What Hillary Has Learned from '93

By Joe Klein

Back in 1993, when Hillary Clinton first tried to reform the nation's health-insurance system, Senator Daniel Patrick Moynihan warned about the difficulty of getting such a gargantuan bill passed: "The Senate has its own peculiar ecology," he told me. "Something like this passes with 75 votes or not at all." Moynihan was then chairman of the Finance Committee, the Senate's natural choke point for big social-engineering schemes. He was worried that the Clintons, especially the First Lady, were being stubborn, trying to jam their bill through with a bare majority rather than build a bipartisan consensus. At the end of his presidency, I asked Bill Clinton what would have happened if he and Hillary had discarded their 1,300-page brontosaurus of a bill and built a bipartisan consensus around the simpler, sketchier -- but also universal -- Republican plan proposed by Senator John Chafee of Rhode Island. "Maybe that would have worked," Clinton acknowledged. Well, Hillary Clinton has now introduced Health Care 2.0, and -- lo and behold! -- it is a direct descendant of the plan she chose not to support in 1993. And with some clever consensus building, it is just the sort of bill that may have a chance to work.

Warning: any discussion of the American health-insurance system is doomed to density. For many, the very concept of insurance is a natural snooze button. But we do have a problem. Our bizarre, disorganized crazy quilt of a health care system is clattering toward a fall. It is inefficient in the extreme and therefore foolishly expensive. It leaves 47 million people uncovered -- and millions of others worrying about how much coverage they have and how much they'll have to pay for it next year and how long their employers will continue to provide it. The sheer anxiety inherent in all this is an incalculable drag on the economy. The question is, How do you reform the system without making it worse and without scaring the majority of people who are happy with their current doctors and health plans? If you're Hillary Clinton, you start by calling your proposal the American Health Choices Plan -- to emphasize how different it is from the 1993 one-size-fits-all rendition -- and keep on repeating the market-tested word "choice" throughout your speech. You say things like, "Here's how my plan will work: If you have private insurance you like, nothing changes ... You like the doctor you have, you can keep that doctor."

But two important things would change. Clinton's "choices" come with two national mandates -- for individuals and for insurance companies. Individuals will have to buy health insurance, just as car owners have to buy auto insurance. Those who can't afford it will be subsidized by the government, which is why universal plans are so expensive; Clinton's plan has a $110 billion annual budget. But an estimated one-third of the 47 million who don't have health insurance are people who can afford it, mostly healthy young people who don't think they need it. They do, of course; the rest of us subsidize their care when they show up at the emergency room after a skateboarding accident. Their presence in the system will make health insurance less expensive for everyone else. This is a bold move on Clinton's part. Of the major candidates, only John Edwards has presented a plan with a similar requirement. It is a detail that Barack Obama, with his army of youthful supporters and his claim to audacity, avoids.

The other mandate will be far more difficult to impose, however: it requires insurance companies to cover all comers, regardless of age or existing medical conditions. In the trade, this is called community rating, and it will be fought hammer and tongs by the insurance industry. Clinton, Obama and Edwards all require it in their plans; none of the Republicans do. This is where politics intrudes, in the form of a legion of insurance- and medical-industry lobbyists. No universal health care plan will pass unless it has enough support from the business community, especially small business, to overcome the opposition of insurers, doctors and the pharmaceutical industry. And this is where Clinton's plan has a subtle advantage.

To be sure, the three Democratic health care plans are very similar. But they come with body language, with auras and emanations. The Obama body language is cautious and conciliatory. He promises a new style of governing to build a bipartisan consensus. Edwards' body language is populist and defiant. "The system in Washington has been hijacked for the benefit of corporate profits and the very wealthiest," he said, attacking Clinton. "If you defend the system that defeated health care, I don't think you can be a President who will bring health care." Edwards calls for an "employer mandate," requiring businesses to provide insurance for their employees. But if you read the fine print, it's more rhetorical than real; his plan, like the other two, provides an escape hatch for employers. If they don't want to provide health insurance, they can pay for their employees to participate in the Federal Employees Health Benefits Plan, which offers a range of insurance choices. The wonky shorthand for this concept is "pay or play."

Unlike Edwards' populist intensity, Clinton's body language communicates pragmatism and making life easier for the business community. Her "individual" mandate sends a signal to small businesses that they won't be forced into the system. She even rewards small businesses that already provide health insurance with a tax credit. This seems quite astute. The biggest change in the political playing field since 1993 lies in corporate America; it is staggering under the burden of providing health insurance and competing against overseas companies that don't. The price of every U.S.-made automobile famously includes $1,500 of health benefits. If the business community -- minus the insurance industry -- supported reform, the ecology of the Senate might change very quickly. So after she unveiled her plan, I asked Clinton, in a phone interview, what it offered big businesses staggered by health care costs. "Business will have a new set of choices," she said. They'll be able to drop their own plans and opt into the federal system. "I think it would make economic sense for a number of them," she added, "because ... they'll be in a bigger pool and they won't have to pay for the administrative costs they now have." That's a big change for the Clintonistas: Back in 1993, they railed against an individual mandate because it would encourage businesses to dump their employee plans.

In our interview, Clinton said the models for her current proposal were the 1993 Republican plan and the individual-mandate plan passed in Massachusetts by former Governor Mitt Romney. She said one of her top health care advisers, Laurie Rubiner, worked on both the Chafee and Massachusetts plans. Clinton said she was watching the progress in Massachusetts, where the plan is having some problems because sufficient taxes weren't raised to help pay for it. But Romney dashed to dissociate himself from Hillary's homage. He has now distanced himself from his own program and prefers 50 separate state-created plans, an attempt to placate conservatives who abhor anything that emanates from Washington. Romney said Clinton's plan provided "government insurance, not private insurance," which is not true. He also said Clinton was "inspired by the European bureaucracies" -- to which Clinton responded, in our interview, "I think they've created six new bureaucracies to deal with all this [in Massachusetts]," and then noted, aridly, that her new plan creates none. That, for now, is true.

Clinton's utter ease with this topic, her ability to parry Romney's jabs without breaking a sweat, is the latest bit of evidence that her experience -- including past disasters -- may actually count for something. If she is to win the Democratic nomination, Clinton will have to do a fair amount of baggage shedding between now and the primaries. There is all manner of baggage to be shed. Some of it is personal: her cold, calculating image. Some of it -- like her current fund-raising imbroglio, the $850,000 she had to return to the skeevy Norman Hsu -- is a debilitating reminder of Clinton-era misdemeanors. Some of it is beyond her control, and has to do with the prospective First Laddie. Much of the substantive baggage has to do with her stiff-necked mismanagement of health care, her unwillingness to modify her ideas, to play the angles, to be a pol. Her current, clever health care plan makes all that moot. Her load is lighter now, and the job confronting those who would defeat her is getting tougher every week.