Rep. Andy Harris (R-Md.): “Let me get it straight. Under the president’s cut of $58 million to the [Section] 317 program, you think you could get around that to avoid cutting vaccines to children, but under a sequester, that the president blames on Republicans, you don't know if you can do that?”

CDC Director Thomas R. Frieden: “We're going to do everything we can to limit any damage that occurs because of the across-the-board cut, but it reduces our flexibility significantly.”

Harris: “Is it your testimony that under the president's proposed cut of $58 million in his budget to the 317 program you could have avoided cuts to vaccines to children in Maryland?”

Frieden: “We believe that we could have maintained vaccination levels, yes.”

— exchange during congressional testimony, March 5, 2013


A colleague alerted us to this interesting exchange on Capitol Hill. Is this another case of sequester spin?

 On the face of it, it looks suspicious. In the White House’s fiscal 2013 budget proposal,  the administration had sought a $58 million cut in funding for the Section 317 Immunization Program, which mainly gives grants to states and localities for child and some adult vaccinations, primarily those who do not have enough insurance to be fully vaccinated. (The program gets its name from the Vaccine Assistance Act, or Section 317 of the Public Health Service Act, which was enacted in 1962.) 

 Yet, in raising the alarm about the sequester, the administration has highlighted the decline in vaccinations that it claims would result from sequestration. The White House Web site displays an interactive map, which when you click on Maryland, it declares: “2,050 fewer children will get vaccines for diseases like measles and whooping cough.”  It’s even worse for Virginia: 3,530 children would supposedly be affected.

 What’s going on here?


The Facts

 Childhood vaccinations are in a period of tremendous flux. The number of recommended vaccines has grown dramatically over the last two decades — 12 additional vaccines have been added for children or adults been since 2000 — so the cost to vaccinate from birth through age 18 has jumped as well, from $70 for the full complement in 1990 to $1,620 for a female in 2011, according to the Centers for Disease Control and Prevention. At the same time, President Obama’s health care law mandated that as of September 2010, health plans should begin to cover recommended vaccinations.

Starting in October 2012, the CDC announced that children could not receive vaccines using Section 317 funds if their insurance covered immunizations. The assumption was that fewer children — the precise number is unclear — would need to use the Section 317 program because of the health care law.

Here’s what the CDC notice said:

The CDC defines fully insured as anyone with insurance that covers the cost of vaccine, even if the insurance includes a high deductible or co-pay, or if a claim for the cost of the vaccine and its administration would be denied for payment by the insurance carrier because the plan’s deductible had not been met.

 In other words, tough luck if the vaccine was not fully covered. That could be a disincentive for some families.

(HHS responds: “It misses the point that ACA requires insurance to cover many vaccinations with no co-pays. So, ACA actually makes it easier and more affordable to get vaccines, including those that Section 317 focuses on.”)

It was in this context that the administration, in its proposed fiscal 2013 budget, requested a cut of more than 10 percent — $58 million — in total Section 317 funding. (The requested amount was about $500 million, compared to $558 million in 2012.)

The administration’s 2013 budget justification cited the completion of “one-time investments” related to the health care law, but also the impact of the health care law as the number of people enrolled in new health plans was predicted to double, to 88 million, by 2013. “As health reform expands prevention services, the size of the uninsured and underinsured populations served by Section 317 is expected to be reduced and cost savings to Section 317 Vaccine Purchase are likely to occur,” the administration said. (See Pages 42-43.)

 (Section 317 is different from another federal program, Vaccines for Children, which was shielded from the sequester because it is an entitlement aimed at low-income families. But 317 operations funding helps implement Vaccines for Children.) 

There’s a strong lobby for Section 317 funds, so we kind of suspect that a bit of budget gamesmanship was going on. To meet its budget targets, the White House budget office often will slate for cuts programs that it knows will be rescued by advocates in Congress. And sure enough, the money was restored in the Senate Appropriations bill for the agency. (See Pages 58-59.) 

Still, the administration is on record as saying it thought that the need for vaccination funding would decline. Apparently, it has not quite worked out that way. States and localities that started billing insurance companies for vaccines have been losing their shirts, because the reimbursement rates are much lower than their actual costs.

