“They Employ a Lot of Our Friends:” Left Reflections on Obama’s Corporatist Health Care Speech


I have no interest in putting insurance companies out of business. They provide a legitimate service, and employ a lot of our friends and neighbors.



- Barack Obama, Speech to a Joint Session of United States Congress, September 9, 2009





With Barack Obama as with Bill Clinton, you must always distinguish between progressive style and corporate-regime [1] substance.  Obama is a master when it comes to embodying what the formerly left Christopher Hitchens once (in a book about the Clintons) called "the essence of American politics" – "the manipulation of populism by elitism."[2] The president is a maestro at executing what former Clinton administration official David Rothokopf calls "the violin model," under which "you hold power with the left hand and you play the music with the right."[3] In other words, "you" gain and keep office with populace-pleasing progressive-sounding rhetoric but govern in standard service to existing dominant corporate and military institutions.


So yes, Obama lectures Wall Street on the immorality of executive bonuses. He visits Elkhart, Indiana to show solidarity with downtrodden working people. He campaigns on cleaning up Washington, ridding it of big special interests and corruption. And then he gives yet more of the public treasury and commons away to the Privileged Few, justifying grotesque handouts of the very same Wall Street perpetrators who drove the economy over the cliff and who rule his economic team as a noble expression of your "sensible," "realistic," and "pragmatic" commitment to rising above ideological divisions to "get things done" for the American people.  Funny how our "pragmatist"-in chief keep getting things done for the rich and powerful. It’s not for nothing that Obama’s presidential campaign garnered a record-setting $39 million (10 million better than McCain) from the finance, insurance, and real estate industries ("FIRE"), $44 million from the legal and lobbyist sector (33 million better than McCain), $25 million from the communications and electronics industries (20 million better than McCain), and more than $19 million from the health sector (12 million better than McCain).




Speaking of the health sector, Obama’s nationally televised high-stakes health care address to a joint session of Congress last Wednesday night was an excellent case in point. It aptly demonstrated the super-confident oratorical athleticism that helped him win voters and make Hillary Clinton and John McCain look even stiffer, paler, and duller than they already were. It contained flashes of quasi populist indignation crafted (with the latest polling data in mind as always) to keep his "liberal base’s" lips locked on the drinking gourd of Hope.


We heard two horror stories (no doubt true) about American citizens who died after being denied coverage by evil insurance corporations. "We are the only advanced democracy on Earth – the only wealthy nation – that allows such hardships for millions of its people." Indeed.


Obama spoke smartly about insurance companies’ practices of "treat[ing] their customers badly — by cherry-picking the healthiest individuals and trying to drop the sickest, by overcharging small businesses who have no leverage, and by jacking up rates."


We were told that insurance premiums driven by out-control health-care costs are rising at three times the rate as wages.  Angry working and social justice folks got another nod when Obama said that his reform would cost "less than the tax cuts for the wealthiest few Americans that Congress passed at the beginning of the previous administration." 


A little more than half way through they heard the president claim to be committed to a "public option" to guarantee universal access and "keep the insurance companies honest."  Obama said that "the insurance companies and their allies don’t like this idea," consistent with his determination to publicly distance himself from a "frenemy" industry that has privately lobbied him quite powerfully, with no small success – part of why Obama blew off his (I think cynical)campaign promise to broadcast his presidential health care negotiations "on C-SPAN."


In a nod to his onetime "antiwar" base, Obama claimed that the price tag of his proposed health reform ($900 billion between 2013 and 2023) would be less over ten years "than we have spent on the Iraq and Afghanistan wars." 


And, of course, the president gave the ridiculous, hyper-Caucasian Republicans a deserved spanking for their fear-mongering nonsense about the "socialist" (try corporatist) president’s imaginary "death panel" and "government takeover" scheme and his supposed plan to grant coverage to "illegal immigrants."[4]


There was more than enough in Obama’s speech to keep my hard-drinking, NPR-listening, power-worshipping, campus-town, and Obama-fan neighbors buzzed on Barack for another couple of months or so.  Enough progressive-sounding rhetoric was thrown their way to sustain their childish belief that Obama is "one of us" and not an agent of corporate and military empire. "I can’t prove it," these curious citizens tell me, "but I just know it in my heart of hearts." All it takes is some pleasing and intelligent-sounding rhetoric (the mere fact of sounding intelligent goes incredibly far in many liberal circles) to keep them remarkably loyal to "our guy" (the "Not Bush") "in the White House." 


