April 29, 2011, updated June 13 - Legislation funding federal programs for the 2011 fiscal year (which began October 1, 2010)—signed into law after many delays—significantly reduces some programs that help low-income people and those with mental illnesses. However, the final law does not include the draconian cuts discussed at one stage of the deliberations.
Update: On June 7, 41 Senators sent a letter to President Obama opposing the proposed cuts to Medicaid. Senator Jay Rockefeller issued a press release strongly supporting the letter. Senators Dianne Feinstein, Mark Udall, Michael Bennet and Amy Klobuchar sent separate letters to the President. Four days earlier, Representative Henry Waxman and Frank Pallone released analyses, District by District Impacts of Republican Medicare Plan and Medicaid Cuts, on the potential impact of the proposed Medicare and Medicaid cuts on all 435 congressional districts.
Now Congress has begun work on the budget resolution for fiscal year 2012. Budget resolutions set goals for overall spending. They include assumptions about savings that might be made in specific program areas. A budget resolution is a congressional instrument, serving as a guideline for authorizing and appropriating committees, and does not need to be signed into law by the President.
The House has passed its budget resolution, which cuts federal spending by $4.5 trillion over 10 years from programs that serve people with limited means. Almost $3 trillion of the savings are offset by tax cuts.
The Senate is expected to work on its version shortly. Most years House and Senate negotiate a compromise budget resolution, but this does not always happen and could very well prove impossible this year.
In this alert we summarize the impact of the FY 2011appropriations on programs that are important to people with mental illnesses and highlight the most significant issues in the House budget resolution for 2012, with links to supporting documents at the end.
Your advocacy will be important to protect people with mental disabilities as the process unfolds. Watch for our alerts and stay tuned to www.bazelon.org for updates.
Fiscal Year 2011 Spending
On April 14, after eight continuing resolutions to keep the government operating, Congress completed work to fund the government through the remainder of this fiscal year.
The 2011final appropriations bill, H.R. 1473, (Public Law 112-10) reduces federal spending $38.5 billion below 2010 levels. The law makes cuts across the board, including in health, housing, education and job training, and removes $3.5 billion from the Children’s Health Insurance Program.
The final law does not include the $61 billion in cuts or the policy riders (including defunding parts of the health reform law) passed in the House version (H.R. 1). That version included a $200 million cut to the Substance The housing budget for FY 2011 includes both good news and bad. Overall, HUD programs lost $2.8 billion, a 6.5% cut below FY2010 levels. Although the FY 2011 law “ameliorates the deepest cuts that H.R. 1 would have The Section 811 Supportive Housing Program for People with Disabilities, which provides housing vouchers for significant numbers of people with mental illnesses, received enough funding to cover the costs of Mainstream Vouchers but only $50 million for new grants. Even at that, Section 811 fared better than the Section 202 program for older renters, many of whom have disabilities. The 202 program lost $426 million from its FY2010 levels.
Unlike most appropriations measures, the FY2011 funding law does not provide details on specific cuts to each program. Instead, the various federal agencies are required to submit a spending plan within 30 days of enactment. As a result, some uncertainty remains as to funding levels for particular SAMHSA programs. More information will be available soon. Advocates are cautioned to review the assumptions included in documents from the House Appropriations Committee with this in mind.
Mental Health
SAMHSA funding has been reduced by approximately $52 million below fiscal year 2010 levels. SAMHSA is funded at $3.386 billion for FY2011 (contrasted with $3.334 billion for FY 2009 and $3.431 billion for FY 2010. No specific cuts were identified, but the compromise spending bill expressly noted that not less than $40.8 million of the total SAMHSA funding go toward the National Child Traumatic Stress Initiative (NCTSI). The NCTSI provides funding for a national network of child trauma centers and other services and activities to help address the problems increasingly arising from children and adolescents witnessing or experiencing violence and trauma.
