[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]
A REVIEW OF THE ADMINISTRATION'S FISCAL YEAR 2006 HEALTH CARE
PRIORITIES
=======================================================================
HEARING
before the
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED NINTH CONGRESS
FIRST SESSION
__________
FEBRUARY 17, 2005
__________
Serial No. 109-35
__________
Printed for the use of the Committee on Energy and Commerce
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COMMITTEE ON ENERGY AND COMMERCE
JOE BARTON, Texas, Chairman
RALPH M. HALL, Texas JOHN D. DINGELL, Michigan
MICHAEL BILIRAKIS, Florida Ranking Member
Vice Chairman HENRY A. WAXMAN, California
FRED UPTON, Michigan EDWARD J. MARKEY, Massachusetts
CLIFF STEARNS, Florida RICK BOUCHER, Virginia
PAUL E. GILLMOR, Ohio EDOLPHUS TOWNS, New York
NATHAN DEAL, Georgia FRANK PALLONE, Jr., New Jersey
ED WHITFIELD, Kentucky SHERROD BROWN, Ohio
CHARLIE NORWOOD, Georgia BART GORDON, Tennessee
BARBARA CUBIN, Wyoming BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois ANNA G. ESHOO, California
HEATHER WILSON, New Mexico BART STUPAK, Michigan
JOHN B. SHADEGG, Arizona ELIOT L. ENGEL, New York
CHARLES W. ``CHIP'' PICKERING, ALBERT R. WYNN, Maryland
Mississippi, Vice Chairman GENE GREEN, Texas
VITO FOSSELLA, New York TED STRICKLAND, Ohio
ROY BLUNT, Missouri DIANA DeGETTE, Colorado
STEVE BUYER, Indiana LOIS CAPPS, California
GEORGE RADANOVICH, California MIKE DOYLE, Pennsylvania
CHARLES F. BASS, New Hampshire TOM ALLEN, Maine
JOSEPH R. PITTS, Pennsylvania JIM DAVIS, Florida
MARY BONO, California JAN SCHAKOWSKY, Illinois
GREG WALDEN, Oregon HILDA L. SOLIS, California
LEE TERRY, Nebraska CHARLES A. GONZALEZ, Texas
MIKE FERGUSON, New Jersey JAY INSLEE, Washington
MIKE ROGERS, Michigan TAMMY BALDWIN, Wisconsin
C.L. ``BUTCH'' OTTER, Idaho MIKE ROSS, Arkansas
SUE MYRICK, North Carolina
JOHN SULLIVAN, Oklahoma
TIM MURPHY, Pennsylvania
MICHAEL C. BURGESS, Texas
MARSHA BLACKBURN, Tennessee
Bud Albright, Staff Director
James D. Barnette, Deputy Staff Director and General Counsel
Reid P.F. Stuntz, Minority Staff Director and Chief Counsel
(ii)
C O N T E N T S
__________
Page
Testimony of:
Leavitt, Hon. Michael O., Secretary, U.S. Department of
Health and Human Services.................................. 11
(iii)
A REVIEW OF THE ADMINISTRATION'S FISCAL YEAR 2006 HEALTH CARE
PRIORITIES
----------
THURSDAY, FEBRUARY 17, 2005
House of Representatives,
Committee on Energy and Commerce,
Washington, DC.
The committee met, pursuant to notice, at 2:12 p.m., in
room 2123 of the Rayburn House Office Building, Hon. Joe Barton
(chairman) presiding.
Members present: Representatives Barton, Hall, Stearns,
Gillmor, Deal, Whitfield, Norwood, Shimkus, Wilson, Shadegg,
Radanovich, Bass, Pitts, Bono, Walden, Ferguson, Otter, Myrick,
Burgess, Blackburn, Dingell, Waxman, Markey, Brown, Rush,
Engel, Wynn, Green, Strickland,DeGette, Capps, Allen,
Schakowsky, Solis, Gonzalez, Inslee, Baldwin, and Ross.
Staff present: Chuck Clapton, chief health counsel; Jeanne
Haggerty, professional staff; Eugenia Edwards, legislative
clerk; John Ford, minority counsel; Bridgett Taylor, minority
professional staff; Jessica McNiece, research assistant.
Chairman Barton. The committee will come to order. We are
honored today to have the Secretary of Health and Human
Services, the Honorable Michael Leavitt, making his first
appearance in the capacity before the Energy and Commerce
Committee. Secretary Leavitt has got a distinguished public
service career; Governor of Utah, head of the National
Governors Association, administrator of the EPA and now is
Secretary of Health and Human Services. He has got a large task
ahead of him. We have tremendous responsibilities in this
committee and his agency regarding the public health of the
United States of America. Just one program of many. He is
responsible for Medicaid. Right now it is a $196 billion per
year program growing and doubled in--we also need to take a
look at the implementation of Medicare reform. I hope that this
committee will undertake a comprehensive review of the
authorization of the National Institute of Health. I do also
believe we should look at the Food and Drug Administration. We
should look at the National Cancer Institute, Centers for
Disease Control; these are all issues that are in Secretary
Leavitt's purview.
Mr. Secretary, We are extremely pleased to have you before
this committee. I am going to give every member of the
committee a chance to make a brief opening statement. They will
come to you for such time with their main concern and I am sure
that everyone on the committee will have questions for you. As
I told you in the anteroom, though, there is both good news and
bad news. The House is through voting for the week, so most of
us are going to be rushing to catch airplanes, so I don't think
you can expect to get a second round of questions today.
I would now like to yield to the Senior Minority Member of
this committee, the former chairman of this committee and the
Dean of the House, the Honorable John Dingell of Michigan for a
5-minute opening statement.
[The prepared statement of Hon. Joe Barton follows:]
Prepared Statement of Hon. Joe Barton, Chairman, Committee on Energy
and Commerce
Good morning. Let me begin by welcoming Secretary Michael Leavitt
to his first appearance before the Energy & Commerce Committee. We look
forward to hearing him testify about the Administration's Fiscal-Year
2006 Health Care Priorities.
Secretary Leavitt is new to the Department of Health and Human
Services; but luckily for all of us, he is no stranger to the
complicated world of health care. As Governor of Utah, he fought to
make Medicaid more flexible, provided new health benefits for the
uninsured, and dramatically improved immunization rates above the
national average. I believe that his experience and insights will
provide strong leadership in the years to come. Mr. Secretary, I look
forward to working closely with you to improve this country's health
care system.
Mr. Secretary, you have a formidable year in front of you. First
and foremost, I would like to praise the Administration and you, Mr.
Secretary, for your ambitious plans for reforming the Medicaid program.
For years, we have discussed the necessity of looking seriously at this
program, and for years we have done nothing.
While we have done nothing, the program has continued to expand
without any oversight. For fiscal year 2006, the Federal share of
Medicaid outlays is expected to be almost $193 billion, a $4.3 billion
dollar increase from last year, and a $16 billion increase from 2004.
Medicaid is now the largest single Federal health care program, and is
often the largest item in most state budgets.
I am extremely interested in hearing more about the reforms
outlined in the President's budget proposal. States need additional
flexibility. At the same time, we also need greater accountability.
Federal dollars given to states for Medicaid should be used only to
provide for beneficiaries' health care services. Reimbursements for
prescription drugs should be at an accurate rate, which reflects the
true costs paid by pharmacists. The laws governing Medicaid eligibility
should not create incentives for individuals to manipulate the system
and transfer assets to qualify for long-term care. My Committee has
already held hearings on a few of the proposals outlined in the budget,
and we will be holding more. Especially in these tight fiscal times, it
is critical that we ensure that every Medicaid dollar is used to
improve the health care of the people who depend on this program.
This year the Administration also has the important task of
implementing the new Medicare prescription drug benefit provided in the
Medicare Modernization Act (MMA). Implementing the new benefit is a top
priority for Congress as well. Beginning January 1, 2006, seniors will
FOR THE FIRST TIME have comprehensive coverage of their prescription
drugs by the Medicare program, and I want to work with you to ensure
that the transition happens smoothly and efficiently. This new benefit
will be a great help to Medicare's beneficiaries.
Quite frankly, the tactics that have been used by opponents of the
Medicare bill disappoint me. Scaring seniors into not enrolling in a
Medicare prescription drug card program that would have saved them
money is inexcusable. Complaining about so-called new ``cost
estimates'' of the bill that compare the cost of the drug benefit over
two different time periods and reflect the gross cost without factoring
savings is dishonest. Arguing that if the Federal government should
negotiate prescription drug prices to drive down the cost of medicine,
when the non-partisan Congressional Budget Office has said that doing
so would not produce substantial savings is just not accurate. It is
these types of ``Medicare myths'' that will harm seniors--not a new
prescription drug benefit.
I am also deeply committed to reauthorizing the National Institutes
of Health (NIH). Most programs under NIH have not been authorized in
over a decade. Shockingly, outside of entitlements, many health
programs have been funded been under lapsed authorization. I've made no
secret of the fact that I don't believe this is a responsible practice
and want my Committee to return to a stronger role in reviewing
programs and program authorizations.
The Energy and Commerce Committee has the largest jurisdiction over
health care of any legislative congressional committee, and thus we
play a key role in creating legislation for better health care. I am
proud that in the past, we have worked in a bipartisan fashion, and I
hope that continues into this new Congress. We work best when we work
together. We could not have passed into law the Medicare Modernization
Act without the input and support from Democrats. I want to be able to
work with our Democratic Members to continue to improve our health care
system.
As Chairman of this committee, I plan to work with President Bush,
Secretary Leavitt, Members of Congress, and our health care colleagues
to continue this important progress and to seize the opportunity for
better health and responsible health care.
Thank you again, Mr. Secretary, for appearing here today. I look
forward to hearing your testimony.
Mr. Dingell. Mr. Chairman, I thank you for your courtesy.
Welcome, Secretary. I ask you to accept my statement to be
inserted in full in the record. I will try to extrapolate----
Chairman Barton. I would also like to compliment your
choice of soft drinks. It is the first time I have seen you
drinking a Diet Dr. Pepper. I may be rubbing off on you a
little bit.
Mr. Dingell. The budget before us seriously shortchanges
the most vulnerable people in our society. This is the
unfortunate result of reckless tax cuts that have benefited the
wealthy few. The elderly, the poor, the disabled will now pay
the price. The President proposes $1.6 trillion in tax cuts
over the next 10 years. Medicaid will be cut by $60 billion.
Deep cuts in Medicaid are unfair. Medicaid faces many
challenges, serving 50 million people who are among the most
poor and vulnerable in our society. It is the only program that
provides financial assistance for middle class and poor seniors
in nursing homes, adequate health insurance for individuals
with disabilities and health care coverage for one in four of
our children and their families.
Are the costs of Medicaid going up? Yes. Medicaid suffers
not so much from ``inefficiency'' or rigidity, but rather from
rising health care and prescription drug costs, increased
enrollment due to declining employer-sponsored coverage, rising
numbers of uninsured due to the Nation's economic woes, and a
society which is aging.
In spite of all of this, Medicaid's per capita growth rate
of 6.1 percent is less than the private sector's 12.6 percent.
The President's own baseline dropped by $91 billion from
previous estimates, indicating that spending is being curbed.
But the President's budget also includes deep cuts to Medicaid
on top of this existing reduction in spending, clearly sending
us in the wrong direction. Rather than cut the program, we
should shore it up. If we do not, States will have no choice
but to raise taxes or to reduce or completely eliminate
coverage for some of the most weak and vulnerable in our
society.
If these reasons are not compelling enough, remember that
cutting Medicaid is also bad for business. Cuts to Medicaid
leave more Americans uninsured or under-insured. This means
that providers will have to make up for lost revenue by
shifting costs to private payers and employer health coverage
will bear the brunt of that cost.
Again, this budget ``proposes to provide States with
additional flexibility in Medicaid to further increase coverage
amongst low-income individuals and family without creating
additional cost to the Federal Government.'' Does that mean
more efficiencies, or simply telling States they can cover more
people by giving somebody less, whether it is providers,
seniors, children, or individuals with disabilities? Is this a
step toward the block grant program that we hear about?
On Medicare, recent revelations of another increase in the
cost of prescription drug laws tells us we cannot afford
bloated payments to HMOs and to drug manufacturers. It is most
unfortunate President Bush will use his veto to protect them.
That is clearly wrong. Allowing the Secretary to negotiate drug
prices, or not paying HMOs the 137 percent of fee-for-service
costs would allow us to reduce costs. It would also allow us to
improve the benefit by providing coverage for drugs between
$2250 and $3600 of spending and to rescind upcoming cuts in
physicians' payments.
Public health service budget proposals are also bad--bad
medicine, not good government. The general theme is to
eliminate, cut, or to freeze many programs of proven worth. The
Centers for Disease Control and Prevention's chronic disease
program is being cut, the preventive health services block
grant is being eliminated, bioterrorism preparedness funding is
being cut by more than 12 percent, HIV/AIDS treatment and
prevention programs remain inadequately funded, biomedical
research is shortchanged by an increase in name only and the
Food and Drug Administration's chronic under-funding will
continue.
Don't take my word for it. The American Public Health
Association has called the budget ``shortsighted.'' The
Association of State and Territorial Health Officials says the
cuts in the Administration's proposed 2006 budget ``would
weaken the ability of the State and local public health
officials to respond to bioterrorism, emerging infectious
diseases, or other public health threats and emergencies.'' The
Association of American Medical Colleges is ``deeply
disappointed'' in the President's 2006 budget. The Association
of American Universities budget says that the budget ``would
erode research and the innovative capacity of our nation.'' The
American Nurses Association states that the ``president's
proposed funding is insufficient to address the increasing
nursing shortage.'' Patient groups for cancer, diabetes, heart
disease, HIV/AIDS, and others have expressed similar concerns.
All this just to pay for past, present and future tax cuts
to those who are most fortunate among us? We and future
generations will pay very dearly if these unfair and
unnecessary cuts are enacted and if this budget passes in the
form in which it now is. Thank you, Mr. Chairman.
Chairman Barton. Thank you, Congressman Dingell. We now
recognize the chairman of the House subcommittee, Mr. Deal, for
a 1-minute opening statement.
Mr. Deal. Thank you, Mr. Chairman. I join with you in
welcoming Secretary Leavitt to our committee today, having
worked with him in his former role as EPA Administrator. I know
that he has the skill and the knowledge necessary to serve as
excellent Secretary; commend the President for his selection of
you and I welcome you to this committee. We look forward to
working with you. I yield back. Thank you, Mr. Chairman.
Chairman Barton. We thank the gentleman from Georgia. We
would recognize the gentleman from California, Mr. Waxman, for
a 1-minute opening statement.
Mr. Waxman. Thank you, Mr. Chairman. I welcome the
Secretary of HHS. I think he has the unenviable task of trying
to defend one of the worst budgets in history, as I can recall,
during the time I have been here. The Bush budget slashes
Federal support for Medicaid, threatening the safety net
program for the poorest and most vulnerable of our citizens. It
also hints at erosion and repeal of basic standards that
protect people in nursing homes, people with disabilities, low-
income children with family incomes only slightly above
poverty. It also suggests an NIH budget that won't keep pace
with inflation which will erode the ability of that institution
to find cures and other ways to save lives and reduce
suffering. The resources for FDA and the CDC are quite
remarkable in light of a recent flu vaccine debacle--it is a
strange response, indeed. The money for unproven and misleading
abstinence-only programs is increased dramatically, but funds
are eliminated for proven preventive health services funded
through State block grants. Mr. Chairman, I welcome the
Secretary. I hope I will have a chance to inquire further about
some of these issues.
Chairman Barton. We thank the gentleman. Recognize the
gentleman from Texas, Mr. Hall, for an opening statement.
Mr. Hall. Thank you, Mr. Chairman. I just congratulate
Governor Leavitt on the services he has rendered, on being here
today, and for the opportunity to work with him the next year.
Thank you, sir. I yield back.
Chairman Barton. We recognize the gentleman from Ohio, Mr.
Brown, for an opening statement.
Mr. Brown. Thank you, Mr. Chairman. Thank you for joining
us today, Secretary Leavitt. I appreciate our candid
conversation last week. Thank you. All my questions about the
President's budget boil down to this, I simply can't understand
how the President's moral values permit him to give multi-
millionaires tax cuts they are not even asking for, while
choking off programs that protect children from abuse, seniors
from destitution, and our communities from crime. Programs like
Medicaid already run on fumes and programs like Medicaid
matter. The President is not making the government more
efficient, he is making it less effective.
A budget should be an accurate reflection of what a society
cares about. This budget doesn't reflect the concerns my
constituents share with me every day; concerns of businesses
and civic organizations and churches in my district. This every
man for himself budget reflects a narrow ideology that not only
invites human suffering, it tests the cohesiveness of our
society. The programs under this committee's jurisdiction
reflect the day-to-day concerns of Americans. They extend a
lifeline to kids and seniors in poverty, they sustain the
public health, they foster medical progress. The President's
budget starves these programs while it gives more to the most
privileged. I hope the Secretary can explain why.
Chairman Barton. Thank you. The gentleman from Kentucky,
Mr. Whitfield's, recognized for an opening statement.
Mr. Whitfield. Mr. Chairman, I waive opening statement.
Chairman Barton. Okay. The gentleman from New York, Mr.
Engel, is recognized for an opening statement.
Mr. Engel. Mr. Chairman, I will waive my opening statement
so I can have an extra minute later on.
Chairman Barton. Okay. The gentleman from Ohio, Mr.
Gillmor, is recognized for an opening statement.
Mr. Gillmor. Thank you, Mr. Chairman. I just want to
welcome the Secretary and commend him for the great job he has
done in the many past positions he has held. We look forward to
working with you. Thank you. I am hiding behind Mr. Norwood's
sign.
Chairman Barton. The gentleman from Massachusetts, Mr.
