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Health Takes a Hit in Spending Deal but Priorities Survive

By Jane Norman, CQ HealthBeat Associate Editor

April 12, 2011 -- The cuts included in the spending compromise for fiscal 2011 will spread pain across federally funded health care programs and harm important initiatives. But the hits could have been even more devastating, advocates and lawmakers said.

And the health battles will be fought again right away. As soon as the 2011 vote is behind them, lawmakers will move on to a 2012 fiscal year budget in which discretionary spending reductions will be a priority for Republicans and Democrats will be forced to respond.

One problem in figuring out the impact of the 2011 spending deal—which averted a government shutdown—was that confusion over the numbers continued throughout the day after the details of the agreement (HR 1473) were released.

For example, an early version of a chart released by appropriators included an incorrect line item for a $1.045 billion cut in funding for HIV/ADS, viral hepatitis, and other diseases. "That was really, really scary," said Carl Schmid, deputy executive director of the AIDS Institute.

In comparison, a funding hit overall for the Centers for Disease Control and Prevention (CDC) of $730 million seemed bearable though it would take away 10 percent or more of the agency's overall budget in areas yet to be determined. Advocates for cancer prevention warned that the CDC cut could have a major impact on programs in the states that provide screening for breast and colorectal cancer among low-income Americans.

Congressional aides, speaking on background, said that the impact on CDC would not be as large as the bottom-line number indicates because the agency has the authority to reduce programs that it considers a low priority. Aides also said that the overall cut in CDC funding likely would be closer to six percent, with the specifics to be determined by the agency.

The National Institutes of Health sustained a reduction of less than one percent, so biomedical research was largely spared. "We're relieved," said Dick Woodruff, senior director of federal relations at the American Cancer Society, though he said advocates will continue working very hard to increase research funding. He also said cancer advocates were continuing to analyze the plan to determine exact reduction amounts.

Richard Hamburg of the Trust for America's Health said that cutting NIH by any amount is a "tough pill to swallow," but praised lawmakers for saving a $750 million prevention fund targeted by Republicans for elimination or cuts.

Overall, the bill reduces federal spending for the rest of the fiscal year by $40 billion in discretionary funds compared to fiscal 2010, according to House appropriators. Senate appropriators said the reduction would amount to $38.5 billion. The House is expected to take up the measure and House Majority Whip Eric Cantor, R-Va., predicted it will be approved.

The single largest health-related cut seemed to be a $1.2 billion one for the Health Resources and Services Administration (HRSA), although some programs within HRSA are slated to receive new money from the health care law.

Overall, Senate Democrats say that the Department of Health and Human Services (HHS) would receive $70.6 billion in fiscal 2011, compared with $74 billion in fiscal 2010 and the $65.4 billion allocated in the House-passed spending bill (HR 1) from earlier this year. Agencies "will have wide discretion over the funding levels for many individual programs unless the levels were specifically cited in bill language," says a summary by Senate Democratic appropriators.

The health co-ops included in the health care law had their funding sliced by $2.2 billion of the $6 billion authorized in the overhaul. The co-ops, which have not yet been launched, would be new nonprofit health plans governed by consumers that are slated to receive start-up grants and loans.

House GOP appropriators said in a statement that co-ops were terminated but Senate Finance Committee Chairman Max Baucus, D-Mont., said the co-op program survived. "It's not pulled out," said Baucus. "One third is pulled out. One third reduction."

The compromise also includes policy riders that Republicans said would give them leeway to continue to probe the details of the health care law (PL 111-148, PL 111-152) as its implementation proceeds. "The agreement generates new tools and accountability mechanisms for the fight to repeal Obamacare," said a statement from the office of Speaker John A. Boehner, R-Ohio.

Democrats Spin Cuts

Democrats who agreed to the proposal tried to put the best face on it and repeatedly compared the results with what would have occurred if HR 1 became law. "This bill makes painful cuts. But it could have been a lot worse, especially when you compare it to the alternative from the tea party extremists in the House, which would have caused real damage to the economy," said Sen. Tom Harkin, D-Ia., chairman of the Labor, Health and Human Services appropriations subcommittee.

