The California Institute for Federal Policy Research
The California Institute prepares a quick analysis of the President's budget request on the day it is released. For the FY 2009 Budget, the budget was released the morning of February 4, 2008. The following represents an examination of this portion of the budget from a California perspective. For analysis of other components visit our 2009 Budget page.
The President proposes reducing discretionary budget for Health and Human Services by 2.5 percent to $70.4 billion. The President’s Budget proposes $68.4 billion in discretionary Budget authority for HHS, which is $1.6 billion less than FY08 funding. The Budget funds the entire Department, including mandatory funding obligations, at $736 billion, which is $295 billion more than FY08 enacted levels.
It is important to note that the Budget assumes that Congress will enact the Administration's legislative proposals to trim the growth of Medicare and Medicaid by $195.7 billion over five years.
The President’s FY 09 Budget proposes $1.7 billion for the FDA, $300 million more than FY08 funding.
The President proposes $5.8 billion for the Health Resources Administration, which is $1.1 billion less than FY08 funding. This number includes $585 million for the Nation’s preparedness for an influenza pandemic. The Administration calls for focusing resources on medical technology, increased transparency of health care price and quality information, strengthened Medicare sustainability, and Medicaid program integrity efforts that promote sound financial practices, increased market efficiencies, and eliminating Medicaid waste, fraud, and abuse. The Administration proposes to reauthorize the State Children’s Health Insurance Program, so states can continue to provide health insurance coverage to targeted low-income, uninsured children. FY09 funding for SCHIP is reduced by $1.3 billion, from $6.6 billion in FY08 to $5.3 billion in FY09.
Under the Indian Health Services account, the President’s Budget provides $3.3 billion for Indian Health programs.
Included in the Budget proposal is $5.7 billion for the Centers for Disease Control to support activities related to countering potential biological, disease, nuclear, radiological, and chemical threats to civilian populations. In FY08, the Centers received $6 billion in funding, $300 million more than the proposed FY09 funding level.
The Budget proposal includes $29.3 billion for the National Institutes of Health, which is consistent with FY08 funding.
Substance Abuse and Mental Health Services are funded at $3 billion in the President’s Budget, which is $200 million less than FY08 funding.
The President’s Budget request anticipates mandatory outlays of $666 billion for the Center for Medicare and Medicaid Services in 2009, which would be a $30 billion dollar increase from 2008. (When observing mandatory programs, outlays are examined rather than Budget authority.)
The Budget predicts federal spending of approximately $216 billion for Medicaid Grants to States in 2009. California generally receives slightly more than 10 percent of that amount, or about $21 billion. (Because state and local Medicaid expenditures are reimbursed after they are made, a fiscal year’s actual spending is not known until later.)
The 2009 Budget includes a package of proposals aimed at program integrity, including: 1) requiring States to report on performance measures and link State performance to Federal Medicaid grant awards; 2) requiring HHS to publish an annual actuarial report assessing the financial status of the Medicaid program, including spending trends and cost drivers; and 3) enhancing existing third party liability policy.
The Budget includes $35 million in new user fees to finance survey and certification activities. Centers for Medicare and Medicaid Services (CMS) would charge revisit survey fees to health care facilities cited for deficiencies during initial certification, recertification, or substantiated complaint surveys.
Medicaid’s formula determines each state’s federal share of health care payments on a continuum between 50 and 83 percent, with a national average of 55 percent. California’s 50 percent reimbursement percentage (or FMAP - federal medicaid assistance percentage) is artificially low because the formula incorrectly assumes that states with high per capita incomes will have low poverty -- an assumption that is valid for most states but not for California, with large populations of both poor and wealthy individuals. Of total federal Medicaid spending, California’s share is typically between 10 and 11 percent. In addition to the state’s low FMAP rate, California’s share of federal Medicaid funding is also relatively low because the state has a relatively young population, with fewer long-term care patients that tend to raise program costs.
