DEPARTMENT OF HEALTH AND HUMAN SERVICES
AT A GLANCE:
2006 Discretionary Budget Authority: $67.2 billion
(Decrease from 2005: 1 percent)
Major Programs:
• Medicare
• Medicaid
• State Children’s Health Insurance Program
• Health Centers
• Marriage and Healthy Family Development
• Bioterrorism
• Health Care Information Technology
MEETING PRESIDENTIAL GOALS
Promoting Economic Opportunity and Ownership
• Promoting national health care information technology, with the goal of most Americans having
an electronic health record with proper medical privacy protection by 2014.
• Proposing a comprehensive, consumer-driven plan to address the problems of rising health care
costs and the uninsured. This plan includes: Health Savings Accounts; Association Health
Plans; tax credits; and medical liability reform.
Protecting America
• Strengthening the Nation’s preparedness against bioterrorism, through biodefense research and
development, biosurveillance early warning systems, hospital and public health preparedness,
and defense against intentional contamination of the Nation’s food supply.
• Improving the ability to respond to bioterrorism through a new initiative to improve mass
casualty care after a catastrophic incident, and augmenting the Strategic National Stockpile
of pharmaceuticals and other medical supplies.
Supporting a Compassionate Society
• Ensuring access through Health Centers to high-quality primary and preventative health care
for low-income individuals.
127
128 DEPARTMENT OF HEALTH AND HUMAN SERVICES
MEETING PRESIDENTIAL GOALS—Continued
• Helping healthy families through initiatives that support marriage, provide assistance to parents,
and encourage the development of family-support programs run by community organizations.
• Strengthening and modernizing health care and offering drug coverage for approximately 42
million senior citizens and persons with disabilities through the Medicare program.
• Providing quality health care in a cost-efficient manner to over 46 million low-income individuals,
elderly individuals, and individuals with disabilities through the Medicaid program.
• Providing health care coverage to a total of approximately 5.8 million low-income, uninsured
children through the State Children’s Health Insurance Program.
• Proposing a health insurance tax credit so that millions of Americans will have access to affordable
health care.
• Enrolling as many uninsured, eligible children as possible into Medicaid and the State Children’s
Health Insurance Program through the President’s Cover the Kids proposal.
Making Government More Effective
• Developing additional decision support tools at the National Institutes of Health to improve the
management of its large and complex scientific portfolio and to better integrate research across
its 27 Institutes and Centers.
• StrengtheningMedicare program integrity by preventing overpayments, accelerating contractor
reform, and rationalizing payments for bad debt.
• Increasing efficiency and lowering costs for Medicaid prescription drugs.
• Proposing to build on past efforts to improve efficiencies and the fiscal integrity of Medicaid and
State Children’s Health Insurance Program.
THE BUDGET FOR FISCAL YEAR 2006 129
PROMOTING ECONOMIC OPPORTUNITY AND OWNERSHIP
Health Information Technology
The Administration is strongly committed to advancing quality, consumer-driven health care and
encouraging collaboration and productivity in the medical services sector. The newly created Office of
the National Coordinator for Health Information Technology (HIT) at the Department of Health and
Human Services (HHS) coordinates Federal efforts across many initiatives and activities, including:
• Advancing the adoption of HIT by physicians, hospitals, and other providers;
• Implementing electronic prescriptions as mandated by the Medicare Prescription Drug,
Improvement, and Modernization Act of 2003;
• Developing models for the exchange of Electronic Health Records (EHRs) and other health data
nationally and with proper medical privacy protection; and
• Identifying standards and the mechanisms for broad adoption of EHRs.
The 2006 Budget includes $125 million to continue progress in this area, including $75 million in
the Office of the Secretary to foster collaboration and develop the conceptual framework and infrastructure
for a nationally interoperable HIT network that would interconnect clinicians, personalize
care, and improve public health surveillance.
Promoting Affordable Health Care
Rising health costs are an impediment to job and wage growth. When health care costs rise, employers
have less to spend on new employees, or on salaries for their existing employees. Rising
health care costs impose a burden on families and small businesses and put coverage out of the reach
of many Americans. Many businesses—particularly small firms—are struggling with these rising
costs. According to the Census Bureau, 45 million people lacked health insurance coverage in 2003,
including 8.4 million children.
The President has proposed a comprehensive, consumer-driven plan to address the problems of
rising health care costs and the uninsured. His plan includes: Health Savings Accounts (HSAs); Association
Health Plans (AHPs) for small businesses, civic groups, and community organizations; tax
credits for low-income families; medical liability reform; and electronic health records for all Americans
within 10 years.
The President’s plan will help reduce the rising cost of health care while improving quality and
safety. It will provide new and affordable health coverage options for all Americans—targeted to
those who need it most: low-income children and families; employees of small businesses; and the
self-employed.
Health Insurance Tax Credit. The President proposes a tax credit that will help individuals purchase
health insurance and health care. The proposal provides greater choice of insurance products
and encourages saving for future health expenses. Individuals under age 65 who are not enrolled
in public or employer-sponsored health plans would be eligible. The credit would be refundable and
could be paid in advance directly to the health plan. The amount of the credit would depend on an
individual’s income level. The credit would phase out at incomes of $30,000 for an individual and
$60,000 for a family.
130 DEPARTMENT OF HEALTH AND HUMAN SERVICES
PROMOTING ECONOMIC OPPORTUNITY AND OWNERSHIP—Continued
• TraditionalHealth Insurance Tax Credit. Withthis
option, the credit would pay for 90 percent of the
cost of the premium of standard coverage, up to a
maximum of $1,000 for an individual, and $3,000
for a family of four.
• Health Insurance Tax Credit with HSA. This modification
would allow individuals to use a portion
of the credit (up to $2,000 for a family of four; $700
for an individual) to purchase a high-deductible
health plan while putting the remaining portion
of the credit (up to $1,000 for a family of four; $300
for an individual) in an HSA. The money in the
HSA belongs to the individual and can be used to
pay for medical expenses. Unspent funds from one
year would roll over for use in the following year.
State Purchasing Pools. To help low-income individuals
purchase coverage with the health insurance tax
credit, the Administration proposes providing $4 billion in grants to States to establish purchasing
pools. By combining the purchasing power of individuals and families, these pools would offer
tax-credit recipients an additional affordable health insurance option and would make it easier and
faster to shop for coverage.
Cover the Kids. Despite the availability of health care coverage through Medicaid and the State
Children’s Health Insurance Program (SCHIP), millions of children eligible for these programs have
not enrolled. The 2006 Budget proposes Cover the Kids, a national outreach campaign that will
provide $1 billion in grants over two years. By combining the resources of the Federal government,
States, schools, and community organizations, Cover the Kids aims to enroll as many Medicaid- and
SCHIP-eligible children as possible.
