President Obama's Path to Greatness: Health Care As Stimulus

President Obama won an enormous victory tonight, that will change the country. But this is just the beginning as he said in his victory speech.

President Obama has the opportunity to establish himself as one of the truly great presidents in his first days in office. He can take advantage of the current economic crisis to announce plans to jump start national health care insurance. Extending health care insurance can be an effective stimulus that will provide an immediate boost to the economy.

More importantly, it will provide the same access to health care that people in other wealthy countries have long taken for granted. For this accomplishment, President Obama will rank alongside Presidents Roosevelt and Lincoln as one of the nation's truly great presidents.

The backdrop is straightforward. Economists from across the political spectrum are now calling for a large stimulus package to limit the economy's decline and the rise in unemployment. The consensus is in the range of 2.0-2.5 percent of GDP, or $300 billion to $400 billion a year.

This level of agreement among economists is encouraging, but the reality is that it is difficult to effectively spend $300 billion to $400 billion a year on short notice. There are some no-brainers that belong in any stimulus package: aid to state and local governments, extended unemployment benefits, and extra money for food stamps and home heating oil assistance. This is money that will be quickly spent, boosting the economy, while helping those hit hardest by the downturn.

A stimulus should also include increases in infrastructure spending, which will come about by moving plans forward for projects already on the books. There should also be a substantial green component, involving retrofitting homes, businesses and other buildings, which will reduce our energy use.

However, after we get through this list, the sum total for the stimulus package is probably still in the neighborhood of $150 billion a year, at best half of the targeted sum. This is the gap that will be filled by extending health care coverage.

As a basic outline, the government can give a substantial tax credit (e.g. $3,000) to employers who cover workers for the first time in 2009 and 2010. It can also offer a tax credit covering most, or all, of any additional payments by employers who increase their coverage.

This means that an employer who picked up the workers' share of insurance payments, or got a better plan, would have much of the cost reimbursed by the tax credit. Credits can also be given to individuals who are either self-employed, unemployed, or not otherwise covered through their employer.

If 20 million workers get coverage through this tax credit, that would cost $60 billion. If another 60 million get an average of $1,000 in additional health care benefits, this would cost another $60 billion. If we also throw in funding to reduce the health care burden for Medicare beneficiaries, for example by $1,000 each, this will cost roughly $40 billion. The total cost would be $160 billion a year, a reasonable target for the stimulus package.

At the same time that this health stimulus is enacted, we should open up the Medicare system, allowing all employers and individuals the option to buy into a Medicare-type plan. This is important, because a well-working public sector plan will be important to controlling costs over the long-term.

After 2010, the tax credits would be cut back, with the goal being a system of subsidies that pay the full cost for low-income people, but phase out at higher income levels. It will also be important to use the Medicare-type plan and other tools to squeeze waste out of the system, since controlling health care costs is essential to sustaining a healthy economy over the long-term.

Extending health care coverage in this way is effectively eating dessert before dinner, but this is exactly what we want to do to counter the recession. It is important that we spend money now to boost the economy. We will be getting double-value if this stimulus can be spent usefully toward meeting a longstanding goal, like providing national health care insurance, rather than just buying things at the mall.

Fixing the health care system so that costs are effectively contained will be a long and difficult political battle. Powerful interest groups, like the insurance and pharmaceutical industries will use all their power to obstruct this effort. The health care system's waste is their profit.

However, we should be reassured by the fact that every other country has managed to more effectively contain their costs. Average per person health care costs in other wealthy countries are less than half as high as in the United States, and they all enjoy better health care outcomes.

Over the long-run the task of containing health care costs is clearly doable. The question for President Obama now is whether he is prepared to take the big leap toward being a truly great president. This opportunity may not come again.

Read more reaction from HuffPost bloggers to Barack Obama's victory in the 2008 presidential election

Comments

[4all]

Take a look at the big picture. Today"s health insurance industry is BIG BUSINESS. The companies make huge profits and their CEOs make millions, while the rest of us, employers and workers alike, face skyrocketing healthcare costs, impossible bureaucracy, and life-diminishing insurance denials.

HEALTH INSURANCE COMPANY PROFITS IN 2007:

1. UnitedHealth Group -- $ 4,654 BILLION. UnitedHealth Group owns Oxford, PacifiCare, IBA, AmeriChoice, Evercare, Ovations, MAMSI and Ingenix, a healthcare data company

2. WellPoint -- $ 3,345 BILLION. Wellpoint owns Blues across the US, including Anthem Blue Cross Blue Shield, Blue Cross Blue Shield of Georgia, Blue Cross Blue Shield of Wisconsin, Empire HealthChoice Assurance, Healthy Alliance, and many others

3. Aetna Inc. -- $ 1,831 BILLION

4. CIGNA Corp -- $ 1,115 BILLION

5. Humana Inc. -- $ 834 million

6. Coventry Health Care -- $626 million. Coventry owns Altius, Carelink, Group Health Plan, HealthAmerica, OmniCare, WellPath, others

7. Health Net -- $ 194 million

We could use the insurance company profits to provide healthcare for millions of people, and to pay primary care physicians adequately for their work. Yet we need integrity by the payers and not greed and corruption.

