[N.B. The following is NOT meant to be a complete, or even highly accurate description of attempts at health care reform from 1991 thru 1994. It is, rather, observations and reminiscences from one who was a close observer and sometime participant in those reform wars.]
In 1991, a special election for US Senate in Pennsylvania featured health care costs and access as a central issue. Harris Worford, the first Democrat elected Senator from PA in 30 years, won on a platform calling for national health insurance. That victory, and the incipient economic slowdown, emboldened Democrats to espouse large scale change in the financing and regulation of health care. After Clinton’s victory the next fall, coupled with a Democratic sweep in national and many state legislatures, health care reform seemed set to barrel down the political highways of our nation.
A number of states either studied or actually made significant changes to their health insurance laws, and began a lively set of experiments designed to test different ways to provide and/or pay for health care services.
In Washington state, the newly elected, Democrat controlled legislature, after several years of study, proposed and passed what seemed to be a landmark bill. Several elements were key to this package. First, barriers to health insurance, such as required waiting periods of up to 12 months for medical conditions already being cared for (“pre-existing conditions”), were reduced or eliminated. Second, market forces would be highlighted to help businesses and individuals spend less on their health care/insurance purchases.
To do this, benefit packages were standardized, and insurers would make their products available through regional Health Insurance Purchasing Cooperatives. These HIPCs would be the hub through which insurance would be sold, allowing for comparison among several different insurers, incorporating a spectrum of care systems. For example, one might find the standard benefit package sold by a either a for profit (e.g., Aetna) or not-for-profit (e.g., Blue Cross/Shield), carrier, featuring a broader or narrower collection of providers. Terms like PPO, IPO, and HMO entered household jargon, and marketers scrambled to learn just what might sell in such a marketplace.
The HIPC would not only publicize costs of standardized insurance packages, but also provide clinical outcome and quality data for each insurer’s system of care, and eventually for individual providers and hospitals.
My own company, Group Health Cooperative of Puget Sound, where I was Medical Director, combined the provision of health insurance and a care system into one entity. We had nearly 1000 doctors employed at almost 40 sites across the state, with 1000’s more under contract in private offices. We featured two hospitals of our own, and exclusive contracts with a number of others, one in each community. If you bought our insurance, you got a relatively restricted panel of providers. We also developed other, more open panels, at higher cost.
We felt our closed system would allow us to provide not only equal or better quality, but also equal or lower costs, than any other product in a HIPC. We never got the chance to find out, and I blame the Clintons for that failure.
Because meanwhile, in the Other Washington (as we call it here), Bill had appointed HIlary to head a task force to prepare a bill for nationwide health care reform. They appointed Ira Magaziner to run this behemoth. Mr. Magaziner was a prototypical “policy wonk”, someone whose brainpower far exceeded his knowledge about political realities. They brought in people from all over the country: academic experts, insurance executives, physician leaders, traditional Democratic interest groups such as unions, government funded health care projects, and an endless supply of interns and bureaucrats.
Group Health’s CEO at the time was a regular participant in these sessions, and through him, I got to attend in September 1993 a White House event designed to rally support among physician leaders for this massive project.
My read of the motivation within the White House was to, first, reduce the profligate annual rate of rise in health care costs, and second, make sure all Americans would have the health care they needed, whether they could afford it or not. At least, that’s the message I brought back, one which I thought was worthwhile on both counts. Clinton seemed to recognize that balancing the federal budget (which was what had gotten him elected, thanks to Ross Perot’s incessant whining about the problem as a third party candidate in ’92) really depended on reining in Medicare and Medicaid cost increases; doing that required reining in health care costs in general, as both followed, rather than led the national market. I was prepared to do my part, which in my organization meant doing what we could to reduce our costs over the short term, to help kick start the longer term project.
When we set our rates for the coming year, 1994, we recognized that the increased scrutiny and altered competitive landscape required lower insurance prices. So we dropped our rates by 9%, mirroring what many others were doing in our market. This unprecedented decrease in health insurance costs was repeated the next year, the only time since the 1930s that health insurance costs actually dropped from year to year. Remember, in our state, we had already passed a law which would implement most of the things just being talked about in DC; to us, the future was already here.
Or so we thought.
In November of 1993, we invited Ira Magaziner to talk before our annual managers’ assembly of 1200 Group Health leaders. By that time, I has thoroughly digested all 148 pages of the Washington State health reform bill (already enacted and signed by the governor), and perused most of the 1400 pages (and growing) federal bill. We had clear evidence of the value of the transparent market within the HIPCs created by our own state legislature, having seen the prices drop for the coming year quite dramatically. And a center piece of the federal legislation was also a set of regional HIPCs, patterned after our own.
So what made up the rest of the bulk in the federal bill? It was a maze of price setting disguised as regulation and incentive. Basically, it appeared that the HIPCs were a sham, a sop to those who valued the power of the market to help set prices (if the market were structured correctly). The real meat of the bill was not only a series of what we would now call “earmarks” for classic Democrat constituencies, like trial lawyers, academic medical centers, community health care systems, unions, etc; but also a set of requirements for federal oversight of prices in almost every element imaginable in the health care system.
These folks THOUGHT they were avoiding designing a system of socialized medicine, because (a) providers would still be independent, not employed by the government, (b) insurers would still be able to exist and contract with providers and the purchaser of care (businesses, governments, individuals, and (c) government would not expand its role as a purchaser, beyond covering those not otherwise covered. But they were still moving to far into a command and control economy for health care, in the views of the majority of Americans.
Republicans and entrenched health care special interests could easily see this, and were poised to pounce on the administration as soon as the bill hit Senate and House committees. Despite never having voted for a Republican in my life, I, too, thought the Clintons were over reaching; worse, they were not being pragmatic, but rather, ideological, a sure recipe for failure when dealing with something as large as the health care economy.
So at that meeting, I asked Mr. Magaziner, “Why, when we have examples in several states, including this one, of health insurance price reduction with the mere HINT of increased competition due to HIPCs, do you feel it necessary to CONTROL prices, rather than letting the restructured market operate as you have designed it?”
He basically responded that they didn’t believe that market would work.
Huh? It was working, all around him, out here in the boonies! Right then, I knew were were all doomed. In more ways than one.
The federal bill never got introduced into committee, much less debated or voted on. It died of its own ideological bloat and arrogance. The republicans used this fiasco as a springboard to the “Gingrich revolution”, in which they took control not only of the US House of Representative for the first time in over 40 years, but also flipped many state legislatures, including our own. As a result, our health care reform bill was gutted. HIPCS – out; pre-existing conditions and other barriers to coverage – back in. All that remained was some increased funding for the uninsured employed.
Enough people revolted against the idea of “socialism-lite” which Clinton’s health reform embodied that he quickly backtracked (he called it “triangulation”) towards such republican ideas as welfare “reform”, and banking deregulation. This effectively pulled the political center of the country far enough to the right to allow the election of a gang of incompetent kleptocratic clowns to have free use of our country’s power levers for the past eight years (intern shenanigans in the oval office didn’t help, of course).
So is there a chance for any REAL health care reform in the next two years? And what would that mean, really? What can and should be improved in health financing, provision, and regulation? Stay tuned for my next installment, coming soon.