Medical Device Daily Washington Editor

WASHINGTON — Despite proposed cuts for 12 out of 23 major government agencies in the proposed federal budget for fiscal 2006, the Department of Health and Human Services (HHS) would see an increase of $58 billion compared to its allocation for 2005.

President George Bush sent his 2006 budget to Congress on Monday, calling for a total of $642 billion for HHS. If Congress approves the president's budget blueprint, HHS would spend $216 billion more in '06 than it did in '01, an increase of more than 50%.

A little more than a week after being sworn in as secretary of the department, Mike Leavitt presented an overview of the budget during a Monday afternoon press conference, saying that he and the president share “an aggressive agenda for HHS that advances a healthier, stronger America while upholding fiscal responsibility and good stewardship of the people's money.“

The budget sets priorities and holds government programs accountable for “real results,“ Leavitt said, and he referred also to a set of “core beliefs“ for guiding the administration's budget and vision for the department.

“We believe we can transform our healthcare system so informed consumers own their own health records, their own health savings and their own health insurance,“ Leavitt said. “We can be a nation where families embrace the power of prevention and wellness-where fewer people get sick because they take action to stay healthy.“

A number of programs that will be completed this year as well as projects “without demonstrated results“ would not be funded, Leavitt said. The HHS had to make tough choices and so the budget focuses money on the “most urgent priorities,“ he added.

Hitting close to home for the medical device industry, $1.9 billion for the year is budgeted for the FDA, an increase of $81 million in 2005 (see sidebar). Almost $6 million in additional budget authority was dedicated for the medical device review process under the Medical Device User Fee and Modernization Act.

The budget requests $2 billion, a $304 million increase from 2005, to fund community and migrant health centers, in addition to $26 million to fund 40 new health centers in high-poverty counties.

Maintaining the same assertions he voiced during his confirmation hearing, Leavitt said that Medicaid is not reaching its potential. He called it rigid, inefficient and not financially sustainable. Though there are no programmatic cuts slated in the '06 budget, Leavitt said the president's approach is to build on the success of waiver programs to allow states to construct targeted benefit packages, coordinate with private insurance and extend coverage to higher income and non-traditional Medicaid populations. He said that during the next 10 years taxpayers would spend nearly $5 trillion dollars on state and federal portions of Medicaid, growing by more than 7% per year. If Congress approves the president's budget, HHS will spend $193 billion in 2006.

In the area of health information technology — which was cut out of the current fiscal year's budget — Bush requested $75 million for the office of David Brailer, the national coordinator for health and information technology. A total of $125 million is budgeted for healthcare IT efforts.

For bioterrorism efforts, the budget includes $4.3 billion for public health preparedness, an increase of almost 1,500% compared to 2001. Funds would go toward developing bioterrorism countermeasures and for expanding the national stockpiles of vaccine. HHS also requested $70 million for the Federal Mass Casualty Initiative to improve medical surge capacity.

One of the most widely anticipated and controversial programs at HHS this year will be the implementation of the Medicare Prescription Drug Benefit.

Leavitt said Medicare will spend $394 billion for benefits in 2006 to assist almost 43 million Americans, and the prescription drug benefit program — to be financed through beneficiary premiums and general revenue — is projected to cost $58.9 billion in 2006.

Some of the more controversial aspects of the HHS budget include a $39 million increase in “abstinence education“ activities, for a total of $206 million. A total of $1 billion over five years to promote healthy marriage through demonstrations, research and a matching state program is proposed, along with $200 million in mandatory funding over five years to support “responsible fatherhood.“

The budget also proposes $100 million to fund faith-based and community organizations.

The 2006 fiscal year begins Oct. 1.

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