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FY 2005 Budget in BriefAchieving a Safe and Healthy NationOn this page: The HHS fiscal year (FY) 2005 budget furthers the goals of President Bush's initiatives to ensure the health, well-being and safety of our Nation. The FY 2005 budget totals $580 billion in outlays, an increase of $32 billion, or 5.8 percent, over the comparable FY 2004 budget. The discretionary portion of the HHS budget totals $67 billion in budget authority, an increase of 1.2 percent over the FY 2004 level. Through the programs and services presented in the budget plan of HHS, Americans will:
In addition, the budget plan will continue to support programs for populations in need, including children, families, and the elderly. All HHS programs and services are strengthened through effective partnerships with other Federal departments, State and local governments, and community and faith-based organizations. The budget plan continues efforts to improve the quality of health care, modernize Medicare, and improve the management of the Department and its programs. HHS has accomplished a number of the Administration's goals to improve the health and well-being of our Nation's citizens. The Department has:
Medicare Modernization HHS fully supports comprehensive Medicare modernization. In response to the need for a subsidized prescription drug benefit and better insurance protection, the Administration and Congress worked together to enact the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA). The MMA phases in a prescription drug discount card in FY 2004. The full benefit begins in FY 2006. Prescription Drug Discount Card: The MMA establishes a new Medicare approved prescription drug discount card program that will immediately help Medicare beneficiaries reduce their out-of-pocket spending on drugs. Seniors and individuals with disabilities could save, on average, 10 to 15 percent on their total drug costs, with savings up to 25 percent or more off retail prices on individual prescriptions. Card enrollment begins as early as May 2004, and discounts begin in June 2004. Low-income beneficiaries will receive a $600 per year credit on their cards to use towards their drug expenditures. New Prescription Drug Benefit: MMA establishes a new voluntary prescription drug benefit that will begin in January 2006. Medicare beneficiaries with the lowest incomes and the highest levels of spending on drugs will get the most financial assistance. Under the full drug benefit begins, seniors and those with disabilities who pay full retail drug prices today are expected to save approximately 20 percent off the retail cost of their prescription drugs. Beneficiaries who spend significant amounts for prescription drugs may pay 50 percent less out-of-pocket, in exchange for a modest monthly premium of about $35. When Congress considered the MMA, the Congressional Budget Office estimated the cost of the bill at $395 billion from 2004 to 2013. The Medicare actuaries have recently estimated the cost of the law as $534 billion from 2004 to 2013. Because the Medicare legislation makes far-reaching changes to a complex entitlement program with many new private-sector elements, there is even greater uncertainty in these estimates than usual. It is not uncommon for different assumptions underlying the respective estimates to produce differences in cost projections. This difference of $139 billion is approximately 2.1 percent of the projected $6.5 trillion in total Medicare and Medicaid spending over the same time period. Medicaid Modernization HHS plans to work diligently with Congress to reform Medicaid and give States the flexibility they need to innovate and stabilize the program. States would be allowed to take Medicaid and SCHIP funds in a flexible allotment to provide coverage in a way that best fits their needs. States would be required to continue coverage for mandatory Medicaid beneficiaries. Disease Detection and Bioterrorism Preparedness The FY 2005 budget includes a multi-prong effort, with targeted investments of $373 million, to improve the security of our Nation by accelerating the detection of and response to potential disease outbreaks of any kind - regardless of whether the pathogen is naturally occurring or intentionally released. The importance of this work is underscored by both the threat of bioterrorism, and the recent series of emerging infectious diseases - SARS, Avian Influenza in eastern Asia, and the Fujian influenza strain circulating in the U.S. this winter. Global Disease Detection and Quarantine: The Centers for Disease Control and Prevention's (CDC) Global Disease Detection initiative will help the U.S. learn more rapidly about new disease threats that emerge in other nations. CDC will help those nations identify and stop those diseases before they can arrive in the U.S. To help ensure those diseases do not enter the U.S., CDC will also expand quarantine capacities at ports-of-entry for international travelers. Defending the Nation's Food Supply: The Food and Drug Administration (FDA) has already dramatically expanded its work to prevent intentionally contaminated foods from entering the U.S. The FY 2005 budget takes the next step, making the investments needed to accelerate Federal and State ability to detect contamination. FDA will substantially expand the laboratory capacity of its State partners, and will work to find faster and better tests to detect contamination, including ones that could be used on-site at ports, processing plants, and other food facilities. Biosurveillance: Under traditional public health reporting mechanisms, disease outbreaks can take several days to a few weeks to detect. The new BioSense surveillance initiative at CDC seeks to shorten this time dramatically. HHS, in coordination with the Department of Homeland Security, the Environmental Protection Agency, the Department of Agriculture, and others, is developing new tools and procedures to identify potential disease outbreaks or environmental releases far more rapidly. This work will be supplemented by targeted CDC investments to more fully integrate public health and commercial medical laboratories into the Laboratory Response Network. Extramural Biosafety Laboratory Construction: New investments in the National Institutes of Health will both provide the research laboratory space our universities need to help develop medical protection from bioterrorism, and back up State and Federal public health laboratories if there is an actual or suspected bioterrorism attack. The $150 million for extramural laboratories will fund an additional 20 Level 3 laboratories across the U.S. Strategic National Stockpile: Under the Homeland Security Act of 2002, HHS continued to manage the Stockpile on a day-to-day basis. The Department of Homeland Security was responsible for authorizing HHS deployment of the Stockpile, and financing its costs. The FY 2005 budget returns financing of the Stockpile to HHS, requesting $400 million, with either Department authorized to order deployment in an emergency. The budget also seeks the ability to respond to revised threat assessments as they evolve, proposing permissive authority to transfer additional funds from other bioterrorism programs. Bioterrorism Preparedness Assistance to State and Local Governments: The FY 2005 request reflects a cumulative investment of over $5 billion in State, local and hospital preparedness since FY 2001 through the CDC and HRSA cooperative agreements to improve capacity to respond to bioterrorism and public health emergencies. Building on this solid investment, this year's request reflects an effort to accelerate targeted progress in preparedness. In addition to providing support to States for preparedness and training, CDC is redirecting some funds to develop surveillance data that will assist States with earlier threat detection. State food laboratory investments will be expanded to protect the Nation from threats against the food supply, and these food defense activities will be coordinated with surveillance efforts across government. Continued investments in hospital preparedness will ensure that 100 percent of States have viable surge capacity plans. Marriage and Healthy Family Development The budget includes an initiative to build on the research that there are life-long benefits of growing up in married-parent families. This initiative comprised of new and existing programs, has four elements: 1) supporting marriage and families; 2) providing tools to parents; 3) teaching values to children; and 4) encouraging community and faith-based organizations to support families. Supporting Healthy Marriages: This initiative builds further upon the Administration's Temporary Assistance to Needy Families (TANF) Reauthorization proposal, which includes $1 billion (Federal funds) over five years to promote healthy marriage and family formation. The FY 2005 budget proposes to increase Federal funds available for this purpose to $1.2 billion over five years - a $160 million increase over the original TANF proposal. With State matching funds, a total of $1.8 billion will help advance this central goal of the TANF program. Responsible Choices: This initiative will educate teens and parents about the risks associated with early sexual activity and provide the tools needed to help teens make responsible choices. To accomplish this goal, the budget doubles total funding for abstinence education activities, providing $273 million. HHS will develop, implement and evaluate abstinence education programs for 12 to 18 year olds that promote abstinence and encourage healthy decisions. HHS will provide grants for up to 500 communities and 59 States and Territories. These grants will be administered by the Administration for Children and Families (ACF) and the Office of Population Affairs. The Community-Based and State grant programs currently being transferred to ACF will have increased linkages to other comprehensive youth development efforts. Funds are also included for a new public awareness campaign to help parents communicate with their children about the health risks associated with early sexual activity. Responsible Fatherhood and Marriage: The budget includes $50 million to support a new program to assist non-custodial fathers in becoming more involved in their children's lives. Over 25 million children currently live in homes without fathers. Preventing and Treating Child Abuse: This initiative also increases two State child abuse grant programs that will increase the ability of States to provide prevention services to an additional 55,000 at-risk children and families and reduce the average time to services provision for State child protective services systems by nearly 38 percent. Supporting Children, Families, and the Elderly Advancing Welfare Reform: The budget again proposes to reauthorize Temporary Assistance for Needy Families (TANF). The proposal builds off the successes of TANF by strengthening work requirements and supporting healthy marriage and families. The budget includes current level funding for State assistance grants and other key components