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Diane Francis

Diane Francis

Posted: March 22, 2010 05:28 PM

Health Care Reform Is Smart Economics

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On Sunday the United States finally joined the ranks of civilized nations by passing a commitment to look after everyone's health care needs.

Of course, some marked this as the beginning of a Soviet-style, Canadian, socialist, commie health care system. Some threatened to derail it. And radio hate-host Rush Limbaugh threatened to leave the American health care system if this is passed and go to Costa Rica. Does he know that Costa Rica has a government medical system like communist Kanada's?

Amusement aside, the legislation benefits millions of people as well as the economy because universal health care is not just smart and fair social policy -- it is also smart economic policy.

A kickstart to the economy

For instance, workers in Canada, Europe or Japan who lost their jobs lost income. But, until now, unemployed American workers face financial ruin if sickness strikes them or their families because they lack health care coverage. Bridge coverage has been available but unaffordable for anyone but the wealthy. Worse yet, if a major illness was diagnosed during unemployment, a worker became unemployable, bringing about a life sentence of poverty.

The catastrophes disappear under these reforms. Consumer spending, which ground to a halt in the United States, can increase as people realize they don't have to set aside huge amounts to pay for a catastrophic illness, do without necessities to pay medical bills or go bankrupt because of an appendectomy.

That's good news for Canada and other countries that rely somewhat on a successful U.S.
It's also good news for America's economy in the long run because Washington now has oversight over doctors and insurance companies for the first time ever. This means that the second health-care issue -- cost -- can finally be addressed. America's biggest competitive advantage is the gouging by health-care monopolies which over-charge because they can.

Aim high America

Cost-cutting, down to Canadian and European levels, should be the next target. The Americans spend 16% of their GDP on their health care, covering only half the population adequately, compared with the Canadian system which covers everyone for 10% of GDP. Then there's the 3% of GDP involving U.S. litigation to cover medical bills which will now diminish because most are covered.

Gouging is obvious. The health insurance lobby makes more profits in the U.S. than Canada pays out in health care benefits for 34 million people. The pharma industry lobbied for laws that made volume discounts illegal which is why Americans pay up to twice as much for U.S. drugs than do Canadians or Europeans or Japanese. Americans pay too much for doctors, tests and hospital beds.

Republicans may pick off a few seats in the fall over this, but this is legislation that will concretely benefit millions -- including their own rank and file as well as the economy -- and last. As Obama's advisor David Axelrod said. "This issue only worked well for the Republican Party if it failed to pass. They wanted to run against a caricature of it rather than the real bill. Now let them tell a child with a pre-existing condition `we don't think you can should be covered'," he said in an interview.

Finally, Washington did something right.