Congress Passes Short-Term CR
Before adjourning so Members could return to their districts to campaign, both the House and Senate passed a Continuing Resolution (CR) that will fund all government agencies and programs at their fiscal year (FY) 2014 enacted levels through December 11th, 2014. President Obama signed the measure averting another government shutdown.
The CR includes $88 million requested by the Administration to help address the Ebola outbreak in West Africa, and a 0.556% across-the-board cut to pay for the added funding for Ebola and other purposes.
House Appropriations Committee Chair Hal Rogers (R-KY.) and Senate Appropriations Committee Chair Barbara Mikulski (D-MD.) have expressed interest in completing an omnibus spending bill during the lame duck to resolve FY 2015 appropriations before the new Congress. However, it is possible Congress may extend the CR through March of next year or for the remainder of FY 2015.
Reps. DeLauro and Higgins Introduce Bill to Increase Funding for the NIH
Representatives Rosa DeLauro (D-CT) and Brian Higgins (D-NY) have introduced the Accelerating Biomedical Research Act, which allows for an increase in National Institutes of Health (NIH) funding, offset by adjusting the discretionary budget caps mandated by the Budget Control Act. The bill is the House companion to S. 2658 introduced in July by Senator Tom Harkin (D-IA).
The legislation gives the Appropriations Committee the authority to increase funding for the NIH as long as appropriators provide at least $29.9 billion for NIH each fiscal year. In total, appropriations may provide up to $46.2 billion at the end of the seven year period from fiscal year (FY) 2015-2021. The additional funding allows an initial increase of 10% in each of the first two years, followed by 5% increases each year thereafter.
In a statement endorsing the bill, AAMC President and CEO Darrell Kirch, M.D., said the bill will “provide the sustained, long-term predictable funding growth essential to catalyze scientific momentum and address current and emerging health challenges. This bill is an important first step to restoring broader federal support for research.”
Congresswoman DeLauro, who is the ranking Democrat on the House Labor-HHS Appropriations Subcommittee, noted in her press release that “Doing so would allow the appropriations committees to restore NIH funding to the purchasing power it would have if it had kept up with inflation since 2003.”
Senate Appropriators Set Allocations for FY 2014 Spending Bills
The Senate Appropriations Committee has adopted subcommittee allocations for its FY 2014 spending bills. The committee approved the allocations, known as 302(b)s, on a 15-14 party-line vote. Senate Appropriations Chair Barbara Mikulski (D-MD) based the allocations on the overall discretionary spending cap of $1.058 trillion adopted in the Senate-passed FY 2014 budget resolution, which assumes that Congress will repeal and replace sequestration.
The Labor-HHS subcommittee, which determines funding for the National Institutes of Health (NIH) and other health programs, would receive $164.3 billion in FY 2014 under the Senate committee allocations, nearly $43 billion more than the $121.8 billion allocation in the House. The Senate Labor-HHS subcommittee is expected to consider its bill in mid-July.
The committee defeated, 14-15, a substitute proposal by Sen. Richard Shelby (R-AL), the ranking member on the committee, that would have capped discretionary spending at $967 billion, the same FY 2014 level adopted by the House Appropriations Committee in late May. Republicans warned that the Mikulski plan would trigger sequestration. Democrats countered that the House allocation for defense, which matches the Senate at $552 billion, also would trigger across-the-board cuts. If the Republicans continue their objections as expected, Democrats will not have the 60 votes needed to move the spending bills to the Senate floor.
The Senate committee’s allocations call for $552 billion in defense spending and $506 billion for non-defense programs. The Budget Control Act of 2011 sets spending levels at $498 billion for defense and $469 for non-defense.
House Appropriators Propose to Slash HHS Funding
On May 21st, the Republican-led House Appropriations Committee formally approved its subcommittee allocations for the twelve individual FY 2014 spending bills. As expected, the committee’s allocations adhered to an overall spending cap of $967 billion as mandated under sequestration. But the committee exceeded spared the Department of Defense from cuts at the expense of domestic programs.
Particularly hard hit was the Labor-HHS-Education subcommittee, which funds the National Institutes of Health (NIH), Title VII health professions education programs, and most of the rest of the Public Health Service. The Labor-HHS allocation is 18.6% below the current year’s level, after sequestration. Exact funding levels for individual programs will not be determined until later, but if all programs in the bill are reduced by 18.6%, it would mean a cut of nearly $5.4 billion for NIH in FY 2014.
The committee allocated $522 billion for defense programs, despite a $498 billion discretionary cap mandated by the Budget Control Act of 2011 as amended by the American Taxpayer Relief Act of 2012.
In a party line vote, the committee rejected, 22-26, an amendment offered by the committee’s ranking Democrat, Nita Lowey (NY), to postpone consideration of the 302(b) allocations. The committee also defeated along party lines, another Democratic proposal by Congresswoman Lowey to set the top-line allocation at $1.058 trillion, equal to the president’s FY 2014 request and the spending cap in the Senate budget. Senate Appropriations Chair Barbara Mikulski (D-MD.) has said she plans to use the $1.058 trillion cap when the Senate sets its subcommittee allocations, expected in early June.
Congress and the President Avoid the Fiscal Cliff, for Now
On January 2nd, 2013, President Barack Obama signed The Taxpayer Relief Act of 2012 (H.R. 8) in to law, preventing millions of Americans from facing a significant tax increase. The bill makes many of the “Bush” tax cuts permanent but does raise rates for high income earners. The law also patches the sustainable growth rate (SGR) for one year, preventing a 26.5% decrease in Medicare physician payments; and delays, until March 2nd, 2013, the across-the-board spending cuts known as the sequester.
Under the Budget Control Act of 2011, if Congress had failed to act, the budget for the National Institutes of Health, along with most other federal domestic spending, would have been cut by 8%, about $2.5 billion for the NIH nationally and $167 million in New York State alone. During the extended fiscal cliff debate, the Columbia University Medical Center, in an attempt to raise awareness on the issue of ensuing drastic funding cuts to the NIH due to the fiscal cliff, held a press conference, where leaders of the New York State Congressional Delegation, physicians, researchers, and patients spoke to the importance of NIH funding and successfully pleaded for its preservation.
