Q&A: Michael Grunwald talks about the impact of the ARRA

In his new book, The New New Deal: The Hidden Story of Change in the Obama Era (Simon & Schuster), TIME magazine correspondent Michael Grunwald makes a compelling case that President Obama's 2009 stimulus bill – despite being lampooned by the right as a pork-laden boondoggle and criticized by the left for not going far enough – is potentially more transformative, in the long run, than Roosevelt's New Deal.

Beyond merely preventing a second Great Depression, Grunwald shows – thanks to fascinating and wide-ranging behind-the-scenes reporting from the White House, Capitol Hill and beyond – how the American Recovery and Reinvestment Act (ARRA) has quietly set the stage for lasting transformation in energy, education, infrastructure and more.

A central pillar of that mammoth, $800 billion dollar legislation, of course, is devoted to digitizing the nation's medical records and rewiring healthcare for the 21st century, via the $27 billion Health Information Technology for Economic and Clinical Health (HITECH) Act.

Grunwald spoke to Healthcare IT News about President Obama's rationale for giving health IT pride of place in the legislation, the negotiations and revisions that led to the creation of meaningful use, the ways it has set the stage for broader healthcare reform, the jobs it has created – and why health IT may just be the most lasting, bipartisan and transformative piece of the stimulus bill.

Q: You call the American Recovery and Reinvestment Act (ARRA) one of the "most ambitious and least understood" pieces of legislation in American history. Explain.

A: In Washington it's just considered this $800 billion joke: $800 billion worth of levitating trains to Disneyland and snowmaking machines in Duluth and mob museums and sod on the Mall and all sorts of nonsense that isn't in the actual stimulus. And even nationally, a year after it passed, the percentage of Americans who believed it created any jobs was lower than the percentage of people who believed Elvis was alive.

I spent nine years at the Washington Post, but I don't live in D.C. anymore. I think it would have been hard to write this book if I did because there's just a groupthink and herd mentality about this stuff. I stumbled into it through energy, and realized that this was by far the biggest energy bill in the history of the planet. And it turns out it really was, not just for energy, but it also laid the groundwork for healthcare reform, it was the most ambitious education reform in decades, the biggest infrastructure bill since Eisenhower, the biggest middle-class tax cut since Reagan, and the biggest investment in research, ever.

And then, oh, by the way, just about every independent economist agrees that it helped prevent a depression and added 2 to 4 percent in GDP, which is really the difference between contraction and growth. So it took this economy that was crashing at a 9 percent annual rate and losing 800,000 jobs a year, and within a few months you had the biggest improvement in employment in 30 years.

So there was clearly a really big story to tell. I didn't know whether everything worked out, but it was clear that this is what Obama meant by "change we can believe in." This was a huge downpayment on just about all his campaign promises.

Q: So why aren't more people aware that the stimulus has worked? Why hasn't the Obama administration done a better job claiming credit?

A: I'll offer four reasons. The first, that I do sort of document in this book really for the first time, the way the Republicans had essentially plotted to obstruct Obama and destroy him before he even took office. I have the first reporting on these secret meetings with Eric Cantor and Mitch McConnell, and they plotted this strategy of 'no' – Republicans have done a really good job of distorting the stimulus and making it sound like $800 billion worth of waste and fraud. The fraud experts were estimating that 5 to 7 percent of it would be lost to fraud. So far, it's been 0.001 percent.

But Republicans have been really relentless. And then you've got the Democrats who, instead of pushing back, have mostly been kvetching about it too: "It's too small," or "There's too many tax cuts," or "It wasn't shovel-ready enough." Even inside the White House there was real debate over how to sell it. And some real mistakes that, I think in retrospect ... I quote some people at the White House saying how they screwed up the message and did some things that were stupid. And then you had the media. The national media is not really interested in public policy; they just cover the game. They do he said/she said stories. There wasn't a lot of incentive for reporters who don't really care about this stuff to try to track down what really happened.

