[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]


                DEPARTMENT OF HEALTH AND HUMAN SERVICES
                        FISCAL YEAR 2020 BUDGET

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

                                HEARING

                               BEFORE THE

                        COMMITTEE ON THE BUDGET
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED SIXTEENTH CONGRESS

                             FIRST SESSION

                               __________

            HEARING HELD IN WASHINGTON, D.C., MARCH 26, 2019

                               __________

                            Serial No. 116-6

                               __________

           Printed for the use of the Committee on the Budget

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]


                       Available on the Internet:
                            www.govinfo.gov
                            
                               __________
                               

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
36-985                  WASHINGTON : 2019                     
          
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                        COMMITTEE ON THE BUDGET

                  JOHN A. YARMUTH, Kentucky, Chairman
SETH MOULTON, Massachusetts,         STEVE WOMACK, Arkansas,
  Vice Chairman                        Ranking Member
HAKEEM S. JEFFRIES, New York         ROB WOODALL, Georgia
BRIAN HIGGINS, New York              BILL JOHNSON, Ohio,
BRENDAN F. BOYLE, Pennsylvania         Vice Ranking Member
RO KHANNA, California                JASON SMITH, Missouri
ROSA L. DELAURO, Connecticut         BILL FLORES, Texas
LLOYD DOGGETT, Texas                 GEORGE HOLDING, North Carolina
DAVID E. PRICE, North Carolina       CHRIS STEWART, Utah
JANICE D. SCHAKOWSKY, Illinois       RALPH NORMAN, South Carolina
DANIEL T. KILDEE, Michigan           CHIP ROY, Texas
JIMMY PANETTA, California            DANIEL MEUSER, Pennsylvania
JOSEPH D. MORELLE, New York          WILLIAM R. TIMMONS IV, South 
STEVEN HORSFORD, Nevada                  Carolina
ROBERT C. ``BOBBY'' SCOTT, Virginia  DAN CRENSHAW, Texas
SHEILA JACKSON LEE, Texas            KEVIN HERN, Oklahoma
BARBARA LEE, California              TIM BURCHETT, Tennessee
PRAMILA JAYAPAL, Washington
ILHAN OMAR, Minnesota
ALBIO SIRES, New Jersey
SCOTT H. PETERS, California
JIM COOPER, Tennessee

                           Professional Staff

                      Ellen Balis, Staff Director
                  Dan Keniry, Minority Staff Director
                                CONTENTS

                                                                   Page
Hearing held in Washington D.C., March 26, 2019..................     1

    Hon. John A. Yarmuth, Chairman, Committee on the Budget......     1
        Prepared statement of....................................     3
    Hon. Steve Womack, Ranking Member, Committee on the Budget...     5
        Prepared statement of....................................     7
    Hon. Eric D. Hargan, Deputy Secretary, Department of Health 
      and Human Services.........................................     9
        Prepared statement of....................................    11
    Hon. Scott H. Peters, Member, Committee on the Budget, 
      summary submitted for the record...........................    39
    Hon. Pramila Jayapal, Member, Committee on the Budget, letter 
      submitted for the record...................................    53
    Hon. Sheila Jackson Lee, Member, Committee on the Budget, 
      statement submitted for the record.........................    84
    Hon. John A. Yarmuth, Member, Committee on the Budget, 
      questions submitted for the record.........................    92
    Hon. George Holding, Member, Committee on the Budget, 
      questions submitted for the record.........................    93
    Hon. Jason Smith, Member, Committee on the Budget, questions 
      submitted for the record...................................    94
    Hon. Chip Roy, Member, Committee on the Budget, questions 
      submitted for the record...................................    95
    Hon. William R. Timmons IV, Member, Committee on the Budget, 
      questions submitted for the record.........................    96
    Answers to questions submitted for the record................    97

