Details of Bush’s Proposal Fiscal Year 2003 Budget Released
President Bush yesterday released a $2.13 trillion proposed budget for fiscal year 2003 that calls for a Medicare prescription drug benefit and tax credits for the uninsured, the New York Times reports. The proposal seeks a $38.3 billion increase in defense spending but attempts to hold funding for most domestic programs relatively flat. Mitchell Daniels, director of the White House Office of Management and Budget, said that discretionary spending on programs not related to defense or national security would rise about 2%, roughly 33% of the increase seen in recent years (Stevenson, New York Times, 2/5). The following is a look at the administration's proposed spending for HHS and its various divisions:
- Under the proposal, discretionary spending at HHS would rise 9% from this fiscal year. About $429 billion of the $489 million the administration is seeking for the agency would be devoted to Medicare and Medicaid.
- While HHS' 9% increase is much higher than the levels sought for most other agencies, most of the increase would be allocated toward bolstering the nation's bioterrorism preparedness. The proposal seeks an additional $4.3 billion in spending for vaccine development, hospital modernization and expansion of the National Pharmaceutical Stockpile, bringing the total spending in this area to $5.9 billion (Connolly, Washington Post, 2/5).
- The proposal seeks $27.2 billion for the NIH, which would complete an effort begun five years ago to double its funding. Nearly half the proposed $3.7 billion increase would go toward bioterrorism research (Washington Times, 2/5).
- The CDC would see its funding decline by $1 billion, or 15%, a drop that the budget documents attribute to the "one-time" purchases of drugs and vaccines related to bioterrorism last year. The Wall Street Journal reports, however, that "some CDC activities, particularly those deemed unrelated to bioterrorism, are being cut or squeezed" (Lueck, Wall Street Journal, 2/5).
- The administration is requesting $1.73 billion for the FDA, a nearly 8% increase over estimated spending this fiscal year. The budget would allocate $159 million for the agency's counter-terrorism activities, including food safety regulation and spend about $5 billion each on patient safety programs and generic drug programs (
FDA release, 2/4).
The following are new health care programs or expansions of existing ones that Bush is seeking:
- $89 billion in tax credits to help the uninsured purchase health insurance. Under the plan, which would cover more people than the tax credit plan advanced by the president last year, families earning up to $25,000 a year would receive a $3,000 credit, while individuals earning up to $15,000 would receive a $1,000 credit.
- $190 billion over 10 years for broad-scale Medicare reform. Of this amount, $77 billion would go to states to provide prescription drug coverage to seniors through Medicaid. The program would cover seniors up to 150% of the federal poverty level -- about $12,880 for singles and $17,400 for couples. An "unspecified amount" would also go to add a limited drug benefit to Medicare and add two more options for Medi-Gap supplemental policies. USA Today reports that "[a]lthough details aren't clear, the plan could result in subsidies for Medicare [beneficiaries] to purchase drugs, with the government possibly covering half the cost of medication purchases up to a specified amount." And $3.7 billion would be allocated to increase payments to Medicare+Choice health plans with the hope of enticing them to remain in the program (Appleby, USA Today, 2/5).
- $12.9 billion to HHS to fight HIV/AIDS in the United States and abroad, an increase of 8% from the current fiscal year. HHS would donate $100 million this year to the Global Fund to Fight AIDS, Malaria and Tuberculosis, bringing the United States to its promised two-year allocation of $200 million (HHS release, 2/4).
- $25 million for the Justice Department's lawsuit against the tobacco industry, the first time the agency has requested funding specifically for the suit (Bloomberg News/Richmond Times-Dispatch, 2/5).
- $100 million to support faith-based groups, the second year Bush has requested this amount. Congress allocated only $30 million last year (Washington Times, 2/5).
The following are areas where the administration is seeking to reduce spending:
- To help pay for HHS' relatively large spending increase, the department is planning to consolidate some of its offices and possibly reduce staff. Under the "One Department" Initiative, the 40 human resources offices within HHS would be reduced to four, and "centralized offices will oversee the press and legislative operations for all 13 of HHS' divisions."
- The administration wants to save $290 million in 2003 and $5.5 billion over five years by using the average wholesale price to calculate the price of drug reimbursements through Medicaid instead of the average manufacturer's price (Lueck, Wall Street Journal, 2/5).
- The proposal would decrease spending on a program that helps children's hospitals underwrite graduate medical education programs from $285 million to $200 million.
- HHS' Agency for Healthcare Research and Quality would see its budget drop by $50 million to $252 million (Rovner, CongressDaily, 2/4).
- To address the rising costs of veterans' medical care, the proposal would make up to 1.6 million veterans with no "service-connected disability" pay up to $1,500 a year for health services (Hitt/Rogers, Wall Street Journal, 2/5).
The president's proposed budget "immediately ignited a partisan battle on Capitol Hill," as Democrats said they would support Bush's requests for defense and national security spending but said the "tradeoffs sought by Bush would shortchange vital social needs in the short run and hobble government in the long run as it faces the huge costs of paying health and retirement benefits to a rapidly aging population," the New York Times reports. Democrats said that at least $300 billion over 10 years was needed for Medicare reform and a drug benefit. And noting that the proposal returns the federal budget to a deficit for the first time since 1997, Democrats "attacked the president ... for the damage they said the budget would do in years and decades to come as the bill for Social Security and Medicare begins to rise sharply" after the baby boom generation begins to retire in 2010 (New York Times, 2/5). Democrats attributed the budget shortfall to last year's $1.35 trillion tax cut, which Bush proposed.
Daniels, however, disputed the argument that the tax cut would threaten Medicare in the future. "The long-term stability and safety of Medicare and Social Security really have nothing to with tax relief except that tax relief -- by making a strong economy more likely -- is a very good step if you are worried about Social Security and Medicare" (Jackson, Dallas Morning News, 2/5). Daniels also rejected the suggestion that Bush is not seeking enough money for Medicare reform. "Listen, I can write you a really lousy Medicare reform for any number you want. Medicare is broken. ... And it needs to be fixed. Now, prescription drug coverage is one of its biggest, perhaps its biggest, defect, but it's only one of many," he said. In response to Daniels' comment, Sen. Edward Kennedy (D-Mass.) said, "Daniels is right, the Medicare system needs to be modernized. But fixing it with false promises and budget gimmickry is a disservice to all Americans, especially seniors facing rising prescription drug costs" (Kornblut, Boston Globe, 2/5).
Another Bush health care proposal that has drawn criticism is his call for tax credits for the uninsured, the Hartford Courant reports. CMS Administrator Tom Scully conceded that the proposal, which most Republicans support but many Democrats oppose, faces a battle in Congress, but said, "This is the quickest, least bureaucratic way to help low-income people with health care." Democrats and consumer advocates, however, say the proposed credits are not large enough to help the uninsured purchase coverage. Ronald Pollack, executive director of the consumer group Families USA, said, "Bush's plan offers no real solutions for the uninsured. The individual tax credits proposed by the Bush administration are far too small to make health coverage affordable for low-income workers" (MacDonald, Hartford Courant, 2/5). NPR's "Morning Edition" also reported on Bush's budget for health care. The full segment will be available at http://search.npr.org/cf/cmn/cmnpd01fm.cfm?PrgDate=02/05/202&PrgID=30 after noon EST. Note: You must have RealPlayer Audio to listen to the report (Rovner, "Morning Edition," NPR, 2/5).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.