Tuesday, February 15, 2011

The Battle over the Budget

Budgets are ultimately about choices: how individuals, families, companies, communities, and government choose to spend their limited resources. When the Republicans gained control of the House of Representatives in the November elections, there was little doubt that it would lead to a confrontation with President Obama and Senate Democrats over the choices that the U.S. government must make to begin to live within its resources. (Although neither party has produced a credible plan to balance the budget.)

This week shows how far apart the sides are in the choices they would make. The GOP-controlled House will be voting this week on a continuing resolution to keep the government open for business when current funding expires on March 4, but it is demanding extraordinarily deep cuts in spending on discretionary (non-entitlement) programs in return, setting up an almost certain confrontation with President Obama and Senate Democrats.

The budget process isn’t the easiest thing to explain, but I’ll try.

The immediate confrontation is the result of the failure of the Democratic-controlled 111th Congress to pass a budget for the current fiscal year, which runs from October 1 of last year through September 30 of 2011. Instead, it funded the government through a series of temporary continuing resolutions. The current one runs through March 4. Usually, a continuing resolution (CR) continues funding for federal agencies at current budget levels, with some modest adjustments.

The GOP leadership of the new 112th Congress, though, looks at the need for a new CR as the vehicle to implement its pledge to cut $100 billion out of the discretionary budget. The CR that the GOP leadership released late last week would cut tens of billions of dollars out of spending on a wide range of domestic programs, and completely terminate dozens of them. Included are enormous spending cuts in health programs, including several that ACP believes will exacerbate the existing shortage of primary care physicians.

Health professions training programs (scholarships, loan forgiveness): the CR would cut $145.119 million (29.1%) below FY2010 enacted levels, which represents a $386.1 million (53.2%) cut from the President’s FY2011 request. Included in the cut is the only federal program (Title VII) that provides grants to institutions to establish or expand primary care training and education, including residency or internship programs in primary care specialties for medical students, interns, residents, or practicing physicians.

National Health Services Corps (NHSC): the CR eliminates $141.925 million in discretionary funding while maintaining $290 million in mandatory funding, which would mean that some 2,365 health professionals would no longer be able to receive NHSC funding.

Community health centers (CHC): $1 billion cut from FY2010 enacted levels; as a result, CHCs will lose the capacity to serve 3.3 million current patients in the next few months and over 11 million patients over the next year.

The CR would cut medical and health services research. The National Institutes of Health would be cut by $1,629.3 million (5.3%) from FY2010 enacted levels and $1,569.6 million (5.1%) from the President’s proposed FY2011 budget and the Agency for Healthcare Research and Quality would be cut $25 million (6.3%) from FY 2010 enacted levels and $39 million (9.4%) from the President’s FY2011 budget request. And, the CR begins to "defund" implementation of the Affordable Care Act by completely eliminating funding for staff salaries in the White House Office of Health Reform and for the IRS to hire staff to enforce the individual insurance mandate.

The House is expected t approve the CR this week, and then the Democratic-controlled Senate will have to pass its own version of the CR. If the House and Senate can't agree with each other, and with the President, the government would begin to shut down when the current CR expires, and at that point, it is anyone's guess which side would blink.

The battle over the CR is only the first of a series of fights over spending:

Debt ceiling legislation: Congress will need to vote on legislation to lift the debt ceiling (which allows the federal government to borrow more money) in March or early April. The GOP will be using the threat of not voting for the debt ceiling to try to force the administration and the Senate to accept even deeper cuts in spending, potentially including Medicare and Medicaid and defunding of the ACA. Like other legislation, both the House and Senate have to agree, and the President can veto a debt ceiling bill. But this takes time, the stakes (if agreement isn't reached) are not only a shutdown of the government, but the United States defaulting on its obligation to investors who hold U.S. treasury bonds.

Fiscal year 2012 budget: The House and Senate also must pass a budget for the new fiscal year that begins on October 1. The President's budget, which was released yesterday, outlines his proposed spending blueprint for the new fiscal year. It addresses not only discretionary spending, but mandatory programs (Medicare and Medicaid). The House GOP leadership will be seeking much deeper cuts than the President will propose. I will have more to say about the President’s budget in a future post.

Medicare Sustainable Growth Rate: The SGR will be another vehicle for showdown on spending, since physicians will face another 28% cut on 1/1/2012 if Congress doesn't pass an SGR fix. The GOP will try to use the SGR to defund major parts of the Affordable Care Act, likely splitting the medical profession in the process. President Obama's budget includes $62 billion to replace the 2012 and 2013 SGR cuts with a freeze in current payments, paid for by cuts in other parts of Medicare and increased fraud and abuse enforcement.

One of the challenges is that even if Speaker Boehner, Majority Leader Reid, and Minority leader McConnell can reach agreements with Senate Democrats and the White House on spending, it isn't clear that Rep. Boehner can deliver the votes of Tea Party conservative members for any compromise on spending.

Right now, it is impossible to predict who will gain the upper hand in the budget battles. But it is clear that the choices that will be made will have enormous consequences, for the nation’s short-and-longer term solvency, for the millions of people who get help from federal programs, and for our health care system—including whether the federal government will continue to fund programs to help avert a growing shortage of primary care physicians for adults. The problem is that these choices are being driven by legislative deadlines—the March 4 expiration of the current funding for the federal government, the debt ceiling legislation—that will not allow for the public to be informed about or participate in the choices being made. For instance, the continuing resolution to be voted on this week will cut $100 billion or more out of federal programs—yet not one hearing has been held to get public input on the choices being made! I expect that very few Americans even know what is in the continuing resolution (the same charge, ironically, that the GOP frequently made about the Affordable Care Act).

