Remember Elizabeth McCaughey?
She was the obscure and conservative op-ed warrior who blow-torched President Clinton's health care plan in the New Republic, triggering a nine-page tirade from the White House, outrage from many health care professionals and charges that she was either confused or a liar. But her article, "No Exit," had legs, and its nightmare scenario of a government eager to force Americans into no-choice, cut-rate health care helped crush the Clinton bill. Even now the article remains so controversial that there was incredulity in certain Democratic quarters when it won a National Magazine Award this spring.
"What she did was just unconscionable," says Ira Magaziner, the architect of the plan.
"This is one of the great scams of modern life," says Theodore Marmor, a health and public policy specialist at the Yale School of Management, talking about McCaughey's startling rise.
McCaughey's fans, on the other hand, called her article nothing less than brilliant -- a "withering analysis" opined columnist George Will -- then elevated her to the status of Park Avenue glamour queen in a world of policy wonks. Her toothy good looks, body-conscious suits, Vassar BA and Columbia PhD reduced right-wingers to mush. "Henry Kissinger's brain and Jessica Rabbit's body," said the New York Post. Soon McCaughey, 46, was posing in a bare-shouldered Norma Kamali evening gown and Manolo Blahnik heels for Vanity Fair.
Today McCaughey (pronounced McCoy) can actually say she got her job through the New Republic. In January she became the lieutenant governor of New York, a miniskirted neophyte battling for the conservative cause along with her partner, Republican Gov. George Pataki. Her fiance, multimillionaire bankruptcy specialist and Democrat Wilbur Ross, likes to point out that McCaughey never even ran for class president. McCaughey herself -- whose first task as lieutenant governor was an attempt to cut the state Medicaid budget by $1.2 billion -- freely admits she knows almost nothing about politics.
One thing she has proved to have is an uncanny gift for not bringing out the best in men. During the campaign, Sen. Al D'Amato (R-N.Y.) leered at her at the restaurant "21" and said she could lure New York Mayor Rudy Giuliani into an endorsement by making him "an offer he can't refuse." This spring, at the height of the annual state budget battles, she crashed a news conference held by the top Democrat in Albany, Assembly Speaker Sheldon Silver, and badgered him for trying to stop Pataki's budget cuts. "I can smile like you, but it doesn't accomplish anything," Silver said, and then, in a gesture broadcast around the state, wiggled his hips in derision. It was a public relations fiasco for him, a coup for McCaughey.
"It certainly raised her profile for those who hadn't seen her perform at the public level -- but I had," says Pataki. "She's a tremendous asset and an enormous help." Pataki's staff complained during the campaign that McCaughey was far more interested in promoting herself than her candidate, but the Silver incident was a turning point that moved her from political oddity to comrade-in-arms. "She hit some bumpy roads along the way," says the governor's press secretary, Zenia Mucha, "but she is developing a much better political sense. She's a great saleswoman, I'll tell you."
In recent months McCaughey has also become a favorite of the New York gossip columns, a new boldface name spotted at Elaine's, in the Hamptons, laughing with Donald Trump. After a bitter separation and divorce from first husband Tom McCaughey and dates with a number of rich and well-connected New York men -- she was engaged for a time to Robert D. Hormats, who served in the Nixon, Ford, Carter and Reagan administrations and is vice chairman of Goldman Sachs International -- she will marry Ross, 57, on Sept. 15. Her three daughters, she says, are thrilled. "My main regret is that we didn't meet a million years ago," says the smitten Ross.
For a janitor's daughter who had a difficult childhood, her life now, says the lieutenant governor, "is so much better than I ever dreamed it would be."
The story of how Betsy McCaughey was catapulted to fame is one of the more bizarre episodes in recent American public policy -- the tale of a remarkable transformation from unknown academic to high-profile politician. It is also, according to McCaughey's friends, not the first time she has reinvented herself. Tour of Duty
"This patient looks too relaxed," says McCaughey, laughing, as she grins at a young woman in a dentist's chair at the William F. Ryan Community Health Center on Manhattan's Upper West Side, a model neighborhood facility serving thousands of poor Hispanics and blacks covered by Medicaid or no insurance at all. The lieutenant governor, in a deep royal blue suit and her trademark high heels, is on a quick tour of the center, striding purposefully through the packed waiting room. She has come from a taping for public TV, where she offered up a numbing, not-always-to-the-point arsenal of statistics with an intense but ebullient style. (Her detractors call her perky; one well-known and evidently competitive Republican woman was overheard in a Washington restaurant calling her a "jumping bean.")
"How old is your baby?" McCaughey asks a young mother, stopping to coo. She asks doctors about the schedule for mammography and the number of patients with HIV, stopping briefly at a table stocked with condoms. But her real purpose is to woo officials worried about her proposed budget cuts. More than half the center's patients are on Medicaid, meaning it will be clobbered financially if McCaughey succeeds in cutting the amount of money it gets from the government for treating the poor. She also wants to entirely cut certain medical services paid for by Medicaid.
