Campaigning for private insurance profits:

Presidential politics and health care

by Pete Brown
(CV #41, February 2008)


Republican prescription: more tax cuts for the rich
The Democratic plan: charts, graphs and promises of universality
Clinton's sellout to private insurers
What will it cost?

. The health care crisis continues to deepen. More and more people in the U.S. are losing health insurance coverage. The number now stands at over 47 million, and it's worsened through the last six years. And those with health insurance are not immune to the crisis: insurance companies routinely raise the price of premiums, co-pays and deductibles, so going to the doctor is a financial gamble for any working class family. Many of those with insurance still cannot avoid bankruptcy if they have a major medical problem. Many workers put off medical treatment because of insufficient funds, and there are estimated thousands of people who die every year due to inadequate treatment. This is a crisis of the free-market private insurance system. Going back to the mid-20th century, Americans relied on private insurance, usually provided by their employer; but now the system is broken.

. Right now we have a gang of aspiring politicians running for president. What do they have to say about this crisis? As a rule their main answer is to help prop up, expand and solidify the private insurance industry. None of the major candidates recognizes that the private insurance industry is a key source of the problem. The Republican candidates can hardly be bothered to talk about health care at all; they are too busy fear mongering about the "invasion" of Mexican immigrants. But to the extent they talk about it at all, they emphasize the need to expand private health insurance and keep government out of it. At most they advise tweaking the tax code to give taxpayers a little help in paying health insurance premiums.

Republican prescription:
more tax cuts for the rich

. Republican candidates are following in the footsteps of George Bush's policies of crushing the working masses and lowering taxes for the rich. Bush's big achievement domestically was to lower the tax rate for millionaires. But for the poor and the working class Bush couldn't care less. Bush recently vetoed a bill to expand S-CHIP, the expanded Medicaid plan that gives medical insurance to children of the working poor. (1) Bush's reason for the veto was that he doesn't want health insurance to go in a government-funded direction. Following the neo-cons, Bush wants to promote more private health insurance, even though the crisis is precisely a failure of free-market insurance. Bush's plan was to give tax rebates to individuals buying private health insurance policies. Individuals would still have to buy the policies themselves and pay the money upfront for premiums, co-pays and deductibles. But Bush promised that some of them (not all) could then qualify for tax credits on their income tax. This plan was killed by the Democratic-controlled Congress which is supposedly looking for something better. Despite that, however, all of the Republican presidential candidates are now embracing variants of this as their plan.

. Rudy Giuliani, for example, will offer a $15,000 tax exemption for individuals to go out and buy their own private health insurance policy. Giuliani says his main aim is to avoid socialist health care. He specifically targets Michael Moore, who promotes single-payer systems such as Canada's in his movie Sicko. Like other candidates Giuliani doesn't want people thinking about such systems because of their obvious superiority to the American system. Canada's single-payer system really is universal and free at the point of delivery, which puts it miles ahead of anything proposed by the major Republican and Democratic candidates.

. Giuliani says he personally knows some people in Canada who are not completely happy with the Canadian system because of long wait times for some procedures. Thus he reduces the health care debate to a matter of anecdotes. But scientific evidence shows that people in Canada are healthier and live longer than people in the U.S., and opinion polls show that Canadians are generally happy with their health care system, while opinion polls in the U.S. show the exact opposite. Scientific time studies also show that wait times in Canada are actually less than in the U.S. In recent years cutbacks by neo-liberal politicians of the major Canadian political parties have put pressure on the plan, but its basic structure remains superior to that in the U.S. This is besides the issue of cost: health care in Canada, per capita, is only half that in the U.S.

. Mike Huckabee is presently surging in the polls due to his Christian "sincerity". Evangelicals like him because he used to be a Baptist preacher, even though Republican "low-taxers" are wary of him because he did raise some taxes as governor of Arkansas. Huckabee's main point of emphasis on health care is, "We don't need universal health care mandated by federal edict." Thus he joins other Republicans in their anti-socialist and anti-big government rhetoric. Like all major candidates of both parties Huckabee talks about modernizing health care bureaucracy, making insurance more portable from state to state and job to job, and like all Republicans he stresses tax deductions for premiums to private health insurers. To make it sound like he's awake, Huckabee talks about the health care system being "broken", but his prescription for that is to make workers pay more for it. He says the problems with the present system are caused by workers overusing it because they have employer-paid insurance that gives workers health care "for free". So should we get rid of the private insurers? Oh no, that would be running things "by government edict. " We just need to make sure that it's the workers themselves paying the premiums, not their employers. Then everything will be fine (if we can halt the flood of Pakistanis coming across the Mexican border).

