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The Myth of 'Free-Market Health Care'

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On this the 10th anniversary of the Republican health-care plan (which consists of Medicare Part C or "Medicare Advantage" private medical insurance, and of Medicare Part D private drug insurance), what are the impacts, on the U.S. taxpayer, and on the people who have signed up for the plans, and for the corporations who receive the massive public subsidies under these plans? First, we shall explore here the history and content of this Republican plan, so that its outcomes will be readily understandable as having been predicted at the start by federal and academic budget-planners. Nothing in this plan's outcome is at all a surprise.

   In November 2003, a Medicare prescription drug and supplemental insurance bill was presented in Congress, which Democrats vociferously opposed, whereby the Republicans offered seniors some help in affording prescription medications, but only if, following President Bush's anticipated re-election, the private health insurers would be permitted, for the very first time, to compete against Medicare after 2006, by offering health insurance, called "Medicare Advantage" supplemental insurance, replacing Medicare Part B supplemental insurance, and with these insurers being heavily subsidized by taxpayers so as for them to be able to compete against the existing government-provided Medicare Part B. Another Republican demand was that Medicare not be permitted to do what the Veterans Administration already was doing and which saved billions to the government and reduced by billions drug company profits: use the massive bargaining power of their millions of patients to negotiate lower prices for the drugs they purchase. The self-styled "seniors' lobby," AARP, which received huge kickbacks/commissions from insurers and the like (typically over $300 million per year) of which over half would now come from private health insurers whose insurance plans they would sell, issued a press release expressing their "strong endorsement" of the bill, without considering or mentioning, at all, that such a law might gradually destroy Medicare.

   Indeed, the bill resulted from communications between former Republican congressional leader Newt Gingrich and his friend Bill Novelli, the AARP chief, who had written a foreword to one of Gingrich's books. (Furthermore, as Barbara T. Dreyfuss noted, in the 7 June 2004 American Prospect, under the headline "The Shocking Story of How AARP Backed the Medicare Bill," "Novelli had first honed his marketing skills on behalf of Richard Nixon. He worked in 1972 with the November Group, the in-house advertising unit that helped devise attack ads against George McGovern.") The enormous taxpayer-financed subsidies to the private insurance companies would increase pressure against the government plan. Washington Post columnist E.J. Dionne thus headlined about the bill on 18 November 2003, "Medicare Monstrosity," and he observed: "How do you know this bill is such a great deal for the drug companies and [health insurers such as] HMOs? On word of an agreement last week, [their] share prices soared." As for the sick and poor, those people were to be shoved off in a Medicare boat now to be shot full of holes.

   The key vote occurred on November 22nd at 5:53 A.M. in the House. Syndicated columnist Robert Novak headlined five days later, "GOP Pulled No Punches in Struggle for Medicare Bill," and he wrote that "There were only 210 yes votes ... (long past the usual time for House roll calls), against 224 no's. A weary George W. Bush, just returned from Europe, was awakened at 4 a.m. to make personal calls to [Republican] House members. Republicans voting against the bill were told they were endangering their political futures." An example cited was Republican Rep. Nick Smith, who was retiring, and his son Brad was gearing up to run for his seat. "On the House floor, Nick Smith was told business interests would give his son $100,000 in return for his father's vote," but Smith still refused the bribe, and so his son didn't get a chance to succeed him. (The gangsters additionally threatened to pour cash into the campaign of his son's Republican primary opponent. They did what they threatened to do, and Republican primary voters -- a faithful bunch of suckers -- chose Brad Smith's primary opponent, Joe Schwarz, who went on to beat the Democrat and to go to Congress.) Bush did, however, manage to persuade enough Republicans to pass the bill by 220 to 215. 204 Republicans voted for it; 25 voted against. 189 Democrats voted against it; 16 voted for. The lone Independent, Bernard Sanders, voted against it. When the U.S. major media reported on the corruption behind this bill, the slant was usually to play down the bill's having been rammed through by the Republican President and Republican congressional leadership, and the bill's having been opposed heavily by the leaderless Democrats in Congress; the focus was instead upon the corruption of drug-industry lobbyists. However, those lobbyists were not corrupt -- they were merely doing the job that their employers, the drug companies, and the insurers, paid them to do. By contrast, the politicians who voted for this bill were violating their solemn obligation to the public, who were their legal employer. Like all gangsters, these Republicans (that's almost all Republicans in Congress) simply despised the public. Thus, though the drug companies looked bad (or else appeared to be excessively focused upon their own profits, depending upon how one looked at this matter), the Republican Party itself, which had actually worked hand-in-glove with the pharmaceutical industry and with private health insurers to shape this bill and to pass it) did not -- the major news media covered over or hid the vileness and profound corruption of the Republican Party on the Medicare Prescription Drug and Medicare Supplement bill.

