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A sorry tale

This page traces the reasons government failed to exert control over corporations in the USA. Only moderately effective control has been initiated by community outrage. It indicates why similar outcomes are likely in Australia.


Market advocates like Wooldridge and Samuel believe that government can maintain control over corporations. They challenge concerns that control will be lost.

The validity of the criticism that control will be lost, not only by government but by the people is shown by the US experience.

The growth of corporate medicine in the USA was totally uncontrolled and the government had nothing to do with it. There was already an established system of private medicine and a largely not for profit community hospital system which functioned in the interests of citizens. They proudly embraced Samaritan traditions. Competition, while more aggressive than other countries was muted and structured within community and professional values. It was governed by accepted ideas of probity. When medicare was introduced in the 1960's a number of people saw the profit potential and the corporate chains were founded. After a slow beginning corporate chains mushroomed and now largely control the culture and set the context within which medicine is practiced.


The same arguments which Samuel uses were made as the corporations started to expand in the early 1980's. They were promoted by John Bedrosian and a cohort of others. People familiar with health care like Arnold Relman debated them making arguments very like those which I am making here.

Relman was simply ignored because success on Wall Street was accepted by politicians and the public as proof of the superiority of the market system. What we see in the USA today is a consequence.

Political influence similar to that which now exists in Australia has prevented any effective action to control corporate behaviour. Politicians whose political success was assured by corporate donations fought a rearguard action frustrating any action. While politicians debated and squabbled the market acted and imposed its own solution to the problems it had created. The only control which government has exerted has been in response to the development of problems serious enough to occasion a public outcry.

In the marketplace itself, the more powerful groups simply dictated changes and made their own rules for the marketplace. Kuttner writing about Columbia/HCA indicated that "Columbia/HCA insists that medicine is a business, and increasingly imposes its rules on the competition game."

(Kuttner R- "Columbia/HCA and the resurgence of the for-profit hospital business New Eng J Med 1/8/96 p 362, 8/8/96 p 446)

While politicians argued about the high costs of care in the 1980's, manufacturing groups which were losing a competitive advantage because of their health care costs acted and introduced their own solution - managed care. Politicians accepted a fete accompli and legislated accordingly.

Many doctors such as Dr. Walter Afield, deeply upset at what had happened in psychiatry and ashamed at the way the profession had yielded to corporate pressures supported this solution. Dr. Afield had investigated Tenet/NME's operations in Florida and gave evidence in 1992. I met him and discussed these issues in 1993.


It was a public outcry which forced PACMAN legislation across the USA, a public outcry which is driving the passage of patient's rights and other legislation to protect citizens from managed care legislation, and a public outcry which is driving the legislation to ensure proper staffing of nursing homes. In each instance government regulation had been ineffective in protecting citizens. Politicians had done nothing about it. Government has procrastinated and repeatedly taken the corporate position. It has required persistent public action and the threat of the ballot box to force any sort of legislation.


The enormous political influence which the corporations exert through donations to politicians, and through lobbying is now widely acknowledged. Health care interests spend more in this way than any other sector in the USA, including the tobacco lobby - once a long way ahead. Ralph Nader's Public Citizen group has recently published the enormous donations made to political parties by health care groups in the current election campaign. Studies have also revealed how closely health care voting patterns follow corporate funding of political parties. As in Australia corporate staff are appointed to senior positions and formulate government policy. George Bush Jnr's senior health care adviser, the person who drafted the health care policy he is asking citizens to vote on has a US $11 million investment in health and aged care. She stands benefit handsomely if her policies are accepted at the poles.

Vast sums are spent in advertising by corporate groups who are able to control the perceptions of a large sector of the population by employing skilled public relations groups. At any one time only limited sections of the population have first hand experience of the health care system - but they are all well aware of how much they pay for insurance. The effective way in which the media was used to manipulate public perceptions and so destroy President Clinton's plans to address the problems in the marketplace are the subject of several academic analyses.

Citizens groups exposing serious deficiencies have limited resources with which to confront and disprove the claims made by corporations. That they have been successful in doing so is a reflection of the seriousness of the problems in the USA and the commitment of the community to its values.


Government in the USA has had the power to exert control over the corporate marketplace. It is however hampered by an ideology which sees markets as being self regulatory - that they correct problems themselves. This does not happen in health care. It has rarely used its powers and has required intense prodding to do so.

Despite corporate attempts to control public perceptions it has been pressure from the public which has forced governments to act. Politicians representing corporate interests have fought a rearguard action which has usually resulted in the removal of key provisions from the legislation. The refusal to address the problems created by the ERISA legislation, and the move by some politicians in Florida to introduce similar legislation to protect nursing home chains are good examples.


A fundamental principle of democracy is that every citizen has the right to redress for perceived wrongs through the courts - except of course in the USA where some health care corporations are protected. The public want this right and the judiciary has repeatedly asserted that it is entitled to this right. The Republicans who receive most health care money have refused to give it to them.


The corporations claim in their marketing that if citizens are given the basic right to use the courts then the costs of health care will spiral out of control. They have run a scare campaign. Given the extent of the problems in care it is very probable that they are right. To the outside observer this indicates a major problem at the heart of the marketplace system of health care. The fundamental rights of citizens must be removed to make it work financially. The vast number of successful lawsuits are clearly a measure of its failure to work for the community.


Politicians all over Australia are entertaining and courting large corporate groups. Nowhere is this more apparent than at the Olympics.

The story of corporate healthcare in Australia is the story of politicians bending over backwards and ignoring the law in order to assist corporate interests. There is a very real danger that once multinational corporate interests dominate the market government will lose what little control it has over them. These groups are often wealthier than government. Government simply cannot shut the whole health system down. There is no road back.

Ron Williams indicated in 1993 they megacorps would not come nor stay unless they could provide medical care the way they wanted to. They would control. Ron Williams predictions can now be seen as insightful. Graeme Samuel's model in contrast is challenged by common sense and fact.

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This page created October 2000 by Michael Wynne