Robert Rubin and Jacob Weisberg's In an Uncertain World on health care:
pp. 149-150: ...giving the Health Care Task Force a hundred-day deadline to submit legislation was probably unrealistic. More significantly, health care cuts across much of the domestic side of the government, and significant participants in the administration--including the members of the economic team, even though most agreed with the general approach--didn't think, at least until nearer the end, that this process aired their views in a way that seriously affected decision making. Consequently, people whose internal backing was crucial too often felt somewhat disaffected, and cooperation was less than it could have been. At one point, for instance, Lloyd Bentsen said he couldn't produce cost estimates because he didn't feel adequately informed. Also, important arguments and criticism weren't exposed in the way that would have occurred in an NEC-type decision-making process.
And, of course, the health reform process had the additional complication of having the First Lady in charge. I [had] told [Clinton] I liked the idea--she was smart and effective and clearly knew the subject well.... What I didn't understand at that stage was how being the President's wife would complicate her role.... People tend to pull their punches and to be less forthcoming in dealing with a President's family member...
Hmmm... That's slightly differently from how I, at least, remember it. If I recall correctly, it was the career staff analysts who told Bentsen that Hillary Rodham Clinton's deputy Ira Magaziner had not told them enough about the policies for them to be able to estimate how much they would cost: it wasn't Bentsen who was being uncooperative, it was Magaziner. It wasn't so much that cooperation was less than it could have been because of disaffection, but rather that the structure of the effort made cooperation next to impossible.
If we were supposed to clear it with Ira Magaziner's office in the White House before we could go talk to Moynihan's office about Baumol's "cost disease" and its implications for the long-term trend of national health spending, and if Ira Magaziner's office never got back to us, then a lot of the normal conversations informing and teaching people about what is going on never happened. "We appeal to the professor inside Senator Moynihan," the plan was. "We hold an after-dinner symposium--a symposium in the old sense of the word, with very good liquor. We invite Will Baumol, we invite Alan Blinder and a bunch of the guys, we talk about long-term trends in health-care technology and why it seems that each possible alternative plan is worse in some critical dimension. We beg for Moynihan's help. We appeal to him as a Senator and as a policy intellectual who regards himself as the guardian of the social-insurance system." It never happened.
Or take Godfather's Pizza, a relatively-small pizza chain in the heartland employing largely low-wage workers. Its CEO ran around the country talking about how "Hillarycare" would bankrupt his business and throw all of his workers out of work. But Godfather's Pizza, as best as we could calculate it, would have been the recipient of enormous subsidies under the reform plan: while other businesses and their workers would have been essentially paying full freight for their health insurance, the government would pay forty cents on the dollar for Godfather's Pizza employees. The effect of the reform plan on Godfather's Pizza was to give at a chance to act as a group purchasing agent for its employees and buy something many of them dearly wanted--health insurance--at 40% off. Now what kind of boss would turn down such a deal? (The CEO of Godfather's Pizza, of course.) We at Treasury were ready to go with analyses, studies, breakdowns of claims by small-business CEOs contrasted with reality. But when we asked the White House for permission to proceed, we were told they needed to think about it.
Or take June O'Neill, wandering around Washington with dire predictions of massive falls in employment if health care reform passed. Somehow--in all her briefings and all her talks with reporters--she never mentioned that in her model employment fell because after health reform people would no longer want to work. The "job losses" in her computer runs were people say, "Thank God we have national health insurance! I no longer have to work at that crappy job I don't want in order to get coverage!" They were not pushed out of work because it cost businesses too much to employ them--the utility of those who were no longer employed was unambiguously higher as a result of health reform. (June O'Neill was later rewarded for her work by being made head of the Congressional Budget Office.) It seemed to us in Treasury that somebody should have called June O'Neill on this: had a big briefing with transparencies and charts, going through her models and showing how much better off her model's "job losers" considered themselves to be as a result of health reform. Once again, the White House said that it "had to think about it," and it never happened.