Above-the-Line Deduction for Certain Health Insurance Premiums. Under this proposal, all individuals
who purchase a high-deductible health plan in conjunction with a health savings account
would be allowed to deduct the amount of the health plan’s premium from their taxable income even
if they do not itemize their deductions. This new deduction would make high-deductible health plans
more affordable.
Rebate to Small Employers Contributing to Employees’ HSAs. To encourage small employers to
contribute to their employees’ health savings accounts, the Administration proposes a refundable tax
credit. Small employers would receive a tax credit of up to $500 per employee with family coverage
and $200 per employee with individual coverage.
Association Health Plans (AHPs). The Administration proposes creating AHPs to make available
new affordable health insurance policies. Under this proposal, small employers, civic groups, and
community organizations can band together and use their purchasing power to negotiate lower-priced
coverage for their employees, members, and their families. Previous proposals have limited AHPs to
small businesses. This proposal applies not only to small businesses but also to private, non-profit,
multi-State entities outside the workplace.
THE BUDGET FOR FISCAL YEAR 2006 131
Medical Liability Reform. Reforms to medical liability law
will increase access to quality, affordable health care for all
Americans, while reducing frivolous and time-consuming legal
proceedings against doctors and health care providers. The
lawsuit burden is driving good doctors out of local communities
across the country and raising health care costs for all.
Reforming the medical liability system and providing a fair,
predictable, and timely medical liability process will improve
access to quality health care and reduce health care costs.
National Marketplace for Health Insurance. Because
individuals can purchase health insurance only in the State in
which they live and cannot shop for more affordable coverage
in other States, competition among insurers is limited by
State boundaries. The Administration proposes creating a
competitive marketplace across State lines that maintains
strong consumer protections. This new marketplace would
allow individuals the freedom to shop for the best buy on health
coverage that most effectively meets their needs, and would
increase the availability of affordable health coverage.
132 DEPARTMENT OF HEALTH AND HUMAN SERVICES
PROTECTING AMERICA
Armed with a single vial of a biological agent small groups of fanatics, or failing states, could gain the power
to threaten great nations, threaten the world peace. America, and the entire civilized world, will face this
threat for decades to come. We must confront the danger with open eyes, and unbending purpose.
President George W. Bush
February 11, 2004
Strategic National Stockpile
The Strategic National Stockpile contains
drugs, vaccines, and other medical supplies
and equipment that can be delivered anywhere
in the country within 12 hours of a request for
assistance. The Stockpile currently contains
enough smallpox vaccine for every American,
treatments for anthrax, countermeasures for
injuries following a chemical, radiological,
or nuclear incident, and treatments for
conventional explosive attacks. The 2006
Budget provides additional funding to improve
the Nation’s ability to respond to biological
and chemical weapons attacks with life-saving
treatments and supplies, including additional
antibiotics to treat anthrax, nerve agent
treatments, and chemical countermeasures
through the Chempack program. The Budget also includes increased funding for the storage and
maintenance of next-generation countermeasures, including a new anthrax vaccine purchased
through the President’s newly enacted Project BioShield.
Biodefense Research and Development
The Budget continues to invest heavily in research and development that will lead to new countermeasures
against the most dangerous threat agents, including those that have been genetically
manipulated. Within the 2006 Budget’s nearly $29 billion for the National Institutes of Health
(NIH), the Administration will continue to fund biodefense research and development activities at
$1.8 billion. This includes $50 million for chemical countermeasure development and $47 million for
radiological and nuclear countermeasure development. NIH supports basic research, which leads to
breakthroughs in scientific knowledge, and applied research and development that converts knowledge
into products that can be manufactured in large quantities. Project BioShield can then be used
to acquire these countermeasures that will be safer and more effective in protecting Americans.
THE BUDGET FOR FISCAL YEAR 2006 133
Medical Surge Capacity
In the event of a large-scale attack in one or more cities, existing medical capacity could be overwhelmed
quickly. The President designated HHS as the lead for coordinating Federal support of
State and local medical and public health response to mass casualty events. The Budget includes
$70 million to improve emergency health care by allowing the Federal Government to purchase and
store deployable medical care units, including medical supplies and equipment that can be delivered
to an affected area. This initiative will also enhance the Medical Reserve Corps and provide prior
training and verification of credentials to ensure the availability of health care providers during such
an emergency.
The Budget also proposes nearly $1.3 billion in investments to bolster hospital preparedness and
State and local biodefense preparedness. Included in the total for hospital preparedness is $25 million
for a targeted, competitive demonstration program to establish a state-of-the-art emergency care
capability in one or more metropolitan areas. These emergency care centers will be designed to meet
the demands of a terrorist attack or other incident requiring mass casualty care and containment of
infectious agents.
Biosurveillance and the National Biosurveillance Initiative
Unlike in conventional attacks, the use of biological weapons may not be immediately apparent.
Reducing the time it takes to detect an attack can save many lives. Last year, the President proposed
a new biosurveillance initiative to provide earlier indication that an attack has occurred, and
to better determine accurately its nature and scope by monitoring human, animal, and plant health,
the food supply, and the environment. The 2006 Budget will build on this progress with continued
investments in the gathering and analysis of this information.
Defending the Nation’s Food Supply
Building upon significant investments in 2005, the President is committed to improving the safety
and security of the food and agriculture supply. In 2006, the Food and Drug Administration (FDA)will
continue to work with the U.S. Department of Agriculture (USDA) and the Department of Homeland
Security to improve protection of the Nation’s food supply from intentional or natural contamination.
The Budget requests a $30 million increase for the FDA to develop strategies to prevent and mitigate
food contamination, as well as testing methods to identify the presence of contamination quickly and
accurately. The Nation’s food laboratory network will work to analyze food samples more rapidly,
which will better help to identify outbreaks and be able to quickly process a surge of samples following
a terrorist incident. Each of these activities will be coordinated with USDA, which will receive
an increase of $145 million in 2006 to protect the food and agriculture supply from terrorist attacks.
134 DEPARTMENT OF HEALTH AND HUMAN SERVICES
PROTECTING AMERICA—Continued
Protecting the Nation from Influenza and the Threat of an Influenza Pandemic
2001 2002 2003 2004 2005 2006
0
50
100
150
200
250
300
350
400
450
HHS Influenza Vaccine and
Preparedness Funding
Millions of dollars
Source: HHS.
