Health Care Corporations Block Reform
to Preserve Profits
The reason our government spends so much on health care is not because we are unduly generous for too many of our fellow citizens. Exactly the opposite: We are the only developed country in the world that relies on an expensive, wasteful, private sector, employer-sponsored health insurance system that leaves millions of citizens with nothing. Our health care costs include billions of dollars of CEO pay and corporate profit that other countries do not need to add into the bill. We pay twice as much on health care as other developed democracies—about 17.4 percent of GDP versus 9.3 percent—with less to show for it.27
When President Clinton tried to change this unsustainable system in 1993, the health insurance and pharmaceutical companies spent hundreds of millions of dollars to defeat reform. The system only got more dysfunctional over the next fifteen years, and the corporate lobby got stronger, spending even more in 2009 and 2010 to block effective health care reform again.
Although a version of reform passed in 2010, the corporate-dominated approach to that reform has serious consequences for long-term deficits and continuing financial drain on American businesses and people. What is mainstream and conventional throughout the world—cost-effective single-payer health care—was never given a second of consideration, despite the fact that a majority of Americans favor that approach.28 The so-called public option, which at least would have allowed people to choose to take our business from profit-driven corporations to a government pool to help keep costs down, never had a chance, despite support from three-quarters of the American people. Even after months of assault by corporate money and lobbyists, most Americans did not think the health care reform went too far; they either supported it or thought it did not go far enough.29
We saw a preview of this type of corporate-dominated health care lawmaking in 2003, when Congress enacted and President George W. Bush signed the Medicare “Part D” prescription drug program for senior citizens. The law provided no means for paying for this expensive program, which effectively transfers hundreds of billions of dollars of (borrowed) money from the federal government to global pharmaceutical corporations. Much worse, the 2003 Medicare law actually made it illegal for the government to negotiate fair drug prices. The law also banned the import of cheaper drugs from Canada and made generic alternatives more difficult to obtain.30
According to a House of Representatives committee report, the federal government now pays 30 percent more for pharmaceuticals as a result of the 2003 law, resulting in overcharges to the government of billions of dollars per year. How did this happen? A Republican congressman from North Carolina explains: “The pharmaceutical lobbyists wrote the bill.”31
A few months after the Medicare Part D law was enacted, the leading congressman who worked on the bill, Representative Billy Tauzin, who had been both a Democrat and a Republican over the years, left Congress. He took a job as president of the pharmaceutical corporations’ lobby group, the Pharmaceutical Research and Manufacturers of America (PhRMA), at a salary of more than $2 million a year. “As a member of Congress, Billy negotiated a large payout to the pharmaceutical industry by the federal government,” said another congressman. “He’s now about to receive one of the largest salaries ever paid to any advocate by an industry.”32
Olga Pierce, a journalist for ProPublica, reviewed what had happened to others in government who worked on that 2003 payout to the pharmaceutical corporations:
Former Sen. John Breaux, D-La., … fought against allowing drug prices to be negotiated in Medicare Part D. A year after the bill passed, he left the Senate to begin his lobbying career. He now has his own lobbying firm, Breaux Lott Leadership Group, which this year has received $300,000 to lobby for the pharmaceutical industry.
Former Sen. Don Nickles, R-Okla., who helped negotiate the final version of Part D, then left to form his own lobbying firm. Bristol Myers-Squibb paid the Nickles Group $120,000 this year to lobby for, among other things, “health care reform issues related to Medicaid and Medicare.”
Thomas Scully, the former Medicare chief who helped design Part D, … obtained a waiver allowing him to discuss job offers before he left his government post. Less than two weeks after the bill passed, he went to work for the lobbying firm Alston & Bird, where he works on behalf of drug companies.
Raissa Downs … a top legislative aide in the Department of Health and Human Services … helped spearhead the agency’s efforts to shape Part D. Now she’s a partner at Tarplin, Downs & Young consulting firm, where she is lobbying against changes to Part D.
