the imissing imiiiions: organized i^bor. business, and the defeat … · 2019. 12. 19. ·...

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The iMissing iMiiiions: Organized i^bor. Business, and the Defeat of Ciinton's Heaith Security Act Marie Gottschalk University of Pennsylvania During the battle over comprehensive health care reform in the early 1990s, organized labor was not only unable to put together a winning coalition but also fotmd itself divided and on the defensive as it struggled to prevent any further erosion ofthe private-sector safety net ofthe U.S. welfare state. Labor's relative inef- fectiveness has deep institutional and political roots and was not merely a conse- quence of its dwindling membership base. Several key institutions ofthe private wel- fare state, notably the Taft-Hardey health and welfare funds and the Employment Retirement Income Security Act (ERISA) preemption, brought the interests of orga- nized labor more closely in line with those of laige employers and commercial insur- ers and aggravated divisiotis within organized labor and between unions and public interest groups. In addition, several political factors conspired to reinforce labor's tendency to stick to a policy path on health care issues that was predicated on an employer-mandate solution and that had been charted primarily by business and lead- ing Democrats. As a result, organized labor did not emerge ftom the 1993-1994 struggle with its political base fortified nor with a viable long-term political strategy to achieve universal health care and to shift the political debate over health policy in a more desirable direction. In the 1993-1994 struggle over health care reform, organized labor proved to be politically ineffective. Unions, which have played a critical part in the passage of a number of major pieces of social welfare legis- lation, notably Medicare (Marmor 1973; Derthick 1979), were not only unable to put together a winning coalition in the early 1990s, but also I am grateful to David Cameron. David Mayhew. Cathie Jo Martin, Rogers Smith, Mark Peter- son. Stephen Skowronek. and an anonymous reviewer for their helpful comments on earlier ver- sions of this article and to Erk LomazofT for his indispensable research assistance. Journal ef Health Politics. Policy and Law. Md. 24, No. 3, June 1999. Copyright O 1999 by Duke University Press.

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Page 1: The iMissing iMiiiions: Organized i^bor. Business, and the Defeat … · 2019. 12. 19. · strategies with which the fight for health reform would be waged.^ The specific institutional

The iMissing iMiiiions: Organized i^bor.Business, and the Defeat of Ciinton's

Heaith Security ActMarie Gottschalk

University of Pennsylvania

During the battle over comprehensive health care reform in the early1990s, organized labor was not only unable to put together a winning coalition butalso fotmd itself divided and on the defensive as it struggled to prevent any furthererosion ofthe private-sector safety net ofthe U.S. welfare state. Labor's relative inef-fectiveness has deep institutional and political roots and was not merely a conse-quence of its dwindling membership base. Several key institutions ofthe private wel-fare state, notably the Taft-Hardey health and welfare funds and the EmploymentRetirement Income Security Act (ERISA) preemption, brought the interests of orga-nized labor more closely in line with those of laige employers and commercial insur-ers and aggravated divisiotis within organized labor and between unions and publicinterest groups. In addition, several political factors conspired to reinforce labor'stendency to stick to a policy path on health care issues that was predicated on anemployer-mandate solution and that had been charted primarily by business and lead-ing Democrats. As a result, organized labor did not emerge ftom the 1993-1994struggle with its political base fortified nor with a viable long-term political strategyto achieve universal health care and to shift the political debate over health policy ina more desirable direction.

In the 1993-1994 struggle over health care reform, organized laborproved to be politically ineffective. Unions, which have played a criticalpart in the passage of a number of major pieces of social welfare legis-lation, notably Medicare (Marmor 1973; Derthick 1979), were not onlyunable to put together a winning coalition in the early 1990s, but also

I am grateful to David Cameron. David Mayhew. Cathie Jo Martin, Rogers Smith, Mark Peter-son. Stephen Skowronek. and an anonymous reviewer for their helpful comments on earlier ver-sions of this article and to Erk LomazofT for his indispensable research assistance.

Journal ef Health Politics. Policy and Law. Md. 24, No. 3, June 1999. Copyright O 1999 by DukeUniversity Press.

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490 Journal of Health Politics, Policy and Law

found themselves divided and on the defensive as they struggled to pre-vent any further erosion of the private-sector safety net of the U.S. wel-fare state. Labor's political enlieeblement in the 1993-1994 battle overClinton's Health Security Act and related health refonn proposals cannotbe attributed solely to its shrinking membership base.

Organized labor's capacity for political action depends on many fac-tors, not just on the size of its rank and file. While labor's ranks certainlyhave thinned out since the 19SOs, on other fronts unions have acquirednew political resources in recent years that complicate any simple pic-ture of inexorable political decline. These include the swelling numberof activist union retirees, important favorable shifts in public opinionregarding unions, labor's formidable financial resources, and closerinstitutional and financial ties between organized labor and the Demo-cratic Party.! Yet analysts of contemporary health care politics tend toattribute labor's political weakness primarily to its dwindling member-ship and thus have had little more to say about the role of organizedlabor in the most recent quest for universal health care (Skocpol 1996:84-88; Judis I99S: 71-72; Martin 1995: 433). In a similar vein, manylabor officials and union staff members have been wont to blame labor'smembership woes for its political setbacks in the 1993-1994 struggleover health reform.-

Labor's relative ineffectiveness was not merely a consequence of itscontracting membership base, however, nor of some ofthe other factorshistorically invoked to explain why unions are politically enfeebled inthe United States, notably the absence of a labor party or a disciplinedleft-of-center party that has strong ties to labor and is able to navigate theracial shoals of U.S. politics. While these are certainly important factors,they focus more attention on labor's weakness and inactions and less onwhat labor actually did and why. Organized labor's political activities inthe health care debate were self-defeating and demand a more directexplanation.

This article examines how the institutional context within which laboroperated and the ideas to which it was committed help explain its politi-cal behavior with respect to contemporary health policy. More specifi-cally, it focuses on two related variables. First, it considers how severalinstitutions of the private welfare state, that patchwork of job-based

1. For a development of this point, see Gottschalk 1997: chap. 2.2. As a consequence, "oiganize the unoi:ganized" became the mantra of delegates lo the

AFL-CIO's biennial convention held in October 1995. a year after the death of Clinton's HealthSecurity Act (Mobeig 1996).

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Gottschalk • The Missing Millions 491

social benefits sometimes called the "shadow welfare state" (Martin1998: 233), constrained organized labor. Second, it examines how thespecific stances labor took on health care reform and the specific politi-cal strategies it pursued contributed to its political defeats in this policyrealm. These include labor's long embrace of a private-sector solutionbased on a government mandate that employers pay some portion of theiremployees' health insurance costs and its elusive quest for a cross-classcoalition with business on health care.

As we will see, several institutions ofthe private welfare state becamea kind of institutional straightjacket for organized labor. We will focushere on two in particular: the Taft-Hartiey health and welfare funds,which are a major source of health benefits for tens of millions of Amer-icans, and a minor provision in the Employee Retirement Income Secu-rity Act (ERISA) of 1974 that has since allowed employers and unionsthat self-insure to operate group health plans free of most state-levelinsurance regulations. Over the years, these two institutions brought theinterests of the national leadership of organized labor more closely inline with those of large employers and the commercial insurers, whoeschewed government-led solutions for comprehensive health reform.They also aggravated divisions within organized labor and between unionsand public interest groups over health policy. These divisions and dis-agreements impeded efforts to knit together an effective political coali-tion on behalf of universal and affordable health care that would severthe connection between employment status and health benefits once andfor all. As a consequence, organized labor found itself implicitly orexplicitly siding with large employers or sitting mute on the sidelinesduring some of the major skirmishes over health policy leading up to thewar over the Clinton health plan. The institutional context not onlyhelped to define the coalitions, but also the worldview and the politicalstrategies with which the fight for health reform would be waged.^

The specific institutional context is only part of the story, however.Several political factors conspired to reinforce organized labor's ten-dency to stick to a policy path on health care issues that was predicatedon an employer-mandate solution and that had been charted primarily byelements of business and leading Democrats. This essay focuses in par-ticular on why organized labor adopted and then held fast to the idea ofan employer mandate despite a drastically changing economic and polit-

3. For more on how the institutional context affects coalition formation and the ways inwhich groups evaluate their interests and develop their worldviews, see Weir 1992, Hattam1993, and Dobbin 1992.

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492 Journal of Health Poiitics, Poiicy and Law

ical environment and examines some of the wider political consequencesof that choice. It shows how the idea of an employer mandate took on alife of its own long before it was embraced by the Clinton administration,even prior to the spread of the antigovernment ideas that were the leit-motif of the Reagan era. Over time this idea became embedded in a world-view closer to that of business and that was even at odds with the caseorganized labor was trying to make in other policy realms. This policyidea developed such that it would play a critical role in defining the strate-gies and coalitions around which the health care debate would be wagedin the early 1990s and may have reduced the likelihood that labor couldput together an alternate winning coalition to promote universal healthcare in the United States over the short or long run.

This article begins by examining the institutional context that shapedorganized labor's role in the debate over health care reform, focusingspecifically on the development ofthe Taft-Hartley funds and the ERISApreemption. It then briefly traces the political trajectory ofthe employer-mandate idea from 1978, when labor initially embraced this policyprescription, to the eve of the 1992 election. The third and fourth sec-tions analyze labor's role in the 1993-1994 struggle over Clinton'sHealth Security Act, focusing on how institutions and ideas shaped thefinal outcome. The essay concludes with a brief discussion of some ofthe broader analytical themes related to organized labor's quest for uni-versal health care.