Poor bamboozled subjects! If only they would read seriously beyond and between the carefully crafted faux-gressive lines to appreciate the deeper, big-business-friendly loyalties of the violin master at the helm of "our" corporate-managed dollar democracy.


The obnoxious Republican New York Times columnist David Brooks got it right this morning (I am writing early on Friday, September 11, 2009): "Obama threw out enough rhetorical chum to keep the liberals happy, yet he subtly staked out ground in the center on nearly every substantive issue."




"That elite is most successful," Hitchens wrote in 1999, "which can claim the heartiest allegiance of the fickle crowd; can present itself as most ‘in touch’ with popular concerns; can anticipate the tides and pulses of public opinion; can, in short, be the least apparently ‘elitist.’ It’s no great distance from Huey Long’s robust cry of ‘Every man a king’ to the insipid ‘inclusiveness’ of [Bill Clinton's slogan] ‘Putting People First,’ but the smarter elite managers have learned in the interlude that solid, measurable pledges have to be distinguished by a ‘reserve’ tag that earmarks them for the bankrollers and backers."[5]


Against a "Radical Shift"


There were at least five corporate-financial "reserve tags" attached to Obama’s violin concert last Wednesday evening. The biggest and most obvious earmark came early with his rapid and short dismissal of Canadian- (and Australian- and New Zealandian-) style single-payer health insurance (widely but irrelevantly popular with a majority of Americans for some time now) as "a radical shift that would disrupt the health care most people currently have." Single-payer (embodied in veteran black Congressman John Conyers’ [D-MI] bill, HR 676, supported by more than 75 U.S. house members) would constitute a significant progressive transformation (a "radical shift" if one likes) in how we pay for health care but the claim that substituting the government for parasitic vampire-like, for-profit corporations – the latter committed largely to denying and limiting care – in funding and (actually) guaranteeing coverage would "disrupt" peoples’ current health care experience is shameful corporatist deception (dare we say "fear-mongering"?) of the worst sort. 


Single-payer health insurance would cut $400 billion in annual costs currently lost to the insurance corporations’ profits and massively inefficient duplicative bureaucracies, dedicated to expensive marketing operations and endless paperwork connected with the provision, refusal, and limitation of care and coverage. Single-payer would also: eliminate working people’s slavish dependence on bosses for health care; reduce employers’ incentives to overwork their personnel (employment-based health care is part of why Americans have the longest working hours in the industrialized world); and potentially create millions of new jobs by off-loading much of employers’ massive health care compensation costs.  Those costs are a major hiring "disincentive" that make it more profitable to manufacture cars in Canada than in Michigan.


"They Provide a Legitimate Service" and Employee a Lot of People


Then there was this interesting and related comment from the president last Wednesday evening: "Now, I have no interest in putting insurance companies out of business. They provide a legitimate service, and employ a lot of our friends and neighbors." 


Perhaps Barack Obama would like to describe precisely what that "service" is and, along the way, to precisely differentiate this "service" from that formerly provided to tavern and gambling and prostitution house proprietors by La Cosa Nostra. 


But then, single-payer advocates are not calling for the abolition of insurance companies.  They advocate the eviction of insurance companies from those corporations’ parasitic and cost-driving role in the provision (and denial) of health care.  If that overdue expulsion drives some insurance companies out of business, causing employment problems for many Americans, then the U.S. faces the welcome challenge of providing workers displaced from a quintessentially bloodsucking industry with socially useful employment.


To justify an economic activity or institutional simply because it employees many people is to step onto a very slippery moral slope.  The nation’s excessive, globally unmatched, and racially hyper-disparate mass arrest and incarceration system (producer and jailer of more than 2.3 million U.S. prisoners, more than 40 percent of whom are black in a nation that is just 12 percent African-American) provides employment to millions of Americans, after all. So does the massive military-industrial Pentagon System, which accounts for nearly half the world’s military spending and maintains an empire of  more than 760 bases spread across more than 130 countries – all in the name of something called "defense." It also, of course, constitutes a major public subsidy and profit stream to such deadly high-tech corporate war-masters as Boeing, Raytheon, Lockheed-Martin, Halliburton, and Blackwater/XE.


