The Consequences of Neoliberalism in Health Care in the US

International Journal of Health

The History and Future Services

2016, Vol. 46(4) 747766
! The Author(s) 2016
of Neoliberal Health Reprints and permissions:
sagepub.com/journalsPermissions.nav
Reform: Obamacare DOI: 10.1177/0020731416661645
joh.sagepub.com
and Its Predecessors

Howard Waitzkin1,2 and Ida Hellander3

Abstract
The Colombian reform of 1994, through a strange historical sequence, became a
model for health reform in Latin America, Europe, and the United States. Officially,
the reform aimed to improve access for the uninsured and underinsured, in collab-
oration with the private, for-profit insurance industry. After several historical
attempts at health reform adhering to the neoliberal pattern, favored by international
financial institutions and multinational insurance corporations, the Affordable Care
Act (ACA) similarly enhanced access by corporations to public-sector trust funds.
An ideology favoring for-profit corporations in the marketplace justified these
reforms through unproven claims about the efficiency of the private sector and
enhanced quality of care under principles of competition and business management.
The ACA maintains this historical continuity by dealing with health care as a com-
modity bought and sold in a marketplace, rather than a fundamental human right to
be guaranteed according to principles of social solidarity. As the ACA heads toward
probable failure, a space finally will open for a U.S. national health program that does
not follow same historical patterns of the neoliberal model.

Keywords
affordable care act, health policy, neoliberalism, health reform, Latin America

1
Department of Sociology, University of New Mexico, Albuquerque, New Mexico, USA
2
Department of Internal Medicine, University of Illinois, Rockford, Illinois, USA
3
Physicians for a National Health Program, Chicago, Illinois, USA
Corresponding Author:
Howard Waitzkin, 5406 East Drive, Loves Park, Illinois 61111, USA.
Email: waitzkin@unm.edu
748 International Journal of Health Services 46(4)

A dynamic, young, newly elected president makes health reform one of his
highest priorities. His proposal aims to improve access for the uninsured and
underinsured. To achieve that goal, he decides to collaborate with the private,
for-prot insurance industry. Public hospitals and other public-sector institu-
tions would compete with the private insurance sector for public, tax-generated
revenues.
The president in this case is not Barack Obama or Bill Clinton but rather
Cesar Gaviria, president of Colombia from 1990 to 1994. In 1994, Colombia
enacted a health reform based on managed competition. The World Bank
mandated and partly nanced this reform. Gaviria and colleagues presented
the reform to nancial elites at the World Economic Forum and elsewhere
(Figure 1). Later, the structure of Colombias health reform became a model
for reform around the world and, more recently, even in the United States.
Seen in this light, the structure of the Aordable Care Act (ACA, or
Obamacare) is not new but rather embodies an approach to reform advo-
cated and implemented previously in other countries. This largely unexamined
history claries the characteristics that deserve close attention as Obamacare
continues to unfold.
In this article, we trace the history of neoliberal health reforms and analyze
the ACA and alternatives to it. We argue that the ACA follows the neoliberal
pattern favored by international nancial institutions and by multinational
insurance and pharmaceutical corporations. This approach enhances access by
for-prot corporations to public-sector health and social security trust funds. An
ideology justies the reform through unproven claims about the eciency of the
private sector and enhanced quality of care under principles of competition and
business management. The ACA and other neoliberal reforms deal with health
care as a commodity to be bought and sold in the marketplace, rather than as a
fundamental human right to be guaranteed according to principles of social
solidarity.

The Strange History of Neoliberal Health Reform

Worldwide, 1994 was a big year for health reform. While reform passed in
Colombia, a similar proposal based on managed competition failed in the
United States. The Health Security Act, designed by the insurance industry
and spearheaded by Hillary Clinton, was abandoned as a central goal of the
Bill Clinton Administration due to opposition from both the right and the left.
The right wing emphasized red tape as a symbol for big government. On the
left, opposition centered on the massively increased role, subsidized by tax dol-
lars, that the private insurance industry, especially a handful of the nations
largest insurance companies, would occupy.
Waitzkin and Hellander 749

Figure 1. Cesar Gaviria, former President of Colombia, presenting the Colombian health
reform of 1994 to the World Economic Forum.

But the characteristics of the Clinton proposal would not die. In 2006, the
Republican administration of Governor Mitt Romney in Massachusetts gained
legislative approval for expanded insurance coverage. The Romney reform used
public funds and mandates that all residents in the state would be required to
buy insurance through the state system if they did not already hold insurance
coverage. Although Romney later distanced himself from the Massachusetts
reform during his 2012 presidential bid, the same overall structure re-emerged
in the ACA.
During the early 1990s, several European countries considered proposals for
health reform that followed a similar model of privatization, managed compe-
tition, and increased access of the private insurance industry to public health
care trust funds.13 Although certain countries like Holland and the United
Kingdom implemented elements of the reform, most European countries did
not, because of opposition from left-oriented parties, labor unions, and civic
organizations. However, proponents of these reforms continued to push for
750 International Journal of Health Services 46(4)

