Vice President Kamala Harris’ bold proposal to eliminate medical debt offers a window into the approach that informs the entire progressive economic agenda the Democratic nominee for President unveiled August 16.
In addition to the proposals for re-instating and expanding the child tax credit with a baby bonus for new parents, federal support for affordable housing construction and a subsidy down payment for first time home buyers, much of the new focus and attacks have centered on what the Washington Post labeled the “first ever” ban on price gouging for groceries and food.
What makes that idea especially noteworthy is its correlation to the medical debt plan and caps on prescription drug costs and rent increases. A central cause of those inflated costs goes well beyond the usual claims of supply chain bottlenecks, government spending on social programs, and the disruption of the pandemic. In every case, there is a direct link to monopolization and big corporations exploiting those factors to jack up charges to extract higher, often record, profits, well beyond their own costs to produce or provide them.
Unpacking the crisis and main source of medical debt as well as for health care costs overall, including for prescription drugs, provides the tell.
For over two decades California Nurses Association/National Nurses United researchers have studied how hospitals inflate charges over their costs. Overall, the conclusion has been that hospital profit taking, augmented by corporate mergers, is a clear driver of medical debt.
A 2020 NNU study found that some hospitals had hiked their charges by as much as 18 times over their costs, exploding profits by 411 percent over the prior two decades. NNU’s forthcoming update on hospital charges will show that some hospitals by 2022/2023 were now setting charges at almost 24 times over their costs, doubling their charges over the past 20 years. Further, the biggest for-profit hospital chains set the highest prices and make the most profits from them. Among the 100 top hospitals with the highest charges, hospital giant HCA had six hospitals alone with a combined profit of almost $400 million for that fiscal year.
Big Pharma is the gold medal winner in profiteering which is why drug costs have become such a national scandal. The U.S. Senate Health, Education, Labor, and Pensions (HELP) Committee, chaired by Sen. Bernie Sanders, issued a Majority Staff Report in February documenting how three of the biggest pharmaceutical giants, Johnson & Johnson (J&J), Merck, and Bristol Myers Squibb (BMS), have prioritized profits over patient need, collectively piling up $112 billion in profits in 2022 through “unethical pricing strategies, relentless price hikes, manipulative patent tactics, and extensive lobbying efforts.”
That lobbying blocked years of efforts to allow Medicare to use its bulk purchasing power to negotiate lower drug prices, as most other industrial countries have achieved. It’s why President Biden’s Inflation Reduction Act to permit Medicare to bargain lower prices for 10 of the highest cost drugs that treat heart disease, cancer, diabetes, and blood clots was such a dramatic success. The White House this week announced it will save millions of Medicare recipients $1.5 billion in the first year of the program.
Grocery and housing prices
There’s a similar story of predatory corporate practices on grocery and housing prices. No they’re not just set by market supply and demand. “Is Harris right on the economics?” asked political economist Robert Kuttner on Friday in response to the announcement of Harris' plan.
"A detailed study by Groundwork Collaborative found that corporate concentration and increased profits accounted for more than half of the inflation felt by consumers in 2022 and 2023," Kuttner wrote. "First, it vividly connects with the issue of inflation where ordinary people feel it… Second, the plan reframes the issue … to how corporate concentration opportunistically drives price hikes…Third, the approach recasts the struggle as ordinary people vs. predatory corporations.”
“Today, everywhere consumers turn, whether they are shopping for groceries at the local Kroger or for plane tickets online, they are being gouged,” wrote David Dayan and Lindsay Owens in the lead to a major American Prospect series in June. “Landlords are quietly utilizing new software to band together and raise rents.”
In the “40 years from 1979 to 2019, nonfinancial corporate profits cumulatively drove about 11.4 percent of price growth. From April to September of last year,” Dayan and Owens continued, “that number was 53 percent.” Factors include corporate concentration, high-tech pricing practices, utilizing “technological innovations such as cloud computing, artificial intelligence, and surveillance targeting” of consumers to collect extensive personal information.
Jarod Facundo described a panoply of corporate grocery pricing practices including dominance of shelf space by the biggest chains, surge pricing, repackaging goods without changing prices, and tech driven personalizing pricing “for each shopping cart” that have been “the path to higher margins,” increased costs, and, of course, bigger profits.
Food company profit increases since inflation peaked, notes former labor secretary Robert Reich, include Cal-Maine, the largest U.S. producer and distributor of fresh shell eggs, whose profits soared 471 percent. Monopolization has also driven food inflation, Reich says: Just four companies control 85 percent of beef processing, 80 percent of corn seed distribution, 77 percent of fertilizer production, and 69 percent of grocery sales.
In an investigative report in October, 2022, ProPublica’s Heather Vogell described how Texas-based RealPage’s software facilitated price inflation on rental units. “Property managers across the United States have gushed about how the company’s algorithm boosts profits,” she wrote. “The nation’s largest property management company, Greystar, used the software to price tens of thousands of apartments.”
In the American Prospect, Luke Goldstein also zeroed in on the effect of RealPage’s practices to “maximize profits” in rental markets. “Clients accept the RealPage recommendations over 80 percent of the time, and the company includes provisions in its contracts to ensure rent hikes. It heavily pushes adoption to new clients of an ‘auto-accept’ feature that forces price increases automatically.”
Corporate price gouging has not gone unnoticed by the Biden administration, as Dayen and Owens note, citing the work of its agencies to aggressively target algorithmic price-fixing, corporate mergers and other practices, such as junk fees and corporate care interest rates that spark inflation.
Harris has been a voice on those initiatives as well, which have contributed to her economic proposals today. The proposals will face considerable assault from corporate lobbyists and the politicians they influence, of course, which will require a lot of political organizing to support.
Among those praising her initiative was Sen. Sanders, as staff writer Jake Johnson reported Friday for Common Dreams. Sanders called the Harris plan “an important step forward in making our country a fairer and more just society. I look forward to working with Vice President Harris when she becomes president to implement her economic agenda, and more, within her first 100 days in office."
