Health Reform WK-EDGE HHS 2021 budget focuses on cutting Medicare and Medicaid costs
Thursday, February 20, 2020

HHS 2021 budget focuses on cutting Medicare and Medicaid costs

By Rebecca Mayo, J.D.

The 2021 budget provides a boost in funding to key areas such as influenza preparedness and combating the opioid crisis, while Medicare and Medicaid look to undergo cost savings efforts.

The HHS budget for 2021 proposes $94.5 billion in discretionary budget authority and $1.3 trillion in mandatory funding. The budget aims to facilitate patient-centered care by funding programs that promote transparency, including an allowance for bipartisan drug pricing proposals, and focusing on paying for outcomes rather than procedures. The budget also aims to protect and save lives by investing in resources to improve maternal health as well as investing in resources to combat the opioid overdose epidemic, HIV and AIDS, influenza, and tick-borne diseases. Resources are also provided to strengthen Indian Health Service and transform rural to increase access to healthcare.

FDA. The budget requests $6.2 billion for the FDA. This would allow FDA to invest in artificial intelligence and other emerging technologies to transform food and device safety, as well as support industry adoption of artificial intelligence technology in medical devices. It would also provide resources for regulatory work related to cannabis and cannabis derivatives, address critical building repairs and improvements, and advance the modernization of the influenza vaccine. Certain areas where there is more of a targeted focus received budget increases, such as influenza preparedness, efforts to support quality compounded drugs, and food safety.

CMS. The budget estimates $1.2 trillion in mandatory and discretionary outlays for CMS, which is a net increase of $47.6 billion above FY 2020. The budget also proposes target savings of $1.6 trillion in CMS mandatory programs over the next decade. These savings would come largely from reforming both Medicare and Medicaid and focusing on program integrity. Reforms to Medicare would include modifying payments to hospitals for uncompensated care, modifying reinsurance arrangements for Medicare Advantage Plans, removing the cap on Medicare Advantage benchmarks and removing the doubling of Medicare Advantage quality bonus payments in qualifying counties, and giving Medicare beneficiaries with high deductible health plans the option to contribute to health savings accounts or medical savings accounts. Reforms to Medicaid would include fostering state innovation and pairing it with enhanced accountability and integrity to improve program sustainability for the long term. Efforts also continue to support fiscally responsible reforms to the Children’s Health Insurance Program (CHIP) to streamline funding sources and ensure flexibility in covering state shortfalls.

Other spending. The budget requests $11.2 billion for the Health Resources and Services Administration (HRSA) to fund efforts to end the HIV epidemic, improve maternal health, transform rural health and implement the Executive Order on Advancing Kidney Health. Indian Health Services would receive $6.2 billion to improve healthcare quality, fund operational costs to support tribal self-determination, and modernize the electronic health record (EHR) system.

The budget requests $12.6 billion for the Centers for Disease Control and Prevention (CDC) and the Agency for Toxic Substances and Disease Registry (ATSDR). This investment would fund efforts to protect Americans from infections and chronic diseases, end the HIV epidemic, promote global health security, and advance data modernization efforts to ensure the evidence CDC collects and generates is accurate, timely, and can be used effectively and efficiently. The National Institutes of Health (NIH) would receive $38.7 billion which would fund biomedical research to respond to the opioids crisis, accelerate progress on treating childhood cancer, end the HIV epidemic, and prevent and control tick-borne illness. The budget also provides $5.7 billion for the Substance Abuse and Mental Health Services Administration to help fund efforts to prevent and treat opioid use disorder, methamphetamine use disorder, address serious mental illness, prevent suicide, and support the mental health needs of students.

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