On the Macroeconomic Subtext of Healthcare Reform

In the current healthcare reform debate, one statistic frequently cited by politicians and pundits indicates that Americans spend between 15% and 17% of their income on healthcare.

While the citation of this figure might be understood as an expression of empathy on the part of politicians and pundits toward the plight of ordinary citizens who must incur increasing healthcare costs as a prerequisite for maintaining employment (and thereby contributing to economic growth through consumer spending), the macroeconomic context in which healthcare reform is frequently debated suggests a different sort of interest.

The US economy, and the behavior of politicians, pundits, bureaucrats, and business leaders who seek to promote US economic interests frequently conceive of their task in terms of profit growth.  

In late 1980, the DOW stood around 1,000.  In late 2009, the DOW stands around 10,000.  This is an increase by a factor of 10.  Over the same period, the US population grew from around 200,000,000 to 300,000,000: an increase by a factor of 1.5.  These intensive economic growth patterns (which must outstrip population growth) are understood to be the cornerstone of US economic success -- mainly, that those who have access to surplus income for investment get richer, while everybody else is served an increasingly smaller slice of the pie.  Although typical wages have increased steadily over the past few decades, the growth of CEO salaries have increased far more dramatically, from about 40 times typical worker pay in 1980 to well over 400 times typical worker pay in 2000.  This type of economic growth disproportionately benefits the wealthiest Americans at the expense of ordinary citizens.

As healthcare costs increase faster than GDP, numerous industries suffer as a result.  If citizens spend their shrinking slice of the pie on inflated healthcare costs rather than on televisions, cars, and dining out, the economy suffers.  So do investments in education, infrastructure, and the like.  Moreover, unexpected healthcare costs are a leading cause of bankruptcy in the US, which further detracts from the potential contributions of consumer spending to overall economic growth.  A driving interest in controlling the increasing cost of healthcare is to keep consumers and corporations spending.  If consumers don't spend and corporations don't invest, the economy doesn't grow.  If employers are responsible for increasing healthcare premiums, fewer funds are available for the types of corporate investment that promote economic growth.  Even personal savings are here out of the question, as personal savings don't contribute to economic growth either (unless those savings are held for the purpose of putting a child through college -- since a college degree, on average, increases lifetime worker income by $1.3 million).

So one major factor in the current political calculation is the desire on the part of politicians to free up more funds specifically for industries that contribute more directly to economic growth -- and thereby to promote the continued enrichment of the wealthiest Americans.

Another major factor in the current political calculation has to do with the impact of illness on the productivity of workers.  At present, the annual cost of chronic illness in terms of lost productivity in the US is estimated at aver $1 trillion.  In a very direct way, if workers take fewer sick days, employers benefit because worker productivity increases.  Worker productivity has nearly doubled since 1980.  Thus, increased access to healthcare contributes to economic growth because access to regular health services makes for more productive workers.  Increased worker productivity is an important factor contributing to US economic growth -- a situation wherein for the same pay, a given worker renders an increased benefit to his or her employer.

The so-called "public option" is therefore an important means of addressing both these key factors -- by decreasing healthcare costs and increasing access to healthcare -- both of which serve to promote economic growth.  Those who oppose the "public option" reveal not only the short-sightedness of their vision, but reveal a profound disingenuousness in their rhetoric: that is, the same people who argue that government can't run anything efficiently are the same people arguing that a public health insurance plan will put private insurers out of business.  While this opposition is typically framed in terms of an ideological opposition to government interference with competitive market forces, it is important to note that industrial-scale corporations routinely do everything in their power to eliminate competition at every opportunity: by under-pricing competitors at a loss, purchasing competitors outright, or manipulating legislation to produce favorable results.  There are few industrial-scale corporations that would not prefer monopoly status to the status of one competitor among many.  The central point here is that the systems of vertical integration so characteristic of industrial-scale commerce (and monopoly) are precisely those systems which are promoted by politicians who advocate the de-regulation of industry.   It seems reasonable to suppose in this case that, while opposition to the "public option" is framed as ideological, it is more likely the product of back-door negotiations between certain politicians and the healthcare industry itself.  

In many respects, then, an important subtext to the ongoing healthcare debate relates more to factors promoting specific macroeconomic benefits than to moral imperatives relating to the personal benefit of individual citizens.  That individuals benefit from affordable healthcare is almost a politically expedient side-effect to the greater benefit rendered to the wealthiest Americans and the largest corporations.  And yet, it is individual citizens who are in the end asked to pay for this healthcare reform -- who are asked, in essence, to subsidize the economic growth of which they receive a steadily decreasing share.  President Obama has pledged that he will not sign into law any healthcare legislation that increases the national debt.  While this may seem like a noble goal, it is, in a sense, just another way in which citizens are treated as a means to the end that the profitability of corporations continues to grow.

Privatization is an important tactic used by the wealthiest Americans to entwine their interests with those of government -- that is, to bring their personal interests more closely into alignment with those of government.  In an economy whose growth relies on easy access to credit -- essentially, debt as currency -- why shouldn't government incur some cost to see its interests so well served?  The government has, after all, demonstrated its willingness to incur large amounts of debt to rescue bankers and pursue protracted war efforts.  That the government is so reluctant to incur additional costs for the benefit of the healthcare interests of the citizenry is an indication that the benefit of the citizenry is not a primary motivation behind the current healthcare reform debate.

What positive conclusion can be drawn from all of this?  Primarily, it is that the wealthiest Americans and the largest corporations should bear the greatest part of the cost of healthcare reform precisely because the wealthiest Americans and the largest corporations derive the greatest economic benefit from healthcare reform -- even if they are paying for the healthcare of citizens who are not their employees.  Of course, this conclusion is profoundly out of step with the contemporary political climate in the United States, which in recent years has been driven by an unprecedented inclination towards the privatization of profits and the socialization of losses (most dramatically evidenced in the recent financial crisis).  Thus, presented with the possibility of immediate relief from the pressures of disproportionately increasing costs and proportionally decreasing incomes, many Americans will gladly accept whatever healthcare reform is enacted -- even if the final legislation is perceived as far from perfect; and though the effect of whatever healthcare reform legislation ends up being enacted will be to further the exploitation of workers for the benefit of the wealthiest Americans, this exploitation can be easily framed as a significant and long-overdue social benefit.  Those who remain dissatisfied after the issue is settled will likely be dismissed as extremists, radicals, and malcontents; and since much of what causes their dissatisfaction will remain in the realm of political subtext -- not widely discussed in the mass media -- they will have little in the public discourse by which to justify their claims.