Markey, make a statement.
Mr. Markey. Thank you, Mr. Chairman. Welcome, Mr.
Secretary. I am very concerned, Mr. Secretary, that the
President's budget, with large cuts in both Medicaid and long-
term care programs will hit our Nation's most vulnerable, the
hardest--are putting an enormous strain on our State budgets.
This short-sighted budget also cuts prevention programs and
other programs that have initial costs but will result in
savings in the long run. Last week we learned that despite the
fact that the price tag for the best Medicare bill the drug
companies can buy has skyrocketed to new heights.
The President is refusing to consider any changes to the
bill that will reduce cost. The President could easily slash
the price if he would simply give you the authority to
negotiate prices on behalf of all Medicare beneficiaries, but
the President has said he will veto any attempts to change his
Medicare drug bill to lower costs to seniors in our country.
That is a big mistake, Mr. Secretary, and we are going to have
a powerful debate in this country this year in order to deal
with that issue.
Chairman Barton. Thank the gentleman. Gentleman from
Illinois, Mr. Shimkus, wishes to make an opening statement?
Mr. Shimkus. I will waive.
Chairman Barton. Okay. Gentleman from Texas, Mr. Green.
Mr. Green. Thank you, Mr. Chairman, and I am glad we have
this hearing and Secretary Governor, I thought always once a
Governor, always a Governor, so welcome to your first
appearance for our committee and I welcome the chance to talk
about the Administration's health care budget.
I want to applaud the Administration for meeting its
commitment to doubling the FQHCs. I think that is so important
in our country and also for the health care technology funding.
But I have to admit, I was disappointed with the continued
effort to eliminate the community access program, the HCAP
program that is been a Godsend for over 150 communities
throughout our--in 42 States. It helped bring our providers
together to see how we can deal with the uninsured. In Houston,
we actually deal with for-profits, nonprofits, everyone to see
how we can deal with it, our hospital systems and also our
program system. And I know, on the Senate side, Senator Murray,
fought to restore the funding last time and I am going to stand
with her again to make sure we can do that.
Like other Federal programs, there are elements of Medicaid
that I think that certainly warrant our examination and I
wholeheartedly, though, disagree with the Administration's
assertions that the program is inefficient. True, their costs
have increased, but Mr. Secretary, the Medicare and private
insurance have increased even more than Medicaid. Mr. Chairman,
I would like my full statement be placed in the record.
Chairman Barton. Without objection, so ordered.
Gentleman from New Hampshire, Mr. Bass. Gentlelady from
Colorado, Ms. DeGette. Gentlelady from California, Ms. Bono.
Okay. The gentlelady from California, Ms. Capps. Okay.
Gentleman from New Jersey, Mr. Ferguson.
Mr. Ferguson. I will waive, Mr. Chairman, except to welcome
the Secretary. We are delighted he is here and looking forward
to working with him. Thank you.
Chairman Barton. All right. The gentlelady from Illinois,
Ms. Schakowsky.
Ms. Schakowsky. Thank you, Mr. Chairman, and welcome,
Secretary Leavitt. In my view, the President's budget worsens
the health care crises in the United States in many ways, but
at the top of my worries about this budget are the proposed
cuts to Medicaid. At a time when over 45 million Americans,
including 9 million children, are uninsured for the entire
year, Medicaid has been a life raft. It is cost-effective. The
per capita increases in Medicaid are less than half of those in
the private sector. When the need is so great, how can the Bush
Administration justify $60 billion in Medicaid cuts?
I am particularly disturbed by your statements that our
only real commitment is to ``mandatory populations.'' Optional
beneficiaries are not extras. They are children and pregnant
women and persons with disabilities struggling to live on
poverty or near-poverty incomes. I believe this is a dangerous
budget that will put the security of a million American
families in jeopardy and by jeopardizing the health of our
people, weaken our economic well-being. I will have some
questions about these optional, so-called optional populations.
Thank you.
Chairman Barton. Thank you. Gentlelady from North Carolina
wish to make an opening statement? Does the gentle lady from
California, Ms. Solis, wish to make an opening statement?
Ms. Solis. Yes. Thank you, Mr. Chairman, and welcome, Mr.
Secretary. Briefly, we have already heard about the problems
with Medicaid, the cuts, the potential cuts, and I am very
concerned about what might take place in California. And with--
especially with respect to the inner-governmental transfers
that I know you are going to be looking at. They have worked
reasonably well for us in California. Please make that
consideration to take a second look. We just met with our
Governor, Mr. Schwarzenegger, and talked about that in depth.
But I am more concerned, also, about health care profession
training programs that are going to be eliminated in the
Department of Health and Human Services. As you know,
minorities only make up 9 percent of the nurses, 6 percent of
the physicians, and 5 percent of the dentists. This program is
something that is much needed if we are to strive for diversity
in Federal Government, so I would hope that those funds would
be restored and look forward to working with you on health care
issues and health care disparity issues that exist in our
country. Thank you.
Chairman Barton. Does the gentleman from Texas wish to make
an opening statement? Dr. Burgess.
Mr. Burgess. Mr. Chairman, I will waive. I just want to
welcome the Secretary to the committee.
Chairman Barton. Okay. Does the other gentleman from Texas,
Mr. Gonzalez, wish to make--okay. Gentlelady from Tennessee,
Ms. Blackburn?
Ms. Blackburn. Thank you, Mr. Chairman. Mr. Secretary,
thank you. We appreciate you being here and I am particularly
interested in a portion of the President's budget that would
allow greater flexibility to the States managing their
Medicaid. My State is a great example of why this is needed.
I am from Tennessee and about 10 years ago we had a
program, TennCare, that was implemented to provide greater
health care coverage. It is known largely as the test case for
Hillary Clinton's health care and as you are probably well
aware, we had a waiver for the program. It has resulted in some
difficult situations, some budget crunches and is on the brink
of catastrophe. And it is a financial crisis, a fiscal crisis
to which we are very closely attuned; double digit increases
each year and our Governor has had some tough decisions to make
this year. So we look forward to working with you, we look
forward to hearing from you. Thank you, sir, for being here.
Chairman Barton. We thank the gentlelady. The gentleman
from Maine, Mr. Allen, wish to make an opening statement?
Mr. Allen. I do, Mr. Chairman. Thank you. Mr. Secretary,
welcome. Two of our greatest challenges of the rising number of
uninsured and the increasing burden of health insurance on our
Nation's employers if the President's budget reduces and in
some cases completely eliminates many important programs which
strengthen our healthcare infrastructure.
The President's solution to dealing with the uninsured is
to trot out old proposals, association health plans, health
savings accounts and tax credits. There is little evidence, in
my view, that these proposals would significantly reduce the
number of uninsured or bring down costs for employers. As
Richard Wagner, the head of General Motors said the other day,
``Our national health care crisis threatens the health and
global competitiveness of our Nation's economy.'' When it comes
to Medicaid, I am convinced that simply shifting costs back to
the States, providers and beneficiaries is not likely to form a
solution and so I really urge us to think long and hard about
the budget we have in front of us and try to come up with one
that does a better job with health care. I am sure you will
have a different view, but I am glad to have you here. Thank
you very much.
Chairman Barton. Does the gentlelady from Wisconsin wish to
make an opening statement?
Ms. Baldwin. I will waive.
Chairman Barton. Does the gentleman from Arkansas wish to
make an opening statement?
Mr. Ross. Yes, sir, Mr. Chairman. I appreciate the
Secretary coming to testify today and like many of my
colleagues, I am deeply concerned about some of the proposals
in the Administration's budget in regard to Medicaid. Medicaid
serves over one quarter of the total population of my home
State, which is Arkansas, and more than half of these
recipients are children. In fiscal year 2004 nearly 700,000
children and adults were eligible for medical care through the
Medicaid program. 75 percent of the nursing home patients in
Arkansas are provided care through Medicaid.
I met with our Governor, Governor Huckabee, who is vice
chair of the National Governors Association and the lead
Republican on this very issue last week in my office here in
Washington and he expressed concerns regarding the
sustainability of Medicaid and the impact of any reduction of
Federal assistance with administering the program. Therefore,
as the Administration develops its changes to State funding
rules, administrative payment cuts, and other reforms, Mr.
Secretary, I just ask that you please do not lose sight of
those who need Medicaid to live and what an impact any cuts
would have on the small, rural and poor States like Arkansas.
Chairman Barton. Is there any other member present which
has not been given an opportunity to make an opening statement
that wishes to do so? Seeing none, the Chair would ask
unanimous consent that all members not present have the
requisite number of days to put their statements in the record
in their entirety. Without objection, so ordered.
[Additional statements submitted for the record follow:]
Prepared Statement of Hon. Heather Wilson, a Representative in Congress
from the State of New Mexico
Thank you, Mr. Chairman, for holding this hearing today to review
the President's budget for health care. And thank you, Secretary
Leavitt, for being here today.
Let me start with what I believe are highlights of the President's
budget. The budget includes a $304 million increase for community
health centers, including $26 million to build new health centers in
low-income communities. The budget also includes needed funding for
health information technology initiatives, including $125 million for
the Office of the National Coordinator for Health Information
Technology.
But there are many items for concern for me in this budget, none of
which are more important than Medicaid. I'm not against making changes
to Medicaid that result in savings. In fact, I believe some of the
specific Medicaid proposals in the President's budget are changes that
are needed and would improve Medicaid. But I believe those changes will
have consequences and can't be made in a vacuum. Starting with a budget
number and only looking at changes that produce savings to meet that
number may not be the right way to go here. We must look at the overall
impact of these changes on the Medicaid program and its ability to
provide access to high-quality health care for low-income children,
pregnant women, disabled, and elderly Americans.
I believe most people in this room are aware that I have introduced
a bill to create a Bipartisan Medicaid Commission to make
recommendations for real reforms that would improve Medicaid. Nothing
in this budget talks about having a national discussion about financing
long-term care, the cost of which will double in the next ten years.
Nothing in this budget talks about improving chronic disease management
in Medicaid, encouraging prevention to keep people healthy. The
commission would provide the right forum to carefully deliberate needed
policy changes and ensure the long-term financial stability of the
program.
I look forward to hearing your thoughts on this legislation, Mr.
Leavitt, and I look forward to working with you as the Administration
continues to develop and refine its ideas for Medicaid reform.
______
Prepared Statement of Hon. Joe Pitts, a Representative in Congress from
the State of Pennsylvania
Mr. Chairman, thank you for holding this important hearing today. I
will be brief since we are all eager to get to the Secretary's
testimony. I just want to welcome Secretary Leavitt to your first
hearing before the committee, and let you know that I look forward to
working with you.
Mr. Chairman, I know many of my colleagues will focus on Medicaid.
Let me just say, at the outset, that while I believe our committee
certainly our work cut out for us in finding the savings the President
requested. However, I am certain that, if we put politics aside, we can
work together diligently in a bipartisan manner to meet the Presidents
goals in this area.
There are two other topics I would like to touch on very briefly.
Last April, HHS limited attendance at its July International AIDS
Conference in Bangkok, Thailand, to 50 federal employees at a cost of
$500,000. That was down from the $3.6 million spent to send 236 people
to the 2002 conference in Barcelona, Spain. Twenty-nine members of
Congress sent a letter to Secretary Thompson last year thanking him for
limiting attendance to this conference. Mr. Chairman, I would like to
insert that letter into the record.
I applaud the Department's leadership in working to scale back the
largess of the federal involvement at these international conferences.
Further, I appreciate the Department's ongoing efforts to change the
way the conference and travel system works at HHS. Total annual US HIV/
AIDS spending in 2004 was $18.5 billion, and Congress passed a five-
year, $15 billion initiative to combat global Aids. Clearly, focusing
resources on AIDS treatment and effective prevention programs should be
a higher priority than HHS spending millions of dollars on a single
conference.
Secondly, I support the President's request for a $34 million
increase in funding for SPRANS community-based abstinence education
grants and hope Congress fully funds his proposal. Overall, our
government spends $12 to promote contraception for every dollar spent
to encourage abstinence. However, these spending priorities are exactly
the opposite of what our parents say they want taught to their teens.
In a recent Zogby poll, an overwhelming majority--85 percent--of
parents said that the emphasis placed on abstinence for teens should be
equal to or greater than the emphasis placed on contraception.
Further, I understand that HHS has jurisdiction over part of the
Global AIDs funds. As you may know, my amendment to this law last
Congress required that one-third of the prevention funds be used to
teach abstinence until marriage, following the successful model Uganda
developed. I just want to encourage you to follow the president's
vision for this and make sure this funding gets proper oversight.
Again, welcome Mr. Secretary, and I look forward to working with
you on these and other issues of importance.
______
Prepared Statement of Hon. C.L. ``Butch'' Otter, a Representative in
Congress from the State of Idaho
I would like to thank the chairman for holding this hearing and
congratulate Secretary Leavitt on his new post.
While health care costs continue to rise and we discuss ways to
trim costs, I think it is important to recognize we may be treating the
symptoms of the system and not the disease. Until we put personal
responsibility back into the health system, through emphasizing healthy
behaviors and structuring health programs that put the actual costs of
care in front of consumers we are going to face budget constraints like
we see in Medicaid. The Medicaid budget problems at hand dictate we
find a new approach. I agree with the Administration's proposal that
would give states more flexibility in Medicaid spending. States must
have the opportunity to shift resources to ensure the right care is
delivered to the right folks.
I look forward to Secretary Leavitt's testimony and working with
the administration in this regard.
______
Prepared Statement of Hon. Tim Murphy, a Representative in Congress
from the State of Pennsylvania
Thank you Mr. Chairman.
It is a pleasure to welcome Secretary Leavitt to today's hearing
and to thank him for his many years of public service to our country.
As the Chairman of the 21st Century Health Care Caucus, I am
pleased that the Secretary shares my passion for the benefits that
health information technology can bring to improving the quality of
care, reducing medical mistakes and managing the costs of health care.
I applaud the President's 2006 budget for providing better options
for how we pay for health care including association health plans for
small businesses, expanded Health Savings Accounts, and medical
liability reform. More importantly, I am pleased that the President
plans an unprecedented commitment to health information technology and
to expanding our nation's community health centers.
The budget takes a strong stance on eliminating waste and
duplication in social spending and entitlement programs. We must be
careful to ensure that we balance the intention to eliminate waste with
our efforts to provide health care to those who need it the most. With
over 45% of mandatory spending going towards these programs, the
federal government should be driving the change to reforming health
care by shifting the focus from ``Who,'' is paying to increasing the
quality of ``What,'' it is that we are paying for with an emphasis on
quality as a means of improving affordability and access.
As a child psychologist, I am also pleased with the
Administration's proposal for the ``Cover the Kids Program,'' to
provide $1 billion in grant money over two years to help coordinate
Federal, State, school and community Medicaid/SCHIP outreach efforts to
make sure that children who are eligible for these vital services get
the care that they need and that we are paying for.
I look forward to hearing the Secretary's thoughts today and to
working together to bring our health care system into the 21st Century.
Chairman Barton. Mr. Secretary, welcome to the Energy and
Commerce Committee. We look forward to your comments. You are
recognized for such time as you may consume, after which we
will have some questions for you.
Secretary Leavitt. Thank you, Mr. Chairman.
Chairman Barton. You need to push that button--there is--on
the actual microphone there is a button you push. There you go,
right there.
STATEMENT OF HON. MICHAEL O. LEAVITT, SECRETARY, U.S.
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Secretary Leavitt. Thank you. Mr. Chairman, I am delighted
to be here. Mr. Dingell, I am very pleased for a chance to work
with you again. Mr. Chairman, I am sensitive to the fact that
there are members of the committee who have deadlines to meet
that may involve transportation and I will tell you that I have
discovered, in my role as Cabinet Secretary, an arrangement
that Cabinet Secretaries have with the airlines and that is if
we are not there, they just leave, anyway. So I would like to
be sensitive to that and submit my full statement for the
record and I would just like to summarize.
Chairman Barton. Without objection, so ordered.
Secretary Leavitt. The President and I share a very
aggressive agenda over the course of the next year. It is an
agenda that I believe will take us closer to being a nation
where health insurance is within the reach of every American, a
Nation where medical technology and information technology can
provide a system that creates fewer mistakes, lower costs and
better care. The budget is $642 billion. It is an increase of
10 percent over the previous fiscal year, an increase of some
$58 billion. I want to be the first one to acknowledge that
that is a great deal of money and that it is my responsibility,
as the Secretary, to ensure that those dollars are spent
wisely. I hope today we can talk about the Medicare
Modernization Act and the prescription drug rollout, what I
believe to be a historic opportunity for us to put prescription
drugs into the hands of many who need them in this country.
I would like to just acknowledge that recent press reports
have inaccurately claimed that our cost estimates have
dramatically increased. That simply is not true. I would like
to comment on Medicaid. I hope we will have a chance to talk
about that some. There are many Governors who are deeply
concerned about this. You have alluded to it. What they are
concerned about is that they are having to leave behind
optional populations that they desperately want to continue to
provide coverage for. The current system is inflexible, rigidly
inflexible, and it is of great concern to them and great
concern to us. My objective is to preserve the coverage for
those groups and to expand to more. I believe it can be done.
We can cover more people on the nearly $5 trillion that we will
be spending over the course of the next 10 years.
I hope today we can talk some about SCHIP and what a
remarkable success that has been and what we could and should
learn from that as we look to provide health care to more
people. The President has put forward a budget that will
include $125 billion over the next 10 years in a way that we
believe will provide access to health insurance for some 12 to
14 million additional Americans. We will be requesting $2
billion, I might add, to increase the number of those served by
our community health centers. A number of you are aware that
the President has set a goal to have an additional 1,200 of
them. We will not only meet that goal but exceed it with a
proposal that would add it to 40 additional centers in the
poorest of our counties.