. Like other Republicans, John McCain talks about giving health care consumers "more responsibility". That's Republican-speak for "make the workers pay a larger share of the costs." Also like other Republicans, McCain advocates income tax credits as a way to encourage individuals to buy private health insurance. His particular proposal is for a $2,500 individual tax credit ($5,000 for families). This seems a lot cheaper than Giuliani's plan, which calls for a $15,000 deduction, but the difference is that McCain's is a credit while Giuliani's is a deduction. Voters will need tax accountants to figure out which plan is more advantageous. McCain has some general rhetoric about the crisis in health care and the need to provide "universal access", but like other candidates he relies on the wonders of the free market to do it.

. Mitt Romney is running away from the Massachusetts program he signed into law as governor, because Republicans nationally oppose any increase in government programs. So just as he flip-flopped on social issues like abortion, Romney flipped on medical insurance. Today Romney restricts himself to proposals for tax deductions to pay for private health insurance premiums. Romney's backers, including financial advisers to previous Republican presidents, sing hosannas about the wonders of free-market solutions to the problem, for example in the article "Bringing the Market to Health Care" by John F. Cogan and R. Glenn Hubbard. (2) Let people buy their own private insurance, they say, and many people will buy the cheaper policies (which cover nothing), which of course will result in lower premiums for everyone (as if the insurance companies which enjoy a monopoly will just voluntarily lower their rates). And to avoid high co-pays, they argue, individuals will forego doctor visits, thus lowering overall health care costs. Won't that be wonderful to have people avoiding doctor visits because of the cost? Piling absurdity onto absurdity, Romney's advisers go further and say that giving tax breaks to individuals and employers will lower health insurance premiums for employers, who will then automatically pass these savings on to their employees. So every worker can expect a net increase of $1,300 a year -- that is, a $1,300 a year raise -- when Romney's tax initiatives are passed! Not only will we be spending less money, we'll be getting money back! The wonders of the free market! Romney's advisers say this is guaranteed, since "competitive market forces . . . have worked in every other market to keep costs low and improve quality." Sure! Just look at the oil and gas industry! Aren't competitive pressures working to keep the price of gasoline, natural gas and heating oil low? Or look at the wonderful free market in home mortgages. Bush's deregulation of banking encouraged mortgage lenders to indulge in an orgy of competition-driven risky mortgage loans, but it didn't make those loans low-cost or high-quality.

. Ron Paul, who is surging in the money poll and may end up among the top three or four Republican candidates, is the most extreme opponent of any government regulation. A right-wing libertarian, Paul's idea of health care reform is simply to restrict the FDA's regulatory powers over drug companies. The capitalists should be free to peddle any drug at any price, and the wonderful free market will then sort out the mess and allow everyone to live happy and healthy lives. But despite all his libertarian "anti-government" rhetoric, Paul maintains an anti-abortion position. It's fine for the government to intervene in the private health care decisions of women, just don't allow government to interfere with the profit-making of corporations.

The Democratic plan:
charts, graphs and promises of universality

. The Democratic presidential race features candidates who mirror George Bush in their imperialist aspirations. But in distinction from Bush, they actually have a domestic program of promises for the working class. The foremost among these is their plans for health care insurance. All of the candidates say they will make health insurance available to millions more Americans, with most of them promising universal coverage. But there's a catch: universal coverage will be achieved primarily by extending the present system of private health insurance. Thus the very same corporations that are to blame for the present health care crisis will be given license to "solve" the problem they created. The Democrats have various plans to subsidize paying for health insurance premiums. Some of these plans are complex, with overlapping bureaucracies, but much of it boils down to the same things advocated by the Republicans: tax credits and deductions. So aside from their promises to slightly expand Medicare and Medicaid, the Democrats' prescriptions are pretty much the same as the Republicans. The difference is their promises are greater: they promise that their complex schemes will somehow someday result in universal insurance coverage.

