President Bush's FY 2008 Budget Proposal Cuts Mental Health, Substance Abuse Programs

On Monday, President Bush announced his $2.9 trillion budget plan for FY 2008. The President's plan makes sharp cuts to a number of programs key to providing services to people with mental illnesses and substance abuse disorders. The proposal includes a net decrease of $76.93 million for mental health, a net decrease of $36.441 million for substance abuse prevention, and a net decrease of $46.859 million for substance abuse treatment.

Medicaid
The Bush Administration's proposal would cut $13 billion from Medicaid through legislative changes and an additional $12.7 billion in administrative changes. In addition, the President's budget proposal would eliminate reimbursements for graduate medical education and those for certain school-based services.

Among other major legislative Medicaid proposals:

• Reimburse for Targeted Case Management (TCM) at 50 percent
• Permit states to use managed formularies for prescription drugs

Among the administrative Medicaid proposals, to be implemented by the Centers for Medicare and Medicaid Services (CMS):

• Issue regulations defining allowable rehabilitation services
• Issue regulations eliminating funding for Gradual Medical Education
• Phase out Medicaid reimbursement for school-based transportation and administrative services
• Curb diversion of funds from government providers to states and cap payments to government providers

SCHIP
Along with budget cuts, the Bush Administration's budget package also includes a plan to reauthorize the State Children's Health Insurance Program (SCHIP), increasing funding for the program by $5 billion over a five-year period. This would provide about a third of $12 to $15 billion more the Senate Finance Committee has estimated to be required to continue SCHIP enrollment at its current levels. Under the proposed reauthorization, states would be encouraged to scale back coverage of children in families with higher income and of all adults. For new participants in the SCHIP program, eligibility would be capped at 200 percent of the Federal Poverty Level (FPL), with states choosing to cover children at higher FPLs receiving lower matching funds.

SAMHSA
The Substance Abuse and Mental Health Services Administration (SAMHSA) faces a $159 million reduction in funding for FY 2008. Funding for the Center for Mental Health Services (CMHS) is reduced by $77 million, with the majority of its activities to be frozen at FY 2007 levels. This includes the Community Mental Health Services Block Grant, slated to remain at $428.5 million, and the Substance Abuse Prevention and Treatment (SAPT) Block Grant, which would remain at $1.75 billion. CMHS' Programs of Regional and National Significance (PRNS) face a $76.6 million cut, with proposed FY 2008 funding at $186.6 million. Funding for Projects for Assistance in Transition from Homelessness (PATH) is slated to remain at $54.3 million. The Mental Health State Incentive Grant (SIG) program would be funded at $19.8 million, representing a $6.2 million cut compared to funding in the FY 2007 Continuing Resolution (CR) recently passed in the House.

Funding for the Center for Substance Abuse Treatment (CSAT) is reduced by $47 million. This includes $98 million for the Access to Recovery (ATR) program, of which $25 million would be targeted for methamphetamine projects. According to SAMHSA's FY 2008 budget document, states that do not report on National Outcome Measures (NOMs) as part of their SAPT Block Grant applications "will not receive more than 95 percent of their SAPT Block Grant allocation." SAMHSA will work with the Office of Management and Budget and the Office of National Drug Control Policy to develop criteria for compliance on NOMs data.

Substance Abuse
This year, the President's budget proposal reversed its trend of seeking to eliminate the Safe and Drug-Free Schools and Communities State Grants Program, which supports community-based prevention programs. The Administration has proposed $100 million for the program in FY 2008. Last year, Congress restored $346.5 million in funding to the program and the National Council hopes they will again support additional funding for this program.

Housing
Overall funding for the Department of Housing and Urban Development (HUD) would shrink by 8% under the President's proposed FY 2008 budget, to $35.2 billion. The Bush Administration has again proposed cutting funding for the Section 811 program in half. Section 811 is the only program at HUD that provides supportive housing for non-elderly, low-income people with disabilities.

Medicare
The Bush Administration's budget proposal would cut $76 billion from Medicare over five years through legislative changes and an additional $10.2 billion in administrative changes aimed at improving program efficiency, productivity, and integrity. The President's proposed budget would reduce Medicare reimbursements to providers by 0.65 percent in FY 2008 and proposes several other means for additional cuts to provider reimbursements. The President proposes ending the practice of reimbursing providers when beneficiaries do not pay their bills. Providers who do not submit price and quality data after 2008 may also face additional reimbursement reductions.

Provider reimbursements would also face an automatic reduction of 0.4 percent when Medicare general revenue exceeds 45 percent of the cost of the program.

NIH
The President proposes near-level funding for the National Institutes of Health (NIH) with an FY 2008 budget of $28.7 billion, a slight decrease over the $28.9 billion authorized in the CR. The National Institute of Mental Health (NIMH), the National Institute on Drug Abuse (NIDA), and the National Institute on Alcohol Abuse and Alcoholism (NIAAA) each receive slight increases in FY 2008.

Comparison of Funding Levels in the Bush Administration's FY 2008 Request, FY 2007 Final Funding Level, and FY 2006 Final Funding Level

Next Steps
The National Council will continue to analyze the FY 2008 budget request and we will update you on developments. For additional budget analysis, please see Avalere Health's "Key Components of the FY 2008 President's Budget," available online. The National Council will also need your help in advocating for the programs essential to behavioral healthcare - be on the lookout for requests for grassroots response throughout the budget process.

Update on FY 2007 Funding Process
The FY 2007 funding process continues in Congress; on January 31st, the House of Representatives approved a $463.5 billion omnibus spending bill for the 2007 fiscal year, which began on October 1, 2006 and will run until September 30, 2007. The spending bill includes programs in the Departments of Labor, Health and Human Services, Education and Justice. Under the House-approved legislation, most programs, including those that fund alcohol and drug prevention, treatment, and education services, would receive funding level to fiscal year 2006 amounts. The FY 2007 CR is set to expire on February 15th. The Senate is expected to take up legislation identical to the House-approved legislation in early February and it has been reported that President Bush is expected to sign the measure into law once the Senate approves passage of the legislation.

The Congressional Budget Committees begin hearings on the President's FY 2008 Budget this week and Congress will begin developing its own budget in the coming months.

For more information on the FY 08 Budget please visit:

SAMHSA: www.samhsa.gov/Budget/FY2008/SAMHSA08CongrJust.pdf

NIDA: www.drugabuse.gov/Funding/Budget08.html

The White House: www.whitehouse.gov/omb/budget/fy2008/