Health Care and the Economy – What is at Stake?

The health care debate that has raged throughout the past couple months has created many questions. Most Americans are concerned over how the proposed reforms will affect them personally, either in relation to their individual health plans or their taxes. But another important question is how health care reform will impact the country’s economy as a whole. Some have claimed that reform will drastically bring costs down and help to gradually decrease the federal deficit in the years to come while others contend that such reform will simply build a debt burden that future generations will be saddled with.The Reform System will Serve to Boost the EconomyIt is predicted that without health care reform Medicare and Medicaid costs will increase from 6% to nearly 15% of the US GDP by 2040. Through a reduction in inefficiencies and a lowering of health care prices, Obama’s plan is estimated to decrease costs between 1 and 2% per year. Not only is it argued that these lower costs will mean significant savings for families, but it is also said that the reduction of uninsured patients visiting emergency rooms could mean savings of $100 billion a year.In addition to reducing the deficit, it has been argued that health care reform will help small businesses and stimulate innovation, resulting in more tax revenues for the government. Around half of all bankruptcies are the result of medical costs, even though more than 75% of these bankruptcy filers were insured. Further, there is a phenomenon known as “job lock” in which people decide not to switch jobs or start new businesses because of fears over healthcare. With more confidence in the portability of their health insurance people will be more likely to start new businesses, thus increasing innovation and investment.The Reform System Will not Save the EconomyDespite these claims, many others assert that health care reform will actually end up being far more costly and expensive for the American economy. Some find it hard to believe that the savings from increased efficiency and lower prices in health care will actually offset the increased costs of covering millions more Americans. Further, while an increase in taxes to pay for the reforms would not add to the deficit, such a tax increase could similarly be levied now to address the current health care deficiencies. Another potential issue is that if the proposed reforms improve the quality of care, as they are intended to, then Americans will live longer. Hence, the cost of taking care of each individual will increase. However, because it is nearly impossible to predict how such reforms would affect the average life expectancy, it is similarly difficult to accurately estimate the long term costs of these changes.Ultimately there are merits to the arguments on both sides of the aisle. While health care reform may be necessary to halt the rapidly increasing insurance premiums, the effect of these changes on the national economy is still unknown. The number of variables involved in the health care equation assures that the future economic impact of any reform will be nearly impossible to predict.

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