Privatizing Health

The United States is unique in its massive spending on healthcare. 16.7% of our GDP, or over $13,400 per person, is spent on medical expenditures each year, almost twice the comparable country average and almost three times that of Japan, a country with a life expectancy seven years longer than our own. This, of course, is not news to Americans. Despite the fact that one in four Americans put off medical care due to prohibitive costs, the U.S. has yet to adopt any form of universal health coverage, making it the only developed nation without such a system.

In spite of private healthcare’s many failings, many Americans comfort themselves by asserting that healthcare in the US is higher quality than elsewhere in the developed world, but even this view is beginning to see its limits; only 44% of Americans consider their healthcare quality to be “good” or “excellent,” down from 62% in 2012. In the end, the US health system remains private for two reasons: momentum, and a national repulsion to socialism.

Though there is a difference between universal and socialized healthcare, Americans have a distinct myopia with regard to any such nuance. Almost 35 years after the dissolution of the Soviet Union, the word “socialism” remains instant political death for health reform bills, and to utilize the vocabulary of the Red Scare on the House floor is enough to tilt health reform of any sort, universal, socialized, or other, towards defeat. The government takeover of any whole market is a neoliberal bête noire, and to tamper with a market so delicate and critical to our livelihoods would be unbecoming of the land of the free.

What many Americans do not realize, and what neoliberal capitalists would be embarrassed to acknowledge, is the extent to which the government is already imbricated in the healthcare system. Though we are all well aware of Medicare and Medicaid as government programs, the history of their development has obfuscated the role that they now play. American health insurance was initially only for workers, developing out of an internal, worker’s-compensation-fund style of management and accelerated by wartime limits on wage increases and a need to attract labor with better compensation. It was not until later that Americans realized they would also need coverage for the elderly and those with disabilities. Aiming to skirt concerns about adverse selection and moral hazard, the government eventually took up insuring these edge cases.

What was initially intended to cover “fringe” groups has turned the United States government into the largest single purchaser of individual healthcare in the nation. Federal outlays for the Center for Medicare and Medicaid Services (CMS) alone outstrip spending on both national defense and debt interest. Not bound by paying for healthcare, the federal government is also one of the largest healthcare providers, with the Military Health System (with 9.5 million beneficiaries) and its Veterans Affairs (the nation’s largest integrated health network). Tax breaks, too, add billions to the federal health-underwriting account. Upon the mere uncertainty of federal subsidy renewals, Aetna, the third-largest for-profit insurer in the US, plans to exit the ACA marketplace entirely. Instead of taking a hit to their $1.1 billion in quarterly profit (and over $88 billion in quarterly revenue), Aetna execs have decided that, unless the federal government coughs up the cash, their million exchange members will need to find new insurance.

In this light, Karl Polanyi might characterize health as a fictitious commodity; something so deeply intertwined with state involvement that it could never form an independent market, just as land, labor, and money require the active role of the government and as such cannot be treated as a commodity produced for market (a real commodity) could.

Where health diverges from these three, however, is in its ethical implications. Polanyi posited a moral argument that nature and human labor have sacred dimensions, and that it is simply wrong to treat them as objects that can be haggled over. Forests, however, have a market price for timber; farmland has a market price for wheat and corn; and mountains have a market price for ore. Though the United States may lack the collective moral ethos of a country like Germany or Japan, we still fundamentally understand the ethical dilemmas of pricing a life. If sickness can be compensated by calculating lost hours of work, how does one value a lost arm? Should the adequate value be a lifetime of lost wages? Or should it be discounted by what ability to work remains? If we value our bodies and health by our wages, do older workers count for less, and retirees not at all?

We may attempt to use economic rationality to calculate our own price tags (how much extra pay would you want to offset the risk of on-the-job death?), but the personal and moral complications of health put it beyond the realm of fictitious commodity––health, rather, is a forced commodity. The translation of “promoting the common welfare” from moral to public to private responsibility requires strenuous and conscious effort to induce a market. Even as the government carefully shifts our health into private hands, per its neoliberal instructions, it must maintain vigilant oversight and rigorous support of this forced commodification in a manner that will render a complete handoff impossible.

