Health care reform is needed now more than ever
By
Mark Weisbrot Read Spanish Version
From
Truthout.org
With
the U.S. economy’s downward spiral still accelerating and the federal
government looking at its largest budget deficits since World War II,
some are saying that this is not the time to expand health care
coverage to all Americans.
But
this is exactly the time for the Obama administration to move boldly
on its campaign promise to implement a universal health care system.
Obama
wants spending that stimulates the economy in the short term, but he
also wants to reduce the long-term deficit problem after the economy
recovers. This is exactly what health care reform will do.
In
the short run, health care spending, like other government spending
on goods and services, creates jobs and generates income. This will
help arrest the economy’s downward spiral.
With
the collapse of private spending, the federal government must act as
the consumer of last resort — hence, the vital importance of the
$787 billion stimulus package that Congress passed last week.
Fortunately, this package did contain at least some health care
stimulus. It included $87 billion for Medicaid payments to the state
governments, $25 billion towards helping unemployed workers extend
their employment-based health insurance after being laid off, and $19
billion for health information technology.
But
health care reform would do vastly more. President Obama has proposed
a reform that would, while keeping the employer-based health
insurance that covers most Americans, create a public health
insurance system for the 46 million who do not have insurance. Large
employers would be required to either pay into this system or provide
their employees with insurance that is at least as good as the
federal system. Individuals without insurance could buy into the
public system, and the federal government would subsidize these
payments so that they would be affordable for low-income households
and those without ties to the labor force.
The
White House estimates that its plan would cost $50 billion to $65
billion annually, but it would be better to spend much more than
this, with more federal subsidies to employers to cover uninsured
workers and improve existing coverage. As big as it may seem, the
$787 billion stimulus bill passed by Congress amounts to less than
2.7 percent of gross domestic product (GDP). This is not nearly
enough to counteract our deep recession: the Congressional Budget
Office estimates the output gap (i.e., how much output is below the
economy’s potential) at $2.9 trillion over the next three years.
Besides
saving thousands of lives by providing health care to the uninsured
and supplementing the fiscal stimulus, health care reform has another
huge advantage: it can drastically reduce future federal budget
deficits. The vast majority of our government’s long-term shortfall
is due to exploding health care costs in the private sector. These
spill over to the public sector, which currently finances about half
of the nation’s health care costs. The United States spends about
twice as much per person on health care as other high-income
countries, and yet has worse health outcomes, including life
expectancy and infant mortality.
The
main economic reason for this colossal failure is that our system of
private insurance and powerful monopolies is vastly more wasteful and
inefficient than the health care systems of other developed
countries. Insurance companies spend tens of billions trying to
insure the healthy, avoid the sick, and deny payment for claims.
Pharmaceutical companies take $350 billion of our health care dollars
for drugs that cost a small fraction of that sum to produce.
The
Obama health care plan won’t eliminate most of these perverse
incentives and waste — eventually we will need a truly national,
single-payer system like Medicare to accomplish that. But it would be
a big step in that direction, creating a nearly universal insurance
system and laying the foundation for a sustainable system that can
contain costs.
Mark
Weisbrot is co-director of the Center
for Economic and Policy Research,
in Washington, DC.