 “As we understand how health departments work to collect money from insurers, we're realizing it’s much harder than we had anticipated,”  Frieden, the CDC director, told lawmakers this week. “And that is one of the things that we're dealing with, with many of our programs, including the immunization program and the reason why we’re less optimistic now about the ability to modulate the impact of cuts than we were a year ago.”

 In any case, the 2013 appropriations were never passed into law and the federal government has been operating on a “continuing resolution” — in effect, the 2012 budget. For complex reasons, that means the current Section 317 budget is $368 million. (This figure does not include yet-to-be-provided funding from a $1 billion health fund controlled by the Health and Human Services secretary, which is also affected by the sequester. The administration’s proposed 2013 cuts to the Section 317 program would have all come from the health fund. We told you it was complicated.)

 The sequester cuts about 5 percent of  the Section 317 budget, or about $18 million, according to CDC officials. With the sequester only in its first week, CDC officials said that the effects were not known yet. But they say that the $58 million reduction sought in the 2013 budget  allowed for greater flexibility than sequestration, which is why Frieden believed that a reduction in vaccinations could have been avoided under the administration’s proposal.

Where did the White House’s estimates of declines in vaccinations come from?

 Tom Skinner, a CDC spokesman, said that the estimates of fewer vaccinations because of sequestration, touted on the White House Web site, were not done at CDC, but by officials in Washington. We first checked with officials at the White House budget office, who then referred us to HHS.

An HHS official gave us the following math: “The reduction amount was calculated by applying the sequester cut to the program total for a full year. The amount sequestered was then divided by $68 (the cost of the vaccines). That’s how we calculate the estimate of 135,000 children” losing access to vaccines.

 The math did not really add up, and oddly, we could not get a fuller explanation. The Section 317 program estimates a per-dose cost of $4.85 but it appears that the $68 figure is based on an estimate of the cost of vaccine premiums for a family that got most, but not all, of the recommended vaccinations over a child’s lifetime. (This is an estimate offered by the HHS Office of Health Policy in 2009.) Presumably, that means vaccines for pertussis (Tdap), measles and mumps (MMR), influenza and Hepatitis B — the mainstays of the Section 317 program.

 Moreover, not all Section 317 money goes for vaccines: 48 percent is spent on  immunization infrastructure grants, 34 percent on vaccine purchases, 12 percent on extramural program operations and 6 percent on national program operations.

We had thought that HHS might have isolated the funding for grants — $9 million — and then used a relatively large number for the cost of the vaccines. But the agency would not clarify its reasoning.

“In calculating the sequester impact, the calculation was applied across all activities, including vaccine purchase, and estimated an impact of 135,000 fewer people getting vaccinations,” said HHS spokesman Tait Sye. “We are continuing to explore any flexibilities we may have to manage program impacts under final budgetary statutes for FY 2013.”

Update: Sye provided an additional explanation Friday morning. He said the $9 million represents a five percent cut of the vaccine purchasing program and $68 is the cost of an individual to receive Hepatitis B, influenza, Tdap and MMR. It appears, then, that the administration is including in its calculation the contributions of the Public Health Fund--which would have been reduced under its 2013 proposed budget.


The Pinocchio Test

 We remain disturbed at how vague and fuzzy estimates keep getting turned into hard facts by the administration. This is a grant program, meaning that the recipients (which also rely on other funding) might be able to make adjustments to accommodate the shortfall in funds. The initial sequester is only for the remaining seven months of the year, so estimates--apparently based on many of the shots a child would receive in their lifetime--are open to interpretation.

 At the same time, we don’t think it is necessarily fair to equate the administration’s request to reduce funding in 2013 with the across-the-board reductions mandated by the sequester. There likely would have been greater flexibility in a non-sequester environment. 

Still, even before the sequester, the administration had sought to reduce costs by ending shots for children who have insurance--on the grounds that the president’s own health-care law was creating new avenues to obtaining vaccinations. Many families might have been dissuaded from getting vaccinations because of the higher costs involved. What are those numbers? That’s still unclear.

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