Ghosts of "ClintonCare"

Posted by Steve Benen, Washington Monthly at 6:04 AM on July 27, 2009.

AHEAD OF THEIR TIME.... I learned a few things from Ezra Klein's Washington Post piece on the "ghosts of Clintoncare," and the ways in which the Obama White House has been trying, perhaps a little too hard, to avoid the mistakes of the last serious campaign to reform health care.

Clinton, Ezra explained, presented reform as the system was changing dramatically, and American consumers shifted from indemnity insurance to managed care. The plan in '93 and '94 was focused on problems that were going to exist, but the White House was ultimately not rewarded for their foresight.

Managed care came anyway. By last year, only 7 percent of American workers were in "traditional" indemnity health plans, while the rest of us -- or at least those of us fortunate enough to have insurance -- were swimming in the alphabet soup of HMOs and PPOs and HDHPs. We're all in networks now. We don't get our choice of doctor. There's no appeals process. No out-of-pocket caps. Nothing to stop insurers from rejecting our coverage applications based on preexisting conditions. And if we don't like our insurer? Tough.

"We got managed care," says Chris Jennings, who was one of Clinton's top health-care staffers. "But we didn't get the things that would protect us from managed care. We got the Wild West version of it."

In the modern health-care system, there is no higher power than the insurance market. And the insurers who populate that market have grown all the stronger. The Justice Department judges an industry "highly concentrated" if a single company controls more than 42 percent of the market. By that definition, 94 percent of statewide insurance markets are highly concentrated. A recent study by the advocacy organization Health Care for America Now showed that in Indiana, WellPoint controls 60 percent of the insurance market; in Iowa, Wellmark accounts for 71 percent; and in Alabama, Blue Cross/Blue Shield holds 83 percent. In the past 13 years, there have been more than 400 corporate mergers involving health insurers.

Economics textbooks tell us that concentrated markets reduce the competitive behavior that benefits consumers and lead to outsize profits for the dominant firms. Predictably, health-care premiums shot up more than 90 percent between 2000 and 2007, while the profits of the 10 largest insurers increased 428 percent over the same period. Clinton had promised us managed care within managed competition. Instead, the insurers took control of our care and managed to effectively end competition. Neat trick.

It's a great piece. Read the whole thing.

Tagged as: clinton, obama, health care

Steve Benen is "blogger in chief" of the popular Washington Monthly online blog, Political Animal. His background includes publishing The Carpetbagger Report, and writing for a variety of publications, including Talking Points Memo, The American Prospect, the Huffington Post, and The Guardian. He has also appeared on NPR's "Talk of the Nation," MSNBC's "Rachel Maddow Show," Air America Radio's "Sam Seder Show," and XM Radio's "POTUS '08."