Perhaps our memos and plans were thrown into the wastebasket by interns who had no clue how much damage June O'Neill, Godfather's Pizza, and company were doing among the key blocks of centrists needed to pass health care reform. Perhaps the word came down from the highest levels that we needed to focus on the positive things reform would do and simply ignore the complaints of critics. Perhaps Treasury and CEA were never forgiven for having accurately told Ira Magaziner what the Congressional Budget Office would think of his plan--and of how key legislative players like Moynihan, Breaux, and Cooper would assess it. Perhaps the insistence on centralized control over the communications process meant that too many pieces of paper passed in front of too few eyes, which glazed over.
Perhaps it was a fear that if we were let off our leashes, we might say what we thought about the plan: that there was no way a benefit package that big could be put into effect while lowering short-run national and government health spending, that it was risking bureaucratic breakdown to try to do such a big benefit package on the cheap in the short run by imposing a bizarre regime of premium-cap price controls, and that we shouldn't try--that the object of the thing was to give more people the resources to go to the doctor more often and not to make people wait sixmonths for appointments, that increased demand for health services was bound to boost large cost components like nurses' salaries, and that the Congress needed to choose in the short run between a smaller benefit package on the one hand and a bigger benefit package funded by some tax increases on the other (and who knew: maybe in the long run Alain Enthoven's hopes about "managed competition" changing the long-run trend of health care prices would come true).
Posted by DeLong at November 26, 2003 11:29 AM | TrackBack
This rings true to me:
"Perhaps Treasury and CEA were never forgiven for having accurately told Ira Magaziner what the Congressional Budget Office would think of his plan--and of how key legislative players like Moynihan, Breaux, and Cooper would assess it."
Magaziner had a Kissinger-sized ego and seemed to think he knew better than everybody - including Treasury, CEA, private industry and all the other participants in possible health care reform. Magaziner is clearly brilliant in a theoretical sense, but he hasn't enough practical experience in life's most important endeavors: bartending, taxidriving and grocery-bag shopping.
Posted by: Anarchus on November 26, 2003 03:03 PMare those scare quotes around cost disease? I cost disease a bogus concept. I hope not, because then I have a lot of explaining to do.
Posted by: c. on November 26, 2003 06:26 PMare those scare quotes around cost disease? I cost disease a bogus concept. I hope not, because then I have a lot of explaining to do.
Posted by: c. on November 26, 2003 06:27 PMare those scare quotes around cost disease? I cost disease a bogus concept. I hope not, because then I have a lot of explaining to do.
Posted by: c. on November 26, 2003 06:31 PMLet me see if I understand this. The CEO of Godfather’s Pizza (sounds like someone you don’t want to mess with) doesn’t understand what a good deal he was being offered for his employees. Evidently he couldn’t do the accounting. But the Health Care Task Force knows better than he even though they can’t calculate the most basic item: how much the program will cost. But they have an excuse; they can’t communicate with each other. I think the members of the task force should go out into the world and run something like pizza shop to establish their bona fides before telling other people what’s how to make business decisions.
Posted by: A. Zarkov on November 26, 2003 07:06 PMOh, I think he understood what was going on very well...
Posted by: Brad DeLong on November 26, 2003 07:36 PMEven at 40% off (off what?) perhaps the low-paid Godfather’s Pizza workers still couldn’t afford health insurance unless their employer kicked in something. And I suppose the CEO was a cheap sob and didn’t want to do that, so he lobbied against the program.
I think this shows why we should separate heath care from employment. I believe health insurance was first offered to employees during World War II. It was a way for employers to attract workers without violating the wage controls then in place. So employer provided health (really sick) insurance is really an accident of history and leads to economic distortions. Now in some cases the insurance benefit can be worth more than the salary.
But if we offer universal free medical services, while not controlling immigration, won’t we suffer escalating costs as foreigners sneak in to get medical care? It might already be a serious problem. I don’t know.
Magaziner will occupy a circle in hell where none of his over complicated plans ever work...Of course the same thing is true of everything he touches on earth only here he is able to talk people into trying them.
Posted by: Joshua Halpern on November 26, 2003 10:02 PMOne wonders if the White House quite wanted to win; it's a question I keep asking myself about Democrats these days.
Posted by: Randolph Fritz on November 26, 2003 10:33 PMOf course, Rubin was one of a few people in the white house with enough political pull to change the process and the package, had he chosen to do so...
Posted by: CalDem on November 26, 2003 11:40 PMWith hindsight, the project was simply "a bridge tto far" (the telling description of Montogomery's untypically risky Arnhem offensive of autumn 1944).
