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  • Washington Highlights

    President Trump Releases FY 2019 Budget Proposal

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

    The White House Feb. 12 released the president’s fiscal year (FY) 2019 Budget proposal, An American Budget, as well as an addendum intended to account for higher discretionary spending caps enacted just days earlier [see Washington Highlights, Feb. 9]. Among other provisions, the budget proposes deep cuts to Medicare and Medicaid, elimination of several health workforce programs, and lower funding for the National Institutes of Health (NIH) than currently under consideration by Congress for FY 2018.

    Members of the administration, including Department of Health and Human Services (HHS) Sec. Alex Azar [see related story] and Office of Management and Budget Director Mick Mulvaney, spent the week on Capitol Hill testifying in support of the budget and the president’s priorities.

    Largely a messaging document intended to relay his priorities to Congress, the president’s budget for HHS proposes cuts that AAMC President and CEO Darrell G. Kirch, MD, characterized in a Feb. 12 statement as “devastating to patients, current and future providers, the health care safety net, and ultimately, our nation’s health security.”

    In particular, the president proposes a $48 billion cut over ten years to graduate medical education (GME) by consolidating Medicare, Medicaid and Children’s Hospital GME (CHGME) spending in 2016 into a single, capped grant program. According to the HHS Budget in Brief, growth in total GME funding would be limited to the Consumer Price Index for all Urban Consumers minus one percentage point annually, and individual hospitals would receive payments “based on the number of residents at a hospital (up to its existing cap) and the portion of the hospital’s inpatient days accounted for by Medicare and Medicaid patients.” The secretary would have discretion to modify the amounts distributed based on several factors, including the proportion of residents training in priority specialties or programs, health care professional shortages and educational priorities.

     Additionally, the proposed budget would make important changes to the Medicare program by eliminating all exceptions to the site neutral payment policy, including grandfathered, “mid-build” hospital outpatient departments, emergency departments and cancer hospitals – an estimated cut of $34 billion over ten years. The budget would also reduce Medicare reimbursement of bad debt from 65 percent to 25 percent over three years – an estimated cut of $37 billion over ten years. The administration also proposes to fundamentally change Medicaid financing by moving to a per capita cap or block grant.   Finally, the administration proposes to repeal the Affordable Care Act (ACA) and replace it with an approach closely modeled after the Graham-Cassidy legislation introduced last summer [see Washington Highlights, Sept. 15, 2017].

    For the National Institutes of Health (NIH), the administration proposes, via the addendum, $35.517 billion in FY 2019, including: funding through the 21st Century Cures Act; funding for three existing agencies (including the Agency for Healthcare Research and Quality) that the administration is proposing to establish as new institutes under NIH; and $750 million from a $10 billion HHS-wide investment in opioids. The proposed total FY 2019 funding level falls below the $36.1 billion for FY 2018 that the Senate Appropriations Committee approved in the spending bill currently pending before Congress [see Washington Highlights, Sept. 8, 2017].

    In a shift from the administration’s FY 2018 budget request, the budget does not propose limiting NIH support for facilities and administrative (F&A) expenses. In his Feb. 14 testimony before the Senate Budget Committee, Director Mulvaney noted, “Not only did that not sway very many people in the legislature, but you all actually added something in the April omnibus [sic] that said that it’s against the law for us to go in and look at the administrative costs. So, I know when I’m beaten.”

    The budget request does, however, continue a proposal from FY 2018 to drop the HHS salary cap from Executive Level II to Executive Level V, coupled with a new NIH proposal to “cap the percentage of investigator salary that can be paid with grant funds to 90 percent of the total salary.”

    The budget also would eliminate all Title VII health professions and Title VIII nursing workforce programs under the Health Resources and Services Administration (HRSA) with the exception of flat funding for the National Center for Health Workforce Analysis ($5 million) and the Nurse Corps Scholarship and Loan Repayment programs ($83 million).

    While the president’s budget proposes discretionary funding of $310 million for the National Health Service Corps (NHSC) and $60 million for the Teaching Health Center Graduate Medical Education program (THCGME) in FY 2019, Congress recently reauthorized two years of mandatory funding for those programs at $310 million and $126.5 million, respectively. Within the Department of Education, the request would eliminate the Public Service Loan Forgiveness program for borrowers who take out loans after July 1, 2019.