I hope we will have a chance to speak about the health care
system, the need to transform it, to create a personalized
patient-centered kind of medicine that will allow us to have
fewer mistakes, and have higher forms of care at lower cost.
The President has proposed $125 million at the beginning, at
the underpinning of that, which is technology. Protection of
our homeland should be a topic of our conversation today. If we
include the 2006 requests, since September 11, 2001, the
President will have spent or requested $19 billion. It is
beginning to have a real positive impact.
FDA has been raised by some. The budget includes a $1.9
billion appropriation. That is an increase of $81 million since
last year. This is a matter of great concern to me. The
citizens of our nation need and deserve safety in their drugs
and their food. This would allow us to combat the threats to
our food safety. The 2006 budget would also expand activities
to educate adolescents and parents on the risks associated with
sexual activity while they are young and to help them make good
choices. In conclusion, Mr. Chairman, this is a strong,
fiscally responsible budget. It is one that I believe comes at
a challenging time for the Federal Government, but I believe it
will strengthen our country, our economy and continue to allow
us to protect our homeland.
[The prepared statement of Hon. Michael O. Leavitt
follows:]
Prepared Statement of Hon. Michael O. Leavitt, Secretary, U.S.
Department of Health and Human Services
Good morning Chairman Barton, Congressman Dingell, and members of
the committee. I am honored to be here today to present to you the
President's FY 2006 budget for the Department of Health and Human
Services (HHS). The President and I share an aggressive agenda for the
upcoming fiscal year, in which HHS advances a healthier, stronger
America while upholding fiscal responsibility and good stewardship of
the People's money.
In his February 2nd State of the Union Address, the President
underscored the need to restrain spending in order to sustain our
economic prosperity. As part of this restraint, it is important that
total discretionary and non-security spending be held to levels
proposed in the FY 2006 budget. The budget savings and reforms in the
budget are important components of achieving the President's goal of
cutting the budget deficit in half by 2009 and I urge the Congress to
support these reforms. The FY 2006 budget includes more than 150
reductions, reforms, and terminations in non-defense discretionary
programs, of which 19 affect HHS programs. The Department wants to work
with the Congress to achieve these savings.
The President's health agenda leads us towards a nation of
healthier Americans, where health insurance is within the reach of
every American, where American workers have a comparative advantage in
the global economy because they are healthy and productive, and where
health technology allows for a better health care system that produces
fewer mistakes and better outcomes at lower costs. The FY 2006 HHS
budget advances this agenda.
The FY 2006 HHS budget funds the transition towards a health care
system where informed consumers will own their personal health records,
their health savings accounts, and their health insurance. It enables
seniors and people with disabilities to choose where they receive long-
term care and from whom they receive it. Equally important, it builds
on the Department's Strategic Plan and enables HHS to foster strong,
sustained advances in the sciences underlying medicine, in public
health, and in social services.
To support our goals, President Bush proposes outlays of $642
billion for HHS, a 10 percent increase over FY 2005 spending, and more
than a 50 percent increase over FY--2001 spending. The discretionary
portion of the President's HHS budget totals $67--billion in budget
authority and $71 billion in program level funding. In total, the HHS
budget accounts for almost two-thirds of the proposed federal budget
increase in FY 2006.
The Department will direct its resources and efforts in FY 2006
towards:
Providing access to quality health care, including continued
implementation of the Medicare Prescription Drug, Improvement,
and Modernization Act of 2003;
Enhancing public health and protecting America;
Supporting a compassionate society; and
Improving HHS management, including continuing to implement the
President's Management Agenda
Americans enjoy the finest health care in the world. This year's
budget provides opportunities to make quality health care more
affordable and accessible to millions more Americans.
MEDICARE
HHS will be working in FY 2006 to successfully implement the
Medicare Modernization Act (MMA), including the Medicare Prescription
Drug Benefit and the new Medicare Advantage regional health plans. I
know there has been a lot of discussion over the past week about the
cost of the new Medicare proposal, and I want to address that issue
today. Recent press reports have inaccurately claimed that our cost
estimates have dramatically increased. This is simply untrue.
The passage of time is the main reason that the FY 2006 budget
shows a higher net federal cost ($723.8 billion) for 2006-2015 than the
cost estimate for 2004-2013. In the original cost estimates, the first
two years in the ten-year budget window were for years before the new
drug benefit was implemented (2004 and 2005). The ten-year budget
window reflected in the 2006 budget includes ten full years of actual
drug benefit spending. In effect, the passage of time has dropped two
low-cost dollar year estimates (only transitional assistance spending)
from the budget window and added two high-cost years, due to
anticipated increases in average drug spending and the growth of the
Medicare population. People should not be surprised that the numbers
look different as a result of the advance of time.
Some individuals have asserted that the estimate for MMA
implementation is now over a trillion dollars. This assertion is
completely unsupported by facts. The trillion dollar figure is a gross
estimate that neglects to subtract out hundreds of billions of dollars
of federal revenue, including beneficiary premiums, state payments, and
other offsetting federal savings. Focusing exclusively on gross
spending levels without considering the offsetting savings creates
false impressions and does a disservice to the budget process and to
Medicare beneficiaries.
Moving beyond the subject of funding, I hope we can all begin to
focus on the task at hand--ensuring successful implementation of a
strengthened and improved Medicare program with the new prescription
drug benefit. Between now and January 1, 2006, we have a lot of work to
do, and I give you my commitment that we will not fail. I know not
everyone in this committee supported the passage of the Medicare bill,
but it is now law, and in 10 + months, almost 43 million Americans will
be eligible to receive much needed assistance with the high cost of
prescription drugs. Let us put aside our differences and work together
towards the goal of ensuring that seniors and people with disabilities
are successfully sign up for their new benefits. We all owe that to
them.
UNINSURED
In FY 2006, the President also proposes steps to promote affordable
health care for the approximately 45 million Americans who are
currently uninsured. The President proposes to spend more than $125.7
billion over ten years to expand insurance coverage to millions of
Americans through tax credits, purchasing pools, and Health Savings
Accounts. To improve access to care for many uninsured Americans, the
President's budget requests $2 billion, a $304 million increase from FY
2005, to fund community health centers. This request does two things.
It completes the President's commitment to create 1,200 new or expanded
sites to serve an additional 6.1 million people by 2006. By the end of
FY 2006, the Health Centers program will deliver high quality,
affordable health care to over 16 million patients at more than 4,000
sites across the country. In 2006, health centers will serve an
estimated 16 percent of the Nation's population who are at or below 200
percent of the Federal poverty level. Forty percent of health center
patients have no health insurance and 64 percent are racial or ethnic
minorities. In addition, the President has established a new goal of
helping every poor county in America that lacks a community health
center and can support one. The budget begins that effort by supporting
40 new health centers in high poverty counties.
Moreover, the President proposes a budget that would expand access
to American Indian and Alaska Native health care facilities, staff six
newly built facilities to serve the growing eligible population of
federally recognized members of Native American Tribes, and address the
rising costs of delivering care. In FY 2006, the Indian Health Service
will provide quality health care through 49 hospitals, more than 240
outpatient centers, and more than 300 health stations and Alaska
village clinics. In total, the President proposes increasing health
support of federally recognized tribes by $72 million in FY 2006, for a
total of $3.8 billion.
The President and the Department are also committed to resolving
the growing challenges facing Medicaid. Medicaid provides health
insurance for more than 46 million Americans, but as you are all aware,
States still complain about overly burdensome rules and regulations,
and the State-Federal financing system remains prone to abuse.
This past year, for the first time ever, states spent more on
Medicaid than they spent on education. Over the next ten years,
American taxpayers will spend nearly $5 trillion dollars on Medicaid in
combined state and Federal spending. The Department proposes to make
sure tax dollars are used more efficiently by building on the success
of the State Children's Health Insurance Program (SCHIP) and waiver
programs that allow states the flexibility to construct targeted
benefit packages, coordinate with private insurance, and extend
coverage to uninsured individuals and families not typically covered by
Medicaid.
The President proposes to give states more flexibility in the
Medicaid program in order to enable states to increase coverage using
the same Federal dollars. The tools we have at our disposal today were
not available when Medicaid was created. States largely agree that
current Medicaid rules and regulations are barriers to effective and
efficient management. Over the past ten years, Medicaid spending
doubled. At its current rate of growth (7.4%), the Federal share of
Medicaid spending would double again in another ten years.
The growth in Medicaid spending is unsustainable. I intend to enter
into a serious discussion with Governors and Congress to decide the
best way to provide states the flexibility they need to better meet the
health care needs of their citizens.
The President plans to expand coverage for the key populations
served in Medicaid and SCHIP by spending $15.5 billion on targeted
activities over ten years. The Budget includes several proposals to
provide coverage, including the ``Cover the Kids'' campaign to enroll
more eligible uninsured children in Medicaid and SCHIP. In addition,
the extension of the Qualified Individual (QI) and transitional medical
assistance programs will ensure coverage is available to continue full
payment (subject to a spending limit) of Medicare Part B premiums for
qualified individuals, and provide coverage for families that lose
eligibility for Medicaid due to earnings from employment. Also,
community-based care options for people with disabilities will be
expanded through the President's New Freedom Initiative, including
authorizing $1.75 billion over five years for the Money Follows the
Person Rebalancing demonstration.
Overall, these efforts to expand health insurance coverage, as well
as those in other Departments, work together to extend health care
coverage and health care services to millions of people. Thanks to the
comprehensive nature of this agenda, workers are already investing
money tax-free for medical expenses through Health Savings Accounts,
Americans have increasing flexibility to accumulate savings and to
change jobs when they wish, and more Americans are accessing high-
quality health care. We estimate that 8 to 10 million additional people
will gain health insurance over the next ten years. Together, these
efforts to expand insurance coverage and improve the Medicaid and SCHIP
programs will cost approximately $140 billion over the same period.
At the same time, we are taking steps to ensure states can use
their Medicaid funds to the fullest potential to reach more individuals
in need of health care. The budget includes proposals that will assure
an appropriate partnership between the Federal and state governments.
We would like to work cooperatively with the states to respond to the
challenges in Medicaid. We must eliminate the vulnerabilities that
threaten Medicaid's viability. In our budget, we have proposed a series
of legislative changes that will ensure Medicaid dollars are used
appropriately to fulfill the program's purpose to provide health care
coverage for low income families and elderly and disabled individuals
with low incomes. Under this proposal, inappropriate federal spending
on Medicaid intergovernmental transfers and spending resulting from
other current loopholes in Medicaid law will decrease by $60 billion
over 10 years.
As a former Governor, I understand the pressure on states in
developing their budgets, particularly given the lack of flexibility in
the current Medicaid law. However, some state officials have resorted
to a variety of inappropriate loopholes and accounting gimmicks that
shift their Medicaid costs to the taxpayers of other states. Obviously,
states that are not engaging in these activities will not be affected
by the proposals in the same manner as states that are. Collectively,
the overall impact of the $60 billion ten-year decrease in federal
Medicaid spending on states will in reality be about $40 billion,
because by changing the calculation of prescription drug payments to be
based on the average sales price and by tightening asset transfer
rules, approximately $20 billion in state spending will be saved. And
it should be noted that two-thirds of the savings will occur beyond the
initial five-year budget window.
PREPAREDNESS
The HHS FY 2006 budget will also build on the Department's
achievements in strengthening our ability to detect, respond, treat,
and prevent potential disease outbreaks due to bioterrorist acts.
It will enable the National Institutes of Health (NIH) to increase
research efforts in developing bioterrorism countermeasures and to fund
biomedical research at current levels, it will allow the Centers for
Disease Control and Prevention (CDC) to expand the Strategic National
Stockpile, and it will support the Food and Drug Administration's
efforts to defend the nation's food supply. This proposal requests $4.2
billion to continue this work, an increase of almost 1500% over 2001.
This request raises to $19 billion the cumulative amount invested since
September 11, 2001 on public health preparedness, and that investment
is showing tangible results.
Let me mention just a few of the highlights and also note that HHS
works in close cooperation with DHS on many of these activities,
including the medical surge initiative and food node threats and
vulnerability assessments:
HHS has a responsibility to lead public health and medical services
during major disasters and emergencies. To support this, we are
requesting $70 million for the Federal Mass Casualty Initiative
to improve our medical surge capacity. We are also investing
$1.3 billion to support work at CDC and the Health Resources
and Services Administration (HRSA) to improve state and local
public health and hospital preparedness.
In the event of a major health emergency, one posed by either nature
or through the intentional use of a weapon of mass destruction,
the Strategic National Stockpile would provide Americans with
almost immediate access to an adequate supply of needed
medicines. In order to ensure the effectiveness of the
Stockpile, we're requesting $600 million to buy additional
medicines, replace old ones, provide specialized storage, and
get any needed medicines and supplies to any location in the
United States within 12 hours. $50 million of this will go to
procure portable mass casualty treatment units.
We're requesting $1.9 billion for the Food and Drug Administration
(FDA)--an increase of $81 million over 2005. $30 million of
this request would be directed to improving the agency's
national network of food contamination analysis laboratories
and to supporting vital research on technologies that could
prevent threats to our food supply. HHS also proposes to
dedicate $6.5 million more than in FY 2005 to evaluating and
communicating drug safety risks to the public and applying
scientific expertise to explore the risks of medical products
already on the market.
We now have a heightened awareness that the nation's critical food
safety infrastructure must be better protected. FDA quickly learned
that pursuing more field exams, alone, is not the most effective
strategy for providing this protection. The new Prior Notice
requirement on the shipment of foods allows FDA to conduct intensive
security reviews on products that pose the greatest potential
bioterrorism risk to consumers in the United States. We intend to
compliment these inspection efforts with further improvements to the
national network of food contamination analysis laboratories, and to
provide support for vital research on technologies that could prevent
threats to food supply. Investments like these will allow FDA to work
smarter in the future.
The Food and Drug Administration is an integral component in our
efforts to promote and protect the health of the United States public.
Its mission is broad, and the agency's decisions affect virtually every
American on a daily basis. In addition to food defense, the proposed
$81 million increase will be focused on achieving specific improvements
in drug safety and medical devices.
The budget includes a total of $747 million for human drugs and
biologics, an increase of $26 million. With these funds, we propose to
strengthen FDA's Office of Drug Safety with an increase of $6.5
million, for a total of $33 million. This increase will better equip
the Office to carry out Center-wide responsibilities for drug safety
analysis and decision-making. Critical staff expertise will be
augmented in such areas as risk management, communication and
epidemiology. Increased access to a wide range of clinical, pharmacy
and administrative databases to monitor adverse drug events will be
obtained. Also, external experts will also be used to a greater degree
to evaluate safety issues.
Medical device products regulated by FDA must be safe and
effective. The budget requests $289 million, an increase of $12
million, to improve timely performance in the review of applications,
as well as, maintaining consistent high standards of safety and
quality. Additional funds will also be directed towards medical device
post-market safety activities.
VACCINES
The FY 2006 budget also includes targeted efforts to ensure a
stable supply of annual influenza vaccine, to develop the surge
capacity that would be needed in a pandemic, to improve the response to
emerging infectious diseases before they reach the United States, and
to improve low-income children's access to routine immunizations.
HHS plans to invest $439 million in targeted influenza activities
in FY 2006, in addition to insurance reimbursement payments through
Medicare. The budget includes a two-part $70 million approach to ensure
industry manufactures an adequate supply of annual influenza vaccine.
The Vaccines for Children (VFC) program will again set aside $40
million in new resources to ensure an adequate supply of finished
pediatric influenza vaccine. The discretionary Section 317 program will
use $30 million to get manufacturers to make additional bulk monovalent
vaccine that can be turned into finished vaccine if other producers
experience problems, or unusually high demand is anticipated.
To improve low-income children's access to routine immunizations,
the budget includes legislative proposals in VFC that I believe should
be strongly supported by the members of this Committee. This
legislation would enable any child who is currently entitled to receive
VFC vaccines to receive them at State and local public health clinics.
There are hundreds of thousands of children who are entitled to VFC
vaccines, but can receive them only at HRSA-funded health centers and
other Federally Qualified Health Centers. When these children go to a
State or local public health clinic, they are unable to receive
vaccines through the VFC program. This legislation will expand access
to routine immunizations by eliminating this barrier to coverage and
will help States meet the rising costs of new and better vaccines. As
modern technology and research has generated new and better vaccines,
that cost has risen dramatically. For example, when the pneumococcal
conjugate vaccine became available, it increased the cost of vaccines
to fully-immunize a child by about 80 percent. FDA has recently
approved a new meningococcal vaccine that will further raise the cost
to fully-immunize a child--making this legislation even more important.
To improve our Nation's long-term preparedness, NIH will invest
approximately $119 million in influenza-related research--nearly six
times the FY 2001 level. The budget also increases the Department's
investment to develop the year-round domestic surge vaccine production
capacity that would be needed in a pandemic, including new cell culture
vaccine manufacturing processes, to $120 million. These research and
advanced development efforts will be complemented by expanding CDC's
Global Disease Detection initiatives from $22 million to $34 million to
improve our ability to prevent and control outbreaks before they reach
the U.S.
OTHER BUDGET INITIATIVES
The toll of drug abuse on the individual, family, and community is
both significant and cumulative. Abuse may lead to lost productivity
and educational opportunity, lost lives, and to costly social and
public health problems. HHS will assist states in FY 2006 through the
Access to Recovery program to expand access to clinical treatment and
recovery support services, and to allow individuals to exercise choice
among qualified community provider organizations, including those that
are faith-based. This program recognizes that there are many pathways
of recovery from addiction. Fourteen states and one tribal organization
were awarded Access to Recovery funding in FY 2004, the first year of
funding for the initiative. This budget increases support for the
Access to Recovery initiative by 50 percent, for a total of $150
million.
Expanding abstinence education programs is also part of a
comprehensive and continuing effort of the Administration, because they
help adolescents avoid behaviors that could jeopardize their futures.
