POLICY: The Lessons of ’94

Ezra Klein, who I think is hanging with Brian Klepper at Families USA — where Don Berwick is hopefuly showing the link between system reform and insurance reform Friday— has a nice article out on the The Lessons of ’94. I, being biased and an arrogant git, slightly prefer this take on the matter.

But the basic question is, will things be bad enough to override the coming opposition of the health care industry to going after their goose? Remember that we need three convergent factors to actually get health care reform that means anything. 1) The Democrats to win big enough in November to both take White House in a canter, and a bigger chunk of the Senate. 2) A new spirit of political ruthlessness (perhaps they could hire Karl Rove, who seems to have time on his hands?) and 3) radical increase in middle class and more importantly middle-class voter insecurity about their continuity of insurance coverage. Translation for #3 is a bad mother of a recession that seems to have no end.

I don’t think we get any of the above….but at least one guy who seems to understand markets a little better than I (around $6bn better) thinks that #3 is coming.


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  1. Sorry, found it. You need to work past “Salon”.
    I’m sure Republicans, those bastians of fiscal responsibility, will brand the Soros view as just another rant from the devil himself and an athiest plot.
    One line from Soros seems to get to the nub:”It was a shocking abdication of responsibility.”
    The next abdication was the mortgage bailout plan (reward the thieves and suckers). And now this (one time?) infusion of $150b will do little to put people into financial security. It assumes they have cash reserves and just a little nudge will cause them to spend those reserves so we can all go back to the way it was. People have already spent their home equity and max’d out their credit cards, so where’s the cash to come from? I’ve read the next melt down will be the credit card market – even American Express is having trouble collecting payments.
    The $150b just seems like a desparate move by incompetent people – Democrats and Republicans that want to win an election, a very dangerous combination. Reducing interest rates and lower home prices will spur interest in real estate (the beast that got us here) but how do you assess true value when we’ve yet to hit a bottom? The Wall Street mantra of dollar cost averaging allows the insiders to sell and collect profits while the suckers keep buying. Can you spell “ponzi”.

  2. Interesting article. The Clintons overestimated the amount of economic insecurity in the voting public in 1994. The 1990-91 recession was concentrated on Democratic turf-the Northeast and far West Coast, and was led by a sharp downturn in defense spending after the collapse of the Soviet Union. The South and Midwest, with limited defense contracting, barely noticed. The last serious recession in those parts of the country was 27 years ago. Southerners and Midwesterners elected George Bush President. A little more fear isn’t necessarily going to produce a better health reform outcome.
    The Clintons also overestimated the level of voter trust in government and in them. Ezra’s most important statistic- 94% of voters already HAVE health insurance (that number was probably higher in 1994). The Clintons proposed to federalize private health insurance, with brand new government agencies collecting premiums from employers and dispersing them to health plans. They also relied on a mechanism of paying for care that was unproven and required completely re-organizing the care system into risk bearing economic units. A technocratic dream; a political nightmare. The plan was laughably, killingly complex, administratively infeasible, financially opaque and a huge execution risk. Other than that, it was a great plan.
    Remember Ronald Reagan’s “the federal government is the problem” was still alive and well in the electorate, only 43% of whom voted for Bill Clinton. The public was right to be skeptical. It was far from clear that the Clintons’ plan would have helped the voting public (it might have created a lot more Democratic voters, however, among the newly insured). Thanks to Katrina, the bungled war in Iraq and a host of other things, voter trust in governmental competence and in politicians is far lower than 1994, and their tolerance for opaque, difficult to understand policies (and technocrats) is virtually non-existent. Technocrats “planned” and executed the War in Iraq.
    Third (and an area where Hillary’s “learning experience” in 1994 would actually help her in 2009 should she make it to the White House), trust between the Executive Branch and Congress was low in 1994 (and is far lower now). The Clinton White House treated Congressional leaders like children. They actually threatened to “roll” the Democratic Chairman of the Senate Finance Committee if he didn’t co-operate, and to “demonize” any House Democrats that didn’t fall in line. Moynihan believed, correctly, that welfare reform was not only more doable but perhaps also, more important, than health reform, and never got a chance to state his case. Also remember, the Clintons had Democratic majorities in both houses of Congress in 1994. If they’d delivered THEIR OWN PEOPLE, and found about five Republican Senate votes, they could have pulled it off. It didn’t have to be bipartisan, but the process did have to be accessible and flexible. It was neither. They seriously pissed off the Democratic leadership and particularly Democratic moderates in both Houses by treating them like stepchildren in the political process, and got nowhere.
    Unless there is a Democratic landslide next year, which ain’t going to happen, it will take bipartisan support to pass health reform legislation. Ezra’s suggestion that keeping the Jerry Springer political mudfight over SCHIP alive for another year will make it easier to pass health reform is delusional nonsense. Republicans “don’t hate kids” and Democrats don’t want “socialized medicine”. Voters are tired of this crap, and the polarized, cartoon-like, poll-driven calculation behind it. That’s why Obama and McCain are still alive in their respective primaries.
    It is going to take a ton of pragmatism and old fashioned deal making to make health reform happen, as well as a recommitment of Americans to the political process. American Prospect’s Paul Starr had it right in the inaugural issue of the publication seventeen years ago- unless Americans’ faith in the efficacy of government and the political process is restored, the progressive political agenda is not going anywhere. Right on, Paul. That’s the heart of the problem- convincing the 94% of the voting population with health insurance that they are going to be better off after the health reform process than before. That’s a fairly high bar. . .

  3. “but at least one guy who seems to understand markets a little better than I (around $6bn better) thinks that #3 is coming.”
    Can’t get there from here. Any thoughts Matthew on connecting the link? All I get is Yahoo Salon.