Though the law does not include cuts to Medicare graduate medical education (GME) funding or payments for evaluation and management (E/M) services in hospital outpatient departments (HOPD), as many in the hospital community had feared it might. It does contain several cuts to hospital payments. These include: Phasing in Documentation and Coding (DCI) adjustments which recoup past overpayments to hospitals made as a result of the transition to Medicare Severity Diagnosis Related Groups (MS-DRGs) ($10.5 billion over 10 years); Rebasing Medicaid disproportionate share hospital (DSH) payments for an additional year ($4.2 billion over 10 years); Rebasing end stage renal disease (ESRD) payments ($4.9 billion over 10 years); Reducing payments for subsequent therapies when therapies are provided on the same day ($1.8 billion over 10 years); Equalizing payments for stereotactic radiosurgery services provided in HOPDs ($300 million over 10 years); Adjusting equipment utilization rates for advanced imagining services ($800 million over 10 years); and Increasing the statute of limitations to recover overpayments from three to five years ($500 million over 10 years).
Under the bill, temporary unemployment insurance will be extended for a year, but the Social Security Tax holiday will expire, so all wage earners will end up paying up roughly $2,000 more in FICA taxes. The bill makes no changes to the charitable deduction but does limit overall deductions for those earning more than $300,000.
While the Taxpayer Relief Act of 2012, did prevent a tax increase for most Americans and did prevent the severe cuts called for under the sequester from becoming effective, there is still much work to be done. The sequester was only delayed for two months and the Continuing Resolution temporarily authorizing spending for this year expires in late March. Many in Congress also want to address tax and entitlement reform, and perhaps most importantly, the new law did not raise the debt ceiling. With the government bumping up against the maximum it is allowed to borrow, Congress and the President need to come to an agreement on this very difficult issue.
OMB Issues Memo Advising Departments and Congress on Sequestration
Responding to Republican criticisms that the Office of Management and Budget (OMB) should be providing more detailed guidance on sequestration, on July 31st Acting OMB Director Jeffrey Zients issued a memo indicating that the budget office will work with agencies, though the White House expects Congress to resolve sequestration through legislation. The memo, directed to the heads of federal departments and agencies, pledges that OMB will engage in near-term and longer-term discussions with agencies about sequestration issues. It notes that “sequestrable amounts can only be calculated once FY 2013 funding levels are known” and that OMB will calculate final percentages “shortly before any sequestration order is issued.”
The memo also makes clear, however, the President’s expectation that Congress act to avoid sequestration. Urging lawmakers to reach an agreement repeatedly throughout the two-page document, it asserts that “sequestration is bad policy, was never meant to be implemented, and should be avoided through the enactment of bipartisan, balanced deficit legislation.”
Mr. Zients also points out that executive agencies’ “sequestration planning and implementation activities, once undertaken, will necessarily divert scarce resources from other important agency activities and priorities.” While departments are awaiting final calculations, the memo advises that “agencies should continue normal spending and operations since more than 5 months remain for Congress to act.”
Effective January 2nd, 2013, the Budget Control Act requires $109 billion in automatic discretionary spending cuts in FY 2013 through sequestration because Congress failed to enact legislation with $1.2 trillion in deficit reduction by the specified deadline. Unless Congress acts to prevent the sequester before January, most appropriated federal programs and agencies, including the National Institutes of Health (NIH), will be forced to implement immediate cuts of at least 8% in FY 2013, and Medicare payments to providers and plans will be cut by 2%.
House and Senate Leaders Announce Deal to Punt Spending Bills to March
On July 31st, Senate Majority Leader Harry Reid (D-NV) and Speaker of the House John Boehner (R-OH) each issued statements announcing a bipartisan, bicameral agreement to craft a six-month continuing resolution (CR) that Congress reportedly will approve in September to avert an October 1st government shutdown. If enacted, the measure would set the stage for an FY 2013 spending showdown in March, 2013, under a new Congress and three months after $109 billion in automatic, across-the-board budget cuts are scheduled to take effect due to sequestration.
According to both statements, the CR will abide by the $1.047 trillion discretionary spending cap established in the Budget Control Act, though staff will draft details of the measure while members are in their home states over the August recess. The CR will allow lawmakers additional time to negotiate final FY 2013 funding levels for the twelve annual spending bills without the threat of a government shutdown when the current funding levels expire September 30th, just before the November elections. The six-month extension also opens space on the legislative calendar for a lengthy list of year-end measures Congress will need to consider during the lame duck session, such as extension of the physician payment “patch.”
But a new Congress will need to revisit the FY 2013 appropriations bills again in March 2013 to keep the government operating through the end of the fiscal year, and overall funding available for discretionary spending is likely to reemerge as a central source of debate. While the Democratically led Senate appropriators have drafted their FY 2013 spending bills using the BCA cap, the House has been working with the $1.028 trillion cap in its budget resolution approved by the Republican majority in March of 2012. This lower cap would lead to steep cuts for domestic discretionary programs in the House appropriations bills, including programs at the Department of Health and Human Services (HHS).
For example, the FY 2013 spending bill approved July 18th by the House Labor-HHS-Education Appropriations Subcommittee blocks funding for the Affordable Care, eliminates three of the Title VII health professions programs, and terminates the Agency for Healthcare Research and Quality (AHRQ). The measure has prompted objections from several health groups, such as a July 30th letter cosigned by Columbia University Medical Center and 138 other organizations and institutions, opposing the proposal to eliminate AHRQ.
Though the full House Appropriations Committee was expected to consider the HHS spending bill the following week, appropriators have not announced a date for the markup and committee Democrats have indicated that it has been “postponed indefinitely.” In the absence of an official committee report on the measure, full committee Ranking Member Norm Dicks (D-WA) and subcommittee Ranking Member Rosa DeLauro (D-CT) issued a series of reports detailing some of the cuts in the mark, including those to the Title VII programs.
If both chambers approve the six-month continuing resolution in September, final FY 2013 funding levels for HHS programs could hinge on how House and Senate leaders reconcile the $19 billion gap between each chamber’s overall spending cap.
Their ability to broker a deal six months into the fiscal year also will be complicated by the $109 billion in discretionary spending cuts required under the BCA on Jan. 2nd. Unless Congress acts to prevent the sequester before then, the National Institutes of Health and other appropriated federal agencies will be forced to implement immediate cuts of at least 8%, the CR notwithstanding.
