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The Economics of Health Care in America

There were demonstrations of 600,000 people in Paris and 90,000 in Germany this past Sunday. Strikes have paralyzed both France and Austria recently. In Peru on Tuesday President Alejandro Toledo declared a 30-day state of emergency and sent troops into the streets to end strikes by teachers and many others.

What is happening? On the surface, the issues are pretty straightforward. In France the main issues are change to retirement benefits. Currently, public workers are able to retire after a 37.5-year contribution period, which the government wants to increase to 40 years. Germans unions are mad at Social Democrat Chancellor Gerhard Schroeder’s plan to cap unemployment benefits at 12 months for those under 55 and 18 months for those over 55. The proposal is also to make it easier for small firms to hire and fire new workers. The issues are similar in Austria. In Peru, teachers are demanding a wage increase of $60 to $260 (US) per month, which they claim is barely a living wage. Farmers want lower taxes on equipment.

Underlying the strikes and demonstrations, however, is a more fundamental question. What is the point of an economy?

While the answer may seem obvious enough–to provide people with decent lives–capitalism often confuses the matter by claiming its interests and the role of the economy are the same.

Take the U.S. medical system as an example. The U.S. spends by far the most money on health care of any country in the world, about 14% of gross domestic product. The next closest country spends just over 10 percent. Not only do Americans allocate a larger percentage of GDP to health care, they spend more in absolute dollars. Americans pay $4,637 on average for health coverage while Canadians, the fourth biggest spenders, shell out $2,200 (US) .

This is good for segments of the economy. Pharmaceutical companies are making big bucks, U.S. doctors are some of the highest paid, fancy new technologies are being sold that purportedly do miraculous things, the hospitals are getting their cut and the insurance companies keep raising their costs, so surely all is swell.

Not really. According to the N.Y Times there are “60 million uninsured during a year (May 13)”

Don’t despair, however, since according to the Financial Times at least “the system is world-class (May 24)” for those with employer paid insurance. But is it?

American life expectancy is only the 17th highest in the world. More importantly a World Health Organization study that counted years of good health showed that the U.S. ranked even lower by that measure. “The United States rated 24th under the system, or an average of 70.0 years of healthy life for babies born in 1999.” Christopher Murray, a director from WHO summarized the findings; “Basically, you die earlier and spend more time disabled if you’re an American rather than a member of most other advanced countries.”

This doesn’t sound “world class” and it isn’t. Unless we define “world class” as the degree to which the system is controlled by private interests. No other industrialized country has a medical system with a greater for-profit orientation. And capital is happy, so why let early death dampen the mood.

To be fair to the U.S. medical establishment, lower American life expectancy is not solely the result of its absurd profit orientation. Nor is the medical sector the only one where the economy has lost its way in serving ordinary people.

For instance, one of the reasons for the shorter American life expectancy is the degree to which Americans work. Even though new time saving devices have been invented and production capabilities are expanding, Americans are still working longer. As a result of the weakening of the organized U.S. working class, Americans are now working 200 hours more than they did in the early 1970s (NY Times April 12). This is taking place while in Europe people are working less. The average Norwegian now works 29 percent less than the average American–a total of 14 weeks per year less. In the past two decades the percentage of Americans over 65 who are still working has increased by close to 50% (La Presse) Because of a 1983 Congressional decision, by 2027 the American retirement age will officially increase to 67. This is not just happening in the U.S. The extremely pro-business Tory government in Ontario, Canada’s largest province, decided to increase the province’s workweek so workers could work 60 hours in a given week and not receive a dime in overtime pay.

According to the N.Y. Times, “the harmful effects of working more hours are being felt in many areas of society. Stress is a leading cause of heart disease and weakened immune system.” (April 12) It’s unhealthy to work so much but also why would we bother? Technological advances should lead to more leisure, not less. But somehow the mainstream press seems to miss that point.

The overwhelming dominance of “capitalist logic” is such that all too often the ills of our world are explained through the lens of what is good for a tiny minority of our population. For instance, according to a recent National Post article “productivity losses due to depression, anxiety, substance abuse and burnout run at about $33-billion a year in Canada (May 14)” Or how about those World Bank officials who complain about the devastating impact AIDS is having on African economies.

Productivity losses? Impact on economies? Isn’t depression damaging people’s lives and aren’t African children growing up without parents?

But capitalism has its own logic and according to it everything that can be, should be explained in economic terms. And if it can’t be explained in economic terms than surely it isn’t really important. What regular people care about is all too often irrelevant.

Nevertheless, people do care.

That is why a few days ago 7,000 East German steel workers voted to strike for a 35-hour workweek. Currently they work 38 hours, which gives them three hours less leisure than their West German counterparts and unemployment is high in their region so they hope a reduced workweek will help create jobs. In France, hundreds of thousand of people care enough to hit the streets to say 37.5 years of work is enough. In Peru, millions care enough to demand a living wage.

These people are acting in the self-interest of their communities, which is not the same as the self-interest of capital.

They are acting sensibly, and should be supported if one considers the economy as an instrument for the community of all people.

YVES ENGLER is vice president communications for the Concordia Student Union Montreal. He can be reached at: yvesengler@hotmail.com