Trump Seeks to Cut NIH, CDC Budgets, Some Medicare Spending

Kerry Dooley Young

February 11, 2020

The Trump administration on Monday argued for cutting spending for a federal agency at the forefront of the efforts to combat the coronavirus, while also seeking to slow spending in certain parts of the Medicare and Medicaid programs.

President Donald Trump presented his fiscal 2021 request to Congress for refilling the coffers of federal agencies. In any administration, an annual budget serves only as a political blueprint, as the White House document itself makes no changes in federal spending.

In Trump's case, several of his requests for agencies within the Department of Health & Human Services (HHS) run counter to recent budget trends. Republicans and Democrats in Congress have worked together in recent years to increase budgets for major federal health agencies.

But Trump asked Congress to cut annual budget authority for the National Institute of Allergy and Infectious Diseases (NIAID) by $430 million to $5.446 billion for fiscal 2021.

In contrast, Congress has raised the annual budget for NIAID, a key agency in combating the coronavirus, from $5.545 billion in fiscal 2019 to $5.876 billion in fiscal 2020, which began in October, according to an HHS summary of Trump's request.

For the Centers for Disease Control and Prevention (CDC), which is central to the battle against the coronavirus, Trump proposed a drop in discretionary funding to $5.627 billion. In contrast, Congress raised this CDC budget from $6.544 billion in fiscal 2019 to $6.917 in fiscal 2020.

Trump also wants to cut $559 million from the budget of the National Cancer Institute (NCI), dropping it to $5.881 billion in fiscal 2021. In contrast, Congress raised NCI's budget from $6.121 billion in fiscal 2019 to $6.440 billion in fiscal 2020.

Trump requested a $2.6 billion reduction in the National Institutes of Health's (NIH) total discretionary budget, seeking to drop it to $37.70 billion. In contrast, Congress raised NIH's budget from $37.887 in fiscal 2019 to $40.304 billion in fiscal 2020.

Trump's budget proposal also includes an estimate of $152 billion in savings over a decade for Medicaid through the implementation of what the administration calls "community engagement" requirements.

The Trump administration has been at odds with Democrats for years about whether work requirements should be attached to Medicaid. "Well-designed community engagement incentives have great potential to improve health and well-being while empowering beneficiaries to rise out of poverty," HHS said in a budget document.

Yet researchers last year reported that Arkansas' attempt to attach work requirements to Medicaid caused almost 17,000 adults to lose this healthcare coverage within the first 6 months, and there was no significant difference in employment.

The researchers say this loss of coverage was partly a result of bureaucratic obstacles and confusion about the new rules. In June 2018, Arkansas became the first state to implement work requirements for Medicaid, Benjamin D. Sommers, MD, PhD, of the Harvard T.H. Chan School of Public Health, Boston, Massachusetts, and colleagues write in The New England Journal of Medicine, as reported by Medscape Medical News.

Budget "Would Thwart" Progress

A few medical groups on Monday quickly criticized Trump's proposals.

"In a time where our nation continues to face significant public health challenges — including 2019 novel coronavirus, climate change, gun violence and costly chronic diseases such as heart disease and cancer — the administration should be investing more resources in better health, not cutting federal health budgets," said Georges C. Benjamin, MD, executive director of the American Public Health Association, in a statement.

David J. Skorton, MD, chief executive and president of the Association of American Medical Colleges (AAMC) also urged increased investment in fighting disease.

"We must continue the bipartisan budget trajectory set forth by Congress over the last several years, not reverse course," Skorton said in a statement.

Trump's proposed cuts in medical research "would thwart scientific progress on strategies to prevent, diagnose, treat, and cure medical conditions that affect countless patients nationwide," he said.

In total, the new 2021 appropriations for HHS would fall by $9.46 billion to $85.667 billion under Trump's proposal. Appropriations, also called discretionary budget authority, represents the operating budgets for federal agencies. These are decided through annual spending bills.

Congress has separate sets of laws for handling payments the federal government makes through Medicare and Medicaid. These are known as mandatory spending.

