Strategy for American Innovation: Appendix C: Catalyze Breakthroughs for National Priorities

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Unleash a clean energy revolution

Double the nation’s supply of renewable energy by the end of 2012

  • 1603 and 48C Grant Programs | Department of Treasury

Federal tax credit and related programs have spurred deployment of innovative solar, wind, and geothermal energy technologies.  The wind industry has led the way, with over nine gigawatts (GW) of new generating capacity installed in 2009 alone, aided by Recovery Act incentives. The Section 1603 Payments-In-Lieu-Of-Tax-Credits program supported more than 200 megawatts (MW) of solar projects and more than 100 wind projects around the country, totaling 5.3 GW of wind power capacity.  The Section 48C Advanced Energy Manufacturing Tax Credits, as well as loan guarantees, are helping thin-film solar manufacturers create manufacturing capacity for 230 MW per year.  The 1603 and 48C incentives have also supported new geothermal projects, including projects with a capacity to generate 112 MW.  Finally, the U.S. Department of Energy has issued loan guarantees or conditional commitments to support nearly 2 GW of new solar, geothermal, and wind capacity.  Aided by these incentives, electricity generation from renewables (excluding conventional hydropower) is projected to be twice its 2008 level, meeting the Administration’s goal of doubling the supply of renewable energy in three years (See Figure 2).

Figure 2

Energy Information Administration data and forecasts

Backup documents: Advanced Energy Manufacturing Tax Credit (48C), Fact Sheet: $2.3 Billion in New Clean Energy Manufacturing Tax Credits, Preliminary Evaluation of the Impact of the Section 1603 Treasury Grant Program on Renewable Energy Deployment in 2009, The Recovery Act: Transforming the American Economy through Innovation

Spur innovation through new energy standards

  • Clean Energy Standard | The White House

In the State of the Union Address on January 25, 2011, President Obama announced an initiative to produce more electricity through clean energy, proposing an ambitious but achievable goal of generating 80% of the nation’s electricity from clean energy sources by 2035.  This target will help position the United States as a global leader in developing and manufacturing cutting-edge clean energy technologies, improving the nation’s economic growth and competitiveness while also protecting the environment and developing an energy future that is secure and independent.

As an important step to reach this goal, the President is proposing a new Clean Energy Standard (CES) that will be founded on five core principles: (1) double the share of clean electricity in 25 years; (2) credit a broad range of clean energy sources; (3) protect consumers against rising energy bills; (4) ensure fairness among regions; and (5) promote new technologies such as clean coal.

The CES should work to steadily increase the share of delivered electricity generated from clean energy sources, rising from 40% today to 80% by 2035. To ensure broad deployment and provide maximum flexibility in meeting the target, clean energy credits should be issued for electricity generated from renewable and nuclear power, with partial credits given for clean coal and efficient natural gas.  Smart policies will help American families and businesses save money by saving energy.  For example, the CES can be paired with energy efficiency programs that will lower consumers’ energy bills (e.g. stronger appliance efficiency standards, tax credits for energy efficiency upgrades, and the proposed Home Star program), and will include provisions to help manufacturers invest in technologies to improve efficiency and reduce energy costs.  Further, because different regions of the country rely on diverse energy sources today and have varying access to future clean energy resources, the CES must ensure that these differences are taken into account.  Finally, the CES should encourage the deployment of emerging technologies, such as clean coal with carbon capture and sequestration.

  • Bioenergy | USDA and EPA

On February 3, 2010, the EPA finalized a rule to implement the Renewable Fuel Standard, a long-term renewable fuel mandate established by Congress that requires the use of 36 billion gallons of renewable transportation fuel by 2022.  Advanced, low-carbon renewable fuels such as cellulosic biofuel must make up 21 billion gallons of this mandate.  Achieving this mandate will help speed the transition to cleaner, more secure sources of energy in the transportation sector, helping our nation address the challenges of climate change, dependence on oil, and job creation.  To do so, the Administration is acting on multiple fronts, such as creating the Biomass Crop Assistance Program andincreasing the amount of ethanol that is allowed to be blended in certain cars from 10% to 15% (E15).

With a focus on helping the country reach 36 billion gallons by 2022, USDA, in collaboration with DOE and EPA, developed the Growing America’s Fuels strategy.  This plan will help ensure that dependable supplies of feedstock are available for the production of advanced biofuels to meet legislated goals and market demand, as well to enhance rural economic sustainability.  Toward that end, USDA is establishing five Regional Biomass Research Centers and has published a Biofuels Production Roadmap addressing regional variations in feedstock availability and biorefinery locations.  In addition, USDA is implementing bioenergy programs from the 2008 Farm Bill, including the Biomass Crop Assistance Program, which provides payments for biomass feedstocks, and Sections 9003, 9004, and 9005, which support producers of advanced biofuels. 

