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Pandemics Show How the Free Market Fails Us

The Spanish flu of 1918 infected a quarter of the world population and was decisive to the rise of public health-care systems. Today’s COVID-19 crisis is again showing that collective problems demand collective solutions — and a state that provides for all our essential needs.

People line up outside Elmhurst Hospital to get tested due to the coronavirus outbreak on March 24, 2020 in Queens, New York City. Eduardo Munoz Alvarez / Getty

If many scientists warned of this kind of pandemic, the spectacular outbreak of the coronavirus has taken the world by surprise. In particular, it has exposed the frailties of the world’s health-care systems after years of austerity — and demonstrated their critical dependence on global supply chains.

Only a few weeks ago, world leaders were describing the threat as “fake news” or minimizing it by encouraging the population to go out as normal. Today, most governments are realizing the catastrophic consequences they face if they don’t respond appropriately. And whether they like it or not, the political perspective is changing — as a pandemic again poses the burning need for collective solutions.

The Spanish Flu

This crisis is showing us how important public health institutions really are — something already highlighted a century ago, when Spanish flu killed tens of millions. Indeed, one of the most notable outcomes of the 1918 pandemic lay in the emergence of a consensus about the need for universal health care and the development of modern epidemiology.

Henceforth, health care could not reasonably be seen as an individual responsibility. Rather, it was shown to be a collective problem, deeply embedded in the way we organize ourselves as a society. As historian François Ewald notes in his pathbreaking study on the French welfare state, the idea of contagious disease, which became dominant after Louis Pasteur’s germ theory, had already begun to change older conceptions of health care based on eugenics and miasma theories.

Writing on the new microbial doctrine, French solidarist thinker Léon Bourgeois noted that “A new notion of humanity could be revealed and passed through the minds.” This new understanding of the social question “proved the deep interdependence which exists between all living beings,” faced with a common “attack on all the organisms in the world.” It thus helped us understand “our mutual duty” of solidarity.

Before the Spanish flu, there had been no serious state health-care policies, while health systems were fragmented, relying on poorly trained doctors without centralized authorities to dispatch them. But by the end of the pandemic, the idea of socialized medicine had gained traction around the world. This new invisible threat, which affected the war itself and was literally unmanageable by decentralized market mechanisms, profoundly influenced the way we conceived public health.

For Vladimir Lenin, writing in 1920, imperialist wars had only given “mankind several million cripples and a number of epidemics.” In response, the young Soviet state established perhaps the world’s first fully socialized health-care system. Only centralized systems with a strong “collaboration between scientists and workers,” Lenin argued, could effectively end “oppressive poverty, disease and dirt” and “put medicine in the hands of the people.”

But this trend went beyond the young Soviet Union. As argued by Laura Spinney, “the lesson health authorities took away from the catastrophe was that it was no longer reasonable to blame an individual for catching an infectious disease, nor to treat him or her in isolation. The 1920s saw many governments embracing the concept of socialized medicine — healthcare for all, delivered free.”

This idea’s final triumph came after World War II, with the implementation of socialized health-care systems in most industrialized countries and the creation, in 1946, of the World Health Organization. Yet the opposition always remained strong, especially among physicians’ associations, pharmaceutical companies, and conservative groups.

The War on Medicare for All

One of the most famous spokespeople for the American Medical Association’s campaign against public health care was Ronald Reagan. “Today, the relationship between patient and doctor in this country is something to be envied any place,” the future president explained in his 1961 vinyl record “against socialized medicine.” “One of the traditional methods of imposing statism or socialism on a people,” he added, “has been by way of medicine.” He deemed the movement toward universal public health care the most “imminent” threat to the American people.

Reagan insisted that the free enterprise system had it all; “the privacy, the care that is given to a person, the right to choose a doctor, the right to go from one doctor to the other.” As Mitt Romney argued decades later, health care should “act more like a consumer market, meaning like the things we deal with every day in our lives: the purchases of tires, of automobiles, of air filters, of all sorts of products. Consumer markets tend to work very well — keep the costs down and the quality up.”

The current chaos provoked by the dramatic shortages of basic medical equipment such as masks, gloves, coronavirus tests, or ventilators illustrates perfectly the wasteful competition engendered by market-driven solutions. Just as Ireland continued to export vast quantities of food to England during the famine of 1845–1849, last week, a supplier in Lombardy exported half a million COVID-19 test kits to the United States — even if Italy may itself need these tests. Even more problematic, the race to find a vaccine is pushing states to aggressively try to buy one another’s pharmaceutical companies and patents for their own use. Donald Trump, who essentially relies on this market-based strategy, recently offered a German company “large sums of money” for exclusive rights to a COVID-19 vaccine. Likewise, he recently told state governors to get ventilators by themselves. “Point of sales, much better, much more direct if you can get it yourself,” he argued — pushing states and hospitals to compete rather than cooperate in the distribution of supplies.

