5 Things to Know About Healthcare in President Obama's Budget

President Obama presented a $4.1 trillion spending plan to Congress this week, and to say it did not get a warm reception would be an understatement. In an unprecedented move, budget chairman in both houses announced they would not hold hearings on the plan, a snub not previously seen that doesn’t bode well for passing a budget by September, when the race to succeed Obama will be in full swing.

That said, healthcare and basic research were front and center in the final Obama budget, and some individual elements could have bipartisan support. Here are 5 things to know about healthcare in the final budget of the Obama Administration:

1. Fighting cancer is a priority. While the effort is spread across multiple agencies, the fact that cancer has a champion in Vice President Joe Biden for the administration’s final year means it will get attention. Biden’s focus on collaboration and information sharing may be more significant than the $1 billion funding request, which some observers point out is about what it takes to develop a new cancer drug. Agencies from the National Institutes of Health to FDA to Veterans Affairs would get cancer-related research funds under the budget. But Biden’s greatest contribution could come if he gets Medicare contractors to pay for diagnostic tests and end the run-around that patients endure when trying to get leading-edge treatments.

2. Mental health seems poised for parity. At long last, it seems the federal parity law for mental health care could finally live up to its name. The budget features $500 million to improve access to care as well as a $1.5 billion provision to take on the heroin epidemic, including funds to support state efforts to curb abuses in prescribing opioid drugs. Given how much attention this issue has received in the presidential contest—in both the Democratic and Republican primaries—it seems likely this area will get some increased funding.

3. Hospital payment reform continues its march. Hospital groups did not react well to the call for nearly $420 billion in Medicare cuts over 10 years, saying that CMS already fails to cover the cost of caring for patients. But the administration is undeterred, saying it will continue with an “aggressive reform agenda” that will save $180 billion over that same time frame. While the numbers may stagger hospital groups, the movement away from fee-for-service reimbursement to payment for quality has been under way for some time, and HHS Secretary Sylvia Mathews Burwell warned a year ago that 30% of reimbursement would be tied to value-based initiatives.

4. The administration takes aim at prescription drug costs. Hospitals welcomed budget language that calls for cutting drug costs in Medicare Part D and for increased data collection that would tie payment to a drug’s effectiveness. The budget seeks to speed up discounts of brand-name drugs for seniors and address out-of-pocket costs for those in the coverage gap. For Medicaid, the budget calls for a federal-state pool to negotiate high drug costs and boosting the Medicaid rebate formula for new therapies, which are projected to save $11.4 billion over 10 years. These ideas come in the wake of state Medicaid officials crying foul after being hit with the cost of Sovaldi, the cure for hepatitis C that hit the market at $1000 a day before competitors entered the fray.

5. An attempt to fix the Cadillac tax probably won’t fly. One part of the 2017 budget that was panned right out of the gate is the proposal to fix the much-loathed 40% excise tax on certain employer-based health plans. Under the Affordable Care Act, plans would have been taxed in 2018 if they had premiums that exceeded $10,200 for single coverage and $27,500 for family coverage, but the tax was deferred until 2020 under the budget agreement last fall. Dislike for the “Cadillac tax” has united unions and business groups, and the delay hasn’t changed that fact. The new proposal would allow the tax to reflect higher costs in some parts of the country. In states where the average “gold” premium is above the Cadillac threshold, the tax trigger would be set above the level of the gold premium. The plan also calls on the Government Accountability Office to study the effects of the tax on some employers with “unusually sick employees,” which could include some union members.

There will be plenty going on in healthcare beyond the budget in 2016. Look for the CMS to make every effort to get the final 19 states that haven’t expanded Medicaid into the fold—and to hold onto those like Kentucky where expansion is already in place. The conventional wisdom is once constituents have benefits, it’s hard to take them away. No matter what the next president does with the law we call “Obamacare,” most experts believe some elements are here to stay.