Letters to the Editor
The New York Times
229 W. 43rd St.
New York, NY 10036

The editorial “When Big is Good” (Editorial, April 3) is dead wrong about the merger between U.S. Healthcare and Aetna. The market rewards companies that deliver health care the least efficiently — companies that spend less on health care and more on overhead.

U.S. Healthcare typifies this profitable inefficiency. In 1994, U.S. Healthcare took 25% out of every premium dollar for its executive salaries, profits, and bureaucracy. CEO Leonard Abramson made $20 million in cash and stock options in a single year. Furthermore, every time U.S. Healthcare’s overhead has bumped up, so has its stock price.

U.S. Healthcare pays doctors huge bonuses for denying patients referrals to hospitals, specialists, and emergency care, according to a recent article in the New England Journal of Medicine. Meanwhile, until a public scandal recently forced U.S. Healthcare to change their policy, they forbade any criticism of their plans by physicians (the so-called “gag clauses”).

Aetna found this ability to scrimp on care and splurge on shareholders so appealing that it paid nearly 25 percent more for U.S. Healthcare than its stock market valuation.

Wall Street defines efficiency as maximizing the profit squeezed from each premium dollar. Patients and physicians, however, want to maximize the resources that actually provide needed health care. The best option for providing efficient, humane, and patient oriented care for all of our citizens is a not-for-profit single payer health care system.

Letters to the Editor
The New York Times
229 W. 43rd St.
New York, NY 10036

The editorial “When Big is Good” (Editorial, April 3) is dead wrong about the merger between U.S. Healthcare and Aetna. The market rewards companies that deliver health care the least efficiently — companies that spend less on health care and more on overhead.

U.S. Healthcare typifies this profitable inefficiency. In 1994, U.S. Healthcare took 25% out of every premium dollar for its executive salaries, profits, and bureaucracy. CEO Leonard Abramson made $20 million in cash and stock options in a single year. Furthermore, every time U.S. Healthcare’s overhead has bumped up, so has its stock price.

U.S. Healthcare pays doctors huge bonuses for denying patients referrals to hospitals, specialists, and emergency care, according to a recent article in the New England Journal of Medicine. Meanwhile, until a public scandal recently forced U.S. Healthcare to change their policy, they forbade any criticism of their plans by physicians (the so-called “gag clauses”).

Aetna found this ability to scrimp on care and splurge on shareholders so appealing that it paid nearly 25 percent more for U.S. Healthcare than its stock market valuation.

Wall Street defines efficiency as maximizing the profit squeezed from each premium dollar. Patients and physicians, however, want to maximize the resources that actually provide needed health care. The best option for providing efficient, humane, and patient oriented care for all of our citizens is a not-for-profit single payer health care system.

By Vicente Navarro, Johns Hopkins University
Journal of Health Politics, Policy and Law, Summer 1995

Many explanations are given for the failure of the 103rd Congress to enact health care reform. The most frequent explanation in the mainstream media and academic press is that people were not ready and were confused. Congress, it is said, merely reflects the voice of the people because the U.S. political system represents the population. Thus the roots of health care reform’s failure can be found in people’s ambivalence: They wanted health care reform but were not quite ready; they were confused or misinformed.

I believe this view is wrong. The American public certainly has a voice in its political system, but it is not one of the most important voices that shape the federal government’s decisions, including those about federal health policies. Most people agree with this perception. Seventy-four percent believe that the U.S. Congress does not represent their interests but rather the interests of what they call the “rich,” the popular term for the corporate and upper middle classes.1 And much evidence supports the accuracy of this perception. The gap between what people want from their government and what they get is substantial and growing, which may explain citizens’ increasing anger with the political establishment. Since 1954, whenever polled on whether they favor a universal health care program, large pluralities or majorities have supported it.2 Even during the 1980s and early 1990s, when concepts such as the “greed” of the privileged few and austerity for the many were supposed to be fashionable, most Americans supported a government-run national health care program (Shapiro and Young 1986).3 Yet Congress has failed time after time to enact such a program.

