[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]

REVIEWING THE PRESIDENT'S FISCAL YEAR 2013
BUDGET PROPOSAL FOR THE U.S. DEPARTMENT
OF HEALTH AND HUMAN SERVICES

=======================================================================

HEARING

before the

COMMITTEE ON EDUCATION
AND THE WORKFORCE
U.S. HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

SECOND SESSION

__________

HEARING HELD IN WASHINGTON, DC, APRIL 26, 2012

__________

Serial No. 112-60

__________

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COMMITTEE ON EDUCATION AND THE WORKFORCE

JOHN KLINE, Minnesota, Chairman

Thomas E. Petri, Wisconsin George Miller, California,
Howard P. ``Buck'' McKeon, Senior Democratic Member
California Dale E. Kildee, Michigan
Judy Biggert, Illinois Robert E. Andrews, New Jersey
Todd Russell Platts, Pennsylvania Robert C. ``Bobby'' Scott,
Joe Wilson, South Carolina Virginia
Virginia Foxx, North Carolina Lynn C. Woolsey, California
Bob Goodlatte, Virginia Ruben Hinojosa, Texas
Duncan Hunter, California Carolyn McCarthy, New York
David P. Roe, Tennessee John F. Tierney, Massachusetts
Glenn Thompson, Pennsylvania Dennis J. Kucinich, Ohio
Tim Walberg, Michigan Rush D. Holt, New Jersey
Scott DesJarlais, Tennessee Susan A. Davis, California
Richard L. Hanna, New York Raul M. Grijalva, Arizona
Todd Rokita, Indiana Timothy H. Bishop, New York
Larry Bucshon, Indiana David Loebsack, Iowa
Trey Gowdy, South Carolina Mazie K. Hirono, Hawaii
Lou Barletta, Pennsylvania Jason Altmire, Pennsylvania
Kristi L. Noem, South Dakota Marcia L. Fudge, Ohio
Martha Roby, Alabama
Joseph J. Heck, Nevada
Dennis A. Ross, Florida
Mike Kelly, Pennsylvania

Barrett Karr, Staff Director
Jody Calemine, Minority Staff Director

C O N T E N T S

----------
Page

Hearing held on April 26, 2012................................... 1

Statement of Members:
Kline, Hon. John, Chairman, Committee on Education and the
Workforce.................................................. 1
Prepared statement of.................................... 3
Miller, Hon. George, senior Democratic member, Committee on
Education and the Workforce................................ 4
Prepared statement of.................................... 6

Statement of Witnesses:
Sebelius, Hon. Kathleen G., Secretary, U.S. Department of
Health and Human Services.................................. 8
Prepared statement of.................................... 9

Additional Submissions:
Barletta, Hon. Lou, a Representative in Congress from the
State of Pennsylvania, questions submitted for the record.. 70
Foxx, Hon. Virginia, a Representative in Congress from the
State of North Carolina:
Letter, dated March 6, 2012, from Congressman Boustany to
Secretary Sebelius..................................... 22
Questions submitted for the record....................... 68
Hinojosa, Hon. Ruben, a Representative in Congress from the
State of Texas, question submitted for the record.......... 73
Hunter, Hon. Duncan, a Representative in Congress from the
State of California, question submitted for the record..... 68
Chairman Kline:
Letter, dated March 8, 2012, to Secretary Sebelius from
U.S. Senator Tom Coburn, et al......................... 60
Letter, dated March 27, 2012, to Senator Coburn from
Assistant Secretary George H. Sheldon, HHS............. 62
Questions submitted for the record....................... 66
Mr. Miller, questions submitted for the record............... 73
Roby, Hon. Martha, a Representative in Congress from the
State of Alabama, questions submitted for the record....... 70
Roe, Hon. David P., a Representative in Congress from the
State of Tennessee, prepared statement of Peter Demos,
Demos' Restaurants......................................... 64
Secretary Sebelius, response to questions submitted for the
record..................................................... 74
Walberg, Hon. Tim, a Representative in Congress from the
State of Michigan, questions submitted for the record...... 69
Wilson, Hon. Joe, a Representative in Congress from the State
of South Carolina, question submitted for the record....... 68
Woolsey, Hon. Lynn C., a Representative in Congress from the
State of California:
Letter, dated March 26, 2012, from Assistant Secretary
Jim R. Esquea, HHS..................................... 32
Questions submitted for the record....................... 72

REVIEWING THE PRESIDENT'S
FISCAL YEAR 2013 BUDGET PROPOSAL
FOR THE U.S. DEPARTMENT OF
HEALTH AND HUMAN SERVICES

----------

Thursday, April 26, 2012

U.S. House of Representatives

Committee on Education and the Workforce

Washington, DC

----------

The committee met, pursuant to call, at 10:03 a.m., in room
2175, Rayburn House Office Building, Hon. John Kline [chairman
of the committee] presiding.
Present: Representatives Kline, Petri, McKeon, Biggert,
Wilson, Foxx, Roe, Walberg, DesJarlais, Hanna, Bucshon, Gowdy,
Barletta, Roby, Heck, Ross, Kelly, Miller, Kildee, Andrews,
Scott, Woolsey, Hinojosa, McCarthy, Tierney, Holt, Davis,
Altmire, and Fudge.
Staff present: Andrew Banducci, Professional Staff Member;
Katherine Bathgate, Deputy Press Secretary; James Bergeron,
Director of Education and Human Services Policy; Casey Buboltz,
Coalitions and Member Services Coordinator; Molly Conway,
Professional Staff Member; Cristin Datch, Professional Staff
Member; Lindsay Fryer, Professional Staff Member; Ed Gilroy,
Director of Workforce Policy; Benjamin Hoog, Legislative
Assistant; Ryan Kearney, Legislative Assistant; Brian Newell,
Deputy Communications Director; Krisann Pearce, General
Counsel; Molly McLaughlin Salmi, Deputy Director of Workforce
Policy; Mandy Schaumburg, Education and Human Services
Oversight Counsel; Dan Shorts, Legislative Assistant; Todd
Spangler, Senior Health Policy Advisor; Linda Stevens, Chief
Clerk/Assistant to the General Counsel; Alissa Strawcutter,
Deputy Clerk; Loren Sweatt, Senior Policy Advisor; Kate
Ahlgren, Minority Investigative Counsel; Aaron Albright,
Minority Communications Director for Labor; Tylease Alli,
Minority Clerk; Ruth Friedman, Minority Director of Education
Policy; Waverly Gordon, Minority Fellow, Labor; Brian Levin,
Minority New Media Press Assistant; Richard Miller, Minority
Senior Labor Policy Advisor; Megan O'Reilly, Minority General
Counsel; Julie Peller, Minority Deputy Staff Director; Michele
Varnhagen, Minority Chief Policy Advisor/Labor Policy Director;
and Daniel Weiss, Minority Special Assistant to the Ranking
Member.
Chairman Kline. A quorum being present, the committee will
come to order.
Good morning, Madam Secretary, thank you for being with us
today to discuss the policies and priorities of the Department
of Health and Human Services.
In his fiscal year 2013 budget, President Obama requests
$932 billion for the Department of Health and Human Services,
one of the largest allocations for any Federal agency. Nearly
$70 billion of this request is dedicated to various social
services programs, including Head Start and Community Services
block grants.
While they support families nationwide, such programs are
also vulnerable to waste and abuse of taxpayer resources. For
example, a 2010 report by the Government Accountability Office
revealed fraud in the Head Start program, including misleading
taxpayers about the number of children enrolled to inflate the
amount of Federal funds received.
Despite a lengthy delay, I am pleased the Administration
finally took steps to implement a 2007 law to strengthen Head
Start and protect taxpayer dollars by requiring the lowest
performing programs to re-compete for funding. I hope the
department will continue to improve the accountability of this
and other Social Services' programs within its jurisdiction.
While these programs and policies will be part of the
discussion today, health care is undoubtedly at the forefront
of the minds of many here. It is an issue continually raised by
our constituents and inextricably linked to the strength of our
economy. Congress continues to closely examine the 2010 health
care law and its unprecedented regulatory process. What we have
learned is deeply troubling. First, we have learned the law
will fall far short of the President's promise to lower health
care costs. By any basic standard, whether the premiums
families and employers pay, or the cost leveraged on taxpayers
to finance government programs, health care costs are going up.
The average cost of a family health insurance plan
increased 9 percent just last year. Charles Blahous, a public
trustee of Medicare and Social Security, recently stripped away
the budget gimmicks to reveal the law will add as much as $527
billion to the Federal deficit over the next decade.
Patti-Ann Kanterman, Chief Financial Officer of her family
owned business in Pennsylvania, recently told this committee
exactly what the law did not do, quote--``It did not reduce the
costs of insurance. It did not reduce uncertainty of offering
insurance.'' It is worthwhile to note the President's budget
requests $111 billion increase for health insurance subsidies,
perhaps an implicit recognition costs are accelerating faster
than even he imagined.
We have also learned the laws made it more difficult to
hire new workers. According to the Congressional Budget Office,
the law will cut 800,000 jobs from the nation's workforce. This
reflects the concerns raised by employers like Gail Johnson,
president of a small business that offers early childhood
education to families in Virginia. Ms. Johnson told the
committee the 2010 law will, quote--``slow or stall the growth
of small and mid-size businesses as they struggle to absorb its
new costs.''
Finally, we learned the President's pledge to the American
people that they could keep their current health care plan was
nothing more than empty rhetoric. The Administration has made
it virtually impossible for employers to maintain their
grandfathered exemption, which means employers must choose
between losing the ability to manage coverage on behalf of
their workers or complying with the law's myriad requirements
as costs skyrocket.
The consequences of this health care law extend beyond an
employer's bottom line. They have consequences for workers as
well. Brett Parker, with Bowlmor Lanes in New York City, has
testified his kitchen staff will have to accept part-time hours
due to the law's employer mandate. Other workers confront
similar changes, including lower wages and loss of coverage as
employers grapple with the law's regulations and mandates.
Pennsylvania employer Will Knetch echoed the concerns of
many when he said the law provides so many unknowns for the
business community, it is scary. With 13 million searching for
work, our nation simply cannot afford policies that create
uncertainty and fear. Folks like Gail Johnson, Brett Parker,
Patt-Ann Kanterman, these are America's job creators and their
personal experiences reveal the difficult reality now facing
countless employers and workers.
Madam Secretary, we realize your job is to administer
Federal law to the best of your ability; however, Congress also
has a responsibility to protect the best interests of the
American people. Toward that end, we will continue to conduct
aggressive oversight of the law and the related regulatory
actions taken by the Administration. As such, effective
oversight requires the timely cooperation of the
Administration.
It was disappointing to receive, just last week, answers to
questions this committee asked 10 months ago. Adding insult to
injury, the responses you provided are out of date and largely
irrelevant to the current debate. If it takes this long for the
Federal bureaucracy to answer basic questions, it is hard to
believe it can effectively run our nation's health care system.
I hope you can provide an explanation for the delay and commit
to doing better in the future.
With that, I will now recognize my distinguished colleague,
George Miller, the senior democratic member of the committee,
for his opening remarks.
[The statement of Chairman Kline follows:]

Prepared Statement of Hon. John Kline, Chairman, Committee on Education
and the Workforce

In his Fiscal Year 2013 budget, President Obama requests $932
billion for the Department of Health and Human Services, one of the
largest allocations for any federal agency. Nearly $70 billion of this
request is dedicated to various social services programs, including
Head Start and Community Services Block Grants.
While they support families nationwide, such programs are also
vulnerable to waste and abuse of taxpayer resources. For example, a
2010 report by the Government Accountability Office revealed fraud in
the Head Start program, including misleading taxpayers about the number
of children enrolled to inflate the amount of federal funds received.
Despite a lengthy delay, I am pleased the administration finally took
steps to implement a 2007 law to strengthen Head Start and protect
taxpayer dollars by requiring the lowest performing programs to re-
compete for funding. I hope the department will continue to improve the
accountability of this and other social services programs within its
jurisdiction.
While these programs and policies will be a part of the discussion,
health care is undoubtedly at the forefront of the minds of many here
today. It is an issue continually raised by our constituents and
inextricably linked to the strength of our economy. Congress continues
to closely examine the 2010 health care law and its unprecedented
regulatory process. What we have learned is deeply troubling.
First, we have learned the law will fall far short of the
president's promise to lower health care costs. By any basic standard--
whether the premiums families and employers pay or the costs leveraged
on taxpayers to finance government programs--health care costs are
going up. The average cost of a family health insurance plan increased
9 percent just last year. Charles Blahous, a public trustee of Medicare
and Social Security, recently stripped away the budget gimmicks to
reveal the law will add as much as $527 billion to the federal deficit
over the next decade.
Patti-Ann Kanterman, chief financial officer of a family-owned
business in Pennsylvania recently told this committee exactly what the
law did not do: ``It did not reduce the cost of insurance; it did not
reduce uncertainty of offering insurance.'' It is worthwhile to note
the president's budget requests a $111 billion increase for health
insurance subsidies, perhaps an implicit recognition costs are
accelerating faster than even he imagined.
We have also learned the law has made it more difficult to hire new
workers. According to the Congressional Budget Office, the law will cut
800,000 jobs from the nation's workforce. This reflects the concerns
raised by employers like Gail Johnson, president of a small business
that offers early childhood education to families in Virginia. Ms.
Johnson told the committee the 2010 law will ``slow or stall the growth
of small and midsized businesses as [they] struggle to absorb its new
costs.''
Finally, we learned the president's pledge to the American people
that they could keep their current health care plan was nothing more
than empty rhetoric. The administration has made it virtually
impossible for employers to maintain their grandfathered exemption,
which means employers must choose between losing the ability to manage
coverage on behalf of their workers or complying with the law's myriad
requirements as costs skyrocket.
The consequences of this health care law extend beyond an
employer's bottom line; they have consequences for workers as well.
Brett Parker with Bowlmor Lanes in New York City has testified his
kitchen staff will have to accept part-time hours due to the law's
employer mandate. Other workers confront similar changes including
lower wages and loss of coverage as employers grapple with the law's
regulations and mandates. Pennsylvania employer Will Knetch echoed the
concerns of many when he said the law ``provides so many unknowns for
the business community; it is scary.''
With 13 million searching for work, our nation simply cannot afford
policies that create uncertainty and fear. Folks like Gail Johnson,
Brett Parker, Patti-Ann Kanterman--these are America's job creators,
and their personal experiences reveal the difficult reality now facing
countless employers and workers.
Madam Secretary, we realize your job is to administer federal law
to the best of your ability. However, Congress also has a
responsibility to protect the best interests of the American people.
Toward that end, we will continue to conduct aggressive oversight of
the law and the related regulatory actions taken by the administration.
As such, effective oversight requires the timely cooperation of the
administration. It was disappointing to receive just last week answers
to questions this committee asked 10 months ago. Adding insult to
injury, the responses you provided are out of date and largely
irrelevant to the current debate. If it takes this long for the federal
bureaucracy to answer basic questions, it's hard to believe it can
effectively run our nation's health care system.
I hope you can provide an explanation for the delay and commit to
doing better in the future.
______

Mr. Miller. Thank you, Mr. Chairman, and I join you in
welcoming Secretary Sebelius back before the committee.
From educating our youngest children at Head Start, to
ensuring seniors access to health care through Medicare, the
Department of Health and Human Services administers programs
that make our nation stronger and healthier. HHS is also
playing an essential role in implementing the Affordable Care
Act. Proper implementation of this historic reform is vitally
important. It has been 2 years since the Affordable Care Act
was signed into law and 2 more years before it will be fully
implemented.
We never said the change would be everything--that it would
change everything that is wrong with our health care system or
fix things that people--everything that people would like, or
as fast as they would like. But we know the Affordable Care Act
is already moving in the right direction. For decades, we
debated about what to do about rising health costs faced by
families, businesses and governments.
I would remind Members and my colleagues that they have all
been visited over the last decade of businesses, small and
large, international and American-based, of which, complained
about their dramatic rise in health care over that last decade.
We think the Affordable Care Act will, in the long-term, lower
those health care costs to businesses, families and to our
economy and it will put American families back in charge of
health care. But, for decades, we kicked the can down the road,
costs continued to rise for millions of Americans lost access
to the affordable coverage.
The billion dollar insurance industry held American
families hostage for too long. They denied coverage due to pre-
existing conditions and they rescinded coverage in the middle
of treatment. They forced families with stricken loved ones
into bankruptcy because those patients had reached their
previously unknown, lifetime coverage limit.
But that finally changed with reform. And now the early
successes of the law cannot be denied. The national trends are
positive. I am also encouraged that I have been hearing from
providers, insurers, patients and health systems in my state
and district. California is one of the most proactive states in
implementing the reform. The state has already activated its
exchanges, the Accountable Care Organizations are being
embraced by physician groups and insurers as a way to better
coordinate care, leading to healthier outcomes and lower
overall costs.
For example, Blue Shield of California announced in October
they would give out $20 million in grants to 18 California
hospital heath systems, clinics and physician groups to form
accountable care organizations, the incentives to reduce
unnecessary hospital readmissions and save California public
employees retirement system $15 million in reduced insurance
premiums. Across the country we have seen similar successes.
The Affordable Care Act is already working to put Medicare
on stronger financial footing. The law provides new tools to
combat fraud and abuse in the Medicare and Medicaid systems.
They have helped the government recover a record amount of
money, over $4 billion since last year, in fraudulent payments.
Additionally, the growth of Medicare costs have begun to
slow. The average Medicare advantage premium is lower this year
and the solvency of the Medicare Hospital Trust Fund has been
extended until 2024. This is exactly the opposite of what
opponents have predicted would happen. While there is more to
be done to secure Medicare in the long-term, the Affordable
Care Act has begun to show results--reforms should be allowed
to work.
Rather than ending Medicare guarantees, as my Republican
colleagues have voted to do repeatedly, we must work to
strengthen the program. Nor should we turn our backs on the
reforms that are already directing the benefits of millions of
Americans right now. Seniors are saving billions on
medications, working families are no longer just one illness
away from bankruptcy, because an insurance company drops
coverage due to an arbitrary limit.
Children with pre-existing conditions are no longer denied
coverage and more than two and one-half million young adults
who aren't offered coverage at work are now allowed to stay on
their parent's health plan. All of these reforms would
disappear if the law were repealed. Repeal means working
families going bankrupt because insurance companies end
coverage when they get cancer.
Repeal means sick children being denied coverage. Repeal
means young adults in jobs that don't offer health insurance,
losing access to their parent's coverage. The repeal means that
all other patient's rights set to go into law over the next 2
years would never happen, like completely ending the use of
pre-existing conditions to deny care or pricing Americans out
of coverage; like ensuring all Americans have access to quality
and affordable health insurance that is not dependent upon
whether your employer offers it or not.
Mr. Chairman, the Affordable Care Act is making a
difference. America has tried to pass meaningful health reform
for nearly a century but we couldn't make it happen until
President Obama and the previous Congress made it a priority
and got it done. Now is not the time to reverse course and go
back to the days when the insurance companies were in charge.
Our nation's businesses can't afford it, families can't afford
it and our government can't afford it.
Once again, Secretary Sebelius, thank you very much for
making yourself available to the committee this morning and I
look forward to your testimony.
[The statement of Mr. Miller follows:]

