On Tuesday morning, another economic shoe will drop when the government announces new federal budget projections. Most economists I know shy away from predictions, but here's one you can take to the bank: Whatever the number is, it will be interpreted as a reason to abandon or delay health care reform by pundits and politicians, and not just from the right. This argument's broad ideological appeal, however, signifies less about its intrinsic worth (which is nil) and more about the sorry state of economic reasoning that characterizes policy debates inside the Beltway. Let's run through the reasons why concern over the deficit should not impede the progress towards health reform.
First, and most simply, the one fleshed-out version of health reform that has made significant progress through Congress -- the House reform bill -- fully pays for its expansion of health coverage. That is, the proposed reforms that provide insurance for over two-thirds of the currently uninsured would not add to the deficit. There's a small caveat to this: included in the House bill is an admirable attempt to end a perennial budgetary gimmick that projects steep cuts in reimbursement rates paid to doctors under the Medicare program and then rescinds these cuts at the last moment. Ending this gimmick brings a cost that was in the past constantly disguised. This cost is roughly $239 billion over the next 10 years.
Even if we decide that this $239 billion must be identified as the net "cost" of the House bill, it's worth noting that this amount is roughly 15 percent of the cost of the tax cuts passed during the Bush administration, or roughly 25 percent of the cost of spending on wars in Iraq and Afghanistan to date, or roughly two-thirds of the cost of the first 10 years of the Medicare prescription drug benefit enacted in 2003. None of these policy initiatives came with even a penny of dedicated revenue sources or offsetting savings specified elsewhere in the budget. Despite these more expensive precedents, somehow it's being argued that health reform should be derailed because a bill that fully pays for new health coverage made the mistake of introducing some honesty to the budget process? This sounds like health reform is being held to much higher budget standards than, well, anything else in recent memory.
Second, it's been exhaustively documented that over the long run, when budget deficit fears have some actual validity, it is precisely the cost of health care that drives the deteriorating budget outlook. While it's true that current versions of reform don't provide a silver bullet for solving these long-run cost issues, they do provide a framework that will make cost control possible. Specifically, if the public plan option in the House bill is opened to all comers and if the proposals to give the Medicare payments advisory board genuine power over reimbursement decisions becomes law, then the House bill does indeed open real possibilities for cost-savings in the long-run. These are big ifs, for sure, but the other alternative on the table for cost-containment is simply the status quo -- a proven failure. At some point, we need to begin reorienting the American health system towards achieving cost-savings. The House will not take us all the way there, but at least it's a step in the right direction.
Third, inside-the-Beltway economic reasoning elevates balancing the federal budget above all other policy targets. Calling this just "myopic" would be a compliment. If households followed the rule that current outlays could never exceed incomes, nobody would ever go to law school, medical school, or buy a house. The ability to incur debt for productive investments is a very valuable option. Put simply, even if health reform has no effect at all on closing long-run budget gaps, it should still be pursued. Even if health reform managed only to reduce the growth rate of private health insurance premiums to the rate achieved by Medicare per-enrollee spending, it would make American households much richer in the long run, even without any beneficial effect on the federal budget deficit.
In June, the White House Council of Economic Advisors (CEA) released a report that evaluated the economic impact of reducing the growth rate of health care spending over the next 10, 20, and 30 years. Crucially, the CEA report broke out the economic benefits of this cost containment into benefits arising from federal budget effects versus all other effects. The federal budget benefits of cost reduction are dwarfed by wider efficiency effects -- explaining only 12 percent of the overall benefits of cost containment over the next decade and 28 percent of overall benefits over the next 30 years. In short, even if reform manages to constrain costs enough to push the federal budget towards balance, this will be a very small part of the overall benefits conferred by this cost containment. This is useful to remind ourselves that the economy and the federal budget are very different things -- and it's the health of the economy that should drive policy.
Finally, and most importantly, green eyeshades just have no place at all in current economic debates. The U.S. economy has lost 6.7 million jobs in the past 19 months as private spending (both by households and businesses) has collapsed. Literally the only thing keeping another economic depression at bay has been the very large rise in the federal budget deficit. It should be noted that the lion's share (roughly 75 percent) of this rise in the deficit over the pat year has been essentially mechanical: reduced tax collections and increased mandatory safety net spending driven by the cratering economy -- and not the result of legislation.
