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A look at President Bill Clinton's efforts to transform health care reform from a campaign issue to a social reality.
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00:01Frontline is a presentation of the Documentary Consortium.
00:07Tonight on Frontline...
00:09We are kidding each other if we think that we can get control of this budget if you don't do something on health care.
00:15As the President prepares to unveil his prescription for health care reform, Frontline tells the story of how this issue became Bill Clinton's biggest challenge.
00:24Here are the risks. We could come out of this five years from now not having spent less on health care, but actually having spent more.
00:32If it goes poorly, there are people who believe it could be the downfall of his administration.
00:37Tonight, the Health Care Gamble...
00:46With funding provided by the financial support of viewers like you...
00:50And by the Corporation for Public Broadcasting...
00:58This is Frontline.
01:07This program was produced in association with the Health Quarterly.
01:12Funding for the Health Quarterly is provided by a grant from the Robert Wood Johnson Foundation.
01:18Resources making a difference in the health care of Americans.
01:32In February 1993, Bill Clinton went to Capitol Hill and staked his plans for the economy and his presidency on one issue.
01:42Let me say this again.
01:46I feel so strongly about this.
01:49All of our efforts to strengthen the economy will fail.
01:52Unless we also take this year, not next year, not five years from now, but this year, bold steps to reform our health care system.
02:03President Clinton's upcoming proposal for health care reform is expected to be the most significant legislative initiative of his presidency.
02:18If passed, it could be the most important social legislation of the past 50 years.
02:23The President believes that without reform, rising health care costs could drag down our entire economy.
02:31Unless we change the present pattern, 50% of the growth in the deficit between now and the year 2000 will be in health care costs.
02:38By the year 2000, almost 20% of our income will be in health care.
02:44Our families will never be secure.
02:46Our businesses will never be strong.
02:48And our government will never again be fully solvent until we tackle the health care crisis.
02:54We must do it this year.
02:59President Clinton faces an enormous task.
03:02Health care is the largest sector of the American economy, a $900 billion industry that employs over 10 million people.
03:10And it's used its economic power for decades to fight change from Washington.
03:17Bill Clinton may never have expected or wanted health care reform to be the defining issue of his presidency.
03:23But increasingly, it looks like it will be.
03:27If you think about presidents having had this tendency to get bogged down in terrible, difficult problems that keep them occupied for a long time and that drive out their ability to focus on other issues.
03:40Almost every president since FDR has faced that.
03:43For Johnson, it was Vietnam.
03:45For Nixon, it became Watergate.
03:47For Bush, it was essentially the double-dip recession.
03:50Health care is going to be that for Clinton.
03:52If you're transforming a $1 trillion system, that's much more analogous to transforming the Russian economy from a command economy to a market economy.
04:03I mean, they're roughly the same size.
04:05It's got the same features inherent in it.
04:07It's got operatics who have power under one system who don't want to give it up under another.
04:12It's got bureaucrats who are vested in the existing system continuing to play out.
04:17It's got people who see their livelihoods attached to the existing order who would be afraid of giving it up.
04:23And it's got the public, which is skeptical inherently, of the government accomplishing any good at all.
04:28It's phenomenal.
04:31It is hard to think of a president who's ever faced these kinds of pressures in an economic situation and in a domestic economic situation ever before.
04:42The story begins in Pennsylvania in 1991.
04:51Here, fundamental changes in the nation's economy had brought layoffs and factory closings.
04:56New jobs in the growing service sector came with reduced benefits.
05:00As a result, many families lost their health care coverage.
05:05Health care became a political issue.
05:08We want national health insurance and we want it now.
05:14Democrat Harris Wofford, campaigning for a seat in the U.S. Senate,
05:18discovered that health care reform got voters' attention.
05:23Well, I discovered very early that I had hit upon what Thomas Jefferson would call a self-evident truth,
05:31that health care should not be a perk, a privilege.
05:35It should be a right for every American.
05:38And a doctor told me he wished somebody would just say,
05:42if you're charged with a crime, you have a right to a lawyer in this country.
05:46Isn't it more fundamental that if you're sick, you have a right to a doctor?
05:50And I started...
05:52We have a right in the Constitution if we're charged with a crime to have a lawyer,
05:57and it's far more fundamental if we're sick to have a right to a doctor.
06:06Stressing health care as a right, Wofford rallied from 40 points down in the polls
06:11and defeated Attorney General Richard Thornburg.
06:14It was a stunning upset, which quickly became known in health care circles as the Big Bang.
06:23Tom Harkin.
06:25Within weeks, every Democrat who had his eyes on the White House featured health care reform as part of his campaign.
06:32They recognized this was one issue on which they could claim a natural advantage.
06:37People trusted Democrats to do something about reform.
06:47And they didn't trust that Republicans would.
06:50I think that people just intuitively associate the big social programs of the past
06:55and the power of government, the good offices of government with the Democratic Party.
07:00And that they were disinclined to think that the Republicans would be able to handle that as well as Democrats.
07:07The Democrats are committed to having affordable health care for all Americans.
07:11We can argue about what's good or bad about the various plans.
07:15But the main thing we have now is a party that is committed to affordable health care for all Americans.
07:20I tell you in 1991 that Americans know plain and clear that on the issue of health care, George Bush is guilty of malpractice.
07:30Americans are incredibly angry about the state of the U.S. health care system and what it's doing to their lives.
07:37However, they're not sure about how they feel about the various health care plans
07:43and in fact may think that the cure is worse than the problem.
07:47This creates an unbelievable dilemma for candidates who want to tap into the frustration on the other side
07:53but are afraid the voters won't support the cure they propose.
07:57And the result is that it's safer for a candidate to just have a 30-second sound bite which says,
08:04I favor a national health plan for all. Thank you.
08:08How are you?
08:10But in a crowded race full of candidates determined to set themselves apart from the pack,
08:15a 30-second sound bite wasn't good enough.
08:18In New Hampshire, both Paul Songhus and Bob Carey decided to raise the health care ante.
08:27This is our plan.
