Want Real Stimulus? Try Universal Health Care

Health-care reform would put one of the most productive sectors in the U.S. to work to shore up the nation's economy, says BW contributing editor Chris Farrell

By Chris Farrell

The economy is in a tailspin. The latest salvo of grim tidings came courtesy of the Labor Dept.'s Dec. 5 employment report: U.S. employers slashed 533,000 jobs in November (BusinessWeek.com, 12/05/08), the largest monthly decline in more than three decades. The unemployment rate now stands at 6.7% and the ranks of the jobless have increased by 2.7 million since December. The broadest measure of unemployment (a figure that includes the unemployed, employees laboring part-time, and others barely working) stands at a dismaying 12.5%, or 19.3 million workers, up from 8.4% a year ago, or 12.9 million workers.

Considering all the actions being taken by the U.S. Treasury and Federal Reserve to shore up the economy, the risk that a disinflationary recession deepens into a deflationary depression remains remote. But it isn't inconceivable.

The New Stimulus Package

To stave off an unwelcome reprise of the 1930s, the incoming Obama Administration and Congress are preparing a large fiscal stimulus package for the New Year. The centerpiece of the new Administration's initiative to get the economy going again was unveiled in news reports Dec. 6: The largest public works initiative since the creation of the national highway system in the late 1950s.

President-elect Obama highlighted the main components of the planned government investment in infrastructure: A massive effort to make public buildings more energy-efficient; more roads and bridges; upgrading school buildings; extending the information superhighway; and medical care electronic record keeping. It's increasingly apparent that the Detroit automakers will also get government money to stay alive.

Yet major health-care reform—specifically, universal health care—should top the list. Forget any suggestion that reform is too expensive or that it would take too long to have an impact. Wrong, on both counts. A bold embrace of universal health care offers policymakers the chance at a fiscal triple-play: Universal coverage would stimulate the economy, it would boost the financial security of ordinary Americans, and it would break the health-care reform log-jam.

Rx for a Healthy Economy

To paraphrase and update a famous quote about General Motors (GM), what's good for health-care reform is good for the economy. (It would certainly be good for General Motors, too.)

The case for long-term reform is compelling. The problems associated with America's badly frayed health-care system are well known. The country spends a world-beating 16% of gross domestic product on health, yet in international comparisons it lags behind a number of key measures. For instance, the U.S. ranks 29th in infant mortality and 48th in life expectancy. The number of people without health insurance was 38 million in 2007, and that number is guaranteed to have risen in the meantime with the recession that began a year ago. With universal health care, everyone under age 65 would be covered by a qualified health insurance company or through a government-sponsored program. (Those over 65 already have a version of universal coverage through Medicare.)