Back to the Future? Spectre of Clintoncare hangs over Obama’s Health Care Reform

As a Canadian who has studied U.S. health policy but now works as a policy analyst at the Wellesley Institute in Toronto, I find that Canadians are very interested in potential health care reforms going on South of the border. One of the questions that I am asked most frequently is what the differences are between Obama’s health care proposals and those put forward by the Clintons’ in 1993. This interesting article entitled “The Ghosts of Clintoncare” by Ezra Klein in the Washington Post does a good job of discussing the differences between the reform proposals, both in terms of policy specifics and the politics behind them

While there are some similarities between the proposals, such as both plans including a “pay or play” employer mandate (see my blog post from July 16th), the Clintons sought to reform the entire health care sector through “managed competition,” while Obama is insistent that health insurance will not change for the hundreds of millions of Americans who already have it through their employers.

Klein points out that in the early 1990s, traditional indemnity insurance (where one goes to the hospital or doctor, sends the bill to the insurer and the insurer pays it) was being replaced by managed care – essentially attempts by insurance companies to reduce costs while maintaining quality. This managed care takes place through the now-familiar organizations such as Health Maintenance Organizations (HMOs) and Preferred Provider Organizations (PPOs). Among other things, the Clintons’ 1,342 page plan sought to create competition in the managed care organization market and regulate the insurers.

However, while the Clintons’ plan failed miserably, managed care developed anyway, but without that competition or regulation. Now millions of Americans have insurance through HMOs and PPOs and are in networks where they cannot choose their own doctor or health facility (they must go to HMO-approved providers) and insurers can reject applicants based on pre-existing conditions. At the same time, the insurance market has become increasingly concentrated while premiums (and profits) have skyrocketed.

Obama’s plan, therefore, seeks to mitigate the effects of the “highly concentrated” health insurance market by increasing competition and choice (at least for the self-employed, uninsured and small businesses who can get insurance through the Exchange) through the Health Insurance Exchange. Essentially, Klein argues that the “health insurance exchanges – regulated markets that the government would set up where insurers would compete for business – are the successors to the managed competition that Clinton sought,” albeit with a public insurance option. Adding the public insurance option to the Exchange is intended to further increase competition, give consumers an additional choice and bring down costs.