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FY 2007 Budget in Brief

Advancing the Health, Safety, and Well-Being of our People

On this page:
Overview
Transform the Healthcare System
Secure the Homeland
Modernize Medicare and Medicaid
Advance Medical Research
Protect Life, Family and Human Dignity
Improve the Human Condition Around the World
Deficit Reduction Act Of 2005
President’s Management Agenda
Overview Tables Begin Here

The Department of Health and Human Services enhances the health and well-being of Americans by providing for effective health and human services and by fostering sound, sustained advances in the sciences underlying medicine, public health, and social services.

The Department of Health and Human Services (HHS) fiscal year (FY) 2007 Budget supports the Department’s mission to provide for the health, safety, and well-being of Americans. FY 2007 outlays will total $698 billion, an increase of $58 billion over FY 2006. Consistent with the President’s long-term goal to cut the deficit in half by FY 2009, the HHS budget includes both new mandatory savings proposals and a reduction in discretionary spending. The FY 2007 HHS budget totals $74 billion in discretionary program level, a decline of $1.5 billion. In discretionary budget authority, excluding emergency funding, the total is $66.0 billion, a reduction of $1.4 billion.

Secretary Leavitt’s 500-day Plan guides HHS in fulfilling the President’s vision of a healthier, safer, and more hopeful America. In FY 2007, HHS will strive to fulfill the major tenets of the Secretary’s plan to:

• Transform the Healthcare System;
• Secure the Homeland;
• Modernize Medicare and Medicaid;
• Advance Medical Research;
• Protect Life, Family and Human Dignity; and
• Improve the Human Condition Around the World.

Significant initiatives funded in the FY 2007 budget include the Department’s ongoing commitment to expand access to quality health-care; prepare for the possibility of a pandemic influenza outbreak; protect our citizens against the threat of bioterrorism; increase outreach, testing, and treatment for HIV/AIDS; and continue to address the health and human service needs of all Americans.

Transform the Healthcare System

Health Information Technology: The FY 2007 budget request includes $169 million, an increase of $58 million over FY 2006, to continue our effort towards achieving the President’s goal for most Americans to have secure personal electronic health records by 2014.

In FY 2007, the request for the Office of the National Coordinator for Health Information Technology (ONC) includes $116 million, an increase of $55 million over FY 2006. Funding will support strategic planning, coordination, and analysis of key technical, economic, and other issues related to public and private adoption of health information technology (IT). The American Health Information Community (The Community) was established in FY 2005 as a Federally-chartered commission to help advance President Bush’s call for electronic health records. In early FY 2006, The Community created four workgroups to produce tangible results in the following priority areas: electronic health records, consumer empowerment, chronic care management, and biosurveillance. These workgroups have identified short-term projects that will provide benefits to Americans within the next two years.

The Agency for Healthcare Research and Quality (AHRQ) will continue to work towards the development, adoption, and diffusion of interoperable information technology in a range of healthcare settings with a new emphasis on health IT in ambulatory care settings. The Office of the Assistant Secretary for Planning and Evaluation will conduct independent evaluations of electronic health record adoption and economic factors influencing health IT implementation.

Health Insurance Reform: The President’s Budget includes proposals to promote Health Savings Accounts (HSAs). These proposals include tax credits for purchasing HSAs, increasing the amount individuals can contribute to an HSA, and making HSA premiums tax deductible. The Budget also proposes three reforms to the health insurance marketplace: association health plans that will allow small employers and community groups to consolidate purchasing power; a competitive marketplace across State lines that includes strong consumer protections; and medical liability reform to reduce frivolous lawsuits against health care providers.

The President’s FY 2007 budget also expands tax deductions on out-of-pocket medical expenses. The increased deduction is designed to make health care more affordable by helping the uninsured pay their health care costs as well as by allowing people with insurance to deduct a greater portion of the money they spend on co-payments, deductibles, and care that is not covered.

Health Centers: The budget provides an increase of $181 million in the Health Resources and Services Administration (HRSA) toward two goals: completing the President’s commitment to provide new or expanded access points in 1,200 communities, and implementing a new initiative to establish new Health Centers in poor counties. In FY 2007, an additional 1.2 million individuals will receive health care through more than 300 new or expanded sites in medically underserved communities throughout the Nation. Of the over 300 new sites, 80 will be in poor rural and urban counties consistent with the President’s goal of establishing new health centers in the poorest counties in the Nation.

