Health Care in President Obama's 2014 Budget Proposal

On April 10, President Obama released his proposed budget for Fiscal Year 2014. The release of the President's Budget (usually occurring in early February) is mostly a symbolic measure. Congress is not required to act on any of the proposals, and most observers agree that the partisan deadlock between the Republican-controlled House and Democratic-controlled Senate will continue, and little, if anything, is likely to be enacted out of the President's proposal.

However, the Budget does represent the Administration's policy priorities, and with major provisions of Affordable Care Act set to be implemented in 2014, there are a lot of health care-related proposals. Among the highlights are:

• An additional $800 million for CMS’s insurance exchange operations, along with an additional 280 employees to work on exchange implementation.
• Cuts to Medicare — more than $300 billion in provider payments and $50 billion from seniors, mostly in the form of increased cost sharing for higher-income beneficiaries.
• A proposal to close the Medicare prescription drug doughnut hole by 2015 — a full five years ahead of the ACA’s target date of 2020.
• Expanding and simplifying the tax credits provided to small businesses for their non-elective contributions to employee health insurance. The expansion would cost $720 million in 2014. 
• $18.4 million for CMS to ensure compliance with MLR and rate-review processes.
• Instead of the SGR formula or a specific SGR "fix," the budget calls for a “period of payment stability lasting several years” to allow the development of “accountable payment models.”
• A one-year delay of the ACA’s scheduled reductions in Disproportionate Share Hospital (DSH) payments to safety-net hospitals; the reductions are scheduled to go into effect in 2014, but the White House wants to wait a year to get a better sense of how much the law reduces the number of uninsured now that Medicaid expansion is optional for states.
• Inclusion of a MedPAC recommendation to cut Graduate Medical Education payments to hospitals by $11 billion over 10 years.
• Elimination of the Preventive Health and Health Services Block Grant program, administered by the CDC. The program funds a variety of state efforts, including emergency medical services, home health services, and fluoridation. It is not the same thing as the Prevention and Public Health Fund in the ACA.

Again, this is the President's proposed budget for Fiscal Year 2014; none of these changes or funding levels are in place, and likely may never happen. NBCH continues to monitor the federal budget process and proposals from Congress, and will keep members informed if any significant health-related budget changes are enacted.