Corporatist Health Reform as an “Attack on Wealth Inequality”:

“It’s very similar to the bill Republicans advocated in ’93 [with its]… basic approach, which is a free-market, market-based-system approach.”

- Rahm Emmanuel, Chief of Staff to U.S. President Barack Obama, speaking to Jim Lehrer on the just-passed Patient Protection and Affordable Health Care Act (PPAHCA) on the “Public” Broadcasting System’s “News Hour,” March 25, 2010 [1].



As became clear to me while talking to local Democrats waiting to see their hero Barack Obama speak in Iowa City last week, many liberals want badly to believe that the President’s conservative health reform bill is a truly progressive and egalitarian measure.  Like Republican “tea-baggers” who protested so-called “socialist Obamacare” the Democrats didn’t want to hear anything about how Obama’s measure is a state-capitalist and corporate-welfarist gift to the insurance oligopoly, the leading pharmaceutical firms, and their Wall Street backers.  


“Obama Attacks Wealth Inequality”


In defense of this denial, some liberals have cited a recent New York Times article by that paper’s business writer David Leonhardt.  Titled “In Health Bill, Obama Attacks Wealth Inequality,” Leonhardt’s report claims that “Mr. Obama was willing to spend so much political capital on the issue of health reform” because the legislation reflected the president’s “deliberate effort to end…[the plutocratic] age of Reagan” and replace it with an era of people-friendly “bottom-up economic growth.” Calling Obama’s health bill “the federal government’s biggest attack on economic inequality since inequality began rising more than three decades ago,” Leonhardt notes that “a big chunk of the money to pay for the bill comes from lifting payroll taxes on households making more than $250,000” (he might have added the 3.8 percent tax on unearned income for higher-income taxpayers.) and that “another major piece of financing would cut Medicare subsidies for private insurers, ultimately affecting their executives and shareholders.”


The benefits, Leonhardt writes, run mainly to households making less than four times the poverty level ($88, 200 for a family of four).  People without insurance in that broad category will become eligible “for government subsidies or to join Medicaid.” By increasing the number of people covered by health insurance (from 85 percent today to 95 percent in 2019) and permitting people to purchase insurance with pre-existing medical conditions, Leonhardt ads, the bill will reduce “the gap between the economic well-being of the sick and the healthy.” (New York Times, March 23, 2010).


Curious Deletions


One can see how Leonhardt’s case might seem compelling to many liberal readers. But there’s a lot of wealth- and power-serving spin, evasion, and deletion in his analysis. There’s nothing in his article about how the “reform” bill prohibits the government from negotiating prices with drug companies and from permitting the importation of drugs or about how it allows the big insurance companies to retain their noxious exemption from antitrust laws. There’s nothing about how the bill denies coverage to “illegal” (and other) immigrants, who will continue to frequent emergency rooms and receive care.


There’s nothing about the following regressive and disturbing problems noted in a powerful critique from leading members of Physicians for a National Health Program (PNHP):


* “About 23 million people will remain uninsured nine years out. That figure translates into an estimated 23,000 unnecessary deaths annually and an incalculable toll of suffering.”


* “ Millions of middle-income people will be pressured to buy commercial health insurance policies costing up to 9.5 percent of their income, but covering an average of only 70 percent of their medical expenses, potentially leaving them vulnerable to financial ruin if they become seriously ill. Many will find such policies too expensive to afford or, if they do buy them, too expensive to use because of the high co-pays and deductibles.”


* “Insurance firms will be handed at least $447 billion in taxpayer money to subsidize the purchase of their shoddy products. This money will enhance their financial and political power, and with it, their ability to block future reform.”


* “The bill will drain about $40 billion from Medicare payments to safety-net hospitals, threatening the care of the tens of millions who will remain uninsured.”


* “People with employer-based coverage will be locked into their plan’s limited network of providers, face ever-rising costs and erosion of their health benefits. Many, even most, will eventually face steep taxes on their benefits as the cost of insurance grows.”


* “Health care costs will continue to skyrocket, as the experience with the Massachusetts plan (after which this bill is patterned) amply demonstrates.”