CDC Vaccine Purchase
CDC Surveillance and
Preparedness
FDA Research and Licensing
NIH Research and
Development
Pandemic
Preparedness
41 53
101
255
419 430
Every fall and winter, influenza poses a
threat to public health, especially for seniors
and others vulnerable to complications from
influenza. If a new influenza virus for which
we have no immunity or vaccine takes a
form that is easily spread, an influenza
pandemic could develop and cause terrible
damage to public health. The Administration
is committed to improving influenza vaccine
supply, preventing another influenza vaccine
shortage, and helping prepare for a possible
pandemic. HHS is enhancing global influenza
surveillance to provide an earlier warning
of the viruses’ emergence; increasing the
supply of influenza vaccine; stockpiling large
quantities of antiviral drugs; promoting the development of new technologies to produce vaccine
more quickly and securely; and investigating promising ways to safely and effectively extend the
supply of vaccine doses, especially in a pandemic.
The Budget builds on this progress, maintains a childhood influenza vaccine stockpile, includes a
$20 million increase for influenza vaccinations for children and other vulnerable populations, and
proposes $30 million to expand the Nation’s vaccine supply. The Budget also includes an increase
to enhance global disease surveillance and a $21 million increase to work with manufacturers to
increase the availability of additional U.S.-licensed vaccine to meet increased supply needs, especially
during an influenza pandemic.
Strengthening the Safety of Medical Products
FDA works to ensure the safety of medical products, including prescription and over-the-counter
drugs. Before being made available to consumers, medical products undergo a rigorous review by
FDA scientists for safety and effectiveness. After approved medical products are made available to
consumers, FDA staff review adverse events and respond to any concerns. This system has succeeded
in providing American consumers with safe and life-improving medical products for decades.
FDA continues to evaluate its systems and processes to refine its oversight and further improve
the safety of medical products. FDA is sponsoring a study by the Institute of Medicine on the effectiveness
of the U.S. drug safety system, with an emphasis on the continued safety of medical products
already approved for use by FDA. The Institute of Medicine study will examine FDA’s role within the
health care delivery system and recommend measures to enhance the confidence of Americans in the
safety and effectiveness of their drugs. In addition, the 2006 Budget proposes a 24-percent increase
for the FDA Office of Drug Safety to enable FDA to continue its track record of success in providing
safe and effective medical products to American consumers.
THE BUDGET FOR FISCAL YEAR 2006 135
SUPPORTING A COMPASSIONATE SOCIETY
Improving Medicare
The Medicare Prescription Drug, Improvement,
and Modernization Act of 2003
(MMA) created improvements to the Medicare
program, providing beneficiaries with more
choices and enhanced benefits. Seniors and
individuals with disabilities will have access
to more modernized, higher quality health
care. Funding for the Medicare program is
projected to be $340 billion in 2006. Medicare
consists of four parts:
• Part A: hospital insurance, which
provides coverage for hospitals, skilled
nursing, hospice, and other related
services;
• Part B: supplementary medical insurance, which provides coverage for outpatient hospital,
physician, home health, laboratory services, durable medical equipment, and other related
services;
• Part C: Medicare Advantage, which finances the full Medicare benefit through private plans;
and
• Part D: the new prescription drug benefit.
Advancing Medicare Advantage. The MMA created the Medicare Advantage program (Part C) to
offer more choices and better benefits to Medicare beneficiaries through competition among private
health insurance plans. Beginning in 2006, Preferred Provider Organizations (PPOs) will begin to
serve beneficiaries on a regional basis. These regional plans will compete with existing localMedicare
Advantage plans to provide health services to beneficiaries. HHS has identified 26 regions across the
Nation in which PPO plans will compete to provide services. HHS established these regions to ensure
all Medicare beneficiaries, including those in small States and rural areas, have the opportunity to
enroll in a PPO and to encourage plans to participate. In 2006, 16 percent of beneficiaries are expected
to be enrolled in Medicare Advantage plans, and by 2009, this number is projected to increase
to 24 percent.
Medicare Prescription Drug Benefit. The MMA created a new prescription drug benefit (Part D)
that will begin in 2006. In the interim, the MMA authorized the Centers for Medicare and Medicaid
Services (CMS) to offer Medicare beneficiaries a prescription drug discount card. Around six million
beneficiaries have signed up for the card since June 2004. Independent studies have shown savings
of 20 percent or more off the retail cost of brand name drugs and 30 to 60 percent off generic drugs.
In addition, over 1.7 million low-income beneficiaries have begun to receive $600 annually in transitional
assistance provided by the Act. These beneficiaries can save up to 90 percent off the average
retail price of name-brand drugs when they combine the drug card savings with the $600 transitional
assistance.
136 DEPARTMENT OF HEALTH AND HUMAN SERVICES
SUPPORTING A COMPASSIONATE SOCIETY—Continued
Beginning January 1, 2006, Medicare beneficiaries will be
eligible for a subsidized prescription drug benefit that helps
lower their drug costs. They will have their choice of enrolling
in either prescription drug-only plans or Medicare Advantage
drug plans. HHS will conduct extensive outreach efforts to
help seniors understand their new choices. Expanded efforts
through 1–800–Medicare, community based organizations,
and media outreach will ensure that seniors have adequate
information to benefit from the new options under the MMA.
The drug plans will receive subsidies from Medicare to help
keep premiums and cost-sharing low. Additional subsidies will
be paid to employers to encourage them to continue to offer
retiree health benefits to millions of seniors. This will assist
beneficiaries in retaining the employer sponsored coverage to
which they have grown accustomed.
In addition, Medicare will provide generous additional
assistance to low-income beneficiaries. For those beneficiaries
with incomes below 135 percent of poverty, they will pay no
monthly premium, no deductible, and very small co-payments
per prescription. Beneficiaries with incomes between 135 and
150 percent of poverty will pay reduced premiums, a $50 deductible, and reduced cost-sharing.
Improving Health Centers
2002 2003 2004 2005 2006
Goal: 1,200 by 2006
Source: HHS.
Completing the President’s
Health Centers Initiative
New and Expanded Sites Since 2001
302
619
490
1,350
772
Health Centers deliver high-quality, affordable
primary and preventive health care
to nearly 14 million patients, regardless of
ability to pay, at 3,740 sites across the United
States annually. In 2006, Health Centers will
serve an estimated 16 percent of the Nation’s
population at or below 200 percent of Federal
Poverty Line.
The Budget will complete the President’s
commitment to create 1,200 new or expanded
Health Center sites to serve an additional 6.1
million people by 2006. Almost 2.4 million
additional individuals will receive health care
in 2006 through over 570 new or expanded
sites in rural areas and underserved urban
neighborhoods. The President has established a new goal to create a Health Center in every poor
county that lacks a Health Center and can support one. The Budget includes $26 million to fund
40 new Health Center sites in high-poverty counties. Faith-based and community programs will be
encouraged to compete for these grants.