Another proposed explanation for Congress’ failure to pass health care reform is that government experts have not yet got it right. In this scenario, professionals and experts are primarily responsible for establishing public policies and convincing key political actors of the merits of various proposals. But this scenario is clearly insufficient to foster an understanding of the failure of health care reform. It ignores the sociopolitical context in which these “experts” operate and the interests with which they are identified or represent. Hillary Rodham Clinton’s Health Care Task Force, for example, was not merely a group of experts. Its key members were persons identified, for the most part, with some of the primary forces (including the insurance industry) responsible for the current predicament of the U.S. health care system. I offer just one example: The chairman of the Governance Committee, a critical committee of the task force, was for many years a high-ranking official of the Health Insurance Association of America. The task force was a predominantly white, male, upper middle class group in which the interests of insurance companies (large and small) and other components of the medical industrial complex were well represented. Obviously, these persons were not on the task force as “representatives” of these groups, but their positions were, for the most part, the same as those of the industries in which they worked and with which they were identified. Others who had no professional association with these interest groups accepted the theoretical framework dictated to them by their spokespersons — the Jackson Hole Group. Indeed, the primary objective of the task force initially was to achieve a synthesis of the major interests at work in the health care sector, to develop a blueprint — managed competition — that could be approved by the major players in this sector.

Similarly, the members and staff of key committees of the House and Senate that craft health care-related legislation have long-standing relationships with these health sector interests. The list of recipients of donations from insurance and professional groups reads like a Who’s Who of federal health policy circles (Kemper and Novak 1992). Of course, part of the official discourse is that such intercourse between politicians and lobbyists does not influence policy makers. None other than Congressman Thomas Foley, then Speaker of the House (and himself a recipient of health care industry funds), has denied the existence of such influence. Empirical evidence shows, however, that lobbyists and their financial contributions do influence the behavior of congressional recipients (New York Times 1994). Common Cause has also documented how most Washington lobbyists for the medical industrial complex previously worked within the U.S. Congress, with which they retain close ties (Kemper and Novak 1992).

This link between the medical industrial complex and the legislative and executive branches of government offers better grounds for understanding the failure of health care reform than does simply examining what the “experts” recommended. Who those experts represent is far more important. The relationship between the components of the medical industrial complex, the large and small insurance lobbies, the large and small employer associations, the representatives of professional associations, and other interest groups, on the one hand, and the U.S. government, both the executive and legislative branches, on the other is crucial to our understanding of that failure. Many authors writing in the “interest group” theoretical tradition have provided useful information on the key relationship between the medical industrial complex and political power (Marmor 1994). Yet this approach, however helpful, is insufficient to explain why health care reform failed. We cannot understand the behavior of U.S. political institutions by focusing only on the interplay of groups and actors while failing to analyze the social, political, and economic contexts in which these political institutions and interest groups operate. In other words, we cannot understand the nature of the tree — the existence or absence of health care reform — without understanding the forest — the structure of power in the United States and how these power relations are reproduced through the state.

In the United States, power is distributed according to race, sex, and, most importantly, class. Alain Enthoven, the principal theoretician of managed competition, the dominant framework in the health care debate, recognized as much when he wrote “The U.S. political system is incapable of forcing change in such power institutions as the insurance industry, the hospital industry, organized medicine, the medical devices industry and the pharmaceutical industry” (Marmor 1994). What these components of the corporate and upper middle classes have in common with the other components, the large and small employers, is not only their composition of race and sex but, most importantly, their class composition: corporate class for large employers, large and small insurers, and the medical industries, and upper middle class for small employers and professionals. Conventional wisdom now dictates that the single-payer proposal, the only proposal that clearly threatened that class dominance, was politically unfeasible because it was unacceptable to those classes.

