February 8, 2008

1. President George W. Bush Releases FY 2009 Budget Proposal

2. FY 2009 Budget Decreases Funding for Medicare, Discretionary Programs

3. AAIM Acts Against Proposed Cuts to VA Research

1. President George W. Bush Releases FY 2009 Budget Proposal

President George W. Bush released his $3.1 trillion budget proposal for fiscal year (FY) 2009, Monday, February 4, 2008. The spending proposal provided a 6% increase over the $2.9 trillion appropriated for FY 2008. However, in an effort to cut the federal deficit, the proposed budget would freeze overall domestic discretionary spending over the next five years, with available funding to be redistributed among federal agencies. The freeze in funding is particularly alarming, as it significantly impacts programs relevant to the academic internal medicine community, including Medicare, Title VII health professions programs, and the VA Medical and Prosthetic Research Program.

Now that President Bush has submitted his FY 2009 budget proposal, Congress will take the lead in developing a budget template. Committees of jurisdiction within both the House of Representatives and Senate are in the process of holding hearings to understand Departments’ programmatic needs and to allow for comment and recommendations. Once hearings conclude, the authorizing committees will offer their “views and estimates” on appropriate funding levels for their respective federal programs.

The appropriations process often extends well in to the fall as the appropriations committees propose their funding allocations. The Alliance for Academic Internal Medicine will take an active role in recommending appropriate funding for the various programs relevant to academic medicine and will keep its members informed of ways to advocate to their members of Congress.

2. FY 2009 Budget Decreases Funding for Medicare, Discretionary Programs

President George W. Bush’s fiscal year (FY) 2009 budget request for the Department of Health and Human Services (HHS), released February 4, 2008, once again freezes or decreases funding for discretionary and entitlement programs in an effort to reduce the federal deficit by 2012. Though the president’s budget requests $737 billion for HHS—an increase of $29 billion over FY 2008—it would cut spending on Medicare and Medicaid as well as decrease funding for the Health Resources and Services Administration (HRSA), the Agency for Healthcare Research and Quality (AHRQ) and the Centers for Disease Control and Prevention (CDC). Funding for the National Institutes of Health (NIH) would remain flat in FY 2009.

The president’s budget request includes a legislative package of Medicare proposals which, according to the proposal’s text, aims to “strengthen the long term financial security of the program and address the unsustainable growth of federal entitlement programs.” The package would save approximately $12.2 billion in FY 2009 and $178 billion over five years, bringing Medicare’s annual average growth rate down from 7.2% to 5%.

Under the president’s request, indirect medical education (IME) funding would be decreased significantly. According to the president’s proposal, in an effort to “rationalize” Medicare payment policies, the president recommends cutting the IME add-on payment from 5.5% to 2.2% over three years starting in FY 2009. Rationale for the $12.9 billion decrease over three years is that lowering funding would better align payments to teaching hospitals with the actual costs they incur. In addition, the president’s proposed budget would eliminate $8.9 billion from 2009 to 2013 in duplicate IME payments to hospitals for Medicare Advantage beneficiaries.

The President’s budget requests $29.3 billion for NIH, the same level appropriated last fiscal year. For FY 2009, NIH’s priorities include developing biodefense countermeasures, continuing support of the NIH Common Fund (which in part funds initiatives under the NIH Roadmap for Medical Research), supporting new investigators, and refocusing programs that translate clinical research results into clinical practice. The president’s request allocates $534 million, an 8% increase ($38 million), to support NIH Common Fund initiatives across institutes. In addition, the president’s budget allocates $15.5 billion, 53% of the total NIH budget request, to support medical research through competitive, peer-reviewed, investigator-initiated research project grants (RPGs). NIH estimates it will support 9,757 new and competing RPGs in FY 2009, which is roughly the same number estimated for FY 2008.

Under the president’s budget, funding for HRSA would decrease from $6.86 billion in FY 2008 to $5.76 billion in FY 2009. Of particular interest to the academic internal medicine community, HRSA’s health professions training programs once again were deemed “underperforming” by the Office of Management and Budgets; training programs for primary care medicine and dentistry have been eliminated in the president’s budget request. The budget also eliminates geriatrics programs that were funded at $30 million in FY 2008.

