RELEASE: Economists Urge Passage Of Health Reform

In Letter, Economists - Including 3 Nobel Laureates - Say Passing Health Reform Is "Critical To The Nation’s Economic Growth And Prosperity"

November 24, 2009

Dear President Obama and Members of Congress,

Responsible reform will help slow the growth of health care spending and cover the uninsured – both of which are critical to the nation’s economic growth and prosperity.

Our current health care system is riddled with inefficiencies. We spend much more per capita on health care than do other developed nations. Yet we don’t do as well as these nations on four basic indicators of health care performance: coverage, health outcomes, cost control and choice of providers. According to a recent report by the Council of Economic Advisers, reducing the inefficiencies in our health care system could reduce health care spending by as much as 5 percent of GDP without compromising care outcomes and choice.

A more efficient health care system would free up resources that could be used to produce other goods and services, and to invest in the future. That would promote economic growth and jobs, along with higher wages and living standards.

Health care reform is also essential to preventing damaging and unsustainable increases in the federal budget deficit. Escalating health care costs are projected to be the primary driver of the deficit’s future growth. Growing federal budget deficits mean higher interest rates, which will translate into less investment, slower growth, fewer jobs and lower living standards. If health care costs continue to climb at current rates, the deficit could eventually become so large that the government would be unable to borrow even at much higher interest rates. At that point, the nation would confront a fiscal emergency, forcing deep cuts in other government spending and significant increases in taxes to limit the deficit and prevent an outright default on government debt and a collapse of the dollar. Health system reform that curbs the growth of health care costs now can head off this future fiscal crisis and its painful ramifications.

Covering the uninsured will also yield significant economic benefits: improved health, reduced mortality, a more productive workforce and higher standard of living. More workers will be able to work, and those who are working will be able to work longer without disability. Ending the losses that health care providers incur from treating the uninsured will eliminate cost-shifting to their insured patients, and increase the quality of care they receive. Expanding coverage will reduce the financial disruption and bankruptcy caused by unexpected medical expenses. And expanding insurance options will increase the flexibility of the labor market by allowing workers to change jobs without fear of losing their insurance coverage.

The ethical case for reforming our health care system is compelling. So is the economic case. Enacting responsible health care reform now is essential to putting the economy on a sustainable path to a more prosperous future.

Signed,

Dr. Henry Aaron, Senior Fellow, Economic Studies, Bruce and Virginia MacLaury Chair, The Brookings Institution

Dr. George Akerlof, 2001 Nobel Laureate, Koshland Professor of Economics, University of California-Berkeley

Dr. Kenneth Arrow, 1972 Nobel Laureate, Joan Kenney Professor of Economics and Professor of Operations Research, Stanford University

Dr. Susan Athey, 2007 Recipient of the John Bates Clark Medal for the most influential American economist under age 40; Professor of Economics, Harvard University

Dr. Dean Baker, Co-Director, Center for Economic and Policy Research

Dr. Linda Blumberg, Senior Fellow, Urban Institute

Dr. Clair Brown, Professor of Economics, and Director, Center for Work, Technology, and Society, University of California, Berkeley

Dr. Len Burman, Daniel Patrick Moynihan Professor of Public Affairs, Maxwell School of Public Affairs, Syracuse University

Dr. David Cutler, Professor of Economics, Harvard University

Dr. John Holahan, Director, Health Policy Center, Urban Institute

Dr. Genevieve M. Kenney, Senior Fellow, Health Policy Center, The Urban Institute

Dr. Frank Levy, Rose Professor of Urban Economics, Department of Urban Studies and Planning, MIT

Dr. Peter Lindert, Distinguished Professor of Economics, University of California-Davis

Dr. Eric Maskin, 2007 Nobel Laureate, Albert O. Hirschman Professor of Social Science at the Institute for Advanced Study, Princeton University

Dr. Catherine G. McLaughlin, Director, Economic Research Initiative on the Uninsured at the Department of Health Management and Policy, University of Michigan

Dr. Richard Murnane, Juliana W. and William Foss Thompson Professor of Education and Society, Harvard University

Dr. Marilyn Moon, Vice President and Director, Health Program, American Institutes for Research

Dr. Matthew Rabin, 2001 Recipient of the John Bates Clark Medal for the most influential American economist under age 40; Edward G. and Nancy S. Jordan Professor of Economics University of California-Berkeley

Dr. James B. Rebitzer, Professor and Chair, Business Policy and Law Department, Boston University School of Management

Dr. Michael Reich, Professor of Economics and Director of the Institute for Research on Labor and Employment at University of California- Berkeley

Dr. Thomas Rice, Professor, School of Public Health, University of California-Los Angeles

Dr. Laura Tyson, S. K. and Angela Chan Chair in Global Management, Haas Business and Public Policy Group, University of California-Berkeley

Dr. Paul N. Van de Water, Senior Fellow, Center on Budget and Policy Priorities

Dr. Kenneth Warner, Dean of the School of Public Health and Avedis Donabedian Distinguished University Professor of Public Health, University of Michigan

Avedis Donabedian Distinguished University Professor of Public Health

Dr. Elliot K. Wicks, Senior Economist, Health Management Associates

Dr. Stephen Zuckerman, Senior Fellow, Heath Policy Center, The Urban Institute

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