The reality is that the United States lacks a national health care program because of its specific class relations. The focus on interest group behavior without understanding class behavior leads to wrong conclusions. For example, why did the major associations representing large employers oppose the single-payer proposal when they would most likely benefit from this proposal by paying considerably less in fringe benefits for their workers? According to their short-term interest group interests, they should have supported it, but the overwhelming majority of large employers and their trade associations did not. As employers, members of the, corporate or capitalist class, they most value control over their own labor force, and employment-based
health benefits coverage gives them enormous power over their employees. The United States is the only country where the welfare state is, for the most part, privatized. Consequently, when workers lose their jobs, health care benefits for themselves and their families are also lost. In no other country does this occur. This is why the corporate class and its instruments in the United States oppose establishing government-guaranteed universal entitlements: They strengthen the working class and weaken the capitalist class. The staggering power of the capitalist class and enormous weakness of the working class explains why health care reform failed again. The United States, the only major capitalist country without government-guaranteed universal health care coverage, is also the only nation without a social-democratic or labor party that serves as the political instrument of the working class and other popular classes. These two facts are related. In most advanced countries, the establishment of universal entitlement programs has been based on the political alliances of the working class with the middle classes, through the election of social-democratic governments or through their pressure on non-social-democratic governments (Navarro 1989).

The Democratic party has traditionally presented itself as the party of working people and of the disenfranchised. And during and after the New Deal, most of the working class supported the Democratic party, largely because of the identification of the party with the popular New Deal programs such as Social Security, the most popular insurance program in the United States. Such an identification, however, has been diluted considerably, and for many decades the Democratic party leadership has distanced itself from the New Deal. In fact, the anti-New Deal measures taken by Reagan and Bush were supported by most Democrats in Congress.4 This situation is responsible for discrediting the two parties, which are now seen as very similar, and has been greatly facilitated by money’s growing influence in politics. Both the Republican and Democratic parties now depend heavily on moneyed interests. As William Greider, author of the best analysis of the Democratic party, concludes, “Anomalous as it may seem, Wall Street is a major source of financing for the party of working people” (1993: 259). Not only is the United States the only capitalist country without a national health program and without a social-democratic party but it is also the country where democracy is most limited by the overwhelming power of money, the milk of U.S. politics.

This situation explains the anti-establishment mood in the country and why all 1992 presidential candidates, Clinton, Perot, and Bush, had to run as anti-establishment candidates, a difficult position for Bush to sustain because he had been part of the Washington establishment for two decades. Clinton (unlike Carter, Mondale, and Dukakis) ran as a left-of-center, anti-establishment populist, with a New Deal platform (which the New York Times called “a Roosevelt platform”) and with a class war campaign, the type of campaign Republicans most fear. As noted by conservative Republican strategist Kevin Phillips, “class war was the strategy most feared by Republicans since they were highly vulnerable (particularly after the pro-rich and pro-business policies of the Republican administrations) to be presented as the party of the rich” (1994), that is, the capitalist and upper middle classes. A clear class polarization occurred during the 1980s and early 1990s. For the upper 20 percent of the population, incomes increased by 125 percent; for the lower 60 percent, incomes declined by 6 percent.

Despite the class discourse Clinton used to mobilize alienated voters, he was a “new Democrat” who did not believe in class confrontation but rather in the development of consensus policies. Clinton’s desire to please was not a personal character flaw, as is often reported. It was part of a political strategy to create consensus among forces with very uneven power and some of these forces were pleased more consistently than others. The Health Care Reform Task Force was an example of this strategy. It was supposed to develop a blueprint that would be acceptable to the principal interest groups in the medical sector, and to large and small employers. These compromises defined the terms of the subsequent debate, moving it farther to the right. Predictably, the compromises did not satisfy the major players — large employers and large insurance companies, which developed their own proposals (Cooper and others) — nor did they satisfy the major grassroots constituencies of the Democratic party, such as labor, civil rights, and other social movements. These constituencies felt increasingly alienated from the Clinton administration, which was increasingly perceived, since the North American Free Trade Agreement debate, as aligned too closely to corporate America. As Mrs. Clinton indicated, the problem faced by the Clinton administration was the strong mobilization of those who opposed health care reform and the lack of support and mobilization by those who supported it. There is growing disenchantment of the working and middle classes, the New Deal coalition, with the Democratic party, which is responsible for its electoral defeat on 8 November 1994. Only 33 percent of Democrats voted, compared with 82 percent of Republicans.