The liwtttutions of 11M PrivateMtoHara State

While organized labor did make a number of political missteps on healthreform, its difficulties were not entirely of its own making. Many of thesemissteps are rooted in the past. The inherited institutional context thatmolded labor's political choices and the health care debate more broadlypushed labor toward private-sector solutions. It also compounded thedivisions and disputes within and between organized labor and publicinterest groups. It needs to be noted at the outset that an interest in insti-tutions per .se is nothing new in discussions of why the United States hasbeen unable to develop, enact, and implement comprehensive social poli-cies except under very special circumstances (see, e.g.. Weir, Orloff, andSkocpol 1988). A number of scholars concerned specifically with the pol-itics of health policy in the United States, or the politics of organizedlabor more generally, have been keenly interested in institutions (Immer-

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Gottschalk > The Missing Miilions 493

gut 1990; L. Jacobs 199S; Morone 1995). Sven Steinmo and Jon Watts(1995), in particular, contend that the fragmented and federated set ofU.S. political institutions is biased against comprehensive national healthinsurance. Yet their analysis begs the question of why health care isdefeated time and time again, as evidenced most recently by the 1993-1994 debacle, while other pieces of major legislation are able to per-severe in the face of a virulent opposition and the same fragmented andfederated set of political institutions. In short, what is so exceptionalabout health care? The health care issue is exceptional because thefragmentation of public institutions is compounded by the particularinstitutions ofthe private welfare state. These institutions ofthe privatewelfare state impede efforts to foige a winning coalition anchored byorganized labor.

Several analysts have ably demonstrated how the fragmented institu-tional environment stymied efforts by segments of business to mobilizein the 1980s and early 1990s on behalf of some version of comprehensivehealth reform (Martin 1993; Beigthold 1994; Brown 1994; Judis 1995).Yet few have considered bow the institutional context afGected organizedlabor's political capacity to mobilize on behalf of universal health care.Tbose scholars who lately have taken an interest in institutions and thepolitics of organized labor have tended to focus on the distinctive politi-cal structures and public institutions of the U.S.—such as the weak andundisciplined party system—and not on bow the particular institutionsof the private welfare state might affect labor's political fortunes in pub-lic policy (Piven 1991; Dubofsky 1994; Rogers 1993). Those few analystswho have concerned themselves with labor, health policy, and the privatewelfare state bave tended to concentrate on much earlier periods andtben to extrapolate briefly to the present (Derickson 1994; Stevens 1990;C. Gordon 1997).* For example, Alan Derickson and Beth Stevens con-vincingly show how organized labor played a central role in the turntoward private-sector, employment-based solutions for medical coveragewith its embrace of collectively bargained healtb benefits as the cam-paign for national health insurance sputtered in tbe 1940s and 1950s. Tbisshift, in tbeir view, subsequentiy posed formidable obstacles to achievinguniversal bealtb care over tbe long run. Yet, tbe line between tbe institu-tional developments of the 1940s and 1950s and tbe contemporary fail-ure to achieve universal health care in the United States is not such astraight and predictable one. Sucb extrapolations from the immediate

4. One notable exception is Weil 1997.

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494 Journal of Health Politics, Poiicy and Law

postwar years to the present not only fail to explain the twists and turnsover time, but more important, fail to identify the mechanisms that per-petuate certain policy preferences.

Two institutions of the private welfare state—the Taft-Hartley healthand welfare funds and what became known as the ERISA preemption orsemipreemption—were key in molding labor's interests and, indeed, itspolitical strategies and worldview. It is important to clarify briefiy thehistorical development of these two institutions before discussing ingreater detail the dramatic and pervasive effect they had on the politicsof health policy in the early 1990s.

Among other things, the Taft-Hartley Act of 1947 established the insti-tutional framework for collectively bargained health, welfare, and pen-sion trust funds. These funds provide employers with a mechanism tocontribute to benefit packages without assuming the administrative bur-den and expenses entailed in single-handedly running their own benefitprograms.-' Today about 10 million American workers and 20 million oftheir dependents receive pension, health, and/or other benefits from jointlabor-management plans established in accordance with the Taft-HartleyAct (International Foundation 1988; National Coordinating Committeefor Multiemployer Plans [NCCMP] Taft-Hartley n.d.; NCCMP Multi-employer n.d.). More than half of all union members covered by healthplans receive their medical benefits through Taft-Hartley funds (Dunlop1983: 10).

Despite initial uneasiness on the part of legislators and labor officials,these funds began to proliferate in the 19S0s as the movement for nationalhealth insurance sputtered.'' Over the next two decades, the Taft-Hartleyplans gradually took root, as did labor's attachment to them. The fact thatthis attachment was slow in coming is underlined by noting that whenorganized labor made its last major push for national health insurance inthe early 1970s, labor officials were not unduly alarmed by legislativeproposals that would have put the Taft-Hartley funds largely out of thehealth insurance business (Seidman 1996).^ By the late 1980s, however,many national labor leaders, especially those of the building trades, were

5. The typical Taft-Hanley plan requires employers lo contribute some negotiated anaount toa pension, health, and/or welfare fund. Employens usually are not actively involved in either theadministration of the plan or the design of benefits.

6. See. for example, Georg/e Meany, letter to National and International Unions, State Fed-erations. City Central Bodies, and Regional Organizers, 7 January 1953 (AFL-CIO Departmentof Legislation Collection, Box 24, Folder 39); and Millis and Brown 19S0: chap. \5.

7. See also Ben Seidman, letter to Al Barican, et al., 21 May 1970 (AFL-CIO Department ofLegislation Collection. Box 2. , Folder 24).

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Gottxiiaik > The Missing Millions 495

fighting tooth and nail to preserve the Taft-Hartley arrangements, eventbough many of these funds were under acute financial stress due to esca-lating health care costs and other factors.^ Tbey were cool by now to sin-gle-payer proposals for national bealth insurance, preferring instead pri-vate-sector solutions based on an employer mandate.

Some labor leaders were reluctant to eliminate tbe funds becausethey viewed tbem as an indispensable device to maintain importantinstitutional ties and to preserve a sense of cobesiveness and identityfor union locals whose members are scattered across numerous worksites and locales (Ray 1996; Nixon 1996; St. Jobn 1996).^ Moreover, theTaft-Hartley funds had created a potential conflict of interest for orga-nized labor because in effect they catapulted some union officials into thelucrative insurance business and thus served to realign the interests ofsome labor leaders more closely with those of large employers and insur-ers (Goozner 1991). Notably, in 1991, Robert Georgine, head ofthe build-ing and construction trades department of tbe American Federation ofLabor-Congress of Industrial Organizations (AFL-CIO), became chair-man and chief executive officer of Union Labor Life Insurance Company(ULLICO), a private company that provides insurance for and managesthe Taft-Hartley plans of hundreds of union locals (Crenshaw 1994,1995).'0

Finally, and most important, thanks to the enactment of ERISA, thefunds helped spawn an important coincidence of interests between unionsthat operate bealtb and welfare funds and large employers, both unionand nonunion. Enacted in 1974, tbe year of labor's last big push fornational health insurance, ERISA included a clause tbat tbe courtssubsequently interpreted to mean that states are permitted to regulateemployer-provided group health insurance if the employer purchases itfrom an insurance company but not if tbe employer is self-insured. ••Representatives of labor at tbe national level worked side by side withlarge employers to slip the preemption language into ERISA (Fox and

8. See, for example, Leo J. Puicell letter to Robert Geoigine, 28 January 1991 (McGanahPapers), Laborers' Health n.d., and Beriioer 1989: 5.

9. See also J. Peter Nixon, memo to Hal Alpert, president of Local 531 of the SEIU, dated 2March 1994 (Nixon Papeis).

10. Richard Ihimka, president of the United Mine Workers, reportedly tried but failed tohave Georgine disqualified from voting on the critical issue of whether or not the AFL-CIOshould endorse a single-payer plan when it came before the federation's health care committeein the 1990-91 period, charging that the head of ULUCO had a conflict of interest (McGarrah1996; Ray 1996).

11. Firms that self-insure use their awn assets to fund their health benefit programs and typ-ically hire outside companies to administer the plans.

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496 Journal of Heaith Poiitics, Policy and Law

Schaffer 1989). Over the years, large employers and unions with largeTaft-Hartley funds became increasingly committed to retaining the ERISApreemption as more of them switched to self-insurance so as to circum-vent state laws mandating that group health insurance policies cover cer-tain specified medical services (Jensen, Morrisey, and Marcus 1987;Treaster 1996). By the eariy 1990s, neariy 60 percent of Americans whowere insured through their employers were covered by self-insuredplans and more than half of all Taft-Hartley funds had switched to self-insurance (Gladwell 1992; U.S. Congress 1993c).

The ERISA preemption and the Taft-Hartley funds pose sizable obsta-cles to state-level initiatives to reduce health care costs while expandingaccess (Chirba-Martin and Brennan 1994; Parmet 1993). Together theyhave helped to short-circuit the state-level political experimentation andinitiatives that in the past paved the way for the nationalization or quasi-nationalization of social welfare schemes like old-age security and work-ers' compensation in the United States and universal health care inCanada. For states desiring to experiment with some kind of single-payerplan of their own, the Taft-Hartley funds and other self-insured plans,inoculated as they are from state-level mandates by the ERISA preemp-tion, lie tantalizingly beyond their legislative and regulatory reach.