The president forgot to mention that the insurance companies also provide a lot of political funding to political candidates, including Obama, who received that cool $39 million from "FIRE."



Feared "Sticker Shock" Trumps Universal Coverage


Another business-friendly reserve tag is Obama’s proposal for his program to be funded at just $900 billion over ten years, too little deliver on the promise of coverage for every American.  As the New York Times noted the morning after the president’s speech, "The number suggests a political and fiscal calculation to avoid the sticker shock of the trillion-dollar threshold. But it probably means that Mr. Obama could fall short of his goal of providing universal coverage for all Americans because the lower cost may force lawmakers to reduce the subsidies needed to help more uninsured individuals and small businesses seeking coverage for employees."


With all due respect for the president’s interesting (though low-ball) comment on the comparative costs of "the [U.S] Iraq and Afghanistan wars [of colonial invasion and occupation, P.S.]," we might add that Orwellian rules prevent either him or the Times from having the elementary decency to note that the supposedly horrific ten-year health care cost of $1 trillion is roughly what the federal government spends each year on the American "defense" (empire) budget.  It is far less than what taxpayers have spent (also and more clearly against their will) on bailing out Wall Street perpetrators since the fall of 2008.


A Stealth Form of Tax Regressivity


A fourth reserve tag: Obama’s deletion of any reference to reversing the arch-plutocratic Bush administration tax-cuts he mentioned in his address.  During the campaign, Obama (following the lead of "fighting" John Edwards) repeatedly cited the reversal of Bush’s tax cuts for Americans "earning" more than $250,000 a year as the funding source for his proposed health reform.  Instead of resurrecting that mildly progressive pledge (deemed "contrary to recovery" in the closely linked minds of Wall Street and the White House), Obama rolled out Senator John Forbes Kerry’s (D-MA) notion of taxing health insurance companies’ most expensive policies, something that would – the Kerry (and Sen. Max Baucus [D-MT]) argument goes – encourage employers to purchase cheaper coverage for their workers, discouraging "excessive use of medical services." Labor and many House Democrats note correctly that this tax will be passed on to workers in the form of higher premiums, violating the spirit if not the exact letter of the president’s promise not to raise taxes on anyone making less than $250,000 a year.


Public Optional


A fifth and critical related plutocratic reserve tag took the form of Obama’s less-than-inspiring and far-from-unequivocal call for a (small and marginal) "public option." The president maintained his standard hyper-cautious ambiguity on the contentious question of whether Congress should establish a new government insurance program to compete with private insurers.  He indicated that the significance of the "public option" had been exaggerated by left and right alike. While he would prefer to see such an option in the mix, he said, "it is only one part of my plan," merely a "means to the end" of affordable coverage for all. 


Continuing with the "mixed signals" the White House has been sending for some time, Obama declared his openness to alternatives to a public option, including "nonprofit insurance cooperatives and a backup plan that could be offered by the government in certain circumstances." Obama further qualified his interest in the "public option" by saying that it would likely enlist "less than 5 percent" (!) of the nation’s health insurance recipients once it was up and running – hardly something for the insurance CEOs to lose sleep over, especially as Obama’s call for mandatory health insurance purchase promises to delver the insurance mafia tens of millions of new "customers." Obama clearly has no interest in seeing a truly "robust" public option that would function as an extension of Medicare or anything close to a real and viable popular alternative to private insurance.




It’s long past time for progressives to stop seeing the vaguely defined "public option" that has been floating around Congress as a meaningful progressive fall-back to the comprehensive single-payer reform that is the real cost-effective and social-democratic counter to corporate-managed health care and to corporate-managed "health reform."[6] As the left-progressive labor journalist and policy analyst Roger Bybee has shown in a series of cogent critiques published in late 2008 and early 2009 [7], the corporate-regime Obama-Emmanuel-Pelosi-Reid-Clinton Democrats’ "Guaranteed Choice" schemes have always been plagued by four basic problems not present in a single-payer system:


* "Adverse Selection": private insurers (who would continue to provide most of the nation’s health coverage by far under Obama’s scheme) would be permitted to use "denial of authorization" for treatments to push "costly" (older and sicker) patients into an over-burdened public option plan.  Those insurers would also use advertising and perks (e.g. free health-club memberships) to attract the healthy and keep them out of the public option. That option would be saddled with a disproportionate share of the sick.  That would in turn raise the "public plan’s" prices premiums, helping make private plans more attractive healthy people.