Prepared Statement of Hon. George Miller, Senior Democratic Member,
Committee on Education and the Workforce

Good morning Mr. Chairman. I join you in welcoming Secretary
Sebelius back to the committee.
From educating our youngest children in Head Start to ensuring
seniors' access to health care through Medicare, the Department of
Health and Human Services administers programs that make our nation
stronger and healthier.
HHS is also playing a central role in implementing the Affordable
Care Act. Proper implementation of this historic reform is vitally
important. It has been two years since the Affordable Care Act was
signed into law. And there are two more years to go before it is fully
implemented.
We never said we could change everything that's wrong with our
health care system, or fix things as fast as people would like. But we
know the Affordable Care Act is already moving us in the right
direction.
For decades, we debated what to do about rising health costs faced
by families, businesses and government. We debated how best to put
American families, instead of insurance companies, back in charge of
their health care.
But, for decades, we kicked the can down the road. Costs continued
to rise and millions of Americans lost access to affordable coverage.
The billion-dollar insurance industry held American families
hostage for too long. They denied coverage due to pre-existing
condition. They rescinded coverage in the middle of treatment. They
forced families with stricken loved ones into bankruptcy because those
patients had reached a previously unknown lifetime coverage limit.
But that finally changed with reform. And the early success of this
law cannot be denied.
The national trends are positive.
I am also encouraged with what I am hearing from providers,
insurers, patients and health systems in my state and district.
California is one of the most pro-active states in the country
implementing reform.
The state has already activated its exchange.
Accountable Care Organizations are being embraced by physician
groups and insurers as a way to better coordinate care, leading to
healthier outcomes at lower overall costs.
For example, Blue Shield of California announced in October that it
will give out $20 million in grants to 18 California hospitals, health
systems, clinics and physicians groups to form an Accountable Care
Organization.
And incentives to reduce unnecessary hospital readmissions saved
the California Public Employees Retirement System $15 million in
reduced insurance premiums.
Across the country we have seen similar successes.
The Affordable Care Act is already working to put Medicare on
stronger financial footing.
The law provides new tools to combat fraud and abuse in the
Medicare and Medicaid systems.
These have helped the government recover a record $4 billion last
year in fraudulent payments.
Additionally, the growth of Medicare costs has begun to slow. The
average Medicare Advantage premium is lower this year. And the solvency
of the Medicare hospital trust fund has been extended until 2024.
This is exactly the opposite of what opponents predicted would
happen.
While there is more to be done to secure Medicare for the long-
term, the Affordable Care Act has begun to show results. These reforms
should be allowed to work.
Rather than ending the Medicare guarantee as my Republican
colleagues have voted to do repeatedly, we must work to strengthen the
program.
Nor should we turn our backs on the reforms that are also directly
benefiting millions of Americans right now.
Seniors are saving billions on their medications.
Working families are no longer just one illness away from
bankruptcy because of an insurance company that drops coverage due to
an arbitrary limit.
Children with pre-existing conditions are no longer denied
coverage.
And more than 2.5 million young adults who aren't offered coverage
at work are now allowed to stay on their parents' health plan.
All of these reforms would disappear if the law were to be
repealed.
Repeal means working families going bankrupt because of cancer and
an insurance company that ends coverage.
Repeal means sick children being denied coverage.
Repeal means young adults, in jobs that don't offer health
insurance, losing access to their parents' coverage.
And repeal means that all the other patient rights set to go into
law over the next two years would never happen.
Like completely ending the use of preexisting conditions to deny
care or pricing Americans out of coverage. Like ensuring all Americans
have access to quality and affordable health insurance that is not
dependent on whether your employer offers it or not.
Mr. Chairman, the Affordable Care Act is already making a
difference.
America tried to pass meaningful health care reform for nearly a
century but we couldn't make it happen until President Obama and the
previous Congress made it a priority and got it done.
Now is not the time to reverse course and go back to the days where
insurance companies were in charge.
Our nation's businesses can't afford it. Families can't afford it.
And our government can't afford it.
Once again, thank you, Secretary Sebelius, for making yourself
available to the committee.
I look forward to your testimony.
______

Chairman Kline. I thank the gentleman.
Pursuant to Committee Rule 7(c), all committee members will
be permitted to submit written statements to be included in the
permanent hearing record and, without objection, the hearing
record will remain open for 14 days to allow statements,
questions for the record and other extraneous material
referenced during the hearing, to be submitted in the official
hearing record.
According to my script, it is now my time to introduce our
witness. I think this is, indeed, one of those cases where our
witness needs no introduction; everyone knows the Honorable
Kathleen Sebelius, the Secretary of Health and Human Services.
She has been before this committee before. We welcome her back
again.
I am also supposed to remind everybody of the lighting
system, which is there in front of you, Madam Secretary. It is
the old green, yellow and red light system. Please give your
testimony, in its entirety, of course. Everything will be
submitted to the record--your entire written testimony.
For my colleagues up here, however, once again, I will be
making every effort to hold us to the 5-minute rule so that all
members have a chance to engage in the discussion.
And, with that, Madam Secretary, you are recognized.

STATEMENT OF HON. KATHLEEN G. SEBELIUS, SECRETARY,
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES

Secretary Sebelius. Well, good morning, Chairman Kline and
Ranking Member Miller and members of the committee. And I want
to start by thanking you for the invitation to discuss the
President's 2013 Budget for the Department of Health and Human
Services.
Our budget helps to create an American economy built to
last by strengthening our nation's health care, supporting
research that will lead to tomorrow's cures, and promoting
opportunity for America's children and families, so everyone
has a fair shot to reach their full potential. It makes the
investments we need right now, while reducing the deficit in
the long-term, to make sure that programs that millions of
Americans rely on will be there for generations to come.
I look forward to answering your questions about the budget
but, first, I want to share a few highlights. Over the last 2
years, as Congressman Miller said, we have been working to
deliver the benefits of the Affordable Care Act to the American
people. Thanks to the law, more than 2.5 million additional
young Americans are already getting coverage through their
parent's health plans.
An estimated 32.5 million beneficiaries with Medicare have
taken advantage of the recommended preventive services without
co-pays or co-insurance. Small business owners are taking
advantage of tax breaks on their health care premiums that
allow them to expand the care and hire more employees. This
year we will build on that progress, continuing to support
states as they work to establish affordable insurance exchanges
by 2014.
Once these competitive marketplaces are in place, they will
ensure that all Americans have access to quality, affordable
health coverage. But we know that the lack of insurance is not
the only obstacle to care, so our budget also invests in our
health care workforce. The budget supports training more than
7,100 primary care providers and placing them where they are
needed most.
It also invests in America's network of community health
centers. The budget will help health centers provide access to
quality care for 21 million people, 300,000 patients more than
what could be served last year. The budget ensures that 21st
Century America will continue to lead the world in biomedical
research by maintaining funding for the National Institutes of
Health.
This budget also continues our Administration's commitment
to high-quality early education programs that put all of our
children on a path to school success and opportunity. Increased
funding for the 962,000 children in Head Start and the 1.5
million children in federally funded childcare assistance
program is not only an investment in higher test scores and
graduation rates, we know it leads to more productive adults,
stronger families and more secure communities.
And our investments also support critical reforms in both
Head Start and childcare programs to raise the bar on quality.
For example, this year, for the first time, we will require
Head Start programs that don't meet important quality
benchmarks to compete for funding. In order to make these vital
investments, the budget recognizes the need to set priorities,
make difficult trade-offs and ensure we use every dollar
wisely; that starts with continuing support for President
Obama's historic push to stamp out waste, fraud and abuse in
the health care system.
Over the last 3 years, every dollar we have put into health
care fraud and abuse control has returned more than $7.00. Last
year alone, those efforts recovered more than $4 billion. Our
budget builds on those efforts by giving law enforcement the
technology and data to spot perpetrators early and prevent
payments based on fraud from going out in the first place. The
budget makes smart investments where they will have the
greatest impact, helping to build a stronger, healthier and
more prosperous America for the future.
I want to, again, thank you, Mr. Chairman, for inviting me
here this morning and I look forward to our conversation.
[The statement of Secretary Sebelius follows:]

Prepared Statement of Hon. Kathleen G. Sebelius, Secretary,
U.S. Department of Health and Human Services

Chairman Kline, Ranking Member Miller, and Members of the
Committee, thank you for the invitation to discuss the President's FY
2013 Budget for the Department of Health and Human Services (HHS).
The Budget for the Department of Health and Human Services (HHS)
invests in health care, disease prevention, social services, and
scientific research. HHS makes investments where they will have the
greatest impact, build on the efforts of our partners, and lead to
meaningful gains in health and opportunity for the American people.
The President's fiscal year (FY) 2013 Budget for HHS includes a
reduction in discretionary funding for ongoing activities, and
legislative proposals that would save an estimated $350.2 billion over
ten years. The Budget totals $940.9 billion in outlays and proposes
$76.7 billion in discretionary budget authority. This funding will
enable HHS to: Strengthen Health Care; Support American Families;
Advance Scientific Knowledge and Innovation; Strengthen the Nation's
Health and Human Service Infrastructure and Workforce; Increase
Efficiency, Transparency, and Accountability of HHS Programs; and
Complete the Implementation of the Recovery Act.

Strengthen health care
Delivering benefits of the Affordable Care Act to the American
People: The Affordable Care Act expands access to affordable health
coverage to millions of Americans, increases consumer protections to
ensure individuals have coverage when they need it most, and slows
increases in health costs. Effective implementation of the Affordable
Care Act is central to the improved fiscal outlook and well-being of
the Nation. The Centers for Medicare & Medicaid Services (CMS) is
requesting an additional $1 billion in discretionary funding to
continue implementing the Affordable Care Act, including Affordable
Insurance Exchanges, and to help keep up with the growth in the
Medicare population.
Expand and Improve Health Insurance Coverage: Beginning in 2014,
Affordable Insurance Exchanges will provide improved access to
insurance coverage for millions of Americans. Exchanges will make
purchasing private health insurance easier by providing eligible
individuals and small businesses with one-stop-shopping where they can
compare benefit plans. New premium tax credits and reductions in cost-
sharing will help ensure that eligible individuals can afford to pay
for the cost of private coverage through Exchanges. FY 2013 will be a
critical year for building the infrastructure and initiating the many
business operations critical to enabling Exchanges to begin operation
on January 1, 2014. The expansion of health insurance coverage for
millions of low-income individuals who were previously not eligible for
coverage also begins in 2014. CMS has worked closely with states to
ensure they are prepared to meet the 2014 deadline and will continue
this outreach in FY 2013.
Many important private market reforms have already gone into
effect, providing new rights and benefits to consumers to put them in
charge of their own health care. The Affordable Care Act's Patient's
Bill of Rights allows young adults to stay on their parents' plans
until age 26 and ensures that consumers receive the care they need when
they get sick and need it most by prohibiting rescissions and lifetime
dollar limits on coverage for care. The new market reforms also provide
for independent reviews of coverage disputes. Temporary programs like
the Early Retiree Reinsurance Plan (ERRP) and the Pre-Existing
Condition Insurance Plan (PCIP) are supporting affordable coverage for
individuals who often face difficulties obtaining private insurance in
the current marketplace. Additionally, rate review and medical loss
ratio (MLR) provisions help ensure that health care premiums are kept
reasonable and affordable year after year. The already operational rate
review provision gives states additional resources to determine if a
proposed health care premium increase is unreasonable and, in many
cases, help enable state authorities to deny an unreasonable rate
increase. HHS reviews large proposed increases in states that do not
have effective rate review programs. The MLR provisions guarantee that,
starting in 2011, insurance companies use at least 80 percent or 85
percent of premium revenue, depending on the market, to provide or
improve health care for their customers or give them a rebate.
Strengthen the Delivery System: The Affordable Care Act established
a Center for Medicare and Medicaid Innovation (Innovation Center). The
Innovation Center is tasked with developing, testing, and--for those
that prove successful--expanding innovative payment and delivery system
models to improve quality of care and reduce costs in Medicare,
Medicaid, and the Children's Health Insurance Program (CHIP). The
Innovation Center began operations in November 2010 and has undertaken
an ambitious agenda encompassing patient safety, coordination of care
among multiple providers, and enhanced primary care. These projects can
serve as crucial stepping stones towards a higher-quality, more
efficient health care system.
HHS is also working to ensure that the most vulnerable in our
Nation have full access to seamless, high-quality health care. The
Affordable Care Act established a new office to more effectively
integrate benefits and improve coordination between states and the
Federal Government for those who are eligible for both Medicare and
Medicaid. While Medicare-Medicaid beneficiaries make up a relatively
small portion of enrollment in the two programs, they represent a
significant portion of expenditures. HHS is currently supporting 15
states as they design models of care that better integrate Medicare and
Medicaid services and is designing additional demonstrations to
continue to improve care.
CMS is currently offering three initiatives that will help spur the
development of Accountable Care Organizations (ACOs) for Medicare
beneficiaries. ACOs are groups of health providers who join together to
give high-quality, coordinated care to the patients they serve. If an
ACO meets quality standards, it will be eligible to share in savings it
achieves for the Medicare program, and may be subject to losses,
offering a powerful incentive to restructure care to better serve
patients.
Ensuring Access to Quality Care for Vulnerable Populations: Health
Centers are a key component of the Nation's health care safety net. The
President's Budget includes a total of $3 billion, including an
increase of $300 million from mandatory funds under the Affordable Care
Act, to the Health Centers program. This investment will provide
Americans in underserved areas, both rural and urban, with access to
comprehensive primary and preventive health care services. This funding
will create 25 new health center sites in areas of the country where
they do not currently exist and provide access to quality care for 21
million people, an increase of 300,000 additional patients over FY
2012. The Budget also promotes a policy of steady and sustainable
health center growth by distributing Affordable Care Act resources over
the longterm. This policy safeguards resources for new and existing
health centers to continue services and ensures a smooth transition as
health centers increase their capacity to provide care as access to
insurance coverage expands.
Improving Healthcare Quality and Patient Safety: The Affordable
Care Act directed HHS to develop a national strategy to improve health
care services delivery, patient health outcomes, and population health.
In FY 2011, HHS released the National Strategy for Quality Improvement
in Health Care, which highlights three broad aims: Better Care, Healthy
People and Communities, and Affordable Care. Since publishing the
Strategy, HHS has focused on gathering additional input from private
partners and aligning new and existing HHS activities with the
Strategy. HHS will enhance the Strategy by incorporating input from
stakeholders and developing metrics to measure progress toward
achieving the Strategy's aims and priorities. Already, the Strategy is
serving as a blueprint for quality improvement activities across the
country.
CMS will continue funding for the Partnership for Patients, an
initiative launched in April 2011 that sets aggressive targets for
improving the quality of healthcare: reducing preventable hospital-
acquired conditions by 40 percent and preventable readmissions by 20
percent by the end of 2013, as compared to 2010.

Support American families
Healthy Development of Children and Families: HHS oversees many
programs that support children and families, including Head Start,
Child Care, Child Support, and Temporary Assistance for Needy Families
(TANF). The FY 2013 Budget request invests in early education,
recognizing the role high-quality early education programs can play in
preparing children for school success. The request also supports TANF
and proposes to restore funding for the Supplemental Grants without
increasing overall TANF funding.
Investing in Education by Supporting an Early Learning Reform
Agenda: The FY 2013 Budget supports critical reforms in Head Start and
a Child Care quality initiative that, when taken together with the Race
to the Top Early Learning Challenge, are key elements of the
Administration's broader education reform agenda designed to improve
our Nation's competitiveness by helping every child enter school ready
for success.
On November 8, 2011 the President announced important new steps to
improve the quality of services and accountability at Head Start
centers across the country. The Budget requests over $8 billion for
Head Start programs, an increase of $85 million over FY 2012, to
maintain services for the 962,000 children currently participating in
the program. This investment will also provide resources to effectively
implement new regulations that require grantees that do not meet high
quality benchmarks to compete for continued funding, introducing an
unprecedented level of accountability into the Head Start program. By
directing taxpayer dollars to programs that offer high-quality Head
Start services, this robust, open competition for Head Start funding
will help to ensure that Head Start programs provide the best available
early education services to our most vulnerable children.
The Budget provides $6 billion for child care, an increase of $825
million over FY 2012. This funding level will provide child care
assistance to 70,000 more children than could otherwise receive
services without this increased investment; 1.5 million children in
total. In addition to providing funding for direct assistance to more
children, the Budget includes $300 million for a new child care quality
initiative that states would use to invest directly in programs and
teachers so that individual child care programs can do a better job of
meeting the early learning and care needs of children and families. The
funds would also support efforts to measure the quality of individual
child care programs through a rating system or another system of
quality indicators, and to clearly communicate program-specific
information to parents so they can make informed choices for their
families. These investments are consistent with the broader
reauthorization principles outlined in the Budget, which encompass a
reform agenda that would help transform the Nation's child care system
to one that is focused on continuous quality improvement and provides
more low-income children access to high-quality early education
settings that support children's learning, development, and success in
school.
Improve the Foster Care System: The Budget includes an additional
$2.8 billion over ten years to support improvements in child welfare.
Additional resources will support incentives to states to improve
outcomes for children in foster care and those who are receiving in-
home services from the child welfare system, and also to require that
child support payments made on behalf of children in foster care be
used in the best interest of those children. The Budget also creates a
new teen pregnancy prevention program specifically targeted to youth in
foster care.
Strengthen TANF and Create Jobs: The Budget would provide continued
funding for the TANF program and would fund the Supplemental Grants for
Population Increases. When Congress takes up reauthorization, we want
to work with lawmakers to strengthen the program's effectiveness in
accomplishing its goals. This should include using performance
indicators to drive program improvement and ensuring that states have
the flexibility to engage recipients--including families with serious
barriers to employment--in the most effective activities to promote
success in the workforce. We also want to work with Congress to revise
the Contingency Fund to make it more effective during economic
downturns.
Keeping America Healthy: The President's Budget includes resources
necessary to enhance clinical and community prevention, support
research, develop the public health workforce, control infectious
diseases, and invest in prevention and management of chronic diseases
and conditions.
Preventing Teen Pregnancy: The Budget includes $105 million in the
Prevention and Public Health Fund for the Office of the Assistant
Secretary for Health for teen pregnancy prevention programs. These
programs will support community-based efforts to reduce teen pregnancy
using evidence-based models as well as promising programs and
innovative strategies. The Budget also includes $15 million in funding
for CDC teen pregnancy prevention activities to reduce the number of
unintended pregnancies through science-based prevention approaches.
Protect Vulnerable Populations: HHS is committed to ensuring that
vulnerable populations continue to receive critical services during
this period of economic uncertainty.

