Features

November/December 2011 Shovel-Ready Clinics

A job creation idea so obviously good even Washington couldn't possibly say no... could it?

By Jeffrey Leonard


Photo: Courtesy of Vista Community Clinic

Barack Obama has spent most of his first term as president wrestling with three enormous tasks: kick-starting the economy to create jobs again; standing the banking sector back on its feet; and providing health care to the 40 million Americans who lack insurance. He’s made progress on all these fronts.

But let’s be honest. Despite billions in federal stimulus money, the American jobs machine is barely functioning, and millions of previously hardworking Americans, especially in construction and the “trades,” are sitting idle. Despite billions in bailouts, America’s banks are barely lending, especially to small businesses. And while Obama did pass health care reform, those very reforms actually threaten to overwhelm an already severely strained primary health care infrastructure with a huge wall of new “customers” demanding health care services.

In 2014, a little more than two short years away, the provisions in the Affordable Care Act (ACA) that are designed to expand coverage will kick in, initiating a deluge of insurance-card-carrying Americans into the health care system. These disproportionately low-income, newly insured people will live in every state and community in the country. Unless we act now, they stand to join the ranks of the “medically disenfranchised”—the more than 50 million already insured Americans who have no regular access to primary health care for lack of physicians and facilities in their local communities. Think our transportation infrastructure is under stress? Our health care infrastructure is like an already clogged highway system that’s about to take on 32 million new vehicles overnight.

These three problems—the economy’s failure to create jobs, the banking sector’s unwillingness to lend, and the health care system’s lack of capacity to meet an accelerating rise in demand—might seem intractable, especially in a deadlocked Washington where no new money is likely to be put on the table. But if we could take off our ideological blinders for a moment—if conservatives could stop seeing every federal action as an assault on freedom, and liberals could get beyond their belief that spending more federal money is the way out of every problem—we would find a modest answer to all three of these problems staring us in the face.

Part of the solution is relatively uncontroversial. As Congress and the president have acknowledged, the way to meet the flood of new patients coming down the pike is to expand the nation’s existing network of community health centers— nonprofit clinics that offer primary care to the medically under-served, often in rural areas or inner cities. But to get this done, there’s no need to appropriate billions more in direct government spending. Rather, there is a way to lure skittish banks into lending private capital to finance a health center construction boom in all fifty states, simply by tweaking the language of an existing federal lending program. Doing so would save money in the long run by providing cost-effective primary care to those who desperately need it. And it would quickly create tens of thousands of jobs, many of them in the hard-hit construction sector. Moreover, unlike the roads, bridges, and other complex infrastructure projects the Obama administration wants to fund, few of which are shovel ready, health center projects could get the hammers swinging in months, not years.

Community health centers may sound like a liberal pet project—they originated under Lyndon Johnson’s Great Society, after all, and offer care regardless of patients’ ability to pay—but they have long enjoyed the steadfast support of Republicans and Democrats alike. President Obama invested $2 billion in health centers through his stimulus package, and the ACA—his signal legislative achievement—rightly carves out a huge role for them in handling the brunt of the newly insured patient load in 2014. But before the age of Obama, perhaps the greatest recent champion of health centers was, of all people, George W. Bush, who doubled their capacity under his watch. Richard Nixon, the first President Bush, and generations of GOP lawmakers also supported them.

Republicans like health centers in part because many of them serve the kind of rural districts that make up the conservative base, but also because they represent a fundamentally cost-effective institutional model. By providing comprehensive care under one roof, with primary care doctors at center stage, heath centers treat patients at a cost that is 41 percent lower than what other providers rack up, according to a recent study by the National Association of Community Health Centers. This translates into savings for the entire health care system of up to $17.6 billion annually. A low-income patient served at a community health center costs the federal government just $125 a year in direct subsidies. Moreover, that patient is far less likely to flock to the emergency room of a private hospital to receive basic care. (For this very reason, private hospitals also love community health centers.)

Today there are about 1,200 registered community health centers in America, serving 19 million patients with branches in 8,000 towns and cities. To meet the coming wave of patients newly insured under the ACA, the Department of Health and Human Services (HHS) estimates that community health centers will have to serve more than twice as many people as they do now—going from 19 million today to 40 million in 2015. To help them meet that goal, the ACA sets aside $11 billion to fuel nationwide health center expansion. There are two big problems with the ACA’s approach, however.

One is that big pots of money in Washington are always vulnerable to having their bottoms drilled out. In a fit of budget-cutting zeal in April, Congress slashed the annual funding that supports the operations of existing community health centers by $600 million. Hence HHS, which administers all the federal aid to health centers, has had to raid the “new expansion” piggy bank just to keep the old health centers running. This August, HHS was slated to announce grants to 350 health centers so they could open new branches. Instead, it named only sixty-seven.

