The New Health Dialogue

Credit: saikofish

The Republicans have named their healthcare bill, "Repealing the Job-Killing Health Care Law Act." This is very good news. I am henceforth naming prime rib with creamy mashed potatoes a "weight reducing meal."  I am also going to name watching the Sacramento Kings on television "strenuous cardiovascular exercise."

It turns out, of course, you cannot change the nature of something just by changing its name. And many analysts, the New America Foundation included, have concluded that the healthcare reform bill will create jobs, not destroy them.

Economic analysis, though, is an inherently flexible exercise and a great deal depends on one's assumptions.  The claim that we can be certain that healthcare reform eliminates jobs, though, has no justification. It's not an irrational position, but there is vastly stronger justification for the claim that it will create jobs than that it will eliminate them.

The more an analysis drills down into the actual dynamics of local industries and economies, the more accurate it is likely to be.  Recently, we released an in-depth economic analysis of the impact on healthcare reform on the economy of the state of Colorado that we conducted in conjunction with the Center for Colorado's Economic Future (full report here). Our research team on this project was headed up by Dr. Len Nichols, a respected health economist, now the director of the Center for Health Policy Research and Ethics at George Mason University.  This report, funded by the Colorado Trust and the Colorado Health Foundation, projected that reform would both increase economic activity in Colorado and reduce the rate of growth of healthcare costs.

Specifically, our findings show that:

• State economic output should be nearly 1% higher than it would be without reform and there will be roughly 19,000 new jobs as a result of the coverage expansion, and 
• Families and businesses in Colorado should expect premiums for employer-sponsored insurance to be $1,962 less per year for individual coverage and $3,917 less per year for family coverage in 2019 than they would have been without federal health care reform.

Critically, we incorporate not only the benefits that come from the coverage expansion but also the cost of financing reform.  So the economic growth figures include the drag on the economy of increasing taxes.  Ultimately, these results are a tonic both to those people who claim that healthcare reform will eliminate jobs (it won't) as well as to those who claim that it is going to be an economic panacea that will solve all of our economic woes (which is equally unlikely).  Healthcare reform was necessary to get our economy back on track, but it alone will not be sufficient, in particular, to create the number of jobs needed to return employment to pre-recession levels.

The type of jobs that healthcare reform does create, though, are the key to its beneficial economic impact.  When people have healthcare coverage - through private insurance or public programs - they access more care.  This causes more spending on the healthcare industry, spending that has a very high "multiplier effect" as it circulates through the economy.  At the same time, the cost controlling provisions of healthcare reform, of which there are many, will make this sector of our economy more efficient and, ultimately, lower the rate of healthcare costs growth. 

To learn more about these dynamics and how they will impact the economy of this particular state, please read the full report.  As for me, I'm off to have a "weight reducing meal" and then engage in some "strenuous cardiovascular exercise."