HEALTH REFORM: Stimulus an Important Step for Helping the Unemployed and Uninsured

This post appears on the National Journal's Health Care Experts Blog where you can also see what other health policy analysts have to say on economic stimulus package.

The American Recovery and Reinvestment Act was designed to create or save 3.5 million jobs. Subsidies for health insurance were created with a couple of ideas in mind:

1. Low-income people are more likely than high-income people to spend money as opposed to saving it. We need to engender spending—and more spending in multiplier effects—to restore incentives to invest and hire (or rehire) workers.
2. Economic downturns increase the strain on safety net programs in the states.

Subsidies for COBRA coverage and increased support for the Medicaid program will engender increased spending, especially by lower-income individuals and the people that sell goods and services to them. Over time, this spending will multiply in the economy as a whole. Furthermore, providing states with additional funding for the Medicaid program will help stabilize state budgets and stave off additional budget and employment cuts.

The health insurance subsidies included in the legislation will lessen the potential increase in the uninsured, but we have much work left to do. The good news is that the Act funded two initiatives—health information technology and comparative effectiveness research—that stand to create jobs and lay the foundation for comprehensive health reform and a high-quality, high-efficiency delivery system.

Our economic crisis has heightened the public awareness of our health system's gaps and placed increasing strains on its patients, payers, and providers. This reinvestment and recovery effort will help reduce the human suffering caused by the economic downturn, but it will not solve the underlying, long-term problems of our health care system: inadequate access to affordable care, rising costs, and low-value for our health care dollars.

We need comprehensive health reform to fix these weaknesses. By all accounts, the Administration understands this and is going to lead Congress into a serious health care debate. Now, as our nation is re-examining priorities in virtually all areas of life, is exactly the right time for such a discussion.