THE BLOG
12/01/2009 05:12 am ET Updated May 25, 2011

Health Care Reform and Corruption

For decades now, American political leaders, as well as global financial institutions, like the World Bank and the IMF, have lectured to poorer countries about the need to root out corruption. A system of government compromised by insiderism, favoritism and lack of transparency will fail to establish the foundations for sustained prosperity and, in the process, weaken the kind of accountability and fealty to the rule of law necessary for democratic governance in the public interest. Thus the sometimes "tough medicine" that the IMF and World Bank prescribed to developing countries, backed by the United States, included a strong dose of anti-corruption efforts in support of good governance.

So it's worth pointing out that corruption -- presumed to have been confined in American history to our Tammany-Hall past -- is an endemic feature of our own political system. It's played an important role, for example, in the current health care reform debate. Let's leave aside the very questionable and secretive deal that the White House made with the pharmaceutical industry and just focus on the public option. Polls that clearly define the public option show that large majorities of Americans support it. The quality of arguments against the public option (setting aside "death panel" garbage) -- for example, that it's "unfair" because a publicly run health insurance option would be cheaper and be run more efficiently than is private insurance -- is, frankly, pathetic. And yet, despite a Democratic super majority in the Senate, the public option appears headed for defeat. Why? In large part because key Democrats are carrying water for the health industry interests that line their pockets. As Nate Silver has shown, you can, in fact, explain quite well whether, for example, so-called moderate Senators will support the public option if you know how much they've received in contributions from health industry PACs. Yes, this is perfectly legal. But, in any other context, we'd call a legislative process so clearly infected by moneyed interests what it is: corrupt.

As Krugman recently observed, in a column waxing nostalgic (to a point) for President Nixon:

We tend to think of the way things are now, with a huge army of lobbyists permanently camped in the corridors of power, with corporations prepared to unleash misleading ads and organize fake grass-roots protests against any legislation that threatens their bottom line, as the way it always was. But our corporate-cash-dominated system is a relatively recent creation, dating mainly from the late 1970s.

And now that this system exists, reform of any kind has become extremely difficult. That's especially true for health care, where growing spending has made the vested interests far more powerful than they were in Nixon's day. The health insurance industry, in particular, saw its premiums go from 1.5 percent of G.D.P. in 1970 to 5.5 percent in 2007, so that a once minor player has become a political behemoth, one that is currently spending $1.4 million a day lobbying Congress.

That spending fuels debates that otherwise seem incomprehensible. Why are "centrist" Democrats like Senator Kent Conrad of North Dakota so opposed to letting a public plan, in which Americans can buy their insurance directly from the government, compete with private insurers? Never mind their often incoherent arguments; what it comes down to is the money.

And such influence also obstructs serious reform efforts that might not include a public option. Jonathan Cohn has explained that the health insurance system in the Netherlands relies mainly on private health insurance that includes for-profit providers. And that system is highly successful -- universal coverage, comprehensive care, high levels of satisfaction and excellent outcomes. But Cohn also points out one key ingredient in the Dutch system that makes it unlikely to serve as a viable model for the United States: stringent government regulation and oversight.

Cohn writes:

Still, there's a catch. A big catch. Private insurance in the Netherlands works because it operates more or less like a public utility. The Dutch government regulates industry practices tightly -- more tightly than the reforms now moving through Congress propose to do in the United States. The public insurance option was supposed to make up for that deficiency, at least in part, by setting a standard for service and affordability that the private industry would have to meet -- and by offering a fail-safe option in case the private plans simply couldn't keep up. If Congress ends up gutting the public plan, in part or in whole, then it needs to work even harder on making private insurance work. And it's an open question whether that will happen.

It's an open question (to put it optimistically) because of the way our legislative processes are compromised. In short, because of corruption.

Of course, it's not just health reform. There have been a spate of stories in recent days -- from malfeasance among defense contractors (brought to light anew by that ridiculous bill to de-fund Acorn), to successful financial industry efforts to undermine consumer-friendly banking regulations, to politically pressured FDA approval of dangerous
medical devices -- that highlight how widespread corruption is in our political system.

Earlier this year, Simon Johnson, the former chief economist of the International Monetary Fund wrote a widely discussed article, "The Quiet Coup," about the degree to which the American financial system had come to embody the practices we typically associate with corrupt "emerging market" economies, like Russia. Central to such practices included the capacity of powerful private interests -- including those most responsible for economic crisis and instability -- to block changes to a status quo that served their narrow purposes at the expense of the public interest. This kind of skewed outcome is at the heart of what is so pernicious about corruption. And it appears, increasingly, to pervade our political system, calling into question, among other things, our credibility in lecturing to the rest of the world about good governance.

Physician, heal thyself.

Jonathan Weiler's second book, Authoritarianism and Polarization in Contemporary American Politics, co-authored with Marc Hetherington, is just out from Cambridge University Press. He blogs daily about politics and sports at www.jonathanweiler.com