Why Health Care Is A Sick Mess

The Editors

NEARLY ALONE AMONG the rich nations, the United States has not made even the slightest move toward recognizing health care as a fundamental social right, rather than as a privilege and a commodity to be traded for on the market.

Not coincidentally, the United States has public health statistics (infant mortality, life expectancy, maternal morbidity, inoculation rates, and so on) that are disgracefully bad. From 1970-1989 this country fell from 15th to 19th place internationally in infant mortality. From 1960-1989 it went from 12th to 15th place in life expectancy at birth for females, and from 16th to 19th for males.

For this rotten state of health the country pays more for health care, per capita, as a percent of Gross Domestic Product, per unit cost of production or by any other measure you care to name, than any other in the world. Health care costs here also go up much faster than the general rate of inflation, and faster than elsewhere. And look where the burden falls: While health care costs as a percentage of GDP are vastly higher in the United States than anywhere else (11.2% as of 1987 and close to 14% today), public health spending as a percentage of total health expenditures is only (1989 figures) 42% in the United States as compared to an average of 76% in the twenty-four OECD countries (only Turkey, at 37%, was lower).

Also not coincidentally, the private insurance industry in the United States has just about the biggest single pile of finance capital in the known universe, which it invests in its own “insurance” — a degree of political clout exceeding those of the National Rifle Association, the tobacco industry and the Israel lobby combined.

It’s therefore hardly surprising that Congress has got itself into a fine mess on the question of health care “reform.” By the time this issue of Against the Current reaches our subscribers, early in September, it is probable that the House and Senate will be working to “reconcile” their respective bills — each of which will be even worse versions of “managed competition” than that proposed with such undeserved fanfare by Bill Clinton. Yet long before Congress and its various committees and subcommittees got their hands on the health care reform questions, all sorts of think tanks and policy wonks had been laboring to create great confusion and enormous recondite complexity from a fundamentally clear and simple situation.

Health insurance companies move money from point A (premium payers) to point B (care providers — doctors, hospitals, etc.). They also manipulate tons of paper (insurance forms, coverage exceptions, red tape in general). Through this bureaucratic sleight-of-hand 25-30% of the money sticks to the insurance industry in the form of insurance or administrative “overhead.”

This rate of administrative overhead in the private sector is about ten times the rate in the public U.S. Medicaid system, and at least three times that of the Canadian single payer system. Unlike the Canadian system, the free market U.S. system leaves tens of millions without any health care benefits, and exposes those with insurance to the risk of losing it if they become sick, or jobless. Thus the vaunted superior efficiency of the free market system is once again demonstrated.

Additionally, the insurance industry serves as a mechanism to pass on to premium payers hugely inflated charges from pharmaceutical corporations, hospitals and specialists. By the roaring 1980s, the escalating costs imposed by these interests had become a notorious burden even on the non-medical sector of the corporate class, to say nothing of the population.

So on its face, the task to be done by health care reforms is pretty straightforward — set up a national health plan that gets rid of the waste, fraud and abuse that is the private for-profit health insurance industry. Avoiding this simple task has been the first priority of policymakers and politicians.

To begin with they did the usual when confronted with urgent, critical human needs: They set up a study commission. The Pepper Commission, chaired by Senator Jay Rockefeller (D-WV), came up with a plan called “pay or play,” designed to continue the “traditional American plan’ (i.e. dating back to World War II) of linking health care coverage to employment — supplemented with taxes on some employers to set up some sort of cut-rate “bare bones” insurance scheme for the uninsured. In the current economic situation of chronic recession interspersed with jobless recovery, this inspired all the popular enthusiasm and political support one would expect.

It was about this time, the latter half of the Bush administration, that the first glimmers of a popular movement for health care reform — based on a demand for a national health plan along the lines of Canada’s single-payer system — began to appear. Partly in response to and partly to counter this popular feeling, demagogic political campaigns — such as those of Harris Wofford and Bill Clinton — started calling for health care change in the most general terms.

Having won the presidency in a very considerable part on this basis, Mr. Clinton turned to a think-tank called the “Jackson Hole Group,” composed largely of insurance company types and fronted by power lobbyist Ira Magaziner (fresh from efforts to obtain federal funding for “Cold Fusion.”) The Jackson Hole Group, as most readers probably know, produced the scheme of “Managed Competition” on which were based the Clinton Plan, the Cooper Plan, the Chaffee Plan and most of the total of about fifty health care bills so far introduced into Congress.