Senate Appropriators Discuss NIH Funding
On March 28th the Senate Labor-HHS-Education Appropriations Subcommittee heard testimony from Francis Collins, M.D., Ph.D., director of the National Institutes of Health (NIH), and several institute directors regarding the agency’s FY 2013 budget.
In his opening remarks Chairman Tom Harkin (D-IA) praised NIH and said that because of the "hundreds of thousands of people who are supported by NIH funding, America is the world leader in biomedical research." But Harkin cautioned, "[H]ow long America can maintain that status is a matter of growing concern." Subcommittee members expressed concerns over the looming sequestration, the budget plan proposed by House Budget Committee Chair Paul Ryan (R-Wis.), and other countries increasing their investments in research.
Ranking Member Richard Shelby (R-AL) expressed similar concerns, saying that “for the millions of Americans suffering from a serious illness, biomedical research is the beginning of hope.” Senator Shelby said that he does not agree with the funding level proposed by the administration and believes that “NIH funding should be made a priority and that its benefits extend well beyond its research discoveries.” In addition, he noted that the administration’s request “does not keep pace with biomedical research inflation and as a result in inflationary adjusted dollars the NIH is 17% below where they were ten years ago. Without sustained support for the NIH, the translation of discoveries from bench to bedside will be dramatically slowed and the U.S. will surrender its role as the world leader in scientific research.”
In response to a question from Chairman Harkin on the impact of sequestration, Dr. Collins said the potential cut would translate to a $2.4 billion loss for NIH and result in roughly 2,300 fewer research project grants, almost a quarter of new and competing grants. Success rates for new applications would fall to historically low levels, and Dr. Collins said that he felt the burden would particularly be felt by first time investigators, who are the nation’s future innovators. Dr. Collins also noted that sequestration would hinder efforts of both basic and clinical research.
Senator Sherrod Brown (D-OH) praised the National Children’s Study (NCS) as an “impressive” way of assessing risk factors in children, but questioned NIH’s findings that the study’s geographic approach for recruitment is “too expensive.” Dr. Collins said that the NIH learned that there are many ways to conduct the study more effectively and efficiently, saving the taxpayers money. Instead of “knocking on doors,” the main study will work through geographically distributed providers to collect data. Noting that not all children have coverage, Dr. Collins said they are working to develop ways to collect information that represents groups from a range of socioeconomic status.
Senator Jerry Moran (R-KS) asked how the newly created National Center for Advancing Translational Science (NCATS) will turn medical discoveries into life saving treatments and cures. Thomas Insel, M.D., acting director of NCATS, said that "all 27 institutes and centers at the NIH have an investment in this kind of translation, going from fundamental discoveries to making changes in health." He told the subcommittee that NCATS will attempt to develop methodologies and tools to develop new procedures that make it easier for the other 26 institutes and centers to succeed. As an example, Dr. Insel described a process to screen drugs to see whether they may be effective for other conditions.
Senator Shelby asked about the potential for collaboration between the Food and Drug Administration (FDA) and NIH to move breakthroughs more quickly into the hands of patients. Dr. Collins acknowledged the need for collaboration and told the subcommittee that he and FDA Commission Margaret Hamburg, M.D., have formed a joint council with senior leadership from both organizations to identify the areas that are most in need of collaboration.
Senator Moran remarked that one of the reasons reduced or flat funding for the NIH is so troubling is because “it sends a message to the next generation, the potential researchers, scientists, and physicians that the certainty of their career path or the value of what they do is not recognized.” Dr. Collins responded that it is indeed a “scary time” for new investigators because they have seen the likelihood of funding decrease from 25-35% to a “grim” 17%.
Congress Wraps Up FY 2012 Spending Bills
On December 15th, House and Senate negotiators signed off on a conference agreement covering the nine remaining FY 2012 spending bills. After the passage by comfortable margins in both houses, President Obama signed the $915 billion just before Christmas.
The portion of the bill covering the Department of Health and Human Services (Division F) includes a 0.189% across-the-board cut of all discretionary programs except for the Pell Grant program.
National Institutes of Health (NIH): For NIH, the conference agreement appropriates $30.690 billion not including the across-the-board cut. However, the agreement does not include any transfer of NIH funding to the Global HIV/AIDS fund; all FY 2012 funding for the fund is included in the State-Foreign Operations portion of the conference agreement (Division I). As a result, the NIH program level for FY 2012 is $30.640 billion after the 0.189%. This is an increase of $241 million (0.8%) over FY 2011. The agreement reduces the salary cap on extramural grants from Executive Level I ($199,700 in 2011) to Executive Level II ($179,700).
The conference agreement includes language to implement the creation of the National Center for Advancing Translational Sciences (NCATS) and eliminate the National Center for Research Resources (NCRR), transferring the various NCCR programs to other institutes and centers. The conferees also provide NCATS with up to $10 million for the Cures Acceleration Network.
Health Professions: The conference agreement provides $233.2 million for the Title VII health professions programs, a $19.3 million (7.7%) cut below the FY 2011 appropriation when accounting for the across-the-board cut. Unlike proposals by both the House and Senate subcommittees to eliminate the Health Careers Opportunity Program (HCOP), the conference agreement provides $15 million for the diversity pipeline program, $7 million (31.9%) less than the previous year. The agreement provides $231.9 million for the Title VIII nursing education programs, a $10.4 million (4.3%) cut.
National Health Service Corps (NHSC): The conference agreement eliminates the appropriation for the NHSC, which received a $24.8 million appropriation in FY 2011. The conference agreement does not appear to make any rescissions to the NHSC Fund created by the Affordable Care Act (ACA, P.L. 111-148 and P.L. 111-152) that provides the HHS Secretary up to $295 million for the NSHC in FY 2012.
Children’s Hospitals Graduate Medical Education: The conference agreement maintains the Children’s Hospitals GME program at the FY 2011 level of $268.4 million. When applying the 0.189 percent across-the-board cut, the agreement provides $263.3 million for the program.