Strengthen the nation's health and human service infrastructure and
work force
Investing in Infrastructure: A strong health workforce is key to
ensuring that more Americans can get the quality care they need to stay
healthy. The Budget includes $677 million, an increase of $49 million
over FY 2012, within HRSA to expand the capacity and improve the
training and distribution of primary care, dental, and pediatric health
providers. The Budget will support the placement of more than 7,100
primary care providers in underserved areas and begin investments that
expand the capacity of institutions to train 2,800 additional primary
care providers over 5 years.

Increase efficiency, transparency, and accountabiliy of HHS programs
Living Within our Means: HHS is committed to improving the Nation's
health and well-being while simultaneously contributing to deficit
reduction. The FY 2013 discretionary request demonstrates this
commitment by maintaining ongoing investments in areas most central to
advancing the HHS mission while making reductions to lower priority
areas, reducing duplication, and increasing administrative
efficiencies. Overall, the FY 2013 request includes over $2.1 billion
in terminations and reductions to fund initiatives while achieving
savings in a constrained fiscal environment. Many of these reductions,
such as the $177 million cut to the Children's Hospital Graduate
Medical Education Payment Program, the $452 million cut to the Low
Income Home Energy Assistance Program (LIHEAP), and the $327 million
cut to the Community Services Block Grant (CSBG) were very difficult to
make, but are necessitated by the current fiscal environment.
The Administration remains supportive of CSBG's important goals and
the services it provides to low-income Americans. We have had to make
tough choices to meet current fiscal targets. The 2013 Budget provides
$350 million for CSBG, and proposes to strengthen the program to make
sure that we are getting the most out of every dollar we spend. The
Budget proposes that entities receiving funding from CSBG meet certain
performance standards, and compete for funding if they fall below those
standards.
Regarding LIHEAP, the Administration proposes to adjust funding for
expected winter fuel costs and to target funds to those most in need.
The request is $3 billion, $452 million below the FY 2012 level and
$450 million above both FY 2008 and the 2012 request. With constrained
resources, the Budget targets assistance where it is needed most. The
request targets $2.8 billion in base grants using the state allocation
Congress enacted for FY 2012. The request also includes $200 million in
contingency funds, which will be used to address the needs of
households reliant on home delivered fuels (heating oil and propane)
should expected price trends be realized, as well as other energy-
related emergencies.
In September 2011, the Administration detailed a plan for economic
growth and deficit reduction. The FY 2013 Budget follows this blueprint
in its legislative proposals, presenting a package of health savings
proposals that would save more than $360 billion over 10 years, with
almost all of these savings coming from Medicare and Medicaid. Medicare
proposals would encourage high-quality, efficient care, increase the
availability of generic drugs and biologics, and implement structural
reforms to encourage beneficiaries to seek value in their health care
choices. The Budget also seeks to make Medicaid more flexible,
efficient, and accountable while strengthening Medicaid program
integrity. Together, the FY 2013 discretionary budget request and these
legislative proposals allow HHS to support the Administration's
challenging yet complementary goals of investing in the future and
establishing a sustainable fiscal outlook.
Program Integrity and Oversight: The FY 2013 Budget continues to
make program integrity a top priority. The Budget includes $610 million
in discretionary funding for Health Care Fraud and Abuse Control
(HCFAC), the full amount authorized under the Budget Control Act of
2011 (BCA). The Budget also proposes to fully fund discretionary
program integrity initiatives at $581 million in FY 2012, consistent
with the BCA. The discretionary investment supports the continued
reduction of the Medicare fee-for-service improper payment rate;
investments in prevention-focused, data-driven initiatives like
predictive modeling; and HHS-Department of Justice Health Care Fraud
Prevention and Enforcement Action Team (HEAT) initiatives, including
Medicare Strike Force teams and fighting pharmaceutical fraud.
From 1997 to 2011, HCFAC programs have returned over $20.6 billion
to the Medicare Trust Funds. Approximately $4.1 billion was recovered
last year in FY 2011, including $2.5 billion returned to the Trust
Funds, and the current three-year return-on-investment of 7.2 to 1 is
the highest in the history of the HCFAC program. The Budget proposes a
10-year discretionary investment yielding a conservative estimate of
$11.3 billion in Medicare and Medicaid savings and 16 program integrity
proposals to build on the Affordable Care Act's comprehensive fraud
fighting authorities for savings of an additional $3.6 billion over 10
years.
Additionally, the Budget includes funding increases for significant
oversight activities. The request includes $84 million for the Office
of Medicare Hearings and Appeals, an increase of $12 million, to
continue to process the increasing number of administrative law judge
appeals within the statutory 90-day timeframe while maintaining the
quality and accuracy of its decisions. The Budget also includes $370
million in discretionary and mandatory funding for the Office of
Inspector General (OIG), a 4 percent increase from FY 2012. This
increase will enable OIG to expand CMS Program Integrity efforts in
areas such as HEAT, improper payments, and focus on investigative
efforts on civil fraud, oversight of grants, and the operation of new
Affordable Care Act programs.
Additionally, Durable Medical Equipment (DME) Competitive Bidding
is providing competitive pricing, while continuing to ensure access to
quality medical equipment from accredited suppliers, which will save
Medicare $25.7 billion over 10 years and help millions of Medicare
beneficiaries save $17.1 billion in out-of-pocket costs over 10 years.
The Budget proposes to extend some of the efficiencies of DME
Competitive Bidding to Medicaid by limiting Federal reimbursement on
certain DME services to what Medicare would have paid in the same state
for the same services. This proposal is expected to save Medicaid $3.0
billion over 10 years.

Completing implementation of the Recovery Act
The American Recovery and Reinvestment Act provided $140 billion to
HHS programs, of which $110 billion had been spent by grant and
contract recipients by the end of FY 2011. The vast majority of these
funds helped state and local communities cope with the effects of the
economic recession.
Thousands of jobs were also created or saved, including subsidized
employment and training for over 260,000 people through the Temporary
Assistance for Needy Families (TANF) program Emergency Contingency
Fund.
The Recovery Act provided states fiscal relief through a temporary
increase in Federal matching payments of $84 billion for Medicaid and
foster care and adoption assistance.
HHS Recovery Act funds are also making long-term investments in the
health of the American people and the health care system itself.
Beginning in FY 2011 and continuing for the next few years, HHS will be
investing more than $20 billion to support implementation of health
information technology in the health care industry on a mass scale.
This effort is expected to significantly improve the quality and
efficiency of the U.S. health care system. In addition, $10 billion in
Recovery Act funds were invested in biomedical research programs around
the country, including a major effort to document genomic changes in 20
of the most common cancers and to build research laboratory capacity.
Of more immediate impact, $1 billion has been supporting prevention and
wellness programs, including projects in 44 communities with a total
combined population of over 50 million aimed at reducing tobacco use
and the chronic diseases associated with obesity.
HHS has also met the challenges of transparency and accountability
in the management of its Recovery Act funds. More than 23,000 grantees
and contractors with Recovery Act funding from HHS discretionary
programs have submitted reports on the status of their projects over
the last 10 quarters. More than 99 percent of the required recipient
reports have been submitted on time and are available to the public on
Recovery.gov; non-filers have been sanctioned. Finally, HHS Recovery
Act program managers are working hand-in-hand with the Secretary's
Council on Program Integrity to ensure that risks for fraud, abuse, and
waste are identified and steps are taken to mitigate those risks.
Thank you for the opportunity to testify. I will be happy to answer
any questions you may have.
______

Chairman Kline. Thank you, Madam Secretary. The health
reform law, which we have just been discussing here, cuts $200
billion out of the Medicare Advantage program. As a result of
these cuts, the Congressional Budget Office has estimated that
5 million fewer seniors will be enrolled in Medicare Advantage
plans during the next decade. And that was a matter of some
concern during the debate leading up to the passage of this
bill.
And, now, just this week, we have seen an alarming report
from the Government Accountability Office, suggesting the
Administration viewed these cuts to the health care of millions
of seniors as a vulnerability and created a so-called
``demonstration project,'' to temporarily avert the damage. The
GAO criticized the $8 billion program that will delay the
impact of these cuts until next year. The GAO also reports that
such a national program in size and cost is unprecedented and
its design, quote--``precludes a credible evaluation of its
effectiveness.''
The Wall Street Journal picked up on this and ventured that
the purpose of the project is to, quote--``give a program that
is popular with seniors a temporary reprieve past election
day.'' It is in the interest of every single member of Congress
to make sure that taxpayer dollars aren't being spent to
protect certain political interests.
Madam Secretary, the GAO called on you to cancel this
demonstration project. Is that your intent or are you going to
continue forward with this project?
Secretary Sebelius. Mr. Chairman, we have no intention of
cancelling the project. And I think the good news is that
Medicare Advantage programs are stronger than ever and,
actually, cheaper than ever. We have more seniors enrolling in
Medicare Advantage this year than ever before. We have more
programs in the marketplace than ever before. Medicare
Advantage programs, when the Affordable Care Act was passed,
were paid at about 114 percent of fee-for-service Medicare.
So the Affordable Care Act, over time, reduces that
overpayment. We are now down to 107 percent, so rates, indeed,
have come down in Medicare Advantage program. That not only
benefits the seniors who choose those options, because they pay
lower co-pays, but they have more options. And, for the first
time ever since Medicare Advantage programs were created, we
have instituted a demonstration to inform seniors about
quality.
Some of these plans are very high quality, others are not.
And we have a 2-year demonstration plan running and I think the
good news is we are seeing seniors migrate away from the lower
quality plan to the higher quality plan. We are on track to
totally eliminate the overpayment to Medicare Advantage Plan,
as promised with the Affordable Care Act. Again, a benefit to
seniors while keeping the choice that seniors have throughout
this country.
Chairman Kline. The GAO pointed out that the demonstration
project, rather than emphasizing those highly successful
programs and rewarding them, basically was making the money
available to everybody, which would help provide those costs
and encourage people to stay in. What is your response to that?
Secretary Sebelius. Well, it is just not accurate. The
plans are rated one through five stars. The three, four and
five-star programs have gotten some additional incentives to
offer quality outcomes. I think the bad news for America's
seniors is that for years not only did Medicare Advantage
programs charge 14 percent more than fee-for-service, which
added costs to every Medicare beneficiary, but there was no
quality difference in health care outcomes.
What we are determined to do is not only lower the costs
but, actually, to make it very clear to the plans operating in
the private marketplace that quality is important and that
seniors should know which plans actually offer better outcomes
than others.
Chairman Kline. Clearly, sharp differences between the
Government Accountability Office and the Department, which we
will continue to explore. I am about to run out of time and I
just want to move quickly to another subject. The 2010 Head
Start Impact Study found the advantages children gain from Head
Start yielded only a few, significant, outcomes that lasted
through the end of the first grade.
Now, the third grade follow-up study was set to be
completed last September. It has been delayed until later this
year. Considering the data for this third grade study was
completed in the spring of 2008, what is the cause for the
delay and what are your expectations?
Secretary Sebelius. Well, Mr. Chairman, I know that the
study is underway and that we anticipate completion on the
timetable that you have just suggested. We think it is
important to continue to monitor what is happening with
outcomes. What we know is Head Start does make a difference and
it does make a difference not only in the families, but in the
children able to start school ready to learn.
And we were really pleased to have an opportunity to work
on additional curriculum issues with the Department of
Education. I think, also, Mr. Chairman, for the first time ever
in the history of the program, we felt it was important to
recognize that Head Start programs operate in a variety of ways
and some are lower performing and that is not good for our
kids.
So, for the first time ever, we have instituted a program
where Head Start programs in the bottom quarter of the programs
in the country are re-competing for funding, recognizing that
we want all of our children in the highest quality programs
possible.
Chairman Kline. Thank you, my time has expired.
Mr. Miller?
Mr. Miller. Thank you very much.
Madam Secretary, just to follow up on the Head Start
question--one, thank you for pushing forward on the re-
competing. I know it has been controversial and, in my case, it
turns out it cuts very close to home. It is still the right
thing to do. I think we will end up with better quality care. I
think we will end up with more diligence by the Head Start
providers knowing that this process is in place.
And I think both the development of the children and the
safety of the children will be dramatically improved because of
that. I appreciate that some providers don't like--they think
they have the premier program. They don't like the idea that
they, somehow, are missing the mark and have to re-compete but
I think that is important.
I would also say that for years, you know, we have gone
back and forth about what the improvement is in children's
ability to learn and the development of children in Head Start,
but we also know that, very often, we take those children and
we put them into an elementary system in first grade and we
measure them at the end of first grade and we measure them at
the end of fourth grade.
And much of what we thought was the advantage is lost. And
there is a pretty significant body of evidence suggesting that
it was lost in first, second and third grade. They came there
reasonably well prepared to learn but not much happened when
they got to the public school system. And there is some
concerns about that so I would just put that into the mix.
I want to go back. I mentioned the development of the
Accountable Care organizations. First, what I am quite
surprised at, the extent to which in our area of California,
Northern California, that these programs have been embraced by
the insurers, by the big medical centers, the hospitals, both
private and public, and large medical groups of doctors,
specialists and across groups with a broad practice in this
effort.
The one that was run by CalPERS that we have pointed out--
it reduced the number of patients hospitalized for 20 days or
more by 50 percent and it reduced hospital admissions by 17
percent. It reduced the total number of inpatients' days by 14
percent and produced a savings of, as we said, over $15
million. I think some $60 million was returned to ratepayers in
that instance.
And, now, Blue Cross, Blue Shield and others are trying to
set these up in other parts of the state. And both hospitals
and physicians are coming to those, understanding that this
provides for an improved coordination of care, better care, and
drop in readmissions.
Also, in the area, you have put forth this program to deal
with the medical errors and falls and accidents, again,
sponsored by a--participated in by a small group of hospitals.
Now, almost all of the hospitals in the area have joined
because of the dramatic savings.
Just in respiratory complications, in terms of keeping the
bed properly elevated, dramatically dropping. Pneumonias and
complications and deaths from pneumonias, the trips and falls--
dramatically reducing the number of falls, which end up in
broken hips and bones and, in some case, death.
So we see this joining and this rush into this process in
terms of trying to develop better practices for patient care
and cost in terms of taxpayers or families who are paying these
premiums. So I, really, welcome what is taking place here.
I put an amendment in the bill before Medicare had to pay
certain providers within 30 days. I think that probably came to
us by all the people that sell things to Medicare; they
insisted they be paid in 30 days. And what we saw in some
regions of the country, you had people who were billing
Medicare off of fraudulently obtained lists and we were paying
them within 30 days. And we didn't even know who the hell they
were.
I put in that you had to time to do due diligence--who is
this person and are they really selling wheelchairs to people
who need them or walkers to people who need them or what have
you--and, of course, it turns out--and you have recovered, not
just because of my amendment, but you have forestalled the
payment of people and recovered almost $4 billion, which, I
think, is a record in the Medicare program.
I think we got a long ways to go but I am certainly
encouraged by the trend line that we have seen over the last
couple of years. And I have used up almost all your time but I
think he is going to let you have a little bit more.
[Laughter.]
He is nicer to the witnesses than he is to us so----
Chairman Kline. Did you have a question?
Mr. Miller. Yes, I would like a response----
Secretary Sebelius. Well----
Mr. Miller [continuing]. On the fact that people are
joining these accountable care and trying to initiate
Accountable Care Organizations all across the country. But,
certainly, dynamically, in California.
Secretary Sebelius. Well, I think you raised two aspects of
the bill which aren't focused on as much, I think, as some of
the insurance issues. One is the whole delivery system changes
and the encouragement to use the best practices and, actually,
try and take them to scale around the country.
So the Partnership for Patients, which is, kind of, the
umbrella title for two efforts that are underway right now:
reducing the number of preventable readmissions by about 20
percent and reducing the number of hospital-required infections
and errors by 40 percent. Those two efforts over the next 5
years not only save lives but reduce health costs dramatically.
We already have over 3,500 hospitals who are participating
in those two efforts around the country, as well as doctor's
groups and employer groups and others, who are really excited
about this focus. And this affects everybody, regardless of
what kind of insurance you have. If you are in the hospital,
100,000 people a year die from what happens to them in the
hospital; not what brought them to the hospital but what occurs
while they are there.
So lowering hospital-acquired infections and preventing by
wraparound care, bundled care, coordinated care--people from
having to cycle back into the hospital is good news, lower
rates, lower costs and more patient care.
And, Mr. Chairman, you also--I mean, Congressman Miller,
you also mentioned the issue around the improper payments and
our tools, now, to really look at what is happening in the
fraud scene. We have a whole new predictive modeling technology
built--the kind of technology that has been in the private
sector for a very long time but missing from the public sector,
which allows us not only to calibrate risk, but really watch
what is happening.
We have re-credentialed providers in the most likely areas
for fraud; durable medical equipment, home health services. We
are really watching billings very carefully and that has
allowed us to be much more timely not only in stopping payments
from going out the door so we don't do the old pay and chase,
but actually discontinuing fraudulent providers from ever
billing Medicare again.
So it is a system that should have been in place a long
time ago; it is now built and up and running. And I think it is
going to yield huge results in the long term.
Chairman Kline. Thank you, Madam Secretary.
The gentleman's time has expired.
Mrs. Biggert?
Mrs. Biggert. Thank you, Mr. Chairman.
Madam Secretary, many, many years ago I volunteered in
Chicago on the Head Start program. It was the first year that
it was in existence so it was a--and so I have always had a
soft spot for Head Start. And I think that it has been a really
good program.
And I know that there has been problems with it and,
recently, the Inspector General's Office audited several of the
Head Start facilities, resulting in a report that there are
numerous violations of the Health and Safety requirement. In
one case there were toxic chemicals that were found within
reach of children. Another there was a machete; I don't know
what a machete was doing there but it was found on the stairway
near the children's play area.
Why are there these problems not complying with the health
and safety within the Head Start Program?
Secretary Sebelius. Well, Congresswoman, I can assure you
that we take the health and safety of the children in Head
Start Programs or our childcare programs, or any place across
the country, very seriously. There are thousands of Head Start
Programs operating. As I say, some are enormously high-quality;
others are not serving our children as well as they could,
which is one of the reasons for the re-compete this year, for
unannounced visits that we are making as a result of some of
the issues GAO had found, programs not operating as well as
they could.
We have made about 172 unannounced visits at Head Start
centers to really be able to monitor more closely what is going
on a regular basis with these variety of sites. We have
instituted new training guidelines, new updated rules and regs.
So we are trying to identify issues that either would cause
children to be in unsafe conditions or, certainly, to be in
conditions where they are not being well prepared for a
rigorous school curriculum, and move to correct those along the
way.
Mrs. Biggert. Thank you. Then, another issue--the diesel
industry is responsible for thousands of jobs and is
represented in my district. Are you concerned that incomplete
information surrounding the diesel exhaust in miners study
could unfairly harm this important industry?
Secretary Sebelius. Well, I share your concern about jobs
in any industry. And, as you know, there has been an 18-year
study on diesel exhaust and the impact on miners, to evaluate
lung cancer from diesel. We have in an unusual situation in
this study, where there has been a court intervention that
allowed certain, publically released, information to only be
released after it was submitted to Congress and reviewed.
We have complied with all of that information. So the
studies are finally being published--peer review studies and
journals. But, I think, the scope of this study is pretty
extraordinary in terms of the length of time that they followed
and the peer reviewers are looking at the scientific data and
reviewing that data. So I think that people will be able to
make a judgment based on the publication of the data and look
at what the science has found over that 18-year period of time.
Mrs. Biggert. Well, I hope that there will be the full
transparency--I yield back, Mr. Chairman.
Chairman Kline. Thank the gentlelady.
Mr. Kildee?
Mr. Kildee. Thank you, Mr. Chairman and Madam Secretary. As
you both know, one of the strengths of Head Start is the close
involvement of parents to the program to ensure that they have
the tools they need to be their child's first and best teacher.
Can you tell the committee the current status of family
literacy training and technical assistance, as required by the
Head Start Act? What the department and the Office of Head
Start are doing to promote and support family literacy, in the
context of Head Start, so that multiple generations might
benefit in the years to come.
Secretary Sebelius. Well, Congressman, I think there is no
question that the involvement of family in their child's
earliest, outside the home, educational opportunities has been,
as you said, one of the real strengths of Head Start from the
outset. And we are, certainly, proceeding in the family
literacy program and involving family members.
And I would tell you that, for the first time ever in a lot
of the other early learning settings, there has been an
incorporation of some of the hallmarks of the family
involvement from Head Start into those programs. So we have
been working closely with the Department of Education around
everything from the race to the top for early learning
challenges to looking at guidelines across the way.
And, I think, there is a recognition that a curriculum for
young learners is important to acquire the skills for school
readiness but so are social, emotional, family skills, so is
health care. And that, for the first time, is being
incorporated across the board, regardless of the setting where
the child would be involved.
So I would say that not only is family involvement
incredibly important in the Head Start Program, but it is
beginning to be very recognized in all of the early childhood
programs, whether they are run by the Department of Education
or in a childcare setting or in a Head Start setting.
Mr. Kildee. Thank you, Madam Secretary. Another interest of
mine--I was pleased to see that the fiscal year 2013 budget
included an increase of $116 million for the Indian Health
Services, to improve health outcomes of American Indian
communities. What steps has your department taken to implement
the Indian Health Care Improvement Reauthorization and
Dissention Act that was included in the health care reform law?
Secretary Sebelius. Well, Congressman, I know this is a
strong priority of yours and one that we have taken very
seriously in this Administration. The health gaps between the
first Americans and the rest of the population are still
staggeringly bad and we have focused additional resources, time
and attention--and, I think, Dr. Roubideaux heading the Indian
Health Service has been a terrific leader.
We are now making investments in the contract service area.
We have new health care facilities coming on line, and staffing
coming on line, with the health services. We are continuing
with some facilities construction, including an IHS facility,
which comes on line this summer in Barrow, Alaska. We are doing
active budget consultations and very much involved in the
Indian Health Improvement Act.
It has been the involvement of tribal leaders, as we begin
to implement the Affordable Care Act, because there are a
number of tribal members who live on Indian land and use, and
access, the Indian Health Services facilities. But there are
lots of first Americans who live in urban settings, and live
all over the country, who are eager to take advantage of the
advantages of the Affordable Care Act that they have coming on-
line.
So we are working actively on everything from diabetes
control, focus on suicide prevention, which is a huge issue in
Indian country, new facilities, new contract services. And, as
you say, this Administration has made an historic investment in
the budget for the Indian Health Service.
Mr. Kildee. Thank you, Madam Chair, and I appreciate your
commitment.
Chairman Kline. Thank the gentleman.
Dr. Foxx?
Ms. Foxx. Thank you, Mr. Chairman.
Thank you, Madam Secretary, for the morning here today.
Good morning. Madam Secretary, in February, you testified
before the Ways and Means Committee about the Class Act. And
you told Congressman Boustany that you had ``no idea'', quote--
``whether HHS secretly negotiated changes to the Class Act in
early 2010, because there was certainly nobody from our
department involved.''
But, then, when the department's report on the Class Act
came out, it admitted that there were backroom negotiations
with the advocacy groups to try to make the Class Act solvent.
Could you tell me and this committee why you stated that the
department was not involved in the backroom negotiations on
Class, when your own department's report admitted those
negotiations took place? I assume you weren't deliberately
trying to mislead the Congress.
Secretary Sebelius. Congresswoman, I never misled the
Congress at all. The question dealt with--were there secret
negotiations during the passage of the Affordable Care Act that
involved Class. And my answer is absolutely accurate.
We were charged, as you know, in the Affordable Care Act,
with setting up a program that would have provided much-needed
services and supports for those individuals who wanted to set
aside a portion in their income and provide their own payment
for home-based care. We were also charged with not beginning
that program unless it was possible to certify to Congress that
the program would be solvent for 75 years.
During the course of the time between the time that the
Class Act was passed and the time that we announced that we
could not make that certification, there were numerous
negotiations with all kinds of stakeholders, not just advocacy
groups but insurers and actuaries, looking at all sorts of
modeling possibilities for whether or not there was a scenario
under which we had both a legal authority and could justify the
financing that would, indeed, allow this program to be up and
running.
They were fully reported to the committee when those
studies were concluded. We did not make reports before the
studies were concluded because, frankly, we didn't know what
the conclusions were. I think they're very transparent, very
above board. And, at the end of the day, without major
legislative changes what we concluded was that the program
designed to help people who wanted to stay in their own homes
and provide their own care services out of a stream of income,
was not able to be either certified as solvent or if, indeed,
the premiums were high enough to make the program solvent, it
wouldn't serve the people it was designed to serve.
So that is the report I made to Congress; it is the report
I made to the President. And I don't think there is anything
inconsistent about either of those statements.
Ms. Foxx. Well, I also understand that Congressman Boustany
sent you a letter, which I am going to make a part of the
record here, asking for a correction of the record of those
statements and that you have not yet replied. It appears that
you have a pattern, is this--as the Chairman said in his
opening comments; it has taken us 10 months to get an answer
from your department on information.
What do you see as the responsibility of the Executive
Branch to respond to members of Congress? And what do you think
is a reasonable time, given the huge bureaucracy that you have
here, to submit answers to questions that are given to you on
things that should be readily available?
Secretary Sebelius. Well, Congresswoman, we make every
effort to respond in a fashion and, also, to gather the
information requested. It probably doesn't come as a big
surprise that we get hundreds and hundreds of requests, often
for thousands of pages of documents, and we have a lot of staff
who do nothing else but gather documents, look at documents,
try and be responsive.
So we are on a full-time, 24/7, trying to be responsive as
questions come in the door. And make sure that the answers that
we get you are accurate information. And we will continue to do
that.
Ms. Foxx. Thank you, Mr. Chairman.
Chairman Kline. Thank the gentlelady.
I understand she was requesting to enter Dr. Boustany's
letter for the record.
[The information follows:]