"This bill protects services for those most in need, such as the Community Services Block Grant and community health centers, while providing a strong level of funding for biomedical research and other programs that are critical to our economic future," said Harkin.

Spending for a voucher program in the health care law championed by Sen. Ron Wyden, D-Ore., was removed in the budget deal and Wyden was furious. He said he would not vote for the bill in its current form.

"I'm flabbergasted," said Wyden. "I've never seen anything like this in my time in public service, that something that is hard-fought battle in public, everybody knows about, is killed behind closed doors so quickly after the public fight."

Wyden did not say how or why it had been axed but said it was "abuse by special interests."

Under the voucher program, certain employees could have used their employers' contributions toward health insurance to help pay for coverage in the health insurance exchange, according to an analysis by the Urban Institute. That analysis found that health coverage would be made more affordable for low-income families under an approach like Wyden's. But other analysts predicted high costs for employers with many-low income employees.

Cuts summarized

Democratic staffers distributed detailed summaries of program cuts while GOP aides did not. The key points of the compromise as it applies to health include:

  • A reduction of 0.8 percent or $260 million for the National Institutes of Health below the fiscal 2010 level, according to summaries released by Democrats. It includes $300 million for the global fund that fights disease worldwide, which was eliminated in the House-passed spending bill.
  • A chart originally released by appropriators showing reductions included a $1.045 billion spending cut for HIV/AIDS, viral hepatitis, STD and TB prevention compared with 2010. But AIDS activists said that figure is incorrect, which congressional aides later confirmed, and that amount was removed from the chart. A summary by Senate Democrats says it's a $730 million cut and $5.66 billion in total funding.
  • Funding for Title X Family Planning is set at $300 million, which is $17 million below 2010, Democrats say. The House Republican bill would have eliminated all funding for Title X services.
  • A prohibition on the use of federal funds for needle exchange that was included in the House-passed bill did not make its way into the final compromise, Democrats say.
  • Also fended off was the elimination of the $750 million Prevention and Public Health Fund in the House GOP bill, Democrats say.
  • The Food and Drug Administration would see its budget grow by 4 percent to $2.5 billion under the measure.
  • An allocation of $109 million is made for the Teen Pregnancy Prevention Program, which is 96 percent of the fiscal 2010 spending level, Democrats say. The House Republican bill would have eliminated all funding.
  • Funding of $885 million for the Aids Drug Assistance Program, which is a $25 million increase over fiscal 2010 after a $25 million transfer for added supplemental funding for waiting lists for those seeking treatment. Schmid of the Aids Institute said the increase was appreciated but it's still too little to meet the growing numbers of low-income people who need medications.
  • Discretionary funding of $6.27 billion for the Health Resources and Services Administration, which includes community health centers, health professions training, the Ryan White Care Act and family planning under Title X. That's $1.2 billion below the 2010 level, though some programs will receive new money through the health care law.
  •  $600 million reduction for community health centers compared to 2010 was included but the nation's 1,100 health centers will stay open and operating because of a separate $400 million pot of mandatory funding in the health care law that will be tapped, aides said.
  • An allocation of $662 million for the Maternal Child Health block grant, the same as in 2010.
  • An elimination of all funding for the State Health Access Grant program. Democrats say with the enactment of the health care law, the program is no longer necessary. The grant program gave $75 million to states in fiscal 2010.
  • A chart from appropriators also shows cuts compared to fiscal 2010 of $35 million for rural health programs, $164 million for the Bureau of Health Professions, $69 million for CDC buildings and facilities and $50 million for NIH buildings and facilities.

According to Boehner's office, the deal gives the green light to studies of the impact of health insurance premium increases on individuals and families due to mandates in the health care law, a "full audit" of waivers granted by the administration to organizations that need more time to meet requirements for benefit packages under the law, another "full audit" of comparative effectiveness research funding, and a report on contractors hired to carry out the law.

The White House Office of Health Reform gets no funding, though the office has ceased functions already.

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