Next McCaughey meets with a small group of doctors, telling them: "If fiscal realities compel us to eliminate non-emergency dental care for adults -- "
"They'll end up in the emergency room with cancer of the mouth!" a doctor interjects curtly.
There is more discussion. "I want to hear your concerns before I leave," McCaughey finally says. "Let's have coffee." Everyone moves to a meeting room table and McCaughey begins. "I know you're going to help us out," she says to the officials. "We need you." But it's a tough crowd. Under McCaughey's cost-saving proposals, 85 percent of New York's non-elderly Medicaid population -- 1.7 million poor people -- would be moved into health maintenance organizations within one year. (The irony is that McCaughey attacked HMOs in the New Republic, calling such care substandard, although she insists now she was simply attacking price controls in managed care.) In any case, the Ryan Center already has its Medicaid patients in its own HMO, and the last thing it wants is for those patients to go elsewhere.
"I don't want to lose my Medicaid patients to other HMOs," Julio Bellber, the executive director of the center, tells McCaughey, adding that he can't afford to advertise on television like his big rivals.
"If they're promised a lot in glitzy marketing, which we can't compete with, we're scared stiff," says Barbara Minch, the center's deputy director. She and the others argue that the center might lose its healthiest patients -- "the cream," says Bellber -- to competitors and end up with the patients nobody else wants.
"It's the people in the emergency rooms who will be the high-cost patients," agrees McCaughey.
"No HMO will try to pick them up," says Minch.
These were the same kind of objections heard all over the state, a chorus of opposition from hospitals, nursing homes, health centers, pharmacists and doctors, all of whom stood to lose financially if the cuts McCaughey was pushing went through. Just as the same interest groups -- and McCaughey herself -- helped defeat the Clinton health care plan, so it went in New York. When the dust settled and the state budget was finally approved earlier in June, much of McCaughey's plan was either blocked or rewritten in negotiations she did not attend.
"I was somewhat disappointed," she says now, talking quietly in her World Trade Center office, 57 floors above Manhattan, with sweeping views of New York Harbor and the Statue of Liberty. "We didn't get everything I hoped we would achieve." She is less frenetic than she was during her budget-selling days, and seemingly sobered by the lessons of politics. "We have to learn how to communicate these fiscal issues in terms that mean something to people," she says. "Only government officials lie awake at night worrying about a state's budget deficit." Reinventing Herself
The first reinvention of Betsy McCaughey occurred when, as a girl growing up in hard circumstances in Westport, Conn., she decided that study was to be her way up and out -- a conclusion reached while visiting her aunt one summer in Rhode Island. "There were a lot of children there who went to private schools," she says, "and who clearly had a very different path in life." Back at home she found the Secondary School Handbook at the Westport Public Library and wrote to the boarding schools that sounded good. Her enterprise was rewarded with a scholarship for her junior and senior years at what was then the Mary Burnham School for girls, one of the more academically rigorous in the Northeast. In 1966 she went on to another scholarship at Vassar.
Life at home was often painful. "My mother was a severe alcoholic, my father was not," she says. She and her father, she adds, "had a wonderful relationship. I just adored him. I could just sense that what mattered the most to him was what happened to me. You know, it gave me a tremendous will. I remember when I won the scholarship to college . . ." She is at this moment in a car with a state trooper driving from Albany to New York City, and she starts to sniffle, then cry. "Sorry," she says, her voice tight as she reaches for a tissue. "I just remember how very excited he was. How we were driving to Vassar, and I was sitting next to him in his old, blue Dodge Dart, and you know he was just holding the steering wheel, and I could just sense this enormous transfer of will. It was so wonderful. I would always run to the pay phone and read my grades to him."
Classmates remember McCaughey as a mousy, slightly overweight young woman who ignored the anti-war activism of the era and spent most of her time in the library. "I'd just go up there and -- it was paradise," she recalls. Her father died soon after she graduated, in August 1970, and her mother a few months later.
She went on to Columbia University to work on a master's and doctorate, and in 1972 married Tom McCaughey, a Yalie who was on his way up as an investment banker on Wall Street. McCaughey got her PhD in constitutional history in 1976, and the following year the couple made the leap from their Upper West Side rental to Park Avenue. "We bought an apartment so we could have children," McCaughey says. Three girls soon followed.
For the next decade, McCaughey raised her children as she taught history in a series of one-year, untenured visiting-professor appointments at Vassar and Columbia. "I taught a year, I had a baby, I taught a year, I had a baby," she says. "Three little girls -- really fun. All those Mary Janes, all those chubby legs, all those playpens." She also lived the life expected of a Wall Street wife in the 1980s -- entertaining her husband's clients (Tom was at this point making millions at Salomon Brothers), decorating the apartment and the country house in New Canaan, Conn., volunteering at her children's private school. By now the unglamorous Vassar student had slimmed down to a pretty Park Avenue mother who kept her brown hair in a simple pageboy and wore bluejeans and flats. Friends call it her second reinvention.
"From the time she moved there, it was like she had never lived anywhere else," says one. "But I wouldn't say she did it more vacuously than other women do. And to her credit, she grew restless with a lot of that."
