President’s Budget Pronounced DOA…and Yet

By Matthew Farber, MA, Director of Director of Provider Economics and Public Policy, ACCC

This week, President Obama released his budget for the coming fiscal year, a document that is supposed to be a blueprint for Congress to use to craft the federal budget. As in recent years, however, the 2012 Presidential budget was pronounced dead on arrival in Congress by Republican leaders. Given the current hyper-partisan legislative environment and the disagreement over fundamental policies, Republican leaders will not even consider many aspects of the President’s recommendations. So, if the President’s DOA budget is destined to go nowhere in Congress—why is this document still important to ACCC members? It is important because the budget’s proposed cuts may still be used in later cost-control efforts. Congress will continue to look at trimming budget deficits, and healthcare remains a prime target.

What should the oncology community be wary of? President Obama’s budget includes a number of cuts to Medicare and other healthcare-related programs, proposed cuts which may be resuscitated in a later appropriations bill.

Overall, the President’s budget proposes to cut $267 billion from Medicare, with the lion’s share coming from providers. The biggest share of the savings would come from extending the drug rebates under Medicaid into Medicare’s low-income population. The projected savings from this program could be close to $150 billion over 10 years. Other cuts include reducing hospital bad debt payments to save $35 billion and cutting post-acute care facilities by $56 billion. As expected, many groups—including PhRMA, the American Hospital Association (AHA), and others—have come out against certain aspects of this document.

However, one positive of the President’s budget would be the provision of a two-year fix to the Sustainable Growth Rate (SGR) formula. Currently, the SGR dilemma is once again being discussed by Congress with a Feb. 29 deadline for approval of another SGR fix. We are hopeful that this portion of the budget, at least, will live on.