There’s only one thing missing: a plan to sell. It’s as though the wonks have designed a big, high-tech engine–without specifying what kind, or how much, fuel it will use. The engine’s contours are familiar: a system of local, government-supervised purchasing cooperatives (“health alliances”) that are supposed to foster competition, cut costs and guarantee care for all. But Clinton’s advisers left open the toughest questions: who pays, how much, to whom and how? It’s up to him to figure out how to reroute the $900 billion Americans now spend on health care each year–and how much new revenue to ask for to get the engine running.
The budget deal made his job tougher. The Democratic “victory,” signed into law last week, left voters distrustful of him and in no mood to pay more new taxes for even the most worthy goal. By imposing higher income-tax rates retroactive to last Jan. 1, Democrats handed the Republicans a made-for-radio issue. “It’s a hot button, all right,” crowed Senate Republican leader Bob Dole.
But the mathematics of the budget deal make it more necessary for the president to look for new taxes. The agreement already turned $64 billion in cuts to deficit reduction over the next five years. Those were savings that Clinton might otherwise have claimed for health-care reform. Even with further cuts, like the $25 billion a year that goes to subsidize care for the uninsured, health reform could wind up costing the federal government an additional $75 billion per year. The main new cost: covering the uninsured.
The biggest political question of 1993–if not of Clinton’s presidency–is where that money will come from. Taxes that are actually called taxes will have to be part of the equation. Magaziner, First Lady Hillary Rodham Clinton and their advisers considered and rejected-a long list of new taxes: on sales, on alcohol, on firearms, on lavish corporate health benefits, on pollution. The president has even been wistfully speculating about a value-added consumption tax, a favored money-raiser among European governments. For the moment, all of these options have been rejected. The only certain one is a hefty new tax on cigarettes; a $2-a-pack levy would raise perhaps $20 billion a year. The administration is still considering taxing the “windfall” profits that doctors and hospitals could make when they are paid for care now donated to the poor.
The rest is supposed to be found somewhere in the vast flow of money now paid in premiums to private insurers. That money will pass to state-run funds, then to the “alliances”, and from there to the providers of health care. Somehow, the theory goes, this river of revenue will contain enough money to help cover the uninsured–and still allow the books to be balanced. How does one create that river without calling it a “tax”? Mrs. Clinton’s preferred method was to create what the wonks call a “wage-based premium”–essentially a new payroll tax. But that was rejected after the budget deal made the T word lethal. Instead, the administration will likely propose that employers and employees pay a flat amount, or “contribution,” into the system. Officials argue that this would, in most cases, simply replace premiums employers already pay.
The critics aren’t buying. It’s going to take a “Rube Goldberg arrangement” to protect low-wage workers, predicted health-care economist Lynn Etheredge. Many Democrats, hearing complaints of businesses back home, oppose requiring that all employers pay a “contribution.” Rep. Jim Cooper of Tennessee says that businesses will “react by simply not hiring new people.” Political analyst Kevin Phillips warns: “He’s about to convince the country that he’s a taxaholic.”
White House insiders privately fret that no one has decided which sales theme to stress: “security” for all or “cost savings” in a system that is spiraling out of control. “We have to decide which one is going to go into the 30-second commercial,” said one aide. “It can’t be both.” Hillary’s allies want to stress security, even if it costs more; deficit hawks, such as Treasury Secretary Lloyd Bentsen, stress savings.
Although Clinton once talked of passage by this summer, his aides now say they’ll be lucky if health-care reform is enacted a year from this fall. But Clintonians are stressing momentum. There will be three days of “teach-ins” for members of Congress in mid-September, followed by a presidential address to the nation on Sept. 22. Political adviser James Carville says that Clinton can’t back off. “When it comes to big issues like jobs, the deficit and health care, it’s best to pile it all on,” he says. “Bill Clinton has started a conversation with the American people on some very important topics. We just have to take on the status quo crowd.”
In the meantime, the idle talk around the White House is about what to call the new health-care command center. Optimists prefer “delivery room.” The cautious settle for “emergency room.” Realists, who know how vicious the fight over healthcare reform will be, call it the “intensivecare unit.” But if Clinton can’t make the numbers add up, they could end up calling it the “morgue.”
