The Crisis of American Healthcare

To say that the American healthcare system is criminally expensive and convoluted would be an understatement.

Earlier this year, the New York Times reported that 20% of people under the age of 65, although insured, have trouble paying medical bills. 75% of them reported that, as a result, they had had to cut back on household spending, and 63% of them used up all or most of their savings to pay a medical bill. In 2015, an average family of four had to shell out $24,671 for medical expenses. An ambulance ride costs $164 per mile, on average. An emergency room visit by itself could cost you around $1,233. The national average for a vaginal birth is now $8,775, and a c-section will set you back $11,525.At the same time, medical and healthcare professionals are relentlessly overworked. Nurses in the US often work shifts that can run as long as 24 to 36 hours. Only 16% of nurses in a national survey think they are adequately compensated. There is a chronic shortage of doctors, who spend an average of just 12 minutes per patient during appointments. Moreover, the for-profit system creates incentives for doctors to provide add-on services, often medically unnecessary, which leads to an estimated 210,000 patients dying each year due to medical errors.

This is the nightmarish scenario that millions of American workers are subjected to in the richest country on earth. How is it that a country with such enormous wealth and advanced medical technology provides the majority of its population with such appalling healthcare?

The need for a state provision of healthcare was recognized by many capitalist countries decades ago, especially during and after World War II. Western European countries such as Britain and France established their national healthcare systems in 1945. In the case of Britain, the National Health Service (NHS) was legislated in the aftermath of a massive Labour Party victory. In France, provision of healthcare by the state was adopted by the Provisional Government under the influence of the Communist and Socialist Parties, which had played a leading role in the resistance to Nazi occupation.

Photo: Azat Akhyarov

Even Franco’s Spain had a tax-funded obligatory health insurance scheme, begun in 1942, and expanded in 1984 into to a unified health system. Denmark’s renowned healthcare system has a long history of proletarian struggle behind it, going as far back as the late 1800s, but it began as state-subsidized health insurance scheme until it changed into a single-payer system in 1973. Japan implemented universal health coverage in 1961. And it goes without saying that the Stalinist states, despite their extreme flaws and mostly backward conditions, provided universal healthcare on the basis of their nationalized-planned economies.

All of this begs the question: why is the healthcare system in the US so chaotic and prohibitively expensive? The answer lies in the fact that the market, rather than state intervention, is the primary factor that shaped how healthcare is provided for the majority.

At the beginning of the 20th century, American workers spent only the equivalent of $100 on healthcare each year. This was because most of the time they could rarely afford a doctor, and used cheap and dubious potions to treat their diseases. If they did visit a hospital, it was most likely that they would die there. The advent of antibiotics and other medicines rapidly changed the role that hospitals played in medicine. Instead of a place of death, they became a place of treatment and distribution of medical products and services.

The working class and its mass organizations were the first to fight for healthcare for all. The Socialist Party, under Eugene Debs’s leadership, put out a demand for a compulsory healthcare system as early as 1904. A small group of academics who argued for a state-run healthcare system, known as The American Association for Labor Legislation, received thunderous support from workers, trade unionists, and women suffragists in 1919. Unfortunately, this demand, along with the movement behind it, was defeated by the ruling class during the first Red Scare. Some conservative legislators even fittingly branded the demand for universal healthcare as “Bolshevism.” The future of healthcare was left to the mercy of the market.

However, as medical care wasn’t as easy to sell as mass-produced commodities, hospitals had to figure out other ways to ensure a steady revenue and accumulation of capital. In 1929, the Baylor University Hospital in Dallas, Texas created a scheme whereby a group of public school teachers could pay a monthly premium to the hospital, and their subsequent visits to the hospitals would be free of charge. This model quickly became popular, and eventually, a health insurance company was founded based on it. The company’s name was Blue Cross, the precursor of today’s health insurance conglomerate, Blue Cross Blue Shield.

