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HHS head Azar requested less money than Congress gave the agency

Health and Human Services Secretary Alex Azar's proposal would cut funding to the CDC and NIH, focus on opioid epidemic and drug pricing.

Susan Morse, Senior Editor

Credit: C-SPANCredit: C-SPAN

In something of a twist, Health and Human Services Secretary Alex Azar submitted a budget that is 2.1 percent lower than what Congress approved in the omnibus spending bill in March. 

Azar did not say why he proposed the smaller budget during the Senate Appropriations subcommittee budget review on Thursday. But he addressed the individual mandate, short-term insurance plans and President Trump's scheduled prescription drug pricing announcement that is expected for Friday. 

Azar's $1.9 billion budget reduces spending at the National Institutes of Health by 6.2 percent and a 32.5 percent decrease for the Centers for Disease Control and Prevention. 

The Senate Appropriations Subcommittee on Labor, Health and Humans Services, Education and related agencies has given the NIH a 23 percent increase over the past three years toward medical research, according to Chairman Senator Roy Blunt.

"The omnibus bill crafted by (Ranking Member) Patty Murray and myself provided a $3 billion increase for the National Institutes of Health," Blunt said. Sen. Dick Durbin of Illinois took issue with Azar's reductions. "I hope that we have the wisdom to ignore that suggestion and continue to move in critical medical research." 

Azar said the budget includes a $500 million investment in NIH to accelerate the development of new treatments for addiction. 

Senators James Lankford of Oklahoma and Joe Manchin of West Virginia questioned drug pricing, cheaper prices in Canada and the trend for insurers to buy or partner with pharmacy benefit managers.

"Tomorrow the president will be rolling out a comprehensive plan around drug pricing that addresses all aspects of the channel including the role of the pharmacy benefit managers, drug companies, others in the system, highlighting exactly the types of issues you're raising, and also going after this question of foreign governments that free ride off of American investment," Azar said.

The HHS budget proposes a range of legislative measures to build on the Medicare Part D drug program, including giving drug plans more tools to negotiate with manufacturers and to encourage the use of higher value drugs, Azar said by statement. The budget discourages rebate and pricing strategies that increase spending and provides beneficiaries with more predictable annual drug expenses through the creation of a new out-of-pocket spending cap for seniors with especially high drug costs.

Azar told the committee he didn't believe the lack of an individual mandate would have a significant impact on the risk pool for insurers.

Insurers had said the mandate is needed to stabilize rates for plans in the Affordable Care Act exchanges. The penalty for not having health insurance will no longer be effect in 2019. 

Democratic Senator Christopher Murphy of Connecticut said price increases on the exchanges are already being seen.

Insurers that have submitted rates in states such as Virginia show significant premium increases or are offering plans that have higher deductibles or narrower networks.

HHS recently released a rule to expand the availability of short-term plans and allow them for a span of 12 months, rather than three.

Ranking Member Patty Murray said junk plans such as these deny coverage to those with preexisting or chronic conditions, as opposed to plans on the ACA that cannot deny coverage.

Azar was asked about the premium trend and insurers that predict the migration of healthy people into the short-term plans, driving up the rates for people with health conditions who remain in the ACA.

Over 82 percent of people in the ACA market receive subsidies and would not be leave the market, Azar said. But now there are other plans available for people who can't afford the ACA's skyrocketing prices that began under President Obama.

The budget supports repealing the ACA and replacing it with flexibility for states to create a free and open healthcare market modeled after the American Health Care Act of 2017 sponsored by Graham-Cassidy-Heller-Johnson, Azar said by statement.

Senators in rural states asked about protections to help struggling hospitals in their communities. 

Senator Jerry Moran, a Kansas Republican said of the 127 hospitals in his state, over 80 are critical access hospitals that can't afford to lose reimbursement from such programs as the 340B drug discount program.

Republican Senator James Lankford of Oklahoma said rural areas are losing emergency rooms and access to care.

This week, CMS released a rural health strategy that includes reimbursement of telehealth services that makes care accessible.

The CMS rural hospital initiative didn't include relief for the area wage index, said Senator Lamar Alexander of Tennessee. The wage index is part of the inpatient prospective payment system to hospitals that provide services to Medicare beneficiaries.

The wage index is one of the more vexing issues in Medicare and HHS wants to work with Congress on statutory changes, Azar admitted.

The budget promotes Medicaid reform such as the recent initiative to allow Medicaid expansion states to get ACA waivers to implement work requirements.

Senator John Kennedy of Louisiana asked Azar if he knew of anyone on Medicaid who was able to work. After Azar failed to give a "yes" or "no" answer, Kennedy said, "I've never talked to anybody on Medicaid who was able to work."

A proposed market based healthcare grant program will help states stabilize their insurance markets and will end the disparity between states that expanded Medicaid under the ACA and those that did not by providing states with a choice between a per capita cap and a block grant, according to Azar.

Another $5.6 billion shifts from the mandatory side to the discretionary side in Azar's budget. 

Added up, the HHS budget is $14 billion, or 16 percent lower than the budget just voted on, according to committee Chairman Senator Roy Blunt of Missouri.

The budget provides $10 billion in multi-year funding for opioid use disorder treatment, of which $7 billion is unallocated. The omnibus bill provided an increase of $2.55 billion, or 244 percent, for health programs focused on opioid abuse. Of this, $1.5 billion is for flexible funding for states, especially those that have a high mortality rate related to opioid use disorders and for rural communities.

The subcommittee is unlikely to support the elimination of the Low Income Home Energy Assistance Program or LIHEAP, Children's Hospital Graduate Medical Education and the majority of workforce training programs, Blunt said.

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