But the big reason? I always say that this black guy whose middle name is Hussein who got himself elected president? He probably didn't become a political idiot on January 20, 2009. But it was such a really hard sell: It was a jobs bill that passed at a time when jobs were hemorrhaging. And the financial earthquake had hit, but the economic tsunami had not reached the shore. So I quote Larry Summers in December 2008 saying that FDR was lucky: there was three years of depression before he took over; everybody knew it was Hoover's depression. But when Obama took over, unemployment was still pretty low: Even if Obama had taken office in March, like FDR did, that would have been an extra 1.5 million jobs lost on Bush's watch.

So you had this really tough sell. And then Keynesian stimulus, which is really uncontroversial – every Republican and Democratic candidate in 2008 was pushing a stimulus bill, and Mitt Romney was pushing the largest one – but then when you've had this nightmare, and you've suddenly bailed out the banks with $700 billion, and now families and businesses are tightening their belts and you're telling them the answer is to throw another $800 billion into the economy, it's not intuitive. I do think in a way it was sort of a perfect storm where they definitely made some mistakes. But even if they had handled this beautifully and brilliantly, double digit unemployment was going to hard to explain.

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Q: Talk a bit about how health information technology became such a big "pillar" of the stimulus bill. You call it a "no-brainer that appealed to Obama's hyper-rational side."

A: There was a lot of money in this bill for healthcare. The biggest chunk was aid to states to prevent huge Medicaid cuts. And there's some other stuff in there, but health IT – Rahm Emanuel had that famous line about how you never want to waste a crisis. And health IT had been something that had real bipartisan support: Hillary Clinton and Newt Gingrich ... I recently did Mike Huckabee's radio show, and he was talking about how he loved health IT when he was governor. Because it really is a no-brainer, right? We've got online banking, we've got online dating. It's preposterous that you have to fill out the same 20 forms every time you go to the doctor's office. And that two doctors who aren't in the same room can't look at the same file. And that if you show up at a hospital on the weekend they have no way of seeing the test that you took on Wednesday and you have to retake it. And that your doctor could kill you with his chicken-scratch handwriting. It's just crazy.

So I do think it sort of appealed to Obama, who really is this sort of rationalist, pragmatist, sort of policy guy. It's not like he had a new idea, this was one of the old ideas. Something that members of Congress had been working on in a bipartisan way. And here was this opportunity to spend $800 billion dollars, well, why don't we just do it? People had been squabbling over the details for several years; the prospect of $27 billion really did focus the mind.

Q: Do you think the administration saw this as sort of a way of laying the groundwork a bit for broader health policy reform – what eventually became Obamacare?

A: Absolutely. In fact, Secretary Sebelius specifically said that to me. She said she considered the stimulus, and especially health IT, as the foundation for Obamacare.

One thing I often point out is that one thing that did set Obama apart from the other Democrats during the primary when it came to healthcare was that he really was focused on cost. That his analysis of the healthcare problem was that it was too expensive. He wanted to do universal care too, but his analysis of why there wasn't universal coverage was that it was too expensive. Anything you could do to make healthcare cheaper was the way to expand coverage. And health IT really has the potential – when you think about all the crazy stuff we do when this is not online, the way you have to see multiple doctors or take multiple tests – to reduce costs. And not just in money, but the personal tragedies that happen because of these mistakes that happen because who the hell can read the handwriting on these clipboards?

For Obama, this was the sort of thing of, "Well yeah, obviously we should do it. Figure out the details and then let's do it." And they did sort of work out the details. And my sense – I'm definitely not as in the weeds as you are – but my sense is, I'm aware of some of the decisions they had to make, and it sounds like they basically came out in the right place and it's already changing healthcare.

Q: It was a big deal in this industry seven or eight years ago when President Bush just gave health IT  passing mention in the State of the Union address. He may have given the industry a boost, but as you point out in the book he spent comparatively little: $100 million or so. Obama earmarked $27 billion. Talk about the challenges of doing something effective with that much money – addressing all the concerns of privacy and interoperability and incentives while still getting the most bang for the buck. What was the process?