Unions continued to stick by the ERISA preemption even thoughemployers used it to perpetuate some highly discriminatory practicesinvolving medical care. Thus, organized labor found itself on the oppo-site side of the barricades in the early 1990s from public interest groupsthat were battling the ERISA preemption in the courts. For example,organized labor did not join a number of public interest groups thatmobilized on behalf of John McGann, whose health benefits for thetreatment of AIDS were reduced from $1 million to $5,000 after hisemployer switched to a self-insured plan (Pear 1991, 1992; Stoddard1992). And in 1993 organized labor found itself on a collision coursewith advocates for the handicapped and AIDS activists when the EqualEmployment Opportunity Commission (EEOC) enlisted the Americanswith Disabilities Act of 1990 to challenge employers and unions thatattempt to use the ERISA preemption to deny health insurance coverageto people with AIDS and other costly illnesses (Oppel 1993; Michelini1995).

In short, the establishment of the Taft-Hartley funds had several unin-tended consequences. It put some union officials in the insurance busi-ness and gave them a vested interest in maintaining the status quo—thatis, a system of social welfare provision rooted in the private sector and

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Gottschalk • The Missing i\ illions 497

specifically based on job-related benefits. ERISA subsequently helped tofortify the coalition of unions and employers in favor of the status quo.These two institutions did not chain labor to the private welfare stateovernight. Rather, they gradually pulled it in that direction. A vested inter-est in preserving the Taft-Hartley funds and ERISA preemption moldedlabor's political preferences and behavior, predisposing it to private-sector altematives. The impact of these institutions was uneven, however,more so on some unions than on others, and more so in some time peri-ods than in others. Nevertheless, labor's concerns about preservingthese two institutions directly affected the course of the struggle overhealth reform in the 1990s, in particular the fate of Clinton's HealthSecurity Act.

The Employei^Mandate Idea

The Taft-Hartley funds and the ERISA preemption did not create thejob-based system of health benefits. Rather, they helped to lock it intoplace and to solidify the commitment of organized labor to the privatewelfare state. As such, they served as protective walls around the pri-vate welfare state.'^ It is important to keep in mind, however, thatinstitutions are not destiny. As such, institutional factors alone do notexplain labor's political strategies and political setbacks in its quest foruniversal care. We need to understand the role of ideas and, specifically,how labor helped to holster a particular understanding ofthe U.S. polit-ical economy that took hold beginning in the late 1970s and thatchanged the debate over health care in subtle but important ways. Justas institutions can cause groups to rethink their interests and form newalliances, as we saw above, so can ideas. We will focus here on the polit-ical trajectory of one policy idea in particular—the employer mandate—that both complemented labor's institutional attachments discussedabove and helped perpetuate its commitment to private-sector solutionsto health problems.

Paradoxically, as the bond between employer and employee weak-ened beginning in the late 1970s with the growth ofthe contingent work-force, such that the very definition of what constitutes an employeewould become a highly contested issue by the early 1990s, organizedlabor's commitment to an employment-based system of benefits rooted inthe private welfare state became more intense. The previous section ana-

i2.1 am indebted to Professor Alan Draper of St. Lawrence University for this metaphor.

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498 Journal of Healtii Politics, Policy and Law

lyzed the institutional underpinnings of this commitment; this sectionexamines its ideational roots. As a result of these institutional andideational commitments, unions became less willing to battle for nationalhealth insurance modeled on some single-payer formula.

Despite significant misgivings among long-time supporters of nationalhealth insurance about the feasibility of an employer mandate, organizedlabor finally embraced this idea in 1978 after having spurned it since1971, when President Richard Nixon first proposed an employer-mandatesolution. •"< As key Democrats, notably President Jimmy Carter and Sen.Edward M. Kennedy (D-MA), cooled to the idea of national health insur-ance, labor leaders hoped at the time that such a rightward compromiseon labor's part would make unions part of a broader winning coalitionand yet would not foreclo.se the possibility of achieving the ultimate goalof universal coverage (Wicker 1977: New Kennedy Bill 1979).'^

When it was initially adopted, the employer-mandate idea was thus akind of focal point that served to reconcile temporarily the interests ofstate, labor, and business leaders such that they could forge a loose coali-tion on behalf of comprehensive health reform. > Over time, this policyidea took on a life of its own, however, as it became embedded in a com-pelling causal story that appeared to explain some of the major short-comings of the U.S. political economy. This causal story would haveimportant consequences for the course of the debate over health policy,especially labor's political efficacy on health reform and other matters.

Appearances are the bread and butter of politics. Political actors—bethey labor leaders, business executives, public interest groups, or gov-ernment officials—all compete to come up with convincing narrativesthat define the cause of a particular problem in such a way that certainpolicy proposals appear to be natural and obvious solutions (Stone 1989:282). Policy and political outcomes depend in part on how one particulardefinition and explanation of a problem wins out. As such, new ideasofren take fiight on the wings of compelling causal stories that come tobe accepted as fact, not as interpretations.

Labor's fierce attachment to the employer-mandate idea over the yearsimpeded its ability to come up with its own independent causal story

13. Jame.s C. Corman, letter to Douglas A. Fraser. 20 December 1978 (UAW Fraser Collec-tion, Box 2, Folder 23): and Keith W. Johnson, letter to Douglas A. Fraser. 17 January 1979(UAW Fraser Collection. Box 2. Folder 21).

14. See also Max W. Fme, letter to George Hardy. 30 May 1978 (UAW Schlossberg Collec-tion, Box 56. Folder 43): and CommiUee for National Health Insurance, report sent to technicalcommittee. 13 April 1978 (CNHI Collection. Box IS. Folder 20).

15. For more on "focal points." see Garrett and Weingast 1993.

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Gottschalk • The Missing Millions 499

about the relationship between the shortcomings of the U.S, politicaleconomy and the roots of the nation's health care dilemmas. As a conse-quence, organized labor was increasingly unable to develop a politicalstrategy for universal health care that was independent of the perceivedwishes and preferences ofthe business sector. Thus, labor was poorly sit-uated to mobilize a wider constituency on behalf of universal health care,one that could outiast the political logic of the moment such that it couldreshape health policy over the long run.

The Clinton administration's Health Security Act was developed andsold on the basis of several assumptions about the U.S. political econ-omy and welfare state that had emerged during earlier debates overhealth care initiatives based on an employer mandate. In its eagerness toforge some kind of an alliance with business based on the idea of anemployer mandate, labor not only embraced but even promoted thesebroader assumptions during the 1980s and 1990s. Among them was theassumption that the employer-mandate formula was not all that radical oreven new a solution but rather merely built upon the well-establishedinstitution of employment-based benefits in the United States; that busi-ness bore most of the brunt of the private welfare state and thus theincreasingly heavy burden of escalating medical costs; and that healthcare costs were imperiling the competitiveness of U.S. firms in the inter-national marketplace. As such, these costs represented perhi^s the primethreat to the U.S. economy and were the root cause for most of the eco-nomic woes of the American worker. Taken together, these assumptionshelped give shape to an alternative worldview, one that was quite sym-pathetic to business. These assumptions were just that—assumptions.Yet organized labor treated them as a set of inevitable facts that were notsubject to debate in the context of discussions of health care reform.However, a sustained and independent questioning of these assumptionsmight have revealed their contingency and highlighted that they werepropositions rather than uncontestable truths.

For example, the heartfelt belief among labor leaders and otherwould-be reformers (including eventually Hillary Rodham Clinton) thatbusiness in the end would agree to support an employer-mandate solu-tion because it would merely ratify what most employers were doingvoluntarily and because it appealed to the bottom-line interests of busi-ness (U.S. Congress 1987: 75; Bieber 1987; D. Jacobs 1989; U.S. Con-gress 1993b: S) was a leap of faith in a few important respects. First, busi-ness support for comprehensive health reform based on some kind ofemployer mandate may have been broad, but it certainly was not deep.

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500 Journal of Health Politics, Policy and Law

as labor officials would belatedly discover.'(i Moreover, all of organizedlabor's talk since the late 1970s about the need to pursue a health carestrategy that built upon the existing job-based system of benefits obscuredhow that system was in the midst of a radical transformation as firmsbegan to experiment widely with cutbacks in health and other benefitsand with new ways of organizing the workforce, notably a greater relianceon pait-time and other contingent workers (Polivka and Nardone 1989:13-14; D. Gordon 1996: 226-227). From the 1970s onward, employ-ment-based health coverage began to shrink (Swartz 1989) as the initia-tive in industrial relations shifted radically from union to nonunion firmsand from labor to management in ways that would have important con-sequences for the private-sector safety net, including health benefits(Kochan, Katz, and McKersie 1986:9, chap. 3; Jacoby 1991:283; Strauss1984: 3). Yet despite the rapid increase in the number of temporary, part-time, and self-employed workers, the plight of contingent workersremained marginal to most discussions of health reform during the 1970sand 1980s, even though such workers are more likely to be uninsured orunderinsured (Levitan and Conway 1988; Pemberton and Holmes I99S:263)."

