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Slash and Burn Budget Clears Congress

April 29, 2005—Last night, the Congress approved its budget resolution, which sets spending guidelines for fiscal year 2006. Its approval clears the way for billions in cuts to the Medicaid program, the single most significant source of public financing for mental health services, and for freezing spending on other domestic discretionary programs, including mental health programs, for three years.

The budget resolution passed the House by a vote of 214 to 211 and the Senate by a vote of 52 to 47. It cuts $10 billion over five years from Medicaid, the first such cut to the program since 1997.

Medicaid plays an increasingly crucial role in helping low-income children and their families, the elderly and Americans with mental and physical disabilities to access needed healthcare.

The resolution does not detail where these cuts should come from; instead lawmakers have picked a number based on a desire to cut federal entitlement programs. However, President Bush's proposed FY 2006 budget suggested specific cuts to Medicaid, and lawmakers will likely look to those changes first.

Among the cuts the President proposed were several that would hurt people with mental illnesses who rely on the public mental health system. In particular, significant cuts to targeted case management services were included. Targeted case management is an important community-based Medicaid service for children who require wraparound services to help them avoid school failure, contact with juvenile justice authorities and other adverse outcomes. For adults, it is equally vital in linking them to a range of critical support services, such as housing and employment.

Furthermore, reductions in the number of people eligible and in services covered by the federal government would almost certainly be needed to meet targets in the House and Senate budget resolutions.

Now that the budget resolution has been passed, Congressional committees will use the $10 billion target as a guideline for making specific policy changes to Medicaid and other programs, as well as for setting appropriation levels for other programs, such as those run by the Substance Abuse and Mental Health Services Administration.

Secretary of Health and Human Services Mike Leavitt has reportedly agreed to form a commission or advisory group on Medicaid, but no details have yet been worked out. The need for a commission to examine Medicaid (in place of arbitrary cuts) was initially backed by Senators Gordon Smith (R-OR) and Jeff Bingaman (D-NM), Representative John Spratt (D-SC) and others. Hopefully, such a group will be formed and specific decisions on the Medicaid cuts will be held in abeyance pending its report.

Earlier this week, the House voted 348-78 to approve Representative Spratt’s motion to instruct the members charged with reconciling differences between the Senate and House budget resolutions (conferees) to reject indiscriminate Medicaid cuts. Unfortunately, those instructions were ignored, as were the successful effort by Senators Smith and Bingaman (D-NM) that stripped all Medicaid cuts from an earlier Senate version of the budget resolution.

Although advocates’ efforts to stop Medicaid cuts were not entirely successful, the final budget resolution calls for roughly half of the $20 billion initially called for by the House.

Whither Medicaid?: A Briefing Paper by the Campign form Mental health Reform on Mental Health Issues in Medicaid Restructuring

The Bazelon Center’s Reaction to the Budget Resolution

The following is a prepared statement by Chris Koyanagi, policy director for the Bazelon Center for Mental Health Law.

"This budget is all dollars and no sense. Forcing billions in spending cuts -- with no indication of how they will be accomplished -- harms low-income individuals with mental illness and does nothing to address the healthcare crisis that is forcing so many people to turn to Medicaid or deal with the causes of escalating health care costs.

“In any budget, tough decisions have to be made. Unfortunately, lawmakers have opted to balance the budget on the backs of some of America’s most vulnerable populations and endorsed the idea that those who can least afford to sacrifice should be asked to bear a heavy burden of the cuts.”

According to the Washington Post, the budget resolution assumes $70 billion in lost revenue due to extension of President Bush's tax cuts. In contrast, cuts to entitlement programs equal roughly $35 billion.

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