February 14, 2011

Obama Proposes Health Agency Cut but Spares Medicare Fees

By ROBERT PEAR and GARDINER HARRIS

WASHINGTON — Spending by the Department of Health and Human Services would decline in 2012 for the first time in the agency’s 30-year history under President Obama’s budget request.
The proposed 2 percent cut, to $892 billion, is striking because the department’s two biggest programs, Medicare and Medicaid, have been growing more than 8 percent a year, and the department has myriad duties under the new health care law.
The president’s budget does not propose fundamental changes to slow the growth in the two big entitlement programs, which together insure more than 100 million elderly, disabled and low-income people.
Mr. Obama seeks to spare doctors from a deep cut in Medicare fees that they would otherwise face in January of next year. He would allocate $54 billion to freeze doctors’ payments in 2012 and 2013. He said he would offset the cost with savings in Medicare and Medicaid that would curb fraud, reduce spending on prescription drugs and limit states’ ability to tax health care providers.
The president proposed further relief for doctors from 2014 to 2021, but did not say how he would pay the cost, which he estimated at $315 billion.
The budget would eliminate a $318 million program that trains doctors at children’s hospitals. Lawrence A. McAndrews, president of the National Association of Children’s Hospitals, said the proposal would “jeopardize children’s access to physicians” and “exacerbate the current national shortage of pediatric specialists such as neurologists and surgeons.”
Mr. Obama would offer $250 million to states in the next four years to test ways of curbing medical malpractice litigation.
Food inspections and research into cancer, infectious diseases and new drugs would receive significantly more money under the president’s budget. But money to help states and cities prepare for health emergencies like pandemic flu would be cut.
Mr. Obama seeks $31.8 billion for the National Institutes of Health in 2012, up $745 million from what was provided in 2010.
Dr. Francis S. Collins, director of the health institutes, is expected by October to open a new center to accelerate the discovery of medicines for which the administration is requesting at least $100 million.
The administration is asking that the budget of the National Institute of Allergy and Infectious Diseases, which finances much of the nation’s research on H.I.V. and AIDS, be increased by $100 million, to $4.9 billion. The budget of the National Cancer Institute would be increased by $95 million, to $5.2 billion.
The Food and Drug Administration would have its budget increased by $1.07 billion, to $4.36 billion, from $3.29 billion in 2010. More than half of the increase, or $634 million, would come from fees paid by drug, tobacco, food and medical device companies.
To help carry out a new law intended to safeguard the nation’s food supply, the president wants to increase spending for food inspections and other food safety services by $324 million, to a total of $1.4 billion.
Mr. Obama would finance the inspections, in part, with fees imposed on food manufacturers under legislation he signed in January. He hopes to impose more such fees on manufacturers. The additional fees were included in a food bill that passed the House in 2009, but were dropped from the final version of the legislation.
Republican senators signaled in the debate last year that they would not accept additional fees on the industry, and Republican House members have indicated that they would like to cut, not increase, the money devoted to food inspections.