To sum up briefly to this point, the employer mandate incorporated inthe Clinton proposal and its legislative forerunners was pitched as a fun-damentally conservative solution to the nation's health care woes. Bymaking the case for an employer mandate based on the argument thatmost employers were already providing their employees with healthbenefits, and that, as such, this solution was a moderate one, laborunwittingly helped to draw public attention away from the enormoustransformations that were taking place in the labor market and fromemployer culpability in these changes. It also downplayed the huge gapsand inequities on which the private welfare state was built. As a result,trapped by ideas it had adopted eariier, labor helped to minimize just howvulnerable the institution of job-based benefits was to shifting politicaland economic winds. In reality, employers in many sectors of the econ-omy retained enormous capacity to engineer a retrenchment of the pri-vate welfare state in quick order.

Organized labor largely left it to state actors—and then to business—

16. For a developinent of this point, see Goltschalk 1997: chap. 5.17. See, for eiuunple, the congressional deliberations sunounding the 1987-88 Minimat

Health Benefits for All Woikeis Act. which was based on an employer niandate, and the finalrepoit of the bipartisan Pepper Commission, which endorsed a modified employer-mandatesolution by a bare majority (IJ.S. Bipartisan Cormnission 1990).

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Gottschalk • The Missing Millions 501

to decipher the shifts in the U.S. political economy and thus to define thenation's preoninent economic problems. Labor leaders eventually endorsedthe idea of an employer mandate, acting more as passive transmitters ofideas rather than as active, independent initiators. Thus, organized laborinitially pursued what appeared to be the most politically expedient solu-tion at that moment and subsequently continued along a policy path con-sistent with its prior commitment to the idea of an employer mandate. Incontrast to what the Canadian labor movement and Canadian advocatesof national health insurance had done on behalf of universal health carein the 1950s and 1960s, unions in the U.S. did not embed their healthcare strategy in a longer-term political strategy derived firom a compre-hensive and independent analysis of the rapidly changing political andeconomic context.'^

Labor's attachment to the institutions of the private welfare state andits embrace of a probusiness worldview, including a commitment to theemployer mandate, spurred unions to pursue what turned out to beself-defeating political strategies. It is important to mention here, how-ever, that organized labor was not of a single mind about health reformin the late 1980s and early 1990s. As noted above, the impact of institu-tions and ideas was uneven. Just at the moment when single-payer pro-posals and the Canadian medical system were attracting wider attentionand gaining respectability among policy makers and the general public,some labor unions were bitterly divided over this issue. However, severalAFL-CIO officials eventually succeeded in neutralizing the remainingsupport within organized labor for a single-payer system. John J. Sweeney,chairman of the federation's health care committee and president of theService Employees International Union (SEIU), played a pivotal rolehere, as did Lane Kirkland, president of the AFL-CIO.

At the time, Sweeney and Kirkland cautioned unions to avoid endors-ing any specific legislation so as not to preclude the possibility of build-ing a consensus with other groups, including business (Keams 1989).This was a major theme of a series of hearings on health care issuesthat the AFL-CIO conducted around the country in fall 1990 (AFL-CIO1990). Yet the federation's efforts to mobilize its membership on thehealth care issue were falling flat around this time because ofits refusalto support any specific proposal and because of deep divisions betweenunions and within unions over the single-payer option. Many local labor

18. For more on labor and the Canadian case, see Taylor 1978. Maioni 1998. and Chandler1977.

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502 Journal of Health Politics, Policy and Law

organizers reported that members wanted to rally around a specitic pro-posal, but beyond the call for health care for all. there was no specificprogram. '

The showdown for organized labor over national health insurancecame in late 1990 and early 1991 as several unions pushed the AFL-CIOto endorse a single-payer solution. Although Kirkland and Sweeney tookan open-ended approach in public, in private they were strongly opposedto any Canadian-style solution. Behind the scenes and consistent withthe analysis described earlier. Sweeney advocated some variant of theemployer-mandate model, believing it was the one most acceptable tobusiness because it built upon the existing system of private-sector healthbenefits.^' This approach was also attractive to him because it would notforce unions that provided health benefits through the Taft-Hartley fundsto give them up (Colatosti 1990).^'

Sweeney and Kirkland brought the full weight of the AFL-CIO'sbureaucracy and the Democratic Party to bear behind the scenes on thesupporters of the single-payer path (S. Gordon 1991). At a critical andcontentious meeting in early 1991. the health care committee ofthe AI^-CIO deadlocked 8 to 8 over whether to endorse the single-payer option. ^Faced with such an impasse, the AFL-CIO's executive council respondedat the time by endorsing what appeared to be a "let a hundred fiowersbloom" approach to national health reform and issued a statement sup-porting some vague "principles" for health care (O'Neill 1991).

Yet like the original Hundred Flowers campaign four decades ago inChina, this one quickly lost its bloom as Kirkland and Sweeney clearlyremained committed to the employer-mandate formula and to undercut-ting the single-payer position. That summer eight union presidents sentan angry letter to Kirkland complaining about indications he had givenRep. Dan Rostenkowski (D-IL) that all of the AFL-CIO unions, includ-ing the single-payer contingent, would support the employer-mandate

19. See. for example. Jobs with Justice newsletter. Report on Health Care Action Day—.1October 1990 fAmalgamated Clothing Workers of America [ACWA], Box S): and McClure1990.

20. See. for example, Robert McGanah, letter to Gerald McEntee, 6 November 1990 (McGar-rah Papers), and Roben McGarrah. letter to Gerald MeEntee, 21 May 1990 (McGarrahPapers).

21. Sweeney reportedly was a widely acceptable choice to head the federation's health carecommittee precisely because his union, the SEIU, had extensive lYift-Hartley commitments(Nixon 1996).

22. This account of the meeting is based on the handwritten notes of Roben McGamh,AFSCME director of public policy, who was present (Notes Re: 1/31/91 Meeting of the HealthCare Committee, McGairah Papers). See also Frieden 1991:42-44.

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Gottschalk • The Missing Miiiions 503

measure that the chairman of the House Ways and Means Committeewas then pushing on Capitol Hill. In their view, the proposed bill did noteven conform to the general principles adopted by the federation sixmonths earlier. ^ Three months later at the federation's biennial conven-tion, speaker after speaker rose to denounce the Canadian nnodel as polit-ically unfeasible. The eleven international unions that favored a single-payer plan were mostly silent on the convention floor as the delegatespassed a vague resolution that reaffirmed the federation's commitmentto some unspecified restructuring of the health care system (AFL-CIO 1991). The real drama at the convention took place off the floor asSweeney announced at a press conference the release of a report fromthe National Leadership Coalition for Health Care Reform (NLCHCR)—a coalition of unions, laige employers, and advocacy groups—that calledfor an employer-mandate solution. Sweeney applauded employers' newwillingness to make common cause with labor on health issues. Mean-while, a representative of the American Federation of State, County andMunicipal Employees (AFSCME) distributed a letter from the union'spresident, Gerald McEntee, that took issue with Sweeney and nnade astrong pitch for a single-payer plan (Colatosti 1992).

While Kirkland and Sweeney were able to keep the AFL-CIO firomofficially straying down the single-payer path, they were unable to quellcompletely the growing sentiment in several unions for a Canadian-stylesolution. As a result, the AFL-CIO was forced to adopt a wait-and-seeapproach to health care reform that, not surprisingly, failed to inspirethe rank and file and that left labor fragmented and tentative just as thehealth care issue lurched once again into the national spotlight with theelection of Bill Clinton in November 1992.

OrganiMd Labor, Clinton, and the Poltticsof Heatth Reform

Almost immediately after the election, labor appeared to close ranksquickly and effortlessly around Clinton on the health refonn question.Yet, in fact, divisions simmered between unions and between the leader-ship and the rank and file. And the twin battles over NAFTA and healthcare reform in the summer and fall of 1993 helped to bring some of thesedivisions to the fore and to debilitate organized labor. These divisions

23. Morton Bahr et al., letter to Une Kirkland, 9 August 1991 (McGarTah Papers): andColatosti 1992.

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had institutional and political roots that reinforced one another. On theinstitutional side, as suggested earlier, was organized labor's commit-ment, especially the commitment of labor's leaders, to the Taft-Hartleyfunds and the ERISA preemption. On the political side, as also suggestedearlier, was its commitment to the idea of an employer mandate, whichmeant seeking an alliance with business on health reform and distanc-ing itself from the single-payer forces. After documenting some of thedebilitating divisions within labor's ranks in tbis section, I will trace inthe following section how the ideational and institutional underpinningsofthe private welfare state exacerbated these tensions.

Days after Clinton was elected, AFSCME and tbe United Auto Work-ers (UAW), two critical anchors of the single-payer coalition, rejected aproposed postcard campaign on behalf of a single-payer plan, as well asthe idea of making a bus caravan to Little Rock, Arkansas, to press theirviews. "We made a conscious decision not to do a grassroots campaign,"explained Alan Reuther, legislative director of the UAW. "We saw it assetting our people all up to be pissed off at Clinton" (Reuther 1996). Offi-cials from these two unions reportedly told other health care activiststhat they would only work from "inside" the Clinton team to infiuencethe course of health reform. At the time, the defection of the UAW andAFSCME was perceived as "deeply wounding" to the single-payer coali-tion (Wboa 1992).

