Lessons of the ’93 Healthcare War Muddle the Current Debate

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WASHINGTON, DC — Politicians can spend a lot of time fighting the last war, and so it is with those who are now caucusing in earnest to produce a new healthcare blueprint by next month.

The last healthcare war was Bill and Hillary Rodham Clinton’s attempt to remake the system in 1993, and this year’s negotiators have smartly avoided some of the Clintons’ mistakes.

There is no White House task force raising expectations around the country, while simultaneously giving congressional opponents the time to plot the plan’s demise.

There is no promise of a seamless bureaucracy – no flow charts, no complicated explanations – but rather an intensive focus on problems such as improving information technology, providing consistent benefits, covering everyone, and eliminating unnecessary procedures.

But another "lesson" of the Clinton healthcare debacle is also shadowing the debate on one of the most significant aspects of the plan President Obama campaigned on: the promise to provide a public insurance option that Americans can choose if dissatisfied with private insurers.

And in this case it’s not entirely clear that the alleged lesson of the Clinton years – that Americans prefer private bureaucracies over public ones – is applicable anymore.

In 1993, Democrats were shocked to realize that most Americans were actually pleased with their health plans, and thus vulnerable to Republican assertions that the Clintons’ changes would leave them worse off. Thereafter, it became a truism of healthcare policy that people who are happy with their coverage should be left alone. Reformers should focus instead on providing better alternatives for other people.

Therefore, on the campaign trail last year, both Obama and Hillary Clinton repeatedly emphasized that people who liked their health plans could keep them. Other people would be given the option of buying into "the same healthcare we get in Congress" – code for a government plan that would provide guaranteed benefits.

That framework was popular with voters, but has run up against some serious opposition in Congress – and, of course, in the powerful insurance lobby.

Mitch McConnell, the top Senate Republican, has signaled to Obama that he would be willing to negotiate a truly bipartisan reworking of the health system – as long as the public option was off the table.

In Republican eyes, the public option is a stalking horse for the type of all-government program that terrifies free marketeers.

In the GOP view, pitting a public plan against a menu of private options would be an unfair fight: Congress could cave to public pressure and allow the government plan to run at a loss, thereby offering lower rates or better benefits, while private insurers would be driven out of the market. The government would then become the only show in town, with bureaucrats running the system and taxpayers footing the bills.

And yet many healthcare advocates believe that without the public option, the insurance and pharmaceutical lobbies would use their substantial leverage with Congress to obtain heavy subsidies for themselves while cutting benefits for patients. Only a public plan would be powerful enough to force hospitals and drug companies to reduce costs.

So the debate comes down to something quite elemental – whether Americans trust the public sector or the private sector to run healthcare more efficiently.

In 1993, the answer was clear: Voters’ fear of wasteful government bureaucrats was worse than their fear of heartless private ones. But now, after watching private mortgage brokers, mutual fund managers, and bankers build a system of rampant foreclosures, plummeting property values, and devastating stock losses, the answer isn’t so clear.

But Obama, who wants bipartisan backing for such a major undertaking, seems to be at least weighing the possibility of trading away the public option in exchange for GOP support.

Nancy-Ann DeParle, his top healthcare adviser, continues to emphasize the administration’s support for the public option, but recently raised eyebrows by saying the president is "open to talking about" alternatives.

Meanwhile, Senate Finance Committee chairman Max Baucus has suggested a healthcare bill could go through Congress without the public option, and activists worry that even Health Committee chairman Edward M. Kennedy, their longtime advocate, is considering trading away the public option.

"The right to healthcare you have championed is not the same as the requirement to buy private insurance," declared the liberal group Consumer Watchdog in a pleading letter to Kennedy.

Kennedy spokesman Anthony Coley responded: "No wavering. He will keep pushing for it."
Peter S. Canellos is the Globe’s Washington bureau chief. National Perspective is his weekly analysis of events in the capital and beyond. He can be reached at [email protected].

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