Taking a scalpel to health programs

Jul 28, 2023

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By Daniel Payne

Presented by

Editor's note: Due to a production error, the Morning Pulse newsletter was previously sent as Future Pulse.

With Ben Leonard

Driving the Day

Sen. Patty Murray (D-Wash.).

Senate Appropriations Chair Patty Murray, who lamented the debt-ceiling agreement's restrictions on funding levels, said the upper chamber will deploy the use of emergency money. | Francis Chung/POLITICO

READING BUDGETS SO YOU DON’T HAVE TO — Cuts appear to be in store for several health care programs because of inflation and the debt-ceiling deal, Ben reports.

That’s the takeaway from the Labor-HHS-Education fiscal 2024 spending bill the Senate Appropriations Committee advanced Thursday. The committee will have to reconcile the bill with the House GOP’s substantial proposed budget cuts and elimination of some agencies.

HHS funding would stay in line with 2023 levels, well below inflation, and some health agencies would also see cuts as a result of flat funding.

Appropriations Chair Patty Murray (D-Wash.) lamented restrictions on funding levels set in the debt-ceiling deal in May but noted that senators have agreed to give the Labor-HHS package $2 billion in additional emergency funding.

The two chambers must compromise to avoid a partial government shutdown on Oct. 1 and fund the government for the next fiscal year. The Senate moved the last of the 12 spending packages out of committee Thursday, while House Republican leaders punted on a second government funding bill — which included FDA funding — before a six-week recess.

House Republicans have proposed riders on abortion and gender-affirming care that Murray has pledged to cull, though some Democrats worry the number of riders could give the GOP leverage.

The bigger picture: If funding stays flat or agencies see cuts, that could mean program cuts.

HHS funding: House GOP appropriators propose funding HHS $103.3 billion, compared with $117 billion in the Senate. Other agencies under HHS would see cuts under that proposal by staying flat, including the CDC.

The NIH would get a boost of $943 million, and CMS trust fund payments for Medicare and other programs would drop from $548 billion to $477 billion.

What got a boost from the Senate: CMS would see a bump in appropriations for state grants for Medicaid, from $367 billion to $407 billion, and the appropriators approved increased funding for ONC. The plan also includes $135 million for artificial intelligence-enabled research at the NIH.

WELCOME TO FRIDAY PULSE, where we wonder what it’s like to take a 46,000-year nap — as a microscopic roundworm did before being revived by scientists Thursday.

What other interesting research is on the way? Let me know — and include a good scoop — at dpayne@politico.com.

TODAY ON OUR PULSE CHECK PODCAST, host Alice Miranda Ollstein talks with Lauren Gardner, who reports on recent tuberculosis cases in the U.S. linked to recalled bone graft materials, bringing the total cases to five, including one death, and what's being done about the latest contamination concerns.

Listen to today’s Pulse Check podcast

A message from PhRMA:

Research and development of cancer medicines after their initial FDA approval can help expand treatment populations, find new ways of treating a cancer or help patients earlier in their cancer battle. Unfortunately, provisions in the Inflation Reduction Act put this progress in jeopardy by selecting medicines for price setting before many of these critical advancements can be fully realized. Read the new report.

Global Health

A PEFAR sign in a South African treatment center with a patient in the background being wheeled

House Republicans say they won’t put forward any reauthorization of PEPFAR. | Denis Farrell/AP Photos

AIDS PROGRAM CAUGHT IN ABORTION FIGHT — Democrats’ efforts to reauthorize the President’s Emergency Plan for AIDS Relief are floundering in the face of GOP lawmakers’ push to restore a Trump-era abortion restriction, POLITICO’s Alice Miranda Ollstein reports.

Foreign Relations Chair Bob Menendez’s (D-N.J.) bid to amend the defense policy bill on the Senate floor this week to reauthorize PEPFAR for five years failed when Republican members objected.