 Backup documents:  USDA Energy Fact Sheet, USDA Regional Biomass Research Centers, Press Release:  Obama Announces Steps to Boost Biofuels, Clean Coal; February 3, 2010, EPA's Renewable Fuel Standard Homepage, Biomass Crop Assistance Program, EPA - E15

Create Energy Innovation Hubs

  • Energy Innovation Hubs | Department of Energy

The urgency of the energy and climate challenges facing our nation, coupled with challenges to our nation’s leadership in technological innovation, led to the establishment of the first Energy Innovation Hubs.  These Hubs are indicative of the Administration’s new, proactive approach to research and a way to harness American ingenuity to drive ground-breaking technology.  Energy Innovation Hubs are large, multi-disciplinary, highly-collaborative teams of scientists and engineers working to achieve a specific high priority goal.  They are led by top researchers with the knowledge, resources, and authority to nimbly guide efforts, seizing new opportunities or closing off unproductive lines of research.  Funding Opportunity Announcements (FOAs) have been issued for three hubs: Energy Regional Innovation Cluster (efficient buildings), Liquid Fuels from Sunlight, and Modeling and Simulation on Nuclear Reactors (nuclear energy). 

The first three Hubs were competitively awarded in 2010: the Modeling and Simulation for Nuclear Reactors Hub was awarded to the Consortium for Advanced Simulation of Light Water Reactors, led by Oak Ridge National Laboratory; the Joint Center for Artificial Photosynthesis, a team co-led by the California Institute of Technology and Lawrence Berkeley National Laboratory, was selected for the Fuels from Sunlight Energy Innovation Hub; and the Greater Philadelphia Innovation Cluster for Energy-Efficient Buildings, a team led by the Pennsylvania State University was chosen to establish the Innovation Hub focused on developing technologies to make buildings more energy efficient.  To solve further, key challenges, the President’s FY 2012 Budget calls for doubling the number of Energy Innovation Hubs.

Backup documents:Energy Innovation Hub Homepage, Factsheet: Energy Innovation Hub for Modeling and Simulation, Consortium for Advanced Simulation of Light Water Reactors, Energy Efficient Building Systems Regional Innovation Cluster Initiative, Fuels from Sunlight, Joint Center for Artificial Photosynthesis, Penn State to Lead Philadelphia-Based Team that will Pioneer New Energy-Efficient Building Designs, Greater Philadelphia Innovation Cluster for Energy-Efficient Buildings.

Invest in clean energy solutions

  • ARPA-E Grants for Transformational Technology | Department of Energy

The Department of Energy has supported more than 100 ambitious research projects that could fundamentally change the way the country uses and produces energy.  Funded through the Department of Energy’s Advanced Research Projects Agency-Energy (ARPA-E), nearly $400 million was awarded to projects that could produce advanced biofuels more efficiently from renewable electricity; design completely new types of batteries to make electric vehicles more affordable; remove carbon pollution from coal-fired power plants in a more cost-effective way; and pursue other game-changing technologies.  The Administration’s FY 2012 Budget proposes to expand funding for ARPA-E.

Backup Documents: ARPA-E Homepage

  • Advanced Technology Vehicles Manufacturing (ATVM) Loan Program | Department of Energy

The President has set an ambitious goal of putting 1 million advanced technology vehicles on the road by 2015 – which would reduce dependence on foreign oil and lead to a reduction in oil consumption of about 750 million barrels through 2030.  The Advanced Technology Vehicles Manufacturing (ATVM) Loan Program is investing in automobilemanufacturers and component suppliers for projects that reequip, expand, and establish manufacturing facilities in the United States to produce light-duty vehicles and components for such vehicles, which provide meaningful improvements in fuel economy performance.  In 2009, the U.S. had only two factories manufacturing advanced vehicle batteries that power advanced technology vehicles and produced less than two percent of the world’s advanced batteries.  The American Recovery and Reinvestment Act included $2.4 billion for battery and electric drive component manufacturing, and for electric drive demonstration and infrastructure – investments that are already transforming the advanced vehicle batteries industry in the U.S.  As a result of these investments, in just the next few years, battery costs are expected to drop by half (2009-2013), the United States will be able to produce enough batteries and components to support 500,000 plug-in and hybrid vehicles and will have the capacity to produce 40% of the world’s advanced batteries (2015).  The Recovery Act is also supporting the deployment of infrastructure for advanced technology vehicles.  And this year’s Budgetwill significantly broaden R&D investments in technologies like batteries and electric drives – including an over 30% increase in support for vehicle technology R&D and a new Energy Innovation Hub devoted to improving batteries and energy storage for vehicles and beyond.