A: Putting the bill together there were all kinds of disputes that had to be worked out. Privacy is one of them. How hard are you going to make it to share this information? If you make it too hard then it's kind of useless. By putting this stuff online, not only are you making the act of providing healthcare easier and more efficient, but you're also providing data. There are really important potential uses for this stuff. And you're also allowing the possibility of having the interaction with the doctor and the patient where, if there are protocols, there are recommended protocols where your computer can say, y'know ... the obvious one is when there are dangerous drug interactions. David Blumenthal describes how he almost once prescribed a drug that a patient was allergic to, but his computer alerted him to the allergy.

But there were all kinds of details that had to be worked out. One I remember is there was a fight when [Democratic California Rep.] Pete Starkef="/directory/stark-law-physician-self-referral-law" target="_blank" class="directory-item-link">Stark basically wanted to force everybody to adopt the VistA system.

Q: Which is a great electronic health record…

A: Yeah, in Jonathan Alter's book [The Promise: President Obama, Year One (Simon & Schuster)], which I really admire, he took a shot at how ridiculous it was that they didn't all just adopt VistA. And I think there are going to be some real challenges in making sure these things can all talk to each other. But the thinking was, as I recall, "Why be prescriptive? Maybe somebody will come up with something better than VistA. We want NIST to create these standards, so there will be these interoperability requirements, but let's not lock ourselves into VistA. This could be an industry of the future, let's see what the great American innovators come up with."

When I wrote the book, the Bureau of Labor Statistics said [health IT] was the fastest-growing industry, and the money had just started going out the door, so there is the sense that this has created a burst of innovation.

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Q: And if the purpose of the stimulus is to be a jobs bill, obviously enlisting private industry would hopefully multiply the effect of this money.

A: Exactly, exactly. For most of the stuff in the recovery act, you could at least say that it provided some reasonably quick stimulus. Health IT was one of the items that at the time they weren't even sure they could say that with a straight face. But it turns out that the prospect of all this money out there did create a real boom in the industry. I'm not sure that they gamed that out in advance.

Q: Talk about meaningful use. At first it was too stringent. When even the Mayo Clinics and Kaisers of the world say they can't meet the mandates, you know it's probably too strict.

A: There was a fight inside the White House. My sense is that the strongest advocate for "stringent" was Zeke Emanuel, Rahm's brother, who was at the Office of Management and Budget, and really felt that this is the time: If you're going to have it, you've got to use it, and this is such an opportunity. Let's force people to do the right thing. They're going to get all this money [in incentive payments], let's get them to do everything.

And Blumenthal, the analogy he always used was the escalator: If we can get people onto the escalator, then they'll sort of naturally ramp up. But there has to be some use. We don't want them to just buy this stuff to have it sit in the corner gathering dust. But if we can get them doing some stuff with it, gradually over time we can get them to be more comfortable and they'll ramp up that way.

And I think the first draft, although they claim it was not just a negotiating position, it was, as you said, really draconian. Even Blumenthal's old boss at Partners was complaining about it in the New York Times. I think there was the sense that they had to go back to something a little less stringent – well, a lot less stringent.

But it's still, I think most people would say, "meaningful" use. You've got to be using this stuff. I think reasonable people can disagree about whether it's meaningful enough. But I think there's a real belief, I think if you're going to spend $27 billion on this stuff you'd better have this belief – that as doctors start to use it they're going to find it useful. There will certainly be some bitching now, especially among older doctors, but my sister is bitching about it too. She's a doctor and she's 39. But like Obama always says about decisions that reach his desk: if it was easy, somebody would have done it already.

And I think the fact that that first draft of meaningful use regs was so harsh, I think if they came out with what they eventually settled on first, people might have howled about that too.

Q: I found it interesting that, beyond the practical considerations of toning the rule down, there was a political calculus, too. They didn't want to pick a fight with the healthcare industry – and give red meat to the Tea Party – as they were starting to to do health reform.

A: I don't remember if I put this in the book, but during the Obamacare debate, comparative effectiveness had become this big kind of crazy political football…

Q: Not as bipartisan as health IT, to say the least.

