A Melancholy State of Affairs

By Karl Reiner

The U.S. House of Representatives voted for the 33^rd time to repeal the complex and little understood Patient Protection and Affordable Care Act also known as Obamacare.  The House measure will go to the Senate and die.  The conservatives demand repeal of the law; they are counting on winning the White House and Congress in November so they can get the tawdry deed done.    

Some analysts in the healthcare sector see this as a distorted compulsion. Governments worldwide are involved in healthcare simply because they know that healthy populations are more useful. Healthy citizens produce, they keep economies functioning.  Given the U.S. role in the world economy, the conservatives’ strident resistance to America’s slow creep toward universal coverage is perplexing. 

The Organization for Economic Cooperation and Development (OECD) reported its 34 member governments spent an average of 9.5% of GDP on health care in 2010, up from 6.9% in 1990.  France, Germany and Switzerland (countries with high standards of living, good health services and higher life expectancy than the U.S.) spent slightly less than 12% of their GDP on health care in 2010.

The U.S. spent 17.6% of GDP on healthcare in 2010, up from 12.4% in 1990. Half of the money expended came from public funds.  The U.S. spends more than any other country on healthcare, yet its programs cover less of the population. 

When the U.S. Supreme Court upheld the individual mandate in Obamacare in June, it also ruled that the Medicaid expansion requirement in the law had to be made optional. Obamacare was supposed to extend insurance to 32 million more people by 2019.  The expansion of the Medicaid program accounted for about half of the number.

Certain states (26 of them) argued that the program expansion was coercive. The court agreed, saying the states must be allowed to make their own decision regarding participating in the Medicaid expansion without fear of losing existing federal aid.  Under the expansion, Medicaid enrollment was estimated to increase between 16 and 23 million by 2019.  With the states now able to opt out, as many as 11 million poor adults could find themselves unable to get insurance coverage.       

The OECD employment outlook reflects the severe impact of the recession. In its member countries, 48 million people are out of work. The unemployment rate in the Euro area is over 11%. In Spain, it is over 24%. Unemployment has reached the double digits in Estonia, France, Greece, Hungary, Ireland, Italy, Portugal and the Slovak Republic.  Things are a bit better in the U.S.  The unemployment rate of 8.2 % is down from a peak of 10%. Due to the slow pace of the recovery, the OECD forecasts that the U.S. unemployment rate will decline to 7.4% by 2013.  

The conservatives have actively fostered political gridlock in Washington. The tussle over healthcare and the repeated failure to come up with a medium-term federal deficit reduction plan has created a climate of economic ambiguity. With government immobilized, consumers and businesses grow more apprehensive about the future.

With the crisis in the Euro area adding to the worry, it is not surprising that people are hunkering down. The political stalemate is bringing with it an increasingly high human and economic cost. The conservative agenda of blocking the administration at every turn is not resolving problems. It is setting a course for economic chaos.  It will wreck the recovery if it continues unchecked.