Health care reform would aid economy
By: Christina Romer
Issue date: 6/11/09 Section: Voices
- Impact on the budget deficit: CEA estimates that slowing the growth of health care costs by 1.5 percentage points would reduce the budget deficit in 2030 by 3 percent of GDP relative to the no-reform baseline.
- Impact on unemployment: Controlling health care cost growth would allow lower unemployment in the short and medium run, without putting pressure on inflation. Employment could be 500,000 higher for a number of years.
- Improvements in economic well-being from greater coverage: We use the best estimates available to quantify the costs and benefits of expanding coverage. Among the benefits we attempt to put a dollar value on are the increased life expectancy that results from access to health care and the decreased chance of financial ruin from high medical bills. We find that the net benefits - the benefits minus the costs - are on the order of $100 billion each year.
- Labor market improvements: By increasing access to insurance coverage and removing limitations on coverage for people with pre-existing conditions, health care reform is likely to increase the labor supply and make it easier for workers to switch jobs and feel confident of their coverage no matter what happens. It will also improve the competitiveness of small businesses by lessening the disadvantage they face in competing with large firms that have lower insurance costs.
As we know from past failures, the process of achieving comprehensive health care reform will not be easy. Controlling cost growth cannot just be a lofty goal, it must become a hard reality. To do this, we will need reforms that emphasize quality over quantity, patient involvement, and reward prevention and wellness. The evidence suggests that up to 30 percent of health care costs, or about 5 percent of GDP, could be saved without compromising health outcomes in the United States.
The bottom line of the CEA report is that doing health care reform right is incredibly important. If we can put in place reforms that slow cost growth significantly and expand coverage, the benefits to American families, firms, and government budgets would be enormous.
To put it simply, good health care reform is good economic policy.
- Impact on unemployment: Controlling health care cost growth would allow lower unemployment in the short and medium run, without putting pressure on inflation. Employment could be 500,000 higher for a number of years.
- Improvements in economic well-being from greater coverage: We use the best estimates available to quantify the costs and benefits of expanding coverage. Among the benefits we attempt to put a dollar value on are the increased life expectancy that results from access to health care and the decreased chance of financial ruin from high medical bills. We find that the net benefits - the benefits minus the costs - are on the order of $100 billion each year.
- Labor market improvements: By increasing access to insurance coverage and removing limitations on coverage for people with pre-existing conditions, health care reform is likely to increase the labor supply and make it easier for workers to switch jobs and feel confident of their coverage no matter what happens. It will also improve the competitiveness of small businesses by lessening the disadvantage they face in competing with large firms that have lower insurance costs.
As we know from past failures, the process of achieving comprehensive health care reform will not be easy. Controlling cost growth cannot just be a lofty goal, it must become a hard reality. To do this, we will need reforms that emphasize quality over quantity, patient involvement, and reward prevention and wellness. The evidence suggests that up to 30 percent of health care costs, or about 5 percent of GDP, could be saved without compromising health outcomes in the United States.
The bottom line of the CEA report is that doing health care reform right is incredibly important. If we can put in place reforms that slow cost growth significantly and expand coverage, the benefits to American families, firms, and government budgets would be enormous.
To put it simply, good health care reform is good economic policy.
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