They’re Not in Business For Our Health

Corporate Stranglehold on Health Care Defies Piecemeal Reform

by Bill Onasch

Bill Onasch is president of the Kansas City Area Chapter of the Labor Party.

The United States spends far more than any other country on health care — 14.2 percent of our Gross Domestic Product. This is double the GDP share spent on health in this country in 1970. It is 40 percent more than Europe’s biggest spender, Germany.

Does this mammoth spending bring U.S. residents the best health care available? Not by a long shot.

Clearly Americans are not getting the “bang for the buck” we deserve. While our available technology and funding are second to none, the care actually being delivered is substandard.

Without health insurance you will probably be turned away from most hospitals and doctor’s offices unless you can produce a substantial amount of cash up front and establish yourself as a good credit risk. Forty-four-million Americans -— more than 15 percent of the population -— have no health insurance.

The uninsured are not the poorest people. Those on welfare have coverage under plans such as government-subsidized Medicaid. The uncovered are mainly the working poor, and the growing number of part-time workers, whose employers don’t provide such benefits. These workers and their families generally seek health care services only when they face a serious injury or major medical problem.

Even many with insurance face big deductible and copayment charges that discourage them from seeing doctors for anything but the most urgent complaint.

So-called managed care policies of the HMOs that have come to dominate health care access in the United States have been chiseling away at services that they will pay for. All this means that American workers and their families are getting short-changed on preventive practices, recovery time in hospital stays, and needed therapy and rehabilitation programs.

The problems of insurance coverage are exacerbated by the deficiency of sick pay in this country. Most blue and pink collar workers get paid time off for health reasons only when hospitalized, or after an absence of several days — if they get such coverage at all. This makes it harder to take time off from work for nonurgent visits to the doctor, or to rest at home to recover from minor illnesses before they become major.

Most Countries Guarantee Health Care

Every other industrialized country, and many developing countries, guarantee access to health care for all of their population. This is not a recent, or even particularly radical concept.

The first major national health insurance program was instituted in Germany more than a century ago. The initiative for this pioneer effort came not from the left but from Otto von Bismarck — the “Iron Chancellor” who united modern Germany. This forward-looking architect of bourgeois development was no bleeding heart, but he understood that good health for all the Kaiser’s subjects was essential for Germany to become a world power. It also helped him steal some thunder from the socialist movement that was growing very strong among workers at that time.

The 1917 Russian Revolution established health care for all as a principle, and this example was followed in China, Eastern Europe, and Cuba after capitalism was overturned in those countries. National health insurance plans were also a part of the rebuilding of capitalist Europe in virtually every country after World War II. Canada was slower, but eventually, after some successful provincial programs were started by the labor party movement there, universal health care became a federal policy in our neighbor to the north as well.

Liberty with IV

But the United States took a different course. We had neither a Bismarck nor a labor party. Instead of a vital public service, gratefully paid for by society collectively, health care in America has always been a commodity, subject to the laws of the market and the insatiable drive to realize profits from it.

Health care is a commodity needed and wanted by virtually everyone. Those controlling its access have great power that can tempt abuse. Few have resisted this temptation.

Why Not in the U.S?

As everyone with a smattering of economics knows simple demand for a product is insufficient to interest capitalists. There must be effective demand — both a keen desire to acquire it and the ability to pay a high enough price to assure acceptable levels of profit. In the post-World War II period American health care capitalists found great effective demand from two major sources.

As both employer-provided health insurance and government reimbursement programs grew enormously during the 1960s and ’70s health care access became a major industry. Now dealing with deep pockets, many providers greatly expanded testing and surgical procedures. While much of this reflected advances in medical technology, and promoted the health of our population, sometimes these services were of dubious medical value, used to pad income. The same could be said about drug development, which has flourished over the past thirty years. And very creative accounting methods in health care billing — not to mention a certain amount of outright fraud — became firmly entrenched practices, boosting the industry’s profitability.

A higher level of care was brought to millions of Americans — but at an exorbitant and ever-expanding cost. No longer a “fringe” benefit, health insurance began to eat up a substantial part of employee compensation, and a big chunk of the federal budget.