Backup Documents: ATVM Loan Program Homepage, ATVM Loan Program Factsheet

  • Investments in Advanced Battery and Electric Drive Component Technology | Department of Energy

Electric cars need batteries and drive components that are in short supply in the U.S.  To stimulate their production, over $2 billion in Recovery Act funding is being invested in companies like A123 (See Box 6) and EnerDel, supporting 30 factories to produce the advanced batteries and electric drive components necessary to power the electric-drive vehicles of the future.  By 2015, when these factories reach scale, they will have the capacity to produce enough batteries to support up to 500,000 plug-in hybrid electric vehicles.  From a negligible portion of the world’s advanced battery manufacturing today, U.S. production capacity for advanced vehicle batteries will amount to more than 20% of global production capacity estimated to be online in 2012.  If successful, these breakthroughs could cut battery costs by as much as 90% and expand range three- to six-fold, bringing the up-front cost of electric cars down to that of gas cars and giving them a longer range.

Backup Documents: President Obama Announces $2.4 Billion in Grants to Accelerate the Manufacturing and Deployment of the Next Generation of U.S. Batteries and Electric Vehicles, The Recovery Act: Transforming the American Economy through Innovation


Box 6: A123 Systems – A Case Study

A smart innovation strategy recognizes that today’s nascent invention in a university laboratory could be tomorrow’s start-up company raising venture capital and eventually growing into a large company that employs hundreds of workers and addresses a key national priority.

Take the case of hybrid and electric vehicles.  For these vehicles to achieve the market share necessary to significantly reduce carbon emissions, they must have batteries that are powerful, efficient, cost effective and safe.  Where will these technologies come from and who will fund the entrepreneurs who develop them into commercial products and create jobs?  Moreover, will this process of innovation and entrepreneurship happen in the United States or elsewhere?

Understanding the success of A123 Systems and the effective yet limited role of public policy in facilitating its development is particularly instructive.  A123 Systems is a leading producer of the lithium-ion batteries that power hybrid and electric vehicles.  The firm was founded in 2001 as a spin-off from MIT, enabled by a $100,000 SBIR grant from the Department of Energy.  Improving the process by which promising university research is commercialized is a key component of our Innovation Strategy.

Buoyed by its early success transitioning from the laboratory to an entrepreneurial venture, the firm went on to raise more than $300 million in venture capital from venture investors like Sequoia Capital and corporations like GE and Motorola.  It also received a $5 million loan from the Massachusetts Clean Energy Center.

A123 went public in September 2009, raising $380 million, and today it has approximately 1700 employees.  In December 2009, A123 obtained nearly $250 million from the Department of Energy to build a manufacturing plant in Michigan.  The Administration’s Innovation Strategy aims to catalyze entrepreneurial activity to address key national priorities, whether it nurtures firms like A123 in the clean energy sector or other innovative companies in biomedical sciences or nanotechnology.

Backup Documents:A123 Systems - Revitalizing American Manufacturing, Remarks by the President in Phone Call to Recovery Act Advanced Battery Grant Recipient, A123 Systems in Livonia, MI

Promote energy efficient industries

  • Increased Demand to Improve Fuel Efficiency and Reduce Oil Dependence | EPA, NHTSA, and DOE

Beyond supporting investments in new vehicle technologies, the government is raising demand for innovation through new fuel efficiency standards and spurring private sector innovation in alternative fuels.  In April 2010, EPA and NHTSA announced a joint Final Rule to establish greenhouse gas (GHG) emissions standards and CAFE standards respectively, for model year 2012-2016 light-duty vehicles.  In September 2010, EPA and NHTSA issued a Notice of Intent to begin developing new standards for greenhouse gases and fuel economy for light-duty vehicles for the 2017-2025 model years.  The two agencies are also focused on medium- and heavy-duty vehicles, and in October 2010, announced a proposed rule to, for the first time ever, establish GHG emissions standards and CAFE standards for such vehiclesfor model years 2014-2018.  In parallel to these rule-makings, the Recovery Act provided the Department of Energy with the opportunity to invest nearly$718 million in the future of biofuels and biopower.

Backup documents:EPA Regulations and Standards, May 19, 2009: President Obama Announces National Fuel Efficiency Policy, Biomass Program Recovery Act Factsheet, Biomass Program - Bioindustry Creates Green Jobs, Growing America's Energy Future: Renewable Bioenergy,Biomass Program Recovery Act Factsheet, Biomass Program - Bioindustry Creates Green Jobs, Growing America's Energy Future: Renewable Bioenergy

  • Government Demand as Innovation Driver | The White House, DOE, and GSA

The federal government, as the single largest energy consumer in the U.S. economy, can play a critical role catalyzing demand for innovative energy technologies.  In October 2009, President Obama signed an Executive Order that calls on agencies to cut the federal government's fleet petroleum use by 30% by 2020, and in January 2010 President Obama announced that the federal government would reduce its GHG pollution by 28% by 2020.

