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What’s in the President’s 2013 Budget Proposal for Mental Illness Research, Services, Housing and Veterans Programs

As is being widely reported, President Obama and his Administration on Feb. 13, 2012, presented their $3.8 billion budget for FY 2013. Included in the budget are requests to Congress for funding levels for all discretionary programs including those for NIMH, SAMHSA, HUD and VA.

Two important qualifications are needed with respect to the budget. In August, the President and Congress agreed to the Budget Control Act and strict limits on overall discretionary spending levels for the next decade. These limits are now in effect and provide little room for the President or the Congress to go above them – with the exception of spending categorized as “security,” which includes veterans medical care. Second, in this current political environment with a looming presidential campaign, there is little prospect of a major agreement on spending bills before FY 2013 begins on Oct. 1. As a result, the President’s budget is only the first step in a drawn out process that will likely extend through Dec. 2012.

Included below are details of the President’s budget as it relates to mental illness research and services, housing and veterans programs, as well as proposed changes to Medicare and Medicaid.

Mental Illness Research at NIMH

The President’s budget for FY 2013 proposes to freeze funding for the National Institute for Mental Health (NIMH) at its current FY 2012 level of $1.479 billion. This is in line with the President’s request for all other Institutes and Centers at the NIH, which is also proposed for a freeze at $31 billion.

It is important to note that holding the NIMH budget at its current level will likely leave the agency struggling to fund an adequate number of “new and competing” research grants in FY 2013. First, a freeze fails to account for “medical research inflation,” the annual escalation in research cost. This would mark the fifth consecutive year that the NIMH budget failed to rise at least to account for medical research inflation. In addition, at least through FY 2012, NIMH has nearly $700 million in “out-year” commitments (more than 40 percent of the total NIMH budget) of ongoing multi-year grants for basic research and clinical studies.

While this is expected to improve next year, nonetheless, holding the NIMH budget at a freeze for FY 2013 could further erode the Institute’s “pay-line” to 15 percent. In other words, 85 percent of “new and competing” research grants (that get through peer review and are deemed to be meritorious science) will not receive funding. The cumulative effect is that in 2011, NIMH was only able to fund 465 new and competing research grants, the lowest level since 1998. This is expected to improve in 2013 and exceed 500 new and competing grants. Nonetheless, this is far below the tremendous scientific opportunities that exist for new discoveries and better treatments for schizophrenia and bipolar disorder.

Mental Health Services at SAMHSA

The overall constraints on discretionary spending have a significant impact on the President’s request for Substance Abuse and Mental Health Services Administration (SAMHSA) in FY 2013, with proposals to enact deep cuts to existing grant programs for primary care integration and systems of care for children. Overall, the President is requesting $3.152 billion for SAMHSA, as compared to its current FY 2012 level of $3.347 billion, a $195 million cut. The cuts in the President’s budget are proportionally spread across both mental health and substance abuse programs.

The Mental Health Block Grant program is proposed for a freeze at $459.7 million. A positive development in that the Obama Administration is supporting the $41 million increase enacted by Congress for FY 2012. The PATH formula grant program for the states (outreach and engagement for homeless individuals living with mental illness) is also proposed for a freeze at $65 million.

The President’s budget proposes a $40 million reduction in discretionary funding for grants to the states for Primary and Behavioral Health Integration, cutting funding from its current $65.7 million level, down to $26 million. NAMI has vigorously supported this program as part of an overall strategy for integrating primary care services into specialty mental health settings such as CMHCs to address early mortality among people living with serious mental illness. Numerous studies have demonstrated both the high incidence of medical co-morbidities (diabetes, heart disease, COPD, etc.) and dramatic gaps in access to basic primary care in this population. These grants support a range of innovative activities including integrating basic primary care services into CMHCs. While this appears in the budget as a deep cut to the program, in fact, SAMHSA should be able to account for a full 4-years of funding for the current set of grants awarded in 2011 and 22 new grantees in 2012. This would ensure that all current grantees are able to complete their grant cycle. This was done by allocating existing dollars from the Prevention Fund authorized under the Affordable Care Act (see below). In addition, the $26 million in new discretionary funds requested for FY 2013 will allow for 12 new grantees in 2013.

NAMI is concerned about SAMHSA’s move to fund the Primary Behavioral Health Integration program solely with ACA Prevention Fund monies. This shift jeopardizes the ability of people living with serious mental illness to access critical health care services by moving the program toward reliance on a vulnerable funding stream. Opponents of the Affordable Care Act have repeatedly tried to repeal the Prevention and Public Health Fund, efforts that are expected to continue in 2013. In fact, just this week, $5 billion from the Prevention Fund (a third of its total funding) is being transferred to help pay for the Medicare physician payment fix included in the payroll tax extension bill moving through Congress. Instead, NAMI will be urging Congress to restore the PBHCI program to SAMHSA budget authority so as to preserve the critical prevention and treatment services that it supports.

Another SAMHSA program proposed for a deep cut is the Children’s Mental Health Initiative (CMHI), also known as the Children’s Systems of Care grant program. Its current funding level of $117.3 million is proposed to be cut to $88.5 million, a $28.7 million reduction. In a number of communities, child-serving systems have used these grants to provide much needed home and community based services for children and youth with serious mental health treatment needs and their families. The timing for these cuts is unfortunate given that SAMHSA recently changed the CMHI grant program to provide grants to states to allow them to plan for and implement much-needed statewide reforms to provide a broader array of effective services and supports for children living with serious mental illness and their families.