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Chairman Kline. Without objection, we will do that.
Mr. Scott?
Mr. Scott. Thank you, Mr. Chairman.
Thank you, Madam Secretary. Madam Secretary, in the
Chairman's opening remarks, he talked about the effect that the
ACA has on small businesses and suggested that there would be a
devastating impact on small businesses when it comes into
effect. I thought small businesses were exempt from the
mandates, is that right?
Secretary Sebelius. Yes, Congressman, certainly businesses
under 50 have no employer responsibility under the Affordable
Care Act but they are eligible for tax credits. So they are--
many small business owners are taking advantage of the tax
credits, which allow them to pay for employee-based health
care.
Mr. Scott. So, let us slow up a minute--first of all, they
are exempt. But if they voluntarily elect to provide insurance,
there are tax credits that they would not be eligible for, but
for the ACA, is that right?
Secretary Sebelius. There not only are tax credits but, in
2014, when the new exchange markets are up and running, the
estimate is that small business owners will be one of the major
beneficiaries, given the fact that right now they are often
paying 15 to 18 percent more in the private market for health
insurance plans because they don't have the large numbers to
negotiate rates.
They will be able to pick and choose out of a plan that
puts them in a much larger pool, without having to change
anything.
Mr. Scott. And, so, they are exempt. And, if they provide
insurance, they have got tax credits. And, if they provide
insurance, they will be able to get it at a cheaper rate
because they will be in a--get the big group markets rather
than the small business rate. And, if they elect not to provide
insurance because they are exempt, would they have access to
insurance that they would not have, since their employer
doesn't provide it?
Secretary Sebelius. Well, currently, as you know,
Congressman, if an employer chooses not to provide coverage for
employees, employees are, pretty much, on their own; they and
their families are shopping in the individual market, the----
Mr. Scott. That is today?
Secretary Sebelius. That is today. In the future, after
2014, those employees would be eligible, again, to participate
in an exchange marketplace, be part of a larger pool, no pre-
existing condition limitations, able to take advantage of tax
credits, depending on their income, to pay a portion of their
health plan. Right now, those employees are paying 100 percent
out-of-pocket, which is often why a lot of working Americans
have no coverage at all.
Mr. Scott. So you disagree with the idea that this is bad
for small business and would, instead, say this is actually
good for small business?
Secretary Sebelius. Well, I think, that at least the--I
have an opportunity to visit with small business owners around
the country. And what I hear from them is that having health
insurance is often one of the best ways to recruit and retain
high-quality employees. And that, time and time again, they
lose those employees to either larger competitors or folks who
can afford a better plan and a better package.
And I would say that the small business market has
disintegrated and not because of the Affordable Care Act. But
it is on a death spiral; more and more small business owners
have dropped coverage as rates have skyrocketed. So that we see
this as not only stabilizing of the market, but giving some
advantage to the entrepreneurs and small business owners who
currently are out on their own trying to negotiate rates.
Mr. Scott. Thank you. As you know, we are going to consider
the student loan interest rate and there is a proposal to cut
prevention funding. Are you familiar with that proposal?
Secretary Sebelius. I am.
Mr. Scott. And exactly what would be cut if that offset is
the one chosen?
Secretary Sebelius. Well----
Mr. Scott. And why is that important? Why is that funding
important?
Secretary Sebelius [continuing]. I think that the
Prevention Fund is a long overdue investment in some of the
most significant efforts to keep our country healthy and well.
It is a significant program to immunize our kids. What we know
is that is an investment that returns about $10.00 for every
dollar invested. It is a public health investment with
laboratory capacity at the state and local level.
We know that public health officials around the country
would be laid off, reduce the availability of mental health and
substance abuse. Some of the efforts around tobacco prevention
and cessation, which can save thousands of lives, would be
eliminated and discontinued. And, you know, right now,
Congressman, America spends about eighty cents of every health
dollar on dealing with chronic disease and illness and about
eight cents of every health dollar on any kind of preventive
effort.
I think we are a great country. I think we can educate our
kids and invest in health at the same time. And I think failing
to invest in long-term strategies that will lower our health
care costs, doom future generations to paying higher and higher
health bills and getting mediocre results.
Chairman Kline. The gentleman's time has expired.
Dr. Roe?
Mr. Roe. Thank the Chairman and thank the Secretary for
being here today.
And I think you and I totally agree that the single biggest
issue preventing people from buying health insurance in this
country, or having health insurance, is cost. I saw it in my
practice. And, then, we had a group of people in our nation
that couldn't afford it because it cost too much. And that has
been a great concern of mine is that--does this plan reduce the
health care cost spending in the country?
And we have held our Subcommittee on Health, Employment,
Labor and Pensions--has held two subcommittee hearings, one in
Evansville, Indiana and one in Butler, Pennsylvania, just a
couple of months ago. And, let me share with you just some
stories that I heard during these subcommittee hearings. And,
really, someone from the Administration should attend these and
listen.
Just last week in my office, a young person, Peter Demos,
from Murphysboro, Tennessee,--has five restaurants in his
family and he has evaluated the Affordable Care Act and the
Accountable Affordable Care Act. And he believes he has about
100--150 employees per restaurant. He is thinking about opening
another restaurant in Clarksville, Tennessee, where I grew up.
He said because of the cost of this--and he has had it
analyzed--he is not going to open his Clarksville shop until he
finds out what the Supreme Court does. And he has two
restaurants that are marginal; sometimes they make a little
money, sometimes they don't. But the others have supported his
business. He is going to close those two restaurants. So we are
looking at three to four hundred jobs with one person that is
going to go away.
Another IHOP owner in Evansville--he had 12 shops, 800
employees--``Dr. Roe,'' he said, ``What do I do here? If I buy
the essential benefits package, of which we don't know what it
is just yet, and I pay for that for all of my employees, I am
upside down $7,000 per employee. But if I pay the penalty of
$200,000, because I have more than 50 employees, which is not
tax-deductible, it costs me $2,800. In this business,'' he
said, ``I make $3,000 per employee,'' which is pretty good, I
think, in that restaurant business, ``it cost me all my
profit.''
I didn't have an answer for him. Do you have an answer for
either one of these owners? What do they do?
Secretary Sebelius. Well, Dr. Roe, I think that there is no
question that cost has eroded the private health insurance
market over time. What we know is costs are up over the last
decade about 115 percent, which is why more and more business
owners have dropped coverage and, particularly, small business
owners and individuals. It is why we have about 50 million
uninsured Americans today.
And those costs continue to skyrocket with----
Mr. Roe. How do you----
Secretary Sebelius [continuing]. No end in sight.
Mr. Roe. How do you talk to these restaurant owners? We
know all that--what you said are facts, I agree with that. But
how do you--what do you say to these folks that own these--and
I could go on and on with stories that I heard in these
hearings that we held. I didn't have an answer for them.
Secretary Sebelius. Well, I think, first of all, there is
not a cost associated yet with the plans in the new exchanges
because they haven't been priced and packaged. That is--I don't
know what they are estimating but there is no costs. There is
no----
Mr. Roe. There is a cost but no one has said what it is
yet.
Secretary Sebelius. Well, we don't have a cost estimate by
the insurance plans who will be offering these programs. That
will become clear as we move forward. But, I think, the
estimate is there is--based on no cost of doing nothing, there
are employees right now who are opting in and out of these
programs because of health insurance benefits that, often,
these employers can't compete with. There are employees who
can't come to work because they don't have access to health
care----
Mr. Roe [continuing]. I hate to interrupt you, but what do
these folks say?
Secretary Sebelius. Those costs are employer----
Mr. Roe. Look, I am an employer. I have been an employer
for over 30 years. I understand all that. And that is one of
the things a good health insurance plan allows; people to come
into your business and retract them and keep them. I certainly
understand that but how do you answer these folk's questions
that are going to close businesses and close down jobs?
We will go on. The question I have, also, is why do you
still think the majority of Americans oppose the Affordable
Care Act? And, secondly, almost 80 percent oppose the mandate,
why do you think that is?
Secretary Sebelius. I think there are still lots of
misconceptions about what the Affordable Care Act does and
doesn't do that we are working to correct. I do think for a lot
of people they have no idea what this is; they have health
insurance, they are uncertain about how it is going to impact
them and their family, and they really want to know ``what
happens to me.''
We have had some considerable success with seniors who
were, frankly, terrified during the course of the debate, told
that Medicare Advantage plans would be done away with, that
their premiums would skyrocket, that they would lose their
doctors, that they couldn't access hospital; none of that has
happened; none of that is accurate and, in fact, they are
beginning to take advantage of the benefits offered. And that
begins to change people's minds.
So, once people connect with the benefits--I can tell you
parents across this country who have young adults who are on
their family health plan know the benefits of the Affordable
Care Act. There are moms I see every day who have a child born
with a pre-existing health condition, who knows that that child
will never be locked out of the insurance market again. And
that has provided peace of mind to those parents.
So, as people begin to connect with the benefits, we are
finding that their attitudes dramatically change.
Mr. Roe. Mr. Chairman, can I submit some questions to her
that would be----
Chairman Kline. For the record?
Mr. Roe. Yes, sir, for the record.
Chairman Kline. Yes, please, that would be fine.
Mr. Tierney?
Mr. Tierney. Thank you, Mr. Chairman.
Thank you, Madam Secretary, for being here today.
Secretary Sebelius. Good morning.
Mr. Tierney. You are painfully aware, I am sure, this is a
national debate that we are having with respect to the budget
and reconciliation measures that are there, surrounded a lot
about feelings that, you know, we can still give more money to
the wealthy at the expense of struggling families, children and
seniors. And not ask any in that category of ``wealthy'' to
participate their fair share.
And not look at the whole budget, just look at narrow
portions of it, and not really focus on growth in jobs. And
some, you know, have put forth this concept of subsidiarity or
try to rationalize the Republican budget and some of these
reconciliation bills. So I would like to read a letter into the
record, if you will indulge me, and then ask you some questions
about it.
This is a letter from a sizeable number of theologians and
religious scholars who were writing to the budget author for
the Republican budget, Mr. Paul Ryan. They are welcoming him to
Georgetown University, appreciating his willingness to talk
about Catholic social teaching policy and dealing with urgent
challenges facing the country.
They cite themselves as members of the academic community
at a catholic university. And they saw his visit, which was on
April 26 for election series, as an opportunity to discuss the
Catholic social teaching in a role of public policy because he
had talked about subsidiarity.
They go on to say, ``However, we would be remiss in our
duty to you and our students if we do not challenge your
continuing misuse of Catholic teaching to defend a budget plan
that decimates food programs for struggling families, that
radically weakens protections for the elderly and the sick and
gives more tax breaks to the wealthiest few.''
This United States Conference of Catholic Bishops has
wisely noted, in several letters to Congress, quote--``A just
framework for future budgets cannot rely on disproportionate
cuts in essential services to poor persons.'' Catholic bishops
recently wrote that the, open quote--``The House-passed budget
resolution fails to meet these moral criteria.''
In short, the letter says, ``your budget'', referring to
Mr. Ryan, ``appears to reflect the values of your favorite
philosopher, Ayn Rand, rather than the gospel of Jesus Christ.
Her call to selfishness and her antagonism toward religion are
antithetical to the gospel values of compassion and love. Cuts
to the anti-hunger programs have devastating consequences. Last
year, one in six Americans lived below the official poverty
level and over 46 million Americans, almost half of them
children, used food stamps for basic nutrition.
We also know how cuts in Pell grants will make it difficult
for low income students to pursue their educations at colleges
across the nation, including Georgetown. At a time when
charities are strained to the breaking point and local
governments have a hard time paying for essential services, the
Federal government must not walk away from the most vulnerable.
While you offer an appeal that Catholic teachings subsidiarity
as a rationale for cutting government programs, you are
profoundly misreading church teaching.
Subsidiarity is not a free pass to dismantle government
programs and abandon the poor to their own devices. This often
misused Catholic principle cuts both ways; it calls for
solutions to be enacted as close to the level of local
communities as possible, but it also demands that higher levels
of government provide health subsidium, when communities and
local governments face problems beyond their means, to address
such an economic crisis--high unemployment, endemic poverty and
hunger.
According to Pope Benedict XVI, subsidiarity must remain
closely linked to the principle of solidarity and vice versa,
and it is signed by almost 90 people that are theologians and
people----
So, Madam Secretary, my question for you is--in the budget
proposal by the Majority, I think voted on by all of their
members, that would cut $1.5 billion, according to the Office
of Management and Budget, from Head Start. In your estimate,
would that cut 60,000 low-income children out of the program
next year and 200,000 out of the program by 2014?
Secretary Sebelius. Yes, it would, sir.
Mr. Tierney. And in childcare, that budget would mean a
substantial cut to childcare assistance for more than 1.8
million, low-income, working families who depend on it to try
to get and keep jobs. By your estimate, would that be 60,000
families losing assistance next year alone?
Secretary Sebelius. I think about 65,000.
Mr. Tierney. And on the Social Service Block Grant, that
bill eliminates funding that would provide services like Meals
on Wheels and childcare to 23 million children and seniors and
Americans with disabilities, is that your estimate as well?
Secretary Sebelius. Yes, sir.
Mr. Tierney. You know, the Childcare Tax Credit, which used
to be a bipartisan measure, Republican bill would end the
refundable tax credit for families of 3 million children and
increase taxes for those families by an average of $1,800 a
year. By your estimate, would that tax increase fall on the
backs of children from low-income families?
Secretary Sebelius. I think that is correct, sir.
Mr. Tierney. And the Supplemental Nutrition Assistance
Program, that bill--the Republican bill, would cut $33 billion
from that program. Would that affect approximately 2 million
individuals, disproportionately from working families and
seniors?
Secretary Sebelius. I would have to defer to Secretary--for
those numbers; that is not in our budget. But that sounds about
correct.
Mr. Tierney. All right. And, if the health care budget were
to be entirely--the Program B, be entirely repealed, as some
propose, 32 fewer million Americans would get health insurance,
is that right?
Secretary Sebelius. That is correct.
Mr. Tierney. And 2.5 million young adults who are now
covered by their parent's plan would lose that coverage?
Secretary Sebelius. Yes, sir.
Mr. Tierney. And 105 billion Americans would, once again,
be subject to lifetime limit caps on their health insurance?
Chairman Kline. The gentleman's time has expired.
Mr. Walberg?
Mr. Walberg. Thank you, Mr. Chairman.
And welcome, Madam Secretary. NIOSH and the NCI issued a
press release addressing the results of the Diesel Exhaust and
Miner Study; this study has been very controversial, I think we
all could agree, especially some of its conclusions. I'm going
to expand on what my colleague from Illinois addressed a bit
earlier.
This study concluded that diesel exhaust exposure of a
surface mine produced higher risks of adverse health effects
than to underground miners, with much higher levels of
exposure. It also--and that is interesting that would be the
case above-ground versus underground. It also concluded that
heavy smokers, with the highest diesel exhaust exposures, have
a lower risk for lung cancer than miners who didn't smoke;
another peculiar finding of this study.
This study was also the subject of a 2001 court order that
requires the agencies involved to provide all data requested by
this committee. Now, to date, this still hasn't happened,
including requests made by Chairman Kline and myself, on three
separate occasions, including at a hearing where you were with
us almost a year ago.
Furthermore, it took you an entire year to just reply,
incompletely, to the question that we have asked last year.
Now, these agencies have not provided all of the materials--
why, Madam Secretary?
Secretary Sebelius. Well, Congressman, NIOSH is in
compliance with both the court order and, my understanding is,
what the committee has asked for. The underlying data has to
be, according to the court order, submitted to the committee
and then can be released. CDC and NIH will make the data
publicly available after the 90-day review period of the
committee is completed, in accordance with the court order.
So we have published the first set of papers, delivered the
underlying data--we now have, in the committee's hands--your
hands, the second data request. We cannot make it transparent
and public until the committee's review is completed.
Mr. Walberg. Well, I, respectfully, beg to differ with
that. As far as the information we have requested, it has been
willfully incomplete and inadequate to address the concerns
that we, respectfully, submitted to you. Let me----
Ms. Woolsey. Will the Gentleman yield to your----
Mr. Walberg. Briefly, I would yield.
Ms. Woolsey [continuing]. Ranking member?
Mr. Walberg. Briefly, I would yield.
Ms. Woolsey. For the record, we do have a letter here that
is dated March 26, from the department, responding to those
questions, that I would like to introduce into the----
[The information follows:]