As part of these efforts, the General Services Administration is replacing 5,603 of the least fuel efficient cars and trucks in the federal fleet with fuel efficient hybrids.  The U.S. Navy is driving demand for new fuels by committing to convert its planes, ships, and vehicles to 50% alternative fuels by 2020.  The Department of Defense (DOD) is also using its installations as a test bed and market driver for the next generation of energy technologies.  For example, DOD is testing a smart microgrid that will allow the Twenty-nine Palms Marine Corps base to operate off the grid if needed and reduce its energy costs when tied to the grid.  At Camp Roberts in California, the Army is validating a new solar technology that exploits advances in nanotechnology to provide significant cost savings.  And at the Great Lakes Naval Training Center in Chicago, the military is testing an innovative building management system that continuously compares design specifications to actual building performance to allow immediate corrective actions.  For these and other energy technologies that prove their worth, DOD can use its significant buying power to help create a commercial market, much as the military did with jet engines, integrated circuits, and the Internet.

Backup documents: President Obama Sets Greenhouse Gas Emissions Reduction Target for Federal Operations, President Obama Expands Greenhouse Gas Reduction Target for Federal Operations, GSA Doubles the Federal Hybrid Fleet, DOE Takes the Lead in Updating to Hybrids, The Department of Energy’s Fleet Alternative Fueled Vehicle Acquisition Report Compliance with EPACT 1992 and E.O. 13423 in Fiscal Year 2007

Invest in Advanced Vehicle Technology

The President’s FY 2012 Budget proposes to make the United States the world’s leader in manufacturing and deploying next-generation vehicle technologies, expanding funding for vehicle technologies by almost 90% to nearly $590 million and enhancing existing tax incentives.  Recovery Act and prior year investments are already making progress on advanced technology vehicles through research initiatives like an ARPA-E grant to develop a battery that will go 300 miles on a single charge.  The FY 2012 Budget will significantly broaden R&D investments in technologies like batteries and electric drives – including an over 30% increase in support for vehicle technology R&D and a new Energy Innovation Hub devoted to improving batteries and energy storage for vehicles and beyond.  In addition, the President is proposing to transform the existing $7,500 tax credit for electric vehicles into a rebate that will be available to all consumers immediately at the point of sale.

Promote energy efficient buildings

  • Greater Energy Efficiency in the Commercial Buildings | DOE and SBA

As a key part getting 80% of our electricity from clean energy resources, the President is calling for new efforts to improve energy efficiency in commercial buildings across the country.  The President’s Better Buildings Initiative will make non-residential buildings 20% more energy efficient over the next decade by catalyzing private sector investment through a series of incentives to upgrade offices, stores, schools and other municipal buildings, universities, hospitals, and other commercial buildings.  The President’s Budget will propose to make American businesses more energy efficient through tax incentives, increased financing opportunities, and a competitive grant program for states and municipalities.

Accelerate biotechnology, nanotechnology, and advanced manufacturing

Complete DNA sequencing for major diseasesand drive sequencing innovations

A decade after the publication of the first draft human genome (a culmination of years of effort by thousands of researchers), the Administration is investing in the sequencing of over 1,800 complete genomes, a more than 50-fold increase over the 34 genomes that have been sequenced to date by non-Recovery Act NIH funding (See Figure 4). This accomplishment will be spread across various studies, projects, and disease groups, and will lend a new level of insight into disease that was previously unattainable.

The Administration, through NIH, is also leading The Cancer Genome Atlas (TCGA), the largest and most comprehensive analysis of the molecular basis of cancer ever undertaken.  TCGA aims to identify and catalog all of the relevant genetic alterations in 20 common types of cancer.  The genomic information generated by TCGA may lead to new targets for cancer treatments, improvements in how cancer is diagnosed, and advances in personalized medicine, such as prevention strategies based on an individual’s genetic makeup and treatment plans based on a patient’s unique disease.

The promise of being able to compare entire human genomes is boundless.  Today, however, the financial cost of doing so is very high and often prohibitive.  Therefore, further investments are directed toward the goal of slashing the cost of DNA sequencing.  NIH has already made great progress in this area and aims to reduce the cost of sequencing a human genome to $15,000 in 2012, a 40% reduction from the current cost and almost 80% less than the cost in 2009.  

Figure 4

Backup Documents:The Recovery Act - Transforming the American Economy Through Innovation

Feed the Future

Agricultural development hinges on access to affordable, appropriate, and sustainable technologies that can improve food production, harvesting, storage, and distribution, and advance the health and safety of all citizens.  In developing countries with largely agrarian populations, a vibrant and sustainable agricultural system is the very basis for broad economic development and stability.  By promoting the exploration of biotechnology and other strategies to improve agricultural productivity, the Feed the Future Initiative will ensure the food security in the U.S. and globally.

