News Release

HHS Proposes $737 Billion Budget for Fiscal Year 2009

Secretary Leavitt calls for an end to inaction on reforming Medicare

HHS Secretary Mike Leavitt released today details of the President’s FY 2009 budget request to Congress for the department.  The budget proposes total outlays of nearly $737 billion for HHS, an increase of more than $29 billion from 2008.  This figure also includes a decrease of $2.2 billion in discretionary spending and proposes $186 billion in savings over the next five years achieved by slowing the rate of increase in mandatory spending.

“This budget reflects our commitment to improving health care for all Americans, protecting our nation against public health threats, advancing medical research, and serving the needs of our citizens with compassion while maintaining sensible stewardship of their tax dollars,” Secretary Leavitt said.   “But it also is a stark warning to those who would ignore the need to act on the tough choices we have made to ensure we stay on a path that will benefit future generations of Americans. 

In the past 25 years, Medicare spending has grown from $52.6 billion in FY 1983 to an estimated $396.3 billion in FY 2008, a 7.5 fold increase.  Currently, Medicare spending consumes 16 cents of every Federal dollar spent, and is third only to Social Security and defense spending.  In FY 2009, funding for total Medicare spending, which will help 45.5 million Americans, is expected to be nearly $425.5 billion, an increase of $29.2 billion over the previous year.

The FY 2009 budget includes a comprehensive package of Medicare legislative and administrative reforms to strengthen the long-term viability and financial security of Medicare.  These proposed reforms will save $183 billion over five years and slow the program’s annual growth rate over that time period from 7.2 percent to 5 percent.

These proposals will encourage provider competition and efficiency; promote high quality care; rationalize payment policies; improve program integrity; and increase high-income beneficiary responsibility for health care costs.

 “American sensitivity to entitlement warnings has become numbed by a repeated cycle of alarms and inaction. Dire warnings have become a seasonal occurrence, like the cherry blossoms blooming in April, part of life’s natural rhythm.” Secretary Leavitt said.  “This must change.  There are those who will be unhappy with this budget, but given the Medicare system we have, putting off solving the problem is no longer acceptable.”

The President’s budget continues the successful transformation of the Medicaid program.  The enactment of the Deficit Reduction Act (DRA) has led to important changes that modernize the financing, benefit structure and infrastructure of Medicaid.  Building on the success of the DRA, the FY 2009 budget outlines a series of proposed legislative and administrative changes that will save $18 billion over the next five years, keeping Medicaid up to date and sustainable in the years to come.

The President’s budget proposes to reauthorize the State Children’s Health Insurance Program (SCHIP) through 2013, increasing the program’s allotments by nearly $20 billion over that time and targeting SCHIP funds more efficiently to those most in need.  The HHS budget proposal also includes $450 million in outreach grants to states, localities, schools, and community-based organizations to enroll uninsured children eligible for Medicaid and SCHIP.   As a result of these additional resources, HHS estimates that in 2013, 5.6 million children would be enrolled in SCHIP on average, or nearly 9 million children enrolled at some time during the year.

“The President and I firmly believe that all Americans should have access to an affordable basic health insurance policy.   Our proposal is consistent with our philosophy that SCHIP should be focused on low income children first.  It is also consistent with the 18 month extension passed in December,” Secretary Leavitt said.

Additional highlights from the FY 2009 request include:

• $198 million in new Health Care Fraud and Abuse Control (HCFAC) discretionary funds to strengthen program integrity oversight activities.  These funds will be used by CMS, the Inspector General, and Department of Justice to fight fraud and abuse in the new Medicare prescription drug benefit and Medicare Advantage programs, and expand financial management oversight of the Medicaid program.
  
  
•  An increase of $42 million for the Food and Drug Administration’s (FDA) Protecting America’s Food Supply Initiative, for a total of $662 million.  This funding will assist FDA in implementing a series of initiatives announced in 2007, including the Food Protection Plan, the Action Plan for Import Safety, and announced agreements with governmental agencies in China on food and medical product safety initiatives, including the establishment of an FDA field office in China. 
  
  
• $29.5 billion for the National Institutes of Health (NIH) to provide funding increases for each Institute and Center at the agency and to support more than 38,000 research project grants, including more than 9,700 new and competing awards.  With recent advances in such fields as genomics, proteomics, and computational biology, researchers at NIH are gaining a broader understanding of the fundamental molecular mechanisms that lead to disease years before it strikes the patient.  This newfound knowledge is laying the groundwork that could transform the practice of medicine into one that is personalized, predictive, and preemptive. 
  
  
• $4.3 billion for bioterrorism preparedness activities, including State and local preparedness and basic and advanced research.    In addition, other key preparedness initiatives in FY 2009 include:
  • $250 million for accelerating the advanced development of medical countermeasures for the Strategic National Stockpile;
  • $53 million to establish five new international quarantine stations and fully staff all 20 domestic stations;  and
  • $30 million to expand, train, exercise and coordinate medical emergency teams, including two Commissioned Corps Health and Medical Response (HAMR) Teams, to be ready to respond to a real or potential threat.
    
    
• $507 million to achieve the goals in the President’s pandemic flu preparedness plan and $313 million for ongoing pandemic flu preparedness efforts across HHS.  These efforts will increase domestic vaccine production capacity; purchase medical countermeasures and personal protective equipment for HHS’ patient population (e.g. Indian Health Service patients) and HHS clinical staff; and enhance our surveillance, detection, communication, and rapid response capabilities. 
  
  
• $25 million in new investments to develop the next generation of ventilators that are portable, up to 90 percent less expensive, and do not require special training to operate.   Whether a flu pandemic or other public health emergency strikes, ventilators to help victims breathe are a critical medical support asset we simply do not have enough of.  The current generation of ventilators is expensive ($8,000-$10,000 each) and requires specially trained teams to operate, and limited production capacity in the U.S. has curbed their availability. This effort will help fill the gap to ensure our nation has an adequate number of ventilators in the event of a public health emergency.
  
  
• $10 million for a new Disaster Human Services Case Management program.  The impact of a disaster on an individual’s or a family’s well-being is far more profound than any physical damage a disaster might bring. This program will tie together existing organizations with expertise in case management and recruit, train and credential volunteers across our nation to come to the aid of those who have been affected by disasters and be their advocate in connecting them with public and private support to begin rebuilding their lives.
  
  
• $7 billion for Head Start, an increase of $149 million over last year.  Head Start helps low-income, preschool children enhance their social and cognitive development and helps strengthen the skills of parents to better nurture and provide for their children. These additional funds will provide approximately 895,000 children, the same level as in FY 2008, with comprehensive child-development services and help them arrive at school ready to learn. 

• $4 million through the HHS Office of Global Health Affairs to bring medical care to rural areas of Central America.  These funds will support HHS’ work with the governments of Panama and neighboring countries, along with other non-governmental organizations, to develop and train community health care workers who can bring much needed medical care to rural areas of Central America.    
  
  

More information about the President’s FY 2009 Budget Proposal for HHS is available at http://www.hhs.gov/budget/docbudget.htm.

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Note: All HHS press releases, fact sheets and other press materials are available at http://www.hhs.gov/news.

Last revised: January 20, 2009