Monday, July 27, 2015

The US Health Care Industry is Sick.

By Richard Mellor
Afscme Local 444, retired

The sickness industrial complex is a very lucrative business in the US.  One of the more successful aspects of it is the hedge fund industry. Needless to say, this industry has nothing at all to do with the kind of hedges that surround a rural field or garden although it is a structure.  “A hedge fund is a investment vehicle and a business structure that pools capital from a number of investors and invests in securities and other instruments.”, according to Wikipedia.
In other words, a hedge fund is a vehicle created to allow owners of capital to earn profits and accumulate more capital. It’s how people get rich as opposed to performing socially useful labor.  Hedge funds cannot be bought by the general public, only by certain “sophisticated” investors.  From what this layperson can determine, they are not regulated or open to any serious oversight by the general public and generally exist under the radar. As of 2009, the global hedge fund industry was worth $2.4 trillion.

But it’s not just the investors that make money. There are others with their grubby little hands in the game. These characters are driving another vehicle of sorts called Capital Management firms. Pretty simple really, they manage capital for those whose existence is based on it as opposed to wage labor.  For their work, which is to ensure the capital employed in these funds returns cash to the investor over and above their outlay, the investor is charged an annual fee of around 2% of the funds net asset value. Then there is a performance fee which is around 20% of annual profits earned but can be as high as 50%.

On top of this, any savvy investor must surely hire a Risk Management firm or risk management strategists that study and advise on the safety of the investments.  Hundreds of thousands of people are employed in this industry, the goal of which is to protect profits for owners of capital.  One can only imagine how different society would be if such human talent and energy were employed in ensuring society functioned in a humane way in harmony with the natural world, in other words, if the capital/wealth that is created by human labor power in use and appropriated by capitalists was allocated on the basis of human need.We would actually have a real health care system.

Glenview Capital Management is one of these firms that hit it big by investing in the sickness industrial complex like hospitals and insurance companies.  Through the combination of all those things that lead a gambler to make the right bet, GCM figured Obama’s health care plan would lead to some profit taking and bet on it.  The decision brought $3.2 billion in to GCM’s coffers over the last for years according to securities filings and reported in the Wall Street Journal.
Robbins, sickness is good to him

Larry Robbins, the Gomer Pyle look alike who heads Glenview Capital Management is worth some $2.2 billion according to Forbes. And as always, Forbes describes these billionaires wealth as being “self made”.  He has made a lot of money betting on hospital stocks and such and naturally, it will be almost impossible to discover who those lucky individuals might be that have profited from gambling on the sickness industry.  It is true that institutions like pension funds also invest in these instruments but that is no way to provide the means needed to live a decent life in retirement for working class people.
In 2009, in the midst of the Great Recession when people were losing their homes and their jobs and while 2.7 million people lost their private health care coverage, the nations five largest for-profit insurers made a combined profit of $12.2 billion.

Russell Andrews, a neurosurgeon and author of Too Big To Succeed says that it’s the rapacious striving for profits that has made US health care so expensive, (as opposed to incorrigable patients who visit the emergency room for a cut finger which is what we are led to believe to a great extent.) The “….morphing of American medicine from a function of a humanitarian society into a revenue stream for healthcare profits, drug and medical device companies, hospitals, and insurance companies.  In essence, we have transformed healthcare in the U.S. into an industry whose goal is to be profitable.” . Andrews refers to the for profit health care system in the US as a “virus” infecting the system. I would add that it is the profit system, or capitalism that is infects human society in general. (I have not read this book but found this reference to it in a review of two books on the subject at
I have to laugh at this comment from the author at Forbes who writes, I think these well-intentioned physicians are conflating interest in making money with the pursuit of profits.”   The author assails greedy CEO’s in the health care industry which is an issue but clearly doesn’t understand the motive behind the struggle for profits. Workers work for wages; we sell our labor power to the owner(s) of capital. A capitalist’s wealth arises from the buying of labor power directly or indirectly through investments.

The main thing is that the bottom line should not be profits, but that profits should not enter in to it. Health care should not be a business but a social service that is a right in any civilized society.

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