Now that Senator Obama’s trip overseas is done, he has signaled a shift in emphasis back to the home front and the US economy . . . which brings us back to healthcare. The fact is that if we are going to enact meaningful health care reform – including the efficiency and other cost saving measures in Senator Obama’s plan – we are going to have to come to grips with the potential effect on the US economy.
For better or worse health care has become one very major growth sector in terms of jobs and spending. See this 2006 Business Week article for some background: What’s Really Propping Up the Economy. By at least one calculation, the health care sector accounts for over 15% of US GDP. That is staggering. What happens if we cut a big chunk of that spending off?
Of course I’m not saying this should slow health care reform down. Providing health care more effectively and efficiently will have enormous benefits, economic and otherwise. The question is how we deal with the potential short to medium term economic side effects of reform. Do we depend on the free market to reallocate resources efficiently? Does major health care reform need a major economic policy element? What should that be?
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