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was created in the ACA whose sole purpose was to rein in Medicare costs if the program reached insolvency, would be repealed.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 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 House of Representatives voted 217-213 on Thursday to pass a bill that rolls back major provisions of the Affordable Care Act, sending the measure to an uncertain fate in the Senate.
The American Health Care Act’s passage in the House comes more than a month after Republicans’ first attempt to bring it to a vote on the House floor, an effort stymied at the last minute when the party came up short of the 216 votes it needed.
In his remarks on the House floor before Thursday’s vote, Speaker Paul Ryan said members have a choice between keeping the “collapsing” ACA intact or setting a new course for healthcare and for the nation.
“We can continue with the status quo, or we can put this collapsing law behind us,” he said. “Let us pass this bill to build a better healthcare system for American families. Let us pass this bill to leave this country better than we found it.”
But House Minority Leader Nancy Pelosi, who spearheaded the effort to pass the ACA, was just as impassioned in her speech, warning her Republican colleagues that “if you vote for this bill, you will walk the plank from moderate to radical.”
Among its slew of provisions, the budget reconciliation measure will:
- End taxes levied by the ACA, including those on pharmaceuticals and medical devices. The taxes would continue for a year to pay for the law’s programs as they wind down.
- Eliminate the ACA’s individual and employer mandates.
- Replace the ACA’s income-based premium subsidies for individual market customers with age-based tax credits.
- Start unwinding the ACA’s Medicaid expansion beginning in 2020.
Republicans succeeded Thursday where they previously failed after amending the bill to appease two recalcitrant factions: hardline conservatives and GOP centrists.
To win over the former, an amendment authored by moderate Rep. Tom MacArthur, R-N.J., and House Freedom Caucus Chairman Mark Meadows, R-N.C., allows states to apply for waivers to opt out of the ACA’s rule that prevents individual market insurers from charging sick consumers higher premiums than healthy ones. However, they would be required to set up mechanisms like high-risk pools to protect those with preexisting conditions.
Then in response to moderates’ concerns about that amendment, representatives Fred Upton, R-Mich., and Billy Long, R-Mo., added an amendment that would provide $8 billion over five years to help states finance high-risk pools. Some healthcare policy experts argued this was a mere “pittance” compared to the amount of funding needed to ensure functioning high-risk pools and a stable individual market.
The Congressional Budget Office has not scored the revised version of the AHCA, though its evaluation of the initial bill estimated that if implemented, the measure would increase the number of uninsured by 24 million by 2026 but shrink the federal deficit by $337 billion from 2017 to 2026.
President Donald Trump is calling for members of both parties in Congress to support his ideas to replace the Affordable Care Act.
In a speech before Congress Tuesday night, Trump outlined, for the first time, a more detailed healthcare reform package.
First, he wants people with pre-existing conditions to maintain coverage. Trump suggested Americans buy their own plans with tax credits and expanded health savings accounts.
It’s unlikely Democrats will back many of Trump’s suggestions. While Republicans stood and applauded during the evening address, their colleagues across the aisle largely remained seated and stone-faced.
Trump pushed back against stabilizing the individual market before addressing Medicaid expansion. GOP plans appear to favor a Medicaid program that offers capped federal funding.
On Tuesday, Trump seem to indicate the two reforms should occur concurrently. Earlier this week, Trump met with insurers who said they were encouraged by recent moves by Trump’s administration to address some of the industry’s concerns.
In what appeared to be a nod to governors who also met with the president this week, Trump called on Congress to give states resources and flexibility to tweak Medicaid as governors see fit.
Finally, he returned to his campaign idea of allowing insurance be sold across state lines.
“Mandating every American to buy government-approved health insurance was never the right solution for America. The way to make health insurance available to everyone is to lower the cost of health insurance, and that is what we will do,” he said.
Policy experts have decried many of the ideas, such as a greater reliance on health savings accounts instead of premium subsidies.
HSAs fail to benefit low-income people who might not have extra cash to store away for healthcare, according to the Center for American Progress. “This proposal would replace assistance for low-income people with a tax shelter for the wealthy,” the left-leaning think tank said.
HSAs are generally tied to high-deductible health plans, meaning that individuals might be responsible for higher out of pocket costs.
Some conservative lawmakers say tax credits and HSAs amount to “Obamacare lite.”
The American Academy of Family Physicians expressed dismay over Trump’s ideas.
“He has stepped back from policies that will ensure all Americans have access to meaningful, affordable health care coverage,” Dr. John Megis.
Trump’s plan “to slash premium subsidies for hard-working families would cause many millions to lose health coverage,” said Ron Pollack, executive director of the advocacy group Families USA. “It would also make out-of-pocket costs unaffordable for many others.”
The CMS has issued an interim final rule Monday that attempts to stop providers and organizations from steering patients eligible for Medicaid or Medicare into private insurance as a way to receive higher reimbursement rates.
The rule issued Monday requires dialysis centers that help patients pay private insurance premiums either directly or through charities to clarify what plans in their region pay for and how that compares to Medicare or Medicaid.
The notices must inform patients that some plans may not cover all costs typically covered by Medicare, such as necessary medical expenses for living donors.
“We believe these individual market premium payments are particularly prone to abuse because they are so closely tied to the type of coverage an individual selects,” the agency says in the rule.
The notices also must detail the exact subsidy amount for private insurance and how much the dialysis center’s reimbursement differs from private insurers to other payers.
Dialysis facilities must also reach out to a plan to ensure that they will accept insurance subsidies from a third party and will do so for a full calendar year to ensure continuity of care. The rule, which affects 6,064 dialysis centers throughout the country, goes into effect on Jan. 14, 2017.
The CMS estimates it will cost these facilities nearly $700 million in administrative costs to comply with the rule between 2017 and 2026.