Employers started demanding that their workers pay more out of their pockets for this coverage — leading to tension in collective bargaining. Many capitalists began to question whether U.S. industry, saddled with this giant health care bill, could remain competitive with those countries with national health insurance. General Motors publicly testified how much they saved in labor costs in their Canadian operations solely because of the differences in health care costs.

Rise of “Single-Payer” Slogan, and the Clinton Plan

Significant forces began to advocate national health insurance under the curious name of “single-payer.” This designation indicated that financing and administration of health care access would be done by the government, using the Canadian system as a model. As this movement grew during the late 1980s and early ’90s the capitalist class became divided over the question and there was a scramble by bourgeois moderates to come up with a workable solution.

President Clinton designated Hillary Clinton to head up a commission to study the health care crisis. Eventually Clinton came up with a health reform plan that billed itself as universal access. This “universal access” amounted to little more than requiring employers to offer some kind of private health insurance on a 75/25 shared cost with their employees. The plan also advocated creating giant pools of HMOs that would use “managed care” efficiencies to hold down costs.

In the discussion period during a panel presentation at the last Socialist Scholars Conference, Tony Mazzocchi, national organizer of the Labor Party, described what happened to the single-payer coalition after Clinton announced his plan.

We [the Labor Party] base our strategy on what happened in the last single-payer campaign [1993–94], and we’re trying to avoid that. We had a broad coalition for single-payer. The single-payer coalition got conned into adopting, let’s not be for single-payer, let’s be for “universal principles,” and the charge was led by Citizen Action into the Clinton health care campaign, which really unraveled our coalition.

 The coalition for single-payer ended up with four groups — UE [United Electrical, Radio & Machine Workers]; OCAW [Oil, Chemical & Atomic Workers]; the Grey Panthers; and the Health Research Group. Jobs With Justice, with the exception of one group in Boston, went the other way. There was total confusion.

While most union bureaucrats, and liberal and social democrat activists, rallied around Clinton’s milk-toast plan, powerful capitalist groups mobilized to protect their interests. Physician trade groups, the drug companies, and the insurance carriers, don’t like even modest restrictions on the way they do business. Small businesses, and even major corporations employing large numbers of part-time workers, were dead set against any requirements to offer health insurance.

These forces spent millions on television “commercials” denouncing the Clinton plan. The themes of these spots were fraudulent.

They warned of a bloated government bureaucracy taking over health care administration. Anyone who has tried to get a claim paid by an “efficient” private carrier will not be impressed with this warning. On average, 27 percent of health care premiums go to CEO salaries, stockholder dividends, marketing, and administration. Contrast this to the “bloated” Social Security program. Social Security tracks accounts on virtually every U.S. resident and mails out millions of benefit checks each month — yet less than one percent of Social Security revenues get spent on administration.

The ads also suggested that the Clinton plan would take away choice of doctors. In fact it is the for-profit HMOs who have severely limited choice of physicians and have forced frequent doctor changes as employers shift HMO plans. Single-payer would have provided for unrestricted individual choice of care-providers.

This propaganda, and intensive lobbying on Capitol Hill, had the desired effect. Clinton’s plan went down to a humiliating defeat.

Health Industry Takes up “Managed Care”

This struggle did serve as a wake-up call for the health care industry, however. They realized they could be in big trouble if they tried to stand pat. They embraced a key element of Clinton’s approach — managed care.

Through the late 1990s there has been a massive consolidation of clinics, hospitals, pharmaceutical companies, and insurance carriers. Hospital capacity has been drastically reduced — as have hospital stays. Much of the work of registered nurses and licensed practical nurses, was reassigned to ill-trained nonprofessionals working at bargain basement wages.

HMOs came to dominate every local market and nearly every doctor has had to sign-up with one or more. The HMOs began to drive hard bargains with participating physicians on what they were willing to pay for services.

Managed care helped to briefly slow down increases in health insurance costs to around the inflation rate while still expanding profits and executive compensation. This respite was welcomed by employers and even some unions. But managed care has not resolved the underlying source of the continuing health care crisis.

For one thing costs are already beginning to rise again — sometimes with a vengeance. Many of the initial gains of managed care were one-time windfalls. To maintain adequate profit levels double-digit premium increases are inevitable. And drug costs were never contained. Prescription costs rose over 85 percent between 1993 and 1998.