------

Mr. Walberg. And I re-claim my time--I indicated that we
received a response but, willfully, inadequate and incomplete.
Let me go on to a next issue, Madam Secretary.
I can't believe that you believe that it is appropriate for
the diesel study author to travel to France to request
international government organization, in this case IARC, which
is International Agency for Research on Cancer, to issue a
finding that diesel exhaust should be labeled as a known human
carcinogen. Can I assume that to be an accurate understanding,
that you wouldn't believe this would be appropriate for the
author, an author of this study, to do such a thing?
Secretary Sebelius. Congressman, my understanding is that
the World Health Organization is organizing a meeting in
France. The International Agency on Research on Cancer--I have
no prior knowledge about what is the testimony that will be
presented but I do know that the researchers have been invited.
We are very committed to sharing information and research
findings with the World Health Organization. The United States
is a very active member of that organization so I assume the
researchers will participate.
Mr. Walberg. Recognizing the time here, the concern would
be, for me, that the IARC's findings trigger automatic U.S.
government regulatory consequences for employers that cost
millions of dollars to comply with. And I find it very unfair
that, when those same regulated entities, like small
businesses, don't have a way to comment on IARC proceedings,
that they are, in fact, blocked from participating, this is
really back-door rulemaking. And can you condone the practice--
--
Chairman Kline [continuing]. I am sorry; the gentleman's
time has expired.
Secretary Sebelius. But, Mr. Chairman, could I respond?
Because what has just been stated is just absolutely not
correct.
Chairman Kline. Please.
Secretary Sebelius. There is no international finding that
automatically triggers anything. We have the responsibility,
under the Centers for Disease Control and NIH, to produce
findings about likely carcinogens and proven carcinogens. That
doesn't even trigger an automatic finding; that, really, is
within another department's jurisdiction. So we do the science,
we publish the science. We have the responsibility for making
that available.
There are other agencies, the Environmental Protection
Agency and others, who actually trigger the regulatory
responses. And they are not automatically triggered; they go on
that agency's line-up list. So I have no idea. The
International agency for Research on Cancer, to my knowledge,
Congressman, has no impact, whatsoever, on an automatic
triggering on anything that would impose any regulatory
requirement----
Mr. Walberg. Mr. Chairman if you might indulge me, I
disagree with that but I am willing to be proven wrong. But we
will follow this up with the Secretary----
Secretary Sebelius. I would be happy to.
Chairman Kline. Thank the gentleman.
Thank you, Madam Secretary.
Mr. Holt?
Mr. Holt. Thank you, Mr. Chairman.
Thank you, Madam Secretary. It was earlier mentioned by one
of our colleagues that there are so many uncertainties now in
the health care field. I would just comment that the
uncertainties that existed before the Affordable Care Act was
passed were even greater. I mean, you know, where do 40 million
people go for their health care and how will we redirect health
care in America toward wellness and health outcomes? And how
will we handle additional families trailing into bankruptcy by
bad luck of illness or injury?
But two things that were not uncertain before the health
care law was passed was health care costs in America would go
up 8 percent a year, or more, and insurance companies would
spend a smaller and smaller fraction of the premiums that they
collect on actually providing health care. And, with regard to
the cost, there is an article by economist Peter Orszag in
Bloomberg, that points out that health care spending in the
past year rose by 4 percent. Now, that is high but that is half
of what it used to be.
And he says that this is not just because of economic
reasons but it is because of structural reasons, with doctors
and hospitals cutting back on unnecessary procedures, expanding
their use of information technology, switching from fee-for-
service to compensation, aimed at maximizing quality of
treatment, and so forth. Do you, in fact, see some changes in
health care costs already because of the Act?
Two other things that I would like to ask you about on this
subject is--the health care law provides assistance to states
in doing rate review. And I am wondering whether State
insurance commissioners and others are beginning to use that
information. Further, I would like to ask if you have data that
show that this medical loss ratio of 80 or 85 percent is about
right or is this subject to further review.
I have other questions but if you could answer those
quickly, I would appreciate it.
Secretary Sebelius. Well, Congressman, I can tell you that
the major program that we are in charge of, probably the
largest insurance program in the world, Medicare, which has
about 49 million beneficiaries, was on a trend line growing at
about 8 percent a year. And that rate of growth definitely has
been slowed in the last two years.
We are now at about 6.3 percent and the Trustee has
certified the fact that that trend line is largely due to
changes in the Affordable Care Act. And I think we can monitor
that very closely. We do know that the rate review efforts
underway in states around the country have been very
beneficial. Time and time again, not only have insurance
departments taken advantage of the encouragement to use some of
the rate review funding to hire additional actuary staff, go to
their legislators to request additional ability.
As a former insurance commissioner, I know how important it
is to have prior approval authority. So a company has to come
through an insurance department process and----
Mr. Holt. And would you say these will begin to have a----
Secretary Sebelius. They are having effects.
Mr. Holt [continuing]. Noticeable effects?
Secretary Sebelius. We are watching rates be reconsidered,
pulled back, reduced in states. And the 80-20 Rule--the medical
loss ratio, I think, we will have pulled that shortly. But we
have been monitoring it closely and beneficiaries will be
getting rebate checks this year from companies who have not
spent 80 percent of their dollars on health care costs.
Mr. Holt. Let me change to something else. In answer to Mr.
Scott's question, you talked about the Prevention Fund. It has
been called, by the Speaker, a ``slush fund.''
Secretary Sebelius. Yes, yes.
Mr. Holt. Could you specifically say what this means for
CDC, what this means for actual treatment? And, I believe,
there is a particular benefit for women.
Secretary Sebelius. I am sorry, can you----
Mr. Holt. Prevention Fund.
Secretary Sebelius. Certainly. Well, I think, the
Prevention Fund, again, is an enormously important effort that
is long overdue. And you have talked about some of the--we have
talked about some of the programs but, additionally, HIV/AIDS
efforts have been enhanced; the, kind of, community
transformation grants, which are really focused on systematic
changes in 61 states and communities across the country; and a
whole series of efforts to actually enhance critical programs
to screen uninsured women for breast and cervical cancer; and
tracking, and prevention of, birth defects, are part of the
Prevention Fund efforts that are making a big difference.
Chairman Kline. Thank you, Madam Secretary.
The gentleman's time has expired.
Dr. DesJarlais?
Mr. Holt [continuing]. For the record, if I may?
Chairman Kline. Yes, certainly.
Mr. Holt. Thank you.
Mr. DesJarlais. Madam Secretary, I really appreciate your
being here today and appreciate this opportunity to speak with
you about some very important issues. I know we have spent a
lot of time, over the past two years, arguing whether or not
``Obamacare'' is good, ``Obamacare'' is bad--you know, whose
fault is it that various provisions aren't working out the way
they are supposed to be.
But what I would really like to discuss with you today, and
see if you would agree on one fact--that Medicare, according to
CBO, Republicans, Democrats, AARP, is going broke in 10 years.
Can we agree on that fact?
Secretary Sebelius. The Trustees Report said that the funds
will be exhausted, which means they will only be about 70
percent of the finances by 2024.
Mr. DesJarlais. Okay, so you would say 12 years; that is
not far off. We have another looming problem at the end of the
year and that is the SGR, or the ``doc fix.'' We were looking
at a 27 percent cut in pay to physicians.
And I know, in my district, there are already concerns
among seniors that it is getting more and more difficult to
find access to physicians. And, in your opinion, what do you
think will happen if that 27 percent cut is put in place next
January?
Secretary Sebelius. Unfortunately, Congressman, those
numbers are a little low too; it is a 31 percent pay cut. And I
think it would be enormously devastating to Medicare
beneficiaries, who would lose their doctors, which is why the
President has called for, every year, a permanent, long-term,
fix to the SGR and would love to work with Congress to do just
that, as opposed to kicking this can----
Mr. DesJarlais. Okay.
Secretary Sebelius [continuing]. Two inches down the road.
Mr. DesJarlais. And it would cost about $300 billion to
just bring us back to even from the plan's implementation back
in 1997, is that right? We are about $300 in the hole?
Secretary Sebelius. Yes----
Mr. DesJarlais [continuing]. Okay, so we have got to come
up with $300 just to pay for the past decade-plus. So, moving
forward, not making that cut is going to be very expensive. We
have got, about, a $500 billion cut to Medicare in the form of
the IPAP. We are rapidly not looking very efficient and, yet,
we have this huge, looming problem of, you know, 10,000 new
Medicare recipients entering the program every day.
I am talking with you today because we need to solve this
problem. It doesn't matter which side of the aisle you sit on,
we all have parents, grandparents, maybe we are of Medicare age
ourselves. So you said the President wants to work on an SGR
fix. I would be happy to work with you. Our doctor's caucus
would be happy to work with you.
We have got to solve this problem because these numbers are
hard to even comprehend. And I just wondered what ideas you
might have for us.
Secretary Sebelius. Well, Congressman, I think that that
would be encouraging. I think that, as you know, the SGR well
pre-dates any discussion in 2010 and 2009 about an Affordable
Care Act. It has nothing to do with it. It is based on the
Balanced Budget Act. And, I think, fixing that in the long-
term, looking at new ways to actually pay docs, is an important
thing going forward.
I would also just suggest that the $500 billion is not a
cut to Medicare; it is an estimated slowdown in the growth
rate, which we are seeing right now. That is where the $500
billion comes from. So Medicare costs will continue to rise,
largely, as you say, because we have the beginning of the
``baby boomers'' coming into Medicare, more beneficiaries than
ever.
Mr. DesJarlais. Okay, let us shift just for a minute
because, you know, we are obviously not going to solve that
problem. To the issue of employers dumping their employees into
the insurance exchanges. I have visited with several businesses
in my district and I will just give a quick example of Belmont
Industries--has about 6,000 employees so they would fall into
the $3,000 penalty.
Right now, they pay about $12,000, per employee, for their
health care benefits. So they would, literally, save about
$9,000, per employee, and $34 million. You know, clearly, they
would be rewarded for dumping these employers--or these
employees into the exchange. What--what do you think the impact
is going to be as we see this trend moving forward?
Secretary Sebelius. Well, again, Congressman, the only
real-life example that we have to look at has been the
Massachusetts example, where the exchange program, the employer
penalty and the subsidy, has provided a template for the
Affordable Care Act. What happened in Massachusetts is more
employers actually offer coverage today than did when the
exchange started. They have not dumped employees. They have
similar incentives in place.
If one would speculate--we have a totally, as you know
right now, voluntary market, where insurers--I mean, employers
voluntarily are participating in an increasingly expensive and
hard to predict insurance market. My sense is, based on the
real-life model that is up and running, based on conversations
with employers as we move along, that these same kind of
incentives, keeping, retaining good employees around health
care, will be in place in the future.
And that employers will, actually, have an incentive to
come back in the market because there will be a larger pool, no
pre-existing conditions, they won't be penalized for being
small employers, and they will have market rates that they can
control.
Chairman Kline. The gentleman's time has expired.
Ms. Fudge?
Ms. Fudge. Thank you, Mr. Chairman.
And, thank you very much, Madam Secretary, for being here
and to continue to show your knowledge of the Affordable Care
Act and why it was so important that this Congress passed it.
I, certainly, am concerned, though, about the recent reductions
to Medicare payments and the effect that they will have on
safety net hospitals, in particular. And the people that are
served by safety net hospitals, of which, certainly, I have
two, fairly large, ones in my district.
The Middle Class Tax Relief and Job Creation Act was the
latest piece of legislation to make it to the President's desk
with significant reductions in Medicare payments for hospitals.
And then there is the cut proposed in the President's budget,
where the Administration proposes to reduce bad debt payment to
25 percent of the current 70 percent for all--from the current
70 percent for all eligible providers, including safety net
hospitals.
And this is done in order to save some $36 million over the
next 10 years. The Medicare payment cuts included in the
Payroll Tax bill and the payment cuts proposed in the
President's budget, come on top of the sequester, where
hospitals will see a 2 percent cut in their Medicare
reimbursement for the next nine years.
Safety net hospitals serve as America's first line of
defense for treating low-income and uninsured patients. Without
a doubt, these cuts will adversely affect already financially
weak safety net hospitals and the people they serve. Metro
Health, which is in my district, is a safety net hospital that
needs our support and not cuts.
So my question is--why does it seem as though the
Administration and this Congress are targeting the health care
providers that can least afford it? And I want to ensure that
safety net hospitals will be able to continue to meet the
health care needs of the communities they serve. So could you
just elaborate for me the thought process here and what is the
plan going forward for safety net hospitals?
Secretary Sebelius. Well, Congresswoman, I share your
interest and concern about safety net hospitals who provide
critical care in some of our most underserved areas. I think
that the President shares that concern and we want to find ways
to both reduce health care costs but, at the same time, not
jeopardize that critical safety net.
I would look forward to working with you on some specific
issues that you find troubling in the budget. I do think that
we are trying to find a balance of areas where there may have
been opportunities to reduce overall payment levels and not
jeopardize the quality of care. And that is really what we are
trying to find is that right balance. But, certainly, the
provision of quality health care to underserved areas continues
to be a very high priority.
Ms. Fudge. I would, certainly, look forward to continuing
the conversation with you. The second question is--there were
workforce demonstration projects, of course, as a part of the
legislation. Now, these projects will, in fact, help low-income
individuals, receiving training and entering health care
professions, which you mentioned earlier in your testimony.
Can you update the committee on the progress that has been
made as a result of these projects? And, if you would, please
highlight any specific goals HHS has regarding increasing the
number of health workforce professionals. And, finally, please
update me on any other dedicated funding that will address
health workforce shortages.
Secretary Sebelius. Certainly, Congresswoman. I think that
the President, from the outset, recognized that additional
health insurance and more affordable, available health
insurance was a piece of the puzzle. But, without a competent,
trained and appropriately placed workforce, it would be a huge
misconnect between people who now have access to health care
and that access.
So, from the outset, really starting with the Recovery Act,
there has been an effort to look at workforce training. We have
tripled the number of National Health Service Corps members in
the last 3 years. And those members are nurse practitioners,
docs, mental health techs, dentists, who are then placed in
underserved areas in return for helping to pay down their
student loans and student debt. A kind of win-win situation.
There is a stream of funding specifically to recruit health
workers out of minority communities that is new, thanks to the
Affordable Care Act, and one that we are actively working on
under the jurisdiction of the Health Resources and Services
Administration. We are re-looking at what is defined as
underserved areas to make sure that we have the most accurate
data.
So that, as new workers come around, we are working to re-
designate graduate education slots to focus on primary care and
preventive care and gerontology, areas that have been missing,
so that we will be training more docs. The Affordable Care Act
contains a couple of years of funding increases for doctors who
serve Medicaid patients, paying them at the rate for Medicare
patients, again, recognizing that the pay differential often is
discouraging to health care providers serving in underserved
areas.
So we are trying to look at everything from training and
recruitment to slots to placement. The additional work, which
is under----
Chairman Kline. I am sorry to interrupt, Madam Secretary.
The gentlelady's time has expired.
Mr. Miller, you are recognized.
Mr. Miller. Thank you, Mr. Chairman.
And I would just like to take a moment to recognize the
presence in our hearing room today of Mr. Bill Payne, the
brother of Donald Payne, our colleague on this committee and
our colleague in the House.
[Applause.]
Mr. Bill Payne is a distinguished public service as--
servant in his own right. Welcome, thank you so much and many
of us had the opportunity--the Speaker sponsored a wonderful
memorial service yesterday for Donald and many of us had the
opportunity to participate with you and your family. And we
grieve the loss of your brother.
Chairman Kline. I thank the gentleman and I welcome Mr.
Payne.
I agree with Mr. Miller, the Ranking Member, it was,
indeed, a moving and memorable service yesterday and we are
very glad to have you here today.
Dr. Bucshon?
Mr. Bucshon. Good morning. The first question I have is can
you--and, based on some previous questions, can you give me
what you consider a definition of a ``small business,''
because, based on some questioning from the other side, it
seemed to me that your interpretation is that is 50 employees
or less.
Secretary Sebelius. A small business is----
Mr. Bucshon [continuing]. Well, because the question was
asked what the effect on small businesses is with the
Affordable Care Act, and you focused on the fact that employers
with 50 or less employees would not be affected or have all of
these credits and exemptions. So, based on that interpretation,
I got the impression that you considered a small business
people that have 50 employees or less. Because that is a
different description of what constitutes a small business from
what we all know is really the truth.
Secretary Sebelius. I don't have any starting place of a