. With all these promises of universality, why do none of the major candidates refuse to advocate a national health care system, a single-payer system such as exists in Canada? When asked if they favor a single-payer system, every one of the major candidates says no. Instead they prefer piddling reforms that preserve insurance company profits. This is what it means to be a capitalist political party: the Democrats will do everything they can to preserve the health insurance industry as a profit-making enterprise.

. Why do Democrats still trust the insurance companies? In fact these companies have created the present mess. And every attempt to include them in a solution only makes things worse. A perfect example is the Medicare drug benefit and supplemental insurance plan, plans passed into law under the Bush administration. Using this law, insurance companies routinely misrepresent their policies when advertising them to seniors. Then they routinely refuse to pay for drugs and services used, and cancel the policies of those who have serious and expensive diseases. This has been documented in testimony to Congress. (3)

. Taking a page from the Clinton playbook of the 1990s, John Edwards offered a health plan with regional super-insurers. This is reminiscent of the plan Hillary and Bill Clinton were contemplating in the 1990s. Edwards also proposed a larger role for Medicare and Medicaid. Edwards' plan attracted much attention for awhile, because he was the first major candidate to propose a plan. But its significance has paled as other candidates have come forward with competing plans.

. The two major candidates, Clinton and Obama, differ mainly over the question of individual mandates. Obama's plan does not force people to buy health insurance, while Clinton's plan does. Clinton's plan is thus very similar to the Massachusetts plan. (4) Obama does not have an individual mandate, although his plan does have an employer mandate; employers are required to provide an insurance plan for their employees. Individuals would be provided with encouragement and incentives to purchase insurance, through an Insurance Exchange. There would also be subsidies through tax credits. Obama's plan is thus very close to Clinton's minus the individual mandate.

Clinton's sellout to private insurers

. Hillary Clinton brags that her plan, unlike Obama's, will cover everyone. This is because she includes an individual mandate requiring everyone to purchase a private health insurance policy if they don't already have one provided by their employer. Clinton will give tax credits to those who buy plans, like the Republicans. This part of her plan is subject to the standard objections, especially concerning those who don't file for income tax or who don't already pay a net tax. But unlike the Republicans, Clinton will allow individuals to buy a government-sponsored plan. But this plan will compete against the private plans, which will be encouraged to continue, so no doubt the prices it charges will be about the same as the private plans. Private insurers will still offer cheap plans with poor coverage, and poorer working class people would probably be impelled to buy these cheap plans. So workers will get coverage, but only in a minimal sense.

. Under Clinton's plan businesses that offer health care plans will be eligible for new tax breaks. Clinton also includes government backing for businesses on catastrophic health insurance. These measures will supposedly allow some expansion of business-sponsored health insurance, but the only thing certain is that it's another government giveaway to the corporations. Overall Clinton's plan is crafted to appeal to business, big and small. Clinton's plan isn't just a gift to the private insurers ­ it's a gift to all the capitalists. The cost of these tax breaks will be borne by the public at large, meaning the working class taxpayer. Clinton says she learned a lot from her 1993 attempt at health care reform. What she learned is that insurance is a strong capitalist lobby with ties to other capitalist interests. So she decided to throw in with them. Since then she has made a habit of taking large campaign contributions from the insurers.

. Clinton will also provide for some expansion of the government programs Medicare, Medicaid and S-CHIP. All in all, Clinton's plan is a mixed bag of additions and expansions coupled with an individual mandate. Anyone not covered by anything else will simply be forced to go buy some private plan. Of course, all these expansions and guaranteed coverage will cost money. But Clinton is simply waving her magic wand at that problem. She says "technical advances" will cover the increased costs. Supposedly improvements in electronic medical filing and billing will cut down on enough paperwork to save hundreds of billions of dollars. This is ridiculous. And it shows Clinton is not serious about achieving universal coverage. Clinton relies on private insurers to do the job, but with their constantly-rising premiums and Clinton's lack of a serious mechanism to pay for them, millions of poor and working class people are bound to be left behind once again.

What will it cost?

