Health Care Reform: How Benefits Portability Will Strengthen the Economy
Considering all the spin on the subject coming from the newly-elected Republican majority in the House of Representatives, and other conservatives, it might surprise many people to learn that the health care reform act of 2010 will actually increase the freedom of the typical American, and strengthen the U.S. economy.
But unless one of the conservatives' unlikely last-ditch efforts to de-fund the law or otherwise prevent its implementation succeeds, three key health reforms will take effect on Jan. 1, 2014, that will benefit individuals and the economy alike:
1. Subsidies, in the form of refundable tax credits, will cap maximum "out of pocket" expenses for lower income Americans.
2. Health plans will no longer be able to exclude people due to pre-existing conditions.
3. State health insurance exchanges for small businesses and individuals will open.
If the health care law is not undermined, it will remain the biggest social policy advance in the United States since the passage of Medicare in 1965, and it would rank third behind the latter and the establishment of Social Security of 1935 in terms of social safety net significance.
Will Benefits Portability Advance Careers?
Those three reforms alone will clearly help many individuals, but what may be less obvious is how they will boost the economy as a whole. That's because its easy to overlook the impact health care reform will have on job mobility via benefits portability.
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Right now, millions of people are remaining in their jobs, not because they really want to, but because of their health care coverage. In some cases, their plans provide vital health care for a spouse or dependent. In others, employees know that changing jobs could jeopardize their own coverage and benefits. So they stay put.
True, mobility also declines cyclically during recessions -- and that's especially been the case during the Great Recession, which increased the nation's job shortage from 7 million jobs to about 14.8 million. But the health care insurance factor has been an impediment to job mobility in the United States for decades.
The new health care law eliminates a great deal of the "coverage risk." Exit health care impediment. Enter increased job mobility. Employees seeking promotions, career changes, or better work environments will be able to make those changes more easily, instead of remaining in their current companies simply to retain health benefits. And that will lead to a more efficient allocation of talent in the U.S. economy.
Benefits Portability: Good for Employees, Economy
Further, the new system will stimulate business formation, innovation, and U.S. GDP growth. Consider these hypothetical (but realistic) examples:
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• An advertising account executive wants to start a new Internet marketing solutions company, but he doesn't, for fear that the shift will prevent his wife, who has a serious pre-existing condition, from continuing to receive health insurance. Under the reformed health care system, he'll be able to start that new company, because he'll be able to purchase insurance for his wife under whatever plan he chooses. The law will require it. Add another job-generating small business to the economy.
• A 20-something wants to head back to graduate school to earn an advanced engineering degree, but she doesn't, due to concerns about obtaining affordable health insurance while she's unemployed. As a result of the new health care law, she'll be able to enter grad school confident in the knowledge that, thanks to federal subsidies, she'll be able to obtain affordable health care coverage. Add another highly-skilled scientist to America's innovation machine.
• A married auto mechanic likes working for his current employer, a large auto repair shop near a big city, 45 miles from his home. But he thinks a better fit for him would be a smaller repair shop nearer to his small home town, and the shorter commute would give him more time with his family. However, he doesn't accept a job offer at the smaller shop because he's concerned about its ability to maintain health insurance. Thanks to the new health care law, he'll be able to take the job closer to home, because health care costs will be more affordable for small businesses under the new system. His quality of life goes up, and the money he spends on gas for his commute goes down.
Health Care Insurance: A Factor in U.S. Job Search
Obviously, health care insurance isn't the only factor people consider when making career decisions, but it can be a major one.
The U.S. is far behind Europe on benefits portability, and any time portability increases, it enhances the ability of talent to seek its best use.
Business formation. Innovation. Americans going back to school to increase their skills or enter a field they believe is their calling. Talent seeking its highest and best use. All of these are good things from an economic value-added standpoint and add to GDP growth, which makes the new health care law good news for investors.
The downside, of course, is that it will take until 2014 until benefits portability really starts to rev up. That's a considerable time away, and one reason many progressive public policy analysts view the 2010 health care law as too modest. That's my view as well: The 2010 act didn't go far enough. Congress did not create a single-payer system, nor something even more revolutionary, like a system in which the health care people receive is determined by how sick they are, not by whether or not they have insurance.
But this isn't France or Sweden -- you're living in the United States, and, to paraphrase Sen. Bernie Sanders (I-Vt.), when the votes aren't there, you take what you can get.
And what we got, imperfect though it may be, will provide real benefits to the U.S. economy.
