Health Care: Insurance Salesman

John Hood from the February 1994 issue

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The HIAA's plan eschews global budgeting, monopoly health alliances, and price controls, and would allow more variation in premiums than would the Clinton plan. But if you grant the necessity for every American to be in a government-approved "plan"--rather than just ensuring access to care through consumer choice of catastrophic insurance and medical savings--then you open the door widely to the Clintons' more expansive view of the role of the federal government. All you can do then is quibble over what will be in the standard package.

To find health insurers who want to stay in the business of managing risk rather than managing care and who perceive excessive third-party payment for medical services as a major cost-driver, you have to travel across the Potomac from the HIAA's still-plush offices in D.C. to a modest outfit in Alexandria, Virginia, called the Council for Affordable Health Insurance. Formed in March 1992, the organization currently has 32 members, mostly insurers in small-group or supplemental markets. Member insurers, including Universe Life in Lewiston, Idaho and Golden Rule Insurance in Indianapolis, cover about 4 million Americans.

Greg Scandlen, who heads the council, says that the concept of tax-free medical savings accounts is the cornerstone of his group's reform agenda, as are insurance reforms that would guarantee re-issue of policies after an insured person is in the system, extension of tax deductibility to individually purchased insurance, and the creation of "risk pools" for those with preexisting medical conditions who cannot qualify for private coverage.

Scandlen endorses plans such as Texas Sen. Phil Gramm's bill, which would allow people to self-insure with medical savings accounts and which focuses on the uninsured, rather than overturning the entire system. The HIAA, Scandlen says, has not been confrontational enough and has alienated potential allies such as the small-business lobby (by endorsing employer mandates), doctors (by promoting managed care as the solution to cost containment), and health underwriters (who'll be unemployed if the federal government eliminates true insurance).

Still, the HIAA is doing a good job in attacking the Clinton plan on television, something the council could never afford to do. And there is evidence that the HIAA's campaign is working. After a brief spike in the support for the Clinton plan right after the president's September 22 speech to the nation, Americans became increasingly skeptical of it, no doubt affected by the ads as well as comments by independent analysts and members of Congress. A USA Today/CNN poll by Gallup in late September found 59 percent of Americans in favor of the Clinton plan and 33 percent opposed, but by late November, after Clinton had presented his bill to Congress, another USA Today/CNN survey found 52 percent in favor and 41 percent opposed.

In polls, Americans express general satisfaction with their own health care and insurance, a little uncertainty about future coverage and the potential for "job lock" because of illness, a suspicion of any plan that sounds too "complex," and concern for the uninsured. This seems to be a mandate for something very similar to what Gramm, the Council for Affordable Health Insurance, and other market-oriented senators and organizations are pushing. "For us," Scandlen admits, "the process is going along just peachy."

That's why Mrs. Clinton felt it necessary to go after the small private insurers who won't make it into any government-created cartels. Unfortunately for the administration, they're fighting back--and, to some extent in spite of themselves, they may well succeed in stopping the administration's forcible takeover of one-seventh of the nation's economy.