The President's Council of Economic Advisers has completed a new study [pdf] demonstrating, once again, the criticality to America's economy to bring health care costs under control. The report is accompanied by a new full court press by President Obama and his senior advisers, which has included a meeting today with key Democratic Senators in the health care debate.
The report is accompanied by an editorial by Christina Romer, chair of President Obama's Council of Economic Advisers.
Years of diagnosis on the ills of the U.S. health system have produced no cure. Health care expenditures in this country are currently 18 percent of GDP and, without change, will keep rising, until they account for nearly one-third of our total output by 2040. Even with this exorbitant bill, about 46 million Americans lack health insurance coverage today, and this number is predicted to rise to 72 million over the next three decades....
The administration and health industry leaders have pledged to work toward a goal of reducing health care cost growth by 1.5 percentage points per year. And, the Administration is committed to working toward ensuring that all Americans have access to health insurance coverage. If we can achieve and sustain this ambitious rate of cost containment and expand coverage, the results would be significant. For example:
• Impact on income: For a typical family of four, income would be higher than it otherwise would have been by approximately $2,600 in 2020 (in 2009 dollars) and by nearly $10,000 in 2030.
• Impact on GDP: Real GDP would be 2 percent higher in 2020 than it otherwise would have been, nearly 8 percent higher in 2030, and nearly 16 percent higher in 2040. The key source of this improved growth would be increased efficiency in the health sector and increased investment stimulated by a reduction in the government budget deficit.
• Impact on the budget deficit: CEA estimates that slowing the growth of health care costs by 1.5 percentage points would reduce the budget deficit in 2030 by 3 percent of GDP relative to the no-reform baseline.
• Impact on unemployment: Controlling health care cost growth would allow lower unemployment in the short and medium run, without putting pressure on inflation. Employment could be 500,000 higher for a number of years.
• Improvements in economic well-being from greater coverage: We use the best estimates available to quantify the costs and benefits of expanding coverage. Among the benefits we attempt to put a dollar value on are the increased life expectancy that results from access to health care and the decreased chance of financial ruin from high medical bills. We find that the net benefits – the benefits minus the costs – are on the order of $100 billion each year.
• Labor market improvements: By increasing access to insurance coverage and removing limitations on coverage for people with pre-existing conditions, health care reform is likely to increase the labor supply and make it easier for workers to switch jobs and feel confident of their coverage no matter what happens. It will also improve the competitiveness of small businesses by lessening the disadvantage they face in competing with large firms that have lower insurance costs.
In addition, key Democratic Senators met with President Obama at the White House today, in a meeting apparently to strengthen their resolve to enact reform this year.
And it looks like the on-again and off-again cooperation from private stakeholders is sort of on again:
In a letter to Obama yesterday, groups including the AMA, the Chicago-based American Hospital Association and the Washington-based America’s Health Insurance Plans identified as much as $1.7 trillion that could be saved by streamlining administrative procedures, managing diseases such as diabetes and avoiding unnecessary procedures. The AMA said shielding doctors from lawsuits should be part of the plan.
Still, Steve Elmendorf, a Washington lobbyist who represents Minnetonka, Minnesota-based UnitedHealth Group Inc., the largest U.S. health insurer by sales, said the display of cooperation doesn’t mean companies will go along.
“Everybody wants to be at the table now, because they really don’t know what it is yet,” Elmendorf said.
This is the backdrop against which the Senate Finance and Health committees begin to do the real work of hammering out the details of a legislative proposal this week. On that front, there are a few things to keep an eye on. Tomorrow Senators Sanders and Baucus will meet with single-payer activists. Baucus got an earful from his Montana constituents last week in a series of health care town meetings. Whethere Baucus's willingness to meet with Sanders and his single-payer supporters is a sign of being softened up a bit by that criticism and signals at least a willingness to listen, or is just a courtesy provided to a fellow Senator, remains to be seen.