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Commentary & Opinion

Michael Meeropol: Now Is The Time To Guarantee Health Care With No Out Of Pocket Expenses

On April 10, 2020, Senator Bernie Sanders (I, Vermont) teamed up with Representative Pramila Jaypal (D. Washington) to introduce the Health Care Emergency Guarantee Act.   The point of the bill is to make sure that until the FDA certifies that there is a well-tested vaccine for COVID-19, the coronavirus that is causing the current pandemic, not one penny of out of pocket medical expenses will be charged to any individual seeking medical care or prescription drugs.  In short, health care will become a right at least temporarily.

Here is the key language in the act: “[T]he Secretary [of Health and Human Services] shall make payments to qualified providers with respect to applicable health care items and services …” (The full text is available here.)  Technically, what we used to pay out of pocket as co-pays and cost sharing and what the uninsured would be billed for (and often be not able to pay) would be directly paid by the federal government.

The rationale for such a bill is obvious but let me spell it out anyway.   During the period before such a vaccine is widely available, large swaths of the population will be in danger from COVID-19.  In this period, it is to the benefit of everyone that our health care system not be overtaxed. 

The current system, with significant portions of the population uninsured or underinsured, is much more expensive than a universal system would be.   For one thing, in our current system, especially before the COVID-19 pandemic hit, many families treated hospital emergency rooms as their family doctor.   Clearly that was always a waste of those resources but in these months when the entire health care system is stretched to the breaking point, we must overtax emergency rooms.   We also, again this should be obvious, do not want people going untreated and walking around sick.

To the extent that people with this disease are not isolated and not treated, they will spread it to more people.   Thus it is essential that those who are not immune (and right now immunity is almost non-existant) not be unnecessarily exposed to such people.  Any financial barrier to people seeking medical care in the context of this pandemic puts more people at risk – and in the end, increases the death rate.

The need to make sure the entire health care system – particularly hospitals – is not overtaxed goes well beyond the extra resources needed to treat victims of COVIC-19.  Cancer patients still need their therapies.  People with heart conditions need checkups and stress tests.  Accident victims need to be treated as do stroke victims.  Pregnant women need prenatal care as well as delivery options.   Anything that reduces the bottlenecks in hospitals --- especially anything that reduces the need for uninsured or underinsured people to use emergency rooms as their first option for treatment --- benefits all of us.

The evidence was clear from those states that chose to expand Medicaid coverage as a result of the passage of the Affordable Care Act.   (And this of course is further evidence of the politically motivated irresponsibility of those state governments that rejected Medicaid expansion even though it was mostly financed by the federal government.)   The health of those state’s Medicaid eligible population improved and they used the health care system less because they received the appropriate PREVENTIVE care.

In times of extreme health emergencies, maximizing the preventive care of the entire population improves the access to important crucial health care for that population.  In other words, giving an otherwise uninsured family full coverage so that they can get good preventive care and timely intervention should they get sick helps the rest of us.

This is another example of appropriate government spending because the money spent covering the medical expenses of a previously uninsured or underinsured person will provide a benefit for all the rest of us --- a spillover benefit as I argued in a commentary only a short while ago.   Here’s one brutal example.   A clogged emergency room could mean that patients needing to be admitted immediately in a life and death situation will not be able to find a bed, a staff member or a ventilator.   A clogged health system means situations such as existed in Italy where doctors had to literally decide who would get life-saving treatment and who would not.   With everyone getting the preventive care they need should the Sanders-Jaypal bill pass, the rest of us would not be less likely to be turned away from a hospital because all the staff and equipment and other facilities are already in use.

And please, no more asking HOW ARE WE GOING TO PAY FOR IT?   Let’s hope that creating multi-trillion dollar plans to protect the profits of the airlines, the hedge funds, the multi-billion dollar hotel chains has finally laid that politically motivated nonsense to rest.    The answer to the question is, we pay for it the same way the Federal Reserve is “paying for” the multi-trillion dollar rescue plans for the financial system.   The Fed can push a few keys on a computer and VOILA, the US Treasury has the balance in the account to write checks to cover the medical expenses of all Americans.

(This is not science fiction.  When someone buys a house by taking out a mortgage loan, the bank does not bring a wheelbarrow full of hundred dollar bills to pay the builder or previous owner for the house.  Instead, a few strokes of a computer prints a check made out to the builder or the previous owner.  When the builder or previous owner deposits the check, that person’s bank credits the account.   No dollar bills changed hands.   Instead (seemingly out of nowhere) the builder or previous owner has a new bank account on which they can write checks to pay for whatever they want to buy.   The lending bank CREATED the money with a few strokes on a keyboard.  The Federal Reserve can do the same thing for the Treasury.  The difference between the Treasury and the homeowner with a mortgage is that the homeowner actually has to earn sufficient income to cover the monthly mortgage payments over the (often 30 year) life of the mortgage.  In short, they do have to be able to “pay back” the loan.  The Treasury pays interest on the loan from the Fed but when the bond comes due the Treasury can just roll it over by issuing a new bond.   Unlike a homeowner with a mortgage, whose ability to pay will first decrease upon retirement and ultimately disappear with death, the Treasury lasts forever.  [Some of the dollars borrowed to finance the Civil War have been rolled over ever since!]   The Treasury never has to “pay off” the National Debt.)

To return to that politically motivated question, “How are we going to pay for it [the expense of the Sanders-Jaypal bill]?”   The answer is the Treasury will borrow it from the Fed for the entire period until a vaccine is certified.   When that time arrives --- and we certainly hope it’s not 18 months but sooner --- Congress can decide how much of the currently proposed emergency bill’s elements should be retained and how much of the current pre-Coronavirus health care system should be re-created.   Right now it is essential we make sure that everyone who NEEDS health care gets it --- We all will benefit from that.

Of course this doesn’t respond to the self-centered arguments of those who want to restart the economy as soon as possible regardless of the cost in human life.  As I argued forcefully in a recent commentary. That desire is based either on ignorance or moral idiocy.  It is also based on bad economics.   (That commentary was delivered on March 29, 2020 and is available here.)

In this context, I must decry the idiocy of the people who risked their lives by demonstrating in Michigan and Kentucky against those states’ Governors’ rules aimed at protecting the health of those states’ citizens.  They also risked the lives of all their relatives and friends.   In Michigan, the group calling for the demonstration suggested people drive their cars as a way of maintaining social distancing.  Yet many too many people got out of their cars and demonstrated without masks clustering in groups, getting very close to each other (and news reporters as well).  It’s one thing to be an idiot and risk one’s own life.  But the grandparents, parents, relatives and other loved ones of the demonstrators who got out of their cars are the ones who will most likely get much sicker than the younger people involved in the demonstrations.  Shame on them --- and shame on the Trumpist enablers in the media who have kept up a drum-beat of mis-information attempting to persuade people that the concerns about COVID-19 are a plot by Democrats to undermine Trump.  I hope the people of Michigan and Kentucky (maybe with petitions) can find a way to make clear that those idiots do not represent more than a tiny sliver of the population of those states.

Michael Meeropol is professor emeritus of Economics at Western New England University. He is the author with Howard and Paul Sherman of the recently published second edition of Principles of Macroeconomics: Activist vs. Austerity Policies

The views expressed by commentators are solely those of the authors. They do not necessarily reflect the views of this station or its management.

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