Serious political dysfunction shows up in two possible ways in a political system dominated by private wealth such as ours. Political contributors get their way in the adoption of policies that benefit them, whether or not they harm the society as a whole. Alternatively, when reform would seriously impinge on their interests, the donor elite uses its leverage to prevent reform from moving forward and solving the country’s problems. We have experienced the first of these with the sub-prime mortgage crisis and subsequent economic collapse. Wall Street achieved the market deregulation that it had long sought. A devastating and protracted period of high unemployment is the result. And today we are living through the second form of dysfunction with the debate about health care reform. Political donors are shaping the debate, making it certain that nothing like the kinds of changes we need will be achieved.

Problems with the United States health care system are real and myriad. Too many people do not have health insurance, health care is too expensive and is becoming more costly and money spent on health care is not used efficiently. The upshot is that compared to other countries, we spend much more on medical care but are significantly less healthy. The United States spends a higher percentage of our GDP on health care and yet has lower life expectancy than other developed democracies.

As a candidate, Barack Obama vowed to reform the health care system and, once in office, he has placed its reform at the top of his agenda. His strategy was to be incrementalist and accommodating to as many competing interests as possible. It is now obvious that this strategy of accommodation calamitously underestimated not only the opposition real reform would generate among health care interests, but also how successfully they could use their wealth in the political process. Although an important player, in the past the health care sector was not among leading contributors to electoral campaigns. But with the possibility of meaningful reform looming, it has made effective use of the political donation process to derail reform initiatives that threaten it.

Health sector campaign contributions have increased, and this increase has been carefully targeted. In just the six months between January and June 2009, health insurance providers, pharmaceutical houses, health professionals and hospitals and nursing homes made political contributions of $15.3 million, paying special attention to leaders of the Senate. Money has been showered on members of strategic committees such as Chuck Grassley, John Boehener, Chris Dodd and Max Baucus. Perhaps most importantly, the health and accident insurers, HMOS and health services have funded campaign “war chests” of the fiscally conservative Blue Dog Democrats, increasing donations by 15 percent between the first and second quarters of this year, five times the increase received by non- Blue Dog House Democrats.

A revealing example of the power of the health care sector is the promise the pharmaceutical industry extracted from the White House – that in any legislation adopted, the government would not be allowed to use its market power to negotiate lower drug prices. Reacting with outrage to this deal, former Secretary of Labor Robert Reich noted on his blog, “Any bonanza for the drug industry means higher health-care costs for the rest of us.” But what really bothered Reich was what this deal meant for the political process. Reich wrote, “When an industry gets secret concessions out of the White House in return for a promise to lend the industry’s support on a key piece of legislation, we’re in big trouble. That’s called extortion.” And if such bargaining was necessary to secure health care legislation, he concludes, “Our democracy is in terrible shape.”

There is no reason to deny the obvious. Theorists used to worry that too much democracy would harm society. Something more nearly the opposite is the case today. The power of private campaign contributions has marginalized democracy, and we are all the worse for it. We need to support real reform in our system of privately funded political campaigns by creating a citizen-funded option for candidates – publicly funded “Fair Elections” – that would eliminate their dependence on big donors and special interests.

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