White House Council Report Sees Economic Boon in Health Reform
Reducing the annual growth rate for health care spending from 6% to 4.5% would provide broad economic benefits, such as creating about 500,000 jobs each year and increasing annual income for a family of four by about $2,600 over the next 10 years, according to a White House Council of Economic Advisers report released Tuesday, the Washington Post reports (Connolly/Montgomery, Washington Post, 6/2).
According to the report, "Health care expenditures in the United States are currently about 18% of [gross domestic product], and this share is projected to rise sharply. If health care costs continue to grow at historical rates, the share of GDP devoted to health care in the United States is projected to reach 34% by 2040."
The report found that real gross domestic product would be increased by more than 2% over the next 11 years and by nearly 8% over the next 21 years through health care cost-containment proposals supported by President Obama.
The report also states that unemployment would be reduced by one-quarter of a percentage point for "a number of years" and that uninsured people would have access to more affordable coverage (Young, The Hill, 6/1).
Without such cost reductions, the number of uninsured could rise to 72 million by 2040, according to council Chair Christina Romer. She said, "The net benefit minus the cost (of insuring the uninsured) is about $100 billion a year" (Reuters, 6/1).
Romer also said, "If we don't do this, we're going to be facing a huge mess in 30 years. The nightmare scenario is getting closer" (The Hill, 6/1).
The report advocates "genuine health care reform" but does not indicate specific policy proposals that the projections could be based on, although it includes language suggesting expanded coverage.
Romer said, "There is no way that we can expand coverage if (costs) are not under control," adding, "Expanding coverage is part of the way that we can get the slowing of the growth rate of health care costs."
Romer noted, "How all of this will play out is unknown" (Haberkorn, Washington Times, 6/2).
House Minority Leader John Boehner (R-Ohio) said, "This report is nothing more than smoke and mirrors. Everyone agrees that reducing the cost of health care would benefit our economy, but the administration hasn't offered a credible plan to do so without raising taxes or rationing care."
Independent analysts noted that it is unknown whether a broad expansion of coverage, which would carry significant upfront costs, could actually achieve such a reduction in spending.
In addition, White House economists acknowledge that reducing spending growth by 1.5 percentage points would be "probably near the upper bound of what is feasible" (Washington Post, 6/2).
The council's report is on its Web site (.pdf).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.