Health Care and the Obama Economic Stimulus Bill

Americans elected Barack Obama as their president because of their hope that he can bring about real change in Washington.

And according to his blueprint for change, re-building the American health care system is going to be a large part of that change.


His plan for re-building the healthcare system has three main planks.

  • To make health insurance affordable and accessible to all:The Obama-Biden plan provides affordable, accessible health care for all Americans, builds on the existing health care system, and uses existing providers, doctors and plans to implement the plan.
  • To lower your health care costs:The Obama plan will lower health care costs by $2,500 for a typical family by investing in health information technology, prevention and care coordination.
  • To promote public health:Obama and Biden will require coverage of preventive services, including cancer screenings, and will increase state and local preparedness for terrorist attacks and natural disasters.

And, unlike previous administrations, it seems like some of these promises may actually be kept.

In the economic stimulus package making it’s way from bill to law, President Obama has earmarked billions and billions of dollars for:

  • State fiscal relief through Medicaid

In this part of the plan, states would receive a temporary (27 months) increase in Federal Medical Assistance Percentage (FMAP) funding. The estimated cost of this plan is $87 billion.

  • Help for working families hurt by the economic downturn

The stimulus bill would help workers and their families hurt by the economic downturn by providing the following:

  • A 65 percent premium subsidy for individuals who lost their jobs after September to help cover the cost of COBRA premiums. This provision is estimated to cost $25 billion over ten years.
  • A temporary extension of Transitional Medical Assistance (TMA) This provision is estimated to cost $1.3 billion over ten years.
  • A temporary extension of the Qualified Individual (QI) program. This provision is estimated to cost $562 million.
  • An elimination of cost-sharing (co-payments) for American Indians and Alaska Natives in Medicaid. The estimated cost of this provision is $25 million
  • Job-creation in the Health Information Technology (HIT) Industry

This part of the plan focuses on the nationwide conversion of all health care records from paper based filing systems to an electronic system. This provisions is estimated to cost $17.9 billion and is supposed to create about 200,000 new jobs.


That’s a lot of stimulus.

By my estimate, the health care portion of the stimulus bill is $130 billion. Of course we need to keep in mind that these numbers are only estimates. Who knows what the final numbers will actually end up at.

But, it’s health care.

That’s a good place to spend money, right?

We all want to live long and healthy lives.

And, considering that the current generation of American children are expected to die at a younger age than their parents, maybe America should move towards a Canadian or European model of health care.


Or maybe, instead of spending 96% of it’s health care dollars on treatments and only 4% on disease prevention, America could shift some money towards making itself fit and healthy.

And if Jim Riesberg, chairman of the House Health and Human Services Committee, has his way, that may actually happen.

As the chairman of the House Health and Human Services Committee, I will spend much of my time this year focusing on health care needs and our health care delivery systems. One of the first places we must begin is to recognize the impact that chronic diseases have on health and health care in the United States.

Chronic diseases are the No. 1 cause of death and disability in the United States.

One hundred thirty-three million Americans, representing 45 percent of the total population, have at least one chronic disease and chronic diseases kill more than 1.7 million Americans per year and are responsible for 7 of 10 deaths in the United States.

Patients with chronic diseases account for 75 percent of the nation’s health care spending.

During 2005, the United States spent almost $2 trillion on health care, and of every dollar spent, 75 cents went toward treating patients with chronic disease. In public programs, treatment of patients with chronic diseases constitutes an even higher portion of spending: more than 96 cents in Medicare and 83 cents in Medicaid. Neither our nation nor our state can effectively address escalating health care costs without addressing the problem of chronic diseases.

Two-thirds of the increase in health care spending is due to increased prevalence of treated chronic disease.

From 1987-2000 that increase amounted to $211 billion among the non-institutionalized U.S. population.

The doubling of obesity between 1987 and today accounts for nearly 30 percent of the rise in health care spending.

The percent of children and youth who are overweight has tripled since 1980.

If the prevalence of obesity was the same today as 1987, health care spending in the United States would be 10 percent lower per person — about $200 billion less.

The vast majority of cases of chronic disease could be better prevented or managed.

Link to entire speechpdf version

In my next post, I will outline some of the disease prevention/health promotion strategies being tested around the world.


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  1. In 2007, the New England Journal of Medicine published an article by Dr. Steven Schroeder, “We Can Do Better – Improving the Health of the American People.” At the time, Dr. Schroeder was working in the Department of Medicine, University of California at San Francisco. He opines that the “determinants of premature death” are a key measure of health status. Here’s a smattering of interesting quotes:

    * Health is influenced by factors in five domains – genetics, social circumstances, environmental exposures, behavioral patterns, and health care. When it comes to reducing early deaths, medical care has a relatively minor role. [These five domains are his determinants of premature death.]
    * The United States spends more on health care than any other nation in the world, yet it ranks poorly on nearly every measure of health status.
    * U.S. expenditures on health care in 2006 were an estimated $2.1 trillion, accounting for 16% of gross domestic product. Few other countries even reach double digits in health care spending.
    * . . .inadequate health care accounts for only 10% of premature deaths . . .
    * The single greatest opportunity to improve health and reduce premature deaths lies in personal behavior. In fact, behavioral causes account for nearly 40% of all deaths in the United States.
    * Although there has been disagreement over the actual number of deaths that can be attributed to obesity and physical inactivity combined, it is clear that this pair of factors and smoking are the top two behavioral causes of premature death.
    * If the public’s health is to improve, however, that improvement is more likely to come from behavioral change than from technological innovation.

    My Comments:

    Since health care determines only 10% of health status and premature death, let’s focus our attention on the other 90% – behavioral patterns, social circumstances, genetics, and environmental exposure. Bigger bang for the buck.

    Behavioral patterns cause 40% of poor health and premature death. The politicians can tinker with obesity, physical inactivity, and smoking. Leave health care and health insurance alone, or improve them by diminishing government involvement.



    Schroeder, Steven A. We Can Do Better – Improving the Health of the American People. New England Journal of Medicine, 357 (2007): 1,221-1,228.

    McGinnis, J.M., et al. The case for more active policy attention to health promotion. Health Affairs (Millwood), 21 (2002): 78-93.

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