By Doug Henwood, Left Business Observer
As Congress and the Obama administration strive to make their already awful health care reform proposal even worse, you've got to wonder: wouldn't big business do better with a single-payer scheme?
Yes, a Canadian-style single-payer system would cover everyone and control costs, making it far more humane and economically rational than the present system, or anything that's likely to emerge from Washington in the coming months.
Such high-minded reasons aside, wouldn't GM, say, be better off if its health care bill were picked up by the feds? Wouldn't big business in general gain if it didn't have to carry so much of the financial weight of paying health insurance premiums?
These sound like reasonable questions. Yet obviously big business is not lifting a finger to support a serious overhaul of health care finance that might be in their material interest. Why not?
An answer you hear now and then is that insurance companies are crucial sources of finance for corporate America, and no sane CEO wants to shut down that money spigot. And you also hear that board interlocks between insurance and other companies personalize things, and deepen the reluctance of non-insurance execs to get involved.
Down the roster
How true is this? Let's run through the five biggest publicly traded health insurers, in the order of their market capitalization (that is, the value of their outstanding stock), as a quick fact-check.
UnitedHealth's outside directors come from Johnson & Johnson, The Directors' Council (a group lobbying for greater "independence" among corporate boards, meaning greater fealty to shareholders), the University of Texas (a retired head of health services, to be precise), Progressive Insurance, Project HOPE, and St. Paul Fire and Marine (insurance). Its chair, Stephen Hemsley (who, by the way, made $3.2 million last year, and holds unexercised stock options worth $744 million), serves on one other board: Minnesota Public Radio.
At the end of 2008 (the date for all the holdings in the following paragraphs), UnitedHealth had about $14 billion in investments, most of that long-term bonds--with almost half of that accounted for by state and local government bonds. Not quite $3 billion were corporate bonds. Holdings of corporate stocks were trivial.
WellPoint's directors come from Banknorth, Trans-Lux, the Southern Company, Freeport-McMoRan, Chubb, Rocky Mountain Hospital, Emmis Communications, and some consulting and portfolio management companies. Its chair, Angela Braly, serves only on the board of the industry trade association, America's Health Insurance Plans.
WellPoint had about $12 billion in long-term investments at the end of 2008, about $5 billion of it in corporate bonds--and about that much in federal, state, and local government bonds.
Aetna's outside directors come from Commonwealth Edison, Polo Ralph Lauren, Harvard Business School, the Yale School of Management, Black Enterprise magazine, Thomson Reuters, Becton Dickinson, and a some private equity and consulting firms. Its chair, Ronald Williams, serves on the boards of American Express, Lucent, and MIT.
Aetna--which also has a substantial life insurance business--held about $14 billion in long-term investments, of which just over $6 billion were U.S. corporate bonds. It had nearly $3 billion in federal, state, and local government bonds, and almost $3 billion in mortgage bonds. Stockholdings were a tiny $32 million.
Cigna directors come from BellSouth, Hershey, Harley Davidson, Duke Energy, VF Corp. (most famous for Lee and Wrangler jeans), AmerisourceBergen (a pharmaceutical distributor), and Harvey Electronics (a bankrupt retailer whose stock last traded at $0.03). CEO H. Edward Hanway's major outside board membership is with The Philadelphia Orchestra, an organization that does not figure prominently in health care politics.
Cigna's investment holdings are around $18 billion, about $7 billion of it in corporate bonds. Almost $4 billion were in government bonds. Stockholdings were just $140 million, mostly in preferred shares, which typically don't confer the right to vote on corporate policies or management.
Humana directors come from a couple of sub-top-tier private equity and venture capital firms, Pfizer, CAST (a software firm), Arrow Electronics (a components distributor), and Ashland (a chemical company). CEO Michael McCallister serves on the board of National City (a Cleveland bank recently absorbed by PNC).
Humana's long-term investments were just over $5 billion. More than two-thirds of it was in government bonds, with just $841 million in corporate bonds. Stockholdings were very minor. Almost half their holdings of corporate securities were in the financial services industry.
So the top five health insurers hold about $22 billion in corporate bonds--a bit over 0.1% of the total $16 trillion outstanding in the U.S. Stockholdings were roughly a billion all together--barely a drop in a $14 trillion ocean of total market capitalization.
In other words, their financial power alone would rival a set of tweezers.
And what about the more personal kind of power, interlocking board memberships? These don't look all that impressive either, really. A lot of the cross-pollination is with other insurance companies and fellow members of the medical-industrial complex, with some fairly obscure names from finance and retail scattered about. There are very few household names on the list--inasmuch as households speak regularly of Fortune 500 members.
So there goes the web of influence argument.
Politics, of course
So why won't the CEO class embrace single-payer? The answers are probably less titillating than the vulgar tales of influence we just refuted--but no less fateful.
By at least one account, the CEO of a large industrial company (that must remain unnamed) had some serious political concerns. Sam Gindin, the former chief economist of the Canadian Autoworkers union who now teaches at York University, interviewed a number of CEOs and bankers along with his frequent collaborator, Leo Panitch.
One top exec they talked to supported the socialization of health care (without revealing exactly what that meant), but the CEO seemed very worried about the negative reaction that smaller firms, including those with which they do business, would have if the company went public with that support in a big way.
The petite bourgeoisie--who, it should be pointed out, has considerable sway in Congress--might see single-payer as an attempt by big business to shift costs onto their lesser cousins. And, says Gindin, high-profile CEOs would be very reluctant to intervene in a big political fight for socializing health care finance, even though they often have no problem in publicly supporting single-payer in Canada, where it's hardly controversial except on the right-wing fringe.
Another angle: David Himmelstein, one of the founders of Physicians for a National Health Program, says that while many execs support single-payer in private, they're reluctant to embrace it publicly for fear of encouraging would-be expropriators. As Himmelstein put it, "If you can take away someone else's business--the insurance companies' business--you can take away mine." Who says there's no class consciousness in America?
That's not the only class war element of the issue. There's an ideological dimension, no doubt. Public anything is deeply unpopular in the USA, and not just among the corporate class. But we haven't yet exhausted the material realm. Employers like it when workers feel insecure. Fear of losing health coverage makes workers less willing to strike or resist pay cuts or speedup.
Granting the working class a new "entitlement," especially at a time when a substantial portion of the ruling class would like to cut or even eliminate existing entitlements like Social Security and Medicare, would make people less fearful. Can't have that, can we?
Doug Henwood is founder and editor of the Left Business Observer, where this article originally appeared.