Obamacare: The Neoliberal Model Comes Home to Roost in the United States—If We Let It

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by Howard Waitzkin and Ida Hellander
Monthly Review

As the Affordable Care Act (ACA, otherwise known as Obamacare) continues along a very bumpy road, it is worth asking where it came from and what comes next. Officially, Obamacare represents the latest in more than a century of efforts in the United States to achieve universal access to health care. In reality, Obamacare has strengthened the for-profit insurance industry by transferring public, tax-generated revenues to the private sector. It has done and will do little to improve the problem of uninsurance in the United States; in fact, it has already begun to worsen the problem of underinsurance. Obamacare is also financially unsustainable because it has no effective way to control costs. Meanwhile, despite benefits for some of the richest corporations and executives, and adverse or mixed effects for the non-rich, a remarkable manipulation of political symbolism has conveyed the notion that Obamacare is a creation of the left, warranting strenuous opposition from the right.

Abundant data substantiate that the failure of Obamacare has become nearly inevitable. Even after the ACA is fully implemented, more than one-half of the previously uninsured population will remain uninsured—at least 27 million people, according to the non-partisan Congressional Budget Office—and at least twice that number will remain underinsured.1 Due to high deductibles (about $10,000 for a family bronze plan and $6,000 for silver) and co-payments, coverage under Obamacare has become unusable for many individuals and families, and employer-sponsored coverage is headed in the same direction.2 Private insurance generally produces administrative expenses about eight times higher than public administration; administrative waste has increased even more under Obamacare, and remains much higher than in other capitalist countries with national health programs.3 These administrative expenditures pay for activities like marketing, billing, denials of claims, processing copayments and deductibles, exorbitant salaries and deferred income for executives (sometimes more than $30 million per year), profits, and dividends for corporate shareholders.4 The overall costs of the health system under Obamacare are projected to rise from 17.4 percent of GDP in 2013 to 19.6 percent in 2022.5 A conservative projection shows that premiums and out-of-pocket expenditures for the average family will equal half of the average family income by 2019 and the full average family income itself by 2029.6

The Origins of Obamacare

The overall structure of Obamacare is not new. Similar “reforms” have appeared in other countries over the last two decades. The year 1994 was a significant one for health reform worldwide. Colombia enacted a national program of “managed competition,” to replace its existing health system, which had been based largely on public hospitals and clinics. The World Bank mandated and partly financed the reform, and President César Gaviria and his colleagues promoted the reform to financial elites at the World Economic Forum and elsewhere. That same year a similar proposal, designed by the U.S. insurance industry and spearheaded by Hillary Clinton, was advanced but ultimately abandoned. The right wing opposed the plan as a big-government boondoggle, while on the left, opposition centered on the massively increased, tax-subsidized role that the plan would create for the private insurance industry, especially a handful of the nation’s largest companies.

During the 1990s, several European countries considered proposals for health reform that followed a similar model of privatization, “managed competition,” and increased access of the private insurance industry to public health care trust funds.7 Although a few, like the Netherlands and the United Kingdom, implemented elements of such reforms, most European countries did not, acceding to opposition from left-oriented parties, labor unions, and civic organizations.

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