THE BLOG
01/22/2008 12:26 pm ET Updated May 25, 2011

The Economy, Health Care and Presidential Politics

It doesn't take a Nobel laureate to know that the national economy is in trouble. But what may be less clear is how much the nation's health care crisis both exacerbates and will, itself, be worsened by growing economic troubles. The leading two Democratic presidential candidates get this, but only one has the right prescription.

Whether we've already satisfied the technical criteria of an official recession -- or are about to -- is immaterial to most middle class families. What they know is that prices are rising rapidly heating oil and college tuition, that mortgage defaults are rampant and that people having trouble finding work at a decent wage. What's more, health care costs continue to rise well above wages, benefits are being substantially cut back by many insurers and retirees increasingly face complete loss of health insurance coverage. So precisely how does the current health care crisis play such an important role in the current economic downturn?

Let's start with family economics. The hard reality is that the cost of health care, like the rising prices at the gas pump, adds substantially to the severe economic pressures already being faced by many families. In fact, between 2000 and 2007, health insurance premiums for the average family grew by 98% compared to only a 24% rise in wages over the same period. Similarly, out of pocket costs, that is to say deductibles and co-payments, have also risen dramatically.

And on a macro level, without aggressive efforts to contain cost growth and improve value, national expenditures for health care, now over $2 trillion per year, are predicted to reach $3 trillion in 2010. National health care gluttony (expensive care without concomitant improvements in lifespan or health status) simply drains money that could otherwise be used to support improving education, job development, retraining for the unemployed and so forth.

Employers, too, face some difficult realities. High costs of health care influences decisions about retaining or creating new employment opportunities here in the U.S. versus moving the business out of the country. Alternatively, many companies simply drop health coverage for employees altogether. Seven years ago, 57% of small businesses with less than 10 employees provided health insurance; last year that number dropped to 45%.

Finally, as people are dropped from existing health care plans and costs of coverage continue to rise, more and more people remain or become uninsured -- depending on "uncompensated care" from hospitals and doctors when serious illness or accidents occur -- as they inevitably do. This, of course, exacerbates an unhealthy cycle of cost-shifting from the uninsured to the insured, raising premiums and increasing the likelihood that even more people will become uninsured.

The fact is that we will not be able to "fix" the economy without thoughtfully and comprehensively addressing our health care system based on several key principles. First, fixing the health care crisis will necessitate participation and contributions of all players and users of the health care system including insurance and pharmaceutical companies, health care professionals and citizens. Second, we have to invest more in wellness, disease prevention and controlling chronic illness. Third, everyone must have health insurance coverage. Obviously, to make that premise even possible, costs of coverage need to be brought under control and reduced.

In the back and forth on these issues between the two leading Democratic candidates, Hillary Clinton and Barack Obama, there has been an ongoing debate around the proposition of requiring every citizen to have health care coverage. Clinton says it's essential that we're all in -- she calls it part of the "shared responsibility" necessary to attain meaningful health system reform; Obama says let's just make health care affordable and people will buy it.

But virtually every independent analyst points out that the lack of an individual responsibility provision in Senator Obama's proposal will leave a minimum of 15 million Americans still without coverage, making his plan a classic non-starter in terms of being able to really reduce costs. The problem is that with millions of people still depending on emergency rooms and charity care, paid for by tax dollars or increasing premiums for those who have coverage, we'll all continue paying what amounts to a hidden, but substantial cost-shifting tax.

Maybe Senator Obama's advisers convinced him not to suggest required coverage for political reasons, or perhaps they don't appreciate the consequences of leaving so many people out of the system. In either case, failing to propose required coverage for all Americans is a fatal flaw in his proposal. Hillary Clinton's perspective, on the other hand, reflects a far deeper grasp of the health care challenges and solutions that must be addressed in the first term of the next administration.

Speaking of advisers to the Illinois Senator, I assume that one of them is egging him on to keep repeating some revisionist historical myths about Clinton's health reform task force that tried, in vain, to create a universal affordable health care system. Obama keeps saying that the 1993 process was veiled in a mysterious secrecy, without the benefits of review and input by doctors and consumers. The fact is that hundreds of practicing doctors, academics, nurses and every existing medical organization and specialty society were involved throughout the review process. Same goes for consumers and advocacy groups of all perspectives. How do I know? I was there, as vice chairman of the Health Professionals Review Group.

Bill and Hillary Clinton's health care plan went down because some members of Congress felt usurped by the new president and his competent wife, and because external communications about the plan to the media and the public left a lot to be desired. Perhaps most of all, proponents of the plan were overwhelmed by a massive PR attack planned and executed by some of reform's most rabid opponents.

Those were extraordinarily frustrating times when a lot of health reform advocates retreated, saying it would be 20 years and a good deal more suffering before meaningful change in the health care system would be back on the political table. (As it turns out, though, Hillary was back in 1997, working with Congressional leaders on both sides of the aisle to pass a new program that has provided health insurance coverage to the families of the working poor.)

Still, if the Clintons' original plan, proposed in the dawn of that first administration, had succeeded, every American would have healthcare today and costs of coverage would have been long ago under control. Maybe it wasn't a perfect plan and maybe it wasn't sold well, but one thing's for sure: an economy-busting health care crisis would not be on the minds and in the pocketbooks of voters in November 2008.