House stimulus bill widens healthcare

Newly jobless would get Medicaid or other subsidies to help pay medical costs.


For the first time ever, newly unemployed workers and their families will be eligible for Medicaid coverage and healthcare subsidies if the economic stimulus package passed by the House Wednesday becomes the law of the land.

Those are just two of the healthcare initiatives included in the omnibus $819 billion stimulus bill. They're aimed at pumping cash into the ailing economy at the same time they shore up the nation's unravelling healthcare system.

The stimulus package, which still must be approved by the Senate, allots $117 billion for healthcare spending. It includes:

•$87 billion dollars to help states pay the costs of Medicaid, which provides medical care for the poor and disabled.

•$11 billion to extend Medicaid benefits to the newly uninsured.

•$29 billion to help the unemployed pay for private insurance.

•$20 billion to implement new healthcare technologies, such as electronic medical records, aimed at improving care and cutting costs.

The provisions that would make Medicaid available to the uninsured and the subsidies for private healthcare are being described as temporary. But some healthcare reform advocates hope they will serve as building blocks to bring about a reform of the healthcare system. Opponents worry they could be the start of the nationalization of healthcare.

But even some conservative analysts, who oppose nationalized healthcare, believe that preventing the newly unemployed from also joining the ranks of the 47 million Americans without health insurance trumps the larger ideological battle over healthcare reform – at least for now.

"It is a sensible ... temporary solution to what we hope will be a temporary problem," says Gail Wilensky, a senior fellow at Project Hope, an international health education foundation. "We don't have the luxury or time right now to flesh out how we want to redo … our healthcare system – right now we need to do things that will shore up populations that are being hurt...."

The proposal to make Medicaid available to people who receive unemployment insurance was not part of the original stimulus package. But it may prove to be one of the most visible and popular elements of the plan. In a public opinion survey conducted two weeks ago by the Harvard School of Public Health and the Kaiser Family Foundation, helping the newly unemployed pay for health insurance ranked second only to helping businesses keep or create jobs as the top priorities for President Obama and Congress.

"It was higher than tax breaks for the middle class and higher than helping people pay their mortgages so they can stay in their homes," says Robert Blendon, professor of health policy and political analysis at the Harvard School of Public Health. "And it wasn't listed as a healthcare issue. It was listed as an economic stimulus issue: Helping people who just lost their jobs pay their health insurance is something that people can really see as instant relief."

The House stimulus package would also provide a subsidy to help the newly unemployed pay for insurance they had received from their employer. Under a provision known as COBRA (the Consolidated Omnibus Budget Reconciliation Act), workers in medium and large businesses have for decades been able to buy it from their employers for up to 18 months after they leave their job. But they must pay 102 percent of the cost of the premium, including the portion paid by their employers.

As a result of the high cost, only about 9 percent of the people eligible for COBRA take advantage of it, according to a report released last week by the Commonwealth Fund, a nonprofit healthcare education and advocacy organization. The stimulus package would provide newly unemployed workers a 65 percent subsidy to help pay their COBRA coverage for up to a year.

"Certainly, that would make it more affordable," says Karen Davis, president of the Commonwealth Fund, though she points out employers now pick up 75 to 85 percent.

The House bill would also make COBRA benefits available to people over the age of 55 for up to 10 years, until they become eligible for Medicare.

Advocates say that would make it possible for older people with serious health conditions to continue to buy insurance at a group rate, instead of at the individual rate, which for the over-55 age group is often not affordable, if available at all.

Business groups, which support the short-term COBRA subsidy, are opposed to extending COBRA benefits beyond the current 18 months. They contend that doing so would increase healthcare costs for current employees because only those with serious health conditions – the most expensive patients – would choose to buy into the COBRA system indefinitely.

"It would amount to a huge tax on employers at the worst possible time," says Helen Darling, president of the National Business Group on Health, which represents 300 mostly large employers.

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