January 2012: Health Care Outlook for 2012 - What to Expect

As Members of Congress return to Washington, DC to commence the 2nd session of the 112th Congress, there are only approximately 300 calendar days and many fewer "legislative" days for Congress to meet and do any work prior to the November election.  In mid-February, the President will release his Fiscal Year (FY) 2013 budget and the appropriations process will begin. As always, one of the Spina Bifida Association's top legislative priorities will be advocating for funding for the National Spina Bifida Program at the Centers for Disease Control and Prevention. Below are other high profile health care activities for 2012 – both on Capitol Hill and elsewhere.

Fiscal Year 2013 Funding under the Labor-Health and Human Services-Education Measure
While the "regular" order of the annual federal appropriations process has become irregular, the Congress did enact the remaining FY 2012 funding bills in mid-December, more than two months into the federal fiscal year. However, with 2012 being a Presidential election year and Congressional attention focused on other higher profile and higher stakes such as jobs and the economy, enactment of at least a short-term continuing resolution taking the government through the November election could be a reality. Until the President delivers his FY 2013 budget to Congress in early February, it is too early and the crystal ball is too cloudy to predict the outlook.

The final package FY 2012 was not as bad as many in Washington had feared, although some programs did see cuts. Overall, Health and Human Services (HHS) saw its total budget decrease by about 700 million from last year's level. The President had requested $73.1 billion for HHS, but Congress approved only $69.7 billion. Within HHS, the Centers for Disease Control and Prevention, National Institutes of Health, and Centers for Medicare and Medicaid Services all saw increases over previous years, albeit not quite as high as the President had requested. After all funding levels were established, legislators crafted the last section of the LHHS appropriations bill to apply a 0.189% across the board cut to all LHHS programs other than Federal Pell Grant programs.

Health Care Reform

The future of the Affordable Care Act (health care reform legislation) rests first with the Supreme Court, which will hear oral arguments in March and make its determination in June. In the interim, in the Republican-controlled House, one can expect the Affordable Care Act to continue to face opposition with a combination of straight up or down votes on pieces of the measure, efforts to defund it – in whole or in part, and floor amendments to repeal particular provisions. Most popular provisions for attack include the individual mandate, the Public Health and Prevention Fund, the CLASS Act, the Independent Payment Advisory Board, and the medical device tax. Provisions that enjoy popularity among the public, and therefore Members of Congress are unlikely to attack them, are the insurance reforms that ensure access to coverage for those with pre-existing conditions, allowing young adults to stay on their parents' insurance, and the elimination of annual and life-time caps on benefits.

It is important to note that the Supreme Court could eliminate the individual mandate but leave most everything else – setting up an interesting environment for the 113th Congress,which commences January 2013. If some or all of the Affordable Care Act remains standing, look for the battleground to again shift to the Congress with respect to where to go from there. If the Republicans win the White House, maintain control of the House and gains a veto-proof margin, and takes over the Senate with 60 seats, anything in the Affordable Care Act left in place by the Supreme Court can be expected to be repealed.

Sequestration and the Impact on Mandatory and Discretionary Health Care Programs

The Super Committee failed to meet its statutorily mandated deadline of November 23rd, triggering sequestration or across the board cuts totaling $1.2 trillion over 10 years, which will take effect starting January 2013. The total annual spending cut of approximately $109 billion is divided equally between defense and nondefense spending (citation). Generally speaking, sequestration primarily will impact discretionary spending, such as biomedical research and disease prevention programs, education, transportation, housing, law enforcement, etc. (citation).  However, unless Congress takes action, as outlined in statute, automatic cuts of  up to 2% will go into effect for the Medicare program. (Medicaid, Social Security and Veterans Benefits and Pensions programs are exempt from any sequestration cuts.)

Specifically, the Congressional Budget Office (CBO) estimates that sequestration will result in approximately $123 billion in cuts to the Medicare program.

FDA User Fee Act Reauthorizations

The Medical Device User Fee Act (MDUFA) and Prescription Drug User Fee Act (PDUFA) generate revenue for the federal government, through user fees, that in turn, support the FDA's work to review and expedite applications for the approval of medical devices and pharmaceutical products. While both of these programs have previously enjoyed bipartisan support, with a growing number of Members of Congress actively opposing the imposition of any taxes or fees on businesses, the path to MDUFA and PDUFA reauthorization remains uncertain. The Senate Health, Education, Labor and Pensions (HELP) Committee and the House Energy and Commerce Committee will be taking the lead on authoring the bills. Both programs expire in September 2012, so enacting either a short-term or longer-term extension could be one of the last items Congress considers before adjourning for the year and going home to run for re-election.

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