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Center for Labor Research and Education

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Health care crisis makes our economic illness worse

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Sacramento Bee


During the first presidential debate, moderator Jim Lehrer pushed both candidates to say how the current economic crisis might affect their various program proposals. But there’s one program proposal that can’t be frozen or even delayed. That’s health care reform, because the health care crisis is contributing significantly to our economic woes.

The health care crisis affects every aspect of our economy – from our lack of global competitiveness to the financial shambles of our states and localities, to the spike in foreclosures.

High health care costs hurt the competitiveness of firms in the United States, which spend more than twice the average per capita on health care than other industrialized nations.

At the same time, we have the highest rate of people without health care coverage, which in turn hurts the productivity of U.S. firms. Workers without health insurance are more likely to skip and delay needed care, are less likely to receive treatment for chronic conditions like asthma and diabetes, and are more likely to experience a debilitating health condition. As a result, there is increased absenteeism and exits from the labor force due to disability, with resulting decreases in productivity and earnings.

Additionally, many American workers are unwilling to leave their jobs for fear of losing their health insurance. That translates into fewer people becoming entrepreneurs and fewer people pursuing productivity-improving job changes.

There are already 47 million Americans who don’t have any health care coverage.

Another 25 million are underinsured, meaning their insurance doesn’t adequately protect them against catastrophic health care expenses. The share of workers with coverage on the job has been declining steadily for the last decade, and for those who are insured, costs are going up while coverage is going down.

Meanwhile, as unemployment increases, so does the number of people with no health insurance. The Kaiser Commission on Medicaid and the Uninsured found that a one-percentage-point rise in unemployment nationally results in 1.1 million more uninsured and 1 million more enrollees in Medicaid and the State Children’s Health Insurance Program. The U.S. unemployment rate is already up 1.2 percentage points since January.

Declining job-based coverage is shifting costs onto state and local governments at the same time they face budget shortfalls due to the economic downturn. As more people lose their health insurance, they turn to government programs for assistance with their health care, which places increased demand on these governments that are already in the red. Additionally, if people go to emergency rooms because they haven’t been able to afford to treat less- severe health conditions that then worsened, the burden of that more-expensive emergency care will be born by cities and states.

There is evidence that rising under- and un-insurance is directly contributing to the current financial crisis. A study recently published in a Case Western Reserve University journal of health law documented that medical crises contributed to a surprising half of all home foreclosures. It surveyed homeowners in California, Florida, Illinois and New Jersey who were on the brink of foreclosure, had defaulted on their home loans or whose lenders had initiated legal foreclosure proceedings. The researchers found that “if these patterns hold nationwide, medical causes may put as many as 1.5 million Americans in jeopardy of losing their homes each year.”

Stabilizing or bringing down health care costs is a win for the economy. Keeping people healthy, productive and in the work force is a win for the economy. Giving people greater freedom to choose between jobs or to leave a job and start their own businesses is a win for the economy. Keeping people from losing their homes because of their medical bills is a win for the economy.

The fact that the economy is reeling from financial turmoil is not a reason to avoid doing health care reform; it’s a reason to make health care reform a top priority.