January 2006

More Domestic Spending Cuts Predicted for New Year
Congress left town for the holidays after passing the funding bill for discretionary health programs at the US Department of Health and Human Services (HHS) at the last possible moment on December 21, 2005.  The same day, it also completed work on funding for the Department of Defense.  That had an important public health consequence for two reasons.  First, the Defense bill also included extra funding for pandemic influenza preparedness.  Second, the Defense bill included a provision making an across-the-board cut in all federal spending of one percent, which further reduced funding for public health programs that had already been sliced.

Congress, however, was unable to complete two other hefty jobs it had set for itself.  The first was tax legislation.  The second was the budget reconciliation bill, which would make significant changes in federal entitlement programs, including Medicare, Medicaid and Temporary Assistance for Needy Families (TANF).  Early action on the reconciliation bill is planned when Congress reconvenes at the end of January. There is a strong likelihood that it will pass, despite significant bitter opposition due to predicted adverse effects on low-income populations, particularly children and the elderly.

The President’s budget for FY 2007 will be presented February 6, 2006, and the debates over federal spending priorities will begin all over again.  An overall five percent cut in non-defense, non-homeland security domestic spending has been rumored.  Program cuts are tougher for Congress to make in an election year, but the outcome of this year’s HHS funding bill demonstrates that anything can happen.

Unprecedented Cuts in Federal Public Health Spending Slated for FY2006
In order to understand the FY2006 HHS spending bill, it is important to know one arcane, but extraordinarily important fact about Congressional budgeting.  Congress has a budget process which usually has been unsuccessful or ignored.  In 2005 the process worked.  The process requires Congress to pass a budget resolution that has the effect of determining the overall size of the budget “pie.”  It is up to the appropriators to divide the pie among federal discretionary (non-entitlement) programs.  In past years, Congress has either failed to agree to budget caps (the size of the pie), or has found ways to skirt them in order to avoid significant program cuts.

This year was different.  Congress set tight budget caps in March 2005 and stuck with them.  This left the appropriators in both House and Senate with insufficient money even to give level funding to all health, education, and labor programs (which are lumped together in one bill).   The result is that they took unprecedented measures to stay within their budget caps.  First, funding for most agencies within HHS was decreased in absolute terms.  Second, and even more surprising, is that the appropriations committees gave up their own “pork.”  The HHS funding bill typically is filled with earmarks for special projects in Congressional districts, from health facilities construction projects to specific research projects.  The appropriators eliminated all these earmarks, which are made at the request of individual Senators and Representatives to benefit their states or districts, in order to stay within the budget caps.  Had they not done so, they would have been required to make even deeper cuts in health, education, social services, and labor programs. 

Overall, HHS took a 2.5% cut in discretionary funding, or about $1.7 billion.  The Health Resources and Services Administration (HRSA) sustained the largest percentage cut, 10.3%, which affected every single program in the agency except for Community Health Centers, which received a 2.8% increase.  Within HRSA, non-nursing health professions education programs were slashed by 51.5%. The Healthy Communities Access Program (HCAP), geriatric training, and rural interdisciplinary training programs were all eliminated. Primary care medicine and dentistry training was sliced by 54%.  The maternal and child health block grant sustained a 4.3% cut, while Ryan White AIDS programs will be down one percent.

The Centers for Disease Control and Prevention (CDC) will experience an overall cut of 4.8%. The greatest cuts were made in the Preventive Health and Health Services block grant (- 16.5%, occupational safety and health (- 10.8%) and state and local bioterrorism preparedness (- 10.4%, or $95 million).  CDC has estimated this will result in a 12% cut in funds for the public health preparedness cooperative agreements with states and three large cities.  CDC’s own buildings and facilities program took a 41% cut.  The only increases at CDC were a one percent increase for chronic disease prevention and a 12% increase for the Strategic National Stockpile.

An unpleasant surprise for the biomedical research enterprise was a 0.5% cut in National Institutes for Health (NIH) funding, which came after years of double-digit increases.

A Shot in the Arm for Pandemic Influenza Preparedness
Notwithstanding the damage done to ongoing federal health funding, Congress did agree to an additional $3.3 billion for pandemic influenza preparedness.  That funding was placed in the Department of Defense bill largely for political expediency and given an “emergency” designation, which exempted it from the budget caps that so constrained other HHS spending.  This amount was about half of what the President had requested, and the Administration is expected to request the remaining half in its FY 2007 budget.  Included was $350 million for upgrading state and local response capacity, while most of the balance is for vaccine and antiviral development and stockpiling. HHS Secretary Leavitt has already announced that an initial bolus of $100 million will go out to the states soon, while the balance will be reserved for later, pending development of more specific performance measures for influenza preparedness than now exist. 

What’s Next?
The President’s FY 2007 budget will set the tone for this year’s budget debate and further cuts in health programs can be expected.  The fact that 2006 is an election year probably cuts in two directions.  On one hand, it is much harder for Congress to cut domestic programs in an election year.  On the other hand, it seems unlikely that Congress will be willing to forego earmarks in the HHS bill, as it did this year.  The need to insert earmarks again will put further pressure on other programmatic funding.  Finally, Congress has less time in which to legislate in an election year, because it always leaves time for October campaigning at home. 

The first salvo in the FY 2007 budget battles will be fired by the President with his budget on February 6.  Every public health advocate should take a hard look at that budget and the likely cumulative effect of FY 2006 and FY 2007 cuts on public health.