08:29What I want to do tonight is issue a challenge to every Democratic candidate.
08:35Put your plan on the table.
08:39The last three years I've been working in the United States Senate trying to come up with a plan.
08:43I've worked with the people of Nebraska to do it.
08:45I introduced it on the 11th of July. It's called Health Care USA.
08:48It's 84 pages long.
08:50I will try to take the next three minutes to summarize it.
08:54Carey's proposal was the more detailed of the two.
08:57He advocated a single-payer approach, a system where one entity, usually the government, pays all the bills.
09:04Thank you very much.
09:05This eliminates insurance companies and puts doctors and hospitals under a budget.
09:10The most widely cited model of a single-payer system is Canada.
09:16Single-payer systems guarantee universal access to care, which was also one of Bill Clinton's goals.
09:23But single-payer is vehemently opposed by well-organized and powerful interests.
09:28Anxious not to alienate any potential supporters, Clinton and his advisors decided to keep their focus on the problem rather than the solution.
09:38Clinton was sort of playing it down the middle.
09:40He was talking about general overarching principles, and he was emphasizing the need for reform, but he was not specifying much.
09:49In fact, reasonably early on, Carey started getting on his case and started goading him, essentially, saying,
09:57Well, where are the details? Where are the details?
09:59Where are the details?
10:00He's going to have to do more than talk.
10:01I mean, all he's done thus far on healthcare is talk.
10:03He's got a very vague general program.
10:05I mean, it's the sort of thing you feed the babies, and people whose teeth are falling out.
10:08I mean, it's very mushy, and it's not as precise as I think people want.
10:14Concerned that Carey was scoring at his expense, Clinton needed to come up with a plan of his own.
10:22Clinton would go up to his hotel room every night and work on the plan by himself, or he'd get on the phone with his networks of experts that he knew and friends that he knew and talk it through.
10:34I'm sure our magazine was part of that discussion.
10:36And each night he'd write, and each day we'd say, Where's the plan? And he'd say, I'm still working on it.
10:41And I remember the plan was finally finished about ten minutes before going to the debates with Carey when we released our plan and sent it out immediately before the debate.
10:51But it was something he did, you know, himself. He was deeply immersed in the issue.
10:57But the issue of healthcare was overtaken by more pressing concerns.
11:02The truth is, I loved him.
11:08First it was Jennifer Flowers, then allegations of draft evasion. Clinton was on the defensive for weeks.
11:18But in spite of distractions, Clinton managed to unveil his own healthcare plan.
11:23Like all his opponents, Clinton called for universal coverage and cost containment, but he chose a moderate democratic scheme to get there.
11:31Clinton essentially pulled something off the shelf, which was the pair play proposal that Ted Kennedy and the Democratic leadership, the majority in Congress, had been pushing for some time.
11:41The play or pay concept had been developed and endorsed by a bipartisan Congressional Commission on Health, the so-called Pepper Commission, headed by Senator Jay Rockefeller.
11:52The idea was to force employers to either play, offer their employees health coverage, or pay a payroll tax.
12:00Those taxes would be used to cover the uninsured.
12:05I think we can have a pay or pay plan that works if we have the guts to take on the insurance, healthcare, government, drug company bureaucracies that have driven costs to astronomical levels.
12:17I don't honestly know why he was talking about player pay.
12:21It may have been that that was the only kind of current, acceptable, respectable, responsible approach to healthcare policy that was out there, that had been certified, so to speak.
12:32I assume that it was never accepted as a final model.
12:35I mean, face it, you're in a primary, you've got 12,000 things to talk about, and do you settle on player pay? You don't even think about it.
12:44You're trying to communicate your frustration, your rage on behalf of working American families, people who play by the rules and then get shafted by this horrible healthcare system.
12:55I mean, I remember very clearly that was the emotion of the primary.
13:00From the Radisson Mart Hotel, this is Decision 92, a presidential debate.
13:08I'm convinced that none of us will ever be successful until we have a national system of healthcare that controls costs, covers everyone, deals with long-term care.
13:23The Miami debate, which I moderated before Super Tuesday, he was clearly, clearly the best.
13:31He left Songhus in the dust at that point because he had a mastery of all of the ills, of all the unfairness, of all the why people ought to be angry and are angry.
13:42He mastered that. It just came pouring out of him.
13:45And the thing gets worse. It'll make the problem worse, not better. It is so cynical.
13:50As he rolled through the primaries, it was clear Bill Clinton had figured out how to talk about the healthcare problem.
13:57Meanwhile, George Bush and his advisers, confident of reelection, debated whether they should talk about it at all.
14:08President Bush had a speech on February 6th and the one on February 7th.
14:14The next time he had a healthcare speech, I think it was May 15th at John Hopkins.
14:18We set up a big event up there and the president gave a great speech and there was a huge thud.
14:21No networks covered it. PBS didn't cover it. Nobody covered it.
14:24We spent a lot of time on the speech and tried to get in the White House thinking healthcare is a big issue.
14:28We have to have a big speech. We made a big event. And the bottom line is no one cared.
14:31I mean, you can look in the newspapers on February, May 16th of 1992 and believe me, you'll find nothing in virtually any newspaper in the country.
14:38Bill Clinton marched toward the nomination.
14:44We want it! We want it! We want it! We want it! We want it! We want it! We want it! We want it! We want it!
15:01I proudly accept your nomination for president of the United States.
15:09In the weeks following the conventions, George Bush stepped up his attacks on Clinton,
15:17focusing on pay-or-play's reliance on new taxes.
15:23Understand what's at stake here.
15:25If the governor of Arkansas is elected with a Democratic Congress
15:29and a new Democratic senator from Illinois,
15:32within a year the government will run health care in this country
15:36and our health care system will combine the efficiency of the House Post Office
15:41with the compassion of the KGB and I'm not going to let that happen.
15:48His plan would require a new payroll tax
15:51and I say small business does not need any more taxes.
15:57Let's do it my way.
15:58By August, there was a real concern about the issue of taxes in the health care plan.
