AAMC Reporter: March 2006

Bush Budget Means Uphill Battle for Academic Medicine

Following the Bush administration's Feb. 6 release of its proposed 2007 federal budget, the academic medical community is expressing renewed concern over the likelihood of more federal budget cuts for health care and medical research.

"It's going to be another tough year," said David Moore, senior associate vice president of the AAMC's Office of Governmental Relations. "Unfortunately, most of the programs important to medical schools and teaching hospitals are set for a freeze, a cut, or they are being eliminated altogether."

For instance, President Bush's FY 2007 budget proposes to freeze funding for the National Institutes of Health (NIH) at the FY 2006 level of $28.587 billion, even though biomedical inflation is projected to be 3.5 percent next year. Since 2003, the NIH budget has declined by more than 10 percent in inflation-adjusted dollars, which means fewer grants and fewer dollars for current and prospective NIH grant recipients.

"President Bush's proposal to freeze the budget for the National Institutes of Health at last year's level is shortsighted in the extreme," said Jordan J. Cohen, M.D., president of the AAMC, in a statement. "At a time when scientific advances hold such promise for unprecedented improvements in the health and welfare of people, failing to seize the opportunity to invest more in medical research is deeply disappointing."

Other domestic programs important to medical schools and teaching hospitals are also slated for major cuts under the administration's budget. Funding for Title VII health professions programs — which support facilities, initiatives, and individuals engaged in health professions training — would plummet to $10 million for 2007. The $10 million will fund the Scholarships for Disadvantaged Students program, with all other Title VII programs receiving no federal funding. The elimination of these programs follows a more than 50 percent cut in Title VII funding in FY 2006.

Also under the proposals, the budget for VA research would decrease by 3 percent in 2007, down to $414 million from $427 million in 2006. Graduate Medical Education payments for children's hospitals would be cut by 66 percent, down from $297 million in 2006 to $99 million in 2007.

Budget prospects for entitlement spending, such as Medicare, Medicaid, and the State Children's Health Insurance Program (SCHIP) — and for the health care providers who receive payments from these programs — could also be bleak. The Bush administration wants to cut $36 billion and $13.6 billion respectively from Medicare and Medicaid/SCHIP by 2011. Much of the Medicare savings would result from freezing or reducing certain provider payments, while Medicaid savings measures include changes to provider taxes, upper payment limits, intergovernmental transfers, and disproportionate share hospital payments.

"These cuts are a serious threat to teaching hospitals, physicians, and their patients," said Steven Lipstein, president and CEO of BJC Healthcare in St. Louis and head of the AAMC's Medicare and Medicaid Special Action Committee. "They will make it difficult for academic medical institutions to sustain their vital missions to treat and care for the nation's most vulnerable populations, educate and train the nation's health care workforce, and provide patient care in an environment in which clinical research can flourish."

Philip A. Pizzo, M.D., dean of the Stanford University School of Medicine, said the cuts, particularly ones affecting grant recipients, may not bode well for medical research or academic medicine as a whole, both now and in years to come.

"The cutbacks in funding for investigators with current grants or the inability of researchers to compete for grant renewal or new grant applications will put a financial strain on already challenged academic medical centers—especially when coupled with other decreases in federal health programs such as Medicare and Medicaid," Pizzo said. "Coupled with this, as funding becomes more challenging and more junior faculty become more disheartened and worried about their futures, a negative message will be sent to students and trainees, impacting the pipeline of future talent who may seek safer or alternative career pathways. We have watched this happen in the past, and it would be tragic to witness it again."

Moore said he does not expect Congress to significantly alter the president's budget proposals for domestic programs but emphasized that academic medicine can help shape opinions, especially by educating the public on the cuts' negative ramifications.

"One positive note is that it is an election year," he said. "And I think that provides us with an opportunity to highlight the impact of this in a way that's more public than normal. We want to put these things before the American people and ask, 'Is this what you really want?'"

The election-year timing may also prevent Congress from cutting mandatory spending, particularly when legislation was just enacted that reduced mandatory spending by $38.8 billion over five years (2006-2010), including $6.4 billion in net Medicare and $4.7 billion in net Medicaid/SCHIP savings.

Other budget items of note include a freeze at $319 million for the U.S. Department of Health and Human Services' Agency for Health Research and Quality, and a 7.7 percent increase for the National Science Foundation's research budget, which would receive $4.6 billion, largely for research in the physical sciences.

Pizzo said research has far-reaching effects.

"The security of our nation does not simply mean defending against external threats," Pizzo said. "It also requires thoughtful and proactive programs to secure the health of our citizens, their education, and our global competitiveness in science, technology, and biomedical innovation."

—By Scott Harris

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