Reg's Blog

Monday = Budget Day

As much as politics consumes the news, little on policy is included. Most days, the political stuff such as trials, Congressional hearings, back and forth tabloid (almost) stuff is front and center, missing is the “meat”. Reminds me of the 80’s Wendy’s commercial titled, “Where’s the beef?” https://www.youtube.com/watch?v=riH5EsGcmTw

While I know that the national election, inclusive of the President, all House seats, and one-third of the Senate is six months plus away, today seemed like a good day to frame some of the bigger issues, namely the budget issues and healthcare. To start, I’ve grabbed President Biden’s budget proposal. The whole proposal/plan is available here and the healthcare stuff starts on Page 77. Biden budget_fy2025

As is typical of these proposals, they are vague missing significant details and the numbers, tough to follow as they are full of economic assumptions. What is clear is that this budget proposal advances an existing trend – deficit spending. One of the larger battles today economically, is controlling inflation. The leading cause of inflation is government spending growing faster than GDP growth and in amounts greater than tax revenues can offset. The Congressional Budget Office forecasts a $1.85 trillion deficit for FY 2024 (ends 9/30/24). 

Reviewing the proposal, I was struck more by what is not in it with regard to healthcare than what is included.  The inclusions, frankly, are more expansion on existing themes for President Biden such as expanding the Affordable Care Act, particularly the Medicaid elements, and adding additional drugs to the list subject to government negotiation.  The Fact Sheet Summary of the Healthcare Provisions https://www.whitehouse.gov/briefing-room/statements-releases/2024/03/11/fact-sheet-the-presidents-budget-protects-and-increases-access-to-quality-affordable-healthcare/

Some notables in the proposal are,

• Increasing the Medicare tax on individuals making over $400,000 from 3.5% to 5%. Directing revenue from the Net Investment Income Tax into the HI Trust (Medicare).
• Adds $150 billion over 10 years to improve and expand Medicaid home and community-based services (these are primarily defined as the HCBS waiver slots). 
• Increases funding for senior nutrition services and meal programs by 8 percent above 2023 level, and 21 percent over 2021 levels.
• Move funding for nursing home surveys from discretionary to mandatory beginning in 2026, and increase funding to cover 100 percent of statutorily-mandated surveys.
• Adds $275 million over 10 years to the Department of Labor to monitor large group market health plans are complying with mental health and substance use disorder requirements (mental health parity).
• Budget proposes to establish a national, paid family and medical leave program administered by the Social Security Administration to ensure that all eligible workers can take up to 12 weeks for adoption or birth of a new child, care for a seriously ill loved one, recover from a serious illness, manage situations due to a loved one’s military deployment, find safety from domestic violence, dating violence, sexual assault, or stalking, or take up to three days bereavement time for the death of a significant other. No dollars are attached to this provision.
• Funding for the VA medical care system of $134.0 billion in 2025, an $11.5 billion increase over the 2023 enacted level. 

As I mentioned earlier, this budget is as notable for what is not included (more so in my opinion) than what is included.  My short list of BIG MISSES is below.

• Medicare Advantage payments are higher than they need to be (higher than modeled premium levels for Parts A and B under fee-for-service) and in turn, plans are generating significant profits.  Now I am not opposed to plans being profitable but I am opposed to contributing to the demise of Medicare solvency when the same is not necessary. Reform is needed and this budget does nothing.
• The budget advocates and advances Medicaid spending but does nothing to adjust how Medicaid is funded. It is well past time for Medicaid’s funding to shift to a block grant program and to allow states to address their resident needs effectively and efficiently.
• Physican payment reform is long overdue, and Congress (plus the President) have kicked the idea down the road too many times to count.  The present system lacks inflation updates and is required to be budget neutral. Congress is considering various proposals to deal with some of the underlying issues in the Physician Fee Schedule (such as the budget neutrality requirement and the lack of an inflationary update). The President’s budget could push this work faster.
• Telehealth and Hospital-at-Home Extensions tied to major Medicare waivers put in place during the COVID public health emergency (PHE), They are set to expire.  With respect to telehealth, the main waivers granted since the PHE relate to the originating site requirement and the geographic restriction. If telehealth waivers expire, the benefit under Medicare would be mainly restricted to rural areas, and patients would be required to visit a facility in most cases to receive a telehealth service (not available at home). The hospital-at-home model is also extremely popular, as it allows patients to receive hospital-level services at home via telehealth and in-person visits.
• The budget does nothing significant in terms of reforming Medicare in terms of costs, financing, and/or programmatic elements.  One such opportunity is around site-neutral payments.  In the Bipartisan Budget Act of 2015, established options for equalized payments for services furnished at many off-campus hospital outpatient departments to the amounts paid for those services when furnished in a physician’s office or ambulatory surgical center. Similar opportunities exist between SNFs and LTACHs and IRFs.

April 15, 2024 Posted by Reg Hislop III | Health Policy and Economics, Policy and Politics - Federal | Biden, Budget, Congress, Debt, Deficit, Economics, Elections, Federal Budget, funding, FY 2025, healthcare spending, Industry Outlook, Medicaid, Medicare, Money, OMB, Policy, Politics, President, President's Budget Proposal, Strategy, Trends, Washington | 1 Comment