House Appropriations Committee Releases Draft HHS Spending Bill
With the House Labor-HHS-Education Appropriations Subcommittee's markup postponed indefinitely, House appropriators have released a draft of its FY 2012 Labor-HHS-Education spending bill and accompanying tables.
The draft bill includes $153.4 billion in discretionary funding, which is $4 billion (2.5%) below the FY 2011 enacted level, and $600 million less than the bill (S. 1599; S. Rpt. 112-84) the Senate Appropriations Committee approved in September. The House draft reflects the change in the FY 2012 discretionary spending cap to $1.043 trillion; the amount to which the House, Senate, and White House agreed in the Budget Control Act of 2011 (P.L. 112-25). However, the draft bill also rescinds FY 2012 funding from the Prevention and Public Health Fund and other mandatory funding streams established in the Affordable Care Act (ACA, P.L. 111-148 and P.L. 111-152), which had been used to supplement (and in some cases substitute for) several health programs’ appropriations in FY 2011.
The bill provides $31.7 billion for the National Institutes of Health (NIH), equal to the president’s request and $1 billion (3.3%) more than the current year’s level. The House draft bill is also $1.2 billion more than the Senate bill.
Of concern to research institutions is a provision that would reduce the cap on salaries on extramural grants to Executive Level III ($165,300 in 2011). The Senate bill retains the cap at its current Executive Level I ($199,700). The president’s budget had proposed reducing the cap to Executive Level II. Columbia University supports keeping the cap at Executive Level I.
Unlike the Senate bill, which provided $20 million for the new Cures Acceleration Network (CAN), the House draft does not include funding for CAN, but provides up to $10 million for the NIH Director’s Discretionary Fund, of which up to $2 million “may be used to establish the Cures Acceleration Board within the Office of the Director’s Division of Program Coordination, Planning, and Strategic Initiatives to develop a plan with prioritized recommendations related to the Cures Acceleration Network for consideration in future appropriations.”
The House draft also continues to appropriate money to the National Center for Research Resources (NCRR) in contrast to the Senate bill, which reflects the dissolution of NCRR and appropriates funding for the new National Center for Advancing Translational Sciences (NCATS). Within the NCRR budget, the House draft provides $331 million for the Institutional Development Awards (IDeA) program.
The bill includes statutory language requiring the Director of NIH to support “at least 9,150 new and competing research project grants,” an increase of about 450 from the FY 2011 projection.
The bill also includes $488 million for Clinical and Translational Sciences Awards and $193 million for the National Children’s Study.
The draft bill drastically cuts funding for Title VII health professions programs, providing a total of $87.5 million, a $185 million (67.9%) cut, eliminating funding for several Title VII health professions education programs, including the Health Careers Opportunity Program (HCOP), Scholarships for Disadvantaged Students, Primary Care Medicine, Area Health Education Centers, and the allied health programs. The draft also substantially reduces funding for the Centers of Excellence and the public health and preventive medicine programs. Title VIII nursing education programs suffer similar cuts in the draft, which provides $106.8 million, a $135.6 million (55.9%) cut for Title VIII. The Senate committee-approved bill also eliminated HCOP, but boosted funding for the preventive medicine program and maintained all other Title VII and VIII programs at FY 2011 funding levels.
The draft bill eliminates $295 million from the National Health Service Corps (NHSC) Fund created under the ACA for FY 2012. The bill also proposes total FY 2012 funding of $142 million for the NHSC, a $173 million (55%) cut below the FY 2011 comparable level.
The draft cuts the Agency for Healthcare Research and Quality (AHRQ) by $47.8 million (12.8%) for a total of $324.3 million.
The draft maintains funding for the Children's Hospitals Graduate Medical Education (CHGME) program at the current year level of $268.4 million.
The House draft provides $5.6 billion for the Centers for Disease Control and Prevention (CDC), $52 million (0.9%) less than appropriated in FY 2011. However, CDC also received a $611 million transfer from the Prevention and Public Health Fund in FY 2011, and was expected to receive the bulk of the $1 billion designated in the fund for FY 2012.
Senate Panel Approves HHS Funding
On September 21st the Senate Appropriations Committee approved its FY 2012 Labor-HHS-Education spending bill by a party-line vote of 16 to 14 following extended debate over funding to implement the Affordable Care Act. The Senate Labor-HHS-Education Appropriations Subcommittee had approved the bill a day earlier.
The bill provides $30.5 billion for the National Institutes of Health (NIH), a decrease of $190 million (0.6%) from the FY 2011 level. The committee rejected, 16 to 14, an amendment by Senator Jerry Moran (R-KS) that would have restored the $190 million cut. All Republicans voted for the amendment, and all Democrats opposed it. The offset for the amendment was an across-the-board cut of all other programs in the bill.
Within the NIH total, the bill provides $582 million for the National Center for Advancing Translational Sciences (NCATS). This includes $20 million for the Cures Acceleration Network (CAN) at NIH, which activates its authorization. According to a summary released by the committee, NCATS is “part of a broader restructuring at NIH that also includes the termination of the National Center for Research Resources.”
According to the committee report the bill provides $255.5 million for the Title VII health professions programs, a $17 million (6.2%) cut below the previous year, and maintains Title VIII nursing education programs at the FY 2011 level of $242.4 million. The Title VII cut results from elimination of the Health Careers Opportunity Program. The Title VII total includes a $25 million transfer to the public health and preventive medicine programs from the Prevention and Public Health Fund, $5 million more than was transferred in FY 2011. The increase is intended to support grants “to accredited residency programs to incorporate competency-based integrative medicine curricula in graduate medical education.” The bill continues funding for all other Title VII programs at the FY 2011 levels.
The committee also maintains funding for the Children’s Hospitals Graduate Medical Education (CHGME) program at the FY 2011 level of $268.4 million, despite the president’s FY 2012 budget proposal to eliminate funding for the program. During the subcommittee markup, Senator Sherrod Brown (D-OH) thanked Subcommittee Chair Tom Harkin (D-IA) for his efforts to continue funding for the program.
The bill freezes funding for the Agency for Healthcare Research and Quality (AHRQ) at the FY 2011 funding level of $372.1 million. Additionally, the committee transfers $12 million from the Prevention and Public Health Fund to AHRQ for clinical preventive services research ($5 million) and for the U.S. Preventive Services Task Force ($7 million).