Backup documents: Feed the Future Initiative

Create nanotechnology solutions

Advances in nanotechnology can drive economic growth, create quality jobs, and address a broad range of national challenges.  Examples of potential nanotechnology applications include smart anti-cancer therapeutics that target tumors without the devastating side effects of chemotherapy, solar cells as cheap as paint, and the next revolution in computing.  Companies are already offering nanotechnology-enabled products with breakthrough capabilities in areas such as disease detection, lighter and stronger materialsand next-generation batteries. 

As indicated in the National Nanotechnology Initiative Supplement to the President's 2011 Budget, to accelerate nanotechnology development in support of the President's priorities and innovation strategy, NNI member agencies have identified areas ripe for significant advances through close and targeted program-level interagency collaboration:

Backup Documents:Draft National Nanotechnology Initiative Strategic Plan 2010, No Input is Too Small: Comment on National Nanotechnology Initiative’s Strategic Plan

Launch breakthrough technologies for advanced manufacturing

A vibrant manufacturing base is critical for continued innovation, with important spillover benefits for the broader economy.  While the manufacturing sector directly represents only 12% of U.S. GDP, manufacturing firms conduct 70% of private sector R&D.  The manufacturing sector also helps train the next generation of skilled workers and supports the foundational knowledge necessary to produce process and product innovation.

Advanced manufacturing can be defined as manufacturing activities that bring substantial intellectual capital, in the form of new technologies, into the manufacturing process, resulting in a combination of lower cost, rapid customization, improved time-to-market, reduced waste, and increased quality.  Advanced manufacturing technologies hold the potential to dramatically enhance the competitiveness of both existing and new manufacturing industries.  The U.S. is already regarded as the leader in foundational knowledge in many of the technologies believed to have potential, including modeling and simulation, nanotechnology, information technology, and cyber-physical systems.  However, to date, leadership in foundational knowledge has not translated into advanced manufacturing leadership. 

The Administration is committed to support private sector investment in advanced manufacturing. 

The Administration is launching private-public partnerships and investing in breakthrough research that can provide the foundation for future economic growth and competitiveness.  The FY 2012 Budget increases investments at key science agencies, including the NSF, NIST laboratories, the Department of Energy Office of Science, and DARPA, to support U.S. leadership in developing advanced manufacturing technologies.  The FY 2012 Budget also provides funding to initiate the Advanced Manufacturing Technology Consortia Program and sustain the Technology Innovation Program, public-private partnerships that will help spur innovation in new manufacturing products and processes.

Develop breakthrough space capabilities and applications

In June 2010, the President released his National Space Policy, which highlights the ever-increasing role that space systems, technologies, and activities play in our daily lives.  Space technologies now help warn us of impending natural disasters, enable worldwide communications, facilitate global commerce, monitor global weather and climate, explore the solar system and universe, inspire our youth, provide global navigation and position location capabilities, and contribute to our security at home and abroad.  The President is committed to continuing U.S. leadership in this arena by strengthening our space-related science and technology R&D initiatives, enhancing mutually beneficial international cooperation efforts, improving the state of the U.S. space industrial base, and taking steps to enable a robust, innovative, and competitive commercial space sector.

NASA will again be helping to lead the way in our space programs for the 21st century as it pursues a bold new approach to space science, exploration, and discovery.  Under direction from President Obama and the U.S. Congress, NASA has been directed to establish a new program in advanced space technology R&D, to begin a new era of utilization of the International Space Station (ISS) by working with the private sector to expand American industry’s role in human spaceflight, and to initiate the development of the next generation of space vehicles that will expand our human presence beyond Earth orbit and deeper into our solar system.  These efforts will create thousands of new jobs as NASA expands its partnerships with industry, generate new markets for new products and discoveries derived from ISS utilization activities, expand our knowledge of our solar system and our place in it, and trigger a rush of new innovations and achievements.

In conjunction with NASA's new initiatives, the Obama Administration is continuing its efforts to advance U.S. capabilities in other space sectors, as highlighted in the President's National Space Policy.  For example, the U.S. Department of Defense is in the process of launching a new generation of global positioning satellites and services and continuing the development of the satellite navigation architecture.  These new capabilities will advance satellite navigation and timing applications in a range of fields, including areas such as urban planning, agriculture, communications, air travel, highway safety initiatives, and many more.  The Administration will also continue and improve a broad array of programs of space-based observation, research, and analysis of the Earth’s land, oceans, and atmosphere.  New initiatives are also underway in areas such as satellite remote sensing and communications, each of which can help improve our security and support new industries and markets. 