Several otber unions, including the Communications Workers of Amer-ica (CWA), the Teamsters, the International Ladies Garment WorkersUnion (ILGWU), and the Oil, Chemical, and Atomic Workers (OCAW),were less reluctant to put pressure on Clinton in the weeks immedi-ately following the election (McClure 1993a). However, as the outlinesof the Clinton plan began to take shape in the months afterward, mostof these single-payer unions attempted to straddle the healtb care ques-tion. While they remained ostensibly committed to a single-payer solu-tion, they increasingly found virtue in the plan the White House appearedto be putting togetiier (McClure 1993b).

AFSCME's McEntee, who had been a pivotal voice for a single-payerplan over the years, was again a pivotal figure in swaying organizedlabor to go easy on the new president. At a meeting of the AFL-CIO'shealth care committee in early 1993, AFSCME reportedly voted in favorof managed competition, breaking with the single-payer contingent onthe committee for the first time as the committee deadlocked 8 to 8between supporters of managed competition on one side and single-payeradvocates on the other (Boatman 1993). In a statement issued by the fed-

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Gottschalk • The Missing Millions 505

eration's executive council in February 1993 shortly after the deadlockedvote, the AFL-CIO did not mention the single-payer solution. Instead, thefederation commended President Clinton for his leadership on healthcare and issued a two-page list of vague principles that it said shouldguide the drafting of any health reform legislation. It had little to say,however, about what labor was prepared to do politically to make uni-versal health care a reaUty (AFL-CIO 1993a).

Despite the lack of any major legislative or political victories for laborin the months leading up to the official introduction of the Health Secu-rity Act in fall 1993, organized labor's commitment to the president didnot waver much, at least in public (Moody 1993,1993b; Brooks 1993; DelValle 1993). In the summer of 1993, Ralph Nader's Public Citizen groupattempted to enlist labor in its efforts to plan a major event to launch acampaign for Canadian-style reform that fall. But the consumer advo-cacy organization was unable to mobilize much support firom organizedlabor because union officials said that they did not want to get involvedin any activity that might be construed as opposition to the president(Ridgeway 1993). Clearly, the institutional and ideological infiuences dis-cussed above were in full operation by now, especially among labor lead-ers. Even after Clinton decided to make the passage of NAFTA a top pri-ority, relations between labor leaders and the White House remainedcordial. When Clinton appeared as the keynote speaker at the AFL-CIO'stwentieth convention in October 1993 at the height of the struggle overNAFTA, Kirkland vowed, "By and large, his agenda is our agenda, andwe are and will be his most loyal troops" (AFL-CIO 1993b: 9).

This close identification with Bill Clinton's agenda ended up vexinglabor with a serious case of political cognitive dissonance that under-mined its stated quest for universal health care. This is most apparent inthe drastically different approaches that the AFL-CIO and major unionstook simultaneously in their campaign against NAFTA and on behalf ofhealth care reform. By the time Clinton unveiled the broad outlines ofthe Health Security Act on 22 September 1993, organized labor and manyDemocrats were already distracted by the growing demands of theanti-NAFTA campaign they were waging (Salwen 1993; Clark 1994). Atthe same time that unions were engaged in this pitched battle with busi-ness and the White House over the free-trade agreement, they were try-ing to make the case that both of them could be counted on to be con-structive partners on the health reform issue. As such, the political messagewas decidedly mixed and inconsistent. In the struggle over NAFTA, laborleaders faulted U.S. multinationals for what they characterized as a ruth-

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les.s and unwarranted etYort to .shift production to low-wage countrieswith laxer environmental and labor standards, at great cost to the Amer-ican worker (Moberg 1993; Richman 1993). Unions sought to make thetreaty a referendum on how corporate America was failing the averageAmerican worker and his or her family. Yet in discussions of healthcare, labor officials conceded, as they had for years, that U.S. corpora-tions were under mounting and dire competitive pressures from low-wage, lower-benefit producers at home and abroad and that escalatinghealth care costs compounded those pressures (see, e.g., UAW 1992:123, 142).

As an analytical aside, it should be noted that labor's contrastingapproaches to NAFTA and to the health care debate dramatically under-line the inadequacy of any explanation of labor politics that emphasizeslabor's shrinking membership and related political weakness. In the caseof NAFTA, labor chose to confront business and a Democratic presidentas it sought to defeat this free-trade agreement. By contrast, labor lead-ers eagerly sought the cooperation of business on health reform matters,even though this strategy was fraught with contradictions. The latterstrategy only makes sense when one keeps in mind labor's imperfect butlongstanding attachment to the private welfare state's institutions forhealth care provision and to the idea of an employer mandate.

The tight linkage that labor leaders made between the health careissue and the competitiveness question ended up boxing organized laborinto a remarkable spot, as demonstrated by a report released by theSEIU in 1992, just as the debate over health care reform was heating up.While the report mentions in passing how '*slow productivity growthand structural changes in the U.S. economy" (SEIU 1992: 3) have con-tributed to falling wages, it identifies health care costs as the main vil-lain responsible for the woes of the American worker. It blames thecountry's "out-of-control" medical expenses for a host of sins, includingfalling wages, the plummeting savings rate, the large federal budgetdeficit, the precarious financial situation ofthe states, slowing economicgrowth, and, notably, the "noncompetitiveness of American businesses"(1). The report identifies the growing health care cost burden as animportant cause of the restructuring of the U.S. economy that haswrought so many hardships for so many American workers and portraysU.S. corporations as largely passive onlookers in that restructuring(SEIU 1992: 1-10).

In the case ofthe free-trade agreement, unions sought to energize theirgrassroots supporters for what they hoped would turn out to be a highly

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Gottschalk • The Missing iMiiiions 507

partisan fight that, simply put, would pit labor against capital. In doingso, organized labor foiged some unprecedented alliances with consumer,environmental, farm, labor, and civil rights groups at home and abroad.In the case of health care reform, however, organized labor threw its lotin with an avowedly nonpartisan group composed of a loose-knit coali-tion of consumer, provider, business, and public interest groups called theHealth Care Reform Project, which was slow to get off the ground (Priestand Weisskopf 1994). The members of this coalition were united by theirshared commitment to the general idea of comprehensive reform of theU.S. medical system and by their expressed willingness to work withCongress, the administration, and the two main political parties to findan acceptable solution.

As the smoke cleared fiom the NAFTA battle following congressionalapproval of the treaty in November 1993, it appeared for a moment as iforganized labor might finally stake out a political path that was moreindependent of the Clinton White House. At the time, labor leaders wereembittered over the way the administration had conducted its campaignfor ratification of the trade agreement in the eleventh hour and useduncharacteristically harsh language to denounce the White House (Clinton-Republican 1993; Kirkland 1993). Several union leaders vowed to punishat the polls those senators and representatives who had supported thetreaty, a promise that went largely unfulfilled (Nomani 1994; Apple1994; Gordon 1994). The AFL-CIO did, however, cut off funding to theDemocratic National Committee for a period of almost six months. Thisleft the DNC's campaign for health care reform, which was alreadystrapped for money, in a real pinch (Johnson and Broder 1996: 292).Labor leaders acknowledged that their rank and file had been alienatedby the great lengths the administration had gone in order to pass a mea-sure that they perceived as deeply detrimental to their interests. Theyalso warned that the business-Republican alliance Clinton had foiged forNAFTA would not hold in the health care debate. Kirkland and otherlabor leaders conceded that the NAFTA setback had deflated the rankand file's enthusiasm for Clinton, thus jeopardizing the prospects for hisHealth Security Act (Byrne 1993; St. John 1996; Baker 1996; Reuther1996). In early December 1993, the AFL-CIO introduced a plan designedto train union activists in how to educate the rank and file about the Clin-ton plan (O'Neill 1993b). However, federation officials postponed send-ing their staff members into the field for several weeks because of therank and file's continued hostility to Clinton over NAFTA. Over the nextfew weeks, the Clinton administration intensified its efforts to smooth the

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ruffled feathers of organized labor as senior labor officials appeared todistance themselves from the glowing endorsement they had given toClinton's Health Security Act in eariy October (Kilborn 1994a; Friedman1993).^

Despite Kirkland's personal reaffirmation of labor's commitment to theClinton framework for health care reform in early 1994 (O'Neill 1994).debilitating divisions simmered within organized labor. The complexnature of the Clinton proposal compounded these divisions over reform.Training sessions for union activists tended to concentrate on providingdetailed explanations of how the Clinton plan would work in practice andreassuring union members that they would not be made worse off by theHealth Security Act. As such, little time was devoted to explaining thepolitical rationale behind labor's support of the Health Security Act andto discussing how to rev up the rank and file for the fight for compre-hensive health reform (Henry 1996). It appears that rank-and-file unionmembers were not the only ones who felt uneasy about the complexitiesof the Clinton plan and who needed to be convinced that the HealthSecurity Act would not leave them worse off. Asked what he thought ofthe Clinton plan. Robert M. McGlotten, who was legislative director ofthe AFL-CIO at that time, bluntly said after the fact. "It scared me todeath" (McGlotten 1996).