Last year, HHS integrated abstinence education activities with the
youth development efforts at the Administration for Children and
Families (ACF), by transferring the Community-Based Abstinence
Education program and the Abstinence Education Grants to States to ACF.
The FY 2006 budget expands activities to educate adolescents and
parents about the health risks associated with early sexual activity
and provide them with the tools needed to help adolescents make healthy
choices. The programs focus on educating adolescents ages 12 through
18, and create a positive environment within communities to support
adolescents' decisions to postpone sexual activity. A total of $206
million, an increase of $39 million, is requested for these activities.
Our request also includes approximately $18 billion for domestic
AIDS research, care, prevention and treatment. We are committed to the
reauthorization of the Ryan White CARE Act treatment programs and
request a total of $2.1 billion for these activities, including $798
million for lifesaving medications through the AIDS Drug Assistance
Program.
Finally, we constructed the FY 2006 budget with the knowledge that
health information technology will improve the practice of medicine.
For example, the rapid implementation of secure and interoperable
electronic health records will significantly improve the safety,
quality, and cost-effectiveness of health care. To implement this
vision, we are requesting an investment of $125 million. $75 million
will go to the Office of the National Coordinator for Health
Information Technology, to provide strategic direction for development
of a national interoperable health care system. $50 million will go to
the Agency for Health Care Research and Quality to accelerate the
development, adoption, and diffusion of interoperable information
technology in a range of health care settings.
PROGRAM PERFORMANCE
The President and the Department considered a number of factors in
constructing the FY 2006 budget, including the need for spending
discipline and program effectiveness to help cut the deficit in half
over four years. Specifically, the budget decreases funding for lower-
priority programs and one-time projects, consolidates or eliminates
programs with duplicative missions, reduces administrative costs, and
makes government more efficient. For example, the budget requests no
funding for a number of smaller, duplicative community services
programs and the Community Services Block Grant, which was unable to
demonstrate results in Program Assessment Rating Tool evaluation. The
Administration proposes to focus economic and community development
activities through a more targeted and unified program to be
administered by the Department of Commerce. It is due to this focused
effort to direct resources to programs that produce results that I am
certain our targeted increases in spending will enable the Department
to continue to provide for the health, safety, and well-being of our
People.
Over the past four years, this Department has worked to make
America and the world healthier. I am proud to build on the HHS record
of achievements. For the upcoming fiscal year, the President and I
share an aggressive agenda for HHS that advances a healthier, stronger
America while upholding fiscal responsibility and good stewardship of
the People's money. I look forward to working with Congress as we move
forward in this direction. I am happy to answer any questions you may
have.
Chairman Barton. Thank you, Mr. Secretary. Let me get the
clock changed and you surprise me. Most Cabinet Secretaries
take 5 minutes just to say hello, so I am----
Secretary Leavitt. Is it possible to reserve that time?
Chairman Barton. I think you are going to get plenty of
opportunity to use it in the question and answer. The Chair
would recognize himself for the first 5 minutes of questions.
Mr. Secretary, I think as chairman of this committee, I owe
it to you and obviously to the President and the people of the
United States to indicate to you what I think this committee's
priorities are for this Congress. Every one of the subjects
that I am about to list in and of itself is worthy of a full
hearing and a full debate, but today is a general oversight
review. I think the first thing we are going to do as a
committee is continue our efforts to oversee the implementation
of the Medicare Modernization Act that includes, as we gear up
for the rollout of the prescription drug benefit that is
scheduled to take effect next year.
The second thing I would like our committee to emphasize is
a review and hopefully a passage of reauthorization bill that
would reform and modernize the National Institute of Health. We
have doubled their budget during the first 4 years of the Bush
Administration, but the agency is still run like it was 13, 14,
15 years ago. As you know, Dr. Zerhouni has just announced a
new policy on consultations, which I totally support. I would
really love for our committee to work with you and the
Governors, the State legislatures, to see if there is some
consensus on how we could reform our Medicaid program. In many
State budgets it is the No. 1 and No. 2 budget item. The goal
should be to try to find the ways to get more real dollars to
low-income Americans in every State in the union and I think in
order to do that we need to begin to think of innovative
solutions and not just rearrange the deck chairs in the
existing program.
Last, but not leastly, there has been considerable
controversy at the Food and Drug Administration about their
drug approval process. There have been a number of major drugs
that have been withdrawn from the market for various reasons. I
think we owe it to the American people to work with you and Dr.
Crawford, who is I think soon to become the permanent
administrator of the FDA, to see if we can't find a way to
maintain the FDA as the gold standard for drug approval and get
drugs to the marketplace as quickly as possible, but also as
safely and as effectively as possible.
And I would add a fifth one. We have had a problem in this
country in the last year in shortage of vaccinations for flu.
It is beginning to appear as if we may have overstated the
problem, but there still is a real problem in making sure that
we have continuing supplies for next year and the year after
that. So we will be looking at that.
So my question is, in having stated what I believe to be
the major priorities for this Congress, for this committee, if
we were to pick one of those, that we ought to try to start
working on immediately in terms of a legislative agenda, I
would say would be reauthorization of NIH; perhaps a review of
the existing Medicaid program. Would you like to share your
views on those two issues about what you think, Mike, can be
done and how you see yourself in the Bush Administration moving
in those two areas?
Secretary Leavitt. Indeed I would, Mr. Chairman. May I just
say that I believe the rollout of the Medicaid and Medicare
prescription drug benefit is an historic moment and let us all
acknowledge this is big, both in terms of the task and its
importance. One of the things I would appeal to you on is that
we recognize the size of this task and that we partner
together. The Congress has a big stake in having this
accomplished and accomplished well and I would like to work
directly with not just this committee, but with the Congress in
general so that when you are in your districts, you are able to
pitch in and help seniors gain access to this. This is an
exciting moment where I believe seniors across the land will
not only have access to a new drug benefit, but it will create
a robust, competitive marketplace that I believe will
ultimately impact and drive the cost of prescription medication
downward.
On Medicaid, may I also say I believe that this is a
problem that has to be dealt with. There is a time in the life
of every problem when it is big enough you can see it, but
small enough you can still solve it, and we are on the verge of
losing that opportunity with Medicaid. States are desperately
seeking ways to maintain coverage for optional population
groups. They do not want to see them leave the program.
Governors, such as myself, for years have been able to add
groups through optional populations. To see those turn around
now and have to be leaving the program is not what is in our
heart or in our mind and I believe there are ways in which we
can cover more people using the substantial investment we are
making in this country.
Now, if I could just add one other, and that is, Mr.
Chairman, I believe there is an issue that connects many of
your priorities, and that is information technology and the
need for us to deploy information technology. There is a huge
opportunity for us in the Medicare rollout to begin to
modernize the system of delivery, to modernize what we learn
about prescription drugs, and to be able to put into the hands
of the FDA information about drugs we have already approved
that badly need to have more information gathered that can
increase the health and safety of our people. So I hope that
that could also be considered as part of your agenda.
Chairman Barton. I am out of time. Could you briefly
comment on your general view about reauthorization of the
National Institute of Health?
Secretary Leavitt. The National Institute of Health is a
treasure. As you suggest, we have doubled our investment there
in recent years. It is now time for us to make certain that we
are using that in the wisest possible way and going after
priorities in a coordinated fashion to the degree that we need
new tools. And I agree that there is a need for us to continue
to work to do it better. You have talked about Dr. Zerhouni and
his ideas. There are many others. I would be supportive and
look forward to any opportunity to work on increasing the fruit
of what we have now planted.
Chairman Barton. Thank you, Mr. Secretary. The Chair now
recognizes the gentleman from Michigan, Mr. Dingell, for 5
minutes for questions.
Mr. Dingell. Mr. Chairman, thank you for your courtesy. Mr.
Secretary, again welcome. Mr. Secretary, the budget cut $60
billion from the Medicaid program, is that correct?
Secretary Leavitt. There are 3 categories.
Mr. Dingell. No, no, no. It is either correct or it is not
correct. Which----
Secretary Leavitt. There are 3 categories that add up to
$60 million with an additional 15 of add-backs. Nearly 20 add-
backs.
Mr. Dingell. Thank you. Now, this means then that to make
up that $45 billion then, you will have to either cut people,
cut provider payments or raise taxes, is that right?
Secretary Leavitt. That basically is a dispute between the
Federal Government and the States on who----
Mr. Dingell. You have got $45 billion to make up. How are
you going to do it?
Secretary Leavitt. I would be very pleased to reconcile it.
If you look at the President's budget, there are basically 3
areas of change in reduction and two areas of add-back. The
first area of change is on prescription drug medication. The
idea is we are paying too much. We believe we can save $15
billion for the Federal Government and $11 billion for the
States by changing the way we pay.
Mr. Dingell. So are you shifting, then, monies--the burdens
to the States?
Secretary Leavitt. In a way----
Mr. Dingell. To pick up a larger share of the cost?
Secretary Leavitt. We will both benefit from that one. We
will benefit----
Mr. Dingell. But you are--I am trying to figure who is
going to pick up this cost. Somebody is going to pay $45
billion. Who is it? You are telling the Feds are not. Are you
telling me the States are not?
Secretary Leavitt. We believe that there is a funding
partnership between the Federal Government and the States and
that the States, in certain situations----
Mr. Dingell. Governor, I have 3 minutes and 27 seconds to
address these questions. I need your help and I need you to
answer the questions as narrowly as you can. Somebody is going
to pick up that $45 billion. Who is it? Feds, States,
providers? Somebody is going to do it. Who?
Secretary Leavitt. A good piece of it will be
pharmaceutical companies who don't get as much money.
Mr. Dingell. Okay.
Secretary Leavitt. A piece of it will be people who are not
giving away their assets and then we will have a dispute that
we have got to resolve with our friends, the States.
Mr. Dingell. Now, it is fair, is it not, Governor, that the
States are already having major financing difficulties in
coming up with money from existing budgets to address Medicaid?
Secretary Leavitt. That is true.
Mr. Dingell. Do you think that the States will raise their
local contributions or raise taxes or allow local taxes to be
raised to address these questions of shortfalls in Federal
funding coming to the States?
Secretary Leavitt. Let me again say, Congressman, we will
spend $5 trillion over the next 10 years. The question here is
can we do a better job of spending it? I believe that----
Mr. Dingell. Who is going to pony up this money?
Secretary Leavitt. I believe the States can very well find
ways to cover more people using the investment that they have
now and that we can cover not fewer, but more.
Mr. Dingell. If I were talking to Governor Leavitt, would
he be telling me that or is this Secretary Leavitt that is
telling me that?
Secretary Leavitt. Oh, the song that I am singing now, sir,
is one I have sung for a long time. I believe that if we give
the States flexibility, they can cover more people. It is rigid
in its inflexibility and we have an opportunity, I think a
historic one, to approve that.
Mr. Dingell. You are going to give more flexibility and
less money?
Secretary Leavitt. Not less money. We are going to be
spending more than 7 percent more money every year for the next
10 years.
Mr. Dingell. But on a straight-line projection, you are
going to be giving them less money in relationship to the
demands upon that money than you did last year, isn't that
correct?
Secretary Leavitt. Congressman, as they have said many
times, Washington is the only place where you can reduce the
amount that a person anticipated and call it a cut when we are
going to be adding some $5 trillion. Not adding, but spending
$5 trillion.
Mr. Dingell. Everybody plays games, Mr. Secretary, as you
well know, with the budget. We only get the budget after the
games have been played with it at OMB and we find that there is
less money being spent for these things on a per capita basis
and what I am trying to figure out is how then will this
shortfall be made up and who is going to be the lucky volunteer
that pays for it? So far, you have indicated that in some
magical way there is going to be--there will be additional
funds made available for somebody because we are giving
flexibility to the States, but we are still leaving the States
in a situation where they are having less money for a lot of
things than they did last year or this year.
Secretary Leavitt. As I have spoken to you privately and I
will now publicly, there are a number of States who I believe
are not meeting the full measure of their agreement under our
partnership and this is not a question of--many States are.
Mr. Dingell. This means they are not spending, then, the
money that they should spend.
Secretary Leavitt. This means that they are----
Mr. Dingell. This means that the services that are needed
by the recipients of Medicaid will not be available. For
example, nursing home care will probably be cut or other
programs of this kind will be cut, isn't that so?
Secretary Leavitt. Again, Mr. Dingell, we are going to be
spending a lot more money, not less, and I believe we can use
that money in a way that will allow us to expand the number
that----
Mr. Dingell. Our chairman, Mr. Secretary, has the gavel up,
but you have reminded me of the loaves and fishes. The last
time that happened it was referred to in the Bible in a very
interesting story. I am not sure that anybody in this
Administration has those powers, although I will not----
Secretary Leavitt. That is not a standard I would like to
be held to either, sir.
Chairman Barton. Gentleman's time has expired. The chairman
of the Health Subcommittee, Mr. Deal, is recognized for 5
minutes.
Mr. Deal. Thank you, Mr. Chairman, Mr. Secretary. We heard
you make a very important announcement earlier this week with
regard to FDA and the issue of drug safety. Would you elaborate
on that and tell us what the next step is in that undertaking?
Secretary Leavitt. It has become, I think, evident that the
people of this country want to see an atmosphere and a culture
of openness and independence at FDA and we intend to deliver
that. I announced that we would have a drug safety board and
that we would begin to monitor more aggressively the many drugs
that have already been approved for market. In making drug
approvals we often use trials, clinical trials, where we
measure a certain number of people for a certain amount of time
and we are able to make scientific judgments about the safety.
They may involve a thousand people for 6 months. In the next 6
years a million people may use that same drug and there are a
million data points available to us about what help the drug
provided and in some few cases, the harm. Our goal is to use
the capacity of information technology to harness that
information, to provide it to the public in an open,
transparent way so that we can learn from what we are
experiencing in post-market uses of those drugs.
Mr. Deal. Thank you. Let me shift back to Medicaid for just
a minute. Most of us, at least on this side of the aisle, have
agreed with the concept of giving the States more flexibility
and that by doing so they can make the money go further. I
presume that is the general thrust of the reforms that you are
proposing and I would simply ask do you see these reforms as
necessitating legislative action by us or do you currently have
the mechanism to make those reforms possible?
Secretary Leavitt. Mr. Deal, they will require legislation
in most cases.
Mr. Deal. And I assume we will be seeing that proposal in
the very near future?
Secretary Leavitt. Yes. I am actually working with a
bipartisan group of Governors to develop what I hope will be a
proposal that can be brought to this committee for help. The
Governors desperately need help here. They want to maintain the
coverage on these optional groups, but they need flexibility
and they are working hard to come up with some proposals that
would untie their hands and allow them to accomplish just that.
Mr. Deal. Thank you, Mr. Secretary. I am going to yield
back, Mr. Chairman.
Chairman Barton. Gentleman yields back. The distinguished
ranking member of the Health Subcommittee, Mr. Brown of Ohio,
is recognized for 5 minutes.
Mr. Brown. Thank you, Mr. Chair. Mr. Secretary, as you
know, the public's confidence in drug safety has been shaken
over the past few months before you arrived on the scene. It
seems we ought to be looking at the part that direct-to-
consumer advertising has played in scandals like Vioxx because
of DTC advertising, demand for blockbuster drugs explodes right
away as soon as the drug goes on the market rather than the
slow increase we used to see from doctors' word of mouth and in
magazines and all of that, and that dramatically increases
exposure to potentially deadly side effects more quickly.
During Vioxx's first year in the market, Merck spent $160
million in DTC advertising and even though subsequent studies
showed that for many patients, drugs like Advil were just as
effective as the far more expensive, but heavily marketed
Vioxx, non-stop advertising prevent that fact from having any
meaningful effect on sales. My question is do you plan to do
anything, as the Secretary, about direct-to-consumer
advertising, given its safety and cost impact?
Secretary Leavitt. Congressman, information is good.
Inaccurate information is bad, exaggerations would be bad,
unsubstantiated claims would be bad. We have the power to cause
that to cease when it occurs and we will use it.
Mr. Brown. Do you really think that that kind of mass
advertising is the best way to educate and empower the public?
Secretary Leavitt. Used properly, it is a powerful tool for
good. Used improperly, it is a powerful tool for bad and the
objective and duty of a regulator is to find those cases in
which inaccurate information has been offered or exaggerated
claims have been offered and to act. And we have that power and
we will act.
Mr. Brown. Was Merck spending $100 million a year an
example of used--of your term ``used improperly?'' Secretary
Leavitt. That is not a judgment I am in a position to make at
this point.
Mr. Brown. The House passed legislation yesterday that
holds broadcasters legally responsible for airing indecent
programming even if the broadcasters themselves did not produce
that content. With revelations about Vioxx and with revelations
about other drugs, it seems it could be only a matter of time
before someone sues a broadcaster for airing an ad that
encourages consumers to buy a pill that ends up harming them.
Are you concerned by the possibility that incomplete or
misleading content in drug ads is going to become a legal
liability for TV and radio stations?
Secretary Leavitt. To the extent that that is true, I would
guess that would be a big worry to them. My concern is that
information has value when it is presented in an objective and
reasonable way. It becomes a liability and has the potential to
harm when it contains inaccuracies or exaggerations. The FDA
currently has the authority necessary to stop that when it
occurs and we will use that authority.
Mr. Brown. But I recall that FDA doesn't fund particularly
well that part of the agency that looks at those
advertisements. What do you--well, how do you propose that
those advertisements are examined a little more assiduously
than they have been and how are you going to aggressively
protect the public when it is clear in the last handful of
years the FDA hasn't been able to do or hasn't chosen to do
that?
Secretary Leavitt. That regulatory power needs to be used
in partnership with the considerable scientific prowess that
that agency holds. It is the gold standard around the world
despite the fact that there have been controversies of late. It
is a remarkable agency with dedicated people who have the
capacity, if anyone in the world has to make those decisions,
is the FDA.