Would it not have been more prudent to create first a comprehensive plan for children - "Medichild" which would have led to unstoppable pressures to fill in the remaining gap for working adults later?
The Founding Fathers failed to abolish slavery partly because abolitionists went for the maximum solution - buying out all the slave-owners at once. The morally messy but more workable British solution was to stop the slave trade first; this condemned a generation of West Indian slaves but freed their children.
Posted by: James on November 27, 2003 02:05 AMA PEACEFUL REVOLT AGAINST THE BUSH ADMINISTRAION AND THE REPUBLICAN PARTY
INSTEAD OF COMPLAINING ABOUT REPUBLICANS, PUNISH REPUBLICANS.
I have started the Buy nothing on Fridays movement.
The Buy nothing Friday movement will work this way.
You will tell your friends and family and colleagues who do not use the net, to avoid buying anything on Fridays. You and everyone you speak to will tell their merchants that we do not support the chimp and we're going on a purchasing strike on every Friday until the Nov 2004 election. You also tell them that you hope they will do everything they can to help vote the chimp out and their republican congresspeople out in 2004.
You will tell your friends, family and merchants If the chimp steals another election or somehow wins, you will also avoid purchasing items on Thursday and this will inflict more punishment on them for not doing enough to unseat the chimp in the 2004 election.
We're doing this to tell businesses in America that we had no confidence in the CHIMP from the day he stole the election on Dec 12, 2000 and that we still have no confidence in him now and that we do not want him to serve another 4 years. RECALL BUSH in 2004.
Petition: TELL CONGRESS WE WANT A PRESCRIPTION DRUG BENEFIT UNDER MEDICARE PART B
(put this link in a browser at work and at a public library and leave the page showing. Make it a browser favorite too)
Location: http://www.thePetitionSite.com/takeaction/383366962
Boycott the LA Dodgers, Arnold's movies, the Viper Car Alarm, Disneyland until Arnold resigns leaving Cruz Bustamante to serve as Governor.
Spread the word.
Do not go to any games where the LA Dodgers appear as visitors or at home and tell the Dodgers you will see their games after they get Arnold to resign. Browse http://www.dodgers.com and send them email from their website telling them to get Arnold to resign or you will not see their games.
Browse these websites
http://www.schwarzenegger.com and email them from their site that you will not buy nor rent Arnold's movies from the video store.
http://www.directed.com makers of the Viper Car Alarm once owned by Darrell Issa and email them from their website that you will not buy the Viper Car alarm.
http://www.disneyland.com and email from their website that you will not go to Disney Land.
You will refrain from doing business with these 4 entities until Arnold Schwarzenegger resigns leaving Cruz Bustamante to take office as Governor.
Stop the Republican Texas redistricting effort.
Call JC Penney Corporate Headquarters in Plano, Texas and tell them unless they get Governor Goodhair Perry to stop redistricting until 2010 when it should happen again, you will not set foot in another JC Penney Store again.
Simple.
So let it get written, so let it get done.
Call them at 1-800-322-1189
Petition: TELL CONGRESS YOU DON'T SUPPORT THE REPUBLICAN AGENDA
Location: http://www.thePetitionSite.com/takeaction/630654745
"The modern conservative is engaged in one of man's oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness."
- John Kenneth Galbraith (1908 - )
The George W Bush 2000 Stolen Election Commemorative Gold Coin
http://www.stolenelectioncoin.com
A PEACEFUL REVOLT AGAINST THE BUSH ADMINISTRAION AND THE REPUBLICAN PARTY
INSTEAD OF COMPLAINING ABOUT REPUBLICANS, PUNISH REPUBLICANS.
I have started the Buy nothing on Fridays movement.
The Buy nothing Friday movement will work this way.
You will tell your friends and family and colleagues who do not use the net, to avoid buying anything on Fridays. You and everyone you speak to will tell their merchants that we do not support the chimp and we're going on a purchasing strike on every Friday until the Nov 2004 election. You also tell them that you hope they will do everything they can to help vote the chimp out and their republican congresspeople out in 2004.
You will tell your friends, family and merchants If the chimp steals another election or somehow wins, you will also avoid purchasing items on Thursday and this will inflict more punishment on them for not doing enough to unseat the chimp in the 2004 election.