 
                     DEPARTMENT OF HEALTH AND HUMAN
                    SERVICES FISCAL YEAR 2020 BUDGET

                              ----------                              


                        TUESDAY, MARCH 26, 2019

                          House of Representatives,
                                   Committee on the Budget,
                                                   Washington, D.C.
    The Committee met, pursuant to notice, at 10:05 a.m., in 
Room 210, Cannon House Office Building, Hon. John A. Yarmuth 
[Chairman of the Committee] presiding.
    Present: Representatives Yarmuth, Moulton, Jeffries, 
Higgins, Khanna, Doggett, Schakowsky, Morelle, Horsford, Scott, 
Jackson Lee, Jayapal, Omar, Sires, Peters; Womack, Woodall, 
Smith, Stewart, Roy, Meuser, Timmons, Hern, and Burchett.
    Chairman Yarmuth. The--this hearing on the--thank you to 
the Ranking Member--this hearing on the HHS fiscal year 2020 
budget--I would like to welcome Deputy Secretary Eric Hargan, 
and thank you for joining us.
    I yield myself now five minutes for my opening statement.
    Today we will discuss the President's 2020 budget for the 
Department of Health and Human Services and its impact on 
American families.
    There are many concerning parts of the Administration's 
proposal, but the budget for HHS is particularly troubling 
because the line between massive funding cuts and severe 
consequences for American families, between policy changes and 
life or death outcomes, is so direct.
    The Trump budget cuts more than $12.1 billion from HHS' 
discretionary budget; $4.5 billion from NIH, which includes 
research on the prevention, treatment, and care of diabetes, 
cancer, heart disease, Alzheimer's, and nearly every other 
disease or disorder facing Americans. It embraces austerity 
level spending caps, and the resulting cuts to health care 
investments, even though these caps have been repeatedly 
rejected by Congress on a bipartisan basis.
    The budget also cuts $1.4 trillion from mandatory health 
care spending, including Medicare and Medicaid, which are the 
only sources of health care coverage for tens of millions of 
Americans.
    The budget repeals the Affordable Care Act and replaces it 
with an inferior plan that would leave millions of families 
without meaningful insurance, while failing to continue 
guaranteed protections for people with pre-existing conditions. 
It ends the Medicaid expansion under the ACA, terminating 
health coverage for millions more.
    In my home state of Kentucky, with total population of just 
over four million, nearly half-a-million people gained health 
care coverage thanks to the ACA's Medicaid expansion. All this 
before the Administration's abhorrent decision last night to 
ask the 5th Circuit to completely invalidate the Affordable 
Care Act, making it crystal clear to the American public that 
this President has zero interest in protecting their health 
care in any form.
    The budget also converts base Medicaid funding into a block 
grant or per-capita cap. This will force states to eliminate or 
drastically reduce services for low-income children, people 
with disabilities, and seniors, or, in the alternative, to 
raise billions of dollars to cover the cost--the loss of 
federal resources, which we all know states don't have.
    In addition, the budget requires all states to implement 
work requirements for Medicaid enrollees, putting yet another 
barrier between Americans and quality health care. In 
Arkansas--wonderful home of my ranking member--which 
implemented the first work requirement in the country last 
year, more than 16,000 people have already lost their health 
insurance with no evidence that they found new employment. 
Expanding this policy nationwide would undoubtedly result in 
hundreds of thousands, if not millions, of Americans losing 
their health care coverage.
    Deputy Secretary Hargan, it is clear that this budget 
jeopardizes the health care security of millions of Americans 
and their families. So it is hard for me and my Democratic 
colleagues to understand how that meets HHS' mission to 
``enhance the health and well-being of all Americans.'' Given 
the severity of the funding cuts and the extreme nature of the 
policy changes, this seems much more like an irresponsible way 
of offsetting our Republican colleagues' deficit-financed tax 
cuts for millionaires and big corporations than a true budget 
you or Secretary Azar would have crafted for your agency to 
succeed. I hope to discuss that further today.
    There are some other areas of the budget that don't add up 
either, where the message doesn't match the math.
    For example, the budget includes a $291 million investment 
in HIV/AIDS, but cuts the National Institute of Allergy and 
Infectious Diseases, which is responsible for most HIV/AIDS 
research at the National Institutes of Health, by $769 million.
    The budget provides an additional $50 million for pediatric 
cancer research--sounds good--but cuts funding for the National 
Cancer Institute by $897 million.
    The budget requests $1.5 billion for state opioid response 
grants--again, something I think we all favor--but it cuts 
Medicaid, the source of coverage for four in 10 adults with 
opioid addiction, by $1.5 trillion.
    When you compare these small funding increases to the large 
cuts they are paired with, it is not hard to see them for what 
they are: token investments designed to get a good headline. If 
there is another explanation, Deputy Secretary, we would 
welcome it.
    I know my Democratic colleagues have other questions about 
the choices made in this budget and the resulting consequences, 
about promises made by the President that are broken in this 
document. We want to know more.
    So once again, thank you, Deputy Secretary Hargan, for 
being here today. We look forward to your testimony.
