Senator Warren Calls Private Equity Bloodsucking “Vampires”

Plus, how Hezbollah pays rent for rocket-launcher sites; latest on Columbia

Senator Warren launching her presidential campaign in Lawrence, Massachusetts, February 2019.

Senator Elizabeth Warren is echoing language used by Karl Marx and other antisemites in denouncing private equity investors as “vampires.” 

“It's true: private equity feeds on the health care system like vampires. They suck resources out of hospitals, physician practices & nursing homes, saddle them with debt, & make off like bandits while patients & workers suffer,” Warren, a Democrat from Massachusetts, said in a social media post today to her 6.8 million followers.

Warren was amplifying a piece from Stat, a publication controlled by Boston Globe and Boston Red Sox owner John Henry.

Headlined, “Private Equity: Health Care’s Vampire,” the article is by two professors at Hunter College and lecturers at Harvard Medical School, Steffie Woolhandler and David Himmelstein, and two medical residents, Elizabeth Schrier and Hope Schwartz. 

My own family’s personal experience with private equity takeovers of Boston-area dental practices has been not good (though I’ve had some similarly bad experiences with supposedly non-profit and publicly traded health care firms, so the issue may not be the capital structure). But even those skeptical of private equity ownership in health care may find this “vampire…suck” language to be counterproductive and destructive. 

“Private equity firms are sucking the resources out of America’s hospitals and nursing homes, and feeding on doctors to generate profits,” the Stat article claims. “These firms — which pool funds from wealthy investors and are exempt from many of the regulations and disclosure requirements that apply to other types of investments — have spent a half-trillion dollars since 2018 buying up medical resources.”

“Communities, not investors, should control essential health resources,” the doctors conclude. 

Left unsaid is that the “wealthy investors” in private equity funds include the endowment at Harvard, where Woolhandler and Himmelstein are on the faculty, along with the Teachers Retirement System of the City of New York that handles the pensions of Hunter College faculty. Senator Warren’s husband is also a Harvard law professor.

Himmelstein is pulling down $235,685 a year from New York State taxpayers while moonlighting at a second job in Massachusetts. Woolhandler is earning $235,185 from the government of New York while also moonlighting at a second job in Massachusetts. Both of them have been plumping unsuccessfully since at least the early 1990s for an American conversion to a Canada-style government-controlled health care system.

I wrote about this bloodsucking vampire image back in 2019 for Reason when Warren was using it in her presidential campaign:

This image of businessmen as bloodsuckers has a long and ugly history. Karl Marx used it: “Capital is dead labor, that vampire-like, only lives by sucking living labor, and lives the more, the more labor it sucks.”

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What's the problem with this sort of language?

For starters, it's more than a bit hypocritical. Sanders and Warren are both campaigning for huge tax increases on the private sector to fund bigger government. If anyone's acting like a bloodsucking vampire or vulture, it's them.

It's also hypocritical in the sense that one line of Democratic attack against President Trump has been faulting him for coarsening the public discourse and for dehumanizing, insulting, and scapegoating vulnerable minority populations. Some people assert that it's different to target a rich insurance company executive or hedge fund manager than it is to target a poor Mexican or Muslim immigrant. There may be some differences, but there are also some similarities. Those similarities aren't particularly attractive. If the Democrats are going to be slinging around this sort of language, it erodes some of their standing to be critical of Trump's rhetoric.

The language is potentially dangerous. Demonizing the investors or insurance company executives or depicting them as less than human could lead to violence against them. Similar language was deployed by communists and fascists in the 20th century, with deadly results.

Private equity’s defenders also note that is the most successful cases, its firms don’t bleed companies dead, but rather transfuse dying firms back to life by providing needed capital and operational improvements that allow the firms to be sold onward for a profit. It doesn’t always work that way in real life, but government ownership doesn’t always work out so well, either, notwithstanding all the communist propaganda extolling the supposed virtues of health care in Castro’s Cuba.

Anyway, with the FBI recording soaring anti-Jewish hate crimes, maybe Senator Warren might consider laying off the private-equity-as bloodsucking-vampire rhetoric? A policy debate about the best capital structures for health care in America is perfectly welcome. In many places, there are government-owned or non-profit hospitals that already compete with private-equity-owned facilities, and insurers and patients are free to choose what best meets their needs. But the vampire talk reduces rather than increases the chances of a rational, merit-based discussion.