The bill also provides $3 million for the National Health Care Workforce Commission, established in the Affordable Care Act. Though the Government Accountability Office appointed members to the commission in Sept. 2010, to date no funding has been provided for the commission to meet.
Debt Deal Caps Discretionary Spending, Sets Up Spending Showdown
After months of ongoing negotiation, and with just hours to spare, on August 2nd Congressional leaders and the Obama administration reached agreement, passed and signed into law the Budget Control Act of 2011 (P.L. 112-25), a bipartisan plan to reduce the deficit and raise the debt limit. The agreement averted the immediate debt crisis but sets the stage for a contentious FY 2012 budget debate.
The compromise legislation:
- Includes a minimum debt limit increase of $2.1 trillion through early 2013 (and up to $2.4 trillion);
- Caps discretionary spending through FY 2021 providing $900 billion in savings;
- Establishes by a new, bipartisan committee charged with finding an additional $1.5 trillion in spending cuts;
- Provides a trigger for automatic spending cuts should the committee be unable to reach agreement; and
- Requires a vote in both the House and Senate on a Constitutional amendment to require a balanced federal budget.
For FY 2012, the agreement imposes a cap of $1.043 trillion for total discretionary spending, with $359 billion within that total specified for “non-security” discretionary spending – essentially level with the $361 billion provided for non-security programs in FY 2011. The Senate, which had not passed a budget resolution while the debt ceiling and deficit reduction negotiations were ongoing, can now commence its appropriations work.
House appropriators, however, have been working with a lower cap based on the budget blueprint approved by the House in April and spending allocations approved by the House Appropriations Committee in Ma]. The debt ceiling agreement could provide as much as $35 billion more than the House budget for non-security programs, which include programs in the Labor-HHS-Education spending bill among others, but the House Appropriations Committee has not indicated whether (or how) it plans to revise its spending allocations. If the committee opts to proceed with the allocations it originally approved, the Labor-HHS-Education subcommittee will need to make $18 billion worth of cuts below FY 2011 to programs under its jurisdiction.
The law does provide some relief to the Labor-HHS-Education subcommittee by providing $10 billion in FY 2012 and $7 billion in FY 2013 for the undergraduate Pell grant program. The program is facing a shortfall of $11 billion, and without the supplemental funding, appropriators would have been forced either to cut the program or find the savings through cuts to other programs in the Labor-HHS-Education spending bill. The new law also eliminates the interest subsidies on Stafford loans for graduate and professional students beginning July 1st, 2012. The law makes clear that graduate and professional students will have access to the same overall level of borrowing ($40,500 annually for medical students), but as unsubsidized Stafford loans. The Association of American Medical Colleges estimates that this change will increase the cost of federal loans for the average medical student by more than $10,000 over the life of the loans.
While entitlement programs are initially protected in the agreement, the bipartisan committee is responsible for drafting legislation to cut an additional $1.5 trillion and has the authority to examine all federal spending including Medicare, Medicaid, Social Security as well as tax policy. The non-amendable package of proposed cuts is due by November, 23rd and a simple majority vote is required by December, 23rd. Should the legislation fail or the committee be unable to produce an agreement cutting at least $1.2 trillion, automatic spending cuts will be enacted with 50% coming from non-defense spending, including up to a 2% cut in Medicare spending, and 50% coming from defense spending.
Mark-Up on NIH Funding Bill Postponed until September
The House subcommittee on the Departments of Labor, Health and Human Service, Education, and Related Agencies (Labor/HHS), which was supposed to have marked up its annual spending bill on July 26th, announced that it was postponing the mark-up to September. The Labor/HHS bill funds the National Institutes of Health.
In May the House Appropriations Committee approved the FY 2012 allocations for its twelve subcommittees with Labor/HHS absorbing the largest decrease, falling to $139.2 billion, a decrease of $18.2 billion (11.6%). These tight guidelines as well as uncertainty about where the discussions on deficit reduction and debt limit extension have made it difficult for several of the subcommittees to move forward. Labor/HHS is traditionally one of the most difficult and controversial bills and often ends up being the last one passed.
Republican House Members Support Funding for the National Institutes of Health
Lead by Congressman Dave Reichert (R-WA), a group of twelve Republican House Members recently wrote a letter in support of funding for the National Institutes of Health (NIH) to Representatives Denny Rehberg (R-MT) and Rosa DeLauro (D-CT), the Chair and Ranking Members respectively of the House Appropriations Subcommittee on the Departments of Labor, Health and Human Services, Education, and Related Agencies. This is the subcommittee with jurisdiction over the NIH budget. Two New Yorkers, Peter King and Nan Hayworth, were among the signers. In additional, Michael Grimm, also expressed support for NIH.
The letter does not request a specific amount, but it does say that continued support for the NIH “is essential to sustain advances in science and the health and economic impacts of the research it funds.” While noting the current budget shortfalls, the authors urged Representatives Rehberg and DeLauro “to consider the wide-ranging, positive effects of investment in research on health and the economy.”
Although Congressman Reichert’s letter did not have nearly as many signers as an earlier letter from Congressman Ed Markey (D-MA) and 116 of his Democratic colleagues, it was nonetheless very well received by research advocates. Most Republicans have been very reluctant to advocate for a federal spending program, so the letter demonstrated the strong bipartisan support which NIH has always had. Three of the signers were Freshmen.
Congresswoman DeGette, 54 Members of Congress Sign Letter Supporting Title VII in FY 2012
Congresswoman Diana DeGette (D-CO) led a letter to House Labor-Health and Human Services-Education Appropriations Subcommittee Chair Denny Rehberg (R-MT) and Ranking Member Rosa DeLauro (D-CT) endorsing the President’s FY 2012 budget request level of $449.5 million for the Title VII health professions programs in the upcoming fiscal year. The letter, which highlights the importance of Title VII to address the growing demand for health professionals, urges Chairman Rehberg and Ranking Member DeLauro to “make the nation’s health care workforce a priority” through support for the Title VII programs. A total of fifty-four joined the Congresswoman on the letter.