16:07The Bush administration, a variety of Republican surrogates
16:11were talking about this being a big tax on people
16:15and that was a real concern.
16:16It always had been a concern of Bill Clinton.
16:19And so he very much wanted to avoid being tagged a tax-and-spend liberal.
16:25He didn't feel he was a tax-and-spend liberal.
16:27They propose a $150 billion tax increase now,
16:32half of it paid by small businessmen and farmers,
16:36and then follow it up with a new payroll tax of at least 7%
16:40to pay for a government-run health care scheme.
16:43That is change, but change is all you're going to have left in your pocket
16:47if you listen to them.
16:49By late August, early September, it became clear to many of us who were reporting on the issue
16:58that Clinton was distancing himself in a very palpable way from player pay.
17:03They were denying that there would be a payroll tax, which is what Bush had been alleging.
17:07And they were denying that there would be a bad impact on small business.
17:13And they were basically saying that they were no longer for play or pay.
17:18Or more correctly, they said that they had really never been for play or pay.
17:22He basically fudged it.
17:25He talked about an employer mandate of some sort.
17:29He talked about requiring employers to provide health insurance.
17:33But if you said to anybody on his health care team,
17:36you mean player pay, they'd say, no, no, no, no, no, it's not pay or play.
17:40You'd say, well, what is it?
17:41Well, it's an employer mandate.
17:42Basically, they were buying time while they cooked up the rest of their proposal.
17:49The plan that had brought them this far was now starting to hurt.
17:53On August 25th, in an office in Washington, D.C.,
17:56Clinton's advisers met to figure out what to do.
18:00We had to find something new.
18:02We had to begin to get out of the deadlock,
18:06not only from a political point of view,
18:07but even more importantly, from a policy point of view.
18:10There were people there that had advocated the Canadian model.
18:15There were people there that advocated the straight employer mandate from Hawaii.
18:20There were people there like myself who advocated a blend of competition
18:24and regulatory aspects like a budget and mandates.
18:28And so it was people sitting down saying,
18:30okay, which of these models works?
18:32Which ones do we like?
18:33Which ones will the governor at that point be comfortable with?
18:38And suddenly, sweeping in from the West, comes managed competition.
18:43The proposal, which had originally been cooked up by Stanford economist Alan Entoven and some colleagues,
18:50had been greatly refined by the California State Insurance Commissioner, John Garamendi,
18:56and his aide, Walter Zellman.
18:57And suddenly, there was something that wasn't pay or play, had an employer mandate,
19:04sounded good to people who loved regulation because it had the word managed in it,
19:09and also sounded good to people who loved the free market because it had the word competition in it.
19:14It was basically a new lease on life for Clinton's health care reform ideas.
19:18And that's why, in about August of 1992, and thereafter, Clinton began to talk about managed competition.
19:28The mountains of Wyoming are an unlikely place to find a solution to the health care crisis.
19:33But it is here that executives of the health care industry came together and developed managed competition.
19:39They met at the home of Paul Elwood.
19:43They represented physician groups, hospitals, the pharmaceutical industry,
19:48and most of the nation's big insurance companies.
19:50Some people have said...
19:52I designed the living room in Jackson Hole so that people wouldn't have to raise their voices
19:56when they were talking to each other so they weren't giving speeches,
19:59because these people are used to giving speeches.
20:02And so they'd be crowded.
20:03And also, I even did it in such a way that they'd have to sit around on the floor
20:09and take their shoes off.
20:11And you find out that everybody's feet stink,
20:14even if they're president of a great big insurance company.
20:19What we don't want to do is give a party and no one shows up.
20:22They had to recognize that in spite of the fact that they were very successful doing what they did
20:27and were very, very good at it,
20:29that it had to change or they weren't going to be able to either run their businesses
20:36or play any significant role in health care in the United States.
20:42The reason the insurance industry was attracted to Jackson Hole
20:47is because they see it as part of their future.
20:51They were afraid that if they didn't come up with a good idea
20:53that would solve a lot of these problems,
20:55someone would come up with an idea that would cut them out of the whole thing.
20:58And one of those ideas is the single payer.
21:03But people are crying out for insurance industry to get out of the whole mix.
21:08And this at least allows them to remain in the mix.
21:14So their task was to figure out a way to save the profit motive in the health care business.
21:19Like Paul Elwood, most of them knew that the health care market doesn't work the way markets should.
21:24I was running a great big rehabilitation center as well as being a doctor.
21:31And we had been taking care of polio patients.
21:33And Jonas Salk put me out of that business.
21:37And so we started doing rehabilitation.
21:40And we weren't very good at rehabilitation at first.
21:43And so patients stayed around forever.
21:45The beds were all full.
21:47We were doing wonderfully.
21:48Then we got to be good at it.
21:50We emptied out half the beds.
21:52And we started losing money.
21:54And I thought, you know, this is a crazy thing.
21:56This rewards you for inefficiency.
21:58In his belief that the incentives in health care needed to change, Elwood found common cause with Alan Antovin, a Stanford economist, a systems analyst, and a former undersecretary of defense under President Nixon.
22:13The fact that a free market, a completely free market doesn't work, does not mean you cannot have an effective market system.
22:22An effective market system in which purchasers are seeking value for money and therefore putting suppliers under very strong incentives or pressures to produce value for money.
22:34So the idea, if you like, with managed competition is it's not no rules, it's new rules and processes.
22:40Or another way of asking the question is, is how long would it take?
22:46Antovin's theory of managed competition is that with new federal rules, doctors, hospitals, and insurance companies will be made to compete so fiercely that enough money will be saved to insure the uninsured.
23:00There is still a widespread expectation that there is some policy or idea that can give us all what we have now, only give it to us cheaper.
23:10The plan promises a health care revolution, but leaves rules for all the industry's major players.
23:17Managed competition had a lot of things going for it.
23:20It wasn't a free market proposal.
23:22It's got this word managed in it.
23:24The government does a lot in managed competition.
23:26The government rewrites the rules for the marketplace.