Get the insurance companies OUT of healthcare. We need a SINGLE-PAYER system NOW.

HEALTHCARE SHOULD BE A RIGHT, NOT A BUSINESS.

FOR MORE INFORMATION, SEE: http://www.healthcareforamericanow.org/
and http://www.insurancecompanyrules.org/

[Paul A. London - Huffpost Blogger]

Dean Baker is right. Healthcare spending could be stimulative. Baker, however, wants to cover more people without modernizing a backward system. A blue ribbon panel in 1929 said that doctors should practice in groups to coordinate care, but 80 years later care is rarely coordinated. The Institute of Medicine said in 1991 that "doctors practice in isolation" and they still do. I have high option Blue Cross/Blue Shield. A month ago I showed my internist a swollen finger. He sent me to an X-ray lab and a rheumatologist where I completed forms the internist had already. The rheumatologist, who had not received the x-rays, sent me to an orthopedist who sent me back to the x-ray people for an MRI. All this costs BC/BS a ton because the doctors and labs communicate if they do at all using 90 year old technology, the telephone. The Institute of Medicine said that doctors should share computerized patient records, yet most Americans have never seen one so few know how transformational they are. U.S. medicine is artisanal. Getting more people covered doesn't change that. Better stimulus spending would pay for computerization, coordination of care, high speed wiring of all medical buildings, and competition between doctors based on data from computerized records that show which treatments work and which doctors get the best results for the least money, patient suffering and inconvenience. Pouring money down this rat hole without modernizing the system is like tossing money from airplanes.

[LanguagePolice]

Dean, I hope O invites you, and Paul Krugman, and whoever else you think should go, to lunch and a working group very very soon.

[TheAntiSheep]

Heard last night that the pharmaceutical companies are looking at significant drops in their profits right now because people are being forced to cut back on their medications due to rising costs, lost health insurance and the overall financial crunch.

Perhaps the whole rotted-out system is about to collapse under its own weight. I wonder if the smarter thinkers in big pharma might be considering the ways in which universal healthcare might benefit them, too?

Americans need to turn away from the lies they've been told about universal coverage, and realize that when everyone else in the developed world does things differently, maybe we're the ones who have it wrong.

[Bobbi112947]

Yes.He.Can.

[jerrypl]

I have been reading Dean Baker for years. This brilliant economist is a true populist. His ideas on health care, the need for a trickle UP stimulus package, and his plan on how to protect failing homeowners need to be driven by Barack Obama. I hope Dr. Baker get the ear of Obama. I know his colleague, Jared Bernstein does. He, Naomi Klein, and others need to have center stage NOW!

http://eye-on-washington.blogspot.com

[workforcedev]

You're right about using health care as the basis for a meaningful stimulus package, but you've left out an important part of the equation - rebuilding America's health care infrastructure. There are far too many rural counties with few or no health care providers, and big cities that are losing hospitals and clinics almost on a daily basis. Look at the VA medical care system. On top of that we have a major shortage of health care workers in the US and worldwide.

We need a New Deal type program that invests in training health care workers and builds health care facilities. The program should distribute those workers and facilities to the communities where they are needed most.

That plus your health care coverage plan will stimulate the economy while meeting some of our most basic needs.

[deliriousgod]

it is completely do-able to insure everyone or provide government-run healthcare to everyone but the one thing that is required is the demise of 'commodity'-care. As long as huge profits are the goal and possible for insurance companies, healthcare will continue to be what it is for America: its next catastrophe. It is Hurricane Rita- Iraq War- Baillout Crisis all-in-one as long as Insurance companies are controlling healthcare.

[Sparty1]

I agree with you wholeheartedly. I hope that that's his greatest achievement. Hopefully it happens with the new alignment of the congress. Hopefully, there will be some left leaning Rethugs that will help make that happen.

[sunny123]

Sounds like you have been thinking and planning. I hope you get this information to our President Elect. It sounds like a plan to me. We are all going to have to work to make this work. President Obama can't do it by himself. He definitely needs people like you who have good ideas and plans. Keep it up. GO OBAMA!

[BarryS]

i doubt Obama's children's children will see health care reform. the repubs will see to that.

[nancyleestover]

Tonight I seen history made and i'am 61 and I felt pride and I was reminded that when i was 15 i Iseen a dream I had of JFK fade but tonight I did feel such a great feeling of pride in country.
Iam glad we have no Palin in office that to me was a joke and we need to mend and make the USA agreat place to be and restore the FAITH back to our great country.

[LanguagePolice]

Remember that Ted Kennedy "passed the torch" to O at the convention. I was in tears when that happened.