IHS Global Insight Perspective | |
Significance | The US budget proposals for 2012 include a planned 2% cut to the budget of the Department of Health and Human Services (HHS). This is the first time in 30 years that the HHS' allocations have been affected, although on an annual basis the 2011 provisions had increased by 6.5%. |
Implications | Comparing core areas, such as the National Institutes of Health, Centers for Disease Control and Prevention, and Health Resources and Services Administration, a slight decline in allocations has been registered from 2010 actuals to 2012 estimates. However, federal programmes under the Centres for Medicare and Medicaid are seeing increased funding. |
Outlook | Against a backdrop of fierce criticism of the government's response to tackle the budget deficit, all-round cuts have been announced. However, with the implementation of health reforms set to gather pace in the next two years, President Barack Obama will continue to protect healthcare expenditure. |
US president Barack Obama has unveiled the proposed federal budget for the fiscal year 2012 with the specific aim of reducing the spending deficit over the coming decade. The plan outlines a reduction of US$1.1 trillion, or about 10%, during the course of the next decade. The 2012 budget looks at an overall provision of US$3.7 trillion, with the Department of Health and Human Services (HHS) reserving almost US$1.1 trillion. The allocation represents a 3.1% rise from 2010 provisions by the federal government.
Salient features of the provisions are as follows:
- US$32 billion in funding for biomedical research, including the National Institute of Health (NIH)'s work in cancer science and research into Alzheimer's disease and autism-spectrum disorders.
- Allocation of US$765 million for the advanced development of next-generation medical countermeasures against chemical, biological, radiological, and nuclear threats. Additionally, US$655 million is provided to ensure the availability of medical countermeasures from the Strategic National Stockpile during a public health emergency.
- US$2.7 billion in budget authority is dedicated to advancing science in the area of food and medicines and US$4.4 billion in total programme resources for the US FDA.
- US$8 billion for the Head Start and Early Head Start projects covering about 968,000 children and families, and US$6.3 billion to support 1.7 million children with child-care subsidies.
- Maintaining funding for health centres, providing US$2.1 billion for comprehensive, high-quality, primary and preventative healthcare services to all Americans regardless of ability to pay. It is estimated that health centres will serve 24 million patients in 2012.
- US$96 million for the administration's Caregiver Initiative.
- Approximately US$3.5 billion for domestic HIV/AIDS prevention and treatment activities across HHS to expand access to affordable healthcare and prevention services, and align activities with the National HIV/AIDS Strategy.
Source: WhiteHouse.gov.
HHS Discretionary Budget Authority Spending (Mil. US$)—Selected Items | ||
2010 (Actuals) | 2012 (Estimates) | |
Food and Drug Administration* | 2,597 | 2,744 |
Health Resources and Services Administration | 7,506 | 6,821 |
Centres for Disease Control and Prevention | 6,467 | 5,893 |
National Institutes of Health | 30,784 | 31,829 |
Centes for Medicare and Medicaid Services ** | 3,734 | 4,397 |
Administration for Children and Families | 17,334 | 16,180 |
Public Health and Social Services Emergency Fund | 1,345 | 595 |
Subtotal | 79,826 | 79,941 |
Source: White House. Gov | ||
Total Discretionary Budget and Mandatory Outlays (Mil. US$) | |||
2010 (Actuals) | 2011 (Estimates) | 2012 (Estimates) | |
Total Discretionary Budget Authority | 82,250 | 81,334 | 79,941 |
Total Discretionary Outlays * | 89,225 | 91,417 | 88,619 |
Mandatory Outlays | |||
Medicare | |||
Existing Law** | 446,616 | 489,319 | 468,522 |
Legislative proposal | - | - | 17,282 |
Medicaid and Children's Health Insurance Program (CHIP) | |||
Existing law | 280,658 | 285,418 | 279,346 |
Legislative proposal | - | - | -297 |
All Other *** | |||
Existing law | 37,645 | 43,636 | 38,130 |
Legislative Proposal | - | 22 | 1,209 |
Total Mandatory Outlays **** | 764,919 | 818,395 | 804,192 |
Total Outlays | 854,174 | 909,812 | 892,811 |
Source: WhiteHouse.gov * Amounts appropriated to the Social Security Administration (SSA) from the Hospital Insurance and Supplementary Medical Insurance accounts are included in the corresponding table in the SSA chapter. | |||
Outlook and Implications
While the overall tone of the 2012 budget was to underscore the potential reduction in deficits, healthcare as such was pretty much protected. There were few surprises in the allocations, primarily because the government's planned alterations to the healthcare outlay had already been indicated in the healthcare reforms announcement last year. In particular, there has been some focus on federal health authorities and programes.
In terms of individual departmental budgets, it appears that while the discretionary budget allocations have witnessed decreases from 2010 to 2012, mandatory outlays representing Medicare and Medicaid have been less affected. The budget proposal includes US$1 billion of spending increases for the NIH. Both the NIH and the FDA allocations have been increased in comparison with 2010 and 2011 figures. The development is important for the regulator as it embarks on an overhaul that will increase its remit.
A scheduled 25% cut in Medicare payments to physicians has, however, been delayed until 2013. The move would have resulted in a decrease in Medicare reimbursements. This delay is expected to cost about US$54 billion. However, other cuts have been made in order to provide this relief in Medicare physician payments. Savings resulting from restrictions on Medicare and Medicaid payments and expanded use of generic drugs in federal health programmes are expected to provide over US$60 billion in savings over the next decade.