excerpted from the article
Health vs. Medicine
Where do we go from here with health care reform?
by Burt Laws
Z magazine, July / August 1998
Early in this decade, health care reform seemed the hottest
political issue going. There was an effective popular demand for
universal health care coverage, that helped to propel some comparatively
liberal candidates into office and elect Bill Clinton President.
We should have known that the medical-industrial complex-the drug
companies, big insurance companies, and medical service conglomerates
led by the vast criminal conspiracy then called Hospital Corporation
of America (now Columbia/HCA)-would rise up to defeat reform.
After all, we already knew how the military-industrial-political
complex maintains itself. The Clintons did not help the cause
by disappearing into secret meetings with a few hundred of their
closest friends for several months, only to emerge with an impenetrable
system of cycles and epicycles, laden with perverse incentives
and antidemocratic features, that begged to be attacked as a bureaucratic
The debacle played into the hands of well-financed party organs
and corporate PR firms masquerading as policy institutes that
have been trying, with considerable success, to pawn off a self-serving
ideology as "scientific" truth. This ruling ideology
maintains that a mythical system called the "free market"
has been scientifically demonstrated to be the most "efficient"
way to allocate resources, to solve social problems generally
and to maximize the "freedom" and power of consumers.
These conclusions derive from the putative "science"
A Review Of The Problems
When Clinton took office, 36 million Americans had no health
coverage at all. Today, that number is over 40 million. Sixty
million more have inadequate coverage that would leave them devastated
by a major illness - and that doesn't include more than 30 million
Medicare recipients who aren't covered for long-term care or,
in general, for basic needs like prescription drugs and eyeglasses.
But we had, and continue to have, comparable crises of homelessness,
hunger, and a few other problems in our society, yet these have
not created a crisis atmosphere in Washington. On the contrary,
we have witnessed the federal government steadily withdrawing
from its role in housing and nutrition, with little effective
opposition. The crisis in health care, as far as Washington was
concerned, was one of cost.
In 1940, the biomedical industry-"health care"-constituted
4 percent of the U.S. economy. By 1980, it had jumped to 10 percent,
and now it is about 14 percent. Spending on health care in the
U.S. is now half again or twice as much per capita as in all other
wealthy countries. This created a crisis in that powerful institutions-the
federal and state governments, and major corporations-had taken
on responsibility for paying for medical services when that obligation
was fairly modest. Now the price was much higher, and they didn't
want to pay it.
Massachusetts, like others, was slashing funding for welfare,
social services, and higher education. Yet the total of state
spending continued to increase, because of the so-called "budget
buster" accounts: Medicaid and health care for state employees.
We were sacrificing much of what state government had traditionally
done in order to pay for medical services. Massachusetts spent
less than $1 billion on Medicaid in 1986 and more than $2 billion
Employers faced the same problem. The U.S. has a unique system
in which so-called health insurance (more properly called disease
insurance) is provided to most people who have it through their
employment. Private employers pay for almost 25 percent of medical
goods and services. Most of that comes from Iarge corporations-small
businesses typically can't afford coverage for their employees.
Some of these corporations are obligated to provide this coverage
by union contracts, or have obligations to retirees, although
they have been trying to escape these requirements. So Lee lacocca,
as Chrysler chair, supported national health insurance. Having
to pay these costs made it harder for U.S. auto makers to compete
with Japanese companies, whose employees are covered by government
At that time there was also an intense focus on Medicaid and
Medicare in the debate over cutting the federal budget deficit.
This was fairly disingenuous, since the deficits of the 1980s
had not been caused by growth in such entitlements, despite Republican
disinformation campaigns. Entitlement spending remained essentially
flat throughout the Reagan and Bush administrations, as a percentage
of GNP. The deficits happened because the Reagan tax cuts left
the government without enough income to pay its expenses, and
the problem was subsequently compounded by growing interest on
the national debt. Still, the focus on Medicare and Medicaid was
not wholly ridiculous because these programs were growing very
fast. This trend threatened to wipe out any progress on the deficit
in future years.
Because of this confluence of interests-workers who didn't
have insurance or were worried about losing it, on the one hand;
corporations, state governments, and deficit hawks who didn't
want to pay for it on the other-we had a window of time in which
it appeared as though some form of radical restructuring could
Understanding the confluence of interests that favored reform
helps us to understand the opposition. It may seem confusing at
first look. The military-industrial complex, after all, wants
the government to spend the most possible on weaponry. Why shouldn't
the medical-industrial complex be in favor of an expanded federal
role in health care? However, the Administration proposal aimed
at driving down the prices paid to drug companies, medical equipment
vendors, hospitals, insurers, and other participants in the medical
economy. Some physicians, particularly in the highest priced specialties,
would have lost income. This was the best thing about the proposal,
and also its doom.