We're doing this to tell businesses in America that we had no confidence in the CHIMP from the day he stole the election on Dec 12, 2000 and that we still have no confidence in him now and that we do not want him to serve another 4 years. RECALL BUSH in 2004.
Petition: TELL CONGRESS WE WANT A PRESCRIPTION DRUG BENEFIT UNDER MEDICARE PART B
(put this link in a browser at work and at a public library and leave the page showing. Make it a browser favorite too)
Location: http://www.thePetitionSite.com/takeaction/383366962
Boycott the LA Dodgers, Arnold's movies, the Viper Car Alarm, Disneyland until Arnold resigns leaving Cruz Bustamante to serve as Governor.
Spread the word.
Do not go to any games where the LA Dodgers appear as visitors or at home and tell the Dodgers you will see their games after they get Arnold to resign. Browse http://www.dodgers.com and send them email from their website telling them to get Arnold to resign or you will not see their games.
Browse these websites
http://www.schwarzenegger.com and email them from their site that you will not buy nor rent Arnold's movies from the video store.
http://www.directed.com makers of the Viper Car Alarm once owned by Darrell Issa and email them from their website that you will not buy the Viper Car alarm.
http://www.disneyland.com and email from their website that you will not go to Disney Land.
You will refrain from doing business with these 4 entities until Arnold Schwarzenegger resigns leaving Cruz Bustamante to take office as Governor.
Stop the Republican Texas redistricting effort.
Call JC Penney Corporate Headquarters in Plano, Texas and tell them unless they get Governor Goodhair Perry to stop redistricting until 2010 when it should happen again, you will not set foot in another JC Penney Store again.
Simple.
So let it get written, so let it get done.
Call them at 1-800-322-1189
Petition: TELL CONGRESS YOU DON'T SUPPORT THE REPUBLICAN AGENDA
Location: http://www.thePetitionSite.com/takeaction/630654745
"The modern conservative is engaged in one of man's oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness."
- John Kenneth Galbraith (1908 - )
The George W Bush 2000 Stolen Election Commemorative Gold Coin
http://www.stolenelectioncoin.com
A PEACEFUL REVOLT AGAINST THE BUSH ADMINISTRAION AND THE REPUBLICAN PARTY
INSTEAD OF COMPLAINING ABOUT REPUBLICANS, PUNISH REPUBLICANS.
I have started the Buy nothing on Fridays movement.
The Buy nothing Friday movement will work this way.
You will tell your friends and family and colleagues who do not use the net, to avoid buying anything on Fridays. You and everyone you speak to will tell their merchants that we do not support the chimp and we're going on a purchasing strike on every Friday until the Nov 2004 election. You also tell them that you hope they will do everything they can to help vote the chimp out and their republican congresspeople out in 2004.
You will tell your friends, family and merchants If the chimp steals another election or somehow wins, you will also avoid purchasing items on Thursday and this will inflict more punishment on them for not doing enough to unseat the chimp in the 2004 election.
We're doing this to tell businesses in America that we had no confidence in the CHIMP from the day he stole the election on Dec 12, 2000 and that we still have no confidence in him now and that we do not want him to serve another 4 years. RECALL BUSH in 2004.
Petition: TELL CONGRESS WE WANT A PRESCRIPTION DRUG BENEFIT UNDER MEDICARE PART B
(put this link in a browser at work and at a public library and leave the page showing. Make it a browser favorite too)
Location: http://www.thePetitionSite.com/takeaction/383366962
Boycott the LA Dodgers, Arnold's movies, the Viper Car Alarm, Disneyland until Arnold resigns leaving Cruz Bustamante to serve as Governor.
Spread the word.
Do not go to any games where the LA Dodgers appear as visitors or at home and tell the Dodgers you will see their games after they get Arnold to resign. Browse http://www.dodgers.com and send them email from their website telling them to get Arnold to resign or you will not see their games.
Browse these websites
http://www.schwarzenegger.com and email them from their site that you will not buy nor rent Arnold's movies from the video store.
http://www.directed.com makers of the Viper Car Alarm once owned by Darrell Issa and email them from their website that you will not buy the Viper Car alarm.
http://www.disneyland.com and email from their website that you will not go to Disney Land.