A: Yeah, it's like rationing and "death panels" and Zeke Emanuel was "Dr. Death," all this crazy stuff. And you can see as the drug industry and particularly the medical device industry – to get a drug approved you just have to prove it's better than a placebo, and to get a device approved you basically just have to prove it won't hurt you – you don't have to prove your stuff is good, or at least better than any other treatment.

They had that [former Calif. Rep.] Tony Coehlo patients' group [the Partnership to Improve Patient Care] – it's not fair to say it's just a front, because it's a real patients group, but it sure does get its money from the device and drug people. Who have really extracted their pound of flesh for this stuff. And have tried to make sure: "You can have your comparative effectiveness research, as long as you don't use it."

But during Obamacare, this almost scuttled the bill. Democrats were behind the scenes screaming about it, and Rahm almost got in a huge fight with Zeke about it. Rahm just wanted to ditch it, and it was Zeke's baby. Rahm actually forced Zeke to write a new version of the bill without comparative effectiveness. This was when they were putting together PCORI [Patient-Centered Outcomes Research Institute]. It was real Emanuel brothers fireworks.

Q: I'm sure there was some salty language exchanged…

A: I would think it was probably not like, 'Well, Ezekiel, I would suggest that perhaps we should…" Or, "My dear Rahm, I must dissent."

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Q: Back to meaningful use for a moment. This is a long process. The rules were devised in 2009, Stage 2 was just published this past month and Stage 3 is still to come. Did other parts of the stimulus, that had all this money thrown at them, have anything like that? Any similarly stringent frameworks outlining how they could receive or spend this cash?

A: That's a good question. Yeah, there were lots of things like this. Another example – a part of the bill that actually has a lot in common with health IT, although it had a more ambitious timetable, because with health IT everybody knew it was going to take several years before it got started – was the Smart Grid. Which also, actually, has the same sort of NIST-doing-interoperability stuff. Merging the Internet with the electric grid: digitalizing the grid with sensors and routers. It's another thing where it's going to be providing all this information about electrons, sending it to utilities through these networks. These networks all over the country are going to have to learn how to talk to each other.

And so there I know there's a similar process going on at NIST. And so with the Smart Grid it was similar to how it was with health IT: There had been $100 million spent on it, and then suddenly it was $27 billion. That's just a lot of money going into a system that wasn't up yet. For the Smart Grid, the deadlines were a lot tighter. And at first it created some issues: The money wasn't moving, there were fights over whether the recipients to the Smart Grid grants would be taxed, people who had done Smart Grid work stopped, because they thought maybe they could get the government to pay for it, and I think there's probably some of that going on with health IT was well.

Q: Yes, some providers wanted stimulus money who had implemented EHRs years before HITECH.

A: Exactly. The Smart Grid was even farther behind than health IT, but certainly people who had been doing some planning and had maybe been thinking of starting their implementation, put it off for a year. There's a scene in the book where Rahm hauls in all the Smart Grid people and asked them what was going on, and tried to hammer them to do, I guess what would be the equivalent of the VistA approach: just do what's easiest and get it done. But the energy guys stood up and said, 'Well, actually, Rahm, that doesn't make sense. At the risk of a lot more F-bombs, we've got to do it the right way." And they have, and now it is starting to show some results – in the same way the adoption rates for health IT are starting to take off.

Q: It is, for sure. You have that quote from former Senator Judd Gregg (R-NH) who referred to the stimulus as: "A bunch of hospitals wanted money." But it wasn't just cash thrown willy nilly at a problem, without any thought about how to make it effective and lasting.

A: I remember I visited Mayo Clinic for another story. I think it came out around the same time as Atul Gawande's [New Yorker] story about McAllen, Texas and the high healthcare costs there, so no one really noticed it. But I did sort of an opposite story about the Mayo Clinic and how its costs were so low. I remember talking to them, and at the time they had like five different computer systems at Mayo. And they were spending a few hundred million dollars to reduce it to three. So the complexity of this stuff is really something. That's why I know Zeke Emanuel was initially annoyed that if we wimped out on meaningful use – if we took our foot off the gas – there was no way we were going to get everyone on an electronic health record by 2015. We won't get all the way across the finish line.