them, and the more recent privatization eorts, in the United Kingdom and
Scandinavia in particular, reect the same perspective.
In Latin America, Asia, and some countries of Africa, a similar scenario
played itself out. During the early 1990s, for-prot multinational insurance cor-
porations, mostly based in the United States, tried to expand their operations
into those continents. Access to public-sector social security trust funds, previ-
ously designated to provide retirement and health care benets for workers and
their families, proved a primary motivation for this expansion.1,2 Conferences
and publications organized by the World Bank and insurance companies pro-
vided legitimacy for such eorts by recruiting progressive spokespersons like
Desmond Tutu in South Africa.3
Framed as a method to improve access to care for the poor and underserved,
these initiatives facilitated eorts of for-prot insurance corporations and con-
tracted groups of practitioners providing managed care. The corporations
could collect prepaid capitation fees or other premiums from government agen-
cies administering the trust funds, as well as from employers and patients, and
invest the reserves at high rates of return. After two or three years in a geo-
graphic area, the corporations could decide not to renew their contracts. Patients
then needed to seek care from underfunded public-sector hospitals and clinics.
Insurance corporations also proted by denying and delaying access to medic-
ally necessary care through a variety of strategies that evolved over time. Such
strategies included stringent utilization review and preauthorization require-
ments; eliminating rst dollar coverage; instituting copayments, deductibles,
co-insurance, pharmacy tiers, and other forms of cost sharing; limiting access
to only certain physicians; and frequent redesign of benets.
Proposals linked to the World Bank almost always sought to enact policies
compatible with neoliberalism. The proposals promoted the use of multiple
competing, for-prot, private insurance corporations. Programs and institu-
tions previously based in the public sector would be cut back and, if possible,
privatized. Overall government budgets for public-sector health care would be
reduced. Private corporations would gain access to public trust funds that they
could invest. Public hospitals and clinics would enter into competition with
private institutions for health care funds; as proposed, their budgets would be
determined by demand rather than supply, and prior global budgets for safety
net institutions would not be guaranteed. Administrators of insurance corpor-
ations would make operational decisions about services, and their authority
would supersede that of physicians and other clinicians.
What were the sources of these worldwide eorts toward health reforms
involving privatization, increased access of private insurance corporations to
public-sector trust funds, and competition between public and private medical
institutions? Strangely, this neoliberal model for health reform grew historically
from Cold War military policy. Alain Enthoven, an economist, had served as assist-
ant secretary of defense under Robert S. McNamara between 1961 and 1969.
Waitzkin and Hellander 751

He and colleagues developed planning-programming-budgeting-system

(PPBS) and cost-benet analysis to promote cost-eective military decisions.
In 1973, four years after leaving the Pentagon, Enthoven became a professor
of health care economics at Stanford and then emerged as the leading propon-
ent of managed competition. Military systems analysis and managed compe-
tition in health care represent similar managerial approaches to policy reform.
Historically, elements common to both managerial approaches included: dis-
trust of professionals (military brass versus medical guild), trust of managers,
choice among competing alternatives (weapon systems or military strategies
versus multiple private health plans), scientic method (cost-benet analysis
in case studies), technical tools for managers, change through incrementalism
with strains, and cost analysis but not necessarily cost reduction.4 Managed
competition became a model for neoliberal health reform throughout the
world, including the Clinton reform and Obamacare.5,6
Enthovens entry into health care management stemmed partly from his asso-
ciation with Paul Ellwood, a physician who in the early 1970s coined the term
managed care. Ellwood consulted with the Nixon administration in the cre-
ation of the Health Maintenance Organization (HMO) Act of 1973. This law
provided the rst federal support for managed care, which was viewed as more
congenial to business interests than an expansion of Medicare and Medicaid.
During this same time period, Enthoven and Ellwood became co-founders of
the so-called Jackson Hole Group, a network of health policy analysts who met
regularly with business leaders and politicians at Ellwoods home in Wyoming.7
The Jackson Hole Group maintained connections with the World Bank,
International Monetary Fund, and other international nancial institutions.
For instance, McNamara left the Pentagon to become president of the World
Bank from 1968 to 1981, and James Wolfensohn, president of the World Bank
from 1995 to 2005, also maintained a home in Jackson Hole. In 1977 Enthoven
proposed to the Carter administration a Consumer Choice Health Plan.
Carter rejected the plan. Nevertheless, Enthoven soon published the proposal
in the medical literature and in a separate monograph.8,9
Enthoven then collaborated with Ellwood and other proponents of managed
care, corporate executives, and ocers of private insurance companies.
Managed competition, the proposals new name, conveyed a message of man-
agerial control that appealed to business leaders. After publication of a revised
proposal in 19881989,10,11 the coalition supporting managed competition broa-
dened to include ocials of the largest U.S. private insurance companies, which
were diversifying into managed care. These business leaders met regularly with
Enthoven, Ellwood, and other proponents of managed competition in Jackson
Hole.12 Large health insurance companies provided major funding for this
group. Aetna, CIGNA, and a small number of other large insurance companies
focusing on managed care nancially supported the Clinton campaign and
helped draft the Clinton health proposal.
752 International Journal of Health Services 46(4)

