HEALTHCARE SPECIAL: Corporate America and Healthcare Reform

For U.S. CEOs who pride themselves on the all-out pursuit of the self-interest of their firms, fundamental health-care reform would seem to be as urgent as putting out flames burning up cash in their office vaults. U.S. health costs are double those of any comparable advanced nation while the health system delivers low-quality results by almost every measure. 

But a substantial segment of businesses has responded by invoking “free-market ideology” and resisting reform of any shape. This hard-line stance is also shared by private insurers, pharmaceutical firms, hospital chains, and other elements of the medical-industrial complex that have the most to lose if fundamental reform is enacted. The most politically influential component of corporate America, the massive, “borderless” transnational corporation, has shown relatively little commitment to health-care reform.  

At the state level, where reform battles will chiefly be fought, leading CEOs and business groups are generally remaining intransigent against reform. These executives and business associations seem bent on committing “economic suicide,” says an exasperated Jack Lohman, retired CEO of a Wisconsin medical-services firm. “Free-market health care is the biggest enemy of free-market businesses in Wisconsin,” says Lohman. 

Globalization adds to the complexity of the health-care debate among business CEOs. Some executives recognize that the burden of health-care costs makes their products and services uncompetitive in global markets. “Wisconsin pays so much more than other states, and then on top of that, we’re competing with national economies that have lower costs and better results,” says Paul Linzmeyer, president of Bay Towel Inc. in Green Bay, Wisconsin. 

The hard-right ideology of groups like Wisconsin Manufacturers and Commerce (WMC) coincides neatly with the self-interest of private health insurers clinging to their role as parasitic middlemen, pharmaceutical firms resisting negotiated pricing of drugs, and hospital chains seeking unrestrained expansion of their empires. 

While Lohman and a handful of other leading business- people have openly split with the WMC and publicly advocated some version of reform akin to Canada’s single-payer plan, it is WMC’s leaders who make the legal payoffs to political candidates that have long produced the payoff of excluding reform from the state’s agenda. 

Timid Steps at National Level 

At the national level, corporate America has taken some timid steps toward reform. Joining in coalition with Service Employees International Union and Families USA have been such unlikely bedfellows—the U.S. Chamber of Commerce, Wal-Mart, and other long-time foes of reform— who now publicly state their support of universal coverage within the next five years. 

Certainly, this is a welcome step away from opposition to reform that has long characterized the top echelons of U.S. business. This resistance softened in the early 1990s, but hardened again when increasingly hard-line corporate leaders: (a) embraced “managed care” as a cure-all for health costs; and (b) came to fear that the Democrats health-care reform would keep Republicans out of power for decades, as neoconservative leader William Kristol warned.  

But the new set of pro-reform proclamations by CEOs have been constrained, voicing a vague version of reform, whose specifics would be worked out later. They have hardly been an oath written in blood. The specific contours of the reformed system—most especially if it will continue to be dominated at its heart by private insurers—have not been addressed. 

Yet it is difficult to seriously discuss reform without confronting the question of who will control the system. If private insurers remain at the helm of a nominally “universal” system, their administrative overhead and profits will continue to unleash spiraling costs and soaring premiums; universality thereby figures to be short-lived. As Dr. Marcia Angell of Harvard Medical School states, the goals of universal coverage and cost controls are inextricably linked: “Though well-intentioned, plans like these [Massachusetts and California] all have the same fatal flaw. They offer no workable mechanism to control costs, mainly because they leave the private insurance industry in place. Yet, soaring costs are the fundamental problem; lack of coverage follows from that.” 

Further, the recent statements by national business leaders have not been commensurate with the scope and urgency of the crisis of healthcare in the U.S., where 47 million are uninsured. As outlined recently in the Commonwealth Fund report, “Mirror, Mirror on the Wall: An International Update on the Performance of American Health Care,” the reflection is downright gruesome. The U.S. pays twice what other advanced nations do for healthcare, yet ranks only 37th in terms of overall health outcomes such as infant mortality and life expectancy. The U.S. also ranks low on the number of patient visits and the length of hospital stays, contrary to right-wing ideologues who insist that higher U.S.-style co-payments will deter frivolous “over-use” of the system. The U.S., despite its vaunted technology, earns low grades even on the effective use of information technology needed to share patient records and improve quality. 

