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Learn about policy issues important to medical schools and teaching hospitals, with Executive Vice President Atul Grover, M.D., Ph.D.

Washington Highlights

President Proposes NIH Budget Freeze, Cuts to Health Professions Training

February 17, 2012—President Obama’s fiscal year (FY) 2013 budget, released Feb. 13, proposes to freeze funding for the National Institutes of Health (NIH) and cut funding for health professions training and children’s hospitals graduate medical education (CHGME).  

For discretionary (appropriated) spending, the budget adheres to the $1.043 trillion cap mandated by the Budget Control Act of 2011 (P.L. 112-25).  Within that total, the administration proposes a $16.8 billion (4.5 percent) cut in nonsecurity spending.  The budget includes $78.3 billion for the Department of Health and Human Services (HHS), a cut of $6.6 billion (8.4 percent).

AAMC President and CEO Darrell G. Kirch, M.D., issued a Feb. 13 statement that the NIH freeze “would have dramatic consequences on the pace of medical innovation” and that the proposed health spending cuts would “jeopardiz[e] the long-term health of the nation in favor of short-term deficit reduction proposals.”

Discretionary spending proposals of interest to academic medicine include:

National Institutes of Health (NIH): The president’s budget proposes to freeze funding for NIH at the FY 2012 level, with $30.623 billion in funds appropriated by the Labor-HHS-Education Appropriations Subcommittee.  In addition, the budget assumes the transfer of $78.9 million from the Interior Appropriations Subcommittee to the National Institute of Environmental Health Sciences and $150 million in mandatory funding for Type I diabetes research funding, which would result in an NIH program level of $30.860 billion. 

These totals do not include $80 million in funding from the Prevention and Public Health Fund for Alzheimer’s research announced last week by the administration [see Washington Highlights, Feb. 10].

In conjunction with the budget, NIH also released its annual update of the Biomedical Research and Development Price Index (BRDPI).  NIH projects the BRDPI will be 2.2 percent in FY 2012 and 2.8 percent in FY 2013.  NIH notes the decrease in the projection for FY 2012, which had been 3.0 percent, is the result of the $20,000 reduction in the NIH salary cap and anticipates the continued freeze on salaries of federal civilian employees for calendar year 2012.

According to NIH’s congressional justification, the number of new/competing research project grants (RPGs) funded with this budget would increase by 672, resulting in an estimated success rate of 19 percent in FY 2013.  However, the total number of RPGs funded with the administration’s request is estimated at 35,888, which is 55 RPGs less than FY 2012.  The budget also assumes the average cost of competing RPGs would decrease by 1 percent.

The budget retains the salary cap on extramural awards from NIH, the Substance Abuse and Mental Health Services Administration (SAMHSA), and the Agency for Healthcare Research and Quality (AHRQ) at the rate of Executive Level II ($179,700 in 2012). 

The budget proposes a 2 percent increase for Kirschstein National Research Service Award (NRSA) pre- and post-doctoral stipends; however, the number of trainees supported would drop by 309.

For the Institutional Development Award (IDeA) program, the budget proposes $255.4 million, which is $50.5 million less than FY 2012.  However, Congress provided nearly a $50 million increase in the FY 2012 budget, so NIH describes this as returning the program’s funding to its FY 2011 level of $226.5 million.

Health Professions: The president’s budget proposes $228 million for HRSA’s Title VII health professions programs, a $40 million (15 percent) cut below FY 2012. The funding level includes an expected transfer of $10 million from the Prevention and Public Health Fund (PPHF), and $15 million in transfers from the Public Health Service Evaluation Tap.

The budget proposes to eliminate funding for the Title VII Health Careers Opportunity Program (HCOP) diversity pipeline program and the Area Health Education Centers (AHEC) program. The request also offers a $12 million boost for physician assistant training programs, and proposes $5 million for a previously unfunded Pediatric Specialty Loan Repayment program authorized in the Affordable Care Act (ACA, P.L. 111-148 and P.L. 111-152).

For Title VIII nursing education programs, the president proposes $251 million, a $20 million (8 percent) increase funded through the Public Health Service Evaluation tap.

National Health Service Corps: The president’s budget proposes to eliminate the annual appropriations for the National Health Service Corps (NHSC) as in the Consolidated Appropriations Act, 2012 (P.L. 112-74).  Likewise, the president includes the full $300 million for FY 2013 provided by the mandatory NHSC Fund established under the ACA.  The NHSC Fund will expire in FY 2016. 

The HRSA budget justification indicates that the NHSC is “reviewing the disciplines that the Loan Repayment Program and the State Loan Repayment Program support” and specifically mentions pharmacists and chiropractors.  The NHSC also plans to decrease awards for service in low-need Health Professions Shortage Areas (HPSAs) to encourage service in areas of “high-need.”