Domestic HIV/AIDS Initiative: There are two key domestic HIV challenges in the United States: making medical treatment and medication available for HIV-positive low-income Americans, and arresting the spread of HIV by preventing new infections and detecting undiscovered cases. The FY 2007 budget includes $188 million for a new Domestic HIV/AIDS Initiative, of which $95 million will be provided through the Ryan White program for treatment and outreach, and $93 million in the Centers for Disease Control and Prevention (CDC) for increased testing among high-risk populations. The primary objectives of this initiative are to reduce the number of new HIV infections each year, diagnose those Americans currently infected with HIV but do not know it, and provide care and treatment to individuals who have limited or no access to health care.

IHS Population and the Cost of Providing Care: In partnership with Tribes, the Indian Health Service (IHS) is transforming its health care system through its health promotion and disease prevention initiatives and the expanded use of health IT. The budget includes an additional $124 million over FY 2006, for a total of $4 billion, to provide health care for the additional 30,000 people who are expected to seek care in FY 2007, meet the rising cost of providing care, and cover increased pay costs for the Federal and Tribal employees who provide health care.

Critical Path to Personalized Medicine: The budget requests $6 million in the Food and Drug Administration (FDA) for the Critical Path to Personalized Medicine in FY 2007, an investment that will pave the way to more efficient, less expensive clinical trials, and safer, more effective drugs for the American people. This targeted investment will lead to the approval of drugs tailored to individual molecular traits, and will allow health professionals to prescribe safer, more effective medications.

Drug Safety: The FY 2007 budget includes an increase of $4 million to improve the safety of drugs already on the market. FDA will continue to enhance drug safety by modernizing the Adverse Event Reporting System, including integration with the Sentinel System, and acquiring access to large population-based databases, such as those at the Centers for Medicare and Medicaid Services (CMS).

Focusing on the Chronically Ill: Securing health insurance coverage can be a struggle for chronically ill individuals. The FY 2007 Budget promotes adoption of innovative policies to promote insurance among the chronically ill by creating a competitive grant program for States at CMS. The program will make $500 million available annually for these grants.

Secure the Homeland

Pandemic Influenza Plan: The current pandemic threat stems from an outbreak of avian influenza in Asia and Europe. The ability of the H5N1 virus to infect a wide range of hosts, including birds and humans, is of great concern to the medical communty. Although the virus has not yet shown an ability to transmit efficiently between humans, it has the potential to acquire this capability. Once a pandemic began, time would be critical in accomplishing necessary research, development, and delivery of vaccines required to mitigate the pandemic.

To prepare for the possibility of a pandemic, the Administration announced an emergency budget request of $6.7 billion in FY 2006, for HHS to fund a three-year strategic plan to improve pandemic influenza readiness. Congress appropriated $3.3 billion to fund the first year of this plan. One goal of the HHS plan is to build capacity to vaccinate every man, woman, and child in the United States within six months of a pandemic outbreak. Other goals are to have access to enough antiviral treatment courses sufficient for 25 percent of the U.S. population, and to enhance domestic and international public health infrastructure and preparedness. In the meantime, HHS will take all possible steps to protect the Nation against a pandemic threat.

The FY 2007 budget includes a $2.3 billion allowance for the next phase of critical pandemic influenza preparedness activities outlined in the Administration's National Strategy for Pandemic Influenza; an allowance means that a formal request for these funds will be transmitted to Congress in the coming months. This funding supports the continuation of the FY 2006 efforts to expand domestic vaccine production and surge capacities, antiviral stockpiles, research and development on promising new antivirals and vaccines, and supplies for the Strategic National Stockpile (SNS) that would be needed in the event of a pandemic.

In addition, the budget includes $352 million to fund ongoing activities within the CDC, FDA, the National Institutes of Health (NIH), and the Office of the Secretary (OS) to expand surveillance and detection capabilities, as well as to improve our Nation's ability to prepare for, communicate during, respond to, and contain a potential pandemic influenza outbreak.

Emergency Preparedness: The National Response Plan calls on HHS to lead public health and medical services during major medical disasters, including bioterrorist attacks and large-scale public health emergencies. In support of this responsibility, the FY 2007 budget includes $4.3 billion in appropriations to the CDC, HRSA, NIH, and FDA, and $81.6 million in the Public Health and Social Services Emergency Fund (PHSSEF). These amounts include a $68 million increase for the SNS for medical countermeasures, including storage for products purchased through Project BioShield, and a medical surge capacity initiative.

HHS will also continue investing $1.3 billion through the CDC and HRSA to improve State and local public health preparedness. In addition, NIH will increase funding by $110 million to support the advanced development of medical countermeasures for the SNS.

