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Budget Update: Senate Completes Action on Budget Resolution, Medicaid Cuts Rejected, Action Now Shifts to the House

Early on March 12, the Senate completed action on the FY 2005 budget resolution, after eliminating $11 billion in proposed cuts to Medicaid over the next five years. The House is scheduled to take up its version of the budget resolution this week. The draft House proposal contains nearly $2.2 billion in required reductions to Medicaid and SCHIP (the State Childrens Health Insurance Program) through unspecified efforts to curb "waste, fraud and abuse."

While the budget resolution does not have the force of law, its provisions do provide binding guidance to House and Senate Committees to produce specified reductions and policy changes to entitlement programs such as Medicaid and SCHIP. These cuts take the form of binding instructions to the Senate Finance Committee and the House Energy and Commerce Committee to reduce federal matching funds to Medicaid program without specifying where to make the reductions. Under House and Senate budget rules these assumptions carry enormous weight and result in a procedural requirement for cuts later in the year. It is therefore critically important to maintain pressure on the House to reject cuts to Medicaid just as the Senate did last week on a bipartisan basis.

During debate last week on the budget resolution, the Senate acted on a number of amendments of importance to NAMI:

• As noted above, the Senate (by a 53-43 vote) rejected efforts to cut Medicaid by $11 billion over the next five years. The bipartisan vote came on an amendment by Senator Max Baucus (D-MT) to strike provisions in the FY 2005 budget resolution that would have required the Medicaid cuts to have been put in place by the end of the year.

• An amendment offered by Senators Arlen Specter (R-PA) and Tom Harkin (D-IA) to increase funding for the NIH by an additional $1.3 billion was passed by a vote of 72-24. This brings the resolution's overall recommendation for the NIH to approximately $29.9 billion, an increase of 7.2 percent. Senator Specter modified his amendment to increase funding just for the NIH rather than the original draft that would have split $2 billion between NIH, CDC and HRSA.

• An amendment authored by Senator Jay Rockefeller (D-WV) to extend fiscal relief for the states, including enhanced federal Medicaid matching funds (also known as FMAP), was not able to be offered. Under the Senate rules, the amendment would have needed a super-majority vote of 60 votes to override procedural objections. Unless Congress acts, the current state fiscal relief and higher FMAP rates for states will expire on June 30.

March 15, 2004

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