In the past 30 years, few sectors of the U.S. economy have escaped the periodic ravages of recession. The health-care industry is a notable exception. Since 1950 hospitals and other health-related enterprises have experienced uninterrupted, indeed meteoric, expansion. Between 1950 and 1982 national health expenditures increased more than 25-fold, reaching $322 billion per year, and the proportion of the GNP accounted for by the health sector increased from 4.4 to 10.5 percent. During the 1970s health-care employment increased from 4.2 to 7.5 million workers, accounting for one seventh of all new jobs in the United States. Moreover, these trends continued through the recession of the early 1980s, with health expenditures rising 17 percent in 1982, despite a growing clamor for cost control. The fast pace of hospital expansion is indicated by the fact that in 1980 the average age of hospital capital assets stood at an all time low of 7 years, as compared to 15 years for the service sector as a whole and 23 years for capital in manufacturing industries.
Strikingly, the conquest of the main killers of the young (infectious diseases) was largely complete in the United States by the time the health-care sector began its explosive growth, and was clearly due to improvements in the standard of living and public health measures rather than curative medicine. The spectacular expansion of health facilities which occurred after the era of the main advances in life expectancy has been accompanied by massive government spending on curative medical care, a singular neglect of public health and preventive measures (which currently account for less than 3 percent of health expenditures), and very modest improvements in health. Moreover, many Americans lack access to the most basic medical services. The United States shares with South Africa the dubious distinction of being the only developed countries without universal health insurance. Despite the widely heralded Medicaid and Medicare programs, 25 million Americans lack health insurance of any kind, 40 percent of infants and toddlers are not fully vaccinated, and the elderly now spend as large a proportion of their incomes for health care as they did before the passage of Medicare. The paradox of vast increases in health care resources which are funded largely by the government yet fail to provide the services most critical to the improvement of health puzzles bourgeois health-policy analysts. An understanding of the role of health care in the accumulation of capital can help to unravel this mystery, forecast future trends, and focus the work of the left in this field.
Health Care and Capital Accumulation
Health care facilitates capital accumulation in three ways. First, many illnesses which sap the productivity of labor can be cured or ameliorated. To quote a nineteenth-century president of Harvard University: "The objective of research in medicine is to prevent industrial losses due to sickness and untimely death among men and domestic animals." Second, medicine is an important ideological prop for the ruling class in the maintenance of the domestic tranquility and social stability needed for production and profit. Since Bismarck's introduction of health insurance for workers in 1883, health care has been used by the ruling class to cushion some of the most savage aspects of capitalist industrialization and forestall more radical working-class demands. Finally, the medical care industry has itself become an important field for investment and source of profit.
While the first two of these roles for health care have a long history, the last is more recent and has become the driving force in health-care expansion. Within the past few decades medicine has become not only a servant of the rest of capitalist industry but a major capitalist industry in its own right. Health care, previously an adjunct to commodity production in other industries, has itself been brought into the age of capitalist commodity production. …