Is the Economic Stimulus Package About to Change the Politics of Health Care Reform?

by Tim Foley

Published January 04, 2009 @ 08:39PM PT

It’s just 25 words in the front-page article in The New York Times on Obama’s economic stimulus package.  It’s easy to overlook.  Heck, I overlooked it the first time.  But they talk about extending Medicaid coverage as part of the stimulus.  If this turns out to be true, it has huge implications for the likely success of a comprehensive health care reform package passing in 2009.

When it comes to health care spending, we know some of the particulars that are likely to be in the final package:

•    An extension of COBRA benefits for individuals who have recently lost their jobs and whose employers provided their benefits
•    A “down payment” on the start-up dollars for developing and implementing an electronic medical records system
•    If it hasn’t passed as a separate bill already, the reauthorization and expansion of SCHIP, which has passed with large bipartisan majorities twice already, only to be vetoed by President Bush
•    A change in the financing of Medicaid, where the Federal government picks up more of the tab, and state budgets pick up less (a change actively sought by governors across the country)

But today comes these 25 words:

“Allow[ing] workers who lose jobs that did not come with insurance benefits to be eligible, for the first time, to apply for Medicaid coverage.”

Details are sketchy, but here’s why it’s a big deal.  70% of the uninsured not only work, they make enough to be above the Federal poverty line – meaning they don’t currently qualify for Medicaid.  The segment of the population that has become increasingly likely to be uninsured are people of prime working age – 18 to 64 – whose employers don’t offer coverage.  They are nearly as likely to be employed, roughly of the same seniority and roughly of the same overall health.  The demographic differences between the insured and uninsured are marginal.

So what happens when you take, as the saying goes, “regular Americans” whose jobs have been lost to the recession and put them into a government-provided coverage program like Medicaid?  At a bare minimum, they’ll realize coverage through Medicaid is no worse than what they had (or didn’t have) through their job.  In a best-case scenario, they’ll be reluctant to give it up when they’re back on their feet.  Already Sen. McConnell and other Republicans are expressing concern that once you extend coverage this way, it’s a “systemic change” – you won’t get the genie back in the bottle.

The old tactic of scaring people about the evils of government-run health care only works when people don’t have firsthand experience of it.  Medicare (and Social Security, for that matter) were controversial up until people were enrolled and saw the benefits for themselves.  Then they became cherished institutions.   Now the same demographics that were the target for the Harry and Louise ads might find themselves knowing people just like them benefiting from government-funded health care.  The coverage may be temporary, but the political effects are long-lasting.

If this change in Medicaid does make it into the stimulus package, and if many recently unemployed utilize it, the whole climate towards health care reform in general and single-payer in specific may be about to change… and that’s good news for the prospects for comprehensive reform.

(Photo credit: Center for American Progress Action Fund on Flickr).