Economist: Health Care Key To Stimulus
ROBERT SIEGEL, host:
By habit, we say Tom Daschle will handle health care while Volcker, Summers, Geithner, and company will tackle the economy. But that distinction tends to minimize the role that health care plays in our economy. Some economists look at the health care sector and see it as a potentially effective place through which to create an economic stimulus. One of them is Uwe Reinhardt, professor of economics and public affairs at Princeton University, who joins us from Princeton. Welcome to the program.
Dr. UWE REINHARDT (Professor of Economics and Public Affairs, Princeton University): Pleased to be here.
SIEGEL: How big is the health care sector as a share of our entire economy?
Dr. REINHARDT: It's now about sixteen and a half percent of gross domestic product. But given gross domestic product isn't growing very much in the next few years, it will probably be 18 percent before too long. And certainly by 2015, it will be one-fifth of the economy.
SIEGEL: And if the economy remains at about $14 trillion or even gets up to $15 trillion, we're in the two to three trillion dollar zone over the next few years, you say.
Dr. REINHARDT: Yeah, two and a half trillion is a good number to remember.
SIEGEL: Now, just to give us some sense of comparison here. How does that compare to other industries or sectors of the economy that we talk about?
Dr. REINHARDT: Well, the other large sector, of course, is transportation, and how large it is depends what are you include in it. If you include your and my car, it's probably bigger. But I would say probably health care is now the biggest sector.
SIEGEL: The biggest sector of our economy.
Dr. REINHARDT: The biggest sector of the economy. Of course there is defense, which - but, no, it doesn't come close. Defense wouldn't come close.
SIEGEL: So, what I'm trying to figure out right now is for years we've been hearing about the desire to contain health care costs. If we did that, it sounds like we'd be aggravating the recession because this seems to be the growth area of the economy.
Dr. REINHARDT: I testified recently before Congress, and I made that point. Right now I wouldn't step on the break. Even if you know, as we all do, that there's wasteful spending, it would not be a good time to do it right now. In fact, right now is a good time to expand health insurance coverage for the uninsured. And the reason I say that is health care is hundred percent produced in the United States.
SIEGEL: As you're speaking, I'm thinking of that line that was attributed, some say slightly misattributed, to a secretary of defense back in the '50s who said what's good for General Motors is good for the United States. What's good for General Hospital is good for the United States, is what you're saying.
Dr. REINHARDT: I think that's right. I mean, I have rebelled for at least as long as I can remember at the idea. And I always used to joke, you can just see Dan Rather, for example, on TV saying I have good news and bad news. The good news is we produced a lot more fast food and SUVs. The bad news is we also produced more hospital care. Why is one good and the other one bad? I mean, fast food, yeah, it stills your hunger, but it also creates obesity. SUVs, they are great, but they guzzle gas and they create mayhem in accidents on the highway.
And if you give people hips who couldn't walk before or they can see again when they couldn't see before, why is that a burden on the economy? So I think there is a culture that grew up over the years that says health care is a burden on the economy. It retards economic growth. But everything else - SUVs, fast food, movies - is good for the economy. There's always waste, and we should cut it out. But I think overall, the health care sector is one of the great and strongest economic locomotives that we now have.
SIEGEL: Well, Professor Reinhardt, thank you very much for talking with us today.
Dr. REINHARDT: It's my pleasure, and I'm glad to be able to talk about it.
SIEGEL: That's Uwe Reinhardt, who is professor of economics and public affairs at Princeton University.