as well as establishing a new grant and demonstration program to promote healthy marriage. Child Support Enforcement: FY 2005 budget includes two new proposals aimed at increasing medical child support and ensure that children have the health coverage they need. This budget includes proposals from FY 2003 and FY 2004 that enhance automation and significantly increase collections to all families. Two of these proposals help families on TANF and those formerly on welfare by giving States the option to pass additional collections on to these families. Overall, these proposals should result in $3 billion over five years in increased collections to families for a Federal investment of $105 million over five years. Child Welfare Program Option: It is a high priority of HHS to pursue with Congress passage of the Child Welfare Program Option. The Child Welfare Program Option would give States the option to receive their foster care funding as a flexible grant over five years. The flexible option would support a continuum of services to families in crisis and children at risk. This proposal costs $37 million in FY 2005 and it is budget neutral over five years. Faith-Based and Community Initiative: The budget maintains a strong commitment to strengthening and expanding the role of faith-based and community organizations in reducing the Nation's social problems. The budget provides $161 million, in total, for the Compassion Capital Fund, Mentoring Children of Prisoners, and Maternity Group Homes to support at-risk youth, ex-offenders, the homeless, and the hungry. Head Start: The budget includes $6.9 billion for Head Start services to 919,000 children. Within the $169 million increase, $45 million is provided to support nine new State pilot projects to coordinate State preschool programs, Federal child care grants, and Head Start into a comprehensive system of early childhood programs. Enhancing Public Health and Disease Prevention Steps to a Healthier US: "Steps" provides funds to local communities to keep citizens from becoming obese and developing diabetes, and to prevent hospitalizations from asthma. The budget proposes an increase of $81 million, for a total of $125 million, to accelerate implementation in existing sites and to expand this new grant program to additional communities. These funds will also support the Diabetes Detection Initiative, which is targeted at the estimated 5 million undiagnosed diabetics. Health Centers: The FY 2005 budget includes $1.8 billion for Health Centers to provide health care services to 15 million individuals - 4.5 million more patients than in FY 2001, of whom approximately 40 percent have no insurance coverage. This is the fourth year of the President's initiative to increase access to health care through the Health Center program. The budget also proposes an increase for the National Health Service Corps, initiating a new effort to recruit nurses and physicians who will also have a long term Reserve Corps commitment to the Public Health Service Commissioned Officer Corps. Access to Recovery: The FY 2005 request proposes to double the Access to Recovery State Voucher program, for a total of $200 million. Access to Recovery provides individuals seeking substance abuse treatment services with vouchers to pay for the care they need from effective community providers, including those that are faith-based. Approximately 100,000 individuals will be served at the FY 2005 funding level. Childhood Immunization: The budget includes three essential improvements in childhood immunizations. First, legislation is proposed in the Vaccines for Children (VFC) program to improve access to these vaccines for underinsured children who are already entitled to receive them, and restore tetanus and diphtheria toxoid vaccines to the VFC program; these changes will expand vaccine purchases by $55 million. Second, FY 2005 will be the third year of the HHS effort to build a six month stockpile of all regularly recommended vaccines; the FY 2005 investment will be $184 million. Finally, HHS will ensure that children have access to influenza vaccines next winter, investing $40 million of FY 2004 funds in a stockpile of next winter's vaccine. Prevention of "Mad Cow Disease": The FY 2005 budget provides the Food and Drug Administration (FDA) $30 million, an $8 million increase, to expand efforts to prevent Bovine Spongiform Encephalopathy (BSE) or "Mad Cow Disease." FDA will intensify its efforts to keep forbidden animal proteins out of cattle feed, the only known mode of transmission. Medical Devices: The budget seeks a $26 million increase in budget authority for FDA's Medical Devices program to ensure medical technologies are safe and available to Americans as quickly as possible. This funding will ensure accomplishment of the aggressive pre-market review goals agreed upon in the Medical Devices User Fee and Modernization Act. Medical Research: Building on the accomplishment of the five-year doubling of the NIH budget, the FY 2005 budget will total $28.8 billion for NIH. This is an increase of $764 million over FY 2004 and will support nearly 40,000 research project grants, a record total for NIH. Included in this budget are funds for the NIH Roadmap, an initiative that will target gaps and major opportunities in biomedical research in order to rapidly transform new scientific knowledge into tangible health benefits for the American public. This request will maintain the long-term stability of the biomedical research enterprise and ensure continued productivity in all areas of research at