President Barack Obama today signed a $787 billion federal economic recovery package today, which includes significant health care provisions, including some help to the state Medi-Cal program, help to some unemployed looking to continue their health coverage, investments in health research and health information technology, and other efforts at cost containment.
The economic recovery package will provide significant and desperately needed help for California, our health care system, and for Californians directly. With our high unemployment rate, California will get particular and much needed help, for our state budget, and for individual Californians trying to keep their coverage.
As President Obama described the health portions of the package this way:
Because we know that spiraling health care costs are crushing families and businesses alike, we are taking the most meaningful steps in years towards modernizing our health care system. It’s an investment that will take the long overdue step of computerizing America’s medical records – to reduce the duplication and waste that costs billions of health care dollars and the medical errors that every year cost thousands of lives. Further, thanks to the action we have taken, seven million Americans who lost their health care along with their jobs will continue to get the coverage they need, and roughly 20 million more can breathe a little easier, knowing that their health care won’t be cut due to a state budget shortfall. And an historic commitment to wellness initiatives will keep millions of Americans from setting foot in the doctor’s office for purely preventable diseases.
Taken together with the enactment earlier this month of a long-delayed law to extend health care to millions more children of working families, we have done more in 30 days to advance the cause of health reform than this country has done in a decade.
Among other provisions, the compromise economic recovery package includes the following health-related items, and their impacts on California:
* Increase temporarily federal Medicaid matching funds by $87 billion, based on a formula that inlude 65% spread evenly, and 35% targeted to states, like California, with high increases in unemployment rates. California is roughly estimated to get $11.23 billion over the 27 months of the stimulus period, although that number is subject to change.
While increased federal Medicaid matching funds won’t solve the California budget crisis, but it is an important part of any solution. We hope specific cuts, to Medi-Cal benefits and public hospitals, will be triggered off with these new funds.
* Subsidize COBRA health coverage, for those eligible who lose employer-based coverage, with over $24.7 billion to cover 60% of the cost of premiums for as long as nine months. This would not include those who are over certain income requirement, who left employment before September 2008, and who don’t qualify for COBRA (for example, if the employer folded.) The final package also does *not* include a House provision allowing for some workers to stay on COBRA for a longer period through to Medicare eligibility.
The COBRA subsidies will help some newly unemployed Californians keep their coverage while they look for new work. Some unemployed Californians may not be eligible for COBRA, or may find it unaffordable even with the subsidies in this package. After all, it may be hard to pay 40% of premium after one loses a job and their income. This will help many Californians, but it’s not enough to prevent an expected spike in the uninsured that will accompany the spike in unemployment.
* Provide $19 billion for health care information technology to implement electronic health records. There would be bonuses between $44,000 and $64,000 for physicians, and as much as $11 million for hospitals. Physicians and hospitals must implement EHRs by 2014 or face the loss of Medicare reimbursements.
* Increase funds to the National Institute of Health by $10 billion for biomedical research.
* Provide $1.1 billion for research to compare the effectiveness of medications and medical devices, an important first step in health reform and cost containment efforts.
* Establish a new Prevention and Wellness Fund with $1 billion.
We see this package as a down payment for health reform. Whether its preventing cuts to Medicaid which will be a foundation for additional expansions, or put in place the data and information technology tools to help control health care costs and improve quality, these are needed investments to our health care system.