    [The prepared statement of John A. Yarmuth follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Chairman Yarmuth. I now welcome, and I recognize the 
Ranking Member for five minutes for his opening statement.
    Mr. Womack. Apologies for running just a little bit late. 
But thank you, Mr. Chairman, and thank you, Deputy Secretary 
Hargan, for joining us.
    Today we are here to examine the President's budget request 
for the Department of Health and Human Services for fiscal year 
2020. This is an important conversation. Your agency is 
responsible for administering programs on which millions of 
Americans rely, including Medicare; Medicaid; Temporary 
Assistance for Needy Families, or TANF; Head Start.
    Further, your agency is at the forefront of combating some 
of our country's biggest health crises, including the opioid 
epidemic which claims the lives of 115 Americans every day. 
Now, let's put that in context. Assuming we are here for two 
hours this morning, 10 people--10 people--will die because of 
this epidemic.
    The growth in spending has been caused by several factors 
that require our attention in Congress. Health care spending is 
growing faster than any other sector of the economy. In 2017, 
the U.S. spent $3.5 trillion in health care. By 2007 [sic] 
health care spending is projected to reach nearly $6 trillion, 
just under 20 percent of GDP, according to a recent report of 
the Centers for Medicare and Medicaid Services' actuary.
    The cost of care is increasing. According to Bureau of 
Labor Statistics, in 2018 the price of hospital services 
increased by 3.7 percent, the price of medical care by 2 
percent, both of which were higher than the rate of inflation.
    The second contributing factor? Americans are living 
longer. Thanks to advancements in modern medicine, the average 
life expectancy has increased by more than nine years since 
Medicare was created in 1965. It is projected to continue 
increasing. That is good news, but it does have an impact on 
growing health care spending.
    Finally, the ratio of retirees to workers is shrinking, 
with an average of 10,000 Baby Boomers a day leaving the 
workforce. Unfortunately, the laws governing how our health 
care programs work do not reflect the dynamics we face today. 
As a result, there is increasing pressure on programs like 
Medicare, which today provides care to about 15 percent of our 
population.
    As an example, Medicare Part A, which covers inpatient 
hospital care, skilled nursing facilities, Hospice, and lab 
tests, is expected to be insolvent by 2026, threatening the 
health benefits many expect to receive in the future--2026. 
That is just eight years away.
    Congress and the Administration together have a shared 
responsibility to address these challenges and put our health 
care spending back on a sustainable path. That requires taking 
a hard look at what is working and what is not. It requires the 
courage to make tough choices that preserve and strengthen 
programs for Americans today and in the future.
    The President's budget takes important steps to do just 
that, investing in the long-term health of the American people, 
while also advancing proposals that will help rein in health 
care spending.
    For example, the President's budget continues historic 
funding to fight the opioid epidemic by expanding access to 
prevention, treatment, support services, and research. This 
includes efforts to prevent improper or abusive prescription 
practices that have dangerously and unnecessarily exposed 
patients to opioids.
    It also aims to dramatically decrease the number of people 
affected by HIV, with the goal of reducing new infections by 90 
percent within a decade.
    At the same time, the budget includes several common-sense 
reforms that have been proposed by Republicans and Democrats to 
make Medicare work better for patients by cutting waste, fraud, 
and abuse, increasing competition, and lowering drug prices and 
out-of-pocket costs.
    All told, these efforts achieve roughly a trillion of 
savings in mandatory spending. That is important progress. But 
with $22 trillion in debt, and annual deficits nearly a 
trillion, there is much more work to do.
    As I have said before, mandatory spending accounts for 70 
percent of all federal spending, and the glide path we are on 
takes it to 78 percent by 2029. Until we make structural 
reforms to mandatory spending like Medicare, discretionary 
spending--including funds for defense and border security--we 
will continue to feel the squeeze, and Congress will continue 
to have the same battles year after year over what programs to 
fund, and how to handle our debt.
    I am fearful that my colleagues on the other side of the 
aisle may double-down on this approach, proposing ideas that 
will make our nation's grim fiscal reality even worse. We have 
already seen a proposal that would radically disrupt our health 
care system, adding trillions of dollars to our national debt, 
while eliminating patients' choice and raising taxes. And there 
is no plan to pay for it.
    We have a responsibility to put forward serious solutions, 
not catchy slogans, to improve our health care system and rein 
in spending.
    I look forward to hearing more from the deputy secretary 
this morning as we work through these questions in Congress.
    Mr. Womack. And with that, Mr. Chairman, I am proud to be 
here, and I yield back my time.
    [The prepared statement of Steve Womack follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Chairman Yarmuth. I thank the Ranking Member. And in the 
interest of time, if other members have opening statements, you 
may submit those statements in writing for the record.
    Deputy Secretary Hargan, the Committee has received your 
written statement, and it will be made part of the formal 
hearing record. You will have five minutes to deliver your oral 
remarks, and you may begin when you are ready.

