Federal Budget Process Summary

Every year, Congress and the Administration sets in motion a year-long process to determine the spending levels for each of the Federal government’s departments, agencies and programs.

The initial step in the congressional budgetary process is the submission of the President’s budget in early February. On February 5, 2007 President Bush submitted to Congress a $2.679 trillion dollar budget proposal for fiscal year (FY) 2008. He proposes to save $100 billion in five years from cuts in Medicare and Medicaid spending. Most of the Medicare savings would be achieved by freezing or reducing the inflation updates for Medicare providers.

As part of his fiscal year 2008 budget proposal, President Bush recommended a five-year freeze in home health payments (2008 through 2012), and permanent market basket reductions annually thereafter of 0.65 percent. The home health reductions are estimated to curtail spending by $9.68 billion dollars over the first five years. It would also cut hospice payments by $1.140 billion through a permanent reduction of 0.65 percent to the hospice update.

After the President’s budget is submitted, the House and Senate Budget Committees begin developing their own versions of a budget resolution. On March 23, 2007 the Senate passed S.Con.Res. 21, the FY 2008 Budget Resolution, by a vote of 52-47. The House passed its Budget Resolution, H.Con.Res. 99, on March 29 by a vote of 216-210. Both resolutions differ from the budget proposed by the President. House and Senate budget resolutions are substantially different. Therefore leading Budget Committee members from both chambers will develop a conference report on the budget – a consensus agreement between House and Senate negotiators – which is typically adopted in April or May. The conference report is the blueprint for broad spending and tax decisions that will be made during the balance of the year.

The budget resolution is not formally a law – it is a concurrent resolution, which does not require the President’s signature. But both the House and Senate have various enforcement procedures aimed at ensuring that the resolution’s directives are met. The budget resolution also sets in motion subsequent legislative activity that is submitted to the President and, when enacted, has the force of law. It is through these laws –specifically, appropriations bills and, if necessary, reconciliation legislation – that the congressional budget’s spending and tax guidelines are implemented. The Deficit Reduction Act of 2005, which narrowly passed the Congress (216-214), is an example of “reconciliation legislation.”

There are two types of spending addressed in the budget resolution – “discretionary” or appropriated spending, and “mandatory” spending, which includes entitlement programs. Once Congress has adopted its budget resolution, the House and Senate Appropriations Committees begin their process of determining funding for discretionary programs through consideration of 11 House and 12 Senate appropriations bills.

The National Association for Home Care & Hospice will be following the congressional budgetary process as it works its way through the House and Senate committees. We are committed to working jointly with our members to urge that Congress reject any efforts to reduce the home health and hospice inflation adjustment and support a full market basket update for Medicare home health and hospice services.

(posted: 4/5/2007)