It wasn’t until World War II that private health insurance truly proliferated on the American market. During the war, private enterprises were under pressure to hire more people in order to produce for the war economy. Unlike their counterparts in Europe, where healthcare was statified, the US government provided tax exemptions and credits to companies in exchange for purchasing health insurance for their workers to attract more workers into their industries. This marked the beginning of employer-provided health insurance on a wide scale.

However, the workers could have halted this trend had it not been for the class-collaborationist labor leadership. There was a rank-and-file demand in the unions, especially in the industrial CIO, to fight for healthcare for all. The leadership of these unions initially took up the demand, but systematically discouraged rank-and-file participation in the campaign. Gradually, they began arguing that it was easier to bargain with individual employers for insurance rather than fighting for a national health insurance program. As the postwar boom gathered steam, and unionized workers won concessions from the bosses, including employer-provided healthcare, the pressure on the union leadership subsided and the movement for universal healthcare again fell by the wayside.

The companies that profit from the sale of health insurance and delivery of care services, known as Health Maintenance Organizations (HMOs), quickly tied the welfare of millions of American workers to the whim of the bourgeoisie under the government’s attempt to motivate corporations to administer healthcare, rather than placing it under state control. Between the 1940s and 1970s, the vast majority of health insurance enrollees were covered under industrialist Henry Kaiser’s HMO, known as the Kaiser system. 

The continuous expansion of American capitalism, coupled with conscious government encouragement, allowed a number of new HMOs to develop and thrive. In the 1970s, several major HMOs became for-profit and went public on the stock market. They quickly ran into a crisis of overproduction, resulting in the “HMO bust” from 1987 to 1990. This led to increasing concentration of the HMO industry, putting a large portion of American working class at risk, as they could easily be refused coverage by the HMOs if they were not covered by their employer’s plan.

The “market-based” solution to healthcare pursued by the US government had a formative effect on how medical facilities are run in the US. The passage of Medicare and Medicaid in 1966 offered federal reimbursements to hospitals caring for patients of age 65 or older, or deemed “medically indigent” by the state. This qualitatively pivoted the way medicine and public health developed in the US. The AFL-CIO participated in the campaign for Medicare, but its participants were primarily retirees rather than active workers. Medicare to this day remains the primary single-payer health insurance provider in the US. While it was indeed a byproduct of progressive struggles in the 1960s, just as all positive reforms, it falls short of being a comprehensive system for all, and remains heavily reliant on the fluctuations and anarchy of the medical market.

With the rising costs of constantly improving technology, the financial incentives provided by Medicare drove most privately owned hospitals to create a variety of business models to game the system. This led to the practice of creating a variety of medical services that can be mass produced and sold repeatedly to elderly patients. Hospitals became increasingly profit-driven—even non-profits. Physician-owned specialist clinics centered on lucrative fields like orthopedics, surgery, and cardiology also began to rise. Less profitable departments and disciplines were sidelined, then shut down. Starting in the 1980s, a process of centralization began in which hospitals were closed or absorbed in a wave of hospital mergers that continued into the 1990s. In 1996 alone, as many as 768 hospitals were involved in 235 merger deals.

As a result of the overgrowth and monopolization of for-profit hospital systems focused on the most profitable services, American workers increasingly came to rely on community hospitals for other necessary treatments. In the late 1980s, a grassroots movement for a single-payer system began to emerge in the unions, in conjunction with the Gray Panthers, the Consumers’ Union, as well as mental and public health groups. A group called Citizen Action, which includes members of the CWA and ILGWU, managed to send one million postcards to the White House demanding a single-payer system. However, major unions like AFSCME and the UAW opposed this campaign to avoid antagonizing the Clinton administration. Once again, major union leaders convinced the rank and file that they needed to work from “within the system” in order to achieve their goals—a grave mistake that opened the way to a massive assault by the Clinton administration against healthcare access.

In 1997, Bill Clinton introduced the Balanced Budget Act which cut federal funding to Medicare, further accelerating the marketization process. Community hospitals providing complex but less profitable services were forced to find ways to generate revenues and cut costs, resulting in as many as a third of US hospitals failing financially, while another third were thrown into financial precarity. This led to layoffs, overworked staff, artificial increases in patient turnover, and price hikes, as hospitals devised ways to bill more services to patients’ HMOs.