    STATEMENT OF THE HON. ERIC D. HARGAN, DEPUTY SECRETARY, 
            DEPARTMENT OF HEALTH AND HUMAN SERVICES

    Mr. Hargan. Thank you. Chairman Yarmuth and Ranking Member 
Womack, thank you for inviting me here to discuss the 
President's budget for HHS for fiscal year 2020.
    It is an honor to be here today, and it is an honor to 
serve as deputy secretary of HHS. The men and women of HHS 
delivered remarkable results since the release of our last 
budget, including record new and generic drug approvals at FDA, 
the beginnings of a sea change in drug pricing behavior, 
opening up new affordable personalized insurance options, and 
initial signs that the trend in drug overdose deaths is 
beginning to flatten and decline.
    The budget proposes $87.1 billion in FY 2020 discretionary 
spending for HHS, while making important reforms to help our 
discretionary and mandatory programs work more effectively and 
efficiently. While this budget delivers on our mission, it is 
important to realize that HHS had the largest discretionary 
budget of any non-defense department in 2018, which means that 
staying within the cap set forth by Congress has required 
difficult choices about the investments we make. Today I will 
highlight some budget proposals around four priorities 
Secretary Azar has identified for the Department: increasing 
the affordability of individual health insurance; bringing down 
drug prices; transforming our health care system into one that 
pays for value; and combating the opioid crisis.
    First, the budget proposes reforms to help deliver 
Americans truly patient-centered, affordable health care. It 
would empower states to create personalized health care options 
that put the American patient in control and ensure he or she 
is treated like a human being, not a number. That means giving 
more responsibility back to states, and increasing options for 
patients, while promoting fiscal responsibility and maintaining 
protections for people with pre-existing conditions.
    Second, the budget supports access to affordable 
prescription drugs through the four pillars of the President's 
drug pricing blueprint: more competition, improved negotiation, 
better incentives around list prices, and lower out-of-pocket 
costs. The budget will boost competition through fostering 
efficient approvals of generic drugs and biosimilars, ending 
anti-competitive practices, delaying or restricting these 
drugs' market entry, and reforming incentives to increase their 
adoption. The budget proposes that historic modernization of 
Medicare Part D to lower seniors' out-of-pocket costs, improve 
incentives for Part D plans that negotiate on their behalf, and 
save money for the program.
    Third, President Trump is focused on the broader goal of 
delivering Americans better care at a lower cost. This means 
ensuring our federal health programs are driving value for 
patients, and living up to the promises that we have made to 
our seniors. The budget proposes a value-based payment system 
for hospital out-patient departments and ambulatory surgical 
centers; expands site neutrality and payments; reduces burdens 
on providers; and addresses overpayments to post-acute care 
facilities. These reforms will mean lower cost for seniors and 
a stronger, more sustainable Medicare program. The budget, in 
total, will extend the life of the Medicare trust fund by eight 
years.
    As you all know, the Administration has worked with 
Congress to make historic investments to address our country's 
opioid crisis, a crisis that, years ago, hit the town I grew up 
in, and it struck my own family.
    The budget fully supports HHS's five-point strategy to 
improve access to prevention, treatment, and recovery services; 
to better target the availability of overdose-reversing drugs; 
to strengthen our understanding of the crisis through better 
data; to support research on pain and addiction; and to improve 
pain management practices.
    The budget provides us four--provides $4.8 billion towards 
these efforts. This investment builds on appropriations 
Congress made in 2018, and ensures that the Substance Abuse and 
Mental Health Services Administration will continue all its 
opioid activities at the same funding level as fiscal year 
2019. That includes the $1 billion state opioid response 
program, which we have focused on access to medication assisted 
treatment, behavioral support, and recovery services. The 
budget proposes to provide a full year of Medicaid benefits for 
pregnant women diagnosed with an opioid use disorder, and takes 
steps to reduce inappropriate prescribing within federal health 
care programs.
    Finally, the budget invests in other important public 
health priorities, including fighting infectious disease at 
home and abroad. In particular, it proposes $291 million in new 
funding for the first year of President Trump's plan to use the 
effective treatment and prevention tools we have today to end 
the HIV epidemic in America by 2030.
    This budget will advance American health care and help 
deliver on the promises we have made to the American people. I 
look forward to working with this Committee on our shared 
priorities this year, and I look forward to the Committee's 
questions today.
    [The prepared statement of Eric D. Hargan follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Chairman Yarmuth. Very good. I thank you for your 
testimony. The Ranking Member and I will defer our questions 
until the end.
    So with that I recognize the gentleman from New York, Mr. 
Higgins, for five minutes.
    Mr. Higgins. Thank you, Mr. Chairman. And thank you for 
being here, Mr. Hargan.
    Firstly, I just wanted to point out that the National 
Cancer Institute was seeking a $400 million increase in funding 
over this year for next year. This was intended to bring 
promising new cancer treatments, particularly in the area of 
immunotherapy, to market.
    As you may know, that drug discovery is a process that 
