The dramatic Republican victory in the Massachusetts Jan. 19th election which destroyed the Democrats filibuster proof margin in the Senate seems for the moment to have thrown the bourgeoisie's plans to "reform" health care into complete disarray. It is still too soon to know what the final outcome will be, but the current situation illustrates yet again the serious difficulties confronted by the ruling class in the period of social decomposition of capitalism in controlling its own political apparatus and implementing policies that clearly serve the interests of the national capital.
Early on the morning of Christmas Eve, following an acrimonious, highly partisan debate, the U.S. Senate passed its version of health care reform on a strictly party-line vote of 60 to 39. President Obama immediately addressed the nation declaring this the most important social legislation since the New Deal. At the time, this "momentous reform" still faced the arduous task of reconciling the Senate and House versions of the bill, and the final outcome depended upon the results of the special election in Massachusetts to replace the late Sen. Edward Kennedy. But at Christmas the Obama administration assumed that the seat held by Kennedy for 47 years would remain in the Democratic column and seemed to count their chickens before they hatched. It looked as if the ruling class would finally manage to deal with the health care crisis.
As we pointed out in Internationalism No. 145, "In reality, there are two versions of the health care crisis in the US -- one for the working class and a separate one for the ruling class." For the working class, the attack on medical benefits has been a central feature in virtually every contract struggle in the past decade. Large companies routinely used to cover 100 percent of insurance premiums, but management increasingly forces workers to pay for a percentage of the costs and once they pierce the barrier of getting workers to pay, in each subsequent contract management pushes to increase the worker contribution. At the same time, workers and their families face skyrocketing co-payments, fees and deductibles and declining quality of medical care as the government grants doctors, hospitals and pharmaceutical companies exemptions from liability for malpractice, incompetence, and defective drugs with disastrous side effects. Recent court rulings permit unions and companies to drop retirees from existing insurance plans, forcing them to rely solely on Medicare and the purchase of their own supplemental coverage. And this doesn't even include the nearly 50 million who have no health care insurance at all.
For the ruling class, as we noted previously, "the health care crisis is that they are saddled with an incredibly inefficient and expensive system that damages American capitalism's economic competitiveness on the world market. Insurance costs, doctor fees, hospital costs, overhead and administrative costs are out of control. The US has the costliest health care system in the world, with per capita expenditures more than double that of most major industrialized nations. Health care costs as a percentage of GDP are 9.9% for Canada, 10.1% for France, and 8% for the United Kingdom, but an astronomical 15.2% for the US. And all of this extra cost provides an inferior quality medical care that makes the US look ridiculous on the international scene. Patient outcomes are among the worst in the industrialized world. In Australia, Canada, France, Germany, Japan, Sweden, and the United Kingdom, life expectancy ranges from 79.5 years (France, UK) to 82.5 in Japan. In the US it lags behind at 77. A study by the World Health Organization evaluating the overall quality of health systems ranked the US as 37th in the world, trailing behind Dominica, and Costa Rica. Infants born in the US are three times more likely to die in their first month as children born in Japan, and newborn mortality is 2.5 times higher in the United States than in Finland, Iceland or Norway." Having so many uninsured people further harms the US economy, as the costs for providing emergency care for such patients is covered by general tax funds. The need to "rationalize" the health care system and control rising health costs, particularly as the baby boom generation nears retirement, is recognized as a pressing policy necessity by economists and politicians across the political spectrum. For the capitalist class, health care reform is NOT intended to improve the health of workers, but rather to cut costs and improve competitiveness in the world economy.
The legislation currently stalled in Congress in the aftermath of the Massachusetts special election addresses the health care crisis for the ruling class, but will only aggravate the health care crisis faced by American workers. No matter how many times the Obama administration uses the word "reform" in their propaganda, they cannot cover up the fact this health care package is part of an austerity attack on the working class. Admittedly, the propaganda about "universal" health care has tremendous mystifying power for the ruling class. For individuals who currently have no health insurance, any expansion of health insurance coverage may sound better than nothing, but this is illusory. For the working class as a whole what is coming is an attack on health care.
Yes, more people would be covered by health insurance, but there will still between 26 million and 32 million without insurance, depending upon whether Senate or House provisions of the bill are incorporated in the final version of the law. In either case, those who will be newly covered will be forced to pay for it themselves. If they fail to purchase insurance, they will face penalties of up to 2.5 percent of their taxable income. Some lower paid workers may be eligible for subsidies from the government to pay for insurance premiums but the funding for this will come out of the hides of the rest of the working class.
Both the Senate and House bills propose cutting medicare and Medicaid benefits to retirees and the poor respectively. Most onerous of all, is the proposed excise tax on so-called "Cadillac" health care benefit plans, defined as plans that cost at least $8,500 per year for individuals or $23,000 for families, which will include an estimated 19% of existing employer-based health plans, including many currently in place for workers in unionized industries. This proposed excise tax is supported by the White House and by leading economists. The excise taxes will be levied against the insurance companies, but by definition the cost of an excise tax may be passed along to consumers, permitting the insurance companies to recover the money. Excise taxes are generally used by the state to discourage certain "undesirable" social behaviors - for example excise taxes on alcohol or tobacco products. In this case, the undesirable "social evil" is what the bourgeois calls "overly generous" medical benefits, which economists deem too costly to the economy. This will lead either to sharp increases in employee contributions to cover health insurance premiums, deductibles or sharply curtailed benefit plans. As Beth Umland, director of research for health and benefits at the Mercer consulting firm put it, "the majority of employers will respond the way policymakers hope, by reducing benefits." According to a recent survey of 465 major corporations by Mercer consultants, 66 percent of the employers plan to cut benefits or increase employee contributions in response to the legislation, by dropping flexible spending accounts, used to cover unreimbursed medical expenses, or by dropping dental or vision coverage. This would "tend to shift more costs to workers - but could help accomplish one of the goals touted by economists and policymakers who support the excise tax: slowing medical spending."