Mr. Brown. Does it need more funding to be able to examine
those ads properly?
Secretary Leavitt. Well, the President has proposed $81
million more than last year. We have a huge mission. We believe
we can conduct that mission in the context of the budget that
we are presenting.
Mr. Brown. Okay. Thank you. Thank you, Mr. Chairman.
Chairman Barton. Before I recognize Mr. Hall, just as a
follow-up to Mr. Brown's question, under the Constitution and
current law, drug manufacturer has the right to advertise its
product so long as it does so in a truthful and generally
accurate fashion. In other words, if you wanted to stop some of
these advertisements, we would either have to amend the
Constitution or at a minimum, get a statute that prescribed the
limits under which those advertisements could occur. Is that
correct?
Secretary Leavitt. That would be my understanding.
Mr. Brown. Could you yield for a moment on that point?
Chairman Barton. Sure.
Mr. Brown. I guess--I am not a lawyer and I am certainly
not a First Amendment lawyer, but I also know that we have
looked on tobacco and alcohol advertising. Without a
Constitutional amendment, we looked at striking a balance
between free speech and the public interest and I would hope
that when a drug has harmed as many people as Vioxx seems to
have had and Resilin and other drugs from time to time that we
would strike that balance and not protect corporations as a
free speech no matter what, which seems to be the
interpretation of many.
Chairman Barton. I would just add that some of these drugs
that have been withdrawn have helped millions of people lead
better lives and if we are going to strike a balance, let us
strike a balance.
The gentleman from Texas, Mr. Hall, is recognized for 5
minutes.
Mr. Hall. Thank you, Mr. Chairman. Governor, like you, a
lot of us have had experience--I was at the local or the county
level for 12 years as a judge and 10 years in the senate at the
State level and up here for 24 years. You, too, were Governor
and mine is more of a practical question than it is anything
specific about the budget because we know the problems and we
know what we will have to do to cure them. But just--you have
the benefit of having been a Governor and being on the other
side now, the Medicaid battle today, it seems that really
should arm you. Discuss, if you would, what your experience
with Medicaid as Governor of Utah was, how you handled it and
what successes you had and what challenges you faced and how
that colored or lost the reforms that are proposed in this
budget.
Secretary Leavitt. Congressman, perhaps the best way would
be to isolate one circumstance that I think illustrates the
principles I am talking about. The Congress, and in a large
measure the good works of this committee and others, passed the
SCHIP program some years ago. It has provided the capacity for
approximately 5.6 million of our citizens' children to be
covered. I believe Congress wisely provided a degree of
flexibility in the bill that allowed States to ask a very
important question: What is basic quality care?
Congress provided 5 choices. They could define quality as
Medicaid or they could say it is the same roughly as the State
employees receive or what Federal employees receive the best
HMO in the state, or a composite of those. Those are 5 choices
to define quality, not just 1, Medicaid, but 5.
We were a State that concluded we would not choose Medicaid
because we believed we could do it more efficiently. And I am
happy to report to you that we covered, with the same coverages
that my children had while I was Governor, 35 percent more
children on the same investment and they had the same coverage
that my children had, in fact, better; lower co-pays than my
children had. Now, I am just pointing out that if the State is
going to provide for the Governor a set of benefits and the
Governor's children, that is pretty good coverage. And we felt
great about that.
What we felt best about was that we covered more children
and that is the kind of thing I believe Governors across this
country are seeking. They have optional populations right now
that are on the verge of losing coverage because of the
inflexibility of the current program. They want to preserve the
coverage of those people. And if we work together, I believe we
can do that. We can meet your objective of preserving their
coverage and perhaps enhancing it in the same way we did with
SCHIP for the number of children that we covered.
Mr. Hall. Thank you, Governor. I yield back my time. I will
thank you for the 125 mil, somewhere in that area, for the
health information technology. I think that is going to be very
helpful. Thank you, sir. I yield back my time, Mr. Chairman.
Mr. Deal [presiding]. Chair recognizes Mr. Waxman for 5
minutes.
Mr. Waxman. Thank you. Mr. Secretary, you said you want to
help the States do more, but the proposed budget is to take $60
billion out of the Medicaid program and the States are already
struggling to do what they are already doing. And one of the
things you are proposing is to change the rules on how the
States can pay for their share of the costs of the program. I
want to concentrate particularly on the proposal to eliminate
what is called inter-governmental transfers. These have always
been a legitimate way of financing the non-Federal portion of
Medicaid. In fact, they are explicitly recognized as legal in
the law and you want to stop the States from doing this. Have
you estimated the savings that you would achieve by changing
the rules on intergovernmental transfers?
Secretary Leavitt. Congressman, there are, in fact, as you
point out, intergovernmental transfers that are very clearly
and explicitly allowed in the law and we support that and
acknowledge it. However, there are intergovernmental transfers
that are not contemplated and here is what I believe the
difference to be; when the State pays a provider----
Mr. Waxman. Let me interrupt you because you are going to
get savings some way or other. You may have a distinction. Now,
if it is legal, it is legal. If it is not legal, you ought to
stop it now. So you are going to stop some things that are
legal because you want to change the law to make it illegal and
you are going to have less money available to the States. How
much less money are we going to have available to the States?
That is my question.
Secretary Leavitt. Congressman, you use the phrase ``change
the rules.'' We simply want to enforce the rules. Congress----
Mr. Waxman. So you don't need legislation for us to do
that, do you?
Secretary Leavitt. That is probably true in most cases and
what we believe will occur over the course of the next 10 years
is that there will, in fact, be a true partnership where the
Federal Government is in essence putting up $.65--5\1/2\ or $5
trillion and the States will be putting up their share and
together, we will provide coverage to more people.
Mr. Waxman. We represent districts with your partners in
the States and so we want to know what it is going to mean to
our State. Last March the Administration came in and said they
were proposing to do something like this and I asked them for a
commitment that we would get, well, legislative language. We
have not received that. I would like to know if you could give
us the legislative language. And the second thing I would like
to have is the State-by-State analysis. We would like to know
what it means for our State if you are going to change, in some
way, these intergovernmental transfers. Will you have that
available for us?
Secretary Leavitt. I have committed to provide others and
will provide you the best information that we can accurately
provide as to which of the provisions we see being violated
regularly and what we believe or would estimate them to be. It
is a complex and it is something, frankly, we are negotiating
with the States one State at a time. Our meeting today, as a
matter of fact, with your Governor----
Mr. Waxman. I know that. He told us.
Secretary Leavitt. [continuing] then meeting with others.
Mr. Waxman. But the reason it is so vague to us is if there
is going to be a change in intergovernmental transfers, which
is an essential way the States now have money to pay for their
share and you make changes in that, that means they have less
money. I want to know how much less money my State is going to
have. I know other members are going to know how much less
money they are going to have and if you are going to do it on a
State-by-State basis, then you are not having a uniform rule.
Maybe you are trying to press each State to agree to something,
but that is a different matter.
Now, if they don't have that money available to them, how
are they going to be able to give Medicaid coverage to those
that now get it? You talked about optional. My colleagues might
be interested to know that 60 percent of the program is
considered optional, either optional populations or optional
benefits. Optional populations are the people in the nursing
homes and the disabled. That is maybe two-thirds of the
expending of the program. We in this committee proudly have
passed legislation to make sure women with breast cancer get
covered for their treatment if they qualify for their status in
poverty. Those optional services are like pharmaceutical
services. States don't have to provide it. Now, those States
that are providing those services now and most of them are
providing most of those optional services, how are they going
to pay for it? Are they going to have to raise taxes? Are they
going to have to cut benefits? Are they going to cut providers?
What is going to happen?
Secretary Leavitt. That isn't true in every State. There
are some States who are not using intergovernmental transfers
inappropriately. And this is an awkward and difficult
conversation we are having with having every one of our funding
partners. We are simply saying to them we want to be partners
and let us just----
Mr. Waxman. Well, then let me give you very parochial--I
want to know what it means for California. We have got a couple
other Californians on the committee on both sides of the aisle.
What is it going to mean for California? I can't imagine any of
the intergovernmental transfers in California being improper or
illegitimate. It all goes into health care. It serves the needs
of the populations that need healthcare and if those sums are
taken away, I see they are going to have a real problem in
California. I think you are asking us to buy into a budget
number of $60 billion and I am not sure how you are going to
achieve that $60 billion cut. It looks like you don't really
know how you are going to achieve that $60 billion cut, either.
Before we adopt a budget calling for it, we better get the
legislative language and the State-by-State analysis and I
would like to have you guarantee that we will get that before
we vote on our budget.
Secretary Leavitt. I will give you every piece of
information I have that is credible.
Mr. Waxman. Mr. Chairman, I want to ask unanimous consent
to put in the record a letter that Mr. Dingell wrote to the
Secretary on this very subject. It ought to be in the record so
members will know what the Secretary has been asked to provide
for us and I think it is important we get it. Thank you, Mr.
Secretary.
Mr. Deal. Without objection.
I would ask members to adhere to the clock.
Mr. Waxman. And excuse me. If there is an actuary figure
that is different than yours, I hope you will provide that to
us, as well. We didn't get the actuary's figures on Medicare,
but we should get them on Medicaid.
Mr. Deal. We do have members who have travel plans, so I
would ask everybody to please adhere to the time clock. At this
time I recognize Dr. Burgess for 6 minutes.
Mr. Burgess. Thank you, Mr. Chairman. Mr. Secretary, let us
stay on intergovernmental transfers just for a moment because I
think my State, Texas, does not participate in
intergovernmental transfers and I will just tell you I, for
one, would prefer that we all play by the rules and if it is
preferable that we get our funding through a shell game, then
Texas needs to be educated by California on how to do that, but
I would prefer that this be a direct transaction between the
Federal Government and the States and that we not finagle the
books in order to up reimbursement to our States because I
don't think it is fair that Texas not receive the same
percentage of dollars back that another State might receive. Is
that a fair assessment?
Secretary Leavitt. Well, there are consultants who you can
hire who will show you just how to do it.
Mr. Burgess. Okay.
Secretary Leavitt. You know, it might be, Mr. Burgess,
helpful if I could just take a moment and describe----
Mr. Burgess. Please.
Secretary Leavitt. [continuing] in large terms what is
happening here. Assume that there are three people who live in
a cul-de-sac. There is Mr. Federal and Mr. States and the Jones
family. The Jones family has a daughter that has a chronic
disease that requires constant help, but they have no health
insurance. It costs about a thousand dollars a month. So Mr.
State and Mr. Federal get together and they decide they want to
help the Jones family. Mr. Federal says to Mr. State, why don't
you go work with the Jones family because you know them well
and when you have worked that out, come back and give me the
bill and I will pay 65 percent of it. Well, it works out great.
In fact, the doctor sends the bill directly to Mr. State and
Mr. State comes over to my house, the Federal house, and I
write him a check for my 65 percent.
Well, this goes on for a while and it works out pretty well
until it gets difficult for us to come up with that money and
Mr. State then goes to the doctor for the Jones family and says
here is a deal that will be good for both of us. You know the
$1,000 a month? Why don't you raise the price to $1,500 and
then give me Mr. State's discount coupon for $300 and then he
brings it over to my house and says I have got bad news. The
$1,000 has now gone to $1,500, so let us think about this. He
says here is your share. I say okay, two-thirds of $1,500 is,
let us see, $1,000. Well, the clinic is now getting $1,200, Mr.
Federal is now paying $1,000 instead of $666 and Mr. States, he
is paying $200 instead of $500. My point is that we all want
the Jones family to have their care, it is a laudable thing,
but it needs to be fair. And we don't think it is fair for a
State who may, in fact, be not doing it and one that is not.
Mr. Burgess. Thank you, Mr. Secretary. Can you just give us
very quickly what the proposal that you talked about, you
actually mentioned three change reductions and two expansions.
You talked, before you were interrupted, about the prescription
savings. Just very quickly take us through that, the change
from average wholesale price to average sales price, what to
expect from that.
Secretary Leavitt. Simply stated, we are overpaying for
prescription drugs and if we could just use the same system
that we are using for Medicare, the States would save $11
billion, we would save $15 billion, and we simply just want to
change it to where we are getting the lowest price. No patients
and no Medicaid recipients will get their services and their
pharmaceuticals, we will just save money. That is just smart.
Mr. Burgess. Yes, sir. What were the other two change
reductions that you were going to mention?
Secretary Leavitt. The second is there are many in the
country who have begun to give their assets away to their
children so they qualify for Medicaid. In many cases, it is
children having their parents give the assets to them so that
as they go into nursing homes, they have coverage. This was not
intended to be, in essence, the asset protection plan. It was
intended to be a way of helping people who have no other
alternative, and the States are asking us to tighten those laws
and we think we should.
Mr. Burgess. Do you think we can partner in some way to
allow individuals who have provided for long-term care
insurance for themselves and their families to protect some
segment of their assets should it then become--should they
exhaust those benefits and have to go into a nursing home?
Secretary Leavitt. Absolutely.
Mr. Burgess. Okay. Then I assume the third change reduction
would be the intergovernmental transfer, is that correct?
Secretary Leavitt. The third is just a dispute between
partners.
Mr. Burgess. Okay. What about the two expansions that you
alluded to?
Secretary Leavitt. The two expansions are No. 1, a $10
billion set aside to cover more children and to go out into the
communities and find those children that are eligible but not
being covered. The second would be to begin a transition
between where we are today, where people are essentially
required to be served if they are disabled or elderly in an
institution or a nursing home, and allow them to be covered and
to have help in community or home settings. There is just under
$5 billion there.
Mr. Burgess. In the last 30 seconds, is there any type of
consumer-directed change we might--transformational change we
could make in Medicaid to more efficiently spend those dollars
that you alluded to?
Secretary Leavitt. Congressman, every morning when I wake
up, the first thing on my mind is health information technology
because it ties all of these together. The power of the
consumer can be linked through information technology, can be
made more efficient, fewer mistakes, better care. That is, I
think, the lynch pin to improvement.
Mr. Burgess. Thank you, Mr. Secretary.
Mr. Deal. Chair recognizes Mr. Markey for 5 minutes.
Mr. Markey. Thank you. Secretary, as a condition of getting
accelerated approval, drug companies promise the FDA that they
will complete post-marketing studies to prove the safety or
efficacy of a drug. I am concerned that some of these drug
companies are failing to keep their commitments and the public
may be buying and using products that they think are safe and
effective, but are no more than sugar pills or worse, are
dangerous. On March 15, 2004, the FDA submitted a report to
Congress regarding the progress of requiring post-marketing
studies. According to that report, only 33 percent of drug
studies and 62 percent of biologics studies were proceeding on
schedule or have been completed. Why is the FDA allowing the
drug companies to get away with not conducting post-marketing
studies that the agency told them to perform as a condition of
approving a drug that has millions of Americans continue to
take drugs even though the long-term studies have not been
completed?
Secretary Leavitt. Our effort in providing and receiving
new information on drugs that have been approved for market has
been essentially passive. We have received information as
incidents have occurred. That is not good enough and we need to
improve it. We need to have those studies done and we need to
continue to gather information from a myriad of opportunities
we have. The new Medicare rollout is a wonderful new
opportunity for us to begin capturing information about the
efficacy and the impact of pharmaceuticals. We need to gather
the information and we need to make it available and we need to
do it in a way that will inform physicians and patients and
consumers in a rapid, transparent way.
Mr. Markey. You do understand, Mr. Secretary, that the drug
companies keep these drugs out on the market even as they foot
drag in the completion of the long-term studies, and the FDA
does have the authority to withdraw approval for any of these
drugs. Would you commit to withdrawing drugs from the market
that do not complete, within the law, the long-term studies
that are required by the FDA?
Secretary Leavitt. Congressman, the FDA is the gold
standard around the world. We have the benefit in this country
of having the assurance of the entire scientific prowess of the
FDA. Judgment calls need to be made. When they are, and when it
calls for them to be withdrawn, we will withdraw them.
Mr. Markey. Well, unfortunately, without information, you
can't withdraw. So what I would suggest is that companies are
keeping information from you because they don't want you to
know what the long-term effects of these drugs are and that, as
a result, the public is at risk because the FDA does not force
the completion of the long-term study. The risk then runs to
families that are taking drugs that are later found to be
endangering the health of those individuals taking the drugs.
So where is the standard then? What is the guillotine moment
where you cutoff the production and sale of the drug?
Secretary Leavitt. As you may be aware, on Tuesday on this
week, I announced the creation of a drug safety board which
will be in a position to independently make those judgments.
These will be people drawn from inside and outside of
government who were not involved in the original approval of
the drug, who have the capacity to make those decisions, to
find those, as you referred to them, guillotine moments. My
guess is that in time they will exist and we will, in fact, do
as the law provides.
Mr. Markey. Well, you know, these post-marketing studies go
right to the heart of the fiduciary relationship that the CEOs
of the drug companies have with their shareholders, which is,
of course, their top legal responsibility, to benefit
shareholders. The problem is that the patients have an
obligation that the companies also have, but the shareholders
split the allegiance of CEOs.
So what I am going to do today is I am sending a letter to
the Securities and Exchange Commission, asking them to ensure
that there is a disclosure given to all investors in drug
companies that there are outstanding studies of the efficacy of
these drugs that the FDA has yet to call in that could affect
the long-term stock valuation of these companies. Because I
think the Securities and Exchange Commission could perhaps put
more pressure on these companies to get to the answer so that
investors aren't harmed and the pressure that we have had
patients placing upon the FDA to get the information out,
either from the drug companies or from the CEO or from the FDA.
Secretary Leavitt. Let me make one thing very clear and
that is that the Food and Drug Administration has one group to
which it is accountable, those who consume and take the drugs,
the citizens of this country.
