Health reform can boost economy - Obama aide

Christina Romer, White House economic adviser, says overhauling health care may juice GDP and boost labor.

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By Jeanne Sahadi, senior writer

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NEW YORK ( -- As Congress starts its 2-month sprint to pull together a health reform package, the Obama administration on Tuesday laid out its estimates of how the U.S. economy might benefit if health care costs are brought to heel and the uninsured get coverage.

Real gross domestic product could increase by more than 2% in 2020 and by nearly 8% in 2030, the Council of Economic Advisers projected in a report.

The group also projects that reform could, among other things, lower the unemployment rate and increase the labor supply by reducing disability and absenteeism. And it could help slow the growth in the U.S. deficit, reducing it by 3% of GDP, the report said.

"Health care reform is incredibly important for the American economy," said CEA chair Christina Romer in a conference call with reporters. After completing the CEA analysis, she said, "I'm now the most passionate advocate for reform."

The headline estimates by CEA assume growth in health care costs is slowed by 1.5 percentage points a year, which is what the health care industry has promised to deliver in cost savings over time. It assumes as a baseline that 100% of Americans will have health insurance, Romer said.

Both those assumptions, however, are far from a sure thing.

Lawmakers haven't decided whether to mandate that everyone must get health insurance, although Senate Finance Chairman Max Baucus, D-Mont., has said he thinks there's a fair chance a reform package could cover close to 95% of Americans.

And there is considerable uncertainty about whether the health care industry can achieve the kinds of savings it has promised -- estimated to be $2 trillion over 10 years. The industry has promised to do several things, including better manage chronic diseases, streamline claims processing, aggregate performance data and implement other efficiency measures.

"I'm skeptical that these proposals will add up to anywhere near $2 trillion. In the legislative process, proposals rise or fall based on what [the Congressional Budget Office] says about them, and the same will be true here," Senate Finance Ranking Member Charles Grassley, R-Iowa, said in a statement on Monday.

The CEA report notes, however, that even if cost growth is slowed by less than 1.5 percentage points, it can still have a beneficial effect on the economy.

Romer said the CEA analysis "is an if-then kind of report" and isn't a recommendation for any one course of reform. "There are an incredible number of actions that can be taken," she said.

Of course, beyond trying to come to consensus over what the best actions are to ensure better coverage, quality care and lower costs, lawmakers will also have to decide how to pay for the overhaul of the health care system, which is likely to exceed $1 trillion.

None of those decisions will come easily. But leaders in the House and Senate still seem confident that they will come quickly -- with hopes pinned on bills going to the floors of each chamber before lawmakers leave for their summer break. To top of page

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