The Job-Killing Stimulus II

President Obama is currently concluding a multistate campaign-style trip promoting his so-called jobs plan, Stimulus II. Yet, while the President is on the road feeding crowds carefully crafted rhetoric, the economy-killing health care policies hidden within Stimulus II threaten the quality of care millions of Americans are accustomed to as well as one of the country’s fastest growing sectors.

Up to this point, the health care industry has been one of the lone bright spots in this dismal economy.  While the country has lost more than 7.5 million jobs during the recession and monthly jobs numbers show little-to-no new growth, the health care industry has consistently added positions.  Due to the misguided policies of this administration, however, that could quickly come to a halt.

President Obama’s Stimulus II contains a section entitled “Encourage efficient post-acute care,” which would shift funding from lower-cost Medicare providers to more expensive ones.  More specifically, President Obama has proposed to shift funding from nursing homes (for which Medicare pays $500 per day) to long-term acute care hospitals (for which Medicare pays $1,500 per day).  While long-term acute care hospitals cost three times more, nursing home facilities see the same types of patients and deliver the same quality of care.  So, why are cost-effective programs being cut while expensive ones maintain their funding?

This transition from lower-cost health providers to costlier alternatives also has a real impact on local economies and jobs.  In fact, nearly every state will lose jobs as a result of the President’s proposal.  The shift further erodes the fragile financial base of long-term care facilities which would drive a majority of skilled nursing providers into bankruptcy, killing jobs and limiting quality care for seniors.

President Obama touts the provision, and others like it, as a means to cut government spending, but pro-business, limited-government conservatives must be wary.    As conservatives, we believe massive cuts must be made to the federal budget and changes to the way taxpayer dollars are spent should be a priority for Members of Congress and the President.  But these issues are not being addressed if federal funding is redirected to more costly services and lower-cost facilities are driven out of business (causing large-scale job loss) as a result of reduced funding.

Unfortunately, this is far from the first misguided policy to emerge from the Obama administration. Similar changes were a major part of Obama’s health care bill, and if the “Encourage efficient post-acute care” provision is passed, the administration will have taken those changes one step further, causing even more damage to the nursing home facility industry.

Unquestionably, policymakers need to have a meaningful discussion about reforming Medicare and Medicaid.  Arbitrarily slashing funding for health care programs, however, is not the right way forward, as it too often leads to higher costs, greater inefficiencies and more government waste.

American workers need President Obama to get serious about jobs, and the “Encourage efficient post-acute care” provision not only fails to focus on jobs but actually works against job creation efforts.  We can’t afford an anti-economy “jobs” plan like this.


Stephen DeMaura is President of Americans for Job Security a leading pro-business trade association focusing on promotion of conservative pro-growth solutions to our fiscal and jobs crises.