Backup documents: National Space Policy

Drive breakthroughs in health care technology

The inefficiencies in our health care system raise costs and reduce the quality of care.  Information technology has the potential to revolutionize our health care systems, creating technological platforms to reduce costs, reduce errors, and increase the quality of care.  By breaking down barriers between health service providers, health IT can integrate our health markets to attract scalable, competitively tested private sector innovation.

Expand the use of health IT

  • Health IT Adoption | Office of the National Coordinator (ONC) for Health Information Technology

Information technology has the potential to revolutionize our health care systems, creating technological platforms to increase efficiencies, reduce errors, and improve the quality of care.  By breaking down barriers between health service providers, health IT can integrate our health markets to attract scalable, competitively tested private sector innovation.  The Office of the National Coordinator (ONC) for Health Information Technology is working to realize this vision through numerous initiatives. 

  • The Medicare and Medicaid Electronic Health Record (EHR) Incentive Programs will provide incentive payments to eligible professionals and hospitals who qualify as "meaningful users" of certified EHR technology.  According to surveys released in January of 2011 by the American Hospital Association and the National Center for Health Statistics, approximately 80% of eligible hospitals and 40% of office-based physicians intend to participate in the program.
  • The Health Information Technology Extension Program establishes Regional Extension Centers to accelerate adoption of EHRs.  Starting in 2010, $677 million has been awarded to create 62 Regional Extension Centers, and an additional $50 million will be invested in establishing the national Health IT Research Center.  The Regional Extension Centers aim to support at least 100,000 primary care providers in achieving meaningful use of EHRs.
  • The Nationwide Health Information Network (NwHIN) develops standards, services, and policies that enable secure health information exchange over the Internet.  The NwHIN will provide a foundation for the exchange of health IT across diverse entities, within communities, and across the country, providing a platform to attract and adopt system-wide innovation.
  • The State Health Information Exchange Cooperative Agreement Program funds states’ efforts to rapidly build capacity for exchanging health information across the health care system both within and across states.  In March 2010, ONC announced a total of 56 awards – to states, eligible territories, and qualified State Designated Entities – amounting to over $547 million.
  • The Beacon Community Program began providing $250 million in May 2010 to support 17 communities with expected EHR adoption rates significantly above national averages.  The program will help accelerate and demonstrate the role of health IT in improving Americans’ health and the performance of the health care providers who serve them.

Backup Documents: HITECH Priority Grants Program - Factsheet, HITECH Priority Grants Program Homepage, State Health Information Exchange Cooperative Agreement Program - Factsheet, State Health Information Exchange Cooperative Agreement Program: Frequently Asked Questions, State Health Information Exchange Toolkit, National Institutes of Health - Mobile Health Homepage, Beacon Community Cooperative Agreement Program - Factsheet, Vice President Biden, HHS Secretary Sebelius Announce Selection of 15 Health IT Pilot Communities through Recovery Act Beacon Community Program, Nationwide Health Information Network (NHIN) Homepage

  • Breakthroughs in health IT technology | Office of the National Coordinator (ONC) for Health Information Technology

The Strategic Health IT Advanced Research Projects (SHARP) Program funds potentially game-changing advances to address well-documented problems that have impeded adoption of health IT.  In March 2010, four $15 million dollar awards were announced to four academic institutions.  Awardees will engage in research and product development to address barriers to health IT adoption in four key areas:

  • Security and health information technology
  • Patient-centered decision making support
  • Health care application and network design
  • Secondary use of EHR information

These academic partners will integrate input from providers, patients, academics, industry, and government stakeholders to translate their research into patient-centered products and services.  This project will yield fundamental improvements within and between project areas to help make an electronic health record available for all Americans by 2014.

Backup Documents:  SHARP Program Factsheet, SHARP Program Frequently Asked Questions Website

Enable innovation in medical technologiesand medical care

  • Council on Medical Device Innovation and Transparency Initiative | U.S. FDA

The U.S. Food and Drug Administration is working to accelerate the development of medical device technologies.  In June 2009, the FDA launched a “Transparency Initiative” which will improve the market’s understanding of the approval process and encourage innovation.  In January 2010, the FDA announced the creation of the Council on Medical Device Innovation, designed to encourage innovations that will address unmet public health needs.  The multi-agency council will facilitate medical technology innovations by identifying the most important unmet public health needs, delineating the barriers to the development of technologies to treat these needs, and addressing obstacles to patient access.

Backup Documents:  FDA - Medical Device Development Process Presentation, FDA Public Workshop: Identifying Unmet Public Health Needs and Facilitating Innovation in Medical Device Development

  • Qualified Therapeutic Discovery Project Program | Internal Revenue Service and Health and Human Services

The Qualified Therapeutic Discovery Project Program provided tax credits and grants to small firms in 2009 and 2010 that show significant potential to produce new and cost-saving therapies, support U.S. jobs and increase U.S. competitiveness.  Applicants were required to have their research projects certified as eligible for the credit or grant.  Health and Human Services, through the National Institutes of Health, reviewed the applications from a scientific perspective, and the Internal Revenue Service made the final determination of the awards. 