definition. I think I was asked were employers under that level
exempted. And my answer was yes.
Mr. Bucshon. Well, the question was small businesses and so
my argument is that, yes, that is true, what you said about 50
employees or less. But I would argue that small businesses
actually incorporates a much larger group of employers. And I
can tell you from experience, talking to business owners in my
district, that the Affordable Care Act will have a dramatic
negative effect on businesses.
And I know Dr. DesJarlais' questioning about employers
dropping their insurance. At least in southwest Indiana, I talk
to small business people all the time that provide health
insurance and they all say they don't know anyone that they
have talked to in southwest Indiana, I can speak for, that is
not planning to drop their private health insurance for
financial reasons and pay the penalty.
The next question I have is--you talk a lot about quality
when you are talking about savings rather than cuts. And, so, I
wouldn't--as a physician, I would like you to, kind of, tell me
how an insurance company controls quality of health care.
Because in my view, the quality of health care comes at the
provider level and the insurance company, essentially, pays the
bill.
And, so, when you talk about quality and making--you know,
with these Medicare Advantage plans, and you are looking for
quality plans, and that is why you are cutting payments to
those; you are not saving anything, you are cutting payments to
programs that seniors really like. How are these insurance
companies improving the quality of the health care, itself?
That is my question.
Secretary Sebelius. Well, I would, certainly, not disagree
that quality health care is at the provider level. I think that
what we are trying to do is stop overpaying for plans that are
currently paid at a rate of about 107 percent of fee-for-
service, with no differentiation in the outcome of those
patients. So diabetes management is no different in a Medicare
Advantage.
They may get a gym membership, they may get free glasses,
but there is no apples to apples comparison between patients;
there is no differential. So the additional financing is not
providing additional incentives to providers who, actually,
manage chronic disease better or help reduce preventable
hospital stays, bundle care, coordinate care.
Mr. Bucshon. But you would have to agree that these
Medicare Advantage plans provide a service that seniors want
and that is why they enroll in them. So, yes, they do get more
services and better--you know, as you know, a health insurance
policy--one policy isn't the same as the next. They cover
certain things, they have got different co-pays.
I mean, you would agree, and I know being in the health
care industry, it is a very, very complicated system that most
of us don't really, truly understand. But I would argue that
those programs provide more services, hence the reason that
they are paid more. The last question is--can you describe your
position on the ``doc fix,'' so to speak; the dramatic cuts in
provider payment.
But, then again, on your controlling the cost or savings,
so to speak, you plan to limit reimbursement to providers based
on, and I will read this, ``rate of growth and productivity in
the economy at large''. So, if we would allow payments to go
down under the formula, the SGR formula, or we cut payments--or
allow the payments to come down, by limiting the growth, based
on the general economy, I don't see the difference; it is the
same thing.
Chairman Kline. Excuse me; can we take that for the record,
please? We are running--I am very mindful of your time, Madam
Secretary. I have got other members to answer so if you could
provide an answer to that for the record, please.
Secretary Sebelius. Sure----
Chairman Kline. Mrs. Davis?
Mrs. Davis. Thank you, Mr. Chairman.
And, Madam Secretary, thank you very much for joining us
today. I wanted to turn to one area of disease prevention,
where we know that trying to quantify the outcomes are very,
very important. A bipartisan group of us in the House and
Senate have been working on approaches to decrease instances of
Type 2 diabetes.
And, as you are aware, 79 million Americans have pre-
diabetes, which puts them at risk in developing Type 2. And
complications cost our nation somewhere in the area of about
$218 billion every single year in health care costs. With about
25 percent population at risk, there is a national interest, I
think, and I believe--I know how supportive you are in
addressing these issues, in reducing the incidence of diabetes
and having far better outcomes for people.
The health bill included bipartisan legislation to
establish the National Diabetes Prevention Program, which
builds on evidence-based methods to give individuals at risk,
guidelines on how to prevent Type-2 diabetes. And it is
eligible for funding from the Prevention and Public Health Fund
at HHS.
Do you see continuing our combating instances of Type 2
diabetes as a national priority? And do you see that funding
for the National Diabetes Prevention Program must come out of
the Prevention Fund? And, if that is the case, is it at risk if
we, essentially, scrap funding for that Prevention Fund?
Secretary Sebelius. Well, I think, Congresswoman, you have
just identified one of the clearly looming health threats, and
present health threats, that is, I think, a target of the
Prevention Fund funding. And we think diabetes efforts and,
certainly, focusing on pre-diabetes to try and ensure that more
Americans don't end up with diabetes in the long-term, is an
effort that not only lowers costs but saves lives in the long
run.
So we have, actually, not only invested--a number of the
community transformation grant activities are focused directly
on communities where there is a high prevalence of diabetes.
And a number of the Beacon Community efforts, with some of the
Electronic Health funding, are focused on diabetes efforts.
We have special projects being run in tribal communities,
where the diabetes rates are even higher than in the general
population. And I would say that the Prevention Fund is an
underlying health funding stream for just the kind of efforts
that you are describing. And, of course, it would be at risk if
the Prevention Fund is eliminated because there are no funds
available, often, at the state and local levels. So this would
continue to be a huge problem.
We also have a Million Hearts effort, where we are trying
to have partnerships with not only health care providers but
some of the major drug companies, and others, around disease
management issues that we think could save people from strokes
and heart attacks in the future if we focus on some of the
underlying causes of blood pressure control and cholesterol
issues, that often also present themselves in diabetes care.
So having those strategies in place, having Medicare,
frankly, invest in prevention efforts--Medicare used to, you
know, pay for an amputation but not for diabetes screening.
Those screenings are now available without co pays and, we
think, that is a huge step forward.
Mrs. Davis. Yes. If, in fact, we were to really target that
fund, are there any other ways that those issues would be
addressed?
Secretary Sebelius. Well, I think that it is very
difficult, often, to have people in particularly difficult
budget times, but even in good budget times, look at
investments in longer term strategies. It hasn't happened in
the past. I am not very confident it would happen in the
future, in spite of the fact that we pay the health results
every day and we pay the costs for them.
Mrs. Davis. I really appreciate that. I think one of the
other things that we have seen on the Armed Services Committee
is how important, just, preventive health care for young people
is, actually, because if we are finding that far too many young
people are not even able to be eligible for the military
services today because of their health care.
Secretary Sebelius. I think the data right now, which is
really alarming, is about 30 percent of the age-eligible young
men and women aren't, actually, physically eligible to even
consider Armed Services as a possibility.
Mrs. Davis. If you could help tie those issues together, I
think that would be very helpful because I don't think we want
to turn around and find that we really have totally ignored
this problem in the future.
Secretary Sebelius. Well, certainly, the effort that the
First Lady is leading around childhood obesity, the community
efforts underway to look at what happens if you increase
exercise, have more access to fresh fruits, your efforts in
Congress to change the child nutrition guidelines around school
breakfast and school lunch, is a start of the kind of
prevention effort that would, hopefully, produce a lot fewer
diabetics when they get to be 50.
Mrs. Davis. Thank you.
Secretary Sebelius. Thank you, ma'am.
Chairman Kline. The gentlelady's time has expired.
Mr. Gowdy?
Mr. Gowdy. Thank you, Mr. Chairman.
Good morning, Madam Secretary.
Secretary Sebelius. Good morning.
Mr. Gowdy. With respect to the HHS mandate, the most recent
mandate, you said, and I quote--``this decision was made after
very careful consideration, including the important concerns
some have raised about religious liberty. I believe the
proposal strikes the appropriate balance between respecting
religious freedom and increasing access to important preventive
services.'' There are only three balancing tests that I am
aware of when it comes to matters of Constitutional
significance; there is the rational basis balancing test for
economic legislation, there is the intermediate, or mid-level
scrutiny for gender-related Constitutional issues, and then
there is the heightened, or strict scrutiny, when fundamental
rights are involved.''
And, given the fact that I am sure you can see that
religious liberty is a fundamental right, which of those three
Constitutional balancing tests were you making reference to
when you said you ``balanced'' things?
Secretary Sebelius. Congressman, I am not a lawyer and I
don't pretend to understand the nuances of the Constitutional
balancing tests.
Mr. Gowdy. But you would agree----
Secretary Sebelius. I assume you are talking about the
preventive services----
Mr. Gowdy. You would agree it is a legal issue, right? I
mean, are we going to wind up in this--last time I was at the
Supreme Court, I think you and I were there the same day during
the oral argument. This mandate is going to wind up in the
Supreme Court.
To me, it is--we can talk about the politics all we want
to, I want to talk about the law. I want to talk about
balancing religious liberty with whatever else you think it is
appropriate to balance it with because you used the word
``balance.'' Which of those three tests is the appropriate test
for us to use when considering religious liberty?
Secretary Sebelius. Again, Congressman, I am not going to
wade into Constitutional law. I am talking about the fact that
we are implementing the law that was passed by the Congress,
signed by the President, which directed our department to
develop a package of preventive health services for women. We
have done just that with the advice of the Institute of
Medicine and promulgated that rule.
Mr. Gowdy. Do you agree with me that government cannot
force certain religious beliefs on its citizens?
Secretary Sebelius. Yes, sir.
Mr. Gowdy. And why can they not do that?
Secretary Sebelius. Why can government not----
Mr. Gowdy. Yes.
Secretary Sebelius [continuing]. Force religious beliefs?
Mr. Gowdy. What is the basis of that?
Secretary Sebelius. The separation of church and state.
Mr. Gowdy. Well, it is the Constitution, right, the First
Amendment? Can government decide which religious beliefs are
acceptable and not acceptable?
Secretary Sebelius. No, sir.
Mr. Gowdy. And why can they not do that?
Secretary Sebelius. It is part of our Constitution.
Mr. Gowdy. It is a legal analysis. I mean, for me, this is
not a political analysis; it is a legal analysis. So, before
this rule was promulgated, did you read any of the Supreme
Court cases on religious liberty?
Secretary Sebelius. I did not.
Mr. Gowdy. You would agree with me that our society has a
compelling interest, not just an important interest, a
compelling interest in having an educated citizenry, right?
Secretary Sebelius. Yes, sir.
Mr. Gowdy. Right. So when a state said you have to send
your children to school until a certain age and a religious
group objected because they did not want to send their children
to school until that certain age, do you know who won? It went
to the Supreme Court.
Secretary Sebelius. I do not.
Mr. Gowdy. The religious group won. I think the state has a
compelling interest in banning animal sacrifice, whether it is
compelling or just important is irrelevant for purposes of this
discussion. When a state banned a practice of animal sacrifice
and a religious group objected, it went to the Supreme Court.
Do you know who won that?
Secretary Sebelius. I do not, sir.
Mr. Gowdy. The religious group won. I think the state has
an important interest in having license tags on automobiles so
law enforcement can know who they are dealing with. When a
religious group objected to having a certain license tag on
their cars, it went to the Supreme Court. Do you know who won?
Secretary Sebelius. I do not.
Mr. Gowdy. The religious group won. And, most recently, I
happen to think government has a compelling interest in
avoiding gender discrimination but this Administration took to
the Supreme Court a case, Hosanna-Tabor, where a religious
group wanted to decide who its teachers were, even if it meant
gender discrimination. It was a nine to nothing opinion in
favor of religious liberty.
So when you say you balanced things, can you understand why
I might be seeking a Constitutional balancing instead of any
other kind?
Secretary Sebelius. I do, sir, and I defer to our lawyers
to give me good advice on the Constitution. I do not pretend to
be a Constitutional lawyer----
Mr. Gowdy. Is there a legal memo that you relied on, at
least when a----
Secretary Sebelius. I relied on discussions.
Mr. Gowdy. At least when an Attorney General Holder made
his--appointments, there was a legal memo that he relied on. Is
there one you can share with us?
Secretary Sebelius. Attorney General Holder, clearly, runs
the Justice Department and lives in a world of legal memos.
Mr. Gowdy. Do you have attorney----
Chairman Kline. I am sorry, but the gentleman's time has
expired. You can ask such a question for the record.
Mr. Andrews?
Mr. Andrews. Thank you, Mr. Chairman.
Madam Secretary, you didn't score well on the pop
Constitutional law quiz, I am sorry.
Secretary Sebelius. I got a kind of drift that----
Mr. Andrews [continuing]. But, more importantly, you did
acknowledge the Constitutional principles that my friend just
talked about because you put a religious exemption in the rule
that you put forward. So we thank you for being sensitive to
that.
We have heard a lot of dark predictions this morning about
terrible things that are going to happen as a result of the
Affordable Care Act. And I think it is important that we get
some context and look at the sources of those predictions and
how they did on some of their prior predictions about the
Affordable Care Act.
We heard from your critics and critics of the Act that
premiums would skyrocket in the private sector, as a result of
the Act. But we hear from the Kaiser Family Health Foundation,
this very morning, that the medical loss ratio provisions that
you were overseeing will likely yield $1.3 billion dollars this
year, in rebates to payers of health care premiums, because of
the quality of the law.
We heard it this morning, that the new IPAP would result,
and I am quoting, in ``$500 billion in Medicare cuts.'' A more
accurate statement is that if the growth of Medicare spending
continues on the same, lower glide path that it has been on for
the last 18 months, my understanding is the IPAP provisions
would never kick in because we would be below the projected
growth rate and there wouldn't be any IPAP decisions or
recommendations.
We heard, this very morning, that Medicare Advantage is in
great peril and, literally, falling apart because of the
Affordable Care Act. It is my understanding that your
department released a report several weeks ago that said
Medicare Advantage premiums are 7 percent lower than they were
last year and enrollment is 10 percent higher than it was last
year.
And then, finally, although we don't hear much about them
anymore, we heard for years about the death panels. Let me just
ask you that question. Has your department formed a committee
that votes on whether any person in this country gets medical
care or not?
Secretary Sebelius. No, sir.
Mr. Andrews. Are you obligated to do so under the law?
Secretary Sebelius. Absolutely not.
Mr. Andrews. Okay, well, we heard, you know, for months,
that this was eminent. So, now, we are hearing this morning
about a prediction that, unfortunately, may come true if
Congress makes the wrong decision this week. And that is that
the Prevention Fund that you oversee would be drained in order
to make this Hobson's choice between making college more
affordable and making preventive health care available to
people.
Now, I want you to answer this question for us--if a young
woman is at the age where she thinks it is the right time for
her to start to get cervical and breast cancer screenings to
take proper care of herself and she is uninsured, and she does
not have a sufficiently high income in her pocket to pay for
those tests and those screenings, is one of the sources that
she might receive that screening from the Prevention Fund that
we are talking about this morning?
Secretary Sebelius. Yes.
Mr. Andrews. What would she do if that Prevention Fund did
not exist? Where would she get that cervical or breast cancer
screening?
Secretary Sebelius. It is possible that she could qualify
for a program but what we know is, right now, unfortunately,
there are millions of women in the situation that you have
described and they go without the screening. What we know about
breast cancer is that if it is found early, it has got a 90
percent survival rate. If, indeed, it is found later in the
disease progression, the survival rate drops to less than 30
percent. So she would be in a very precarious situation, not
being able to identify----
Mr. Andrews. She, sort of, just opts for the malignancy
lottery. She hopes that she gets a winning ticket and doesn't
have that problem. Ten percent of the country's health care
expenses are attributable to obesity and Type 2 diabetes. Are
there preventive services offered for Type 2 diabetes under
this Prevention Fund that we are talking about?
Secretary Sebelius. Yes, there are.
Mr. Andrews. And what would happen to people if that fund
were removed? Where would they get their services to begin to
manage their diet and their exercise and their blood sugar, to
avoid further complications?
Secretary Sebelius. Again, we don't have to look very far
because the Prevention Fund is relatively new. So the kind of
costs that not only are imposed upon people's shortened lives
and their family for loss of a loved one, and their reduced
productivity to their employer, but the kind of health care
costs are a part of what is driving health care in this country
on an ever-increasing pace.
We pay lots of money, private insurers, public insurers,
hospitals, taxpayers, for chronic disease and diabetes and
obesity and smoking are underlying those chronic diseases. So
we know that anything that can reduce those chronic disease
onsets will, indeed, save money, save lives, save productivity,
in the long run.
Mr. Andrews. Thank you, Madam Secretary.
Thank you, Mr. Chairman.
Chairman Kline. I thank the gentleman.
Dr. Heck?
Mr. Heck. Thank you, Mr. Chairman.
And, thank you, Madam Secretary, for being here. I have
enjoyed the discussion this morning and appreciated you
acknowledging the difference between access to health insurance
and the access to health care, in the answer to the question
from my colleague from Ohio; certainly the two are not
synonymous. And, with fewer health care practitioners, true
access to health care will, obviously, be impeded.
As you know, the Association of Medical Colleges projects
