February 5, 1999

Clinton Releases FY 2000 Budget

President Clinton submitted his FY 2000 budget to Congress Feb. 1. Listed below are the proposals for various discretionary programs of interest for medical schools and teaching hospitals. The president's Medicare and Medicaid proposals are detailed on page 3.

National Institutes of Health: The president's budget proposes $15.933 billion for the NIH. This is an increase of $320 million (2.05 percent) over last year. The NIH estimates this budget would support 7,617 new and competing renewal research project grants (RPGs) in FY 2000, which is 1,554 fewer than the estimated 9,171 competing RPGs to be funded in FY 1999. The NIH proposes to focus on four major research themes in FY 2000: exploitation of genomic discoveries; interdisciplinary research; reinvigoration of clinical research; and elimination of health disparities.

Health Professions Education: The administration's budget proposes $252 million for health professions and nursing education, a decrease in $50 million (17 percent) from last year. The administration claims that this funding level will "focus resources on programs which will help disadvantaged students and reflects the Administration's goal to move away from broad-based, categorical programs." The administration proposes:

• $109 million for the Training for Diversity cluster, a $16 million increase targeted for the Centers of Excellence and the Health Careers Opportunity programs;

• $65 million for the Nursing Workforce Development cluster, no increase over FY 1999; and

• $37 million for the Community-Based Linkages cluster, a decrease of $17 million.

The administration proposes elimination of the Primary Medicine and Dentistry Program and the Public Health Workforce Development Program. The administration also is requesting $1 million for Workforce Information and Analysis.

The administration's request for health professions also includes $40 million for a new Children's Hospitals Graduate Medical Education (GME) program that will provide temporary financial assistance for GME at free-standing children's hospitals.

National Health Service Corps: The president's budget includes a request of $116 million for the National Health Service Corps program. The request includes $37 million for NHSC field activities and $78 million for NHSC recruitment. This is the same amount that was appropriated in FY 1999.

The president's proposal also includes tax relief for participants in the NHSC Scholarship Program (see story below).

Agency for Health Care Policy and Research: The administration requests $206 million for AHCPR, a $35 million increase (20 percent). However, the majority of this funding is derived from inter-agency transfers, rather than direct appropriations. The agency would receive $27 million in direct appropriations, down from $100 million in FY 1999, while transfers would increase to $179 million, up from $71 million in FY 1999.

The budget proposes $168 million for Research on Health Costs, Quality and Outcomes, $36 million for the Medical Expenditures Panel Survey and $2 million for program support.

Centers for Disease Control and Prevention: The presidents budget includes a $201 million (7 percent) increase for the CDC, bringing the agency's total funding to $3.1 billion. This includes:

• $182 million for infectious diseases, a $44 million (32 percent) increase;

• $526 million for childhood immunization efforts, a $77 million (17 percent) increase;

• $35 million for race and health demonstrations, a $25 million increase;

• $110 million, all provided through inter-agency transfers, for the National Center for Health Statistics, a $15 million (15.8 percent) increase; and

• $118 million for bioterrorism activities provided through the Public Health and Social Services Emergency Fund, a $6 million (5.3 percent) increase.

Food and Drug Administration: The administration's budget request for the FDA includes an increase of $216 million (18 percent) for a total program level budget of $1.35 billion, including $195 million in industry-specific user fees. Specific increases are targeted at the food safety initiative (an increase of $30 million), the youth tobacco initiative ($34 million) and the bioterrorism initiative ($13.4 million).

Department of Education: Education Secretary Richard Riley announced a FY 2000 discretionary budget request of $34.7 billion. This is an increase of $1.2 billion (3.7 percent) over FY 1999. Highlights of the department's FY 2000 budget request relevant to medical schools and teaching hospitals include:

• $52.1 billion in total available student financial aid, an increase of 3.9 percent over current year funding;

• cutting an additional three tenths of a point from the federal subsidy that non-profit lenders receive in return for reducing the rates paid by borrowers;

• reducing from 24.5 percent to 18 percent the amount guaranty agencies can keep from default collections;

• extending the interest rate basis for Direct Consolidation loans that expired on February 1, 1999 through the end of FY 2000;

• eliminating both the 60-month limit on student loan interest deduction and the tax when forgiving student loans subject to income contingent repayment.

• increasing the maximum amount of a Pell Grant from $3,125 to $3,250; and

• $540 million for the Office of Educational Research and Improvement (OERI), including $108.8 million for the National Education Research Institutes and $65 million for the Regional Educational Laboratories.

VA Medical Care: The president's budget includes an VA medical care budget of $18.1 billion. This includes an appropriation of $17.3 billion (the same amount as FY 1999) and medical collections of $749 million (an increase of $124 million over FY 1999). The proposal includes language to open 89 new outpatient clinics, provide an additional $50 million for homeless veterans, increase the response to Hepatitis C to $250 million, and provide an additional $106 million for VA's long-term care alternative programs.

VA Medical and Prosthetic Research: The FY 2000 administration budget includes an appropriation request of $316 million for VA medical and prosthetic research. This is the same amount appropriated by Congress for FY 1999.

Information: Dave Moore (NIH and general budget issues), Colleen McCabe (health professions and AHCPR), or Jonathan Fishburn (VA, CDC, National Health Service Corps, Department of Education), AAMC Office of Governmental Relations, 202-828-0525.