Another alternative strategy, never considered, would have been the mobilization and development of alliances between the working class and the lower middle class, which represent most of the U.S. population. Clinton could have put forward a single-payer, left-wing position at the start of the debate, which would have been diluted in Congress, eventually reaching a center position as the final outcome. After wasting several months, however, Clinton began the debate from a center-right position that moved so far to the right that he could no longer mobilize popular support, the grass roots of the Democratic party. Clinton’s plan was very complex and cumbersome because of his commitment to leave unchanged the current system’s major partners of financing and organization. He was actually stimulating a process already occurring in the medical care sector: the corporatization of medicine in the United States. A key element of Clinton’s plan was control by the large insurance companies over the medical care sector. As stated by Starr and Zelman (1993), two of Clinton’s advisors, “the integration of health insurance companies and health care provision into the same organization, i.e., health plans” would be the key element of managed competition.

In the debate, the major media and academia (also heavily influenced by the hegemonic ideology of corporate America) systematically excluded alternatives that would have had a stronger effect on the core of the corporate and upper middle classes: the large employers, large insurance companies, and the medical industrial complex. Not only the New York Times (whose editorial board includes several CEOs of insurance companies) but also The Washington Post and the major television networks marginalized and ridiculed the single-payer position, presenting it as “fundamentalist,” “extreme,” “utopian,” and the like (Brundin 1993). As Miliband (1969) has eloquently written, “Class dominant value generating systems contribute to the fostering of a climate of conformity, not by total suppression of dissent, but by the presentation of views which fall outside the consensus as curious heresies, or, even more effectively, by treating them as irrelevant eccentricities, which serious and reasonable people may dismiss as of no consequence.” This is how class power is reproduced in the United States. Strengthening the exclusion of alternative proposals was the absence not only of a mobilizing discourse but of an instrument that could facilitate such a mobilization. The Democratic party was not such an instrument. The conditions for establishing a national
health care program include active mobilization to democratize the political, institutions, with the formation of political instruments that better represent the interests of most of the working population. Such mobilization cannot occur without a substantial confrontation with the pattern of not just race and sex but also primarily class-dominant relations in the United States.

Vicente Navarro is professor public policy, The Johns Hopkins University, and professor of political science, Pompeu Fabra University, Spain. He can be reached at vnavarro@jhsph.edu.

Notes

1. These are the electorate’s views of the U.S. Congress, as determined by a Gallup poll in November 1992.
2. For an analysis of popular support for a universal health program since the 1950s, see Navarro (1994).
3. See also polls conducted by NBC (National) in 1989; the Los Angeles Times (National) in 1990; CBS/New York Times (National) in 1990; the Associated Press (National) in 1990; and Roper (National) in 1990.
4. Within a few months of Reagan’s election, Senator Daniel Patrick Moynihan of New York told his colleagues on the Senate Budget Committee that, responding to what they mistakenly defined then as a popular mandate, “we have undone thirty years of social legislation in three days” (Navarro 1994).

References

Brundin, J. 1993. How the U.S. Press Covers the Canadian Health Care System. International Journal of Health Services 23(2):275-77.
Greider, W. 1993. Who Will Tell the People? New York: Basic Books,
Kemper, V., and V. Novak. 1992. What Is Blocking Health Care Reform? Common Cause Magazine 18(1):8-13, 25.
Marmor, T. 1994. Understanding Health Care Reform. New Haven: Yale Univer¬sity Press.
Miliband, R. 1969. The State in Capitalist Society: An Analysis of the Western System of Power. London: Weidenfeld and Nicolson.
Navarro, V. 1994. The Politics of Health Policy. Oxford: Blackwell Publishers.
______. 1989. Why Some Countries Have National Health Insurance, Others Have
National Health Services, and the U.S. Has Neither. International Journal of Health
Services 19(3):383-404.

Journal of Health Politics, Policy and Law, Vol. 20, No. 2, Summer 1995.
http://jhppl.dukejournals.org/content/20/2/455.citation