Federal Budget Update: What to Expect in FY 2015 and Beyond

NCPHA Spring ConferenceRaleigh, NCMay 13, 2014

Federal Funds Information for States

www.ffis.org

Overview

The federal budget and how it worksWhat to expect this year

– FY 2015 appropriations– Mandatory sequestration (across-the-board cuts)

Issues to watch– Deficit reduction, changes to Budget Control Act (BCA)– ACA program expirations

Where the money goes: pieces of the federal budget pie

Composition of Federal Outlays in FY 2013($ in Billions, % of Total)

Trends in state grant funding

Source: FFIS Grants Database

Federal grants going to North Carolina: per capita, 2013

Major Category Per Capita RankMedicaid $817 28Other State 512 44Local 58 39Individual/Other 346 24Total $1,733 35

What programs areas are supported by state/local grants?

Federal grants going to North Carolina: share of funding by function

What are the major health grants?

Types of grants

Mandatory

Capped Uncapped

Direct Appropriation

Annual Appropriation

Discretionary

Block Grant

Formula Grant

Categorical Grant

Formula Grant

Project Grant

Mandatory vs. discretionary health grants

Health Care Reform

Mandatory Funding Amended uncapped entitlements (Medicaid) Reauthorized capped entitlements (CHIP) Directly appropriated funding for new and existing programsDiscretionary Funding Extended authorization of existing programs Authorized new programs that must receive annual approp.

– Creative funding mechanisms (Prevention and Public Health Fund, initial direct appropriations)

What agencies have benefited from Prevention and Public Health Fund?

Focus on FY 2015: Budget Control Act (BCA) Recap

$984 billion in cuts through FY 2021 (~$109 billion/year, half from defense, half from nondefense)

FY 2013 sequestration occurred on March 1, 2013– “Fix” reduced cuts from $109b to $85b

Many mandatory and a few discretionary programs are exempt (special rules for some programs)

ATB cuts in FY 2013, different process for FY 2014+ Bipartisan Budget Act (BBA) provided some sequester relief

in FY 2014 and FY 2015

House, Senate, President Adhering to BBA in FY 2015

Status of FY 2015 Appropriations

House is moving appropriations bills, Senate plans to begin in mid-May– 302(b) allocations – Easy bills moving first – Aggressive timetable– Many state grants likely to be level-funded– Prediction: Labor/HHS/Education will not be among the

bills passed before October 1

How have major health grants fared?

Program ($ in millions) FY 2010 FY 2013 FY 2014 FY 2014 vs. FY 2010

Health Centers $2,190 $2,950 $3,651 67%Maternal Child Health BG 662 605 634 -4%Ryan White HIV/AIDS 2,312 2,249 2,319 0.3%Rural Health 185 131 142 -23%Substance Abuse BG 1,799 1,710 1,820 1%Mental Health BG 421 437 484 15%Immunization grants 497 469 588 18%Preventive Health BG 102 75 160 57%Public Health Emergency Preparedness 761 623 656 -14%

Budget proposals to watch

Extend Medicaid primary care payment increase Potential cuts to public health programs because

of new coverage under ACA– Refugee Assistance, Access to Recovery, State High-

Risk Pool, Section 317 Immunizations, and National Breast and Cervical Cancer Early Detection

Additional funding for substance abuse/mental health

Reductions to the Prevention and Public Health Fund

BCA still the law of the land

Amended discretionary caps enforced by sequestration Mandatory sequestration still in place

– BBA extended to FY 2023– President proposes repeal, Congress unlikely to agree– ATB percentages applied to current-law levels

Defense NondefenseFY 2014 -9.8% -7.2%FY 2015 -9.5% -7.3%

Mandatory programs: FY 2015 OMB sequestration estimates

Program Pre-Sequester

($ in millions)

Sequester Cut($ in millions)

Maternal, Infant, and Early Childhood Home Visiting

??? ???

ACA Health Centers (2%) $3,244 -65

Affordable Insurance Exchange Grants

836 -61

Money follows the person 434 -32

Prevention and Public Health Fund

1,000 -73

Social Services Block Grant 1,700 -124

Aging and Disability Resource Center

??? ???

What happens after FY 2015?

Pressure to tackle deficit diminishing, long-term issues remain

Source: CBO Budget and Economic Outlook, 2/14

House and President take different approaches to deficit reduction

Discretionary caps– President’s budget increases defense and nondefense– House cuts nondefense and shifts savings into defense

Mandatory programs (health care spending)– President’s budget (-$400 billion/10yrs.): Medicare changes – House (-$3 trillion/10 years): repeals ACA, converts Medicaid

into block grant, modifies Medicare Tax Policy

– President’s budget increases revenues, doesn’t include comprehensive tax reform

– House proposes revenue-neutral tax reform

Deadlines on the horizon

October 1, 2014

• Enact FY 2015 budget or pass a Continuing Resolution (CR)

• Aging and Disability Resource Centers (ADRCs)

January 1, 2015

• HHS cannot award additional exchange grants

March 15, 2015

• Raise debt limit

Deadlines on the horizon

April 1, 2015

• Medicaid Qualifying Individual and Transitional Medical Assistance

• MIECHV• ADRCs, Area

Agencies on Aging• SHIPS• Family-to-family

Sept. 30, 2015

• Health Profession Opportunity Grant

• Personal Responsibility Education Program

• Abstinence Ed.• CHIP• Community Health

Centers

Beyond

• Prevention of chronic disease in Medicaid (1/1/16)

• Money Follows the Person (9/30/16)

• DSH Cuts (10/1/16)

• CMS Innovation Center (9/30/19)

• PPHF (indefinite)

More questions than answers

FY 2015: states can expect level funding for most programs; little chance of major legislation

FY 2016: – BCA: discretionary funding increases; many open

questions Will Congress amend the caps? Up or down? Will deficit reduction be a focus? Will ACA programs be extended? The policies will stem from the politics.

Questions?

For more information: www.ffis.org, Trinity Tomsic (ttomsic@ffis.org )