* “The much-vaunted insurance regulations–e.g., ending denials on the basis of pre-existing conditions–are riddled with loopholes, thanks to the central role that insurers played in crafting the legislation. Older people can be charged up to three times more than their younger counterparts, and large companies with a predominantly female workforce can be charged higher gender-based rates at least until 2017.”


* “Women’s reproductive rights will be further eroded, thanks to the burdensome segregation of insurance funds for abortion and for all other medical services.” (PNHP, “A False Promise of Reform,” March 22, 2010, read at www.pnhp.org/news/2010/march/pro-single-payer-doctors-health-bill-leaves-23-million-uninsured).


There’s nothing in Leonhardt’s article about how money raised from slightly increased future taxes on the wealthy will return to the rich through premium subsidies and the mandate that (nearly) everyone purchase insurance. As the PNHP members ad, “The bill…require[s]  millions of Americans to buy private insurers’ defective products, and turn over to them vast amounts of public money.”


That is regressive state capitalism in the interest of the corporate Few, not progressive policy on behalf of the ordinary working- and lower-class Many. It enriches the owners and top managers of the basic problem: the “private” for-profit insurance syndicate. Surely, if Leonhardt can note that cutting Medicare subsidies will “ultimately [negatively] effect [private insurers’] executives and shareholders” he could have the decency to observe that requiring millions more Americans to buy private insurance and pouring in massive federal subsidies to pay for the purchase of the insurers’ damaged instruments will “ultimately [positively] effect” the insurance firms’ profits. Leonhardt could also have acknowledged that all serious plans to expand health coverage would spread the risk of illness and injury across a larger pool of insured. This is hardly a unique attribute of the Republican (1993 vintage, by Rahm Emmanuel’s account) bill just passed by corporate Democrats and their not-so “progressive” Democratic enablers (see P. Street, “Health Reform: Theirs and Ours,” ZNet, March 24, 2010).


“A Market-Based System Approach”


But no other health reform plans are visible in Leonhardt’s analysis, revealingly enough.  He writes as if the relevant policy counter-point to the corporate Democrats’ “Patient Protection and Affordable Health Care Act” (PPAHCA) was Ronald Reagan’s tax cuts for the wealthy, not single-payer health insurance (with the government as sole “insurer” and the provider of universal coverage) or versions containing a public alternative (Medicare for All) to corporate-managed health care. 


This is a critical and telling omission. There’s nothing in Leonhardt’s article about how the Obama bill represents a great victory for the corporate insurance mafia over and against more truly progressive and redistributive health policy options that the popular U.S. majority (almost irrelevantly) supports.


Leonhardt is dreaming if he thinks that Obama and other top Democrats conceived and fought for the PPAHCA primarily as an assault on “wealth inequality.” The Obama administration and Democratic leadership’s basic objective this late winter and early spring has been to score a perceived policy success (of any kind) on something that played a special part in Obama’s presidential campaign for the simple reason that masses of voters were (quite legitimately) outraged by the high cost, limited availability, and often low quality of health care in the United States – the only “advanced” industrialized state that does not guarantee coverage to its entire populace. Failure to pass some version of “comprehensive health reform” was widely seen as a major blow to Obama’s chances of enjoying a second term.


In pursuit of a “health care victory,” the president and the Democrats worked with the structurally super-empowered business class and especially with the leading insurance, hospital, and drug companies to craft what Obama’s chief-of-staff Rahm Emmanuel proudly calls “a free-market, market-based-system approach.” Close in basic design to what the Republican Party proposed in the 1990s and to the right of what Richard Nixon proposed in the early 1970s, the bill is consistent with Obama’s comment to CNCBC three days after Hillary Clinton withdrew from the Democratic presidential contrast in June of 2008: “Look, I am a pro-growth, free market guy. I love the market” (N. Klein, “Obama’s Chicago Boys,” The Nation, June 12, 2009)[2].


