The slow-motion health care crisis began in the 1980s, went into brief remission for part of the nineties, and is now back with a vengeance. The core of the crisis is the decline in employment-based insurance. As recently as 2001, 65 percent of American workers had employment-based coverage. By 2006 that was down to 59 percent, with no sign that the downward trend was coming to an end.[9] What’s driving the decline in employment-based coverage is, in turn, the rising cost of insurance: The average annual premium for family coverage was more than eleven thousand dollars in 2006, more than a quarter of the median worker’s annual earnings.[10] For lower-paid workers that’s just too much —in fact, it’s close to the total annual earnings of a full-time worker paid the minimum wage. One study found that even among “moderate income” Americans, which it defined as members of families with incomes between twenty and thirty-five thousand dollars a year, more than 40 percent were uninsured at some point over a two-year period.[11]
Why is insurance getting more expensive? The answer, perversely, is medical progress. Advances in medical technology mean that doctors can treat many previously untreatable problems, but only at great expense. Insurance companies pay for these treatments but compensate by raising premiums.
The trend of rising medical costs goes back for many decades. Table 8 shows total U.S. health care spending as a percentage of GDP since 1960; except for one brief episode, of which more later, it has been rising steadily. As long as medical costs were relatively low, however, rising spending posed little problem: Americans shouldered the financial burden, and benefited from medical progress.
By the 1980s, however, medical costs had risen to the point where insurance was becoming unaffordable for many employers. As medical costs continued to rise, employers began dropping coverage for their employees, increasing the number of people without insurance, who often fail to receive even basic care. As Robin Wells and I wrote back in 2006:
Our health care system often makes irrational choices, and rising costs exacerbate those irrationalities. Specifically, American health care tends to divide the population into insiders and outsiders. Insiders, who have good insurance, receive everything modern medicine can provide, no matter how expensive. Outsiders, who have poor insurance or none at all, receive very little….
In response to new medical technology, the system-spends even more on insiders. But it compensates for higher spending on insiders, in part, by consigning more people to outsider status—robbing Peter of basic care in order to pay for Paul’s state-of-the-art treatment. Thus we have the cruel paradox that medical progress is bad for many Americans’ health.[12]
| Table 8. Health Care Spending | ||
|---|---|---|
| Year | Percentage of GDP | |
| 1960 | 5.2 | |
| 1970 | 7.2 | |
| 1980 | 9.1 | |
| 1990 | 12.3 | |
| 1993 | 13.7 | |
| 2000 | 13.8 | |
| 2005 | 16.0 | |
Source: Centers for Medicare and Medicaid Services, http://www.cms.hhs .gov/NationalHealthExpendData/.
This cruel paradox was well under way in the 1980s, and it led, for a time, to a powerful movement demanding health care reform. Harris Wofford won a surprise victory in Pennsylvania’s 1991 special senatorial election, in large part by stressing the problems of health care. Bill Clinton picked up the same theme, and it helped elect him in 1992.
But Clinton’s attempt to deliver on his promise failed, and Wofford himself was defeated by Rick Santorum, a full-fledged movement conservative, in 1994. (Santorum, in turn, was defeated solidly in 2006. As I mentioned in chapter 8, he has taken refuge for the time being in a movement think tank, where he is creating a program called “America’s Enemies.”) Why did health care reform fail under Clinton, and why has its time come again?
There were a few months in 1993 when fundamental health care reform seemed unstoppable. But it failed—and the failure of the Clinton plan was followed by the Republican triumph in the 1994 election, a sequence that haunts and intimidates Democrats to this day. Fear of another debacle is one of the main factors limiting the willingness of major Democrats to commit themselves to universal health care now. The question, however, is what lessons we really should learn from 1993.
I find it helpful to divide the reasons for Clinton’s failure into three categories. First, there were the enduring obstacles to reform, which are the same now as they were then. Second, there were aspects of the situation in 1993 that are no longer relevant. Third, there were the avoidable missteps—mistakes Clinton made that don’t have to be repeated.
Let’s start with the enduring obstacles, of which the most fundamental is the implacable opposition of movement conservatives. William Kristol, in the first of a famous series of strategy memos circulated to Republicans in Congress, declared that Republicans should seek to “kill” the Clinton plan. He explained why in the
