Trump budget would cut $636 billion from HHS agencies
As part of his $4 trillion budget for next year, President Donald Trump is proposing a $636 billion cut in federal funding for CMS programs over the next decade. Those cuts would make room for more spending on defense and border security.
The budget also proposes deep cuts to Medicaid—previously reported around $800 billion over the next decade. Those savings would come from transforming Medicaid into a per capita cap program starting in 2020. That's the same move proposed in the House's Obamacare replacement bill.
Medicare is not directly slashed in Trump's budget, allowing the President to maintain part of his campaign promise to not touch either entitlement program despite federally subsidized healthcare being one of the biggest contributors to the national debt. In its final report on the state of the CMS, the Obama administration conceded that Medicaid was on track to deplete other federal programs.
Trump's proposed budget still needs to be passed by Congress and that's unlikely to happen in its current form.
"I just think it's the prerogative of Congress to make those decisions in consultation with the president," Sen. John Cornyn (R-Texas) said as he predicted the Medicaid cuts wouldn't survive the Senate. "But almost every president's budget proposal that I know of is basically dead on arrival."
Trump's budget extends funding for the Children's Health Insurance Program, which is up for renewal at the end of this year.
States, however, would lose the enhanced match funding provided by the Affordable Care Act. The law gave states a 23-percentage-point bump in federal matching rates.
The draft budget also ends a provision that prevented states from narrowing the pool of eligible CHIP beneficiaries below what it was in 2010, the first year the ACA kicked in.
The Independent Payment Advisory Board, a panel that was created in the ACA whose sole purpose was to rein in Medicare costs if the program reached insolvency, would be repealed. That move would garner $7.6 billion in administrative costs over 10 years, according to the budget proposal.
Trump's plan promises that overhauling the tax code and easing regulations will lift economic growth from the lackluster 2.1 percent average rate of recent years to sustained annual gains of 3 percent or better. Higher growth means lower deficits and Trump's plan folds in more than $2 trillion in unspecified deficit savings over the coming decade from "economic feedback" to promise balance.
Trump also wants to overhaul medical malpractice laws, stating they add to the average American's healthcare costs. The proposed reforms would save HHS programs $31.8 billion over 10 years and $55 billion to the federal government overall.
A chunk of these savings would result from fewer unnecessary services and curbing the practice of defensive medicine, according to the budget proposal. Trump proposes capping awards for noneconomic damages at $250,000 indexed to inflation. There would also be a three-year statute of limitation on claims.
Trump's budget targets the National Institutes of Health, though Congress made it clear that it's willing to spend on medical research, adding $2 billion to NIH funding when Trump had suggested a $1.2 billion cut in the remainder of 2017.
For 2018, HHS continues to recommend a cut of $5.8 billion, with the biggest cuts in the National Cancer Instute, at $1 billion; National Institute of Allergy and Infectious Diseases, at about $840 million; and National institute of Diabetes & Digestive & Kidney Diseases at $355 million.
The National Cancer Institute was particularly favored by appropriators earlier this month, with a $476 million increase.
HHS seeks to reduce how much labs can put towards overhead, such as fringe benefits, utilities and buying lab equipment. On average, labs get 30% of the total grant for overhead, higher than the overhead percentage from private funders.
The budget said: "NIH will implement reforms to release grantees from the costly and time-consuming indirect rate setting process and reporting requirements. Applying a uniform indirect cost rate to all grants mitigates the risk for fraud and abuse because it can be simply and uniformly applied to grantees. The Budget includes this critical reform to reduce indirect costs and preserve more funding for direct science."
The budget did not say what that overhead amount would be, however.
It's not just overhead that would fall in the unlikely case that Congress passed this plan. The Trump draft budget would eliminate 1,648 grants in 2018 for a total of 7,326 for the year.
Diana Zuckerman, president of the National Center for Health Research, does not expect Congress, which was generous to the institutes earlier this month, to support Trump's cuts.
"I have never known Congress that enthusiastically cut NIH funding," she said.
But she's less sanguine about the fate of the Centers for Disease Control and Prevention, which would be cut by $1.3 billion, or just over 20%, in this budget.
Congress loves NIH, but she said, "they don't realize, whether it's CDC or AHRQ (Agency for Healthcare Research and Quality), that they have a very important role to play."
AHRQ is zeroed out in the Trump budget, but NIH would receive $272 million to carry out similar initiatives.
The budget says CDC can still protect the nation and the world at the proposed funding level and that it can even respond to emerging health threats such as Zika.
The administration is prioritizing opioid abuse prevention efforts, combating childhood obesity, vaccine stockpiling and investing in CDC infrastructure, the document states.
Despite that statement, the budget proposes a 17% cut to the CDC's sexually transmitted disease and tuberculosis prevention efforts. Immunization and influenza preparation funding would fall by 10%. Chronic disease prevention and health promotion would be cut by 19%.
Trump's plan promises that overhauling the tax code and easing regulations will lift economic growth from the lackluster 2.1% average rate of recent years to sustained annual gains of 3% or better. Higher growth means lower deficits and Trump's plan folds in more than $2 trillion in unspecified deficit savings over the coming decade from "economic feedback" to promise balance.
The Associated Press contributed to this report.
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