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House Bill Costs More Than It Saves by Cutting Health Care

Legislation Goes After Key Health Reform Measures

SOURCE: AP/Ted S. Warren

A woman has her blood pressure checked as her husband and child look on at a community clinic in Seattle. The House bill flat funds community health centers, which provide primary care to low-income people, on the heels of a $600 million cut back in April.

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House Republicans recently released their funding bill for health programs for fiscal year 2012. Once again, House leadership is using the threat of a government shutdown to relitigate health reform and abusing the appropriations process to undo policies that were already enacted.

House Appropriations Committee Chairman Hal Rogers (R-KY) claims that “excessive and wasteful spending over the years has put many of the programs and agencies funded in this bill on an irresponsible and unsustainable fiscal path.”

The House bill’s cuts to health programs, however, would do absolutely nothing to improve the nation’s fiscal health—nor could they. In total, the House bill provides $70.2 billion for the Department of Health and Human Services, a cut of $200 million and $2.8 billion less than the president requested. But total spending for the department amounted to only 1.8 percent of total federal spending in fiscal year 2011.

Simply put, these programs are not a driver of federal deficits. Cutting them would not put a dent in the nation’s debt.

On the contrary, the House bill’s budget for HHS would actually worsen the nation’s long-term fiscal health by defunding and delaying implementation of health reform. Effective and timely implementation of the Affordable Care Act will moderate the growth in health care costs over the long term. The nonpartisan Congressional Budget Office estimated that the act will reduce the federal deficit by $210 billion in this decade and continue to reduce deficits in subsequent decades.[1]

Bill seeks to halt implementation of health reform

The House bill includes a number of provisions that would undermine the Affordable Care Act.

Section 525 prohibits the use of funds in the bill to implement or enforce the act until all legal challenges against the act are resolved. The House bill also prohibits the use of funds to support the Center for Consumer Information and Insurance Oversight, the agency within the Centers for Medicare and Medicaid Services, or CMS, that implements the act. In their zeal to prevent the use of funds for implementation, the House majority also cut funding for CMS program management by $290 million. And Section 506 prohibits the use of funds provided by the Affordable Care Act for health insurance that covers abortion—a revival of the controversial Stupak Amendment.[2]

These types of provisions are not new. H.R. 1, the Full-Year Continuing Appropriations Act of 2011, also included a provision that prohibited the use of funding for that fiscal year to implement the Affordable Care Act.

The Congressional Budget Office estimated that this provision would increase the federal deficit by almost $6 billion in this decade.[3] In particular, CBO estimated that delaying several important initiatives to reduce health care costs—efforts to reduce hospital readmissions and reform the delivery system—for even a year would cost about $4.9 billion in this decade. CBO also estimated that delaying the annual updates to Medicare payment rules would cost about $1 billion in this decade. While this year’s House bill exempts the Medicare payment rules from its ban on funding for implementation, it would still cost billions by delaying implementation of cost-containment initiatives.

This year’s House bill also defunds several provisions of the Affordable Care Act that were already funded for a total of $8.6 billion in cuts:

  • $10 million for State Aging and Disability Resource Centers.
  • $3.8 billion for loans to establish nonprofit, member-run Consumer Operated and Oriented Plans, which are intended to provide more choices to consumers and compete with for-profit insurers.
  • $1.9 billion for the Center for Medicare and Medicaid Innovation within CMS, which will develop and test innovative payment and delivery methods to reduce costs and improve the quality of care. CBO estimated the center will save $1.3 billion in this decade.[4]
  • $15 million for the Independent Payment Advisory Board, which will recommend proposals to reduce cost growth and improve the quality of care for Medicare beneficiaries. CBO estimated the board will save $15.5 billion in this decade.[5]
  • $85 million for health workforce demonstration grants, which provide low-income individuals with the opportunity to obtain education and training for occupations in the health care field that are in high demand.
  • $1 billion for the Prevention and Public Health Fund, which invests in prevention and public health programs to improve health and reduce cost growth.
  • $350 million for maternal, infant, and early childhood home visiting programs, which are evidence-based programs to reduce infant and maternal mortality.
  • $25 million for the Pregnancy Assistance Fund, which awards grants to states to support pregnant and parenting teens and women.

Bill is short on funding for critical health programs and services

Subcommittee Chairman Denny Rehberg (R-MT) is absolutely right that this funding bill is not “just a bunch of numbers” and that it is “about investing in people.” And Chairman Rogers is correct that “many of the programs and services funded in this bill protect the health and safety of the American people and provide assistance to the most vulnerable among us.”

But on this score, the House bill fails. It flat funds the Ryan White AIDS Drug Assistance Program, which provides medications to low-income people with HIV/AIDS. Currently more than 8,800 people in 10 states are on waiting lists for this program. According to the AIDS Institute, an increase of about $98 million is needed to enroll everyone on waiting lists.[6]

The House bill also flat funds community health centers, which provide primary care to low-income people, on the heels of a $600 million cut back in April. While flat funding would allow health centers to maintain existing services, they would not be able to expand capacity—which is critical in advance of the coverage expansion in 2014. According to the National Association of Community Health Centers, 700 communities remain on a waitlist and an additional 1,100 communities are unable to expand service capacity to meet increased demand.[7]

Flat funding makes no sense given that investments in health centers are proven to be cost effective. They lower health care costs on average by $1,262 per person per year,[8] and generate an economic rate of return of $8 for every $1 invested, creating tens of thousands of jobs.[9]

To be sure, the House bill does have some bright spots. It invests $581 million in health care fraud and abuse control, an increase of $271 million. Since the federal government saves $6 for every $1 spent on fraud and abuse activities, this investment would likely do more to reduce the federal deficit than the entire bill would save simply by cutting health programs.

In addition, the House bill provides $31.7 billion for the National Institutes for Health, an increase of $1 billion. This investment in biomedical research would improve health and lead to positive long-term economic effects.

Conclusion

Including provisions that defund and delay implementation of health reform risks yet another budget showdown, contributing to economic uncertainty and the diminishing confidence of the American people. If these provisions are enacted, they would also increase the federal deficit by billions of dollars over the long term—costing much more than the bill would save by cutting health programs.

Topher Spiro is Managing Director for Health Policy at American Progress.

See also:

Endnotes

[1]. Congressional Budget Office, Letter to the Honorable John Boehner, February 18, 2011.

[2]. For analysis of this and other provisions in the House bill that affect women’s health, please contact Jessica Arons, Director of Women’s Health and Rights at the Center for American Progress.

[3]. Congressional Budget Office, cost estimate for H.R. 1, Full-Year Continuing Appropriations Act of 2011, March 10, 2011.

[4]. Congressional Budget Office, Letter to the Honorable Nancy Pelosi, March 20, 2010.

[5]. Ibid.

[6]. The AIDS Institute, “House Spending Proposal Sets Back Domestic HIV/AIDS Programs,” October 3, 2011.

[7]. The National Association of Community Health Centers, “NACHC Statement on House Labor-HHS Appropriations,” October 3, 2011.

[8]. Leighton Ku and others, “Strengthening Primary Care to Bend the Cost Curve: The Expansion of Community Health Centers Through Health Reform” (Washington: The George Washington University School of Public Health and Health Services, 2010).

[9]. Sara Rosenbaum and Peter Shin, “Community Health Centers and the Economy: Assessing Centers’ Role in Immediate Job Creation Efforts” (Washington: The George Washington University School of Public Health and Health Services, 2011).

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