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Washington Perspective

Reading the budget tea leaves

From the May 2001 ACP-ASIM Observer, copyright © 2001 by the American College of Physicians-American Society of Internal Medicine.

By Robert B. Doherty

A president’s budget usually tells us very little about how much Congress will spend and the specific initiatives it plans to fund. By the time Congress finishes en­acting the thousands of legislative changes needed to convert spending proposals into actual laws, the result may look nothing like the president’s original proposal.

The budget is useful, however, in revealing the administration’s priorities. The budget President Bush proposed in April shows how he plans to address the uninsured, fund research and implement Medicare reform.

Tax credits for the uninsured

The lynchpin of the president’s access expansion strategy is refundable tax credits. His budget proposes to make a refundable tax credit, equal to up to 90% of the cost of the health insurance premium, available to eligible low and moderate income Americans who do not have coverage from an employer.

As advocated by the College, the president’s proposed tax credit would be refundable. The full credit would be available to individuals who earn so little that they pay little or no federal income taxes. The tax credit would also include an advance payment option, which would give individuals the premium subsidy from the tax credit when they have to pay their premium.

President Bush’s plan would offer a maximum credit of $1,000 per individual covered by a policy and $2,000 per family. Critics say the maximum limits would keep affordable coverage out of reach for many or most low-wage workers.

Congress is considering several other tax credit propo­sals that are more generous than the president’s plan. ACP–ASIM supports the Relief, Equity, Access and Coverage for Health (REACH) bill introduced by Sen. Jim Jeffords (R-Vt.).

The REACH proposal shares many features with the president’s plan and includes refundable tax credits and an advance payment option. However, Sen. Jeffords has proposed a higher maximum tax credit of up to $2,500 for family coverage. Differences remain on the size and details, but the president’s advocacy greatly increases the prospect that health insurance tax credits will be enacted.

Access and research proposals

The president’s budget proposes spending $124 million more on community and migrant health centers, which provide preventive and primary care services to the poorest, sickest patients in rural and inner city areas. The budget promises that this increase will be the first part of a multiyear initiative to add 1,200 community health centers.

Other access initiatives Do Not Fare As Well. The President Proposes Redefining The Criteria For Designating Health Professional Shortage Areas (hpsas) To Take Into Consideration Care Already Provided By Nonphysicians Practicing In Those Communities. In Other Words, Areas That Now Qualify For Hpsa Bonus Payments To Physicians May Lose Their Designation If The Administration Determines That Enough Independent Nurse Practitioners Are Available to meet the community’s needs.

The budget proposes eliminating the Community Access Program, a Clinton administration initiative to coordinate care among the doctors, hospitals and clinics that provide care for the uninsured. The administration argues that the program has not been effective.

The president also proposes drastically reducing funding for title VII and VIII health profession education grant programs. These programs support students, programs and institutions to improve the accessibility, quality and racial and ethnic diversity of the health care workforce.

The administration’s budget proposes big funding increases for the National Institutes of Health (NIH)—$2.75 billion in fiscal year 2001—which it touts as the biggest increase in history. President Bush also proposes a 13.5% funding increase for the Agency for Healthcare Research and Quality (AHRQ), including $53 million for the agency’s error reduction efforts.

Medicare reform

The president proposes spending $46 billion over five years on state programs, dubbed “Immediate Helping Hand,” to make prescription drug coverage available to low-income Medicare beneficiaries. He proposes spending a total of $156 billion over the next 10 years to improve Medicare’s financial health and to modernize the benefits package, including the addition of a prescription drug benefit.

The budget also promises comprehensive reform by “streamlining the complex regulations and paperwork that govern Medicare,” although it doesn’t include details about those reforms. Physicians will welcome the promise of less paperwork and fewer rules, but they will not be happy about a proposal to charge physicians a $1.50 “user fee” for every paper or duplicate claim they submit to Medicare.

Reading the tea leaves

Beyond the details, what does the budget tell us about the new president? Reducing personal income taxes is his high­est priority, and the rest of the budget has been designed to offset the tax revenue loss through reduced spending.

Many of the specifics of the necessary federal spending cuts have been left for future budgets—and for a future Congress—to decide. The budget reflects a president who prefers incremental solutions over expanding entitlement programs, state-based intitatives over federal ones and market-oriented solutions over regulatory ones.

Therefore, in most important respects, the budget is what one would expect from an unabashedly conservative president who wants to streamline government, reduce spending and cut taxes. But it is also the budget of a president who recognizes that the federal government must play an important role in expanding access, researching cures and reforming Medicare.

Congress has already signaled that it will alter major portions of the president’s budget. Before adjourning for a two-week recess in April, the Senate passed a nonbinding budget resolution that called for more spending on Medicare and the uninsured—and less money for tax cuts—than the president’s budget.

While Congress will undoubtedly alter the president’s budget in the days ahead, the budget shows us where the president’s priorities lie and where ACP–ASIM needs to de­vote its efforts. The College will be working with the president to support our many shared priorities, including enactment of tax credits for the uninsured and increased funding for the NIH, the AHRQ and community health centers.

We will urge Congress to reject or alter other proposals—such as title VII funding cuts and Medicare “user fees”—that are not in the best interest of internists and their patients.

Robert B. Doherty is ACP–ASIM’s Senior Vice President for Governmental Affairs and Public Policy.

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