More Health Care Details Released From Obama's 2012 Budget Proposal

More specific details about health care funding in President Obama's $3.7 trillion fiscal year 2012 budget proposal were revealed on Monday, showing increases for some health-related agencies but mostly frozen or reduced budgets, the New York Times reports (Pear/Harris, New York Times, 2/14).

Obama’s proposal includes budget increases for CDC, FDA and NIH. Spending for most other health-related programs would be frozen under the proposal.

However, the nearly $80 billion in the proposal for HHS to administrate its discretionary programs and implement the federal health reform law is $1.3 billion lower than the agency's current funding levels. NPR's "It's All Politics" reports that discretionary spending accounts for only a portion of HHS' proposed overall budget of $892.8 billion. The Obama administration insisted that total spending for Medicaid and Medicare -- the two largest programs under the purview of HHS -- will be reduced under the health care overhaul ("It's All Politics," NPR, 2/14).

Obama's budget proposal also includes $465 million for the implementation of the health reform law, of which about $300 million has been allotted to CMS, The Hill's "Healthwatch" reports. The agency will assign some of its nearly 650 new personnel to the Center for Consumer Information and Insurance Oversight, according to CMS Administrator Donald Berwick (Millman [1], "Healthwatch," The Hill, 2/14).

The proposed budget also would create $62 billion in Medicare savings over 10 years. The savings would result from tighter restrictions on Medicare and Medicaid payments and expanded use of generic drugs in federal health programs. The savings would be used to delay for two years a scheduled 25% cut to Medicare's physician reimbursement rate -- called for by the Sustainable Growth Rate formula -- according to the proposal (California Healthline, 2/14).

Additional Details of the Budget Proposal

The budget plan -- which must be approved by Congress -- includes the following health-related spending proposals:

  • $11.2 billion for CDC, up from its FY 2010 budget of $10.8 billion. However, the agency's discretionary spending budget would be reduced from $6.5 billion to $5.9 billion, which is expected to affect occupational safety and health, environmental health and disaster planning program in states. Programs that would see a funding boost include childhood vaccinations, domestic HIV/AIDS programs, and initiatives designed to treat and prevent chronic diseases (Brown, "44," Washington Post, 2/14).
  • $2.7 billion for FDA, an increase of about $1 billion from the agency's current fiscal year budget, to enhance its new oversight of food safety and the nation's medicine, medical equipment and blood supplies. The FDA budget includes a projected collection of $1.7 billion in "user fees" for expedited product review-and-approval procedures. However, the agency's budget proposal is likely to be rejected by lawmakers, particularly in the House, where Republicans have indicated that they are preparing legislation that would reduce the agency's budget to $2.1 billion as part of a broader effort to further cut discretionary spending ("It's All Politics," NPR, 2/14).
  • $32.3 billion for NIH, up from $31.3 billion in FY 2011, with a goal of spurring biomedical research and innovation, The Hill's "Healthwatch" reports (Millman [2], "Healthwatch," The Hill, 2/14) According to the Times, $100 million from the allocated funds would be used to establish a new federal drug development center to advance existing research and develop new medicines (New York Times, 2/14).
  • An 11% increase in funding for the Department of Veterans Affairs to improve and provide essential health care services for returning military veterans and personnel from combat missions abroad. The $62 billion budget proposal focuses on improving diagnostic and treatment plans for post-traumatic stress, traumatic brain injuries, and other combat-related psychological and cognitive health issues. The proposal also would include funding for a program under the health reform law to provide enhanced benefits and medical care for veterans' caregivers, which recently missed its implementation deadline ("It's All Politics," NPR, 2/14).

The administration's budget proposal also:

  • Scales back -- but does not completely eliminate -- the 1099 tax-reporting requirement in the health reform law. Under the proposal, businesses, not-for-profit groups and government offices only would have to file 1099 forms with the Internal Revenue Service when they purchase $600 or more for services from another business in a given year. The overhaul also would require businesses to file the forms for goods purchased (Pecquet, "Healthwatch," The Hill, 2/14);
  • Requests $4.9 billion, an increase of $100 million, for the National Institute of Allergy and Infectious Diseases, which helps fund most of the research into HIV and AIDS nationwide;
  • Seeks $5.2 billion for the National Cancer Institute, an increase of $95 million;
  • Eliminates a $318 million program that trains physicians at children's hospitals;
  • Distributes $250 million to states over the next four years to examine strategies to reduce medical malpractice litigation (New York Times, 2/14);
  • Reduces the so-called "exclusivity" period for brand-name drugmakers to market their products from 12 years -- which was included in the health reform law -- to seven years, allowing generic drugmakers to introduce less costly versions of useful medications to consumers earlier; and
  • Ends the controversial practice of "pay-for-delay" agreements, which brand-name drugmakers have been making with their generic competitors to postpone the market arrival of generic medications (Heavey, Reuters, 2/15).
Anne Cuenca
The Patient Protection and Affordable Care Act promises to cover more people - especially sick ones and at the same time try to lower down the costs. But ow can you possibly add more people to the system, offer more benefits and reduce health care costs? Is it promising something that can't be realized after all? Or it might be fully implemented but at the expense of our economy that is already not doing good as it is right now. Anne C NY Health Insurer
Hatti Hamlin
The 1099 requirement is ridiculous! From now on I'll be filing 1099s for airfare, office supplies,computers, a new printer or copier--the list goes on. How this will generate income for the U.S. Treasury is beyond me (do they think they're going to discover that United Airlines or Office Max or Best Buy hasn't been reporting its sales???)but it will certainly generate income for one industry--accountants! I would rather they racheted up my tax rate by 5% than waste my time on this tomfoolery!

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