takes some 10 or 15 years. So when funding is delayed, 
promising new treatments are delayed, and those promising new 
treatments are denied for people that are in desperate need of 
new, effective therapies.
    So the President's budget proposes to cut $900 million from 
the National Cancer Institute. What is the rationale behind 
that cut, which is enormous, based on anybody's view of it?
    Mr. Hargan. When we work within the caps that--on the 
budget, which were set forth by President Obama and this 
Congress years ago, we face a tough budgetary environment this 
year.
    We fully support medical research and the NIH. We know that 
this is very important to the American people, and particularly 
the National Cancer Institute is important to ongoing research 
in oncology and cancer area.
    Within that we are also proposing, as I am sure you have 
seen, increases for pediatric cancer. So we have attempted to--
--
    Mr. Higgins. What is that amount?
    Mr. Hargan.----focus on----
    Mr. Higgins. Is that $50 million?
    Mr. Hargan.----on pediatric cancer?
    Mr. Higgins. Is that initiative $50 million dollars more 
for pediatric?
    Mr. Hargan. Yes.
    Mr. Higgins. Okay.
    Mr. Hargan. So we are proposing new money for pediatric 
cancer.
    Mr. Higgins. So it is still a cut of $850 million, 
generally, to the National Cancer Institute. Does that concern 
you, as a----
    Mr. Hargan. Within the discretionary budget that we have, 
we had its--the NIH is the largest component of our 
discretionary side of our budget. And we have attempted to be 
evenhanded in how we approached the--approached it. We have a 
lot of different initiatives within the Department, and we 
wanted to make sure that it--we were as evenhanded as we could, 
and as thoughtful as we could when we were confronting----
    Mr. Higgins. Well, here is what I would say to you, that 
government funding is--has been involved in about 97 percent of 
the basic science and research toward the goal of bringing 
promising new cancer treatments to market. In fact, the last 
100 major products, from Herceptin for metastatic breasts 
cancer, and many of the vaccines for immunotherapy are a direct 
result of government involvement in the financing of clinical 
trials that test both efficacy and safety.
    And a cut of this amount, even when you take into account 
the increased funding for pediatric cancer, is still $850 
million. That will have a devastating impact on what NCI is 
able to fund to the various cancer institutes throughout the 
country, including in Buffalo, New York, the nation's first 
cancer center, Roswell Park. So that is of concern.
    Secondly, on the issue of Alzheimer's, Alzheimer's is a 
horrible disease. It inflicts pain not only on the afflicted, 
but those who love and care for the afflicted. Some 3.5 million 
new cases will be diagnosed this year. And the primary 
treatment is a drug called Aricept. And it was developed 
probably two decades ago. And in 60 percent of cases, it may 
delay the onset of Alzheimer's by maybe six months. This 
problem is growing, and we don't seem to have a handle on it.
    I would ask you what are the Administration's initiatives, 
as it relates to developing new treatments for Alzheimer's, 
beyond the Aricept era of those drugs?
    Mr. Hargan. We definitely see the impact of Alzheimer's on 
our--directly on our--the beneficiaries of our programs. 
Obviously, a disease like that falls straight into many 
elements of the Medicare program that we administer. So we--and 
we take the issue of medical research very seriously across the 
Department to develop new therapies, new modalities to treat 
it.
    It has proven a difficult disease to solve, but we are 
committed to standing behind our researchers that are working 
on that, both at NIH and then in the grantee community that is 
served with the money that is given generously by Congress to 
NIH.
    Chairman Yarmuth. Okay, the gentleman's time has expired. I 
now recognize the gentleman from Missouri, Mr. Smith, for five 
minutes.
    Mr. Smith. Thank you, Mr. Chairman. Thank you, Deputy 
Secretary Hargan, for being here.
    Labor HHS has been one of the most difficult funding bills 
to get through Congress. In fact, the fiscal year 2019 Labor/
HHS being passed by the Republican House, the Republican 
Senate, and then signed by President Trump was the first time 
that a Labor/HHS bill had passed in over 20 years. And I think 
it is very noteworthy that the last time that a Labor/HHS bill 
was passed and funded was in 1996, the prior time that the 
Republicans were in power.
    And so, I find it to be very ironic that my colleagues on 
the other side may throw arrows at you, and may criticize your 
budget, but yet they have failed to ever, in the last 20 years, 
to pass their own Labor/HHS budget. It is easy to point blame, 
but it is their turn to govern. And let's see if they govern 
this Congress in being able to pass a budget, and whether they 
will be able to appropriate a Labor/HHS.
    I do want to say, Secretary, where did you grow up?
    Mr. Hargan. I was actually born in Cape Girardeau, 
Missouri.
    Mr. Smith. What a wonderful city.
    [Laughter.]
    Mr. Hargan. Absolutely.
    Mr. Smith. It is home of Rush Limbaugh, as well.
    [Laughter.]
    Mr. Smith. So two great people from southeast Missouri. And 
it is the great congressional district that I get to represent.
    So we definitely are very interested of your rural 
upbringing. How has that affected how you have helped mold this 
budget?
    Mr. Hargan. Well, I didn't just grow up in a rural area in 
deep southern Illinois after being born in southeast Missouri, 
but my mother was actually an x-ray technician in a small 
hospital outside the town of 800 that I grew up in. She was an 
x-ray tech there for 58 years. So, yes, my late mother was 
there from 1953 to 2011.
    So this is--the area--the issue of rural health is 
something that is extremely close to my heart. Having grown up 
