The health impact of the debt deal

The debt ceiling bill marks the end of big annual hikes for NIH but overall avoids worst-case scenarios for health care financing, health policy experts tell Axios.

Because matter: If this bill passes both houses of Congress, it will outline how the next two fiscal years of federal spending on health care agencies will proceed and reduce the threat of a government shutdown as well as prevent a default.

Details: The bill would raise the debt limit through January 1, 2025 and keep non-defense discretionary spending levels broadly stable for FY 2024, up 1 percent in FY 2025.

  • COVID terminations amount to about $30 billion withdrawn, according to a White House official. However, the official said $5 billion in terminations will be saved for the NextGen project, which will focus on developing next-generation COVID vaccines and therapeutics.
  • A familiar source said $15 billion in COVID recovery is pouring out of the public health bucket. The remainder of the funds will come from a variety of programs, including the State, Treasury, Labor and Justice departments, as well as the EPA.
  • The bill isn’t specific about the exact programs that will affect COVID public health terminations, but it does list funds from the CDC, NIH, and CMS.

What are they saying: Health policy experts told Axios that the bill is almost a best-case scenario for funding appropriations from health agencies like the NIH and CDC, given the realities of the political situation.

  • “This increases the chances that Congress will write appropriation bills, and if that happens, NIH has a very reasonable chance of getting a raise. That might not happen if there was a year-long CR,” said Erik Fatemi, Dean of Cornerstone Government Affairs and former Democratic Labor-HHS Senate Appropriations staffer.
  • Fatemi said the biggest concern of NIH watchers this year, going into a divided Congress, was that Republicans wanted to cut non-safety spending by billions of dollars and Democrats wouldn’t agree on what could lead to two consecutive years of CR.

Even if the debt ceiling bill sets top lines for spending, doesn’t have a specific number for how much money will be set for specific appropriation bills.

  • “Well, we’ll probably see Democrats fighting to get a little more for Labour-HHS, even if it’s at the expense of some of the other appropriation bills,” Fatemi said.
  • “NIH more than virtually any other non-security program in the bill could benefit from this scenario, since there is still much bipartisan support for the agency.”

Between the lines: Chris Meekins, a health policy analyst at Raymond James and a former House Republican staffer, noted that NIH has averaged a 5.6 percent increase in funding over the past seven years. “This budget deal confirms those days are probably over,” he said.

  • The good news, Meekins said, is that the outcome for NIH is likely to be better than the 2011 deal between then-President Obama and House Republicans. After that deal, NIH funding fell 5% in two years.
  • “The worst case scenario is the automatic 1% cut for NIH if they don’t pass a Labor-HHS bill. This is manageable even if it’s not ideal,” Meekins said. “It’s conceivable that NIH could see an increase if they can pass a Labour-HHS bill, but in my view disagreements over policy factors will make that a heavy switch.”

  • Darbin Wofford, health policy adviser at Third Way, noted that “in the aftermath of a worldwide pandemic, we would like to see more investment in pandemic preparedness and public health, not flat levels or canceled funds. But the reality is that we are in a divided government and we simply can’t get everything in. At the end of the day, this bill is a win.

Of note: Don’t forget, the bill dropped Medicaid’s job requirements, which were a major bone of contention between House Republicans and the White House.

  • Even during last week’s negotiations, The Republicans appeared insistent on maintaining that measure, which was in the original GOP’s debt limit law. But it finally fell.
  • “It’s quite significant that Medicaid is intact,” said Larry Levitt, executive vice president for health care policy at KFF. “This demonstrates once again that the political power of Medicaid should not be underestimated.”
  • “Medicaid is symbolically important because of its connection to Obamacare, but it also has powerful interests behind it,” Levitt added.
  • Both republicans and Democrats also promoted how they didn’t touch Medicare when negotiating the outlines of the debt ceiling bill.

What are we looking at: The House is expected to vote on the bill on Wednesday.

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