Economists, keeping with David Harvey’s characterization of them, continue to tinker with the “problems” of this system, ignoring the contradictions that underlie them. Take, for example, the market of insurers. Many small insurers (a classical “perfectly competitive” market that is dictated as ideal) might mean low premiums, but they lack the institutional power to negotiate low prices with providers, leading to cost growth and higher long-run premiums. To combine local insurers would give them more bargaining power, and lower the negotiated cost of services, but, with fewer options to choose from, these consolidated firms would charge higher premiums to customers, squeezing both patient and provider.

Economists attempted to patch this in part with the ACA’s 80/20 rule, whereby insurers are required to spend 80% of their premiums on care. A reasonable concept, but it only ends up furthering the conflict. If they can only keep 20% of their premiums, why fight for low prices? Fight too hard for low prices, and you’ll violate the 80/20 rule. High prices, however, mean higher premiums, and if you can only keep a fifth of the pie, why not make the pie as large as possible? The proportion stays the same, but the dollar value increases.

Thus, the dynamic meant to keep prices in check, by pitting providers against insurers as market forces, collapsed under the burden of an artificial market. Other examples exist across the sector, but all point towards a fundamental failure in the neoliberal agenda. In its blind attempt to impose market logic across all aspects of life, neoliberalism forcefully constructed a fictitious market that wasn’t able to bear its own weight; economic rationality simply couldn’t assemble a framework sound enough to support the contradiction of health as both commodity and intrinsically human.

This stems from Marx’s apt description of capitalism’s moral stance: it is not immoral (willing into being ill-intent and dehumanization with incentives antithetical to ethical behavior, as Frank Knight might argue), but rather amoral. Capitalism is totally devoid of a mechanism for moral reasoning, operating independently of ethical constraints and unable to be confronted on those grounds. Its only source of feedback is the degree of success to which capital is endlessly accumulated, for capital’s sake.

Polanyi’s moral arguments on land, labor, and capital, then, fell on deaf ears, but health and life, being unique in their ethical centrality to the human experience, is totally incapable of being metabolized by the capitalist system. As such, the artificially constructed market for health remains plagued by recursive issues. Capitalism’s disregard for human consequences is, as Max Weber asserts, totally irrational. Though it may not manifest as Marx predicts, through the destruction of its workforce, and therefore its basis of production and survival, capitalism’s inability to appreciate its own fundamental unit, the human, opens a fault in the armor of capitalist logic that is exemplified by the privatization of health.

As the neoliberal order of capitalism re-entrenches its attempt to privatize American health, each successive generation grows increasingly dissatisfied with its results. The skyrocketing cost of staying alive is the most immediate grievance of the public, but it speaks towards a deeper inability of the market system to converse with us on a moral level. Though perhaps painted as a neoliberal invention, for which history will cook up a remedied version of capitalist organization, the fundamental inhumanity of privatized health offers an opportunity for Americans to interrogate their understanding of capitalism. Where capitalism has embedded itself in the various sectors of life, health’s moral resistance to the integration of the market opens a window into the limits of naturalized capitalism. If Americans can seize this opportunity to recognize capitalism as a foreign addition to our lexicon of the natural, then it can be stripped of its claim to universal truth and understood as cultural infrastructure, not teleological necessity. The epoch of capitalism may seem infinite, but its failure to digest contingency and moral reasoning, as in the case of health, offers us an opportunity to dissect its narrative of inevitability, and instead assert, contrary to Thatcher, that there is an alternative.

Citations

KFF “Healthcare Costs and Affordability” (2024)

Gallup “View of US Healthcare Quality” (2024)

MedPAC, National Health Care and Medicare Spending (2021)

CMS “Fiscal Year 2024 Financial Report”

Veteran Affairs, MHS (health.mil)

NPR, “Aetna to exit health insurance exchange” (2025)

Fierce Healthcare “Aetna to exit the ACA exchanges in 2026”