The single-payer activists among organized labor's rank and fileremained reluctant to heed the leadership's call for a united front with theClinton administration on health care reform. For many years, the rankand file of those unions that had been the most active on health careissues, including the UAW, AFSCME. and the ILGWU. had been hear-ing from their leadership about how a single-payer plan was the only wayto go in terms of access, affordability, simplicity, savings on administra-tive costs, and preservation of freedom of choice for patients. Yet. nowthey were being told to mobilize in support of a complicated, untried planthat was rooted in the existing job-based system of benefits and thatretained a sizable role for the major commercial health insurers. More-over, the plan had been hatched by a president who had just kicked sandin labor's face during the NAFTA struggle.

These rank-and-file activists were emboldened by two related develop-ments to stay the single-payer course in defiance of their national leader-ship. First, public interest groups with whom organized labor had estab-lished closer ties during the NAFTA fight began making direct appeals

24. On labor's initial endorsement, see O'Neill 1993.

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Gottschalk • The Missing Millions 509

to labor's rank and file on behalf of Canadian-style solutions. Second, anew movement to establish a labor party as an alternative to the Demo-crats and Republicans had emerged in the early 1990s and had singledout national health insurance as one of its top priorities. This movementpresented neither an immediate threat to the Democratic Party nor a seri-ous challenge to the pro-Democratic Party line of the leadership of theAFL-CIO. However, it did provide a new venue for disgruntled laboractivists to pursue an alternative political agenda and to link the single-payer issue to other broader social and economic concerns. As such, itprovided an opportunity for political activists to focus not just on thelegislative battle of the moment but on the development of long-rangestrategies to engineer a major and enduring political shift.

In the 1993-1994 period, single-payer activists from Ralph Nader'sPublic Citizen made a conscious effort to court labor's rank and file throughvisits to union locals in which they explained why, in their view, the single-payer approach was superior to the Clinton plan. Single-payer activistsrevved up labor's rank and file with facetious slogans that poked fun atthe alleged lack of political imagination that went into developing andselling the Health Security Act. ^ These attempts to appeal directly to thelocals over the heads of their national leadership jeopardized the new cli-mate of detente that had emerged in the struggle over NAFTA as liberalpublic interest groups and the nuiinstream of organized labor were ableto overcome some of their historic antagonisms and work together witha degree of cooperation that was perhaps unprecedented.

These efforts by liberal-leaning public interest groups to appealdirectly to the rank and file on behalf of Canadian-style health refonnwere not the only new source of tension. In the late 1980s a handful ofpublic interest and labor activists had begun working together to lay thefoundation for a third political party; in early 1991 they formally launchedthe Labor Party Advocates (Moody 1991; Slaughter 1993). Their actionsheightened tensions both within organized labor and between the nationalleadership of organized labor and certain public interest groups (Slaugh-ter 1995).

The 100,000-member OCAW union was the main catalyst behindthis movement to organize a third party. Third-party activists in theOCAW and other unions placed national health insurance at the center

25. IVvo ofthe slogans that sparked chuckles from union memben were: "Hey, hey, ho, ho,aiguably better than the status quo," and "What do we want? Universal health coverage. Whendo we want it? As soon as the savings are available" (Nichols 1996).

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510 Joumal of Health Politics, Policy and Law

of a new social agenda around which they hoped to organize u viablelabor party. In contrast to many other labor leaders, OCAW officials reg-ularly expressed doubts in public about the degree to which businesscould be counted on to cooperate with labor to find an acceptable healthcare solution and viewed the issue of universal health care as a pillar onwhich to build a wider critique of U.S. corporations (Labor-Management1988; OCAW 1991a: 6). OCAW officials did not shy away from drawinga connection between the health care issue and broader questions aboutthe role of corporations in the U.S. (Hoyle 1993: Wages 1993; We WereNever Meant 1992). In its coverage of health care matters, the OCAW'sleading publication did not just document the problems of the U.S. healthsystem and explain why Canadian-style reform could ameliorate manyof these difficulties. Unlike most other unions, the OCAW publisheddetailed articles about the political context out of which national healthinsurance in Canada was bom.^ Over the years the OCAW also pointedlychallenged what it viewed as the AFL-CIO's wait-and-see approach tohealth care reform and its favorable stance toward employer-mandateproposals.-^

The OCAW was one of the few single-payer unions that did not attemptto straddle the health care issue in the 1993-1994 period. Instead, itunequivocally rejected the Clinton plan. A number of other unions triedto have it both ways. They would say nice things about the Clinton plan,yet attempt to keep one foot, or at least one toe, in the single-payer waters.In justifying their retreat on the single-payer question, many represen-tatives of organized labor dismissed Canadian-style reform proposals asnot politically feasible or politically viable. They stuck to this positioneven though single-payer proposals had attracted the greatest number ofcosponsors and even though the Congressional Budget Office (CBO),which was required to cost out all health reform proposals, had deemedsingle-payer plans very cost effective (Skocpol 1996:292, n. 47; McNamee1993).

To sum up, in the 1993-1994 period labor was divided over whether ornot to assume a more confrontational stance vis-^-vis the Democrats. Dif-ferences over the single-payer approach further divided labor and openedup schisms within the public interest community. Lingering hostility toPresident Clinton because of his zealous support of NAFTA made it diffi-cult to mobilize the rank and file on behalf of health reform, as did the

26. See, for example, the OCAW Reporter co\tr story on health care (1990) and Hoyle 1993.27. See. for example, the remarks by OCAW presidents Joseph M. Misbrener and Robert

Wages in OCAW (1991b, 1991a: 3: 1993). See also Wages 1992.

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Gottschalk > The Missing Millions 511

mixed, inconsistent, and at tinfies contradictory messages that organizedlabor employed simultaneously in the NAFTA and health care reformdebates. Fiirthermore, organized labor's nnainstream, which had begun toerect some important bridges with liberal-leaning public interest groupsduring the struggle over NAFTA, was unable for various reasons to utilizethese connections to forge a winning coalition for health care reform."Labor was fractured. It couldn't really decide what it wanted," explainedlong-time congressional staffer David Abemethy (1996). Another keyCapitol Hill staffer on health matters descrihed labor unions as "heing atwar with each other" over health care reform at this time. ^

Organised Labor, Clinton, and theinstitutions of tiie Private Vlteifare State

The inherited institutional context compounded these divisions overhealth care reform within organized labor. Unions that depend heavilyon Taft-Hartley funds for their health benefits rennained reluctant to givethem up, and this hsid far-reaching consequences for the fate of theHealth Security Act and other comprehensive reform proposals. Theseunions fought long and hard to get a provision included in the HealthSecurity Act that would permit Taft-Hartley funds with 5,000 or moremembers to opt out of the proposed health alliances if they so wished.The main lobbying group for the Taft-Hartley plans, the NCCMP,hailed the Clinton plan with its S,OOO-member cutoff as a welcome prodto force smaller, less efficient Taft-Hartley funds, which had resistedefforts over the years to get them to merge, to finally do so in order toremain independent ofthe alliances (Ray 1996; SEIU 1993:9). In givinghis endorsement to the Health Security Act, NCCMP chairman RobertGeorgine stressed that under the Clinton plan, many Taft-Hartley fundscould continue doing business as usual (U.S. Congress 1993c: 103).

This opt-out provision for the Taft-Hartley funds ended up strength-ening the hand of large employers, many of whom, as members of theCorporate Health Care Coalition, had been lobbying hard for such a pro-vision for themselves. Once organized labor had successfully made thecase that large l^-Hartley fiinds should be free to choose whether or notto join a health care alliance, it became that much more difficult forunions to argue that all large employers should be required to participatein the alliances. Kirkland of the AFL-CIO testified on Capitol Hill that

28. His remarks were not for attribution.

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512 journal of Heaith Politics, Poiicy and Law

while organized labor did not like the provision in the Health SecurityAct that would pennit large employers to remain outside the alliances, "ifit's necessary to broaden support for the plan, we're prepared to live withit" (Parks 1993).

Some union officials went ballistic over Kirkland's efforts to preservethe independence of large Taft-Hartley funds and to keep them out of thealliances, however. They contended that by doing so labor was sanction-ing the deleterious practice of carving up the health care market in a waythat would essentially perpetuate the practice of experience rating.^ Assuch, the health care alliances would end up as the dumping grounds forless healthy people in need of greater—and more costly—medical care.Furthermore, by securing an opt-out provision for organized labor, theycharged, unions helped open the door to a lengthy debate over just howlow to set the cutoff point for requiring private-sector employers to jointhe alliances.""' In discussions of the Health Security Act, a cutoff pointas low as 100 employees was seriously considered (which in effect wouldhave allowed more than half the workforce to remain outside the alli-ances).-''

The institutional context antagonized the divisions within organizedlabor over health reform in a second respect. Not wanting to appear as ifthey had totally sold out on the issue of Canadian-style reform, unionswith strong single-payer contingents pushed the Clinton administrationto incorporate some single-payer language into the Health Security Act,reportedly against the wishes of AFL-CIO president Lane Kirkland. Theywere joined in their efforts by a number of public interest groups, notablyConsumers Union, which called upon the White House to provide federalfinancing to help individual states establish single-payer programs if theyso wished (Consumers Union 1994: 26; Shearer 1996). In the end, theWhite House did include a measure in the Health Security Act that wouldallow states to create single-payer .systems of their own if they so chose.This neither-fish-nor-fowl legislative compromise proved to be highly

29. Under experience rating, health insurance is priced on the basis of the health experienceof a paitkulai group. The alternative is commuoity ntmg, whereby the entire community assumesthe risk for those who might become ill: under that system insurance rates do not vary muchfrom one individual to the next in a given community.

