Wednesday, August 19, 2009

Big Business Loves Health-care Reform

Big Business Loves Health-care Reform
By Jerome Grossman

The liberals achieve their maximum political strength in the Democratic Party primary elections: they speak up at meetings, define the issues, make early political contributions, and rarely miss a vote. As political consciousness spreads slowly through the rest of the electorate, the liberal influence and vote diminishes in importance. They know that agreements on issues with candidates must be made early in the campaign and are likely to be modified under the pressures of the wider campaign.

In the 2008 presidential campaign, neither Barack Obama nor Hillary Clinton gave the liberals the health-care position they wanted: the transformation of the U.S. system of private insurance coverage to a single-payer expansion of Medicare that would include all Americans, a system paid for out of general tax revenues. Obama came the closest, saying that if he were to install a new system from scratch it would be single-payer. That was enough for the liberals to vote for him out of love and hope.

And indeed the Obama administration never proposed a health-care revolution challenging the insurance and drug industries. Such a challenge might have been successful if Obama was prepared to play political hardball, using political power to force compliance from Congress and business interests. Like Obama, Franklin Delano Roosevelt and Lyndon Johnson won landslide victories in 1932 and 1964 gaining huge majorities in Congress. They knew how to use their political power generated by the landslides to force liberal legislation through an unwilling Congress by threatening the incumbents with loss of privileges, loss on their ability to pass legislation, loss of political contributions, loss of appointment of friends, etc. That was how they revolutionized the nation by installing the Social Security System, minimum wage, civil rights and voting rights legislation, Medicare, to name just a few, but not as defined by Chris Mathews on TV as merely talking tough.Chris Matthews worked for Speaker Tip O'Neill, a nice guy with no particular ideology whose idea of pressure was scotch and soda and a joke on the nineteenth hole.

Without hardball, President Obama will get a health-care bill but it won't be a revolution and it may not even be reform. His people have already made a deal with the pharmaceutical companies, the Pharmaceutical Research and Manufacturers of America. The industry will offer $8 billion a year in consumer savings for 10 years out of its current annual profits of $300 billion a year. Industry benefits: the barriers against importation of foreign drugs will be maintained; the government's ability to use its enormous purchasing power to negotiate lower drug prices is off the table; the government will subsidize more drug purchases by seniors.

Insurance companies are similarly delighted with other elements of "reform". The government will require the uninsured to buy health insurance, subsidizing them if necessary. These millions of mostly young and healthy customers will demand few services, increasing industry profits far more than the cost of the Obama changes. The oldest and the sickest will be on Medicare, the poorest on Medicaid, the young and healthy new customers must buy from the insurance companies. Looks like a good deal for the health-care industry. And Obama’s lieutenants have discovered that it is easier to deal with big business than with the Republicans and their Blue-Dog allies in Congress.


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