The president’s budget requests $762.5 million for Title VII and Title VIII in FY 2012, including $449.5 million for Title VII and $313.0 million for Title VIII. The president’s request is $220.6 million above the FY 2011 funding level for the Title VII and Title VIII programs, with increases requested for the primary care medicine; geriatrics; public health and preventive medicine; and workforce information and analysis programs, among others. The programs received a total of $514.9 million in FY 2011, including $272.5 million for Title VII, an $18.5 million increase over FY 2010, and $242.4 million for Title VIII, a $1.4 million decrease below FY 2010 levels.
House Appropriations Panel Approves FY 2012 Subcommittee Allocations
On May 24th the House Appropriations Committee approved the FY 2012allocations for its twelve subcommittees. Known as the 302(b)s, the allocations are based on the $1.019 trillion discretionary spending cap the House adopted in mid-April as part of its FY 2012 budget resolution (H.Con.Res. 34). This is a decrease of $30.4 billion (2.9%) from the FY 2011 level. The committee vote was 27-21, largely along party lines.
During the committee markup, House Appropriations Committee Chair Hal Rogers (R-KY) said, “These 302b allocations are a reflection of the need to pare down government spending to smart and sustainable levels…. The bills this year will include double-digit reductions, for virtually every non- security area of government while providing additional resources for the nation's critical and urgent needs, such as national defense.”
Noting the cuts “would do next to nothing to balance the budget,” Ranking Member Norm Dicks (D-WA) rebutted the chairman, saying the allocations would “cause real harm to the economy and devastate program that represent vital investments in people and infrastructure all across the nation.” He also cautioned that with these allocations “many of these bills will be extremely difficult to pass in the House and impossible to pass in the Senate or be signed into law.”
Labor-HHS-Education Appropriations Ranking Member Rosa DeLauro (D-CT) called the allocations “reckless” and “ill-conceived.” The Labor-HHS-Education subcommittee, whose jurisdiction includes the National Institutes of Health (NIH), would absorb the largest decrease, falling to $139.2 billion, a decrease of $18.2 billion (11.6%). Saying the allocations would take the Labor-HHS bill subcommittee back to 2004 levels, she warned that we are “potentially looking at” cutting NIH by $2.9 billion.
The committee rejected, by voice vote, an amendment by Congressman Jeff Flake (R-AZ) to reduce the allocations by an additional $41.4 billion as proposed by the conservative Republican Study Committee. The amendment would not have reduced the allocations for the Defense and Mil Con-VA subcommittees; each of the remaining ten subcommittees would have been reduced by roughly 10%.
House Democrats Call for Increased NIH Funding
A total of 117 Democratic Members of Congress signed a March 21st letter urging increased funding for the National Institutes of Health (NIH) in FY 2012. The letter, organized by Reps. Edward Markey (MA), Joe Courtney (CT), Susan Davis (CA), Brian Higgins (NY), Rush Holt (NJ), and Janice Schakowsky (IL), requests at least $32 billion for NIH for the fiscal year that begins October 1st, a level that is consistent with the president’s budget request. The letter, which was sent to the chairs and ranking members of the House Appropriations Committee and the Labor-HHS-Education Subcommittee, states, “We feel this level is absolutely vital in order for NIH to sustain its mission of improving health through medical science breakthroughs and maintaining international leadership in science and biomedical research.”
President Signs Funding Extension through March 4th
On December 22nd President Obama signed into law a stopgap measure (P.L. 111-322, H.R. 3082) to continue funding for federal programs through March 4th, 2011. The House of Representatives and Senate had approved the continuing resolution (CR) the day before.
The CR, which is the fourth for the fiscal year that began October 1st, funds most federal programs at their FY 2010 levels with the exception of a few anomalies, such as funding to maintain the maximum Pell Grant at the current $5,550. Unlike longer-term FY 2011 spending bills unsuccessfully proposed by House and Senate Democratic leaders, the latest CR does not include increases for most programs under the Department of Health and Human Services.
The 112th Congress is scheduled to convene Jan. 5 with the swearing in of new members. The new Congress will need to finalize FY 2011 funding before March 4th. The incoming House Republican leadership and several fiscally conservative Democrats have recommended reducing discretionary spending to FY 2008 levels.
Congress Undecided on Stopgap Funding Bill
Just a few days before the federal 2011 fiscal year begins on October 1st, Congressional leaders are still working to structure a continuing resolution (CR) to keep the federal government running past September 30th. Leaders in both the House and Senate have expressed the view the CR will need to be a "barebones" extension of current funding levels and not include additional funding or other legislative provisions that Republicans will oppose.
That has not stopped some Democrats from pushing for added funding for specific programs. Both the Obama Administration and Senate Labor-HHS-Education Appropriations Chair Tom Harkin (D-IA) reportedly are seeking additional funds in the CR for the Pell grant program.
At this point it is unclear how long the CR will last. At a minimum it will need to run until Congress returns to Washington in mid-November after the midterm elections. But the White House and some Democratic leaders are said to be pushing for a CR that will run into early December.
Democrats also are undecided about whether the CR will be considered first in the House or Senate. By law, spending measures must originate in the House, but House Democrats are wary of voting on a measure that may not muster the sixty votes needed to clear procedural hurdles in the Senate. The Senate could initiate the CR by amending one of the FY 2010 spending bills.
House HHS Subcommittee Approves FY 2001 Bill, Boosts NIH, Health Professions Funding
On July 15th, the House Labor-HHS-Education Appropriations Subcommittee approved its FY 2011 spending bill. According to the committee, the bill provides $176.4 billion in discretionary spending for the coming year, an increase of $12.7 billion (7.7%) but $1.5 billion less than President Obama's request. This includes $76.7 billion for the Department of Health and Human Services, $3.8 billion (5.2%) more than FY 2010 and about $270 million more than the President's budget.
For the National Institutes of Health, the bill provides the president's requested $32.007 billion, a $1 billion (3.2%) increase. In his opening statement, Appropriations Committee Chairman David Obey (D-WI) highlighted "continued support for biomedical research" as a major theme of the bill and said, "Within limited resources, this year's bill puts the emphasis on translating basic research results into practical and available cures and treatments. Among other things, it permits NIH to use up to $50 million to launch a newly authorized program aimed at that objective, which is called the Cures Acceleration Network."
