Will the $19 billion in the American Recovery and Reinvestment Act dedicated to grants and incentives for health IT shake the venture capital recession blahs?

Experts say the sheer complexity of fixing the very broken United States’ health care delivery system affords immense room for innovative solutions from talented and nimble startups.

“There is a ton of opportunity here given the percentage of GDP that health care represents that will be accelerated by what’s happening in Washington,” said Axel Bichara, a partner who heads Atlas Venture’s health care investments.

Large IT firms and systems integrators such as IBM and Accenture are unlikely to possess massive plug-in systems that take care of the many moving parts of health care from billing to prescriptions. (IBM Starts Health IT Gold Rush)

And because of the complexity of the market, few if any small startups will be able to take a leadership role in the bigger health IT projects that are already surfacing.

That requires a high level of familiarity with the thick political underbrush inherent in the government’s grant process that few small startups possess or can afford to keep on staff. (IBM, Google Extend the Medical Cloud)

“Unlike most other markets this market is highly integrated at the federal, state, and local levels so there is no way to attack this from a narrow focus,” said John Slye, principal analyst at INPUT.

But small VC-backed companies such as NaviMedix and Canopy Financial can participate as subcontractors or benefit from the ongoing IT overhaul of U.S. health care.

“This makes the health care system more consumer-friendly and that in itself creates opportunities for smaller companies like Canopy,” said Vik Kashyap, CEO of Canopy and a former VC.

Health care savings accounts give consumers the option of paying routine health care expenses directly. HSAs work in conjunction with high-deductible health insurance policies. (Canopy Financial Banks $15M)

“We believe HSAs fit the goals of the reinvestment act in that it gives consumers the ability to get detailed pricing information and more effectively negotiate medical bills,” Mr. Kashyap said. (Canopy Acquires CareGain)

VC investments in health care has fallen steadily from $503 million back in the bubble days of 2001 to $268 million in 2007 and $195 million in 2008, according to PriceWaterhouseCoopers, National Venture Capital Association, Money Tree, Thomson Reuters.

But VCs expect the Reinvestment grants to spur added investments in the market.

“There is so much need out there that even without the stimulus money this is an interesting investment space, but the money does help,” Mr. Bichara said.