View from Washington

The Big Push
What the economic stimulus plan may mean for healthcare and healthcare reform.

At the ballpark, the saying goes “you have to have a program to tell one player from another.” This is certainly true for the economic stimulus package out of the chute at the beginning of 2009. This bill will be big – some estimates exceed $900 billion. Moreover, it will spend a lot of money on healthcare. However, the larger more complex reform bill will be many months and possibly a year in the making.

Besides direct aid to deficit-ridden states, the centerpiece of the economic stimulus package will be help to the states with Medicaid; aid for those hardest-hit in unemployment insurance extensions and food stamps; liberalizing access to COBRA benefits; tax cuts or rebates for the middle class; and funding for “shovel-ready” infrastructure projects.

The economic stimulus package will be the first of an upcoming two-step process at health reform. Besides the Medicaid assistance to states, this bill will contain major funding initiatives for a short-term reauthorization of the State Children’s Health Insurance Program (SCHIP) along with a major initiative in healthcare information technology (IT). The federal government is about to put a huge sum of money as a down payment on health reform. However, the economic stimulus bill is not to be confused with what is ultimately the major overhaul of the U.S. healthcare delivery system to come at a later date.

By tacking three costly healthcare items – Medicaid, SCHIP and health IT – onto the economic stimulus package the Senate Democratic leadership believe they can help clear the path for comprehensive healthcare reform. Additionally, by enacting the stimulus package with these three initiatives, the Obama Administration can garner some early credit for action on healthcare issues with the American people. The logic is this will build momentum for the more difficult work ahead on healthcare system reform. The following examines three health initiatives in the stimulus legislation.

First, Congress is likely to include a short-term reauthorization of the SCHIP as opposed to the large-scale expansion Obama wants. This may be a timing issue as the Obama Administration wants to claim immediate recognition for action specifically on SCHIP. This program must be reauthorized by March 31 or it will shut down. The previous Congress and the Bush Administration failed to come to agreement on reauthorizing and expanding the program in 2007. To keep ahead of the health reform parade, early action on SCHIP is necessary for the new president.

Technology assistance
Second, support exists for putting $40 to 50 billion in the economic stimulus bill President Obama is seeking for health information technology assistance – as the hospitals and doctors have been requesting. Nevertheless, growing concern about what the money would exactly be used for clouds this aspect of the stimulus bill. The Democratic leadership in the House and Senate has let it be known they do not want the money simply to be used for the purchase of software for providers. They want an accelerated program for provider adoption. The trick for Congress will be how to implement an initiative leading to a significant increase in healthcare IT utilization. Rightly or wrongly, Congress is convinced the implementation of IT for providers will seriously help to reduce healthcare costs and improve quality of care.

Medicaid funds
Finally, the stimulus bill will provide funds for Medicaid – as the governors have pleaded for – perhaps by more than $45 billion over two years. Do not anticipate too many strings attached to this part of the stimulus bill. The states desperately need the money right away and Congress wants to push it through ASAP.

The reformation
As big as the economic stimulus package will be, it will not be the comprehensive health reform initiative, which – many agree – is coming. This may seem like a “duh” now to those in healthcare, but think how difficult this distinction may be for the American public. The danger for health policy makers is early action on the stimulus may cost them momentum later when the warring components of the healthcare industry unleash their lobbying machine.

By dumping some of the costs for SCHIP, IT and Medicaid into the stimulus bill, it will make the Congressional healthcare committees job easier down the road – particularly since Congress is expected to set aside its pay-as-you-go budget rules and not fully offset the cost of the stimulus package.

As part of this healthcare reform work, these issues will be debated in the coming months in light of a re-examination of the following values – efficiency, access, equality, rights, and freedom. Reforming a sector of the economy representing 16 percent of the GDP will not be done early in the new Congress. Expect many months of deliberative and difficult policymaking, and intense lobbying by interested groups. My guess is the 2009 economic stimulus package will seem – in hindsight – like the proverbial, “piece of cake.”

About the Author:
Robert Betz, Ph.D., is president of Robert Betz Associates, Inc. (RBA), a health policy consulting firm located in Washington, D.C. For over 26 years, RBA has been serving the public policy and business interests of various health care organizations, including hospitals, pharmaceutical related businesses, trade associations, group purchasing organizations, investment firms, among others. Additionally, Dr. Betz is a part-time professor teaching at The George Washington University where he specializes in political science and health policy. For more information about RBA, visit

About the Author

Robert Betz Ph.D.
Robert Betz, Ph.D., is president of Robert Betz Associates, Inc. (RBA), a well-established federal health policy consulting firm located in the Washington, D.C. area. Additionally, Dr. Betz is an adjunct professor teaching at The George Washington University where he specializes in political science and health policy. For more information about RBA, visit