Deficit reduction will only be successful if the public buys into the hard choices that must be made, and that can’t happen if Congress doesn’t allow a full debate on the choices being made on their behalf.

Today’s questions: What is your reaction to the budget battle? And how should Congress and President Obama ensure that the public is informed and participates in the choices being made?


Steve Lucas said...

First we need to remember that the CR is the result of a Democratic House and a Democratic Senate not passing a budget when they were in control.

Secondly people are informed and participating through the election of the Tea Party.

People are very aware of the following:

Medicare Chief Dodges Republican Health Law Questions in House Testimony
Feb 11, 2011 8:32 PM EST

“Not only that, but Douglas Elmendorf, director of the Congressional Budget Office, said in another hearing today before the House Budget Committee that the law will result in 800,000 fewer people working by the end of the decade.”

Collectively the general public, those outside the beltway, understand our spending needs to match our income. While we all lament the cuts to worthwhile programs, there will be cuts.

Steve Lucas

doc777 said...

I am totally disgusted with the ACP leadership’s lack of sensitivity toward it’s members and state chapters. How dare they let 45 employees go in 2009. Those individuals provided value to the membership and were always there to assist us when we called. How dare the leadership cut funding to support having a College rep come to regional/state annual meetings and instead move those costs onto the shoulders of the regional/state chapters. Those reps provide important outreach to the regional/state chapters and allow the College to keep in touch with the needs of those local chapters. How dare the leadership cut funding supporting the attendance at national meetings of local chapter governors and instead place more of that responsibility on the local chapters. The governors volunteer to serve their state chapters and serve a vital role in disseminating information from the College. Further, how dare the College leadership charge attendees $25 for the privilege of attending Leadership Day. These physician give up 2-3 days of productivity and often times pay their own travel/room costs to be a voice for the College, and leadership rewards them with a bill for $25.

The College has reserves, why are we not spending more of them? If we spend them all, it’s not a big deal, we can just borrow more money? If that is not enough, we can just double dues. Doctors are very well compensated so we can easily increase dues to 3 or 4 times the current level if need be.

Under President Obama’s proposed budget, the debt will easily exceed the GDP. When the debt reaches 90% of GDP, economists have argued that growth of the economy will be hindered. In addition, due to the aggressive monetizing of our country’s debt, there are growing calls from world leaders that the dollar be replaced as the world’s standard currency.

The comments from the College leadership confirm that the leadership is simply clueless. Their total disregard for the economic disaster facing this country is no less absurd than the statements I made initially above. The country is broke. Cuts need to be made everywhere and in every department. Most departments saw 20%+ increases (EXCLUDING stimulus dollars) in their budgets since 2008. So maybe you might consider comparing the funding levels proposed by the republicans to those 2008 levels instead of the bloated 2010 levels. Finally, there are some in congress who have created an outline of how to get us out of this mess, despite the ACP leadership’s refusal to acknowledge that they exist. Congressman Ryan’s Roadmap for America’s Future is one example. The College leadership should read it. They might learn something. Then again, that might be expecting too much.

ryanjo said...

I disagree that most Americans are unaware that hard decisions need to be made to cut spending. Most national newspapers are publishing polls of thousands of citizens, most supporting budget cutting, and most realizing that it will affect them personally. It is only in Washington that nobody gets it.

Mr. Obama certainly doesn't get it yet. His budget submitted this week supposedly cuts $1.1 trillion over 10 years. At the same time he adds $2 trillion in taxes and nearly $1 trillion in new spending. Obama's "painful cuts" to the health and social programs mentioned in this blog post are from the huge increase in "Stimulus" spending he made in the past 2 years. The Education Department funding for 2012 remains 35% higher, Energy 22% higher, EPA 18% higher than pre recession in 2008. More political fanfare about austerity, and leave the real budget-cutting (and negative media attention) to the Republicans.

Same old Washington 3-ring circus -- no surprise. But a more balanced view in these blog posts would be refreshing.

PCP said...

Since when does ACP advocacy extend to Gov't funding for CHCs and training for "health professionals".

I have already explained how inefficient that method is of filling a primary care void created by idiotic reimbursement of Primary care Internists by CMS. The issue is not one of Gov't but rather one of the RUC.
Rather than address the root of the problem we have this typically gov't solution of inefficient costly and bankrupting band aids like CHCs/FQHCs etc under Obamacare. ACP more ideologically pure than representative of their memberships interests talks about this as a hot button issue. Any wonder Generalism is dying?
I have stated many times and I believe this blog confirms my view, that the ACPs view of the future of a General Internist, is one where they work at a inner city or rural CHC/FQHC, for a politically connected CEO with a phony board, and an ANP medical director, get a loan repayment deal for 5 yrs of service, and where a Private practice is nothing but a pipe dream. For the older doctors on this board, would you take that deal considering what your work every day entails? That is precisely the reason younger doctor are flocking to everything but General IM.

I have long blogged (before the mid term elections) that the ACP/AMA position in support of Obamacare has put us squarely in the position of negotiating with the tea party about SGR. With expanded cost committments under Obamacare, you can imagine how this will end for us. This is nothing but a sell out, and the ACP and AMA are squarely to blame.
I doubt anyone but the most gullible buy their arguments otherwise.

I predict that ACPs role/membership will be continuously eroded over the next decade due to their actions. I suspect that from the cuts in their operational budget this is already happening. Perhaps they will shamelessly open up their membership to all health professionals soon thereby "reinventing themselves" in their vision. No Bob, we do not have to wait until the SGR battle for a division in the profession, the ACP/AMA have already done an able job of creating such a situation, by failing to advocate for the primacy of the solo private practice Doctor. This is the height of irresponsible advocacy.