underfoot in a hospital like that, you see the real challenges 
that are faced by rural hospitals and rural providers close up, 
and really, for my entire life.
    I was very gratified that Secretary Azar last year 
instituted a rural health task force that brings together a lot 
of the elements of the Department to focus on rural health, 
particularly. In many cases, agencies deal specifically with 
their parts of the rural health landscape, and being able to 
unify that and focus on it when we have a lot of shared issues 
across the different agencies, I think, is going to result in 
some good effects that we are going to be able to have. And 
also, allowing more flexibilities around the use of tele-health 
and other sort of technological areas that I think are going to 
be important to solving rural health issues as we go forward.
    We are going to need a lot of imagination to deal with the 
issues that are coming forward, a lot of good thinking about 
what is going--about how we solve the problems with rural 
health.
    Mr. Smith. We have nine critical-access hospitals in 
southeast Missouri, nine qualified health centers that serve 
almost 130,000 patients in 51 different sites. So when you are 
looking at a geographic area of 20,000 square miles, access to 
quality, affordable health care in rural America is big. So, I 
appreciate the Administration's effort on that. I appreciate 
your background.
    Earlier I stated the fiscal year 2019 appropriations and 
budget passing for the first time in 20 years. Mr. Hargan, what 
benefits did you see from the certainty of fully funding HHS?
    Mr. Hargan. Yes, well, it was tremendous. As you say, the 
first time in 22 years that we have had a budget pass for the 
Department. So it creates a lot of confidence on our part to be 
able to plan for the future.
    We were able to work through a lot of the issues to stand 
out the new initiatives--say the Ending HIV Epidemic in America 
initiative that the President announced in the State of the 
Union Address. It allows us to focus on--rather than focus on 
funding issues, we really focused on new initiatives to help 
the American people, to allow us to promote new ideas that we 
are going to--that we are standing out right now.
    Mr. Smith. I do want to state real quickly that proposal on 
the investment for eliminating HIV in the President's State of 
the Union is something that I applaud. And also investment in 
pediatric cancer research.
    So thank you for being here, thank you for representing the 
Show Me State very well. Even though you were just born in Cape 
Girardeau, we adopt you. So----
    [Laughter.]
    Mr. Hargan. I appreciate it. Thank you. Thank you, 
Congressman.
    Chairman Yarmuth. The gentleman's time has expired. The 
love fest for Missouri will continue at some point.
    The Chair now recognizes the gentleman from Texas, Mr. 
Doggett, for five minutes.
    Mr. Doggett. Thank you very much for being with us, Mr. 
Hargan. But as to health, how is Secretary Azar? Is he ill this 
morning?
    Mr. Hargan. I don't have any knowledge of----
    Mr. Doggett. Well, I know he has offered all week to be 
here. This is the second week he has been offered an 
opportunity to come. And it is almost as if the Administration 
has a policy of being fearful of sending its cabinet members to 
be questioned, indeed, on the tax bill. We couldn't get anyone 
at any level of the Trump Administration to come and answer 
questions and be held accountable about the hypocrisy in the 
bill.
    So I do find it troubling that he has not come to respond 
on some of these issues, and all the more so because of what 
happened yesterday. And that is the decision of the 
Administration down in my home state of Texas to, once again, 
throw in the towel with our indicted Attorney General, and not 
only to go after pre-existing conditions, which you have been 
doing, but to say that you favor, as our Republican colleagues 
did 60 or 70 times, the total repeal of the Affordable Care 
Act. And I don't see anything in your budget that would provide 
comparable care for the tens of millions of people that will 
lose out if you and the Texas Attorney General are successful 
in destroying the Affordable Care Act, which our Republican 
colleagues tried so often but were unable to do anything about.
    Let me ask you, since I am sure we are not going to agree 
on that, about one issue that I would hope we could agree on, 
that you referred to in your testimony, though I don't see it 
anywhere in the fine print, and that is this whole question of 
prescription drug costs, and whether we can save taxpayers and 
seniors anything on that.
    Candidate Trump made it very clear that he could save 
hundreds of billions of dollars on prescription drugs, and it 
seems to me that this budget really abandons that. It goes 
around the edges. It does not deal with what candidate Trump 
said on January 11th of 2017, among other times, that we are 
the largest buyer of drugs in the world, and yet we don't bid 
properly. And he said we could save hundreds of billions of 
dollars, and of course, he is right. The estimates are up to 
half-a-trillion dollars in annual--excuse me, in 10-year 
savings that could be had by negotiating drug prices.
    I don't see anything in this proposal that calls for the 
negotiation of drug prices, and I would just ask you if the 
Administration is abandoning candidate Trump's promise that we 
bid, as he talked about it, that we negotiate drug prices in 
order to protect seniors and to protect taxpayers.
    Mr. Hargan. We welcome all of this, we welcome this issue. 
The President is very dedicated to lowering drug prices for 
Americans----
    Mr. Doggett. So far he hasn't been too successful. But I 
am--he has reiterated his desire, and I hope there could be 
some bipartisan action on this.
    Mr. Hargan. We have the first lowering of drug price 
inflation in 46 years.
    Mr. Doggett. Well, he didn't run on a promise that he would 