The White House web site openly supports this excise tax and tries to sugar coat it by minimizing the number of medical plans that will be impacted and cynically claiming that it will lead to wage increases for workers: "for the small sub-set of plans that are affected, the primary impact of this provision will be to increase workers' wages... Economists agree by taxing the highest cost plans this provision will lead insurance companies to be more efficient and provide quality care to consumers at lower prices (see this endorsement in a letter from a group of prominent economists - including three Nobel laureates and previous members of both Democratic and Republican administrations and this analysis by CBO 2009). Even a report commissioned by the insurance industry's trade association acknowledged that: ‘[w]e expect employers to respond to the tax by restructuring their benefits to avoid it.' As a result, employers will be in a position to increase workers' take home pay." What incredible nonsense - as if employers will pass on the supposed cash savings gained from cutting workers medical compensation in pay increases. Even if they did the money would be taxable income, which means workers would lose 25 to 35 percent to the government, whereas currently their compensation in the form of medical benefits is non-taxed. In behind closed door negotiations between Congressional leaders, the White House and union officials, it's been agreed that the final version will slightly decrease the amount of the excise tax and delay its implementation for five years (from 2013 to 2018), giving the unions a chance to ‘voluntarily' cooperate in designing the cutbacks in workers' medical coverage.
If health care reform is so obviously essential for the bourgeoisie, as evidenced by the the fact that every Republican and Democratic presidential primary candidate in 2008 offered some form of health reform policy proposal, why have the Republicans opposed this legislation so virulently? Why all the ridiculous denunciations of Obama's alleged "socialism" and "death panels"? There are two plausible explanations: the first, of course is the political division of labor that the ruling class often employs to augment the democratic mystification, to create the illusion of genuine political debate. Before the Jan. 19th election, with 60 votes under Democratic control, passage of some form of health care reform was guaranteed and Republican opposition in no way threatened to undermine the achievement of the necessary rationalization of health care for the bourgeoisie. But secondly, we must also acknowledge an aspect to this opposition that reflected the impact of the social decomposition of capitalist society on the political processes within the ruling class as well. In the past ten years we have noted other instances of the political difficulties for the bourgeoisie to act effectively in its own interests, such as the botched presidential elections of 2000 and 2004, in which the "every man for himself" tendency so clearly manifest on the inter-imperialist terrain where bloc discipline disappeared with the fall of the Russian imperialist bloc, led the major political parties to pursue electoral advantage and victory in a manner totally disregardful of what was genuinely in the best interests of American state capitalism. In this context, no doubt, the racism afflicting the far right in regard to an African American president in the White House, has come into play. This deep seated racism fuels the "birthers" who deny Obama's "legitimacy" because he wasn't born in the US or those who charge that he is a secret Muslim or a "socialist". If Obama were to propose that Ronald Reagan's birthday become a national holiday, one could only imagine that these elements would denounce the proposal as a nefarious socialist-Islamic plot. Another aspect to this decomposition may be seen in the dogged resistance of the insurance industry which finances the opposition of so many conservative members of the House and Senate. We even see in it the ridiculous, petty maneuvering of the more conservative Democrats who held out for particularistic concessions for their own pet projects or financial backers. Such difficulties in implementing policies that serve the vital interests of American state capitalism are not a healthy sign for the ruling class.
The bourgeoisie truly faces a bizarre political situation. It is at last on the brink of "solving" its health care crisis, imposing a change that will NOT be a reform, not an expansion of health care, not an attempt to improve the health of the working class but will in the end be an austerity attack against the working class as a whole. The goal is to cut health care expenses and improve American economic competitiveness by attacking the standard of living of the working class. And for the moment it looks like the one remaining obstacle to this austerity attack against the working class is the opposition of the Republican party. It's too soon to tell whether the political situation is so out of control for the bourgeoisie that this measure which is so vitally important to American state capitalism will be wind up on the garbage heap of missed political opportunity. It is still possible that mainstream Republicans will realize that their "bluff" has been called, that they will have to find some way to compromise with the Democrats in the interest of the national capital, even if it's only a handful of Republican senators who in the end wind up voting for some kind of modified bill.
But if a compromise measure emerges, there can be no doubt about its nature as an attack against the standard of living of the working class. Such is the net result of so-called "reforms" in the period of capitalist decadence, demonstrating yet again that capitalism has no future to offer humanity. Only the replacement of the current society driven by the relentless quest for profits with one where the guiding principle is the fulfillment of human needs offers any real solution to the health care crisis confronted by the working class.
Jerry Grevin, 23/1/10