December 19, 2008 5:55PM

To Stimulate the Economy, Defeat Health Care Reform

By Michael F. Cannon

The Church of Universal Coverage is telling us that national health insurance will stimulate economic growth.

  • Senate Finance Committee chairman Max Baucus (D-MT) says universal health insurance coverage is the key to a healthy economy.
  • MIT economist Jonathan Gruber says "health care reform is good for our economy."
  • Business Week columnist Chris Farrell writes, "Universal coverage would stimulate the economy [and] boost the financial security of ordinary Americans."

That seems to contradict their usual spiel — which happens to be correct — that America's health care sector is wasteful and inefficient.  Americans spend twice the amount that other advanced nations spend on medical care, yet we're not noticeably healthier.  Researchers estimate that one third of U.S. medical spending produces nothing at all — that's about $700 billion wasted per year.  How is pumping more money into such an inefficient economic sector supposed to stimulate growth?

It also doesn't seem to square with the facts. If anything, the economy appears to grow faster when Congress rejects universal coverage.

  • After Congress defeated President Harry Truman's proposal for national health insurance in 1949, the nation enjoyed four years of robust economic growth.
  • The defeat of the Clinton Health Security Act in 1994 was followed by six years of robust economic growth.
  • The largest step Congress has taken toward universal coverage was when it launched Medicare and Medicaid in 1966.  Real economic growth averaged 5.7 percent in the four years prior to 1966, but only 2.7 percent in the four years that followed.

If history is any guide, politicians who want to stimulate the economy should be trying to defeat universal coverage.

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Source: Bureau of Economic Analysis

The right kind of health care reform will reap economic dividends.  Letting consumers control their health care dollars and choose their own health plan will make us healthier and wealthier by encouraging innovation, eliminating wasteful spending, and making health care more affordable.  Nationalizing health insurance, on the other hand, will suppress innovation and encourage wasteful spending, as evidenced by Medicare, Medicaid, etc.

My favorite New Yorker cartoon shows a bar patron telling his compatriot, "I figure if I don’t have that third Martini, then the terrorists win."  People will seize on a crisis to justify, well . . . anything.