February 11, 2020

The health care cuts—and priorities—in Trump's latest budget proposal

Daily Briefing

    The White House on Monday released President Trump's fiscal year (FY) 2021 budget proposal, which calls for cuts to HHS, Medicare, Medicaid, and other federal health care agencies and programs.

    While the budget proposal likely won't gain traction in Congress, it offers some insights into the Trump administration's health care priorities for Trump's remaining term as president—and his second term if he is re-elected.

    Trump proposes cuts to major health care agencies, programs

    Trump's budget proposal calls for a total of $4.8 trillion in federal spending and looks to eliminate the federal deficit by 2035. As such, the budget proposal includes cuts to some significant domestic and safety-net programs—and those proposed cuts would have big implications for providers and public health.

    For example, the budget proposal would allocate $94.5 billion in FY 2021 funding for HHS, which includes CDC, CMS, NIH and other major health care agencies. That figure represents a 10%, or about $9.4 billion, decrease when compared with FY 2020.

    According to CNN, during a meeting with governors at the White House, Trump in regards to his budget proposal said, "We're not touching Medicare. We want to keep Medicare," and "[w]e're not decreasing Medicaid. But we're doing a lot of things that are very good, including waste and fraud."

    Trump proposes big cuts to Medicaid

    One of the biggest proposed health care funding cuts in Trump's budget is to Medicaid. The budget includes several Medicaid-related legislative proposals that would reduce federal Medicaid spending by about $920 billion over 10 years.

    The bulk of those savings would come from Medicaid reform, though the Trump administration released few specific details on the proposal. The proposal states, "Medicaid spending will grow at a more sustainable rate by ending the financial bias that currently favors able bodied working-age adults over the truly vulnerable."

    The budget also projected $152.4 billion in Medicaid savings over 10 years by implementing national Medicaid work requirements. Several states have sought to implement work requirements through Medicaid waivers, but many of those policies are tied up in legal challenges.

    Other projected Medicaid savings would stem from reducing enhanced federal funding for state Medicaid expansions under the Affordable Care Act (ACA), recouping improper payments made under Medicaid, and continuing cuts to Medicaid disproportionate-share hospital payments through FY 2030.

    Trump proposes reducing Medicare spending

    The budget proposal also calls for reducing federal spending on Medicare by $750 billion over 10 years, mostly by implementing certain cost-saving proposals that largely would lower payments to providers. The cost-saving proposals include medical liability reforms, changing uncompensated care payments to hospitals, expanding site-neutral payments, and reducing fraud, waste, and abuse in Medicare.

    The proposal also projects that the federal government could reap $130 billion in savings over 10 years from drug pricing legislative proposals. For example, the proposal mentions legislative efforts that would reduce prices for drugs covered by Medicare and calls for legislation to cap out-of-pocket costs for Medicare Part D beneficiaries.

    According to the New York Times, many of the cost-sharing proposals included in Trump's budget were first called for under former President Barack Obama's administration. The Times reports that the measures included in the budget proposal would not cut benefits for Americans enrolled in Medicare.

    The ACA and Trump's 'health reform vision'

    The budget proposal does not include language explicitly calling for repealing and replacing the ACA, which breaks with Trump's previous budget proposals, the Times reports. However, the latest proposal calls on Congress to draft and approve legislation that would "advance [Trump's] health reform vision," and projects that such policies would save the federal government $844 billion over the next 10 years. According to Modern Healthcare, the budget proposal notes that Trump's health reform vision includes:

    • Increasing competition in the health care market;
    • Increasing transparency of health care costs;
    • Protecting Americans from receiving so-called "surprise" medical bills;
    • Protecting Americans with pre-existing medical conditions;
    • Reducing prescription drug costs; and
    • Reducing burdensome regulations.

    Trump proposes funding boosts to advance administration's health care priorities

    The proposal also calls for funding increases to advance several of the Trump administration's health care priorities, including:

    • Advancing the administration's efforts to improve kidney care in the United States;
    • Bolstering mental health care;
    • Combating the U.S. opioid epidemic and substance use disorders;
    • Ending HIV transmission in the United States;
    • Improving access to care in rural areas;
    • Modernizing influenza vaccines; and
    • Moving the country's tobacco regulation efforts from FDA to a new agency within HHS.

    Other proposals 

    The budget request also calls for reducing federal spending on disability benefits by about $70 billion over 10 years, in part by tightening certain eligibility requirements, as well as reducing spending on the Supplemental Nutrition Assistance Program, which provides Americans with assistance commonly referred to as food stamps, by about $181 billion over 10 years.

    Experts, observers warn of potential health care effects

    Larry Levitt, executive VP for health policy at the Kaiser Family Foundation, in a tweet posted Monday wrote that although Trump's budget proposal likely won't be approved by Congress, "it signals that he would look to dramatically scale back the [ACA] and Medicaid if he's reelected and Republicans control Congress."

    And experts and observers warned that the health spending cuts called for in the budget proposal, if enacted, would have negative effects on providers and public health and could harm vulnerable patients.

    For instance, Democrats and patient advocates have cautioned that Medicaid work requirements could force Americans off of Medicaid—which could increase the country's uninsured rate. And evidence shows that was the case in Arkansas, which last year began implementing Medicaid work requirements until they were blocked by a federal court.

    Aviva Aron-Dine, VP at the Center on Budget and Policy Priorities, said, "This is a budget that would cause many millions of people to lose health care coverage."

    Federation of American Hospitals President and CEO Chip Kahn in a statement called the budget proposal "bad medicine for the most vulnerable American patients," saying, "This is no time to cut the Medicare and Medicaid programs that so many Americans depend on."

    Kahn also said the proposed cuts could harm providers. "The arbitrary cuts to health care programs envisioned in the budget will make the job of America's caregivers much more difficult. This proposal combined with already issued regulations will result in a reduction in coverage, putting the health care of millions of patients at risk."

    American Hospital Association President and CEO Rick Pollack had a similar response. "The proposals in this budget would result in hundreds of billions of dollars in cuts that sacrifice the health of seniors, the uninsured, and low-income individuals. This includes the one in five Americans who depend on Medicaid, of which 43% of enrollees are children."

    Further, Pollack said the budget proposal's call to expand site-neutral payments "fail[s] to recognize the crucial role hospitals serve for their communities, such as providing 24/7 emergency services." He added, "Post-acute cuts threaten care for patients with the most medically complex conditions," and "[t]he cuts also undermine medical advances and the availability of around-the-clock services exclusive to teaching hospitals, and the training they provide to those who will become our nation's future physicians" (Stein/Werner, Washington Post, 2/10; Tankersley et al., New York Times, 2/10; Stein, Bloomberg Law, 2/10; Luhby, CNN, 2/10; Cohrs, Modern Healthcare, 2/10; Rupar, Vox, 2/10; White House fact sheet, accessed 2/10; Trump's FY 2021 budget proposal, accessed 2/10; Federation of American Hospitals blog, 2/10; Commins, HealthLeaders Media, 2/10).

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