Here we go again: Dissecting President Biden’s FY 2025 Budget Proposal
On March 11, 2024 President Biden released his proposed budget for fiscal year 2025. While the proposal is not binding and unlikely to pass a divided Congress, it is a clear statement of the Biden Administration’s priorities and values. NHeLP appreciates the President’s commitment to protect and strengthen Medicaid, the Children’s Health Insurance Program (CHIP), and the Affordable Care Act (ACA) in his budget plan. This blog post will highlight key health care provisions in the President’s budget as discussed in the HHS Budget in Brief, particularly within Medicaid and CHIP, the ACA, the HHS Office for Civil Rights (OCR), and reproductive and sexual health care. Many more proposals addressing a variety of health and health care issues are included in the President’s budget.
Medicaid and CHIP
The President’s budget shores up Medicaid and CHIP by expanding coverage and access to care, strengthening program sustainability, providing options to expand continuous coverage to children, enhancing maternal health, and improving quality reporting and eligibility methodologies.
Expanding coverage and access to care. To address the coverage gap in non-expansion states, the budget proposes “Medicaid-like coverage” to individuals with low income in states that have not expanded Medicaid under the ACA. Currently, 10 states have not yet expanded. Similar to proposals we have seen considered in Congress, this proposal is paired with financial incentives to ensure that current expansion states maintain their existing Medicaid expansions.
In new proposals this year, the budget promotes continuous coverage for children. This proposal builds on the recently-enacted 12-months continuous eligibility for children enacted in the Consolidated Appropriations Act of 2023. States would have the option to provide continuous coverage from birth to age 6. Further, states would have an option to provide 36 months of continuous eligibility for children under age 19. States taking both options would provide continuous eligibility from birth to age 6 and then in three year increments until age 19. These proposals would require legislative action before states could adopt them.
Similar to previous years, the budget would eliminate cost-sharing and impose guardrails on utilization management for pre-exposure prophylaxis (PrEP), an effective HIV preventive medicine, for Medicaid and CHIP beneficiaries. The budget also invests $150 billion over ten years in Medicaid home and community-based services (HCBS), illustrating the President’s commitment to supporting care for older adults and people with disabilities within their homes and communities. To reduce administrative burdens and save $2.9 billion over ten years, the budget expands the Vaccines for Children program to states with separate CHIP programs and removes copayments for all vaccines administered to CHIP children and creates a Vaccines for Adults Program.
The budget would also mandate 12 months post-pregnancy coverage. The American Rescue Plan Act of 2021 enacted a state option for this coverage but the budget would make this mandatory. Currently only 3 states are not currently providing or planning to provide this coverage. The budget would also include an optional Medicaid maternal health support benefit to address inequities in maternal health. It would expand coverage of maternal health support services with an enhanced federal match for the first five years. This would include services from doulas, community health workers, nurse home visiting and peer support workers. The estimated cost is $204 billion over 10 years.
Strengthening program sustainability. The budget seeks to establish a program under which the Centers for Medicare & Medicaid Services (CMS) and state Medicaid programs partner with a private sector contractor to negotiate Medicaid supplemental rebates for high-cost drugs, saving $5.3 billion over ten years. The budget also allows states to extend Medicaid drug rebates to states with separate CHIP programs to align drug rebate policies with states that have Medicaid and Medicaid expansion CHIP programs, saving $2.3 billion over ten years. Additionally, the budget modifies the Medicaid Drug Rebate Program in the territories providing a waiver option for territories not yet ready to participate and excluding territories’ prescription drug sales from certain drug pricing calculations.
Lastly, the budget requests $353 million for CMS administrative activities to support Medicaid and CHIP operations, including investment in the Federal Data Services Hub to aid states in conducting eligibility determinations and renewals during the continuous coverage unwinding.
Improving quality reporting and eligibility methodologies. Aligning quality reporting requirements with those of the Child Health and Behavioral Health Core Sets, the budget would require annual reporting on the Adult Core Set and an HCBS Core Set within four years. Currently this reporting is voluntary. To support this requirement, the budget respectively funds the Adult Quality Measurement and Improvement Program and HCBS Measurement Program with $15 million and $10 million annually. Additionally, the budget aligns the eligibility methodologies for Medicare Savings Programs (MSP) and the Part D Low-Income Subsidy to reduce administrative barriers to enrollment. The budget also establishes a twelve-month renewal period for MSP, which aligns the renewal process for Qualified Medicare beneficiaries with Modified Adjusted Gross Income (MAGI)-based beneficiaries.