Her social life and pattern of late-night work kept her away for unusually long hours from her children, which prompted talk among the mothers in her circle. McCaughey's friend Deborah Fennebresque takes a different view. "This is a really hard-working, smart girl," she says. "I think if she were a man, there wouldn't be all this noise."
By 1993, as McCaughey's marriage was breaking up, she landed at the Manhattan Institute, a conservative think tank, after a friend on the board of trustees recommended her to William Hammett, the institute's president. "It wasn't our kind of resume," says Hammett. "But once in a while somebody comes along, and you take a chance on her." McCaughey worked on a book on the American jury system until the proposed Clinton health plan caught her eye in September 1993.
"It just didn't seem to make sense that you could insure 38 million Americans and only put a tax on cigarettes," she says. "Or that you could limit what the whole nation spends on health care and not take quality and choice away from somebody." She got a copy of the plan -- it was not yet a 1,364-page bill -- and took it home. "I thought, Oh, I'll read for 20 minutes before I go to sleep.' But when I started to read it, I was amazed."
She wrote two opinion pieces for the Wall Street Journal, both admired by New Republic Publisher Martin Peretz, who asked her to come up with something for TNR in time for the State of the Union address. McCaughey, who had no background in health care, worked day and night for the next month. She says she spoke to doctors, health care economists, executives at managed care companies, some 45 people in all.
The piece laid out an ominous Clintonian world of price controls and health care rationing, but its most dire claim was that a patient could not walk into a doctor's office and pay out of pocket, even if she wanted to. Citing a provision in the plan, McCaughey wrote that "the doctor can be paid only by the plan, not by you." And yet the passage she cites, on Page 236, simply states that "a provider may not charge or collect from an enrollee a fee in excess of the applicable fee schedule" -- a consumer protection for plan participants that was included, the White House says, to prevent doctors from collecting payment from the health plan and an extra payment from the patient.
"It was a complete misreading," says Magaziner. "We had all these lawyers come in and they all said there was no way you could interpret it that way." To this day Magaziner says he is confused by what happened. "She had no health care background, and I don't know whether she was ignorant or just purposely distorted," he says. "In the beginning she may have misunderstood. But a couple of months down the road she must have known. And yet she continued to perpetrate it."
McCaughey continues to defend "No Exit" -- "I believe that the article accurately described what the bill said" -- but also seems to suggest that one thing she wanted from the White House was a piece of the game. "I really wanted them to say, Okay, let's discuss what Page 236 really means,' " she says. "Maybe it was a drafting error, maybe we should do it differently. I was hoping they'd debate or invite me to discuss it." But the vitriolic administration response, which termed McCaughey's claims "deliberately inaccurate" and "ridiculous," was like putting rocket fuel on an already blazing debate. Conservatives -- and the White House -- made McCaughey a star.
"I remember I was driving one night in the middle of the San Joaquin Valley from Tahoe to L.A.," says Hammett of the Manhattan Institute. "I was listening to Rush Limbaugh, and they were going on and on about Betsy McCaughey. I thought, God, this is amazing."
In the spring of 1994, with New York Republicans eager for a woman on the gubernatorial ticket, particularly a pro-choice one, McCaughey's name was in circulation. By this time, her appearance had evolved once more, into the glossy newscaster look she still has today. Friends call it her third reinvention.
McCaughey's name soon came up in a meeting at CBS headquarters attended by Pataki, state Republican Chairman Bill Powers, CBS Chairman Laurence Tisch and his son Tom, a trustee of the Manhattan Institute. Powers remembers that the younger Tisch first suggested McCaughey's name at that meeting as a possible Pataki running mate, but he says it may have been his father. In any case, D'Amato, Pataki's sponsor and the most powerful Republican in New York, had the same idea, and McCaughey soon found herself in the middle of a campaign.
She was hailed as a constitutional historian and health care expert who would add intellectual heft and pizazz to the ticket, but an embarrassing moment came when the Village Voice, in an article by Rashmi Vasisht, printed excerpts from McCaughey's divorce papers that emphasized her financial helplessness over nearly two decades. In one affidavit, McCaughey said that "throughout my 18 years of marriage, my annual earnings were mostly zero."
McCaughey does not deny it. "My husband had always encouraged me to make career choices on criteria other than the monetary rewards," she says. "So I had chosen research and education as opposed to building a career that left me financially independent. That's a course many women have taken when raising a family." Next Course
The talk in New York Republican circles these days is that in a few years, barring political scandal, Betsy McCaughey could run for Congress. McCaughey of course has learned enough political etiquette in six months to brush such suggestions aside -- but not quite deny them. "I certainly like being in public service," she says. "I like taking my public policy skills and actively making a difference. But right now, being lieutenant governor is filling my plate."
As anyone who knows Betsy McCaughey will tell you, this is not the end of her story. CAPTION: From academia to Park Avenue: Elizabeth McCaughey parlayed her health-care manifesto into the lieutenant governorship. CAPTION: McCaughey and financier Wilbur Ross plan to be married in September. CAPTION: Elizabeth McCaughey presides over New York's legislature. Next stop: Washington and the House of Representatives?