneurial small businesses will subsidize aging dinosaurs and their union work forces, in essence buying out bad labor-management contracts to the tune of about $14 billion per year, according to the Heritage Foundation.

A Graduate Medical Education Board will allocate the number of students per year who can specialize in cardiology, orthopedic surgery, gynecology, etc., basing its decisions on the "national need for new physicians in specific specialties." This, along with "physician retraining programs," is designed to increase the percentage of primary-care physicians from the current level of 40 percent to the Administration's preferred 55 percent, thus overruling patient demand.

Such grandiose social schemes cost money, of course, and the Clinton plan is good old-fashioned income redistribution ("We want to spread that burden fairly"). At least 40 percent will pay more, according to HHS Secretary Donna Shalala, which means it's probably more like 60 percent.

As is often the case with government expansion, the Clinton plan is being sold in the name of "security." The Administration tested focus groups, and wrapped its plan in the word that garnered the warmest response. The promise of security is false, however.

The employer mandate on which the plan's financing rests will result in the loss of hundreds and thousands of jobs, mostly in industries with a high percentage of low-wage and part-time employment (which disproportionately hire women and minorities). It's hard to feel secure without a job, but the President's rhetoric ignores this basic fact of life.

Global budgets and other limits on health-care spending, including a government mandate that real per-capita health-care spending be held constant after 1998, will result in diminished returns on research and development. It's hard to feel secure when a possible cure for your daughter's life-threatening ailment stays on the drawing board because of limited funds.

As Harry and Louise (the couple at the kitchen table in the television ad that so infuriates the First Lady) ask: "What happens when our plan runs out of money?" Judging from the experience of two programs that rely on federally prescribed funding levels—the Indian Health Service and the Veterans Administration health-care system— patients will wait in line for services. According to one doctor who worked in VA hospitals, Myra Kleinpeter, when the money Congress had appropriated ran short, elective surgery, including open-heart surgery, had to be delayed.

Most Americans feel secure with their current doctors, but the Clinton plan would limit a family's ability to retain them. When the fee-for-service plans fill up, patients will be allocated to plans via "random selection." Can there be security in "random selection?"

And anyone who tries to circumvent this bureaucratic nightmare—say, by buying a doctor a case of wine for Christmas in exchange for a little fee-for service—can be barred by the Secretary of HHS from "participation in any applicable health plan." Anyone convicted of "health-care-related crimes or patient abuse" would be subject to a "minimum period of exclusion…not less than five years" (p. 940 of the Health Security Act). Are you feeling more secure yet?

The Administration's early polling data also turned up public concern about "choice," and so every Clinton (Hillary or Bill) speech on health care asserts that their plan assures choice.

One of us asked the First Lady at a hearing, "Let's imagine a typical American family. The husband has an internist he likes. The wife has her gynecologist, with whom she is confident and comfortable. Their children have a pediatrician they like. Is there any chance under your plan that this family would have to go to doctors other than the doctors they've known and relied on for years?"

The First lady conceded that "I can't say that in every instance, in every family that it would not happen" that a family would have to go to other doctors. The Clinton plan is the "which doctor" bill, because after it passes you will be forced to choose which doctors to keep and which ones to drop.

The Federal Government imposed price controls on gasoline in the 1970s, and the result was rationing. Drivers waited in lines for hours on "odd/even" days. Health care is a subject to the same laws of supply and demand.

In the same way Jimmy Carter misdiagnosed the "energy crisis" of the 1970s, Bill Clinton has misdiag-nosed the "health-care crisis" of the 1990s. As Daniel Casse of the Project for the Republican Future noted in a recent Wall Street Journal article, both Carter and Clinton responded with bureaucratic solutions—Carter creating the Department of Energy, Clinton the National Health Board and its teeming offspring—and fit black hats on any who opposed their plans, calling them "naysayers," "profiteers," and "friends of the status quo."

History may not always repeat itself, but Democrats never seem to change their focus from finding new reasons and innovative ways to bring big government further into the lives of the American people. Whether it be the energy "crisis," the environmental "crisis," the homelessness "crisis," the day-care "crisis," or now, the healthcare "crisis," their game plan is fairly constant. By studying history, Republicans can learn from previous mistakes and previous successes.