THE BUDGET FOR FISCAL YEAR 2006 137
Modernizing Medicaid and SCHIP Coverage
Medicaid was created nearly 40 years ago to provide access to health care for individuals on welfare,
based on health care available at that time. Over that time span, Medicaid has grown far faster
than most Federal entitlement programs. The Budget calls for specific reforms to Medicaid that promote
better care for low-income Americans, more local control for States, fair payments to providers,
and better accountability measures so that Medicaid’s fiscal condition will improve.
In 2006, funding for Medicaid is projected to be $338 billion, about $193 billion of which is paid by
the Federal Government. Since 1998, SCHIP has made available approximately $40 billion over 10
years for States to provide health care coverage to targeted low-income, uninsured children. Since
the beginning of the Administration, enrollment in SCHIP has grown by over one million children to
a total of approximately 5.8 million in 2003.
Even though Medicaid will serve more than 46 million Americans in 2006, it operates under outdated
rules. Medicaid excludes millions of individuals who are well below the Federal poverty level
because program rules remain tied to welfare eligibility categories. While the President’s Health
Centers Initiative has provided access to health care for many uninsured individuals, many are still
left with the choice of seeking health care through hospital emergency rooms, contributing to the
growing burden of uncompensated care among hospitals.
Instead of helping these individuals get better coverage, States often reluctantly decline to expand
coverage because Medicaid rules do not easily support many up-to-date, efficient approaches to expanding
coverage. Moreover, millions of senior citizens and individuals with disabilities in need of
long-term care are provided only with the choice of leaving their homes for institutional care to get
the support they need. There is now widespread evidence that updating Medicaid to keep pace with
the people it serves, and better coordinating it with SCHIP, can lead to better coverage, better health
care, and a more sustainable cost structure for the States and the Federal Government.
Medicaid and SCHIP Modernization. In addition to proposing an increase in Federal resources
for covering the uninsured (the elements of which were outlined in the Promoting Economic Opportunity
and Ownership section of this chapter), the Administration proposes to provide States with
additional flexibility in Medicaid to further increase coverage among low-income individuals and
families without creating additional costs for the Federal Government. This proposal would build
on the success of SCHIP to provide acute care for children and families, as well as current efforts to
reduce the number of uninsured individuals.
States generally regard the complex array of Medicaid laws, regulations, and administrative guidance
as overly burdensome, with the result being higher costs for covering fewer beneficiaries. In
response, the Administration has granted waivers that allow States to extend Medicaid coverage
to higher income and non-traditional populations, such as childless adults. For example, in 2001,
the Administration introduced the Health Insurance Flexibility and Accountability (HIFA) demonstration
initiative. This initiative emphasizes the coordination of currently available Medicaid and
SCHIP funding with private insurance. Through these waiver programs and the HIFA initiative,
States have found that they can provide health care to more beneficiaries with the same amount of
funding by changing delivery systems and using mainstream coverage, including managed care and
coordination with employer plans.
SCHIP provides States with more flexibility than Medicaid, allowing States to cover targeted populations,
incorporate private sector insurance options, provide appropriate benefit packages, and
maximize public dollars.
A modernized Medicaid system will give States greater flexibility without the need for burdensome
waiver applications. Principles that are employed in SCHIP and emphasize innovation will be
expanded to Medicaid beneficiaries, while long-term care reforms will build on successful programs
138 DEPARTMENT OF HEALTH AND HUMAN SERVICES
SUPPORTING A COMPASSIONATE SOCIETY—Continued
that use consumer direction and home- and community-based care to improve satisfaction and lower
costs. AmodernizedMedicaid system will continue to grow at a robust rate to accommodate increases
in health care spending.
Enhancing Medicaid and SCHIP Coverage
Apart fromprogram modernization, the following proposals will enhance coverage under both Medicaid
and SCHIP.
SCHIP Reauthorization. The authorization for the SCHIP program expires at the end of 2007.
Due to its success at enrolling millions of low-income uninsured children, the 2006 Budget proposes
to reauthorize this program early. The Administration will seek authority to better target SCHIP
funds in a more timely manner.
Transitional Medical Assistance (TMA). TMA provides Medicaid coverage for former welfare
recipients after they enter the workforce. The Budget proposes to extend TMA for one year with
certain statutory modifications, including a State option to eliminate TMA reporting requirements
and provide 12 months of continuous eligibility regardless of changes in families’ financial status.
In addition, the Budget proposes a waiver of the TMA requirement for States that currently provide
health benefits for families at 185 percent of the Federal poverty level, which is the statutorily
mandated income eligibility level. These changes will allow for consistent enrollment of TMA
beneficiaries while easing the administrative burden on States.
Medicare Premium Assistance. The Administration proposes to continue Medicare Part B premium
assistance for Medicare beneficiaries between 120 and 135 percent of the Federal poverty level for
one year. In 2005, these premiums will be $78.20 per month. States receive 100 percent Federal
funding for these benefits.
Vaccines for Children (VFC). VFC provides all recommended childhood vaccines, free of charge, to
four categories of eligible children: Medicaid beneficiaries, American Indians/Alaskan Natives, the
uninsured, and the underinsured (those without coverage for a particular vaccine). The Administration
proposes to improve vaccine access by allowing underinsured children to receive VFC-funded
vaccines at State and local health clinics, rather than only at Federally Qualified Health Centers and
Rural Health Centers.
Health Insurance Portability and Accountability Act (HIPAA). Since enacted in 1996, HIPAA has
increased the continuity, portability, and accessibility of health insurance. To ensure that Medicaid
and SCHIP beneficiaries receive the benefits of HIPAA coverage, the Administration proposes
two legislative changes. Under this proposal, eligibility for a Medicaid/SCHIP Employer-Sponsored
Insurance (ESI) Program would be a qualifying event, which would allow families to enroll in ESI
immediately through special enrollment. This proposal also would require SCHIP programs to issue
certificates of creditable coverage, which promote portable health coverage by verifying the period of
time an individual was covered by a specific health insurance policy.
Improving Options for People with Disabilities. The Budget includes several policies that promote
home- and community-based care options for people with disabilities. These policies build on the
President’s New Freedom Initiative, which is part of a nationwide effort to integrate people with
disabilities more fully into society.
• Money Follows the Person Rebalancing Demonstration. This five-year demonstration would
finance Medicaid services for individuals who transition from institutions to the community.
Federal grant funds would pay the full cost of home and community-based waiver services for
THE BUDGET FOR FISCAL YEAR 2006 139
one year of a beneficiary’s care, after which the State would agree to continue this care at the
regular Medicaid matching rate.
• Home and Community-based Care Demonstrations
and Programs. The Budget includes
proposals to encourage home and community-
based care for children and adults with
disabilities, such as demonstrations to provide
respite care for caregivers of adults and children.