Housing
The housing budget for FY 2011 includes both good news and bad. Overall, HUD programs lost $2.8 billion, a 6.5% cut below FY2010 levels. Although the FY 2011 law “ameliorates the deepest cuts that H.R. 1 would have made in housing and community development programs for 2011, but does not eliminate them,” according to the Center on Budget and Policy Priorities.
People with mental illnesses rely on housing assistance programs that target them directly and on programs that are available to all who are poor enough to qualify.
Some programs directed at renters with disabilities lost funds while others enjoyed modest, but surprising increases. The McKinney-Vento Homelessness programs were increased by $36 million above FY2010 levels. $50 million was added to the program that funds vouchers for homeless veterans (VASH), creating approximately 700 new vouchers. However, no funding was added for vouchers for other homeless individuals or families.
The Section 811 Supportive Housing Program for People with Disabilities, which provides housing vouchers for significant numbers of people with mental illnesses, received enough funding to cover the costs of Mainstream Vouchers but only $50 million for new grants. Even at that, Section 811 fared better than the Section 202 program for older renters, many of whom have disabilities. The 202 program lost $426 million from its FY2010 levels.
Public housing capital funds lost $460 million and the budget for housing voucher administrative fees lost $128 million. On the other hand, the budget for housing voucher rental fees, available to pay landlords two thirds of the rent for assisted families, appears to be fully funded. (Families are required to pay the other third.)
Also of importance are community development programs, which some communities use for rental vouchers. Others use them for security deposits and initial utility payments, for leveraging private funds to create new housing, and for modifications to make homes accessible. The general community development programs took the biggest hits.
Funding for the HOME program was reduced by $218 million below its FY2010 level and funding for the Community Development Block Grant was reduced by $658 million below FY2010l. As a result of these cuts, some families will lose their homes.
FY2011 and FY2012 Budget Chart for Selected HUD Programs
(figures in millions -- 4/15/2011)
|
HUD Program
|
FY10
|
FY11
|
FY12-President’s Request
|
|
Community Development Fund
|
4,450
|
3,501
|
3,804
|
|
HOME
|
1,825
|
1,606.8
|
1,650
|
|
Homeless Assistance Grants
|
1,865
|
1,901.2
|
2,372
|
|
Housing for People with Disabilities (811)
|
300
|
149.7*
|
196*
|
|
Housing for Seniors (202)
|
825
|
399.2
|
757
|
|
Tenant Based Rental Assistance
|
18,184
|
18,370
|
19,233
|
|
Project Based Rental Assistance
|
8,552
|
9,257.4
|
9,429
|
|
Public Housing Capital Fund
|
2,500
|
2,040.1
|
2,405
|
*Section 811 numbers are not actually lower than FY10 because the funding for rental vouchers was moved to the Tenant-Based Rental Assistance program.
Justice
In the Department of Justice appropriation, the mental health and criminal justice collaboration program (Mentally Ill Offender Treatment and Crime Reduction Act), is down from $12 million in fiscal year 2010 to an estimated $9.6 million for fiscal year 2011.
Social Services
One bright spot in the bill is in social services. The Child Care and Development Block Grant received $100 million more than fiscal year 2010 (now at $2.227 billion).
Budget Proposals for FY 2012
Earlier this year, President Obama released the Administration’s proposed budget for FY 2012. Because the FY2011spending bill had not yet been enacted, the President’s $3.7 trillion proposal was based on assumptions about FY2011 spending that have not turned out to be correct. The President proposed what was presumed to be level funding for most programs. The President’s proposal seeks to reduce the deficit by $1.1 trillion over the next decade. It includes a five-year spending freeze on non-security discretionary programs and a number of program cuts, consolidations, eliminations and freezes. Any modest increases to federal programs are overshadowed by these cuts. However, funding for mandatory programs (such as Medicaid, Medicare and Social Security) is not subject to any reductions. See the Bazelon Center’s February 25 information alert.
