House Approves $819B Economic Stimulus Plan

Main Category: Medicare / Medicaid / SCHIP
Also Included In: Health Insurance / Medical Insurance;  Public Health
Article Date: 30 Jan 2009 - 3:00 PDT

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The House on Wednesday voted 244-188, with no Republican support, to pass a two-year, $819 billion economic stimulus package that includes funds for health care, the Washington Post reports (Kane, Washington Post, 1/29). The stimulus package includes $153.2 billion in new funds for health care (USA Today graphic, 1/29).

The stimulus package includes about $20 billion for investment in health care information technology and about $87 billion in additional federal funds for state Medicaid programs. In addition, the stimulus package includes about $40 billion to subsidize health insurance premiums for recently unemployed workers under COBRA or Medicaid (Lightman, McClatchy/Philadelphia Inquirer, 1/29). Low-income workers who lose jobs that did not include health insurance could apply for Medicaid through 2010. In addition, workers older than age 55 or those who have 10 years tenure at a company can keep COBRA coverage until they are re-employed or obtain Medicare coverage (Weisman et al., Wall Street Journal, 1/29).

Among the provisions related to health care, the stimulus package includes $4 billion for preventive care, $1.5 billion for community health centers, $420 million to fight avian flu, and $335 million for programs that fight sexually transmitted infections and tuberculosis (Washington Times graphic, 1/29).

Republican Opposition
According to the San Francisco Chronicle, the vote on the economic stimulus package marked a "victory, of sorts, for Republicans," who "have been winning the public relations battle over the bill in recent days by portraying certain provisions in the bill as 'pork'" (Coile, San Francisco Chronicle, 1/29). House Minority Leader John Boehner (R-Ohio) said that the stimulus package includes a number of "wasteful" provisions, such as a measure that would provide $300 million for CDC "to do whatever" (Bendery, Roll Call, 1/28).

In addition, Republicans criticized some "little noticed provisions that would greatly expand access to health care for the unemployed" as a "Trojan horse for Democrats' hopes of expanding the federal role in health care," the Los Angeles Times reports. Rep. Michael Burgess (R-Texas) said, "Things that should be debated in the context of health care reform are being rushed through in this stimulus bill" (Hook, Los Angeles Times, 1/29).

Prospects
The Senate, which will consider a different version of the economic stimulus package next week, "is gearing up for a debate for the ages," and President Obama is "putting on a full-court press for a bigger, bipartisan vote" to "muscle the bill over the line," the Christian Science Monitor reports (Russell Chaddock, Christian Science Monitor, 1/29). In addition, in the event that the Senate passes the stimulus package, differences with the House version could delay final approval of the package.

"In particular, House and Senate Democrats are split over how to divide $87 billion in relief to the states for Medicaid, with senators favoring a formula more beneficial to less-populous states," according to the New York Times (Calmes, New York Times, 1/29). The House version of the stimulus package would distribute 52.5% of the funds to states under the current Medicaid formula and distribute the remainder as part of a "bonus" program to help states with high growth in unemployment rates; the Senate version would distribute 80% of the funds to states under the current Medicaid formula. According to the Wall Street Journal, the debate "pits Democrats from rural and urban areas against one another" (Wall Street Journal, 1/29).

Lawmakers, Budget Experts Raise Concerns
Some lawmakers and budget experts have raised concerns that many of the temporary increases in spending included in the economic stimulus package for health care and other programs could become permanent, USA Today reports. Maya MacGuineas, president of the Committee for a Responsible Federal Budget, raised specific concerns about increases in spending for health care IT, COBRA and an expansion of the earned income tax credit for low-income workers. Robert Bixby, executive director of the Concord Coalition, said, "The things that are being described as investments ... are by definition going to last longer," adding, "The crisis environment shouldn't be used to add permanent new entitlements" (Wolf, USA Today, 1/29).

Meanwhile, "it may be difficult to predict how well the overall plan will work," as use of a large portion of the funds for health care and other programs included in the stimulus package likely would not occur until 2012, according to the New York Times. In addition, although the $87 billion in additional federal funds for state Medicaid programs included in the stimulus package likely will "go a long way to help states close their budget gaps" and "prevent cuts that would make the downturn even worse, ... there has been little discussion so far on a proposal ... that aid to states be provided in the form of loans, encouraging them to spend the money wisely and, once the economy rebounds, obligating them to help reduce the national debt," the New York Times reports (Herszenhorn, New York Times, 1/29).