You will refrain from doing business with these 4 entities until Arnold Schwarzenegger resigns leaving Cruz Bustamante to take office as Governor.
Stop the Republican Texas redistricting effort.
Call JC Penney Corporate Headquarters in Plano, Texas and tell them unless they get Governor Goodhair Perry to stop redistricting until 2010 when it should happen again, you will not set foot in another JC Penney Store again.
Simple.
So let it get written, so let it get done.
Call them at 1-800-322-1189
Petition: TELL CONGRESS YOU DON'T SUPPORT THE REPUBLICAN AGENDA
Location: http://www.thePetitionSite.com/takeaction/630654745
"The modern conservative is engaged in one of man's oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness."
- John Kenneth Galbraith (1908 - )
The George W Bush 2000 Stolen Election Commemorative Gold Coin
http://www.stolenelectioncoin.com
ooops the comment server took so long i accidentally entered duplicate posts. sorry.
Posted by: buckfush on November 27, 2003 04:57 AMThanks for the history lesson.
WIth the latest Medicare change, I think the GOP has opened a Pandora's box. They are paying for drugs. This is supported by the Pharmaceutical companies. Never mind that million dollar advertising budgets have people taking drugs they really don't need or replace needed lifestyle changes with drugs. Many doctors will prescribe something (anything) just to make the patients feels their visit was worthwhile. The new bill will exacerbate the problem.
The other problem is that Congress has inserted another layer of bureaucracy by having the government pay middleman insurance companies. This will greatly increase the expense. Plus it is questionable that insurance for drugs will work. Krugman summarizes the problem nicely.
http://www.pkarchive.org/column/72600.html
In short, the GOP has now given seniors prescription drugs, but in the form of an unworkable budget busting program. Once given, it will not be taken away. There will be pressure to fix the problems. We may yet get closer to the Democrats solution on this when implementation requires facing reality. This will include Wal-Mart style bargaining with the pharmaceutical mfgs and cutting the private insurers out of the loop. This will be done kicking and screaming, but the business interests will see the handwriting on the wall. Give up a few of the golden eggs or kill the goose.
Posted by: bakho on November 27, 2003 10:48 AM@Brad:
"June O'Neill was later rewarded for her work by being made head of the Congressional Budget Office."
Aren´t you offering an alternative interpretation here? (There are, after all, countries in the world that offer both cheaper and more inclusive health care insurance. While some of them may possibly have lower medical standards, they surely don´t suffer from coverage-induced absenteeism. It is true, however, that employers *might* be discouraged to hire more expensive workers. Why in the world did O`Neill project an image of the American worker that amounts to reverse American exceptionalism? Is that the kind of perception you can change by debating the details of computer models? If Clinton had succeeded in introducing universal coverage, he might have revived Roosevelt´s New Deal-coalition. There might have been no surpluses, but, OTOH, the deficit would likely not have risen as fast as it did under Bush. Nor would it have been spent as badly. Iraq might not have been liberated, but the number of U.S. casualties in the ill-defined war on terror would also have been lower.)
I wonder whether Bob Rubin really knows the world better than Warren Buffett. I remember Buffett making a statement to the effect that he had "no strong views" on the (un-)desirability of federal budget deficits, whereas he is clearly very concerned about the trade deficit. Rubin´s trademark "strong-dollar" policy was, of course, the result of a diametrically opposed set of priorities.
The potential danger inherent in the trade deficit is not that foreigners might want to dump their dollars and bonds on the U.S. They have a choice of either buying imports or assets for their exports - there is no third option. The real threat is that the exporting countries might someday experience higher levels of internal demand - due to either dissaving or stimulative policies - and force the U.S. to rebuild capacity under inflationary conditions. Foreigners´ "asset dumping" would just signal that the decades of U.S. underinvestment and exported inflation would come to an end. This would be a demand shock - not a "capital supply"-shock (except to the government, which would not be well-positioned to raise more revenue). The positive internal output gap of the U.S. is, after all, dwarfed by its negative external output gap (I know that I am taking a terminological license here - but not without good reason). Then, U.S. citizens would wonder about both rising prices and the lack of universal coverage. They might still be disinclined to vote for the Democrats, but the latter couldn´t claim that they didn´t have a chance to win over voters.