FY17 Federal Funding

U.S. Capitol

FY17 Presidential Proposed Budget

On February 9, 2016, President Obama released his recommended budget for FY2017, which runs from October 2016 through September 2017. This release is the last budget proposal of the Obama administration, and includes a number of highly ambitious and liberal policy items that will receive stark opposition from Republicans in congress, such as a new tax on oil that would fund clean energy research and development. Leadership in both the House and the Senate elected not to invite the OMB director to testify on the budget, indicating that they intended to focus on developing their own balanced budget proposals instead.1 As such, the recommended budget represents a visionary statement of priorities from the administration and is extremely unlikely to be enacted in law. The President’s FY2017 budget recommends 4.1 trillion of total spending over the course of the year. The budget proposes establishing several new programs that would impact health and human services, such as:

  •  A new initiative to reduce opioid-related addictions and illnesses, funded at $1 billion over two years;
  •  $680 million of funding for cancer research driven by the Vice President’s request, referred to as the “moonshot” initiative; and
  • $115 million of new funds to establish grants to states for mental health early intervention programs.

Many of the federal government’s largest expenses are mandatory expenditures, such as Social Security, Medicaid, and Medicare, and, as such, are not subject to the annual appropriations process. Therefore, the budget does not include recommendations on annual appropriations for these mandatory programs. However, the President does include some substantial policy recommendations for Medicaid and Medicare in the budget. The President’s proposal contains initiatives that would have wide-reaching effects on government services and spending, including changes to the tax code and new spending, but these programs are unlikely to be enacted. President’s budgets are generally intended to initiate negotiations with Congress over the annual appropriations bills, which ultimately determine the funding for the federal government. However, as noted earlier, leadership in both chambers have issued statements disregarding the proposal, and Congress does not appear likely to consider the President’s budget when developing its budget and appropriations packages.

Key Takeaways
The FY2016 Appropriations bill, enacted last year, provided some modest increases to crucial programs that serve seniors and people with disabilities. The President’s budget proposes maintaining the previous year funding levels for crucial programs serving individuals with disabilities, and provides funding increases to several Older Americans Act (OAA) programs. For example, title III nutrition services would receive approximately $848.5 million of total funding. This represents an increase of $13.7 million from FY2016, with $8 million of the increase allocated to home delivered meals and $5.7 million used to increase funding for congregate meals. Two additional proposals are particularly notable for seniors and people with disabilities. First, the FY17 budget requests $674 million for the Community Services Block Grant, an amount in line with the President’s FY16 budget request, but would represent a $77.3 million decrease from the amount appropriated through the FY16 Omnibus. Second, the FY17 proposal requests $3 billion for the Low income Home Energy Assistance Program (LIHEAP), a decrease of $390 million from the FY16 Omnibus. Please see the attached chart for summaries of proposed funding levels of many
programs important to seniors and people with disabilities. In addition to the tables, we highlight several areas where the President’s FY2017 budget makes
recommendations for substantial changes or funding increases below.

Administration for Community Living

The Administration for Community Living (ACL) receives several significant increases in the President’s budget proposal. Some of these increases are the result of programs transferring from other agencies, such as the Independent Living programs, while other increases stem from proposals to expand funding for core ACL programs.

The FY17 President’s budget proposes an increase of approximately $14 million for the core nutrition formula grants, to a total of approximately $688 million, as well as flatfunding the Nutrition Services Incentive Program. Overall, ACL proposes nearly $849 million for nutrition services. Of this funding request:

  • Congregate meals would receive $458 million;
  •  Home-delivered meals would receive $234 million; and
  • Nutrition Services Incentives would receive $160 million.

Also, the FY17 budget includes a proposal to use up to 1% of ACL’s funding for nutrition programs to pursue new evidence-based practices to combat senior
malnutrition. The budget also proposes a $2 million dollar increase in funding for Aging and Disability Resource Centers (ADRC) from $6 to $8 million. The ADRCs, however, still remain inadequately funded after the lapse of $10 million in mandatory funding that was appropriated from 2010-2014.

Centers for Medicare and Medicaid Services
Medicare and Medicaid are entitlement programs, and the core programs are not subject to the annual appropriations process. However, the President often proposes policy and legislative changes in his annual budget. In the FY2017 budget, the Centers for Medicare and Medicaid Services (CMS) propose a number of substantial changes to\ both the Medicare and the Medicaid programs that could impact seniors and individuals with disabilities as well as state long-term services and supports systems. Some of the most notable CMS proposals that affect state agencies are outlined below. Many of these proposals were included in prior President budgets, but have not been enacted into law.