Children’s Hospitals Graduate Medical Education (CHGME): The president proposes $88 million for CHGME, a $177 million (67 percent) cut to the program. According to an accompanying budget document summarizing the proposed cuts, HRSA seeks to cease support for “indirect costs associated with graduate medical education” such as expenditures “associated with the reduced productivity of hospital staff because they are helping train residents and the processing of additional diagnostic tests that residents may order during their clinical experience.” Instead, the administration intends to focus CHGME grants exclusively on “direct” costs, defined in the HRSA budget justification as “expenditures related to stipends and fringe benefits for residents; salaries and fringe benefits of supervising faculty; cost associated with providing the GME training program; and, allocated institutional overhead costs.”

Agency for Healthcare Research and Quality (AHRQ): The budget proposal provides $409 million for AHRQ, a $4 million (8.9 percent) increase over the FY 2012 comparable level. This figure includes a $12 million transfer from the Prevention and Public Health Fund, as well as a $62 million transfer from the Patient-Centered Outcomes Research Trust Fund (PCORTF) in FY 2013. Without the proposed transfers, the AHRQ total comes to $335 million, a $34 million (9.2 percent) cut below the comparable FY 2012 level.

As a result of the PCORTF transfer, the president proposes to reduce funding within AHRQ’s patient-centered health research portfolio from $17 million to $10 million. The request also reduces funding for investigator-initiated research grants from $43 million to $29 million.

National Health Care Workforce Commission: The president’s budget requests $3 million for the National Health Care Workforce Commission established as an independent advisory body in the Affordable Care Act. Though the Government Accountability Office appointed commissioners Sept. 30, 2010 [see Washington Highlights, Oct. 1, 2010], to date, Congress has not approved an appropriation to fund the commission’s activities.

Centers for Disease Control and Prevention (CDC): The budget requests $5.068 billion for CDC, a $664 million (11.6 percent) cut below the FY 2012 comparable figure. In addition, the budget assumes a $903 million transfer to CDC from the Prevention and Public Health Fund, compared to $825 million transferred in FY 2012. However, the president’s request also proposes to cut the Fund by $4 billion over 10 years, beginning in FY 2014.

Department of Veterans Affairs: For the Department of Veterans Affairs (VA) Medical and Prosthetic Research program, the president’s budget proposes $583 million, a $2 million (0.3 percent) increase over the FY 2012 enacted level.  The increase recognizes the need for inflationary adjustments and drastically departs from the $73 million cut proposed in FY 2012.

For the VA medical care accounts, the president proposes a total of $54.462 billion in advanced FY 2014 funding.  The president’s budget assumes that $1.750 billion will be carried over from unspent one-year advance appropriations provided for FY 2013.

Department of Education: The president’s Department of Education budget request includes a number of legislative proposals for education reform that will require congressional action, such as making permanent the American Opportunity Tax Credit.

The proposed Race to the Top: College Affordability and Completion initiative would provide $1 billion for grants to states to “drive systemic State reforms that simultaneously lead to increased affordability, quality, and productivity,” and is tied in part to maintaining state education funding levels.

The president’s “First in the World” fund would provide $55.5 million in grants to postsecondary institutions, including private institutions and nonprofit organizations, to “develop, evaluate, or scale up innovations and effective strategies for improving college completion outcomes while lowering costs and increasing the quality and capacity of higher education.”

Similar to the administration’s proposal in FY 2012, the president would reform the “Direct Perkins Loan” and proposes a funding increase to $8.5 billion, $7.5 billion (750 percent) over current levels.  Under the reformed program, Perkins loans would be unsubsidized and carry a 6.8 percent interest rate instead of the current 5 percent. The president also proposes to tie campus-based aid, including Perkins loans, to specific measures (e.g., tuition increases and gainful employment) that would be tracked by institutions and reported to the Department of Education.

National Institute on Disability and Rehabilitation Research (NIDRR): The president’s budget proposes $107 million for the NIDRR, a $2 million (1.8 percent) decrease compared to FY 2012.

National Science Foundation (NSF): For NSF, the president requests $7.4 billion, a $340 million (4.8 percent) increase over the FY 2012 level.  For research and related activities, the president’s budget requests $5.983 billion, a $294 million (5.2 percent) increase over the FY 2012-enacted level.

Food and Drug Administration (FDA): The president requests $2.517 billion for FDA, an $11 million (0.4 percent) increase over the FY 2012-enacted level. In addition, the FDA budget is supplemented by industry user fees, proposed to generate $1.969 billion in FY 2013. This addition brings the total request to $4.486 billion, a $654 million (17 percent) increase over the comparable FY 2012 level.

Contact:

Tannaz Rasouli
Sr. Director, Public Policy & Strategic Outreach
Telephone: 202-828-0525
Email: trasouli@aamc.org

Matthew Shick, JD
Director, Gov't Relations & Regulatory Affairs
Telephone: 202-862-6116
Email: mshick@aamc.org

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Jason Kleinman
Sr. Legislative Analyst, Govt. Relations
Telephone: 202-903-0806
Email: jkleinman@aamc.org