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Federal Budget Request Proposes Significant Health Program Cuts and Medicaid Policy Changes

March 11, 2019

In the federal fiscal year (FY) 2020 budget request released today, President Trump signaled the Administration’s support for specific public health initiatives, including ending HIV transmission over the next decade. His request also includes cuts to discretionary funding and significant policy proposals to Medicare and Medicaid in order to achieve savings.

While the President’s proposal reflects the administration’s budget blueprint, Congress will engage in its own budget and appropriations process to determine the final funding levels provided.

Overall, the budget proposal calls for a 12 percent cut to funding for the U.S. Department of Health and Human Services. Legislative proposals impacting mandatory health programs would reduce funding by nearly $1.25 trillion. As in past years, Medicare cuts make up a significant portion of the savings.

Of concern, the Administration is targeting changes to the Medicaid program as a major avenue to reduce federal spending. The proposal would impose a new funding structure by providing states with a set amount of funding through a block grant or per-capita cap rather than funding Medicaid according to the needs of the beneficiaries. That policy change is estimated to reduce Medicaid spending by more than $386 billion over the next decade.

Additionally, legislative proposals under the budget would limit eligibility for Medicaid by imposing work requirements. That policy is estimated to cut Medicaid funding by more than $130 billion over ten years.

The President also seeks to generate $220 billion by cutting benefits under the Supplemental Nutrition Assistance Program (SNAP) which supports low-income Americans with access to healthy food. HAP has advocated for federal policymakers to understand the important connection between food security and health outcomes.

Highlighted as a priority, the budget proposes a series of policies to address drug pricing. Changes include:

  • Enhancing Part D plans’ negotiating power with manufacturers
  • Encouraging use of higher value drugs
  • Discouraging drug manufacturers’ price and rebate strategies that increase spending for both beneficiaries and the government
  • Providing beneficiaries with more predictable annual drug expenses through the creation of a new out-of-pocket spending cap

Questions regarding the federal budget process may be directed to Laura Stevens Kent, HAP’s vice president, federal advocacy.

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