Most recent proposals for national health reform, including that of the
Obama administration, have emerged from this historical tradition.13 Certain
proposals have suggested modications in the conceptual structure outlined by
Enthoven and his colleagues. For instance, some proposals have separated
employment from insurance through the creation of a single, tax-nanced, glo-
bally budgeted public fund, which would contract with private plans for a min-
imum benet package.14,15 This public option emerged prominently in the
debates about the Clinton health proposal. About 15 years later, a smaller-scale
public option, this time in the form of a government-run health insurance plan
to compete with private insurers for subscribers outside large employment-based
groups, became part of the initial Obama proposal. The Obama administration
withdrew the public option under opposition from the insurance industry, which
did not want to compete with government.
Several short-term historical processes facilitated the creation of Obamacare
as a reform that enhanced the nancial well-being of the private insurance indus-
try. As usual, campaign nancing played a role. As a state legislator in Illinois,
Obama had supported a single payer approach to a state and national
health program. As a presidential candidate, Obama drastically changed his
position. During his 2008 and 2012 campaigns, Obama received the largest
nancial contributions in history from the insurance industry, more than the
contributions received by John McCain and Mitt Romney, his Republican
adversaries. Obama became the rst presidential candidate ever able to turn
down government funds for the campaign, based mostly on contributions
from corporations in the nancial sector linked to Wall Street and from the
health insurance industry.1618
Arguably, the individual most responsible for drafting the 961-page bill
known as Obamacare was Liz Fowler, who as Chief Counsel of the Senate
Finance Committee during 2008 wrote the original White Paper that morphed
into the ACA.19 Fowler previously worked as vice president of Wellpoint (now
named Anthem), one of the largest for-prot insurance corporations; she
choreographed the insurance industrys shaping of Obamacare. In the early
2000s, also as Chief Counsel of the Senate Finance Committee, she took the
lead in designing Medicare Part D, widely viewed as a gift to the pharmaceutical
industry. Democratic Senator Max Baucus chaired the Senate Finance
Committee, working with Fowler during both historical periods. After the
ACA passed in March 2010, Fowler was appointed Deputy Director of the
Oce of Consumer Information and Oversight at the U.S. Department of
Health and Human Services, which oversaw the rollout and implementation
of Obamacare. Then, in 2012, she left the Obama Administration to become
Director of Global Health Policy, focused on lobbying operations, for Johnson
& Johnson, the major pharmaceutical corporation. Fowler embodied the
revolving door tradition by which executives historically have moved between
government and large corporations. Fowlers central role in the drafting and
Waitzkin and Hellander 753

implementation of Obamacare and the Medicare Part D drug law helps explain
how these reforms ended up so favorable for the insurance and pharmaceutical
industries.

The Standardized Neoliberal Health Reform,

With Colombia as Prototype
International nancial institutions, especially the World Bank, historically sup-
ported the neoliberal health agenda. An ideology asserted that corporate man-
agers could control the self-interested behavior of physicians and hospitals that
resulted in over-utilization of care.20 These managers could access public-sector
health and social security trust funds. Academic health economists, including
Enthoven and colleagues, helped shape proposals for health reform that the
World Bank spearheaded.21
On the surface, all neoliberal health reform proposals have appeared so com-
plex that laypeople have felt overwhelmed and unable to understand the details
of the insurance plans for which they may become eligible. For that reason,
corps of specialists have appeared in each country (policy wonks) whose
jobs involve researching and interpreting the proposals. Additional jobs also
have emerged to help ordinary people enroll in the new insurance arrangements
(under Obamacare, these jobs include the navigators who receive their pay
from the state insurance exchanges).
Despite this supercial complexity, the overall structure of neoliberal health
reform actually is fairly simple. As with other proposals by international nan-
cial institutions, health reform historically has involved a model in which the
language and structure of the proposals for each country resembled one another
very closely (Table 1).

Large, Privately Controlled Organizations of Health Care Providers

These organizations almost always have operated under the control of for-prot
insurance corporations, in collaboration with hospitals and health systems. The
corporations have employed health care providers directly or contracted with
providers in a preferred network. The Clinton proposal named these organiza-
tions Accountable Health Partnerships (AHPs). Obamacare has labeled them
Accountable Care Organizations (ACOs). (So far, only the Medicare program
supports ACOs, but consolidation among physicians and hospitals nationally
anticipates broader implementation.) The Colombian health reform has called
them Provider Institutions of Health Services (Instituciones Prestadores de
Servicios de Salud or IPSSs). Under this model, for-prot managed care organ-
izations (MCOs), usually subsidiaries of multinational insurance corporations,
have competed with one another. Historically, competition has been constrained
by consolidation in the private insurance industry, in addition to the small
 Table 1. Structural Elements of Neoliberal Health Reform.
754
Clinton health reform
proposal (1994)
Large privately controlled Accountable Health
organizations of health Partnerships (AHPs)
care providers
Large organizations pur- Health Insurance Purchasing
chasing or facilitating Cooperatives (HPICs).
the purchase of private Several large for-profit insur-
health insurance ance companies contract with
provider organizations for
managed care coverage.
Cutbacks affecting safety Predicted adverse effect on
net providers public hospitals and clinics
Benefit packages in tiers Uniform effective health bene-
fits that could be supple-
mented by purchase of
additional private insurance
coverage
Obamacare (2010)
Large organizations that include many
physicians practices, hospitals, and/
or other health facilities.
Accountable Care Organizations
(ACOs) in Medicare.
Large for-profit insurance corporations
contract with networks of provider
organizations for managed care
coverage.
 Affordable Insurance Exchanges,
Marketplaces
 Medicare Advantage Plans
 Medicaid Managed Care
Fiscal crisis and closure of public hos-
pitals; fiscal crisis of other safety-net
providers
 Designated by metals (bronze,
silver, gold, platinum) in the
marketplaces
 Determined by Medicare Advantage
plans for seniors who choose man-
aged care under Medicare
 Determined by private Medigap
plans for seniors who supplement
traditional Medicare coverage
Colombia health
reform (1994)
Provider Institutions of Health
Services (Instituciones
Prestadores de Servicios de
Salud or IPSSs)
Corporations Promoting Health
(Empresas Promotoras de Salud)
 System for the Selection of
Beneficiaries for Social
Programs (El Sistema de
Seleccion de Beneficiarios para
Programas Sociales) deter-
mines eligibility for public
subsidy.
Fiscal crisis of state and local
public hospitals; many close
Varying health service
packages
(continued)
 Table 1. (continued)

Clinton health reform Colombia health

proposal (1994) Obamacare (2010) reform (1994)

