Obamacare Puts Squeeze on Working People

For Socialized Medicine—Quality Health Care for All!

News coverage of the botched rollout of President Obama’s Affordable Care Act (ACA) initially focused on the government’s virtually unusable Web site. But the headlines soon shifted to a bigger story: insurance companies canceling millions of families’ policies. So far, some 4.8 million people who do not get coverage through their employers have received cancellation notices because their plans do not conform to the ACA. Many are being forced to accept policies that impose much higher premiums and out-of-pocket medical costs for inferior coverage.

Obama repeatedly promised: “If you like your health plan, you will be able to keep your health plan.” In fact, the administration knew from the start that this was false. Though it was practically unreported in the press, the administration estimated as far back as June 2010 that up to two-thirds of privately purchased insurance policies would get canceled when the ACA was introduced. On November 7, Obama apologized to those losing their coverage despite “assurances they got from me.” He insisted that the problem would impact only “about 5 percent of the population who are in what’s called the individual market.”

That new promise by the president is just as false as the previous one. A major component of Obamacare is the drive to scale back employer-paid health plans, which provide health insurance for 156 million people—more than half of the population. By the administration’s own estimate, as many as 80 percent of small-employer plans and 64 percent of large-employer plans could be canceled as a result of the Affordable Care Act (Federal Register, 17 June 2010).

When working people got a measure of decent health coverage through employer-paid plans, it was the fruit of hard class struggle by this country’s industrial unions. The years-long attack on those plans is reflected in the increasing medical costs that workers are obliged to pay. Since the financial crisis began six years ago, average family premiums have grown by over 25 percent. The efforts to water down employer-funded health plans are of a piece with the drive initiated under the Ronald Reagan presidency to replace defined-benefit pension plans with 401(k) accounts, to which the bosses make only minimal contributions.

In our previous article on Obamacare (“U.S. Rulers Intensify War on Workers, Poor,” WV No. 1031, 4 October), we laid out several ways that the ACA further undermines company health plans. One key provision is the tax on so-called “Cadillac” plans, which actually comprise up to three-quarters of all employer-paid plans. An economist who helped draft the ACA called the tax “one of the most significant provisions” of the law (New York Times, 27 May). Companies—as well as local and state government agencies—are putting unions under intense pressure to accept whittled-down health benefits before the tax goes into effect in 2018.

The Obama administration has trumpeted the fact that, with the expansion of Medicaid, millions of currently uninsured poor people will have access to health insurance under the ACA. As is traditional in racist capitalist America, even that improvement is being denied to many black people and others on the bottom. Since the Supreme Court gave the green light, a total of 26 states—including every state of the former Confederacy except Arkansas—have rejected the expansion of Medicaid, which was supposed to help finance the extension of coverage to the poorest layers of society. Those states are home to more than two-thirds of the poor blacks and single mothers nationwide who lack insurance. A Mississippi doctor pointed to the legacy of segregation: “If you look at the history of Mississippi, politicians have used race to oppose minimum wage, Head Start, all these social programs. It’s a tactic that appeals to people who would rather suffer themselves than see a black person benefit” (New York Times, 2 October).

The low-cost insurance plans obtainable under the ACA require such high out-of-pocket payments in the form of copayments and deductibles that many of those covered will still not be able to afford doctor’s examinations or medical tests. In reality, these so-called “bronze” plans offer little more than catastrophic care insurance: If you run up major hospital bills, you will be much less likely to lose everything in bankruptcy than is now the case. In opposing the ACA from the outset, we noted that “Obama invokes the plight of the uninsured, with promises of a level of care not much above a pledge to pick up the dead bodies” (“For Socialized Medicine!” WV No. 943, 25 September 2009). With the population mandated to purchase coverage, the insurance companies expect to collect an additional annual bonanza of $60 billion.

Access to health care should be an elementary right for everyone, not just those who can pay for the highly advanced care that can be found in the U.S. The allocation of skilled personnel, medical facilities, equipment and medicines entails a cost to society. That cost should be borne not by individuals out of pocket but by the government. At the point of delivery of health care, the service should be free of charge. The U.S. government throws plenty of money—collected through taxes—at its police, prisons, army and other repressive state institutions to protect capitalist profits and rule. But it will take fierce class struggle for workers to win even a modicum of the quality health care everyone needs. This requires fighting the class-collaborationist outlook of the trade-union bureaucrats, who have acceded to countless givebacks in the service of capitalist profitability. The labor traitors went all out to help ensure passage of the ACA, whatever their current misgivings about the “reform.”