FDA’s budget includes an increase of $20 million to continue to improve the protection and safety of the national food supply. Such activities will reduce the morbidity, loss of human life, and economic disruption caused by a terrorist attack or other public health emergency.

Modernize Medicare and Medicaid

Strengthening Long-Term Financial Security of Medicare: The budget includes a comprehensive package of Medicare legislative proposals designed to strengthen the long-term financial security of the program. These proposals will encourage efficient payment for services, foster competition, and promote beneficiary involvement in health care decisions. Net savings from this package total $2.5 billion in FY 2007 and $35.9 billion over five years.

Implementing the Prescription Drug Benefit: As of January 1, 2006, Medicare beneficiaries have access to a prescription drug benefit. The new drug coverage represents the most significant transformation of the Medicare program since its inception. As of this printing, more than 24 million Medicare beneficiaries are already participating in the program. Beneficiaries in every State and region have a broad choice of prescription drug plans from which to choose, including at least one plan with monthly premiums below $21 and plans with zero deductibles or deductibles below the Medicare standard of $250 annually. CMS has marshaled all resources toward assisting beneficiaries, plans, pharmacies, States, and other partners in enrolling beneficiaries in Part D and ensuring that no one loses access to vital prescriptions during the transition.

Reforming and Modernizing Medicaid & SCHIP: The Administration is committed to modernizing the financing, benefit structure, and infrastructure of Medicaid and the State Children’s Health Insurance Program (SCHIP). The Deficit Reduction Act of 2005 (DRA) takes important steps toward this goal, including enacting many of the President’s FY 2006 budget proposals. This budget seeks to build on the momentum of the DRA. It proposes legislation that will save $1.3 billion over five years. These proposals will pay more appropriate payment levels for Medicaid services and foster greater access and enrollment in these programs.

The budget also proposes a series of administrative actions that will expand on our success with State waivers, improve the financing structure of the Medicaid program, and assure the fiscal integrity of Medicaid and SCHIP. These actions will save $12.2 billion over five years.

Improving Program Integrity: A central goal of the President’s Management Agenda (PMA) is to reduce improper payments and improve financial management of Federal programs. Successful program integrity oversight for Medicare and Medicaid is critical to achieving this wider goal. The FY 2007 budget proposes a Health Care Fraud and Abuse Control (HCFAC) program level of $1.2 billion, $30 million more than the FY 2006 level. Included in the FY 2007 program level request is $118 million in new discretionary funding to support HCFAC activities. These funds are part of a govern-ment-wide proposal to fund program integrity activities through discretionary spending limits. This new funding will be used to safeguard the new prescription drug benefit and Medicare Advantage programs from fraud and abuse, as well as to enhance oversight of the fast-growing Medicaid program. These resources will complement funds provided in the DRA that are dedicated toward Medicare and Medicaid program integrity activities.

Advance Medical Research

Federal investments in biomedical research have contributed to dramatic reductions in mortality from heart disease and stroke and declining cancer incidence and death rates. Major advances in knowledge about life sciences are also opening dramatic new opportunities for further improvements in preventing, treating, and curing disease and disability. To capitalize on these opportunities, the FY 2007 budget request includes $28.6 billion for NIH. The budget request enables NIH to continue implementing the NIH Roadmap for Medical Research; provides $49 million in resources to expand studies on the connections between genes, the environment, and health; and provides increased support for new research investigators.

Protect Life, Family and Human Dignity

SAMHSA Methamphetamine Treatment Initiative: The number of methamphetamine users has more than doubled from 63,000 in 2002 to 130,000 in 2004. The FY 2007 request includes $25 million within the Access to Recovery program to reduce methamphetamine abuse. The Substance Abuse and Mental Health Services Administration (SAMHSA) funds will be targeted to States with high methamphetamine prevalence to provide vouchers for clinical treatment and recovery support services.

Vouchers to Improve Access to Services: The budget includes new proposals to increase access to a wider array of service options through vouchers, including faith and community-based providers. Through the SAMHSA Access to Recovery program, incentives will be available to States that voluntarily distribute a portion of their Substance Abuse Block Grant funds through a voucher system. In addition, the Administration for Children and Families (ACF) will begin using vouchers to provide maternity group home services to pregnant and parenting homeless youth and proposes to allow the use of vouchers to provide mentoring services to children of prisoners.

