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  • Washington Highlights

    President Obama Releases Final Budget

    Tannaz Rasouli, Sr. Director, Public Policy & Strategic Outreach

    The president released his fiscal year (FY) 2017 budget Feb 9. The administration proposes $4.23 trillion in budget authority and $3.64 trillion in revenue for the fiscal year that begins Oct. 1. The administration projects $4.15 trillion in actual spending (outlays) in FY 2017, resulting in a deficit of $503 billion.

    The budget follows the FY 2017 discretionary spending caps agreed to in the Bipartisan Budget Act of 2015 (P.L. 114-74). However, as he has done previously, the president’s 10-year plan proposes to repeal the sequester-lowered discretionary caps and the across-the-board cuts to mandatory spending programs in future years, starting in FY 2018.

    In a move to alleviate some of the pressure of the discretionary spending caps, the president proposes mandatory funding for a number of programs, including the National Institutes of Health (NIH), Children’s Hospital Graduate Medical Education (CHGME), and the initiative to expand access to treatment for prescription drug abuse and heroin use. Republicans have been quick to reject the use of mandatory funding [see related article].

    The following summarizes some of the research, public health, and education proposals of interest to medical schools and teaching hospitals. A related article covers the Medicare and Medicaid proposals [see related article].

    National Institutes of Health (NIH): The president’s budget proposes $33.1 billion, which is $825 million (2.6 percent) over the FY 2016 level. This increase includes $1.8 billion in new mandatory funding, which means the discretionary funding in the president’s budget is about $1 billion less than the current level. Approximately $1 billion of the mandatory funding request would be used to keep the NIH base budget at the FY 2016 levels.

    The budget proposes to use $825 million in mandatory funding to increase three White House initiatives:

    • $680 million for the cancer “moonshot” to accelerate progress in preventing, diagnosing, and treating cancer;  

    • a $100 million increase for the Precision Medicine Initiative, bringing total funding to $300 million; and

    • a $45 million increase for the Brain Research through Advancing Innovative Neurotechnologies (BRAIN) Initiative, bringing total funding to $195 million.

    NIH estimates the budget would fund 9,946 competing research project grants (RPGs) – 807 less than estimated for FY 2016. To sustain the maximum practicable number of new awards, the average cost for competing RPGs will be $469,000 for FY 2017, essentially the same as the average cost in FY 2016.

    For training, the budget proposes $849 million, which is $18 million more than the current year. The budget also proposes a 2 percent increase to stipend rates to offset the effects of anticipated inflation. This budget would fund 16,421 Full-Time Trainee Positions (FTTPs), which is 225 more than FY 2016.

    The budget would retain the cap on salaries paid through a discretionary grant or other extramural mechanisms at Executive Level II ($185,100 in 2016).

    VA Research: The president’s FY 2017 budget includes $663.4 million for VA Medical and Prosthetic Research, a $32.7 million (5.2 percent) increase over the FY 2016 enacted level. $65 million of that funding is newly dedicated to the Millions Veterans Program (MVP) to advance the president's Precision Medicine Initiative. As a result, the VA will reprioritize program spending to fund the initiative, including a decrease in investigator-driven projects.

    Title VII and Title VIII Health Professions Programs: Titles VII and VIII received a combined $460.7 million, a $ 31.2 million (6.3 percent) decrease below the FY 2016 enacted omnibus levels. The Health Professions and Nursing Education Coalition (HPNEC) website provides a detailed funding chart of the Title VII and Title VIII funding amounts included in the President’s FY 2017 budget.

    Title VII Health Professions receive $231.3 million, which is a $31.2 million (11.9 percent) cut below FY 2016 enacted-levels. Unlike previous years, the president’s budget request preserves funding for the Title VII Health Careers Opportunity Program (HCOP). However, the president’s budget proposes eliminating the Area Health Education Centers (AHECs) program, stating that the AHEC program awardees “may be able to support on-going activities through other funding sources.” In addition, the Preventive Medicine Program receives $17 million, which is a $4 million (19 percent) cut below FY 2016 enacted-levels. The Scholarship for Disadvantaged Students program receives $49.1 million, a $3.1 million (6.7 percent) increase over FY 2016 enacted-levels, and the budget maintains funding for all other programs at the FY 2016 levels.

    Title VIII Nursing programs receive $229.5 million, the same as FY 2016 enacted-levels. Moreover, as the Health Resources and Services Administration (HRSA) did in FY 2016 (and as enacted in the FY 2016 omnibus), the budget consolidates the Title VIII Comprehensive Geriatric Education program with the Title VII Geriatric program.

    National Health Services Corps: The president’s FY 2017 budget includes $380 million for the National Health Service Corps (NHSC), a $70 million (22.6 percent) increase over FY 2016. This request comprises three different funding streams. It includes $310 million from the NHSC mandatory fund extended under the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA, P.L. 1140-10). The budget also includes $20 million in discretionary appropriations to support new loan repayment awards for behavioral health clinicians, and proposes an additional $50 million (half of a two-year mandatory fund) to help expand the addiction treatment workforce through the NHSC. Additionally, the administration proposes to increases total mandatory funding for the NHSC to $810 million annually for FYs 2018-2020.

    Agency for Healthcare Research and Quality (AHRQ): The president's FY 2017 budget proposes $363.7 million for AHRQ, providing a $29.7 million (8.8 percent) increase over FY 2016, and restoring funding to the agency's FY 2015 level. The FY 2017 request includes $83.5 million through the Public Health Service evaluation tap; though the agency previously had been funded through the tap, both the FY 2015 and FY 2016 spending bills funded AHRQ entirely through budget authority as AAMC and other stakeholders have recommended. AHRQ also is expected to receive $106 million in transferred funding from the Patient Centered Outcomes Research Trust Fund (PCORTF) in FY 2017, which would bring the total proposed AHRQ funding level to $469.7 million.

    Children’s Hospitals Graduate Medical Education (CHGME): The president’s budget proposes to eliminate the $295 million appropriation for the CHGME program, and instead requests legislative authority to fund the program through a mandatory appropriation of $295 million each year through FY 2021.

    340B Drug Pricing Program: The FY 2017 budget proposes $7 million in new funding for HRSA to administer the 340B Drug Pricing Program; as in previous years, the budget also proposes a user fee totaling 0.1 percent of total 340B drug purchases paid by the covered entity, expected to generate an additional $9 million per year. Unlike previous years, the budget also requests legislative authority for the Secretary of HHS to “issue regulations with binding and future effect for the program.” The HRSA budget justification explains, “Clear legislative authority to conduct rulemaking for all provisions in the statute...would be most effective in facilitating HRSA’s oversight over, and management of the 340B Program [and]...would allow HRSA to provide greater clarity and specificity for its program requirements.”

    Department of Education: Similar to FY 2016, the president’s FY 2017 budget for the Department of Education calls for “simplification” of the federal student aid system. Among other proposals impacting medical student aid programs, the president’s budget would cap Public Service Loan Forgiveness (PSLF) at $57,500 (the aggregate loan limit for undergraduate students), and eliminate the Lifetime Learning Credit and Student Loan Interest Deduction education tax incentives. Guidance on the student aid legislative proposals in the president’s FY 2017 budget is available on the AAMC government affairs website.