Because the economy needed an even bigger boost than this mechanical rise in the deficit allowed, the American Recovery and Reinvestment Act (ARRA) was passed and will add another $260 billion to the deficit in 2009. However, even given this large increase in the budget deficit in 2009 it is almost certainly the case that more public relief and investments will be needed to stabilize the job market in coming years. To bring this back to the health reform debate, enacting health reform and subsidizing coverage expansions without paying for them in the first few years would actually have been the wisest macroeconomic course of action.
Maybe an analogy can help here. Normally, it would be considered a bad idea to dump a bucket of water on your living room rug. When that rug is on fire, however, it's not just a good idea, it's absolutely necessary. Insisting that health reform be fully deficit-neutral in the current macroeconomic environment is sort of like insisting that your pail has a water-tight top on as you pass through a living room that is ablaze: what may be a sensible rule in normal times becomes downright bizarre in times of crisis.
Beltway pundits would do well to repeat the following as many times as it takes to sink in: balancing the federal budget is a tool, not a target. To continue with the analogies, just as a hammer is the wrong tool for many jobs, balancing the federal budget is the wrong tool in the context of virtually all of today's economic debates: it would short-circuit the economic recovery and could derail action on the crucially important job of reforming the health care system. It's time conventional wisdom realized that not every problem is a nail.
Josh Bivens is an economist at the Economic Policy Institute, where he specializes in macroeconomics, social insurance, public investment, and globalization.
Britain began it's Universal National Health Care System immediately after World War II when most of it's buildings lay in bombed out ruins and Britain was incredibly bankrupt.
The Universal National health Care system catalyzed the nation causing economic growth with the training of huge numbers of new doctors and medical personnel and the huge growth of the medical economy.
Universal National Health Care helped lift Britain out of economic collapse. There was no "option".
The time for American National Health Care is NOW BECAUSE we are in an economic depression.
American Universal National Health Care will cause the high wage jobs and taxable business growth economic recovery in America that we so desperately need RIGHT NOW that are now being stifled by the minimal market coverage of private health insurers.
American Universal National Health Care is an economic necessity. Our economic recovery that will be caused by the American Universal National Health Care can not be just an "OPTION."
Vivzizi
see "THE UNIVERSAL INDIVIDUALIZED MEDICINE PLAN"[partII] at :
www.insurancetomorrow.net
see whar real health care reform can mean for this great economic powerful country
The US health care system spends more money at 16% GDP than any country on the planet (Germany is second at 9%) however, ranks 37th in the quality of health care available to the "average" citizen (Costa Rica ranks 36th in quality).
Is there a problem? You betcha there is. It is about priorities, it only took a week and a half for the banks and Wall Street brokerage houses to steal the US Treasury blind and empty the larder. There was no townhall meetings about starting a war of choice in Iraq and Afganistan. And now, it is looking more and more like Health Care Reform will go the way of the Bush Income Tax Reform, a giveaway to the richest 10%, Energy Reform which was a giveaway to the oil companies and the Medicare Prescrption Drug plan which was a giveaway to the drug companies. Public financing of elections is the only way to take the For Sale sign off the White House and Congress. You can't do the public business on the basis of bribes.
This is completely false. The real reason is the federal reserve. The fed has put trillions onto their balance sheet, is buying fannie and freddie paper which is keeping mortgage rates artificially low, has dropped interest rates to zero to banks can make a lot of money on loans, supplied cheap liquidity to the market when needed, and has been backing debt. Without all these measures the economy would be substantially worse than it is now, even if the federal govt spent several hundreds of billions more.
As long as the Central Banking System control our money they control our Government.
Passing laws like the Government Option and eventually National Health Care allows Americans to help each other fight another day so one day we can reclaim our country and our Government from these Paracites.
We must learn from Eroupe they have been dealing with Central Banker 300 years longer than we have.
With each recession more and more people go into poverty while the speed at which these corrections or recessions are faster and will be more harmful each time they hit. If we do not act in our own citizens best interest we lose.
How do you feel about Economic Slavery for your childen and grandchildren ??
The list goes on and on.
Also the BILLIONS of dollars paid into Social Security by Milti Millions of Americans who never lived to receive one dime of Medicare or Social Security. It now belongs to the Central Banks pledged as security on Debt.
The Federal Reserve is nearly the only one buying the Debt the U.S. Treasury issues.
Next week the Bank of America is set to sell $1,999 Billion in those AAA Investments everyone know is grabage who do you think the buyer will be ?
So hundreds of thousands of Home loans will now be transfers to the Fed. and the Central Bankers.