After defeating President Carter's energy policy, Republicans enacted market-oriented reforms that ended the gasoline lines. Deregulation led, as it inevitably does, to lower prices. By defeating the Clinton plan, Republicans can refocus health-care policy on portability, cost, control, and increased access, and we can do it with market-oriented reform.

President Clinton said in November onMeet the Press,"We're the only people who have a plan." Of course, that's not the truth. Quite the contrary. There's the Chafee bill, the Gramm bill, the McDermott single-payer bill, the Cooper managed-competition bill, the Stearns-Nickles plan, and the bill with the largest number of co-sponsors of all, the Affordable Health Care New Act, HR-3060 introduced (more than a month before the Clinton plan was brought to the Hill) by House Republican Leader Bob Michel (R. Ill) and Senate Republican Conference Secretary Trout Lott (R., Miss.).

The Michel-Lott bill provides a common-sense approach to the three problems that most concern Americans about their health care, without losing sight of the fact that 85 percent of the people have health insurance and 85 percent of them are happy with their own health care.

The GOP bill, shepherded through the House Republican Conference by former high-school wrestling coach Dennis Hastert (R., Ill.) and crafted largely by Tom Bliley (R., Va.), Nancy Johnson (R., Conn.), and Marge Reukema (R., N.J.), begins by looking at the nature of the uninsured.

The figure of 37 million uninsured is the Democrats' rhetorical leverage. But the population of uninsured is constantly in flux; according to a 1990 Urban Institute study more than half of those 37 million will be insured in less than four months, and nearly three-fourths will be insured in less than a year. Other estimates have put the number of the "chronically and involuntarily" uninsured at between 10 and 15 million people, or about 6 percent of the population.

Instead of compelling all Americans to change health-care practices that the vast majority find satisfactory for the benefit of 6 percent of the population, the Michel-Lott bill focuses on expanding access through direct subsidy and market reforms.

It would guarantee continue access to coverage for employees changing jobs. It would establish Medical Savings Accounts so families could serve thousands of dollars per year tax-free, and roll the account over year after year to build. As long as the funds were used for health care, they would remain tax free; otherwise withdrawals would be treated as taxable income and subject to a 10 percent penalty. The bill also changes the tax code to treat long-term-care insurance the same as other health-insurance plans, thus making it easier for older Americans to obtain coverage.

The Michel-Lott bill addresses the underlying causes of rising costs in health care, as opposed to artificially imposing government price controls. Physicians pay nearly $6 billion annually in liability premiums, according to the AMA, and defensive medicine costs the nation between $7 and $12 billion per year. Our Republican bill deals with both these problems by limiting frivolous lawsuits with serious malpractice reforms.

Our bill would cost about $20 billion over five years, most of it to pay for subsidies to families below the poverty line who still do not qualify for Medicaid, for more community health centers targeted for poor women and children, for emergency services for rural communities, and for 100 percent health-insurance deductibility for the self-employed (up from 25 percent). All of it is on the books and paid for, while Clinton's funding is dubious at best, and he seeks to keep the employer/employee payroll taxes—a/k/a the "premiums"—off budget.

According to a new analysis by Morgan Reynolds and Lawrence Hunter, Republican staff economists at the Joint Economic Committee, the shortfall between promised benefits and anticipated revenue in the Clinton plan will be about $425 billion in the year 2000, and will accumulate to more than $1 trillion in the first eight years of implementation.

If the Clinton plan becomes law, therefore, Congress will face some unsavory policy options in the year 2000, specifically: 1) increasing the annual budget deficit by about $425 billion, or 2) raising taxes by the same amount (about $3,500 per household), or 3) diminishing health care by $425 billion (probably through price controls that would result in rationing, as has been the case in other countries), or 4) some combination of the three.

Rarely have Americans been presented with a more stark contrast in policy approaches. The Clinton path leads to a complete government takeover of 14 percent of the U.S. economy. It's a top-down, welfare-state approach that diminishes personal freedom, choice, and quality and would convert a vibrant, innovative industry into a drab, lethargic bureaucracy.