By now pretty much completely under the control of oligopolistic corporate management, “free market” forces are notorious agents of inequality. As the left historian and political commentator Laurence Shoup noted two months before the 2008 elections, “the market loves and rewards those who already have money and power, not those lacking these advantages.  To say that you ‘love the market’ is akin to saying that you love the ruling class (the top 1 percent of the population that controls 20 percent of the country’s income and nearly 40 percent of the country’s wealth) and do not care about the great majority (the 60 percent of the population that controls only 25 percent of the income and 5 percent of the wealth).  To say ‘I love the market’…is to be deaf to the reality of how powerful interests are protected by the government while everyone gets a lecture on personal responsibility.”  (L. Shoup, "Obama and McCain March Rightward," Z Magazine, September 2008, p. 27).


“The Battle is Already Over”


Consistent with his “market”-love (corporate-love under really existing oligopolistic conditions), Obama as president never took seriously the long popular notion of a national single-payer government plan that would eliminate the main institutional taproot of the problem: the profit-driven, private health insurance industry. Deceptive claims to the contrary, he also made no serious effort to meaningfully advance and defend a robust public insurance option (“Medicare for All” who want it), supported by two-thirds of the U.S. populace in a September 2009 CBS-New York Times poll (New York Times-CBS Poll, “Confusion Over Health Care,” survey of 1,042 adults, September 19-23, question number 57, p. 15 of 26).  According to Business Week last August, the insurance industry had already in the early summer of 2009 on its basic goal in the health reform process: excluding a public insurance option from serious consideration by Obama and other key Democrats:


“As the health reform fight shifts this month from a vacationing Washington to congressional districts and local airwaves around the country, much more of the battle than most people realize is already over. The likely victors are insurance giants such as UnitedHealth Group, Aetna , and WellPoint. The carriers have succeeded in redefining the terms of the reform debate to such a degree that no matter what specifics emerge in the voluminous bill Congress may send to President Obama this fall, the insurance industry will emerge more profitable. Health reform could come with a $1 trillion price tag over the next decade, and it may complicate matters for some large employers. But insurance CEOs ought to be smiling.”


“…The [insurance] industry has already accomplished its goal of at least curbing, and maybe blocking any new publicly administered insurance program that could grab market share from the corporations that dominate the business.”


Significantly, Business Week noted that industry executives had “already offered” such “concessions…as accepting all applicants, regardless of age or medical history.” Such allowances “make a government-run competitor unnecessary,” UnitedHealth’s Oxford-educated Vice President Simon Stevens (a former advisor to neoliberal British Prime Minister Tony Blair) told leading administration and elected officials in Washington . ."We don’t think reform should come crashing down because of [resistance to] a public plan," Stevens argued. “Many congressional Democrats have come to the same conclusion,” Business Week candidly noted (C. Terhune and K. Epstein, “The Health Insurers Have Already Won,” Business Week, August 6, 2009).


The key point for the corporate insurance syndicate was to block any profit-reducing public replacement or competition. The insurance moguls were quite ready to give on lesser and collateral issues to achieve their major goal. Their plutocratic objective, deeply regressive and successfully achieved more than half a year ago, was to “redefine” and set the terms in a way that left core corporate prerogatives intact and unchallenged by popular public alternatives


“Quid Pro Quo Handshake Deals”


As has been known by people who care for some time, Obama cut also backroom deals last summer with the drug and for-profit hospital industries. Under the terms of the corrupt bargains, recently described by New York Times reporter David Kirkpatrick as “quid pro quo handshake deals on both sides,” Obama agreed NOT to honor his election pledges to pursue a public insurance option, to let Medicare negotiate for lower drug prices and to allow Americans to buy cheaper drugs from Canada (for Kirkpatrick’s original story, see “Obama is Taking an Active Role in Talks on Health Care Plan,” New York Times, August 12, 2009).  “Even while President Obama was saying that he thought a public option was a good idea and encouraging supporters to believe his healthcare plan would include one,” the liberal attorney Miles Mogulesco recently noted on Huffington Post, the White House “had promised for-profit hospital lobbyists that there would be no public option in the final bill.” By Mogulesco’s account, “there are serious questions about the extent to which Obama, with the help of Rahm Emanuel, used a K Street strategy [relying on inside corporate connections and lobbyists – P.S.] to pursue health care reform.”  The outcome, Mogulesco added, “is a health care bill that is generally unpopular with voters,” who “viscerally sense that the White House and Congressional Democrats may be as concerned with protecting special interests – whether it’s drug companies, private hospitals, or Wall Street banks – than they are with protecting the people.” (M. Mogulesco, “New York Times Reporter Confirms Obama Made Deal to Kill Public Option,” Huffington Post, March 16, 2010),


