It’s Still the Economy: “These go to eleven”

Reader Christopher Masak recommended this video on the site today. It’s an advertisement co-sponsored by The American Cancer Society, Families USA, SEIU, the AMA – groups that have generally been leaders on expanding access over the past couple of years -- as well as Pharma and Blue Cross Blue Shield Regence – groups that make you say, “What the heck are these guys doing sponsoring this ad?” Despite the strange bedfellows aspect of the sponsoring groups, the ad is absolutely the right message for these times.

A lot of focus is on the economy, and rightly so. But fixing health care is fixing the economy. Why? Because all of the bad news we’re getting about unemployment and frozen credit leads directly to the worsening of the health care crisis, which in turn feeds into the rising costs that make health care costs unsustainable for businesses and individuals, which leads to worse economic news, and so on and so on. It’s a fire-breathing dragon chasing its own tail – and all of our money’s been misted with kerosene.

Out today were reports that the U.S. lost 2.6 million jobs in 2008. It’s a staggering number, as is the 0.4% rise in unemployment from November to December alone. But it’s only the beginning of the story. According to calculations, for every 1% increase in the unemployment, 1.1 million people lose their health insurance. That means December saw 440,000 join the ranks of the uninsured. Of those, maybe half will be eligible for COBRA benefits – the transitional health care coverage that allows you to stay on your employer’s plan for 18 months if you pay the full cost of the plan. And of those, maybe 15% will be able to pay for it. Sound unusually low? Well, try figuring out how to pay $12,000 a year (average cost of a plan for a family of four) when you’ve just lost your job.

Families USA did the math for you – in 41 states, COBRA would cost more than three-fourths of your unemployment benefits.

So what happens when people need care? They either go to crowded emergency rooms where their uncompensated care is extremely expensive and passed on to everyone in the form of higher premiums and more strain on the social safety net paid for by our tax dollars, or they apply and get care through government programs like Medicaid or the proposed subsidies for COBRA (see “social safety net”), or they tough it out until they get really sick and the cost of their care is much, much worse and then do one of the above. Notice that every single option ends in more health care spending for all of us?

This cycle is the health care crisis that we’ve lived with for the past couple of decades. But like Spinal Tap, it’s going “to 11.” Cost increases were galloping before. They’re about to be shifted into the “Speedy Gonzalez” velocity.

Despite all the grim news, Ezra Klein points out the silver lining – unlike 1993, when the economy had already begun to recover and the public appetite for reform was fading quickly, Obama “is taking office just as the recession really hits, and will be selling his policies at the moment of maximum necessity.”

Let’s hope so. The need is greater than ever – the commitment to reform needs to respond in kind.