HHS Secretary defends cuts to department in budget proposal

In his first congressional testimony since being confirmed as HHS Secretary, Alex Azar argued the department’s proposed budget would extend the life of Medicare while making HHS more efficient by cutting nearly $18 billion in funding.

Azar said the budget reflects four of the Trump administration’s healthcare priorities: fighting opioid addiction, lowering the cost of health insurance, lowering drug costs and “using Medicare to move our health system to a more value-based direction.”

“The budget makes clear that business-as-usual will not suffice,” Azar said in his written testimony, “and that the substantial investments made every year at HHS ought to be allocated with efficiency and toward programs that work.”

Among the programs targeted by the budget proposal is the Affordable Care Act (ACA). The budget would rely on it being repealed and replaced with the Graham-Cassidy proposal which would have turned the ACA’s funding for premium subsidies and Medicaid expansion into state-administered block grants. Azar mentioned it would provide a “smooth transition away from Obamacare” and fix “perverse incentive structures” by ending the “disparity” in Medicaid funding between states which chose to expand eligibility and those which didn’t.

Presidential budgets don’t carry the weight of law and often contain provisions which Congress never seriously considers. Republicans have already indicated they won’t try repealing the ACA again in 2018 after several failed attempts to do so last year, but Azar said both parties share the same goal of lowering insurance premiums and his department intends to move towards that goal with state-based reforms.

“There’s no one-size-fits-all, there’s no magic bullet, no single right way to run a competitive, well-run risk pool insurance system,” Azar said.

When asked by Rep. Sandy Levin, D-Michigan, if working with states meant approving waivers which violate the ACA, such as the one proposed by Idaho, Azar said he wasn’t aware of the waiver being formally submitted while adding “there’s a rule of law that we need to enforce.”

Democrats focused on the cuts in the budget, including reduced or eliminated funding for graduate medical education programs or Medicare payments to hospitals. Those cuts include more than $138 billion over 10 years by removing uncompensated care from Medicare's Inpatient Prospective Payment System (IPPS) and another $37 billion from reducing reimbursement for bad debt.

Hospital groups have come out strongly against those proposals. Rep. Richard Neal, D-Massachusetts, said those reductions show the budget would cut Medicare, despite Azar’s insistence otherwise, and could lead to hospitals and post-acute care providers cutting jobs.

“I don’t believe these cuts are tied to improving efficiency or increasing quality,” Neal said. “In fact, I believe these cuts could jeopardize quality healthcare for many Medicare beneficiaries.”