NIH. Breast and Cervical Cancer: The FY 2005 budget provides an increase of $10 million for the breast and cervical cancer program. The CDC's breast and cervical cancer program supports screening services for low-income, underinsured, or uninsured women. Preventive Benefits: Beginning in January 2005, all newly enrolled Medicare beneficiaries will be covered for an initial physical examination. All beneficiaries will be covered for cardiovascular screening blood tests, and those at risk will be covered for a diabetes screening test. Indian Health Service: The Indian Health Service (IHS) will receive $3.7 billion to provide medical care and prevention and wellness activities to 1.6 million American Indians and Alaska Natives (AI/AN). IHS will staff five new facilities - doubling the number of primary care provider visits - and support an 11 percent increase in sanitation construction to provide safe water and waste disposal to AI/AN homes. Mental Health: The budget responds to the recommendations of the President's Commission on Mental Health by proposing a new $44 million State grant program to support State planning efforts to reduce system fragmentation and increase services to persons living with mental illness. The request also maintains a strong commitment to increasing services for the homeless, many of whom suffer from mental illness. The budget includes $10 million to support the Samaritan Initiative - an Administration-wide initiative to reduce chronic homelessness. Health Care Information Technology The Administration will work with those involved in heath care information technology (IT) to advance the efforts to translate IT opportunities into higher quality, safer, and more efficient health care for all Americans. In support of this effort, the budget proposes $50 million in new funding to support State or regional demonstration grants to test the feasibility of information exchange among health care settings, and to fund other innovative IT projects that will improve health care quality. In addition, the budget continues the President's commitment to improve quality of care and patient safety in all health care settings by proposing $84 million in the Agency for Healthcare Research and Quality (AHRQ). Within this total, $50 million will fund grants to continue efforts to promote, accelerate, and demonstrate the development and adoption of IT, including in small and rural communities where health IT penetration has been low. HHS is also leading the Consolidated Health Informatics (CHI) initiative which promotes the adoption of interoperability standards for clinical data used within the Federal government. It is anticipated that this effort will provide an incentive for non-Federal organizations to adopt these standards as well. The CHI effort is expected to lead to creation of an information infrastructure that will ensure wider availability and interoperability of clinical data. The use of common standards will mean that clinical data will be more widely available for use in patient care which will lead to overall improvements in health care quality. The New Freedom Initiative This initiative builds upon the progress made by the Americans with Disabilities Act of 1990 (ADA) in protecting the civil rights of people with disabilities. The initiative promotes the full integration of people with disabilities into all aspects of American life. For health services, the goal is to place more of an emphasis on home and community-based care. The FY 2005 budget includes proposals in support of the New Freedom Initiative for a total of $73 million. Medicaid Program Integrity Ensuring the fiscal integrity of Medicaid continues to be a high priority of HHS. To ensure that Federal taxpayer dollars are being used appropriately to serve Medicaid recipients, HHS proposes two provisions to limit excessive payments to providers. The first limits Federal reimbursement to the States to no more than cost of Medicaid services provided. The second restricts the use of certain intergovernmental transfers. These measures would stop excessive payments while preserving the ability of States to pay reasonable rates to Medicaid providers. Management Improvements President's Management Agenda: In August 2001, President Bush challenged HHS and other departments to "address the most apparent deficiencies where the opportunity to improve performance is the greatest." Based on this challenge, The President's Management Council, the Office of Management and Budget and the Office of Personnel Management developed standards for success in each of five Government-wide initiatives:
Budget & Performance Integration The FY 2005 request supports improvements in all five initiatives:
Conclusion The HHS FY 2005 President's Budget builds on past accomplishments in protecting the health and safety of our Nation while continuing to move toward future goals. It reflects the ongoing work in enhancing the benefits of Medicare and modernizing Medicaid. It increases support of our Nation's families, children, and elderly, with emphasis on at risk populations. It supports the President's health and social service initiatives, and keeps the promise of a safe and healthy Nation. The budget also maintains the Department's goal of improving the management and performance of its programs, and strives to better serve the American public.
* Public Health and Social Services Emergency Fund HHS Budget by Composition
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Last revised: February 8, 2005
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