How We Can Kick-Start the Economy, Save Lives, Give Working People a Raise and Turn a Deficit into a Surplus

It won't make you better looking, stop climate change or result in world peace, but progressives in Congress are pushing a bill that would prove a cure for much of the economic pain we're suffering. If passed, it would save lives, make American companies more competitive, put more cash in our pockets and turn those deficits everyone's obsessing over into surpluses as far as the eye can see.

This week, Senator Bernie Sanders, I-Vermont, and Rep. Jim McDermott, D-Washington, introduced the American Health Security Act of 2011(S. 915 in the Senate and HR 1200 in the House), a bill that would create a state-based system similar to Medicare but open to Americans of all ages.

“The United States is the only major nation in the industrialized world that does not guarantee health care as a right to its people," Sanders said at a press conference announcing the measure on Capitol Hill. "It is time that we bring about a fundamental transformation of the American health care system. It is time for us to end private, for-profit participation in delivering basic coverage."

“The best way to reduce costs and guarantee coverage for all is through a single-payer system like Medicare,” said McDermott. “This bill does just that -- it builds on the new health care law by giving states the flexibility they need to go to a single-payer system of their own. It will also reduce costs, and Americans will be healthier."

According to Sanders' office, the bill would “provide federal guidelines and strong minimum standards for states to administer single-payer health care programs.” Sanders represents Vermont, which is poised to enact the nation's first Medicare-for-all system. If it gets there, the state is projected to lower its healthcare costs by 12 percent by 2018, while covering everyone. The California legislature is considering a similar proposal.

There's no question enacting Medicare-for-all at the federal level will be a difficult lift, politically. Yet, as Laura Flanders noted in the Nation, “two years ago, [Vermont activists] were told that it was not politically possible to pass single-payer legislation, but they didn't take no for an answer.”

If ever there was an uphill battle worth fighting and winning, this is it. Here are some of the things that would happen were we to enact a Medicare-for-all system in the United States.

It Would Save Lives

When the Affordable Care Act is fully implemented, it will provide insurance for around 30 million Americans who currently lack it. The bad news: the Congressional Budget Office estimates that 23 million will remain uninsured.

A 2007 study conducted by researchers at Harvard University estimated that 45,000 people die every year in the United States from problems associated with lack of coverage. The study found that “uninsured, working-age Americans have a 40 percent higher risk of death than their privately insured counterparts,” even “after taking into account socioeconomics, health behaviors, and baseline health.”

To put that number in perspective, 47,000 GIs died in during the 12 years of conflict in Vietnam.

It Would Turn Deficits into Surpluses

The Center for Economic and Policy Research has a handy tool that allows you to project what the federal deficit would look like going forward if we spent the same amount on health care per person as any of the 35 countries that enjoy longer average life expectancies than we do.

Plug in Australia's per capita spending, and you get the deficit down to zero within a few years; select the spending levels for Chile or Costa Rica – again, both with longer average life expectancies – and you see surpluses almost immediately. By 2020, we'd be taking in around $500 billion more than we spent, which could be used for all sorts of things, including tax cuts if you're so inclined.

It Would Make Our Domestic Firms More Competitive

Conservatives are always telling us that our regulations and first-world wages – anything minimally progressive, actually -- are forcing U.S. companies to send jobs overseas. But what about health-care costs?

Here's what we pay to cover a person's health care, along with that paid by some of our leading economic competitors:

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(click for larger version) 

According to the Kaiser Family Foundation, “the issue [of rising health-care costs] is particularly acute in the United States, which not only spends much more per capita on health care, but also has had one of the highest spending growth rates.”

During the debate over health-care reform, economist Josh Bivens of the Economic Policy Institute wrote that shifting health care from the insurers "will pay off big for American families in the form of lower premiums, copays and space for wage growth."

Bivens explained that "health care is an area where the more costs are loaded up on the federal government, the more efficiently care tends to be delivered overall." He pointed out that although the U.S. spends far more than other advanced countries on health care, far fewer of those dollars are in the public sector, and suggested that the difference is a major reason why we get far worse results than other wealthy countries (in terms of access, life expectancy at birth, our chances of living until age 60 and most other meaningful metrics).

To illustrate the savings built into public-sector health spending, he went on to cite an analysis by the Lewin Group of competing approaches to reform. The results are summarized in this graphic:

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(click for larger version)

On the left, was Rep. Pete Stark's, D-California, proposal for a Medicare-for-all, single-payer system. As you can see, while it extended coverage to everyone -- unlike the other approaches – it was the only one studied that would also result in an overall reduction of health-care spending.

In the middle is a hybrid, like the “public option” that was proposed, and eventually defeated, during the debate over the Affordable Care Act. The right column shows the impact of Sen. Mike Enzi's, R-Wyoming, boilerplate conservative proposal based on offering tax cuts to those who purchase private insurance and slightly expanding eligibility for Medicaid.

It Would Give Working Americans a Raise

Over the past 30 years, economic growth hasn't made its way into most working people's paychecks. But -- and this is key -- the amount businesses have to pay for an hour of work has steadily increased. As the Washington Post's Ezra Klein put it, “Most workers think stagnant wages mean their employer is paying them less. They don't know that the main reason for stagnant wages is that their wage increases are going to pay for their health insurance premiums."  

Looking just at the George W. Bush years -- before the recession gained steam -- economists Lawrence Mishel and Jared Bernstein found that while average weekly wages for (nonsupervisory) workers increased by a paltry 1.7 percent annually, average compensation -- including health care and other benefits -- increased by 5.1 percent per year.

A picture can be worth 1,000 words, and this graph, based on projections by the Council of Economic Advisers, shows that Americans' incomes will remain flat long into the future if rising health costs aren't better controlled. 

Health care and compensation

It Would Break Insurers' Stranglehold on Health Care

Most people are aware of the massive subsidies enjoyed by the oil and gas industry, but it's less well known that insurers rank second in industry-specific subsidies, raking in $169 billion in 2008. And they protected those subsidies by spending a half-billion on lobbying last year.

This gets us nothing but lower tax revenues and higher costs. As Sarah van Gelder and Doug Pibel explained, “in the private sector, profits and excessive CEO pay are added to the [costs of] paperwork and bureaucracy.”

An estimated 15 cents of each private U.S. health-care dollar goes simply to shuffling the paperwork. The administrative costs for our patched-together system of HMOs, insurance companies, pharmaceutical manufacturers, hospitals, and government programs are nearly double those for single-payer Canada. It's not because Americans are inherently less efficient than Canadians—our publicly funded Medicare system spends under five cents per budget dollar on administrative overhead. And the Veterans Administration, which functions like Britain's socialized medical system, spends less per patient but consistently outranks private providers in patient satisfaction and quality of care.

Those insurers will fight like hell to kill these measures, and it won't be easy to beat them. But for all these reasons, it's a battle that's well worth waging.

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