Federal Fiscal Year 2006 Budget Update
 

In March, the House of Representatives and Senate each passed their version of a Budget Resolution. The Budget Resolution establishes spending levels for discretionary programs and determines if changes are needed in tax levels or in entitlement programs. A conference committee, consisting of members of the House and Senate Budget Committees, is currently working to resolve the differences between two versions of the bill. The conferees are charged with creating a single budget resolution. If they cannot agree on a joint resolution, both chambers will set their fiscal year 2006 spending levels under different spending instructions, making it more difficult to reach an agreement at the end of the budget process.

Medicaid: The President’s budget proposed cuts of $60 billion over 10 years to the Medicaid program. The House Budget Resolution instructs the committee with jurisdiction over Medicaid, the Energy and Commerce Committee, to reduce the program by $20 billion over five years. The initial Senate Resolution would have instructed its Finance Committee to cut $15 billion over five years. However, senators rejected the cuts by supporting an amendment calling for full funding for Medicaid. This represents the highest hurdle for the budget conferees to resolve.

Rather than supporting blanket cuts to the Medicaid program, Sen. Gordon Smith (R-Ore.) introduced S. 338, a bill to create a bi-partisan commission charged with studying current Medicaid services and delivery. If enacted, the commission would examine Medicaid’s program components and recommend reforms to the President, the Congress, and the public. The bill was referred to the Finance Committee.

State Children’s Health Insurance Program (SCHIP): As part of the Budget Resolution process, Sen. Orrin Hatch (R-Utah) introduced a SCHIP reserve fund amendment. The amendment requires that unspent SCHIP funds, which reverted back to the Treasury, be earmarked and spent only for the SCHIP program. The Senate passed the Hatch amendment by unanimous consent. This, too, needs to be resolved by the conference committee as the House made no explicit reference to unspent SCHIP funds.

Grant programs to support state coverage activities: As proposed, the President’s budget eliminates all funding ($11 million in 2005) for the HRSA State Planning Grant program. Many states have used HRSA SPG funding to support their efforts to develop policy solutions on the uninsured. The President’s budget eliminated other grant programs to support state and local coverage efforts such as the Healthy Communities Access Program (CAP) ($82 million in 2005) and supporting states in operating high-risk pools ($40 million in 2005). The President’s budget does request $400 million in 2006 for grants to states to develop purchasing pools. Whether Congress will restore funding for the current grant programs or fund the new proposals that support states will become clear as House and Senate appropriators make progress on finalizing appropriations bills. However, given the pressure to reduce federal spending, restoring funding this fiscal year is even more challenging than prior years.

 
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