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Clinton's Risky Faith In A Health Care Fix


Washington Outlook

CLINTON'S RISKY FAITH IN A HEALTH-CARE FIX

When it comes to manipulating the symbols of the Presidency and keeping a tight focus on the economy, Bill Clinton is taking a few pages from Ron-

ald Reagan's script. Now, Clinton's advisers are discovering another similarity: An unwillingness to accept bad news about a central campaign promise.

Reagan clung to the belief that tax cuts would produce a revenue gusher and that the government could save tens of billions by rooting out "waste, fraud, and abuse." Clinton insists that he can both extend medical coverage to all Americans and put the brakes on the runaway cost of health care.

So far, Clinton's health advisers are having as much luck with their boss as the Gipper's aides had shaking his faith in supply-side miracles. On Jan. 11, Clinton's transition team gave him the bad news: Extending benefits to 33 million uninsured Americans would require a higher deficit, new taxes, price controls on medical services--or all three. "It was sticker shock," says one adviser. "The President was very frustrated."

BANISHED DOUBTER. The problems arose from Clinton's embrace of "managed competition," which relies on large purchasing cooperatives to bargain down the cost of medical care. Many Clintonites think this market-based approach can't be counted on to control costs. Transition health director Judith Feder of Georgetown University was one of the doubters. She told Clinton his plan would produce no budget savings.

Longtime Clinton friend Ira Magaziner offered a much rosier view. Based on his 1991 study of health care in Rhode Island, he argued that half of the health-care dollar goes to administrative overhead. Managed competition would squeeze those costs and quickly yield big savings.

Clinton responded with some surgery on his health team. Magaziner was installed as the top White House staffer on health reform. Feder was exiled to the Health & Human Services Dept. To underscore the importance he gives to the health issue, the President handed Hillary Rodham Clinton the tough job of harmonizing policy conflicts and building public support for reform. "She's his closest, most trusted adviser," says a Clinton transition aide. "She'll be able to cut through the personal turf baloney and present him with a clear plan."

But by taking the issue into the First Bedroom, Clinton guarantees that if health reform fizzles, the blame will land squarely on the White House, not on some hapless Cabinet secretary. "He's betting the farm--not just his social policy, but a good chunk of his economic policy, too," says Jack A. Meyer, president of New Directions for Policy, a research group.

Clinton aides say that he had no choice. His vow to overhaul the health system was so central to his victory that failure to deliver would be devastating. "There is no issue on which the stakes are higher," says Democratic pollster Celinda Lake. "Voters are willing to ignore the small issues if he can deliver on the big ones."

But even with Hillary in charge, Clinton aides will have a tough time reconciling the contradictions in his plan. As a result, they're thinking about a phased-in plan that could take years to unfold. For starters, the initial expansion of coverage may be limited to children and pregnant women. And he may have to resort to mandatory price controls to keep spending within his planned ceiling on national health expenditures.

The danger is that four years from now, voters may not see much of the sweeping overhaul that he promised during the campaign. That's why President Clinton is acting so ornery with aides who tell him his prescription won't work.EDITED BY DEIDRE A. DEPKE Edited by Stephen H. Wildstrom Susan B. Garland and Mike McNamee


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