Another demonstration will test the effectiveness
of providing home and community-based
alternatives to psychiatric residential treatment
for children enrolled in Medicaid. States will
have the option to continue Medicaid eligibility
for spouses of individuals with disabilities who
return to work. States will also have the option
to provide Medicaid presumptive eligibility for institutionally qualified individuals who are
discharged from hospitals into the community.
• Long-Term Care Insurance. The 2006 Budget would promote the use of long-term care (LTC)
insurance by eliminating the Federal legislative ban on new LTC Partnership Programs, which
are a proven approach to lowering Medicaid costs while giving consumers and families more
control and involvement in their long-term care services. Through these programs, consumers
who purchase and use Partnership-approved insurance can become eligible forMedicaid services
after their insurance coverage is exhausted without having to divest all of their assets, as is
typically required.
Faith-Based and Community Initiative
Compassion Capital Fund. To advance the efforts of community-based, charitable organizations,
including faith-based organizations, the President’s 2006 Budget provides $100 million for the Compassion
Capital Fund, to enhance their ability to provide social services, expand their organizations,
diversify their funding sources, and create collaborations to better serve those in need. Among the
priorities within the 2006 proposal is an emphasis on supporting anti-gang efforts through community
and faith-based organizations. Since 2002, a total of $149 million has been given directly tomore
than 300 organizations and sub-grants to more than 3,000 grass-roots organizations.
Mentoring Children of Prisoners. As a group, the more than two million children with parents
in prison have more behavioral, health, and educational problems than other children. Mentoring
by caring adults can improve the long-term outcomes for children whose parents are incarcerated.
In 2004, HHS awarded $8.9 million in continuation grants and $37 million in 169 new grants to
programs that provide mentoring services to these children. The Budget includes $50 million for
competitive grants. Since 2003, this program has been working toward providing over 70,000 new
mentors for children with a parent in prison.
Maternity Group Homes. The 2006 Budget also provides $10 million to increase support to
community-based maternity group homes by providing young pregnant mothers with access to
community-based coordinated services.
Access to Recovery. In 2004, HHS awarded Access to Recovery (ATR) grants to 14 States and one
tribal organization to create substance abuse treatment voucher programs. ATR is designed to give
addicted individuals the ability to choose from a range of effective treatment and recovery support
options, including faith-based and community providers. The 2006 Budget includes $150 million
140 DEPARTMENT OF HEALTH AND HUMAN SERVICES
SUPPORTING A COMPASSIONATE SOCIETY—Continued
Wisconsin issued the first Access to Recovery voucher to Kimberly
Washington (left), a 41-year old mother from Milwaukee, Wisconsin
whose addiction and related felony convictions are a barrier to employment
and to raising her children. Ms. Washington chose Meta
House because the agency provides residential treatment and recovery
support services, and it will allow her one-year old baby to
live with her in treatment once she is ready for re-unification. She
and her Access to Recovery coordinator (right) developed a Recovery
Support Team, including her service providers, probation officer,
church, family, and others to help her achieve and sustain recovery
post-treatment. Ms. Washington said that “...knowing there’s someone,
or something, like an angel onmy shoulder givesme hope, and
motivation, that I will not fail this time—someone will be there.”
to maintain existing commitments and expand access to effective treatment in additional States.
States will hold providers accountable for results and reward those providers most effective at helping
clients to achieve recovery from addiction.
Marriage and Healthy Family Development
The Administration’s initiatives to promote marriage and healthy family development are built
around four strategies:
1) Support marriage and families;
2) Provide tools to parents;
3) Teach children how to be good family members and citizens; and
4) Encourage community organizations, including faith-based organizations, to support families.
Supporting Healthy Marriages and Responsible Fatherhood. The Budget proposes to direct $240
million to new efforts to support healthy marriages and responsible fatherhood. Of this amount,
$100 million, plus dollar for dollar matching contributions from States, would fund competitive
grants for States, territories, and tribal organizations to develop innovative approaches to promote
healthy marriages. The Budget includes $100 million for research, demonstration projects, and
technical assistance, primarily focusing on family formation and healthy marriage activities. To
support these programs, funds would be redirected from the Temporary Assistance for Needy
Families High Performance Bonus ($100 million) and the Illegitimacy Reduction Bonus ($100
million).
The Administration also proposes to create a $40 million per year grant program, through faithand
community-based organizations, that helps non-custodial fathers become more involved in their
children’s lives. More than 25 million children live in homes without fathers.
Abstinence Only Education. Last year, President Bush announced the expansion of the initiative
to educate teens and parents about the health risks associated with early sexual activity and to help
THE BUDGET FOR FISCAL YEAR 2006 141
teens make healthy choices. As part of this initiative, the President directed the Department as
follows:
• Develop research-based standards for abstinence education curricula;
• Conduct a review of the consistency of messages in all federal programming for youth addressing
teen pregnancy prevention, family planning, and STD and HIV/AIDs prevention;
• Develop a public education campaign designed to help parents communicate with their children
about the risks associated with early sexual activity; and
• Provide grants to communities and States to develop and implement abstinence-only programs
and for Federal evaluation of these programs.
In support of this initiative, by 2008 funding for these programs will increase to a total of $270
million.
Refugee and Entrant Assistance
Refugees come to the United States for protection from persecution and in search of freedom, peace,
and opportunity. The Office of Refugee Resettlement provides programs to help refugees, asylees,
trafficking victims, and other beneficiaries achieve economic self-sufficiency and social adjustment.
The Budget includes $552 million, or an increase of $68 million, to assist States and faith-based
and community organizations in resettling the growing number of refugees, and for the care and
placement of unaccompanied alien minors in safe and appropriate environments.
Carlos, a 15-year old Guatemalan who never knew his parents and was raised by relatives, journeyed to
the United States through Mexico with an older cousin in search of his mother and a better education. His
journey was mostly by foot and bus. While residing in shelter care in Phoenix, Carlos exhibited developmental
and physical delays. With the help of intensive services from the Unaccompanied Refugee Minor
(URM) program in the Office of Refugee Resettlement, the child’s mother and grandmother were advised
of the child’s exceptional needs and thus were more prepared to handle his serious medical issues. The
URM program completed a home suitability assessment, confirmed that the mother was prepared to care
for Carlos, prepared Carlos to join his mother, and worked aggressively to complete family reunification.
Reforming Welfare
Temporary Assistance for Needy Families (TANF). The Administration continues to pursue its plan
to reauthorize the TANF program, which provides grants to States for programs that assist needy
families with children. TANF grants also promote work and the formation ofmarried-parent families
in order to reduce dependence on government benefits. The Administration’s planmaintains funding,
strengthens work requirements, supports healthy marriages and family formation, and increases
State flexibility.