Claiming their spoils.
Therefore, we will never balance the budget and any "surplus" is not really a surplus.
Therefore, we should spend our debt-money on things that are important to us. Since we seem to have no problem coming up with money when the banks or the military needs it, why would we have a problem when it comes to the health and well being of all Americans? Perhaps it can even be included in the defense budget, since diseases are like little armies of terrorists, those tyrants.
It's not about money anymore. This is about What Is Important To U.S. So, as an organized group of people calling ourselves "Americans," what shall we do with our collective power? What important things shall we commit our resources to?
This bill is only self-funding based on taxes on more expensive health insurance. If this program "succeeds" over time, it will lower the price of all health insurance, thus decreasing the revenue on which it depends, and increase the number of people moving from private to public options, thus increasing the cost. Like all government programs, it's financial failure is built-in.
The arguments put forth by proponents depend on some magical forces that will control costs. The only tool that will work here is price-fixing. The government will decide how much health services are worth. Wherever and whenever this is tried, it has led to shortages and a decrease in quality and choice. See Cuba and toilet paper.
Are you aware that the claim you make about these other countries healthcare systems ignores the fact that this country is outperformed by countries (like Cuba) in most issues dealing with public health? You would think that that would be enough to shame you from even making such a shortsighted argument.
Even Chile has the USA beat they are at number 33 in the world and the USA is 37th.
Read a little will ya.
From the Congressional Research Service - May, 2009
"In a January 2009 update, the Congressional Budget Office projected that additional war costs for
FY2010-FY2019 could range from $388 billion, if troop levels fell to 30,000 by 2011 to $867
billion, if troop levels fell to 75,000 by about 2013. Under these CBO projections, funding for
Iraq, Afghanistan and the GWOT could total about $1.3 trillion or about $1.8 trillion for FY2001-
FY2019. This report will be updated as warranted."
Think about it. What are our priorities?
Make raising taxes even in the hardest time diffucult for Congress even for a war.
But then go to war and cut taxes was the Bushie way.
In 1985, Bezmenov told us that our enemies were working hard at brainwashing us (dumbing us down) and would succeed if we did not defend our principles: http://www.dailymotion.com/video/k6KUDv1wzraWhwlBt1
The dumbed down are obviously unable to understand that Obamacare will further contribute to “the American descent into Marxism,” which “is happening with breath taking speed, against the back drop of a passive, hapless sheeple…” http://english.pravda.ru/opinion/columnists/107459-american_capitalism-0
Fortunately, as we can see in the town halls, most Americans have not been dumbed down and they will do whatever necessary to defend themselves, their children and grandchildren from the abomination of Obamacare.
Obamacare has nothing to do with improving or expanding health care. It's just another power grab that will further destroy our health care, destroy our economy, steal money from our children and grandchildren, multiply our deficit, and enslave us through lies, manipulation, intimidation and coercion.
No wonder the Russians are gloating: “The final collapse has come with the election of Barack Obama. His speed in the past three months has been truly impressive. His spending and money printing has been a record setting, not just in America's short history but in the world. If this keeps up for more than another year, and there is no sign that it will not, America at best will resemble the Wiemar Republic and at worst Zimbabwe. http://english.pravda.ru/opinion/columnists/107459-american_capitalism-0
Fortunately, as we can see in the town halls, most Americans have NOT been dumbed down and they will do whatever necessary to defend themselves, their children and grandchildren from Obamacare and Marxism.
For example, a VAT tax instead of a corperate income tax would encourage exports (which would only be taxed on the wholesale price, instead of the retail price under an income tax system), and discourage inports (which would actually be taxed, instead of dodging US taxes because they are products of foreign firms).
Replacing part of our income tax with a carbon tax would replace a disincentive to work with a disincentive to pollute.
As for being broke, cancel all weapon system development and you would get rid of half the deficit...
7 out of every 10 bankruptcies are due to medical bills, 75% of those bankruptcies were people that had health insurance. The health care system as it is, it's killing our economy. If no reform is done by 2020 premiums and costs will double. Wages remain flat, too many people are unemployed and will have to spend years digging out of that debt.
My God people...do the freaking math. The government can administer healthcare cheaper, people won't be denied coverage because it's not a private machine driven by profit. I'm getting so sick of people screaming about the cost when in the long run it will help our economy and save money.
What benefit do we get from that spending?
So, in the best scenario possible, we have 7% to work with.