Meanwhile, House Republicans confirmed this week they won’t put forward any reauthorization of the $7.5 billion program that fights HIV/AIDS in more than 50 developing countries in Africa, Asia, Latin America and Europe. PEPFAR’s authorization expires this fall. Republicans say the Biden administration has “hijacked” it to fund groups that provide and counsel people on abortion.

GOP lawmakers instead want to use a one-year patch tucked into their Foreign Operations spending bill that keeps the decades-old program operating and includes language restoring a Trump administration rule blocking funding to any groups that discuss or financially support other organizations that provide abortions.

The Biden administration, Democratic lawmakers, officials running PEPFAR and independent experts say there’s no evidence program funds have ever gone to provide or promote abortion.

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In Congress

DRUG OFFICE IN THE BALANCE? GOP lawmakers may oppose reauthorization of the White House Office of National Drug Control Policy to protest the Biden administration’s handling of the opioid epidemic, POLITICO’s Evan Peng reports.

“We have to determine if we intend to support reauthorization or not — and I’m not there yet,” Rep. Clay Higgins (R-La.) told ONDCP Director Rahul Gupta during a House Oversight and Accountability Committee hearing. “I have questions about the direction that you’re leading your department.”

The office coordinates federal efforts to contain illicit drugs. It was last reauthorized in 2018 in the bipartisan SUPPORT Act, and its authorization expires Sept. 30.

The ONDCP can continue to operate without reauthorization, as long as Congress appropriates funds for it, but failing to do so would indicate that the bipartisan commitment to finding solutions to combat the near-record levels of fatal opioid overdoses has eroded.

Reauthorization is Congress’ opportunity to direct the office’s activities and priorities.

If the ONDCP isn’t reauthorized, Gupta said, “it would weaken significantly the response of federal, local and state law enforcement as well as first responders and public health officials who respond to this crisis ... because coordination would not happen, intelligence would not be shared.”

A message from PhRMA:

Providers

STATE OF PAY — Not-for-profit hospitals face a “make-or-break” year for their financial outlook in 2023, according to a new report from Fitch Ratings, a credit ratings agency.

The rest of the year could help define the post-pandemic trajectory for hospitals, Kevin Holloran, senior director and the sector leader of the Not-for-Profit Healthcare Group, said about the findings.

Across the not-for-profit hospitals the agency tracks:

— Credit ratings are “decidedly tilting negative” so far this year, with almost as many downgrades in the first half of 2023 as in all of 2022.

— Median cash on hand dropped to more normal pre-pandemic levels but below the elevated amounts in 2020-2021.

— Median operating margins dropped to their lowest level in a decade, from 3 percent to 0.2 percent.

— Median patient volume is up, compared with pre-pandemic levels, with inpatient surgeries, emergency department visits and outpatient visits each rising 10 to 20 percent.

— Revenue growth is up nearly 6 percent but so is expense growth, up 9.5 percent.

At the Agencies

PROBLEM-SOLVING PROPOSALS — The Advanced Research Projects Agency for Health wants proposals to address two cancer-surgery problems: tumor-edge visualization and critical anatomy visualization, POLITICO’s Erin Schumaker reports.

The agency focuses on funding high-risk, high-reward research that would allow surgeons to better see tumors, nerves and blood vessels, leading to better surgery outcomes.

The request for proposals for the Precision Surgical Interventions program dovetails with President Joe Biden’s goal for his cancer moonshot program: reducing the cancer death rate by half in the next 25 years. It’s the first cancer-focused program from ARPA-H.

What We're Reading

The Atlantic reports on the fatigue that’s come to define daily life for many with long Covid.

KFF Health News reports on the hospitals welcoming patients, families and workers to RV living.

A message from PhRMA:

A new report showcases the vital role of post-approval R&D in nine critical oncology treatments. This research can help expand treatment populations, find new ways of treating a cancer or help patients earlier in their cancer battle. Unfortunately, provisions in the Inflation Reduction Act put this progress in jeopardy by selecting medicines for price setting before many of these critical advancements can be fully realized. See how post-approval R&D in cancer is at risk.

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