   On November 26th, the AP headlined "Analysts: Medicare Drug Costs Will Rise," and opened, "Seniors will face annual increases in premiums and deductibles -- and a growing gap in coverage -- for the prescription drugs they buy under the new Medicare law, budget analysts say." The price-hikes under the new Republican law were geared to kick in during the period 2006-2013, well after the President's assumed 2004 "re-"election (is such corruption really "election" in the democratic sense?), so that, "By 2013, the eighth year of the program, the deductible and the coverage gap are both projected to grow by 78 percent," and, "Insurance premiums " are projected to increase 65 percent " by 2013."

   In April 2004, the Lyndon B. Johnson School of Public Affairs at the University of Texas held a conference on the new law, and in 2006 they published a free e-book on the findings, titled "Big Choices: The Future of Health Insurance for Older Americans." Page 201 noted that, "The 2004 Medicare Trustees report ... projects the Trust funds have lost two full years of solvency due in large part to the extra costs of privatization in the new Medicare law." Even the Bush-appointed Trustees acknowledged that this new drug program would financially weaken Medicare by its privatization features (the very same features that would fatten the profits of insurers and drug-makers, while adding to the federal debt).

   A few months before the price-hikes were due to begin, BusinessWeek, on 25 July 2005, reported (p. 42): "Health insurance may not be the sexiest of businesses, but that hasn't stopped investors from sending industry stocks soaring in recent months. A key reason for the runup is the expected bonanza from the long-awaited Medicare prescription-drug benefit. Starting next year, the federal government will start subsidizing insurers who offer extra drug coverage to as many as half the 42 million Medicare beneficiaries who are eligible. Some analysts expect insurers, who will offer a range of plans, to reap $10 billion from the program in 2006 and quadruple that in coming years."

   In August 2005, the U.S. Chamber of Commerce (USCOC), which is dominated by large American corporations, mailed a colorful brochure to about a hundred million American households: "Introducing Medicare Prescription Drug Coverage: Peace of mind you deserve. Prescription drug coverage you need." Three months later, in October, the USCOC mailed out yet another full-color advertisement, headlined this time "People with Medicare Really Have Something to Smile About," and explaining: "That's because they can save on their drug costs by joining a Medicare prescription drug plan." A few weeks further on, the USCOC mailed out yet another such brochure, titled, this time, "Concerned About Affording Your Prescription Drugs?" and subtitled "COMING JANUARY 1, 2006: Security and Peace of Mind with Medicare Prescription Drug Coverage." And those were just the start of the USCOC's phenomenally expensive promotional campaign for this Bush drug plan. If the pharmaceutical trade organization, the Pharmaceutical Research and Manufacturers of America (PhRMA, which is one of the nation's biggest lobbying forces) had funded these multi-million-dollar promotional mailings directly, then perhaps the average boob might have recognized that there was something fishy here, and wouldn't have trusted these brochures, but evidently the USCOC radiated no similarly obvious self-interested stench. However, what was the backroom deal that had induced the USCOC, which represents the largest corporations of all types, and not merely pharmaceutical manufacturers, to foot the bill for what ultimately approached a billion full-color brochures being mailed out through the U.S. postal system? If the pharmaceutical manufacturers didn't compensate the USCOC in some way for that, then why were all big businesses, and not just the big pharmaceutical firms, funding this promotion of a new governmental drug program?

