UPDATE: US House Stimulus Plan To Spur Health-Care Spending

An economic stimulus package under consideration Thursday by the House Energy and Commerce Committee would help provide health- insurance coverage to unemployed and uninsured Americans, give states expanded federal funding for Medicaid programs, and promote use of electronic health records by doctors and hospitals.

The health-care provisions are contained in a two-year, $825 billion package that congressional Democrats hope to enact by mid-February in response to President Barack Obama's call for rapid-fire action to revive a slumping U.S. economy.

Unemployed individuals who lose their health-care coverage would get more of a helping hand as the bill would provide a 65% subsidy for Cobra premiums to workers involuntarily terminated between Sept. 1, 2008, and Dec. 31, 2009. The assistance, expected to cost upward of $30 billion, would cover premiums for up to 12 months and would end sooner for those who get hired and are offered employer-sponsored health-care coverage.

Cobra, or the Consolidated Omnibus Reconciliation Act, allows the unemployed to remain under their former employer's health plan temporarily if they pay 100% of the premium cost and a 2% administrative charge. Critics say the program is simply too costly for many unemployed workers to afford.

In a related vein, the bill would permit Cobra-eligible individuals who are 55 years or older and who have worked for an employer for at least a decade to retain Cobra coverage at their own expense until they become eligible for Medicare at age 65, or secure a new job with health-care coverage.

Medicaid, a health-care program for the poor, would receive upward of $87 billion under the bill, with additional federal matching funds to help states maintain their Medicare programs through 2010. All states would get more federal aid, and those with big jumps in unemployment would get additional payments.

Additionally, the bill would give states the option of temporarily providing Medicaid coverage to unemployed individuals who lack health insurance but who wouldn't otherwise qualify for Medicaid. It also would bolster a transitional medical assistance program that continues Medicaid coverage for one year for individuals who leave welfare rolls to work. Funding for the program, set to end June 30, would be extended through 2010.

Information technology would get $20 billion of federal funding under the bill, which calls for the Department of Health and Human Services to develop standards by 2010 for a nationwide system to exchange health data electronically. The bill includes funding to reward doctors and hospitals for using health information technology. Doctors would be eligible for payments of $ 40,000 to $65,000, and hospitals could qualify for millions of dollars of bonus payments under the plan.

The National Business Group on Health, whose members include about two-thirds of the Fortune 100 companies, said it has serious concerns about expanding Cobraand urged House lawmakers to strip those provisions from the stimulus bill.

Cobra was designed as a temporary source of health coverage and "is the wrong vehicle to assist the uninsured on a permanent basis," the business group wrote in a letter Thursday to House Ways and Means Committee Chairman Charles Rangel, D-N.Y. It warned that the proposed expansion of Cobra would increase health-care costs for employers and employees.

Some Republicans also expressed reservations about the massive spending for health programs. Rep. Joe Barton, R-Texas, questioned the proposed Cobra expansion, saying it would cover former executives who may have received generous severance packages along with low-level employees who got nothing but a pink slip.

"That doesn't seem right," Barton, the ranking Republican on the House Energy and Commerce Committee, said in a statement Thursday.

Barton also took issue with the proposed Medicaid provisions in the bill, saying it would "federalize" the program and expand it to unemployed individuals regardless of their income or assets. Barton endorsed promoting use of health-care information technology but suggested it should be addressed separately rather than as part of the stimulus package. He said incentives to reward doctors and hospitals that use such technology wouldn't start until 2011 and questioned how that would stimulate the economy in 2009.

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