Backup Documents: Program Homepage, IRS guidance

  • Health Care Innovation Through Reduced Cost | Health and Human Services

Over time, the Affordable Care Act will reduce costs throughout the health care system.  The bill creates competition among private-sector insurance companies in newly-created insurance exchanges.  Most importantly, in the current fee-for-service system, manufacturers, hospitals, and other providers are generally reimbursed based on the volume and price of treatment, creating little motivation to innovate to contain costs.  With the Affordable Care Act, delivery system reforms through accountable care organizations, bundling payments, and pressure to reduce hospital-acquired conditions and re-admissions will all provide incentives for physicians, hospitals, and other providers to improve quality while lowering costs.

Projections by the Centers for Medicare and Medicaid Services find that the law will reduce the annualized growth rate of Medicare spending between 2012 and 2019 by 1.4 percentage points.  An analysis by the Congressional Budget Office found that private-sector premiums for individuals will fall between 7 and 10 percent for a given amount of coverage.

Cost containment will provide strong incentives for innovation and the development of technologies (see Box 7) that improve the quality of care, saving lives and lowering costs by wringing inefficiency out of the health care system.  In addition, reform will stimulate innovations in the processes of care and patient flow.  A number of these innovations have occurred, but with health care reform the pace of innovation will accelerate.

Backup documents: GAO Report on Hospital Flow, HHS Healthcare Related Infections Initiatives, Hospital Checklist Reduces Infections, GAO Report on Advanced Imaging



Box 7: Innovations in Health Care

The innovations in health care that the Administration hopes to drive by containing costs go far beyond the important – but traditional – view of medical innovation as new drugs or approaches to treatment.  Medical innovations range from redesigned devices to prevent errors that cost lives to changes in the workflow of hospitals and doctor’s offices to the rapid accessibility of patient data.  This box describes some of the technologies that most patients – and even many doctors – may not imagine are possible, yet would be scaled up within a system that rewards innovations by reducing costs:

  • Devices designed for efficiency and lower cost.  Curbing costs will require manufacturers to innovate to provide quality for less.  For example, device designers have developed a resuscitation “crash cart” that splits into three pieces with dedicated equipment for each part of a medical team to provide care quickly and accurately in crisis situations.  Designers have created lightweight, simpler plastic clamps to guide orthopedic surgeons in knee operations, replacing cumbersome, overweight, metal instruments.  The innovative guides improved accuracy because surgeons found them easier to employ, rather than operating freehand instead of using the older, bulkier devices.  The current medical marketplace does not reward these types of innovative and efficient designs.
  • Safer medical equipment. Safety can be embedded in the architecture of medical equipment itself.  A 2006 survey found that 16% of hospitals had experienced a medical tubing error, such as attaching a tube delivering liquid food into a line leading to a vein – resulting in agony and death.  Tubing designed so that it will not fit if it is connected improperly is an example of a medical equipment innovation that would reduce costs, prevent errors, and save lives.
  • Redesigned monitoring devices.  Patient monitoring devices – from those reporting vital signs to diagnostic tools – often have complex displays, and confusing ports for input and output.  In high-pressure situations, these devices can hinder the effectiveness of nurses and doctors.  Better industrial design would yield a simpler interface with clear labels and display of patient information for quick reference.  Designers have created diagnostic devices that improve safety as well, such as a blood pressure cuff with a Velcro-detachable, hygienic “wipe clean” surface, and a timestrip for intravenous lines that gradually fills with ink to provide a visual guide for how long a line has been inserted.
  • New office and hospital flow processes.  Management of the flow of patients between different arms of hospitals and within doctors’ offices is an area ripe for innovation, and could be augmented with new technology.  According to the Government Accountability Office (GAO), hospitals have improved the flow out of emergency departments and into inpatient beds by forming teams, which meet several times a day, to carefully monitor entering patients and opening beds.  Hospitals have partnered with states and cities to establish diversion programs to reduce the burden on ER departments of patients who require treatment, but not emergency care.  These processes save costs and improve quality, but are not rewarded under a system with high reimbursements for ER visits and payments based on volume.
  • Less expensive diagnostic tests. According to the GAO, from 2000 through 2006, Medicare spending for imaging services paid for under the physician fee schedule more than doubled—increasing to about $14 billion.  Spending on advanced imaging, such as CT scans, MRIs, and nuclear medicine, rose substantially faster than other imaging services such as ultrasound, X-ray, and other standard imaging.  The Affordable Care Act takes steps to realign and rein in this growth in excess spending, driving providers towards effective and efficient diagnostic tests.
  • More health data.  As described elsewhere in the report, the Recovery Act makes large investments in health IT and electronic medical records.  The Affordable Care Act drives new pricing and performance transparency of the health-insurance and healthcare-provider markets.  The President’s open government initiative continues to publish a growing array of healthcare data sets online and make them freely available.  Mining and sharing data from these sources will augment the implementation of all of the innovative technologies outlined above, by allowing the identification of high-risk individuals and good practices to address their needs.    
  • A simple checklist for preventing infections.  Healthcare-associated infections (HAIs) exact a significant toll on human life.  They are among the leading causes of preventable death in the United States, accounting for an estimated 1.7 million infections and 99,000 associated deaths in recent years.  It is estimated that healthcare-associated infections cause $28 to $33 billion in excess health care costs each year. A simple, 5-point checklist developed at Johns Hopkins and implemented in hospitals in Michigan – which includes basic steps like washing hands, cleaning the skin, and wearing the proper mask, hat, gown and gloves – was found to reduce HAIs to nearly zero.  In the current health care system, with payment based on volume rather than quality, these types of innovations in the structure of delivery are not rewarded.

