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Obama Requests $81.3 Billion for HHS, Including $1 Billion for NIH

By Jane Norman, CQ HealthBeat Associate Editor

February 1, 2010 -- President Obama's quest to overhaul the nation's health care system may remain stuck in Congress, but he proposed a 2011 budget of $81.3 billion for the Department of Health and Human Services on Monday that takes other routes to expand access to care, such as new community health centers. In addition, the president would increase federal commitments to biomedical research and launch payment system pilot programs for Medicare.

The overall budget assumes enactment of a health care overhaul and thus anticipates that it would reduce the deficit by $150 billion over 10 years, administration officials said — an average of the House bill and the Senate bill. HHS Secretary Kathleen Sebelius said, however, at an afternoon press conference that "there really are no specific features in this (budget proposal) that have that assumption built in, but I think the president made it very clear at the State of the Union that he does not intend to walk away from health reform."

Sebelius said the budget is aimed at strengthening working families, investing in a foundation for future growth and "bringing a new level of accountability and transparency to government." Relief is targeted at Americans who need it most at a time of economic stress, she said.

In a move sure to be applauded by states with strapped budgets, Obama included $25.5 billion for a six-month extension of Medicaid money under the economic stimulus program for continuation of an increase in the federal match, through June 30, 2011. Without it, spending was scheduled to decrease by $30 billion after Dec. 31, 2010. The budget says that the federal share of current Medicaid outlays is expected to be $271 billion in the 2011 budget year.

Obama proposes a $2.5 billion emergency fund for the Temporary Assistance for Needy Families block grant, providing assistance to needy families. He also proposes $500 million for a new Fatherhood, Marriage and Families Innovation Fund that would extend competitive grants to states to "conduct and rigorously evaluate comprehensive responsible fatherhood programs."

An expansion of Head Start and Early Head Start for needy pre-schoolers, also in the economic stimulus program, would be continued and Head Start is projected to serve 971,000 children from birth to age five. There is additionally an increase of $1.6 billion for child care for 235,000 more low-income children than would otherwise have been served.

The $81.3 billion in total discretionary budget authority for HHS in 2011 would be less than the $81.9 billion estimated for fiscal 2010, including balances transferred from the Department of Homeland Security related to the BioShield program that protects against terrorism. Excluding those balances, it would be an increase from $79.5 billion in fiscal 2010.

Obama has proposed a $3.8 trillion budget overall for 2011 focused on adding jobs and reducing deficits, and he would freeze domestic discretionary spending, though not across the board. That freeze does not affect big mandatory human services programs like Medicare and Medicaid.

Obama has proposed terminations, reductions and savings for the federal 2011 budget overall of $23 billion, and some programs in HHS are targeted. However, often savings such as these are difficult to achieve because they are politically popular or favorites of members of Congress. Some of the programs have been recommended for cuts in the past but have survived.

In HHS, Obama would terminate anthrax vaccine research, a Children and Families Services job demonstration program, three congressionally earmarked projects in the Health Resources and Services Administration in Alaska and Mississippi and the Rural Communities Facilities Program.

The Centers for Disease Control and Prevention, which was a main agency in fighting the H1N1 flu outbreak that's now abated, is slated for a $133 million decrease; budget documents say there's still money available from the fiscal 2009 pandemic influenza supplemental bill, so less money was requested for CDC.

But Obama would provide an increase of $1 billion for the National Institutes of Health for an expansion of support for biomedical research, which in his remarks on Monday morning on the budget he put in the context of job stimulation. Obama said he would "increase investment in scientific research, so that we are fostering the industries and jobs of the future right here in America."

At NIH, the focus is expected to be on genomics, translational research, science to support the health care overhaul, global health and "reinvigorating the biomedical research community." There would be more than $6 million to support efforts to battle cancer including 30 new drug trials in 2011 and doubling the number of novel compounds in Phase 1 through Phase 3 clinical trials by 2016. The budget would support the completion of a catalog of cancer mutations for the 20 most common malignancies.

There's $2.5 billion in budget authority and $4 billion in total program resources for the Food and Drug Administration, a net program increase of $748 million or 23 percent compared to 2010. Food safety funds would rise by $318 million. FDA would develop an integrated national food safety program and set new standards for safety, strengthen surveillance and enforcement and improve response to outbreaks. The budget again proposes four new user fees and proposes increases in existing user fees.

Obama would add $290 million for health centers in medically underserved areas, for a total of $2.5 billion in 2011. With the money, 25 new community-based sites could be added and the 2 million new patients that existing sites saw in 2009 could be served; there were 17 million in all last year. There would be money in the budget to expand behavioral health services such as care for addicts.

Obama also would spend more than $3 billion on HIV/AIDS prevention and treatment activities, budget documents said.

In the category of supporting the health care overhaul, the president would devote $110 million for continuing efforts to strengthen health IT policy, coordination and research activities; and spend $286 million for comparative effectiveness research that was begun under the recovery act through the Agency for Healthcare Research and Quality. That takes in $273 million for research and $13 million for program support.

At the Centers for Medicare and Medicaid Services, new demonstration projects would be launched aimed at higher quality care at lower cost and better alignment of provider payments with costs and outcomes. Programs are expected to put special emphasis on chronic care for beneficiaries. In Medicare and Medicaid, the request is to spend $561 million, an increase of $250 million, on fighting fraud and abuse and increasing oversight.

There's $169 million for the National Health Service Corps to add providers to areas of the country that don't have enough doctors and other health professionals. And there's $222 million across the agency to expand research, detection and treatment for autism spectrum disorders.

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