Over 70% of Americans, according to one poll, want what's called a "public option" included in the health care reform package now before the Congress. It's reasonable to assume that these Americans are fed up with the health care they are getting from the private option (when it is available at all), and they are willing to risk all the scary consequences of government bureaucracy that the Republicans warn about when deriding publicly-provided health care.

So what's not to like about private health care from companies like Cigna and Humana and Blue Cross Blue Shield, other than the fact that fewer and fewer Americans are eligible if they have even the possibility of a chronic illness, those who are left in the system are paying skyrocketing premiums and out-of-pocket costs (averaging now at least $6,000 a year per person), and these companies will use the flimsiest pretexts to avoid paying claims?

What's not to like is the profit motive of the American capitalist system, at least as practiced these past 25 years. There was a time when the private sector did a decent job of providing health care, but that was a time when profit expectations of health care providers were much lower. Since 1982 and the Ronald Reagan economic program, profit expectations of American corporations have skyrocketed, and right behind have been the costs of health care, the cost of housing, the cost of military programs, the cost of banking, and the cost of many other products and services.

The locus of this pressure for profits is to be found in the American board room, and in industry after industry you can find the following:

1) Boards of directors profess to be interested first and foremost in shareholder value, because consulting firms like McKinsey have sold them on the mantra that the most successful companies (in terms of stock price) are those where management has a "laser-like focus" on the shareholders. Except this is a gross overstatement - management is only really interested in the stock price, and not at all in the shareholders. This is made possible by the fact that individuals who own the stock do so through intermediaries like mutual funds and pension plans, who defer to management except in the most egregious cases of incompetence.

2) As a result of point 1) above, an elite management class has arisen in corporate America that acts not simply as managers, but as owners of the company. They reward themselves with lucrative stock options and other perquisites, the CEO as leader of the company is granted dictatorial power by a compliant board chosen by him, and they are free to spend millions on lobbyists who buy off the Congress so as to avoid any meaningful government oversight or control.

3) The average chairman of the board of a company in the 1950's earned 40 times the salary of the lowest clerk in the company. Today that ratio is 400 times on average, and much higher in outlying cases. For 25 years the elite and self-perpetuating managerial class has been on a track of accelerating payouts for their performance, using as their yardstick the return on equity of the company because this, according to industry consultants, is the most accurate and proper measure of shareholder value.

4) Since companies now compete first and foremost on return on equity, rather than on something basic like market share, there is intense pressure to ratchet up each year the return that the company must achieve. Whereas in 1970 a return of 5% to 10% on equity was respectable for a mature company, that is simply unacceptable today. A minimum 15% return on equity is expected in most industries, and in aggressive situations as in banking or the hedge fund industry, returns of 30% are the norm.

When you apply this model of capitalism to an industry like health care, the first thing you notice is that corporate moguls begin to be rewarded like kings, with $5 million a year in salary, bonuses and benefits merely the floor. The first people to notice this were the doctors, previously the kings of the industry when it came to pay. They responded by moving to specialties like plastic surgery that paid well (because it was outside of the constraints on reimbursable services imposed by the health care industry itself), and they moved into positions of ownership, either of specialty clinics or of medical devices they invented.

A second thing that occurs is an emphasis on "value added" services that are very profitable to perform. Hospitals concentrate on procedures such as colonoscopies or heart bypass surgery, rather than deliver basic health care or "error prone" care like obstetrics. Pharmaceuticals pour their investment dollars not into cures, but into treatments, preferably for chronic illnesses like hypertension or high cholesterol. Massive amounts of advertising dollars are spent convincing Americans to seek treatment for imaginary national medical crises like Restless Leg Syndrome.

A third aspect of this model is relentless cost cutting, first at the direct level of services, but then concentrated on efforts to avoid paying for services at all at the insurance level. Insurance companies set up gatekeepers every bit as bureaucratic and uncaring as the worst federal government employee imaginable.

As health costs balloon and services collapse, another industry arises in the form of trial lawyers, many of whom become millionaires collecting on malpractice suits. Malpractice awards drive up costs of health care, but nowhere near as much as is claimed by the insurance industry and their supporters in Congress. The bulk of the costs are actually borne by doctors in the form of much higher malpractice insurance premiums.

At every step of the way, the profit motive influences behavior in the health care system. It starts at the top with CEOs and executive vice presidents at the large insurance companies and private hospitals, and then travels down to those doctors more interested in being business successes rather than medical practitioners. Lawyers are attracted to the industry for the large fees that can be created in prosecuting and defending malpractice claims. As with any large private sector industry caught up in the return on equity mania, the average worker suffers terribly in the system, starting with the nurses who are the principal source of contact most Americans have with the health care industry.

We have seen what has happened to the financial industry as a consequence of a drive for ever-higher ROEs: a train wreck of massive proportions. The same thing has been happening in the health care industry, only it has been a slow motion train wreck. The end result is nonetheless the same - a bankrupt industry incapable of offering affordable basic services to any but the wealthiest Americans. The poor, and now the middle class, are priced out of the system.

The Bush administration was the culmination of Ronald Reagan's free market reforms that set us on the path of ROE-driven health care. Bush was so clueless about the dysfunction of the system that he thought anybody could get health care by just showing up at an emergency room. It was this attitude that personified the political and business elite's attitude to health care, and it is this attitude that is at the core of the public disgust with the present system.

Whether the senators and representatives in Congress now working on various health care reform packages appreciate this or not is unclear. Some do, but others seems to be carrying the burden of supporting the private sector companies no matter what. It is not even clear they are aware of the fundamental argument here, which is that the capitalist system in the United States has failed miserably at delivering health care in the past 25 years. The public is willing to try something else, something not tied to the profit motive, because staying on this path is a road to an even greater disaster.