"Untenable Cuts"

AAMC's Skorton also objected to what he termed Trump's bid "to reduce and consolidate Medicare, Medicaid, and children's hospital graduate medical education into a single grant program."

This would force teaching hospitals to absorb $52 billion in "untenable cuts," he said.

"The proposal ignores the intent of the Medicare GME program, which is to ensure an adequate physician workforce to care for Medicare beneficiaries and support the critical patient care missions of America's teaching hospitals," Skorton said.

The budget also seeks cuts to Medicaid, which come in addition to the administration's "recent proposals to scale back Medicaid coverage," Skorton said.

"More than 26% of all Medicaid hospitalizations occur at AAMC-member teaching hospitals, even though these institutions represent only 5% of all hospitals," Skorton said. "Each of the administration's proposals on their own would be devastating for patients — and combined, they would be disastrous."

Rick Pollack, the chief executive and president of the American Hospital Association, described Trump's fiscal 2021 proposal as another bid to undermine medical care in the United States.

"Every year, we adapt to a constantly changing environment, but every year, the administration aims to gut our nation's health care infrastructure," Pollack said in a statement.

In it, he noted that about 1 in 5 people in America depend on Medicaid, with children accounting for a large proportion of those covered by the state-federal program.

"The budget's proposal on Medicaid financing and service delivery would cut hundreds of billions of dollars from the Medicaid program annually," Pollack said.

He also objected to "hundreds of billions of proposed reductions to Medicare" endorsed by Trump.

Medical Malpractice Overhaul

The Trump administration also offered many suggestions for changing federal laws to reduce healthcare spending. Among these was a proposed overhaul of the approach to medical malpractice cases.

The president's budget proposal estimates $40 billion in savings over a decade from steps to limit medical liability, according to a report from the Office of Management and Budget (OMB).

"The current medical liability system does not work for patients or providers, nor does it promote high-quality, evidence-based care," OMB said. "Providers practice with a threat of potentially frivolous lawsuits, and injured patients often do not receive just compensation for their injuries."

Trump's fiscal 2021 budget calls for a cap on noneconomic damage awards of $250,000, which would increase with inflation over time, and a 3-year statute of limitations. Under this plan, courts could also modify attorney's fee arrangements. HHS could provide guidance to states on how to create expert panels and administrative healthcare tribunals to review medical liability.

These steps would lead to lower healthcare spending, with clinicians dropping "defensive medicine practices," OMB said. That would benefit the Medicare and Medicaid programs as well as lowering costs of health insurance in general.

Trump's fiscal 2021 budget also includes a series of proposals for Medicare that it estimates would, in aggregate, save $755.5 billion over a decade.

Site-Neutral Policy

A large chunk of the estimated Medicare savings in Trump's fiscal 2021 health budget would come from lowering payments to hospitals for services provided in their outpatient and physician offices.

In the fiscal 2021 proposal, HHS noted that "Medicare generally pays on-campus hospital outpatient departments substantially more than physician offices for the same services."

Trump's budget proposal seeks a more expansive shift to what's called a "site-neutral" payment for services delivered in hospital outpatient programs or physician offices. This would bring these payments more in line with those made to independent physician practices.

"This proposal would eliminate the often significant disparity between what Medicare pays in these different settings for the same services," HHS said in the budget summary.

HHS estimated this change in policy would generate $117.2 billion in savings over a decade. Combined with saving from medical malpractice reforms, the Trump administration estimates these two moves combined could save about $164 billion over a decade.

The site-neutral policy has been a legal battleground, with hospital and physician groups winning a round last year, as reported by Medscape Medical News.

Another Medicare proposal included in Trump's fiscal 2021 budget homes in on this issue for cases where a hospital owns a physician office. Medicare now pays most off-campus hospital outpatient departments higher rates than the program's physician fee schedule dictates for the same services.

Switching to a site-neutral policy for these hospital-owned physician offices would result in $47.2 billion in savings over a decade, HHS said in the budget document.

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