As has been widely reported, President Trump’s proposed fiscal year 2018 budget, released on May 23, 2017, would cut corporate and personal income taxes, particularly for higher-income taxpayers, increase defense and border security spending, and cut spending for health and social programs. Projected spending cuts across virtually all federal government health programs would be dramatic. Over the next ten years, the budget proposes cutting Obamacare” outlays by $1.25 trillion, resulting in $250 billion in deficit reduction, through the American Health Care Act’s program amendments. Beyond that, Trump’s budget would cut Medicaid spending by $610 billion and cut CHIP by $5.8 billion (while extending it through 2019.
Medicaid would apparently be cut beyond the AHCA reductions by increasing the stringency of per capita cap and block grant reductions already included in that bill. CHIP funding would be cut by eliminating the 23 percent increased federal funding match added by the ACA and by no longer providing federal CHIP dollars for children from families with incomes above 250 percent of the federal poverty level. States would also be allowed to transfer children from families with incomes below 133 percent of FPL, who had been transferred from CHIP to Medicaid, back to CHIP.
The budget would cut funding for the Food and Drug Administration for 2018 by over $850 million, but increase user fees by $1.3 billion, resulting in a program increase of $450 million. The budget would cut 2018 cut funding for the Centers for Disease Control by $1.3 billion and funding for the National Institutes of Health by $5.8 billion. It would eliminate the Agency for Health Care Research and Quality, folding it into the NIH with reduced funding. Substance Abuse and Mental Health budgeted funding would be cut by almost $400 million. Funding for the Center for Medicare and Medicaid Innovation would increase by $114 million.
The HHS budget promises to fund efficient operations and necessary activities to provide a stable transition from the “burdensome requirements of Obamacare to a patient-centered health care system.” The budget includes $471 million for the ACA exchanges in 2017, $453 of which is to go to program operations such as eligibility, call center operations, and information technology. To this will be added an expected $1.3 billion in user fees, for total exchange funding of $1.7 billion. The 2017 Obama budget requested $2.1 billion for exchange operations, including $535 in budgeted funding and $1.6 billion in user fees. The 2018 HHS budget projects the expenditure of $28 million in rate review grants and $59 million in state exchange grants that remain unspent from previous appropriations. The budget also proposes abolishing the Independent Payment Advisory Board, saving $16 million for 2018 but costing $7.6 billion over 10 years.
The Department of the Treasury budget projects the expenditure during 2018 of $32 billion in advance premium tax credits, $6.3 billion in cost-sharing reduction payments, and $4.5 billion in funding for the Basic Health Program. All are described as “mandatory” funding.
Finally, the budget proposes a number of “medical liability reforms,” that would generally limit access to the courts and damages recoverable by individuals injured by medical negligence. This has been a favorite project of HHS Secretary Price. The budget projects that the proposed changes in medical liability law would save HHS programs almost $32 billion over ten years and the federal government $55 billion. Presumably the federal reforms would preempt state law, which currently governs medical liability.
Of course, the President’s budget is only a statement of the administration’s priorities. Any 2018 spending bill that emerges from Congress is likely to look very different.