 Determined for medications under

Complex financing  Capitation payments
(sources: patients, employers,
public-sector trust funds such
as Medicaid and Medicare)
 Copayments
 Deductibles
 Taxes
Tax code changes  Restricted ability of individ-
uals and companies to claim
income tax deductions for
health insurance
 Tax incentive to buy less
expensive coverage
 Reduced tax deduction for
Cadillac plans that exceed
minimum benefits standards.
Medicare Part D and Medigap plans
 Determined by state governments
for Medicaid Managed Care
 Capitation payments (sources:
patients, employers, public-sector
trust funds such as Medicaid and
Medicare)
 Copayments
 Deductibles
 Taxes
 Reduced tax deduction for
Cadillac plans that exceed min-
imum benefits standards
 Penalties through tax system for
non-adherence to required purchase
of private-sector health insurance
 Capitation payments
(sources: patients, employers,
public-sector trust [solidar-
ity] funds):
 subsidized for low-income
and unemployed
 contributory for employed
workers
 Copayments
 Deductibles
 Taxes
Increased payroll taxes for
employees and employers

755
756 International Journal of Health Services 46(4)

number of organizations large enough to possess the required nancial resources

and infrastructure.

Large Organizations Purchasing or Facilitating the Purchase

of Private Health Insurance
Such organizations have bought or have helped others buy health plans from
private insurance corporations, which in turn have contracted with large, pri-
vately controlled organizations of health care providers (such as AHPs, ACOs,
and IPSSs above). Health Insurance Purchasing Cooperatives (HPICs) referred
to these organizations in the Clinton proposal, although they were not neces-
sarily organized as member-owned or worker-owned cooperatives. The federal
and state health insurance exchanges, later named marketplaces, have been
the corresponding entities under Obamacare, where private, for-prot corpor-
ations sell their services with government subsidies and coordination.22 In
Colombia, Corporations Promoting Health (Empresas Promotoras de Salud or
EPSs) have fullled a similar role.23

Cutbacks Affecting Safety Net Providers

Neoliberal health reforms historically have increased the vulnerability of the
public-sector safety net. Consistent with neoliberal principles, for instance,
public hospitals have competed for patients covered under public programs
with private, for-prot hospitals. Due to cutbacks in funding, public hospitals
have reduced services and programs; eventually a substantial proportion of
public hospitals have closed, despite their historical record as safety-net institu-
tions. Community health centers (CHCs) sometimes have received increased
funding temporarily, while remaining vulnerable to cutbacks. In Colombia,
public hospitals and clinics have closed or have faced crippling budget cuts;
those surviving have encountered increasing pressures because many of the
newly insured could not aord high copayments and have faced other access
barriers. Neoliberal reforms in Argentina, Mexico, Brazil, and other countries in
Latin America have generated similar problems.2 Under Obamacare, public
hospitals have faced another wave of severe nancial instability, and multiple
hospitals either have closed or are likely to close.24

Benefit Packages in Tiers

Neoliberal reforms have required minimum benets packages, while individuals
or employers voluntarily could buy additional coverage. Such a limited approach
to benets reected a retreat from the historical goal of the World Health
Organization (WHO) in the famous declaration at Alma Ata, Soviet Union, in
1978. The Alma Alta declaration proposed primary health care for all.25
Waitzkin and Hellander 757

Under neoliberalism, the goal shifted to selective primary health care

for all26,27 and the scenario of minimum benets packages emerged. For
instance, with these packages, all women could receive pap smear screening
for cervical cancer. However, treatment of cervical cancer revealed by pap
smear screening would not necessarily be covered or might require cost sharing.
In Colombia, Mexico, and other countries that have adopted neoliberal health
reforms, benets available for treatment of cervical cancer for poor women with
positive pap smears have depended on the nancial resources and policies of
dierent states or municipalities.28
Neoliberal reform proposals in the United States also have included tiered
benets packages. Under the Clinton proposal, all health plans would have
been required to provide uniform eective health benets, although additional
benets could have been sold if patients or employers could aord them.
An appointed national health board would have dened the minimum benets
package, based on research about the eectiveness of specic services.
Under Obamacare, although there is a package of minimum benets, these bene-
ts only have to be partially insured. Metal namesbronze, silver, gold, and
platinumidentify the tiers of coverage. Platinum represents the highest tier
(covering 90% of in-network health care expenses) and bronze the lowest
(60%). Under the most valuable metal, individuals and families out-of-pocket
copayments average the least, and their premiums cost the most. These percent-
ages, however, represent actuarial calculations of the insurance companies
nancial payouts for services during a year among all beneciaries at a specic
tier; for that reason, an individual or family expecting 60% coverage may pay
much more in actual premiums, deductibles, and copayments than 60% of total
expenses. The value of coverage in a tier under Obamacare is strictly a nancial
calculation based on actuarial principles in accounting. Tiered benets for services
and medications also have arisen under Medicaid managed care and in managed
care programs under Medicare (as well as Medicare Part D for medications).
For instance, although benets in the U.S. Medicaid program previously did
not include cost sharing, states increasingly have imposed premiums and copay-
ments since Obamacare passed.

Complex Financing
Complexity of nancial ows characterizes neoliberal health policies.
Administrative costs to manage neoliberal policies therefore have been quite
high (about 2528% of total health care expenditures). For instance, adminis-
trative overheadoften called administrative waste because the costs do not
contribute to direct patient servicesgrew 10.6% in 2014. Until 2022, with
Obamacare in place, private insurance overhead is projected to increase
$273.6 billion.29 The following information summarizes the complex nancial
operations (Figure 2).
758 International Journal of Health Services 46(4)

Public sector trust fund (social security, Medicare, Medicaid)

Capitated payments
Large
Private insurance corporations, managed privately
care organizations (generally for profit) controlled
organizations
Taxes of health-care
Capitated payments providers

Copayments Deductibles
Premiums
Employers* Patients*

Figure 2. Financial flows under neoliberal health reforms.