Mr. Deal. Time is expired. The Chair recognizes Ms. Bono
for 6 minutes.
Ms. Bono. Thank you, Mr. Chairman. Again, welcome, Mr.
Secretary. First of all, I just would like to comment on our
concern about the IGT issue. I, along with Congressman Waxman,
just heard with our meeting with Governor Schwarzenegger, that
he is working on these reforms. I am concerned that we are
going to come out and pull the rug out from underneath our
Governors as they are trying to reform and modernize our States
and that our budget is not on track with what the State needs.
Second, my colleague, Ms. DeGette, on the other side had to
leave to catch a plane, so she asked if I would ask her
questions and I said I would not but I would ask if we could
submit to you in writing her questions about embryonic stem
cell research, which I also am very interested in, so could we
send it to you?
Secretary Leavitt. Yes, we would be happy to respond.
Ms. Bono. Thank you. And then last, I have two more
boutique issues that I am concerned about and I don't believe
that we have addressed. My first question is regarding the
Women's Health Initiative, which was a study that was being
conducted on hormones on women. Once it was found that there
are increased incidences of different cancers, the study was
abruptly halted. And I believe women are still out there
clamoring for answers to this and I am hopeful that you will
take this into consideration. And by furthering any studies
with the Women's Health Initiative, you might look at bio-
identical hormones. Do you know why, in fact, bio-identical
hormones have not been included and the necessary research has
not been done on bio-identical hormones, but only on synthetic
hormones?
Secretary Leavitt. Representative Bono, may I suggest, that
sounds like a question that would be well-responded to in
writing?
Ms. Bono. Thank you. I just wanted to point out to you that
this is extremely important and I think women really deserve
this answer and only the NIH and only we can do this research.
Next, your predecessor cared a great deal about obesity and
I have worked with Senator Frist on an obesity bill, the Impact
Act, last Congress. To tell you the truth, I was a little bit
torn with the legislation because I don't know how we legislate
to cure obesity, but I do believe it is something that we need
to handle sooner rather than later. I was wondering if you have
any thoughts on obesity and the epidemic, both childhood
obesity and adult obesity and the burdens on our society and
how we can do something to help with that problem?
Secretary Leavitt. I am persuaded, as you have been, that
it is a substantial part of the health dilemma of this country,
that there is an unquestionable link between obesity and
diabetes and other heart ailments and cancer and that by
getting to the heart of that, we will make substantial
improvement other places. My own sense is that it is a matter
of educating people to change their behavior, that it is about
orienting our entire emphasis to not just be about curing
disease, but in creating wellness and obesity is a big part of
that.
Ms. Bono. Well, thank you. I look forward to working with
you on it further. I am hopeful that the chairman of my full
committee can also hold a hearing at some point in time on the
Impact Bill which, again, looks at obesity and does address it
as a disease. Thank you very much.
Chairman Barton. We will certainly take that under
advisement. Who seeks recognition on the Minority side? Mr.
Engel of New York is recognized for 5 minutes, 6----
Mr. Engel. 6 minutes.
Chairman Barton. Thank you.
Mr. Engel. First of all, welcome, Mr. Secretary. I have two
somewhat lengthy questions, but I first want to identify with
the remarks Mr. Waxman made about the potential elimination of
IGTs. In a State like mine, New York, IGTs are very, very
important and if we are going to go after them, we really need
to have an answer of what is going to happen to the people that
are using them for care; in the absence of care, what is going
to happen to these people. I know you can take IGTs alone and
say well, there are certain states that are doing very well and
yes, this happens to be one of the instances that New York does
very, very well, but New York certainly puts more money into
Washington than it gets back and we really don't like
eliminating the programs where we do well. It eliminates some
of the programs where we are not doing so well and other States
are doing well, so I think it is unfair to--well--certain
States are gaming the system. The fact that we need the IGTs,
and I am very concerned about, so I want to add my voice to
that.
Mr. Secretary, since the attacks on September 11, there has
been a renewed focus on emergency preparedness. Hospitals and
public safety officials have scrutinized their readiness to
comprehensively respond to nuclear, biological, or chemical
attacks. I know everyone here agrees that it is critical that
our hospitals be a top priority in funding should our nation
become victim to a future attack, particularly in light of a
December 2004 study by the Trust for America's Health stating
that over two-thirds of States lack basic preparedness
capabilities.
I have grave concerns regarding the budget, the 2006
budget, which public health officials have stated would
actually weaken the ability of State and local public health to
respond to bioterrorism and related public health emergencies.
I want to draw your attention, Mr. Secretary, to a few of the
questionable financing provisions, and when I am done, get your
feedback on it.
If we start with hospital preparedness, your budget states
that you are cutting $8 million out of the program, leaving a
grand total of $483 million for the Nation's hospitals. It
doesn't sound like a terrible cut until you realize a couple of
things. First, the program is ridiculously under-funded as it
is. An American Hospital Association report done 2 years ago
says that hospitals in New York alone would need at least $750
to $850 million in funding for basic readiness. And my
hospitals in New York tell me that HRSA, the program, was a
joke even before the cuts because by the time it was divided,
most hospitals got only about $45,000 each, and one of my
hospitals used that for a security camera.
And my second point is that hospital preparedness, the main
program, was actually not cut by $8 million, but nearly $34
million this year, since $25 million of overall funding has
been allocated for a competitive demonstration grant and if you
don't win the grant, you surely lose. So how does the
Administration justify such gross under-funding and further
cuts to hospital preparedness, particularly in light of a $130
million cut to CDC, State and local bioterrorism preparedness
funding? I would like your answer and then I have a second
question for you.
Secretary Leavitt. Let me comment on two points. One is
intergovernmental transfers. I want to make clear that there
are some intergovernmental transfers that are not just
acceptable to us, but we support with our money. If money goes
into a provider and it stays there, we applaud that; that is
our goal. It is when they are recycled in a way as to create
more obligation for the Federal Government and to minimize
theirs, that troubles us.
Second point. With respect to bioterrorism, it has been
troubling to us that there is a substantial amount of the money
to be drawn down by States that has still not been drawn down.
We don't believe that the hospital capacity has been moving
fast enough and so much of the new investment that you will see
in this budget goes to develop national stockpiles so that we
have the capacity to deploy, on a rapid response basis, within
12 hours, to any community in this country substantial or
suitable supplies to respond. All the States are clearly
benefiting from this new investment.
Mr. Engel. I would like to continue to dialog with you on
it and because my hospitals are yelling bloody murder and that
is not what they are saying to me.
The second question I have is, as you know, earlier this
month our New York City Health Commissioner gave notice of a
potential new strain of HIV that may be impossible to treat.
For many, the identification of a possible AIDS super bug,
recall the same fear that arose 20 or 30 years ago when the
original AIDS virus was discovered. I think it is critical,
more than ever, that we use the scarce funds to appropriately
fund AIDS surveillance, prevention, and treatment programs
wisely toward at-risk populations, so I am concerned that
funding for HIV/AIDS prevention has been reduced by nearly $5
million, while abstinence education, a program that I think has
limited effectiveness, is getting an increase of $38 million.
HIV, as you know, is in a place we want to cut corners and
while there is a modest increase in funding for ADAP under the
Ryan White program, it really doesn't excuse the other
shortfalls, so I would like you to mention that how do you
justify spending so little money on HIV/AIDS prevention given
the President's repeated commitment to fighting the spread of
the virus globally.
And finally, I know from conversations with New York City
health officials that many are concerned about the level of
funding that will be required to track and research this new
resistant HIV strain in New York City, should it be a serious
and widespread a problem as we fear and if asked will the CDC
provide necessary funds to New York health officials to respond
to this potential new strain of HIV due to its impact on our
public health. Can you answer that, about the cuts?
Secretary Leavitt. I think the President's commitment, as
you acknowledged, on Ryan White funds in the international and
the continuation of research funds, makes evident his
commitment here and maybe given the time, I could respond to
you in writing with more detail.
Mr. Engel. Okay, I appreciate that. Thank you.
Chairman Barton. The gentleman from Oregon, Mr. Walden, is
recognized for 6 minutes.
Mr. Walden. Thank you very much, Mr. Chairman. I certainly
appreciate the opportunity to have the Secretary come before
our committee and congratulations on your new appointment and
or is it sympathy, as I am never sure, the responsibilities you
take on. Mr. Secretary, there are a couple of issues I wanted
to raise that are somewhat specific to the Northwest or Oregon
and somewhat broader than that. The first is my senators and I
and other colleagues have said to CMS a letter requesting
another look at a decision made in Region 10 involving Medicaid
payments. Under an Oregon statutory framework, the State of
Oregon is required to provide full-cost payment for hospital
services provided to Medicaid patients when those services are
provided at rural hospital at 50 or fewer beds, referred to as
Type A or B hospitals. And Region 10 now says that may violate
some Federal law and so it is one of those issues that I would
like to draw your personal attention to; as I say, our
delegation has sent a letter to Mr. Smith, the director of
Center for Medicaid and State Operations in Baltimore. And so
it is one we will be making sure you are aware of, as well.
Secretary Leavitt. Thank you. I will assure that that is
responded to.
Mr. Walden. In another issue that I and others had raised
with your agency prior to your arrival there, it involves
graduate medical education training and as I understand it, and
we have never gotten a response back from the letter that was
sent last year sometime, but it seems that hospitals cannot
claim for Medicare graduate medical education payment purposes
the time residents spend in non-hospital sites unless the
hospitals pay a supervisory physician some amount even if the
physician agrees to train the resident on a volunteer basis. So
according to a family practice residency in Klamath Falls,
Oregon, this policy, they believe, will result in teaching
hospitals pulling their residents back into the hospital
setting for training, thus limiting residents' exposure to the
physician office and non-hospital environment. And we will get
you more information on----
Secretary Leavitt. I actually heard some of this this
morning and it has raised my level of curiosity and I will do
what I can to be responsive to you.
Mr. Walden. I appreciate that. Earl Pomeroy, from North
Dakota, and I are the co-chairs of the Rural Health Care
Coalition for this period and there are a number of other
issues that we are raising that I will give to you and not
expect immediate answers here today, but we have sent a letter
to you raising them and one of them, though, I would throw out
at you is that your predecessor, Secretary Thompson, did
establish a Health and Human Services Rural Task Force that was
charged with examining how HHS programs can be strengthened to
better serve the healthcare needs in rural communities and I am
just seeking your sort of commitment to continue that process,
especially coming from a State like Utah. I am sure I am
preaching to the choir here.
Secretary Leavitt. Well, I understand well the dilemmas of
delivery in rural America. I have observed what I think to be a
quite prudent choice that has been made on how to get to those
problems. For many years we have tried to surgically find ways
in which to bolster with various programs, I see in this budget
a different strategy, and that is to essentially use a rising
tide lifts all boats. We have dramatically increased or
improved the reimbursement rates through the Medicare Bill by
some $25 billion. That is a substantial infusion going directly
into the system and allowing communities the flexibility that
is required to make a difference, and I like that. As a person
responsible to deliver in rural America, I think that makes a
lot of sense.
Mr. Walden. Now, I appreciate that and I think the Medicare
Bill is probably singularly the most important improvement in
rural health care that we have seen passed in the Congress,
certainly in my time here. However, my understanding is only 4
of the 118 Rural Health Care Services Outreach grants funded
between 2001 and 2003 focused on the Medicare population.
Apparently these are grants that may be targeted. The vast
majority of grantees are not Medicare providers, thus receive
no benefit from MMA, so there may be some other pieces in the
budget that may adversely affect our rural areas.
I want to follow up on something that Dr. Burgess talked
briefly about, as well. I spent 5 years on a community non-
profit hospital board before coming to the Congress. I was in
the legislature and dealt with health care issues when we not
only passed but implemented the Oregon Health Plan, which was
trying to get at Medicaid population to do as you say with
SCHIP, insure more people but hold the cost by prioritizing how
you do it. I would encourage you in your work with the
Governors to think outside the box on Medicaid because it seems
like we sort of nibble around the edges, we cut here and think
we can shove costs there and I will tell you, if there is one
thing that really struck home with me on the hospital board, it
was the amount of rules and regulations and audits and as you
say, I mean, we hired somebody to come in and tell us how to
bill more properly so we could get more money back.
It is a standard process out there, all within the rules,
but we have created a bureaucratic, no offense, but a rules-
based system that is so complicated that you have to hire
professionals to come in to tell you just how to bill. And I
have often wondered if there isn't a better way to give the
providers or the States or somebody--there has to be a way to
cut through the incredible complex procedures that we have put
in place. We could save so much money and deliver such better
health care if maybe we measured the outcomes rather than the
bureaucracy.
Secretary Leavitt. Congressman, may I just echo what you
said? If we could measure outcome and hold ourselves against
that standard, as opposed to filtering everything we do through
binders full of regulations, we would have better outcomes.
Chairman Barton. Gentleman's time has expired. My list
shows that Mr. Allen actually got here before Ms. Capps, but
that is not right. She says it is not right. I am going to
yield. I will recognize either Mr. Allen or Ms. Capps,
whichever one of you arm wrestles the best. Okay, Ms. Capps has
apparently recognized--6 minutes or 5 minutes?
Ms. Capps. 6 minutes----
Chairman Barton. 6 minutes.
Ms. Capps. --Chairman, and thank you very much and thank
you, Mr. Allen. Thank you, Mr. Secretary, for your testimony
and for spending this much time with us. I have three different
topics to bring up in this time and so I appreciate this time.
First, to continue or perhaps conclude the discussion of my
California colleagues, will you make available to us the
actuaries which estimated the budget savings from your various
Medicaid proposals? By this, I mean the actuaries that predict
the cutting the IGTs will save certain amounts or increase
outreach will cost this much or whatever. I would like to ask
for this, as specific as possible and in writing?
Secretary Leavitt. I am happy to provide you with the
information I have on how it was scored. I will tell you that
there are a lot of complications, as the people at CBO would
tell you on how they arrive at those estimates looking out 10
years and there are disagreements, I suppose, available to be
analyzed on why, so----
Ms. Capps. Well, we would like to have access to the actual
actuaries, if possible, please, sir.
Secretary Leavitt. I will do my best to give you everything
that I have that is credible.
Ms. Capps. Thank you, Mr. Secretary. I am holding in my
hand the 2005 Blue Cross and Blue Shield Service and Benefit
Plan book for Federal Employees Program. You have made a number
of public statements about how Medicaid benefits are more
generous than those in the Federal Employees Program and how
Medicaid should be more like our private insurance plans, so I
want to ask you about two benefits not covered under FEHBP and
how Medicaid beneficiaries would fare without them.
Now, the Blue Cross plan document says it does not cover
maintenance or palliative rehabilitative therapy. Would you
address, please, ``optional infant'' with cerebral palsy in a
family with an income of about $1400 a month who requires
weekly maintenance therapy to prevent complete atrophy of his
muscles. Address how living in pain and suffering because
Medicaid doesn't cover such therapy or should Medicaid cover
such therapy and I want to ask you another example on that,
too.
Secretary Leavitt. I will respond with this construct.
There are populations of our citizens, those who are disabled,
those who are elderly, those who are elderly and disabled,
those who are in foster care, populations of our young, of our
children who are in the lowest possible income brackets or the
lowest income brackets; they need to have not just acute care
or insurance, they need multiple services.
Ms. Capps. So that wouldn't be covered in----
Secretary Leavitt. Well, many of those--there are also
people in the optional groups who fall under there and the
States need the capacity to do that. My point all along is we
need the capacity to treat groups according to their situation
and the help they need, not a situation where we provide the
same thing to everyone.
Ms. Capps. Okay, so then the comparison with the private
insurance is not for every population group?
Secretary Leavitt. In our SCHIP program, we provided States
with the flexibility of being able to design programs around
the needs of the recipients and it is a brilliant way to go
because it provides us the capacity to provide coverage to
more.
Ms. Capps. Let me ask you about another population. The
Blue Cross plan document does not cover admissions to non-
covered facilities such as nursing homes. The vast majority of
seniors in nursing homes as so-called optional beneficiaries.
How about the millions of individuals with disabilities in
elderly, in institutions? How would they manage or would this
be another exception to the private insurance plan?
Secretary Leavitt. Again, if you were to go back to SCHIP
it wouldn't be covering elderly, but we provided the option of
being able to design it. I believe that many States are now
viewing value in creating home and community care where they
can provide the coverage that the citizen wants, what the
recipient wants, in the place they want it as opposed to
dictating the fact that it will happen in a nursing home. And
if a State had that flexibility, they not only could cover them
in the way they wanted, meaning the person wanted to be served,
but they could also cover more of them.
Ms. Capps. Okay, but if a person is not using a benefit,
Medicaid isn't paying for it and how does this save money
unless you take benefits from people who are using it?
Secretary Leavitt. Again, I don't see us taking benefits
from people who are using them. I am suggesting that there are
large populations of those served by Medicaid who simply need
help buying insurance.
Ms. Capps. Okay.
Secretary Leavitt. And what we provide them with is the
same benefit we provide for someone who has a disability and
that is not, in my judgment, the best use of resources.
Ms. Capps. I want to switch to another topic, if I could,
just for my last few seconds. President Bush indicated in his
State of the Union address that his budget would be targeting
for elimination, and it did eliminate programs that are not
getting results, yet he has proposed a $38 million increase for
unproven abstinence only programs, sex education programs.
Recent evaluations of 11 different abstinence only programs
show that the programs had no lasting positive effect on
younger people's sexual behavior and may even result in riskier
behavior by teenagers. In 2001 a report released by the
National Campaign to Prevent Teen Pregnancy found no credible
studies of abstinence only programs showing any significant
impact on participants' initiation or frequency of sexual
activity and the National Academy of Science's Institute of
Medicine has criticized the investment of hundreds of millions
of dollars in unproven abstinence only programs as poor fiscal
and public health policy. So in a few seconds, could you
explain to me why the administration recommended that we
increase funding for this program that hasn't been proven
effective, but in fact may even put young people at risk?