   On 12 November 2009, Bloomberg News headlined "Chamber's Donohue Keeps Cash Coming After PG&E, Apple, Defect," and reported that, after a few large firms publicly quit the Chamber out of embarrassment over its huge (Koch, Exxon, etc.) campaign to discredit the threat posed by global warming, an even bigger influx of new membership contributions came in from firms which were pleased by what the Chamber had done. "The Chamber is the biggest spender among Washington lobbyists, shelling out $65 million in the first nine months of this year, according to the nonpartisan Center for Responsive Politics. That's more than the combined total of the next three biggest spenders, Exxon Mobil Corp., the Pharmaceutical Research and Manufacturers of America and General Electric." Moreover, "The Chamber doesn't disclose its funding sources. According to company Web sites, Dow Chemical Co., a backer of climate-change legislation, paid the Chamber at least $1.6 million in 2008; Chevron Corp., $250,000; Intel Corp, $286,583; and Prudential Financial Inc., $1.65 million. ... Waging such battles is what Chamber members expect, and why they pay dues, [Tom] Donohue [the Chamber's president] says. "Companies find it a little dangerous to get too far out ahead of what Congress and others are doing,' he said in an interview. "They look to us.'" In other words: America's aristocrats looked to the Chamber to oppose the President, Congress, the judiciary, and state governments, whenever those governments or political figures stood up for the public against the special interests of those aristocrats. During the George W. Bush Administration, the U.S. Chamber of Commerce was like an extension of the Republican National Committee, and during the Barack Obama Administration which followed, the Chamber was, again, like an extension of the RNC. The Chamber was, in essence, just a money-packed extension of the Republican Party, and it thrived no matter how bad the economic conditions in America became. It was an economic parasite upon the nation.

   Incidentally, that statement by Bloomberg that Dow Chemical Co. was "a backer of climate-change legislation" was a lie: Dow, just like the other petro firms, opposed the Democrats' climate-change bills (not "legislation," because that part of Bloomberg' falsehood indicated proposed legislation is "legislation," which just isn't so: it's only "bills," the term that refers to proposed legislation.). In any case, Michael Bloomberg is always a supporter of Wall Street, and so Dow Chemical was described there as "a backer of climate-change legislation." The Sierra Club would wish that it were so.

   The battle within the USCOC continued. In fact, on 23 July 2009, Capitol Weekly bannered "An Unusual Battle: Big Business vs. Small Business," and Nick Brockaw reported that the U.S. Chamber of Commerce was mute regarding a bill which "aims to eliminate the diversion of billions of dollars in federal contracts intended for small businesses from going to Fortune 500 corporations." The American Small Business League "has estimated that every year more than $100 billion in federal small business contracts are awarded to Fortune 500 companies. ... "Both [the U.S. and California Chambers of Commerce] are funded by, and run for the benefit of, the Fortune 500 firms that I am trying to stop from receiving federal small business contracts,' American Small Business League President Lloyd Chapman said." So, the Chambers of Commerce were virtually pure representatives of the Republican Party: Wall Street (international U.S. firms).

   Bush's prescription-drug plan was a perfect fascist scheme -- socialism for the rich, capitalism for the poor, marketed by Big Lie techniques. (On 25 August 2006, the AP headlined "Medicare Ads Paid by Drug Industry," and reported that, "The pharmaceutical industry quietly footed the bill for at least part of a recent multimillion-dollar ad campaign praising lawmakers who support the new Medicare prescription drug benefit  ... The U.S. Chamber of Commerce claims credit for the ads, although a spokesman refused repeatedly to say whether it had received any funds from the Pharmaceutical Research and Manufacturers of America." The corrupt politicians who had voted for this program were now receiving PhRMA campaign cash, laundered through the USCOC -- Republican political payback, in "democracy" as conservatives practice it.) 

   The Congressional Budget Office initially estimated that 2.7 million retirees would lose employer-provided benefits because of this new law's incentives for employers to terminate group coverage; seniors would have to either purchase their own far costlier individual plans or else do without. On 14 July 2004, the lead story in the Sunday New York Times confirmed this problem, and even raised the estimated damages by more than a million people, when it opened, "New government estimates suggest that employers will reduce or eliminate prescription drug benefits for 3.8 million retirees when Medicare offers such coverage in 2006." These figures weren't even from the same source, the CBO, but came this time from the Department of Health and Human Services, part of the Bush Administration itself. Democrats said the new estimates confirmed that the Bush law would likely "prompt some employers to curtail drug coverage for retirees, forcing them, in some cases, to rely on Medicare's leaner benefits."

