United States: Where's the socialism? The good, the bad and the ugly of health-care reform

By Billy Wharton

November 9, 2009 -- Where is the socialism now? Frenetic right-wingers spent a good part of the US summer shouting about the “government takeover of health care” or the “stealth socialist health-care plan”. Now that the Affordable Healthcare for America Act has been passed by a slim margin in the US House of Representatives, on November 8, there are few traces of anything even resembling socialism. Instead, Americans will find the good, the bad and the ugly of health-care reform all contained within the 1990-page bill.

The good

The longer a rotten system lasts, the more any change to it is perceived to be a giant leap forward. In this light, the House health bill contains some positive changes. Insurers will now be prevented from refusing enrollment based on a pre-existing condition, or from dropping subscribers who become ill. Such policies have allowed private insurers to maintain profit margins and, consequently, are contributing factors to the swelling ranks of the uninsured. Their elimination is certainly a positive reform.

Another provision in the bill removes the anti-trust exemption for private health insurers. Since 1945, insurers have been exempt from federal anti-trust law but subject to whatever state-by-state provisions existed. Insurers argued that this allowed them to share essential information about pools of subscribers in order to determine risk. In practice, much more than information was shared. The American Medical Association reports that large insurers now control 94% of health-care business in most regional markets. A few large-scale private insurers lord over each segment of the country. House Democrats view anti-trust law enforcement as a means to combat this concentration, but it presents a more ominous prospect when viewed inside of the rest of the reform proposal.

Transforming the mass number of uninsured in the United States, at last count around 48 million people, into potential customers will favour those companies capable of operating economies of scale. In other words, the larger the corporation, the easier it will be to price your way into the new market. For a time, prices may drop, but only at the cost of further monopolisation, this time on the national instead of regional scale.

Anti-trust law is a notoriously weak weapon to break up monopolies, since enforcement is contingent on the political appetite of whatever administration directs politics in Washington. Removing the exemption is positive, yet creating the conditions to expand the problem of monopolisation seems to neutralise the benefits.

The bad

Many emotional pleas and an equally large number of words have been delivered for and against the public option. Right-wingers point to it as the crux of the secret ``socialist'' plan, while honest liberals made it a litmus test for the utility of the bill. What emerged from the debate is a watered-down version of a public plan sabotaged by concessions made to a vocal right wing and paid for by campaign contributions to Democrats from the private insurance lobby.

Key to the watering-down was de-linking reimbursement rates from the Medicare schedule. Medicare operates as a price-fixed program where rates are negotiated into annual budgets through the legislature. These are, generally, significantly below rates in the private sector. The House bill version of the public plan will operate with rates determined by the marketplace. This means that the private sector will play a primary role in determining the cost structure in which the public plan will operate. This will end the deflationary effect a Medicare-compensation structure would have and may also mean, as the Congressional Budget Office has argued, that a public plan will be forced to offer more expensive plans than private insurers.

The weak public plan will have negative ripple effects inside the overall reform. The uninsured who can prove financial need, can now apply for “insurance credits” to purchase coverage. However, since the public plan may prove to be more expensive than private plans, it is likely that a significant amount of public subsidies will be funneled into the coffers of private health insurers. This fits with a larger pattern being developed by the administration of US President Barack Obama of funneling good public money into bad private sector businesses that have failed to meet the needs of the US people. The double problems of price inflation inside the plan and the issuance of insurance credits to private companies threaten to drive the already inflated price tag for the reform well past the estimated US$1.2 trillion.

The Ugly

In another act of right-wing sleight of hand, House Democrats shifted the mandate burden from the business community onto individuals. Republican Party pressure forced the ceiling on businesses mandated to provide insurance to their employees up to $500,000 in payroll. This will allow a significant swath of the businesses to be relieved of the burden of purchasing insurance.

Conversely, individuals will be forced by the government to carry some sort of health insurance. The penalty for not doing so will be a fine of 2.5% of your income. Continued non-payment and remaining uninsured will result in further fines and a possible jail term. This is a bonanza for private insurers, as millions will be forced into a new market for low-cost health insurance. Such plans are sure to skimp on coverage and run high on costs.

The site of the herding will be the new health insurance exchanges. This idea, championed by the conservative Heritage Foundation, will insure that market-based ideology frames the new health-care system. Rates will be determined, insurance offerings will be made and terms of care will be formulated here. All this with the continued logic of the marketplace where profits are a central concern and people’s health an afterthought.

Not socialism

None of the changes outlined above amount to socialism. Nor do they even signal the opening of a road which could lead to a socialist health care plan. The hope for genuine reform rests in the same place as it did before the bill was passed – in the certainty that the private sector will make such a mess of health care that the US people will be outraged enough to move towards socialising health care.