Under the capitalist system, fully satisfying basic human necessities—including good education, decent housing and stable, well-paid jobs—inevitably runs up against the drive by corporations to generate profits. For the capitalist bosses of the U.S. insurance giants and pharmaceutical companies, health care is essentially a commodity trade in human lives. These parasites should be expropriated, a task that points straight to the need to overturn the capitalist order through socialist revolution. To achieve this goal requires forging a workers party that champions the cause of all the exploited and oppressed.

Socialism and Health Care

That the U.S. is the only major industrialized country in the world without a national health care program is, in large part, testimony to how successfully America’s rulers have wielded anti-black racism and anti-immigrant nativism to divide and weaken the working class and its struggles. Those divisions have been a major roadblock to the development of elementary class consciousness—that is, the understanding that the multiracial proletariat has distinct class interests that require political expression in its own party. In Europe, the rise of mass workers parties beginning in the late 19th century went side by side with the introduction of national health care.

Europe’s first compulsory social health insurance program was introduced in Germany by Chancellor Otto von Bismarck. A major concern of the “Iron Chancellor” and his advisers was to avoid any repeat in Germany of the 1871 Paris Commune, when the French workers briefly seized power during the Franco-Prussian War. In 1883, shortly after passing the Anti-Socialism Laws to squash the German Social Democratic Party, Bismarck introduced the Health Insurance Act. Bismarck declared that government policy “cannot be expressed simply by the repression of Social Democratic excesses, but that this must be accompanied by the positive enhancement of the workers” (Vicente Navarro, “Why Some Countries Have National Health Insurance, Others Have National Health Services, and the U.S. Has Neither,” Social Science and Medicine, 1989).

Insurance plans soon spread to Austria (1888), Hungary (1891), Luxembourg (1901), Norway (1909) and Serbia (1910) after social-democratic parties had been established in most of those countries. In Russia, where the tsarist regime had survived workers revolution in 1905, state insurance was introduced in 1912 during a period of explosive strike battles and spreading influence of the Bolsheviks and Mensheviks. The outbreak of World War I split the workers movement between the social-democratic parties that supported the war effort of their own capitalist ruling classes and revolutionary elements and organizations, prominently including the Bolsheviks, that opposed all sides in this interimperialist conflict.

In October 1917, the Bolsheviks led the working class in seizing state power. As reported in John Reed’s Ten Days That Shook the World (1919), one of the Soviet government’s early decrees, issued months before the expropriation of capitalist industry, declared:

“The Workers’ and Peasants’ Government, relying upon the support of the Soviets of Workers’, Soldiers’ and Peasants’ Deputies, announces to the working-class of Russia and to the town and village poor, that it will immediately prepare laws on Social Insurance based on the formulas proposed by the Labour organisations:

“1. Insurance for all wage-workers without exception, as well as for all urban and rural poor.

“2. Insurance to cover all categories of loss of working capacity, such as illness, infirmities, old age, childbirth, widowhood, orphanage, and unemployment.

“3. All the costs of insurance to be charged to employers.

“4. Compensation of at least full wages in all loss of working capacity and unemployment.

“5. Complete workers’ self-government of all Insurance institutions.”

The subsequent development of a collectivized, planned economy assured access to health care for all. This gain remained despite the degeneration of the October Revolution under the rule of the Stalinist bureaucracy. Workers in the Soviet Union had guaranteed health care, housing and jobs up until the workers state was destroyed through capitalist counterrevolution in 1991-92. The value of the collectivized economy can be seen today in the Cuban deformed workers state, where despite an imperialist embargo and limited resources, health care outshines in many respects what is generally available in the U.S.

Nationalized health systems introduced in capitalist West Europe following World War II were themselves a response to the appeal the Soviet Union held for militant workers. The USSR, and by extension the mass Communist parties in capitalist Europe, gained enormous authority for having borne the brunt of the fighting to defeat the Nazi armies. As a wave of working-class militancy swept the continent, the capitalist rulers were willing to surrender a portion of their profits and grant social benefits in order to contain the powerful workers movements and prevent them from going further in a revolutionary direction.