With a steady drumbeat of well-documented flaws, growing public complaints, and soaring premiums, elements of corporate America have felt obligated to speak out in favor of “reform.” But even as Wal-Mart CEO Lee Scott speaks vaguely for universal healthcare, secret Wal-Mart memos show that the company is trying to force out older workers with health problems, by assigning them onerous tasks. 

The most tangible concrete step thus far has been the passage of a notably non-viable plan in Massachusetts requiring moderate-income individuals to purchase insurance. Labeled a “fraud” by Dr. Steffie Woolhandler of the Physicians for a National Health Program, many of the program’s supposed beneficiaries will continue to be unable to afford insurance, just as they are currently, she says. 

Single payer: Disqualified From Debate By Elites 

In California, Governor Schwarzenegger vetoed a single-payer plan, which would have supplanted the private insurance industry with a state agency and slashed administrative costs by an estimated $12 billion annually. But the veto of a health-care model proven successful in numerous nations captured barely a mention from major corporate media. Instead, Schwarzenegger was hailed as a progressive innovator when he proposed a plan to provide coverage by subsidizing private insurers. 

As it did during the 1992-94 public debate over health care, the mainstream corporate media have largely disqualified the single-payer model from serious consideration despite strong support in the general public and even in the medical profession. For example, a 2005 Business Week poll found that “67 percent of all Americans think it’s a good idea to guarantee healthcare for all U.S. citizens, as Canada and Britain do, with just 27 percent dissenting.” Further, the Minnesota Medical Society released a study in February showing 64 percent of Minnesota doctors favoring a single-payer system. 

The notion of uprooting private insurers from their central role in healthcare is largely dismissed by policy-making elites, including liberals like SEIU President Andy Stern. But with private insurers running healthcare, there is no effective mechanism for controlling costs that would keep a system of universal care financially viable. As economist Dean Baker put it (Common Dreams.org), “Basically, anyone who is not serious about controlling health-care costs is not serious about providing universal coverage. It’s that simple.” 

Between the detachment and resistance of a significant chunk of corporate executives, genuine reform is moving at a snail’s pace at both the state and national levels. One traditional segment of business, active in state-level politics, is maintaining its decades-old opposition to any reform that would require companies to make payments for “socialized” healthcare. Their almost-suicidal intransigence largely drown out business leaders arguing that healthcare reform is essential for their competitiveness. 

A newer element is the role of large transnational corporations like the automakers who felt a strong self-interest in a national health plan in the early 1990s. But with an ever-growing share of their workforce and markets located overseas, transnationals seem disconnected from the fate of health reform in the U.S. With a mounting share of their profits derived from overseas operations and often stashed in offshore tax havens, they have felt little motivation to promote health-care reform that would require them to shell out more taxes toward solving the health problems of a nation from whose conditions they are increasingly remote. 

The U.S. auto industry, despite its allegedly parlous condition, appears to fit this description. “The stock prices of GM and Ford have been depressed because of long-suffering North American operations, but the companies’ earnings are increasingly international,” William J. Holstein reports in the New York Times. “Among the Dow industrials, the stock of GM was the second-best performer in the second quarter, after Intel’s.” 

Withdrawal From Health Debate 

Rather than press for national healthcare in the U.S., the automakers are pursuing a strategy of slashing their domestic workforce to less than one-fifth of its level of 400,000 in 1990 and developing trust funds to lower health costs for their remaining workers and retirees in America. The latest GM contract with the United Auto Workers, reached in late September, addresses the health-care issue through the pact’s “main feature—a health-care trust called a voluntary employee benefit association, or VEBA— [which] means that GM will no longer have to carry the debt it will owe for employee and retiree health care benefits on its books,” the NY Times reported.  

The Times called this provision “a momentous step toward eliminating much of that burden, a step likely to be followed by Ford Motor and Chrysler.” Further, “The American auto- makers will no longer have the excuse that their health care burden is a barrier to successfully battling Japanese auto companies in the United States.” As a hollow concession to the UAW’s pressure for company support for a single-payer system, GM agreed to provide $15 million for a commission. This figures to produce yet another report, in addition to all those previous commissions whose recommendations for universal healthcare have been ignored, to study solutions for health-care costs. Meanwhile, GM has failed to reiterate its previous support for single-payer reform (NY Times). 

At the same time, GM will continue to dump another burden—more U.S. workers—with as many as 13 plant closings over the next four years. This is on top of the more than 320,000 lost U.S. jobs and the shift of many of them to Mexico and China, where employer obligations on health benefits are nonexistent.  

While publicly stating that the Canadian single-payer system has provided quality healthcare and held down costs in that country, GM, Ford, and Chrysler have seemingly spent virtually no political capital—whether lobbying the president or seeking to influence state business lobbies, much less advertising dollars to aggressively promote reform—in fighting for a similar system in the U.S. 

The auto firms were not absent due to some inexplicable oversight. As Morton Mintz noted in his superb “Single-Payer is Good for Business” piece in the Nation, two of GM’s 11 board members are drawn from the pharmaceutical industry. Next to private insurers, Big Pharma has the most to lose from a national health plan that would feature direct negotiations between the government and drug companies over prices, as occurs in virtually every other advanced nation. Thus, GM’s board contains many decision-makers whose primary commitment is to resisting fundamental health reform at any cost, regardless of the enormous toll that U.S. health costs take every hour on GM’s bottom line. It no longer supports a single-payer system, as it did in the early 1990s under CEO  Jack Smith.     

While the U.S.-based auto firms have been shedding U.S. workers in huge numbers, they have continued to aggressively expand overseas in low-wage nations. General Motors and its subsidiaries have long been Mexico’s biggest private employer. This spring, GM announced plans to increase its investment in India to $750 million, with CEO Rick Wagoner noting that Indian manufacturing costs are already “extremely competitive and among the lowest in the world.” But the GM CEO claimed that this is “not just due to lower wage rates” but also, rather implausibly, to the Indians’ thriftiness. 

On the contrary, it is the Indian government’s enormous generosity with tax breaks—not some innate rupee-pinching—that has whetted GM’s interest. As the International Herald Tribune revealed, “The Indian government has been pushing to turn the country into a new low-cost car manufacturing center in Asia through tax incentives and other measures.” 

China, with its combination of a high repression/low-wage economy, has also become a magnet for a wide array of U.S. corporations seeking cheap labor across the entire spectrum of the production process, from assemblyline workers to highly-trained engineers. While wages in mostly U.S.-owned “maquiladora” plants just inside Mexico average less than 10 percent of the stagnant average factory wage in the U.S., China offers an even bigger low-wage bonanza. According to calculations by economist Jeff Faux, manufacturing wages in China average just 3 percent of U.S. wages. 

The spread of U.S. jobs to such low-wage sites as Mexico, China, and India reflects a powerful, constantly-reinforced ideology of “free trade” which argues in essence that corporations can no longer afford the longstanding “social contract” between U.S. employers and their workers and home communities. “There is no job that is America’s God- given right anymore,” Hewlett-Packard CEO Carly Fiorina regally announced. “We have to compete for jobs.” 

More than two-thirds of what U.S. corporations sell overseas now actually originates from their plants located abroad. As the New York Times’ Louis Uchitelle reported U.S.-based corporations’ “overseas sales, which have risen to more than $2.2 trillion annually in recent years, dwarf the nation’s exports of roughly $1 trillion.” While the output of overseas U.S. plants has nearly tripled in the past 15 years, exports from U.S.-located factories have grown much more slowly. 

Despite America’s spiraling trade deficit, which hit $763.3 billion in 2006 ($232.5 billion with China alone), neither transnational corporations nor the Bush White House seem particularly alarmed by the trade imbalance. Informed observers “conclude record trade deficits aren’t as threatening as they appear, because they are being driven in part by increasingly profitable U.S. companies producing [outside the U.S.] and shipping their goods and services back to the U.S., [thereby serving] to keep overall corporate profits strong,” the Wall Street Journal states. “Earnings overseas account for 40 percent of the profit growth for all corporations.” 

