Life Science Compliance Update

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July 11, 2017

Some Programs Entirely Eliminated Under Trump Budget Proposal

Budget-cuts

Many highly criticize President Trump’s fiscal year 2018 budget, for a variety of reasons. Many are opining that the projected spending cuts across the government would be dramatic, including cuts to “Obamacare” outlays by $1.25 trillion, through the American Health Care Act’s program amendments. Health care is implicated further, as the proposed budget would cut Medicaid spending by $610 billion and cut the Children's Health Insurance Program (CHIP) by $5.8 billion, while extending it through 2019.

Medicaid would be cut even beyond proposed reductions in the AHCA bill, by increasing the stringency of per capita cap and block grant reductions. CHIP funding would be cut by eliminating the twenty-three percent increased federal funding match added by the Affordable Care Act (ACA) and by no longer providing federal CHIP dollars for children from families with incomes above 250% of the federal poverty level.

Health and Human Services

The HHS budget promises a lot, including funding efficient operations and necessary activities to provide a stable transition from the ACA to a “patient-centered health care system.” The budget allows for $471 million for the ACA exchanges in 2017, $453 million of which is to go to program operations such as eligibility, call center operations, and information technology. The 2018 HHS budget projects $28 million in expenditures for rate review grants and $59 million in state exchange grants that remains unspent from previous appropriations. The budget also proposes abolishing the Independent Payment Advisory Board, saving money in the short run ($16 million in 2018) but actually costing $7.6 billion over the course of ten years.

Programs Eliminated Entirely

Under the Health and Human Services agency umbrella, the proposed budget entirely eliminates four programs, for a total savings of roughly $4.834 billion. The four programs are: the Agency for Healthcare Research and Quality (expected to be folded into the National Institutes of Health, which also sees funding slashed under the proposal); the Community Services Block Grant; Health Professions and Nursing Training Programs; and Low Income Home Energy Assistance Program.

According to the Administration, the Budget eliminates the Community Services Block Grant (CSBG) because it constitutes a small portion of the funding these grantees receive, and funds are not directly tied to performance. CSBG also funds some services that are duplicative, such as emergency food assistance funded through the Department of Agriculture's Emergency Food Assistance Program (TEFAP) and workforce programs funded through the Departments of Education and Labor.

The Budget also eliminates health professions and nursing training programs that lack evidence of significantly improving the Nation's health workforce. The Budget does fund health workforce activities that provide scholarships and loan repayments in exchange for service in areas of the United States where there is a shortage of health professionals.

The Budget further proposes to eliminate the Low Income Home Energy Assistance Program (LIHEAP) in order to reduce the size and scope of the Federal Government and better target resources within the Department of Health and Human Services' Administration for Children and Families.

Food and Drug Administration

As we noted previously, the budget would cut funding for the Food and Drug Administration (FDA) for 2018 by over $850 million, but increase user fees by $1.3 billion, resulting in an estimated program increase of $450 million.

Medical Liability Reforms

The budget also proposes a number of medical liability reforms, that would generally limit access to the courts as well as limit damages recoverable by individuals who are injured by medical negligence. HHS Secretary Tom Price has been a champion of this idea, and the budget projects that the proposed changes would save HHS programs $32 billion over the course of ten years and the federal government $55 billion.

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