column-parente-feb09

Associate Professor in the Department of Finance in the Carlson School of Management at University of Minnesota

As a former McCain Campaign health policy advisor, I have now reached the final stage of the Kübler-Ross process - - acceptance. I accept the inevitability of a Keynesian macroeconomic policy to achieve health insurance expansion. Since this was not a considered thought experiment during the McCain campaign, please consider this proposal ‘thinking outside the box’ given the new Realpolitik

This proposal will be approached as part of a domestic ‘war on the uninsured’ policy and will borrow from the dual-use opportunities deployed by the Roosevelt Administration in 1941 to transform a consumer economy to a war economy. The proposal is guided by three principles. First, for the economic stimulus to work, money needs to be spent by consumers as quickly as possible. Second, inventing new programs for spending the money will not be as effective as using existing firms to facilitate rapid stimulus. Third, opportunities to achieve multiple public policy goals that create multiplier effects through a program have great merit.

These principles guide the development of the following ‘health restoration and maintenance’ proposal. In this proposal, any consumer would get a debit card issued by the dozen or so national retail pharmacy chains to purchase needed pharmaceuticals for their health as well as primary care visits at the retail clinics associated with these pharmacies. The cards would come preloaded with $500 and made available by cashiers at the stores. To receive a card, a person must supply their driver’s license for a card swipe to record identification. The cards can be ‘topped’ up based on financial need up to $3,000. Financial need would be determined by cross-referencing IRS data with the card user on a web site at the card users’ discretion. The cards could only be used as the qualifying pharmacies and only for non-controlled pharmaceuticals to prevent an oxycodone fueled stimulus.

This proposal addresses the first principle by directly channeling money to consumers to help counter many ill effects of the economic downturn, including a rise in the uninsured or underinsured as employers face bankruptcy or need to scale back insurance benefits to survive. If enacted, this policy effectively turns Target, Walgreens and Wal-Mart into the World War II industrial policy dual use analog of Ford Motor company building bombers and GM building tanks. However, whereas it took nearly a year for Ford to re-tool to make a bomber, the retail pharmacies could likely respond within months if not weeks. This satisfies the second principle of using some of the best infrastructure already built to deliver the stimulus, not starting with a time-draining set of new business practices.

Finally, the third principle of achieving multiple goals from one program would also be addressed. For example, every chronic illness has a significant pharmacologic treatment component and this policy would help an uninsured or underinsured asthmatic adult continue to maintain his or her health, if not enhance it. In addition to providing needed care and stimulating the economy, a third long term value of this policy would, for the first time ever, allow policy makers to know who the uninsured really are in terms of their illness burdens and potential cost for insurance coverage. Furthermore, the debit cards themselves might be a first step in identifying a means to arrange future insurance contracts using a hybrid approach of individual private insurance mandates programs implemented by the Netherlands and Switzerland. Indeed, the Association of Health Insurance Plans recently stated they would support a national health insurance reform program where they to provide coverage to all Americans as long as an individual mandate is in place. In the Netherlands, a private insurer receives an additional subsidy for taking care of a sicker patient, if they provide pharmaceutical consumption patterns as one of the key data elements. As part of this stimulus proposal, this type of approach would jump start the data collection required for a future comprehensive health reform proposal as well as alleviating the current economic crisis.

How much would this cost? The total eligible market is roughly 210 million non-Medicaid and Medicare populations. If you include Medicaid because of the states’ financial crises, we are talking about a program serving roughly 255 million Americans. Based on results of previous health policy subsidy programs, assuming only a 40% take up the use of the cards would yield an upper bound stimulus/cost of $51 billion.

As a role-playing Keynesian, I suggest this policy proposal with great trepidation, not because I think it will fail at stimulating the economy, but because this initiative will burden an already high national debt. But if money is to be spent regardless of my political economy concerns, this strikes me as one of the most comprehensive, national, efficient and pragmatic proposals with measurable metrics of success. One policy prescription offered by the Obama Administration of air dropping $50 billion for electronic medical records does not have nearly the direct consumer benefit or velocity of stimulus action required. Are there many details beyond these several hundred words of essay to work out? You betcha! But the logistical details employed to make Ford build bombers instead of sedans were no less daunting and the outcome from this dual-use proposal is a lot healthier for all parties concerned.

--See "Health Care Information and Technology's Next Frontier: The Potential of Medical Banking", Business Economics...more

--See Parente discussion about the Sustainability of RHIOs - Medical Banking Offers a Plan B...more

>> What's your point of view? Email Dr. HSA. We look forward to hearing from you!

Stephen Parente, PhD is Director of the Medical Industry Leadership Institute and Associate Professor of Finance at the Carlson School of Management at the University of Minnesota.