The pundit are saying the election today is a referendum on Obama’s health care reform plan. Massachusetts voters, they say, don’t care about health care reform. That’s too easy.

Today’s news that $850 million in funds earmarked for pandemic flu prevention and preparation was stripped from the stimulus package at the request of Republicans who claimed such funds were not stimulative comes as no surprise, but it may be a lesson far costlier than $850 million.

Besides the looming and possibly dire public health threat, this is an illustration of how wrong it is to separate health care and the economic health of our nation. The decision to remove those funds from the stimulus package stemmed from the argument that investments in public health are not stimulative.

How wrong they were.

There’s an old nursery rhyme that carries a timely message for today:

Karl Rove was one of loudest voices against this particular investment, ironically claiming it was “pork”, not stimulative, and an investment in a sector that needed no stimulus. Maine Senator Susan Collins was a key player in getting the provision stripped from the bill, pointing specifically at the provision for pandemic flu preparedness as an example of spending that didn’t create jobs. We may come to understand that it is far more likely to be the horseshoe nail.

Because of the widespread nature of the outbreak in the United States, the DHS has confirmed that it has the potential to become a pandemic. There are 40 confirmed cases spread coast-to-coast in the United States alone. The virus has been confirmed to match the virus linked to 68 cases in Mexico. It is of global concern, and poses a threat to the global economy.

The same politicians that criticized government investment in preventive measures are now appealing to the government to assist in containing the virus. Texas Governor Rick Perry made a large show of refusing stimulus funds and going as far as to suggest that Texas secede from the US if spending continued to reel out of control. Yet, after 3 confirmed cases of the swine flu in Texas, Governor Perry is now requesting an additional stockpile of antiviral medications (a key component of pandemic flu preparation) for the state of Texas.

As well he should. While we all hope this flu is not a pandemic, this outbreak underscores the need for preparedness, but also that politicians get a clear understanding of how closely health care is related to the health of the United States and global economies. If this flu becomes a pandemic, a major factor in its spread will be the lack of access that many have to adequate health care, preventive measures, antiviral medications, and proper education about the simple steps needed to prevent flu outbreaks.

I hope this is not a pandemic flu. I hope even more that the lesson learned by every single politician in Washington is this: Healthcare reform is our horseshoe nail. If we do not invest in and fix healthcare in this country, our economic “horse” will be lost.

More swine flu information:

• World Health Organization
• CDC web site
• CDC Twitter updates

If our economy is to grow, health care reform must become reality, sooner rather than later. It is no longer realistic to expect this nation’s employers — large and small — to bear the skyrocketing costs of insuring employees and their families.

Yet there has been a rising swell from some conservative quarters that there is no relationship between the economy and the current state of our health care system.

Here are some facts:

1. Health care spending is growing at an exponential and unprecedented rate, and has grown faster than inflation and wages in recent years. In 2008, health care spending represented 17% of the GDP. If it continues as it is, it’s projected to reach 20% of the GDP by 2017. (By comparison, health care spending in Switzerland accounted for 10.9% of GDP, 10.7% in Germany, 9.7% in Canada, and 9.5% in France)
2. The group hit hardest by the costs of health care are young adults, aged 25-34. These are the heart of this nation’s workforce now and in years to come.
3. Average out-of-pocket medical debt for those who filed bankruptcies was $12,000. 68% of those who filed for bankruptcy had health insurance, and medical expenses were responsible in part for 50% of bankruptcy filings. (details here)
4. Approximately 1.5 million families lose their homes to foreclosure each year because of unaffordable medical costs.
5. Employers’ cost for health insurance premiums rose by 5% in 2008. Small employers’ (25-100) premiums rose 5.5%. The smallest businesses, representing the largest sector of business in the country, saw premiums rise by 6.8%, even as workers contributed 12% more toward the cost of insurance than in 2007. Health insurance expenses are the fastest growing cost component for employers, outpacing inflation and threatening to outpace profits.
6. Increased employee costs mean less discretionary funds for savings, investment, home purchases, and consumer spending. Increased employer costs decrease profits, funds to expand, and funds for research and development, while limiting the number of jobs an employer can offer.

There is no doubt that home foreclosures and personal bankruptcies are the largest contributing factors to our current economic crisis and bank implosion. We can argue over whether derivatives and selling risk is at the heart of the crisis, but the fact is that if homeowners were not facing foreclosure, those instruments would have continued to function as a profit center and lucrative investment vehicle.