Sources: Authors analysis of field observations in the United States and Latin America and systematic
review of international literature on health reform.
Note: * Purchase of insurance policies for employers and patients mediated by large organizations of health
care purchasers.

Neoliberal reforms have viewed each insured person as a head, for whom a
capitation has been paid to an insurance company or MCO. Historically, a
justication for capitated payment held that organizations receiving the pay-
ments would encourage prevention, so costs for expensive services would
decrease and earnings would increase. Prepaid capitation payments in practice
became a source of capital that MCOs could invest in the global nancial
marketplace, with an estimated 16% return on equity.30
Funds for capitation payments have come from ve sources. The rst source
has involved premiums paid by workers and their families. Employers contri-
butions have comprised a second source. The balance between premiums and
employer contributions has varied, depending on the benet package selected by
employers.
A third funding source has involved public-sector trust funds. A means test
has required documentation of nancial resources and expenses for low-income
individuals and families, the unemployed, and those whose employers have not
paid for health insurance. People with incomes below a means-tested limit, after
considering other resources such as savings, homes, and cars, have received a
subsidy from a public-sector trust fund. In the United States, Medicaid and
Medicare have been the trust funds providing such subsidies. Under
Medicaid, federal and state components of the public trust funds have varied
based on states decisions about using revenues for this purpose. In the
Colombian reform, the tax-generated budgets of the national Ministry of
Health and regional, state, and municipal health authorities created a trust
fund for the poor and uninsured (Fondo de Solidaridad del Regimen
Waitzkin and Hellander 759

Subsidiado or Solidarity Fund of the Subsidized Regime). In addition, the

national social security system receiving employers and employees contribu-
tions for health and retirement benets became a second public-sector trust fund
(Fondo de Solidaridad y Garanta or FOSYGA), which made capitated payments
to private MCOs.
The fourth source of payments has involved copayments and deductibles.
Copaymentsout-of-pocket payments that patients make when they receive
serviceshave been justied by a largely untested assumption that patients
will use unnecessary services less if they must pay something at the point of
delivery. Copayments usually have decreased with higher premiums; those who
pay higher premiums for the more precious metal plans under Obamacare usu-
ally pay lower copayments. There is strong evidence that for the poor, copay-
ments of any size reduce needed care.31,32 Deductiblesrequired payments at
the beginning of each time period before the insurance begins to payalso can
become barriers to access. The least precious metal tiers of Obamacare, for
example, require deductibles as large as $6,000 per person per year and therefore
discourage utilization of services other than catastrophic care.
Taxes have provided a fth source for capitated funds to insurance corpor-
ations. Employers taxes paid as a proportion of payrolls and workers taxes
paid as deductions from wages have moved into the public-sector trusts funds
and then into the ow of funds received by insurance corporations. In addition
to payroll-related taxes, neoliberal health programs have required additional
taxes, usually general income taxes, to maintain the public-sector trust funds
dedicated to care for the poor. Because the income tax system has remained
regressive overall in countries like Colombia and the United States due to loop-
holes favoring the rich, the non-rich have contributed proportionally more to
neoliberal health programs through taxes, in addition to premiums, copayments,
and deductibles.

Tax Code Changes

Neoliberal reforms usually have led to higher taxes overall, mainly because they
increase administrative costs and prots. Payroll taxes for employers and
employees in Colombia increased substantially, to approximately 11%.33 In
the Clinton proposal, tax code changes would have reduced individual and cor-
porate tax deductions for health insurance, to incentivize purchase of less expen-
sive coverage. Reduced tax deductions and a tax for Cadillac insurance plans
with coverage beyond minimum standards have become two of Obamacares
most controversial components. Obamacare also has called for penalties for
those who do not purchase mandatory insurance coverage; the Internal
Revenue Service administers the penalties. A rationale for tax code changes
has argued that reduced tax deductions and tax penalties for non-adherence
would lead to decreased overall costs. This rationale usually does not
760 International Journal of Health Services 46(4)

acknowledge the increased administrative costs of restructuring the tax code and
then enforcing those changes.

Assessments of Neoliberal Health Reforms

Through History
As expected, international nancial institutions and international health organ-
izations favoring neoliberal health reforms have produced evaluations yielding
favorable results. For instance, WHOs World Health Report 2000, which the
World Bank helped support, tried to rank the worlds health systems.34 The
Report used choice as one key criterion to assess health system performance.
Public-sector health systems that covered everyone but did not encourage choice
among private insurers ranked lower than those that did. As a result, Colombia
(ranked 22nd in the world and 1st in Latin America), Chile (33rd), Costa Rica
(36th), and even the United States (37th) ranked higher than Cuba (39th), des-
pite Cubas much admired, accessible health system and outstanding health
indicators. Brazil ranked very low, 125th, again due to its attempt to achieve
a unied health system, codied in the Brazilian constitution of 1988. The
Reports conceptual orientation and methodology received criticism world-
wide.35,36 Later, the codirector of WHOs ranking project, Julio Frenk, pro-
moted neoliberal reform as Mexicos minister of health. Favorable reports
about Mexicos reform by Frenk and colleagues24,37 again generated criticism
about the conceptual and empirical bases for their claims of success.2,38
The neoliberal approach in recent years has taken on the misleading name,
universal health coverage (UHC). UHC reincarnates the same basic principles
of selective primary health care for all and has received major monetary sup-
port and promotion by the same international nancial institutions and philan-
thropies, especially the World Bank and Rockefeller Foundation.39 Frenk and
coworkers have emerged as proponents of UHC.40 However, UHC does not
mean health care for alla delivery system that provides equal services for the
entire population regardless of an individuals or familys nancial resources and
without tiered coverage according to income.41
The UHC orientation has become hegemonic in global health policy circles,
as pointed out by observers and activists such as the leaders of the Latin American
Social Medicine Association.42 UHC embraces several ideological assumptions:43