Medicaid:

  • The budget includes a new proposal that would modify the increased Federalmatch (FMAP) for Medicaid expansions under the Affordable Care Act. The ACA provided for 100% FMAP during 2014-2016; a gradually reduced FMAP during 2017 and 2018; and 90% match indefinitely thereafter. The budget proposal would allow any state adopting the expansion to receive the 100% FMAP for the first three years of the expansion.
  • The budget also includes a new proposal to lift the cap on Medicaid expenditures in territories. Currently, territorial Medicaid programs are subject to a limit on total Federal matching funds unlike the open-ended entitlement for state programs. Under the proposal, this limit would be removed and the Federal matching rate for territories would be increased to 60% immediately, and then become normalized with state FMAP calculations once a territory established the full range of mandatory Medicaid benefits.
  • Provide home and community-based service to children eligible for psychiatric residential treatment facilities. This proposal was also included in the FY2016 budget and proposes to build upon a demonstration that was authorized in the Deficit Reduction Act of 2005, and would expand the ability of states to provide HCBS services to children with significant behavioral health needs.
  • Pilot a comprehensive long-term care state plan option. This proposal, which was also included in the FY2016 budget, would create an eight-year pilot program in up to five states. Under the pilot program, states would be able to create equal access to HCBS and institutional care, and improve rebalancing in their LTSS systems. The Secretary would then have the authority to make the changes permanent.
  • Allow states to develop age-specific health home programs. Currently Medicaid health homes cannot target services to individuals based upon age. Thiss proposal would allow states to establish age-specific health homes, in order to establish teams that provide coordinated care in a manner sensitive to the needs of different age groups. This proposal was also included in the FY2016 budget.
  • Expand eligibility for 1915(i) and 1915(k) – commonly known as Community First Choice (CFC) - HCBS options. The 1915(i) and the CFC are two state plan options that provide HCBS to qualifying individuals. CMS proposes to change the eligibility for each of these options, in slightly different ways, in order to allow states to determine eligibility for the options without first establishing that a person is eligible for a HCBS waiver. The intent is to reduce the administrative burden of determining eligibility, and to provide states with more flexibility around these options.
  •  Allow states to provide full Medicaid benefits for individuals in a 1915(i). This proposal would enact a small change to eligibility and benefits for some medically needy individuals who access 1915(i) services by allowing them to receive all Medicaid benefits, instead of just limiting them to 1915(i) services. This change would provide states with a new option to provide more robust services individuals with significant health care needs.
  • Reestablish the Medicaid primary care payment increase through December 31, 2017 and include additional providers. This payment increase was in effect during calendar years 2014-2015 in order to increase the availability of primary care providers and services to Medicaid beneficiaries. The payment increase expired on December 31, 2014. Prior budgets proposed extending the primary care increase, but Congress has not authorized it.
  • Require Coverage of Early and Periodic Screening, Diagnostic and Treatment Benefit for Children in Inpatient Psychiatric Treatment Facilities: EPSDT provides a comprehensive benefit to Medicaid enrollees under the age of 21; however, current law does not provide EPSDT to children in psychiatric residential treatment facilities. The President’s budget proposed to require EPSDT for children in PRTFs.
  •  Expand the ability of State Medicaid Fraud Control Units to investigate or prosecute abuse and neglect in non-institutional settings, such as HCBS.
  • The budget proposal would allow CMS to partner with state Medicaid programs to negotiate supplemental rebates from drug manufacturers.
  • The President’s budget would provide CMS with authority to apply a medical loss ratio (MLR) of 85 percent to Medicaid and CHIP managed care plans. The 85% MLR is the same requirement on health plans in the private marketplace.
  •  The budget includes a program integrity proposal that would allow CMS to disallow and defer individual payments or partial payments in Medicaid managed care.

Proposals Impacting to Dual Eligible Individuals:

  • Establish integrated appeals process for Medicare-Medicaid enrollees. Dual eligible individuals often have to navigate two separate, and complex, appeals systems. Under the CMS Financial Alignment demonstrations, a number of states have attempted to streamline the appeals process to reduce burden on providers, beneficiaries, and government entities. This proposal would allow the HHS Secretary to implement a streamlined appeals process.
  • The President’s budget includes a proposal that would align the countable income and assets for Medicare Savings Programs and Part D Low-Income Subsidies in order to improve the ease of enrollment for dual eligible individuals.

Department of Labor
The President’s budget requests level-funding for the Senior Community Service Employment Program and includes several proposals to reform SCSEP. The first proposal would alter the eligibility criteria for SCSEP to align with other health and human services programs. Under the proposal, participants would have to be over the age of 55; and either earn less than 133% of the Federal Poverty Level or be receiving SSI, SNAP, or veterans benefits. The budget also proposes increasing set-asides at the state and federal level to provide more funding to promote on-the-job training (OJT), through demonstration grants from the Federal government as well as flexibility for current grantees on how to spend their funds. Lastly, the budget includes a proposal that would allow the Department to, “conduct a competition among State agencies and other public and nonprofit organizations to carry out the [SCSEP] program in the State,” in instance where DOL determines that the state SCSEP program is low performing

HHS Programs
The President’s budget includes a proposal that would only adjust the Federal Poverty Level if it results in an increase in the FPL thresholds, and would keep the FPL the same if the annual update would result in a decrease.

Click here to view the FY17 President's Budget Chart.