Managed Competition’s Ideology

Baldly stated, the idea behind managed competition is this: the main thing wrong with U.S. health care is that it costs society in general, and big business in particular, too much money; the reason it costs too much is that people buy too much of it; they buy too much of it because they don’t feel the sting of the rising costs — too much of the burden is borne by third-party payers, such as employers, insurance companies or the government.

Therefore the solution is to redesign the market so that consumers feel the sting of prices, inducing us to use less. Put another way, all the market-based plans — all the bills but one — with all their various complications, their 80% employer mandates (which implies a 20% employee mandate) or individual mandate (intended to make insurance mandatory for anyone owning a body, as it now is most places for anyone owning a car), health alliances, medical savings accounts, subsidies to small business, subsidies to the poor and so forth, have as their basic purpose to shift more of the burden of health care off capital onto the backs of working people.

Additionally, advocates of managed competition would have us believe that intercorporate competition would drastically lower the price of health care. Undoubtedly the industry would cut health care service — but the growing number of health alliances doesn’t suggest that the cost will decrease. Rather, administrative and advertising costs will rise. So managed competition has the danger of reducing even further the quality of health care and reinforcing a two-tiered medical system.

Even in Congress’ most progressive-sounding plans — those that propose universal coverage — mean universal coverage by “private” insurance” (Bill Clinton’s emphasis). So the burden would be shifted while keeping whole the interests of the insurance oligopoly. In the Congressional process, universal coverage as a practical matter is disappearing, replaced by a promise to achieve “near”-universality sometime in — how appropriate — the new millennium. And along with the sellout of universal coverage, there are the “compromises.” Most importantly, the Catholic bishops demanded that abortion be eliminated from the basic package.

Insurance Industry Vs. Single Payer

Although we don’t know exactly what Congress will pass, we can be pretty sure what they are not going to do. They are not going to give fair and honest consideration to the only proposal before them that would actually deal with the crisis, that would begin to decommodify health care and recognize care as a right — the single-payer Wellstone/McDermott/Conyers American Health Security Act (HR1200/S491,also known as HR 3960).

Thanks to insurance industry pressure, even television ads for single-payer have been kept off the networks. In California, where a state single-payer initiative is on the November ballot (as described elsewhere in this issue), the medical insurance lobby has stated publicly that whatever amount of money — our money, poured as premiums into their corporate coffers — will be spent to defeat it.

Tragically, almost all the pressure on Clinton in this sorry debate has come from the right wing and corporate America, not from the left — in particular, not from most labor leaders, who are too intimidated to risk “alienating” Bill and Hillary by agitating for the single payer solution their members so desperately need.

In this context, the best outcome that could occur in Congress would be the passage of no bill at all. More likely is the passage of some bomination called Universal and Health Care Reform, which is neither, and which guarantees most people less care and less choice of care for more money. Such a bill may very well contain some sort of language to enable large corporations to opt-out. The whole purpose is to make impossible the institution of single-payer systems by state initiative.

In immediate terms the passage of an even-worse-than-Clinton bill will slow down the progress of the movement for single-payer universal health care, as it will take people some time to fully realize how they have been done in. In the medium-to-long run, however, efforts to disable or disorient the movement for a genuine universal health care plan are not likely to succeed. More and more, the market is displaying its fundamental inability to meet this basic human need.

In recent years it has been the practice of the ideological friends of capitalism to meet the horrendous social symptoms of the global market, homelessness and mass unemployment with two tactics. First, they define the problem as not existing. Hence the spectacle of so many conservative politicians telling us there is no health care crisis.

When this pretense becomes too absurd to maintain, they then define the problem as being the fault of the public sector. For example, massive homelessness is taken not as proof of the inability of the market to meet the need for affordable housing, but only as more proof that “government doesn’t work.”

But if nothing else, the factor of uncontrolled greed — the sheer mass of money to be made by the health insurance industry’s manipulation and exploitation of human misery — is likely to keep forcing the issue back on the political agenda. Overplaying its hand could turn out to be the insurance industry’s big mistake. Maybe even, in the long run, a fatal one.

ATC 52, September-October 1994