AoA Choices for Independence: Choices for Independence will provide seniors and their caregivers with information, assistance, and counseling as they confront difficult decisions about their long-term independence in the community. The FY 2007 request for the Administration on Aging (AoA) includes $28 million to pilot Choices for Independence, which seeks to reduce the current systemic bias in favor of institutional care. By expanding options that rely on private financing and less costly community-based alternatives, this initiative will help seniors remain at home and in their communities for as long as possible.

ACF Helping America's Youth Initiative: In the 2005 State of the Union Address, the President announced a new initiative to help youth at risk of gang influence and involvement as part of a broader outreach effort to at-risk youth. The budget provides $50 million within the Compassion Capital Fund for faith-based and community organizations with a demonstrated history of providing services to youth and families in disadvantaged situations.

ACF Support for Refugees and Other Entrants: The request includes $615 million, an increase of $45 million, to maintain the current level of assistance for refugees and other entrants, and for the care and placement of an increasing number of unaccompanied alien children. Within the request, an additional $5 million will expand assistance for United States citizens or aliens admitted for permanent residence who have been victims of human trafficking.

TANF, Foster Care, and Child Care: Temporary Assistance for Needy Families (TANF), Foster Care, and Child Care are key HHS programs that protect life, family, and human dignity. Under TANF, the Administration proposes an increase of $100 million for a new state grant program for Family Formation and Healthy Marriage. This initiative builds on the $150 million Healthy Marriage and Responsible Fatherhood program that was included in the TANF reauthorization in the DRA. These new programs address areas that the Administration considers vital to the TANF purposes of strengthening families and improving the well-being of children.

The Child Care Entitlement to States program provides $2.9 billion per year for childcare, which provides vital support for working parents. The FY 2007 budget also proposes to provide States with more flexibility in Foster Care so that States can support a continuum of services to families in crisis and children at risk.

Improve the Human Condition Around the World

In FY 2007, HHS agencies involved in international research and global disease prevention and control activities will continue efforts to respond to health events from around the world, which also minimize their potential to impact health within the United States. The budget provides $145 million to detect, contain, and respond to pandemic influenza around the world, as well as conduct clinical trials and research activities in other countries. Other examples of HHS’ global activities include CDC, NIH, and HRSA involvement in the President’s Emergency Plan for AIDS Relief.

The FY 2007 budget request for CDC and NIH includes approximately $490 million to support ongoing global HIV/AIDS prevention, care, treatment, surveillance, and capacity-building activities, as well as HIV/AIDS research, training, and research infrastructure programs conducted in collaboration with investigators in developing countries. In addition to these funds, the FY 2007 budget for NIH includes $100 million to continue the HHS contribution, initiated in FY 2002, to the Global Fund to Fight AIDS, Malaria, and Tuberculosis.

CDC and NIH will also continue to work collaboratively with other Federal agencies, national and international organizations, and foreign governments on specific global programs to reduce morbidity and mortality from malaria, polio, measles, influenza, and other emerging microbial threats. These efforts emphasize implementing immunization programs where possible; rapidly detecting and controlling disease outbreaks; and developing new vaccines, therapeutics, and diagnostics.

Deficit Reduction Act of 2005

Beginning in FY 2006, implementation of the provisions of the DRA will produce efficiencies and reduce costs for a number of HHS programs, including Medicaid, SCHIP, TANF, and Child Support Enforcement (CSE).

The DRA makes significant improvements to many HHS mandatory programs and produces substantial long-term savings. The DRA provides more appropriate Medicare payment levels to providers, reforms Medicaid prescription drug payments, and makes significant improvements to Medicaid long-term care eligibility and asset transfer policies. Additional funding is made available for the Medicare Integrity Program to improve the accuracy of payments, and a Medicaid integrity program is established. The DRA reauthorizes TANF through 2010. It includes improvements to CSE such as prioritizing collection of medical child support and enhancing enforcement tools.

The DRA also has a number of provisions to improve quality of care, such as incentives for quality data reporting and initiatives to pay for performance.

President’s Management Agenda

The FY 2007 budget supports HHS efforts to implement the PMA. The PMA encompasses a broad strategy for improving management and program performance and consists of five government-wide management initiatives and several program-specific initiatives.

The five management initiatives are:

1. Strategic Management of Human Capital;
2. Competitive Sourcing;
3. Improved Financial Performance;
4. Expanded Electronic Government; and
5. Budget and Performance Integration.

