Health Care Reform and Globalisation

The US, China and Europe in Comparative Perspective

Peggy Watson

• Publisher: Routledge
• Year: 2012
• ISBN:
  9781136259432
• Edition: 1
• Topic: Medicine
• Subtopic: Health Care Delivery

In the post-Cold War, post financial crisis era, health care is an issue of critical political, personal and economic concern. In the US, plans to address a troubled health care model were met by vocal opposition. In the UK and post-communist Europe, attempts to introduce aspects of that model have resulted in controversy and violent protests, while China and Russia have recently backpedalled on marketising reforms. This innovative book provides a timely analysis addressing the many dimensions of radical health care change.

Bringing together three major geopolitical regions with strikingly different recent histories, this international cast of contributors, examines reform in US, China and Europe within a single study frame. They look at the processes that have been involved when countries with such diverse starting points try to move towards a globally shared health care framework. An underlying theme running through the chapters is access to care, and how it is shaped by moral economies, by what can be said and known, and by political and economic power.

Health Care Reform and Globalisation confronts the interpretations and experiences of patients, professionals, and politicians of health care transformation in practice. It will be of interest to scholars from a range of diverse disciplinary backgrounds, including public health, anthropology, area studies, sociology, politics, social policy, geography and economics.

1	Producing public opinion: how the insurance industry shaped US health care
	Wendell Potter

The American health system is the most expensive in the world.¹ It is also one of the most inequitable. Hospitals in major metropolitan areas are gleaming cathedrals of technology. But by some very meaningful measures, the American health system itself is sick, lagging behind far less developed countries. According to a frequently cited World Health Organization study, a baby born in Bosnia has a longer life expectancy than one born in the United States of America. The citizens of Bangladesh have more equitable access to health care than their American counterparts. The United States ranks 47th in life expectancy at birth and 54th in fairness, a measure of the extent to which the best care is available equally throughout a country (WHO 2000). Nearly 51 million Americans have no health care coverage, and, according to the Commonwealth Fund, an additional 25 million are considered underinsured. Many in low-paying jobs have only the illusion of health care coverage (DeNavas-Walt et al. 2010). The number of uninsured and underinsured Americans has grown larger as for-profit corporations have come to dominate the health insurance industry. At the same time, the percentage of premiums that insurers spend paying claims, reflected by an equation called the medical loss ratio (MLR), has steadily declined. The higher the MLR, the more the insurer has paid out in claims. From 1993 to 2010, the average MLR, which is a key measure that investors consider in evaluating an insurer’s financial performance, dropped from 95 percent to around 80 percent. Investors prefer to see a decreasing MLR every quarter, and if they don’t, their displeasure can be reflected in a decrease in the company’s stock price.

It was in this environment, in 2008, that Barack Obama was elected President of the United States. His election was thanks, in part, to his stance on health care reform. Indeed, many health care reform advocates in the United States believed the stars had aligned for a fundamental restructuring of the American health care system with Obama’s election and the Democrats’ firm control of both chambers of Congress. Health care had been a major campaign issue, and many advocates believed Obama would succeed in shepherding legislation through Congress that would bring about radical changes in how care is financed and delivered in the United States, and that would guarantee universal coverage. As it turned out, they underestimated the ability of entrenched special interests, especially health insurers, to influence the legislative process by skillful manipulation of public opinion.

The basics of health care in the United States

In the United States, health care coverage comes in a variety of forms. Americans use private coverage both as a way to insulate themselves from the prohibitive costs of medical care for a catastrophic illness, and to grant them access to other necessary health care services. A wide array of public and private sources provide health coverage. Public sources include Medicare, Medicaid, the State Children’s Health Insurance Program, federal and state employee health plans, the military and the Veterans Administration.² In very basic terms, most Americans with health care coverage get it through their employer. This coverage comes through either a state-licensed health insuring organization or a self-funded employee health benefit plan that operates under federal law and is sponsored by an employer or an employee organization.

Citizens aged 65 and older, and younger citizens with permanent disabilities, are most commonly enrolled in Medicare as their health insurance program. Established in 1965, it consists of four parts: Part A covers hospital expenses; Part B pays for doctor visits, outpatient care, and home health; Part C, the Medicare Advantage program, allows beneficiaries to enroll in a private plan; and Part D covers prescription drugs. Medicare does not, however, cover many relatively expensive services and supplies, long-term care (whether in the patient’s home or at an assisted living facility), or nursing homes. How these coverage options were arrived at, and what their fate will be in the years to come, tells a great deal of the story of reform efforts in the United States, and how those efforts have been affected by the furtive application of influence over the public by powerful special interests and the often shadowy organizations they deploy.