23:29The government sets up health insurance purchasing cooperatives.
23:33The government standardizes and creates a core benefits package that every American gets.
23:37There's a big role for the government.
23:39But there's also a big role for the private market.
23:42There's a sense that inherent in managed competition that if you can just get health care to finally act like a market,
23:49where the incentives really do drive people in the direction of cost-effective care, not care at any cost,
23:56that you really could accomplish some good in terms of containing costs in the long run and getting Americans the care that they really need.
24:02So it wasn't just a sense that this was just politically palatable to all kinds of people.
24:09It was also a sense that there were some real ideas in managed competition that deserved to be tried.
24:14The prospect of reduced health care costs through a plan that sounded so rooted in basic American values proved irresistible to the Clinton campaign.
24:25It accepted the notion that competition was healthy, that competition could help reduce costs, that competition could help expand access.
24:32But it also imposed a fairly heavy managerial aspect on that competition, and it said we can't have competition as we used to have it, or as we now have it.
24:43We can't have competition in which the insurers compete over who can get rid of the tough risks or the high risks and insure only the good risks.
24:51We can't have competition over who can screen out most effectively who's got a preexisting condition and who doesn't.
24:57We've got to have competition on who can deliver the best quality product at the lowest price.
25:03So on September 12th, in a meeting with his closest health care advisors, Bill Clinton made managed competition with one key modification, the basis of his new health care initiative.
25:18He decided to unveil the plan in a major speech to be delivered at Merck Pharmaceutical.
25:23Personal choice, private care, private insurance, private management, but a national system to put a lid on cost.
25:33Managed competition fulfills that part of Bill Clinton, the Democratic Leadership Conference, Bill Clinton,
25:41who yearns for a free market solution on the one hand,
25:46but who, on the other hand, having been a governor for 12 years and a very astute observer of the vagrancies of Washington and, you know, and everybody,
25:58says, I can't trust it all by itself, so I've got to put on top of it something called a national expenditure cap.
26:06We have to have a national budget ceiling.
26:09That would be the most controversial thing across the country, I guess.
26:12Although budget caps were anathema to managed competition purists, they proved to be a smart political move.
26:21Liberals saw a national budget as a constraint on a greedy industry.
26:25Most conservatives saw the reliance on market forces as a constraint on government interference in health care.
26:32What he did not do was propose a government takeover of health care, which the Republicans would have exploited,
26:41which would have scared a lot of people, which would have prompted a lot of organized interest to rise up,
26:47and caused the issue to, I think, turn sour on us.
26:51Because he proposed a mixed system, he intrigued lots of people,
26:56and therefore lots of people of very diverse political views, I think,
27:01were willing to take their chance on the kind of reform that he would bring about.
27:05Everybody's for managed competition.
27:07I don't think anybody knows what the hell it was that that, you know, that was the general view,
27:10is what is managed competition?
27:11We don't know. We're for it.
27:12So I think there's an awful lot of variations.
27:14I've heard very conservative Republicans say,
27:16I'm for managed competition, and describe it as something completely different
27:19as what a very liberal Democrat sitting next to them would describe it as.
27:22I mean, some versions of managed competition sound an awful lot like single-payer national health care,
27:28and others sound an awful lot like no change in the current system.
27:31I think it was a solution to a pressing political problem,
27:34and it was a solution to his pressing political problem,
27:37which is that he had to have something to say
27:39that sounded a lot more like a fully articulated health care plan
27:43than just not talking about it being not pay or play for several months.
27:47$100 a year more than the Bush plan.
27:49I mean, how fundamentally can you embrace something
27:52that you've really just sort of started to pay attention to in a couple of months?
27:55$7 million behind, and get this, best of all,
27:58freeze up over the next 12 years over $2 trillion.
28:02We're going to waste on health care to invest in jobs and incomes
28:07and a future for the American people.
28:09We've got to do it.
28:11That was one of the other great fictions that the Clinton campaign cooked up.
28:15The underlying premise was that managed competition would be enacted.
28:23Costs would be contained to such a degree
28:25that you could magically finance the expansion of access to 35 million Americans,
28:32and it would cost you nothing net,
28:34because you would be saving so much money over a period of time
28:37that you would pay the way for all these people to have access to the health care system.
28:42It was a total joke, but they repeated it like a mantra,
28:47basically to avoid the discussion of the taxes that would essentially be necessary
28:51to extend access to people,
28:53if you wanted to do that in a reasonable period of time.
28:56But by late October, when the presidential debates were finally held,
29:02it was Clinton's commitment to reform
29:04and not the mechanics of his proposal that voters were hearing.
29:07The key is to control the cost and maintain the quality.
29:10To do that, you need a system of managed competition
29:13where all of us are covered in big groups
29:15and we can choose our doctors and our hospitals across a wide range,
29:18but there is an incentive to control costs.
29:21Rhetorically, President Clinton hit the right buttons,
29:23got on the right issues and zinged the right things at the right time.
29:27President Bush didn't, and I think it probably hurt.
29:30I don't know, but certainly the polling evened up during the summer
29:32to where it was just about an even issue,
29:34and then we got shellacked in the end.
29:35And there are a variety of reasons for that.
29:37So maybe I'm to blame for some of that,
29:39for not preparing him better or whatever.
29:41But yeah, we clearly got creamed on that at the end.
29:53I don't think that you've been a little bit before.
29:57Yesterday's gone, yesterday's gone.
30:10One moment, one moment, one moment, one moment.
30:14And I'm proud of all the things that you've done for me.
30:18If your life goes back to me.
30:21Following the election, while the president-elect caught his breath,
30:28his transition team began to evaluate the strategy for delivering a health care revolution.
30:34They had the broad outlines of a plan, but few details about how to make it work.
30:45What was clear was that Bill Clinton expected to save money
30:49by getting people to join so-called prepaid plans,
30:53like Kaiser Permanente, the country's largest health maintenance organization.
31:01Dr. Jay Crossan has worked for Kaiser for 16 years.
31:05His patients don't pay a separate fee every time they come to see him.