HHS, along with other agencies, develops and implements action plans to achieve PMA goals. Quarterly PMA scorecards assess progress and assign status ratings in achieving the goals of each initiative. The scorecards also serve as blueprints for improvement efforts and employ a grading system of green for full achievement of all goals for a particular initiative, yellow for intermediate achievement, and red when at least one deficiency is found. The progress rating scores an agency’s progress in meeting its quarterly deliverables for each initiative. The status rating indicates the overall achievements of an agency for each initiative. As of the first quarter of 2006, HHS achieved a green progress rating for all PMA initiatives.

Strategic Management of Human Capital: HHS has successfully achieved a green status and green progress rating for Strategic Management of Human Capital. This high rating recognizes several HHS accomplishments, including the development of a new four-tier Performance Management System for all of the Department’s employees, with full implementation anticipated by January 2007. HHS is planning several upcoming projects to support the Human Capital initiative and maintain this high rating.

Competitive Sourcing: HHS has successfully achieved a green status and green progress rating for Competitive Sourcing for eight consecutive quarters, dating back to March 2004. To date, HHS has conducted competitive sourcing studies for over 40 percent of its commercial activities. For studies completed in FY 2005, HHS projects gross savings of over $100 million for the benefit of HHS programs and the American taxpayer. HHS plans to maintain high performance in support of Competitive Sourcing. This includes structuring bid competitions to maximize efficiencies and savings utilizing Most Efficient Organization principles and implementing an independent savings validation plan.

Improved Financial Performance: HHS continues to implement several reforms to improve the financial performance of the Department, such as streamlining and accelerating the annual financial reporting process and combining annual audited financial statements with program performance information in the Department's Performance and Accountability Report. HHS also continues to implement the Unified Financial Management System within several HHS agencies and the new requirements of OMB Circular A-123 to assess and report on internal controls, and is currently pursuing an initiative to improve access to and use of financial performance information to support program, operations, and management decisions. HHS is striving to continue its green progress rating and improve its status ratings in the upcoming fiscal year.

Expanded Electronic Government: HHS continues to score green for progress for Expanded Electronic Government (e-Gov) which illustrates an enhanced ability to conduct Departmental business and serve the Nation’s citizens effectively and efficiently. The Department’s strategic planning goals and objectives are supported through the integration of IT capital planning and budget processes; implementation of enterprise architecture, security, and project management; and use of performance measurement and management as a component of enterprise planning and performance life cycle planning processes.

Enterprise planning and performance life cycle planning provide a structured framework in which sound business decisions can be made through consistent practices that offer the opportunity for repeatable successes in IT investments and project management. For example, the goal of the HHS security program is to ensure the security of HHS information systems and the privacy of the information in those systems by certifying and accrediting 100 percent of critical HHS systems, completing Privacy Impact Assessments (PIAs) for 100 percent of developmental and operational systems, and conducting security awareness training for 100 percent of HHS employees. In FY 2005, HHS certified and accredited 99 percent of its critical systems (the remaining one percent will be certified in FY 2006), completed PIAs for 100 percent of developmental and operational systems, and provided security awareness training to 98 percent of HHS employees.

Budget and Performance Integration (BPI): Budget and Performance Integration (BPI) aims to improve program performance and efficiency by ensuring that performance information is used to inform funding and management decisions. In FY 2007, HHS enhances the integration of budget and performance information. Each agency’s performance budget displays how its strategic goals link to Department-wide strategic goals. In addition, agency budget justifications present performance information in sequence with a program’s budget justification narrative. The budget presentation along with other successes enabled HHS to achieve a progress rating of green and maintain its BPI status rating at yellow on the PMA scorecard. HHS performance budgets establish the resource needs of HHS programs and identify the results that Americans can expect from their investment in these programs.

The Program Assessment Rating Tool (PART) is an important component of BPI and is used by the Office of Management and Budget (OMB) to assess program performance and improve the quality of performance information. Nearly 100 HHS programs have been assessed in the PART processes for FY 2004 through FY 2007 budgets. These programs account for approximately 79 percent of HHS budgetary resources. Close to 70 percent of the programs assessed received a narrative rating of Effective, Moderately Effective, or Adequate. More detailed information on the PART assessments can be found at http://www.expectmore.gov.

Program Initiatives: In addition to the five government-wide management initiatives, HHS is also responsible for managing the following PMA program initiatives:

• Broadening health insurance coverage through state initiatives;
• Eliminating improper payments;
• Real property asset management;
• Faith-based and community initiatives; and
• Research and development investment criteria.

Overview Tables Begin Here:

Note: Detail in this document may not add to the totals due to rounding.

Composition of the Budget Pie Chart [D]

FY 2007 Budget in Brief Home