President Bush Releases $2.4 Trillion Fiscal Year 2005 Budget With Funds for Health Care Programs
President Bush on Monday released a $2.4 trillion budget proposal for fiscal year 2005, which includes "a virtual freeze on spending for everything but national defense, homeland security and federal benefits," the Los Angeles Times reports (Hook, Los Angeles Times, 2/3). Under Bush's budget, total HHS spending would increase 5.8% to $580 billion, the Washington Post reports (Washington Post, 2/3). However, discretionary funding for all HHS programs would decrease 1.6% to $68.2 billion, the Washington Times reports. Mandatory expenditures for Medicare and Medicaid account for more than 85% of the total budget, according to the Washington Times (Washington Times, 2/3). Although the budget does not officially mention a Medicaid reform plan, one is "still in play," Reuters reports (Reuters, 2/2). Discretionary funding for the FDA would increase 7.9%, or by $109 million, the Post reports (Washington Post, 2/3). Total outlays for the FDA would "rise sharply" to $1.84 billion from $1.66 billion; however, some of the money would come from user fees paid for by drug and medical device companies, the Wall Street Journal reports. Much of the new FDA money would be for food safety, including funds for increased inspections related to mad cow disease. Bush's budget proposal also includes a $217 million, or 13%, increase in the FDA budget for reviewing medical devices, the Journal reports (Solomon et al., Wall Street Journal, 2/3). Under the budget, NIH would receive a 2.7% increase, "much lower" than 6% to 7% increases in previous years, the Boston Herald reports (Heldt Powell, Boston Herald, 2/3). Funding for CDC would drop to $4.1 billion from $4.5 billion, the Augusta Chronicle reports (Augusta Chronicle, 2/3).
Funding for Medicare under Bush's budget reflects a difference in cost estimates between the administration and the Congressional Budget Office regarding the new Medicare legislation (HR 1), the Washington Times reports (Washington Times, 2/3). Last week, administration officials announced that according to the Office of Management and Budget, the legislation will cost $534 billion over the next 10 years, $134 billion more than estimated by the CBO. Last week, the CBO reiterated its estimate of $395 billion over 10 years (California Healthline, 2/2). CBO Director Douglas Holtz-Eakin on Monday sent a letter to a letter to several lawmakers defending the agency's cost estimate, the AP/Las Vegas Sun reports (Sherman, AP/Las Vegas Sun, 2/2). HHS Secretary Tommy Thompson said that the $50 billion difference between the two estimates exists because the administration believes 5% more Medicare beneficiaries will sign up for the drug benefit than the CBO does, CongressDaily reports. Holtz-Eakin said in the letter that the difference in the estimates is seven percentage points. In addition, HHS estimates that prescription drug utilization rates will increase $25 billion more than the CBO estimate. About $32 billion of the difference stems from HHS' estimate that 33% of beneficiaries will join private health plans, compared with a 14% estimate from CBO, according to Thompson. Holtz-Eakin's letter indicates that CBO estimates only 9% of beneficiaries will join private plans, not 14% (Rovner, CongressDaily, 2/3). "CBO's estimate was the result of extensive analyses of the pharmaceutical drug market, the Medicare program, and the likely responses of potential enrollees. To date, we have not received any additional data or studies that would lead us to reconsider our conclusions. Therefore, CBO believes its estimate is sound and has no reason, at present, to revise it," Holtz-Eakin says in the letter. The letter was sent to Reps. Jim Nussle (R-Iowa), Billy Tauzin (R-La.) and Bill Thomas (R-Calif.) and Sens. Don Nickles (R-Okla.) and Chuck Grassley (R-Iowa) (Holtz-Eakin letter text, 2/2).
Bush's FY 2005 Budget proposal also includes:
- $270 million in funding for abstinence education programs;
- A 10-year, $70 billion proposal for refundable tax credits to help people purchase health insurance (Los Angeles Times, 2/3);
- A proposal to close a loophole in the Medicaid upper payment limit (Rovner, CongressDaily, 2/2); and
- $135 million for biosurveillance (Goldstein/Allen, Washington Post, 2/3).
Bush's budget calls for spending on health-related activities in departments other than HHS. The following describes those amounts.
Department of Homeland Security: Under the Bush proposal, discretionary spending for the DHS would increase 4.6% to $28.3 billion, not including the $2.5 billion proposed for Project BioShield, a plan to help develop treatments against bioterror attacks, the Post reports (Washington Post, 2/3).
Department of Veterans Affairs: Under the Bush proposal, discretionary spending for the VA would increase 1.8% to $29.7 billion, the Washington Times reports. The budget would increase from $7 to $15 copayments for outpatient pharmacy services for certain veterans with higher annual incomes. In addition, the budget would eliminate waiting lists in 2004 for veterans seeking medical care (Washington Times, 2/3). About $35.6 billion of the VA's total $67.7 billion budget would be directed towards mandatory spending for entitlement programs like disability, the Post reports.
- Department of Agriculture: Under the Bush proposal, discretionary spending for the USDA would decrease 8.1% to $19.1 billion. However, the budget included new funds to protect the food supply (Washington Post, 2/3). In addition, the budget includes $60 million for programs related to mad cow disease, an increase of $47 million (Wall Street Journal, 2/3).
Bush said that the budget proposal "sets clear priorities," including "making sure the seniors get a modern Medicare system" (Stevenson, New York Times, 2/3). HHS Secretary Tommy Thompson said that the budget sets an "aggressive agenda," adding, "These investments not only will better prepare our nation for and protect us from a bioterror attack, they will also better prepare us for any public health emergency" (New York Times, 2/3). However, Sen. Edward Kennedy (D-Mass.) said, "Despite the administration's rhetoric about the importance of medical research, their budget shortchanges NIH and breaks faith with millions of patients and their families" (Boston Herald, 2/3). Sen. Saxby Chambliss (R-Ga.) said that he is not concerned about the proposed reduced funding for CDC because there is a "long tradition of the administration low-balling" certain funds for the agency and Congress then appropriating more funding, the Chronicle reports. Chambliss added, "We'll start here and work throughout the year to secure the appropriate funds to allow CDC scientists access to the best, most modern equipment and facilities possible to continue protecting our country, and the world, from biohazardous threats" (Augusta Chronicle, 2/3). The Los Angeles Times reports that Bush's budget proposal could be "substantially revised" by Congress as it writes its budget in the spring and implements the budget with specific spending and tax bills later in the year (Los Angeles Times, 2/3).
- Bush's budget and additional information are available online.
- NPR's "Morning Edition" Tuesday reported on Bush's proposed health spending in FY 2005. The segment includes comments from David Moore, board member for the Coalition for Health Funding and president of the Association of American Medical Colleges; Rep. John Spratt Jr. (D-S.C.); and Thompson (Rovner, "Morning Edition," NPR, 2/3). The complete segment is available online in RealPlayer.
- PBS' "NewsHour with Jim Lehrer" on Monday included interviews with Sen. Kent Conrad (D-N.D.) and Rep. Jim Nussle (R-Iowa) about their reactions to Bush's budget, including the increased cost estimates for Medicare (Warner, "NewsHour with Jim Lehrer," PBS, 2/2). The complete transcript is available online. The complete segment is available online in RealPlayer.