Taxpayer's Guide to the Stimulus: 13. Public Health Spending

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Summary: Over $160 billion of the stimulus is given to programs through Medicare, Medicaid, National Institutes of Health, and COBRA insurance, and for developing Health Information Technology (IT) systems.

>> The Major Provisions

Medicaid
$87 billion for Increased Federal Medicaid Funding to the States. Through the Federal Medicaid Assistance Percentages (FMAP) program, the government will increase the amount of money it gives to the states to fund their Medicaid payments by 4.8 percent through the end of 2010. Some of this money will also be distributed specifically to highly unemployed areas.
$9.9 billion for Medicaid Coverage for the Unemployed. This money will go to the states for two purposes: $8.6 billion to help states provide Medicaid coverage to those unemployed and are below the designated poverty line; and $1.3 billion to extend the Transitional Medical Assistance program until the end of 2010, providing Medicaid coverage to families as they go from unemployment back into the workforce.

Medicare
$550 million (estimated cost) for the Qualified Individual Program. The QI program helps cover Medicare premiums for low-income individuals. The program was set to expire at the end of 2009, but the stimulus provides funding to extend it until the end of 2010.

COBRA Insurance Benefits
$24.7 billion (estimated cost) for COBRA Unemployment Healthcare. COBRA laws allow people to keep their insurance after becoming unemployed if they continue to pay the full premium costs for the plan. This money will pay 65 percent of that cost for those who want to keep their insurance coverage after becoming unemployed, allowing people to have full coverage for just 35 percent of the cost. These special benefits only last for nine months, and will only apply to those who have lost their job due to layoffs between September 1, 2008 and the end of 2009.

Health Information Technology
$19 billion for Health IT Infrastructure. Seeks to create an electronic health record for every American. These e-records would be digitally available to any medical facility in the U.S. digitally and are projected to improve the quality of care received and reduce costs. The bill grants $17.2 billion in initial funding, but sets aside $2 billion additional dollars if needed.The money for Health IT will probably eventually lead to an effective electronic system, making people’s health records readily available to medical facilities around the country. This would undoubtedly be a positive development for individuals. Yet, a major benefit e-health records is letting hospitals do their jobs better. With files available digitally, hospitals are better able to provide accurate, timely treatment and have been control of their inventory. This is an investment that hospitals should be making on their own, as several already have, with the networks being connected together overtime as systems were during the evolution of the Internet. Standards can emerge through the competitive process, similar to the current development of a network and standards for battery powered automobiles.
$2 billion for the National Coordinator for Health Information Technology. The Health IT National Coordinator’s office is to spend this stimulus money on projects that advance the Federal Health IT Strategic Plan, which seeks to create digital health records.A principal problem with the Health IT system developed by the federal government is the mandatory nature of the current project that violates the privacy of millions of Americans. Letting the private sector develop and pay for an e-health records system instead of a government federal plan would avoid the violation of privacy (because the system would not be forced on individuals by government mandate) and would cost the American treasury nothing.

Comparative Effectiveness Research
$1.1 billion for CER Programs at HHS and the National Institute of Health. Comparative Effectiveness Research studies what medical treatments and drugs provide the best results. The government programs will compare medical products, analyze the different reactions they create, and make recommendations to public agencies on what treatments or drugs should be legal or approved. This money will go in part to CER programs at Health and Human Services ($400 million), the National Institute of Health ($400 million), and also the Agency for Healthcare Research and Quality ($300 million).Potentially the most damaging to the development of better health services is the Comparative Effectiveness Research, which will give the government the power to pick winners and losers in the medical field. While it is good for the government to make decisions based on what is most effective, the role of government should not be to limit treatment options. If knowledge about the comparative value of medical treatments is a public good, it should be limited to research only. The fear with CER is that the research will be used to limit choice based on special interest preferences. Americans should have access to the treatments they want, regardless of whether or not they carry the government’s seal of approval. And for the government to claim that recommendations would not limit choice is disingenuous because the standards would likely be followed by all public facilities and government funded services.

National Institute of Health
$8.2 billion for NIH General Research Funding. This money can be spent however the director of the National Institute of Health deems appropriate.
$1.3 billion for NIH National Center for Research Resources. This money goes to the National Institute of Health’s NCRR, largely to renovate facilities at universities that run NCRR projects.
$500 million for NIH Buildings. Funding for new facilities, repairing current buildings, and making current facilities more energy efficient.

Other Public Health Programs
$2 billion for Community Health Centers. The stimulus bill provides $1.5 billion in grant money to modernize local community medical care clinics. These health centers can apply for this money, though some of it will go to extend grants that are already given out. The bill also provides $500 million for these clinics to provide healthcare to the uninsured and poor.
$500 million for Specialized Training for Doctors and Nurses. Provides medical training to doctors, dentists, nurses, and healthcare professionals.
$81 million for “Title V” Administration. In Title V of the bill, $80 million is given to help with IRS administrative costs of implementing health insurance tax credits, and $31.25 million is given to provide oversight of National Institute of Health programs outlined in Title V.

>> Commentary

During the period preceding the economic crisis, states spent four times more than the rate of inflation plus growth in population. This spending binge has led to the financial troubles states face today. The money given to states, such as the $87 billion FMAP Medicaid funding, simply covers the fiscal failure of states and does nothing to discourage future frivolous spending. This increase in public health spending moves the country closer to a publicly funded health care system that will decrease choice in providers, increase wait times for treatment, and put the government in charge of approving who gets access to what services and who is out of luck.

Taxpayer’s Guide to the Stimulus: 13. Public Health Spending

Location in Stimulus Bill:
Division B, Titles III, IV, V and Division A, Title VIII