The Economics of Healthcare Reform

It’s getting so I hate to turn on the television, unless I’m watching something I have TIVO’d, and can zip through the commercials. On live TV, there is an ad that runs every few minutes declaring that healthcare reform will add to the national deficit and raise taxes. The ad ends by darkly warning that “America cannot afford” to reform healthcare.

Complex issues are never accurately addressed by slogans and bumper stickers, of course, but those of us who have actually been following the various proposals and arguments cannot help but be offended by the intellectual dishonesty of this particular 30-second spot. There are a number of proposals still on the table, for one thing, that would have different results. None of them currently would do any of the things this ad claims, for another. The Congressional Budget Office says that the version in the U.S. House would REDUCE the deficit by some 100 billion dollars over the next ten years.

Since I grit my teeth every time this particular bit of propaganda airs, I was gratified to see release of the following open letter from several of the nation’s most eminent economists.

Successful health care reform is vital to the nation’s fiscal and economic future. The legislation the House will vote on in the coming days will guarantee security of coverage, limit the costs of care, create incentives for improved quality of care, and set us on the path towards sustainable economic growth. In short, the House health reform legislation takes the steps necessary to promote our economic health.

Specifically, the bill:

  • Reduces the deficit by over $100 billion in the first 10 years, and continues to reduce the deficit in subsequent years, as judged by the Congressional Budget Office.
  • Takes initial steps to “bend the cost curve,” and thus might lead to even larger cost savings than official estimates suggest.
  • Covers nearly all American citizens and legal residents.

We urge House passage of the legislation, which provides a historic opportunity to realize the long-delayed goal of significant health care reform.


Dr. Henry J. Aaron, The Brookings Institution
Dr. Mike Chernew, Harvard University Medical School
Dr. David Cutler, Harvard University
Dr. Judy Feder, Georgetown University, Center for American Progress Action Fund
Dr. Dana Goldman, University of Southern California
Dr. Jonathan Gruber, Massachusetts Institute of Technology
Dr. Len Nichols, The New America Foundation