Review of Boomerang: Clinton's Health Security Effort and the Turn Against Government in U.S. Politics, by Theda Skocpol. New York: Norton, 1996. 230 pp. $27.50 cloth.

From Contemporary Sociology(March-April 1997): 150-153.

By Paul Starr

Explaining the outcome of a single political initiative poses a dilemma to the structurally minded sociologist. The basic problem of historical sociology -- too many variables, too few cases -- here finds its purest expression. In any complex chain of events, if one or another background condition or strategic choice by an actor had been different, the outcome might plausibly have changed. But since the counterfactuals can't be tested, many conditions and choices may seem plausible causes of the outcome. This ambiguity may not trouble a historian who claims only to narrate how events reached their conclusion and who may be willing to acknowledge an indefinite number of possible contributory factors, including individual personalities and unique circumstances as well as wider social realities. But the institutionally oriented sociologist in search of a more parsimonious explanation confronts the challenge of showing the decisive effects of structure, even though a narrative -- indeed, the writer's own narrative -- may point in many directions.

In her new book, Theda Skocpol offers both a narrative and structural account of the defeat of the Clinton Health Security initiative. Her narrative is attentive to a wide range of conditions and choices that contributed to the final defeat. Then toward the end and especially in her final chapter, Skocpol delineates a causal chain of a more parsimonious and structural kind; here she also offers lessons for future political initiatives. And while I find a great deal to admire about her narrative, her final explanatory account and political counsel seem less persuasive.

On this subject I am not, it must be admitted, a detached reviewer. I helped to develop the ideas that became the Clinton health plan and served as an adviser to the President. Since I attended most of the decision meetings on the plan with President Clinton from February to September 1993, most of my knowledge of the choices he made and alternatives presented is first-hand. After the much-maligned Task Force disbanded in the spring, I was among a small group that stayed on to work out the details of the plan following the President's instructions, to represent the White House in negotiations with cabinet departments, and to explain and defend the plan to the press and the public.

Skocpol's discussion of the Clinton plan itself and the reasoning behind it is generally accurate and even sympathetic. Contrary to the opponents who have represented it as an ideologically driven government takeover of health care, she describes the plan as a "compromise," which is exactly how several of us envisioned the approach during the 1992 campaign and presidential transition (Starr, 1993; Starr and Zelman, 1993). It sought to achieve liberal ends of universal coverage through the conservative means of managed competition among private health plans, with a backup cap on the rate of growth in average insurance premiums. This approach had a political as well as policy rationale. It was meant to be the basis of an alliance that could include conservative Democrats and moderate Republicans and thereby achieve the majorities necessary for congressional passage. But what we saw as compromise, they did not -- especially as the very locus of the political center shifted to the right during the debate. Health care reform that seemed "inevitable" to many serious observers at the start became unthinkable by the end.

Skocpol rejects the view that attributes the outcome of this process primarily to national values and public opinion and instead focuses on why the administration was unable to build on or even sustain the majority support it held in opinion surveys for four to five months after President Clinton's speech to Congress on September 23, 1993. In the narrative, she singles out both strategic choices (such as the Clinton's decision to push NAFTA late in 1993 instead of promptly following up his health proposal) and institutional conditions (for example, the limited grass-roots organization that a Democratic president today can activate). She is particularly critical, and rightly so, of the administration's language and its failure to explain how the reform would work.

Discounting the influence of ideology, Skocpol emphasizes the constraints of the budget and budgetary process, particularly the role of the Congressional Budget Office (CBO), in encouraging the administration to adopt tight regulations. But although the CBO did have this effect, it did so only because Clinton already made decisions about the scale of the program -- for example, the broad benefit package -- that were certainly influenced by political convictions. Elsewhere (1995) I have described the evolutionary path of the health plan as "right, left, right" -- right toward managed competition during the campaign; left toward broader benefits and tighter controls during the White House phase; then (we anticipated) right during the congressional phase toward more limited benefits and looser controls.