keep prices from going up quite as much as they had before. He 
said he was going to do something to lower them and save us 
hundreds of billions of dollars. And there is nothing in this 
budget to do that.
    Mr. Hargan. We have seen the actions that have been taken 
that resulted in companies lowering drug costs for cholesterol 
medicine, for diabetes medicine----
    Mr. Doggett. They've lowered it where they had competition 
to meet. And I agree with you that competition is a good way to 
deal with this problem. But unless there is a negotiation, as 
the President himself pointed out when he was a candidate, you 
don't get where we need to be.
    And in that regard, I will move from prescriptions directly 
into one specific prescription and another issue you mentioned, 
which is the opioid crisis.
    We know that the price of Naloxone from one provider went 
up about 700 percent at the same time our first responders all 
over the country were being told to stock it. Chris Christie, 
who headed the President's opioid commission, and more recently 
the Office of National Drug Control Policy, Jim Carroll, in 
testimony to the Oversight Committee here within the last 
month, have agreed that what we need to do is at least, if we 
can't get comprehensive negotiation through Medicare, we ought 
to at least negotiate down the price of Naloxone, which can 
help respond to the fact that we are seeing so many Americans 
every day--an average of 115 every day--die of overdose.
    Do you agree with Mr. Carroll and Chris Christie and his 
commission, that we ought to be negotiating on the prices for 
these overdose drugs?
    Mr. Hargan. We believe that the most popular form of 
Naloxone, which is Narcan, the nasal spray, is highly 
affordable, that there are other forms of Naloxone that have 
higher prices. But we believe that it is widely available to 
all states and first responders.
    Mr. Doggett. While I don't agree with you, I thank you for 
your candor. You don't really think there is a problem on 
Naloxone that needs to be negotiated.
    Mr. Hargan. We believe that it is highly affordable for----
    Mr. Doggett. Thank you very much.
    Chairman Yarmuth. The gentleman's time has expired. I now 
recognize the gentleman from Utah, Mr. Stewart, for five 
minutes.
    Mr. Stewart. Thank you, Mr. Chairman.
    Deputy Secretary, thanks for being here. You have a 
difficult job, but it is important work. And I think you take a 
very serious approach to that. I want to thank you for that.
    And the proposal that you have before us that you are here 
to defend today, I would like to point out before I get to my 
main point and my question, many parts of it are bipartisan. I 
was interested to see a New York Times, which is hardly a 
bastion of conservative thought--even the New York Times in the 
last day had an editorial scolding the Democrats for 
disparaging it and putting aside some of the proposals that you 
and the President have put forward, saying that many of them 
make sense, that many of them should have bipartisan support, 
and they are just practical reforms that will drive down costs. 
And I could go into that, but again, that is not where I want 
to spend my time.
    But I will conclude by saying this. We will hear again and 
again and again--we are going to be told the Administration 
wants to cut $845 billion from Medicare, and $1.5 trillion from 
Obamacare. But again, it is not true. It is just simply not 
true. About a third of that $845 billion is being shifted out 
of Medicare, but it is being shifted into other programs. The 
money is still going to be spent, it is just being spent more 
efficiently.
    And again, I appreciate your being here to defend that, and 
I hope you do so vigorously, because these are defensible 
positions that you and the Administration have taken.
    Now, if I could get to my point, and that is, like you, I 
grew up in a small town. In fact, I have you beat on this. You 
grew up in Mounds, which has 800 people. That was a big city to 
me. I grew up in a town of 295. It had two bars. I don't 
understand how that quite adds up.
    But in my district--I represent Salt Lake City, but also 
very rural parts of Utah, some incredibly beautiful places--
Zion National Park and Bryce's and Canyonlands--but these are 
rural, difficult places to get to here in the country. About a 
third of my district lives very rural. They drive up to an 
hour, just--not to see a specialist--just to see a family 
doctor.
    So talk to me a little bit about tele-health. I mean we 
think it is incredibly important to providing our rural 
communities with better health care. We know you are interested 
in this. Take a few minutes and tell us how we are going to 
help our rural communities, especially in the West.
    Mr. Hargan. Sure. We think that it is one thing that has 
got to be one of the keys. We have to get more specialty care. 
We have to have more access to more sophisticated care to be 
provided at the rural locations. And with--between that and the 
development of a health care workforce that can get the 
information once we are able to use tele-health to provide 
information to a rural setting, I think we will be able to see 
there to be just much more and better provision of health care 
in rural areas.
    So we have allowed there to be much more flexibility in CMS 
for the use of tele-health, and we are looking forward to kind 
of building out on that, and----
    Mr. Stewart. Elaborate on that, if you would, the 
flexibility and, you know, practical application, what that 
means to a family.
    Mr. Hargan. So a practical application would be that--how 
do you--if you have somebody who is going to be prescribing to 
you, can you use a--can you use tele-health to be able to--for 
a patient in one location to be able to have a screen in front 
of them, to be able to talk to a doctor. A doctor can then 
analyze something, make a prescription, then the prescription 
