On February 9, 2016, the Obama administration released its fiscal year (FY) 2017 budget request. Released on an annual basis, the President's budget request generally plays three key roles in shaping federal policy:

  1. articulating the President's recommendations for overall fiscal policy (how much the federal government should be taxing and spending);
  2. laying out the President's relative priorities for various federal programs (how much should be spent on healthcare, education, defense and agriculture, for example); and
  3. sending signals to Congress regarding recommended spending and tax policy changes.

Every year for the past several years, the President's budget request has recommended changes to federal funding for graduate medical education (GME), and the FY 2017 budget is no exception. The President’s budget notes the impact of proposed changes in a 10-year budget window, beginning with the next federal fiscal year (which begins October 1).

In the FY 2017 budget, the administration specifically proposes to reduce indirect medical education (IME) payments by 10 percent ($17.8 billion over 10 years). This IME cut would be part of a plan to reduce Medicare payments to providers by $425.6 billion over the 10-year budget window. An additional $56.4 billion in Medicare spending reductions would result from proposed structural reforms that target beneficiaries.

In contrast to the cuts recommended for the Medicare GME program, the President's budget proposes to stabilize the current Children's Hospitals Graduate Medical Education (CHGME) program by making it a mandatory appropriation rather than one that must be continuously reauthorized. Under this proposal, the President would eliminate the $295 million annual appropriation for CHGME and request legislative authority to fund the program through an annual mandatory appropriation of $295 million through FY 2021.

Outside of GME and CHGME, other provisions of the President's budget request would have significant effects on academic medical centers and teaching hospitals, including provisions related to research funding, Title VII and Title VIII health professions programs, the National Health Service Corps, the 340B drug pricing program, and non-GME-related Medicare payments. HHS's summary of the key healthcarerelated provisions of the President's FY 2017 budget request is available here. Whether any of the budget proposals move forward will of course depend on actions the President and Congress are able to take this year. The fact that the upcoming fiscal year falls during a presidential election cycle reduces the window of opportunity for Congress to act legislatively on any of these proposals, even if they draw bipartisan support. Congressional committees with appropriate jurisdiction have indicated, however, that they intend to consider improvements to graduate medical education.

The Dentons team listed here will continue to track congressional action regarding these and any other proposed federal GME funding changes.