From the Office of Government Relations of the University of Pennsylvania Health System

(Previous Issues)

March 14, 2001

President Bush Introduces FY 2002 Budget Request.
Lawsuit Impedes NIH Stem Cell Research Plans.
New Jersey
DiFrancesco Urges Funding Formula Reform for Veterans.
In Other News
Organ Transplant Wait List Peaks.
NIEHS To Examine Minority Health Disparity Issues.


President Bush Introduces FY 2002 Budget Request. Political battle lines are being drawn over the President's proposed tax cut and his spending priorities outlined in his $2 trillion FY2002 budget request to Congress. President Bush simultaneously promotes increased spending for education, defense, protecting social security, doubling the Medicare budget over 10 years and paying down the national debt by $2 trillion over 10 years; while also asking for a $1.6 trillion tax cut. The President's budget also would provide a contingency fund of $1 trillion over ten years for unexpected funding needs, but critics charge that the contingency fund is mostly comprised of surpluses reallocated from the Medicare program.

Although President Bush claims to support efforts to double the FY 1998 NIH budget by 2003, the $2.8 billion increase proposed for this year falls $600 million short of the $3.4 billion, (16.5 percent) increase needed in FY 2002 to reach this goal. NIH officials are identifying strategies to provide flexibility in the budgeting and management processes of the agency as a result of the infusion of funds in recent years. These strategies could include funding the total cost of a new grant in its first year and one-time funding for construction and renovation projects.

The President also reiterated his commitment to modernize the Medicare program, seeking a $153 billion increase over 10 years, utilizing the framework of the Breaux-Frist privatization model debated last year. He further pledged to include prescription drug coverage to Medicare beneficiaries and proposed an Immediate Helping Hand (IHH) initiative to provide funds for states to implement a Medicare prescription drug coverage plan to the most needy seniors who lack insurance coverage for prescriptions. On the down side, the President's budget proposes a reduction in the funding level provided for health professions, eliminating the community access program, and prohibiting State Upper Payment Limit (UPL) plans approved after December 31, 2000, from receiving the higher Medicaid payments. The President's budget also proposes scrutiny of the mission and goals of the Health Care Financing Administration (HCFA) along with the Medicare program. The full budget request is slated for release on April 3. Additional information can be obtained at

Lawsuit Impedes NIH Stem Cell Research Plans. Last year, the NIH announced plans to fund studies using embryonic stem cells using lab-grown cell lines. A lawsuit brought forth by the Christian Medical Association, Nightlight Christian Adoption, and others alleges that the policy violates a ban on using public money for research in which embryos are knowingly destroyed or discarded, and that it ignores other viable research methods. Many anti-abortion groups oppose the plans, and President Bush has indicated that he may block implementation. The lawsuit, also joined by an Indiana professor who contends competition with embryonic researchers will hurt funding of adult stem cell experiments, charges that the NIH policy violates a federal ban on taxpayer-funded embryo destruction. The lawsuit names Health and Human Services Secretary Tommy Thompson, who is reviewing the NIH policy.

In related news, the American Council of Education, the Association of American Universities and the National Association of State Universities and Land-Grant Colleges are coordinating a joint letter to Secretary Thompson urging support for the current NIH guidelines.

New Jersey

DiFrancesco Urges Funding Formula Reform for Veterans. Acting Governor Donald T. DiFrancesco joined US Secretary of Veterans Affairs Anthony Principi and Congressman Chris Smith (R-NJ) (recently named Chairman of the House Veterans Affairs Committee) at a roundtable discussion and tour of the James J. Howard VA Outpatient Clinic to listen to concerns from New Jersey veterans over Clinton-era reductions in federal funding for health care services. Under the newly implemented Veterans Equitable Reallocation Act (VERA), funding for health care services for New Jersey's 700,000 veterans has been reduced more than any other veterans' health care system in the country. Despite large increases in the VA budgets in the past two years, including a $1 billion increase this year, New Jersey VA services have suffered tremendous shortfalls, requiring supplemental short-term funding requests.

In Other News

Organ Transplant Wait List Peaks. According to the tenth Annual Report of the U.S. Scientific Registry of Transplant Recipients and the Organ Procurement and Transplantation Network (OPTN), compiled and analyzed by the United Network for Organ Sharing (UNOS), the waiting list for organ transplants has surpassed 75,000 for the first time. The benchmark prompted HHS Secretary Tommy Thompson to issue a pledge that during his first 100 days in office he will develop a national effort to encourage greater organ donation. The report indicates that as transplantation training and techniques have improved over the last decade, recommendations for organ transplantation have risen; the waiting list has grown by at least 10 percent each year since 1990, when 20,481 people were on the waiting list. Most patients on the list await kidney, liver and heart transplants. The report is available at

NIEHS To Examine Minority Health Disparity Issues. In conjunction with the annual Society of Toxicology meeting on March 29, the National Institute of Environmental Health Sciences (NIEHS) will examine environmental justice and health disparity issues. Case studies of successful community-university interactions and research partnerships will be highlighted, and elements essential for development of such collaborations will be presented. Based on the idea that exposure to environmental and occupational hazards falls mostly on low income communities and communities of color, the panel will address ways of translating this observation as well as recent basic research and epidemiology, into public health action among community groups, including Hispanics, African Americans, Laotians and Native Americans. Additional information can be obtained at

The Government Relations Weekly Update is provided by the Office of Government Relations of the University of Pennsylvania Health System. For more information, contact:
Russ Molloy, J.D.
Associate Executive Vice President
21 Penn Tower, Suite 2021
Philadelphia, PA 19104-4385
Telephone (215)349-5136
Fax (215)662-3910

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