Thirteen years after “HillaryCare,” her failed one-woman crusade for universal healthcare coverage, became a byword for political overreach, Sen. Hillary Clinton is in the health care business once again. On Monday, Clinton unveiled the “American Health Choices Plan,” her latest bid to enact universal coverage by expanding government control over health care. Meet the new Hillary Clinton, same as the old Hillary Clinton.
The style has changed, to be sure. In laying out her new plan, Clinton stressed profusely that it marked a break from the past. “It is not a government takeover of health care,” Clinton lectured earlier this week. “There will be no new bureaucracy.” So far from limiting consumer choices, her new plan “expands personal choice and keeps costs down.” In other words, it’s nothing like the plan that Clinton controversially championed as a First Lady in 1993. That plan, conceived in an unwieldy 1,342-pages and ultimately aborted by a Democratic Congress, would have created a vast new government bureaucracy in a National Health Board while forcing all businesses to provide employees with coverage through government-administered plans. The new plan, by contrast, is all about “choice,” a word the senator employed at least 20 times in her Monday remarks. What’s not to like?
A great deal, actually. Start with the so-called “individual mandate.” This provision of Clinton’s plan would require all Americans to purchase health insurance. Refusal is not option: fail to follow the government’s orders and you will be subject to penalties. If you think this sounds suspiciously like Clinton’s old plan, you haven’t been properly listening to spinmeisters. What makes the new plan different, they say, is that small businesses will no longer be punished for failing to provide insurance. Instead, they will be encouraged to do so through tax credits. Large businesses will still be required to provide insurance.
Two conclusions follow. The first is that Clinton has plainly absorbed the lessons of her 1993 defeat, which sent the country’s leading small-business organization, the National Federation of Independent Businesses, fleeing headlong into the Republican camp. The second is that the concepts of basic economics continue to elude her. How else to account for the senator’s peculiar notion that strong-arming employers to provide coverage -- a measure that will only serve to discourage hiring -- is a step toward progress?
Indeed, like it’s ill-starred predecessor, the new Clinton plan should make even a first-year economics student wince. For instance, Clinton proposes massive regulation of the insurance industry as means to “end discrimination” against those with pre-existing health problems. Aside from exaggerating the insurance industry’s sins in this regard -- industry representatives say that that insurance companies reject only about 3 percent of claims, many of them for experimental procedures -- it also increases government regulation, and thus government’s inefficient reach, into healthcare. An analogous flaw underlies Clinton’s plan to compel drug companies to “offer fair prices.“ Instead of letting the free-market operate, the federal government will become the arbiter of fairness. One need only recall the disastrous price and wage controls of the seventies to see how well this will turn out.
These elements of Clinton‘s plan not only fail an economics test. Grace Marie Turner, president of the Galen Institute on health policy, notes that they also make a mockery of her pledge to provide greater choice to American consumers. “Hillary is saying that people will have more choices, but they will be government-directed choices,” Turner told me. In that sense, she says, “it’s like what she did 14 years ago. But it sounds a lot better.”
If Clinton’s pro-“choice” rhetoric rings hollow, her assurance that the plan will entail no new bureaucracy bespeaks, at best, a willful blindness on the senator’s part. Michael Cannon, a director of health-policy studies at the libertarian Cato Institute, points out that Clinton’s proposal still advances her earlier aim of growing government control over health care -- it just disguises it better. Despite her claim to keep government at bay, Clinton’s plan actually invites more government intrusion into health care. Thus, the plan calls for an expansion of three government-run programs, including Medicare, the State Children’s Health Insurance Program, and the Federal Employee Health Benefit Program. Skeptics aren’t fooled. “There may be no new bureaucracy, but she’s building on existing bureaucracy,” Cato’s Cannon said in an interview.
And then there’s the price tag. By Clinton’s earliest, and no doubt most conservative estimate, her plan will cost $110 billion a year and some $1.1 trillion over 10 years. To pay for it, Clinton has proposed repealing the portion of President Bush’s tax cuts going to Americans making over $250,000 a year. But, as critics note, this is not the silver-bullet solution that Clinton seems to believe. U.S. News & World Report’s James Pethokoukis points out that the $50 billion in expected budget revenue from eliminating the tax cuts will come nowhere close to covering the cost of Clinton’s plan. In fact, the opposite is arguably more likely: By slowing economic growth, the revived taxes may well make it more difficult to generate the required revenue. No less significant is that Clinton has offered no long-term solution to curbing rising health care costs. “Putting a lid on a pressure cooker is not going to work,“ observes the Galen Institute’s Turner. “You have to hold down the fire as well.”
Republicans would seem well placed to capitalize on the shortcomings of Clinton’s plan, but for one obvious problem: they’ve already endorsed many of its worst ideas. As governor of Massachusetts, presidential hopeful Mitt Romney signed into law a plan that, like Clinton’s individual mandate, required every state resident to purchase health insurance. To realize universal coverage in California, Gov. Arnold Schwarzenegger, a declared student of Milton Friedman, followed in Clinton’s footsteps instead by prohibiting insurance companies from denying claims to anyone on the basis of health or age. Hillary Clinton may have lost the battle in 1994. But observing the GOP’s enthusiasm for government intervention into health care, one might conclude that she is winning the war.
All is not lost, however. In taking the national stage, Romney has backtracked from the more statist parts of his Massachusetts plan. Upping the ante, Republican presidential candidate Rudy Giuliani has proposed a free-market friendly plan that, on top of other reforms, would create personal health savings accounts and allow Americans to shop for insurance in other states. Health care reform remains an urgent priority, but Republicans won’t get it done by taking their cues from the woman who engineered the greatest health care policy debacle in recent history. As Michael Cannon says, “You don’t fight HillaryCare by offering Hillary-lite.”