OMB Releases President's FY 2013 $ Trillion Budget

Last Monday the OMB released President Obama’s FY 2013 budget recommendations which include $76.4 billion in discretionary spending for HHS, an increase of $260 million from this fiscal year.  The Senate is not expected to bring the President’s budget to a vote, nor any alternative, according to Senate Majority Leader Harry Reid
Key elements of the budget include the following discretionary spending proposals for HHS agencies: CMS: $4.8 billion, up $864 million; FDA: $4.5 billion, up $864 million (with about 45% from user fees); NIH: $30.7 billion, level; CDC: $5.1 billion, down $664 million; SAMHSA: $3.2 billion, down $228 million; HRSA: $6.1 billion, down $140 million; Indian Health Service: $4.4 billion, up $115 million.
HHS Secretary Kathleen Sebelius said that proposed reforms under Medicare and Medicaid would reduce the federal deficit by $366 billion over 10 years.  The budget also recommends an additional $1 billion increase to implement the PPACA, including about $860 million for health exchanges.  The Medicare and Medicaid “reform” proposals are similar to the Administration’s FY 2012 recommendations, including: cutting payments for hospital bad debts; reducing Medicare GME payments; reducing drug costs for dual-eligibles (e.g. banning “pay for delay” agreements, etc.); introducing higher income beneficiary cost sharing; increasing the Medicare Part B deductible; instituting new copayments for home health services; increasing Medigap premiums; providing a single blended rate for Medicaid and SCHIP funding; limiting state provider taxes which fund the state share of Medicaid; adjusting the payment rates for DME; and eliminating funding for Area Health Education Centers. 
Of note, the budget also proposes to reduce and reallocate funding under the PPACA Prevention and Public Health Fund, a recommendation which helped ease the $5 billion reduction in the fund used as a cost offset for the temporary Doc-Fix described above. 
In general, the budget does not include a proposed long-term fix for the SGR problem under the Medicare physician payment system.  Instead, the Administration said that “to promote more honest and transparent budgeting, the budget includes an adjustment totaling $429 billion over 10 years … to reflect the Administration’s best estimate of the cost of future congressional action based on what Congress has done in recent years for physician payments.”  Republicans were critical of the President’s recommendations or lack thereof.  For example, House Ways and Means Committee Chairman Dave Camp said that again “the President has refused to address the looming bankruptcy in our entitlement programs….”  Given the stalemate between the House and Senate as to FY 2013 budget matters, the provisions of the President’s budget are instructive of possible changes that a successor Congress may take after the November elections.

Hearings on PPACA Contraceptive Mandate

The House Government Oversight and Reform Committee held contentious hearings on the HHS/PPACA rule requiring health insurers and self-insured sponsors of health plans covering religious based organizations, such as universities and non-profits, to provide women’s contraceptive coverage at no cost to plan participants.  Various religious organizations testified that the rule violates first amendment rights guaranteeing religious freedom while women’s groups argued that the rule appropriately advances women’s health measures.  Senate Majority Leader Harry Reid announced that he will allow a vote this week on an amendment to be offered by Senator Roy Blunt (to an unrelated transportation bill, S. 1813) which would negate the PPACA-based mandate for such religious organizations.

Additional Briefs Filed in PPACA Constitutional Case

The Department of Justice filed its latest brief with the Supreme Court arguing that the expanded Medicaid eligibility required under the PPACA is properly exercised under Article I of the constitution.  The brief filed earlier by 26 states argued that the expansion would overtax state budgets and that the provision amounted to a coercive action by the federal government to force states to comply or forfeit all federal Medicaid matching funds.  The DOJ said the coercion argument “is nothing more than an argument that the citizens of their States would hold them politically responsible for either the reduction in benefits that would result from opting out of Medicaid or for the increased taxation needed to fund those benefits entirely at the state level” and that “Congress has broad authority to attach conditions to federal spending in order to further federal policy objectives….”  Also, several private organizations, such as the Cato Institute and the Landmark Legal Foundation, filed briefs arguing that the individual mandate to purchase health insurance is unconstitutional in that the “outermost bounds” of the commerce clause “stops Congress from reaching intrastate non-economic activity regardless of its effect on the economy” and that the individual mandate is an “unprecedented and unconstitutional police power” supported by neither the commerce clause nor the necessary and proper clause.

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