WASHINGTON -- More health insurance results in more Americans who are in better health, which in turn makes the economy stronger, said the chief White House economist at a briefing here Thursday.
"The first benefit of [expanded healthcare] coverage is healthier people are better workers," said Jason Furman, PhD, MSc, chairman of the Council of Economic Advisers, at a panel on the economic effects of the Affordable Care Act hosted by the Center for American Progress, a left-leaning think tank.
The uninsured rate has fallen to a record low following the implementation of the ACA -- including a 35% drop in under 2 years, Furman said. Today, 16.4 million Americans who were previously uninsured are now covered.
Healthier people are more likely to have jobs, more likely to be productive at their jobs, and more likely to be paid higher wages. They also take fewer sick days and are less likely to retire early due to illness or disability, he said.
It's difficult to show a causal relationship between Americans' health and employment, because doing so requires randomized trials and "we tend not to be able to do those at large scale on actual human beings," Furman joked, adding that nonetheless there is a strong correlation.
But having insurance does seem to be correlated with better health, according to results from the Oregon Health Insurance Experiment, Furman said. Under that randomized trial, the state used a lottery system to decide which applicants on a newly opened waiting list would be added to the Medicaid rolls, and researchers followed those who were added as well as those who weren't. The investigators found lower rates of depression and better self-reported health status among the group that received Medicaid coverage.
Health insurance expansion also increases workers' freedom of choice by eliminating "job lock" -- the tendency to stay at a job for fear of losing health insurance. People shackled to their jobs because of benefits don't leave to pursue other degrees or other careers, and they don't start their own businesses, Furman said.
Helping more people obtain health insurance also helps lower the unemployment rate, he continued, quoting Doug Elmendorf, former director of the Congressional Budget Office. "[Elmendorf] said that, because providing tax credits to workers injects money into the economy, it frees up workers to spend money on other things, creating jobs throughout the economy."
Health insurance expansion would also help stabilize the economy in the event of another crisis, Furman said. "If and when the U.S. goes into a recession again at some future date, the Affordable Care Act will be there. It will protect people from the worst consequences of that recession."
Furman also touched on the hot issue of national healthcare spending, which in 2011, 2012, and 2013 showed the slowest growth rates in 50 years, he said. Factors such as the recession, the shift of "blockbuster drugs" to generics as their patents expired, and the trend towards higher deductibles were important in lowering expenditures, but they can't explain the magnitude of the cost decline, he said.
"The slowdown has continued and if anything deepened in 2014, when we're getting increasingly far from the recession."
Furman dismissed the rise in deductibles as having "the lead role" and noted that the now off-patent blockbuster drugs have been replaced by new expensive ones, such as treatments for hepatitis.
So if all of those reasons don't totally explain the decline in cost growth, "that makes us suspect something else is going on," he continued. "Then we look at the Affordable Care Act."
He noted that the CBO said the ACA "would reduce Medicare spending this year by $26 billion; that itself is 0.2 percentage points off the growth rate of national health expenditures."
In addition, "when Medicare changes its reimbursement policies, those tend to spill over into the private sector ... If you assume plausible rates of spillover, it's 0.5 percentage point off the growth rate," a number that is "quite important," he said.
While national healthcare expenditures for 2014 will pick up, that's partly due to increased enrollment in health insurance, which is "something we were trying to accomplish," he added, noting that so far, this growth hasn't caused per-enrollee costs to rise.
Earlier this week, Drew Altman, PhD, founder of the Kaiser Family Foundation and former commissioner of human services for the state of New Jersey, offered a different perspective on the declining rate in the growth of healthcare spending.
"There is widespread agreement that the [healthcare cost growth] slowdown is due both to the sluggish economy and changes in the healthcare system," said Altman. "There is far less agreement about the role of the ACA or, frankly, whether it has played any role at all."
Furman said that shifting away from fee-for-service models toward alternative delivery systems is critical to continuing to drive down health costs. "Going forward the number one thing is those bundled payment[s] and [affordable care organizations]."
He added that the sustainable growth rate bill, currently on hold during the congressional recess, could offer new opportunities to expand alternative payment models.