. Eciency increases through competition among multiple insurers and public

and private providers.
. The market is the best regulator of costs and quality.
. Private administration is more ecient and less corrupt than public
administration.
. Deregulation of health and social security trust funds allows the user freedom
of choice.
Waitzkin and Hellander 761

Studies that have analyzed UHCs outcomes based on data rather than asser-
tion of success have not conrmed these assumptions. Under UHC, costs and
corporate prots increase as access barriers remain or worsen.2,38,44,45
International nancial institutions favorably evaluated Colombias reform.
The World Bank sponsored the reform and also assessed it favorably, despite
acknowledging weaknesses such as a lack of randomized data and inability to
infer causality.21 A similar study by the Inter-American Development Bank
revealed an underlying ideological assumption that the public sector interferes
with the market: Achieving universal coverage faces several hurdles. . .because
of the existence of safety-net providers that act as substitutes for insurance and
provide incentives to ride the system for free. . . The resistance of public hospitals
to forgoing supply-side subsidies cannot be underestimated.. . .46
Assessments of the Colombia reform not tied to its sponsors have found
mostly adverse eects. As shown in one major study, costs had outstripped
public funding, there was inadequate citizen consultation in improving the
program, and citizens initiated approximately 143,000 lawsuits (tutelas) in
2008 alone due to denial of treatment by private insurance companies.47
According to another research report, insurance covered too few services, the
system could not address the health impacts of poor living conditions, and prot
seeking permeated the system.48 Ethnographic research claried legal attempts
to protect the systems market structure.49 An esteemed senator analyzed cor-
ruption, monopolistic practices, delayed payments, high overhead, denial of
care, and illegal investment of health funds by for-prot insurance companies;
he argued: Statute 100 does not work, because it is not a law intended for the
health of Colombians, but rather a law intended to nance the business of the
health of Colombians.50

The History and Future of Neoliberal Health Reform

The Colombia health reform, the Clinton health proposal, Obamacare, and
many other health reforms worldwide emerged historically from the same neo-
liberal boilerplate. Like earlier neoliberal proposals, Obamacare has enhanced
corporate access to public-sector trust funds. A market ideology has made
unproven claims about private-sector eciency, competition, and business man-
agement. Health care has remained a commodity to be bought and sold in a
marketplace, rather than a fundamental human right.
Private insurance generally shows administrative expenses between 20% and
30%,29,51 about 8-fold higher than public administration, and administrative
waste has increased even further under Obamacare. Many of these expenditures
pay for activities such as marketing, billing, denial of claims, processing copay-
ments and deductibles, exorbitant salaries and deferred income for executives
(sometimes more than $30 million per year), prots, and dividends for share-
holders.52 The overall costs of the health system under Obamacare are projected
762 International Journal of Health Services 46(4)

to rise from 17.4% of gross domestic product in 2013 to 19.6% in 2024.

A conservative projection, assuming the expected rate of increases under
Obamacare, shows that premiums and out-of-pocket expenditures for the aver-
age family will equal half of the average family income by 2019 and the full
average family income itself by 2029.53
Regarding accessibility, according to polls, a majority of the U.S. population
remains concerned about the aordability of health services, and many who have
obtained coverage under the ACA report that the insurance remains mostly unu-
sable due to the patients required share of cost.54,55 The ACA will leave more
than one-half of the previously uninsured population, about 30 million people,
still uninsured and at least twice that number underinsured.56 Sophisticated stu-
dies of the ACA show modest though statistically signicant improvements in
some measures of insurance coverage and health care access in certain population
subgroups and geographical areas.57,58 However, these ndings do not detract
from the inherent structural problems of neoliberal health reforms.
There are multiple historical examples of countries that have not accepted the
neoliberal model but instead have constructed health systems based on the goal
of health care for all (HCA). These countries struggle to achieve universal
access to care but without tiers of diering benet packages for the rich and
poor. Canada, for instance, prohibits private insurance for services provided in
its national health program. Wealthy people in Canada must participate in the
publicly nanced system, and the presence of the entire population in a unitary
system assures a high-quality national program. Countries trying to advance the
HCA model in Latin America include Bolivia, Brazil, Cuba, Ecuador, Uruguay,
and Venezuela. After Obamacares probable failure, a space nally will open for
a U.S. national health program that does not follow the neoliberal model. That
new system will recognize health care as human right rather than a commodity
to be bought and sold in a marketplace.59

Declaration of Conflicting Interests

The authors declared no potential conicts of interest with respect to the research,
authorship, and/or publication of this article.

Funding
The authors received no nancial support for the research, authorship, and/or publication
of this article.

References
1. Stocker K, Waitzkin H, Iriart C. The exportation of managed care to Latin America.
N Engl J Med. 1999;340(14):11311136.
2. Waitzkin H. Medicine and Public Health at the End of Empire. Boulder, CO: Paradigm
Publishers; 2011.
Waitzkin and Hellander 763

