By Tom Curry National affairs writer
msnbc.com
updated 1/27/2010 10:04:18 AM ET 2010-01-27T15:04:18

Claim: President Obama's budget freeze won't have a big impact on federal health care spending.

Congressional Budget Office director Douglas Elmendorf said Tuesday that in the current fiscal year, which ends on Sept. 30, the deficit will be 9.2 percent of gross domestic product (GDP), a bit smaller than the FY 2009 shortfall of 9.9 percent of GDP. Last year's deficit was the largest since the end of World War II. Elmendorf predicts that the deficit for FY 2010 will be the second largest since 1945, or perhaps bigger if Congress enacts major new spending or tax cuts. Deficits will "drop markedly" after FY 2010 "but remain high -- at 6.5 percent of GDP in 2011 and 4.1 percent in 2012," said Elmendorf. Faced with these numbers, President Obama has proposed to freeze non-security discretionary spending for three years, starting this October. Would this freeze affect the money that the government spends on medical care?

Fact or fiction?
Fact. Obama's freeze wouldn't affect people whose bills are paid for with federal dollars. It wouldn't apply to Medicaid ($280 billion) or Medicare ($530 billion). And congressional leaders, such as House Appropriations Committee Chairman David Obey, D-Wisc., would have to OK a freeze. But the government spends a lot of money on research which can yield life-enhancing treatments, although the amounts are smaller than Medicaid and Medicare spending. For instance, in 2009, the National Institutes of Health spent about $32 billion. Mary Woolley, head of Research!America, an advocacy group for federal research, said, "We are extremely concerned about the proposed freeze on non-security discretionary spending, particularly in light of the compelling evidence that an innovation-driven economy is the future. We're looking to the President for national priority-setting that's consistent with that goal."

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