Exterior Motives

Diane Rowland in NEJM (and yes, ya'll get to read it, bless 'em) describes the impact of the recession on the percentage of people without health insurance. You don't need to be a Doctor of Science to figure out that it's probably not good. However, I want to focus on the other side of the dynamic, which is the multiplicative effect on the economy as people lose health care and the states lose revenue to cover the increasing demand for Medicaid.

Contrary to John Boehner and that grumpy old guy -- what was his name again? -- who ran for president, recessions and depressions are not caused by excessive marginal tax rates. They are caused by what is happening to us right now, which is one trigger or another -- such as a burst asset bubble -- withdrawing aggregate demand from the economy and starting a chain reaction. As some people buy less stuff, other people lose their jobs or have reduced incomes, so they buy less, and so on and so forth. And of course businesses cut back on investment as well when they don't figure they can sell more stuff. So that giant sucking sound is economic activity swirling down the bowl.

Health care is the largest single industry, so it has a big potential role in stopping this negative momentum. Even better, it can have strong positive externalities, it provides jobs at every level of skill, and it's comparatively non-energy intensive and has readily policeable environmental costs (though we don't always do as well as we should -- viz all those pharmaceuticals in the water. Uggh.)

As Rowland points out, Medicaid and its extensions to more moderate income people, such as the Children's Health Insurance Program, can be an important automatic stabilizer -- a circuit breaker for depression -- if it can be fully funded by the states. Because these are entitlements, when people lose employer-provided insurance they may be eligible to be picked up by government-sponsored programs, which keeps the health care industry from contracting and so slows the downward spiral. The American Recovery and Reinvestment Act -- known more colloquially as the Stimulus Package -- was hurried through Congress so quickly that most people don't know what's in it other than that ridiculous, wasteful volcano monitoring and beaver management, but in fact, as Rowland says, it "provides $87 billion for a temporary increase in the federal share of Medicaid costs through 2010 and $25 billion in temporary subsidies to assist unemployed families with the cost of their COBRA premiums." Now, that's going to keep people from dying in the streets, which is nice, but it's also going to save a whole lot of jobs. Even better, 0% of it goes to pay for insurance company marketing, although some of it will go to profit and administrative waste.

With a national single payer plan, all that good stuff would happen automatically, every time there's an economic downturn, and it will happen even bigger and better because it will keep 100% of the people 100% insured instead of just helping a little bit the way the ARRA does. That will make economic downturns shorter and shallower and much less damaging. Does that help sell the idea? I sure hope so.