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TIME: Almanac 1995
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1994-03-25
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<text id=93TT0317>
<title>
Oct. 04, 1993: Flies In The Ointment
</title>
<history>
TIME--The Weekly Newsmagazine--1993
Oct. 04, 1993 On The Trail Of Terror
</history>
<article>
<source>Time Magazine</source>
<hdr>
THE PRESIDENCY, Page 30
Flies In The Ointment
</hdr>
<body>
<p>By DAN GOODGAME/WASHINGTON--With reporting by Dick Thompson/Washington
</p>
<p> Last September, economist Henry Aaron was preparing to meet
Bill Clinton to talk about health care when he got a call from
a Clinton aide who said abruptly, "Don't come." A scholar at
the Brookings Institution in Washington, Aaron had been asked
to advise the presidential candidate, then campaigning in Michigan,
on ways to finance his expansive health-care goals. Aaron agreed
to brief him, but declared in advance that he rejected the easy
assumptions of Clinton's staff members that health insurance
could be guaranteed to all merely by targeting "waste, fraud
and abuse." Aaron stated that "the savings that some people
think can be realized are baloney." Then he learned, Aaron says,
why he had been disinvited: "Clinton didn't want to hear that."
</p>
<p> What Clinton desperately needed a year ago was not an economic
quarrel but an attractive campaign issue: a proposal to expand
health insurance to everyone without asking for any painful
trade-offs from the vast majority of Americans. Now that he's
President, however, Clinton is finding it difficult to deliver
the four-course free lunch that he promised. The health-care
initiative he unveiled to the nation last Wednesday, though
widely praised for boldness and compassion, is drawing fire
on precisely the point identified by Aaron and others: the rosy
assumptions that undergird its financing. Senator Pat Moynihan
of New York, chairman of the powerful Finance Committee, spoke
for many fellow Democrats last week when he dismissed those
assumptions as "fantasy" and warned that "we mustn't pretend
that this is going to be free." And Republican lawmakers who
attended the President's address wore lapel buttons that asked
WHO PAYS?
</p>
<p> The White House claims that only about one-fifth of Americans
would pay more for health care under the Clinton plan. Losers
include small-business owners who don't currently provide health
insurance to their workers and would be forced to do so; some
low-wage workers who would lose their jobs as a result of that
new burden; young adults who feel they need no insurance but
would be forced to take--and pay for--it; upper-income families,
who would pay more to keep the health coverage they have; and
smokers, who would pay a new cigarette tax of about $1 a pack.
Under the Clinton plan, according to White House calculations,
most Americans would pay the same or less for health care comparable
to what they now receive.
</p>
<p> Many citizens, however, will dispute the Administration's idea
of "comparable" care. Most Americans with insurance currently
receive treatment through a fee-for-service arrangement with
a particular doctor, and they would have to pay more to keep
that arrangement. The Clinton plan includes strong price incentives
for patients to switch to more economical health maintenance
organizations and preferred provider organizations, in which
groups of doctors and hospitals provide care for a flat fee--and usually at a cost to the patient of longer waiting times
and rationing of specialists' services. "Most people would be
forced into HMOs because that's all they would be able to afford,"
says Representative Jim McDermott, a Democrat from Washington
State who has proposed a "single-payer" health-care system similar
to the one in Canada. White House officials privately explain
that pushing more Americans into HMOs and PPOs is crucial to
cost control, but that is a point the President prefers not
to discuss.
</p>
<p> Perhaps for that reason, early carping about the Clinton plan
has been focused elsewhere, especially on its proposed cuts
of $124 billion over five years from Medicare, the federal program
that insures the elderly. Representative Henry Waxman, a California
Democrat, warns that "there's a lot of concern on the Hill about
the magnitude of savings this plan hopes to achieve, especially
in Medicare." Moynihan says bluntly, "It's not going to happen."
For its part, the White House contends that the elderly as a
group would enjoy a net gain from the health plan, since the
amount Clinton is planning to cut is less than the $152 billion
he would spend on new benefits for senior citizens, including
prescription drugs and long-term care. Probably the softest
number in Clinton's proposal is the assumption that its reform
will achieve savings that rise to nearly $200 billion a year--about one-sixth of the health-care spending covered by Clinton's
plan--mainly by reducing fraud, health-care paperwork, "inappropriate"
treatments and other inefficiencies. Economist Aaron estimates
that even if reform "miraculously eliminated all useless, defensive
medicine," slashed doctors' incomes 20%, cut drug prices enough
to eliminate all pharmaceutical-company profits, doubled the
number of Americans in the most-cost-saving HMOs and accomplished
all plausible administrative efficiencies, it still "would have
achieved barely half the savings called for in the President's
plan."
</p>
<p> Several top officials who helped draft the plan agree that a
more realistic estimate of savings would be about 10%, rather
than 17%. "The assumptions are not dishonest," insists a key
Clinton adviser, "but they are optimistic." Expert estimates
of the savings available ranged widely, from about 10% to 30%.
"We had to pick a number, and we picked a high one."
</p>
<p> If the Clinton plan is passed and fails to achieve the promised
savings from waste, fraud and abuse, health-care experts fear
that the result could be sharp pressure on doctors and other
care providers to cut costs through rationing of medical treatment.
That might hold down total health-care spending and help the
rest of the economy. But unless Clinton prepares Americans for
such a sacrifice, many will feel that reform is costing them
much more than they were promised.
</p>
</body>
</article>
</text>