Michelle Easton has gone through the revolving door several times, working for Breaux, then the industry, then for Senate Finance Chairman Max Baucus, the Montana Democrat who is a key player in the current reform debate. Now Easton works in Downs’ firm.
John McManus, … staff director of the House Ways and Means health subcommittee when Part D was created, now has his own lobbying firm. Between 2004 and June 2009 the McManus Group earned about $6 million lobbying for PhRMA and various drug companies.33
To move reform forward in 2009, the White House secretly negotiated a deal with the pharmaceutical lobby, headed by the former Representative Billy Tauzin. The Obama administration promised not to touch the ban on the government’s negotiating fair Medicare pharmaceutical prices. In exchange, the international drug corporations promised not to block other reforms and offered some unspecified “savings” of $80 billion over the next decade.
Apart from the grotesque elevation of a corporate lobby into a branch of government requiring negotiation with the White House, the deal was bad: If Medicare simply paid the same price that the government pays for the same drugs under the Medicaid program, taxpayers would save $150 billion.34 As former Secretary of Labor Robert Reich says, “Perhaps the White House deal with Big Pharma is a necessary step to get anything resembling universal health insurance. But if that’s the case, our democracy is in terrible shape.”35
The Human Cost
The impact of the corporate takeover of government lawmaking in health care contributes to huge deficits and drains small business capital, but we should also remember the human cost. Health care is about lives of real people. Those who advance the corporate interest at the expense of the people’s interest should do what one health insurance executive did: look into the eyes of Americans who suffer the consequences.
Wendell Potter had been a high-level public relations executive for the CIGNA health insurance corporation. As Potter describes in his book Deadly Spin, after more than two decades in the health insurance industry, he quit in a moment of conscience. His life was changed by his visit to a “health fair” at a county fairground in Tennessee, where Potter had grown up. A nonprofit medical group that usually brings needed health care to Third World regions had made its eighth annual trip to the fairgrounds to help Americans who had no other option for treatment.
Potter’s description of stepping into what he calls a “war zone” at the health fair is haunting. Hundreds of soaking-wet Americans waiting all day in lines to be examined and treated in barns and animal stalls; teeth being pulled in open-sided tents; people “lying on gurneys on the rain-soaked pavement”; hundreds more turned away at the end of the day before they could be treated.
These are Americans. They were not waiting all day to be treated in animal stalls because they are shirkers. Two-thirds of them had jobs but no health insurance because, as Potter explains, they worked for small businesses that could not afford for-profit health insurance or, in many cases, the health insurers had “purged” unprofitable small business coverage from their rolls.36
Bill Moyers calls Potter’s book “an exposé of corporate power that reveals why real health care reform didn’t happen, can’t happen, and won’t happen until that power is contained.”37 He’s right, and the problem goes beyond health care.
Beyond Health Care
American strength has come from resiliency couple
d with practicality, determination coupled with distrust of zealotry. Our eighteenth-century republic has prospered into its third century because we have been able to endure and adapt to tremendous changes and challenges. Now Citizens United and the buildup of corporate power is ossifying government, blocking reform, and preventing adaptation to fundamentally new circumstances in the world.
Citizens United turns uncontrolled corporate lobbying and corruption of government into uncontrollable corporate lobbying and corruption of government. Any attempt to control that problem, now says the Supreme Court, violates the right of free speech. The dynamic that culminated in Citizens United of corporate rights feeding corporate power, and of corporate power building corporate rights, makes the practical balancing effect of a political process that represents all interests increasingly difficult or even impossible to achieve.
This danger is particularly acute in the energy sector. Just as we can have no real health care reform until we contain corporate power, we can have no real energy reform. That has catastrophic consequences, given our dependence on fossil fuels. Multibillion-dollar oil, coal, and gas subsidies grow, our costly ensnarement and overexten-sion in the Middle East further weakens our own country, alternative technologies are developed elsewhere, and the resources and environment that we need to sustain life and security are rapidly destroyed.
