Obama’s FY 2015 Budget Proposal Calls for Increased HHS Funding

On Tuesday, President Obama released his fiscal year 2015 budget proposal, which pushes HHS spending to more than $1 trillion for the first time, and includes a number of other health provisions, the AP/U-T San Diego reports (Alonso-Zaldivar, AP/U-T San Diego, 3/4).

The proposals are not expected to be adopted by Congress, as lawmakers are developing their own budget blueprints (Morgan, Reuters, 3/4).

Health-Related Proposals

The budget proposes funding for various health agencies and initiatives.

HHS: The proposal calls for more than $1 trillion in funding for the agency, reflecting growing benefit programs such as Medicare and expanded coverage under the Affordable Care Act. In addition, the budget will cover expanded access to HIV/AIDS programs, as well as initiatives to address mental health issues in younger populations and youth foster care. Close to $1.8 billion of HHS' proposed budget is intended to fund expanded coverage under the ACA (AP/U-T San Diego, 3/4). A total of $25 million was included to fund exchange monitoring to prevent fraud over the next two years (AP/Sacramento Bee, 3/5). An additional $60 billion will fund federal tax subsidies to help U.S. residents purchase coverage through the ACA's insurance exchanges.

Medicare/Medicaid cuts: The budget proposal calls for an estimated $400 billion in cuts to Medicare and Medicaid over the next decade, including a variety of reductions affecting providers, increased use of competitive bidding to obtain medical equipment and support for a bipartisan initiative to repeal Medicare's sustainable growth rate. In addition, the proposal would raise outpatient care and prescription drug coverage premiums for middle- and high-income beneficiaries (AP/U-T San Diego, 3/4). However, the proposed cuts to the programs are not expected to be enacted by Congress, according to Reuters (Reuters, 3/4).

NIH: The proposal included a $200 million increase to NIH's budget, bringing funding levels to $30.3 billion. In addition, Obama proposed an additional $970M for NIH for priorities such as Alzheimer's disease and brain function research (AP/U-T San Diego, 3/4). The proposal also included funding for an advanced research program aimed at developing medical countermeasures against biological, radiological, nuclear and chemical threats (Cha, "Federal Eye," Washington Post, 3/4).

FDA: Obama proposed $4.7 billion in funding for FDA, including $235 million to implement the Food Safety Modernization Act, which supports programs aimed at preventing instead of reacting to food-borne illness outbreaks (Kindy, "Federal Eye," Washington Post, 3/4). The proposal also included $25 million to implement stronger oversight of drug compounding facilities (AP/U-T San Diego, 3/4). The proposed funding levels represent an increase over the agency's $4.4 billion budget in 2014 (Kindy, "Federal Eye," Washington Post, 3/4).

Prescription drug misuse: About $26 million in the proposal is allocated to address prescription drug misuse, including $16 million for CDC to help states implement programs to detect whether physicians are inappropriately prescribing medication or when patients are seeking numerous prescriptions for painkillers from separate doctors (AP/U-T San Diego, 3/4).

Physician training: The proposal also includes funding for a new initiative to train more physicians by funding a graduate medical-education program that would train 13,000 medical residents over the next 10 years, to create new federal health centers and to broaden the National Health Services Corps, while also increasing programs to train new mental health care providers (Corbett Dooren/Burton, Wall Street Journal, 3/4).

ACA risk corridors: Obama's proposal also includes $5.5 billion to fund a controversial portion of the ACA that creates a temporary pool of money to help insurers that face higher-than-expected costs from enrolling too few young, healthy individuals in coverage through the exchanges (Easley, "Healthwatch," The Hill, 3/4).

Department of Veterans Affairs: Obama also proposed $65.3 billion of funding for the VA, $56 billion of which is intended for veterans' medical care. The proposal calls for a 2.7% increase in the department's medical spending to address a growing number of patients. In addition, $312 million would fund technological improvements to help reduce a longstanding backlog of disability claims, while $7 million would expand the department's mental health services (AP/Sacramento Bee, 3/5).

In addition, the proposal completely cuts a preventive health services block-grant program (Wall Street Journal, 3/4).

Reaction

Various health care providers and organizations have responded to the proposal, with many calling for increased funding for health-related agencies and initiatives.

The Federation of American Hospitals criticized proposed funding cuts to Medicare, with FAH President and CEO Chip Kahn saying they would "further threate[n] seniors' access to vital hospital services" and noting that both Republicans and Democrats oppose such reductions (Demko/Zigmond, Modern Healthcare, 3/4). According to National Journal, the group is hoping to persuade Congress against the cuts by touting a new study estimating over $900 billion in Medicare savings over the next 10 years through cost cutting resulting from changes to the way providers deliver care (Ritger, National Journal, 3/4).

American Hospital Association President and CEO Richard Umbdenstock said the proposal contained some "problematic policies" that would hurt hospitals' abilities to improve the health care system and place patients' at risk of losing access to services (Demko/Zigmond, Modern Healthcare, 3/4).

Kasey Thompson, president and chair of the Alliance for a Stronger FDA and vice president of policy, planning and communications for the American Society of Health-System Pharmacists, called for additional FDA funding, saying, "Given that FDA regulates about 25 cents of every dollar of the gross domestic product, it does not have enough money to fulfill its public health mission."

Alliance for a Stronger FDA Deputy Executive Director Steven Grossman added that the group plans to ask Congress for more FDA funding (Lee, Modern Healthcare, 3/4).

The proposed increase in NIH funding also generated backlash. Research! America President Mary Woolley in a statement said that the U.S. "simply cannot sustain [its] research ecosystem, combat costly and deadly diseases ... and create quality jobs with anemic funding levels that threaten the health and prosperity of Americans," adding, "These funding levels jeopardize our global leadership in science -- in effect ceding leadership to other nations as they continue to invest in strong research and development infrastructures" (Viebeck, "Healthwatch," The Hill, 3/4).