The Obama Healthcare Plan: Democrats Refuse to Take On Insurance Companies


President Obama wants a comprehensive healthcare reform bill on his desk by October. But can the Democrats actually deliver the healthcare we need?

The U.S. healthcare system is totally dysfunctional. At the root of the problem is a system organized to meet the profit needs of corporations. A former corporate executive for the healthcare company Cigna, Wendell Potter, recently admitted, “[O]ur Wall Street-driven healthcare system has created one of the most inequitable healthcare systems on the planet.” (

Costs are added that have nothing to do with delivering care. An average of 31% of all spending goes straight to administration, the highest overhead costs in the industrialized world.
The insurance companies that control this wasteful system are the key obstacles to universal coverage. These companies are parasites. They don’t provide care. They are middle men interested in profit.

But they have powerful connections to both political parties.

Obama’s Plan

Obama is tapping the anger of millions of people at the healthcare system. But he is not willing to replace the insurance companies, killing his chances of delivering the reform we need. Instead, his policies reflect his overriding priority since his inauguration: fixing Corporate America’s crisis-ridden capitalist system.

Obama threw trillions at the Wall Street banks to save them from collapse. Now, Obama has identified skyrocketing healthcare costs as the biggest challenge to the long-term health of U.S. capitalism and a “ticking time bomb” for the Federal budget.

Healthcare makes up 17% of U.S. GDP, compared to less than 10% in Canada and France. Costs are predicted to rise to 20% of GDP in the next few years.

Obama claims he has found billions in savings through reforming regulations. He is also proposing a public plan option that he says will help lower costs by injecting competition into the insurance market (see box below).

Obama is also proposing to subsidize and expand coverage partly through increased spending. But subsidizing expanded coverage under the current for-profit system will be extremely expensive, with a targeted cost of $1 trillion over ten years, and debate in Congress is raging over how to pay for it. Still, it won’t achieve universal coverage unless Obama supports the appalling plan to force everyone to buy insurance.

Single Payer

Eliminating the insurance companies, as proposed by supporters of “single payer” and backers of House Resolution 676, is the best way to cut costs and immediately achieve universal coverage.

Currently, hospitals are mainly funded through battles with various insurers over thousands of itemized bills. It’s a costly system that requires loads of administration. Some hospitals have more billing clerks than nurses!

Instead of channeling our money through a mess of insurers who skim off profits at every turn, single payer would fund hospitals like fire departments. A single public agency would provide budgets for hospitals, clinics, and doctors’ offices.

According to studies at the Harvard Medical School, this would save as much as $400 billion per year, enough to cover all out-of-pocket expenses with $300 billion left over to create jobs.


Democrats Declare Single Payer is “Off the Table”

FACT: Before Obama made his spectacular rise to power in the Democratic Party, he was an avowed advocate for single payer.

In a speech to the AFL-CIO in 2003, Obama declared, “I happen to be a proponent of a single-payer
universal healthcare program.”

Of course, he warned of obstacles. “But as all of you know, we may not get there immediately. Because first we have to take back the White House, we have to take back the Senate, and we have to take back the House.”

Done, done, and done. So, what happened?

Obama points to polls showing most Americans like their current plans. But numerous polls have also found that a large majority of Americans support a single-payer national health insurance plan. A February NY Times/CBS News poll showed 59% in favor of single payer.

With this initial support plus the popular anger at corporations, certainly an extremely popular president could mobilize support for single payer – if he wanted to.

The Democrats are a party of big business and actually received more money from the healthcare industry in 2008 than the Republicans. 54% of industry donations, or $90.7 million, went to the Democrats while the Republicans got $76.6 million. So far in 2009, the Democrats have received 60% of industry donations (

Sen. Max Baucus, the Democrat heading the reform effort in the Senate, received nearly 25% of all his campaign donations from the healthcare industry in 2008.

Now that Obama is president, he says we can’t “start from scratch” with single payer. But eliminating the insurers doesn’t eliminate the hospitals, doctors, and nurses. What Obama really means is that he defends the insurance companies. In the 2008 elections, he received $18 million from the healthcare industry, more than any other candidate.

Like all past Democratic Party presidents, Obama has decided to put the interests of his party – and their big business backers – above those of struggling working-class Americans.


Should We Support Obama’s “Public Option?”

Not willing to pass single payer, Obama has put forward a vague proposal for some sort of public plan option as an alternative to private insurance. This proposal has become the most controversial aspect of the debate.

Many unions and progressive groups are mobilizing support for a kind of public option plan similar to Medicare and Medicaid, but available to everyone at low cost. Under this best-case scenario, the public option would be cheaper than private insurance because of savings on administration.

But the overall savings would still be very small and prices would continue to rise at inflated rates. That’s because it won’t eliminate the biggest source of waste: the huge administrative apparatus that is needed to battle with the variety of insurance companies over every item of every bill.

Physicians for a National Health Plan estimate that even if half of the population switched to a public option plan with minimal overhead, the savings would amount to less than 9% of the savings from a single-payer plan (

However, the “public option” we are more likely to get, if at all, will be much worse. The insurance companies and their supporters in Congress, including many Democrats, have enough support to strip any public option of real teeth.

This has led to a “middle ground” proposal from the third-ranking Democrat in the Senate, Charles Schumer, calling for any public option to operate within the current rules and standards of the insurance market, with co-pays and premiums set to market rates. This kind of public option is virtually meaningless.

Rather than limiting our demands to what is acceptable to Obama and the Democratic Party – and therefore to big business, we should build an independent mass movement in the streets, clearly demanding single payer and an end to for-profit healthcare.

How NOT to Build the Single-Payer Movement

At the end of May, over 3,000 people rallied in Seattle behind a coalition of 200 progressive groups and unions urging support for “universal” healthcare. Demands for single payer were intentionally excluded by the pro-Democratic Party organizers of the rally.

But the signs and chants brought by ordinary people showed widespread support for this demand. Democrat Senator Patty Murray was shouted down at the rally when she refused to support single payer.

With a bold lead, millions of people could be mobilized in support of single payer, fundamentally shifting the public debate in Washington. According to Labor Notes, 558 resolutions in favor of single payer have been passed by union locals, central labor councils, and state federations.

Unfortunately, most unions and progressive organizations give a blank check to the Democrats, but this is a dead-end strategy for single-payer supporters. The Democratic Party leadership has a vested interest in defending the insurance companies who finance their party. Even supposed single-payer supporters in Congress like Sen. Bernie Sanders have given up without a fight, saying only Obama’s plan is “realistic.”

Only a determined social movement, like the civil rights movement, that campaigns independently of the two parties can bring enough pressure to bear on the politicians to force them to concede single payer.

Instead of giving millions to the Democrats, unions and progressive groups should put their resources towards a major mobilization with marches and rallies for single payer across the country.

We can force the politicians to cave if, instead of rallying support for the Democrats, we boldly expose the big business character of both parties and run our own candidates against them on a clear pro-single-payer, anti-corporate, pro-worker platform.

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