But in the end, not just the Clinton health plan but every other plan and attempt at compromise failed in the 103rd Congress. In her treatment of the Congress, Skocpol takes note of the dispersion of power among the Democrats and the turn in strategic thinking that led the Republicans to withdraw cooperation. Many members of Congress who initially put forward health reform proposals later retracted them; Senator Dole, in fact, backpedaled twice from bills he sponsored. Precisely because Clinton had staked so much on reform, his opponents realized they had an enormous amount to gain if he failed.

In her final chapter, "Legacies and Lessons," Skocpol places her emphasis, however, on one key antecedent condition -- the federal deficit brought about by the 1981 tax cuts -- and the effects of this "legacy" on liberal initiatives, which the historian Alan Brinkley has called "Reagan's revenge." In Skocpol's view, the deficit led Clinton to emphasize cost containment or, as she puts it, to "substitute regulations for revenue," thereby dampening support and giving opponents an "ideal" symbol of overreaching federal regulation. And the lesson she derives is that Clinton and the Democrats would have been "politically wiser" to have offered a looser, more expansive program: the President should have "acted more like a Democrat in the New Deal tradition" than a New Democrat concerned about fiscal responsibility.

There are at least three difficulties with this explanatory account and counsel. First, if it had not been for the deficit, Clinton might not have made health reform a top priority in the first place. During the campaign, he raised health care as only one of several domestic issues, and it was of less defining importance to him than economic policy or welfare reform. Skocpol's narrative skips the period between the 1992 election and presidential inauguration, but the transition was the time when health reform rose to the top of Clinton's domestic agenda. New CBO projections that fall for the costs of Medicare and Medicare raised deficit forecasts, leading the President-elect to scale back his planned public investment package. During the transition, Clinton assigned Ira Magaziner not health care, but long-term deficit reduction. Magaziner argued that health reform and deficit reduction went together, and it was this argument that Clinton bought when he chose Magaziner to run the health reform effort.

Second, even if there had been no deficit, any program for universal health insurance in the 1990s had to include strong cost controls. Federal costs for Medicare and Medicaid were projected to grow at a compound rate of 13 percent a year; revenue was growing at less than half as fast. Congress and the cabinet would not have taken seriously any proposal for extending coverage that did not include credible cost containment. The "policy legacy" Clinton confronted was not only the deficit hangover from the Reagan years, but also the failure of earlier health programs to control spending. Indeed, suppose Clinton had been able to zero out the deficit in his first year but persisted in his effort for universal coverage; he would still have required stringent cost controls because outlays would have otherwise been projected to rise much faster than revenues.

Third, it is doubtful that less stringent cost containment would have mollified the Clinton plan's political opponents. Indeed, the opposition would just as likely have been inflamed as disarmed by a looser program that promised even higher federal spending. After all, the Clinton plan already demanded substantial financial obligations from employers and other groups; when many opponents objected to a government takeover, it was the compulsory financial obligations that they chiefly had in mind. Bigger, uncontrolled obligations would not have quieted them.

Skocpol believes that the administration brought unnecessary regulatory complexity upon itself by deciding to finance coverage through a mandate on employers to pay a percentage of insurance premiums rather than through a payroll tax. She attributes this decision to the administration's desire to avoid a new tax, but this was not the only consideration. A payroll tax had substantially different distributive implications. Unless the ceiling on earnings subject to the tax was low (in which case the rate would need to be higher), a payroll tax would have cost middle- and high-income people far more than health insurance now costs them. One of the administration's concerns was to try to avoid making the insured middle-class into financial "losers" under reform; a payroll levy would have done that.

The payroll tax also had other political complications. If the tax had been at a single national rate, it would have redistributed money from states with low health costs (in relation to per capita income) to states with high health costs. That would have been good for New York, but bad for the midwest and for Democratic unity in Congress. Alternatively, if the payroll tax had been set state by state, there would have been a two-fold variation in tax rates, with some states (such as Louisiana, where the rate would have been 12 percent) at politically daunting levels. While insurance premiums under the Clinton plan would have varied by state, that was already the case and therefore was unlikely to become an issue (and never did).