3. Waitzkin H, Iriart C. How the United States exports managed care to third world
countries. Mon Rev. 2000;52(1):2135.
4. Waitzkin H. The strange career of managed competition: military failure to medical
success? Am J Public Health. 1994;84(3):482489.
5. Enthoven AC. Market forces and efficient health care systems. Health Aff
(Millwood). 2004;23(2):2527.
6. Enthoven AC, van de Ven WP. Going Dutch managed-competition health insur-
ance in the Netherlands. N Engl J Med. 2007;357(24):24212423.
7. Ellwood PM. In First Person. Chicago: American Hospital Association; 2011. http://
www.aha.org/research/rc/chhah/EllwoodFINAL050211.pdf. Accessed May 14,
2016.
8. Enthoven AC. Consumer-choice health plan (two parts). N Engl J Med.
1978;298(12):650658 and 1978; 298(13):709720.
9. Enthoven AC. Health Plan: The Only Practical Solution to the Soaring Cost of
Medical Care. Reading, MA: Addison-Wesley; 1980.
10. Enthoven AC, Kronick R. A consumer choice health plan for the 1990s (two parts).
N Engl J Med. 1989:320(1):2937 and 1989:320(2):94101.
11. Enthoven AC. Theory and Practice of Managed Competition in Health Care Finance.
Amsterdam: North-Holland; 1988.
12. Ellwood P, Enthoven A, Etheredge L. The Jackson Hole initiatives for a twenty first
century American health care system. Health Econ. 1992;1(3):149168.
13. Enthoven AC. Health Care, the Market and Consumer Choice. Camberley, Surrey,
England: Edward Elgar Publishing; 2012.
14. Starr P. The Logic of Health Care Reform. Knoxville, TN: Whittle Direct Books; 1992.
15. Starr P, Zelman WA. A bridge to compromise: competition under a budget. Health
Aff (Millwood). 1993;12(supplement):723.
16. Barack Obama on Single Payer in 2003. http://www.pnhp.org/news/2008/june/
barack_obama_on_sing.php. Accessed May 14, 2016.
17. Jacobson B. Obama received $20 million from healthcare industry in 2008 campaign.
The Raw Story. http://rawstory.com/2010/01/obama-received-20-million-healthcare-
industry-money-2008/. Accessed May 14, 2016.
18. Center for Responsive Politics. 2012 Presidential race. https://www.opensecrets.org/
pres12/. Accessed May 14, 2016.
19. Physicians for a National Health Program. Wellpoint really did write the Baucus
health plan [series of articles]. http://www.pnhp.org/news/2009/september/wellpoint_
really_di.php. Accessed May 14, 2016.
20. Levine D, Mulligan J. Overutilization, overutilized. J Health Politics Policy Law.
2015;40(2):421437.
21. Enthoven AC. Introducing market forces into health care: a tale of two
countries. World Bank. http://siteresources.worldbank.org/INTAFRHEANUTPOP/
Resources/HSD_News_January_06.pdf. Published January 2006. Accessed Mary 15,
2016.
22. Health policy brief: The CO-OP Health Insurance Program. Health Affairs. http://
www.healthaffairs.org/healthpolicybriefs/brief.php?brief_id107. Updated January
23, 2014. Accessed May 15, 2016.
764 International Journal of Health Services 46(4)

23. ENTIDAD PROMOTORA DE SALUD ORGANISMO COOPERATIVO

SALUDCOOP EN LIQUIDACION, Directorio de Empesas, Colombia. http://
www.informacion-empresas.co/Empresa_ENTIDAD-PROMOTORA-SALUD-
ORGANISMO-COOPERATIVO-SALUDCOOP.html. Accessed May 15, 2016.
24. Thomas SR, Kaufman BG, Randolph RK, Thompson K, Perry JR, Pink GA. A
comparison of closed rural hospitals and perceived impact. North Carolina Rural
Health Research Program, University of North Carolina. http://www.shepscenter.
unc.edu/wp-content/uploads/2015/04/AfterClosureApril2015.pdf. Published April
2015. Accessed May 15, 2016.
25. Declaration of Alma-Ata, International Conference on Primary Health Care. http://
www.who.int/publications/almaata_declaration_en.pdf. Published September 612,
1978. Accessed May 15, 2016.
26. Cueto M. The origins of primary health care and selective primary health care. Am J
Public Health. 2004;94(11):18641874.
27. Brown TM, Fee E, Stepanova V. Halfdan Mahler: architect and defender of the
world health organization health for all by 2000 declaration of 1978. Am J
Public Health. 2016;106(1):3839.
28. Waitzkin H. Universal health coverage: the strange romance of the lancet, MEDICC,
and Cuba. Social Medicine/Medicina Social. 2015;9(2):9397.
29. Himmelstein D, Woolhandler S. The post-launch problem: the Affordable Care Acts
persistently high administrative costs. Health Aff (Millwood) Blog. http://healthaf-
fairs.org/blog/2015/05/27/the-post-launch-problem-the-affordable-care-acts-persis-
tently-high-administrative-costs/. Published May 27, 2015. Accessed May 15, 2016.
30. Are health insurers making huge profits? The Economist, May 5, 2010. http://www.
economist.com/blogs/democracyinamerica/2010/03/insurance_costs_and_health-
care_reform. Accessed May 15, 2016.
31. Lurie N, Ward NB, Shapiro MF, Gallego C, Vaghaiwalla R, Brook RH.
Termination of Medi-Cal benefits: a follow-up study one year later. N Engl J Med.
1986;314(19):12661268.
32. Newhouse J. Free for all? Lessons From the RAND Health Insurance Experiment.
Cambridge, MA: Harvard University Press; 1996.
33. Giedion U, Uribe MV. Colombias universal health insurance system. Health Aff
(Millwood). 2009;28(3):853863.
34. World Health Report 2000. Health Systems: Improving Performance. Geneva,
Switzerland: World Health Organization; 2000.
35. Almeida C, Braveman P, Gold MR, et al. Methodological concerns and recommen-
dations on policy consequences of the world health report 2000. Lancet.
2001;357(9269):16921697.
36. Navarro V. Assessment of the world health report 2000. Lancet. 2000;356(9241):
15981601.
37. Knaul FM, Gonzalez-Pier E, Gomez-Dantes O, Garc a-Junco D, Arreola-Ornelas H,
Barraza-Llorens M, et al. The quest for universal health coverage: achieving social
protection for all in Mexico. Lancet. 2012;380(9849):12591279.
38. Laurell AC. Three decades of neoliberalism in Mexico: the destruction of society. Int
J Health Serv. 2015;45(2):246264.
Waitzkin and Hellander 765

