Created: Friday, 20 December 2013 13:30
Written by Steve Palmer
Fight Racism! Fight Imperialism! 236 December 2013/January 2014
‘Capitalist apologists are always trumpeting the supposed efficiencies of “competitive capitalism” compared to the supposedly “inefficient”, “bureaucratic” practices of socialism. Nothing could be further from the truth. Of $2.5 trillion of US health spending in 2009, a staggering 31% ($765bn) was wasted.’
In mid-October, following a bitter battle over fiscal issues and a Republican-led government shutdown, polls showed that 50% of registered voters would vote Democrat, and 42% Republican. Democrats were smugly discussing taking back the House of Representatives in next year’s elections. Now, a month later, polls show 47% voting for Democrats and 49% for Republicans – a huge 10% swing. What happened? Steve Palmer reports from the United States.
What happened was that healthcare.gov, the internet portal for the Patient Protection and Affordable Care Act – also known as ‘Obamacare’ – went live, or at least attempted to, on 1 October. In the first four days, 8.1 million Americans visited the site to obtain information about health insurance or to sign up. The administration had expected 50,000-60,000; testing the day before the launch showed that the site would grind to a halt with just 1,100 users. Users had great difficulty simply registering, and even more when they attempted to sign up for an insurance option.
It eventually emerged that just 26,794 had enrolled for insurance in the first month of operation. The total number expected to enrol by the original deadline of 15 February 2014 – 12 million people – would, at this rate, be able to complete enrolment by March 2050. The administration is putting on a brave face and attempting to present the website problems as just a temporary technical glitch, which will soon be solved.
In fact the problems with the website are just one part of the problems which Obamacare is creating. These problems go much deeper, to the very impossibility of ever being able to create a capitalist healthcare system which provides decent care to the entire population throughout their whole life. None of the national health systems which operate in the other imperialist countries are fully privatised. They were established in the years immediately following the Second World War, when the Soviet Union, which had universal healthcare, enjoyed enormous popular prestige; when the working class movement was immeasurably stronger than it is today, and capitalism was still recovering from the devastation of war. Just as the achievement of the 10-hour day in the 19th century was a progressive reform, so with the establishment of the national health systems, as Marx put it, ‘the political economy of the middle class succumbed to the political economy of the working class’.
To a limited extent, capitalists do have an interest in the welfare of their workers: they want them to be fit enough to do the work required. However, capital has no interest in the welfare of the unemployed, the disabled or those who are retired. It is the provision of universal healthcare, even in its distorted capitalist form, that represented this victory of the ‘political economy of the working class’. Since this expenditure is unproductive, financed out of capitalist profits, the capitalist state organises the system in a way that minimises costs and strives to reduce the scope of services. The service is financed by a combination of social insurance, taxation and fees. Social insurance originated in the late-19th and early 20th centuries, but was only fully universal after the Second World War. The existence of such large-scale financing enables the state to control costs as a result of its market power, reducing the cost of drugs and equipment.
The history and situation of the United States is radically different. The system of insurance that grew up was employer-based, essentially a risk-based insurance scheme to minimise absence from work for medical reasons. During the Second World War, there was a huge shortage of labour and, while wages were strictly controlled, employers competed for workers by the provision of benefits. The post-war anti-communist hysteria, prevented any possibility of true social insurance. As a consequence, there was an established system of private health insurance. In addition, the physicians, organized in the American Medical Association, fought hard to prevent any ‘government interference’ in healthcare, and capitalism was given free rein.
A completely capitalist healthcare system is inevitably more expensive – profits have to be made; huge amounts have to be spent on sales, marketing and accounting that are unnecessary in a socialist system; medically unnecessary treatments are carried out because they make money. Overall, it is highly inefficient: primary and preventive care is much less profitable than other activities, but the absence of such care increases the demand for more expensive treatments later to ameliorate the consequences. Finance capital gets its cut through issuing insurance policies. The priority is selling a commodity, healthcare, at a profit – not on keeping everyone healthy. Like any other commodity, if you can’t afford it, you go without: 48 million people in the US, some 15.4% of the population, are uninsured; it is estimated that this results in 45,000-48,000 unnecessary deaths each year.
Spending on US healthcare in 2011 was 17.7% of GDP, compared to an average of 9.3% in OECD countries – almost double. Yet the US is not getting twice the results: the number of doctors per 1,000 people was 2.5 compared to an OECD average of 3.2. Basic health indicators for the richest country in the world show below average results. The average infant mortality rate was 4.1, while for the US it was 6.1 per 1,000 live births. Life expectancy at birth was 78.7 years in the US compared to an average of 80.1 years. In addition, the United States has the highest or near-highest prevalence amongst the 17 richest countries of heart and lung disease, obesity and diabetes, sexually transmitted infections, adolescent pregnancies, injuries, homicides, and disability.