The law dictates that each state administer Medicaid fund provided by the federal government. However, every state has differing standards for who qualifies as “medically indigent,” and the level of commitment that the state has to the Medicaid program. This results in all sorts of inequalities and complications that are completely nonsensical, placing the health of millions at risk. By 2006, 44 million Americans had no healthcare and those who had it had to pay absurd amounts out of pocket for decreasing quality of care. Incredibly, the US spent 83% more per capita on healthcare than Canada, which has government-provided universal coverage. Where those billions of dollars went is no mystery: they went to line the pockets of the shareholders and executive officers of the HMOs, hospitals, pharmaceutical, and medical device corporations.

This dysfunctional mess, which uses public money to subsidize private profits, could only be resolved through a single-payer, socialized healthcare system. However, the Affordable Care Act, more well-known as Obamacare, is in fact a repetition of the same approach of using market-based solutions to patch up the growing problems resulting from marketized healthcare. The most abjectly poor gained access to expanded Medicaid coverage, while the insurance premiums of millions of others were subsidized by government handouts to the HMOs. As if there weren’t enough for both advocates of a single-payer system and enemies of the poor to hate, it also imposes a tax penalty for anyone not purchasing coverage.

While the program did initially allow more people to purchase health insurance, it immediately faced the problem of implementation. Nearly half the states continue to resist expanding Medicaid, leaving millions uninsured who make “too much” money according to their state’s ridiculously low poverty line to qualify them for Medicaid, but still cannot afford even the lowest grade of insurance offered by the Obamacare “exchanges.” The White House itself pointed out that there are 4.3 million people in this situation, but was content to simply point fingers at the states rather than doing anything to remedy the situation.

More importantly, this legislation not only fails to address the contradictions existing in hospital systems and the continuous pressure to raise prices, it also relies on the major HMOs to cooperate by joining in the state exchanges. Since it does not own or control these entities, the only way it can compel them to do so is to entice them with the prospect of juicy profits at the public expense. Earlier this year, major HMO Aetna  announced that they are no longer participating in the exchanges, citing financial losses. If more large HMOs follow suit, the exchanges would have no policies to sell and costs per patient would rise even further.

The government response was to announce massive increases in Obamacare premiums starting in 2017, by an average of 22%. Immediately, over 1.6 million people dropped out of the plan because they could no longer afford it. Those who are still able to buy the lower tier health insurance through Obamacare will have to pay a $3,500 to $6,000 deductible when they do visit the hospital—this at a time when only 37% of Americans have the $500-$1,000 in savings required to cover an emergency medical bill. The Affordable Care Act at this point is decidedly unaffordable. No wonder Trump was able to demagogically play on Americans’ discontent with Obama’s signature legislation.

However, whatever Trump and the Republicans come up with can only be even worse than Obamacare. Their aim is “Robin Hood in Reverse”—public subsidies to big business while cutting support from the poor. Support for a socialized national healthcare system is widespread and could be easily achieved by simply expanding Medicare and Medicaid into a universal, single-payer system. In 2009, legislation HR 676, also known as Expanded and Improved Medicare for All Act, was endorsed by 561 union organizations in 49 states, including 130 Central Labor Councils and Area Labor Federations, as well as 39 state AFL-CIOs. However, the labor leadership did not mobilize the working class or threaten strike action to compel its approval, and its fate was left to a handful of Democratic Party cosponsors. It remains stuck in congressional limbo to this day.

The problems with US healthcare are wide-ranging but the fundamental problem is simple: it is a for-profit system, not a healthcare system. But even if we achieve a single-payer system, on the basis of capitalism, it inevitably would go into crisis along with the rest of the economy. We’ve seen this repeatedly in European countries that have single-payer systems as they are forced to slash public health expenditures as part of the austerity programs demanded by the crisis of the system, and the complete failure of reformists to combat this trend. This is why the only lasting solution is to nationalize the key levers of the economy, including all aspects of healthcare provision, to be run democratically under workers’ and public control.