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Second Opinion

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

Washington Highlights

House, Senate Proceed on Differing Budget Paths

March 23, 2012—With the Senate opting to pursue a different budget strategy, the House Budget Committee March 21 approved, 19-18, the fiscal year (FY) 2013 budget blueprint released March 20 by Committee Chair Paul Ryan (R-Wis.). The budget proposal proposes strict discretionary spending caps and to overhaul the Medicare and Medicaid programs. Though the budget plan does not hold the force of law, it establishes enforceable spending limits and outlines spending priorities and targets.

The proposed House budget would create a Medicare exchange where seniors would choose between traditional Medicare fee-for-service (FFS) and federally qualified private plans. Premium support for seniors would be based on income and the cost of the second-least-expensive plan in the exchange. Medicare spending would be controlled through an annual competitive bidding process used to determine the federal subsidies seniors would receive to purchase their coverage, with a ceiling of no more than gross domestic product plus 0.5 percent.

Much like the committee proposed in FY 2012, this proposal converts the federal share of Medicaid spending into a block grant indexed for inflation and population growth. Chairman Ryan opened the budget markup saying, “It is very clear that, absent action, government spending on health and retirement programs will soon grow to consume every dollar of revenue that the government raises in taxes. We can’t avert a debt crisis without dealing with these programs.” Ranking Member Chris Van Hollen (D-Md.) stated in response that the “Republican budget … proposes to end the Medicare guarantee, shifting rising costs onto seniors and disabled individuals.”

The budget plan also proposes to repeal the Affordable Care Act (ACA, P.L. 111-148 and P.L. 111-152) and replaces the sequester required by the Budget Control Act (BCA, P.L. 112-25) [see Washington Highlights, Aug. 5, 2011] with budget reconciliation instructions to six House committees. Specifically, the proposal directs the Ways & Means and Energy & Commerce committees to identify by April 27 a total of $150 billion in savings over 10 years.

The committee’s budget resolution sets the discretionary spending cap at $1.028 trillion, which falls $19 billion below the $1.047 trillion spending cap enacted in the BCA. The committee arrives at the cap by assuming cuts across most non-defense discretionary accounts, including an estimated 3 percent cut to discretionary health spending.

AAMC President and CEO Darrell G. Kirch, M.D., March 20 urged lawmakers to consider the “unintended consequences” of the House proposal, which “would endanger the ability of [medical schools and teaching hospitals] to train America’s health care workforce and to conduct groundbreaking research that leads to treatments and cures for all patients.” He continued that the proposal “abandons Medicare’s long-standing support for physician training and specialized, emergency care services,” and  “further cuts discretionary spending, threatening national priorities such as the investment in scientific discovery and lifesaving medical research through the National Institutes of Health.”

During the markup, Democrats offered several amendments, many protecting provisions in the ACA; however, only one amendment passed, and the budget now goes to the full House, which is expected to vote on the plan the week of March 26.

Meanwhile, Senate Budget Committee Chair Kent Conrad (D-N.D.), characterized the House plan as “partisan and ideological,” and criticized the committee’s decision to lower the discretionary spending cap below the BCA-approved level as a “breach of faith.” He and Senate Appropriations Committee Chair Daniel Inouye (D-Hawaii) sent a March 19 letter urging House leaders to abide by the cap established in the August agreement, and Chairman Conrad March 20 filed a “deeming resolution” to formalize the $1.047 trillion spending limit in the Senate.

Formally adopting the cap allows the Appropriations Committee to determine its “302(b)” allocations, or top-line funding levels, for spending bills in each of its 12 subcommittees. The AAMC was among more than 900 stakeholders from the health, education, and labor communities on a March 16 letter  urging House and Senate appropriators to “provide the largest possible FY 2013 302(b) allocation to the Labor, Health and Human Services, Education, and Related Agencies Appropriations Subcommittee within the discretionary cap established by the Budget Control Act.” The subcommittee is responsible for funding many health agencies at the Department of Health and Human Services, including the NIH.

AAMC also joined letters from various coalitions to recommend funding levels for the Agency  for Healthcare Research and Quality, the National  Center for Health Statistics, and the Health  Resources and Services Administration.

Despite the recent budget-related activities in both chambers, the different spending caps in the House and the Senate likely will complicate efforts to proceed with the annual spending bills, and Congress is not expected to complete its appropriations work until after the November elections.

Contact:

Dave Moore
Senior Director, Government Relations
Telephone: 202-828-0559
Email: dbmoore@aamc.org

Len Marquez
Director, Government Relations
Telephone: 202-862-6281
Email: lmarquez@aamc.org

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Washington Highlights, a weekly electronic newsletter, features brief updates on the latest legislative and regulatory activities affecting medical schools and teaching hospitals.


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