Create a quantum leap in educational technologies

Advance development of educational technologies

The Opportunity

There is growing evidence that technology can improve learning outcomes and reduce the time needed for students of all ages to gain new knowledge and skills by personalizing the learning experience.  Furthermore, technology can increase the rate of improvement in education by enabling rapid, low-cost experimentation to better evaluate new methods and accelerate the diffusion of best practices.  With relatively widespread access to broadband, cloud computing, digital devices and software, the technological conditions are increasingly ripe for the development of advanced educational technologies.

Additionally, learning technologies have the potential to be a rapidly growing industry internationally. As developing countries seek to educate broader segments of their population, they may turn to learning technologies.  Many countries, such as India and China, have not invested in the brick-and-mortar infrastructure that we have in the United States, and they may seek less expensive, more flexible approaches to learning.  With appropriate leadership, the United States has an opportunity to lead in this new and expanding market, but we must move rapidly to secure our leadership or other countries will close the gap.

Government’s Role

The government’s role in stimulating and facilitating the development of this sector could take several forms.  In the education sector, where there is potential for widespread adoption of these technologies, demand is currently fragmented and insufficient to encourage the private sector to make substantial investments.  As it has done successfully in other sectors of national importance (for example, semiconductors or biotechnology), the government is currently exploring limited and strategic investments in educational R&D that will catalyze the emerging education technology industry and secure American leadership in a global sector – upfront investments that many educational institutions and companies would not be able to make on their own but that will produce benefits that accrue to the entire nation.

The President has already demonstrated his commitment to educational technology and the Department of Education recently released a National Educational Technology Plan,which is a five-year action plan for using technology to improve student learning, accelerate and scale up the adoption of effective practices, and use data and information for continuous improvement.  Across the government there are initiatives to support improved learning outcomes through the use of technology, from the National Science Foundation launch of “Cyberlearning Transforming Education” to a variety of DARPA, DOE, and Navy programs in this area.  Given the opportunities in this sector the government will seek to promote the development and adoption of educational technology in the following ways:

  • Support federal research, development, demonstration and evaluation that will improve our understanding of how and in what contexts educational technology can improve student achievement.
  • Provide immediate opportunities for the creation of new learning technologies, including through support for the development of specific applications and courseware through interagency procurement agreements.
  • Develop “pull” mechanisms to accelerate the market for advanced learning technologies, working with the Department of Defense Education Activity (DoDEA) schools as platforms for innovation and as early “customers” for new effective approaches.
  • Stimulate private sector investment in the sector—call on companies and philanthropic organizations to supplement federal government spending on K–12 STEM education, building on the successful Investing in Innovation (i3) Fund.

There are a number of opportunities to catalyze market opportunities and make transformative investments, with an Advanced Research Projects Agency for Education (ARPA-ED) as a flagship leader in this field.  Modeled after the Defense Advanced Research Projects Agency (DARPA), the government department that has supported the creation of the Internet, GPS, stealth technology, and other revolutionary innovations, the creation of ARPA-ED will drive innovation in the area of educational technology. With funding in Fiscal Year 2012, ARPA-ED will:

  • Sponsor the synthesis and vetting of the nation’s public and private research and development efforts with the explicit purpose of identifying breakthrough development opportunities and shaping the next wave of R&D.
  • Invest in the development of new education technologies and digital learning materials.
  • Identify and transition the best and most relevant R&D with possible applications in education from other federal agencies.

The Goal

ARPA-ED would fund bold programs and increase entrepreneurship and innovation in the field of education.  The end goal is to develop transformative, game-changing education technologies – technologies that will be interoperable and build strategically upon one another to achieve progress at scale. 

Backup documents:National Educational Technology Plan