* Lost Administrative Savings. By retaining for-profit insurers, the corporate Democrats "forsake almost all of the potential $400 billion a years in excess administrative overhead that could be eliminated by a single-payer system.  Private insurers with their huge overhead costs devoted to a strategy of ‘denial management – paying as few claims as possible – would remain in operation," Bybee notes.  "Also still intact would be the overhead costs hospitals and doctors pay to deal with securing payments from patients and multiple insurers with intricate differences in coverage."


* Absent Cost Control.  The corporate-Clintonian business-liberal Obama Democrats’ plan contains no effective measures to prevent insurers from boosting profits by continually raising premiums – something that insurers will be certain to do with great frequency in response to the Obama plan’s (in-itself noble) denial of insurance corporations’ right to deny coverage on the basis of pre-existing conditions. The "mainstream" Democrats’ reform also contains no provision to prevent insurers from continuing their practice of "improperly allocating all kinds of administrative costs as medical expenses for anything than can be labeled an effort to improve quality and cut costs."


* Unaffordable Mandates. The Obama plan’s requirement that all individuals who can "afford" to do so buy health insurance or pay a financial penalty ignores the critical fact that private health insurance premiums are typically too high for many working people. As has been seen in the handful of states (Massachusetts, Tennessee, Minnesota, Oregon, Washington, and Vermont) with "universal plans" based on individual purchase mandates (with penalties for those who do not buy in), the outcome is often "coverage without care" and a tendency for many to tragically identify "universal coverage" not with "government help" but rather with "government coercion."    





There’s more that one could note in an unpleasant light about Obama’s speech of and for the corporate "health" and death regime, including his threat to impose new cost controls, his concessions to Republican’s misleading medical malpractice machinations, and his denial of the fact that we actually need to find reasonable ways to cover the medical costs of human beings who happen to be illegal immigrants. But I’ll let it rest for now, satisfied that there was nothing in Obama’s latest great oration to make us question the wisdom of Business Week’s candid judgment more than a month ago: "Health Insurers Have Already Won."  "The industry," Business Week writers Chad Terhune and Keith Epstein matter-of-factly concluded, "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."[8] And dominate policy, in cold defiance of public opinion, we might add – a curious reflection on life in the "world’s greatest democracy."


Paul Street ([email protected]) is the author of many articles, chapters, speeches, and books, including 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), Empire and Inequality: America and the World Since 9/11 (Boulder, CO: Paradigm, 2004), Segregated Schools: 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. On corporate regimes in U.S. history and the distinction between corporate regime Democrats and progressive Democrats, see Charles Derber, Hidden Power: What You Need to Know to Save Our Democracy (San Francisco, CA: Berrett-Koehler, 2005)


2. Christopher Hitchens, No One Left to Lie To: The Values of the Worst Family (New York: Verso, 2000), 17-18.


3. David Sanger, "Obama Tilts Toward Center, Inviting a Clash of Ideas," New York Times, November 22, 2008, A1.  


4. Obama has no intention of making it legal to cover "illegal immigrants."  This is sad, since, of course, stateless people without papers will continue to suffer injuries and ailments, showing up in U.S. hospital emergency rooms, the cost of their care in fact being passed to health care "consumers."


5. Hitchens, No One Left to Lie To, 18.


6. Please see the useful reflections in Bruce Dixon, "The President, Progressives, and the Myth of a Robust Public Option," Black Agenda Report (September 9, 2009), read at http://www.blackagendareport.com/?q=content/president-progressives-and-myth-robust-public-option


7. See R. Bybee, "Health Reform via ‘Guaranteed Choice,’ Z Magazine [December 2008], "Crisis=Opportunity for Single Payer," Dollars and Sense [March 2009], and "Obama’s Health Reform," Z Magazine [July/August 2009]). 


8. Chad Terhune and Keith Epstein, "The Health Insurers Have Already Won," Business Week (August 6, 2009), read at http://www.businessweek.com/print/magazine/content/09_33/b4143034820260.htm

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