Strengthening Programs for Children
Early Childhood (Good Start, Grow Smart). Because it is important for children to enter school
ready to learn, the Administration has worked to improve early childhood programs through the
Good Start, Grow Smart initiative. The goals of this initiative are:
• Strengthening Head Start;
142 DEPARTMENT OF HEALTH AND HUMAN SERVICES
SUPPORTING A COMPASSIONATE SOCIETY—Continued
• Working with states to improve early childhood learning; and
• Providing parents, teachers, and caregivers with information on early learning.
Head Start. The Budget supports reauthorization of Head Start and provides $6.9 billion, including
$45 million to support State implementation of a demonstration authority to promote better coordination
of existing programs, improve services for families and children, and achieve better results
with the resources already being used.
Independent Living Education and Training Vouchers. The Budget commits $60 million to the
Foster Care Independent Living Program to help older foster care youth transition to adulthood and
self-sufficiency after leaving foster care. This program provides vouchers of up to $5,000 for education
or vocational training to help youth aging out of foster care develop skills and lead independent and
productive lives.
Child Welfare Program Option. The 2006 Budget seeks legislation to introduce an option for all
States so they can choose an alternative system for foster care. Flexible financing will allow States to
design programs with a stronger emphasis on child-abuse prevention, family support, and increased
flexibility in providing services.
Battling HIV/AIDS
Global AIDS. The President’s Emergency Plan for AIDS Relief is a bold strategy to combat the
global HIV/AIDS pandemic. Under the President’s five-year, $15 billion plan, the Administration
has moved quickly and efficiently to mobilize the scientific and programmatic expertise, leadership,
and resources of HHS and other Federal government agencies and their partners. The goals of the
plan are to prevent seven million new HIV infections, treat two million HIV-infected people, and provide
care for 10million people affected by HIV/AIDS by 2008. The 2006 Budget will continue progress
toward meeting these goals by preventing 3.8 million infections, treating 860,000 HIV-infected people,
and providing care for 4.3 million people affected by HIV/AIDS.
Domestic AIDS. The Budget invests over $17 billion for domestic AIDS treatment, prevention, and
research, including almost $2.1 billion for the Ryan White program and its comprehensive approach
to address the health needs of persons living with HIV/AIDS. Through this program, low-income
individuals living with HIV/AIDS receive medical care, counseling and testing, and other support
services. The Budget provides for a continued investment in the AIDS Drug Assistance Program
that helps provide life-saving antiretroviral drug treatments to those who otherwise could not afford
them.
Reforming Community and Economic Development Programs
The Budget proposes a $3 billion program within the Department of Commerce to support communities’
efforts to meet the goals of improving their economies and quality of life. This initiative
will consolidate programs across the Federal Government into a more targeted, unified program that
sets accountability standards in exchange for flexible use of the funds. HHS programs consolidated
into this initiative are the Community Services Block Grant, Community Economic Development,
and Rural Community Facilities. (See the Department of Commerce chapter for more details.)
THE BUDGET FOR FISCAL YEAR 2006 143
MAKING GOVERNMENT MORE EFFECTIVE
The National Institutes of Health
The National Institutes of Health (NIH) will receive nearly $29 billion. Overall, NIH’s research
program has rated well in its Program Assessment Rating Tool (PART) performance assessments
and is an effective mechanism for promoting biomedical breakthroughs. To better integrate research
across its 27 Institutes and Centers, NIH is developing additional decision support tools to improve
the management of its large and complex scientific portfolio. This will allow NIH to more efficiently
address important areas of emerging scientific opportunities and public health challenges. The Administration
is committed to this new effort, which will stimulate accelerated investments in research
involving multiple Institutes and Centers, thereby helping improve the Nation’s health.
Medicaid and SCHIP
Program Integrity. Medicaid’s complexity and open-ended finance
structure encourages efforts by States to draw down Federal
matching funds, sometimes inappropriately. These financing
practices undermine the Federal-State partnership required
by the Medicaid statute and jeopardize the financial stability of
the Medicaid program. The 2006 Budget proposes to build on
past efforts to improve efficiencies and the fiscal integrity ofMedicaid
and SCHIP—and evenwith these reform efforts, Medicaid’s
future spending is expected to increase at a robust 7.2 percent
growth rate over 10 years.
The Administration proposes to further improve the integrity
of theMedicaidmatching rate basis of funding by proposing steps
to curb financing arrangements that have been used by a number
of States to avoid the legally determined State matching funds
requirements. Through various mechanisms, Federal funds are
returned from providers back to the State and “recycled” to draw
additional Federal dollars.
• Recovering Federal Funds Diverted From Providers. Some
States keep a portion of Federal payments intended for
providers. The Budget proposes to build on CMS efforts to identify and recover diverted
payments that are not used for their intended purpose.
• Capping Payments to Government Providers. Under current law and regulation, States continue
to have ample opportunities to make excessive payments to individual government providers
above their costs for the purpose of leveraging additional Federal dollars. The 2006 Budget proposes
to limit Federal reimbursement to no more than cost to curb excessive payments and still
preserve a State’s ability to pay reasonable rates to providers.
• Reforming Provider Taxes. Under certain conditions, States may use the proceeds of taxes
collected from a certain class of health providers to help finance the State’s share of Medicaid
expenses. Under current rules, the tax cannot exceed six percent of revenues and must be applied
uniformly across all health care providers in the same class (e.g., all hospitals). The 2006
Budget proposes to phase down the allowable tax rate from six percent to three percent and
144 DEPARTMENT OF HEALTH AND HUMAN SERVICES
MAKING GOVERNMENT MORE EFFECTIVE—Continued
require that managed care organizations be treated the same as other classes of health care
providers with respect to provider tax requirements.
• Strengthening Reimbursement Policies for Selected Medicaid Services. The 2006 Budget proposes:
1) clarifying allowable services that can be claimed under targeted case management
(TCM), and rehabilitation services; 2) aligning Federal reimbursement for TCM services with
administrative matching rate of 50 percent; and 3) codifying in regulation CMS reimbursement
policies for services provided free of charge to the public.
• Strengthening Medicaid Requirements for Questionable Asset Transfers. To qualify for Medicaid
long term care services, an individual may only retain nominal assets. Applicants who transfer
assets at less than fair market value are subject to delays in Medicaid eligibility. With estate
planning, however, Medicaid applicants can retain their assets and qualify forMedicaid without
any delays. In conjunction with the long-term care partnership proposal, the Budget proposes to
strengthen existing requirements for questionable asset transfers as part of an effort to promote
personal responsibility and planning for long-term care expenses.