As Jared Diamond reminds us in Collapse: How Societies Choose to Fail or Succeed, empires and societies often fail not because of a sudden, surprising blow but because of a long-term unwillingness or inability to adapt. Decline proceeds apace, as all can see the plainly perilous conditions, but candor and action are blocked by zealotry, denial, or force. What can it mean except fatal, corporate-fueled zealotry when the rallying cry of a major political party in America becomes “drill, baby, drill” after all we know the dangers of our reliance on oil?
Corporate Power: Energy, Deficits,
and the National Interest
In a real sense, our entanglement in seemingly endless wars in the Middle East (Iraq-Kuwait, 1990-1991; Iraq no-fly zone, 19912003; Iraq War, 2003-2009; Afghanistan, 2001-present; Libya, 2011; Yemen 2010-2011; ongoing near-war with Iran; billions of dollars in military aid to Pakistan, Israel, Egypt, Saudi Arabia, and others in the region) is a multitrillion-dollar subsidy to protect the oil on which we have depended for too long. We expend so much in that region because it is highly strategic for one main reason: because we depend on its oil.
Apart from the indirect subsidy of our military, fossil fuel corporations are among the biggest corporate welfare recipients. They receive billions in tax subsidies, liability caps, and other government assistance, not to mention the subsidy of massive highway funds and minimal funds for transportation other than auto and truck. Between 2002 and 2008, the government provided more than $100 billion in direct subsidies to the energy sector. Approximately $72 billion of that went to the fossil fuel industry, while only $29 billion went to alternative energy programs. Half of that alternative energy support went to the inefficient corn-ethanol industry.38
Do the global oil companies need these handouts to obtain oil? Oil corporation profits are extraordinarily high and keep setting new records, so that seems unlikely. Take it from a Texas oilman, George W. Bush: “I will tell you with $55 [per barrel] oil, we don’t need [to provide] incentives to oil and gas companies to explore.”39 With oil now costing nearly twice as much per barrel, it is insane to subsidize oil companies, which already have the massive built-in subsidy of benefiting from the price-fixing of the global OPEC cartel.
We know we have to change. Here’s what the president has said: “At the end of this decade … the United States will not be dependent on any other country for the energy we need to provide our jobs, to heat our homes, and to keep our transportation moving.” The president also said: “My program was designed to conserve the energy we now have, while at the same time speeding up the development and production of new domestic energy.” And the president said, “We must start now to develop the new, unconventional sources of energy that we will rely on in the next century.”
Actually, three presidents said those things, nearly four decades ago: the first was spoken by Richard Nixon in 1974; the second, by Gerald Ford in 1975; and the third, by Jimmy Carter in 1977.40 It is a tradition as reliable as the Thanksgiving turkey pardon ceremony and the White House lawn Easter egg roll to promise change, conservation, and development of alternative energy, and yet little changes.
Ronald Reagan said this a quarter-century ago:
“My goals in this area are to… continue conservation and progress toward diversification of our energy resources,”
George H. W. Bush, twenty years ago:
“[I’ve] prepared a detailed series of proposals that include … a comprehensive national energy strategy that calls for energy conservation and efficiency, increased development, and greater use of alternative fuels,”
Bill Clinton, thirteen years ago:
“Our overriding environmental challenge tonight is the worldwide problem of climate change, global warming…. We have it in our power to act right here, right now, I propose $6 billion in tax cuts and research and development to encourage innovation, renewable energy, fuel-efficient cars, energy-efficient homes,
George W. Bush:
“America is addicted to oil, which is often imported from unstable parts of the world,” “Our security, our prosperity, and our environment all require reducing our dependence on oil,”
Barack Obama:
“We have known for decades that our survival depends on finding new sources of energy, yet we import more oil today than ever before…. We know the country that harnesses the power of clean, renewable energy will lead the twenty-first century,”41
By 2006, we imported 60 percent of our oil, compared to 35 percent in 1973. Two-thirds of the known oil reserves are in the Persian Gulf. OPEC cartel countries have 70 percent of the world’s oil reserves; the United States has 2 percent.42 “Drill, baby, drill” will not change these facts. We have compromised our national security, our military is overstretched, our trade deficit is exploding, and our republican values and commitment to democracy for all are undermined by our unshakable commitment to profit for global fossil fuel corporations.