A single-payer plan would cut across the good, the bad and ugly of this round of health-care reform. Our health would cease to be a commodity and be guaranteed as a human right. Plenty of organising is needed to win a single-payer plan and, in the immediate term, we have plenty of myths to dispel about the wonders of small reforms.

[Billy Wharton is the co-chair of the Socialist Party USA and editor of The Socialist and the Socialist WebZine]

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Vote no on Obama-care!  Healthcare is our human right! Socialist Party USA statement


While citizens in most other industrialized nations enjoyed the benefits of publicly administered healthcare from the aftermath of WW II forward, Americans have suffered under a healthcare system dominated by private corporations. For-profit healthcare has produced negative health outcomes at all levels of the system. More than 48 million people have no health insurance, 30 million more are underinsured and 6 out of 10 Americans report that they have either delayed or deferred a necessary medical procedure in the last year. Americans are more than ready for publicly-run healthcare that guarantees access at all levels of the system.

Unfortunately, the bill recently passed by the House of Representatives, The Affordable Healthcare for America Act (HR 3962), and the proposals being considered by the Senate will not provide the relief Americans so desperately need. Instead, these reforms were shaped and, in some cases, authored by the very same private interests who have spent decades collecting massive profits by restricting access to care. As a presidential candidate, Barack Obama sensed the growing public anger about healthcare and scored many popularity points for promising “universal healthcare coverage.” Once in office, after taking millions from the healthcare lobby, his rhetoric shifted to the neoliberal promise of “choice and competition” in healthcare.

The primary problem with HR 3962 and the Senate proposals is that all of the changes they propose are made within a for-profit system. The House Bill strips the insurance companies of the right to deny coverage based on a pre-existing condition. Yet, it de-links the public option from Medicare reimbursement rates, thereby surrendering pricing to the private sector. The Bill removes the anti-trust exemption enjoyed by private insurers. However, it simultaneously mandates that all Americans carry some form of health insurance, thereby herding millions into low-coverage high-fee private plans. Each step in a positive direction is coupled with a restructuring that will enrich private insurance companies and pharmaceutical makers.

The bills lost further reform credentials as Democrats cut last minute deals with Republicans.  Immigrants were removed from eligibility for the public option, abortions were written out of the proposal and Medicare funding was cut. The Medicare cuts are particularly cruel, since they will reduce an already compromised plan to bare bones coverage. Some of the cuts will limit private insurance profiteering, but others will slash necessary items such as exercise programs for seniors. Overall, these omissions signal that the reforms are not about providing comprehensive medical coverage, but about political expediency within the establishment political class. The next round of negotiations in the Senate is sure to produce even further regressive measures as campaign-donation driven legislators cut more deals.

What people in this country need is healthcare. It is their right as human beings. The only way to secure this right is to place the healthcare system in public hands–-to remove the profit-motive from the system. Single-payer healthcare, as embodied in House Resolution 676, would be a positive step in this direction. It would provide universal access to care to all residents of the United States by abolishing private health insurance companies. In thirteen clearly written pages, HR 676 does the things the 1,990 page HR 3962 does not. Access to care is made universal, a framework is created to make bulk negotiations with hospitals and doctors and healthcare activists would be freed to set their sights on making the pharmaceutical industry public as well.

The Socialist Party USA therefore encourages its members and supporters to continue their work in the single-payer movement and to pressure elected representatives to vote “No” on the Senate proposal and, eventually, on the merged bill.  All non-violent forms of protest should be employed to prevent the passage of this legislation. The protests should clearly oppose the legislation. We do not want a stronger public option, we want what is rightfully ours–-unfettered access to healthcare services.

The passage of the weak and contradictory reform bills threaten to disgrace the notion that the public sector should play a prominent role in the administering of healthcare. Resisting the Obama, House and Senate proposals for reform not only promotes the idea that healthcare is a human right, it sends the message that people will not allow private sector campaign contributions to drive politics–-the satisfaction of our needs as humans should shape legislation.

Access to healthcare is our human right. We must build a movement to secure this right.

Say no to HR 3962! Say no to Obama Care! Yes to single-payer! Yes to a socialized medical system!

For more information contact natsec@socialistparty-usa.org


This article by Wharton is very clear, direct and simple. I wonder how you reach out to US families. It should reach every
I am going to circulate it in India. Many of the local Papers are projecting this bill as an achievement. The Hindu wrote an editorial. But it also wrote an editorial before that recommending UK model for India. But I am afraid India may under present regime, may adopt Obama model and destroy the present model which is not bad in so many ways. We have a chain of rural hospitals and the private sector is aiming to capture them, so also with rural government school system with its infrastructure.

For US it is a trillion dollor budget for for ten years for health but 7 trillion for military. As its global overlordship is declining , one wonders it may find the money for its social sector. It may be moving towards a period of Munroe doctrine.