Just as the New York Times reported that “Medicaid rolls are surging, by unprecedented rates in some states,” Republican strategist Jennifer Millerwise Dyck appeared on MSNBC this afternoon to argue that extra federal funding for health care initiatives (expanding Medicaid, subsidizing COBRA) would not create jobs and should not be part of the Democrats’ economic stimulus package:

There is money in there getting us prepared for universal health care. I mean, this is supposed to be a stimulus package that gets people into jobs, that gets the economy moving, gets money back into the pockets of the people and I think this is ideologically where you see a real difference between Republicans.

Watch it:

In fact, investing federal dollars in Medicaid, as House Democrats have proposed, is far from an “ideological divide”; it actually generates business and “gets people into jobs.”

A recent report by Families USA, for instance, found that “every dollar a state spends on Medicaid pulls new federal dollars into the state—dollars that would not otherwise flow into the state. These new dollars pass from one person to another in successive rounds of spending”:

For example, health care employees spend part of their salaries on groceries, which adds to the income of grocery store employees, enabling them to spend part of their salaries on new shoes, which enables shoe store employees to spend additional money on home improvements, and so on. The new dollars pass from one person to another in successive rounds of spending, generating additional business activity, jobs, and wages that would not otherwise be produced. Economists call this the “multiplier effect.” The magnitude of the multiplier effect varies from state to state, depending on how the dollars are spent and on the economic structure of, and conditions in, the state.

Moreover, health insurance protects families from medical bankruptcy and allows healthy individuals to keep looking for employment.

Throughout the presidential campaign the Wonk Room emphasized the deficiencies of Sen. John McCain’s (R-AZ) consumer-driven health care model (in which the individual purchases health insurance coverage from an unregulated insurance market). In short, we argued that his plan allowed insurance companies to market sub-prime health insurance plans to the healthiest Americans while leaving individuals with pre-existing conditions without coverage.

Yesterday, the Journal of the American Medical Association, highlighted another consequence of commodifying health care — a fundamental re-ordering of the patient-physician relationship:

What has not received attention is that the consumer driven model implicitly calls for a fundamental reordering of the patient-physician relationship, placing increased reliance on commercial ethics while eroding professional ethics as the guiding force for patient-physician interactions.

The article argues that consumer-driven care — in which the consumer pays high-out of pocket fees and only uses health insurance for catastrophic expenses — could push physicians to “promote their own services to would-be patients, making unverifiable assertions about the cost and quality of the services they are selling.” Commercial competition would require physicians to deliver desired products at competitive prices without prioritizing their professional knowledge and “expertise to inform patients’ medical decision making and encourage judicious use of scarce health resources.”

In other words, with consumers “driving” their care, professional ethics, which “demand a fiduciary responsibility to the patient putting his or her needs above all else” would be swapped for market pressures, lowering health care quality and only increasing costs.

All this gets at the fundamental problem with consumer-driven care: it pretends that buying health care is the same as buying an IPod and ignores the fact that health care — in which the patient simply can’t know about the complexities of the treatment, outcomes are uncertain, and treatment is sometimes essential — is not subject to the benefits of the market. Indeed, the market often distorts the product.

The Politico is reporting that President Obama is planning a big push for health care reform “following passage of an economic stimulus package in February”:

President Barack Obama will convene a White House working session on health care reform in the late winter or the early spring, according to sources familiar with the plan…The health care meeting, which would bring together members of Congress and other stakeholders, could come as early as March.

Throughout the transition, Obama and his team reaffirmed their commitment to tackling health care in a big way and the president’s inaugural address was no exception. Twice Obama referred to the high costs of health care, promising to “restore science to its rightful place, and wield technology’s wonders to raise health care’s quality and lower its cost.”

But how does Obama plan to finance his $50-$65 billion proposal? During the campaign he pledged to roll-back Bush’s tax cuts for the wealthiest Americans, and that pledge is still on the official White House website, despite indications that he may delay the roll-back:

A Commitment to Fiscal Responsibility: Barack Obama will pay for his $50 – $65 billion health care reform effort by rolling back the Bush tax cuts for Americans earning more than $250,000 per year and retaining the estate tax at its 2009 level.

Bush’s tax cuts will expire in 2010. If health care reform is not implemented before then, Obama’s could presumably finance health care expansion through the revenue generated by their expiration and a wide-array of cost containment measures.

Still, the costs of inaction far outweigh the price tag of reform. Bringing everyone into the system, helping businesses afford health care coverage, insulating Americans from catastrophic health care bills and improving the quality of care will require a significant upfront investment in coverage and health care infrastructure. But it’s smart economic and social policy, well worth the investment.