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Blogging the CEA Health Care Report: Executive Summary

healthreformongdp.jpg

The Council of Economic Advisers is not assuming anything radical. Health care reform will not chop, slice, and juice. It will not yoke the growth in health care spending to the rise in GDP or the swell of inflation. It will be modest. It will cut the growth of health care by 1.5 percentage points a years. If health spending were to grow at 6 percent, now it will grow at 4.5 percent.

But when it comes to health care spending, modest restraint can prove hugely important. Here's the key takeaway from the report:

[P]roperly measured GDP could be more than 2 percent higher in 2020 than it would have been without reform and almost 8 percent higher in 2030. The real income of the typical family of four could be $2,600 higher in 2020 than it otherwise would have been and $10,000 higher in 2030. And, the government budget deficit could be reduced by 3 percent of GDP relative to the no-reform baseline in 2030.

Those are big numbers. Bigger than it feels they should be. But this isn't a delicate projection based on strange assumptions. It's pretty standard arithmetic projecting what will happen in the aftermath of a modestly successful health reform. So I'm going to end this post here and let those sums sink in. But I'll have a couple more posts on the CEA report as the day wears on: It's an important document on the economics of health reform, and a number of its arguments -- and, excitingly, its graphs -- deserve to be considered in full.

(Graph Credit: Council of Economic Advisers.)

By Ezra Klein  |  June 2, 2009; 11:40 AM ET
Categories:  Health Economics , Health Reform  
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Comments

You say, "It's pretty standard arithmetic projecting". Right, if you believe in arithmetical projections which have never worked in the past. But O.K., let's just say it's a religious belief for which facts are unnecessary.

My question is, why should we wait until 2020 or 2030 when there are huge savings available now. And these savings do not depend on a religious belief in straight line projections.

I refer to the immediate savings of at least $500,000,000,000 each and every year we can get by passing to something like Medicare for All (HR676). Notice that even if we do this, we will still be nowhere near as efficient as the rest of the world, but if we do do this, we can provide good health care to ALL of our citizens at no more cost than we pay today. Then we can work on the difficult problems of how medicine is practiced as so ably depicted by Dr. Gewande to try and catch up with all other wealthy countries.

Posted by: lensch | June 2, 2009 1:35 PM | Report abuse

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