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The US Healthcare Sham and the Scandinavian Model

by Serge Halimi Wednesday, Dec. 09, 2009 at 5:18 AM

The reforms that Barack Obama is proposing will not change the US' abysmal healthcare system because those who profit from it have been able to buy protection from the lawmakers.. The Golden Age of the welfare state began after the Second World War.

US Healthcare Sham
by Serge Halimi

[This article was published in the English edition of Le Monde diplomatique, September 2009, http://mondediplo.com/2009/09/ushealthcare.]

A Republican Congress and President Bill Clinton abolished a welfare program in 1996 under the (largely fallacious) pretext that it bred fraud, waste and abuse. Thirteen years on, the reforms that Barack Obama is proposing will not fundamentally change the United States’ abysmal healthcare system because those who profit from it have been able to buy protection from the lawmakers. The welfare program ditched in 1996 absorbed about 1% of the US budget; today’s well-ensconced private insurance companies swallow most of the 17% of the budget set aside for healthcare.
Paradoxically, the US president is one of the most spirited prosecutors of the system he has chosen to retain. Day after day he recounts how “we are held hostage by health insurance companies that deny coverage, or drop coverage, or charge fees that people can’t afford for care they desperately need… We have a healthcare system that too often works better for the insurance industry than it does for the American people” (1).
Obama’s project initially set out with two important objectives. It proposed compulsory health cover for the 46 million Americans outside the system while funding the poorest amongst them. It also suggested the creation of a public insurance system with less prohibitive tariffs than private companies (2), which commit huge resources to finding legal loopholes (“pre-existing conditions”) allowing them not to pay out when their insured clients fall ill.
What is it that so alarms the right? Bobby Jindal, the Republican governor of Louisiana, claims that “any government plan will benefit from taxpayer subsidies and be able to operate at a financial loss, competing unfairly in the marketplace until private plans are driven out of business” (3). Other more telling tales of distress might have concerned him, particularly in Louisiana, one of the poorest US states.
American politics is so poisoned by money flowing from industrial and financial lobbies that the only proposals ensured a smooth ride through Congress are those that cut taxes. Banks, insurance companies and the pharmaceutical industry have almost nothing to fear. Max Baucus, the Democrat chairman of the Senate finance committee, whose approval is needed for reforms to be adopted, is also the lawmaker who receives the most money from private hospitals, insurance companies and doctors. However, his largest donors are hardly worried about the problems of Montana, the small rural state he represents, since 90% of their contributions come from elsewhere in the country, in a perfectly legal and accountable way. Will anyone be surprised to hear that Baucus opposes a complete overhaul of the current medical system?
A year after the crash of neoliberalism, the (small-scale) panic that gripped the ruling classes has vanished. The political system remains locked in their favor. From time to time, a more corrupt or unlucky operator goes to jail; the mantra – morals, ethics, regulation, G20 – is chanted; then it all starts again. Questioned recently about the huge bonuses awarded to traders at BNP-Paribas, Christine Lagarde, France’s economy minister and a former Chicago business lawyer, had only this to say: “If we say no more bonuses, the best trader teams will simply move elsewhere.”
Cradled in a political system that protects them (and which they in turn protect) and profiting from the public’s widespread cynicism and all-round despair, traders and medical insurance companies can only pursue their parasitic ways. “Abuse” is not some aberration in their practice, it’s their essence. So a “reform” they could agree to will not do: what we need is their disappearance.
1) Town hall meeting in Montana, 14 August 2009.
(2) In 15 of the 50 states, more than half of the “market” is held by one private healthcare company. See “The Tight Grip of Health Insurers,” Business Week, 3 August 2009.
(3) Bobby Jindal, “How to Make Health-Care Reform Bipartisan”, The Wall Street Journal, 22 July 2009.


By Jean-Pierre Séréni

[This short article published in: Le Monde diplomatique 10/9/2009 is translated from the German on the Internet, http://mondediplo.com/2009/11/09nordicmodel.]

Is there a common social model in the five Scandinavian countries different from the rest of Europe? The first Scandinavian conference on social questions took place in 1907. At that time politicians, unionists, engaged citizens and experts came together to grapple with urgent themes like social security in work accidents and industrial safety.

A regular exchange about social questions continues today. That is why the country of the high North appears to outsiders like a great family. They have found very similar answers to central challenges like sickness, old age, poverty and unemployment – despite great demographic and historically conditioned differences. With its 9.3 million inhabitants, Sweden has a population almost twice as large as Denmark, Finland or Norway. Sweden and Denmark were once powerful kingdoms while Norway, Finland and Ireland were part of other great kingdoms and first became independent at the beginning of the 20th century. Before 1939, Copenhagen led the welfare state reorganization. Spared from war, Sweden began right after 1945.

Scandinavia was long a poverty-stricken region on account of its raw climate and barren soil. This first slowly changed at the middle of the 19th century. Up to then, 2.5 million people, more than a quarter of the population, migrated to the New World to escape poverty. After 1875, Scandinavia was mainly agricultural. In Sweden, 87 percent of the population lived and worked on the land, 75 percent in Denmark, 81 percent in Norway and 94 percent in Finland.

In the whole region, political, social and economic changes were parallel processes. The absolute monarchies developed into constitutional monarchies (1849 in Denmark, the Swedish class parliament gradually became a modern parliament from 1809). The agricultural reforms at the end of the 18th century produced a new class of independent landowners. With modern big industry – steel plants in Sweden and food industry in Denmark – a general urbanization process started.

Since the Reformation in the 16th century reached Scandinavia from northern Germany, r3elief for the poor was in the hands of the powerful Lutheran state churches that watched over their protégés with moral strictness. The responsibility of the parish councils for welfare for the poor was taken over by the communes over time – first in Sweden and then in Norway and Denmark. The state made the laws and the communities implemented them with their own means. The biggest taxpayers, landowners, bore the main burden. Whenever the central government ordered social improvements (for pensions, health care and orphan welfare), all the communes grappled with implementing them as inexpensively as possible without raising taxes.

In the 1920s and 1930s, the relative strengths changed under the growing influence of the unions. In the parliaments, Conservatives and Liberals lost to the Social Democrats who formed majority coalitions in Denmark, Sweden and Norway. Only in Finland was the general swing to the left delayed. After Finland gained its independence in 1917, the battle between supporters of the Russian Revolution and the middle class camp began. The first step toward a welfare state was taken when unions and employers finally agreed on permanent cooperation on the basis of a regulation of the labor market. This means today every citizen without exception has a claim to social security. The benefits of the welfare state are financed out of tax funds, not from social security taxes. Only unemployment benefits are financed from voluntary insurance contributions of employees (except for Norway).

The Golden Age of the welfare state began after the Second World War. The common idea was a third way between liberal economic society and socialist utopia. This amounted to a reform capitalism that joined social generosity with economic power. All political and social forces agreed that the market society should produce as few social inequalities as possible. This system is regarded worldwide as a social-democratic version of the welfare state that covers everything: social security, pensions, the disabled, senior citizen homes, nursing, health care, education, training, research and culture. This type of welfare state was the result of more than 60 years of social-democratic government work – either in sole political responsibility or in coalitions – in Sweden and 45 years in Norway or Denmark. The economic crisis of the 1980s and 1990s, the end of the Cold War, loss of political significance of social democracy and globalization of the financial world have weakened the Nordic welfare state model. Since then Scandinavia has been oriented socio-politically more toward the West where states are less generous.


(1) Niels Finn Christiansen and others, “The Nordic Model of Welfare: A Historical Reappraisal,” Copenhagen 2006.

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