HealthLawProf Blog

Editor: Katharine Van Tassel
Concordia University School of Law

Tuesday, December 9, 2008

Health Care Spending and the Economy

In an op-ed in the New York Times published last Thursday, Jonathan Gruber,  professor of economics at the Massachusetts Institute of Technology and a board member of the Massachusetts Health Insurance Connector Authority, wrote about the prospects of health care spending serving as an economic stimulus.  He stated,

Images A central feature of Barack Obama’s presidential campaign was an aggressive plan to expand health insurance coverage by subsidizing low-income Americans and preventing discrimination against the ill. In recent weeks, Senators Max Baucus and Ted Kennedy have been working on a similar plan that might also require people to purchase insurance. Senators Ron Wyden and Bob Bennett are promoting a different approach that would largely replace our employer-sponsored health insurance system with new insurance-purchasing pools.

What all of these plans have in common is the goal of covering every American. And all would require major new spending in the near term — perhaps $100 billion a year or more. Given the present need to address the economic crisis, many people say the government cannot afford a big investment in health care, that these plans are going nowhere fast. But this represents a false choice, because health care reform is good for our economy.

As the country slips into what is possibly the worst downturn since the Depression, nearly all experts agree that Washington should stimulate demand with new spending. And one of the most effective ways to spend would be to give states money to enroll more people in Medicaid and the State Children’s Health Insurance Plan. This would free up state money for rebuilding roads and bridges and other public works projects — spending that could create jobs.

Health care reform can be an engine of job growth in other ways, too. Most proposals call for investments in health information technology, including the computerization of patient medical records. During the campaign, for example, Mr. Obama proposed spending $50 billion on such technology. The hope is that computerized recordkeeping, and the improved sharing of information among doctors that it would enable, would improve the quality of patient care and perhaps also lower medical costs. More immediately, it would create jobs in the technology sector. After all, somebody would need to develop the computer systems and operate them for thousands of American health care providers. . . .

Universal health insurance coverage would also address economic problems that existed before this downturn began — and that are likely to linger after growth resumes. In our current system, people who leave or lose their jobs often must go without insurance for months or years, and this discourages people from moving to positions where they could be more productive. Most reform proposals call for the creation of pools of insurance coverage that would guarantee access to high-quality, affordable care for people who are self-employed or out of work, increasing their mobility.    

If this coverage focuses on disease prevention and wellness, it could also improve the health, and thereby the productivity, of the workforce. . . .

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