Health Care IT Investment
The $20 billion for investment in health care IT included in the economic stimulus package "would be, by far, the biggest government infusion to enable medical information to follow patients back and forth among doctors' offices, hospitals and other providers," the Philadelphia Inquirer reports. Most health care IT experts support the investment, but many have raised concerns about the privacy protections included in the House version of the stimulus package and the lack of interoperability standards (Goldstein, Philadelphia Inquirer, 1/29).

Editorials

• New York Times: "The signature achievement of the $819 billion stimulus and recovery bill ... is that it directs most of its resources where they would do the most good to stimulate the economy," and provisions that would provide funds for states are "well thought out," a New York Times editorial states. According to the editorial, the "single biggest chunk of spending -- $87 billion for states to shore up Medicaid programs -- would allow them to provide care to the neediest, whose ranks have been swelled by the deepening recession." The editorial adds, "Equally important, by taking on more of the states' Medicaid burden, the federal government frees up states to continue providing other services that would have had to have been cut." The editorial states, "Republicans' objections are mostly ideological," adding, "They worry, in particular, that subsidizing health insurance may be a step toward universal coverage." Republicans might "be right," but "that is an argument for another day," according to the editorial (New York Times, 1/29).
  
  
• Wall Street Journal: "The more we dig into the pile of spending and tax favors known as the 'stimulus bill,' the more amazing discoveries we make," such as that "Democrats have apparently decided that the way to gun the economy is to spend even more on health care," a Journal editorial states. According to the editorial, Obama "has been talking up entitlement reform as a way to free up the money for his other social priorities," but "it turns out that Congress is using the stimulus as cover for a massive expansion of federal entitlements." The only health care "investment" included in the stimulus package is the "$20 billion or so devoted to electronic health records," the editorial states. The $87 billion for state Medicaid programs included in the stimulus package "will give governors more incentive" to make "unaffordable health care promises," and federal subsidies for health insurance under COBRA included in the package will result in "less capital to invest in new jobs" and will "mean adding another disincentive ... to get a new job," according to the editorial. The editorial concludes, "In sum, what we are really getting in this stimulus bill are several more steps in the gradual government takeover of the health care market" (Wall Street Journal, 1/29).

Opinion Pieces

• Martin Feldstein, Washington Post: The economic stimulus package "needs to be thoroughly revised," as "it does too little to raise national spending and employment," Feldstein, an economics professor at Harvard University and president emeritus of the National Bureau of Economic Research, writes in a Post opinion piece. "Computerizing the medical records of every American over the next five years is desirable, but it is not a cost-effective way to create jobs," he writes. In addition, the funds for state Medicaid programs included in the stimulus package leave questions about whether "these vast sums actually lead to additional spending" or "merely finance state transfer payments or relieve state governments of the need for temporary tax hikes or bond issues," Feldstein writes. He adds, "The plan to finance health insurance premiums for the unemployed would actually increase unemployment by giving employers an incentive to lay off workers rather than pay health premiums during a time of weak demand," and "this supposedly two-year program would create a precedent that could be hard to reverse" (Feldstein, Washington Post, 1/29).
  
  
• George Will, Washington Post: "Sensible people are queasy about throwing trillions of dollars at barely understood problems on the basis of untested theories," and Republicans should oppose provisions in the stimulus package that would impose "major and nongermane policy changes," Post columnist Will writes. For example, the stimulus package would establish the Council for Comparative Effectiveness Research, which would be "about medicine but not about healing the economy," Will writes, adding, "The CER, which would dramatically advance government control -- and rationing -- of health care, should be thoroughly debated, not stealthily created in the name of 'stimulus.'" Will concludes, "If Republicans conclude that the truly stimulative portion of the legislation is less than half the size of the portion composed of banal and brazen opportunism, and irrelevant but consequential policies surreptitiously pursued, they should oppose it" (Will, Washington Post, 1/29).

Broadcast Coverage
NPR's "All Things Considered" on Wednesday examined provisions in the economic stimulus package that would subsidize health insurance premiums for recently unemployed workers under COBRA and expand the program. The segment includes comments from health insurance expert Karen Pollitz of Georgetown University; Helen Darling, president of the National Business Group on Health; and Tom Miller of the American Enterprise Institute (Rovner, "All Things Considered," NPR, 1/28).

On Thursday, NPR's "Morning Edition" reported on the House passage of the stimulus package (Cornish, "Morning Edition," NPR, 1/29).

Reprinted with kind permission from http://www.kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery at http://www.kaisernetwork.org/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation.

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