Secretary Leavitt. Well, in the 2 seconds we have left, I
will simply say abstinence is 100 percent effective.
Ms. Capps. The programs I am talking about. Everyone agrees
with that.
Mr. Deal [presiding]. Gentlelady's time has expired. I
recognize Mr. Whitfield for 6 minutes.
Mr. Whitfield. Thank you, Mr. Chairman, and Mr. Secretary,
thank you for being with us this afternoon. It is my
understanding that Utah has one of the most comprehensive and
technologically advanced prescription drug monitoring programs
in the country and about 20 States that have these programs,
and I have even been told, I don't know if it is true or not,
but that you were Governor when Utah created their monitoring
program and as you probably know, in the last Congress, we
passed legislation on the House side establishing a
prescription drug monitoring program with the support of Frank
Leone, Charlie Norwood, Ted Strickland and others, and Senator
Sessions had introduced it on the Senate side and I do notice
that President Bush, in his budget, has provided some funding
for monitoring programs.
Our legislation would have placed this with the Department
of Health and Human Services and of course, the goal was simply
to enable all of the States to have a program, meet certain
basic requirements, establish a stable funding stream and
allows the sharing of information across State lines. And of
course, Secretary Thompson was quite supportive of our efforts
and I would just like to know, with your background
particularly as it relates to Utah, would you be supportive of
this type of a program, trying to Federalize it and encourage
States to establish these programs?
Secretary Leavitt. Mr. Whitfield, earlier I said and I will
repeat for emphasis, when I wake up in the morning, the first
words that come to my mind are health information technology
because I believe it weaves together most of the subjects we
have been talking about today. The capacity for FDA to monitor
drugs that have been approved for market, literally tens of
millions of data points that can be gathered in anonymous ways
to be able to provide the FDA with powerful insights into the
impact of drugs, the worldwide web being able to then put that
information into the hands of those who need it; consumers,
physician, pharmacists. The ability, then, for electronic
health records to where we are eliminating the inefficiencies
on purchasing, allowing us more dollars to be able to provide
benefits for health coverage like our colleagues have been
suggesting are so badly needed. All of this weaves together.
Now, it is going to require, in my judgment, a large
national collaboration. There are very few ways to get to the
kind of national system, not Federal, national system, where we
are essentially creating standards by which people begin to
operate and provide additional support for. It is well within
our grasp and for that reason the President has proposed $125
million as a means. Beyond that, other agencies of Federal
Government, State governments, private providers all need to
pull together. The words are health IT. It is the secret to
many of the things that we have been talking about today.
Mr. Whitfield. Well, thank you. You know, Mr. Norwood and I
plan to reintroduce this legislation and the purpose, of
course, is to provide that impetus with the States to create
programs because the first program is, I think, around 40 years
old and yet, we still only have 20 States that have good
programs, so----
Secretary Leavitt. I look forward to working with you on
this. You have my full enthusiasm and complete interest.
Mr. Whitfield. Thank you so much. A second issue I want to
discuss just briefly, we all recognize we have a very complex
health care system and it is fragmented and I know that
President Bush is totally supportive of these community health
centers and since he has been president, he has provided more
money each year in his budget and I know that these are
effective centers. I have one in my district and everyone sings
its praises, but I am just curious, is there anyone at Health
and Human Services looking at how these community health
centers complement or work with the Medicaid program, the
Medicare program, because all of a sudden we have got these
health centers and anyone is eligible, they can go and there is
a sliding scale for what you pay for services, but is there any
long-range plan coordinating the service that they provide with
the existing government health programs?
Secretary Leavitt. My level of experience at the department
is still new enough that I cannot respond properly to date. I
will be happy to respond in writing, but I would like to tell
you that the promise of community health centers, I believe, we
are only beginning to see. In my own State, we created a small
network of these and in essence, then, created a little HMO, if
you will, and provided a health card we were able to provide
basic, very basic, but basic health insurance to 18,000 people
in our State who didn't have it before with money we were able
to take from savings in other areas. Using that community
network, we were able to provide basic quality care,
preventative care and others; not as good of coverage as we
would like, but we linked it together with some other things.
There are lots of imaginative ways to use these and they need
to be coordinated closely with Medicaid and Medicare.
Mr. Whitfield. Well, I mean, I agree with you and someone
even made the comment and not seriously, because no one has
even looked at it, but someone made the comment we might be
better off as a nation to take the dollars being spent in the
Medicaid program and establish community health centers around
the country, so----
Secretary Leavitt. 6.1 million people will be served this
year. And by the way, we don't count among those who have
insurance, because they don't have insurance. However, they are
getting care and it is increasingly higher quality.
Mr. Whitfield. Absolutely. Thank you.
Mr. Deal. Gentleman's time has expired. Chair recognizes
Mr. Allen for 5 minutes.
Mr. Allen. Thank you, Mr. Chairman. Mr. Secretary, the $45
billion in reductions in Medicaid spending works out to about
$4.5 billion a year over 10 years. But there is another number
that is worth keeping in mind and that is $89 billion. That is
the amount in tax cuts that people earning over $350,000 a year
will keep in 2005 alone. The administration budget has $23
billion in additional tax cuts over 5 years proposed, which is
on an annual basis, about what the reductions in the Medicaid
program are. I think those numbers speak more loudly and
clearly than you or I can about this administration's
priorities. It is why we feel that putting more of the burden
on State taxpayers and on Medicaid beneficiaries is really the
wrong way to go.
I am prepared to concede to you that there certainly are
circumstances where additional flexibility could yield some
savings at the State level; not in every State, not at every
time, but clearly, I think you are right about that, but I
believe, unless you tell me differently, that the $45 billion
figure was a budget figure. It wasn't based on any sort of
calculation of what the savings could be in all 50 States over
the next 10 years and I think, in your testimony before the
Senate, you recognized that frankly, there will be lower
benefits. Yesterday you told Senator Bingaman that the States
need help coping with Medicaid costs now, I agree with that.
But you also said that States should be able to cover more
people in optional populations with the same amount of money by
offering a less costly set of benefits. To me, that means that
some people will get fewer benefits than they have today under
Medicaid under your proposal. Isn't that right?
Secretary Leavitt. It is possible.
Mr. Allen. You also said yesterday that if we don't allow
States to give people fewer benefits, many will, and I quote,
``many will simply lose coverage.'' Is that true, as well?
Secretary Leavitt. Well, that is certainly true. I want to
make sure I am understood. We have a mandatory set of groups
that we have made a commitment with an entitlement to, we all
know who they are, and there are no block grants in the
President's budget, there are no involuntary caps. We recognize
the need to keep trust and faith with those groups. There are
other groups who are covered by Medicaid that basically need
insurance. They need help buying insurance. And the question is
do we treat both of those groups precisely the same or do we
recognize that given the fact that they need help buying
insurance that we could provide more help to more people if we
treated them in a way that was consistent with their needs, not
with the same level of care as those who need for long-term
care, or those who have needs for additional services beyond
which virtually anyone else in society gets?
Mr. Allen. In theory, you know, I understand what you are
saying in theory, but the bottom line impact is going to be--I
mean, for example, I understand that it is something like 60 to
70 percent of Medicaid dollars go to nursing homes, or close to
that. And I have been through nursing homes in Maine and the
people who are in nursing homes in Maine today, as opposed to
20 years ago, really need to be in nursing homes. That is a
terribly disabled population. And it seems to me that when you
start doing this budget from the top down, when you make a
decision at other levels of the administration, that we are
going to do enormous tax cuts for people earning over $350,000
a year on the one end, but we are going to start reducing the
amount of money flowing to the States. We say we are going to
provide--you say you are going to provide flexibility, that is
a little bit of help, but the bottom line is, as you said
yesterday, that somebody, some people are clearly going to have
either less coverage or no coverage. And that, it seems to me,
is the bottom line.
Secretary Leavitt. I would invite you to just look a little
south of you to two States, New Hampshire and Vermont. Vermont
has adopted a waiver that allows them to use home and community
care with their elderly citizens. New Hampshire has chosen not
to. There are dramatic differences in the number of people that
can be covered in Vermont and the way in which they are
covered. As I recall, the number is roughly 50 percent of those
in Vermont who are of that age or in nursing homes, and it is
roughly 85 percent in New Hampshire. And it costs roughly twice
as much. The net effect is that two States, both your
neighbors, next door to one another, one pays twice as much to
care and they are able to care for roughly half as many people.
Mr. Allen. And just to conclude, Mr. Secretary, I am not
contesting that point. I do recognize there are differences in
States, I do recognize there are efficiencies to be had. My
only point is the $45 billion is an arbitrary number, not
related to what you think can be achieved by efficiencies in
the 50 States, and we are going to have to see how that works
out. But the bottom line is some people are going to be worse
off, they have to be.
Secretary Leavitt. This is not a debate over whether we
should pay, it is a question of who should pay.
Mr. Deal. Gentleman's time is expired. Chair recognizes Mr.
Stearns for 5 minutes.
Mr. Stearns. Thank you, Mr. Chairman, and welcome, welcome.
You have been through quite a bit here. I have got two
questions and I don't think they have been asked yet. The
President's budget seemed to suggest a need to recalibrate
peoples' expectation regarding Medicaid, its role and its
limitations and I remember when we had the welfare debate here
and we came up with plans and nobody thought we would pass it,
but we did try to say that we wanted to have some personal
responsibility and we had some limitations in it. And I guess
after reaching this consensus and finally after it was vetoed 2
or 3 times by the President, we finally passed it, and I guess
I would say to you and ask your best personal opinion whether
there is a way to bring to the Medicaid program this personal
responsibility and a sense of ownership of what they have so
that they would be more mindful, not only of the cost, but also
how to improve health maintenance for themselves?
Secretary Leavitt. I believe we can do for Medicaid what we
did for welfare.
Mr. Stearns. Good. That is good to hear. That is good.
Governor Bush came up here and talked about some of the
problems he had and he and other Governors were working on this
Cash and Counseling program they had. You are familiar with it.
It provided beneficiaries with the flexibility and self-design
over their personal care. It was conducted in Florida, Arkansas
and New Jersey and I understand now it is expanding to 11
States that I have here, in a map. It has been demonstrated to
have dramatic and satisfactory satisfaction with both the
people and the savings of money. It improved the health
outcomes and cost no more than traditional delivery systems and
I think Governor Bush is to be commended for doing this, and
the other Governors. I think the Robert Wood Foundation,
Johnson, the Robert Wood--Johnson Foundation has been a partner
in this and we have got in the prescription drug bill a Cash
and Counseling demonstration for Medicare. And I was hoping
that you would look at that and perhaps give me an idea of what
you think, as a legislator, I could do to help you in
developing both Cash and Counseling for Medicaid and for
Medicare to bring in more personal responsibility.
Secretary Leavitt. Thank you. I look forward to that.
Mr. Stearns. Okay. That is it. Thank you, Mr. Chairman.
Mr. Deal. Thank you, gentleman. Ms. Schakowsky is
recognized for 5 minutes.
Ms. Schakowsky. Thank you, Mr. Secretary. I appreciate your
patience and staying to answer these questions and clearly,
this will be an ongoing dialog because so many of these things
can't be dealt with just today and are so critical. I want to
focus in on one question, as I said, about this issue of the
mandatory populations, but I just want to tell you that I would
love to be part of the conversation, too, about stem cell
research, about drug safety. I have a friend who had some
anxiety, who ended up committing suicide after taking anti-
depressants and I know we have dealt with some of that with
young people, but her family is convinced that that drug had
something to do with it. The whole issue of information about
trials and testing and public access to those.
I am concerned about some of the things that you said. I
know that they have been brought up in many different ways and
by different members, but you gave a speech before the World
Healthcare Congress in early February where you said, I will
quote, ``The optional populations on the other hand, may not
need such a comprehensive solution. Most of them are healthy
people who just need help paying for health insurance,'' which
is what you said, but I wanted to ask some additional questions
about so-called optional beneficiaries and find out which
benefits you think they should not receive, if that is the
route that States are forced to go.
Let me give you a couple of examples that I have thought
of, of real-life people. A 63-year-old widow who has multiple
conditions; fibrosis of the lungs, rheumatoid arthritis, high
blood pressure, whose income is $700 a month, which is just too
much to qualify for SSI and become mandatory eligible for
Medicaid because her income is low enough in her State to
qualify for Medicaid home and community-based care. So which
services in the Medicaid benefit package should be eliminated
for her, you know, physician services, hospital services,
prescription drugs? And let me just run through them and then
you can answer.
Another example might be an 85-year-old with Alzheimer's
with a monthly income of $1500, which is about 200 percent of
poverty, qualifies for nursing home care. Under the law, she is
allowed, as our other Medicaid--to keep $30 a month for
personal needs, something I hear a lot about from people
because it is such a low dollar number. But the remainder of
her income goes to the nursing home to support her care, but
even that isn't enough to keep her off Medicaid as the nursing
home care costs more than her income. So which services in the
Medicaid benefits package do you think should be eliminated for
her and as my colleague from Maine said, increasingly, people
in nursing homes are very, very sick.
No. 3, a 7-year-old boy with autism living with his parents
whose income is greater than $1310 a month, 100 percent of
poverty for a family of three. He qualifies for Medicaid
through a home and community-based care waiver. Which services
in the Medicaid package do you think should be eliminated for
him? Physician services, preventive care, hospital care? You
know, again, in theory, as my colleague, Mr. Allen said, there
is a lot of things that can be said about cutting costs, but
when you face these individuals, where do you start cutting?
Secretary Leavitt. Let me answer that by offering another
couple. A 58-year-old man and a 56-year-old woman who are
married; she works as a waitress, he works as a mechanic. They
work two jobs. Together, they make about $24,000 or $28,000 a
year just above the poverty line, and they have nothing. I
guess the question I would have, all of those people that you
have identified to me sound like people who need not just
insurance, but they need services and I don't propose anything
that would distract from the States' ability to do it, but what
about this couple who doesn't have anything and the States
would like not only to be able to provide coverage to the
people you have described, but also to these, and they believe
they have the capacity, if they can give the people that you
have talked about the same benefits that you and I get, or the
same benefits that the biggest HMO in the State provides and
then they could provide basic coverage to this couple, which is
better?
Ms. Schakowsky. Well, it is just that when you--overall,
when you see that there are going to be cuts in Medicaid, I
think the notion that we should--you said at some other point
that there are, you know, why give Cadillacs to some when you
could give a Chevy to others? I mean, I guess when I talk about
these people, we are not talking about Cadillac services. Why
should we take from some poor to give to other poor when there,
for example, are billions of dollars in tax cuts for the
wealthiest? I agree with your description of that family, but
budgets are a question of priorities and I think they are
misplaced here.
Secretary Leavitt. You know, it has never occurred to me--I
say never occurred to me--it has never seemed right to me that
we would say we are taking from one poor person to give to
another. We are managing the resources of taxpayers to try to
help the most possible people. We are not taking money from
poor to give to other poor; we are taking taxpayers' dollars
and saying how can we help the most people in the best possible
way?
Mr. Deal. The gentlelady's time has expired. Dr. Norwood is
recognized for 5 minutes.
Mr. Norwood. Thank you, Mr. Chairman. Governor, welcome.
Secretary Leavitt. Thank you.
Mr. Norwood. I am pleased you are here. Some people call
this the greatest committee on Capitol Hill and I agree with
those some people. And we are pleased to work with you. I am
excited about your new posting and I will bet you are, too.
Secretary Leavitt. I am.
Mr. Norwood. You have got some possibilities here to do
some really great things in the next 4 years and we want to be
part of working with you on that.
Secretary Leavitt. That pleases me.
Mr. Norwood. Now, I have a lot of questions and they are
detailed and I don't want----
Mr. Deal. I am going to give you an extra minute. You are
entitled to 6 instead of 5.
Mr. Norwood. Thank you so much, Mr. Chairman. The questions
I need answered in writing. Frankly, I don't want a 5-minute
answer, I want some thoughtful answers and I think it is best
done in writing, so I will take my little few minutes and try
to raise your level of curiosity to an issue that is very
important to me. I want to talk to you about this on behalf of
Congressman Simpson and Congressman Linder and Chairman Don
Young. Before I do, I want to make sure I got it right, so you
correct me if I am wrong, but the Public Health Service Corps
is under your jurisdiction?
Secretary Leavitt. True.
Mr. Norwood. And within that, we have the Indian Health
Service that is under your jurisdiction?
Secretary Leavitt. True.
Mr. Norwood. So you are the man. It stops with you. That is
what I wanted to be sure of. Now, I have a great concern with
the Indian Health Service and I hope you can help me and I hope
we can sit down and talk through this at some time, but the
dental--I mean, the Indian Health Service has approved the use
of dental health aids in Alaska. Now, I have looked high and
low and nobody in America knows what that is. There is no such
title. It is not taught or trained in any institution of higher
learning that I am aware of. My problem is whatever a dental
health aid is, the Indian Health Service is going to allow them
to perform highly skilled procedures without sufficient
training. The limited amount of training that they are supposed
to receive would not let them qualify to be licensed in any
State in America.
Now, an important first rule for me is do no harm, and I am
scared of this thing and so is Congressman Young about his
constituents. I want to think, and I believe it to be true,
that the services under your authority will have respect for
State law and the traditional role of States in determining
appropriate scope of practice. I don't think it is a good idea
at all for the Indian Health Service to bring in from out-of-
country training, under-trained, unlicensed providers into
Alaska that are clearly acting outside the licensure
requirements of the State of Alaska, in fact, of any State in
America.
Now, I know you have been here just a few weeks; 30, 40
days, something like that. So I don't expect to get detailed
answers right here. I hope you and I can have a grown-up
discussion about it at some time, but three little quick
queries. Does HHS take any steps to ensure that providers that
receive Federal dollars are properly licensed in the States
they provide care?
