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The Democratic Strategist

Political Strategy for a Permanent Democratic Majority

Health Care Reform: The Price of Inaction

Progressives preparing to engage in the battle for health care reform can get a little basic training at the Center for American Progress web pages, where two articles make it clear that taxpayers bear a hefty burden as a result of inaction on health care reform. In “The Cost of Doing Nothing on Health Care,” Peter Harbage, CAP health care policy advisor and CAP Research Associate Ben Furnas explain:

Our analysis shows that the broken health care system will cost us between $124 billion and $248 billion in lost productivity this year alone due to the almost 52 million uninsured Americans who live shorter lives and have poorer health. In fact an analysis by the Institute of Medicine found that, “the estimated benefits across society in healthy years of life gained by providing health insurance coverage are likely greater than the additional social costs of providing coverage to those who now lack it.”
These findings are based on a 2008 analysis by the New America Foundation, which found that the national economic cost from lost productivity in 2007 was between $104 billion and $207 billion. Economic costs from lost productivity have increased by about 20 percent during the two years since the New America Foundation conducted its analysis. The low bound of this estimate represents just the cost from uninsured Americans’ shorter lifespan. The high bound represents both the cost of shortened lifespan and the loss of productivity due to the reduced health of the uninsured.

The authors source their data from Institute of Medicine’s report on the economic cost of uninsurance, the Congressional Budget Office and the Cecil G. Sheps Center for Health Services Research and North Carolina Institute of Medicine.
In the second CAP article David M. Cutler, Otto Eckstein Professor of Applied Economics at Harvard University, offers some interesting statistics in his summary report “Health System Modernization Will Reduce the Deficit

Health care modernization involves four broad steps: investing in infrastructure; measuring what is done and how well it is performed; rewarding high-value care, not just high-volume care; and realigning consumer incentives to encourage better health behavior.
This report (PDF here) analyzes how such reforms would affect the federal budget over time. It shows that health system modernization could increase productivity growth in health care by 1.5 to 2.0 percentage points annually starting in four to five years. The impact of such productivity improvement would be substantial. The federal government would save nearly $600 billion in health spending over the next decade, and $9 trillion over the next 25 years. Over time, these savings would more than offset the cost of providing insurance coverage to all Americans and put the United States on a path to long-term fiscal balance.

Of course the human costs of not enacting meaningful reforms would be absolutely staggering. As the debate over the economic costs of health care reform intensifies this summer, however, reform advocates would do well to note these figures in marshalling their arguments.

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