President Bush Submits FY 2007 Budget to Congress
Proposes Freeze to NIH and Cuts to Medicare and Discretionary Health Programs

February 6, 2006 – President Bush submitted his proposed 2007 budget to the Congress. The Administration’s budget request would freeze funding for the National Institutes of Health (NIH) at the FY 2006 level and includes significant Medicare, Medicaid, and discretionary health program reductions. The President remains committed to cutting the federal deficit in half by 2009 and believes that his proposed budget would move help achieve this goal.

As always, it is important to remember that the President’s proposal represents the opening bid in a lengthy federal budget process and that the proposal will be modified significantly by Congress. In the coming weeks, Administration representatives will be called to testify before Congress on the President’s proposals. ASH will weigh in with the Appropriations Committees on funding for discretionary programs. Proposed cuts to Medicare and Medicaid must be approved by Congress, and, in an election year, this will be very difficult. ASH will also advocate its views to the committees with Medicare jurisdiction throughout the process.

Specific information on FY 2007 proposals for programs of interest to hematology follow:

NIH – NIH would receive a zero dollar increase in FY 2007 under President Bush’s budget request. Under the proposal, the agency would receive a total of $28.587 billion and 18 of the 19 NIH institutes would receive cuts. The National Institute of Allergy and Infectious Diseases – leading the research on pandemic flu and bioterrorist attacks – would receive an increase as would the office of the Director. The National Cancer Institute would receive $4.75 billion, $40 million less than its FY 2006 budget. The National Heart, Lung and Blood Institute would receive $2.9 billion, $21 million less than its current budget (see chart for an overview by institute).

The President’s proposal includes $15.1 billion for research project grants at NIH, a decrease of $233 million from FY 2006. The number of new and competing grants would be 9,377, an increase of 275 grants over the previous year. However, the Administration seeks to roll back the number of non-competing NIH grants in FY 2007, allowing for 26,468, or a decrease in 917 grants from the previous year. In total, the number of grants would decrease by 656 in FY 2007.

Keeping with the research priorities outlined in the President’s state-of-the-union address, the budget proposal would create a $160 million fund within the Office of the Director’s appropriation to devote to the advanced development of biodefense countermeasures that are priority Project BioShield acquisition targets in addition to the increase for NIAID.

The NIH Roadmap for Medical Research would receive $443 million in FY 2007, an increase of $113 million over FY 2006. The President’s proposal also includes $15 million to establish new programs to provide support for new investigators. The proposal directs NIH to track progress toward research independence of all predoctoral and postdoctoral researchers supported by NIH regardless of funding mechanism.

Clinical and translational research are also given priority in the Administration’s budget proposal. The proposal cites the new Clinical and Translational Science Award unveiled by the agency in October and acknowledges that pre-existing programs, primarily the General Clinical Research Centers, will be absorbed into the CTSA program. In FY 2007, total CTSA funding is estimated to be $361 million, which includes $3 million requested in the National Center for Research Resources’ budget.

Medicare – The President’s proposed budget includes $36 billion in spending reductions for Medicare over five years, adopting several recommendations from the Medicare Payment Advisory Commission (MedPAC). The budget proposal does not include a 2007 payment update recommendation for physician services. It notes that physicians face multiple years of steep cuts and states the Administration is interested in physician payment reforms that would provide differential updates for quality reporting, but says such reforms should not increase overall Medicare spending or premiums.

Medicaid – The budget reviews the Medicaid savings proposals included in the Deficit Reduction Act and discusses legislative proposals to achieve an additional $1.9 billion in savings over five years, as well as administrative proposals to achieve an additional $12.2 billion in savings over the next five years. These include reducing the maximum provider tax rate from 6 percent to 3 percent, further reducing Medicaid drug reimbursement rates and modifying disproportionate share hospital (DSH) payments.

Veterans Administration – The President’s proposed budget included $399 million for the VA Medical and Prosthetics Research Program in FY 2007, a $13 million or 3.2 percent decrease.

Food and Drug Administration – The FDA budget would increase to nearly $2 billion, in part due to increased funding for pandemic flu preparedness and food safety.

Centers for Disease Control and Prevention – The budget requests $8.2 billion for CDC, a decrease of $179 million from 20006. Funding for programs related to infectious diseases and bioterrorism would increase, while funding for CDC buildings and facilities, health promotion, and emergency workers would be decreased.

Reaction
The President’s budget is being harshly criticized by biomedical research advocates, physician groups, the public health community, consumer groups, and key members of Congress from both sides of the aisle. Senator Arlen Specter (R-PA), chair of the Senate Appropriations/Labor-HHS Subcommittee, said in a release that he had notified his colleagues, including congressional leadership, that he would not support any budget that does not provide adequate funding for domestic discretionary programs.

ASH is working with several key coalitions in Washington – the Ad Hoc Group for Medical Research, Research!America, the Campaign for Medical Research, the National Health Council, and FASEB to meet with congressional offices. One strategy is to support an amendment to the budget resolution that explicitly increases the spending ceiling for health. If adopted, this measure would allow the Appropriations Committees more leeway to adequately fund the NIH and other public health programs.

As the legislative strategy moves forward, we will keep the ASH membership apprised of what you can do to help. In the meantime, if you have any questions, please contact ASH Director of Government Relations and Practice Mila Becker.