It is axiomatic: If an uninsured homeowner or family member suffers a severe health crisis, they will lose their home, either by fire sale or foreclosure. Without the COBRA subsidy provided in the recently passed American Reinvestment and Recovery Act, nearly 84% of those newly unemployed workers would not have had the means to pay for their insurance on their own (I am one of them), because continuation premiums are often far higher than unemployment benefits. This is particularly true in the case of family coverage.

Any economic recovery is going to involve not only the rehabilitation of existing businesses, but also the growth of new businesses, startups and innovators. The hidden cost of healthcare is no more obvious than in this sector. As long as employer-based health care insurance is the standard in this country, innovators and self-starters will have to seek employment rather than consider self-employment, simply because they do not have access to affordable health insurance. It is really that simple. For all of the discussion over the auto and banking industry, the truth is that small businesses (1-24 employees) are the heart of this economy, and if new businesses cannot start and have fertile ground in which to grow, the economy will stagnate and die. Our best talent will be stifled in corporate environments, simply because of their need for affordable health care coverage. Options will be limited, creative solutions to difficult problems lost, the potential for the creation of jobs in growth sectors crippled.

Economic recovery and health care reform are inextricably tied together. Every single citizen in this country, every single company doing business here, every single market has the mark of a broken health care system on its struggle to survive.

To take the economy off life support, health care reform must be implemented. We can have a debate about solutions, but let’s not waste time debating the problem.

Additional resources:

• Testimony of Cathy Schoen on Underinsured Trends, Health and Financial Risks, and Principles for Reform (2/24/2009 – Charts and full testimony (PDF)
• Commonwealth Fund Comprehensive Suggestions for Insurance, Payment and System reforms
• BusinessWeek: Want Real Stimulus? Try Universal Health Care

This is now cross-posted at Huffington Post.

I was going to write a nice dry post about all the changes that the economic stimulus package (ARRA) made to COBRA, but then I noticed that it has been done by many who have spent a considerable amount of time researching it.

Instead, I’m going to update my COBRA story.

I. Draconian Decisions

Like any employee working for a large company, at the time of my layoff I was given the option to extend my health coverage, at the low, low price of $1400/month for health coverage and an extra $100/month for vision and dental. I also had a dilemma: Part of the terms of severance was a short extension of health coverage, but as far as I could tell, I had to opt-in to COBRA to receive it.

So I did. I also set aside the $1500 for the February coverage from savings, leaving me with very little in the way of cash to get by, but for us, health insurance is an imperative. Beyond February, I wasn’t sure what to do. There was no way I could afford another $1500 payment, and if I didn’t have another job I wasn’t going to have coverage, so it was back to comparing plans that were no comparison at all to what I had.

My current plan is a PPO with a low deductible, pharmacy benefits, and decent catastrophic coverage. The individual plans I was comparing had $10,000 deductibles, no pharmacy benefits, and I would more or less be out of pocket for any doctor visits. The upside? I could get one for about $700/month.

I tried to estimate what doctor/pharmacy costs would be entirely out of pocket, and realized my net cost would be about $500/month on top of the $700/month, because without the pharmacy benefit, I pay full retail for medications that are necessary for our family.

It wasn’t much of a choice, because adding a monthly cost equal to a decent-sized house payment to the budget in a time where I wasn’t working (and freelance work is scarce, too) really meant I would have to risk having no insurance at all, and paying the out-of-pocket costs for the medications.

It also meant that I did not have the means to go down the route of self-employment and a reinvented career, and most importantly, the risk of having no insurance meant we could lose our house or declare bankruptcy if one of us became seriously ill.

These are not light decisions to make. No matter which way we went, the pathway was dark and uncertain. They are decisions millions and millions of laid-off workers are making every day. I am not unique at all.

II. President Obama understands that health care reform is the center of recovery

My light came in the form of the House version of the economic stimulus bill. The original version included an 18-month subsidy for laid-off or terminated workers (provided it wasn’t for cause) of 65% of the COBRA premium. Do the math for me, and it comes out to something far more manageable (around $490/month, plus $100 for the dental/vision if I opt into that).

As I watched the bill go from the House to the Senate, my hopes were dashed. The Senate version of the bill had no provision for COBRA subsidies, and the rumors I was hearing said they had no intention of including them. Fortunately, enough noise was made about it (from those within the administration and those like me, who were urging calls to Senators) that it was included in the compromise.

Unfortunately, the compromise watered down the subsidy to 50% and 12 months. Still, better than nothing.

Now we have the final version. It provides for the 65% subsidy for a 9-month period. This means that those of us who have joined the ranks of the unemployed can now breathe a little easier while we figure out what to do next, whether it be to launch a new venture, find a new job, or do whatever we have to for our families to eat and have shelter.

