The American Recovery and Reinvestment Act (ARRA, aka ‘stimulus funds’) is investing $100 billion worth of U.S. taxpayer dollars in projects meant to transform the American economy.

$20-some billion of these funds are being earmarked for health information technology, which the White House sees as part of a “platform for private sector innovation” in a report published August 24 2010, The Recovery Act: Transforming the American Economy Through Innovation.

Health IT (HIT) is bucketed with broadband and smart grid technology as planks in this economic-transformational platform. Among these three pillars, compare the $20 billion going to health IT with the $6.9 billion being earmarked for broadband access to rural America. Smart Grid technology, which supports an intelligent infrastructure enabling smarter use of energy, is receiving about $4 billion.

So as far as platform funding for innovation, health IT is receiving the bulk of investment from ARRA.

Health Populi’s Hot Points:  What’s the rationale for investing tax dollars in health IT in a recession? The executive summary of the report speaks to using the investment’s role to create, “a more efficient health administration system,” enabling applications like remote monitoring (which couples synergistically with the broadband investment), e-prescribing (to reduce medication errors and deaths due to prescription drug mishaps), and be able to pay for quality health care by managing what we can measure.

Health IT isn’t about doctors and hospitals buying new electronic health records systems. It’s about fully harnessing the potential energy of those systems to change workflow and processes in health care, and to empower both providers and consumers to co-create health. One example of this is detailed in a sidebar in the report, highlighting a project of the Western New York Clinical Information Exchange in Buffalo. This organization received a $16.1 million grant to improve quality of care provided to chronically ill people in their region managing diabetes. The Exchange is acquiring clinical decision support tools including registries, point-of-care alerts, and telemedicine gear to work with 5,000 diabetics in helping them control blood sugar and, potentially, avert 2,300 complications, reduce ER visits by 15%, and save $1.1 million a year beginning in 2012.

That $1.1 million savings is just for the Exchange. The bigger number is the economic transformation/stimulus one: that is, how much more productive would those 5,000 individuals managing diabetes become if they got their conditions under control — allowing them to return to work sooner, stay at work longer, pay more taxes over more years, and in aggregate lower the burden of chronic disease in western NY state?

That’s but one of what will be thousands of stories that will be told by health systems and physician practices when EHR systems are meaningfully used. That’s how $20 billion of HIT stimulus funding can help to transform the U.S. economy.