Other Appropriations Issues

With the FY 2012 CR dispute spilling over until this Monday, it remains unlikely that the House will move a separate Labor/HHS/Education appropriations bill.  Nonetheless, the Senate Appropriations Committee cleared that chamber’s FY 2012 measure last week on a party-line vote providing HHS with $70.18 billion, only slightly lower than for this fiscal year.  Also, the bill creates a new $582 million “National Center for Advancing Translational Sciences” under NIH to accelerate treatments from “bench to bedside” while reducing total NIH funding by $190 million to $30.5 billion.  CDC also gets a haircut in FY 2012 funding to $6.22 billion from $6.28 billion.  Community health centers would receive $1.58 billion which together with PPACA mandatory spending amounts to an increase in FY 2012 of about $200 million.
President Obama’s Deficit

Reduction/Tax Increase Plan

Last week the Joint Select Committee on Deficit Reduction heard from the Joint Tax Committee on the potential effect of various means to reform the corporate and individual income tax code.  While members appeared to agree on the overall goal to make the tax code simpler and more fair, their views differed when it came to a discussion on what so-called loopholes should be closed and whether a restructuring to reduce rates should be revenue neutral.  DOD Secretary Leon Panetta also told Congress that the Pentagon will soon be sending up recommendations to the super committee which would cut DOD spending by $450 billion over ten years without affecting military capabilities.  Last week the President also delivered his deficit reduction proposals to the Joint Committee.  The White House said the tax increase and spending cut plan would reduce the deficit by about $3.2 trillion over ten years.  The President said the plan was fair and balanced and that he would veto any plan produced by the joint committee that reduces entitlement program benefits without raising taxes on the wealthy and eliminating tax loopholes for corporations.  Senate Minority Leader Mitch McConnell dismissed the President’s plan as class warfare and a non-starter.  The plan would cut mandatory federal spending by $580 billion, including $248 billion from Medicare and $65 billion from Medicaid and about $7 billion from other health-related programs.  Most of the Medicare cuts would come from reducing payments to health care providers and drug companies while some higher-income beneficiaries would pay higher premiums.  The minimum age for Medicare eligibility would not be raised under the plan.  Increased taxes would make up almost $1.6 trillion of the deficit reduction plan, a move that House Speaker John Boehner quickly rejected as not a viable option. 

The following are some of the health related cuts under the President’s plan: 


  • reduce payments to drug makers to the level paid by Medicaid ($135 billion);
  • adjust payments for nursing homes and rehabilitation facilities that provide post-acute patient care ($42 billion);
  • increase by 15% the premiums for both Medicare Part B and D that are tied to income levels and apply these premiums to 25% of beneficiaries ($20 billion);
  • reduce reimbursements to providers resulting from beneficiaries’ non-payment of deductibles and copayments ($20 billion);
  • reduce waste, fraud and improper payments ($5 billion);
  • implementing payment adjustments for advanced imaging equipment to account for higher levels of utilization of certain types of equipment ($400 million);
  • adopting prior authorization for the most expensive imaging services beginning in 2013 ($900 million);
  • limit state taxes on providers and reduce the federal matching contribution ($26 billion);
  • apply a single matching rate for each state for Medicaid and SCHIP ($15 billion);
  • include Social Security benefits in the calculation of eligibility ($15 billion);
  • increase pharmacy co-payments for the military Tricare health program ($15 billion);
  • initiate annual premiums for the Tricare Medigap program ($7 billion);
  • reduce the exclusivity period from 12 to 7 years for brand-name biologic drugs ($3.5 billion);
  • Office of Personnel Management would contract directly for pharmacy benefit management services under the FEHBP ($1.6 billion).
In addition, the plan would ban pay-for-delay or reverse payment agreements in drug patent litigation.

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