   Consequently, it wasn't really by mere happenstance that, within days of this new program's start, the Wall Street Journal headlined, on 13 January 2006, "Low-Income Seniors Get Tangled In Unexpected Medicare Glitch," and reported that, "The new Medicare drug benefit, created to make prescription drugs more affordable for the elderly, is having the unintended effect of making it more expensive for some of the poorest older Americans to get their medications." That "more expensive" was, to put it mildly, an understatement: These seniors, on account of their poverty, had previously qualified for free drugs, directly from the drug companies, but, "they no longer qualify for free drugs because they are eligible for the new Medicare drug benefit." Behind this change stood an action by the Bush Administration: "Last fall, the office of inspector general for the U.S. Department of Health and Human Services" -- and this was the office whose first-term G.W. Bush occupant had been Janet Rehnquist, the daughter of the Republican U.S. Chief Justice, who was now a drug company lobbyist -- "warned drug companies they couldn't help patients enrolled in the Medicare plan with their out-of-pocket costs. ... The drug industry has blamed the government guidance for the elimination" of free drugs. The drug companies' saving money from this, while they were simultaneously enabled to blame the Federal Government for the problems that resulted for poor people, was one of many ways in which this Supreme Court "Justice"s daughter had already earned her keep as a pharmaceutical industry lobbyist, even before she left government "service" to lobby.

   The next day, January 14th, the Washington Post headlined "The States Step In As Medicare Falters," and reported: "Two weeks into the new Medicare prescription drug program, many of the nation's sickest and poorest elderly and disabled people are being turned away or overcharged at pharmacies, prompting more than a dozen states to declare health emergencies and pay for their life-saving medicines." These very low income Medicaid recipients, who had previously received their medications without charge (which had cut costs for the Federal Government, because emergency room and surgical alternatives were far more expensive than these preventative prescriptions), were, under this new lobbyist-written law, being automatically switched into Bush's Medicare drug plan, where they were charged, sometimes, hundreds of dollars to fill a single prescription. "The states that have stepped in to help have already incurred several million dollars in unexpected drug bills, but Mark B. McClellan, administrator of the federal Centers for Medicare and Medicaid Services (CMS), said he did not have the authority to reimburse them." (His brother Scott McClellan was President George W. Bush's press secretary.) Bush's drug law was impoverishing not only the poor, but the states. However, one good reason why the states were stepping in to pay for these medications was in order to halt the vastly larger costs of skyrocketing emergency-room admissions that were already being caused to the states by Bush's new law. For example, on January 21st, The New York Times headlined "Medicare Woes Take High Toll on Mentally Ill," and Robert Pear reported numerous instances of mental patients who were being admitted into hospitals because their lack of required medications was causing them psychotic episodes. In some instances, "The patients take antipsychotic drugs for schizophrenia; more drugs to treat side effects of those drugs, like tremors and insomnia; and still other drugs to treat chronic conditions like diabetes and high blood pressure. "If I didn't have any of those medications, I would probably be institutionalized for the rest of my life,' said Deborah Ann Katz, a 36-year-old Medicare [disability] beneficiary. ... "I'd be hallucinating, hearing voices.'" So, the states were stepping in. Bush's people hadn't been concerned about these ill and poor individuals -- those aren't God's People, and they don't contribute to politics at all, not to the Democratic, and certainly not to the Republican, Party; they hadn't poured tens of millions of dollars into Republican lobbying firms and campaign advertisements.

   On 20 January 2006, Times columnist Paul Krugman headlined "The K Street Prescription," and he contrasted the start of Bush's prescription-drug program, versus the start of Medicare itself under Democratic President Lyndon Johnson: "When Medicare began 40 years ago, things went remarkably smoothly from the start. But this time the people putting together a new federal program had one foot out the door; this was a drug bill written by and for lobbyists." Actually, it was written by lobbyists, but for their pharmaceutical and insurance benefactors -- not for themselves. (The bipartisan "Democrat" Barack Obama has been copying some of Bush's and Reagan's approach, as President Clinton did regarding the deregulation of Wall Street.)

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... by Eric Zuesse on Monday, Nov 25, 2013 at 9:33:52 AM
Four points:1) There's no such thing as "crime tha... by Joe Reeser on Monday, Nov 25, 2013 at 11:09:17 AM
Congressional Democrats never supported a privatiz... by Eric Zuesse on Monday, Nov 25, 2013 at 11:20:37 AM
Well, it appears just about everyone with whom you... by Joe Reeser on Tuesday, Nov 26, 2013 at 5:12:18 PM
"In November 2003, a Medicare prescription drug an... by Autumn Cote on Tuesday, Nov 26, 2013 at 3:44:21 AM
They voted overwhelmingly against it, but Republic... by Eric Zuesse on Tuesday, Nov 26, 2013 at 7:18:49 AM
It would appear we're both right.  Although g... by Autumn Cote on Tuesday, Nov 26, 2013 at 1:41:19 PM
Not true at all. I showed the numbers:  Democ... by Eric Zuesse on Tuesday, Nov 26, 2013 at 2:42:22 PM