that, by 2020, the U.S. will be facing a shortage of 91,500
physicians, both specialists and primary care docs. I am
concerned that in a time when we need to grow the physician
workforce, and we have heard you reference the investments in
health care workforce in the Affordable Care Act, that the
Administration is actually proposing cutting Medicare support,
physician training and the critical services provided by
teaching hospitals.
It is estimated that the President's proposal to cut
Medicare IME payments by 10 percent will cost America's
teaching hospitals over $685 million annually and would
severely impact their ability to train the next generation of
physicians. So can you explain the Administration's rationale
behind this cut when, throughout the debate on the Affordable
Care Act, and here this morning, we have heard about the new
investments in growing the health care workforce?
Secretary Sebelius. Well, again, Congressman, I think that
the workforce issue is one that we have tried to focus on well
before, even, the debate on the Affordable Care Act began
because it is a situation that was looming in this country with
an aging population and not nearly enough health care
providers.
And, so, we are really reassessing all the tools that we
have throughout the department with graduate medical education,
with Medicare, with the National Health Service Corps, with
training of community health workers around some medical home
models, with a variety of strategies to try and increase the
pipeline of medical providers. And, not only increase our
pipeline, but try and refocus on primary care providers,
gerontologists, nurse practitioners, and others, who will
deliver the kind of primary and preventive care we think is so
important.
Mr. Heck. Well, and I appreciate using all those tools but,
the fact is, cutting IME reimbursements to teaching hospitals
cuts the pipeline. We can give Pell Grants to get them through
college. We can get them into the health profession's Student
Loan Re-payment Program after they are done but they still need
to go to a residency program. And decreasing IME funding will
result in fewer residency slots, which will result in fewer
doctors.
So, again, I am caught because there is a lot of talk about
investing in health care workforce yet there is significant
cuts to training the physicians of tomorrow.
And, with that, Mr. Chairman, I would like to yield the
rest of my time to my colleague from South Carolina, Mr. Gowdy.
Chairman Kline. Let me interrupt for just a minute. We have
had, apparently, an operator error in our light system. You
have about 1\1/2\ minutes.
Mr. Gowdy. I thank the gentleman.
Madam Secretary, I think the last time you were here I
asked you about tort reform. And I don't think it was the most
recent State of the Union, it might have been the one before
that, the President mentioned tort reform, specifically, in his
State of the Union address. The House just passed H.R. 5, which
is our version of tort reform.
Do you know whether you or the Administration took a
position on H.R. 5? And what forms of tort reform would you
support?
Secretary Sebelius. Congressman, I did not take a position
on H.R. 5. I know that the President has said, from the outset,
that he certainly opposes anything that imposes caps on injured
patients and is also not supportive of programs that pre-empt
the state court system.
We have, underway, a series of efforts looking at
strategies that both lower liability rates for practicing
physicians, increase safety initiatives and compensate injured
patients more promptly, that are yielding, actually, some very
promising results. And I would be happy to provide that data to
you. They are in place in hospital systems, in provider groups
and in states across the country.
Mr. Gowdy. What about tort reform for Medicare, Medicaid,
Tri-Care, Federal Bureau of Prisons; things that are inherently
Federal. I understand he doesn't want to take over the state's
civil justice system but what about tort reforms? If 88 percent
of all the payment comes from one of the Federal providers,
what about tort reform that connects Medicare, Medicaid, Tri-
Care, Federal Bureau of Prisons?
Secretary Sebelius. I have no idea what you are putting
under an umbrella of tort reform so that is an impossible
question for me to answer--court claims act----
Mr. Gowdy. I am aware of that.
Secretary Sebelius [continuing]. Where he provides a limit
on any suit that is against a Federal entity so what----
Mr. Gowdy. Are you opposed to caps for non-economic damages
in all instances, pain and suffering caps?
Secretary Sebelius. Again, Congressman, you show me the
bill and I would be happy to take----
Mr. Gowdy [continuing]. H.R. 5.
Secretary Sebelius. We don't really deal in the tort reform
arena; that isn't our area in Health and Human Services. We are
trying to avoid errors to patients, though. We are trying to
help hospital systems limit the number of cases where a lawsuit
would be brought.
I believe in prompt payment to victims. I, certainly,
believe in helping health care providers have affordable rates
in malpractice coverage. Most of that experience comes from
former lives; it is not an area that I deal with day in and day
out today.
Chairman Kline. Sorry, the gentleman's time has expired.
Ms. Woolsey?
Ms. Woolsey. Thank you, Mr. Chairman.
Thank you, Madam Secretary, you are amazing. I know you
know, and I am going to repeat what others have said; tomorrow
the Republicans are going to bring to the floor legislation to
postpone their student loan interest increase rate that is
included in their Republican Ryan budget. That would raise the
interest rate to 6.8 percent over the current 3.4 percent.
In so doing--we are glad they want to postpone it--I am.
But they want to pay for it out of the Prevention Fund; that is
their offset. The Democrat offset would be to end tax subsidies
for big oil companies. We think that is where you go for
offsets, not from the people you are trying to help in the
first place.
Speaker Boehner refers to the Prevention Fund as a ``slush
fund.'' Well, that slush fund is already--it is not a slush
fund. That fund, that Prevention Fund, is already being
accessed. And some of the--and you know what that fund provides
for us. What I would like you to talk about--the other people
have, kind of, missed this one. It is increasing child
immunization and screening for newborns.
What happens if these immunizations are not made available?
What is going to happen to these children and our society at
large? And what happens if newborns aren't screened? Why do we
care?
Secretary Sebelius. Well, Congresswoman, what we know is
that the Children's Immunization Program, which is, I think,
one of the great health successes of, frankly, the last
century, to get our children into a situation where they now
have resistance to a lot of deadly and infectious and
preventable diseases. It is an investment that the health
studies show returns about $10.00 for every dollar invested.
It is significantly funded through the Prevention Fund;
that plus the operators at--at the Centers for Disease Control
and Prevention, who have public health laboratories in states
across the country, to fund health professionals in states
across the country so we can both track disease surveillance
and prevent disease. It is a huge payoff. We know what happens
in countries where the immunization rate is far lower and
children die.
Ms. Woolsey [continuing]. Children die. And, if newborns
aren't screened, what do you find--what do we learn when
newborns are screened?
Secretary Sebelius. Well, again, I think the screening is
advantageous because what it does is highlight, at the very
beginnings of life, what are the issues that may be
complicating that child's ability to succeed and have a healthy
and prosperous life. So addressing it early, finding problems
early is not only saving those children from potentially
threatening disease but a lifetime of health issues.
Ms. Woolsey. Thank you, and what impact would using that
fund to offset--to do away with that fund, virtually, what
impact would that have on community health centers?
Secretary Sebelius. Well, I think that it has a significant
impact across the board. And, I think, Congresswoman, your
earlier issue raises just a false choice. In America, we should
both invest in the education of our children and not allow
student loan rates to double, as they are scheduled to do in
July, which would make student loans far less affordable to
working class families.
And we would have kids drop out of school and not access a
college degree. And choose between that and keeping our
children healthy in the first place so they can get to college.
So I think there is a choice here that is not--there are,
clearly, ways that student loans can be funded other than
destroying the Prevention efforts, which are finally underway
in this country, after decades of talking about them.
Ms. Woolsey. Well, thank you, because I agree with you, of
course. You know, the Affordable Care Act provides states with
millions of dollars in grants to strengthen statewide insurance
review programs. My state of California has benefitted, with
$5.3 million to fight unreasonable premiums.
And the California department insurance recently reduced
four rate increases, by an average of 9.65 percent, saving
87,000 Californians; a total of $1.66 million, per month, in
premium increases. I think----
Chairman Kline. The gentlelady's time has expired.
Mr. Ross?
Mr. Ross. Thank you, Mr. Chairman.
Madam Secretary, thank you for being here. You know, when
the President started his campaign for health care reform, he
talked about a health care crisis. Over time, when it didn't
seem to be getting traction, it turned into a health care
insurance crisis. And my question to you is--would you not
agree that health insurance carriers are an indispensable
party, in the aggregate, to the resolution of affordable and
accessible health care in this country?
Secretary Sebelius. That health care insurers are
indispensable----
Mr. Ross. Correct.
Secretary Sebelius [continuing]. Is that the question? I
think that is what the President believes, which is why he
built the new system around the private health market.
Mr. Ross. Well, I don't think he built it around the
private health market because I want to make sure we
understand. As much as I don't like writing my premiums and as
much as I think insurance companies are their own worst
enemies, health insurance, as in every insurance, is private
capital backing a risk. When the government gets involved in
the business, it's government dollars; it's taxpayer dollars,
covering that same risk or being part of that same risk.
My question to you is, in light of where we are with this
health care reform now before the Supreme Court, should we find
a mandate to be un-Constitutional--and you have addressed
affordability and accessibility in your opening, and you talked
about market forces. But would it not be in the best interests
of every American to have interstate sale of health insurance,
over policies that can meet the demands of individual choice?
Would that not create a competitive environment that would
bring price stability and keep the government out of being in
the business of funding health care?
Secretary Sebelius. Congressman, I have been involved in
the health insurance market for decades and what we have is a
private health insurance market that, frankly, is fully able to
operate in market strategies and decreasing in members' year in
and year out. The health insurance rates skyrocket, fewer
people, particularly, young and elderly people drop out----
Mr. Ross [continuing]. Right. We can do assigned risk pools
to take care of pre-existing conditions.
Secretary Sebelius. [Off mike]
Mr. Ross. Yes, we can. We have done it in other areas. We
can also require that there be more availability of choice to
consumers by allowing for interstate sale. But, more
importantly, we can incentivize wellness if we make it part of
the choice that the consumer has.
What we are doing here is the same thing we have done to
the Student Loan Program and the health--we have nationalized
it, suppressed the rates, and now we are telling the American
public that if you want to have a student loan at all, you have
got to come to the Federal government. We have taken away
competition. We have taken away choice and we have taken away
market forces that are absolutely necessary if the individuals
are going to want to have the coverage they deserve at the
price they want.
Secretary Sebelius. Well, again, sir, I think you have
mischaracterized what the new exchanges will do, which is offer
competitive choice in a private market strategy around--it does
get rid of some of the most onerous rules of insurance
companies; they can't any longer kick people out because of
pre-existing conditions.
They can't charge women 15 to 20 percent more than they
charge males for the same disease. They cannot operate with
rules that rescind an insurance plan if you make a technical
mistake. They can't put a lifetime limit on caps but they will
compete on the basis of price and quality.
Mr. Ross. How do I respond to my constituents who, back
home, said, ``I was told I could keep my doctor but now my
doctor won't keep me because of the reimbursement reductions
that are being done in Medicare?''
Secretary Sebelius. There have been no reimbursement
reductions----
Mr. Ross [continuing]. There will be. But we just argued
over this 6 months ago, in trying to do a piecemeal approach to
guaranteeing that our----
Secretary Sebelius. A long-term approach would be much
preferable and we would love to work with you around a long-
term approach.
Mr. Ross. And what are you saying about giving student loan
forgiveness, then, to physicians out of school, that decide
they want to sign a contract with the Federal government to
handle Medicare patients?
Secretary Sebelius. I am sorry, say----
Mr. Ross [continuing]. Incentivize medical students to have
a loan re-payment program if they will commit so many years to
taking Medicare patients.
Secretary Sebelius. Well, sir, right now we have 98 percent
of doctors involved in Medicare and it hasn't been a problem.
The problem is that there is no long-term solution to the
sustainable growth rate and that looms----
Mr. Ross [continuing]. But I won't get into that now. I
want to ask you real quickly because--CBO Director, Doug
Elmendorf, testified that ``Obamacare'' would cost 800,000
jobs. March 13th of this year, CBO released a projection that
the new health care law will cost $1.76 trillion over the next
10 years, nearly double the $940 billion estimate provided when
it was signed into law.
Have you or anyone in your administration discussed this
with the President? And how do you reconcile this increased
exponential cost, in light of the fact that this economy
doesn't seem to be doing too well, either in revenue generation
or in spending cuts?
Secretary Sebelius. Sir, I am not sure of the precise
quote. I know the 800,000 job loss is not, necessarily, a job
loss; it was the projection by the Congressional Budget Office
that more people would have the ability to retire earlier,
choose other options, who are now job locked because they are
terrified of losing----
Mr. Ross. The cost was highly----
Secretary Sebelius [continuing]. Health coverage. The cost
differential, I can get the quote.
Mr. Ross. [Off mike]
Secretary Sebelius. The CBO continues to suggest that the
Affordable Care Act will, indeed, reduce the deficit by over
$100 billion the first decade and close to $1.1 trillion over
the second decade; that is--those numbers continue to be
updated and, so, I would be happy to respond in writing to
what, exactly, you have quoted there. I don't know. But the
$1.1 trillion deficit reduction is an updated number from CBO.
Chairman Kline. The gentleman's time is expired.
Mr. Hinojosa?
Mr. Hinojosa. Thank you, Mr. Chairman.
Secretary Sebelius, over the past 2 years, the Centers for
Medicare & Medicaid Services, or CMS, have been working to
implement new operating systems that will allow for CMS to
process claims in compliance with the new HIPAA requirement. In
January of this year, CMS began the processing of those
electronic claims through HIPAA Version 5010.
And it is my understanding from providers who have visited
my office, that this change has been met with some
reimbursement delays, in particular, for dual-eligible
patients. Therefore, I would like to submit a question for the
record to ask you to work with me and my staff to see what can
be done to ensure these delays can be avoided in the future
because they say that it has been, in some cases, taking 60
days to get paid.
Madam Secretary, the Prevention and Public Health Fund is
an opportunity to invest in the health services before people
are sick, instead of paying for more costly care. This is
important for racial and ethnic minorities, who continue to
have higher uninsured rates and are less likely to gain access
to health care when they really need it. What are the specific
ways in which the fund is being used to mitigate the impact of
these differences in access?
Secretary Sebelius. Well, Congressman, first of all, we
look forward to working with you around the----
Mr. Hinojosa. Thank you.
Secretary Sebelius [continuing]. Delayed billing issue and
take a strong look at it because, certainly, the health care
to, particularly, the poorest, oldest Americans is a high
priority. In terms of the Prevention Public Health Fund, you
are absolutely right that identifying early, preventing causes
and, even, dealing with disease at the earliest stage, is not
only saving lives but saving dollars.
So the Prevention Fund is investing in everything, as we
have talked about, from immunization of kids to disease control
to breast and cervical cancer screening for uninsured
Americans; a whole series of strategies. Smoking cessation,
which we know now that tobacco causes about 400,000 premature
deaths a year in this country, has a huge toll on workforce
productivity, and any effort to reduce the smoking rates pays
off.
I think, in the case of particularly the minority
communities, the prevalence of chronic disease is significantly
higher. Diabetes rates are higher, blood pressure issues are
higher, obesity rates are higher. So efforts to, really,
develop strategies that work, have access to prevention and
care, supporting everything that we are doing, like public
housing that gives, now, residents smoke-free options so they
and their kids don't have to live in situations of secondhand
smoke, delivering clinical preventive services in a much more
user-friendly fashion, are all ones that will save lives and
lower costs.
Mr. Hinojosa. It is clear that health reform is making a
difference for communities of color. Nearly 1.2 million young
adults of a racial and ethnic minority background were able to
get on their parent's plan because of this Affordable Care Act.
And we are very happy about that. This includes, nearly,
750,000 Latino adults under the age of 26. This is progress but
we all know that an insurance card isn't always enough.
In fact, the Agency for Health Care Research and Quality
reported that disparities in health care treatment between
whites and minorities have worsened every year since the report
was first made public. What investments does the President's
budget make to eliminate racial and ethnic disparities that
affect access to quality care?
Secretary Sebelius. Well, I think there is a series of
strategies; more health centers in underserved populations,
bringing health care providers to where people live,
additional, I think, support for minority health workers,
knowing that having culturally competent, language competent
workers dealing with patients is incredibly important,
certainly expanding insurance coverage.
We know minority communities are far more likely to be
uninsured than insured. So, looking forward to 2014, when there
will be insurance coverage available at an affordable rate and
that will have a huge impact on helping the health disparity
situation. Additional research is in the budget on some of the
health disparity strategies and, certainly, looking at the
prevention, which now is available to seniors without co-pays,
