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The President recognizes the importance of health care to America's families. The 2002 Budget includes targeted investments in key Presidential priority areas such as improving biomedical research, strengthening community-based health care, enhancing drug treatment, and providing an immediate prescription drug benefit to those in the greatest need.

Doubling Resources for the National Institutes of Health (NIH): The 2002 Budget includes a Presidential initiative to double NIH's 1998 funding level by 2003 (see Chart 13 1). To accomplish this, the 2002 Budget requests $23.1 billion for NIH, a $2.8 billion increase above the 2001 level. Over the past three years, NIH has received annual increases of approximately $2.0 billion, $2.2 billion, and $2.5 billion, respectively, in an effort to double the agency's 1998 funding of $13.6 billion. During the campaign, then-Governor Bush pledged to complete the effort to double NIH's budget in five years, a goal that is supported in Congress by a bipartisan coalition. Consistent with NIH's large funding increase, cancer-related research is estimated to increase by over $500 million, to $5.1 billion in 2003.

NIH is working to meet the management challenges that can arise when an agency receives a substantial infusion of resources over a short period of time. NIH is in the process of identifying strategies and policies that could be implemented in 2002 and 2003 and beyond to maximize budgetary and management flexibility in the future. Such strategies could include funding the total costs of an increasing number of new grants in the grant's first year and supporting some one-time activities such as high-priority construction and renovation projects. Once the doubling effort is complete, NIH will receive stable, moderate funding increases to continue to support investments in biomedical research that improve the health of all Americans.

The Federal Government has a leading role in promoting cutting-edge research and biomedical advancement. The budget recognizes NIH leadership in this area by providing a substantial funding increase to support the highest levels of research in the diseases that threaten the lives of many Americans, including cancer, diabetes, Alzheimer's, Parkinson's and other diseases afflicting the elderly, and substance abuse. Through the results of the Human Genome Project and other similar revolutionary research, NIH will accelerate the advancement of medical knowledge and health care to unprecedented levels.

Strengthening the Health Care Safety Net: There are approximately 44 million people in the United States who are uninsured and at least 48 million lack access to a regular source of health care. Many of our Nation's uninsured and medically underserved people live in inner-city neighborhoods and rural communities where there are few or no physicians or health care services. These Americans have lower life expectancy and higher death rates from cancer and heart disease compared to the general population.

To strengthen the health care safety net for those most in need, the budget proposes a $124 million increase for Community Health Centers. This increase is the first installment for a multi-year initiative to increase the number of community health center sites by 1,200. Community Health Centers, which are a critical component of the American health care safety net, deliver health care services to roughly 11 million patients, 4.4 million of whom are uninsured, through a network of over 3,000 community-based health care center sites.

By expanding the number of health care center sites by 1,200, the initiative's long-term goal is to double the number of people served. These new health center sites will offer quality primary health care services to anyone regardless of their ability to pay, including culturally competent care through the development of creative programs to serve diverse populations. Community Health Centers will continue to build partnerships with local hospitals and providers, managed care organizations, or other Community Health Centers, to ensure a more stable health care delivery system.

The budget also assumes additional public health resources for the States from the President's proposal to extend fiduciary responsibilities to the representatives of States in tobacco lawsuits.

Reforming the National Health Service Corps (NHSC): By offering scholarships and loan repayments to health care professionals in exchange for service commitments in communities that lack health care providers, the NHSC has placed over 20,000 doctors, nurses, dentists, midwives, and mental health clinicians in communities that lack access to care.

Through a targeted management reform initiative, the NHSC will be better able to address the neediest communities. The NHSC management reform will examine the ratio of scholarships to loan repayments, as well as other set-asides, to ensure maximum flexibility in placing NHSC providers. The Administration will also seek to amend the Health Professional Shortage Area definition to reflect other non-physician providers practicing in communities, which will enable the NHSC to more accurately define shortage areas and target placements better. To further avoid overlap in the provision of health care, the Department of Health and Human Services (HHS) will enhance its coordination with immigration programs, including the J-1 and H-1C visa programs, which review applications for health care providers practicing in underserved communities. The NHSC initiative will also encourage more health care professionals to participate in the NHSC by making scholarship funds tax free.

Increasing Access to Drug Treatment: The budget includes an additional $111 million to increase the availability of substance abuse treatment services. According to the National Household Survey on Drug Abuse, there is a treatment gap of almost three million people between the number of individuals who need drug treatment and the number who receive it. One recent study found that only 10 percent of child welfare agencies were able to locate treatment within a month for clients in need. Another study found that only 37 percent of substance abusing mothers with minor children received any treatment at all in 1997.

Of this additional $111 million to increase access to substance abuse treatment and help to close the treatment gap, the budget proposes $100 million for the Substance Abuse and Mental Health Services Administration. This increase includes $60 million to help States finance treatment to those in need through the Substance Abuse Block Grant, and an additional $40 million will be made available through the Targeted Capacity Expansion grants designed to support a rapid, strategic response to emerging trends in substance abuse. A portion of this funding will be used for competitive grants to organizations that provide residential treatment to teenagers. The budget also includes an additional $11 million for the Office of Justice Programs' Residential Treatment grants at the Department of Justice.

Studies also show that religion can be a powerful tool in helping individuals overcome drug and alcohol addiction. As part of the President's broader Faith-Based Initiative, Federal funding will be available to faith-based entities on an equal basis with all other providers, and their use of these funds will be encouraged.

Supporting the Healthy Communities Innovation Fund Initiative: In communities across the Nation, local organizations are addressing health care needs in innovative ways. To build on this success, the President has proposed the Healthy Communities Innovation Fund Initiative that supports grants to health care improvement projects in State and local communities. These grants encourage and implement innovative technologies that target areas of health risk, including heart disease, childhood and adult Type II diabetes, and childhood obesity. In 2002, HHS will target approximately $400 million in existing grant activity to innovations at the local level, including programs to promote comprehensive care through integrated State health care delivery systems for women and children; grants to States to help prevent the incidence of disease; and research programs to promote alternative disease treatments.

