Bush Sends Congress $2.23 Trillion Fiscal Year 2004 Budget Proposal
President Bush yesterday sent Congress a $2.23 trillion budget proposal for fiscal year 2004 that would create a $307 billion deficit in the next budget year and a deficit of more than $1 trillion over the next five years, the New York Times reports (Bumiller, New York Times, 2/4). Under Bush's budget proposal, mandatory spending, including that for Medicare and Medicaid, would total $1.188 trillion. Discretionary spending in fiscal year 2004 would total $782 billion, a $30 billion increase over fiscal year 2003, with $28 billion of the increase going to nondefense homeland security spending (Ghent, CongressDaily, 2/3). The Washington Post reports that Bush's proposal holds spending on most domestic programs at or below projected inflation levels for fiscal year 2004 (Weisman, Washington Post, 2/4). Because Congress has not yet approved an FY 2003 budget, all increases and decreases in Bush's proposed FY 2004 budget are comparisons to his FY 2003 budget blueprint and rather than to an actual budget (Goldstein/Allen, Washington Post, 2/4). Overall, HHS would receive a 7% increase in funding, to a total of $537.6 billion under Bush's proposal. Most of the increase is mandatory spending on Medicaid and Medicare, but the spending proposal also includes the new funding for Medicare and Medicaid reform. Bush's plan would raise discretionary funding for HHS by 2.6% to $65 billion (Walsh, Washington Post, 2/4).
Bush's FY 2004 proposal calls for a $6 billion "downpayment" on a 10-year, $400 billion Medicare "modernization" plan that the president mentioned in his State of the Union address and in a speech in Michigan last week (Walsh, Washington Post, 2/4). Although neither Bush nor the administration has released details about the plan, media reports have said that the plan is expected to establish a prescription drug benefit for Medicare beneficiaries who enroll in a new managed care program. According to reports, Medicare beneficiaries could remain in the traditional fee-for-service program, enroll in regional HMOs that offer prescription drug coverage or enroll in private health plans with "enhanced fee-for-service benefits" that include prescription drug coverage (California Healthline, 2/3). Bush's budget outline "didn't offer any more details about the plan" than had already been released, AP/Virginian-Pilot reports (Carter, AP/Virginian-Pilot, 2/4). The budget proposal does say that the proposed "drug benefit would protect beneficiaries against high drug expenditures and would provide additional assistance to low-income beneficiaries" (Rovner, CongressDaily, 2/3). Further, the Wall Street Journal reports that an administration official said the "vast bulk"-- as much as 95% -- of the $400 billion will be designated for the "drug benefit and other improved benefits," including preventive care and assistance for beneficiaries with "catastrophically high health costs" (Lueck, Wall Street Journal, 2/4). HHS Secretary Tommy Thompson said it will be another week before full details of the plan are made available; CMS Administrator Thomas Scully said it could be another two weeks before details are released. As for other Medicare reforms, the Bush budget proposal also seeks changes in the Medicare physician reimbursement formula, which has produced payment cuts over the previous two years (Rovner, CongressDaily, 2/3).
Bush's budget plan also includes his "sweeping" proposal to overhaul Medicaid, CongressDaily reports (Rovner, CongressDaily, 2/3). Under the proposal, announced Friday by Thompson, states would have more freedom to decide what Medicaid benefits they provide to the one-third of beneficiaries states choose to cover. States would no longer need to apply for federal waivers to deviate from federal standards for Medicaid eligibility and benefits. Rather, for "non-mandatory" beneficiaries, the proposal would allow states to change Medicaid rules and regulations, simplify and alter eligibility requirements and "tailor" or cut benefits at their own discretion. In addition, the proposal would give states a fixed amount of federal money for the beneficiaries they voluntarily choose to cover -- a shift away from the current system, under which the federal government matches every dollar that states spend based on each state's wealth. Under the proposal, states would be required to preserve comprehensive Medicaid coverage for the roughly two-thirds of Medicaid beneficiaries whose income levels are low enough that the federal government mandates that they be covered (California Healthline, 2/3). Bush's FY 2004 budget proposal would allot states $3.25 billion in additional Medicaid funds to alter their programs, and an additional $12.7 billion over seven years (Rovner, CongressDaily, 2/4). The Wall Street Journal reports that Bush's plan also calls for drug companies to increase the prescription drug rebates they offer Medicaid, a change that would save the government $13.2 billion over 10 years. Congress rejected a similar plan last year, in response to opposition from the drug industry (Wall Street Journal, 2/4).
