Details Emerge About Health Provisions of Obama’s Budget Plan
About the Proposal
Obama's plan aims to reduce the federal deficit by $229 billion from FY 2013 through a combination of tax hikes for higher-income individuals and targeted spending cuts over a decade (Calmes, New York Times, 4/10).
Overall, the blueprint aims to reduce the federal deficit by $1.8 trillion over a decade, bringing the deficit to about $500 billion in 2016 and down to 1.7% of the economy by 2024 (California Healthline, 4/10).
The proposal would replace the $1.2 trillion in across-the-board spending cuts under the sequester with other savings over the 10-year period. The sequester -- which took effect March 1 -- includes a 2% reduction to Medicare reimbursement rates for providers (New York Times, 4/10).
Obama's budget plan calls for $400 billion in health care savings. The bulk of the savings would come from reduced payments to health care providers, including hospitals, The Hill's "Healthwatch" reports (Baker , "Healthwatch," The Hill, 4/10). According to Politico, the hospital savings would be used to help the government cover "bad debt" (Haberkorn, Politico, 4/11).
Medicare savings also would come from raising premiums for higher-income beneficiaries, which the budget plan estimates would save about $50 billion over the next decade. In total, Obama's spending blueprint would cut about $68 billion from Medicare benefits.
Meanwhile, the plan calls for nearly $150 billion in cuts for the pharmaceutical industry. Under this proposal, changes to Medicare payment rates for prescription drugs and new policies that would introduce low-cost generic drugs more quickly into the market would result in more than $6 billion in savings (Baker , "Healthwatch," The Hill, 4/10).
Budget Blueprint Boosts Funding for Affordable Care Act Implementation
Obama's budget blueprint also seeks increased funding for CMS and the Internal Revenue Service to help the agencies implement various portions of the Affordable Care Act, the Washington Times reports.
The proposal requests $440 million for the IRS, which must process tax credits for the ACA's health insurance exchanges and assess tax penalties under the law's individual mandate (Howell, Washington Times, 4/10).
Meanwhile, CMS' budget would increase from $3.8 billion in FY 2012 to $5.2 billion, of which $1.5 billion would be allocated for the implementation of the ACA's health insurance exchanges, which are scheduled to begin operating in 2014 (Politico, 4/11).
Budget Plan Aims To Bolster Mental Health Services, Food and Drug Safety
In addition, Obama's FY 2014 budget proposal requests $130 million to expand mental health treatment and prevention services, CQ HealthBeat reports. Of that, about $55 million would be used to provide school officials with mental health "first aid" training to identify early warning signs of mental illness.
The proposal also calls for $50 million to help train 5,000 counselors, psychologists and social workers to serve students and young adults, and $25 million for grants to help young people find and access mental health treatment programs.
Meanwhile, the plan calls for a 21% boost in funding for FDA over its FY 2012 budget to $4.7 billion. Obama's budget requests for NIH and CDC were significantly smaller. He is seeking $472 million for NIH -- which includes extra funding for Alzheimer's disease research -- and $432 million for CDC (Reichard, CQ HealthBeat, 4/10).
Other key parts of Obama's FY 2014 budget proposal include provisions to:
- Create a new category to health plans offered in the Federal Employees Health Benefit Program -- called "self plus one" -- that would allow same-sex couples to share a policy without violating the Defense of Marriage Act (Baker , "Healthwatch," The Hill, 4/10); and
- Increase funding for the Health Resources and Services Administration by $9 billion, including $2.4 billion for the Ryan White program to help individuals living with HIV/AIDS.
Reactions to Obama's FY 2014 Budget Proposal
The plan promptly drew a mix of criticism and praise from lawmakers, industry officials and advocacy groups, and was dismissed by Republican leaders, who pledged to withhold their support for tax increases as part of a deficit-reduction deal, Politico reports.
Chip Kahn, president of the Federation of American Hospitals, criticized the cuts to hospital payments saying, such proposals are "counterproductive" and "mask efforts to attack the true drivers of cost in the health care system and will make the task of finding a durable solution addressing Medicareâs fiscal viability even more difficult" (Haberkorn, Politico, 4/11).
In a statement, American Medical Association President Jeremy Lazarus said many of Obama's proposals "align with many of the principles developed by the AMA and 110 other physician organizations on transitioning Medicare to include an array of accountable payment models" and praised the plan for seeking to boost funding to expand mental health services (American Medical Association release, 4/10).
Meanwhile, AARP Executive Vice President Nancy LeaMond in a statement said that "prescription drugs are one of the key drivers of escalating health care costs, so we appreciate the President's inclusion of proposals to find savings in lower drug costs" (AARP release, 4/10).
House Speaker John Boehner (R-Ohio) said Obama deserves credit for including some entitlement reforms, but added that he hopes Obama will not "hold hostage" those reforms as way to achieve tax increases (AP/Sacramento Bee, 4/10).
Senate Majority Leader Mitch McConnell (R-Ky.) called the proposal "another left-wing wish list." He added, "It's mostly the same old thing we've seen year after year" (Slack, Politico, 4/10).
House Budget Committee Chair Paul Ryan (R-Ohio) -- who authored the House-approved FY 2014 budget proposal -- said Obama is "creaking the door open ever so slightly on entitlement reform." Ryan added that he is skeptical about whether the president is serious about curbing spending (Wolfgang, Washington Times, 4/10).
Meanwhile, White House Senior Adviser Dan Pfeiffer in an appearance on MSNBC's "Andrea Mitchell Reports" on Wednesday defended the president's budget saying it is "not ideal," but is an attempt at a "compromise" (Epstein, Politico, 4/10).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.