By Nancy Spannaus

July 11, 2017—As the U.S. Senate takes up the question of repealing Obamacare again this week, Americans can expect to be inundated with waves of facts, figures, and moralisms that will accelerate the conflict over this issue, but which provide no clear pathway to a solution to what is a genuinely catastrophic health care crisis in the United States. The first step to resolving the deadlock in Congress is a return to the principles of the American System, as defined particularly by Alexander Hamilton and President Franklin D. Roosevelt.

This article will be a preliminary approach to the healthcare question from that standpoint, not a prescription. But the first place to start is with a clear-eyed view of the problem as a whole.

 A National State of Emergency

The United States population faces a health crisis unprecedented in the nation’s history. This is demonstrated by the fact that life expectancy in the United States is actually decreasing in significant geographical areas and sections of the population—a situation not even experienced during the nation’s worst depression, that of the 1930s. A study on mortality rates released in December 2016 by the National Center for Health Statistics showed that Americans could expect to live for 78.8 years in 2015, a decrease of 0.1 from the year before. The overall death rate increased 1.2 percent, fed by the fact that the mortality rate is increasing among white (non-Hispanic) middle-aged women, particularly in rural areas. The causes of the increase in the death rate is being attributed to what are called “diseases of despair”–alcoholism, drug use, and obesity.

A related aspect of the crisis is the opioid epidemic, which is gathering steam. A recent New York Times study, based on government statistics, estimated the rate of overdose deaths from opioids at approximately 100 per day, and projected the total deaths from this source in 2016 to be 59,000 or more (final statistics will be released by the CDC in December of this year.) Detailed studies have been released on the specific causes (see Dreamland—The True Tale of America’s Opiate Epidemic), but every indication is that the problem is increasing (an estimated 19% rise from 2015 to 2016!), despite crackdowns on over-prescription of painkillers and the like.

American System Principles to Solve the Health Care Crisis
This rise in mortality, documented by Brookings scholars in 2017, highlights the severity of the healthcare crisis.

The third aspect of the crisis is the horrifying scarcity of means to provide medical care to deal with these conditions. The shortfall ranges from a drastic decline in the availability of medical facilities, to the skyrocketing price of medication and medical care for vulnerable parts of the population, to the shocking dearth of investment in advanced medical science.

Take the availability of hospital facilities.  An estimated 57 million people in rural areas (whatever their insurance and income status is or is not) are experiencing, or threatened with, a lack of medical care, from the absence of medical infrastructure. One-third of all rural community hospitals, some 670, are currently at risk of closing. Over the period 2010-2016, there were 80 rural hospitals shut.

Nationwide, over the 20 years of 1993-2013, the total number of community hospitals in the U.S. dropped from 5,261 to 4,974 (of those, 3,003 were urban, and 1,971 were rural, as of 2013). The total number of community hospital beds fell from 917,847 in 1993 to 795,603 in 2013. Accordingly, the national beds per 1,000 population ratio fell from 3.56 in 1993, down to 2.52 in 2013.

So far, every proposal to “reform” health care fails short, usually because they focus more on reducing the cost of care (to the individual, the government, or both), rather than increasing its availability overall.  The Medicare-for-all bill (H.R. 676) put forward by Rep. John Conyers (D-MI) goes the farthest to addressing the crisis in provision  of affordable care, and represents a feasible and necessary first step. It has 114 sponsors. If combined with the overall restoration of American System policies of banking and investment (Glass-Steagall, national credit system for infrastructure, et al.), including in woefully inadequate medical facilities, it can begin to solve the crisis.

Taken as a whole, the United States faces a medical state of emergency, and must act immediately.

The Principles Required

General Welfare: The first step is to define the principles for approaching the problem. It begins with the principle of the General Welfare which was defined by Treasury Secretary Alexander Hamilton, and can be found in both the document he is heavily responsible for bringing into being—the U.S. Constitution—and his four major reports, especially the Report on Manufactures.

The U.S. Constitution twice cites the responsibility of the Federal government to provide for the General Welfare of the population, first in the Preamble and then in Title I, Section 8, the enumeration of the powers and responsibilities of Congress. Then, in the Report on Manufactures, Hamilton elaborates:

American System Principles to Solve the Health Care Crisis
Alexander Hamilton

“The terms “general Welfare” were doubtless intended to signify more than was expressed or imported in those [matters] which Preceded [in Section 8]; otherwise, numerous exigencies incident to the affairs of a nation would have been left without a provision. The phrase is as comprehensive as any that could have been used; because it was not fit that the constitutional authority of the Union to appropriate its revenues should have been restricted within narrower limits than the “General Welfare” and because this necessarily embraces a vast variety of particulars, which are susceptible neither of specification or of definition.