A Curious Motive for the Reagan-Praising “King of Corporate Subsidies”



If the Obama-Pelosi-Reid health reform does in fact “attack wealth inequality” to any significant degree (that remains to be seen), the “attack” must be seen as relative, highly qualified and as a defensive measure to prevent more seriously progressive and more redistributive and radical reforms that are (all-too invisibly) supported by the majority of Americans. The explicitly pro-capitalist and pro- “free market” Obama and other elite (neo-) “liberals” may perhaps believe that Reagan- and Bush-Cheney-era levels of socioeconomic disparity are dangerously de-stabilizing and dysfunctional for the “homeland’s” corporate-managed social fabric. 


This hardly makes them progressive egalitarians or anything close. The United States will certainly sustain its status as the industrialized world’s most unequal and wealth-top-heavy society well beyond the passage of the new health legislation. This should bring few complaints from Obama.  Rightfully dubbed “King of Corporate Subsidies” by liberal political scientist Thomas B. Edsall last year, Obama has set a new standard for the transfer of taxpayer dollars to the Wall Street speculator class [3] – this even though he has repeatedly proclaimed that the vicious slashing of public cash assistance for deeply poor American women and children (so-called “welfare reform”) was a great and necessary policy success [4].  As a presidential candidate, Obama praised the arch-reactionary Ronald Reagan for “chang[ing] the trajectory of America ” and rescuing the U.S. from the supposed radical “excesses” of the 1960s [5] and wrote the following in his 2006 campaign book The Audacity of Hope:


“Calvin Coolidge once said that ‘the chief business of the American people is business,’ and indeed, it would be hard to find a country on earth that’s been more consistently hospitable to the logic of the marketplace.  Our Constitution places the ownership of private property at the very heart of our system of liberty…..  Rather than vilify the rich, we hold them up as role models…As Ted Turner famously said, in America money is how we keep score.”


“The result of this business culture has been a prosperity that’s unmatched in human history.  It takes a trip overseas to fully appreciate just how good Americans have it….  America may have been blessed with some of the planet’s best real estate, but clearly it’s not just our natural resources that account for our economic success.  Our greatest asset has been our system of social organization, a system that for generations has encouraged constant innovation, individual initiative and efficient allocation of resources…our free market system[6].


The “progressive” Obama’s Audacity of Hope left it to hopelessly alienated and insufficiently “realistic” “carpers,” “cranks” and “gadflies” (Obama’s insulting description of the populist U.S. Senator Paul Wellstone) and other dangerous “zealots” and “ideologues” of the “morally absolutist” and insufficiently “pragmatic” Left to observe the terrible outcomes of America’s distinctively anti-social and incidentally heavily state-protected “free market system” and “business culture.”  Those unfortunate results include the marvelously “efficient,” climate-warming contributions of a business-dominated nation that constitutes 5 percent of the world’s population but contributes more than a quarter of the planet’s carbon emissions.  Other notable effects include the innovative generation of poverty for millions of U.S. children while executives atop “defense” firms like Boeing and Raytheon rake in billions of taxpayer dollars for helping Uncle Sam kill and maim untold hundreds of thousands of Iraqi civilians. It was left to the radical lunatic fringe to note the American System’s “efficient” allocation of more than a third of the nation’s wealth to the top 1 percent of the U.S. population and its systematic subordination of the common good to private profit.  “Unreasonable” Marxists, left-anarchists and “conspiracy theorists” were left to observe that business-ruled workplaces and labor markets steal “individual initiative” from millions of American workers subjected to the monotonous repetition of imbecilic and soul-crushing operations conducted for such increasingly unbearable stretches of time – at stagnating levels of  material reward and security – that working people are increasingly unable to participate meaningfully in the great “democracy” Obama trumpeted as the Founders’ great legacy.