31:09Instead, they pay Kaiser a single monthly fee,
31:12which covers all their health care needs, from prenatal visits to open-heart surgery.
31:18Because Kaiser doctors don't get paid by the visit,
31:21there's no incentive for them to recommend more visits or tests or procedures than absolutely necessary.
31:26In theory, this should save money.
31:29In other words, if I could wave a magic wand and tomorrow we woke up
31:32and Kaiser Permanente or a Kaiser Permanente-type model existed suddenly everywhere in the United States,
31:38then we would have an instantaneous saving of health care dollars.
31:43There's no question about it.
31:44But experience has shown that switching to an HMO provides only a one-time saving.
31:51Then costs begin to rise again.
31:54To keep downward pressure on costs constant,
31:57advocates of managed competition want to force providers to compete against one another for patients.
32:04They contend this will happen if small groups and individuals buy their insurance together.
32:09Right now, the individual goes out to buy health insurance or the small group goes out to buy health insurance.
32:14It costs a fortune.
32:15They have no bargaining clout.
32:16They don't really see their choices.
32:18They're confused.
32:19There are a hundred different products in front of them.
32:21So what you do is to give the consumer greater strength and greater choice is what the consumer tries to do at any time.
32:27Get allies, form a bigger group, and then go to the person you want to sell from or buy something from and say,
32:35this is what we want, I don't need a hundred different products, I don't need a lot of bells and whistles.
32:40Here's what I want, I got a lot of people on my side, now give them your best price.
32:44And I'm going to look at your best price and his best price and her best price, and I'm going to figure out what's best for me.
32:50These huge buying groups are called health insurance purchasing cooperatives, or HIPICs.
32:58They are a critical element of the entire scheme.
33:01They are supposed to force the competition in managed competition, but not everyone agrees they will.
33:07The notion that a whole series of competitive HIPICs, or buying cooperatives, are going to discipline the providers,
33:14again, is an act of microeconomic faith, because it assumes, first of all, that the sellers will beat each other's brains out
33:25in order to be the low-price seller, as opposed to the sellers saying, hey, take it or leave it.
33:33There are three hospitals in this town.
33:35If you want to hospitalize anybody in this town, you've got to come to us.
33:38Indeed, in much of America, there's only one hospital in a town.
33:41So exactly who are these HIPICs going to play off against whom, if there are not more than one hospital available?
33:50And in addition, many physicians like Tom Bodenheimer worry that profit-oriented HMOs may skimp on care.
34:04Let me give you an example.
34:05Say that I get $31 per month, per patient, from a particular HMO, whether or not that patient sees me.
34:16It's in my interest to never see the patient.
34:18I'll get the $31 without doing any work.
34:21However, if I see a patient, and I send the patient to a specialist,
34:26I have to pay for that specialist out of my $31 a month capitation fee.
34:32Direct conflict of interest.
34:34If I send the patient to the specialist, I make less money.
34:39Now, that's the opposite incentive from fee-for-service.
34:42Neither of them are good.
34:43There shouldn't be such a strong financial incentive regarding patient care.
34:48There should be some kind of separation of money from the decisions that a physician makes.
34:53While questions surfaced about managed competition,
35:00at the Little Rock Economic Summit,
35:02Clinton heard business leaders continuing worries about health care costs.
35:06Ford spends as much on health care as it does on steel.
35:12Health care providers...
35:13And the president heard more bad news about the federal deficit.
35:17He began doubting the wisdom of the course he had set.
35:20There were comments he made during the Economic Summit which suggested,
35:24well, maybe we ought to move away from managed competition
35:27and towards some single-payer system
35:29where we sort of average out these costs for everybody.
35:34So, that may have triggered in his mind that,
35:38well, maybe I'm not as comfortable with where I was as I used to be.
35:43And the truth, I'm just making the point,
35:45if Elaine is right, and I think she is...
35:47What was certain was that Bill Clinton now needed health care cost reductions
35:52more than ever.
35:54We are kidding each other.
35:56We are all just sitting here making this up
35:58if we think that we can fiddle around with the entitlements
36:01and all this other stuff and get control of this budget
36:03if you don't do something on health care.
36:05It is a joke.
36:06It's going to bankrupt the country.
36:08The Bill Clinton post-November election
36:14is far more passionate, I'm noticing,
36:19about health care
36:20even than the Bill Clinton as candidate running for the presidency.
36:25I just noticed that.
36:27I mean, the way he talks about it,
36:29I remember at the Arkansas couple of days
36:31when he was, you know, pounding the table.
36:34And it makes sense to me
36:37because I think Bill Clinton,
36:40now the president, or about to be,
36:43sees the cost of health care
36:46and the future of the economy
36:49as inextricably intertwined.
36:52And will to the best of my ability...
36:54And will to the best of my ability...
36:57Preserve, protect, and defend
37:00the Constitution of the United States.
37:02So important had health care become to President Clinton
37:05that less than a week after his inauguration,
37:08he began his attack on the problem.
37:13As a first step in responding
37:15to the demands of literally millions of Americans,
37:19today I am announcing the formation
37:21of the president's task force
37:23on national health reform.
37:25This task force will be chaired
37:27by the first lady, Hillary Rodham Clinton,
37:30and will include the secretaries...
37:31Hillary Rodham Clinton became the public face
37:34of the task force,
37:35traveling around the country,
37:37meeting people,
37:38and keeping the issue in the headlines.
37:40I don't think there is any doubt
37:42that the American people
37:44do want fundamental health care reform.
37:48While she toured,
37:49500 academics, professionals,
37:51and Capitol Hill staffers
37:53were hired to help figure out
37:55how to guarantee the cost reductions
37:57Bill Clinton so desperately needed.
38:00There have been many groups in the past
38:00that have stood against...
38:01The big decision
38:02is to have a task force,
38:05is to have 500 people
38:06from all over this country come in.
38:09I mean, this is the biggest
38:10preparation
38:12for anything in public policy
38:15since the invasion of Normandy Beach,
38:17and it is.
