Hillarycare: The Health Security Act of 1993

Hillarycare: What It Was and Why It Failed

Bill and Hillary Clinton
President Bill Clinton and First Lady Hillary Clinton discussing health care. Photo by Jeffrey Markowitz/Sygma via Getty Images

Hillarycare was a 1993 health care reform initiative. President Bill Clinton proposed it to make health care affordable for all Americans. His primary objective was to lower the government's rising healthcare costs. Clinton realized health care reform was critical to cutting the budget. Medicare and Medicaid were the biggest part of the budget. 

Hillary Clinton chaired the Task Force on National Health Care Reform that developed the bill.

She worked with the Task Force’s director, Ira Magaziner, to flesh out the details of Bill’s vision. She also led the charge of getting the Health Security Act passed through Congress. She became the public face of the Clintons' health care reform efforts.

Summary of the Health Security Act 

Hillarycare used a managed competition strategy to achieve its purpose. The government would control the costs of doctor bills and insurance premiums. Health insurance companies would compete to provide the best and lowest cost packages to companies and individuals. This is different from Medicare in which the government contracts directly with doctors, hospitals, and other health providers. Medicare is known as a single-payer system.

Hillarycare would implement its objective using three features: universal coverage, regional health alliances, and a national health board. 

Universal Coverage 

Universal coverage was a proposal to make sure that everyone had health insurance.

Insurance companies could no longer deny coverage to anyone with pre-existing conditions. To make this work for the health insurance companies, it also meant everyone was required to have health insurance. That included U.S. citizens and resident aliens.

Most people would get insurance plans from their employers because all employers were required to provide health insurance coverage to every employee.

They could use Health Maintenance Organizations (HMOs) or offer Preferred Provider Organizations (PPOs) or a custom-designed benefit package. Health insurance companies would compete for their business. 

People without jobs could purchase health insurance on their own from the regional health alliances. The Federal government would subsidize the costs for low-income people.

Regional Health Alliances 

Regional Health Alliances were state-based health insurance purchasing groups. The federal government would fund states to administer them. The alliances could be either private non-profits or state government agencies. They would act as the intermediary for consumers and contract with health insurance providers to provide plans for their areas. The alliances would control costs by setting the prices for health care providers based on a fee-per-service. They also set the price for premiums, which they collected. States were charged with making sure all premiums from employers and employees were paid. Companies with more than 5,000 full-time employees could provide their own insurance outside the alliances. 

The National Health Board 

The National Health Board was a new federal agency. It set a cap on total health care spending for the nation.

That meant it regulated health insurance premiums. For individuals, it set limits on maximum annual out-of-pocket costs. 

It also determined minimum coverage requirements. That included many free preventive services, such as immunizations, Pap smears, and cholesterol screening. It would also cover mammograms, blood tests, and periodic medical examinations. Preventive care lowers the cost of health care by identifying and treating chronic illnesses before they require an expensive trip to the emergency room. 

Timeline

  • September 1992: Bill Clinton introduced his concept for health care reform during a campaign speech. 
  • January 1993: Hillary chaired the Task Force on National Health Care Reform. Clinton advisor Ira Magaziner directed the efforts. The Task Force had 500 members.
  • February 1993: The American Association of Physicians and Surgeons (AAPS) filed a lawsuit to stop the bill. The organization argued that the Task Force’s proceedings were too private.
  • May 1993: Hillary presented the plan to 52 senators. Republicans felt the administration had already gone too far in developing the plan without them. The Task Force dissolved.
  • June 1993: Hillary met with 600 doctors at the centennial celebration of Johns Hopkins University School of Medicine to promote the health reform plan.
  • September 23, 1993: President Clinton formally presented the plan in a speech to Congress.
  • October 1993: "Harry & Louise" ads convinced constituents that Hillarycare was too complex and dangerous. Support evaporated. Many congressional Democrats offered their own proposals rather than support the administration’s plan.
  • November 20, 1993: Senate Majority Leader George Mitchell introduced the bill S.1757 (103rd): Health Security Act to Congress. 
  • December 8, 1993: President Clinton signed the North American Free Trade Agreement (NAFTA). That upset many unions, further weakening support for Hillarycare.
  • September 26, 1994:  Senator Mitchell declared the Act — and all other health care reform proposals —dead. 
  • January 1998: If the bill had passed, this would have been the deadline for states to set up regional health alliances.
  • 2003: If the bill had passed, employees would pay income taxes on any health benefits that exceeded the standard package. 

Why It Was Defeated

  • Doctors worried about being forced into insurance-run HMOs. They feared they would completely lose control over pricing, care, and treatment. Instead, health insurance companies would further dictate what would be covered and who would receive care. That's believed to be the real reason the AAPS sued the Task Force for violating the Federal Advisory Committee Act. 
  • Congress was concerned about the number of benefits. They thought it would add too much to the budget deficit. 
  • The American people weren’t as worried about the cost of health care by 1993. The recession was over, and people were going back to work.
  • Labor unions didn’t support the initiative. They were angry at the President for signing NAFTA. Their members lost jobs when manufacturers moved them to low-cost Mexico. 

How It Changed the Economy

Portions of the failed bill did become law. The Health Insurance Portability and Accountability Act of 1996 (HIPAA) allowed employees to keep their company-sponsored health insurance plan for 18 months after they lost their jobs. Democratic Senator Edward Kennedy of Massachusetts and Republican Senator Nancy Kassebaum of Kansas proposed HIPAA. 

Hillary did convince Senators Kennedy and Orrin Hatch to introduce the Children's Health Insurance Program. CHIP provides subsidized health insurance for children in families that earn too much to qualify for Medicaid. It now covers eight million children. She also added $1 billion for an outreach program to help states publicize the program and sign up recipients. 

Hillarycare molded the nation's public image of Hillary, and it was negative. Carl Bernstein's biography A Woman in Charge said Hillary's secretiveness and rigidity were responsible for the plan's failure in Congress. In reality, the complexity of the bill created friction between all administration staff who were involved with the project. The press blamed Hillary's personality for White House efforts to control the process. 

It also set a precedent for health care reform in America. The Patient Protection and Affordable Care Act of 2010 (ACA) has many of the same features as Hillarycare. President Obama and his team learned from the Clintons' mistakes in how to present the ACA to Congress and the American people. 

Hillarycare vs. Obamacare

Despite the similarities, there are also many differences between Hillarycare and Obamacare. This chart shows each plan’s components: 

FeatureHillarycareObamacare
Universal coverageAll employersMost employers
Pre-existing conditions coveredYesYes
Non-employer coverageRegional health alliancesHealth insurance exchanges
Reliance on insuranceYesYes
Universal mandateYesYes
Required coverageYes10 essential health benefits
Low-income subsidiesProvided by Federal governmentExpanded Medicaid
Tax on high-end insuranceIncome taxCadillac tax on businesses
Focus on Preventive CareYesYes
Funded byDeficit spendingObamacare taxes
Doctors paid on Fee-for-service Patient wellness
Medicare"Donut hole" did not existEliminate "donut hole"