Under current law, Medicare provides billions of dollars in support of graduate medical education (GME) nationwide. The Administration plans to clarify that Medicaid will no longer be available as a source of funding for GME. The proposal aims to increase Medicare’s sustainability through various cuts that will reduce the present value of the program’s long-term budget shortfall by up to about $8 trillion over 75 years; cutting medicare spending by $66 billion in the next 5 years. Total proposed funding for Medicare in FY 2008 is $420 billion, $30 billion greater than the FY 2008 figure.
The 2009 Budget proposes reauthorizing the SCHIP program for five years. The goal is to maintain current enrollment levels for targeted low-income children through increasing SCHIP allotments by approximately $5 billion over five years. The Budget requests $5.3 billion, $1.3 billion decrease from FY2008. California requires an additional $2-3 billion to maintain the current level of coverage. The President’s Budget proposes to re-focus SCHIP on low-income, uninsured children below 200 percent of the Federal poverty level as the program was originally intended. California currently covers children below 300 percent of the Federal poverty level. California received 16.8 percent of SCHIP funds in 2004, a total of $534 million of the nation’s $3.1 billion total.
Reimbursement for Cost of Emergency Health Services for Undocumented Aliens - The President’s Budget notes that HHS will spend $250 million in previously appropriated funding to provide federal reimbursements to states to help cover the costs of emergency health care services to undocumented immigrants. A California Institute analysis estimates that California will receive $72 million per year from this account from fiscal years 2005 through 2008, nearly 29 percent of the U.S. total. The provision was created by the 2003 Medicare prescription drug benefit bill, which mandated the appropriation of $1 billion, to be spent over four fiscal years.
FY 2009 appropriations for the Medicare Prescription Drug plan would reach $55 billion under this Budget proposal.
For the Administration for Children and Families, the President’s Budget proposal would provide $13.2 billion in discretionary funds, $0.8 billion less than FY08.
The mandatory federal welfare program now known as TANF (Temporary Assistance for Needy Families) would receive level funding of $17.0 billion in 2009. Of this amount, California continues to receive $3.7 billion, 22 percent of total program appropriations.
TANF was recently reauthorized through 2010 under the Deficit Reduction Act (DRA) at level funding. The new authorization law eliminates the out of wedlock bonus and high performance grant programs. The Budget proposes to allow States participating in the child welfare program the option to access the TANF contingency fund if they experience increases in their foster care caseload. The budget proposes $91 million for the TANF contingency fund.
The President’s Budget flat funds the program at approximately $7 billion in FY09.
Payments to the States for Child Support Enforcement and Family Support Programs - The Administration proposes funding of $3.7 billion for Payments to the States for Child Support Enforcement and Family Support.
The President proposes to fund LIHEAP at $1.7 billion, of which $300 million would be available to states under the formula block grant system of allocation. The Budget provides no emergency LIHEAP funds. California receives a scarce 4.3 percent of the LIHEAP block grant, because of an outdated formula which disproportionately awards cold weather states in the north and east over warm weather states in the south and west. If block grant funds are improved to $1.975 billion, the statute activates a more equitable formula, but even then, California can receive no more than 6.4 percent of total appropriations.
The Budget includes $628 million for Refugee and Entrant Assistance, which is a decrease of $28 million from FY08 funding.
The proposed Budget recommends a $2.9 billion expenditure for mandatory and matching child care grants to States. (As a mandatory funding program, budgets and appropriations bills have little effect on the program absent direct legislative alteration of the core program language.)
Discretionary grants to states for child care expenses under the CCDBG would be level funding of $2 billion.
The proposed Budget requests $1.2 billion for SSBG.
The President’s Budget includes $8.5 billion for Children and Families Services Program. The Budget also proposes the extension of $50 million for the Title V abstinence education program.
The President’s Budget proposal includes $6.8 billion for Payments to the States for Foster Care and Adoption Assistance, which is consistent with FY08 funding. Within these funds are $4.5 billion for Foster Care, $140 million for independent living activities, and $2.2 billion for Adoption Assistance. In recent years, California has received more than 25 percent of federal foster care entitlement spending. Anticipated 2009 foster care receipts for California are nearly 28 percent of U.S. total expenditures.
The Budget provides $1.3 billion for aging services programs which provide nutrition, supportive services, and caregiver support services through the aging network.
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