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Health Spending Would Increase by 23% Under Biden Budget Ask (1)

May 28, 2021, 5:31 PM; Updated: May 28, 2021, 6:46 PM

Health spending would increase by almost a quarter of its current funding level as the White House aims to build a new health research agency, eliminate racial and socioeconomic disparities, and beef up the nation’s public health preparedness.

President Joe Biden’s budget request, released Friday, includes includes $133.7 billion for the Department of Health and Human Services. That amount represents a 23.4% increase from the fiscal 2021 enacted level of $108.6 billion.

About a quarter of the $25 billion increase, or $6.5 billion, would build the Advanced Research Projects Agency, or ARPA-H, a new effort housed within the National Institutes of Health to speed up the availability of medical advances. The White House also wants to work on drug pricing and expanding the Affordable Care Act.

“The President does have a robust health-care proposal,” Shalanda Young, acting director of the White House Office of Management and Budget, said during a press briefing Friday.

Most agencies would receive a boost in funds under the request, including $47.9 million dedicated to the Office for Civil Rights, $430 million for the Office of the Inspector General, and $4.3 billion in discretionary funding for the Centers for Medicare and Medicaid Services.

Part of the funds for the civil rights office would be dedicated to additional staff to resolve “the significant backlog of complaints alleging sexual orientation or gender identity discrimination,” the HHS said. The agency recently announced it would again enforce nondiscrimination protections for LGBT people.

The administration also would remove the Hyde Amendment, which bans federal funding for abortions, teeing up a fight over the provision with Congress.

Work With Lawmakers

Some of the biggest items on Biden’s health agenda—which received scant mention in the budget documents—will require extensive work with Congress.

“The president is very clear, he would like to see action this year to reduce prescription drug costs, strengthen the ACA, Medicaid and Medicare coverage, and create additional public coverage options,” Young told reporters. “We know there are proposals on the Hill being introduced, and we believe that it is more productive to work collaboratively with Congress to develop and build consensus around specific policies that achieve his broad goals.”

The Covid relief bill enacted in March expanded who could qualify for subsidies to offset the cost of premiums in health plans bought through the Affordable Care Act exchanges. It also increased subsidies for lower-income people. That helped close a coverage gap for people who made too much to traditionally qualify for financial help but made too little for the Obamacare premiums to be affordable.

The financial boost “helped millions of people gain coverage and reduce premiums for millions more,” Young said.

“This budget also invests $400 billion in improving home and community-based services for older people and people with disabilities.”

Opioid Epidemic

The White House is proposing more funds for research, prevention, treatment, and recovery services for opioid use. Before the Covid-19 lockdown, U.S. health officials were already battling overdose deaths and the rise of potent, synthetic opioids.

Deaths from drug overdoses hit record levels in 2019.

Consequently, the White House asked for $10.7 billion in HHS discretionary funding, a $3.9 billion increase over the 2021 enacted level, to steer toward opioid recovery support, with particular emphasis on populations “with unique needs” like Native Americans, older people, and rural populations, according to the budget fact sheet.

The Department of Veterans Affairs would also get $621 million for opioid prevention and treatment programs under the proposal.

The budget requests $6.5 billion for the FDA, which is an increase of $477 million from the 2021 enacted budget. That includes $3.6 billion in discretionary funding and $2.9 billion in fees the agency collects from the entities whose products it regulates.

Proposed changes for the Food and Drug Administration include an increase on maximum fees for certificates companies typically need to export their products to other countries. It also proposes cutting tax credits for rare disease drug research from 50% to 25% and allowing the FDA to collect fees from e-cigarette companies.

The FDA collects fees from other companies whose products it regulates, including drugmakers, device companies, and tobacco companies.

Research, Public Health

The National Institutes of Health would receive one of the largest increases in the agency’s history, at $9 billion, but most of that would go toward the three-year $6.5 billion to establish ARPA-H. The goal is to cut in half the time it would take to develop medical advances, such as a single shot to protect against the top 10 infectious diseases or an mRNA vaccine, akin to the Covid vaccines made by Pfizer Inc. and Moderna Inc., to shield against common cancers.

The agency’s budget would soar to nearly $52 billion, a 21% increase above the current level of $42.9 billion. That funding includes the ARPA-H money and leaves about $2.5 billion for the rest of the agency to address priorities such as the opioid crisis, health disparities, and the Covid-19 pandemic, according to the HHS budget in brief document.

The funding proposal brings NIH close to what it was in 2003, adjusted for inflation, after a decade of flat funding, according to Tannaz Rasouli, executive director of the Ad Hoc Group for Medical Research, said in an email.

The Centers for Disease Control and Prevention and Agency for Toxic Substances and Disease Registry would receive one of the largest funding increases in two decades of $1.6 billion for a total spending level of $8.7 billion. The toxic substances registry is an independent agency, but the CDC performs many of its administrative functions.

The Biomedical Advanced Research and Development Authority, which helps develop countermeasures against emerging diseases, would see an increase of $227 million, bringing its budget to $823 million. The agency regularly finances new technologies, drugs, and devices that can be used during a public health emergency or biohazard attack, including many used during Covid-19.

CDC Director Rochelle Walensky told a House spending panel Wednesday the agency plans to focus on a robust public health infrastructure, reduced health disparities, and using public health approaches to reduce violence and defeat other diseases and epidemics.

The Biden administration is calling for about $1 billion to go toward the public health emergency fund, which can be used both for Covid-19 and future emergencies, including the development of vaccines, therapeutics, and diagnostics.

The HHS is also requesting $73 million for its cyber response during public health emergencies. The department was hit by a cyber-attack in March 2020.

(Updated throughout with additional budget details)

To contact the reporters on this story: Jeannie Baumann in Washington at jbaumann@bloombergindustry.com; Jacquie Lee in Washington at jlee1@bloomberglaw.com; Shira Stein in Washington at sstein@bloomberglaw.com

To contact the editor responsible for this story: Fawn Johnson at fjohnson@bloombergindustry.com

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