To be sure, the employer mandate didn't avert charges of higher taxes, but it was by far the most politically plausible approach to paying for universal coverage. In early 1993, key business groups were signalling they could live with an employer mandate if it was kept to lower levels. But instead of negotiating a middle ground, these groups within a year abandoned their support as a result of internal conservative mobilizations and "reverse lobbying" (that is, efforts by Republicans in Congress to change the position of the lobbying groups). Clearly, the administration miscalculated how hard it could push business and how much support it could rally, even among Democrats, not just for a mandate, but for any method of finance capable of paying for health insurance for every American. As a supporter of universal coverage, Skocpol seems to want to avoid a conclusion that I resisted at the time: For a program of such magnitude, there was no politically feasible financing strategy in 1994 -- not with the Democratic margins in Congress that Clinton could count on, or more likely not count on.

The inference I draw, therefore, is exactly the opposite of Skocpol's. Instead of adopting a more expansive policy, Clinton would have been far more likely to succeed if from the outset he had gone "smaller, faster" (Starr, 1995). A proposal that was part of Clinton's 1993 budget would have needed only 50 votes to pass the Senate, instead of the 60 required for normal legislation -- and Clinton did not have 60 votes for any substantial domestic initiative, as he learned when his scaled-back stimulus package went down to defeat. One practical option in 1993 would have been an accelerated expansion of Medicaid, combined with greater reliance on managed care, as Tennessee was about to undertake -- the one state in recent years to have raised insurance coverage to near-universal levels.

This kind of approach would not have required changes in insurance arrangements for the middle class; the whole effort could have been quieter and for that very reason less likely to have set off fierce opposition or risked a boomerang. Skocpol defends Clinton's decision to establish the Task Force as reasonable, but it raised public expectations that Clinton could not meet, divided his own government, and helped to mobilize his opponents.

Boomerang suggests that the Clinton health reform effort contributed to the Republican sweep in 1994, and perhaps it did. A normal off-year election, however, produces losses for the president's party; such losses were especially likely in 1994 because of the ongoing party realignment in the South and the administration's failure to show progress on many of its original promises, particularly to voters experiencing a decline in living standards. The additional effect of the failure of health care reform may have stemmed from a combination of anger and disappointment. Perhaps I am a bit touchy on this point (it is a heavy burden to carry), but the voters may have been reacting, not to the content of reform, but to the Democrats' failure to perform: they had promised to do something about health care, and hadn't delivered. Even if the Congress had only passed as tepid a measure as the later Kassebaum-Kennedy bill as a first down payment on reform, Democrats might have averted the backlash that hit them in November 1994.

But, of course, this is as conjectural as imagining what might have happened in the absence of the deficit that Clinton inherited. Without a deficit, the whole Clinton administration would have been so different. And if Clinton had enjoyed the kind of margins in Congress that Franklin Roosevelt had in 1935 or Lyndon Johnson had in 1965, his administration would almost certainly have had different results in health care and other areas. But Clinton knew the budgetary and political conditions and still went ahead. What weight we assign to those conditions and what weight to strategic miscalculation in producing the outcome is inevitably a matter of judgment. My own judgment is this: The political conditions put the full objective of universal coverage out of reach, but the President's and congressional Democrats' strategic choices reduced opportunities and incentives for progress on lesser objectives and thereby led to complete failure. As they say about sending troops abroad, make sure you have an exit strategy.

References

Starr, Paul. 1993. "Healthy Compromise: Universal Coverage and Managed Competition Under a Cap," The American Prospect No. 12 (Winter): 44-52.

Starr, Paul. 1995 "What Went Wrong With Health Reform," The American Prospect, no. 20 (Winter 1995): 20-31.

Starr, Paul, and Zelman, Walter A. 1993 "Bridge to Compromise: Competition Under a Budget," Health Affairs (Supplement): 7-23.