Health Care Reform: Perspectives from the Economic Theory of Regulation and the Economic Theory of Statutory Interpretation

<div> Health care currently consumes more than fourteen percent of&nbsp;<span>the United States’ gross domestic product. President Clinton has&nbsp;</span><span>proposed radically changing this entire segment of the economy by&nbsp;</span><span>offering a government-run system of universal health insurance. As&nbsp;</span><span>originally conceived, the Clinton plan would have provided certain&nbsp;</span><span>standard benefits—including hospital care, visits to physicians, and&nbsp;</span><span>prescription drugs—to all Americans through a system of regional&nbsp;</span><span>health care purchasing alliances, which were to have received their&nbsp;</span><span>funding through government subsidies and mandatory contributions&nbsp;</span><span>from employers and employees. Indeed, with the exception of employers&nbsp;</span><span>of over 5000 people, all employers would have been </span><i>required</i><span> to&nbsp;</span><span>procure health insurance from their regional alliance, as well as to pay&nbsp;</span><span>for eighty percent of the costs of health insurance for their employees—</span><span>up to 7.9% of payroll. Furthermore, with few exceptions, the&nbsp;</span><span>Clinton plan would have required all Americans to enroll in a health&nbsp;</span><span>plan offered by their regional alliance. Those who failed to enroll&nbsp;</span><span>would be assigned to plans automatically and made to pay premiums&nbsp;</span><span>to their assigned plan. Never before has a politician proposed bringing such a large part of the American economy under government&nbsp;</span><span>control outside of war time.</span> </div> <div> <br> </div> <div> In order to administer the new system, the Clinton plan would&nbsp;<span>have created 105 new government bureaucracies and enlarged 47&nbsp;</span><span>others. Because one of the primary objectives of this superstructure&nbsp;</span><span>would be to contain costs, a National Health Board, comprised of the&nbsp;</span><span>President’s political appointees, would have to decide how much to&nbsp;</span><span>spend on health care, and would dictate what the average health plan&nbsp;</span><span>in each region could cost. The bill sought to forbid plans that cost&nbsp;</span><span>more than 120% of the average plan, thus limiting the amount that&nbsp;</span><span>people could spend on health care. As Elizabeth McCaughey observed&nbsp;</span><span>in her comprehensive analysis of the Clinton plan, “[t]he goal&nbsp;</span><span>[of the Clinton health care plan] is to curb spending by limiting what&nbsp;</span><span>every American is allowed to pay for health insurance.” Predictably,&nbsp;</span><span>such radical proposals for change generated opposition. Largely in&nbsp;</span><span>response to concerns over the restrictive and mandatory nature of the&nbsp;</span><span>proposed system, the President’s plan lost momentum and stalled out&nbsp;</span><span>in Congress.</span> </div> <div> <br> </div> <div> This Article employs the economic, or “interest group,” theory of&nbsp;<span>regulation to explore the current debate about reform and regulation&nbsp;</span><span>of the health care industry. It will focus on the Health Security Act&nbsp;</span><span>(HSA), the work product of the Health Care Task Force which was&nbsp;</span><span>organized by President Bill Clinton and directed by Ms. Hillary&nbsp;</span><span>Rodham Clinton. Part I of the Article briefly contrasts the economic&nbsp;</span><span>theory of regulation with public-interest theory, and then proceeds to&nbsp;</span><span>discuss aspects of the economic theory that are of particular importance&nbsp;</span><span>in understanding the health care debate. Part II provides a&nbsp;</span><span>brief discussion of the critical features of health care reform, and then&nbsp;</span><span>explores the interest-group aspects of those features.</span> </div> <div> <br> </div> <div> Descriptively, this analysis will show that the critical features of&nbsp;<span>President Clinton’s proposal were inconsistent with the traditional&nbsp;</span><span>public-interest approach to regulation, but were entirely consistent&nbsp;</span><span>with the economic theory of regulation. Through consideration of&nbsp;</span><span>the HSA, this analysis will cast doubts on the </span><i>possibility</i><span> of achieving net&nbsp;</span><span>improvements in social welfare through legislative reform of any sort.</span> </div>