WASHINGTON — President Trump’s proposed budget continues the administration’s push to repeal and replace the Affordable Care Act despite waning enthusiasm for repeal among some key lawmakers, who would prefer to move on to other priorities.
The fiscal year 2019 budget proposal also promotes comprehensive Medicaid reform (including a repeal of the Medicaid expansion), strategies for reducing drug prices, increased funding for the opioids crisis, greater investment in veterans’ healthcare, and a potential overhaul of key Department of Health and Human Services (HHS) agencies.
The proposal would reduce the deficit by $3 trillion over a 10-year period, according to documents released by the administration on Sunday.
In total, the president’s budget request includes $68.4 billion for HHS, which is $17.9 billion or 21% less than 2017 enacted levels. The proposal also includes $675 billion in “net mandatory savings across HHS and the Department of the Treasury to repeal and replace Obamacare.”
The document proposes “a two-part approach to repealing and replacing Obamacare, starting with enactment of legislation modeled closely after the Graham-Cassidy-Heller-Johnson (GCHJ) bill as soon as possible, followed by enactment of additional reforms to help set Government healthcare spending on a sustainable fiscal path that leads to higher value spending.”
“The President is also committed to the comprehensive Medicaid reform in the GCHJ bill, including the repeal of the Obamacare Medicaid expansion and reducing State gimmicks, such as provider taxes, that raise Federal costs.”
The proposal supports identifying state-based solutions that “prioritize Medicaid dollars for the most vulnerable” such as work requirements — also known as “community engagement activities” — for certain “able-bodied adults.”
Previous proposals have been criticized for cuts to Medicaid and Medicare, and Mick Mulvaney, director of the Office of Management and Budget, sought in a press call Thursday afternoon to pre-emptively defend against such critiques.
“When we talk about Medicare and talk about Medicaid today … we’re talking about things that lower drug prices and save money for folks who are in these programs. We’re not talking, in a single instance, about denying anybody coverage, raising anybody’s age, [or] doing any means testing.”
For example, the executive budget proposes better defining which drugs Medicaid treats as brand-name products versus generic drugs. Correctly categorizing certain products, such as epipens, as generics would create savings for the program.
Curbing the Opioid Epidemic
In responding to the opioid crisis, the proposal requests $5 billion in new funding for HHS over 5 years, including $1 billion in 2019, to help prevent opioid abuse and to provide overdose-reversal drugs, treatment, recovery, and supports.
If this proposed budget is followed, the Office of National Drug Control Policy would receive more than $7 billion for prevention, treatment, and law enforcement efforts, and the Drug Enforcement Administration (DEA) would see another $2.2 billion.
The budget also endorses a $123 million increase in funding for the Substance Abuse and Mental Health Services Administration for “opioid abuse prevention, treatment, recovery support, and overdose reversal” and requests another $126 million to increase prevention efforts and surveillance by improving Prescription Drug Monitoring Programs.
The proposal also suggests authorizing HHS to work with the DEA to revoke a provider’s certificate to prescribe controlled substances “when that provider is barred from billing Medicare based on a pattern of abusive prescribing.”
Trump’s budget also supports implementing a pilot program at the National Institutes of Health for developing non-addictive pain medications as a subsitute for opioids, Mulvaney noted in the teleconference.
Lowering Drug Prices
The budget proposal also aims to lower drug prices by addressing “perverse payment incentives” and by “exposing drug companies to more aggressive competition,” the document noted.
The proposal looks to achieve lower drug prices by proposing changes that would improve 340B program integrity. (The program provides discounts on drugs for low-income hospitals but critics say it has expanded beyond its intended scope.) The budget proposal suggests revising hospital payments for drugs bought through the program by “rewarding hospitals that provide charity care and reducing payments to hospitals that provide little to no charity care.”
The document also suggests that Medicaid pursue a pilot project allowing five states to establish their own drug formularies and negotiate drug prices directly with drug companies. The approach would also involve establishing an appeals process as a guardrail against beneficiaries losing access to needed drugs.
Regarding the FDA, the budget proposes to increase competition by ensuring that “first-to-file generic applicants,” which have a 180-day exclusivity period, aren’t trying to “unreasonably and indefinitely block subsequent generics from entering the market” past the predetermined exclusivity period.
In addition, the proposal recommends allowing Medicare Part D beneficiaries to share in the rebates manufacturers provide. “At least one-third of those rebates have to be passed on to the purchasers at the point of sale; it’s going to have the impact of lowering the out-of-pocket costs of folks who are on Medicare,” Mulvaney explained.
He also pointed out in a teleconference Monday afternoon, that the executive budget seeks to establish “true out-of-pocket caps” for seniors through the Medicare Part D program, and to limit increases in reimbursement for drugs administered under Medicare Part B.
The new budget proposal suggests directing $83.1 billion for the Department of Veterans Affairs, representing an $8.7 billion, or 11.7%, increase from the 2017 enacted level, the document noted.
“It is our Nation’s duty to ensure veterans have access to the medical treatment they need, when they need it — and that they have a choice when it comes to their care,” wrote President Trump in a letter that preceded the budget document.
The budget would expand the Veterans’ Choice program in an effort to increase access to healthcare and would “implement a modernized appeals system to provide veterans with better medical options,” the document noted.
The budget plan also provides a blueprint for “reorganiz[ing] HHS by “improving the management of the Strategic National Stockpile; streamlining the administrative functions at the National Institutes of Health; and improving efficiency through examining the effectiveness of the U.S. Public Health Service Commissioned Corps.”
The blueprint suggests that because the corps does not meet the criteria for the Department of Defense’s military compensation system and because its “mission assignments and functions have not evolved in step with the public health needs of the Nation,” HHS should review how the corps is structured.
A new plan will be announced after a deep analysis, but the administration’s recommendations could range from more minor “phasing out unnecessary Corps functions” to substantial, “reinventing the Corps into a smaller, more targeted cadre focused on providing the most vital public health services and emergency response.”
In addition, the budget suggests shifting the Strategic National Stockpile from the CDC’s purview to HHS’s Assistant Secretary for Preparedness and Response.
The proposal also suggests consolidating the research of three entities — the Agency for Healthcare Research and Quality; the National Institute for Occupational Safety and Health; and the National Institute on Disability, Independent Living, and Rehabilitation.
On Friday, Congress passed a stopgap spending bill to keep the government open for roughly 6 more weeks.
In addition to boosting defense spending, that bill included billions in funding for the opioid crisis, community health centers, and disaster relief, and extended the Children’s Health Insurance Program for 10 years, but it also blew through predetermined spending caps, increasing spending by somewhere between $300 billion and $500 billion over the next 2 years, depending on various estimates.
On Friday, policy experts shared their expectations of the budget proposal, with some calling it “irrelevant” given that the spending bill had already passed.
When asked about the projected deficit increases from Congress’s recently passed spend bill, Mick Mulvaney, director of the Office of Management and Budget, speaking on Fox News on Sunday, argued that the president’s proposal could undo that damage.
“The budget does bend the trajectory down, it does move us back towards balancing. It does get us away from trillion dollar deficits. Just because this deal was signed does not mean the future is written in stone,” he said.