with Medicare it is available, with private insurance plans. So
prevention will be front and center, in terms of health care
responses.
Mr. Hinojosa. Thank you----
Chairman Kline. I am sorry to interrupt.
We are, Madam Secretary, mindful of your hard stop at
12:30. We have three more members with questions so we are
going to be almost exactly on time.
Mrs. Roby?
Mrs. Roby. Thank you, Mr. Chairman.
Thank you, Madam Secretary, for being here. As you may
know, the Catholic TV station, the Eternal Word Television
Network, EWTN, is located in my home state of Alabama. And EWTN
does not fall under the small umbrella of the religious
exemption of a religious employer, nor do many hospitals,
charitable service organizations and universities. And I
understand that you, along with the Administration, are working
on a, quote--``accommodation'' for groups that fall in this
category.
But my question is--putting aside any future accommodation,
why is EWTN, and similar religiously affiliated entities, not
completely exempt from covering these services, especially when
these drugs, such as the ``morning-after pill'' and services
fundamentally contradict their moral belief?
Secretary Sebelius. Congresswoman, the Affordable Care Act
made it clear that, in the future, insurance policies should
include health benefits essential to women's health care and,
often, they are missing. And, so, we asked the Institute of
Medicine to give us an analysis of what were the key preventive
health services for women. They included everything from
domestic violence screening to maternity care to contraceptive
coverage.
We then looked to state law; 27 states in the country have
mandatory contraceptive coverage. And we looked at the various
kinds of exemptions that were currently present in the majority
of states around the country----
Mrs. Roby [continuing]. Let me, maybe, ask----
Secretary Sebelius [continuing]. That is why we developed
the----
Mrs. Roby. Right, let me get to it because I only have a
short amount of time and this Chairman is pushing it. Why are
you defining some religious organizations as acceptable for the
full exemption and others as only religious enough to qualify
under some other----
Secretary Sebelius [continuing]. Again, we were guided by
the exemption that was in place; we didn't invent this
exemption. The exemption that was in place in the majority of
states that had any religious exemption, and a number of them
don't have any, is what we proposed, with an additional issue
that we, in the year and in the ANPRM that we have just issued,
we will provide a series of strategies for religious employers
who currently do not offer contraceptive coverage as part of
their health plan, to have the opportunity to employ one of
these strategies.
The mandate is not to the employer; it is to the insurance
company. Insurance companies will offer preventive services to
women, at no cost to those women, and religious employers will
not have to purchase, or refer, or pay for, that coverage.
Mrs. Roby. All right, well, let us--we have talked a lot
this morning about the preventive care and, so, I just have,
very quickly, a series of questions. And I want to make sure
that we are very clear on those. And yes or no is good. Is your
testimony that without the Preventative Fund, there would be no
more screenings for children anywhere?
Secretary Sebelius. Of course that isn't.
Mrs. Roby. Okay. Isn't it true that the statute does not
direct preventive funds to any specific program?
Secretary Sebelius. It is the Prevention Fund and we have
worked with bipartisan members of both----
Mrs. Roby [continuing]. And isn't it also true that the
President's very own budget made cuts to the Preventative Fund?
Secretary Sebelius. The President's budget did recommend,
over 10 years, a reduction in the Prevention Fund, certainly
not an elimination of the Prevention Fund.
Mrs. Roby. But there were cuts to the Preventative Fund----
Secretary Sebelius [continuing]. There was a reduction in
the Prevention Fund, made in the President's budget, which
would still leave about a billion-plus dollars a year to invest
in these critical health programs.
Mrs. Roby. Okay. And, since I have a little bit more time,
I am going to circle back. I wanted to make sure I got these
questions in. All plans after 2014 are expected to include
coverage for sterilization and contraception, including drugs
that some believe can cause abortion, i.e. the ``morning-after
pill'' that I have already mentioned. If an employer, such as
EWTN, that I mentioned, the Catholic television station, has a
moral objection to such coverage, what penalties will be
imposed on the employers or, as you clarified, the insurance
providers?
Secretary Sebelius. Again, the mandate is not on the
employer; this is a direct----
Mrs. Roby [continuing]. What penalties will they suffer if
these employers do not offer these services?
Secretary Sebelius. Well, those plans won't be certified to
be sold in the market.
Mrs. Roby. Okay.
Mr. Chairman, I yield back.
Chairman Kline. I thank the gentlelady.
Mr. Kelly?
Mr. Kelly. Thank you, Chairman.
Ms. Sebelius, thanks for being here today. I had a
question--early on, Dr. Roe had asked you some questions. We
held a hearing, back in western Pennsylvania, regarding lawyers
and their approach to the Patient Protection Affordable Care
Act and the costs that were going to be involved.
And maybe I misunderstood, but you said that the reason
that there is a--that the people don't know--there is a lot of
misconceptions that are still out there. You still do believe
there are a lot of misconceptions about the protection plan of
the Affordable Care Act?
Secretary Sebelius. I do.
Mr. Kelly. Okay, why do you think there are so many
misconceptions?
Secretary Sebelius. Well, I think that there was about a
year-and-a-half of mistruths and erroneous debate, that was
driven by 24/7 news coverage, and people still believe that
there are elements of the law that not only were never part of
the law in the first place, but they believe that those will
come to pass. I find people every day who----
Mr. Kelly [continuing]. Yes, and I also do. And, maybe,
part of reason is the rules haven't been written yet. Let me
read to you a part of the testimony from Will Knetch, who is
the President of Wendell August Forge: ``I believe that we, as
a nation, are about to walk into an unknown abyss that, humbly,
I believe our country will face with full force and effect, the
implementation of the 2010 health care bill in 2013 and 2014.
The sheer monstrous size of the bill intimidates most Americans
and provides so many unknowns for the business community that
it is scary.'' And to verify it, he quoted Speaker Pelosi,
during the voting on the bill, ``We have to pass it so we can
read it.''
In other words, nobody really knows all the tentacles of
this bill and that is bad for America and it is bad for
business. Now, I would just contend to you that there is a lot
of misconceptions, especially for people who have never run a
business and, especially, for people who come here thinking
that they know what is best for everybody at every step of the
way.
Is there some reason that, after 2 years, we still don't
have the rules and regulations because you really--if there is
a misconception, it would be because this Administration never
really made it clear what the rules and regulations are going
to be. So that is not a matter of people sticking pins in a
voodoo doll; this is a matter of an Administration that has
never clearly, never clearly, put out what the rules are and
never, really, clearly told employers what it was going to
cost.
Now, I know a little bit about that because every 2 weeks I
do have to make a payroll. And it is not funded by the American
taxpayers; it is funded by the success of my business. I can't
tell you how uncertain most employers are today as to what is
it going to cost them as employers, as business owners. We
still don't know, do we?
Secretary Sebelius. Sir, I would just----
Mr. Kelly [continuing]. Answer will be ``yes'' or it will
be ``no.''
Secretary Sebelius. We are writing rules and regulations--
--
Mr. Kelly [continuing]. So we still don't have the rules
and regulations 2 years after the bill was passed?
Secretary Sebelius. Excuse me, we do not have every rule--
--
Mr. Kelly [continuing]. Do not have the rules, is that the
answer?
Secretary Sebelius. We don't have 100 percent of the
rules----
Mr. Kelly. Okay, so we don't really know what the costs are
going to be?
Secretary Sebelius. That is exactly what----
Mr. Kelly. So the misconceptions are based on the fact that
the Administration has not yet come up with the rules and
regulations? Passed the law, didn't need one Republican vote to
get it passed--and I hear how terrible the Republicans have
been----
Secretary Sebelius. Well, there was a Republican vote but--
--
Mr. Kelly. Okay, all right. You and I can, maybe, agree on
a lot of things. I would agree on this and I would say that any
business owner is scared to death of this. They have absolutely
no idea what it is going to cost them. Now, it is going to cost
the business owner one of two ways; either increased costs to
him or increased taxes. Is that a given? I mean, this money
isn't just going to fall out of the sky; this increased cost--
this health care bill is going to cost an awful lot of money.
Secretary Sebelius. I think for any small business owner
who currently is providing health coverage, the estimates are,
by every economist who has looked at this, CBO, et cetera, is
that costs will go down, not up.
Mr. Kelly. We don't have the rules yet. We don't have the
finals rules. We don't know. You can't draw a conclusion on
something you don't know----
Secretary Sebelius. I understand, but I keep being cited
all kinds of people who have drawn all kinds of conclusions. We
are working----
Mr. Kelly [continuing]. My question to you is if there are
no rules and regulations, how can you----
Secretary Sebelius [continuing]. There are plenty of rules
and regulations----
Mr. Kelly [continuing]. Excuse me, I am in the automobile
business. Do you know what you are asking people to do?
Secretary Sebelius. I do----
Mr. Kelly. You are asking people--I said I am in the
automobile business. I would imagine that somewhere in your
life you bought an automobile. Can you imagine walking into a
place of business and saying, ``I want to buy a car,'' and the
dealer saying, ``Okay, fine, I have got a car for you, can't
tell you what is in it, can't say how much it is going to cost
you, can't tell you how much the monthly payment's going to be.
But I want to go ahead and start paying for it today and 4
years from now you can take delivery.''
Secretary Sebelius. And, well before people have access to
the health care changes, they will know what they cost.
Mr. Kelly [continuing]. I understand, but they don't know.
It is 2 years later. I got to tell you, this is either inept,
an inept Administration, or people who truly don't actually
know at all how to treat the American people fairly. This is
going to fall on the backs of the American taxpayers; that is
who it is going to fall on.
This is not some benevolent monarchy that supplies all
these wonderful services to people. The American taxpayers are
the ones that pay for this. And I have only been here 15 months
but I have never seen such a disconnect to the real world, in
the way that things work inside the Beltway. There is such a
lack of understanding as to what people have to do, in order to
pay their fair share, play within the rules, and live within
their means. So----
Chairman Kline. The gentleman's time has expired.
Mr. Petri?
Mr. Petri. Thank you very much, Mr. Chairman.
I have a couple of questions. First, I have heard from a
number of constituents, including employers, in the area that I
represent in Wisconsin, about the importance of health savings
accounts. And health savings accounts offer a more affordable
option that puts the consumer in control of their health care
plan decisions. So I am concerned that some of the regulations
being written to implement the Affordable Care Act, most
importantly the medical loss ratio regulations, could
jeopardize consumer access to these types of plans.
Do you think consumer access to health savings account-type
plans is important? And, as you write regulations for medical
loss ratio and other components of the Affordable Care Act, are
you taking steps to ensure that health savings account plans
are able to compete on a level playing field with other, more
comprehensive, plans?
Secretary Sebelius. Well, I think, Congressman, the impact
that you may be referring to is on the so-called ``mini med''
plans, some of which are offered along with an HSA. There are
no direct implications on the health savings account. But the
``mini med'' plans, which do not offer a full package of health
insurance, are not currently subject to the medical loss ratio
but they will no longer be insurance plans post-2014.
Mr. Petri. In another area, Section 9010 of the Act
includes an annual fee on health plans. And I am concerned
about two, possibly unintended, consequences of this fee.
First, there are many managed care plans in my state and I am
sure in others that serve exclusively to low-income individuals
who are on Medicaid or who are dually eligible for Medicaid and
Medicare.
These types of plans were created to help coordinate care
for these individuals, both to lower costs and to improve
quality. Because the plan revenue comes directly from state
Medicaid programs, the tax, as applied to these plans, will
ultimately be paid by the state government and by the Federal
government. So we are taxing ourselves, raising the costs of
Medicaid. Are you concerned about this, sort of, anomalous
situation?
Secretary Sebelius. Well, certainly, Congressman, the
access to health insurance for low-income Americans is in
jeopardy. And we, certainly, don't want to compound that
situation. I think that the fee that is being looked at is a
partial offset to the millions of new customers that health
insurers are looking forward to serving through the insurance
exchanges.
So, we think, on balance, the number of new customers will
far outweigh the modest fee going into the plans, because
currently they are really on a situation where they are losing
customers day in and day out as health costs spiral. But they
are looking forward to, you know, 15, 17 million Americans who
will be signing up for health insurance.
Mr. Petri. And, secondly, in connection with the fees, we
have a lot of integrated health care providers in our state who
offer their own health plans; Marshall Clinic and so on. These
providers have been very effective at using their plans to
coordinate care for patients to reduce costs and to improve
quality.
Concern is that this health plan fee will be
disproportionately harmful to these plans because they are
smaller and may be less able to absorb these additional costs.
Do you have any concerns in that area?
Secretary Sebelius. Well, I think that the kind of
coordinated care strategy that often is available in an
integrated health plan is exactly the kind of best practice
that we are trying to encourage in systems across the country.
And I have visited a number in your home state, which are some
of the best, I think, in the country.
On balance, I really think that the kind of more efficient
care delivery is a strategy that, not only will pay off but--
right now, we have got the financial incentives in the wrong
places for the very plans you have described. We pay on volume
and not on outcome. So if you coordinate care, if you keep
people healthier in the first place, if you reduce hospital
admissions, you get penalized.
I think what you will find is that those plans are exactly
the strategies we are--in fact, they will be receiving enhanced
payment through Medicare, through other strategies, going
forward. So we are shifting a payment system that, I think,
again, will not penalize those plans but, in fact, will
appropriately pay for those plans for the first time.
Chairman Kline. The gentleman's time has expired. It looks
like the morning has expired.
I want to thank the Secretary, again, for being here and
sharing her time and expertise with us.
I will recognize Mr. Miller for any closing remarks he may
have.
Mr. Miller. Thank you very much. I am sorry Mr. Kelly left
the room. This year, the automobile manufacturers put 15
million new cars on the road. I assume they didn't just simply
dump those on the automobile dealers. I assume they took time
to ramp up the service department, to ramp up the sales
department, to ramp up the warranties, to change their
policies, and they knew that those cars were going to come on
line in a period of time.
Had we dumped 40 million uninsured people into this system
on one day after we passed the legislation, I think there would
have been a howl. The fact of the matter is, I think your
department has done an amazing job in working with patients,
with insurance companies, with hospitals, with doctors, with
specialty people, with general practitioners, with all the
health services, with the education institutions, so that,
hopefully, in 2014, this nation will be ready for this. I can't
tell you, I hear all the time from people who are telling me,
``Why did you wait until 2014?'' because they want to go start
their own business but they can't risk health care for their
spouse and their families. Maybe that is just in California,
where we have a lot of innovative start-up companies, but I
hear it all of the time from young people about job lock and
that side. So I think you have done a very prudent job on that.
We are out of time. You are out of time. I would just like
to ask if I could prod you, in writing, for an update on how we
are doing on complying with, and managing, mental health
parity? I am getting more and more questions in the mental
health community, and in my general community, about this.
There is a great deal of concern. As you know, this was a very
long struggle----
Secretary Sebelius. You bet.
Mr. Miller [continuing]. In the Congress to get this into--
--
Secretary Sebelius. And I would be glad to respond in
writing. Thank you.
Mr. Miller. Thank you very much, Madam Secretary. Thank you
for being here today.
Chairman Kline. I thank the gentleman.
Again, I thank the Secretary----
Secretary Sebelius. Thank you.
Chairman Kline [continuing]. For being with us today. I
think we have made it with----
Secretary Sebelius. It is brilliant.
Chairman Kline [continuing]. Twelve seconds to spare. There
being no further business, the committee stands adjourned.
[Additional submissions of Chairman Kline follow:]

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[Additional submission of Mr. Roe follows:]

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[Questions submitted for the record and their responses
follow:]

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Questions Submitted for the Record by Mr. Miller

Secretary Sebelius, each year an estimated 40 million American
adults suffer from some type of mental illness. That is why passage of
the Mental Health Parity was so critical.
1. Can you give me an update on what the Department is doing to
ensure that health plans are complying with Mental Health Parity?
2. Can you please provide an update on guidance HHS has or will
prepare for states to assist them implementing and enforcing Mental
Health Parity?
During the April 26th hearing you were asked about the Diesel
Exhaust in Miners Study that was conducted by the National Cancer
Institute and the National Institute for Occupational Safety and
Health.
1. Could you please clarify when the peer reviewed study was
published in scientific journals?
Lastly, subsequent to the hearing on May 24, 2012, the Fifth
Circuit Court of Appeals vacated and remanded a lower court order
regarding the obligations of the Secretary to produce to the Committee
certain documents and studies pertaining to the Diesel Exhaust in
Miners Study.
1. What did the Appeals Court find with regards to the Secretary's
compliance with the previous court orders to provide studies to this
Committee?
______

[Secretary Sebelius' response to questions submitted
follows:]

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[Whereupon, at 12:31 p.m., the committee was adjourned.]