The other problem with the funding set aside by the ACA is that the vast bulk of it can only go toward paying the operating expenses of a center, not its construction costs. That means a new center may use that federal money to pay rent on a new facility, but not to build or buy one. Thus the new centers will wind up operating as many do now, in make-do spaces like defunct big-box stores, rickety trailers, and even—in at least one case—a retrofitted gas station.

This is a very inefficient and, over the long run, expensive way for centers to expand. Needless to say, a converted gas station is hardly the ideal physical plant for a medical facility. But more importantly, rents only go up with time. If centers could build, own, or sign long-term leases for their own space, they would level out their occupancy costs, rather than watch those costs threaten to eclipse revenues year in and year out. Better yet, if health centers did so now, they would buy into a depressed real estate market with rock-bottom prices.

Jeffrey Leonard is the CEO of the Global Environment Fund, a growth capital-oriented investment firm, and the chairman of the Washington Monthly board of directors. He is the author of five books and numerous articles on issues relating to energy, the environment, and economics.

Comments

  • sue rn on October 26, 2011 11:27 AM:

    AMEN!

  • momo on October 26, 2011 2:21 PM:

    a good and through article. refreshingly fair, too.

  • beb on October 26, 2011 5:57 PM:

    The Republicans have already spoken. They will oppose any and everything that Obama proposes. Community Health Clinics... won't happen. That's Kenyan socialism!

  • Equal Opportunity Cynic on October 26, 2011 8:37 PM:

    I got to paragraph 4, then false equivalency fatigue set in.

  • Diane Smith on October 27, 2011 8:13 AM:

    I also believe that Mr. Obama had a lot of serious problems to deal with, but he is a decent and reasonable man and I am sure that he is doing his best!

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  • Howey on October 29, 2011 11:36 AM:

    I proposed this same idea almost two years ago on my forum. It's such a simple solution I'm not surprised nobody figured it out.

    http://popculturedoneright.smfforfree.com/index.php/topic,32.0.html

  • cjenk415 on October 30, 2011 3:39 PM:

    I'd say part of the problem is liberals insisting on engaging conservatives as though they were acting in good faith, like what you're doing in this article. In fact, I would say that is the ONLY problem and everything else is just obfuscation.

    Why is the conservative ideology inconsistent?

    BECAUSE. THEY. ARE LYING.

    Their ideology serves and agenda to gain and hold power but it's just a tool they would discard if another tool served better. Quit being suckers, liberals.

  • dcotler on October 30, 2011 4:27 PM:

    So right EOCynic. Does the author really think that liberals harbor the preposterous belief "that spending more federal money is the way out of every problem?" A positive article about a good liberal policy proposal could do without the pro forma smack at a stupid straw man.

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  • Ben Leet on November 07, 2011 5:44 PM:

    A government guaranteed loan program was proposed by Robert Pollin to generate 18 million new jobs devoted to retrofitting buildings. See the March 8, 2010 issue of Nation Magazine. http://www.thenation.com/article/18-million-jobs-2012?page=0,3 Banks are sitting on about $1 trillion and corporations on $2 trillion, and virtually no jobs are being created. The default rate on government insured loans is historically low. The added cost to the government is relatively low. If 5,700 community health care centers were constructed, California communities would receive about 700 new medical provider centers. And that rate would be national. A problem with these solutions is that they minimize or ignore the problem: inequality. An economy where the majority of workers cannot purchase the products they produce can only shrink. The median household income has shrunk by 10% since 2007. Income inequality creates this condition, and it is unaddressed here in this article or nationally in general. A prime example is that $26,362 is the median income nationally according to the Social Security Administration, and $109,000 is the average economic output per worker according to the Federal Reserve Bank of San Francisco. (I source this information at http://benL8.blogspot.com) This is our learning moment, and this article contributes nicely to my education, but it does not go far enough. Don't forget to look at the Pollin article if you are really interested. Also inequality.org is a good source, toomuchonline.org, and stateofworkingamerica.org.

  • Stella Godbey on November 09, 2011 12:36 AM:

    Present your plan to a congressman, preferably a republican, so they won't automatically reject it as a socialist plot.

  • CaptainVideo on January 01, 2012 12:40 PM:

    "Washington couldn't possibly say no... could it?"

    Of course the Republican House will say no. They want to keep the unemployment rate as high as possible before the election and will oppose anything that can create jobs.

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