The Corporate Compromise: A Marxist View of Health Policy

By Himmelstein, David U.; Woolhandler, Steffie | Monthly Review, May 1990 | Go to article overview

The Corporate Compromise: A Marxist View of Health Policy


Himmelstein, David U., Woolhandler, Steffie, Monthly Review


THE CORPORATE COMPROMISE: A MARXIST VIEW OF HEALTH POLICY

Over the past century medical care has evolved from a small cottage industry, through a period of rapid expansion as a charitable public service, to an enormously profitable and increasingly private business. Medicine has become one of the largest industries in the United States, and economics now competes with science and humanitarian concerns in shaping the future of medical care. The dominance of economic imperatives and the corporate transformation of American medicine is strikingly congruent with Karl Marx's century old description of the development of a capitalist industry.

In this article we present a Marxist view of current U.S. health policy. We argue that the growth of Health Maintenance Organizations (HMOs) and similar payment schemes can be traced to an implict compromise between cost-conscious corporate purchasers of care, and corporate health care providers struggling to expand profitability and assert control of medicine.

Marx emphasized that technological progress in the eighteenth and nineteenth centuries changed not only the processes of production, but also power relations in industry. As the cost of the tools of manufacture (capital) rose to exceed the means of individual producers, the owners of capital gained power, since producers without modern equipment could not compete. The dominance of the owners allowed them to depress wages and command profits, which in turn paid for the ever larger investments needed to remain competitive - investments increasingly unthinkable for ordinary workers. Thus owners of capital came to control production (often from afar), as well as the profits which became new capital. Through these powerful levers they shaped much of society.

The history of health care's emergence as a capitalist industry reads like a modern textbook of Marxist economics. Small scale owners/producers (doctors) initially came together in workshops (hospitals). Technical development made access to large concentrations of capital (buildings and machines) indispensable for medical practice and increased the power of those who controlled health care capital. Simultaneous with this increasing accumulation of capital, control of health care institutions shifted from public to private hands. Today in medicine the power of those who control capital is reflected in the rising influence of hospital administration, corporate executives, insurance bureaucrats, and other functionaries unfamiliar with the clinical encounter, but well versed on the bottom line.

The recent conversion of health care from public service to private industry has brought those who profit from providing health care into conflict with industries for whom health care (viz., employee health benefits) is a cost of production. This inter-corporate conflict powerfully shapes health policy. It has caused the rapid proliferation of HMOs and other forms of prospective payment which establish incentives for cost containment but allow health institutions to remain profitable, and has hastened the decline of physician dominance in both health policy and clinical decision making.

Health Care and the Profitability of Industry

Marxists view medical care as an industry analogous to other industries. Medicine is not an autonomous discipline guided solely by scientific discoveries or idealistic concerns. Rather health care is one sector of economic production which responds to the economic and political needs of the capitalist system as a whole.

Marxists hold that the drive for profit and expansion is the main determinant of the development of any capitalist industry. However, some industries that would not be viable in a purely market driven economy are necessary for the profitability of other industries, or the stability of the system as a whole. In such cases the government, which Marx referred to as "a committee for managing the common affairs of the whole bourgeoisie," may step in to assure that needed functions are carried out. …

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