Trump's 2021 Budget Would Trim Health Services, Boost Border Control

The budget sets out the administration's priorities, if the president is re-elected

Stephen Miller, CEBS By Stephen Miller, CEBS February 11, 2020
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White House
updated February 13, 2020

President Donald Trump proposed a $4.8 trillion 2021 federal budget on Feb. 10, with reductions in Medicare and Medicaid based in part on controlling prescription drug costs, and with increased spending for immigration enforcement, defense, veterans affairs and other priorities.

The budget proposal is not a legislative package but a broad outline of the administration's plans. While some budget items can be acted on by federal regulatory agencies, major changes in federal spending must be passed by Congress. The House of Representatives is currently controlled by Democrats, who immediately announced their opposition to major parts of the proposed budget.

Enacting Trump's agenda would require not only that the president be reelected in November, but also that Republicans take back the House and keep control of the Senate when voters go to the polls.

We've rounded up articles from SHRM Online and trusted news sources on the budget proposal and related policy initiatives. 

Cuts Linked to Lowering Drug Prices

The White House proposes to cut spending by $4.4 trillion over a decade. Of that, it targets $2 trillion in savings from mandatory spending programs, including $130 billion from changes to Medicare prescription-drug pricing, $292 billion from safety-net cuts—such as work requirements for Medicaid and food stamps—and $70 billion from tightening eligibility access to federal disability benefits.

The savings for prescription drugs in the Medicare program would require the White House and Congress to agree on a plan to lower drug prices. Trump has praised a Senate plan that has bipartisan support and is currently before the Senate Finance Committee, the Prescription Drug Pricing Reduction Act, which would make pharmaceutical pricing by drug makers and pharmacy benefit managers more transparent, among other steps. While the legislation mostly alters Medicare Part D benefits, the reforms could have spillover effects on private and employer-sponsored coverage, health industry watchers say.

A Democratic bill that would allow the government to negotiate with prescription drug companies on the price of their medications for Medicare was passed by the House in December but rejected by the White House.
(MarketWatch and NPR)

Medicaid Changes Shift Power to the States

Trump has proposed modest adjustments to eligibility for Social Security disability benefits and cuts to Medicare providers such as hospitals. But with Medicare and Social Security largely off the table, Trump has focused on Medicaid, which provides care to more than 70 million poor and disabled people.

The administration proposes letting states that want more flexibility in Medicaid to accept their federal share as a lump sum; for states staying in traditional Medicaid, a 3 percent cap on cost growth would apply. Trump would also revive a plan, rejected by lawmakers in the past, to cut food stamp costs by providing much of the benefit as food shipments instead of cash.
(The Oakland Press)

Support for Child Care and Paid Family Leave

The budget calls for spending $10 billion for programs aimed at improving child care options for working parents. This includes a one-time, mandatory investment of $1 billion for a competitive fund aimed at supporting underserved populations and "stimulating employer investments in child care for working families." According to the budget document, "the administration looks forward to continuing to work with the Congress to advance policies that would make paid parental leave a reality for families across the nation."

The budget follows Trump's Feb. 4 State of the Union address, in which he promised to support "America's moms and dads" through increased child care options, paid family leave and child tax credits.
(White House Fact Sheet and CNBC)

Veterans Funding Would Get a Boost

Veterans Affairs (VA) programs would see a 13 percent funding boost under Trump's fiscal 2021 budget plan, bringing the department's entire projected budget to nearly $250 billion. The VA is the only cabinet department to have a double-digit percentage spending increase under the president's fiscal plan. The Department of Homeland Security is projected to see a 3.4 percent increase in its funding while the Pentagon is set to see only a 0.5 percent increase. The Department of Health and Human Services is projected to receive a 9 percent funding cut under the plan.
(Marine Corps Times

Pensions Protections

A rising number of multiemployer defined benefit pension plans, which are collectively bargained plans maintained by more than one employer and a labor union, are severely underfunded and expected to run out of funds by 2025. The budget seeks to shore up funding for the Pension Benefit Guaranty Corporation (PBGC) multiemployer program, which insures the pension benefits of 10 million workers, by raising approximately $26 billion in added premiums over the next 10 years, "helping to ensure that there is a safety net available to workers and retirees whose multiemployer plans fail," according to the budget document. Added premiums would be paid by employers that withdraw from a multiemployer plan to compensate the PBGC for the additional risk imposed on it when employers exit.

The budget proposal noted that the PBGC's insurance program for single-employer pensions had a modest surplus last year for the second year in a row, and proposes to freeze for three years premium rates for many single-employer plans and adjust the variable-rate premium cap to restore an incentive for employers to improve funding of promised pensions.
(National Association of Plan Advisors)

Funding for the Border Wall and Immigration Control

The president is asking Congress for $2 billion in new funding for construction of a wall along the U.S.'s southern border with Mexico, one of the signature promises from his 2016 presidential campaign. That is less than the $5 billion sought last year in border wall funding, a request that triggered a record-setting, 35-day government shutdown last winter after congressional Democrats refused to approve the money.

The budget also seeks to bump up Immigration and Customs Enforcement and Customs and Border Protection spending by $1.9 billion and $1.4 billion, respectively.
(USA Today and Politico

E-Verify Would Remain Voluntary

The proposed budget supports the current, mostly voluntary version of E-Verify, an electronic system run by the Department of Homeland Security that businesses use to check whether a person is authorized to work in the U.S.  Currently it's voluntary for most companies, though federal contractors are supposed to use it, and some states have passed laws mandating use as well.

In the new budget proposal, gone is language from the previous two budgets calling for "mandatory nationwide use." Immigration experts said the administration is setting the table for the 600-page immigration plan that would shift U.S. immigration to a more business-friendly system. And, sources say, it does not include mandatory E-Verify.

This year's budget also cuts $3.7 million from E-Verify's funding. The budget says that comes from savings due to efficiencies from using cloud computing, and doesn't mean any loss of capabilities.
(Washington Times)

H-1B, L-1 Visa Reforms on Tap for 2020

In addition to the 2021 budget proposal, the Trump administration plans to move forward in 2020 with new regulations redefining key aspects of the H-1B and L-1 visa programs, including a long-promised proposed rule to revise the definitions of an H-1B specialty occupation and the employer-employee relationship and addressing H-1B workers' wages.

U.S. Citizenship and Immigration Services (USCIS) has also set its sights on the L-1 visa program, which allows multinational companies to transfer foreign executives, managers and experts within the company to U.S. offices. In September 2020, USCIS plans to propose new immigration regulations, which would impose wage requirements on employers of L-1 visa holders. The regulation is also expected to tighten the definition of what qualifies as "specialized knowledge" in the L-1B category.
(SHRM Online

[SHRM members-only HR Q&A: H-1B: What is an employer's responsibility when an employee with an H-1B visa is terminated?]


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