The Health Care Flaw

The Health Care Flaw

In 2010, Congress enacted the Patient Protection and Affordable Care Act in order to increase the number of Americans covered by health insurance and decrease the cost of health care. One key provision is the individual mandate, which requires most Americans to maintain “minimum essential” health insurance coverage.

Argued March 26–28, 2012 and decided June 28, 2012, National Federation of Independent Business versus Kathleen Sebelius as the 21st United States Secretary of Health and Human Services was a landmark United States Supreme Court decision in which the Court upheld Congress's power to enact most provisions of the Patient Protection and Affordable Care Act (ACA), commonly called Obamacare. It also upheld enactment of the Health Care and Education Reconciliation Act (HCERA), including a requirement for most Americans to have health insurance by 2014. The Supreme Court, in an opinion written by Chief Justice Roberts, upheld by a vote of 5 to 4 the individual mandate to buy health insurance as a constitutional exercise of Congress's taxing power.

Nonetheless, Republicans and Democrats in Congress began their bickering over funding the government and President Obama's health care law.

Sept. 29, 2013, just after midnight on Sunday morning, the House of Representatives used a rare and lengthy weekend session to shift its demands for restricting Obamacare. By a near party-line 231-192 vote, the House voted to delay implementation of the health care law by a year. It also voted 248-174 to repeal a tax on many medical devices that helps pay for the health care overhaul.

Sept. 30, 2013, after the Senate removed the House provisions postponing Obamacare and erasing the medical device tax, the shutdown bill moved back to the House. The House approves a new shutdown bill 228-201 with different demands on Obamacare. It would delay for a year the requirement that individuals purchase health insurance, and require members of Congress and their staff to pay the full cost of health insurance, without the government paying part of the costs. The measure then bounced to the Senate.

The Senate voted 54-46 to strip the House provisions on individual health insurance and federal health coverage subsidies for lawmakers and staff. The bill returns to the House. Shortly before midnight, White House Budget Office Director Sylvia Mathews Burwell sent memo to agency heads stating that a shutdown seemed unavoidable.

The following Tuesday, Oct. 1, 2013, with no spending legislation enacted, partial federal shutdown began to take effect. House voted 228-199 to stand by its language delaying required individual health coverage and blocking federal subsidies for health insurance for lawmakers and staff, and to request formal negotiations with the Senate. The U.S. government shutdown began as the result of the Republican-run House vote to approve legislation denying money for much of the health care law.

The Republicans are now responsible for intensifying conservative fervor for using the shutdown bill to try to force Democrats to limit Obamacare. The obstinate determination of the Republicans to forestall Obamacare is so invincible that the latest twist in the budget battle is whether the House of Representatives could open the government with a so-called "clean" budget resolution. The government shutdown could be ended immediately by putting a no-strings-attached spending bill up for a vote on the House floor - that is, a bill that deals only with the federal budget, and that does not address funding for the Affordable Care Act or defunding Obamacare, as many Republicans would like. But Republicans have already reneged on their previous agreements regarding the Affordable Care Act and do not seem to be willing to give in now, holding the government hostage over Obamacare.

Certainly, there must be something wrong with that piece of legislation, if it has become such a cornerstone of contention in the Congress. With the shutdown in its ninth day, Congressional leaders met to discuss the issue Wednesday, when House Speaker John Boehner, R-Ohio, and Majority Leader Eric Cantor, R-Va., met with House Minority Leader Nancy Pelosi, D-Calif., and Minority Whip Steny Hoyer, D-Md., sat down for about a 40 minute meeting. Right after the meeting, however, Boehner took to the House floor to double down on the Republican position that Obamacare be part of negotiations to fund the government and raise the debt ceiling.

Putting aside the details as to who is not doing enough to cooperate with whom, one thing is clear, i.e. some members of the U.S. government are not willing to introduce greater regulation of the U.S. health care sector. So far, House Republicans have passed a bill that would create a 20-member bicameral working group to negotiate over government funding. Senate Democrats have introduced their own bill that raises the debt limit with no other conditions.

The Republican effort to curtail President Barack Obama's health care law has not been substantiated by any feasible argument on their part. When asked, they simply refuse to answer unequivocally and do not discuss the main reasons behind their attack on Obamacare. However, there is at least a tactical reason Republicans have been rushing recently to try and defund the Affordable Care Act before October 1, when major sections of the law took effect.

It has been reported that Republicans know what polls show — that most Americans do not know exactly what is in Obamacare, but when told what the law actually includes, a strong majority support the law. Once state health insurance exchanges take effect, and premiums for all Americans go down, Republicans know that the new health care law will only become more popular and even harder to repeal. As Republican Senate Minority Leader Mitch McConnell said, “It's a lot harder to undo something than it is to stop it in the first place.”

Timing of their attack on Obamacare was important to those who are trying to forestall the regulation of the health care in the U.S. but it does not explain the major reason of the attack. On the other hand, who is ultimately behind those efforts?