Second question. Do you agree with the proposition that
States are the appropriate entities, and I am so glad you are a
former Governor, to license health care professionals?
And third, if time permits, maybe you could give us just a
comment on the general principle of respecting State Scope of
Practice Laws and maybe we can get detailed at another time.
Secretary Leavitt. Question one.
Mr. Norwood. Yes, sir.
Secretary Leavitt. I don't know.
Mr. Norwood. Okay. It is all right.
Secretary Leavitt. Question two. Yes, I believe that the
States are the appropriate way.
Mr. Norwood. I hope.
Secretary Leavitt. Question three. I believe, though I am
not sure; the last time I testified in this room, it was on
federalism.
Mr. Norwood. No wonder I want you to be the new Secretary.
If you would, perhaps maybe your staff and we could just get
together to talk about this. We are very greatly concerned that
we are going to set some precedents that is going to hurt our
country in terms of dental health care and it needs to be
nipped in the bud. I do know how difficult it is, it has got to
be, to deliver dental care in Alaska. I mean, half the year you
can't even get out there. But many people are willing to try to
help solve that problem in the private industry, but we don't
want the system we have set in place to protect patients in the
Nation to be torn apart in the process of trying to treat the
natives. We want to help, we will help, but you and I need to
get together sometime and talk about this.
Secretary Leavitt. Congressman, this is a subject that I
think does warrant a lot of discussion. I reference the fact
that I was to here to talk, as a Governor, about federalism. I
believe we are in a period of history where political
boundaries are not as relevant in a practical way as they might
have been 50 or 100 years ago.
Mr. Norwood. Understood.
Secretary Leavitt. I mentioned the fact that when I wake up
in the morning and I am thinking health IT, what that means is
we have the capacity to move big blocks of information
instantly across not just the States or the country, but the
planet and that it is requiring us to think through, in a new
way, ways to provide the protections that come from State
licensing and the efficiencies that a global economy requires.
I believe this conversation is a very important one and I look
forward to having the conversation with you. I think the
principle is that the Federal Government establishes standards,
but we have to leave to the local communities the capacity to
have local strategies.
Mr. Norwood. But you are not going to help the government
establish standards that dumb-down care for patients, I know.
Secretary Leavitt. True.
Mr. Norwood. And they do that sometimes in their effort to
say we are trying to help everybody. But we must not do harm.
There are things that can be done, I agree, but this thing goes
too far and I look forward to working with you on it.
Secretary Leavitt. Thank you, sir.
Mr. Norwood. Mr. Chairman, I know you are not going to
believe this, but I am going to give you back my little bit of
time.
Mr. Deal. It is already gone. We appreciate the thought,
anyway. Ms. Baldwin is recognized for 6 minutes.
Ms. Baldwin. Thank you, Mr. Chairman. Welcome, Mr.
Secretary. I note that your predecessor and his predecessor
before both hailed from Madison, Wisconsin, my district,
immediately before occupying their position as Secretary of DH
and HS, but welcome, nonetheless.
Secretary Leavitt. Thank you very much.
Ms. Baldwin. I wanted to follow up on a question that has
been alluded to but not specifically asked by previous
speakers, and that regards embryonic stem cell research. And as
we all know, in August 2001, President Bush banned Federal
funding for research on new embryonic stem cell lines that were
created after the date of his announcement. President Bush's
policy, in my opinion, has severely limited the number of stem
cell lines available for research and we know, as scientists,
including those in my district, believe that this embryonic
stem cell research could lead to incredible breakthroughs in
treatment and knowledge of diseases, conditions such as
Alzheimer's, Parkinson's, cancer, diabetes, spinal cord
injuries and more. I, for one, believe that we should lift the
ban on funding, Federal funding for new stem cell lines,
embryonic stem cell lines, but I wonder whether you plan to
review or revisit this policy. If so, I would like to hear
about your plans in that regard and let you know that many
members both side of the aisle would be very happy to work with
you to review that policy.
Secretary Leavitt. Representative, I share in the hope and
optimism for stem cell research. I would like to point out that
the President's decision empowered dramatic increases in the
amount of stem cell research that occurred. He made what he
believes, and I believe, as well, to be a decision, a moral
decision on embryonic stem cells. I have spoken with him about
it. I understand the reason he made the decision. I understand
why he believes it is a moral decision. I concur with him and I
will support him in that decision.
Ms. Baldwin. So no, you do not plan on reviewing or
revisiting that during your tenure?
Secretary Leavitt. I will be supporting the President's
position.
Ms. Baldwin. Okay. You have said, in your testimony, that
you were hoping for some questions on the Medicare prescription
drug rollout next year and I have a couple that certainly
emanate from my district and the concerns that have been raised
about that rollout. Specifically, our State has a Pharmacy Plus
waiver and we have had a great deal of success in making
prescription drugs more affordable for especially low-income
senior citizens through what we have called our SeniorCare
program. And it appears, as we see some of the new regulations
with the Medicare Modernization Act that it may be the intent
to rapidly extinguish the four Pharmacy Plus waivers that are
in existence. This would have a devastating effect on people
that I represent. We have calculated sort of side-by-side how
they would be served under SeniorCare versus how they would be
served under the Medicare prescription drug benefit. They are
much better off if they remain in the SeniorCare program. What
assurances can you give to Wisconsin seniors that the
administration will not force Wisconsin to terminate its
SeniorCare program as a result of the new regulations that deal
with budget neutrality renegotiations of these waivers?
Secretary Leavitt. CMS is going to work very closely with
States who have these waivers to enable them to provide
comparable drug coverage to their beneficiaries. In fact, our
objective is to have our systems be able to work with them so
they not only are compatible, but they work hand-in-hand.
Ms. Baldwin. And as you have more specifics, I certainly
want to keep in touch with this because it is something that
has been a vital lifeline for our seniors in Wisconsin. Lastly,
specifically dealing with dual eligibles, those individuals who
are both on Medicare and Medicaid, I am wondering if you can
identify specific measures that CMS will be taking to ensure
that the transition for dual eligibles as they go from Medicaid
to this Medicare prescription drug benefit commences goes as
smoothly as possible to avoid any disruptions in access to
essential medications. Especially we are concerned about people
with severe mental illness. In the case of a dual eligible, for
example, who is auto-assigned to a preferred drug plan that
does not cover the mental health medications that they are
currently taking. What sort of provisions or contingencies or
plans do you have in order to ensure that the beneficiary does
not have any uninterrupted coverage?
Secretary Leavitt. Representative, our first priority, of
course, is to assure that a decision is made on behalf of all
recipients and that no one is dropped from coverage because of
a lack of decision. We also recognize that there may be those
who will have special needs where one decision will be
measurably better than another and we intend to be imminently
flexible and work with them until we have--and very willing to
make changes to accommodate them. There is no question that
many people will need to make decisions quickly and that some
will not make the decisions. We are going to make a decision
and then work with them to make certain it is the right
decision.
Ms. Baldwin. Thank you. I yield back, Mr. Chair.
Mr. Deal. I thank you. Representative Wynn is recognized
for 5 minutes.
Mr. Wynn. Thank you, Mr. Chairman. Mr. Secretary, thank you
for your patience. On the subject of Medicare physician
payments, currently payments remain well below the rate of
inflation and cuts of 4 to 5 percent are predicted annually
between 2006 and 2013. In that time, the physician costs will
rise by 19 percent, the Medicare payments will fall by 31
percent. We are already seeing physicians leaving the Medicare
program. What actions are you going to take to prevent
physicians continuing to leave the program given the shortfall?
Secretary Leavitt. You have defined very carefully and
skillfully the dilemma and, frankly, the solution for us to
work together to come up with a solution. The Secretary needs
to be working with this committee to find a solution. I
recognize the dilemma. We have got to work together to find a
solution.
Mr. Wynn. Well, I appreciate that. I look forward to
working with you on that, but we are also going to have to have
some more money in the--similarly, on Medicaid, you are
proposing about $60 billion in cuts over 10 years and you have
acknowledged to my colleague, Tom Allen, that there is going to
be increased cost sharing and less benefits. You said that that
is likely to happen. Now, my question to you is won't this
result in an increase in uncompensated care? People with
insurance are going without care because they can't afford the
cost sharing responsibilities as the premiums go up. This has
got to be even worse for the poor. So my question, won't
uncompensated care go up? Two, won't this put an additional
burden on hospitals? And three, won't this drive up private
insurance, which means four, won't small businesses have a more
difficult time providing insurance?
Secretary Leavitt. Important that I am understood here. The
President has proposed three changes in Medicaid. One of them
is a reduction in the amount we pay for pharmaceuticals, not to
those receiving benefit, but to the companies we buy it from.
Mr. Wynn. If I can just jump in. Didn't you agree that
there would be a reduction of benefits? I am sure there are
some other features involved in the President's budget, but in
the interest of time, isn't it true that there would be a
reduction of benefits and increased cost sharing?
Secretary Leavitt. Not automatically. The States--I am
suggesting that there will be many people who will fall on the
system, just like you are saying, if they don't have coverage
and right now, the States are struggling to find ways to keep
the people insured who they have insured and they----
Mr. Wynn. And so the States are going to have less money,
isn't that true?
Secretary Leavitt. No. Well, the States----
Mr. Wynn. Well, a $60 billion cut over 10 years.
Secretary Leavitt. We made a deal with the States. The deal
is we will pay roughly 65 percent if they will pay 35. All we
want is for States to keep the deal.
Mr. Wynn. Does that result in a $60 billion cut over 10
years?
Secretary Leavitt. It means that States are going to have
to step up and pay their part of the deal and not----
Mr. Wynn. Will States have more people to cover?
Secretary Leavitt. I suspect that populations have, in
fact, been expanding, but an important----
Mr. Wynn. So you have more people to cover with less money.
Doesn't that, by definition, mean that there are going to be
lower benefits or higher deductible, the higher cost sharing by
people on the lower end of the economic spectrum?
Secretary Leavitt. Congressman, you have large groups of
people who are optional coverage groups now that are on the
verge of losing their coverage because States do not have the
flexibility to be able to find ways of covering them. What we
are proposing is to use methods that would allow the States to
manage those groups while keeping----
Mr. Wynn. But the bottom line is that the amount of money
the States will get will be less, so it seems to me that this
is worsening the problem.
Secretary Leavitt. This isn't a function of whether or not
the money goes into Medicaid, it is a question of who puts it
in.
Mr. Wynn. Okay.
Secretary Leavitt. There are many States who are meeting
their part----
Mr. Wynn. How will the States, given the fact that they are
currently strapped, how will they come up with their share of
the money? They will have to raise taxes, isn't that true?
Secretary Leavitt. It will be different in every State.
What we are asking is that they be given flexibility so that
they can manage the money that they are currently spending----
Mr. Wynn. More flexibility, but more people, isn't that
true?
Secretary Leavitt. Well, we would hope that they could
cover more people, yes.
Mr. Wynn. With less money.
Secretary Leavitt. And we believe it can be done with
flexibility. There are many States who come to the Secretary of
HHS and offer waiver requests and say we believe that given
flexibility we can not only continue to cover people that we
worry we won't be able to without this waiver----
Mr. Wynn. If you increase the cost sharing, which you have
indicated will happen, won't that result in more uncompensated
care as people are unable, as the poor are unable to meet those
obligations?
Secretary Leavitt. Congressman, our conversation is leaving
out one important fact and that is we are not talking about
less money going into Medicaid, we are talking about a 7
percent increase every year for 10 years that over the----
Mr. Wynn. I have been asking you about a $60 billion cut
over 10 years and each time you have acknowledged that that's
the cut.
Secretary Leavitt. No, I am acknowledging that over the
next 10 years we will spend $5 trillion. There will be more
money every year going in. What we are talking about is whether
or not the rate of growth is 7.6 percent or 7.4 percent.
Mr. Wynn. Okay. Well, we seem to be going around and around
and my time has expired. I yield my time. Thank you, Mr.
Secretary.
Mr. Deal. Mr. Inslee is recognized for 5 minutes.
Mr. Inslee. Thank you. Mr. Secretary, over to your right
here. My name is Jay Inslee from Seattle. Welcome to your new
post, wish you the best of luck. If you have any problems in
your job, just give me a call, because I was Region 10's
director for a while, so I solved all the problems at HHS.
There are a few that haven't been implemented yet.
Secretary Leavitt. I need your phone number.
Mr. Inslee. You give me a call and we can work--but one of
them is local, as many of our concerns are and I am from one of
the States that we are very visionary in increasing our SCHIP
eligibility some time ago, back in 1997 and was rewarded by the
Federal Government before your tenure with the penalty, if you
will, of not getting coverage for a significant number of our
young folks. And we hope that we will be able to work with you
in an effort to resolve that. We are not the only State, as you
know, there were punished for our being ahead of the curve a
little bit and being an early adopter of our increased
enrollment. I think you may have heard about our $2 billion
shortfall in Washington State. I know Washington State is not
alone in that regard. I hope that you can give us some
assistance in designing a way that will remove that getting hit
with a 2x4 financially because we were ahead of about 40 other
States in advancing the cause that you now seek to advance.
What can you do to help us in that regard?
Secretary Leavitt. I am uncertain, but I will look forward
to working with an experienced hand to try.
Mr. Inslee. I won't let you forget that. You know, it is
our job to extract promises from secretaries, so I will try to
hold you on that. It is a very serious issue because if we are
going to expand eligibility and you are making this commitment
to get these eligible but unenrolled people in, that is going
to exacerbate the problem, in a sense, which is increasing our
coverage, which is our goal, but causes additional financial
stresses. So I will hope to talk with you again about this
issue, to find a way and--you know, before we move forward, I
hope we can look at this as a top priority first to remedy this
inequity for us and several other States. I hope to talk with
you about that.
Secretary Leavitt. I will look forward to that
conversation.
Mr. Inslee. Thanks. As far as reimbursement levels, is
there any thought being given to a more permanent fix to this?
We are seeing very significant lack of coverage in our State in
a variety--I know we are not alone. This is getting worse
rather than better. We have this tremendous technology that is
not available in parts of our State in no small measure because
these reimbursement rates--is your administration considering
any more permanent fix to this other than temporary stop-gap
measures to give us some hope in that regard?
Secretary Leavitt. I hear a lot about this. I have this
conversation with lots of Members of Congress. It is pretty
clear to me that we have got to work together to solve it.
There are those in Congress who believe the Secretary has
authority to do it. There are serious questions about that.
What I do believe is that we are going to have to work together
to find a solution. Not coming up with a solution is not an
option in my mind.
Mr. Inslee. Now, let me ask you a difficult question. Those
were two softballs. Let me ask you a difficult one now. In
listening to the budget proposals the administration, in your
agency, they seem, by and large, except maybe enrollment, the
effort to increase enrollment for eligible SCHIP kids, which we
applaud--other than that, they pretty much seem, to me, budget-
driven. We have budget issues; we are going to take policy
issues to try to close those holes and those are driven by
three things; our economic, sort of, recession for a period of
time; the war/wars that we are now involved in; and the tax
cuts, and one can argue about the percentage contribution to
those. At what point would you discuss with the President the
necessity of reviewing his revenue position in order to
maintain your ability to fulfill your responsibilities? And
maybe it is a little early in your tenure to ask you a hard
question like that, but I hope you will think about it.
Secretary Leavitt. Great question and one I wish I had more
than 37 seconds to answer, but I will tell you, the President
gave me a direct charge and it was to help Americans to live
longer and to live healthier and to do it in a way that will
help us maintain our economic competitiveness. Now, I believe
that is an important charge and I think the key to it--and he
also put into this budget $125 billion over 10 years to allow
12 to 14 million people who don't have health insurance to get
it, and $125 million to begin to connect the Nation together
with an IT system that will transform our health system. Those
are big visionary objectives that have to be accomplished in
order for me to meet my mission and I am delighted for a chance
to work with an experienced hand at this problem.
Mr. Inslee. Thank you. Good luck.
Secretary Leavitt. Thank you.
Mr. Inslee. Thank you, Mr. Chair.
Mr. Deal. Thank you, gentleman. The Chair has three
requests for documents to be added to the record. One is a
letter from CBO to Chairman Barton dated February 16 of this
year. The second is a report from the Office of Actuary of
February 11, 2005, and the third is a letter from Ranking
Member Dingell dated February 15 to Secretary Leavitt. Without
objection, they are admitted to the record.
The Chair would recognize Mr. Burgess for an inquiry or
request.
Mr. Burgess. Thank you, Mr. Chairman. Mr. Secretary, if I
could, and I know the hour is late and I will ask this and it
is certainly okay to respond in writing, but I will have my
office get--there has been several questions the last few
minutes about Medicare reimbursement rates for physicians and
it always brings up the question of balanced billing and what
is going to happen with the STR or the MedPack formula, so let
me get a question in writing to you, if I could, about that
issue. And then finally, I would just ask, there has been some
community health centers and I am relatively new here. This is
the start of my second term. It seems to me that there are
enormous barriers to entry for community health centers,
getting one of those up and running and I would very much
welcome talking with someone on your staff with my staff and
myself about how to step-by-step go through that process. We
have got 127,000 poor residents in Tarrant County who
desperately need that type of facility, so I would----
Secretary Leavitt. That conversation can take place.
Mr. Burgess. Thank you.
Secretary Leavitt. Thank you.
Mr. Deal. I thank the members who are still here for
staying and I thank the Secretary for his patience and for
being with us today and we look forward to seeing you in the
future and good luck on your job.
Secretary Leavitt. Thank you.
Mr. Deal. This hearing is adjourned.
[Whereupon, at 4:33 p.m., the committee was adjourned.]
[The Department of Health and Human Services failed to
respond to questions for the record.]