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Rx For The Economy: A Strong Dose Of Health Reform

By now, you've probably heard plenty of pundits explain--some sorrowfully, some not so sorrowfully--that plans for universal health care will have to wait because of the economy. In one popular version of this argument, we can't pursue universal coverage right away because we have to spend what money we have on measures that stimulate growth. And health care reform, this argument contends, wouldn't do that.

But why wouldn't it? On Thursday's New York Times op-ed page, MIT economist Jonathan Gruber argues that health care reform would actually be a good way--no, a great way--to stimulate the economy.

Most proposals for universal coverage envision implementing the components of reform in stages, starting with a federally financed expansion of Medicaid and the State Children's Health Insurance Program. That means more poor people would get health insurance right away. And when poor people have health insurance, Gruber says, two things tend to happen. The first is that they purchase medical goods and services. The second is that they spend more money on other things, since they no longer have to put aside money to pay for medical emergencies. (Gruber's own research has shown this.) Either way, the money is going right back into the economy and promoting growth.

And there's more, as Gruber writes:

Most proposals call for investments in health information technology, including the computerization of patient medical records. During the campaign, for example, Mr. Obama proposed spending $50 billion on such technology. The hope is that computerized recordkeeping, and the improved sharing of information among doctors that it would enable, would improve the quality of patient care and perhaps also lower medical costs. More immediately, it would create jobs in the technology sector. After all, somebody would need to develop the computer systems and operate them for thousands of American health care providers.

Expanded insurance coverage would also drive demand for high-paying, rewarding jobs in health services. Most reform proposals emphasize primary care, much of which can be provided by nurse practitioners, registered nurses and physician’s assistants. These jobs could provide a landing spot for workers who have lost jobs in other sectors of the economy.

Gruber, who is one of the nation's most respected experts on health care issues, goes on to make a point familiar to readers of this space. Reform, he notes, could eventually create a more rational health care system in which we don't throw away so much money on administration, inefficient care, or unnecessary treatments. And less waste in health care means more money for other, more productive purposes.

Here's one, slightly oversimplified way to think of it: Health care reform would help the economy in the short term--by increasing spending on medical care. It would also help the economy in the long term--by reducing spending on medical care. Pretty neat, huh?

--Jonathan Cohn