These ideas of “freedom of choice,” “consumer primacy,” or “self-determination” have, however, spread across political boundaries. They have fueled anti-vaxxer movements that could impede future actions against the virus and skepticism toward science and public health recommendations (not to mention radical left critiques of “biopolitics,” depicting public health care essentially as a mechanism of social control). Yet after decades of critique launched at public health care as inefficient, too expensive, and limiting of our individual freedom to choose, this crisis will show how unable decentralized market mechanisms are to produce an optimal allocation of health care resources.

And one of the most exemplary illustration of this failure is precisely the US health care system. If the world envies the land of free enterprise for a lot of things, health care is probably at the bottom of the list. It brings bureaucracy — with endless forms and contracts to fill and sign — incredible costs, the fear of being sick, and poor results. For observers like us, coming from Belgium and Denmark, the US system looks exactly like what Ronald Reagan thought socialism was: lower quality, less efficient, and more expensive — and, in reality, less choice.

Less Freedom to Choose

While the “freedom to choose” has probably been one of neoliberal economists’ most powerful slogans, in terms of health care, it has also, ironically, resulted in less freedom for most patients. This is obviously the case in the general sense of reduced access to treatment. If we accept that individual freedom cannot exist without our basic needs met — that we can’t be truly free in a society where millions can’t even afford a prescription for their health condition — then we have to admit that a system run by private insurance restricts our liberty.

But even if we restrict our understanding of freedom to market “choice,” the American health system actually reduces the scope of “consumer sovereignty.” One of the outcomes of private insurance is that you can only choose the doctors and hospitals associated with your insurance — an insurance that you didn’t choose in the first place, as it came with your or your partner’s job. This situation has not only reinforced inequalities among Americans, but also between hospitals attracting the wealthiest clients, and understaffed clinics dealing with poor and sicker patients. This system looks strange in most countries outside the United States — particularly as public health-care systems generally offer the best of both worlds: guaranteed care and choice.

In Belgium, for example, there is no restriction on the hospital, doctor, or specialist you’d like to consult. Any patient is free to choose whatever doctor they want without having to pay more. As one of us had to stress to an incredulous American friend visiting Belgium, “you just go wherever you want.” Doctors can also choose to work wherever they want, either in public or private hospitals or as independents. Moreover, the system does not require that all hospitals are public (even if most are). Private hospitals do exist, but only so long as they’re non-profit and respect the prices set by the public authority for each kind of intervention.

Free Costs Less

Conventional wisdom might tell you that nothing is free — and that public health care would cost more for the taxpayer than private bills would. But the numbers show quite the opposite. While countries like Belgium and Denmark spend around 10 percent of their GDP on health care, the US spends as much as 17.8 percent — one of the most expensive systems in the world. Why should we pay more for less?

First, the American system squanders resources on the bureaucratic process of submitting and monitoring reimbursements to insurance companies. Almost a quarter of US health care costs are administrative — more than twice as much as the average for other industrialized countries. To that, we may add the excessive prices that drug companies are allowed to demand for their products. While American citizens spend, on average, more than $1,000 a year on prescriptions, most Europeans spend about half of that. No surprise, then, that the lobbyists who are funded most in Washington, after finance, are in health care.

This also explains why, in the United States, a third of Americans admit to postponing medical treatment. A quarter of the population would even postpone treatment for serious conditions. And among people making less than $40,000 a year, that figure rises to almost 40 percent. As Vox recently pointed out, even women with breast cancer sometimes delay care “because of the high deductibles on their insurance plan, even for basic services like imaging.” This problem is particularly striking faced with the coronavirus pandemic — patients with symptoms have been reluctant to get tested, because they can’t afford the cost of the test or hospitalization. Since this could dramatically impair the containment of the virus, Republicans have finally been forced to announce that tests will be free.

To overcome this kind of barrier, Belgium has promoted preventive consultations in community health centers where any visit to your doctor is totally free. Part of the idea is that making these visits free provides more of an incentive to go see your primary care physician early on, rather than waiting till your condition gets worse — meaning higher costs for social security and society (heavier treatments, specialist consultations, more days of sick leave, and contaminating more people). Moreover, as everyone is covered, you don’t reach a situation where uninsured people overwhelm emergency rooms with conditions that could have been treated easily if they were spotted early.

The Danish system functions in the same way. Everyone can — and is expected to —visit their doctor if they feel ill or unwell. Moreover, there is a strong focus on preventive care, such as vaccinations and contraceptives. For example, women between fifty and sixty-nine are invited for a (free) breast cancer screening each second year, and women between twenty-three and sixty-five are frequently invited for a cervical cancer screening. In Belgium, the system also pushes everyone to make a yearly check-up with the dentist, helping them to detect problems early on.

We All Need More of It, Not Less

Yet over the last thirty years, the trend toward rationalization and privatization has also been growing in Europe. The market-focused approach to running public services, today known as New Public Management, has severely challenged Europe’s health systems. The most important cost-reduction measures include decreasing hospital beds (now to function at high rates of occupation), incentivizing de-hospitalization, reduced stocks, a team approach to work, more multitasking among nurses, rationalized equipment use and patient flow, and increased competition between hospitals, managed as semi-autonomous entities.

