COVID-19 Economy Healthcare Rob Urie

More People Died From the Failures of Obamacare Than From Covid-19

Why a better healthcare system is needed.

By Rob Urie / Substack

Donald Trump’s policy failures with respect to the Covid-19 pandemic are reasonably well known to people who pay attention to such things. On the success side, his Operation Warp Speed produced at least two viable vaccines in record time. On the failure side, half a million people died as the U.S. experienced amongst the highest infection and death rates in the world. Mr. Trump’s unwillingness or inability to effectively manage the crisis is the basis of calls for his prosecution for Covid-19 deaths.

Apparently unbeknownst to those making these calls is that over two and one-half million people in the U.S. died while Barack Obama was in office who wouldn’t have if the U.S. had a functioning healthcare system. Nearly two million of them died in the time between passage of Obamacare and when Mr. Obama left office. More than one million died after Obamacare was implemented in 2015. These are ‘excess deaths,’ deaths over and above the levels experienced in like countries that have functioning healthcare systems.

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The accusations against Mr. Trump amount to a failure to govern effectively. No one is charging that he ‘caused’ the deaths that the disease, Covid-19, did in fact cause. This is also the basis of the assertion made here that Mr. Obama failed to govern effectively in allowing the preventable deaths that took place after Obamacare was implemented in 2015. What are deemed personal failings in the U.S. healthcare system, ‘deaths of despair,’ were treated as public health matters in nations with functioning healthcare systems.

Graph: excess deaths represent the number of people who died in the U.S. versus a benchmark value. The benchmark is the average rate of deaths for Canada, France, Germany and the U.K., put in terms of the U.S. population. Because the U.S. population was quite a bit (five years) younger than the benchmark population during this period, excess deaths should have been negative. By the time that Obamacare was implemented in 2015, the U.S. was deep into a healthcare crisis. Obamacare expanded insurance coverage as excess deaths continued to grow at crisis levels. Source: OECD.

To get this out of the way, there is no position, preference or accusation in this piece that is related to American party politics. It is the political economy of neoliberalism that led both Mr. Trump and Mr. Obama to imagine that healthcare-related corporations could fill the public health function of functioning governments that have functioning healthcare systems. China’s response to Covid-19 was managed by a pandemic response team created in 2003. It had squelched the pandemic in China before Andrew Cuomo had learned to spell coronavirus.

This idea of a duty to govern competently and / or effectively gets to the very heart of the neoliberal conundrum. Neoliberal theory, to the extent that there is such a thing, is premised in the economistic conceit that markets serve the role of social mediation generally reserved for government. For four decades, this principle has been used to systematically eviscerate the governing institutions of the West. This was the state of the U.S. healthcare system when Covid-19 hit.

Readers may recall that early in the pandemic the Federal government stepped in to force health insurers to pay for Covid-19 testing that many otherwise wouldn’t have paid for. In the U.S., the legal obligation for healthcare providers to provide medical care is both contingent, and separate and distinct from the obligation of health insurers to pay for it. Through the price function— healthcare has a price that must be paid in order to receive healthcare, health insurers ration healthcare.

Through business logic, the best ‘customers’ for healthcare providers are perpetually ill and in need of expensive medical treatment. Health insurers in theory have an offsetting incentive— to constrain medical providers to provide the least care at the lowest price. However, this incentive is conceptually distinct from keeping people healthy. Both prior to and after the implementation of Obamacare, the U.S. has the most expensive healthcare system per capita with the worst outcomes amongst rich nations.

This analysis from the Commonwealth Fund illustrates the contradiction between the business motives of health insurers and positive healthcare outcomes. While Obamacare raised the number of people who have health insurance, half of the nation still isn’t ‘effectively’ insured— it can’t afford healthcare. Handing health insurers a boatload of additional revenue to see only a tiny benefit— in the midst of the wholesale public health calamity described here, illustrates the point that health insurance isn’t healthcare.

Within the neoliberal frame of making government ‘run like a business,’ the large expenditure on Obamacare bought only a minor benefit. In neoliberal terms, the program is a failure. Furthermore, the logic of privatization— of handing the provision of public goods like healthcare to private corporations, is that they are more efficient than government. However, the U.S. had the worst healthcare outcomes amongst rich nations at the highest price before Obamacare was passed. And this is still true a decade after it was passed. 

In terms of healthcare politics, the tiny benefit from the large Federal expenditure will eventually be used to claim that the Federal government is less efficient than the so-called private sector. Understand, on its own, the private sector created the most expensive healthcare system amongst rich nations with the worst healthcare outcomes. The motivating logic of Obamacare was that adding market features would lower costs while improving outcomes. To date, a main outcome has been higher payfor health insurance executives.