Bush's FY 2004 budget outline includes:
- $3.6 billion for bioterrorism prevention efforts;
- $125 million for a disease prevention program to combat diabetes, obesity and asthma (Walsh, Washington Post, 2/4);
- $15 billion over five years to combat HIV/AIDS in African and Caribbean nations, supplemented by $200 million request to fight international famine ;
- $200 million for a new substance abuse treatment program, which would provide people vouchers that could be used at "faith-based" or secular drug treatment centers (Weisman, Washington Post, 2/4);
- An increase in funds for programs that help pregnant young women who to their pregnancies to term (Goldstein/Allen, Washington Post, 2/4);
- A $2.1 billion increase for the Veterans Affairs department, $1.9 billion of which would go toward health care for veterans. Nearly $28 billion of the department's budget would go toward health care, a 7.7% increase over the amount Congress is expected to provide the VA for health care (Walsh, Washington Post, 2/4). Currently enrolled veterans with higher incomes and health conditions unrelated to their service will be required to pay an enrollment fee and higher copayments for outpatient care and prescription drugs. The budget proposal also includes a previously announced plan to halt enrollment for higher-income veterans with conditions unrelated to their service. In addition, the proposal calls for restrictions on long-term nursing care for veterans with severe disabilities related to their service (AP/Minneapolis Star-Tribune, 2/3); and
- $890 million to create new vaccines for smallpox, anthrax and botulinum toxins, as part of the "first installment" of funds for the new Project Bioshield (White House press release, 2/3). The proposal calls for nearly $6 billion over the next decade for Project Bioshield (Curl, Washington Times, 2/4).
The proposal also includes a $33 million cut in the CDC's budget, although the Post reports that administration officials say CDC spending actually will increase by $61 million in FY 2004 (Walsh, Washington Post, 2/4). The budget also calls for reductions to a $300 million-per-year program that provides funds to train potential doctors for "needy communities" and to a program that assists some hospitals in purchasing equipment such as X-ray machines. Further, Bush's proposal would reduce funding for a program initiated by the Clinton administration that provides more than $100 million annually to facilitate cooperation between community health centers, hospitals and drug treatment centers. The proposal would keep NIH funding for FY 2004 flat, adjusted for inflation (McKinnon/Hitt, Wall Street Journal, 2/4). Under the proposal, NIH would receive $27.9 billion in funding, and annual 4% increases in funds for "cost-of-doing-research" for current grants would decrease to 1% per year (California Healthline, 2/3).
The following broadcast programs yesterday reported on Bush's budget proposal, including the impact on health care programs:
- NPR's "All Things Considered": The segment includes comments from White House Office of Management and Budget Director Mitch Daniels, Families USA Executive Director Ron Pollack, Sen. Jay Rockefeller (D-W.Va.), Kaiser Family Foundation Executive Vice President Diane Rowland and Thompson (Rovner, "All Things Considered," NPR, 2/3). The full segment is available in RealPlayer online.
- NPR's "Morning Edition": The segment reports on changes in funding for Medicare, Medicaid, NIH and international HIV/AIDS projects, as well as reactions to the budget plan (Rovner, "Morning Edition," NPR, 2/4). The full segment will be available in RealPlayer online after noon ET. In addition, extended NPR coverage is available online.
- PBS' "NewsHour with Jim Lehrer": The program included a discussion of the budget plan with William Beach, senior fellow in economics at the Heritage Foundation, and Robert Greenstein, executive director of the Center on Budget and Policy Priorities (Warner, "NewsHour with Jim Lehrer," PBS, 2/3). The full transcript of the segment is available online. In addition, the full segment is available in RealPlayer online.