. Clinton isn't alone is this: all the Democratic candidates understate the cost of their programs. For that matter, so do Republicans, even when criticizing the Democrats. This is because none of the establishment politicians want to admit the enormity of the problem. The Democrats don't want to admit how much their programs will actually cost. The Republicans, on the other hand, who aren't proposing any expensive government programs, don't want to admit to the shortages of health care that exist at present. According to Bush, everything is fine: anyone who needs health care can just "go to an emergency room" and be taken care of. But the Republicans' own advocacy of "consumer-driven" health plans belies this, since they rely on consumers to only go for procedures they can afford or absolutely need. On the one hand they say there's no problem; on the other hand they insist that workers pay for fixing the problem.

. The dirty little secret about the Democrats' plan was unintentionally spilled by Paul Krugman, columnist for the New York Times and unofficial economic adviser to the Democrats. In his column for December 7 Krugman noted that Clinton's health plan was very similar to the Massachusetts plan and argued in favor of Clinton's call for individual mandates. Krugman says, ". . . all the Democratic plans include subsidies to lower-income families to help them pay for insurance, plus a promise to increase the subsidies if they prove insufficient." Naïve Professor Krugman takes this promise as an ironclad guarantee. But in fact this promise is only worth about as much as the Romney campaign's promise of a $1300 raise for every worker.

. In arguing against Obama's reluctance to call for individual mandates, Krugman says, ". . . the limitations of the Massachusetts plan to cover all the state's uninsured . . . come not from the difficulty of enforcing mandates, but from the fact that the state hasn't yet allocated enough money for subsidies." So the plan is great, and the promises are great; there won't be any problem enforcing mandates, forcing people to sign up for private insurance and imposing various legal and financial penalties on them for being slow to do so. The only problem is, the money to help individuals pay for escalating premiums might not be available. That's not a problem for Krugman, of course; it's only a problem for the workers and poor who are struggling to get by and are now faced with the additional problem of state-mandated penalties.

. The experience of states that have tried individual mandates shows the same thing: the number of uninsured actually increases under these mandates. Why? Insurance premiums skyrocket as insurance companies have a state-backed monopoly and state-enforced mandates requiring everyone to sign up for their policies. Poor working class people simply cannot afford the higher rates. State legislatures, despite their promises, back off from subsidies for the poor and renege on their promises to strictly regulate insurers. As a result states like Massachusetts, Minnesota, Tennessee, Vermont and Washington that have mandated universal coverage have actually seen big increases in the number of uninsured. (5)

. The main cost-savings reform that could readily be adopted would be a single-payer government plan that would eliminate private insurance companies altogether. This would eliminate the waste and bureaucracy associated with doctors dealing with a multitude of insurers. It would also eliminate the profiteering of the private insurers and would do away with their administrative costs, which are mainly directed to "research" on finding out which clients to avoid. This could save some hundreds of billions of dollars a year.

. One candidate, Dennis Kucinich, has come out straightforwardly for the single-payer plan envisioned by HR 676. But Kucinich doesn't have a prayer of getting the Democratic nomination. Now that we're moving into serious candidate-selection season, Kucinich is being excluded from the debates of presidential candidates. Kucinich is the only one advocating a not-for-profit system of medical insurance and has refused to take financial contributions from health insurance companies. Now that serious electioneering has begun, he's not considered a legitimate contender and is relegated to the sidelines by the party hierarchy. Kucinich is the best the Democrats can do with respect to health care reform, and even he is not for the mass struggle needed to impel serious reform. So don't expect much in the way of health care reform under a Democratic president. The key to serious reform is a shakeup in the present political system locked up by the two big capitalist parties. <>


(1) At the end of December Bush finally signed a new funding bill for S-CHIP after vetoing it twice and only after Democrats in Congress gave up the call for large, needed expansions to S-CHIP. (Return to text)

(2) Wall Street Journal, Sept. 15, 2007. (Text)

(3) See "Medicare audits show problems in private plans" by Robert Pear, New York Times, Oct. 7, 2007. (Text)

(4) See Pete Brown, "Massachusetts plan­propping up the private insurers while pretending they can provide universal coverage", Communist Voice, issue #40 (August 24, 2007). (Text)

(5) See "I am not a health reform" by David U. Himmelstein and Steffie Woolhandler, co-founders of Physicians for a National Health Program, New York Times, Dec. 15, 2007. (Text)

Back to main page, how to order CV, write us!

Last changed on February 26, 2008.