30. AFSCME, whose membership is made up primarily of govemment employees, was par-ticularly upset because the Health Security Act, as originally proposed, permitted laige employ-ers in the private sector and private-sector unions with big IW-Haitley fiinds to keep tbeiremployees and members out of the alliances. Yet it required all public employees to participatein the new system (McGarrah 1996; Robert McGarrah. memo to Gerald McEntee. 22 April 1994[McGarrah Papers]).

31. See U.S. Congress 1993e: 403 and Skocpol 19%: 66.

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controversial, however. "All hell broke loose at that point," said con-gressional staffer David Abemethy (1996). Business leaders denouncedthe state-level single-payer provision as a stalking horse for nationalhealth insurance k la Canada. Corporations that self-insure were paitic-ulariy upset. They contended that the proposed single-payer provisions ofthe Health Security Act flew in the face of the ERISA preemption(Atkins 1996; U.S. Congress 1993d: 667-669,707).

Not surprisingly, corporations were here joined in their efforts byunions that rely heavily on Taft-Hartley funds to provide benefits to theirmembers. These unions feared that the single-payer provision in theHealth Security Act would permit states either to force unions to give uptheir Taft-Hartley funds or to begin dictating to labor how to run thesefunds (Ray 1996; U.S. Congress 1993c: 103-105). In short, the single-payer provision appeared to put the ERISA preemption so cherished byemployers that self-insure and unions with Taft-Hartley funds oo a colli-sion course with the Health Security Act (Wise 1993). Labor's extremesensitivity to the ERISA issue reportedly prompted the AFL-CIO to pullits support from the eleventh-hour compromise legislation proposedby Sen. George Mitchell (D-ME) in the summer of 1994. The proposalappeared to threaten the sanctity of the preemption by permitting gov-ermnent surcharges on Taft-Hartley funds for the first time. ^

Even some unions without sizable Taft-Hartley commitments, notablythe UAW, did not favor the idea of allowing individual states to createtheir own single-payer plans. The UAW and other unions with multistatecontracts feared that the emergence of a hodgepodge of single-payerplans at the state level would impede their efforts to negotiate and imple-ment unifonn contracts spanning several states (Reuther 1996). This fearof jeopardizing multistate contracts and of weakening the ERISA pre-emption through state-level initiatives tended to reinforce a longstandingtendency within organized labor to look askance at social reform effortsat the state level.

Historically, the AFL-CIO and its antecedents have tended to beambivalent or downright hostile toward attempts to extend the safety neton a state-by-state basis. Among other things, federation officials havefeared losing control of the social welfare agenda to the states. More-over, they have feared that the most socially backward and poorest stateswould end up setting the national standard for social welfare. They also

32. In the words of James Ray of the NCCMP, unions with TiA-Hanley funds "went ber-serk" over the Mitchell proposal and were proud to have brought it down (Ray 1996).

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have questioned the capacity of individual states to develop und imple-ment comprehensive social welfare reform programs on their own.- ^Gerald M. Shea, who headed the federation's 1993-1994 health carereform campaign, described state-level initiatives as a "drain on politi-cal energy for national action." Furthermore, he said he doubted thatlabor and other activists could prevail by pursuing universal care on astate-by-.state basis (Shea 1996). In 1993 and 1994. the national leader-ship of some unions that had once been ardent single-payer supportersbegan pressuring single-payer advocates at the state level to change theirtune. AFSCME pushed hard to get the Coalition for Universal HealthInsurance for Ohio (UHIO). which had first introduced a state-level sin-gle-payer bill in 1990. to support the managed-competition approachfavored by the White House (Boatman 1993; Healthy States? 1992).Moreover, the national leadership of the AFL-CIO did not mount anyhigh-profile efforts on behalf of California's Proposition 186. whichaimed to create a statewide single-payer system and was placed on theNovember 1994 ballot thanks to a state-level labor-community coalitionthat gathered over 1 million signatures in record time.

Despite all the time and energy that union officials and some publicinterest groups devoted to getting some single-payer language incorpo-rated into the Health Security Act. organized labor won few kudos fortheir efforts from the diehard members of the single-payer coalition(Nichols 1996). "This was their badge of loyalty to the cause." said Bar-bara Markham Smith, a former legislative aide to single-payer advocateRep. Jim McDermott (D-WA). She disnussed labor's efforts as a "mean-ingless trophy" (1996).

These divisions within and between organized labor and public inter-est groups, together with the distractions of the NAFTA fight, made itdifficult for organized labor to take the offensive on health care reform.Preoccupied with NAFTA until November 1993. oiganized labor left thefield clear for opponents of comprehensive health reform—most notablythe Health Insurance Association of America (HIAA)—to define theterms ofthe public debate eady on beginning with the devastating Harryand Louise commercials, which saturated the airwaves in select televi-sion markets that fall. At least as early as October 1993, key union staffmembers were indicating in private that Clinton's Health Security Act

33. See. for example. Sweeney 1991. In 1991. Sweeney tried to get tbe Ohio AFL-CIO torescind its support of legislation that would create a single-payer system in Ohio (Boatman1991).

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was in trouble.^ After the NAFTA vote in November 1993, labor wasunable to recapture the initiative on health care. Valuable time was spentattempting to repair rifts between its grass roots and the tree tops, as wellas between the White House and labor. As such, organized labor's cam-paign for health care reform did not get into full swing until about Feb-ruary 1994, just as the Clinton plan was in its death throes.

That month the two central assumptions on which organized laborhad staked its health care strategy for more than a decade finally camecrashing down in quick succession. The first was the belief that busi-ness could be counted on to be a constructive partner in health carereform if organized labor distanced itself from any Canadian-stylesolution. The second was the belief that an employer-mandate solutionwould ultimately triumph because it built on the existing system ofjob-based benefits and thus placed no additional burden on the federaltab.

Despite an intense lobbying effort by the White House, the BusinessRoundtable, an elite business organization comprised of two hundred orso leading CEOs, refused to endorse the Health Security Act. Instead itvoted on 2 February to back the rival plan sponsored by Rep. Jim Cooper(D-TN), which would not require employers to pay any of the costs oftheir employees' health insurance (Schneider 1996; Stout and Wartzman1994; Ifill 1994; Priest and Weisskopf 1994). The following day, theChamber of Commerce, in an important retreat, unequivocally dis-avowed the Clinton plan (U.S. Congress 1994a: 16-17, 54; Sprague1996). By that time, the National Association of Manufacturers (NAM)was likewise distancing itself from the Clinton plan in no uncertain terms(NAM 1994; Johnson and Broder 1996:316-318). Labor officials tried tocounter the U.S. Chamber of Commerce, NAM, and Business Round-table setbacks in early 1994 by imploring business leaders, notably exec-utives of the Big Three auto makers, to reaffirm publicly their conmiit-ment to comprehensive health care reform. Their attempts to encouragethe leading CEOs of the automobile industry to author a high-profileop-ed on behalf of the Clinton administration's efforts were unsuccessful,however. "There was this deafening silence when we needed business totake a stand," said Mary Kay Henry of the SEIU (1996).

The second major blow to labor's strategy came at about the sametime. The appeal of the employer-mandate solution had rested on what

34. See, for example, Nancy Donaldson and Ned McCulloch, memo to Bob Welsh and GerryShea. 2 October 1993 (Nixon Papers).

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turned out to be a questionable assumption—that it would not be con-sidered a tax increase and that it thus would not affect the federal budgetin any significant way.- '' In early February, Robert Reischauer, head ofthe CBO. swept away this "tortured fiction" that had sustained labor'sdeep faith in an employer-mandate solution over the years. He told leg-islators that the federal government would have to treat the health insur-ance premiums that firms would be required to pay for their employeesunder the Health Security Act as a tax increase for business (Marmor andMashaw 1994; White 199S). AFL-CIO president Lane Kirkland subse-quently conceded that this decision by the CBO was a major blow forlabor (Hardesty 1994).

In light of a string of political setbacks on health care reform and otherissues in late 1993 and early 1994, labor leaders began to debate whetherorganized labor should recommit itself once again to the single-payerpath (AFSCME 1994). Teamsters president Ron Carey called on Presi-dent Clinton to alter his strategy on health reform after the businesscommunity resoundingly deserted his compromise proposal in February1994 (Carey Calls 1994). Several unions, including AFSCME, UAW, andILGWU. were reportedly ready to put up substantial sums of money onbehalf of the single-payer solution and entered into discussions with oneanother and legislators about conducting a major publicity campaign forit. ^ But this effort sputtered because of continued disarray and dis-agreement within and between unions, liberal public interest groups,and legislators (Com 1994; Kilborn 1994b; Weil 1997: Johnson andBroder 1996: 287-191; Salwen I994).37

In short, organized labor's efforts to mold the health care debate inearly 1994 were sporadic at best. For the most part, the debate overhealth care reform was conducted in a vacuum in which labor seldomraised broader issues about economic restructuring, the responsibilitiesof employers to their employees, and the role of insurance companies inthe U.S. medical system. The harshest criticism of the job-based systemof benefits, the commercial health insurers, and the competitivenessargument wielded by business in its campaign against the administra-tion's health reform proposal came not from leading figures in organized

33. In private, dniflens of the Health Security Act had been uneasy about how the Congres-sional Budget Office would ultinMtely choose to categorize the employer mandate for budget-ing purposes (Skocpol 1996:67-68: Hacker 1997: 124).