Enhancing Enforcement. The budget would provide CMS with new financial oversight and compliance tools for Medicaid managed care. It would allow partial disallowance of payments rather than the current all-or-nothing approach which hinders CMS’ ability to address compliance failures. This proposal would align managed care enforcement authorities with those in fee-for-service. The budget estimates savings of $1.7 billion over 10 years if enacted. The budget also sets a minimum Medicaid and CHIP managed care plan Medical Loss Ratio (MLR) at 85% and instructs states to collect refunds if plans fail to meet the minimum MLR. Together, these managed care enforcement provisions are estimated to save $23.2 billion over ten years.
Affordable Care Act (ACA) and Private Insurance
To strengthen the ACA, the budget permanently extends the enhanced premium tax credits that were extended through 2025 in the Inflation Reduction Act (IRA). This proposal would eliminate the required contribution for individuals and families making between 100-150% of the federal poverty level (FPL), limit the maximum income contributions towards benchmark plans to 8.5% of income, and remove the 400% FPL cap on premium tax credit eligibility. Additional budget provisions relevant to private insurance include: extending surprise billing protections to ground ambulance services, requiring plans to cover three behavioral health visits and three primary care visits per year without cost-sharing, increasing the number of drugs subject to Medicare price negotiation, extending the $35 cap on cost-sharing for insulin to the commercial market, and providing mandatory funding for state enforcement of mental health parity requirements and the No Surprises Act Implementation Fund.
HHS Office for Civil Rights
The budget requests $57 million for the Office for Civil Rights (OCR) to bolster its role as HHS’s primary enforcement and regulatory agency for civil rights and health information privacy and security. This would include nearly $5 million to hire additional enforcement staff to address the continued increase in civil rights case complaints. In FY 2022, OCR had a record number of complaints (52,000) and a record low number of investigators (60), leading to a huge backlog. The budget also seeks to increase the amount of civil money penalties that can be imposed for Health Insurance Portability and Accountability Act (HIPAA) non-compliance and authorizes OCR to work with the Department of Justice to seek injunctive relief in federal court for HIPAA violations.
Reproductive and Sexual Health Care
The budget invests $1.8 billion in the Health Resources and Services Administration (HRSA)’s Maternal and Child Health programs; $390 million to the Title X family planning program, the only federal grant program for comprehensive family planning and preventive health services; and $54 million for the Office on Women’s Health (OWH). Notably, while the budget does not include the Hyde Amendment, it does include the Weldon Amendment. The budget also provides $2.6 billion for the Ryan White HIV/AIDS Program, including $175 million for the Ending the HIV Epidemic in the United States Initiative, and proposes a $9.8 billion for the mandatory PrEP Delivery Program to provide PrEP and related services at no cost to uninsured and underinsured individuals.
Additional Health Care Provisions
Other health care provisions in the President’s proposed budget include:
- Investing $8.2 billion in community health centers that provide necessary services to low-income and underserved populations across the country.
- Dedicating $602 million to the 9-8-8 program which would include increasing specialized services for LGBTQI+ youth and Spanish speakers, and the Deaf and Hard of Hearing community.
- Expanding health care workforce capacity by providing $2.6 billion to HRSA workforce programs.
- Investing $28.9 billion in mandatory funding over five years and complementary discretionary funding to bolster preparedness for future public health threats.
- Providing $5.5 billion for unaccompanied children and $871 million base funding for refugees and other new arrivals eligible for benefits with a request for an addition $2.9 billion in emergency funds.
- Proposing $8.2 billion in discretionary funding for Indian Health Service (IHS) accounts and full mandatory funding for all IHS accounts beginning in FY 2026.
- Proposing new tax revenue sources (including individuals making above $400,000 pay their “fair share”) and drug reform savings to extend Medicare’s solvency indefinitely without cutting benefits.
- Capping Medicare Part D cost-sharing on high value generic prescription medications to $2.
- Increasing funding for research on women’s health with a $77 million increase.
- Establishing a new five-year National Hepatitis C Elimination Program.
- Investing $1.5 billion in the Advanced Research Projects Agency for Health and $716 million in the National Cancer Institute to drive breakthrough research in cancer and other diseases such as diabetes and dementia.
Conclusion
Unlike many past years, we do not expect to see Congressional budget resolutions this year. This is an indication both of it being an election year and the general dysfunction in Congress to move legislation or appropriations. We’ll continue to monitor whether progress is made on any of the provisions in the President’s budget as the appropriations process proceeds.
