That's what Bentsen's people thought: that Magaziner had tried to set up a plan that insurance companies would support because they would have a big role to play, but had also guaranteed that the insurance companies would lose oodles and oodles of money because of the extremely tight caps not on the prices doctors could charge them but on the prices they could charge insurees.
Leave to one side the question of whether you actually *want* to shrink health spending (I would say no: a lot of waste in the system, but if you squeeze with Magaziner-style global budget caps what comes out isn't the waste). The strategy of trying to make the insurance companies your partners and giving them a big, money-losing role to play was--to me, and to others higher up in the Treasury--a big, bad idea.
So why didn't Hillary shift gears once it became clear that insurance company support was not forthcoming--and either loosen up the global budget or shift to single payer? No idea. But she wound up pushing a plan that seemed to have all the defects of managed competition and all the defects of single payer at once.
<Ira Magaziner rant>
I kind of understand what Magaziner was doing. He was doing what comes naturally given that he had two major flaws. His first was that his instinct was always to make things more complicated. Faced with a choice between doing 90% of a job with an organization that has 10% of the present complexity and doing 100% of a job with 200% of the present complexity, he would always choose the second. He had no sense that complicated organizations tend to break, to exhibit bizarre and unplanned behaviors, and are hard to explain--but he had never run and had spent little time working in large human organizations, and when he got his chance to do so during health-care reform he rapidly proved to be incompetent at marshalling resources and using his people's time effectively.
His second flaw was that he thought like a management consultant. A management consultant's principal goal is to win a debate in front of his employer, the senior decision maker, the "Principal." You win a debate by making intellectual arguments, controlling the flow of information to the senior decision maker, walling-off potential adversaries from the process, and winning the confidence of the Principal by telling him things that he likes to hear: that he is smart, that his goals can be achieved, that the nay-sayers just don't grasp the issues.
But that's not how you develop a policy. You develop a policy by forming a large coalition all of whom agree that the proposal will make the world a better place, and that it is close to the best that can be attained at the current moment. Then you have a large group of people who are enthusiastic about the proposal: they will go out and make your arguments for you. The compromises and concessions that had to be made within the policy-planning group in order to form the coalition will then perform a very important exeterior purpose: just as they brought people within the process onboard, so they will bring other people outside the process who think in a similar fashion onboard as well.
For a management consultant, it doesn't matter if everyone else in the organization hates your guts as long as the Principal--the CEO--is convinced, for the CEO is the boss and can then make things happen. For a policy planner, winning the confidence of the Principal is almost beside the point: instead, the point is forming a coalition that can then be extended to win a majority of the House of Representatives, the 60 votes in the Senate to end a filibuster, and a Presidential signature.
His judgment was also poor. Remember: this is a guy who, without knowing anything about nuclear physics, testifies before congress that America has no choice but to pour lots of money into research into Cold Fusion. This is a man who thinks at the end of the 1970s--a time of record high energy prices and rapidly-growing competition from new producing nations like Brazil and Korea--that what America really needs to do is to invest in more brand-new integrated steel factories...
</Ira Magaziner rant>
And I am gloomily looking forward to a Hillary Rodham Clinton-led Democratic Party for the next four years if Gore loses. She's not reliably left of the DLC. Her political judgment on health care seemed to me to be really, really poor. And her substantive policy judgment seemed to me to be poor too. I could take someone with good political and good substantive policy judgment who was nevertheless in the core of the DLC. I could take someone with good substantive policy judgment who was left of DLC even if their political judgment wasn't so hot. Hell, I could take someone left of DLC with good political judgment even if their policy analysis judgment skills were poor.
But you got to have at least two of the three--not zero--in order to make me feel happy...
Brad DeLong