In the wake of last year's epic Medicare reform battle, this year's federal budget proceedings seem relatively tame as far as provider issues are concerned.
As the House and Senate prepare to reconcile differences in their budget proposals, the two areas of greatest interest to hospitals appear to be Medicaid funding levels and veterans' healthcare. Last week, hospital lobbyists expressed guarded optimism that Medicaid would be spared from cuts, while veterans' advocates said proposed increases in funding to veterans' healthcare would not be enough.
The House narrowly passed its $2.4 trillion budget blueprint by a 215-212 vote late last week. Included in the proposal is a provision that could translate into Medicaid cuts of up to $2.2 billion over five years and increases in funding for veterans' healthcare by $1 billion for fiscal 2005. Earlier this month, the Senate passed its own resolution sparing the federal- and state- financed health insurance program from any cuts, while giving veterans a $1.4 billion increase for healthcare. Next up is a conference committee, in which members from both chambers will iron out differences in their spending framework. Those committee members could be named as soon as this week.
Meanwhile, President Bush's budget proposal, which served as the starting point for Congress' own proposals, included cuts of almost $24 billion to the Medicaid program over 10 years and would cut funding to veterans' healthcare by $200 million from 2004 levels.
Rick Pollack, executive vice president of the American Hospital Association, said there is a good chance that when a compromise bill is completed, Medicaid will come out largely unscathed. Last year, a similar scenario developed when the Senate passed its budget resolution without cutting into Medicaid, while the House resolution sought a cut of $93 billion over 10 years to the program. Eventually, under pressure from the Senate, the House passed a new resolution that removed the cuts.
"Given we're in an election year, the appetite for cutting something that affects the most vulnerable may not be there," Pollack said.
How much Medicaid could face in cuts under the House proposal is uncertain because the resolution doesn't specifically target cuts to the program. Instead, it requires that the House Energy and Commerce Committee reduce spending in programs under its jurisdiction by $2.2 billion. Because Medicaid is the largest program under that committee's purview, many in Washington said the program would be an inevitable target of any mandated cuts.
"That's most likely where it'll come from," said Matt Salo, director of the health and human services committee at the National Governors Association, which has lobbied legislators to maintain funding for Medicaid. Faced with drastic budget constraints, governors have warned that cuts to the program could result in reduced access and benefits.
As members from the two chambers head into conference committee, it is unclear what will happen to the Medicaid program.
"The concern is: If it passes, what will happen in conference?" said Edwin Park, senior health policy analyst at the Center on Budget and Policy Priorities. The center is a Washington-based nonpartisan think tank.
This year, the Senate budget resolution contained cuts to Medicaid of $11 billion over five years, but the final version included an amendment by Sen. Max Baucus of Montana, the ranking Democrat on the Senate Finance Committee, that stripped away the cuts.
The narrow margin by which the resolution passed in the House suggests that many lawmakers are uneasy about cutting Medicaid. In early March, a letter signed by 28 representatives urged Rep. Jim Nussle (R-Iowa), the architect of the House resolution, to keep the Medicaid program intact.
"While states continue efforts to provide the best possible services to eligible beneficiaries, the federal commitment to ensuring this goal must not be diminished," the letter said.
But with no guarantees that the program will be spared, the AHA plans to continue its lobbying efforts. "Our major focus is to knock out Medicaid cuts," Pollack said.
The other major healthcare-related issue the House resolution addressed is funding for veterans. The House is allocating $27.9 billion for fiscal 2005 specifically for medical care, not including money drawn from billing collection. The Senate allocates $28.3 billion, while the administration has proposed $26.7 billion. In fiscal 2004, the Veterans Affairs Department received $26.9 billion for medical care. A coalition of veterans' advocates had recommended a 2005 budget of $29.7 billion.
Given fiscal constraints, Joy Ilem, assistant national legislative director for the Disabled American Veterans, sounded less than optimistic about the possibility of getting more funding. "We definitely are aware that competing factors are out there," she said. "But we believe we have to fight hard. Veterans have paid their dues."