Congressional negotiators are relying on crude oil and Obamacare to break a year-long stalemate over how to fund the 21st Century Cures Act, a $6.8 billion package intended to boost medical research funding.
The funding for the package would be offset by selling off part of the Strategic Petroleum Reserve, cutting Obamacare funding and using savings from various health reforms. The approach could, however, lead to higher spending levels later on, one expert said.
The $6.8 billion includes $4.8 billion for the National Institutes of Health, $500 million for the Food and Drug Administration and $1 billion in grants to states to help fight the opioid crisis. The money would be spread out over 10 years.
The increased spending would be offset by drawdowns in the petroleum reserve, created as an emergency fuel storage facility in response to the 1970s Arab oil embargo, and rescinding certain spending authority, which one expert deemed a novel and reasonable approach.
The bill would provide “dedicated funding in the future which is offset by other savings while keeping the spending subject to the oversight and review of the annual appropriations process,” said Ed Lorenzen, senior adviser for the Committee for a Responsible Federal Budget, a nonpartisan think tank.
Lorenzen said the problem could occur after the extra money runs out in 10 years.
“Most of the offsets only achieve one-time or temporary savings, which are enough to cover the increased spending in the bill for 10 years,” he said. “The bill only provides increased spending for 10 years, but the higher spending will be built into the baseline, creating pressure to continue the higher spending levels and a funding ‘cliff’ if it is not extended.”
The $6.8 billion in the finalized version is below the roughly $9 billion that was in the original 21st Century Cures Act that passed the House last year.
The House decided to pay for the legislation by tapping the Strategic Petroleum Reserve, and the Senate used the same approach, calling for a sellof of 25 million barrels of crude. The bill calls for the reserve to sell off 10 million in fiscal 2017, 9 million in 2018 and 6 million in 2019, according to the legislation. The reserve held almost 700 million barrels of crude oil at the end of July, enough to supply 149 days’ worth of imports.
Lawmakers also sought to take some money from various Obamacare programs and projects.
For instance, it plans to take $464,000 in Obamacare funding that was meant for U.S. territories but has not been spent.
The bill also would use more than $1.5 billion from the Prevention and Public Health Fund created as part of Obamacare.
It is a mandatory funding stream for public health. The administration has used the fund to provide grants for items like immunization programs and diabetes prevention.
Obamacare allows congressional appropriators to transfer the funds to eligible activities.
The law calls for Congress to devote $2 billion each year to the public health fund, but continuation of the fund appears in doubt as congressional Republicans and President-elect Trump have made repealing Obamacare a top priority.
The new cures legislation announced Saturday pinpoints other moves that could help save money. For instance, it would eliminate Medicaid payments for things used for cosmetic purposes or hair growth except when it is medically necessary.
The legislation could see further changes before it hits the Senate floor or reaches President Obama’s desk. Sen. Chuck Grassley, R-Iowa, threatened to gum up passage of the cures package if a provision weakening the Sunshine Act isn’t stripped.
The Sunshine Act requires doctors and teaching hospitals to disclose any payments from healthcare manufacturers. The provision would ease the reporting requirements for several parts of the law, including requiring doctors and companies to report speaker fees for attending a medical conference.
The House is scheduled to vote Wednesday to include mental health reform legislation into the final cures package, and then it will be in the Senate’s hands.
Time is not on Congress’ side, as the lame-duck session is scheduled to end on Dec. 19. Congress also must pass a separate spending measure for the federal government.
The White House has not issued a veto threat for the package and has lauded several of its provisions.
“The administration has prioritized combating the opioid epidemic and investing in the Cancer Moonshot and the Precision Medicine Initiative,” said spokeswoman Katie Hill. “We are currently reviewing the 21st Century Cures proposal released by the Energy and Commerce Committee while conversations continue in Congress.”