38:18Nobody's done anything comparable to this.
38:20I remember Ira calling me up
38:22and saying,
38:22you know,
38:22we need your help on this,
38:23we want you to come to Washington.
38:25And I said,
38:25Wendy,
38:25when do you want me there?
38:26And he said,
38:26well, there's a meeting tomorrow
38:27at 2 o'clock.
38:29And I was in Los Angeles.
38:32Did you make the meeting?
38:33Sure, I made the meeting.
38:34I think anyone who's interested in politics,
38:37anyone who's interested in health policy,
38:40could not want to participate
38:42in something like this.
38:44This is a rare moment
38:45in American history.
38:46It comes around about every 30 years.
38:49And I think if we don't take
38:50real advantage of it,
38:51it'll be gone.
38:55In the weeks that followed,
38:57the task force did what politicians
38:59almost never let such advisory groups do.
39:02They studied the problem
39:03from top to bottom.
39:05They said,
39:06we're going to start from square one
39:07to turn everything inside out
39:09and look at it
39:10from all the different angles.
39:12We're not going to accept
39:12any preconceived.
39:14We're not going to accept
39:15the plan that was in the campaign
39:17or the transition.
39:18We're going to go back
39:19and look at everything from square one.
39:22There were thousands of details
39:24to be examined.
39:25Over and over again,
39:27the central philosophical question
39:28reemerged.
39:30How much should the president
39:31rely on competition
39:32versus regulation
39:33for cost control?
39:35One of the toughest issues here
39:36is do you allow
39:37price competition or not?
39:39There are some people
39:40who fear that
39:41if you allow
39:42price competition,
39:43you will have poor people
39:44in the low-cost plans,
39:46rich people
39:46in higher-cost plans,
39:48and you'll have
39:48what we call tiering,
39:50levels of health care
39:51that we don't want.
39:52Other people feel
39:54that that doesn't have to happen,
39:55that you can have
39:56some price competition,
39:58you can give everybody
39:59a quality plan,
40:00let those people
40:01who have more money
40:02choose to spend more money
40:03on health care
40:04if they wish,
40:04without forcing everybody up
40:06to a much, much higher level.
40:08That will be very expensive.
40:09So the question is,
40:10can you protect the quality
40:12in lower-cost plans,
40:14or will the lower-cost plans
40:16inevitably sink
40:17and give you a system
40:19for poor people
40:20and a system for rich people,
40:21which none of us would want?
40:22It was debate
40:25on the highest level.
40:27Apparently,
40:27the First Lady
40:28was in favor of regulation.
40:30The President
40:30was more trusting of markets.
40:32The task force meetings
40:33went behind closed doors.
40:39They wouldn't say
40:40who worked on the task force,
40:42they wouldn't say
40:43who's paying them,
40:44they wouldn't say
40:44who they were meeting with,
40:46and they wouldn't say
40:47what the plan looks like.
40:49And I think that angered
40:51lots of people,
40:52rightfully so.
40:55While the task force
40:56met in private,
40:57a shadow debate
40:58about the fundamental principles
40:59was fought on the outside.
41:03Market forces are a better idea
41:05because they really rely
41:08on our own culture,
41:11our own way of doing things.
41:13They allow for greater preference,
41:15and they allow for more dynamism
41:17and change.
41:17We're spending way too much money
41:19for the health care that we get.
41:21And we need to create
41:22a powerful incentive
41:23to bring that down.
41:24The most powerful economic signal
41:27to get your costs down
41:29is price competition.
41:30That's what works
41:31in the world economy,
41:32in the market economy in general.
41:34I believe the only kind of competition
41:38that makes sense in health care
41:40is competition
41:41for the loyalty of patients
41:44and physicians
41:45on the basis
41:46of the quality of services,
41:48and the quality of the organizations
41:49that provide services.
41:52Because of the peculiar,
41:54unique nature of health care,
41:57competition on the basis of price,
42:00whether it's the price
42:01of the insurance
42:02or the price of individual services,
42:05cannot work.
42:06Do we really want people
42:09dealing with physicians
42:11the way careful housewives
42:14deal with grocery stores,
42:16that is,
42:17watching for the specials
42:18and shifting their business
42:20from one store to another
42:21depending upon what the price
42:23of a sack of flour
42:24or a can of peas is this week?
42:27I don't think people want
42:29their health care relationships
42:31to be that much subjected
42:33to the market
42:34and I don't think
42:35the sellers will behave
42:36in sufficiently rivalrous ways.
42:40By mid-March,
42:42uncertainty about the details
42:43of the administration's plan
42:45was high.
42:46Advocates of every reform scheme
42:48and representatives
42:49of every special interest group
42:51intensified their lobbying efforts.
42:53The American Health Security Act,
42:56single payer,
42:57that's the yardstick for reform.
43:00Advocates of a single payer,
43:02Canadian-style system,
43:03brought a million postcards
43:04to Washington,
43:06hoping to encourage
43:06the government
43:07to take a more regulatory
43:08approach to health care reform.
43:13Concerned that the administration
43:14was moving too far
43:16in the direction of regulation,
43:18a thousand doctors
43:19came to Washington
43:20to support the AMA's demand
43:21for more physician input
43:23to the task force.
43:25Senator Robert Dole
43:27offered a consolation prize.
43:29I brought one chart with me
43:30just in case you never
43:32get in the White House.
43:32I want you to see
43:33a picture of it.
43:38He then acknowledged
43:39the Republicans
43:40were feeling left out too.
43:43But I must say
43:44that we've been, in effect,
43:47told they don't want
43:48any Republican input
43:49at the White House.
43:52And I don't see
43:53how we're going to have
43:54a bipartisan relationship
43:55if you don't have bipartisans
43:57sitting around the working table.
43:59Good morning to everyone.
44:01Welcome to the first official meeting
44:04of the President's Task Force
44:05on Health Care Reform.
44:07This was the first official meeting
44:09because it was the first in public.
44:11A federal judge ruled
44:13that task force hearings
44:14must be open.