In contrast, the House FY 2012 budget resolution (Budget Committee Chairman Ryan’s Proposal) calls for $4.3 trillion in cuts over 10 years, to be achieved with major structural changes to Medicaid and Medicare and substantial cuts in other federal programs for low-income people, such as food stamps. All of these programs provide vital services to people with serious mental illnesses. At the same time the plan gives tax breaks to wealthy individuals and reduces to 25% the tax rate on top earnings. The House passed the resolution (H.Con.Res 34) by a vote of 235-193, See the Bazelon Center’s description of its potential impact in our April 6 alert.
The House resolution, termed the “The Path to Prosperity: Restoring American’s Promise,” is in stark contrast not only to the President’s 2012 budget proposal but also to his April 13 speech on fiscal policy, which set forth a framework to build a long-term deficit-reduction plan for the nation while building on the reforms in the Affordable Care Act and rejecting Medicaid as a block grant.
Medicaid
The House budget resolution proposes $771 billion in federal savings by restructuring the Medicaid program into a federal block grant. This would eliminate the current entitlement to coverage and jeopardize services for people enrolled in the program. Another $1.4 trillion in savings would come from repeal of the health reform law’s expansion of Medicaid and subsidies to other moderate-income individuals to enable them to buy health insurance.
Under the proposed block grant, federal rules on eligibility and services, as well as consumer protections, would be eliminated. Each state would devise its own program for meeting the health care needs of low-income people. Given that the federal contribution is designed to be less than under the current law, this would greatly increase the number of people who are uninsured and without access to vital medical and mental health care.
As part of this approach, the Affordable Care Act’s expansion of Medicaid would be eliminated. (Medicaid is slated to expand in 2014 to cover all individuals with incomes under 133% of poverty, a group that includes primarily childless adults, such as homeless people with mental illnesses, among others.) The expansion is designed to provide access to health services for 16 million Americans, including approximately 4-6 million who have a mental disorder. This change would save the federal government $431 billion.
Discretionary Spending, Including Mental Health
The Ryan resolution also caps non-security discretionary funding at or below FY 2008 levels for five years, then ties this cap on non-security discretionary spending to a percentage of the gross domestic product (GDP). This includes all SAMHSA programs and services and the vast range of federal public health, education and criminal justice programs that help to meet the needs of people with mental illnesses. Enforcement would be through required across-the-board cuts if spending goes above the prescribed percentage of GDP.
Social Security Disability Benefits for Children
The House-passed budget resolution proposes a cut of $1.4 billion over 10 years in the children’s Supplemental Security Income (SSI) disability benefit program. According to Budget Committee documents, these savings would be achieved by reducing “incentives to medicate children.” The Committee report asserts that “currently, the SSI program contains incentives for parents to place their children on medication solely to receive SSI benefits.” That statement is based on an article in the Boston Globe that made such an assertion, although there is no evidence that this is the case. Moreover, Social Security rules take account of the positive effect of any medication the child is on, and children whose functioning improves due to medication are less, not more, likely to be found eligible for SSI benefits.
A further threat to SSI is outlined by the Republican Study Committee, which, in its proposals for the FY 2012 budget, has suggested that the entire SSI program for both adults and children become a block grant to the states. This would eliminate all of the current federal guarantees of cash benefits to people disabled by mental illness, who would then need to apply to their state for resources from a far smaller pot of money that the state receives from the federal government. People with disabilities resulting from a mental illness, which are generally invisible, are not likely to compete well in such a system with those who have more obvious physical or developmental disabilities.
Medicare
The House Budget Resolution would transform Medicare into a premium support program starting in 2022. The government would make payments to insurance companies to subsidize the cost for new Medicare beneficiaries. Those who qualify for Medicare prior to that date (i.e., people who are now 55 or older) would remain covered under the current program, but new Medicare beneficiaries would be subject to the premium-support “voucher” system. The transformation would dismantle the current health care program for seniors and individuals with disabilities as it now works.
There are many flaws with this approach, but for people with disabilities who qualify because they are on Social Security Disability Insurance (SSDI), including millions with mental illnesses, it could be disastrous. The costs of a private insurance policy for a person with significant disabilities and health care needs would be prohibitive and the federal voucher is highly unlikely to be anything close to sufficient. This proposal is estimated to save the federal government $30 billion over 10 years; which means the vouchers would inevitably be worth far less than the coverage provided through the present Medicare system.
