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Important Notes on The French Health Care System

The French Health Care System

Editor’s Choice

Main Category: Health Insurance / Medical Insurance

Also Included In: Public Health

Article Date: 08 Jun 2009 – 15:00 PDT


SiCKO's Michael Moore alerted the US public to the existence of better, socialized health systems.  he's to be credited for putting the issue back on the front burner.

SiCKO's Michael Moore alerted the US public to the existence of better, socialized health systems. he's to be credited for putting the issue back on the front burner.

The public health insurance program in France was established in 1945 and its coverage for its affiliates have undergone many changes since then. One of the major changes has resulted in the expansion to all legal residents, under the law of universal coverage called la couverture maladie universelle (universal health coverage). It is based on the principle of solidarity, guarantying financial protection against life´s contingencies for everyone.

Originally, professional activity (being in employment) was the basis of the funding and benefits of the French public health insurance system known as the Sécurité Sociale (social security). The main fund covers eighty percent of the population. There are two additional funds for the self-employed and agricultural workers.

Reimbursement is regulated through uniform rates. The financing is supported by employers, employee contributions, and personal income taxes. The working population has twenty percent of their gross salary deducted at source to fund the social security system.

The contribution of financing through personal income taxes has gradually increased and its purpose is to make up for the fall in remuneration, reduce price changes on the labor market and allocate the system´s financing among citizens equitably.

Employer and union federations jointly control the funds under the State´s supervision. This involves an intricate collaboration between the various entities of the system.

About seventy five percent of the total health expenditures are covered by the public health insurance system. A part of the balance is paid directly by the patients and the other part by private health insurance companies that are hired individually or in group (assurance complémentaire or mutuelle, complementary insurance or mutual fund).

The State

The State sees that the whole population has access to care; it dictates the types of care that are reimbursed, and to what degree, and what the role is of the different participating entities.

The State is in charge of protecting patient´s rights, elaborating policies and enforcing them. It is responsible for public safety.

Health authorities plan the size and numbers of hospitals. They decide on the amount and allocation of technical equipment (such as MRI, CT scans…). Through its agencies, the State organizes the supply of specialized wards and secures the provision of care at all times.

In recent years, regional authorities have taken a growing role in policy-making and negotiation.


There are two general categories:

  • The public sector, which accounts for 65% of hospital beds. Public hospitals are responsible for supplying ongoing care, teaching and training.
  • Private hospitals are profit oriented. They concentrate on surgical procedures and depend on their fee-for-service for funding.

There is no significant difference in the quality of care between public and private hospitals.

In France, there are 8.4 hospital beds per 1,000 people.

Health Professionals

Health professionals and physicians usually work in both public hospitals and private practices. About 36 percent of physicians work in public hospitals or establishments. They are in essence public servants, and the amount they are paid is determined by the government. However, 56 percent of physicians work in private practices because of the difficult working conditions in hospitals.

Experts set the relative price of procedures that are then negotiated by physicians’ unions and public health insurance funds. Around ninety seven percent of practitioners conform to the Tarif de convention (tariff references) which sets prices. Tariff references are the fixed rates to be used by doctors set by the national convention for all health services. Medical practitioners and clinics/hospitals who are not conventions (complying with the tariff references) have to display their prices.

In some situations, certain medical practitioners (such as surgeons with extra qualifications or experience) can charge more than the Tarif de convention. The extra fee is called a dépassement.

There are 3.37 physicians per 1,000 people.

There was a reform in July of 2005 which put in place a process of coordinated care. The patient first visits his/her médecin traitant (general practitioner). This physician has been previously registered at the caisse d´assurance sociale as the one in charge of the coordination of care for the patient. In case the physician or his substitute is unavailable, the patient can consult another physician and inform his/her caisse d´assurance – this does not affect his/her entitlement reimbursement. The patient is free to change to another general practitioner but has to report the change.

The médecin correspondant (correspondent doctor) is the physician to whom the patient has been referred and is usually a specialist. With the authorization of the patient, this physician sends the relevant information to the médecin traitant in order to follow up and coordinate care.

Several specialists have direct authorization for passing on information relevant to care, such as gynecologists, ophthalmologists and psychiatrists.

The service of gynecologists, ophthalmologists and dentists are covered by the State without a referral by a médecin traitant (the patient does not have to go to his/her General Practitioner first).

The patient has to present his card called “Carte Vitale” which transmits all transactions to the caisse d’ assurance where he/she is registered. All medical procedures (hospitalization, laboratory tests, x-rays…) have to take place in the locality of his/her caisse d´assurance. However, the patient can buy medicines anywhere in France and have the reimbursement later deposited on his/her bank account, usually within a ten-day-period.

An average of 70 percent of the cost of a visit to a family doctor or specialist is refunded. Reimbursements are on average of: 95 percent for a major surgery, 80 percent for minor surgery, 95 to 100 percent for pregnancy and childbirth, 70 percent for x-rays, routine dental care and nursing care at home. Reimbursements for prescribed medicines depend on the type of medication and range from 15 percent to 65 percent.

The percentage that is to be paid by the patient and not reimbursed by the Sécurité sociale is called ticket modérateur. This fraction varies following each individual´s obligatory regime set by the tariff references allocated to various medical treatments and associated fees encountered.

A patient can receive 100 percent coverage under certain conditions, such as having a chronic or acute medical condition (including cancer, insulin-dependent diabetes, heart disease…), requiring long-term care, having a long-standing condition, requiring a hospital stay of more than 30 days.

Beneficiaries of the RMI (revenu minimum d´insertion, minimum revenue of introduction) are automatically affiliated to the social security system. They are several requirements to qualify, but essentially every legal resident in France who earn less than a certain amount are entitled to this financial aid. As soon as they are affiliated, they also entitled to the health coverage. Those individuals are entitled to a 100 percent reimbursement of medical and hospital costs.

Complementary Insurance

Since health expenditure is growing in France, there has been ongoing concern about the deficit of the Sécurité Sociale and governments have been inclined to reduce the degree of reimbursement. As a result, more individuals are turning to l´assurance complémentaire (complementary insurance). This health insurance covers all or part of the costs not reimbursed by the health system.

The complementary insurance offers an extensive range of plans. The patient has to select the one that is best suited to his situation and needs to take into consideration his/her state of health, medical consumption, family, income and place of residence.

Expatriates in France

Since 2007, there have been some changes for EU citizens residing in France, introducing restrictions in their access to the health care system. This affects inactive individuals (not in employment) that do not have a professional activity (not working) or are looking for work, or students. The reason for those limitations is that France has to conform to the European community rules, like the other countries in the community. The new conditions of the right of stay have direct consequences on the social benefits in France.

Right of stay for inactive residence (not in employment) depends on two conditions:

  • They need to have a reasonable level of income in order not to become a burden for the State.
  • They need to have health coverage.

The conditions for inactive EU residents already living on France before November 2007 remain the same.

Students and retired people need to have medical coverage. Students usually have medical coverage from their country of origin or through the French Social Security for students; this applies to students under 28 years of age. Retired individuals, in most cases have health insurance from the country where they worked.

If an EU resident becomes sick and does not fulfill those two conditions and has been residing in France for less than three months, this person is entitled to dispositif soins urgent (emergency care device ). If the person has been residing for more than three months, he/she is entitled to l´Aide Médicale d´Etat (state medical aid).

Inactive EU residents can receive the couverture maladie universelle (universal health coverage) known as CMU if they are legal residents (stable and uninterrupted).

CMU de base (basic CMU)

Basic CMU helps anyone living in France who is not covered by another type of insurance get access to medical care and reimbursement of services and medication. People from all levels of income are entitled to it. The affiliation is not automatic and the person has to apply for it. It covers part of the medical services for the legal resident and the people in his/ her household. It covers typically seventy percent of a doctor’s visit.

CMU complémentaire (complementary CMU)

Complementary CMU facilitates access to health care for people with low income residing in France for more than three months, in a stable and uninterrupted manner. These individuals have one hundred percent coverage without advance payment for the health services or medication (they are fully covered, no money upfront needed). The income of the individual´s household must not exceed a maximum amount. The spouse or partner of the individual, as well as the dependents under 25 years of age are also included in this coverage. It is renewable on a yearly basis.

If a person is a foreign national, outside EU member states or Switzerland, he/she must justify their right of residence in France in order to gain right to the State healthcare.

After five years of legal residence all EU nationals gain permanent right of residence and therefore become fully entitled to the CMU.

Any EU expatriate not officially retired (under retirement age), not working, and not having lived in France for more than five years will lose their right to the French state healthcare except for those who have been living in France since before November of 2007.

Life expectancy in France topped 80 years in 2004. The French health care service is certainly costly to maintain, but it remains one of the best in the world, offering a large choice of general practitioners and healthcare specialists.

Written by Stephanie Brunner B.A.

Original article date: 27 June 2004

Article updated: 8 June 2009



France’s model healthcare system

By Paul V. Dutton  |  August 11, 2007

MANY advocates of a universal healthcare system in the United States look to Canada for their model. While the Canadian healthcare system has much to recommend it, there’s another model that has been too long neglected. That is the healthcare system in France.

Although the French system faces many challenges, the World Health Organization rated it the best in the world in 2001 because of its universal coverage, responsive healthcare providers, patient and provider freedoms, and the health and longevity of the country’s population. The United States ranked 37.

The French system is also not inexpensive. At $3,500 per capita it is one of the most costly in Europe, yet that is still far less than the $6,100 per person in the United States.

An understanding of how France came to its healthcare system would be instructive in any renewed debate in the United States.

That’s because the French share Americans’ distaste for restrictions on patient choice and they insist on autonomous private practitioners rather than a British-style national health service, which the French dismiss as “socialized medicine.” Virtually all physicians in France participate in the nation’s public health insurance, Sécurité Sociale.

Their freedoms of diagnosis and therapy are protected in ways that would make their managed-care-controlled US counterparts envious. However, the average American physician earns more than five times the average US wage while the average French physician makes only about two times the average earnings of his or her compatriots. But the lower income of French physicians is allayed by two factors. Practice liability is greatly diminished by a tort-averse legal system, and medical schools, although extremely competitive to enter, are tuition-free. Thus, French physicians enter their careers with little if any debt and pay much lower malpractice insurance premiums.

Nor do France’s doctors face the high nonmedical personnel payroll expenses that burden American physicians. Sécurité Sociale has created a standardized and speedy system for physician billing and patient reimbursement using electronic funds.

It’s not uncommon to visit a French medical office and see no nonmedical personnel. What a concept. No back office army of billing specialists who do daily battle with insurers’ arcane and constantly changing rules of payment.

Moreover, in contrast to Canada and Britain, there are no waiting lists for elective procedures and patients need not seek pre-authorizations. In other words, like in the United States, “rationing” is not a word that leaves the lips of hopeful politicians. How might the French case inform the US debate over healthcare reform?

National health insurance in France stands upon two grand historical bargains — the first with doctors and a second with insurers.

Doctors only agreed to participate in compulsory health insurance if the law protected a patient’s choice of practitioner and guaranteed physicians’ control over medical decision-making. Given their current frustrations, America’s doctors might finally be convinced to throw their support behind universal health insurance if it protected their professional judgment and created a sane system of billing and reimbursement.

French legislators also overcame insurance industry resistance by permitting the nation’s already existing insurers to administer its new healthcare funds. Private health insurers are also central to the system as supplemental insurers who cover patient expenses that are not paid for by Sécurité Sociale. Indeed, nearly 90 percent of the French population possesses such coverage, making France home to a booming private health insurance market.

The French system strongly discourages the kind of experience rating that occurs in the United States, making it more difficult for insurers to deny coverage for preexisting conditions or to those who are not in good health. In fact, in France, the sicker you are, the more coverage, care, and treatment you get. Would American insurance companies cut a comparable deal?

Like all healthcare systems, the French confront ongoing problems. Today French reformers’ number one priority is to move health insurance financing away from payroll and wage levies because they hamper employers’ willingness to hire. Instead, France is turning toward broad taxes on earned and unearned income alike to pay for healthcare.

American advocates of mandates on employers to provide health insurance should take note. The link between employment and health security is a historical artifact whose disadvantages now far outweigh its advantages. Economists estimate that between 25 and 45 percent of the US labor force is now job-locked. That is, employees make career decisions based on their need to maintain affordable health coverage or avoid exclusion based on a preexisting condition.

Perhaps it’s time for us to take a closer look at French ideas about healthcare reform. They could become an import far less “foreign” and “unfriendly” than many here might initially imagine.

Paul V. Dutton is associate professor of history at Northern Arizona University and author of “Differential Diagnoses: A Comparative History of Health Care Problems and Solutions in the United States and France,” which will be published in September.

© Copyright 2007 Globe Newspaper Company.

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Obama chooses private profit over healthcare needs

BUSINESS AS USUAL—the “Changeman” didn’t cometh—

Despite solid support for radical reform, and to the detriment of millions, Obama puts private insurers and Big Pharma above the public interest

Dateline: 8 June 2009  | TOP PRIORITY

And be sure to read our BONUS FEATURE on the same topic, penned by Glen Ford, America’s most distinguished Black journalist (see bottom of this article)

obama.health.doddPresident Obama’s Saturday address initiated the public phase of his administration’s effort to pass major healthcare legislation. His remarks were notable for the absence of any reference to the actual crisis facing tens of millions of working people in the United States: more than 47 million people are living without health insurance, and millions more are underinsured and face crippling bills and even bankruptcy in the event of a serious illness.

Instead, Obama focused entirely on the rising cost of healthcare, which he presented as a major problem both for the federal government, the largest single payer of healthcare bills, and for corporate America. He declared, “The soaring costs of health care make our current course unsustainable” and pledged to heed concerns “that the ballooning costs of Medicare and Medicaid could lead to fiscal catastrophe down the road.” In other words, the administration is concerned, not about improving healthcare services for the American people, but about cutting costs in order to improve the financial health of American capitalism.

His remarks were notable for the absence of any reference to the actual crisis facing tens of millions of working people in the United States: more than 47 million people are living without health insurance…

The Obama administration has already ruled out the only rational response to the crisis of healthcare availability: the establishment of a single-payer system in which the federal government would guarantee universal access to healthcare as a matter of right. Every other advanced industrialized country has some form of universal coverage. But such a system would eliminate the tens of billions raked in by insurance companies whose “business model” requires that they limit coverage, deny treatment or reject bills—in other words, it would infringe on the “right” of MetLife, Aetna, CIGNA and other giant corporations to make a profit from illness and disease.

The abortive healthcare reform plans of the last Democratic administration, headed by Bill Clinton, collapsed ignominiously in 1993-94 in the face of intransigent opposition from the insurance companies, drug companies and for-profit hospital chains. Obama boasted in his Saturday address that he had made progress in wooing the opponents of healthcare reform to join instead of oppose him.


Geri Jenkins, RN, co-president of the 86,000-member California Nurses Association/National Nurses Organizing Committee, and a practicing RN at the University of California San Diego Medical Center, is expected to describe how the nation’s healthcare meltdown is a “patient care crisis” and how single-payer reform best meets the needs of the nation. Given the plutocratic shills we have in the White House and Congress, she will be politely listened to, and dismissed.

“Unlike past attempts at reforming our health care system, everyone is at the table—patient’s advocates and health insurers, business and labor, Democrats and Republicans alike,” he said. By now the rhetoric from the White House is familiar, even predictable. Take any critical and highly charged political issue, acknowledge the opposing factions involved, and announce that your goal is to “resolve the differences.” But in the case of healthcare, there is an intrinsic conflict between the right of the people to enjoy the benefits of modern medicine and the profits of the capitalists who control the insurance industry, the manufacture of drugs and medical equipment, and the operation of for-profit hospitals and nursing homes. Obama has come down decisively on the side of these giant corporations.

There is no difficulty, intellectually or technically, in devising a rational healthcare system. Advances in science and technology make it possible to deliver adequate healthcare services to the entire population at a fraction of the current cost. Every person should have access to healthcare as a basic right and be able to choose their own doctor and receive treatment at a modern, clean, well-run facility, run as a public utility either at no cost to patients at all, or with a modest fee. Medical bills should be relegated to the museum of antiquities, along with the saws used to conduct surgery without anesthesia.

But such a system would require putting an end to the private, profit-making medical industry, one of the most lucrative sources of wealth for the financial aristocracy that rules America. The pharmaceutical and medical equipment companies, the insurance industry, and the hospital and nursing home chains would be nationalized and operated under democratic control as a public service—a transformation that the vast majority of the American people would applaud.

Doctors would become well-paid salaried employees, like airplane pilots or nuclear physicists, not businessmen/owners concerned with profit maximization—a transformation that physicians genuinely concerned with patient welfare would welcome. Instead of a medical system driven by the dictates of insurance companies and HMO “gatekeepers,” medical decisions would be made by healthcare professionals based on the welfare of their patients.

Socialized medicine would be nothing but beneficial for small businessmen as well, since it would relieve them of an employee benefit cost that puts them at the mercy of rate hikes demanded by insurance companies. Small proprietors and self-employed professionals would have the same access to the healthcare system as all other working people, unlike the present system where they frequently go without coverage or pay prohibitive individual rates.

Despite the fevered rhetoric of the ultra-right, the Obama administration’s plans have nothing in common with such a restructuring of the healthcare system along socialist lines. On the contrary, Obama has repeatedly sought to reassure the profiteers that their interests will be looked after and that they are better off at the table, working with him, than outside. The for-profit healthcare and insurance firms have taken up this offer with enthusiasm.

A major reason for the changed posture of the corporations is the financial crisis sweeping world capitalism. They see Obama’s healthcare “reform” as an opportunity to join the banks and speculators in raiding the federal treasury. These concerns are evident in the plans being drafted at the White House and by congressional committees.

One key provision is a mandate that every American buy health insurance coverage, similar to the requirement that automobile drivers purchase liability insurance. This will produce a guaranteed market of tens of millions of new insurance customers for the private companies, with the federal government helping low-income purchasers—in effect, providing a mammoth federal subsidy to the insurance companies. The number of people buying private health insurance has declined by 9 million since 2000 because of soaring premiums, deteriorating real incomes and employer cutbacks in benefits. This decline will accelerate as baby boomers become eligible for Medicare beginning in 2011 and leave the private market.

The “debate” between the Republicans and Democrats in Congress involves little more than the terms on which hundreds of billions in treasury dollars will be turned over to the healthcare profiteers. The Obama administration wants to offer a public option as an alternative or supplement to private insurance, in the name of promoting competition and “keeping the insurance companies honest.”

The Republicans, and a sizeable number of right-wing Democrats, oppose any public option—largely for ideological reasons, since they fear the establishment of any form of public health insurance, no matter how inadequate, will lead to demands for a fully public healthcare system. One consulting firm recently estimated that 119 million of the 172 million now privately insured would switch to a public health plan that paid Medicare rates and charged premiums accordingly.

An analysis in the New York Times Sunday noted “the fears of private insurers that they would not be able to compete with a Medicare-like option and might gradually be priced out of existence,” and cited the arguments of right-wing critics of Obama “that with low administrative costs and no need to produce profits, a public plan will start with an unfair pricing advantage.”

One could hardly state the advantages of a fully state-run healthcare system more succinctly. A system with “low administrative costs and no need to produce profits” might be regarded as “unfair” by the healthcare profiteers, but it is the only way to meet the needs of working people to healthcare that is decent, affordable, and available to all as a basic human right.

Patrick Martin is a senior editor with the World Socialist Web Site


Obama Charges Backward On Health Care

By Glen Ford

Created 06/10/2009 – 07:07

By BAR executive editor Glen Ford

Barack Obama, like the little kids that used to appear on Art Linkletter’s TV show, says “the darndest things.” He has discovered that the “root cause” of America’s health care cost problem isn’t the insurance companies, or the drug barons, or the hospital corporations. Medicare is the villain. “Disastrously, he has created a situation in which health care ‘reform’ is predicated on stripping Medicare down to the bone.”

Obama called on Congress to squeeze half a trillion dollars over the next ten years out of Medicare.”

President Obama this past weekend made a big to-do about taking charge in the health care debate. His phrase-mongers were busy at their specialty: shaping air for their boss to blow without hurting anyone powerful. “Simply put, the status quo is broken,” said Obama [1] on Saturday. “We cannot continue this way. If we do nothing, everyone’s healthcare will be put in jeopardy.”

The problem is, status quos are usually arrangements that serve the purposes of those in power, and do not break by themselves. Breaking the status quo requires doing battle with entrenched interests. One cannot cajole, lie or primp one’s way out. There is one exit, and that is through struggle.

We must attack the root causes of skyrocketing health costs,” the president told his radio audience, correctly. But of course, fighting the powers-that-be in health care – the corporations whose quest for mega-profits is the “root cause” of wildly overpriced and criminally ill-distributed health services in the United States – has never been on Obama’s agenda. Instead, like a McCarthyite searching for communists under the bed, the president pointed a long finger at the imagined culprit: Medicare. Obama then called on Congress to squeeze half a trillion dollars over the next ten years out of Medicare, whose overhead is a fraction of the for-profit health sector.

Obama succeeds only in further alarming what’s left of the Left in his party – a sport of his, that no doubt makes him feel courageous. Disastrously, he has created a situation in which health care “reform” is predicated on stripping Medicare down to the bone. That’s a game the Right would love to play, and Obama has given them the invitation.

Obama, himself, is a principle impediment to real discussion of health care.”

He has given progressives nothing but the finger – and some lefties are finally gathering up enough self-respect to get angry about it. They have come to the realization that Obama, himself, is a principle impediment to real discussion of health care. In crudely freezing single payer advocates out of White House mediated realms of discussion, he has drastically thinned the ranks of serious potential allies in any future throwdown with the corporations. One can only conclude that Obama and his advisors are either bad strategic planners, or that they never intended to confront Big Pharma, Big Insurance, and Big Hospitals in any serious manner.

My own belief is that Obama and his circle understood that any winning Democrat would be required to seem to embrace something that sounded like “universal” health care. A master of ambiguity, Obama convinced those who were not listening closely that he is, at heart, a reformer – whatever that is. Yet even before winning the general election, Obama prepared to govern, as the New York Times noted, from the “center-right” of his party – through Democratic Leadership Council (DLC) operatives like his chief of staff, Rahm Enamuel, Blue Dogs, Wall Street’s many servants on Capitol Hill, and Republicans. It has been quite clear for some time (and crystal clear in hindsight) that Obama’s general legislative and public relations strategy was to silence and neutralize the Democratic Party’s Left. This was thought to be necessary in order to prepare the pubic for some grand proclamation by Obama on his forging of a national consensus – a coming together of business and labor, rich and poor, all regions and sectors, in time of crisis. That’s his kind of music.

When that didn’t happen in the health care arena, Obama’s people simply invented a “consensus” and political “breakthrough” that never occurred. In what we described as “Obama’s Health Care Charade” (BAR, May 13, ’09 [2]), the White House in May proclaimed that industry leaders had “agreed” to save the public $2 trillion over the next ten years, out of the goodness of their hearts. Of course, this was nonsense on the face of it, and corporate executives found themselves compelled to announce they had made no such promise.

Obama’s general legislative and public relations strategy was to silence and neutralize the Democratic Party’s Left.”

Obama will play tricks on his friends in the boardrooms in hopes of making them appear more public-spirited than he knows them to be, but he will never challenge their power, which he sees as legitimate and benign (the “genius of capitalism”). The social peace he seeks, therefore, must come at the expense of those who would upset the status quo: chiefly, Blacks and progressives.

However, the real world intrudes on Obama’s political theater. He was so busy putting single payer Democrats in quarantine, he allowed the so-called “centrists” to make their own deals with the health care industry. For example, Montana Sen. Baucus, whose Finance Committee followed Obama’s lead in banning single payer supporters from testifying at its “hearings,” is vowing to come up with a bill weak enough to draw substantial Republican support. Sen. Ted Kennedy’s plan would expand Medicare [3], the program Obama wants to scapegoat. New York’s Sen. Charles Schumer swears that he will not allow a national plan that would undercut private insurance companies.

The big secret is that Barack Obama doesn’t have a health care plan, just a bunch of vague statements. In this regard, he is truly the hollow man. Every corporate interest in Washington now has the opportunity to write their profits into the legislation that finally emerges.

The 80-strong Congressional Progressive Caucus [4] and the 41-member Congressional Black Caucus both endorsed a national health care plan along the lines of Medicare for all [5]. The two caucuses heavily overlap, and strong majorities favor single payer. In a more sensible world, progressives on The Hill would have made their presence felt much earlier, before the obituaries had been written on single payer. At the vortex of the confusion is Obama, both the actual corporate politician and the imagined ally. With smoke, mirrors, and duplicity, he has spread confusion among the enemy – which as far as he’s concerned, is us.

glenFord2BARBAR executive editor Glen Ford can be contacted at Glen.Ford@BlackAgendaReport.com [6].

Source URL: http://www.blackagendareport.com/?q=content/obama-charges-backward-health-care

[1] http://www.nytimes.com/2009/06/07/us/politics/07policy.html?_r=1&hp
[2] http://www.blackagendareport.com/?q=../../../../../../../%3Fq%3Dcontent/obama%E2%80%99s-health-care-charade
[3] http://www.nytimes.com/2009/06/06/health/policy/06health.html?ref=us
[4] http://thehill.com/leading-the-news/house-liberals-insist-on-strong-govt-health-plan-2009-06-05.html
[5] http://thehill.com/leading-the-news/cbc-splits-with-dems-on-healthcare-reform-2009-06-07.html
[6] mailto:Glen.Ford@BlackAgendaReport.com

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Keynes, Capitalism, and the Crisis


Karl Marx clearly foresaw the current crisis in his economic and sociological writings.

John Bellamy Foster Interviewed by Brian Ashley, Co-Managing Editor of Amandla

John Bellamy Foster is editor of Monthly Review, professor of sociology at the University of Oregon, and author (with Fred Magdoff) of The Great Financial Crisis: Causes and Consequences (Monthly Review Press, 2009).

Amandla: As governments across the world spend trillions to help private capital survive the global financial crisis, is it not misleading to talk of a shift to Keynesian policies?

JBF: I think there has been, as Paul Krugman says, a “return of depression economics,” and in that sense we can talk about a revival of broadly “Keynesian” policies.  Keynes advocated expansive fiscal policy and deficit financing in a depression, and all governments are now seeking to put such expansive policies in place to some degree — although generally not on a big enough scale.  Also Keynes clearly advocated government attempts to reflate the economy in the face of deflationary pressures, in the context of the banking crisis of the early 1930s.  So in this sense too we can talk about a return to Keynesian economics.

But the real action right now is elsewhere, in the direct government salvaging of financial capital.  This has little to do directly with Keynesianism and in fact reflects the continued dominance of financial capital in the crisis.  Keynes was far from being a big supporter of speculative finance and argued for the “euthanasia of the rentier.”   In the course of this downturn the United States has committed up to $10 trillion in aid to financial institutions, by such means as guarantees of bank debts and asset-backed securities, direct investments, the establishment of currency swap lines with central banks, and programs for the purchase of mortgage-backed securities.  In comparison to this, Obama’s total fiscal stimulus is less than $400 billion a year.  The annual public works spending for the entire country in the stimulus package is less than what Bank of America by itself has received in financial support commitments from the Federal Reserve and the Treasury in this crisis.  What we are seeing therefore is a socialization of private financial losses on a scale never before conceived.  None of this has much to do with Keynesianism as such.

Those who might reasonably be called “Keynesians” of a sort today (though not nearly as critical of the system as Keynes himself), such as Paul Krugman and Joseph Stiglitz, represent a different policy mix.  They would argue for a bigger fiscal stimulus and would probably be less immediately responsive to financial capital.  (Another Keynesian or post-Keynesian figure of a more radical sort is James K. Galbraith.)   But such individuals are not in charge today in Washington, while more decidedly conservative economists who represent the interests of Wall Street, such as Bernanke, Geithner, and Summers, are ensconced in the Federal Reserve, the Treasury, and the White House.

The fact that Keynesianism, even of the mild sort represented by Krugman and Stiglitz, is still on the outside in all of this has to do, in my view, with the shift in the nature of capitalism from monopoly capital to monopoly-finance capital beginning in the 1980s.  This meant that financialization was increasingly the focal point of the economy.  I wrote at length on this together with Fred Magdoff in our recently published book, The Great Financial Crisis: Causes and Consequences.  The present economic catastrophe is in many ways a crisis of financialization (i.e., the shift in the center of gravity of the economy in the last three decades or so from production to finance) overlaid on deeper problems of stagnation.  Hence, financial capital is still the focus during the downturn.  Keynesianism, classically, was concerned much more with what economists call the “real economy” related to production of goods and services (as measured by GDP), than with the financial economy, geared to speculation in asset prices.  So in that sense Keynesianism, though given some impetus by the crisis, is still secondary to what is going on immediately, since the center of attention is still on the financial implosion.

One reason that Keynes’s theory is considered so relevant today of course has to do with what he called the “liquidity trap”: the interest rate falls to a near-zero level and hence monetary policy is no longer able to stimulate the economy through reductions in the interest rate.  This was a description of what happened in the Great Depression and it was repeated in Japan in the 1990s.  It is this that brings “depression economics” into play.  Bernanke, Geithner, et al., argued that if banks were restored to solvency they would resume lending.  But the destruction of the supposed assets on the bank balance sheets, still unquantifiable, has been to date beyond repair.  Banks therefore hold on to every scrap of tangible equity — cash — they obtain.  Keynes long ago explained that this was what the banks necessarily would do in such a situation.  Fiscal stimulus offers hope of halting or slowing the collapse, but far greater sums are poured into what still seems to be an intractably insolvent banking system.  Such policies are not Keynesian.

Amandla: In a recent interview you spoke of the bastardization of Keynes’ ideas.  What did you mean and who was the real Keynes?

JBF:  Keynes even before The General Theory was recognized as an outstanding, perhaps the most illustrious figure, in orthodox economics of his day, the heir to Alfred Marshall at Cambridge.  But in response to the Great Depression he became both a critic of economic orthodoxy and of capitalism itself.  However, his criticisms of capitalism, though far-reaching, suggested that there were technical ways out that could save the system from some of its worst faults.  He is thus an ambiguous figure.  There is the pre-Keynesian Keynes (prior to The General Theory), Keynes as a critic of capitalism, Keynes as a system savior, as well as the later “bastard Keynesianism,” invented in the 1950s and ’60s by those seeking to reestablish the neoclassical orthodoxy, with only small concessions to the “Keynesian revolution.”  All of this of course creates complex issues of interpretation.  When we speak of Keynes we are usually referring to the Keynes of The General Theory of Employment, Interest, and Money, which was published in 1936, and related works and not the Keynes of his earlier A Treatise on Money (1930).

Keynes, as he himself emphasized in the preface to The General Theory, fought hard in response to the Great Depression to free himself from the orthodox neoclassical economics of his earlier years.  This required something of a revolutionary break, which he never followed out to completion, leading to various interpretations of his theory.  Monetarists, like Milton Friedman, preferred the A Treatise on Money Keynes (what we would call the pre-Keynesian Keynes) and mostly rejected The General Theory.  The main group of so-called “Keynesians,” like Paul Samuelson, tried to repair the damage resulting from Keynes’s break with economic orthodoxy, so as to create the neoclassical-Keynesian synthesis or what is more commonly called the “neoclassical synthesis.”  Joan Robinson famously called this in 1962 “bastard Keynesianism,” since it jettisoned all of Keynes’s major criticisms of the system.

One way to understand the evolution of bastard Keynesianism (as I explained in the March 2008 issue of Monthly Review in an article entitled “A Failed System”) is in terms of the way that Keynes employed the concept of  “the general theory” and how that later came to be subverted.  Keynes explained in the beginning of hismagnum opus that orthodox economics (what we now call “neoclassical economics”) was a “special theory” pertaining to a full employment economy, which in reality hardly ever existed under capitalism.  In that sense his “general theory” was meant to address the usual case of an economy of unemployed resources.  However, neoclassical economists after the Second World War argued that partly due to Keynes’s own influence, which had led to fiscal and monetary fine-tuning, the main dilemmas that Keynes had raised hardly ever applied.  As a result Keynes’s own economics was reclassified as a “special theory” while the orthodox neoclassical economics, which saw the economy as naturally tending to full employment, was pronounced the true “general theory.”

Under Friedman’s inspiration, full employment was redefined to be compatible with actually existing unemployment through the introduction of the notion of the “natural rate of unemployment.”  Keynes was pronounced dead, since a depression/deflation, in which his ideas would be operative, could never occur again.  Ben Bernanke, chairman of the Federal Reserve Board and an academic scholar of the Great Depression, said a few years ago that we had entered the Great Moderation, in which the business cycle had essentially smoothed out.  In fact these views played a role in getting him appointed as Fed chairman.  I have discussed this (together with Fred Magdoff) in The Great Financial Crisis.

Of course the truth was that Keynes’s critique of capitalism never ceased to be relevant, as is now readily apparent.  But economic orthodoxy was unable to move beyond Keynes to address the larger issues he raised (nor did Keynes himself in the end do so).  Paul Sweezy was thus right in saying somewhere that Keynes represented the last major scientific representative of bourgeois economics.  From Keynes on there was nowhere to go but the rejection of capitalism itself.  Far from an apologist for the system, Keynes had written in the Yale Review in summer 1933: “The decadent international but individualistic capitalism, in the hands of which we found ourselves after the [first world] war, is not a success.  It is not intelligent, it is not beautiful, it is not just, it is not virtuous — and it doesn’t deliver the goods.  In short, we dislike it, and we are beginning to despise it.”  But he did not follow his views to their logical conclusion in the rejection of the system, while mainstream, bastard Keynesianism retreated from his view.

Amandla: What was the essence of Keynes’s ideas and why are his ideas suddenly seen as relevant again?

The essence of Keynes’s contribution was the demolition of Say’s law of markets.  (A secondary element was Keynes’s rejection of the then orthodox theory of interest, and its replacement by one based on liquidity preference.)  Say’s Law argued that supply created its own demand, so that there could never be an actual glut of production.  Hence, full employment was regarded as the natural tendency of the system.  If there were limits to economic expansion they were on the supply (cost) rather than the demand (sales) side.

Marx had rejected Say’s Law from the beginning, calling it “the childish babbling of a Say, but unworthy of Ricardo.”  But neoclassical economics was built on it.  Keynes had to undergo a great struggle to overcome this.  Part of the problem was that neoclassical economics was erected on the notion of a kind of barter economy model with money laid over the top like a veneer.  Once monetary exchange was viewed as central to the inner workings of the capitalist economy it became apparent that it was possible for overproduction or insufficient effective demand to emerge.  In working this out, Keynes, in his early notes to The General Theory, actually used Marx’s shorthand of M-C-M′ (Money-Commodity-Money′ [the last equal to M + ∆m or surplus value]) as a way of figuring out the contradiction in Say’s Law.  (Keynes got this from a secondary source rather than from Marx himself.)  Meanwhile Richard Kahn, a close associate of Keynes and the originator of the Keynesian multiplier, came up with a way of conceiving the savings and investment relation that replicated (unbeknownst to him) Marx’s reproductive schema.  As a result of this critique, Keynes was able to separate out more clearly the two sides of accumulation (savings and investment) and to argue that it was investment that determined savings and not the other way around as previously thought.  The famous “paradox of thrift” could be explained then as excess savings (ex ante) that could not find investment outlets.  In terms of effective demand as a whole, the problem was a lack of consumer demand due to income inequality, and then leading fairly naturally, but not inherently, to weaknesses in investment demand, as a normal shortcoming of the system.  For Keynes the proper policy response was to increase government spending to compensate for a lack of consumption and investment demand — to the point that full employment was reached.  But this of course ran normally straight into the class barriers of the system.

Amandla: What was the substance of Keynes’ critique of capitalism and how does it differ from the other great critic of capitalism Karl Marx?  What are the short-comings of Keynes critique of capitalism?

JBF: Keynes, as I explained in “A Failed System,” pinpointed what he called two “outstanding faults” of capitalism: an enormously unequal division of income and persistent, built-in unemployment, tending toward what was to be called an “unemployment equilibrium.”  Orthodox economics was by nature blind to both of these flaws, and thus was, in his view, “incompetent to tackle the problems of unemployment and of the trade cycle.”   Keynes made it clear that he believed that the investment or accumulation function of the mature capitalist economy was systematically depressed over the long run.  As Joan Robinson wrote in 1955 in a piece on“Marx, Marshall, and Keynes,” Keynes showed “that there is a natural tendency for an advanced capitalist economy to run into chronic stagnation, with permanent unemployment, and that it is by its very nature highly unstable.”  Yet, Keynes never provided an actual theory of stagnation, and those early Keynesians who did so based on his suggestions, such as Alvin Hansen, also fell short of what could be seen as a complete theory of the stagnation tendency of advanced capitalism.  It was thus left to Marxist theorists, such as Michal KaleckiJosef SteindlPaul Baran and Paul Sweezy, to develop this further.

Keynes by the time he wrote The General Theory no longer believed in the harmonious self-regulation of capitalism, along orthodox lines, as represented by Hayek and neoliberalism.  As Robinson said, Keynes represented “the disillusioned defence of capitalism.”   He tried to deal with what he saw as the system’s major flaws through various technical fixes, probably knowing that this would never be sufficient.  He could never get himself to wage a full-fledged critique.  Keynes still hoped for a kind of rational capitalism, as I explained in my article “The End of Rational Capitalism” (Monthly Review, March 2005).  Still, his critique was so radical in its implications that his analysis was not acceptable to the system except at those moments when its back was against the wall.  Keynes went so far as to point to the need of a“somewhat comprehensive socialization of investment,” the “euthanasia of the rentier,” lessening of income inequality, and limited controls on international capital flows.  All of this meant that he remained a “dangerous” figure from the standpoint of the system.

To get an idea of Keynes’s limitations from a Marxist perspective it is useful to compare him to the Polish economist Michal Kalecki, who developed most of the essentials of the “Keynesian revolution” before Keynes himself.  Kalecki was a Marxist economist, whose work also became crucial in defining Keynesianism.  In Kalecki one finds the legacy of Marx and Luxemburg.  His work contains not only a powerful critique of class-based accumulation and imperialism, but also a developed theory of monopoly capitalism.  Keynes lacked all of these elements.  A particular deficiency was Keynes’s continued adherence to notions of pure and perfect competition, even though his younger colleague Joan Robinson, part of the Cambridge “circus” that helped generate The General Theory, was one of the foremost developers of the theory of imperfect competition.  (Paradoxically, Robinson herself did not integrate this into most of her later work.)  Kalecki’s concept of the “degree of monopoly” (focusing on the price markup on labor and raw material costs) became a way of integrating class income distribution under capitalism (governed in Marx by the rate of exploitation), with concentration and centralization, and economic stagnation.  All of this was essentially derived from Marx and placed in a contemporary context.  Kalecki’s work led to the development of Josef Steindl’s Maturity and Stagnation in American Capitalism and Paul Baran and Paul Sweezy’sMonopoly Capital.

The most important concept in Marx’s economics is the rate of exploitation.  For Keynes this is entirely missing.  Kalecki, however, provided a link between Marx and Keynes (from the Marxist side) with his theory of long-run income distribution: workers spend what they earn, and capitalists earn what they spend.  The trouble is that capitalist spending on accumulation is affected by expected profits on new investment, which become depressed if (among other factors) consumption is weak due to growing inequality and unemployment.  “The tragedy of investment,” as Kalecki said, “is that it is useful.”  Capital will not invest if it has a large idle capacity of plant and equipment and expects this excess capacity to grow as a result of the building of new factories and the anticipated weakness of final markets.  This contradiction of accumulation, ultimately related to income distribution, explains why the U.S. and other advanced capitalist economies have been experiencing creeping stagnation over recent decades — a fact partly disguised by the secular build-up of debt before the crash (i.e. financialization).

Recently, it has been more and more recognized that Keynes also pinpointed a third outstanding flaw of capitalism, and that this was crucial to his overall theory.  Thus he stressed that, with the rise of the market for industrial securities and the developed financial system, there were two price structures under capitalism, one related to GDP and the other speculation in asset prices.  And the correlation between the two price structures was unstable, and dependent upon unpredictable social-psychological pressures.  This created enormous speculative binges, which strongly impressed themselves on Keynes, particularly following the 1929 Stock Market Crash.  The socialist economist Hyman Minsky drew out the importance of Keynes’s critique in this respect in John Maynard Keynes and subsequent works.  From this Minsky developed his famous theory of financial instability.

Minsky’s analysis, though, was still oriented towards explaining periodic financial bubbles/crises and not so much the secular process of financialization building up over decades.  The analysis of financialization as a response to stagnation was dealt with systematically by Marxist economists Harry Magdoff and Paul Sweezy, in a series of works – The Dynamics of U.S. CapitalismThe End of ProsperityThe Deepening Crisis of U.S. CapitalismStagnation and the Financial Explosion, and The Irreversible Crisis, written between the early 1970s and the late 1980s (with subsequent essays in the 1990s).  These works were rooted in Marx-Kalecki, but also drew on Keynes, and particularly in the later years, on his critique of speculation.  Magdoff and Sweezy understood that the financial explosion was not merely a phase immediately prior to the peak of the business cycle — ultimately Minsky’s view — but a process causally interconnected with stagnation extending over multiple business cycles.

Amandla: Is it likely that as the crisis deepens there could be a shift to Keynesian policies especially if there is a new wave of struggle and resistance in the face of the bailouts.

JBF: There has already been something of a switch toward Keynesian-style policies, out of sheer necessity.  But Keynesianism is inadequate to deal with the overall crisis of capitalism.  Further, there is a great deal of resistance to Keynesian measures structurally from the capitalist class, as well as resistance to Keynes’s ideas at the level of economic theory and policy.  One has to remember that Keynes helped account for the Great Depression, but Keynesianism and civilian government spending did not lift the economy out of the depression.  Rather the Great Depression ended when it merged into the Second World War.  So there is no historical case of an effective Keynesian response to conditions of depression (unless you count so-called “military Keynesianism” of the kind that began in Germany with Hitler and reached full flower in the Second World War).

We talk in the United States of the possibility of a new New Deal associated with the expansion of civilian government spending.  The New Deal itself was never Keynesian in inspiration, but it did lead to a moderate (though inadequate) increase in civilian government spending and, more importantly, in the creation of jobs and work relief programs, Social Security, etc., i.e. programs that genuinely benefited the majority of the population.  A new revolt from below (such as that associated with the rise of industrial unionism in the 1930s) in the United States and other countries could produce similar programs, which might be justified this time around on the basis of a Keynesian stimulus.  Some have tried to interpret Obama’s stimulus in the United States that way.  But the current stimulus is far too small to have much of an effect under present circumstances, and 40 percent is taken up by tax cuts.  (Nor, it should be noted, is Obama’s stimulus package progressive in the sense of the later New Deal.)

In the United States, in fact, there has been a ceiling on civilian government spending as a share of GDP (as Paul Baran and Paul Sweezy were the first to point out) that has lasted for seventy years.  Given that it has persisted so long, we can conclude that there are enormously strong class forces keeping that ceiling in place.  So any attempts to increase the share of civilian government spending in national output, even in the deepest crisis since the Great Depression, face strong resistance, as we are already now seeing.  (The fact that the ceiling on civilian government spending has remained in place does not mean that the level of government expenditure benefiting the general population has been maintained.  Instead there has been a vast growth in recent decades of the “criminal justice system,” police and prosecutors, prisons, and incarceration, giving the United States by far the largest percentage of its population incarcerated of any country on earth.)

If you look at those economists who are taking a kind of Keynesian stance — figures such as Krugman or Stiglitz, both of whom received the Bank of Sweden’s Memorial Prize in Economic Sciences for their services to the economics mainstream — the level of criticism of the system is very muted compared to Keynes himself.  There is here no mention of the “outstanding faults” of the capitalist system or the “somewhat comprehensive socialization of investment.”  Until fairly recently, Krugman was a strong critic of what he called, in the title of a 1997 article (originally published in Slate), “Vulgar Keynesians.”  In that piece he wrote:

You might think that raising wages would reduce the demand for labor; but some early Keynesians argued that redistributing income from profits to wages would raise consumption demand, because workers save less than capitalists . . . and therefore increase output and employment [through their spending].  Such paradoxes are still fun to contemplate; they still appear in some freshman economics textbooks.  Nonetheless, few economists take them seriously these days.  There are a number of reasons, but the most important can be stated in two words: Alan Greenspan. . . .  Indeed, if you want a simple model for predicting the unemployment rate in the United States over the next few years, here it is: It will be what Greenspan wants it to be, plus or minus a random error reflecting the fact that he is not quite God.  (Krugman, The Accidental Theorist, 1998, 30-31)

In his introduction to the 2007 edition of Keynes’s General Theory issued by the Royal Economic Society, Krugman observed that Keynes was “wrong” in thinking that the economic contradictions of the 1930s would persist and that problems of stagnation would continue.  I mention Krugman only because he is one of the very best liberal economists, and frequently identified with Keynesianism.  He and Stiglitz and some others are certainly “disillusioned defenders of the system.”  But they are a far cry from Keynes himself in this respect.  To be sure, Keynes, as I have noted, offered no real solution to the problems of deep stagnation, financialization, and widening inequality that currently beset the capitalist economy.  Nor were his criticisms of the system ever acceptable to the vested interests.

What this means is that real solutions to the contradictions of capitalism lie not in Keynesian economics but in a revolt from below of the population, which holds out the potential for a change in the rules of the game.  Joan Robinson said somewhere that a political movement strong enough to reform capitalism would also be strong enough to introduce socialism.  Therein lies our hope and their fear.

Amandla: Can there be an exit from this crisis through a shift to green capitalism, i.e. massive investment in renewable energy, green technologies — a kind of “green Keynesianism” as proposed by the folk of New Economics Foundation.

JBF: There is a lot of talk recently about “green Keynesianism.”  Robert Pollin and others at the Political Economy Research Institute at the University of Massachusetts issued a report last year on Green Recovery, which was conceived in essentially these terms — as is the work of the New Economics Foundation in Britain, with which I am less familiar.  In this context, Obama’s stimulus package has been interpreted by many as a “Green New Deal” or as “Green Keynesianism,” due to its emphasis on the development of energy saving technology.  Theoretically, any increase in government spending at this time can help soften the downturn and even contribute to the eventual restoration of economic growth.  As Keynes said, if the government simply put people to work by having them dig holes in the ground it would help stimulate the economy under such circumstances.  So there is no doubt that spending on the environment would, like any other spending, serve to promote growth.

What kind of spending one does of course matters economically in the degree to which it immediately provides jobs and socially in its usefulness.  Dollars spent on investments in future technology are certainly less efficient in putting people to work immediately than work relief programs.  Environmental spending can of course be of either kind, but the bulk of green spending in the Obama plan is, I gather, directed at research and long-run technology and investment projects.  This will not give as much bang for the buck in terms of current job promotion and in fact is heavily geared to subsidies to industry.  We might even say that what is being advanced is not so much green Keynesianism as “green Schumpeterianism,” since it is primarily aimed at stimulating investment with new technology.

In spending on the environment in a capitalist economy one runs up, like everywhere else, on deeply entrenched class forces of resistance.  Those things that could be done to address the ecological crisis, such as the closing of coal plants and their massive replacement by other forms of energy, or the establishment of a national carbon tax with 100% dividends to the public, as proposed by NASA’s James Hansen, are not done, because the vested interests won’t allow it.  Either it interferes with economic growth or with profits or both.  Obama heavily committed himself during the presidential campaign to the continued support of big coal.

Indeed, there are really two questions here.  Can a green Keynesianism lead to economic recovery?  And can we save the environment this way?  My take on green Keynesianism is that it is much too limited in nature, and too technologically driven, to constitute the nucleus of a full economic recovery.  In fact, we are faced with a deep, long-lasting problem of economic stagnation and the crisis of financialization, as discussed in The Great Financial Crisis, which Keynesianism by its nature can do little to address.  With regard to the environment — to be understood as by far the most serious challenge of our time since the climate, the earth’s species, and human civilization are all threatened — what is currently needed is not an economic recovery plan or faster economic growth, but an ecological revolution.  This would necessarily be a social revolution, on a far more massive scale than anything yet imagined.  This is an issue that I have addressed in my forthcoming book (to be published in April) The Ecological Revolution.

Keynes can help us understand the flaws of capitalism but he cannot take us very far down the road to meeting the challenges of the twenty-first century.  His practical suggestions were in the end simply limited to trying to fix what he called “magneto” (or alternator) problems.  He avoided directly addressing the larger contradictions or “outstanding faults” of capitalism that he saw.  He never got beyond advocating more in capitalist terms, while we live in a world where we need to focus on enough.  For this we need not Keynes (or Schumpeter), but the much more revolutionary — economically, socially, and ecologically — figure of Marx.  (See my Marx’s Ecology.)  Keynes represented the last great scientific defender of a “rational capitalism” that has now proven to be impossible.

This interview also appears in Amandla.



URL: mrzine.monthlyreview.org/foster170309.html

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President Obama: Hypocrite and Hater on Single Payer Health Care / Bruce Dixon


obamaon_health_care2When it comes to health care, Barack Obama is a hater, and a dishonest one at that.  An honest and ethical hater tells you where she or he stands, and throws down the appropriate facts.  President Obama doesn’t do this.  He has claimed for years to be a proponent of single payer health care, the only practical and workable health care solution, but since his election to the senate in 2004 he has become accustomed to saying he would favor single payer “if we were starting from a clean slate” but of course we are not. Insurance companies are powerful interests, he seems to say, and for some reason, we have to let them keep the third of every health care dollar they currently take.

President Obama knows there is no blank slate and there never was.  That’s not even honest hating.  It’s hypocrisy.  And it’s not leadership, it’s caving to the parasitical private insurers.

“…the Obama Administration’s emerging health care plan is expected to be based upon a model that has failed multiple times, most recently in Massachusetts”

Obama likes to say that the insurance industry employs tens or hundreds of thousands, and we cannot just displace them. That’s hating.  But his advisors know perfectly well that single payer health care insurance would create 2.6 million new jobs, after allowing for the 440,000 insurance company jobs it would do away with, a fact detailed in the groundbreaking report issued earlier this year by the National Nurses Organizing Committee.  Instead, in the spirit of a dishonest hater, Obama has tried to ban from public forums any discussion of the single payer health care option, despite the fact that it has massive support among the people who voted for him.  That is hypocrisy.

When the Obama campaign asked for house meetings across the nation on health care, the option suggested most often was indeed single payer.  So you didn’t hear much of anything about the outcomes of those meetings.  If that’s not dishonest hating on single payer health care it’s hard to imagine what is.

Instead, the Obama Administration’s emerging health care plan is expected to be based upon a model that has failed multiple times, most recently in Massachusetts, which includes “individual mandates” requiring people above a certain income level to purchase private insurance or face a fine, and provides some kind of care at subsidized rates to those with the lowerst incomes.  A recent study by physicians at Harvard Medical School meticulously exposes the predictable failure of the  Massachusetts Plan live up to any of its promises, and explains succinctly why no “individual mandate” which subsidizes private insurance companies should be a model for any national health care plan. It’s called “Massachusetts’ Plan”  A Failed Model for Health Care Reform“, and you can find it online here.

In it, Drs. Rachel Narden, David Himmelstein and Steffie Woolhandler, all of Harvard Medical School deliver a withering assessment of the plan’s failure, and explain why it must not be a model for any national health care plan worthy of the name.

These are the key features of the Massachusetts Plan upon which Obama’s health care plan is modeled.

  1. Subsidized private insurance is made available for the poorest at reduced or no cost through a state agency.
  2. Unsubsidized private insurance at controlled costs was to be made available for those who made a little more.
  3. As with automobile insurance, those not qualifying for subsidized insurance would be fined ($912 a year in 2008, $1,068 in 2009, collected with your state income tax) for failing to purchase insurance.
  4. Employers were required to pay $295 a year for each employee they didn’t give health insurance to.
  5. To control costs, funds to pay for the program were taken from the existing pool that previously financed “safety net” care for the poor and uninsured, leaving many with fewer options and less care than was available befor the “reform.”

But the subsidized health insurance policies available to the poor in Massachusetts often covered fewer services than they were already receiving under previously existing conditions, and the greater the “income” of these poor people, the lower the subsidy and higher the deductibles.  Under the Massachusetts Plan, the subsidies vanish altogether when one makes 300% of the ridiculously low Federal Poverty Level — about $31,000 per year.

Despite the fines for persons who fail to buy health insurance under the so-called “individual mandate” plans, many remain uninsured because coverage is simply not affordable.

“…the reform law specifically exempts uninsured families from fines if no affordable private plan is available. About 79,000 Massachusetts uninsured residents received this exemption in 2007, which excused them from fines, but left them uninsured.  

“The private insurance plans available through the Commonwealth Choice program can be extremely expensive. According to the Connector website (accessed December 29, 2008 at www.mahealthconnector.org) the cheapest plan available to a middle-income 56-year-old now costs $4,872 annually in premiums alone. However, if the policy holder becomes sick, (s)he must pay an additional $2,000 deductible before insurance kicks in. Thereafter the policy holder pays 20% co-insurance (i.e. 20% of all medical bills) up to a maximum of $3,000 annually ($9,872 in total annual costs including premium, deductible and co-insurance). A need for uncovered services (e.g. physical therapy visits beyond the number covered) would drive out-of pocket costs even higher. It is not surprising that many of the state’s uninsured have declined such coverage.”

How can someone making $31,000 a year pay $90 a week in premiums alone, plus $20% of all medical bills up to $3,000 if they get sick?  Is calling this “reform” even the least bit honest?  Or is it hypocrisy?

The study makes the point again and again that access to health insurance is not the same as access to health care.  A full third of every health care dollar is already diverted to private insurance companies.  The Massachusetts Plan, and the emerging Obama Plan seem intended to preserve this cut for private insurers, even at the expense of needed care.  “…(T)he new inssurance policies that replced the (previous) free care system require co-payments for office visits and prescriptions, which are difficult for many low income patients to pay…” says the study, hence patients suffering from HIV-AIDS and other chronic conditions have had to reduce doctor visits or skip their meds due to the high co-payments that the “reform” required.

The report outlines how the advocates of these private insurance industry endorsed versions of health care reform have lied in state after state where this has been tried — in Oregon, Maine, Vermont, Tennessee and elsewhere.  We encourage our readers to download and read it, at only 18 pages, as an antidote to whatever form of “individual mandate” health plan is finally proposed by the Obama Administration.   

Plans of this type have not lowered overall health care costs, either.  They provide no incentive to tone down the over-reliance on expensive techniques and specialists, and produce more primary care physicians, the doctors who provide day to day, person to person coverage.  Obama’s offer to ”let’s computerize medical records” as a cost-saving procedure sounds nice, but falls flat.  Most of the unecessary paperwork is between care givers, hospitals and insurers with a vested interest in saying no to this or that treatment, test, or medicine.  

During the presidential campaign, Barack Obama declared we should judge his first term by whether, under his leadership, the nation finally enacted national health care system that takes care of everybody and lowers the cost of health care.  Now we are in the middle of a completely foreseeable economic crisis caused in part by many of the people who are advising the president.  Single payer health care has come to the fore as a viable means to create 2.6 million new jobs, a proposal that Obama’s advisors neither address nor discuss.

Sixty days into his presidency, the clock is ticking.  Lofty rhetoric and lawyerly evasions are giving way to actual policies, many of them deeply disappointing to the people who campaigned and voted for this president.  It looks like national health care for everybody is a dream, that if left up to this president and his advisors, will be deferred again.  The question is, should we leave it up to them at all?

Bruce Dixon is managing editor at Black Agenda Report.  He is based in Atlanta GA and can be reached at bruce.dixon@blackagendareport.com.

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