44:16It was a 13-hour televised marathon
44:19in which representatives
44:20from 60 different groups
44:22were given three minutes
44:23to offer advice.
44:25Don't regulate premium rates.
44:26Insurers earned less than two cents
44:29on the dollar
44:29over the last decade.
44:31Limiting premiums
44:32threatens company solvency
44:33and therefore our ability
44:35to continue to offer policies
44:37to our customers.
44:38We do oppose
44:39government price regulation.
44:41Price controls on medicines
44:42would have immediate impacts
44:44on the amount
44:45and the very nature of research,
44:47biasing research
44:48toward low-risk,
44:49low-benefit new products.
44:51To preserve excellence
44:53in American medicine,
44:54we must preserve patient freedom
44:56of choice
44:56and not turn it into the sham
44:58of choosing between
44:59monolith A and monolith B,
45:01both of which offer
45:02exactly the same
45:03government-dictated package
45:05of benefits.
45:07Government bureaucracy
45:08has never controlled costs.
45:11Government officials
45:12do not take an oath
45:13to do no harm.
45:14But the real working meetings
45:19remained behind closed doors.
45:22What leaked out
45:24suggested that advocates
45:25of regulation
45:26were doing well.
45:27But then a new computer analysis
45:29of the reform package
45:30put the annual price
45:32to the government
45:32at a staggering
45:33$175 billion,
45:36over twice what had
45:37previously been estimated.
45:39Immediately,
45:40everyone began looking
45:41for benefits to cut
45:43and taxes to raise.
45:47Now,
45:48the final decisions
45:49are being made
45:49at the White House.
45:51The president
45:51is going over his options
45:53with the first lady
45:54and a few close advisors.
45:56It's believed
45:56the plan will look
45:58like managed competition,
45:59even though it will probably
46:00be called something else.
46:03How ambitious it is
46:04in the details
46:05will depend on
46:06how confident
46:07the president
46:07is feeling politically.
46:08Mr. Burrow.
46:13Recently,
46:13that confidence
46:14was shaken
46:14when Senate Republicans
46:16successfully filibustered
46:17his stimulus package.
46:19What we got right now
46:20is not gridlock,
46:21it's pork lock.
46:23Pork.
46:23P-O-R-K lock.
46:24Pork lock.
46:27Bill Clinton
46:28and his party
46:28desperately need
46:29Republican support.
46:31The first lady,
46:32whose popularity
46:33is now higher
46:34than the president's,
46:35is working hard
46:35to win it.
46:36As both
46:39Senators Mitchell
46:40and Dole
46:40have said,
46:42health care
46:43is an issue
46:44that goes beyond
46:46politics.
46:47It is an issue
46:48that affects
46:49every single
46:50American
46:50every day.
46:52What started
46:53for Bill Clinton
46:53as a campaign promise
46:55to reform health care
46:56may become
46:57the most ambitious
46:58social legislation
46:59of the last
47:00half century.
47:01It will certainly
47:02be President Clinton's
47:03toughest campaign.
47:05I'll have a statement
47:06later.
47:06When managed
47:08competition became
47:10a presidential issue,
47:13I called Fritz Mondale
47:15because we both
47:16happened to come
47:16from Minnesota
47:17and know each other
47:18and asked him
47:19for advice
47:20because I'd never
47:21dealt with big league
47:21politics like this.
47:23He said,
47:23Paul, you've never
47:24been through
47:24anything like this.
47:25This is nuclear
47:26warfare you're
47:27talking about now.
47:28It's not the kind
47:29of Mickey Mouse
47:29club that you've
47:30played in before.
47:31And he's so right.
47:33And it's not just
47:36a public opinion
47:36question.
47:37It's a reality
47:37question.
47:38I can show you
47:39the material.
47:40Every special
47:41interest is hiring
47:42every lobbyist
47:43they can find
47:43in this town
47:44to get ready
47:44to try to
47:45derail
47:47this reform.
47:49So this is a
47:50battle not just
47:51for public opinion.
47:52This is a real
47:53battle against people
47:54who don't want
47:54to change the
47:55health care system.
47:56We have no
47:56guarantee whatsoever
47:57that the savings
47:58that people think
47:59are going to accrue
48:00from health care
48:01reform will ever
48:02show up.
48:02We could easily
48:03be staring at a
48:04situation where
48:05the 14% of the
48:06economy that we're
48:07devoting to health
48:08care now expands
48:09to 20% or more
48:10by the end of the
48:11decade.
48:12There are just no
48:13guarantees in this
48:14at all.
48:15There's hope.
48:16There's good
48:16intentions.
48:18There's theory that
48:20true price competition
48:22could lower prices
48:23in health care.
48:24But we have
48:25absolutely no
48:25guarantee that that
48:26will happen.
48:27Many people feel
48:28that this will be
48:29the defining issue
48:30not only for the
48:31Clinton administration
48:32but will set the
48:33tone for the
48:34Democratic Party
48:35for decades to
48:36come.
48:37So there's
48:37potentially an
48:38enormous amount
48:40riding on this
48:41issue.
48:41If it goes well,
48:43it could be a
48:45boon to the
48:46party and to
48:47Clinton for years
48:50to come.
48:51If it goes poorly,
48:53there are people
48:54who believe it
48:54could be the
48:55downfall of his
48:55administration.
48:56after a number
48:59of delays,
49:00the White House
49:01now hopes to
49:02unveil its
49:02health care plan
49:03by July.
49:12Dear Frontline,
49:13I am so grateful
49:14for...
49:14And now,
49:15letters from
49:16viewers and
49:17reactions to some
49:18recent Frontline
49:19programs.
49:19Until now,
49:23Hoover's reputation
49:24as a law
49:24enforcement officer
49:25has remained
49:26largely intact.
49:28But tonight,
49:30Frontline will
49:30present new
49:31evidence that
49:32Hoover was
49:32personally corrupt,
49:34sexually compromised,
49:35and tainted by
49:36ties to organized
49:37crime.