Acknowledging the increased demand for physicians and other health professionals, Chairman Obey noted, "This bill includes $356 million for programs under title VII of the Public Health Service Act, and $292 million for nursing education to alleviate shortages and help people prepare for well-paying careers." He also indicated "Most of the programs have a particular emphasis on encouraging students and graduates to enter primary care fields and to practice in medically underserved areas." The president's budget had proposed $260 million for Title VII, and the FY 2010 spending bill included $254 million for the programs. The Affordable Care Act (P.L. 111-148 and P.L. 111-152) authorized several new health professions education and training programs under Title VII that were not included in the President's request. The President requested $244 million for Title VIII nursing education programs, the same level as FY 2010.
Funding for the Agency for Healthcare Research and Quality (AHRQ) is $411 million,$14 million (3.5%) above the FY 2010 level, but $200 million short of the President's request. The Centers for Disease Control and Prevention (CDC) receives $6.782 billion, a $32 million (0.5%) increase over FY 2010, and a $170 million increase over the President's request. The Committee also lists the agencies that will receive funding from the $750 million in mandatory appropriations provided through the Prevention and Public Health Fund established in the Affordable Care Act. The subcommittee allocates the bulk of the fund ($594) million to CDC, with $10 million to AHRQ, $30 million to the Health Resources and Services Administration, and $116 million for the Substance Abuse and Mental Health Services Administration. It is unclear whether the agency totals listed on the table are inclusive of funding provided through the fund.
OMB Guidance on FY 2012 Budget Calls for 5 Percent Cuts, Targets Low-Priority Programs
On June 8th, the White House Office of Management and Budget (OMB) issued two memoranda directing non-security federal departments and agencies to submit separate plans in their FY 2012 budget submissions for reducing spending and eliminating low-priority programs.
The first memorandum (M-10-19) requires each non-security agency to submit an FY 2012 budget request that is 5% below the FY 2012 discretionary budget listed for the agency in the president's FY 2011 budget request. The memorandum, from OMB Director Peter Orszag, notes, "This will allow the President's Budget to accomplish an overall non-security discretionary freeze even while providing funding for new initiatives and any contingencies that arise over the coming months," The memorandum also notes that "tight budget targets" will be imposed on security-related agencies.
The memorandum states that agencies "should not simply reduce spending across the board" and urges agencies to restructure their operations strategically, eliminate low-priority programs and activities, re-engineer staffing plans, improve procurement and grants management processes, and strengthen IT and financial management to "squeeze waste out of existing operations and produce better outcomes." Agencies also are directed to focus management attention "on high-priority performance goals can deliver better service to the American people within available resources."
The second memorandum (M-10-20), issued by Orzag and White House Chief of Staff Rahm Emanuel, directs agencies to identify the programs and subprograms that have the lowest impact on the agency's mission and constitute at least 5% of the agency's discretionary budget. Agencies are directed to evaluate programs based on their impact on the agency's mission and relevant presidential initiatives, considering whether the program "has an unclear or duplicative purpose, uncertain Federal role, completed mission, or lack of demonstrated effectiveness."
Agencies are to identify either entire programs or subprograms for elimination or "substantial cuts amounting to at least 50% of total spending within a program or subprogram." Agencies cannot meet the 5% target with across-the-board reductions or incremental savings in administrative costs.
Information requested in both memoranda is to be included in agencies' FY 2010 budget submission, due to OMB on September 13th, 2010.
Lieutenant Governor Ravitch Proposes Budget Solution Includes Borrowing $6 Billion
While all the controversy surrounding Governor Paterson continues, there still remains the matter of passing a State budget by April 1st. The Budget which the Governor introduced in January totaled $134 billion in spending but is not estimated to lead to a deficit of approximately $9 billion. New York could borrow up to $6 billion over the next three years under a budget plan unveiled Wednesday by Lieutenant Governor Richard Ravitch. Although his plan buys time for lawmakers facing the unlikely prospect of balancing a $9 billion deficit by April 1st – when the 2010-11 budget is supposed to be adopted – it would require cuts to a variety of programs and services funded by the State. “I haven’t denied the fact that a lot of people are going to get hurt,” Lt. Gov. Ravitch said after laying out his plan for reporters in the State Capital. Among the highlights of the plan are:
- There could be up to $2 billion of borrowing in each of the first three years of the five year plan. Any surpluses in that time would go to debt reduction;
- The current fiscal year would be extended to June 30th, allowing for a better picture of tax collections and greater clarity on anticipated Federal monies. Future budget years would start on July 1st;
- Budgets would be developed according to “generally accepted accounting principles.” This standard would preclude some current practices, such as booking future anticipated revenues in a current budget.
- The creation of a Financial Review Board as an overseer, would not propose budgets or legislation, but it could declare a budget to be out of balance after which the Governor and Legislature would have fifteen days to fix it. If not, the Governor could unilaterally reduce appropriations to bring the budget into balance.
This last element will likely be one of the more controversial proposals, as it potentially gives the Governor far greater leverage in making budget cuts. Indications are that this balance – of – power issue could be an early bargaining chip with Assembly Speaker Silver, a long time friend of the Lt. Governor. The Review Board will consist of two Gubernatorial appointments plus one each selected by the Senate, Assembly and State Comptroller.
Reaction to the proposal was mixed as E.J. McMahon, Director of the Empire Center for N.Y.S. Policy says he fears it could let lawmakers continue their stalemate without tackling runaway spending. Robert Ward, Deputy Director of the Rockefeller Institute said that “this could be one of the most significant fiscal reforms ever enacted by the State.
President Releases FY 2011 Budget
On February 1st, President Barack released his FY 2011 budget. The $3.8 trillion blueprint outlines the administration's fiscal policies and major budgetary initiatives. The president proposes to freeze "non-security" discretionary spending - i.e., appropriations for domestic programs - for the next three years while increasing funding for priorities such as research and education. For the Department of Health and Human Services (HHS), the budget proposes $81.2 billion in discretionary spending, an increase of $2.3 billion (2.9%).
Among items of interest to medical schools and teaching hospitals:
National Institutes of Health (NIH): The president proposes $32.089 billion in discretionary budget authority, a $1 billion (3.2%) increase over FY 2010. This includes $32.007 billion through the Labor/HHS/Education appropriation bill and $82 million for Superfund Research activities at the National Institute of Environmental Health Sciences from the Interior appropriation.
