AAMC Reporter: March 2008

Budget Battles Could Last Into 2009

President George W. Bush holds up an electronic version of his administration's budget during a Feb. 4 cabinet meeting. Credit: White House photo by Joyce N. Boghosian

The Bush administration's final budget, which recommends massive cuts in several areas that are important to academic medicine, may not be "dead on arrival" in Congress, as some lawmakers have predicted.

The $3.1 trillion fiscal year 2009 spending plan, released Feb. 4, proposes to increase discretionary spending by $46.2 billion or 4.9 percent, with nearly all of this increase going toward "security funding" such as defense, homeland security, and international affairs. In terms of domestic spending, health care agencies and programs are generally being targeted for serious decreases. The Department of Health and Human Services (HHS) would be cut by $1.5 billion or 2.1 percent overall. Within HHS, the National Institutes of Health (NIH) budget would hold steady at $29.3 billion (equivalent to a cut when accounting for inflation), and Title VII health professions education programs and Children's Graduate Medical Education, which funds residency training at children's hospitals, are eliminated.

In addition, the new budget seeks to reduce Medicare and Medicaid spending by $182.7 and $17.4 billion, respectively, over five years. Many of these cuts would affect teaching hospitals and other academic institutions.

"The president's cuts are exactly the wrong medicine when the cost of health care and the number of uninsured continue to rise and families are feeling economically insecure," said Speaker of the House Nancy Pelosi (D-Calif.) in a statement. "…The president should work with Congress to create a budget that recognizes that affordable health care is a priority."

Lawmakers from both sides of the aisle in Congress rejected many of the health care spending proposals.

"This administration ought to know that five years' worth of Medicare and Medicaid cuts totaling $200 billion are dead on arrival with me and with most of the Congress," said Sen. Max Baucus (D-Mont.) chairman of the Senate Finance Committee, in a meeting with reporters.

Sen. Gordon Smith, R-Ore., another Finance Committee member, said that "cuts to Medicare and Medicaid start an unwelcome ripple effect in state budgets and doctors offices," according to a report from WebMD.

Additionally, the president has proposed $19.7 billion over five years for the State Children's Health Insurance Program (SCHIP). According to a statement from House Energy and Commerce Committee Chair John Dingell (D-Mich.), the proposed figure "fails to provide sufficient funding to maintain SCHIP at current coverage levels and does nothing to reduce the number of uninsured children."

As a reaction to the proposed cuts, and in anticipation of Bush's well-established willingness to veto any legislation that his administration views as unfavorable, AAMC Government Relations Senior Associate Vice President David Moore said lawmakers may hunker down in this election year.

"There's a chance the Democrats could just wait [Bush] out," Moore said. "In the last budget cycle, he threatened to veto everything they sent to his desk that wasn't in keeping with his original proposals. So we could see the appropriations process chug along for a while, and then grind to a halt, probably in July. It will be politics all the time, probably with no resolution anytime soon."

Moore said that Congress could pass a series of continuing resolutions that keep all programs funded at fiscal year 2008 levels until after the new president takes office. This means the budgets for programs and agencies such as the NIH may not be resolved until spring 2009. But even as experts speculated that the budget is a nonstarter in Congress, rising federal deficits and recession worries mean that lawmakers may be more open to cuts, Moore said. There are also some programs and proposals that for various reasons will require Congress to work with the president. For example, Medicare physician payment rates will be reduced 10 percent this year unless Congress intervenes, meaning lawmakers will need to work with Bush on the issue in order to avoid major cuts.

According to Moore, the tighter purse strings in Washington will mean that academic medicine, like many other groups that receive federal funding through the budget, will need to step up advocacy to build political support for the programs they care about.

"We're going to have to be much more vigilant," Moore said. "AAMC and our constituents have to do even more advocacy on two levels. We need to work with other groups to make the case for more overall discretionary spending, and then we need to make the case specifically for health programs."

Moore said academic medical institutions can help by educating local elected officials on the specific costs and benefits of certain programs, and working to encourage political candidates to discuss health care more often during campaigning and make it a stronger portion of their platforms.

There is some cause for optimism for academic medicine in the budget proposals. The president included a $2 billion or 5.5 percent increase for Department of Veterans Affairs medical care. And the NIH does enjoy support on Capitol Hill, where Pelosi and others have previously spoken favorably about funding medical research.

"If they have money, chances are medical research will be a high priority," Moore said.

—By Scott Harris

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