Impact on “Middle Class”

But an even bigger problem created by managed care is the impact it has had on the “middle class.” The typical worker had not personally and directly felt the full force of rising health care costs over the years. Much of the increase was absorbed by employers. People still felt that they were getting good health care service — and by and large they were. Managed care has altered both the reality and perception of middle class health care.

At least until recently, most white “middle class” Americans got health care as good or better than that available anywhere else in the world. America’s relatively inferior overall comparisons with other countries in many areas was explained away by the dismal figures among poor nonwhites, which pulled down the averages.

Poor nonwhites — for a variety of reasons — still lag behind in health. But now health care among whites in HMOs is also taking a hit. There has been much publicity about HMO restrictions on hospital stays — such as “drive-through” child births. But other changes have also been numerous, complex — and inconsistent between plans and regions.

The National Committee for Quality Assurance, an independent, not-for-profit research group, recently released its third annual “report card” on 400 HMOs covering more than 50 million people. Some inconsistencies in their practices were quite disturbing.

The committee’s study estimates that more than 4,000 lives could be saved annually if all plans administered beta blockers as routinely as the high-performing ones. It calculates that 3,000 diabetics could be spared blindness if all health plans provided eye exams as routinely as the best plans do. And there would be almost 60,000 fewer cases of relapse into major depression if every plan managed antidepressant drugs as well as the best plans did.

These thousands of people are not trapped in an environment of poverty that undermines their health. They are, for the most part, “middle-class” folks who directly, or indirectly through employer payments, give the HMOs lots of money. They are victimized by economic, not medical, decisions about their treatment.

Enough has been exposed about these practices to earn HMOs and their “managed care” public repugnance. The politicians have responded to public outrage with grandly titled measures such as “Patient Bill of Rights” schemes. The Democrats and Republicans each had conflicting ones in congress. Neither do very much.

“Sky’s the Limit” for Corporate Health Care

Corporate health care is not in business for our health. They operate to make profits — end of story. If there is no oversight of their pricing, as was largely the case through the 1970s and ’80s, the sky will be the limit; they will encourage utilization of medical services whether they’re really needed or not. But if there is a major push to control costs — as we have seen over the past five years — the volume and quality of medical care will be slashed, again without regard to actual need, to maintain profits. If there comes a time when there is an insufficient level of profit in the industry they will shift their investment elsewhere.

This stranglehold on access to health care will defy all efforts at incremental reforms. There is a fundamental conflict of interest between the drive for profits and providing health care based solely on sound medical judgment. We need to take health care out of the market and establish it as a public service. Nothing less will do.

Labor Party’s “Just Health Care” Plan

That is what the Labor Party’s Just Health Care campaign proposes to do. It is a simple plan, based on the best elements of the Canadian system. It would provide genuine universal access to all residents. It would allow individuals to select their own doctors. It would be financed through payroll taxes calculated to meet the costs of actual health care delivery. And even after we take in the forty-four million presently uninsured, and scrap the deductibles and copayments that discourage many millions more from seeing doctors when they need to, we could still reduce the overall share of the GDP going toward health care. We would do this by eliminating profits, obscene CEO compensation, advertising, and the huge overhead involved in billing — factors that currently consume at least a quarter of health care spending while contributing absolutely nothing to actual health care.

This proposal, adequately explained, will make sense to most people. It realistically addresses their concerns about health care. The challenge is getting the message out and organizing around it.

The Labor Party is not yet a mass party. But it has an important role as a catalyst in building a mass movement around Just Health Care — and the party can gain numbers and influence in the process. In addition to raising this issue within the trade unions, the Labor Party has taken some modest but creative steps to bringing it into the communities. There have been successful ballot propositions favoring just health care in communities in Massachusetts and more are in the works elsewhere. The party produced an effective national call-in radio show, carried in over thirty cities, heard by thousands. And the party activists are gearing up for a petition campaign aimed at getting a million signers.

These actions won’t bring Just Health Care overnight. But they indicate the needed direction for ultimate victory. Every union activist, every health care advocate, and certainly every socialist, belongs in the Labor Party and the campaign for Just Health Care.