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White House Releases FY 2019 Budget

The Trump Administration released its budget request for fiscal year (FY) 2019 last week. While lawmakers in Congress will ultimately write their own spending bills, the White House budget is considered an important outline of the President’s legislative priorities. The Administration’s plan would reduce the deficit by $3.6 trillion over the next decade. The proposal calls for $1.7 trillion in cuts to mandatory spending and receipts, and a two percent yearly reduction in non-defense discretionary spending after 2019. The Trump budget underwent some last-minute changes to take into account the new spending caps recently passed by Congress in the Bipartisan Budget Act, which provided an additional $63 billion in nondefense spending for FY 2019.

The White House proposes to provide the U.S. Department of Health and Human Services (HHS) with $68.4 billion in discretionary budget authority, a 21 percent or $17.9 billion cut from currently enacted levels.

The White House budget includes a total of $17 billion in opioid-related spending for FY 2019, including $10 billion in new discretionary funding for HHS and $7 billion that remains unallocated to particular programs but available for key activities. The Administration says that the new funds will be used to expand access to prevention, treatment, and mental health services. While unscored, the budget also includes key proposals for both Medicare and Medicaid. The budget proposes to allow Medicare to provide comprehensive coverage for substance abuse treatment, including a per-week-per-patient bundled reimbursement to providers for medication-assisted treatment (MAT). The Administration also proposes to require Medicaid to cover all three Food and Drug Administration (FDA)-approved MAT options (i.e., methadone, buprenorphine, and Vivitrol). The Drug Enforcement Administration (DEA) would receive $2.2 billion in new funding for the agency’s opioid related-activities in FY 2019.

The budget would fund the National Institutes of Health (NIH) at the current level of $33.4 billion in the coming fiscal year. This figure does not include an additional $750 million for the agency’s role in addressing serious mental illnesses and combating the opioid abuse epidemic. The NIH proposal translates to a cut for the agency as a whole and 21 of its 27 institutes. The Administration also proposes to consolidate the Agency for Healthcare Research and Quality (AHRQ), the Centers for Disease Control and Prevention’s (CDC) occupational safety center, and the Administration for Community Living’s National Institute on Disability, Independent Living, and Rehabilitation into the NIH. Given that NIH is statutorily restricted to only 27 institutes and centers, without further Congressional action, the addition of other institutes would require a reorganization of some of the current institutes and centers.

The Administration requests a cut of nearly $900 million for the CDC in FY 2019. The agency would receive $11.1 billion in total program-level spending, down from the current $12 billion spending level. The CDC would receive approximately $175 million in new funding as a part of the broader allocation through HHS to combat the opioid crisis.

The budget would boost funding at the FDA by $663 million, or 13 percent, for a total of $5.8 billion. The White House requests $47 million in new user fees. FDA Commissioner Scott Gottlieb stated that he would use additional funding to develop standards and guidance to encourage the adoption of new manufacturing platforms, which are more likely to be built within the U.S. He also pitched the establishment of an FDA center of excellence for facilities that compound large volumes of drugs and expressed support for the development of clinical trials networks focused on drug development for rare diseases.

The Office of the National Coordinator for Health Information Technology (ONC) would receive $38 million in FY 2019, a decrease from the $60 million it received under currently enacted spending levels. The budget request states that ONC will focus its work on electronic health data exchange, reducing physician burdens, certifying health IT products, and developing standards to assess product performance. The Health IT Adoption program would be eliminated, and the cuts to ONC would also result in a reduction of office space and staff training.

The Trump budget proposal would transition the Affordable Care Act (ACA)’s premium subsidies and Medicaid expansion to a block-grant system run by states, followed by additional reforms to address “unsustainable healthcare spending trends.” The plan is similar to legislation introduced last year by Senators Lindsey Graham (R-S.C.) and Bill Cassidy (R-La.), which aimed to give states more flexibility to manage their Medicaid programs and health insurance markets.

The budget for the Office of National Drug Control Policy (ONDCP) would be cut by approximately 95 percent. The budget only requests $17 million for ONDCP. The agency’s High Intensity Drug Trafficking Areas grant would be moved to the Department of Justice, while the Drug Free Communities Act would be transferred to HHS. The Administration argues that these changes would enable ONDCP to better focus on its core mission to reduce drug use and its consequences.

The budget includes several provisions aimed at reducing the cost of prescription drugs. The budget blueprint would mandate that insurance plans share rebates with patients in Medicare Part D. It would also cap Medicare enrollees’ outof- pocket (OOP) costs. Five states would be allowed to join together to negotiate drug prices in their Medicaid programs. The budget would also limit the growth rate of Medicare Part B payments to inflation. The Administration proposes changes to the 340B drug discount program that would increase program transparency and reward those hospitals providing the most charity care.

Republican appropriators praised the President’s vision, but stressed that the Trump budget is just a starting point for the FY 2019 appropriations process. And, in light of the recent Congressional budget agreement for FY 2018 and FY 2019, lawmakers are more likely to craft proposals based on those agreements.

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