How special interests used propaganda and often stealth public relations campaigns to shape the development of the US health care system

Public relations has become a great force in the United States in shaping public opinion and, ultimately, public policy. The use of often secretive PR tactics began in earnest soon after the turn of the twentieth century, when business leaders such as John D. Rockefeller, who were frequently the subject of critical news coverage, hired former newspaper reporters to help them enhance their reputations. Tobacco companies were also among the first clients of the early PR practitioners in the USA. One of the big tobacco companies even hired a PR firm in the 1920s, in a successful effort to persuade young women that smoking was not just for men, that it was in fact a fashionable and liberating thing to do. When the tobacco industry found itself in a fight for survival in the 1960s, after the US Surgeon General declared that smoking caused cancer and other often fatal illnesses, it hired big PR firms to cast doubt on the government’s findings. And when cigarette makers came under fire for encouraging smoking among minors, and studies emerged about second-hand smoke, they hired their own scientists to spin messages about the beneficial effects of tobacco.

The industry also recruited a wide range of ‘soft scientists’ – sociologists, philosophers, political scientists, psychologists, and economists – to influence public opinion through cultural routes. For example, the industry recruited economists to produce ‘studies’ based on non-scientific, anecdotal evidence that claimed to demonstrate how bans on smoking hurt businesses. The science was weak, but the dissemination process was comprehensive. For decades, whenever there was a public push for a law restricting smoking in restaurants, restaurant owners would claim they were afraid of losing business, citing those commissioned reports. One prominent philosopher, while secretly taking payments from Japan Tobacco, wrote articles deriding public health advocacy and publishing pro-smoking stories in newspapers and international magazines (Kmietowicz and Ferriman 2002). He coined the term ‘nanny state’ – a phrase still regularly employed by politicians – claimed that seat belt laws caused people to drive faster, extolled the benefits of risk-taking, and argued that smoking was actually a healthy activity because of its stress-relieving benefits.

What the tobacco industry essentially was doing during this time was creating a primer on how corporations and their trade associations could use stealth PR to manipulate public opinion and influence public policy without anyone being aware of the true sponsors of the PR initiatives. Indeed, the tobacco industry’s PR strategies have been so broadly based, well funded, effective, and replicable that they comprise a kind of PR ‘playbook’ to which almost all industries, including the health insurance industry, turn when under attack.

Reform attempts from the 1940s to the 1970s – and how PR campaigns ended most of them

In 1945, President Franklin Roosevelt died, the Second World War ended, and Harry S. Truman became the first president in the nation’s history openly to endorse a single universal comprehensive health insurance plan. Truman’s first major peacetime address to Congress, in November 1945, laid out his agenda. In announcing his legislative proposal Truman noted that during the Second World War, nearly 5 million Americans had been classified as unfit for military service for health reasons, and another 3 million had been treated or discharged for physical or mental problems that had existed before their induction. ‘In the past,’ he told Congress, ‘the benefits of modern medical science have not been enjoyed by our citizens with any degree of equality. Nor are they today. Nor will they be in the future unless government is bold enough to do something about it. We should resolve now that the health of this nation is a national concern; that financial barriers in the way of attaining health shall be removed; that the health of all its citizens deserves the help of all the nation’ (Daschle 2008: 49).

The American Medical Association (AMA) – which had opposed medical reform in previous decades as ‘an incitement to revolution’ – cast Truman’s ‘socialized medicine’ as an extension of Russian communistic control of the world. The AMA’s Journal wrote: ‘(If this) Old World scourge is allowed to spread to our New World, (it will) jeopardize the health of our people and gravely endanger our freedom’ (Henderson 1949). Republicans in the House blocked the bill from even getting a hearing. The press took up the AMA’s argument that the legislation would make doctors ‘slaves.’ Truman responded that it allowed doctors to choose their own form of payment. Not only did the legislation not advance in 1946, the Republicans used it against the Democrats and Truman’s ‘socialism,’ and swept back into control of Congress in that fall’s elections.

