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HEALTH REFORM: Making A Down Payment Work

January 15, 2009 - 5:23pm

Traditionally, the down payment for a prospective home buyer has been around 20 percent (hat-tip to David and New America's Asset Buidling crew). If that's the case, then the $825 billion in economic stimulus plan released today by House Democrats looks like a serious down payment on health reform. More than 25 percent of $550 billion in new federal spending us going toward health-related items (the remaining $275 billion is slated for temporary tax cuts).

You'll find the full the 258-page bill here, an accompanying report here, and a press summary here. Below, we've highlighted some of the major health care components of the proposed legislation:

  • $87 billion for a temporary increase in the federal Medicaid matching rate.
  • $39 billion to extend COBRA benefits beyond 18 months and to provide options for short-term coverage in Medicaid
  • $20 billion to jumpstart Health IT—with $2 billion appropriated in this bill and another $18 billion to be introduced as authorizing legislation for incentives to be administered through CMS.

The plan also includes significant funding for comparative effectiveness research, community health centers, prevention and wellness, as well as a variety of agencies at HHS, including the CDC and NIH.

Health reform is not a subprime investment and a down payment through stimulus spending makes sense on many levels. States need the Medicaid money. COBRA benefits are unaffordable for many workers. Health IT is an investment that done properly will create jobs, while ultimately saving lives and money.

Still, there's a tension between goals of a stimulus and the challenges of health reform. Economic stimulus requires spending money fast. Health reform will mean spending money smarter. Upfront investments in things like health IT and comparative effectiveness make sense, but only if they're done while keeping broader goals of comprehensive health reform in mind.