The result, therefore, would be to shift significant costs for their health care onto the backs of seniors and people with disabilities.
Housing
The House FY 2012 budget proposal further reduces housing programs. It would also impose work requirements, reduce the amount of rental assistance available to families who have rental vouchers, and, by imposing time limits, convert permanent housing to transitional housing. Bazelon was one of 170 national organizations to sign a letter sponsored by the Coalition on Human Needs criticizing the proposal.
In a related development, HUD reported for the first time that it had been undercounting households that include members with disabilities. A month later, HUD issued its first Worst Case Housing Needs of People with Disabilities. Households paying more than 50% of their income in rent, living in substandard housing, or both, and who receive no housing assistance, fall in the “worst case” category. The February report finds that renter households that include people with disabilities are more likely than other households to have very low incomes, experience worst case needs, pay more than half of their income for rent, and have other housing problems such as living in inadequate or overcrowded housing.
The report also finds that these households “are two times more likely to receive housing assistance than those that do not include people with disabilities.” What that means is that households with disabled members are more likely to qualify for housing assistance, not that all households with disabled members actually receive assistance.
In fact, housing assistance reaches only a third to half of the low-income households that qualify for it. According to the Center on Budget and Policy Priorities, in four of the states in which Bazelon is litigating Olmstead cases (Connecticut, Georgia, Illinois and New Jersey), where individuals with mental disabilities are institutionalized for lack of adequate housing, one-and-a-half to two times as many low-income families pay more than half their income in rent as receive rental assistance. Of those households, between 42% and 60% are seniors or non-elders with disabilities. For example, in New Jersey, 156,647 households (with and without disabled members) receive rental assistance. But 263,175 or 60% of New Jersey’s low-income renter households receive no housing assistance and pay more than half their income in rent. These households have only $139 per month available for all other expenses.
Against this background, any reductions in federal housing assistance are intolerable. More assistance, not less, is necessary.
Next Steps
In the Senate, Budget Committee Chairman Kent Conrad (D-ND) has not yet introduced a fiscal year 2012 budget resolution proposal. Senate Democratic leaders are waiting for a bipartisan negotiating group known as the “Gang of Six” to propose a long-term deficit-reduction plan that may serve as an alternative vote to the Ryan plan. The “Gang of Six” is expected to unveil a proposal modeled after the Fiscal Commission’s recommendations.
Also in the deficit-reduction mix is legislation (S. 245) by Senators Bob Corker (R-TN) and Claire McCaskill (D-MO) that would cap total federal spending to no more than 20.6% of the gross domestic product after 10 years (federal spending is now nearly 25% of GDP). Such a limit would inevitably force deep cuts in entitlement programs such as Medicaid and Medicare and might even threaten Social Security by imposing an automatic, across-the-board cut or “sequester” to close the gap between projected spending and the proposed cap if the cap is exceeded. The Congressional Budget Office projected cuts totaling $1.3 trillion in Social Security, $856 billion in Medicare and $547 billion in Medicaid over the first nine years under the cap (2013-2021). In the out years, cuts to Medicaid, Medicare and Social Security would increase substantially to maintain the cap in the face of rising health care costs and an aging population.
Given the great divide over federal spending, evident from the recent partisan debates over the spending bills, we can expect another long appropriations season. During these critical discussions increased advocacy will be critical to protect people with mental illnesses and ensure the integrity of entitlement programs and important federal discretionary programs.
Congress returns from its spring recess on May 2. The House appropriations subcommittees will soon begin work in earnest and the Senate will unfold a FY2012 budget proposal. Stay tuned for more information as this process continues.
For more information:
See these links to documents cited in this document and web pages with more information about the budget items.
On the FY 2011final law:
On fiscal year 2012 budget proposals:
On long-term deficit-reduction proposals: