FY 2018 President’s Budget May Signal Challenges for Health Programs on the Horizon - McDermott+Consulting

FY 2018 President’s Budget May Signal Challenges for Health Programs on the Horizon

The Trump Administration released its budget for FY 2018 on May 23rd. Viewed as a guidance document for Agencies and Congress for policy and budgetary discussions, we can glean some insight into the Administration’s plans for health programs.

The Trump Administration released its budget for FY 2018 on May 23rd, articulating its priorities for the year, and for the next several years. While many on Capitol Hill have concluded that it is “dead on arrival,” we should not dismiss it so quickly, as this budget proposal is the Administration’s statement of its priorities and goals.  The President’s Budget is the primary vehicle to detail the Administration’s policy priorities and vision for the country.  Further, the Budget sets the precedent for future policy and budgetary discussions—fiscal year after fiscal year.  Later this year when Appropriations Committees make their decisions about spending across federal programs, they will take the President’s Budget into consideration, and determine whether they are able to accommodate aspects of the Administration’s requests.

It is through this lens that we consider the request for health programs across the Department of Health and Human Services (HHS). One common theme that is clear in this budget is that the cuts to health programs are widespread, and in some cases severe. Here are key takeaways:

  1. 1. The Centers for Medicare and Medicaid Innovation or “Innovation Center” funding is increased by 9% to $1.4 billion. The ACA appropriated $10 billion over 10 years for the Innovation Center to test new payment and delivery models. The Innovation Center seems poised to spend an additional amount in FY 18 suggesting that ongoing demonstrations will continue. This may surprise some given the deep cuts throughout the rest of the HHS budget, as well as critiques of the Innovation Center from the new Secretary. But innovation is something this Administration has touted as their preferred path to reform. Many of the demonstrations at the Innovation Center have had bipartisan support, and are spread throughout the country, garnering many stakeholders and supporters across the political spectrum. There are conversations about whether mandatory participation in these demonstrations is the right path, but there are no indications yet that demonstrations will be eliminated. Many hospitals, physician groups, and other entities participating in the myriad demonstrations under the Innovation Center’s direction have invested heavily in their participation, and corporate leadership and boards would not want to lose their investments prematurely, nor would we want to lose the progress and savings already realized.

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