President Barack Obama’s proposed 2014 budget includes an increase of $3.9 billion to implement the Affordable Care Act, with $1.5 billion of that going to support the launch of health insurance exchanges.
Health and Human Services Secretary Kathleen Sebelius said that this figure would cover both outreach to support enrollment and building the federal exchange.
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“We estimate that we will receive $450 million in user fees as part of that figure,” she said.
The nearly $4 billion increase to the budget for the Department of Health and Human Services is compared with funding levels enacted in 2012, for a total budget of $80.1 billion. A 2013 budget has not been passed yet and the government is funded through the end of the fiscal year with a continuing resolution.
Hospitals don’t like the reimbursement cuts. Neither do device companies. Democrats don’t like the reduction in Social Security benefits. Food and Drug Commissioner Margaret Hamberg called the budget “austere.” There are pockets of new funding for specific projects – Alzheimer’s research, mental health programs, brain research but cuts elsewhere. The administration says the new programs are budget neutral and paid for with new revenue sources.
The budget claims $1.8 trillion in savings over the next 10 years and those cuts would replace the sequester cuts. The budget would include a doc fix as previous budgets have. The goal is to keep reimbursements stable for the next few years while a “pay for performance” plan is developed.
The proposal reduces some Medicaid payments to match Medicare payments for the same products. Stephen J. Ubl, president and CEO of AdvaMed, pointed out that this is a double whammy on top of the medical device tax:
“We are deeply concerned that some of the policy proposals in the budget such as reductions in payments for clinical lab services and for durable medical equipment in Medicaid and, if adopted, unprecedented prior authorization for advanced imaging, will chill continued medical innovation affecting current and future Medicare beneficiaries as well as significantly harm access to life-saving, life-enhancing medical technology.”
Medicare spending is reduced by $370 billion over 10 years with the cuts coming mostly at the expense of hospitals, drug companies, nursing homes, and wealthy seniors, who will be asked to pay higher premiums.
Sebelius said that the budget would cut spending by allowing dual eligibles to get prescription drugs at lower Medicaid rates, which would result in $120 billion in savings over next 10 years. She said the proposed budget would generate an additional $317 billion in Medicare savings over the next decade.
Blair Childs, senior vice president of Public Affairs at Premier healthcare alliance, had this to say about the proposed reimbursement cuts:
Instead of payment cuts that undermine hospitals’ ability to transform healthcare, we urge the Obama Administration and Congress to seek a more transformational approach to reduce costs. We urge a focus on accelerating and expanding delivery system reforms that simultaneously achieve sustainable savings and improve healthcare quality. Providers need tools to bend the cost curve and improve quality. We should look to bipartisan reforms such as accountable care organizations and bundled payments that have proven to incent quality and successful outcomes and improve coordination, thereby generating better value for beneficiaries and the government.
Some of the new spending includes a $130 million initiative to expand mental health services, including $55 million for a project to help school districts and communities identify students with mental health issues and ensure they are referred for treatment. The money also covers training 5,000 mental health professionals.
The overall budget at the Centers for Disease Control went down by $270 million. CDC Director Dr. Thomas Frieden said that the center will be spending more money on advanced molecular detection.
“We will have a a $40 million increase in this program to figure out how to stop outbreaks sooner and figure out how they are spreading,” he said.
Frieden also discussed the proposed increase in the cigarette tax. He said this would benefit children in two ways.
“The increased tax will go to expanding early childhood education and increasing the price of tobacco is the best way to discourage kids from smoking,” he said. “The higher cost will result in about 230,000 fewer kids smoking.”
Download the entire 2014 budget proposal here.
Listen to a discussion of the proposed budget from The Diane Rehm show this morning.
See how Obama’s plan comapres to budget proposals from the House and Senate.
One reporter at the press conference asked what HHS would do if congress doesn’t provide the extra money requested to support the insurance exchanges.
“We’re determined to make these work,” was the answer from Assistant Secretary for Financial Resources and Chief Financial Officer, Ellen Murray.
(Additional reporting by Thomson Reuters)