For AHRQ, the president’s budget requests $325.7 million—a decrease of $8.9 million from the FY 2008 enacted level. The FY 2009 budget provides flat funding for comparative effectiveness research initiatives ($30 million) and health information technology ($44.8 million); it also decreases funding for general patient safety research by $2.1 million to $32.1 million.

The president’s budget request also includes $8.8 billion for CDC, a decrease of approximately $412.1 million below the FY 2008 level. However, increases for CDC programs in the president’s budget exist for the pandemic influenza program, HIV/AIDS domestic testing initiative, and vaccines for children program.

3. AAIM Acts Against Proposed Cuts to VA Research

While President George W. Bush’s fiscal year (FY) 2009 budget proposal, released Monday, February 4, 2008, increases funding for Department of Veterans Affairs (VA) Medical Care Services, the administration fails to provide the same support for the VA Medical and Prosthetic Research Program. An intramural program, the VA research program is one of the nation’s premier research endeavors, attracting high caliber clinicians to deliver care and conduct research in VA health care facilities. While Congress provided a significant $69 million increase to the program in FY 2008, the President’s proposal sets funding at $442 million, a $38 million decrease over last year’s appropriation.

President Bush’s $442 million budget request for VA research is projected to require significant cuts to programs directly benefiting military service personnel returning from the wars in Iraq and Afghanistan. According to the President’s proposal, VA will cut funding for research in central nervous system injury by 20%; acute and traumatic injury, military occupations and environmental exposure, and substance abuse by 18%; and mental illness by 15%. The cuts are counter to congressional requests for increased focus on research addressing “mental health—especially the causes, prevention, mitigation, and treatment of post traumatic stress disorder (PTSD)… the full spectrum of traumatic brain injury; [and] substance abuse.” Additional cuts were made to research in diabetes and major complications (a 21.5% decrease), even as VA notes that “nearly a quarter of the veterans receiving care from VA have diabetes, and an even greater number (73%) are at risk due to overweight or obesity.”

Members of the veteran and research communities are concerned that cuts in funding will significantly diminish research productivity and output, arguing that a one-time investment in research will not lead to the medical advances required to improve the lives of the nation’s veterans. The Friends of VA Medical Care and Health Research (FOVA)—of which the Alliance for Academic Internal Medicine is an executive committee member—recommends $555 million for the program in FY 2009 to keep pace with inflation, increase the award cap for VA investigators, and increase programmatic support for research impacting returning soldiers.

The House Veterans Affairs Committee held a hearing Thursday, February 7, 2008, to discuss VA’s budget request and programmatic activities for the upcoming year. Several members of Congress questioned VA officials on the cuts to VA research. Representative Vic Snyder (D-AR) countered VA’s argument that shortfalls in direct research funding can be made up from grants from other federal agencies, such as the National Institutes of Health, whose funding was frozen in FY 2009. Representative Shelley Berkley (D-NV) said, “I suspect the committee will fight to restore these cuts, and it would be an appropriate role for this committee.”

While the President increased funding for VA Medical Care by 5.6%, to $38.7 billion in FY 2009, the amount is still far below that requested by a number of veterans service organizations. According to House Veterans Affairs Committee Chair Bob Filner (D-CA), the President’s recommendation barely covers the cost of inflation. And this year, VA is expected to treat an additional 333,000 veterans returning from the conflicts in Iraq and Afghanistan. In his opening statement, Representative Filner argued that if there is to be a supplemental appropriations measure providing additional funding for the war, there must be parallel funding for the warriors.

The Alliance for Academic Internal Medicine—the nation’s largest academically focused specialty organization—consists of the Association of Professors of Medicine, the Association of Program Directors in Internal Medicine, the Association of Subspecialty Professors, the Clerkship Directors in Internal Medicine, and the Administrators of Internal Medicine.

Please contact AAIM Vice President for Policy Charles P. Clayton (cclayton@im.org), AAIM Policy Associate Nicole V. Baptista (nbaptista@im.org), or AAIM Policy Assistant Allison L. Haupt (ahaupt@im.org) at (202) 861-9351 with questions or comments about this week’s Merlin.