• Medicaid Administrative Claims. The Administration proposes establishing individual State
allotments for Medicaid administrative claims. Medicaid administrative claims operate under
an open-ended financing framework, which does not encourage States to administer the program
as efficiently as possible. In some instances, there is evidence that States have attempted
to shift administrative costs associated with other social service programs to Medicaid. For
these reasons, the Administration proposes to create new incentives for program administration
by establishing administrative claim allotments that will encourage cost-effective methods
for operating the program.
• Medicaid and SCHIP Financial Management. In 2006, HHS will continue to devote more resources
to Medicaid and SCHIP financial management. This effort will include increasing the
number of audits and evaluations of State Medicaid programs, and elevating the importance of
financial management oversight at HHS. The Budget proposes to allocate $25 million from the
Health Care Fraud and Abuse Account to finance this initiative.
Medicaid Prescription Drugs. The Budget makes several proposals to increase efficiency and lower
costs in Medicaid prescription drugs, one of the fastest growing segments of the Medicaid budget.
• Amend Medicaid Drug Rebate Formula. All drug manufacturers must pay a rebate to States in
order to have their drugs covered by Medicaid. Part of the rebate formula is the lowest private
market price, also called best price. Best price effectively acts as a price floor, preventing manufacturers
from negotiating deep discounts with large purchasers such as hospitals and HMOs.
The Administration proposes to replace best price with a budget neutral flat rebate, allowing
private purchasers to negotiate lower drug prices.
• Restructure Pharmacy Reimbursement. The House Energy and Commerce Committee recently
held a hearing that documented substantial and rising Government overpayment for prescription
drugs inMedicaid. The Administration proposesmoving to a system that more closely aligns
pharmacy reimbursement with pharmacy acquisition cost, while providing adequate payment
for dispensing prescriptions.
• Pharmacy Plus Demonstrations. Pharmacy PlusMedicaid demonstrations provide a drugs-only
Medicaid benefit to certain aged and disabled beneficiaries not otherwise eligible for Medicaid.
Pharmacy Plus was intended as a placeholder program in the absence of a universal drug
benefit under Medicare. With the introduction of the Medicare drug benefit, Pharmacy Plus
has achieved its goal. CMS will continue to work closely with States that have Pharmacy Plus
THE BUDGET FOR FISCAL YEAR 2006 145
programs to enable them to provide comparable coverage to their beneficiaries under the new
Medicare drug benefit at the same or lower cost to the States.
Medicare Financial Enhancements
0
2
4
6
8
10
12
14
Medicare Expenditures and
Non-Interest Income
Source: 2004 Annual Report of the Board of Trustees for the Federal Hospital
Insurance and Federal Supplementary Medical Insurance Trust Funds.
Percent of GDP
2000 2010 2020 2030 2040 2050 2060 2070 2080
Payroll
Premiums
General Revenues
Expenditures
Other
Strengthening Medicare’s Long-Term Financial
Security. Medicare is financed by two
separate trust funds, the Hospital Insurance
Trust Fund and the Supplementary Medical
Insurance Trust Fund. This bifurcated
trust fund structure finances Medicare as if
the program offers two separate, unrelated
benefits, instead of recognizing that Medicare
provides integrated, comprehensive health
insurance coverage. The MMA took steps
to address this problem, and requires the
Medicare Trustee’s Report to include a new,
comprehensive fiscal analysis, the Combined
Medicare Trust Fund Analysis. This analysis
examines the program’s financing as a whole,
and provides the President and the Congress
with a warning if Medicare’s dedicated revenues are projected to fall below adequate levels in seven
years. The Administration supports a unified trust fund for Medicare, which would provide an
integrated financing structure for the program’s comprehensive benefit package.
Improving Quality. Medicare currently pays all health care providers equally for the same service,
regardless of the efficiency or the quality of services furnished. The Administration has promoted
accountability for quality, creating initiatives to collect data fromMedicare providers on quality measures
and making them publicly available. Better measures of efficiency and quality in health care
suggest that Medicare can improve payments for high-quality care. The Administration will take
further steps to encourage excellence in care by exploring provider payment reforms that link quality
to Medicare reimbursement in a cost neutral manner. Such payment reforms should be flexible
enough to support innovations in health care delivery.
Administrative Improvements. In the coming years, HHS will make changes to rationalize several
components of the payment system. Specialty hospitals, which tend to be physician-owned and focus
on patients with specific medical conditions or who need surgical procedures, are a small but growing
segment of the health care industry. MedPAC, the congressional advisory committee for Medicare
issues, conducted extensive research and found that there are problems in physician ownership of
hospitals and in the way Medicare pays for hospitals. The Administration will seek to refine the inpatient
hospital payment system and related provisions of regulations to ensure a more level playing
field between specialty and non-specialty hospitals.
With regard to Medicare Advantage, the Budget will phase in over four years the savings from the
full implementation of risk adjustment payments to account for different health status of beneficiaries
in Medicare Advantage plans. The phase-in will begin in 2007 and will be completed by 2010,
and is projected to produce savings to the extent that Medicare Advantage plans serve healthier beneficiaries,
on average, compared to fee-for-service. The Budget also proposes to improve payment
accuracy for patients who are transferred from inpatient hospitals to post-discharge acute settings,
such as nursing facilities. Lastly, HHS will refine the Skilled Nursing Facility Prospective Payment
System in 2006 to ensure appropriate payments for certain high-cost cases.
146 DEPARTMENT OF HEALTH AND HUMAN SERVICES
MAKING GOVERNMENT MORE EFFECTIVE—Continued
Program Integrity. Medicare program integrity efforts have
yielded billions of dollars in savings. The Budget continues
this effort with $1.1 billion from the Health Care Fraud and
Abuse Control Account to fight improper Medicare payments.
The Budget requests $75 million for efforts to protect the new
Medicare prescription drug program and Medicare Advantage
against fraud, waste, and error, and these funds will be included
in a Government-wide proposal to fund program integrity
activities through a discretionary cap adjustment.
Additionally, HHS will strengthen program integrity by preventing
overpayments, accelerating contractor reform and rationalizing
payments for bad debt. HHS will institute several data
processing improvements that will reduce overpayments. The
Budget provides funding to continue the modernization of Medicare’s
data systems to this end. HHS will also accelerate implementation
of a new process for awarding contracts to administrative
contractors, which will enhance Medicare’s ability to hold
contractors accountable for their program integrity performance.
Lastly, the Budget proposes to rationalize the reimbursement of
bad debt to promote efficiency and ensure equitable treatment
across providers.
