For two days Clinton moderated his televised town-hall meeting-an idea borrowed from Ross Perot-with the ease of Phil Donahue and the aplomb of David Brinkley. He dropped none of his old ideas, still talking hopefully of plans for government training and infrastructure investments and private tax incentives. But only when talking about health-care-cost control for the sake of deficit reduction and economic growth-another campaign theme of Ross Perot’s-did Clinton show real passion. Such sweeping reform, if achieved, would work like a magic bullet, his advisers believe. The new president could then expand health coverage to people who are now uninsured while also creating genuine budget-deficit reduction. And as a side benefit, the changes just might end two decades of stagnation in American take-home pay.
Clinton wasn’t exaggerating when he said health-care costs are bankrupting the country: half of the projected increase in the budget deficit over the next five years reflects skyrocketing health-care costs. At the same time, rising health costs have destroyed the chance for worker pay gains. Over the past two decades, the annual cost to business of paying wages and fringes-total compensation-has risen by nearly 2 percent a year. “All this increase has gone to increased health-care costs, to increased payroll taxes to pay health care and social security for the elderly, and a little to increased pensions,” says Robert Reischauer, director of the Congressional Budget Office. “There’s simply been nothing left for wage increases.”
Simply put, keeping the health-care system to which Americans are accustomed means saying goodbye to increased take-home pay for most people-unless you happen to work in the health field. Employment of doctors, nurses and other health-care workers accounted for all of the growth in total U.S. employment-1.2 million workers-under George Bush (from December 1988 to September 1992). In 1993, Medicare and Medicaid expenses to the federal government will run an unbelievable $50 billion above the official Congressional Budget Office estimate that was made only two years ago this month. “To paraphrase somebody,” says Paul Krugman of MIT, “we are offering the health industry each year an unlimited budget and they are exceeding it.”
As Clinton clearly understands, this explosion puts everything he wants to do in an iron box. His own health planners are carefully crafting a proposal to gradually extend federally subsidized coverage to 36 million uninsured Americans. Their plan would pay for this by turning all other health care over to government-mandated “managed care” health units (a bit like HMOs), which would compete for customers under a government board that was progressively slowing the growth of all health-care fees and costs. This by itself would do nothing to reduce the federal budget deficit.
Meanwhile, the reforms would create huge problems of their own. For one thing, virtually all private health-insurance systems would be temporarily thrown into the air, creating tremendous anxiety among middle-class Americans even if they ultimately suffer no real reductions in insurance coverage. A second problem: the savings that Clinton’s reforms would achieve would come mostly from private insurance companies. This would force Clinton to promote a large tax increase-ultimately, perhaps, $40 billion to $60 billion a year-in order to convert those savings to pay for public subsidies to the 36 million newly insured.
Elaine Kamarck of the Progressive Policy Institute aptly terms enacting such trade-offs a “political nightmare.” And in plain fact, Clinton would need to bargain with Republican leaders on Capitol Hill for substantial GOP support before obtaining passage of reform legislation. Democrats enjoy majorities in both houses of Congress. Even Clinton can’t expect his party to vote a large tax increase while simultaneously throwing all health insurance up in the air to be rejuggled-without getting Republicans on board to take some of the heat. Even a newly minted president on his honeymoon can persuade his party to take on only so much risk.
There is always a chance that Clinton might shy from real health-care reform and try to rely on tinkering and pure blind luck to carry him through 1996. But swelling budget deficits and continued slow growth would likely crush him. And copping out is not in Clinton’s character. Last week he looked very much like a man preparing for the legislative fight of his life. And the catch phrase of his campaign-“The economy, stupid”-is segueing into a catch phrase for governance: no, stupid, now it’s health care.
Health Spending (as a percent of gross domestic product) 1970 $74.4 billion 2000 $ 1.7 trillion* *ESTIMATE. SOURCE: OFFICE OF NATIONAL HEALTH STATISTICS (BLUMRICH–NEWSWEEK)