The Republican approach uses what's right with America to fix what's wrong with America, vesting individuals with greater discretion and cutting back on the regulation and litigation that are causing most of the problems Americans face in health care today.

SIGNIFICANCE

At various times during the final decades of the twentieth century, U.S. law and policy makers suggested the creation of a universal health care system to address the issue of adequate and appropriate health care coverage for all of the country's inhabitants. Each time this occurred, opposing factions squashed the efforts. In the early 1990s, Presidential candidate Bill Clinton launched a substantial health care reform effort. The medical superstructure, including the AMA and the HIAA, voiced their support of health care reforms, particularly as the burden of absorbing the cost of health care provision to the uninsured would be eliminated by a universal coverage system. At the same time, the American public indicated statistically significant endorsement of sweeping health care reforms, as well as support for universal health care coverage. In 1993, when Clinton first announced his plan, momentum was still strong. Had it gone to vote at that time, it might have had a reasonable chance at passage. However, it was several months before any action could be taken.

By early 1994, the economy of the country was improving and unemployment was down, resulting in a larger proportion of the population having health care coverage. Health care costs had decreased as inflation was lessened by the improving economy, so Americans were far less receptive to considering detailed plans centered around the concept of physician assignment and cost controls. Republican politicians strongly opposed the health care reform policies endorsed by the Clinton administration, as they considered them broadening of bureaucracy and insinuating the power of the government into the everyday lives of the American population. Many others criticized the plan as being too cumbersome and difficult to understand.

The proposal was lengthy, spanning almost 1500 pages. One of the central requirements of the plan was that employers would be mandated to provide health care coverage to all employees. The coverage was to be managed and provided by a limited number of tightly monitored health maintenance organizations (HMOs). Virtually the entire health insurance industry opposed the plan. Many of those factions alleged that the plan, in addition to being excessively bureaucratic and potentially intrusive into people's private lives, would sharply restrict personal choice in health care decisions and would likely prevent the general public, the large majority of whom had personal health care practitioners with whom they were satisfied, from being able to exercise free choice among health care providers.

The opponents of the plan launched a successful media campaign featuring a middle class-appearing couple referred to as "Harry and Louise," who lamented over their inability to navigate what they described as a bureaucratic and administrative boon-doggle in order to obtain basic health care provision. One of the many apparent strengths of the campaign was the depiction of a middle class that was unable to successfully manage their health care, despite their best efforts—as this subtly suggested that the Clinton administration was denigrating the middle class— which forms the basis of the working, voting, and privately paying (in contrast to those who need to make use of local, state, and federally funded health care options) health-care utilizing public. There was much fragmentation in Congress, as many put forth competing plans, rather than rallying around one or two and negotiating a viable compromise bill. Within just over a year of the plan's initial announcement by Clinton, on September 26, 1994, Senate Majority Leader George Mitchell publicly announced that the bill was defeated and would no longer be considered during that particular Congressional session.

FURTHER RESOURCES

Books

Bowman, Karlyn H. The 1993–1994 Debate on Health Care reform: Did the Polls Mislead the Policy Makers?. Washington, D,C,: American Enterprise Institute, 1994.

Chapman, Audrey R., ed. Health Care Reform: A Human Rights Approach. Washington, D,C,: Georgetown University Press, 1994.

Flood, Colleen M. International Health Care Reform: A Legal, Economic and Political Analysis. London, United Kingdom: Routledge, 2000.

Rushefsky, Mark and Kant Patel. Politics, Power and Policy-Making: The Case of Welfare Reform in the 1990s. Armonk, New York: M.E. Sharpe, 1998.

Shelton, Michael W. Talk of Power, Power of Talk: The 1994 Health Care Debate and Beyond. Westport, Connecticut: Praeger, 2000.

Periodicals

"The Beginning of Health Care Reform: The Clinton Plan." The New England Journal of Medicine. 329(21) (November 18, 1993): 1569–1570.

Web sites

The Health Security Act of 1993. "Health Care That's Always There - Executive Summary." <http://www.ibiblio.org/nhs/executive/X-Summary-toc.html> (accessed May 20, 2006).