Clinton must hold out for bold health-care reform

Robert Kuttner

May 03, 1993|By Robert Kuttner

REPORTS from the White House health task force suggest that the emerging reform plan is in critical condition. If the plan is to survive, President Clinton himself must overrule his advisers on several key questions.

There is a political logic to overhauling health care: Fundamental reform is politically thinkable today not because insured Americans are suddenly more compassionate about the medically needy, but because middle-class people are worried sick that their own insurance is no longer secure.

Given Mr. Clinton's tenuous majority in Congress, enactment of health reform depends on the president creating a groundswell of support in the country. But that groundswell requires a package that can win enthusiastic middle-class support.

Such a package would cut costs by producing administrative savings, not by restricting benefits. It would create a unified and simplified health program, with everyone securely in the same system.

But unfortunately, budgetary constraints and interest group politics are leading the health task force in precisely the opposite direction. For example, the task force has already recommended that large companies be allowed to keep their own separate health plans.

This would have several disastrous consequences. It would perpetuate the costly fragmentation of the present system. It would leave employees of big firms (who tend to be relatively young, healthy, and hence cheaper to insure) with better coverage at lower cost.

That, in turn, would create a political context in which "reform" meant mainly higher taxes on middle-class voters to buy benefits for others, not to strengthen their own coverage. Taking such a program to the country would backfire.

The task force is also envisioning a slow phase-in of benefits, emphasizing cost-containment now and added coverage later. Reform of nursing care for the elderly would be delayed.

A gradual phase-in with taxes now and benefits later will also backfire. Unless the program is comprehensive enough to win wide voter support, the broad public will tune out and health reform will become just another insider affair: The package eventually legislated will be the lowest common denominator that industry interest groups can agree on.

There is also the issue of how to pay for it. None of the choices is very good, but a combination of "sin taxes" on alcohol and tobacco and a value-added tax has the virtue of raising enough money to do the job properly.

A payroll tax, now under serious consideration, would make it more expensive for business to hire workers and would add to unemployment. Here again, the course of least resistance is a minimal program building on the present employer-based system. This would require less tax revenue -- but it would hardly be worth having.

The president faces a fork in the road. He can embrace a bold reform that stands a chance of making a real difference and tap a reservoir of voter good will. Or he can submit a stripped-down package that will neither command popular support nor deserve it.

Health reform is now more politically arduous than it had to be. For one thing, America waited too long. As recently as 1980, health care consumed only about 9 percent of gross national product, compared to over 14 percent today. As the system has become more expensive, it has become more complex, and its entrenched inefficiencies represent income to potent interest groups that resist fundamental reform.

If we had put in place universal coverage before the system spiraled out of control, it could have been done at far less economic and political cost. The extreme difficulty of reform today is another legacy of the decade of deferral under Ronald Reagan and George Bush.

Moreover, the general strategy of the Clinton task force makes it harder for Mr. Clinton to take the interest groups on. At the outset, the task force calculated that a Canadian-style "single-payer" approach would be too radical a break, and instead decided to build on the present system via "managed competition."

A single-payer system is seemingly a tough sell. It would require putting half a trillion dollars of health charges through a tax-supported system. It would also put out of business the private health insurance industry.

On the other hand, a Canadian-style system would present a clearer politics -- the special interests versus the people -- as well as yielding a better system at the end of the day. By staking out a complex middle ground, Mr. Clinton has invited just as much industry opposition to the program's more far-reaching aspects, but without gaining the offsetting support of the broad public. It's a bad sign that the insurance industry has been running ads supporting something like the emerging plan.

Somehow, through the distractions, Mr. Clinton must focus on the intricate details of health reform, and get them just right.

Otherwise, that "great sucking sound," in Ross Perot's graphic phrase, could be Mr. Clinton's health reform going down the national drain -- and with it the promise of his presidency.

Robert Kuttner writes a syndicated column on economic matters.

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