39. Rodin J, Kim JY. Universal health coverage: a smart investment. Rockefeller
Foundation and World Bank. https://www.rockefellerfoundation.org/blog/univer-
sal-health-coverage-smart/. Published December 12, 2014. Accessed May 15, 2016.
40. Frenk J. Leading the way towards universal health coverage: a call to action. Lancet.
2015;385(9975):13521358.
41. Legge D. Priority setting for universal health care: peoples health movement position
paper. http://www.phmovement.org/sites/www.phmovement.org/files/PHM%20paper
%20full.pdf. Published January 2016. Accessed May 15, 2016.
42. Heredia N, Laurell AC, Feo O, Gonzalez-Guzman R, Torres-Tovar M. The right to
health: what model for Latin America? Lancet. 2015;385(9975):e34e37. doi:10.1016/
S0140-6736(14)61493-8.
43. Iriart C, Merhy EE, Waitzkin H. Managed care in Latin America: the new common
sense in health policy reform. Soc Sci Med. 2001;52(8):12431253.
44. Sengupta A. Universal Health Coverage: Beyond Rhetoric. Ottawa, Canada:
International Development Research Centre. Occasional Paper No. 20. http://
www.municipalservicesproject.org/sites/municipalservicesproject.org/files/publica-
tions/OccasionalPaper20_Sengupta_Universal_Health_Coverage_Beyond_Rhetoric_
Nov2013_0.pdf. Published November 2013. Accessed May 15, 2016.
45. Stuckler D, Feigl AB, Basu S, McKee M. The political economy of universal health
coverage. Background paper for the global symposium on health systems research.
November 1619, 2010; Montreux, Switzerland: World Health Organization. http://
www.pacifichealthsummit.org/downloads/UHC/the%20political%20economy%
20of%20uhc.PDF (accessed May 15, 2016).
46. Glassman AL, Escobar M-L, Giuffrida A, Giedion U. From Few to Many: Ten Years
of Health Insurance Expansion in Colombia. Washington, DC: Inter-American
Development Bank; 2009.
47. Tsai TC. Second chance for health reform in Colombia. Lancet. 2010;375(9709):109110.
48. Vargas I, Vazquez ML, Mogollon-Perez AS, Unger J-P. Barriers of access to care in a
managed competition model: lessons from Colombia. BMC Health Serv Res.
2010;10(Oct 29):297. doi:10.1186/1472-6963-10-297
49. Abad a-Barrero CE. Neoliberal justice and the transformation of the moral: the pri-
vatization of the right to health care in Colombia. Med Anthro Q. 2016;30(1):6279.
doi: 10.1111/maq.12161
50. Robledo J. Saludcoop: the greatest robbery of public assets. Speech in a plenary
session of the Colombian Senate. http://colombiasupport.net/2014/10/saludcoop-
the-greatest-robbery-of-public-assets/. Published September 9, 2014. Accessed May
15, 2016.
51. Woolhandler S, Campbell T, Himmelstein DU. Costs of health care administration in
the United States and Canada. N Engl J Med. 2003;349(8):768775.
52. Crystal G. Well paid insurance CEOs vs. 45 million uninsured Americans. http://www.
pnhp.org/news/2004/october/well_paid_insurance_.php. Accessed May 15, 2016.
53. Young RA, DeVoe JE. Who will have health insurance in the future? An updated
projection. Ann Fam Med. 2012;10(2):156162.
54. Jost T. Affordability: the most urgent health reform issue for ordinary Americans.
Health Aff (Millwood) Blog. http://healthaffairs.org/blog/2016/02/29/affordability-
766 International Journal of Health Services 46(4)

the-most-urgent-health-reform-issue-for-ordinary-americans/. Published February

29, 2016. Accessed May 15, 2016.
55. Geyman J. The Human Face of ObamaCare. Friday Harbor, WA: Copernicus
Healthcare; 2016.
56. Nardin R, Zallman L, McCormick D, Woolhandler S, Himmelstein D. The unin-
sured after implementation of the Affordable Care Act: a demographic and geo-
graphic analysis. Health Aff (Millwood) Blog. http://healthaffairs.org/blog/2013/
06/06/the-uninsured-after-implementation-of-the-affordable-care-act-a-demo-
graphic-and-geographic-analysis/. Published June 6, 2013. Accessed May 15, 2016.
57. Sommers BD, Blendon RJ, Orav EJ. Both the private option and traditional
Medicaid expansions improved access to care for low-income adults. Health Aff
(Millwood). 2016;35(1):96105.
58. Sommers BD, Gunja MZ, Finegold K, Musco T. Changes in self-reported insurance
coverage, access to care, and health under the affordable care act. JAMA.
2015;314(4):366374.
59. Waitzkin H, ed. The Collapse of Capitalist Health Care and the Road Ahead. New
York, NY: Monthly Review Press. In press.

Author Biographies
Howard Waitzkin is distinguished professor emeritus of sociology at the
University of New Mexico and adjunct professor of internal medicine at the
University of Illinois. For many years, he has been active in the struggles for
national health programs in the United States and Latin America. He is the
author of Medicine and Public Health at the End of Empire (2011) and other
books.

Ida Hellander is director of Health Policy and Programs at Physicians for a

National Health Program (PNHP), a research and advocacy organization
with more than 20,000 members headquartered in Chicago. She received her
bachelors degree from Yale University and her medical degree from the
University of Minnesota Medical School. Before joining PNHP in 1992, she
was a research associate in drug safety for Public Citizen Health Research
Group.