MMA Implementation
CMS Operations and Efficiencies. HHS has initiated an extensive effort to implement the many
provisions of the MMA. In 2004, CMS reorganized to improve the oversight and administration of
Medicare Advantage and the prescription drug benefit and provide more support for improving quality
and efficiency in Medicare. HHS has begun outreach efforts to ensure that beneficiaries can get
the most out of their new choices, and develop new procedures to enroll beneficiaries and employers
in the new benefit. In 2005 and 2006, HHS will also implement other provisions of the MMA, such
as contractor reform for Medicare’s administrative contractors and changes to payments for Part B
Covered Drugs.
Update on the President’s Management Agenda
The following table provides an update on HHS’ implementation of the President’s Management
Agenda as of December 31, 2004.
THE BUDGET FOR FISCAL YEAR 2006 147
Human Capital
Competitive
Sourcing
Financial
Performance E-Government
Budget and
Performance
Integration
Status
Progress
HHS successfully consolidated its human resources personnel into four centers and achieved greater
accountability through its employee appraisals and its Strategic Management System. Additionally, it has
implemented a number of initiatives to improve the skills and abilities of its workforce including HHS University
and its Emerging Leaders Program.
HHS’ strategic approach to competitive sourcing is facilitated by the use of evaluation factors such as mission,
outcomes, and commercial market-place composition to identify commercial activities available for competition.
In 2004, HHS completed a total of 33 streamlined studies of 365 FTEs and five standard studies of 351 FTEs.
The average time for completion was 69 days for streamlined studies and 285 days for standard competitions.
As a result, HHS estimates gross savings of over $250 million for completed 2003 studies and $55 million for
completed 2004 studies, as they are fully implemented over a five-year period.
In E-Gov, HHS is implementing Earned Value Management to track and manage information technology
investments. More than 95 percent of HHS’ information systems have certified and accredited security plans.
Initiative Status Progress
Faith-Based and Community Initiative
Real Property Asset Management
Eliminating Improper Payments
Broadening Health Insurance Coverage through State Initiatives
To improve the overall management of its real property assets, HHS has a three-part strategy: 1) develop an
asset management plan; 2) maintain a real-time inventory of owned, leased, and otherwise managed properties;
and 3) track performance measures, which are consistent with the Federal Real Property Council’s guidance.
HHS plans to complete these activities by December 2005.
HHS’ annual Performance and Accountability Report (PAR) includes an annual estimated improper payments
error rate and amount for Medicare, which accounts for nearly 50 percent of improper payments that have been
measured. For 2004, the Medicare error rate was 10.1 percent, or $21.7 billion. For the first time, HHS reported
improper payments for Head Start in the 2004 PAR, with an estimated error rate of 3.9 percent, or $255 million.
HHS is working to reduce improper payments, expand the number of programs reporting estimated improper
payment estimates, and improve the accuracy of these estimates. (Because this is the first quarter that agency
efforts in the Eliminating Improper Payments Initiative were rated, progress scores were not given.)
The Administration has developed several model Medicaid demonstrations to foster State innovation in reducing
the number of uninsured. To date, the Administration has approved 23 demonstrations and the Urban Institute
is conducting a study to assess the impact of Health Insurance Flexibility and Accountability demonstrations
on rates of uninsurance.
148 DEPARTMENT OF HEALTH AND HUMAN SERVICES
Department of Health and Human Services
(In millions of dollars)
Estimate 2004
Actual 2005 2006
Spending
Discretionary Budget Authority:
Food and Drug Administration......................................................................... 1,362 1,433 1,487
Program level (non-add) ............................................................................... 1,695 1,801 1,881
Health Resources and Services Administration........................................ 6,677 6,806 5,982
Program level (non-add) ............................................................................... 7,323 7,373 6,541
Indian Health Service.......................................................................................... 2,921 2,984 3,048
Program level (non-add) ............................................................................... 3,639 3,774 3,846
Centers for Disease Control and Prevention 1 ......................................... 4,440 4,584 4,017
Program level (non-add) ............................................................................... 6,062 6,312 5,901
National Institutes of Health.............................................................................. 27,733 28,444 28,590
Program level (non-add) ............................................................................... 27,896 28,650 28,845
Substance Abuse and Mental Health Services Administration ........... 3,234 3,268 3,215
Program level (non-add) ............................................................................... 3,351 3,392 3,336
Agency for Healthcare Research and Quality............................................ — 3 —
Program level (non-add) ............................................................................... 304 321 319
Centers for Medicare and Medicaid Services 2 ........................................ 2,579 2,666 3,178
Program level (non-add) ............................................................................... 2,358 3,445 3,999
MedPAC/OCR/GDM/AHRQ Administration ................................................ 19 19 19
Discretionary HCFAC.......................................................................................... — — 80
Administration for Children and Families ..................................................... 13,288 13,537 13,127
Program level (non-add) ............................................................................... 13,292 13,599 13,187
Administration on Aging ..................................................................................... 1,374 1,393 1,369
Office of the Secretary........................................................................................ 393 405 385
Program level (non-add) ............................................................................... 497 508 517
Health Information Technology........................................................................ — — 75
Office of Medicare Appeals 3 .......................................................................... 58 58 80
Program Support Center: Medicare eligible retiree accrual ................. 27 33 34
Office of the Inspector General ....................................................................... 39 40 40
Public Health and Social Services Emergency Fund.............................. 2,164 2,269 2,428
Subtotal, Discretionary budget authority .......................................................... 66,308 67,942 67,154
Medicare Reform Administrative Expenses 2 ............................................ 1,000 — —
Total, Discretionary budget authority ................................................................. 67,308 67,942 67,154
Memorandum: Budget authority from enacted supplementals ............... — 350 —
Total, Discretionary outlays ................................................................................... 64,520 67,095 69,002
THE BUDGET FOR FISCAL YEAR 2006 149
Department of Health and Human Services—Continued
(In millions of dollars)
Estimate 2004
Actual 2005 2006
Mandatory Outlays:
Medicare:
Existing law ........................................................................................................ 264,890 290,310 340,217
Legislative proposal 4 .................................................................................... — — 195
Medicaid/SCHIP:
Existing law ........................................................................................................ 180,838 193,615 197,996
Legislative proposal ........................................................................................ — 225 955
All other programs:
Existing law ........................................................................................................ 32,255 33,144 33,561
Legislative proposal ........................................................................................ — 38 565
Total, Mandatory outlays ........................................................................................ 477,983 517,332 573,489
Total, Outlays.............................................................................................................. 542,503 584,427 642,491
1 For comparability, the 2004 budget authority level reflects the creation of the Global AIDS Coordinator and program levels reflect a childhood
immunizations legislative proposal.
2 Amounts appropriated to the Social Security Administration (SSA) from the Hospital Insurance and Supplementary Medical Insurance accounts
are included in the corresponding table in the SSA chapter.
3 Reflects comparable Medicare Appeals funding levels for 2004 and 2005.
4 Medicaid proposal to subsidize Medicare cost sharing.