This also helps explain why attention to health care reform
has largely died down since 1993, even though more people today
are uninsured and those who are insured are increasingly unhappy
with the kind of care they receive. The growth in medical costs
has slowed temporarily, as both public and private payers move
consumers into managed care arrangements; hence the powerful interests
that made reform a viable issue in the past do not feel the same
urgency today. ...
Now let me address an important question that may have been
troubling some readers. How do those other countries manage to
keep costs below ours while covering everybody, without creating
the same problems? There are some variations in the details, but
I'll use Canada as an example because it makes the main points
Canada has what's called a single payer system. In every province
of Canada, there is only one health insurer, which is a public
authority. Immediately, that means there is no competition among
insurers, with all of the problems we have seen. By law, the single
payer covers every legal resident. (Non-legal residents who show
up will get care, by the way, although they may get deported or,
if they are tourists, they will get a bill.) The coverage is financed
by tax revenues, which are as progressive as the province cares
to make them, so it can be affordable for everyone, and in Canada,
in fact, it is.
Since all providers are in the plan, by definition, there
is free choice of providers. In general, primary care is not managed
(though there have been recent experiments in this direction).
For the most part, it's based on an indemnity model. You go to
see your doctor, you and the doctor decide what needs to be done,
the doctor sends the bill to the single payer. Utilization review
exists but with a light touch. Basically, they look for patterns
of billing that suggest fraud or malpractice. They can do this
easily because all providers' billing records are in a single
Where they do most to control costs is where the greatest
costs are located, that is hospital care and particularly high
tech procedures. Hospitals are put on an annual operating budget,
with a separate capital budget. Hospitals can't compete to have
the most high tech equipment, and they don't all need a maternity
ward, etc., because the single payer figures out what capital
resources are really needed for the province, and authorizes only
those. So the perverse effects of competition among hospitals
The hospital's annual operating budget is based on what it
has historically cost to serve the population in its area, plus
an adjustment for changing population, new technology, etc. This
is negotiated between the hospital and the authorities. Then the
hospital has the responsibility for allocating this money to best
effect in terms of health outcomes and the amelioration of suffering.
Is this rationing of health care? Of course. But we have rationing
here in the U.S., and our rationing is based on the insane criterion
of who has what kind of insurance. The fact is, rationing of health
care is necessary and inevitable. We can always think of more
ways to spend a million dollars on a million-toone chance of prolonging
the life of one individual, but that same million dollars could
have fed 200,000 hungry people a good meal, or built housing for
a dozen homeless families. We must make these difficult choices
as a society. Other countries are making them, but we hide our
heads in the sand.
Among the most politically powerful institutions in our country
are the American Medical Association, the American Hospital Association,
the Insurance Industry Association of America, the big drug companies.
They are by far the largest contributors to poIitical campaigns,
and the biggest spenders on lobbying. They're making sure we have
a system that lets the people who run them get rich.
There is an analogy often used in public health literature.
Suppose there is a steep cliff in the town, and people are falling
off. At the bottom of the cliff are all the caring, compassionate
people who make up the medical industry. As the people hit the
ground, the medical workers rush in to stanch the bleeding, set
their fractures, and rush them off to the gleaming new hospital
for recovery and rehabilitation.
Meanwhile, at the top of the cliff, there is no warning sign
or fence. Indeed, some people are being enticed toward the cliff
by people from tobacco and fast food companies and other firms,
who are selling them tickets to jump off. Other people are actually
in chain gangs, being driven toward the cliff by overseers with
What is the sensible thing to do in this situation? Spend
more on the doctors and ambulances and hospitals, so we can get
to more of the people faster? Or stop squandering all that money
and put up a fence? We do the former because we depend on the
market: individuals who have already fallen off the cliff will
pay (or their insurers will pay) for treatment; but only society,
through its government, will pay to put up a fence, and as a society
we have not made this choice. No clearer example exists of the
inability of the market to produce efficient allocation of resources.
The myth that the biomedical industry holds the key to health
and longevity stands in the way of creating a just and humane
society. We are not just biological entities, but also social,
psychological, and spiritual. We are physically healthy only to
the extent that we are socially healthy. Biomedicine, with its
one-dimensional and mechanistic interpretation of the body, denies
our very nature.