The U.S. was in a full-blown public health crisis before the Covid-19 pandemic hit. As measured by excess deaths, death rates over and above a benchmark composed of Canada, France, Germany and the U.K, about five million Americans died unnecessarily in the first two decades of the twenty-first century. According to the NAS (National Academy of Sciences), there were as many excess deaths in 2017—two years after Obamacare was implemented, as died from Covid-19 in 2020.

As stated above, the U.S. experienced one million excess deaths between the time that Obamacare was implemented in 2015 and when the OECD data ends in 2017. One million more people died unnecessarily between 2017 and the end of 2020 (per NAS). So, while demands for accountability from politicians for their failures to act in the Covid-19 pandemic are not only reasonable but necessary, demanding accountability for the failures of Obamacare have a higher likelihood of yielding beneficial results in terms of public policy.

Graph: life expectancy is the flip side of death rates. Illustrated above is that income determines life expectancy in rank order. The rich live ten years longer than the poor. That the rich receive more healthcare than the poor is a major source of this relative longevity. Alternatively, the poor in the U.S. are being ‘passively’ exterminated through inadequate healthcare. The slopes of the longevity curves relative to the excess deaths illustrated above (top graph) is a function of absolute versus relative measures. Excess deaths are a relative measure. Source:

To tie this together, Obamacare appears to have produced a small benefit in terms of healthcare outcomes within a larger trajectory of rising excess deaths. In claiming the small benefit, Obamacare supporters share the neoliberal premise that five million excess deaths aren’t within the purview of the healthcare system. These deaths weren’t even visible to the U.S. healthcare system because no one was paid to see them. Contrast this with the public health view that the mandate of the healthcare system is to keep people healthy. 

To repeat, the central rationale of neoliberalism is that the private provision of public goods is efficient. But the way that this efficiency is demonstrated is always theoretical. If it is assumed that the purview of healthcare is that which is covered by health insurers, then everything that isn’t covered by health insurers— like the deaths of five million people in the U.S. since 2003, isn’t within the purview of healthcare outcomes. As the graph above illustrates, it is mostly poor and working people who are doing the dying.

These perverse incentives apply to politicians as well. Writer David Sirota recently made the point that when Barack Obama handed large amounts of Federal money to the people on Wall Street who wrecked the economy in 2008, he was rewarding his campaign contributors. Wall Street contributed half of all of the campaign contributions that Mr. Obama received in his first presidential bid. Healthcare-related interests likewise contributed one-quarter of Mr. Obama’s 2008 campaign haul. And they were rewarded with Obamacare. 

For those who may have forgotten, Obamacare (the ACA) was written by a health insurance industry lobbyist, Liz Fowler, who went on to lobby for the pharmaceutical industry after pushing the ACA through Congress. Senator Max Baucus, the congressional point person with respect to the ACA for the Obama White House, owed his political career to the healthcare industry. And the health insurance executives who backed Mr. Obama in 2008 reaped windfalls when executive pay and stock prices skyrocketed after the passage of Obamacare. 

The point is often made that Mr. Obama didn’t personally benefit from the contributions made to his political campaigns. However, through them, Mr. Obama was elected President of the United States. Not only is this the pinnacle of success in American politics, it has provided material benefits to him and his family over-and-above those of being a U.S. Senator. Through the logic of economic incentives, Mr. Obama wouldn’t have run for President if he didn’t believe that doing so would benefit him. 

‘Deaths of despair’ is the oft-given explanation for the five million excess deaths that have taken place since the turn of the millennium. The storyline is that deindustrialization and neoliberal reforms led to a large number of manufacturing workers being cast aside. This led to social isolation and economic exclusion that in turn caused large numbers of people to commit slow or fast suicide through alcohol and drug poisoning or a bullet to the head. 

As far as it goes, this narrative is backed by evidence. And in this sense, it is true. What is missing is that the benchmark nations (Canada, France, Germany, U.K.) experienced many of the same causes, but not the deaths of despair. Not only does the U.S. have the weakest social safety net amongst rich countries, but it wasn’t until well after the fact that economists— not the healthcare industry, noticed that very large numbers of people were dying.

In analytical terms, if 375,000 per year were dying from deaths of despair before Obamacare was passed and 375,00 per year were dying after Obamacare was passed, Obamacare neither raised nor lowered deaths of despair, and under neoliberal logic, had no role in causing them. However, Donald Trump only ‘caused’ Covid-19 deaths to the extent that he failed to prevent them. This illustrates the political nature of the question of causation. 

If there is a duty to govern, then the public health crisis that Obamacare failed to address is approximately equivalent to a Covid-19 pandemic every year. ‘We’ know that these deaths were preventable because the benchmark nations prevented them. To the extent that there is a duty to govern, George W. Bush, Barack Obama, Donald Trump, and now Joe Biden, all ‘caused’ excess deaths in the U.S. If there is no duty to govern, then none did. 