The highly-profitable “outsourcing” phenomenon is both rapidly accelerating and climbing up the occupational ladder. “Just as with the move of manufacturing overseas, you’re going to see an increasing flux of technical jobs out of the U.S. We don’t have any protected domains anymore,” Intel Corp. Chief Operating Officer Craig R. Barrett told  Business Week. 

The projected loss of white-collar professional jobs due to outsourcing is staggering: Princeton economist and former Federal Reserve Board member Alan Blinder, who describes himself as a “free trader down to my toes,” believes that up to 42 million professional jobs are “highly out-sourceable” (Wall Street Journal ). 

No longer is it simply low-end “call-center” and manufacturing jobs at risk, says Blinder. Large numbers of actuaries, film and video editors, medical transcriptionists, accountants, microbiologists, and most ironically, financial analysts and economists—who have been vocal and influential backers of “free trade”—now find their highly-skilled jobs on the endangered species list because replacements can be found in China, India, or Russia for as little as 20 percent of their cost in the U.S. 

Free-market Fundamentalism At Work 

As with the outsourcing of U.S. jobs to low-wage, authoritarian regimes, the U.S. health system reflects the same free-market “fundamentalist” elevation of capital over human needs. While this position captures little popular support among Americans, the struggle for decent healthcare for all Americans will surely be arduous, as evidenced by the corpses of past efforts strewn along the roadside. Notably, FDR felt compelled to delete a health plan from the Social Security Act in order to get it passed without medical interests killing the entire bill; Truman’s post-war health plan was crushed by the AMA despite 75 percent public support for it at the outset; and even the highly-flawed Clinton plan in 1993-94 provoked an onslaught of modern PR techniques and advertising by medium-sized insurers. The coming counterattack against the new drive for health reform will be rocket-propelled with the even larger profits and increasingly sophisticated communication strategies of the big insurers and Big Pharma. 

But while the existing system benefits immensely some influential sectors of Corporate America, enactment of an efficient, high-quality single-payer health system would benefit the majority of U.S.-located businesses in competing internationally. Some corporate leaders and a substantial portion of the public are finally recognizing this, at long last casting off the “free-market” blinders that kept them on a path toward economic suicide. “The people of the United States cannot effectively compete unless their government reorganizes our disastrously inefficient healthcare system that takes 15 percent of our GDP, compared with 10 percent in France and 8 percent in Japan, and provides less longevity, greater infant mortality, and generally less health than that of any other developed nation,” warns Jeff Faux in The Global Class War. 

Referring to the need for massive investments in healthcare, energy, and technology to insure continuing U.S. competitiveness, even globalization cheerleader Thomas Friedman of the NY Times openly worries that the U.S. corporate elite is not stepping forward: “When I look around for the group that has both the power and interest in seeing America remain globally focused and competitive— America’s business leaders—they seem to be missing in action.” 

As much as Friedman has defended the corporate-supremacy agenda of globalization, even he recognizes that it is outsourcing that has led so many CEO’s to be “missing in action.” Outsourcing both manufacturing and white-collar work has unhooked many CEOs from their historic self-interest in a well-trained and healthy U.S. workforce: “In today’s flatter world, many key U.S. companies now make most of their products abroad and can increasingly recruit the best talent in the world without ever hiring another American” (NYT) . 

The sobering implications of this secession from U.S. workers and communities by many American-based transnationals from the U.S. are concisely explained by Faux: “The CEOs and principal owners of corporations who have disconnected, or are in the process of disconnecting, their fate from America’s have no interest in paying more taxes to make the society they are abandoning more competitive.” 

Finding effective leverage to exert on these secessionist transnational corporations figures to be one of the most vital and most difficult tasks for America’s reinvigorated reform movement. As these corporations shift more and more resources out of the U.S., it will be harder to make effective public claims on the revenues needed to pay for universal, quality healthcare in the U.S. Thus, the fight for a single-payer healthcare system in the U.S. is likely to become increasingly intertwined with the movement to impose democratic controls over corporate globalization. 

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Roger Bybee is a Milwaukee-based writer, consultant, and anti-globalization activist.