Austerity Kills

The coverage of how Asian countries that previously experienced large SARS outbreaks have responded to the current pandemic could easily lead one to believe it’s only the worst-hit countries that were able to learn and make preparations. The rest of us just didn’t realize how bad it could get.

But that’s not true. California did realize, way back in 2006, what could happen if they didn’t invest in advance preparation for a major health crisis. That year, the state invested $400 million to shore up the state’s capacity to respond to a major pandemic or natural disaster. They built three mobile crisis hospitals that could be deployed around the state and amassed a stockpile of emergency medical equipment such as the now critically undersupplied N95 masks, ventilators, and 21,000 hospital beds.

The decision to invest in these stockpiles was made in the wake of increasingly close calls with the pandemics that rocked other parts of the world. Those crisis response resources alone would not have been enough for the number of infections caused by COVID-19, but they were a big step in the right direction.

Unfortunately, that foresight was thrown out the window in 2011, when Jerry Brown and the Democratic Party that controlled California legislature passed an austerity budget. The 2008 financial crisis had devastated state revenues, and among massive cuts to state services was the meager $5.8 million annual expense of maintaining the mobile hospitals. The program was cut, the highly equipped mobile crisis centers were turned into “high-end tents,” and the remaining stockpiles were either given away to hospitals or simply disposed of. Dr Howard Backer, who was placed in charge of the original program, says he never found out where all the materials ended up.

The crisis response stockpile was only one of many programs for which the state cut funding. Undoubtedly, many of them left working-class Californians more vulnerable in our current economic and health crises. But now, in a moment marked by acute medical resource shortages, it’s hard to imagine a more shortsighted decision. Public health experts saw the preparations that needed to be made, and while the economy was booming, politicians were willing to take some of their advice. As soon as there were “hard choices” to be made, however, corporate-backed politicians made sure it was working people that paid the price.

Public-Private Profiteering

Medical ventilators are the critical piece of equipment needed to help people survive a severe COVID-19 infection. Without it, doctors and nurses can do nothing as the patient’s lungs are ravaged by the virus. As the American public is now learning, the United States has an alarming shortage of these devices.

Public health officials have known about this vulnerability for years. That’s why, over a decade ago, funds were set aside and contracts issued for a new model of cheap, portable ventilators that could be deployed in a pandemic.

By 2010, a small medical device manufacturer, Newport, won the contract to build the new low-cost, streamlined machines. By 2011, they had functioning prototypes and, according to the New York Times: “In April 2012, a senior Health and Human Services official testified before Congress that the program was ‘on schedule to file for market approval in September 2013.’ After that, the machines would go into production.”

A month later, the ironically named Covidien, a much larger corporation, purchased Newport for $100 million. It just so happened that Covidien already produced a more expensive ventilator. Things began falling apart after the merger.

Covidien asked the government for more funding and a higher purchase price for the ventilators. Finally, they simply asked to be released from the contract, since the devices would be insufficiently profitable. The government signed a new contract with Philips in 2015 — five years after the original Newport contract — with the first ten thousand ventilators to be delivered in the summer of 2020.

Covidien’s new parent company, Medtronic, is now pleading innocence, but it is obvious that the purchase was meant to torpedo a cheaper product that would have produced more ventilators for less money but cut into profits.

This isn’t uncommon. In 2018, researchers found “an average of 45 instances per year of pharmaceutical firms buying out competitors developing rival drugs that could cut into their profits, and subsequently putting the new therapeutic on ice.”

Not wanting to be seen as the company responsible for thousands of unnecessary deaths, Medtronic has decided to do a little brand building by publicly releasing design documents for one of its portable ventilator models. The catch is that they’re only granting a license for the explicit purpose of dealing with the pandemic. After the World Health Organization (WHO) declares the pandemic over, any person or organization hoping to continue using devices built from these specifications — say, in preparation for a different pandemic in the future — will receive a call from Medtronic’s legal department.

We’ll probably never get to that, since the amount of time and resources it would take even experienced engineers to source materials and assemble any substantial number of devices based on these designs makes them largely useless. Little will come of it, and we should not let Covidien or its successor off the hook. It’s never been clearer that the billions in profits that pharmaceutical and medical device manufacturers have raked in over the decades as the price of private “efficiency” have left us with exactly nothing. Not merely useless, they have been an active obstacle to medical advancement.

Rather than doing cute PR, manufacturers like Medtronic should be seized by the government to produce ventilators as quickly as possible at cost. You cannot respond to a pandemic the way you cram for a test — it takes serious preparation and investment. Corporate America robbed us of that opportunity, and the death toll will reflect that.

The Only Right That Matters

With at least a million Americans needing intensive hospital care in the coming months and not nearly enough beds, much less ICU beds, hospital space is at a premium. Unfortunately, hospitals haven’t exactly been building in excess capacity. They’ve either been cutting beds, consolidating hospitals, or, in rural areas. closing them down entirely. At least thirty hospitals filed for bankruptcy in 2019. Since 2010, a hundred rural hospitals have closed, a number that will increase as underfunded hospitals are crushed by the pandemic.

What’s clear is that it’s hard for private capital to turn a profit when they actually have to provide care.

In July of last year, the owner of Hahnemann University Hospital in Philadelphia announced that the hospital would be shut down. Hahnemann’s closure made more headlines than the average hospital closure when Bernie Sanders attended rallies with protesting hospital workers and community members calling for it to remain open. The hospital’s owner, Joel Freedman, protested that it simply wasn’t profitable enough to keep open. What if the city of Philadelphia simply took over management of the hospital and paid the employees?

For the right to use the idle hospital, Freedman is demanding $1 million per month from the city. The mayor says they don’t have the money. In the middle of a pandemic, when every hospital bed could mean a saved life, Freedman is invoking the most sacred right in capitalist society, the right of private property. People are sick, there are nurses and doctors ready to work, but since Freedman doesn’t get a cut, a collective social resource sits empty and unused, no matter how needed it is. Other countries have found a solution to this problem: nationalize the hospitals.

It’s clear that this pandemic was anticipated a long way off. It was certainly obvious enough that the US government began preparations. But it was the logic of the market and austerity spending that hobbled efforts to better prepare for this moment. It’s not possible to predict the exact time a pandemic will break out, but there was no doubt that it would happen.

In Corey Robin’s timeless formulation, “the point of socialism is to convert hysterical misery into ordinary unhappiness.” There is no good pandemic, but prudent social investment in our health care system could have dramatically lessened the blow. We cannot let capitalists absolve themselves of blame for the COVID-19 crisis. Their choices have turned an emergency into a disaster.