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Hacker on healthcare and institutional change

- February 23, 2009

Jacob Hacker has an “article”:http://www.henryfarrell.net/hacker.pdf on healthcare reform in the new issue of “Politics and Society”:http://pas.sagepub.com/ (incidentally my favourite journal). It’s a very interesting piece, not only for its content (which includes, _inter alia_ a nice summary of Hacker’s arguments about why the Clinton healthcare plan went south), but because it brings together two different aspects of Hacker’s work that aren’t usually seen together. Policy wonks are familiar with his healthcare proposals and his arguments about risk – but not so much with his political science arguments about mechanisms of institutional stability and change. Political scientists know his work on institutions, but not his detailed policy proposals. Despite this, I’ve always thought that his policy and political science work are closely integrated, and this piece brings out the connections nicely.

The article argues that the Clintonites emphasized policy over politics:

In the craft of policy design, the plan was a tour de force, envisioning the comprehensive remaking of America’s medical-industrial complex. … The problem was not that the Clinton reformers did not have a strategy to enact their proposal. The problem was that the strategy _was_ their proposal. … It was but a short distance from there to the denigration of existing institutions as flawed and inefficient means of achieving “a genuinely higher synthesis,” no matter their familiarity or entrenchment. And it was but a short distance from there to the conceit that coalition building was mostly a matter of policy fine-tuning, of brokering political deals ex ante via the fine points of policy blueprints. But it was a very long distance from there to a proposal that could address public concerns about declining coverage and rising costs without stoking fear or confusion. Premised on resolving elite-level disagreement, the structural details of the proposal were not just incomprehensible to most Americans but frankly threatening, envisioning the near-total eclipse of employment-based insurance and the massive expansion of tightly managed plans. The resulting scheme was so complicated, so intricate, so unwieldy it could be portrayed as anything opponents wanted.

Hacker argues that reformers should concentrate on politics as well as policy – wonderful policies have no chance of getting enacted unless they are politically viable, given existing public beliefs, entrenched interest groups and institutions. This is (in part thanks to Hacker’s own arguments) received wisdom, but the details of Hacker’s recommendations have a specific political science spin. Hacker argues not for the immediate dismantlement of the current employer-based healthcare system, but instead for the construction of a parallel system that would gradually render it irrelevant.

Finally, the Health Care for America proposal embodies a means of gradually moving away from America’s embattled employment-based structure. If, as most expect, public insurance proved capable of controlling costs better than employment-based plans (or if employers simply continue to retreat from coverage), then the public plan would over time come to enroll a larger share of Americans—without the massive disruption entailed by an overnight transformation. This is not an incidental feature of Health Care for America and proposals like it; it is the core of their strategy for gradually moving away from America’s embedded and fragmented employment-based structure.

Hacker doesn’t say this, but his argument here is a particular application of his political science work on mechanisms of institutional change. In this 2004 APSR piece on the politics of welfare state privatization, he talks about how opponents of well entrenched institutions may be best advised not to attack these institutions head-on, but rather try to erode them indirectly.

When existing policies resist conversion but the political–institutional context permits the creation of new policies, the dominant pattern of change is likely to be what Eric Schickler … terms “layering,” in which proponents of change work around institutions that have fostered vested interests and long-term expectations “by adding new institutions rather than dismantling the old.” … And when insurgents gained sufficient leverage to enact legislative reforms (yet not to dismantle existing policies outright), the emphasis correspondingly shifted away from conversion and toward the layering of new policies onto old. Layering in fact aptly describes conservatives’ use of openings in the early 1980s (due to Reagan’s election), the late 1990s (due to the GOP capture of Congress), and the early 2000s (due to unified Republican control of Congress and the White House) to create tax breaks encouraging individualized private benefits that compete with public programs.

Hacker’s Health Care for America proposal is _precisely_ an exercise in institutional layering – building an institution that is intended to parallel, and over time to undermine, an existing institution that is too well entrenched to attack directly. It tries to create a new plank of the welfare state using techniques with a strong family resemblance to the techniques that conservatives have previously used to try to undermine it. Which means that healthcare reform is (among other, much more important things) likely to be an experiment in whether historical institutionalist theories can provide strategic insights to policy makers about how to get difficult policy changes through the system.