Capitalist apologists are always trumpeting the supposed ‘efficiencies’ of ‘competitive capitalism’ compared to the supposedly ‘inefficient’, ‘bureaucratic’ practices of socialism. Nothing could be further from the truth. Of $2.5 trillion of US health spending in 2009, a staggering 31% ($765bn) was wasted. This waste was attributable to unnecessary services ($210bn), excess administrative costs ($190bn), inefficiently delivered care ($130bn), excessively high prices ($105bn), fraud ($75bn) and missed prevention opportunities ($55bn). Productivity in US healthcare has steadily declined at a rate of about 0.6% per year. For every doctor there are six clinical workers (nurses, physiotherapists etc) and ten administrative workers. Private insurance creates unnecessary waste. There are about 50 significant different private insurers, each of which negotiates different plans with various employers and providers, each of which have different billing requirements, clinical care guidelines and covered benefits. These contracts are renegotiated annually, further complicating administration.
The alternative to private insurance to fund healthcare is what in the US
is called the ‘single-payer system’. Whether health services are provided privately (like Canada) or through the state (Britain), the government pays for, and hence negotiates, all healthcare costs. This allows it to negotiate lower rates with suppliers (such as drugs from pharmaceutical companies), standardize procedures and have uniform rules, cutting costs dramatically. It might be expected that US corporations would welcome this sort of cutting of their overhead costs, but corporate support for single-payer is lukewarm amongst capitalists. There are two main reasons: finance capital, which operates private insurance, is deeply intertwined with other industries; and US corporations want the entire funding of workers’ healthcare to be borne by the workers themselves, through a voucher scheme.
This is where Obamacare comes in: far from being the radical surgery needed to reform the bloated, sclerotic healthcare system, it is a grab bag of sticking plasters and bandages to patch over all the major problems. It not only leaves private insurance intact, it actually helps broaden the market by providing subsidies to those who would not otherwise be able to afford insurance. Extraordinarily, the Act requires everyone to purchase private insurance: failure to do so will result in a fine! Insurance is to be purchased through a ‘health insurance marketplace’, which dovetails with employers’ plans to move to a voucher scheme. These insurance exchanges offer a range of plans – Bronze, Silver, Gold, Platinum, and Catastrophic – those with lower premiums have much higher excess rates (called the ‘deductible’ in the US). Corporations are dropping their insurance plans and giving workers a stipend, enough to purchase the cheapest plans. The excesses in these plans are massive, perhaps $5,000, which workers must pay from their own pockets before insurance coverage begins. Charges for visits to the doctor, for prescriptions and hospitalisation have all been increased.
This is hardly surprising. The original Bill which emerged from Senator Max Baucus’s office was designed by his senior aide, Liz Fowler. Fowler was formerly Vice President for Public Policy and External Affairs at Wellpoint, the largest health insurer in the US. She helped ensure that the so-called ‘public option’, a government-run insurance option, was dropped from the Bill. In July of 2010 the administration hired her to work in the Department of Health and Human Services to oversee the implementation of the Act. In November 2012 she then left to become Vice President of Global Health Policy at Johnson & Johnson, a $67.2bn health product conglomerate.
The final Act is huge – more than 900 pages long – and impossible to describe here in any but the broadest outlines. The Act became law in March 2010, and different parts of the law have been rolled out ever since. However, only now have we come to the real core of the Act: attempting to ‘fix’ the inevitable deficiencies of private insurance. While the failure of the website was not inevitable, it was predictable. Software development is still done using craft, artisanal techniques which cannot be managed using the ‘despotic’ (Marx) methods of capitalist control. Combined with the enormous complexity of the system and the continually shifting requirements, it became impossible to deliver the anticipated result. The ‘fix’ was then rashly promised by 30 November. This is highly unlikely to work correctly, and already the part of the system which enables small business to sign up is being postponed for a year.
Obama said that those already enrolled in individual, non-employer plans would not have to change them. However many of these did not meet requirements imposed by the Act and millions have had their plans cancelled, and been offered much more expensive replacements. The administration has scrambled to try and patch this problem.
In the longer term, for the working class, Obamacare is helping implement ‘disguised austerity’ by aiding corporations such as IBM, Time Warner and Caterpillar to cut costs by dismantling the employer-based system of healthcare. It is estimated that nearly a quarter of the 170 million people enrolled in these plans will be pushed to the private exchanges within the next five years. This is going to reduce the range of services and quality of care available, while drastically increasing the cost to workers.
Far from being a progressive reform bringing universal healthcare, Obamacare is an attack on the working class. It is racist, excluding illegal immigrants from any coverage. It is an attack on women: it won’t pay for abortion at all and there are no guarantees that contraception will be covered for all. It won’t even achieve its own explicit objective of ameliorating the burden of healthcare costs on US capitalism. The one sure winner is the insurance industry and the big conglomerate healthcare providers. Any genuinely progressive healthcare reform in the US must begin by getting rid of private insurance.