Earlier this year, UnitedHealth Group alleged it was charged more by dialysis treatment chain American Renal Associates by steering Medicare- and Medicaid-eligible patients to the insurers’ plans and then helping the patients pay for the premiums through a charity, the American Kidney Fund.
The rule’s comment period ends Jan. 14, 2017.
Federal government accounts for nearly 29% of the total
Healthcare spending in 2015 increased at a rate of 5.8%, the fastest in eight years, as more people obtained health insurance and prescription drug costs continued to rise, according to a CMS report published Friday by Health Affairs.
For the first time, the federal government accounted for the largest share of healthcare spending at 29%, mainly because of Medicaid expansion. Household spending made up 28%, private businesses were 20% and state and local governments were 17%.
Federal government spending grew at a rate of 8.9% in 2015 after an 11% increase in 2014.
The 2015 increase follows a 5.3% spending increase in 2014, which came after five years of historically slow growth. National healthcare expenditures represented nearly 18% of the GDP in 2015.
Spending in 2015 reached $3.2 trillion, or $9,990 per person. The report’s authors predict continued growth in health spending over the next decade because of the aging population and continued medical price growth.
The report “casts further doubt on the extent of a permanent slowdown in health cost growth,” said economist Eugene Steuerle of the nonpartisan Urban Institute.
Although the 9% increase in prescription drug spending was lower than the 2014 rate of 12.4%, it was the fastest growth of any service in 2015. This was mainly due to new, high-cost medications to treat hepatitis C, cancer and autoimmune disease.
High prescription drug prices have been a rallying cry for Democrats and Republicans recently. Pharmaceutical executives have faced a backlash in Congress for generally high prices and price hikes to generic drugs.
Private health insurance continues to be the largest payer of healthcare and accounted for about one-third of total spending in 2015. Medicare spending grew by only 4.5% and was 20% of total spending.
Former White House official Ezekiel Emanuel said that’s partly due to the Obama administration’s stewardship. Not only did the health care law cut payments to service providers, it set into motion a series of initiatives that aim to reward quality, improve coordination and penalize poor performance.
Medicaid expenditures grew 9.7% and accounted for 17% of overall spending. About half of the states expanded Medicaid eligibility to cover all people who make up to 138% of the federal poverty level in 2014. A few more expanded in 2015. The federal government pays all the costs of expansion for the first three years.
Spending growth for physicians and clinical services was 6.3% and that category accounted for 20% of all healthcare spending. Hospital spending was 32% of overall spending and increased at a rate of 5.6%.
Out of pocket spending increased 2.6% in 2015, up from an increase of 1.4% in 2014. It accounted for 11% of total spending. The report notes that as coverage has increased, more people are enrolled in high deductible health plans, which generally produce high out of pocket spending.
The report was disappointing news for the outgoing Obama administration, which had enjoyed a long stretch of historically low increases in health care spending, and had sought to credit its 2010 health care overhaul for taming costs. It’s a reality check for President-elect Donald Trump, who did not focus much on health care during his campaign and implied that problems could be easily fixed.
“You get back to this old problem we have of spending growing faster than the economy,” said Douglas Holtz-Eakin, president of the America Action Forum, a center-right think tank. “If you don’t solve the cost problem, it will undercut coverage expansions because they get too expensive.”
The HHS report was published online by the journal Health Affairs. The Associated Press contributed to this report.
HHS wants to capitalize on bipartisan interest to address opioid addiction and lack of access to behavioral health services by releasing a new report that shows Medicaid expansion could address the crises. The goal is to convince Republican holdout states to expand coverage.
An estimated 1.9 million uninsured people with a mental illness or substance use disorder live in states that have not yet expanded Medicaid under the Affordable Care Act and had incomes that could qualify them for coverage, according to the report released Monday.
The report found that if all states expanded Medicaid, an estimated 371,000 fewer people each year would experience depression, and 540,000 more people would report being in good or excellent health.
To date, 30 states and the District of Columbia have expanded Medicaid under the Affordable Care Act.
On a call with reporters Monday, a senior HHS official admitted that recent bipartisan interest in addressing mental health woes and substance abuse epidemics played some part in releasing the report.
“We thought it was good time to inject some new facts into that discussion,” said Richard Frank, assistant secretary for planning and evaluation at HHS.
Earlier this month, the Senate passed, 94-1, a bill aimed at combating opioid misuse and overdose deaths. The bill creates grant programs for states to build education programs, develop evidence-based treatment plans and strengthen prescription-monitoring programs. It also expands the availability of naloxone, which can reverse an opioid overdose.
However, Democrats said that without funding, the legislation is essentially powerless. The White House made a similar assertion.
And HHS’ own data shows Medicaid expansion is not a silver bullet as some behavioral health providers are unwilling to take any insurance, especially Medicaid.
For instance, a 2014 JAMA Psychiatry study posted on the National Institutes of Health’s website showed that psychiatrists’ Medicaid acceptance rates, at 43%, were lower than physicians of other specialties, who came in at 73%.
Just last month, the CMS released a report that found Medicaid enrollees were not getting the behavioral care they needed, noting that the results “suggest that states have substantial room for improvement.”
A CMS spokesman countered that there is also positive data about Medicaid beneficiaries getting the behavioral care they need.
A 2015 American Journal of Public Health study found that low-income adults with serious mental illness are 30% more likely to receive treatment if they have Medicaid coverage.
He also pointed to a 2015 Government Accountability Office report, which found that Medicaid expansion states reported greater access to behavioral health treatment.
Officials in Nevada noted that there were fewer delays in receiving care, and officials in West Virginia reported an increased availability of prescription drugs for individuals with behavioral health conditions.
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