It isn’t that the U.S. doesn’t have drug and alcohol treatment facilities and suicide prevention programs. It does. But these are for profit enterprises. Or if nominally non-profit, they are run for the benefit of their executives. As was the case with Covid-19, those who lost their jobs also lost their health insurance. While Obamacare expanded the ranks of the insured, the percentage of people who still couldn’t afford healthcarewas unchanged. 

As is reasonably well understood, health insurers in the U.S. are intermediaries— they manage the flow of payments into the healthcare system. In the case of Obamacare, a large increase in Federal payments resulted in a vanishingly small benefit in terms of increased healthcare. This raises the question of the efficacy of health insurers as intermediaries. 

Compensation for health insurance executives, and the stock prices of health insurance companies, skyrocketed after Obamacare was passed. Within the tautological (circular) terms of market economics, this implies that Obamacare raised the franchise value of the health insurance industry. Tellingly, it did this without materially increasing the quantity of healthcare provided.

Here the veil of political accounting obscures the hard truth. If 10% of every Federal dollar that health insurers receive is profit, by increasing the number of people who are buying health insurance, total profits would be expected to rise proportionately. But so would the quantity of healthcare purchased with these dollars. The relevant measure by which to judge Obamacare is healthcare outcomes, which are in no way proportionate to the expenditure.

It wasn’t until the rich and PMC (professional managerial class) started dying from Covid-19 that calls for political accountability for excess deaths (from Covid-19) began being issued. In fact, the Covid-19 pandemic of 2020 was just another year for most of the country with respect to healthcare outcomes. If the rich and PMC have a problem with 400,000 people per year dying from inadequate healthcare, why did they wait until the problem affected them to register a complaint? 

As mentioned above, following a SARS outbreak in 2003, the Chinese government created a pandemic response team as part of the Chinese healthcare system. The pandemic response team successfully contained the outbreak (to date). This demonstrates two points. In the first, there is a public interest that isn’t captured by the ‘consumer demand’ healthcare model. In the second, the Chinese pandemic response team effectively prevented the spread of Covid-19 (to date).

The initial response of U.S. health insurers to the Covid-19 pandemic was a rush to extricate themselves from having to pay for the response. They weren’t going to pay for testing— a necessary component of any public health response to the pandemic, until they were coerced into doing so by the Trump administration with promises of more government subsidies. As with the Federal bailouts of Wall Street in 2009, a capitalist response would have been to let health insurers fail as a functioning alternative like Medicare was expanded to provide coverage. 

The excess deaths posed as the product of corruption on the part of the Trump administration, and not even counted relative to the Obama administration, gets to the essence of what neoliberalism is. Neoliberal logic is that markets ‘govern’ more effectively than governments do because corporations provide the goods and services that people want. The fact that this is a religious view— neoliberalism is simply assumed to work, it isn’t based on evidence, explains why its failures never seem to pose a challenge to the premises.

That markets ‘respond,’ at least in theory, helps illustrate the conundrum. The reason why China had a quick response to Covid-19 was because they didn’t have to build the infrastructure to do so from scratch when the pandemic hit. China had a pandemic response team in place. The reactionary nature of markets— consumer demand motivates producers to produce goods and services in response, is the opposite of planning. What neoliberals miss is that the institutions they have spent four decades tearing down were built to solve problems before the occur. 

As the (Joe) Biden administration pours more money into Obamacare, there is no reason to believe that the U.S. healthcare system will be improved. Executive compensation for health insurers will rise. Campaign contributions to Mr. Biden from healthcare interests will increase. DNC affiliated research will be published proclaiming that if you take their word for it, a healthcare benefit can be found. And a million people will die every three or so years who wouldn’t have if the U.S. had a functioning healthcare system.

The Left / liberal posture that the small gains that Obamacare may or may not have made need to be protected would make more sense if I didn’t mean looking past the millions of people who are dying that still aren’t being counted. An analogy is bailing out a sinking ship with a pail. Proponents can point to the act of bailing and conclude that progress is being made. And if the ship weren’t sinking, they would have a point. But the ship is sinking.

The American political context is of two parties arguing the virtues of bailing out the ship (Democrats) versus not bailing out the ship (Republicans). Within the constraints of the frame, people are either pro-bailing of anti-bailing. To date, Democrats have been successful in portraying those who point out that the ship is sinking as being ‘anti-bailing.’ No. We aren’t anti-bailing. Five million excess deaths have happened since 2003, with two million taking place after Obamacare was passed (2011), and more than one million after it was implemented.

I’ve heard anecdotes from people who tell me that Obamacare saved their lives, and I believe them. This explains the need for statistical analyses that compare U.S. healthcare outcomes not only to prior U.S. history, but to how the U.S. compares with nations with functioning healthcare systems. Compared with the benchmark outcomes, the U.S. healthcare system was in crisis before Obamacare was passed, and it remained in crisis after it was passed.

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Rob Urie

Rob Urie is the of Zen Economics, artist, musician. Rob has written on political economy— on the politics of economic issues, for over a decade.

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