36. Nichols 1996 and Robert McGarrah. memo to Gera\d McEntee. 17 February 1994(McGarrah Papers).

37. See also Robert McGarrah. memo to Gerald McEntee, 21 March 1994 (McGarrahPapers).

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labor, but from maverick legislators in the U.S. House, notably Rep.McDermott and Rep. Pete Stark (D-CA) (U.S. Congress 1994b: 205,212,219; 1993e: 118-119).

For the most part, the leaders of organized labor raised few of thesedeeper structural issues in their public discussions of health care reformin the 1993-1994 period. In their appearances before Congress, theytended to give a qualified "yes, but" endorsement to the Health SecurityAct and, in some cases, to follow it up with some pleasantries about thesingle-payer approach (U.S. Congress 1994c: 7-75). Few dared to raisesome of the third-rail questions associated with health care and the roleof corporations in the new work order in the United States. One notableexception was Tom Gilmaidn, a vice president of the Teamsters, who inhis congressional testimony directly tied the health care reform questionto broader issues conceming econonmc restructuring. When he was askedwhy, given the concerns he had raised, organized labor was not speakingout more loudly and forcefully on behalf of a single-payer system, Gil-martin told legislators: "That is certainly a question our general execu-tive board and president ask quite often" (U.S. Congress 1994d: 255,294).

Conclusion

In the 1980s and 1990s, a social movement or reform coalition pushingmore radical proposals for health care reform—such as national healthinsurance that did away with the commercial health insurers and theemployment-based system—never congealed. The political conditionsseemed promising enough for the emergence of such a movement, giventhe economic dislocations associated with employers' quest for greaterlabor-market fiexibility. After all, as the bond between employer andemployee frayed, workers faced a radically new economic environmentwith the downsizing of the labor force, the retrenchment of the private-sector safety net, growing income inequality, and a burgeoning contin-gent workforce.

There are numerous reasons why such a social movement or power-ful reform coalition did not emerge around these issues and why thehealth care reform question failed to galvanize one. One central reasonhas to do with the role of organized labor. With its attempts over theyears to woo the business community, culminating in what it thought tobe a business-friendly legislative solution, organized labor helped lay thepolitical groundwork for the Health Security Act and the worldview that

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the Clinton admini.stration employed to sell it. Business was able to dom-inate the health care debate over the years because the whole health careproblem, so to speak, got defined with the help of ot;ganized labor inways that favored the economic worldview of key business executivesand prominent economists.-^"

While the recalibration of the U.S. political spectrum to the rightbeginning in the late 1970s is important, it does not entirely explain whyprivate-sector solutions, most notably the employer mandate, trumpedpublic-sector ones time and again in discussions of health policy. It isimportant to understand how the U.S. welfare state developed in theyears prior to the Reagan revolution so as to facilitate organized labor'scontinued embrace of private-sector solutions in the 1980s and its luke-warm stance toward proposals that called for eliminating the commercialhealth insurers and job-based medical benefits.

Several institutions of the private welfare state—notably the Taft-Hartley funds and the ERISA preemption—developed in the postwaryears so as to facilitate labor's turn toward private-sector solutions. Theemployer mandate helped to fix labor's gaze on the private welfare state.This policy idea was adopted in a moment of political expediency at theprodding of state actors. Eventually it became embedded in a compellingworldview and causal story that were favorable to business, and thatended up vexing labor with a serious but largely unrecognized case ofpolitical cognitive dissonance. By endorsing the Clinton proposal and itslegislative antecedents based on a job-based solution, organized laborended up endorsing a highly selective understanding ofthe U.S. politicaleconomy. It generally accepted that in this age of widespread economicrestructuring and a manic search on the part of employers for greaterlabor-market flexibility, the institution of job-based benefits was a well-established, stable one that had long shielded most U.S. residents andwould continue to do so. Moreover, by holding up the existing system ofemployment-based benefits as a model of social responsibility, oiganizedlabor mininuzed or whitewashed the gross inequities embedded in thatsystem which, during earlier campaigns for national health insurance, ithad spotlighted and taken issue with. It thus helped to promote the mis-perception that business shouldered most of the burden of the privatewelfare state and. in particular, most of the burden of escalating health

38. For more on how policy ouicome.s vary with the ability of business to define the rele-vant issues in ways that favor or disfavor business, see Mucciaroni 199S. On the pivoul role ofeconomists in recasting the health care debate, .see Melhado 1998.

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care costs. In doing so, organized labor became an accomplice in nnni-mizing the retrenchment of the private welfare state that was under way.

The institutions of the private welfare state and the employer-mandateidea were mutually reinforcing, and both, in turn, molded labor's politi-cal choices and behavior. It is not my contention here that the idea of anemployer mandate and the institutions of the private welfare state mor-tally wounded the Health Security Act. Rather, I have attempted to showhow they represented a severe impediment to forging a winning politi-cal strategy and coalition that could secure universal and affordablehealth care over the long haul. In this sense, they contributed to the defeatof comprehensive health reform in 1994. These institutions and ideashelped to realign the interests of labor more closely with those of busi-ness. They also contributed to tensions within and among unions andliberal-leaning public interest groups that impeded efforts to fonn adurable coalition. These divisions made it that much more difficult forlabor to lead rather than follow in the health care reform debate and rein-forced organized labor's tendency to defer to the leadership of the Demo-cratic Party on social policy questions.

This focus on organized labor's mistakes in the health care debateshould in no way minimize the fact that labor was up against not just for-midable institutional obstacles but also formidable political obstacles. Itfaced powerful opponents who could muster enormous resources, finan-cial and otherwise, to shape the fate of comprehensive health care reform.Furthermore, in discussions of health care reform, the media and oppo-nents of the Health Security Act generally distorted the public debate(Peterson 1995; Marmor 1995).

During the battle over the Health Security Act, the Clinton administra-tion echoed the view that escalating health care costs were the root causeof the woes of the American firm and hence of the American worker. ForPresident Clinton, this was an important shift away from the picture ofthe U.S. economy that he had painted on the campaign trail. As theDemocratic Party's presidential candidate in 1992, Clinton certainly didnot launch any stinging broadsides against corporate America. However,he did gingerly suggest in his smmp speeches that a complex mixture offactors was to blame for the fact that more Americans were workingharder than ever just to maintain the economic foothold they had. Inshort, "It's the economy, stupid."^^ Yet after his bruising battle over the

39. These factors included an inequitable tax system, inadequate government and coipoiateinvestment in infrastructure, education, economic development, and environmental protection,and the "biggest imbalance in wealth in America since the 1920s" (Ifill 1992).

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budget, which dominated his first seven months in office, Clinton emeigedwith a reduced vision of what was ailing the U.S. woiker. In short. "It'sthe health care costs, stupid."^'

In her explanation of the failure of health reform in the 1993-1994period, Skocpol faults the administration for not doing more to shape thepublic debate by educating the public about the details ofthe Clinton pro-posal, in particular the rationale for the employer mandate, the healthalliances, and the heavy regulatory hand underpinning the Health Secu-rity Act. Yet the right message will not, on its own, assure passage ofmajor social policy legislation, especially in the face of decided ambiva-lence on the part of big business and the absence of a crisis on the orderof. say, the Depression.'*' Ultimately, advocates of universal health careneed to figure out how to create and nurture durable political alliancesglued together by something more than just the dght message for a spe-cific policy. This is especially so today in an age when budgetary con-cerns drive social policy.^^ Major social policies ultimately raise funda-mental questions not just about which is better—more government orless—but about what constitutes a fair and just society and who shouldbear what burden to that end. And that question is inherently contro-versial. And during periods when the winds of retrenchment blow hard,that question is inescapable.

To enter into a broader public debate about how the employer mandatewould work and the reasons for it would have meant opening up abroader discussion about why the United States has such a jeny-built sys-tem of employer-sponsored benefits in the first place. It would havemeant confronting not just the question of whether employers shouldprovide benefits like health insurance, but what social obligations, if any.employers have in exchange for the Hght to do business in the U.S. Indoing so, the Clinton administration would have had to confront many ofthe volatile issues raised by the wrenching restructuring ofthe U.S. econ-omy that has been under way for almost two decades now.

In presenting the idea of an employer mandate to the public, Clintonand organized labor together might have raised some of these deeperquestions about the U.S. economy and triumphed in the court of publicopinion. But to do so would have required building more than just afair-weather coalition that entered into a marriage of convenience over

40. See. for example. Bill Clinton. September 1993 Health Security Speech, in Eckholm1993:301-314.

41. For more on crises and cross-class coalitions, see Swenson 1997.42. On the obstacles to coalition building today, see Weir 1998.

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health care refonn with elements of business after engaging in a messypublic spat over NAFTA. Given Clinton's conservative £)emocratic Lead-ership Council credentials, his deep ties to the financial sector, and hislack of any solid political or ideological grounding, it is unlikely that hewould have begun this public debate on his own accord. However, orga-nized labor together with some public interest groups might have beenable to drag him in this direction. Yet, as we saw here, the institutionalconstraints of the private welfare state, internal divisions within andbetween oiganized labor and public interest groups over health carereform, labor's dogged commitment to working with business to solvethe nation's health care dilemmas, and its general lack of political imag-ination precluded this option.

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