The role of the New Democrats in the explosion of managed care

According to Marmor’s rule, wouldn’t a focus on quality and cost put pressure on access? “Allocating care has got to happen,” Marmor said, “and allocating it by ability to benefit and the seriousness of the medical need is a just, in my view, way of talking about this, as distinct from allocating it by ability and willingness to pay. That’s the central philosophical issue in medical care.”

Marmor insisted that it was not possible to provide “unlimited” highest-quality care for everyone: “You cannot do all the things that are possible and live within a reasonable budget,” he said, adding in a follow-up interview that doing so was also logistically impossible.

But what about trying to identify the highest standard of care currently available, estimating the cost of delivering that care universally, and only then deciding what compromises were necessary (rather than simply starting with the judgment that current expenditure levels are the appropriate place from which to start cutting)?

Marmor acknowledged the possibility that one could “imagine extending to everybody suffering [from an] illness the quality of care that is [provided] at very good places,” and derive, at least in broad terms, the cost of doing so. He was skeptical, however, because of what he described as practical impediments to the delivery of such care on a universal basis (including the difficulty of replicating universally best-practice care now being delivered by a self-selected population of doctors to a self-selected population of patients), and did not weigh in on the question of whether cutting should precede or follow the identification of, and cost associated with, universal best practices.

Fallout and backlash

Despite the failure of the HSA as a piece of legislation, the principles behind it had an enormous impact on American health care. Its ideas — and the bipartisan acceptance of those ideas — sent a signal to the for-profit health insurance industry that no one would stop a scramble for profit, and scramble they did.

Hellander, noting that previous Democratic administrations had consistently aimed at creating a national health program, said, “That’s what capital and business and everyone thought was eventually going to happen, so they weren’t going to invest too much money in the health sector as a for-profit industry. Health insurance at that point was still mostly not-for-profit,” despite the steady growth of the for-profit sector over the previous two decades.

“Once it became clear that they [the New Democrats] were on the side of big business,” she said, “there was an all-out rush of insurance companies to merge…There were a lot of billionaires made during that period. Before that we’d seen people get rich in medicine, they’d have a few million dollars, but we’d never seen the creation of these billionaires.”

During this same period, the percentage of American workers in some form of managed care plan exploded — from 27 percent in 1988 to 90 percent in 1999 — primarily because employers favored them as a means of cost control. Managed care transformed from a niche market that catered largely to self-selecting enrollees into the primary way that Americans received medical care. “We got the market reorganization without the superstructure of public law and regulation,” PPI’s Marshall said, referring to the fallout from the New Democrats’ support of a market-based system, combined with the failure to pass the HSA.

This was most Americans’ first taste of managed care, and many found it bitter. The result was what is often called “the managed care backlash,” a period in which newspapers filled with horror stories about patients being denied care by their HMOs, or made to jump through so many hoops that when care finally came, it was at a grave cost. A 1996 op-ed column by Bob Herbert in The New York Times that excoriated a North Carolina HMO for forcing a three-month-old girl with leukemia to receive treatment in a different state for several months, away from her family, is a typical example.

Of course, not every managed care enrollee had to deal with denials of service. Enough did, however, and enough newspapers reported about such cases that in a 1997-1998 survey of consumer satisfaction, only tobacco companies were seen as providing worse service than managed care companies and health insurance companies. Banks and oil companies both received higher satisfaction ratings.

Though demands for more access remained a resonant political theme, and ultimately resulted in the increases in access promised by the ACA, demands for improving the “gold standard” of care have not been heard in force for 20 years. Indeed, rather than engaging in a process of first determining what the gold standard is, then making that standard of care available to all (in other words, the provision of care that would be “the envy of the world”), the ACA adopted a very different concept: it speaks in the language of “minimum essential benefits,” with each state being able to define that standard by matching it to the level of coverage currently provided by one of the largest health insurers or managed care organizations in the state (as long as certain broad categories of coverage are met).