David Leonhardt, who covered (and supported) corporate-welfare kingpin Barack Obama’s bailouts of Wall Street, should  know better than to feed hopeful liberals’ childish dreams of Obama as a champion of the people over and against the wealthy Few.                                        


Paul Street’s next book The Empire’s New Clothes: Barack Obama in the Real World of Power ( Boulder , CO : Paradigm, 2010), will be released next summer. Street ([email protected]) is the author of Empire and Inequality: America and the World Since 9/11 ( Boulder , CO : Paradigm, 2008); Racial Oppression in the Global Metropolis ( New York : Rowman & Littlefield, 2007); Segregated School: Educational Apartheid in the Post-Civil Rights Era ( New York : Routledge, 2005); and Barack Obama and the Future of American Politics ( Boulder ,  CO : Paradigm, 2008).




1. Transcript at www.allyourtv.com/index.php?option=com_content&view=article&id=1058:transcript-rahm-emanuel-on-pbs-newshour-03252010&catid=1:latest-news



2. For the primary source, see “Obama Interview on CNBC,” The Page (June 2008, n.d.) read at http://thepage.time.com/obama-interview-on-cnbc/


3. Thomas B. Edsall, “Barack Obama: King of Corporate Welfare,” Huffington Post, April 24, 2009. “No matter what else he achieves or where he falls short,” Edsall noted, “Barack Obama can lay claim to the title of King of Corporate Subsidies…Using any variety of measures, the Obama administration has broken all records in the distribution of tax dollars to American businesses, primarily banks, automobile manufacturers and insurance companies…The tidal wave of dollar bills has stunned folks on all sides of the political spectrum.” It is worth adding here that Obama went out of his way in late September of 2008 to praise George W. Bush’s arch-plutocratic and authoritarian Treasury Secretary Hank Paulsen as a reasonable and practical man of good will and sound judgment.  A former CEO of Goldman Sachs and the original architect of the massive federal giveaway to the very elite Wall Street, Paulsen had attempted to make the bailout and his own office literally above the rule of law. Section 8 of his original bailout package read as follows: “Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.” The Bush-Paulsen-Wall Street money and power grab struck many observers and citizens as nothing less than an attempted financial “coup.”  In his first public remarks about the Bush-Paulsen proposal, candidate and soon-to-be President Election Obama offered what the New York Times called “qualified support.” ‘This initial outlay of up to $700 billion is sobering,” Mr. Obama said. “In return for their support, the American people must be assured that the deal reflects the basic principles of transparency, fairness, and reform.” In an interview aboard his campaign plan, Obama “offered guarded praise of how Treasury Secretary Henry M. Paulson Jr. is managing the crisis…While he is critical of how the crisis began,” Times reporter Jeff Zeleny noted, “Mr. Obama offered kind words for the instincts and judgment exercised by Mr. Paulson in recent weeks. The two have spoken on the phone nearly every day for the past week about the problem. ‘He has been put in a situation where there are no great options,’ ” Mr. Obama said. ‘I think he’s a serious person. I think he is not an ideologue.  I think he’s very practical-minded and he wants to solve the problem.’ ” See Jeff Zeleny, “Obama: No Blank Check on Bailout,” New York Times, September 22, 2009, read at http://thecaucus.blogs.nytimes.com/2008/09/21/obama-no-blank-check-on-bailout/ 


4 For evidence of and reflections on Obama’s (frankly nauseating) position on “welfare reform,” see Paul Street , Barack Obama and the Future of American Politics ( Boulder , CO : Paradigm, 2008), 93-95


5 For some fascinating “liberal” praise of Reagan, see Barack Obama, The Audacity of Hope: Thoughts on Reclaiming the American Dream ( New York : Crown, 2006]), 31-32, where Obama reflects on how “[Reagan’s] critics” dysfunctionally “carped” about the policies of the man who “changed the trajectory of America ” away from the radical tendencies of the frightening Sixties. For more disturbing information on Obama’s attachment to Reagan, see Street, Barack Obama and the Future, 96-98.


6 Obama, The Audacity of Hope, pp. 149-150.


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