In Denmark, for example, New Public Management’s strong focus on cutting costs has led to a situation in which patients (now deemed consumers) have fewer and less attractive products to choose fromm, as they are rushed through the system. Meanwhile, doctors and nurses have little capacity to help weaker consumers navigate in the “choice” system, as they are occupied by new, expensive, and time-consuming bureaucratic procedures used to conduct consumer assessments, internal evaluations, and reports. In consequence, many have resigned in protest. Moreover, thousands have taken up jobs in the private health sector.

While these “lean management” reforms have sometimes increased productivity and reduced costs, this has serious downsides. Recent health-care reforms are not only generally associated with greater work intensity and stress, but also (as in Italy) growing mortality rates due to geographical disparities and inequality of access. Moreover, while increased efficiency in the occupation of hospital beds leads to a more optimal resource allocation, this makes the system more fragile faced with any sudden increase in patients. The long trend of declining hospital bed numbers (including for intensive care beds) creates situations that could rapidly lead us all to the Italian catastrophe.

For example, in Denmark, large-scale layoffs have reduced any possibility of a crisis response that mobilizes extra employees. Private hospitals, on the other hand, have been expanding since Anders Fogh Rasmussen’s premiership in the 2000s, primarily because of a huge rise in public spending on private hospitals. The expansion owes to a 2002 move giving patients the right to choose a private hospital if they have been waiting more than two months for treatment at a public hospital (a period reduced to one month in 2007). Celebrating the slogan “Money follows the patient,” the public sector is thus subsidizing private treatment.

While the private sector is yet to conquer large parts of “the market” still controlled by public hospitals, Denmark’s universal system has been challenged on yet another front — the growth of private health insurance. Today, around 2 million Danes are covered by such insurance. These people have typically been covered by employers, directly or via a pension system. While some claim that this development will lead to shorter waiting lists, others argue it will lead to social inequality (those with insurance have better access to health care than others). This also risks eroding the public health sector and driving the growth of expensive alternatives that siphon off staff and resources.

In the present situation, however, Europeans have, in general, placed their full trust in public health systems and their workers’ incredible devotion. Support for doctors and nurses working overtime has led many citizens and students to volunteer their help in relieving this critical situation. This crisis is conceived as a public problem, not a private, individual matter — and it thus demands a collective response.

Never Waste a Crisis

When Reagan made his health-care record in 1961, he was probably right in arguing that if the American could vote on socialized medicine, they “would unhesitatingly vote against it.” While this state of things has been changing incredibly fast over the last four years, we can now say that we are entering unknown territory. In a way few would have imagined, the coronavirus has, in recent weeks, severely challenged the dynamics of global capitalism by bringing the economy to a halt — perhaps even dragging it toward an unprecedented depression.

Responses to the looming crisis could go in many directions. On the one hand, as Naomi Klein has pointed out, the contours of a so-called coronavirus capitalism are taking shape, one in which the “Trump administration and other governments around the world are busily exploiting the crisis for no-strings-attached corporate bailouts and regulatory rollbacks,” all while China has indicated that it will relax environmental supervision to stimulate its economy. On the other hand, governments around the world have implemented fiscal measures, such as wage compensation and aid packages for small businesses, to address financial hardship.

Indeed, there currently seems to be rediscovery of the state — as an instrument that is not only well suited to upholding a market order by enforcing competition and keeping public expenses at a minimum but that is also able to boost the economy through fiscal policies and strong political measures for the common good. In a stunning turnaround, governments are now once again rebuilding the authority of the state. Spain has requisitioned private hospitals and medicine suppliers; Italy has renationalized the airline carrier Alitalia and the UK its railways; Germany is speaking of nationalizations to re-localize supply chains “in order to win back national sovereignty in sensitive areas.”

Moreover, the incredible difficulties states have encountered in rapidly producing basic supplies to contain the virus — and their reluctance to seize stocks or use federal law to comply companies to produce the supplies — have put into question the very principles of the globalized “just-in-time” division of labor.

Basis for Alternatives

Altogether, these developments indicate that alternatives to neoliberal hegemony are still possible. So does the fact that the measures against the coronavirus have hitherto engendered public approval and societal solidarity. It is up to the Left to seize this historic opportunity by ensuring that the political alternatives do not disappear with the same speed as they emerged.

One obvious place to begin, or rather continue, political labor is in the area of public health. The current crisis has made one thing clear: the virus doesn’t care about your insurance plan. In contrast, it forces us to think about health care as a collective right, which requires strong health-care systems that can be accessed universally and for free by all citizens.

But surely, in this moment, we should think big — not only about health care as a collective right, but about the way capitalism has managed our existence. COVID-19 has shown that the world is willing to make dramatic changes and economic sacrifices to save lives. We should demand that the principles for collective health-care solutions also apply for other issues, such as food security and combatting climate change.

The Spanish flu in 1918 brought lasting societal changes made possible through strong action taken by the state and the public realm. The COVID-19 crisis of 2020 provides a unique opportunity to change the world once more — and shows us that the necessary tools are within reach.