And now he's at peace with it. He realizes, "OK, so maybe it will be 2017. It's fine." I'm often asked when I give talks about the book, "What could happen? How much of this is permanent legacy and how much could be overturned tomorrow?" Health IT, I think is one example of, "There's no turning back," I think. Different public policies and different economic settings will change the rate at which this stuff becomes adopted, and how it becomes adopted, but we're not going back to pen and paper.

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Q: Three years in, what's the legacy of the HITECH portion of the bill? Where does it rank with the other portions of ARRA? You argue that it is certainly one of the most visible. Could it be that it's the best way to secure ARRA's legacy in the general public's mind?

A: People are going to see their healthcare change. It's going to change their relationship with their doctor, it's going to improve their care, it's going to improve care in general as you begin to see that interplay with comparative effectiveness, for which there was $1.1 billion [in the stimulus], which was unprecedented.

I think it's going to have a huge impact on cost. It's always hard to quantify what it would have been without it, but just in terms of less mistakes and less redundant tests and less unnecessary visits to the doctor when you can just knock some of this out online.

I think that's going to make a real difference. It's real change. The question is: Is anyone going to remember that it was part of the stimulus? I don't know. Maybe after everybody buys my book.

But one of the lessons of my book: what are the politics of this and what are the politics o that, and should he have tried healthcare reform first, should he have done the auto bailout when it was so unpopular … well, after doing all these incredibly unpopular things that have created a lot of change, he's still pretty popular!

And even if he wasn't, I think one of the lessons – I talk about this with Charlie Baker, a Republican who ran for governor of Massachusetts and ran Harvard Pilgrim – we were on a panel together and he said his takeaway from my book was: "Do stuff." And I think health IT is one example where there had been a lot of talking about stuff, and I think people would have laughed about a $27 billion investment. "You just can't do that." But you can, if you have 60. Sometimes getting 60 votes is ugly. And when Rahm's involved it's not suitable for young ears. But if you can do it, and you're willing to take people yelling at you that it's not perfect, and you're a sellout, and why is there no public option, and why isn't it bigger, and why is there that money for catfish subsidies, you can really make big change. And I think this is a pretty good example.

Q: You talk about the politics of it. But I'm reminded of an interview a colleague of mind did recently with someone from the American Academy of Family Physicians, who said he was kind of happy that health IT sort of floats under the radar and lets health reform and Obamacare take the heat. You can get some stuff done when its not under the microscope, or being railed about on Fox News.

A: That's a good point, that's a good point. When they were doing that lame duck deal, in December 2010, after the election, when they did all those tax cuts and McConnell and Biden cut a deal, and they extended the cuts for the rich and in exchange they extended the payroll tax cut for the middle class, the real stumbling block was that the Republicans decided everything that was in the stimulus had to go. And Gene Sperling [then acting as a counselor to Treasury Secretary Timothy Geithner] was running around saying, 'Half of this is your stuff! Stuff you wanted in the bill!' Y'know, the problem with Obamacare is not so much the care part as the Obama part. Or cap and trade suddenly became toxic the minute it became Obama's cap and trade. I think a lot of stuff in the stimulus got that scarlet letter – and so far I think health IT has largely avoided that.

So if there is a Romney presidency, or a Jeb Bush 2016, they'll hopefully be able to be reasonable about it, unlike so many other previously uncontroversial policies that have become anathema to the party.

Q: And so much of the HITECH money has already been spent. But you think, no matter who wins the election, it will be safe? There have been bills introduced to defund ARRA before.

A: I think one of the main planks of the pledge to America that Republicans ran on in 2010 was to rescind all the unspent stimulus money. And of the couple hundred billion dollars that were still unspent they rescinded … zero.

So, I don't know. I'd be really surprised if they picked that fight. Especially since it was something they'd supported in the past, even conservatives like Newt Gingrich and Joe Barton. Same goes for comparative effectiveness: Gingrich wrote an op-ed in the New York Times with John Kerry and the Moneyball guy, Billy Beane. They were pushing "Moneyball for healthcare" – comparative effectiveness – back in those crazy days before it became Sharia socialism.