There are further reductions at SAMHSA proposed for the Programs of Regional and National Significance (PRNS) within the Center for Mental Health Services (CMHS), a broad range of service demonstration and capacity building programs that includes mental health transformation, suicide prevention, seclusion and restraint, co-occurring disorders and homelessness. Overall, PRNS funding would be reduced from its FY 2012 level of $286 million, down to $248 million. Included in this reduction is a $16 million cut to suicide prevention activities under the Garrett Lee Smith Act (including grants to states and colleges). Under the President’s budget, GLS funding would slip from $58 million down to below $42 million.

At the same time, the President’s budget includes increases for a broad range of substance abuse and mental health “prevention” and “promotion” activities. This includes a $20.4 million increase for state grants for mental health prevention (boosting funding to $55 million). The budget also proposes $40 million in funding for a new grant program for Native American tribes for substance abuse and suicide prevention.

Finally, SAMHSA’s share of the Prevention Fund authorized under the Affordable Care Act (ACA) is projected to rise by $35 million, to $164.7 million in FY 2013. These funds were authorized under the health care reform law to promote disease prevention and chronic disease management. With this budget, SAMHSA is proposing to begin shifting these funds away from chronic disease management for persons living with serious mental illness, toward other prevention and promotion activities.

Supportive Housing Programs at HUD

The President’s budget proposes a $15 million reduction for the HUD Section 811 program, reducing the program from its current FY 2012 level of $165 million, down to $150 million. Section 811 funds grants to states and non-profit agencies to develop and maintain permanent supportive housing targeted to non-elderly people living with severe disabilities including serious mental illnesses. For FY 2013, HUD projects that $96 million will be needed to renew expiring project-based operating subsidies (known as PRACs) and fund contract amendments for existing units. These funds cover the operating costs for the more than 30,000 existing 811 units across the country, paying the difference between actual costs (utilities, insurance, maintenance, reserves) and tenant rent contributions.

The remaining $54 million in the President’s request would go toward a second year for competition among states for new supportive housing units funded by additional PRACs. This new program option was authorized by Congress in 2010 as part of the Frank Melville Supportive Housing Investment Act. HUD projects that this $54 million will fund as many as 1,900 new supportive housing units integrated into new affordable rental housing projects and leveraged from programs such as the Low-Income Housing Tax Credit program.

For programs under the McKinney-Vento Homeless Assistance Act, the President is asking for $330 million increase for FY 2013, boosting funding to $2.231 billion. McKinney-Vento funds a range of permanent supportive housing programs such as Shelter Plus Care and SHP that are targeted to chronically homeless individuals living with serious mental illnesses and other disabilities. At the same time, the budget request is targeting most of the increased funds for McKinney-Vento to the Emergency Solutions Grant (ESG) program for activities such as rapid re-housing and other short-term homelessness prevention activities.

Finally, for the VASH (veterans supportive housing) program the President is requesting an additional $75 million in FY 2013 for new supportive housing units—specifically, new rent subsidies to secure housing for homeless veterans, with separate support services funded by the VA.

Mental Health Services at the VA

Overall, the President is requesting a 4.5 percent increase for discretionary programs at the Department of Veterans Affairs, boosting overall funding to $64 billion. It is important to note that a large portion of the VA discretionary budget (most importantly VA medical care) is NOT subject to the strict discretionary spending limits in the Budget Control Act imposed last summer. As a result, it allows Congress and the President to meet the critical needs of veterans outside of the spending limits. In addition, the VA, unlike all other federal agencies, is on a two-year advance appropriation cycle. Therefore, this budget is in effect requesting a $54.5 billion advance appropriation that would carry VA medical through FY 2014.

Within this overall request is $6.2 billion to expand inpatient, residential and outpatient mental health services, a $312 million increase over the current level. This maintains and expends the VA as the largest single provider of mental health services in the country. The budget also expands the current efforts to VA Secretary Shinseki to end homelessness among veterans by 2015 with a $333 million proposed increase for homeless grants, per diem payments and assistance to community organizations. The VA is proposing to direct $1.352 billion to combat and end homelessness in FY 2013.

For the Iraq and Afghanistan conflicts, the VA is requesting $3.3 billion for direct medical care and services, a $510 million increase. Finally, the President is requesting $583 million for medical research at the VA, a slight increase over the current level.

More information on the VA budget for FY 2013 is available through the “Independent Budget,” a joint statement of major Veterans Service Organizations and other experts on the comprehensive needs of veterans. NAMI is also signatory organization on the IB for 2013.

Administrative Expenses at the Social Security Administration (SSA)

Disability cash benefits under the SSI and SSDI programs are mandatory programs that are not subject to annual appropriations. However, the administrative costs of administering these and all other Social Security programs—including claims processing and appeals and continuing disability reviews (CDRs)—are subject to annual appropriations under SSA Limitation on Administrative Expenses (LAE). Without an increase in the annual LAE, Social Security will not be able to keep pace with the high volume of claims for eligibility and appeals for critical safety net programs such as SSI and SSDI. Many claimants are forced to wait years for their appeals to be adjudicated. While progress was made in 2008 through 2010 to start to clear this backlog, much work remains. For FY 2013, the President is proposing an LAE of $10.84 billion, a slight increase over FY 2012. It remains to be seen if this amount is sufficient to allow SSA to finish upgrading computer systems and adding the needed capacity to clear the current claims backlog.

Posted: February 16, 2012

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