49:40The secret file
49:41on J. Edgar
49:42Hoover generated
49:43enormous press
49:44attention,
49:45and its
49:45revelations became
49:46a recurrent theme
49:48in cartoons and
49:49sitcoms.
49:52Welcome back
49:53to Larry King
49:53Live with
49:54Anthony Summers.
49:54After the broadcast,
49:56Frontline consultant
49:57Anthony Summers
49:58debated former
49:59FBI assistant
50:00director Deke
50:01Deloche about
50:02whether Hoover
50:03really pursued
50:04the mob.
50:05Kefauver was
50:05personally questioning
50:06him and said,
50:07Mr. Hoover,
50:08would you like
50:09new laws or
50:09new capabilities
50:12for the FBI
50:13to have the power
50:13to deal with
50:14this thing?
50:14And he said,
50:15no.
50:15And it's there
50:16in the transcript.
50:17Why did Mr. Hoover
50:17push for the laws
50:18in 1961?
50:20We needed a battle
50:21and we got them.
50:211961 had been
50:22pushed into it
50:22by Bobby Kennedy.
50:23No, no, we had
50:23the top hoodlum
50:24act.
50:24That's not accurate.
50:25They had the top
50:26hoodlum intelligence.
50:27There's no doubt
50:28in your mind
50:29that Hoover
50:29was after the mafia
50:30or anyone
50:31in organized time.
50:31100%,
50:32including one
50:33of his favorite
50:34sources,
50:35Myra Lansky.
50:37Dear Frontline,
50:39as both a
50:39taxpayer and a
50:41retired career
50:42FBI agent,
50:43I find this
50:45one-hour production
50:46to be a most
50:47unprofessional
50:48and unethical
50:49presentation.
50:51A convicted
50:52perjurer,
50:53a Watergate
50:54burglar,
50:55a dismissed
50:56FBI agent,
50:58and some minor
50:59underworld friends
51:00of dead
51:01mobsters
51:02projecting
51:03second-
51:04and third-person
51:05hearsay
51:06and alluding
51:07to never-seen
51:09fatal photographs
51:10are certainly
51:12not becoming
51:13to the Corporation
51:14of Public
51:15Broadcasting,
51:16Frontline,
51:17or the Code
51:18of American
51:19Ethics
51:19and Fair Play.
51:21Sincerely yours,
51:23Lawrence J.
51:24Heim,
51:25editor,
51:26The Great
51:26Mind.
51:27Dear Frontline,
51:29I'd like to
51:30congratulate you
51:31on your expose
51:32of J. Edgar
51:33Hoover.
51:34He was an
51:35arch-con man
51:36who was
51:37constantly doing
51:38a PR job
51:39on the
51:40American people.
51:41This hideous
51:43deception
51:43implanted
51:45in our minds
51:46the image
51:46of a fearless
51:47patriot
51:47who was
51:48protecting us
51:49from crime
51:50of all kinds,
51:51but especially
51:52from atheistic,
51:54monolithic,
51:56ever-creeping
51:57communism.
51:59Well,
51:59the blackmailer
52:00got blackmailed.
52:02Your documentary
52:03put many
52:05of the pieces
52:05of this monstrous
52:06puzzle in place.
52:08Keep up
52:09the good work.
52:11And with
52:11kindest
52:12regards,
52:13Charles Waters,
52:16U.N.
52:17Michigan.
52:20What happened
52:21to the drug war
52:22investigated the
52:23flaws in the
52:23government's
52:24billion-dollar
52:24program to
52:25stop drug
52:26smugglers at
52:27the border.
52:28That radar
52:28system detects
52:30anything that
52:30is moving
52:31all the way
52:32from Florida
52:32to San Diego.
52:35The aerostats
52:36are a tremendous
52:36boondoggle.
52:37As far as I'm
52:38concerned,
52:39they're a total
52:40waste of money
52:41on all sides
52:41and, in fact,
52:43almost laughable.
52:44I was appalled
52:45by the front-line
52:47piece, which was
52:48full of inaccuracies,
52:50insinuation,
52:51and unsubstantiated
52:53accusations.
52:54The day after
52:55the broadcast,
52:56Senator Deconcini
52:57spoke from the
52:58Senate floor.
52:59Front-line states
53:00that in 1992,
53:03the aerostats
53:04were up only
53:0439% of the
53:05time.
53:06Well, Mr.
53:07President, that
53:07figure is flat
53:08wrong, and
53:09they know it.
53:10Dear front-line,
53:12seeing Senator
53:13Deconcini leaving
53:14the aerostats
53:15lobbying office
53:16was one of the
53:18best things I've
53:19ever seen on
53:19the tube.
53:21By chance, I
53:22happened to see
53:22him the following
53:23day on C-SPAN
53:252 denouncing
53:26the front-line
53:27program.
53:29But, like the
53:30aerostats
53:30balloons, he
53:32was just leaking
53:33hot air.
53:34Sincerely,
53:35Rosemary
53:36Friedman.
53:38But to use
53:39the news show
53:40to try to
53:41dismantle a
53:41program which
53:42is working is
53:44just flat
53:45wrong.
53:46In late
53:46February,
53:47Senator Deconcini
53:48held two days
53:49of hearings on
53:50border drug
53:51interdiction and
53:52recommended no
53:53changes in the
53:54aerostat program.
53:55But in April,
53:56an investigation by
53:57the Arizona
53:58Republic reported
53:59findings similar
54:00to front-lines
54:01and criticized
54:02Senator Deconcini's
54:03position.
54:04Dear front-line,
54:05it is only with
54:06information like
54:07this that we have
54:08a chance of
54:08protecting our
54:09democratic system
54:10and our
54:10constitution.
54:12When those who
54:13would threaten our
54:14precious hard-won
54:15government by the
54:17people are exposed,
54:19we have some chance
54:20of throwing the
54:21rascals out.
54:22Eileen Henry,
54:24Encinitas,
54:24California.
54:25Eileen Henry,
54:39Eileen Henry,
56:11Call this toll-free number, 1-800-328-PBS1.
56:16This is PBS.
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