The Trump Administration released its budget request to Congress on Tuesday, seeking $4.7 trillion in federal spending in fiscal year 2020 with $3.6 trillion projected in revenue, for a net deficit of $1.1 trillion. Deficit spending has dramatically spiked in recent years, nearly doubling from the deficits of under $600 billion from 2014-16, and rapidly approaching the deficit levels of the Great Recession. The Administration specifically cites the growing deficits as “one of the largest threats to continued economic prosperity,” and calls for sweeping reductions in domestic spending to offset the revenue gap in an effort to reach balanced budgets by 2034. The administration specifically seeks dramatic cuts to public health programs in its effort to reduce the federal deficit and reach its balanced budget goal.|
The administration is seeking nearly $1.25 trillion in mandatory savings from public health programs, largely targeting Medicare and Medicaid. The budget calls for reducing federal Medicaid spending by $143 billion through 2029 by transitioning to block grant funding or setting per-person caps, and tightening eligibility standards through new asset tests. These were core tenets of the failed healthcare reform proposals put forth by Republicans last Congress and often championed by former House Speaker Paul Ryan (R-WI). Among the more notable projected savings is roughly $1.5 billion over the next 10 years by penalizing Medicaid beneficiaries through a higher copayment if they go to the emergency department for non-emergency care, which has been included in several states’ Medicaid expansion waiver proposals.
The administration is also forecasting $845 billion less for Medicare spending over the next decade, estimates that are not dissimilar to those put forth by the Obama Administration, and for much of the same reasoning. Both Democrats and Republicans have often included in their budgets optimistic projections of how much they can save on Medicare through simple reforms targeting waste, fraud, and abuse, without altering premiums, deductibles, or co-pays. This year’s budget includes $457 billion in savings from waste, fraud, and abuse, and adds additional savings expected by reforming provider payment and reducing prescription drug costs. Roughly 85% of the cuts would be expected from reductions in provider reimbursements, while $19 billion would be saved under the “America First” prescription drug initiative to reduce federal spending on Medicare drugs.
The budget request continues a major spending assumption from previous years that may not be as realistic this year. Previous Trump Administration budgets have assumed that the ACA would be fully repealed and replaced with a plan similar to those proposed in 2017. This year’s budget makes the same assumption, despite it being much less realistic given the Democratic control of the House of Representatives and its ability to block, or refuse to consider altogether, any such proposal. The federal court challenge, Texas v. U.S. could potentially result in the law being overturned, but a final ruling is not expected in the near term, nor have many legal scholars expected the initial district ruling to stand as-is.Healthcare spending outside of mandatory programs would be slashed by 12% next year to $87.1 billion. This includes reducing the budget for NIH by $4.5 billion and the CDC by $1.27 billion, while increasing the FDA budget by $643 million. The top House Republican on the Appropriations committee, Representative Tom Cole (OK-4) called these cuts “short-sighted” and “something I hope this Congress will not adopt.” Funding for these departments was also included as part of two items pledged by the president during last month’s State of the Union Address: to eliminate HIV in the U.S. by the end of the next decade and additional funding for childhood cancer research. To reach this goal, the budget includes $140 million in new funding to improve diagnosis and testing for HIV and a $70 million increase to the Ryan White HIV/AIDS Program. The budget also adds $50 million towards childhood cancer research to the current $438 million allocated, although the national cancer institute would see its overall budget slashed by $897 million.
NAHU was particularly pleased to see the prioritization of expansion of access to health savings accounts, which would cost the federal government $27 billion over the next 10 years, and allowing Medicare beneficiaries the ability to contribute to HSAs if they are covered by a high de¬ductible health plan, which is estimated to cost $12.4 billion over 10 years. Other NAHU-supported proposed changes include funding $479 million towards the ACA cost-sharing reduction program, reducing the grace period for marketplace premiums (saves $78 million), adding a new minimum required contribution for premium tax credits (saves $345 million), and implementing tort reform (saves $34 billion).
Ultimately, it’s important to keep in mind that the president’s budget request is just that—a request to Congress for them to consider when they draft their own budget. Under ideal circumstances, the president would submit a budget request, Congress would put forth their budget proposal, and the Administration and Congress would work together at creating a cohesive document. Of course government, and especially divided government, doesn’t quite work like that. House Speaker Nancy Pelosi (D-CA) helped underscore this point, calling it a “toxic, destructive budget”. Given that, the president’s budget was effectively dead on arrival, but it does help to frame the priority policy issues that the Administration intends to advance in the overall budget negotiation process over the course of the next several months.