“It is therefore of necessity left to the discretion of the national Legislature, to pronounce upon the objects, which concern the general Welfare, and for which under that description, an appropriation of money is requisite and proper…

“The only qualification of the generality of the Phrase in question, which seems to be admissible, is this–that the object to which an appropriation of money is to be made be General, and not local; its operation extending in fact, or by possibility, throughout the Union, and not being confined to a particular spot.”

Increase the Productive Powers of Labor: Alexander Hamilton also outlined the necessarily related American System principle for dealing with national crises—the Federal government’s fostering of the productive power of the economy. As also elaborated in the Report on Manufactures, the economic health of the nation depends upon investments that improve productivity. These include material investments, such as the development of new technologies and infrastructure–both specified in the Report on Manufactures–but also obviously extend to the physical and mental state of the labor force itself.  That means the Federal government must assume responsibility for ensuring the health and welfare of the population—although not necessarily paying for it directly.

But the necessity of providing the growth of the economy is relevant in another respect: Without a rising productivity, a nation doesn’t have the resources readily available to invest adequately in social services like health care! We can’t just reshuffle present monies (especially when so much of our money is backed by the equivalent of digital hot air, and our actual physical productivity is abysmal). We have to create new wealth, at higher levels of technology, to do what Hamilton understood as producing a more efficient economy, with a surplus to take on further advances in the future. Such an economic program will also create millions of new, decent-paying jobs and a sense of hope in the population once again—a crucial feature of turning around the “diseases of despair.”

FDR’s Approach

Franklin Delano Roosevelt was the first President to seriously approach dealing with systemic social crises such disease and poverty. He did it when the nation was devastated economically, but saw it as part of lifting up the productivity of labor and the economy as a whole, along with his infrastructure and financial programs.  To be concrete: FDR understood that his Glass-Steagall banking reform, TVA program, and the like were absolutely crucial as concomitants of social programs like Social Security (old age insurance). They were all part of creating an economically secure and healthy population. (He addressed this directly in his 1944 State of the Union address with the so-called Economic Bill of Rights.)

American System Principles to Solve the Health Care Crisis
A Social Security recipient shows off her check in 1950, the first year of a cost-of-living increase.

FDR’s initial concept of Social Security included health care as well as an old age pension for those over 65 and their survivors. He began by mandating a Committee on Economic Security (CES), headed by Labor Secretary Frances Perkins, to study the conditions of the population and their economic and social needs. When the CES recommended postponing the issue of medical care for further study and discussion, FDR agreed. Then ensued a process of discussions among the CES and medical providers, and a major conference on health care convened by the President. In 1938 FDR began a push for health insurance, which took the form of the Wagner National Health Act. FDR motivated the bill as “a comprehensive health program required as an essential link in our national defense against individual and social insecurity.”  The fight was later taken up by Truman, who also failed to pass the bill.

But meanwhile, with the passage of Social Security in 1935 (which included a provision for expanding public health facilities and personnel), FDR had to engage in a major fight to implement the Hamiltonian view of the General Welfare.  The FDR Administration argued, and the Supreme Court ultimately agreed in May of 1937, that the old-age benefits provisions of the Social Security Act were constitutional. In this case, {Helvering v. Davis,} Justice Benjamin Cardozo expressly adopted the Hamiltonian view of the general welfare power, as opposed to that of James Madison.

“The conception of the spending power advocated by Hamilton and strongly reinforced by Story has prevailed over that of Madison,” Cardozo wrote. He said that in response to the nationwide calamity that began in 1929, Congress had enacted various measures conducive to the general welfare, including old-age benefits and unemployment compensation. Only a national, not a state, power can serve the interests of all, Cardozo declared. (See “What is the General Welfare? by Edward Spannaus, New Federalist, May 15, 2000)  We quote further from Cardozo’s decision:

“Congress may spend money in aid of the `general welfare’… There have been great statesmen in our history who have stood for other views… The line must still be drawn between one welfare and another, between particular and general. Where this shall be placed cannot be known through a formula in advance of the event… The discretion belongs to Congress, unless the choice is clearly wrong, a display of arbitrary power, not an exercise of judgment. This is now familiar law….

“Congress did not improvise a judgment when it found that the award of old age benefits would be conducive to the general welfare. The President’s Committee on Economic Security made an investigation and report, aided by a research staff of Government officers and employees, and by an Advisory Council and seven other advisory groups. Extensive hearings followed before the House Committee on Ways and Means, and the Senate Committee on Finance. A great mass of evidence was brought together supporting the policy which finds expression in the act. …

“The problem is plainly national in area and dimensions. Moreover, laws of the separate states cannot deal with it effectively. Congress, at least, had a basis for that belief. States and local governments are often lacking in the resources that are necessary to finance an adequate program of security for the aged. …”

The Principle  is Established

With this decision, and the further expansion of Social Security, including with Medicare and Medicaid in 1965, the General Welfare principle has been clearly established. It took enormous battles, and popular mobilizations, around those policies for victory to be won. It remains for leaders to step forward to do so again in the emergency situation of today. (To be continued)


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