The pendulum quickly swung back the other way when Truman made public health care part of his own re-election platform in 1948, and staged one of the biggest election upsets in US history, also leading the Democrats back into power on Capitol Hill. The AMA asked of each of its members an additional $25 and hired a PR firm (Whitaker & Baxter) as part of an anti-Truman campaign in 1949. The campaign against Truman cost $1.5 million, more than had ever been spent before on such an effort (Starr 1982: 285). Part of the PR effort was a poster and a pamphlet distributed to patients in doctors’ waiting rooms across the country that proclaimed, ‘The Voluntary Way is the American Way.’ The AMA also enlisted as allies insurers and employers as part of a quid pro quo in which the AMA urged its own members to ask patients to purchase private, voluntary insurance to head off the attempt to enslave them. The US Chamber of Commerce printed a pamphlet of its own, called You and Socialized Medicine, that urged member companies to endorse and purchase private group-insurance plans for their workers to eliminate any need for a public plan. Southern politicians also joined the opposition by preaching at home that the dangers of ‘socialized’ medicine included an end to racially segregated hospitals and the enforcement of staff privileges for black doctors. This was the first-ever all-out paranoid-propaganda blitz by the country’s health care sector (Daschle 2008: 53).

But it was the Soviet Union’s establishment of a Communist government in East Germany, and the ascendancy of Mao Tse-tung’s Communist party in the People’s Republic of China, that finally dealt Truman’s plan its death blow. As the Cold War began, Democrats retained control of Congress in the 1950 elections, but the GOP (the Republican ‘Grand Old Party’) made enough gains to stop any further effort by Truman to get national health insurance back on the agenda. Truman wrote later in his memoirs:

I cautioned Congress against being frightened away from health insurance by the scare words ‘socialized medicine,’ which some people were bandying about. I wanted no part of socialized medicine, and I knew the American people did not. I have had some stormy times as President and have engaged in some vigorous controversies. Democracy thrives on debate and political differences. But I had no patience with the reactionary selfish people and politicians who fought year after year every proposal we made to improve the people’s health (Daschle 2008: 53).

The AMA’s opposition to Truman, and its successful partnership with business and private-pay insurance companies, put into motion the market forces that eventually took control of American health care. As General Motors and other large employers began paying for health insurance and pensions for their workers in 1950, a shift was under way.

The 1950s were a prosperous decade for large for-profit insurance providers in the USA. It was during these years that commercial insurers began cherry-picking young and healthy premium-payers by offering them lower prices. Large employers began to self-insure by entering into tailored agreements with insurance carriers, thus no longer needing to belong to the health plans administered primarily by the non-profit Blue Cross and Blue Shield companies. By the end of the decade, insurers were ‘experience rating’ firms to base premiums on their employees’ usage of services. All of these forces produced a golden age for the idea of free-market insurance. By 1963, nearly 80 percent of Americans were employer insured, and health care costs had largely been contained by market conditions.

Johnson and the creation of Medicare

By the 1960s, however, the nation’s elderly were an increasing problem for the free-market paradigm because of their health care demands. Company health plans with benefits to retirees – mostly through unions – had to raise current workers’ premiums in order to cover rising costs. The elderly without retiree benefits, including many who were poor and uninsured, were creating larger demands on state and local charity suppliers. The American health care solution was showing its Achilles heel. When the first legislation to cover hospital costs for people on Social Security was introduced in 1958, the AMA carried out the same paranoid-style attacks as before, but this time the tactic did not work as well. By concentrating their focus on problems of the aged, proponents of reform eventually passed a bill in 1960. The Kerr–Mills Act made federal grants available to the states to help them pay for health care for the elderly poor. However, only twenty-eight states signed onto the plan, and many of them didn’t set aside enough state money to trigger the release of the federal funds. Many doctors and hospitals rejected payments because they were ‘below the prevailing rate’ (...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Contents
• List of figures and tables
• List of contributors
• Introductory remarks and acknowledgements
• 1 Producing public opinion: how the insurance industry shaped US health care
• 2 The break-up of the NHS: implications for information systems
• 3 Rethinking problems surrounding access to care: the moral economies shaping health care workforces in Russia and the USA
• 4 Human oriented? Angels and monsters in China’s health care reform
• 5 We are all in this together – European policies and health systems change
• 6 Catastrophic citizenship and discourses of disguise: aspects of health care change in Poland
• 7 The making of health care policy in contemporary Hungary
• 8 Community health services in urban China: a geographical case study of access to care
• 9 ‘Health care and change’: popular protest and building alternative visions of health systems at the end of empire
• Index