III. Real stories of how it works

Health care reform is at the center of our economic well-being. Extending COBRA gives unemployed workers a chance to breathe and get affordable insurance to bridge the unemployment gap. It also leaves those same workers with a far higher percentage of disposable income to put back into the economy in the form of spending, or perhaps simply being able to swing their house payments and stave off foreclosure while getting back on their feet. Either outcome works to better the economic big picture.

My neighbor’s story is similar to mine, except that she is a casualty insurance underwriter who has been out of work for nearly six months. At the time of her layoff, she’d just managed to renegotiate her mortgage to a manageable level and was getting back on her financial feet after nearly losing her home.

Being laid off meant she had to make a choice between health insurance and mortgage payments. She chose the mortgage. Opportunities in her line of work are scarce and far between. She goes on interviews all the time for related jobs, but a job with her skills is hard to find right now. When AIG has to be bailed out and bought by the federal government, it’s not a great time to be looking for casualty underwriter jobs.

The stimulus bill, though, offers hope. All of those projects to build bridges, fix roads? They’re going to be bid on by contractors, and those contractors are going to have to have casualty insurance as part of their package, which in turn means that casualty underwriters, particularly ones with experience in the building/contractor market, will be in demand.

That means she may have employment sooner than she thinks. When she’s employed, she can catch up on her mortgage, and begin to buy things that may be more than the absolute minimum to get by. It means her college-aged daughter can go back to school instead of working full-time at a minimum wage job to help with family expenses.

For me, I now have the space to consider the possibility of launching my own business or at the very least, working freelance while the web community landscape stabilizes a bit. If I go the route of self-employment, I will be putting funds back into the economy and becoming part of the backbone of what makes this country great: the small business meeting niche needs in creative and cost-effective ways.

Remember these two stories when you hear the naysayers tell you that the country is going to hell in a handbasket because the government is spending money. Make no mistake: The government has been spending money for years, long before President Obama was elected. It just wasn’t spending it on us.

Now it is. And we have a responsibility to be responsible, too, and take care of business, try to find jobs, try to invent ones. I honestly think there will need to be a second piece of legislation that extends the 9 month period, because the key to true, long-lasting economic recovery is going to be true, deep health care reform that doesn’t put a bandaid on an ailing system.

Tell us how you’re affected by the stimulus package. Do you have more hope for your future? Do you see opportunities? Leave a comment.

…and shoots across the bow of obstructionists in Congress. Expanded SCHIP benefits were widely supported on a bipartisan basis and sailed to President Obama’s desk where he signed it into law with a flourish and a warning.

The flourish:

This is not who we are. We are not a nation that leaves struggling families to fend for themselves. No child in America should be receiving her primary care in the emergency room in the middle of the night. No child should be falling behind at school because he can’t hear the teacher or see the blackboard. I refuse to accept that millions of our kids fail to reach their full potential because we fail to meet their basic needs. In a decent society, there are certain obligations that are not subject to tradeoffs or negotiation – health care for our children is one of those obligations.

The Warning

President Obama made it clear that he views his Economic Recovery and Reinvestment Plan as a key first step toward comprehensive health care reform.

Think about this – if Congress passes this recovery plan, in just one month, we’ll have done more to modernize our health care system than we’ve done in the past decade.

We’ll be on our way to computerizing all of America’s medical records, which won’t just eliminate inefficiencies, save billions of dollars and create tens of thousands of jobs – but will save lives by reducing deadly medical errors. We’ll have made the single largest investment in prevention and wellness in history – tackling problems like smoking and obesity, and helping people live longer, healthier lives. And we’ll have extended health insurance for the unemployed, so that workers who lose their jobs don’t lose their health care too.

He also made it clear that he was committed to getting this work done, and that he was not going to tolerate politics as usual with regard to Americans’ futures:

Now, in the past few days I’ve heard criticisms of this plan that echo the very same failed theories that helped lead us into this crisis – the notion that tax cuts alone will solve all our problems; that we can address this enormous crisis with half-steps and piecemeal measures; that we can ignore fundamental challenges like the high cost of health care and still expect our economy and our country to thrive.

I reject these theories, and so did the American people when they went to the polls in November and voted resoundingly for change. So I urge members of Congress to act without delay. No plan is perfect, and we should work to make it stronger. But let’s not make the perfect the enemy of the essential. Let’s show people all over our country who are looking for leadership in this difficult time that we are equal to the task. Let’s give America’s families the support they need to weather this crisis.