“Cui bono?” as Lucius Cassius Longinus Ravilla, a Roman consul in 127 BC, whom the Roman people used to regard as a very honest and wise judge was reportedly in the habit of asking, repeatedly. As it is well known, U.S. Republicans railed against Social Security and Medicaid and Medicare when they were first proposed. Today, those programs are now highly effective and broadly popular parts of American social safety net, which is supported by strong majorities of Republican voters. There have always been special interest groups opposed to increasing government regulation under the pretext of trying to prevent the U.S. government from getting too “big”. Republicans and conservatives have effectively captured the role as protectors and advocates of “small government,” leaving Democrats and liberals to wrestle with the pejorative connotations of “big government.”

The assertion Republicans make that the Affordable Care Act will in the end be detrimental to the U.S. small businesses is groundless. They would not be able to substantiate their claims with details or sound reasoning. During the latest segment of the Daily Show with Jon Stewart, Jason Jones asked Noelle Nikpour, GOP Strategist and author of “Branding America”, why Republicans were opposed to the Obamacare to which she replied: “ We don’t need government in our health care, we don’t need government in our life. We need a smaller government.”

As Jones pointed out, the problem is, “no matter what we do, the GOP is holding something hostage that they just don’t value”. When asked if they were going to maim the U.S. government, that they were holding hostage, regardless, she plainly rejoined: “we will always fight for less government”. Republicans do not intend to reach a compromise regarding the health care law so that the government would be able to work on efficiently. Their ultimate target is not the Affordable Care Act proper but the government itself. The GOP stance on regulation is such that they would welcome any disruption in federal government activities, as long as it proves that the government is unable to do its job and certain private enterprises have their prospective paths to taking over the government functions paved for them as a result.

Republicans criticize the Patient Protection and Affordable Care Act (PPACA), commonly called the Affordable Care Act (ACA) or Obamacare, a United States federal statute signed into law by President Barack Obama on March 23, 2010, ostensibly questioning the constitutionality of the "individual mandate," which is requiring that every American either purchase health insurance or pay an annual fine. To them, mandated health insurance is just a pretext to raise the issue of the “big government”.

The whole Obamacare debacle seems to be a pretext to bring this issue forward once again. The government shutdown was the objective and the government is in the crosshairs, now. Like the U.S., other countries have to deal with this situation, too. It is part of a global strategy in the context of the global financial crisis to create environments so that the scope of the state would be redefined in many countries. In light of the recent debt/financial turmoil, it has been revealed for all to see that many governments these days are nearly bankrupt. That hope is, it seems, that it will focus some minds on solving this problem. But the final solution has already been demonstrated – privatization sell-offs from debt-strapped governments.

It has been reiterated for some time already that the governments the world over in financial trouble, over the next decade, will not be able to afford the entitlements due to the increasing numbers of pensioners, healthcare and welfare recipients, plus salaries and benefits to government employees, plus the myriad other programs and subsidies. For example, unfunded U.S. government liabilities currently amount to $120 trillion. Those who will sometime later come as privatizers would certainly welcome that number that is being emphatically noted already to be about double the value of the total private net worth of all 300 million Americans.

Comparing U.S. government’s debts to private net worth, accompanied by public services’ price increases is not accidental. The problems that not so long ago seemed to be characteristic of the European economies mostly are coming home to roost on the American soil, now. There is an interesting dynamic present in Europe, though. The European Union and European Central Bank are demanding that debt-strapped Greece sell off its prime tourist land, ports, transport systems and other assets in the public domain. That is perfect example of classical liberalism grab for basic infrastructure as part of the overall asset stripping.

The U.S. classical liberalism in action has been demonstrated through financial engineering which required unregulated milieu. Financial and banking sector has already proved to be a paradise for liberal laissez-faire economics. In the new debt-strapped low-interest environment, pooled investment vehicles like private equity firms, hedge funds, and buyout funds are doing something that has not been seen in nearly a century: they are buying up assets, starting with the inventory of foreclosed properties and ending with consolidating inventories by buying assets directly for cash.

As a result, financial charges and tollbooth rents are being built into the prices charged for access to what is essentially public services (i.e. roads, schools, hospitals). Prices began to rise not because costs and wages were rising, but because of monopoly rents and other rent-extraction activities.

In the process of increasing consolidation, a new neo-feudal rentier class is forming eager to buy roads and bridges to turn into them toll roads and bridges, to buy parking-meter rights (as in Chicago’s deal), to buy prisons, schools, hospitals, parks, public services and other basic infrastructure. According to PwC's Health Research Institute (HRI), U.S. health industry consolidation has increased more than 50% since 2009 — activity that is expected to continue through 2014. According to a recent report, hospital mergers can lead to price increases of up to 20.3%.

Pooled investment vehicles are usually used to aggregate collective profits. The process of privatization and consolidation is best carried out in the environment similar to the one in the U.S. financial sector, which has increasingly lacked government regulation and thus allowed financial businesses and trade associations do basically whatever they wanted. Now, as they started buying assets up, they most naturally would like to see the same classical liberalism in other sectors of the U.S. economy.

