Vidhya Alakeson on the US stimulus bill

While Tom Daschle waits another week for his confirmation as the Secretary of Health and Human Services, health reform has got underway without him in the form of the stimulus bill. The bill that is currently working its way through Congress falls just short of $900 billion in tax cuts and spending. Principally, it is about kick starting the economy and healthcare has a major part to play in that. But within the 600 pages of the bill are also several provisions that have little to do with immediate economic recovery and more to do with longer term health reform goals. Overall, the stimulus bill includes an extra $120 billion for the Department of Health and Human Services.

A central concern of the bill is to prevent people losing their health insurance during the recession. This tends to happen in two ways. First, the majority of Americans get their health insurance and often their whole families’ insurance through their employer.

Loss of health insurance can be a devastating consequence of unemployment for many families. Second, as tax revenues fall and state budgets come under pressure, states are forced to restrict eligibility for Medicaid, the public health insurance program for the poor, leaving newly unemployed people with nowhere to turn.

To counter this, the stimulus bill includes additional federal funding for states to support Medicaid and hospitals that provide care to low income and uninsured populations. It also provides subsidies to help people who do lose their jobs to buy into their old employers’ health insurance through a provision called COBRA. Without a subsidy, paying the health insurance premiums required by COBRA can quickly become unaffordable.

From a health reform perspective, the big winners from the stimulus package are health information technology, comparative effectiveness and prevention. These are all areas that both Obama and Daschle have highlighted as important to the reform of healthcare funding and delivery. The bill includes around $20 billion for health information technology over two years to be paid out in incentives to qualified medical providers who participate in the major public programs, Medicare and Medicaid.

There is $1.1 billion dedicated specifically to comparative effectiveness research, although other research funding set aside for the National Institutes of Health is also likely to go towards comparative effectiveness. The bill also establishes a Federal Coordinating Council for Comparative Effectiveness, a first step perhaps in implementing Daschle’s vision of a federal health board.

The House version of the stimulus bill creates a prevention and wellness fund. This is an idea put forward in 2007 by Jeanne Lambrew, now Daschle’s Deputy in the White House Office of Health Reform. The Senate version of the bill does not include this exact language but there is close to $6 billion dedicated to preventative activities, including smoking cessation, immunizations and screening programmes. Before any bill can be signed by the President, the House and Senate have to agree on identical versions. Slight differences in language and funding in current versions will be ironed out after the Senate has voted on the bill this week.

Pragmatism is the best explanation for how these longer term health reform issues found their way into the stimulus bill. With concern over the economy at fever pitch, it is inconceivable that some kind of stimulus bill will not pass Congress. Getting as many other priorities passed at the same times would seem to make a lot of sense except that some of these issues such as health information technology and comparative effectiveness research need to be put into place carefully to form a solid foundation for reform. Most of the money in the stimulus bill, however, has to be spent quickly, within the next two years. Is it possible to spend so much money quickly and wisely?

Vidhya Alakeson is a former Harkness fellow.

  • This interesting news ends with the question: “Is it possible to spend so much money quickly and wisely?” My answer sounds NO, as demonstrates a long experience. We have to change a lot of NHS programs, especialy regarding diabetes an cancer, two among the severe today’s epidemics. In fact, despite of all expensive prevention campaigns, realized until now, both disorders are groing up distressingly.

  • Tim Wright

    A thoroughly optimistic and myopic perspective on the the so-called stimulus package. The bill, which luckily is undergoing greater scrutiny as it travels throught the American Senate, is extemely limited in any means by which it actually stimulates the American economy. We Americans hope to hold back the flood of socialism ushered into the UK behind the smiling face of Tony Blair, et al……

  • Matiram Pun

    Hi Vidhya,

    Yes I agree with the crux – “Pragmatism”!!! Whatever you do or you pass the bill or reform the law; there is not going to be any change unless you land with pragmatism. Therefore, the policy makers will have to think practically and design the policies accordingly. If you are flying the cheap popularity or pressure without thinking ground reality, the policy no matter what it is the best, going to fail.


    Best wishes,