Introduction

After the spectacular demise of the Clinton health reform plan in 1994, it was commonly said that health reform in the United States is dead. That is not an accurate assessment. Health reform in the United States is not dead. It is not even half dead. Rather, half of it is totally dead and the other half is very much alive.

The part of health reform that died in 1994 is the decades-old American dream that all Americans would one day have comprehensive health insurance and share a single-tier health system that would “remain” simply the “best in the world.” American politicians of all ideological stripes had always sworn allegiance to that dream—at least for public consumption. It turns out that it was not so much a dream as a pretense. That pretense has ended, at long last, with the official embrace by the United States Congress of an income-based health system that will ration health care quite severely for Americans assigned to the bottom tier and not at all for Americans in the upper tier.

The part of health reform that survived are two major shifts in the control over health care. The first is a major shift of market power from the supply side of the health sector to its demand side. The second is a transfer of control over the cost and quality of health care away from government to private-sector regulators— the executives of the managed care industry. This second shift has come to be known by the rather elastic concept of “managed care.”

Although physicians, hospital leaders and other providers of health care had traditionally decried the heavy hand of government in health care and had pretended to yearn for “the market,” they are discovering to their dismay that private regulators are much tougher, much more capricious and much less easily manipulated than is government. Indeed, the objectives and methods of these private regulators remind one of nothing so much as the nation's legendary bounty hunters who, to this day, step in with their roughly hewn methods where the arm of government fails.