In Britain, the Labour Party government under Clement Attlee instituted the National Health Service (NHS) in 1948. Even at its best, the NHS did not provide adequate care for the needs of the population. But the legal obligation for the state to provide universal health care, free to everyone at the point of delivery, was one of the most significant gains ever won by working people from British capitalism. Attempts by the British bourgeoisie to roll back that gain by privatizing health care repeatedly ran up against massive popular opposition. It was the Labour government of Tony Blair, using plans hatched in the 1980s under Conservative prime minister Margaret Thatcher, that succeeded in introducing the first significant measures opening the NHS to the penetration of private capital and the generation of corporate profits. That set the stage for the substantial shift of medical care toward the private sector under current Conservative prime minister David Cameron (see “Britain: Nationalized Health Care Under Attack,” WV No. 1023, 3 May).

Class, Race and American Medicine

In the U.S., the campaign in the early 20th century for government-organized health insurance was spearheaded by the bourgeois Progressives. The high point of the Progressive Era was the presidential election of 1912, when the Progressives bolted from the Republican Party and nominated former president Theodore Roosevelt. Roosevelt supported government health insurance on the basis that no country could lord it over other nations if its people were in poor health, i.e., the rank and file of the armed forces had to be in shape to project U.S. military might around the world.

Nevertheless, the campaign for state insurance was defeated by an alliance of capitalists seeking to lower wages and benefits, insurance companies reaping cash from insecurity and fear, pharmaceutical companies hungering for profits and doctors in the American Medical Association (AMA) defending their incomes and social status. Lacking their own class party, workers were led by the likes of American Federation of Labor president Samuel Gompers, who denounced compulsory health insurance. This stalwart of U.S. capitalism (who also opposed legislation for the eight-hour day, the minimum wage and unemployment insurance) hypocritically intoned that government-paid health care would stand in the way of the workers struggling “for their own emancipation through their own efforts”!

In the 1930s, the issue of state-sponsored health insurance arose again in response to the working-class upsurge that led to the creation of the mass, integrated industrial unions of the CIO. President Franklin Delano Roosevelt sought to head off class struggle and the deepening leftist political radicalization by proposing a New Deal of palliative reforms. The racist Dixiecrats, who controlled the Democratic Party in the South and had a stranglehold in Congress, imposed a veto on any government intrusion in the health care system because they feared that it could ultimately threaten Jim Crow segregation of Southern hospitals and other health care services. The Dixiecrats did not block FDR’s social security program, though they insisted that the mostly black agricultural and domestic workforce be excluded from its benefits. However, national health insurance did not survive the final draft of the 1935 Social Security Act.

The sharp class battles in the 1930s created an opening to form an independent workers party in the U.S. But that potential was stymied by the Communist Party and social democrats who used their influence in the CIO unions to help channel the workers’ upsurge into support for FDR’s Democratic Party. The working class has paid for this class-collaborationist alliance ever since.

Following World War II, a massive strike wave broke out. When the United Mine Workers (UMW) walked off the job in 1946 demanding employer-funded health care benefits, Democratic president Harry Truman seized the mines and ordered striking miners back to work. They refused. The nationwide strike ended when Truman agreed to endorse the miners’ demand for lifetime health benefits. In 1947, Congress passed the slave-labor Taft-Hartley law, which specifically forbade company-funded welfare plans directly controlled by the unions. When the miners struck again in 1950 in defiance of government threats, they won an unprecedented cradle-to-grave union-controlled health plan. Miners paid a big price for their victory: UMW head John L. Lewis made a deal with the coal bosses not to protest the loss of thousands of jobs to mechanization. Nevertheless, the miners opened the way for the United Auto Workers and other unions to win health benefits, helping lay the basis for the employer-funded health plans that today are under attack.

While the bourgeoisie’s ongoing class battle with the miners was playing out, Truman’s platform for the 1948 presidential election included a proposal for national health insurance. Truman’s electoral promises soon foundered in the sweeping tide of anti-Communist witchhunting, as the AMA mounted what was at the time the most expensive lobbying effort in American history to stop this “creeping socialism.” Congressional Republicans denounced “socialized medicine” as a communist-inspired assault on personal freedoms, sounding a theme that has been taken up by today’s Tea Party yahoos as they fulminate against Obamacare.

Wall Street Bullish on Obamacare

The neo-Confederates of the Tea Party are part of a long tradition of right-wing demagogues railing against “big government.” That is coded language for a call to ax social programs portrayed as a “redistribution” of income from hard-working folks to “undeserving” blacks and immigrants. Ironically, as the media increasingly reports on—and Republicans seize upon—examples of families overwhelmed by increased insurance costs, liberal backers of Obama’s health plan are putting forward their own version of the redistribution theme. For example, columnist John Harwood argued in the New York Times (23 November) that “the redistribution of wealth has always been a central feature of the law” because some must pay higher insurance costs so that coverage can be extended to those with pre-existing medical conditions and others who suffered discrimination at the hands of the insurance companies.