As of now, various financial businesses and trade associations (like private-equity groups) own the majority of the US health care system facilities (Hospitals, Medical Centers, etc.). They use various umbrella organizations and front groups to operate the Medical Centers, Hospitals, and other medical facilities.

Hospitals make the most politically powerful institution in any congressional district, now. Their position is usually solidified as that of community’s most important charitable institution, and their influential stakeholders determine economic policies of medical equipment manufacturers, drug companies, doctors, and rank-and-file employees. Hospitals are consolidating by buying doctors’ practices and competing hospitals, their leverage over insurance companies is increasing.

The U.S. health care system's operations have become an extension of the corporate finance capital's economic activity. The revenues, profit margins, and net profits of most of the local Medical Centers and Hospitals (nonprofit as well as for-profit) exceed those of the local banks and other economic enterprises.

Therefore, the question of who benefits from the lack of government regulation in the U.S. health care is more than relevant. The U.S. health care system economic model is represented by economic operations and transactions (between Medical Centers, Hospitals, pharmaceutical companies, medical equipment manufacturers, insurance companies, Centers for Medicare and Medicaid Services, and doctors) that tend to be just as unregulated as the operations of the financial sector used to be. The culture of self-regulation, especially when it comes to drug and medical equipment pricing policies and health care service charges, startlingly reminds one of the culture of lacking regulation present in the financial sector.

Drugs and medical equipment producing companies, along with the major medical facilities (Medical Centers, Hospitals, and test labs), have been given free hand in pursuing their policies of unrestrained prices and profits under the pretext that it is necessary to fund the risk taking of research and development. Because of heavy lobbying on the part of the medical community, regulating the health industry market has always been very difficult, too.

Congress has continually prohibited the Centers for Medicare and Medicaid Services (CMS) of the Department of Health and Human Services from negotiating prices with drug makers, medical devices manufacturers, and durable medical equipment manufacturers or take any measures which could be construed as mandates for practice guidelines, coverage recommendations, payment, or policy recommendations.

Obamacare, which intends to bring new customers into the market by mandating their health insurance and then providing taxpayer support to pay their insurance premiums, is most likely to create conditions necessary for greater hospital consolidation. Dominant hospitals and their doctors will have a greater advantage over the insurance companies, which will lead to greater health-insurance costs. The result would be ever higher (close to “chargemaster” list) prices for health care products and higher profits for the health-care-industrial complex with their anonymous absentee owners operating through their pooled investment vehicles at the top of this food chain.

The U.S. health care has become part of the playing ground for post-bubble environment of debt-strapped austerity, which is empowering the financial sector to become an all-powerful oligarchy much like landlords in the 19th century. Now that the economy and the governments are being increasingly “loaned up”, those financial oligarchs are going to obtain their capital gains through direct ownership and charging economic rent.

One of the most interesting consequences of this economy will be accentuated financial power grab and great political fight for the remainder of the 21st century. That political fight will need new fields and new ploys for its parties to cross swords. The fact that Obamacare is now law, duly passed by Congress and then smiled upon by a majority of both the electorate and the Supreme Court in 2012, means that both parties, Republicans and Democrats alike, are being used do delineate the context of the future battlefield. The fight has just begun!

The U.S. health care law has one fundamental flaw in it that makes it a bad instrument to provide health care benefits to the majority of the U.S. citizens – its initial purpose was not to make health care more affordable but to create a maneuver for the financial oligarchs to try the grounds of the government regulation domain. The sole reason Republicans stand against Obamacare is that they want to establish private finance corporate regulation in place of the federal government regulation. That is why they keep saying that they do not want government in their lives. They mean it.

Unlike the majority of the U.S. citizens, the members of the corporate elite have enough money to provide for their own good, including health care. Privately owned health care facilities, regulated by private owners – this is the end goal of the opponents of the President Obama’s health care law. The only way to get in that private paradise of theirs is through incessant political fighting, though, and they are truly happy now, because the Patient Protection and Affordable Care Act (PPACA), commonly called the Affordable Care Act (ACA) or Obamacare, has given them ground for that epic fighting and it began as planned, it seems.

That is the main flaw of Obamacare. Regardless of outcome of the Obamacare standoff, the end beneficiaries are going to win. If the health care law and government funding is approved in full, the government regulation of the health care sector will increase, paving the way for more consolidation of the health care industry, etc. If the government shutdown crisis ends up unresolved with Congress failing to raise $16.7 trillion ceiling, the U.S. economy will probably enter a “very deep recession”, thus undermining the position of the federal government and paving the way for the private enterprises to eventually take over the government’s regulatory functions. One way or the other, that absentee owner, who stands behind Obama as well as behind the Republicans, is going to win. It is just about which way the financial power grab will develop. One master with two puppets on his hands, as always, he would not approve of anything less than a win-win situation.