SHOULD OBAMA REFORM HEALTH CARE NOW?

Yes: Program will stimulate economy

By MARK WEISBROT

Washington —- 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, 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 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 just passed.

Fortunately, this package included $87 billion for Medicaid payments to the state governments, $25 billion toward 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. 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 comparable insurance. Individuals without insurance could buy into the public system, and the government would subsidize these payments so that they would be affordable for low-income households and those outside the labor force.

The White House estimates that their 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.

Big as it may seem, the $787 billion stimulus bill amounts to less than 2.7 percent of gross domestic product. This is not nearly enough to counteract our recession: The Congressional Budget Office estimates the output gap —- how much output is below the economy’s potential —- at $2.9 trillion over the next three years.

Besides saving thousands of lives, health care reform has another huge advantage: It can drastically reduce future deficits.

The 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 finances about half the nation’s health care costs.

We spend about twice as much per person on health care as other high-income countries, and yet have worse health outcomes, including life expectancy and infant mortality.

The economic reason for this failure is our system of private insurance and powerful monopolies is more wasteful and inefficient than the systems of other developed countries.

Insurance companies spend 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.

No: Plan will stifle choice, innovation

By GRACE-MARIE TURNER

Alexandria, Va. —- President Obama’s plan for new taxpayer-funded health plans will stifle competition in the health sector and leave doctors and hospitals more beholden to the demands of politicians and government bureaucrats than to the needs of patients. More government is not the answer.

Medicine is a scientific process that is constantly evolving to create new treatments, new surgical techniques and new drugs, devices and technologies. America leads the world in medical advances because we value and reward innovation.

Countries that centralize decisions over health care and coverage stifle medical progress as doctors and hospitals respond, not to patients, but to the latest bureaucratic and political dictates.

In Britain, for example, politicians were getting pressure from constituents because hospital emergency rooms were so crowded that patients were left on gurneys in hallways awaiting care, sometimes for days. Politicians told the hospitals this had to stop and that they had to admit patients faster.

The response of some hospital administrators: Take the wheels off the gurneys because they then fit the definition of a “hospital bed.” The patients were no better off, but the statistics looked better to the politicians.

Europe lags behind the United States in medical advances, largely because the government controls payments and often refuses to pay, especially when it comes to new medicines that are proved to save lives.

We are veering down this same path. President Obama has signed legislation that creates a new federal health board in which 15 government officials will decide what medical treatments are good or bad. It’s only a matter of time before payment policies follow their dictates.

The president also envisions creating a new government health insurance plan for working-age Americans. While this initially may seem appealing, it could actually be the tipping point in government dominance of our health sector.

This plan would “compete” with private plans. But it would have federal policing and price-control authority, would benefit from government subsidies and could change the rules of the game to make sure it wins in the marketplace. Private insurance would not be able to compete on this uneven playing field, and soon Americans would have only the “choice” of this government plan.

A better idea is to provide a climate friendly to innovation and to offer new federal subsidies to help the uninsured purchase the private coverage of their choice. This could turn us toward a properly functioning market in the health sector so that doctors and patients, rather than politicians and bureaucrats, control medical decisions.

This decade has seen advances in making care and coverage more affordable, including convenient and affordable walk-in retail health clinics, TelaDoc phone access to physicians, and innovative health insurance offerings coupled with wellness and prevention plans.

We need more of this innovation, and we need fewer bureaucratic programs that are slow, rigid, unresponsive and rule-driven.

But if Congress and the Obama administration have their way and continue down this path, we will lose the dynamic creativity of the marketplace that can respond to the needs and demands of consumers and get us to faster-better-cheaper medical care and coverage.

> Grace-Marie Turner is president and founder of the Galen Institute, which is funded in part by the pharmaceutical and medical industries.