If we want a healthier society, we need to spend less on biomedicine,
not more. Yes, biomedicine can cure some illnesses and reduce
the symptoms o others, but it has side effects as well. I won't
go through all of the harms that some people have ascribed to
biomedicine-that's for another day-but I have identified one of
the most important, and that is its opportunity cost. If we get
so-called "health care" reform that appropriates an
increased share of workers' income to pay for biomedicine, they
will very likely be left less healthy. If we as a society have
faith that the 14 percent of national wealth that we spend on
biomedicine is the best possible investment in health, and if
we let that share keep growing at the expense of meeting our important
social needs, we will be less healthy.
Viewing the issues at stake in this way, I approach with skepticism
most of the current piecemeal initiatives to extend "health
insurance" to more of the population. Having lost the battle
over the Clinton Administration Health Security Act proposal,
activists retreated to a strategy of modest proposals at the state
and federal levels. So the president got his proposal passed to
provide funding to the states to extend Medicaid (now often called
by other names) to a higher percentage of low- and moderate-income
children, and now proposes to allow people 55 and older to buy
into Medicare. In Massachusetts, Rep. Joseph Kennedy has suggested
that the state (an entity which does not employ him in any capacity)
should combine moneys from various sources, including the special
excise tax on tobacco passed by the voters in 1993, to extend
the expanded Medicaid program (called MassHealth) to everyone
who is now uninsured.
The fundamental problem with such proposals is that they aim
only at achieving expanded coverage. They do nothing to solve
the fundamental problems in the system, and could even make some
of them worse. There are at least two indispensable requirements
of any reform proposal: it must have progressive financing, and
it must address the profiteering and other destructive features
of the medical marketplace, so that resources can be directed
away from the biomedical industry and toward social welfare and
Many popular schemes would actually force low and moderate
income people to sacrifice resources for the sake of health insurance.
The prototypical example is the perennial effort in Massachusetts
to force employers to buy insurance for all their employees. Although
this is usually sold as a free lunch for employees, the fact is
that the funds would principally come out of wages, and to a lesser
extent show up in higher consumer prices. This would be invisible
to workers, since they wouldn't see it on their pay stubs, but
the effect would be there all the same. The result would be to
redirect more of society's resources to biomedical intervention-taken
right out of the pockets of workers. At the same time, such a
scheme would do absolutely nothing to reform the market for health
Similarly, the Clinton proposal to allow people to buy into
Medicare has little progressivity. To be sure, many people in
the age group 55-64 are experiencing difficulty in the job market
and have lost access to employer-provided insurance. Some would
take advantage of this option. But without progressive financing,
again, struggling people may be forced to direct resources away
from other basic needs to pay for it. This is not progress.
The Kennedy proposal to use tobacco tax revenues for health
care is outrageous. The measure approved by the voters specifically
required that the revenues be used for public health initiatives,
particularly to combat tobacco addiction but also for comprehensive
health education for school-age children. To steal these moneys
for medical services is to go up to the top of our metaphorical
cliff, where workers have just begun to set up some warning signs,
and toss the signs over and the workers after them.
These piecemeal reforms are in the air because of their apparent
political viability. They attract the support of many physicians
and even medical executives, and most provoke little or no opposition
from insurers. Proposals that place obligations on employers tend
to split the corporate community, which may give them some chance,
though so far they have not gone very far.
However, there is no logic in reformers opting for proposals
just because they may be politically viable, when these proposals
are taking us in exactly the wrong direction. The right approach
to building a movement for reform is to organize around health,
not medicine. That includes much of the traditional progressive
agenda-environmental protection, public transportation, job safety,
community nutrition programs, full employment, peace and anti-militarism.
It also includes public health measures that have not received
enough attention from the progressive community. Some of these
are often defined as "social issues," such as health
education in the schools and community HIV education; needle exchange
programs; and replacing the hypocritical and counterproductive
"war on drugs" with universal access to addiction treatment
for those who want it. Unfortunately, the prison industry is becoming
almost as powerful as the medical industry, so there is no time
When it comes to reforming the medical industry per se, nothing
short of the real thing will do: progressively financed single
payer national health care. No, it isn't going to happen any time
soon, but most of the piecemeal reforms aren't really getting
us any closer, in fact they are missing the point.
One reason the single payer idea has been hard to sell almost
seems silly: the name. It isn't very inspiring, and most people
don't understand it. The focus on financial structure seems to
overlook the sources of most people's dissatisfaction with the
system: lack of insurance or insecurity about keeping insurance
or paying large bills, bureaucratic invasion of the relationship
between physicians and patients, the huge cost of medicine. In
fact, the single payer idea does address all of these concerns,
but it isn't obvious enough.
So let's call it the People's Health Plan or the Health Freedom
Plan or something like that. And let's put it in the center of
a vision of society in which health flows from all the good things
in life, from strength of community, and from social justice,
not from an IV bottle.