Some working people have bought in to that reasoning, which feeds on the populist notion that “we’re all in this together.” In our recent subscription drive, comrades encountered unionized black workers in the South who were willing to take a hit on their health care costs—to pay their “fair share”—if it meant that their impoverished relatives might see an improvement in their conditions. In those Southern Republican-controlled states, this sentiment is reinforced by a sense of racial solidarity with the president, particularly as the ACA comes under attack from overt racists. In reality, the fundamental problem in medical care is the obscenely rich owners of the insurance, pharmaceutical and other health care corporations who prey upon the working people and poor.

Almost 20 percent of the entire economic output of the U.S. goes to pay for health care, about twice the level of spending in most industrialized countries. Yet that enormous expenditure does not come close to resulting in a corresponding level of health and welfare of the population. A study by the Institute of Medicine in January compared the health of the U.S. population to that in other economically advanced countries. Americans fared worse in a broad range of categories, including infant mortality, heart disease, chronic lung disease, HIV/AIDS infection, obesity and diabetes. Not surprisingly, life expectancy in the U.S. is lower than in all other advanced industrial countries, and that gap continues to grow.

Like all businesses, for-profit health care companies exist to generate the maximum possible return on their owners’ investments. In that regard, those corporations have been spectacularly successful. They are raking in such fabulous profits that the S&P stock index for the health care sector is up 38 percent this year, more than for any other sector of the economy. Big investors are definitely bullish on Obamacare.

A valuable window into the parasitic dealings of this industry was provided by investigative journalist Steven Brill in a Time (20 February) cover story. Brill noted: “When medical care becomes a matter of life and death, the money demanded by the health care ecosystem reaches a wholly different order of magnitude, churning out reams of bills to people who can’t focus on them, let alone pay them.” He documented cases of hospitals charging patients two and a half times the purchase price of an implantable device, $77 for a box of gauze pads and $1,200 per hour for nursing services. As for the pharmaceutical industry, Michael Moore’s 2007 documentary movie Sicko showed a woman in Cuba paying a nickel for the same inhaler that in the U.S. cost $120.

Make no mistake: When the capitalist rulers speak of cutting health care costs, they are not referring to the elimination of such obscene examples of the heartless exploitation of working people’s suffering. In the interest of swelling profits, the bourgeoisie means to further slash the medical care that is provided to the working population. As the New York Times (27 May) put it, companies that are cutting health benefits “are right in line with the administration’s plan: To encourage employers to move away from plans that insulate workers from the cost of care and often lead to excessive procedures and tests.”

That same logic is fueling the drive to cap Medicaid spending by turning millions of recipients over to private “managed-care organizations.” Those outfits are typically paid a fixed sum for providing (grossly inadequate) care. Since 2000, the number of Medicaid enrollees covered by managed care has increased from 19 million to 30 million and now accounts for some 40 percent of beneficiaries.

Growing popular anger at the Wall Street and health insurance robber barons has helped fuel the rise of a number of liberal Democratic Party politicians, such as New York City mayor-elect Bill de Blasio and Massachusetts Senator Elizabeth Warren. Playing the populist card, they reinforce the illusion that the system can be made to work for the little guy. Of course, when the Republican Party revels in union-bashing as well as racist, anti-woman, anti-immigrant reaction, it is easy for a Democrat to appear as the lesser evil. This is despite the fact that “illegal” immigrants and their families are excluded from the ACA, which also will not put a dollar toward abortion services. And that many poorer people who find themselves shelling out more for health care are seeing their food stamp benefits cut by bipartisan agreement.

Populist nostrums help obscure the fundamental class divide between the capitalists—the coterie of families who own the banks and means of production, such as the factories and mines—and the working class, whose labor is the source of the capitalists’ profits. As such, the working class is the only force with the potential power and historic interest to sweep away the capitalist system. The interest of the capitalist class in the health of the population comes down to maintaining a workforce fit enough to be exploited and to fight in their imperialist wars. To put the immense wealth generated by the labor of working people at the service of human need will require the expropriation of the bourgeoisie through workers revolution and the establishment of a workers state as part of a socialist world.