The rising costs of our fossil fuel dependence for the environment, families, and communities have moved from inconvenient to dangerous and are approaching catastrophic. When crises occur, as in the Gulf of Mexico when BP’s Deepwater Horizon oil rig exploded in 2010 or when the Exxon Valdez ripped open in Alaska or when oil refineries exploded as in Texas and Washington State in recent years or when another war in the Middle East begins or an old one enters its second decade, we see the death of people, ecosystems, businesses, and livelihoods. What we sometimes fail to see right in front of us is the growing and terrible price that we place on families, communities, and our environment everywhere, every day. In some ways, oil is not the worst of it.
According to the coal lobby, we burn what the lobby calls “clean coal” for half of our electricity.43 But there is no such thing as “clean coal.” Coal-burning utilities emit toxic pollution. Coal causes tens of thousands of premature deaths each year in the United States, as well as many thousands more cases of lung and other cancers, asthma attacks, upper respiratory illness, heart attacks, and hospitalizations.44 Coal combustion pushes 48 tons of mercury, a neurotoxin, into the air each year.45 Mercury and other coal pollutants contaminate the air we breathe and are deposited with the rain into our rivers, lakes, and streams. Thousands of water bodies where people used to fish are poisoned. Forty-five states now have fish advisories.46
Coal is not cheap, either. The coal industry, like other nineteenth-century industries that leverage improper political power from their old economic power, takes billions of dollars each year from American taxpayers. As with oil, massive government subsidies prop up outdated coal energy, while Arch Coal, Pea-body Energy, Patriot Coal, Massey Energy, and Alpha Natur
al Resources take record profits for themselves. Since 1950, the coal industry has received direct subsidies of $72 billion from the U.S. government. Congress added $9 billion in subsidies as recently as 2005. The so-called stimulus bill in 2009 added another $3.4 billion to help the coal industry figure out—so far unsuccessfully—how it could stop emitting massive amounts of carbon pollution.47
Coal corporations pass on, or to use the economists’ term, “externalize,” huge costs onto American society. Annual costs of thousands of coal-caused disease, land devastation, and destroyed water resources are conservatively estimated at $333 billion.48 Coal, along with oil, is the principal cause of the very real climate crisis. Fossil fuel emits polluting greenhouse gases such as carbon dioxide, which trap heat in the atmosphere due to absorption of sunlight. The climate change we now face is due to human-caused emissions, 80 percent of them stemming from the burning of coal, oil, and natural gas. The increased emission of these gases, based on thermometer measurements going back to 1880, has led to an average global rise in temperatures of 1.5 degrees Fahren-heit—twice as much in the Arctic—and an additional warming of 2.0 to 11.5 degrees is predicted over the next century if emissions go unabated. Likely effects of this rise include diminished water supplies; vanishing of snow and ice; rising sea levels endangering coastal populations; increased frequency of droughts, floods, and more devastating hurricanes and storms; and long-term decline in agricultural production and increased incidence of malaria, cholera, and other disease.49
Corporate Power Blocks Alternatives
Are we unable to change and adapt because we have no alternative? No, alternatives are available now. If all we did was allow the Environmental Protection Agency (EPA) to do its job and proceed with proposed auto standards, we could reduce oil imports by billions of barrels, save every American thousands of dollars each year, and eliminate millions of pounds of carbon pollution. Alas, oil-funded politicians are pushing laws to strip the EPA of its authority to do this and in 2011 came within minutes of shutting down the federal government in a budget standoff caused in part by their zeal to neuter the EPA.
Corporations Are Not People Page 11