HHS will increase coordination among these funds to ensure that the best and broadest range of innovative solutions are funded across the country.

Extending Health Tax Incentives: To help lower-income families purchase private health insurance, the budget includes a new tax credit for individuals and families who do not have access to employer-sponsored insurance. The budget also includes new tax provisions to extend permanently Medical Savings Accounts, help those with long-term care costs, and improve flexible spending accounts.

Reforming Medicaid and the State Children's Health Insurance Programs (S-CHIP): The Administration will also focus over the next few months on Medicaid and S-CHIP and recommend reforms that will improve the way these programs provide health care coverage to the poor and near-poor. In cooperation with the States, the Administration will develop ideas to increase State flexibility and ensure that Medicaid and S-CHIP are being effectively used to promote health insurance coverage. The review of these programs will emphasize giving States the flexibility to use private insurance, when possible, and to coordinate with employment-based insurance for those who have access to it. The Administration will also work with the States to build a systematic approach to monitoring, stabilizing, and improving insurance coverage through reforms of these programs.

Providing an Immediate Helping Hand and Reforming Medicare: The President believes the Nation has a moral obligation to make retirement a time of health and security for America's seniors. For thirty-five years, Medicare has played an integral part of providing security to millions of Americans. Yet, to fulfill our Nation's promise to seniors and the disabled, Medicare must be reformed. No aspect of the flaws in the Medicare program more acutely highlights the need for reform than the limited access of seniors to prescription drugs that can improve and save lives.

As prescription drugs have become an integral part of modern medicine, private health insurance in the United States has changed to incorporate adequate prescription drug insurance. Yet Medicare still does not provide coverage for most drugs as part of its benefit package. As a result, around three in ten Medicare beneficiaries have no insurance coverage for prescription drugs.

To renew the promise made to our seniors thirty-five years ago, the President will recommend funding to preserve and sustain the Medicare program and to incorporate a prescription drug benefit for all seniors. Until Medicare reform is enacted, the budget proposes to enact the Immediate Helping Hand (IHH) prescription drug proposal. The IHH proposal provides for immediate funding to States to allow for interim prescription drug coverage for those beneficiaries who need it most. This immediate assistance will give States the temporary financial support they need to protect beneficiaries with limited incomes or very high drug expenses and no other alternative for drug coverage until Medicare reform is achieved.

The IHH proposal will cover the full cost of drugs for individual Medicare beneficiaries with incomes up to $11,600 who are not eligible for Medicaid or a comprehensive private retiree benefit, and for married couples with incomes up to $15,700 (135 percent of poverty) who do not have access to coverage. These beneficiaries would receive comprehensive drug insurance for a premium of $0, and pay a nominal charge for prescriptions. The proposal would also cover part of the drug costs for individual Medicare beneficiaries with incomes up to $15,000 and married couples with incomes up to $20,300 (175 percent of poverty). These beneficiaries would receive subsidies for at least 50 percent of the premium of high-quality drug coverage. The IHH proposal would also provide catastrophic drug coverage for all Medicare beneficiaries, giving them financial security against the risk of very high out-of-pocket prescription expenditures.

The IHH proposal would begin immediately. Unlike other plans, IHH builds on coverage that is available in over half the States, and under consideration in almost all States. No other proposal would provide interim access to drug coverage for up to 9.5 million of the most vulnerable Medicare beneficiaries until Medicare reform can be enacted. This would minimize the temporary burden on States. IHH is 100 percent federally-funded, with flexibility in how States can choose to establish or enhance drug coverage.

Coordinating Department of Defense (DOD) and Veterans Affairs (VA) Health Care Benefits: The Federal Government provides health care to millions of people through the VA and DOD. Eight million active and retired military personnel and their families are eligible for DOD care, while over five million veterans are enrolled for VA care. However, over 700,000 are enrolled in both systems and may use either DOD or VA services whenever they choose. As a result, DOD and VA have difficulty estimating the number of people that will obtain health care services in each of the systems, and therefore encounter problems in allocating the necessary resources.

The Administration will seek legislation to ensure that DOD beneficiaries who are also eligible for VA medical care enroll with only one of these agencies as their health care program. Assigning a primary Department responsible for the coordination and cost of care of a fixed population will enable a better assessment of sharing and consolidations. Beneficiaries will benefit from continuity in health care services, since the enrolling agency will be able to manage their care more closely to ensure quality and comprehensive coverage. The Administration believes that enrollment will allow DOD and VA to know how many people will obtain health care from them, and to budget correctly. This will lead to the more efficient provision of health care to our deserving veterans and military personnel.

Reforming the Federal Employees Health Benefits Program (FEHBP): Established in 1960, the FEHBP is the largest employer-sponsored health insurance program in the Nation, covering over nine million Federal employees, annuitants, and their families. The program offers a wide range of health insurance plans that enable employees to choose the benefits package that best suits their particular health care needs and budgets. Because choice and competition are hallmarks of the program, the FEHBP reports one of the highest levels of satisfaction of any health care program in the country. The FEHBP is one part of the Government's total compensation package, and, like other employers, the Government has seen health insurance costs outpacing inflation over last few years. The Administration intends to take steps to keep the program contemporary and manageable, and is looking at ways to contribute to that objective. Among the initiatives under consideration are: options to ensure that the program offers high quality and cost effective health plans; incentives to Federal employees and annuitants to choose their plans wisely; and integration of annuitant health benefits with future reforms to Medicare.