Wednesday, June 24, 2009

The public option

Robert Reich (Bill Clinton's Secretary of Labor) gives us a bunch of good reasons to keep the public option part of health care reform. (You should read his blog to monitor both the sensibility and the ineffectuality of reformist capitalism.)

It's clearly in the interests of the people to have a public option. However it's not in the interests of the American Medical Association (i.e. physicians), Big Pharma, and the biggest insurance companies. Shocking news, I know.

It's in the interests of physicians to have tens of millions of working people locked out of health care. Without a public option health insurance will simply be too expensive for these people; any "mandates" that everyone must buy health insurance (similar to auto insurance mandates) will get watered down or ignored completely. A guy making $7.25/hour is not going to drop two weeks' pay on a monthly health insurance premium, whether he "has to" or not. A subsidized public option will put pressure the health care industry to lower costs and lower profits.

Theoretically, under capitalism, you would expect tens of millions of people who want health care and are willing and able to pay for it to constitute an untapped market: demand creates supply. Imperialist capitalism (the dominance of financial and monopoly capitalists) however, is as much or more against actual free market economics as the most doctrinaire Marxist. Truly free market economics brings the exchange value of every commodity, including health care, into equilibrium with its true cost, either by lowering the exchange value to the cost, or by raising the cost to the exchange value.

A truly free market is not in the interest of any owner of capital, except insofar as he wants his competitors subject to free markets. But when capitalists of some industry do not face competition, they have zero interest in free markets. Interests always trump "principles".

If some commodity is relatively scarce, i.e. demand exceeds supply, then the supplier can demand a price (exchange value) much higher than the cost, generating profits. Under free market economics, this gives other people an incentive to allocate more capital and labor to supplying that commodity, either lowering its price or raising its cost, thus reducing profits.

However, if a capitalist can somehow maintain the relative scarcity, by externally restricting the supply, then higher prices and higher profits can be maintained indefinitely. Relative scarcity, though, never distributes the scarcity evenly; instead, some people get a lot and others get nothing. If health care were distributed to everyone, then the price of health care would fall to what the poorest people were willing to pay (or what the people were willing to pay in taxes to provide the poorest with health care). There would no longer be a scarcity to prop up higher prices and higher profits. The capitalists who own the government will make damn sure this scarcity remains. They are no longer naive, as they were when Lyndon Johnson created Medicare — they know they can just buy more congressmen and senators, and the profits are so huge that money is no object — and they are facing no threat of revolution or severe civil unrest.

One ironic thing about the health care debate is that ordinary physicians themselves are participating in maintaining scarcity to prop up their own individual profits. But what they do not realize is that they work for a living (technically physicians are petty capitalists, since they necessarily own their own training, but petty capitalists face the same pressures as ordinary workers, and end up in the same place), and they require enormous amounts of external capital to work: not just their own training, but the equipment they use directly, drug development and manufacturing, and medical technology in general. As the computer programmers have discovered, the owners of the financial capital underlying all of this investment will eventually appropriate the physicians' surplus labor, either directly by lowering their pay or indirectly by raising the cost of education, insurance premiums, use of medical equipment, etc. They may be the last to go, but they will go: medicine isn't that difficult, and there are enough people desperate for even the lowest rung in the professional middle class to do the work for the lowest prices.

We will not see anything resembling universal health care from the Obama administration. We will see at best only a few token reforms. And when the next Republican administration and congress is elected, the physicians will be the next to get the shaft. Don't say I didn't warn you.


  1. Don't be too quick to throw physicians into the "anti-" group. In Illinois (my home state), lots of doctors who aren't employed directly by extremely large organizations (hospitals, usually) are getting desperate for insurance reform.

    In part, it's because there are currently too many insurance plans. If a doctor doesn't carry a plan, then they theoretically lose business, but each plan represents a number of extra rules to follow and/or a bunch of negotiations over prices. (Remember, insurance companies in the U.S. don't just rip off customers by taking in more money in premiums than the cost of care, they also basically blackmail doctors into negotiating bulk rates for services so that they aren't even paying the usual cost of care anyway.) At small practices, this is a huge waste of time, so the list of supported plans changes every year -- and the doctors hate dealing with that as much as patients do.

    More importantly, though, in recent years insurance companies have become bad payers. This is no surprise: every extra day that an insurance company can delay a claim is a day that it is earning interest on that money. This has led to a culture in which claims are deliberately unprocessed until the last week of the submission period, and in which claim forms are rejected for reasons not related to the claim itself. (Suppose insurance company X has 18 weeks to process a claim under the terms of their contract. They will routinely wait until week 17, and then announce that the middle initial of the patient's name is missing on the form, so that the claim has to be re-submitted and they have another 18 weeks. I wish I was making that up, but I've heard that specific reason for rejection citied twice now by different doctors.) In Illinois, many small practices are constantly in financial trouble because of these games, even though they do plenty of business. Every practice has to pay for extra clerical staff to handle the paperwork -- hospitals (and other large facilities) don't suffer from this as much because having more doctors make the process more cost-efficient. Some doctors have even had the foresight to offer discounts to uninsured patients who pay immediately.

    Illinois has a few (I forget whether it's 2 or more at this point) state insurance plans for particular categories of people who would otherwise be uninsurable for one reason or another, but who are deemed worthy of state protection (children of low-income parents, for example). Two decades ago, doctors used to hate to deal with these state plans, because the state had a long claim period and was notorious for taking most or all of it to pay out. Now they're actually preferred over private insurers by many doctors, because the private insurers now have equal or longer claims periods, and Illinois doesn't ask for individual negotiations or reject claims for trivial reasons, so that the payments actually arrive within a reasonable and predictable amount of time.

    (It's also worth noting that the AMA doesn't represent most doctors; their clout comes not from having votes or influencing medicine but from having money for lobbyists.)

  2. That's a good point, Vicar.

    Like all working people, physicians have to organize to secure their own interests; the ones who do organize are the one who will speak with power. Perhaps all physicians should join the AMA and start influencing its policies and lobbying activities.

  3. All capitalist societies have free health care except Amreeka. Reformist capitalism evidently worked there.

  4. The analysis of why reformist capitalism fails is beyond the scope of the comments, but that a country achieves socialized health care does not mean that reformist capitalism has been successful overall.


    It’s official. America and the World are now in a GLOBAL PANDEMIC. A World EPIDEMIC with potential catastrophic consequences for ALL of the American people. The first PANDEMIC in 41 years. And WE THE PEOPLE OF THE UNITED STATES will have to face this PANDEMIC with the 37th worst quality of healthcare in the developed World.


    We spend over twice as much of our GDP on healthcare as any other country in the World. And Individual American spend about ten times as much out of pocket on healthcare as any other people in the World. All because of GREED! And the PRIVATE FOR PROFIT healthcare system in America.

    And while all this is going on, some members of congress seem mostly concern about how to protect the corporate PROFITS! of our GREED DRIVEN, PRIVATE FOR PROFIT NATIONAL DISGRACE. A PRIVATE FOR PROFIT DISGRACE that is in fact, totally valueless to the public health. And a detriment to national security, public safety, and the public health.

    Progressive democrats and others should stand firm in their demand for a robust public option for all Americans, with all of the minimum requirements progressive democrats demanded. If congress can not pass a robust public option with at least 51 votes and all robust minimum requirements, congress should immediately move to scrap healthcare reform and demand that President Obama declare a state of NATIONAL HEALTHCARE EMERGENCY! Seizing and replacing all PRIVATE FOR PROFIT health insurance plans with the immediate implementation of National Healthcare for all Americans under the provisions of HR676 (A Single-payer National Healthcare Plan For All).

    Coverage can begin immediately through our current medicare system. With immediate expansion through recruitment of displaced workers from the canceled private sector insurance industry. Funding can also begin immediately by substitution of payroll deductions for private insurance plans with payroll deductions for the national healthcare plan. This is what the vast majority of the American people want. And this is what all objective experts unanimously agree would be the best, and most cost effective for the American people and our economy.

    In Mexico on average people who received medical care for A-H1N1 (Swine Flu) with in 3 days survived. People who did not receive medical care until 7 days or more died. This has been the same results in the US. But 50 million Americans don’t even have any healthcare coverage. And at least 200 million of you with insurance could not get in to see your private insurance plans doctors in 2 or 3 days, even if your life depended on it. WHICH IT DOES!

    Contact congress and your representatives NOW! AND SPREAD THE WORD!

    God Bless You

    Jacksmith – WORKING CLASS


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