At a briefing on the president's budget, NIH Director Francis Collins, M.D., Ph.D., reiterated the agency's new initiatives would revolve around five priorities, including:
- applying "high throughput" technologies to understand fundamental biology and disease;
- translating basic science into new and better treatments;
- putting science to work for the benefit of health care reform;
- encouraging greater focus on global health; and
- reinvigorating and empowering the biomedical research community, including new scientists.
The President's budget would fund a total of approximately 9,052 competing research project grants (RPGs), a decrease of 199 RPGs from the estimated FY 2010 level. For noncompeting continuation awards, the budget provides inflationary increases of 2%. The average cost of competing RPGs also increases by 2% over the FY 2010 level. Due to the receipt of Recovery Act funds in FY 2009, NIH will temporarily suspend the NIH Director's Bridge Award program in FY 2011. The budget also proposes $824.4 million for the Ruth L. Kirschstein National Research Service Awards, a 6% increase over FY 2010, which will be directed to training stipends. In addition, the budget includes a total of $500 million for Clinical and Translational Science Awards (CTSA).
As in previous years, the president's budget proposes to reduce the salary limit through a grant or other extramural mechanism from NIH, the Agency for Healthcare Research and Quality, and the Substance Abuse and Mental Health Services Administration to Executive Level II ($179,700 in 2010). The current cap is at Executive Level I ($199,700 in 2010). The Association of American Medical Colleges, the Association of American Universities (AAU), and the Association of Public and Land-grant Universities issued a joint statement praising President Obama for the increased funding. A summary of the FY 2011 President's Budget for NIH is available on the NIH Web site.
Health Professions: For Title VII health professions and Title VIII nursing education programs, the budget requests $503.9 million, a $5.9 million (1.2%) increase over FY 2010. The increase is designated for the Title VII workforce information and analysis program, which is proposed at $8.8 million, a 210% increase over FY 2010. The president recommends level funding for all other Title VII and Title VIII programs.
National Health Service Corps (NHSC): For the NHSC, the budget proposes $169 million, a $27 million (19%) increase over FY 2010.
Agency for Healthcare Research and Quality (AHRQ): The budget boosts funding for AHRQ to $611 million in FY 2011, a $214 million (53.9%) increase over FY 2010. Within the total, the budget increases funding for "Patient-Centered Health Research" to $273 million, but cuts funding for Patient Safety Research and Crosscutting Activities.
Children's Graduate Medical Education (GME): The president proposes $318 million for the Children's program, the same funding level as FY 2010.
Office of the National Coordinator for Health Information Technology (ONC): The budget requests $78 million for the ONC, a $17 million (40.4%) increase over FY 2010. The president proposes the funding level entirely through budget authority, unlike FY 2010, when $19 million was provided through Public Health Service Evaluation funds. Additionally, the budget materials cite $2 billion provided to ONC through the American Recovery and Reinvestment Act (ARRA, P.L. 111-5), as well as funds throughout HHS, as additional resources to help promote health information technology (HIT). Other HIT funding throughout HHS includes: $32 million within AHRQ for the use of HIT to enhance patient safety, $1 million in the Office of the Assistant Secretary for Planning and Evaluation for evaluation of EHR adoption, $1.6 million in the Office of Civil Rights for regional privacy advisors, and resources within the request for the Centers for Medicare and Medicaid Services to conduct the third year of a demonstration project to promote EHR adoption among small physician practices.
Emergency Preparedness: The budget requests $1.1 billion through the Public Health and Social Service Emergency Fund for the Office of the Assistant Secretary for Preparedness and Response (ASPR), an increase of $162 million (14.7%) over FY 2010, to help achieve a previously announced initiative to "review the public health countermeasures enterprise." Within the ASPR total, the budget requests $476 million from the BioShield Special Reserve Fund to fund the Biomedical Advanced Research and Development Authority (BARDA), including management costs associated with Project BioShield. The budget also "will permit the Secretary to make additional BioShield funds available for advanced research and development activities after notification of Congress" to "enable BARDA to target resources to the most promising countermeasure candidates whether through advanced development or through acquisition using Project BioShield." The budget also proposes $426 million for hospital preparedness cooperative agreements, as provided in FY 2010.
Additional HHS budget materials, including the Budget in Brief and links to individual agency budget justifications, are available on the HHS Web site.
Department of Education: Similar to the FY 2010 budget, the president's budget for FY 2011 proposes to eliminate the Federal Family Education Loan (FFEL) program and originate all new Stafford loans under the Direct Loan program beginning July 1, 2011. The budget also proposes to increase to $6 billion the total annual loan amounts available under the Perkins Loan program from its current $1 billion. However, this proposal would also eliminate the in-school interest subsidy on these loans. The President's budget reiterates the President's support for enacting the Student Aid and Fiscal Responsibility Act (H.R.3221), which includes the President's legislative proposals. The House passed H.R. 3221 on Sept. 17, 2009, and the bill is expected to be part of a budget reconciliation package.
The budget also proposes to reduce the repayment formula of the Income-Based Repayment (IBR) program from 15% of adjusted gross income to 10%, as well as reducing the maximum loan repayment duration from 25 years to 20 years before forgiveness.
Additional materials on the budget for the Department of Education are available on the Department's Web site.
Centers for Disease Control (CDC): The president's budget recommends $6.34 billion in funding for the CDC, a reduction of $125 million (1.9%) bellow the FY 2010 enacted levels. The majority of the reductions in funding are seen in cuts to administrative functions, such as decreases in travel and reductions in advisory and assistance service contracts, while most programmatic funding levels are maintained at or above FY 2010 enacted levels. Programs that are subject to reductions in funding include vector-borne activities, including West-Nile Virus, congressionally-directed projects, and blood disorders, among others. The CDC will also receive a $225 million transfer from the Public Health and Social Services Emergency Fund to offset reduced budget authority for pandemic flu and for a portion of the Strategic National Stockpile activities.
National Science Foundation (NSF): The president's budget requests $7.42 billion for NSF, $551 million (8%) above the FY 2010 enacted level. The request also includes $6.02 billion for research and related activities, a $455 million (8.2%) increase over FY 2010.