can be sent by tele-health, and then sent bar-coded to a 
pharmacy, and they can dispense it there, so that you can 
actually do prescriptions remotely.
    You can actually provide--with the sophistication of the 
cameras and the technology we have now, you can have a lot of 
things that are done, a lot of visits, virtual visits that are 
done by doctors that can provide really good and sophisticated 
care and diagnoses to a patient which can then be used locally 
to provide care.
    Mr. Stewart. So, Mr. Hargan, I would be curious, and I 
don't know the answer to this.
    One of the benefits--again, my district and others--is to 
make it more accessible. It can be difficult, especially for 
someone on a fixed income, someone who has some limited 
capabilities, to travel an hour to see a doctor. That is a 
great thing. Get that--you just indicated that that was 
possible.
    I am curious whether this is also more efficient. Do we 
actually save money by some of these processes, where the 
doctor is able to see the patient more quickly and more 
effectively?
    Mr. Hargan. We have been doing research on that. We look 
forward to sort of further developing that with Congress about 
what the cost impacts are going to be. But we definitely want 
to have them move from higher-cost settings like hospitals into 
being able to take care of themselves at home.
    I personally have sponsored this thing called the Patient 
Empowering Technology Summit that--we are looking to advocate 
for more tele-health, more wearable technologies, and things 
where patients can have technology for themselves in their own 
homes, in their own settings, that allow them to have better, 
more sophisticated care for themselves at home or in local 
settings like community health centers.
    Mr. Stewart. And thank you. I am out of time, but I 
appreciate your answers.
    Chairman Yarmuth. Thank you. The gentleman's time is 
expired. I now recognize the gentlelady from Illinois, Ms. 
Schakowsky, for five minutes.
    Ms. Schakowsky. Thank you, Mr. Chairman, and thank you, 
Deputy Secretary. I want to talk to you about Title X, which is 
the only federal program dedicated to contraceptive health care 
and family planning services. The program has operated 
successfully for about half a century, and serves 4.1 million 
low-income individuals, which is why I think its funding 
actually should be increased. Right now it is--in the budget it 
is $280 million. I think $400 million would be better.
    But my concern right now is the way that a--an executive 
order was issued, and a regulation that would dramatically 
change Title X and the organizations that are possible 
recipients of Title X funding, providing a tremendous service.
    I wonder if you could describe in--perhaps more 
specifically what we see, many of us, including providers, as a 
domestic gag rule preventing physicians and providers from 
giving the full story of the full range of health care 
services, including even recommending or referring for abortion 
services.
    Mr. Hargan. The final rule is not a gag rule. It is--it 
does not prohibit. In fact, it affirmatively permits 
counseling, non-directive counseling, about abortion. So it 
is--in this way it is different than the Reagan 
Administration's Title X rule that was upheld in the Supreme 
Court.
    What we are trying to do is to make sure that the Title X, 
the statute we have to obey, says none of the funds 
appropriated under this title shall be used in programs where 
abortion is a method of family planning. This rule is intended 
to safeguard the requirements in the law that require us not to 
fund abortions or to--in the program.
    Ms. Schakowsky. Well, you know that under current law, 
under the Hyde amendment, no dollars can be spent for abortion 
services. But what we are concerned about--and correct me if I 
am wrong--that organizations like Planned Parenthood, who 
provide many preventative services, the single largest 
organization to receive Title X funding, believes that their 
programs would have to dramatically change, not just a matter 
of providing abortions, but my understanding is that counseling 
about abortions, leaving it as a potential option, or for--with 
other money, not federal dollars, providing abortion.
    Are you saying that Planned Parenthood is misinformed, and 
that they will continue to receive funding from the federal 
government under Title X?
    Mr. Hargan. I don't know the details of Planned 
Parenthood's internal finances or how they arrange their 
centers. I know as long as they comply with the law, that they 
will be entitled to apply for the funds under Title X, as long 
as they comply with the rules and regulations----
    Ms. Schakowsky. Well, how would you define them, complying 
with the law? That is what I want to get at, because many of us 
feel that the--preventing qualified providers who--the Planned 
Parenthood itself sees about five million people a year, often 
for screening for cancer, STDs, for basic health care, that 
they would be prevented from getting Title X, which is very 
important.
    Mr. Hargan. Well, the final rule is there to help provide 
high-quality, comprehensive family----
    Ms. Schakowsky. No, no, no. I want to know, regarding 
abortion, how this affects organizations like Planned 
Parenthood.
    Mr. Hargan. I would have to refer you to them for the 
impacts that they think the rule would have for that 
particular----
    Ms. Schakowsky. No, except that you--aren't you the person 
that is speaking on behalf of the Administration on a dramatic 
change?
    In your view, do you think these changes in Title X will 
lessen the number of people who get served by Title X?
    Mr. Hargan. I don't believe that--we have lots of 
federally-qualified health centers located all over the 
country, 1,400 health centers----
    Ms. Schakowsky. Other than what? You said we have many 
other.
    Mr. Hargan. Other providers.
    Ms. Schakowsky. Than Planned Parenthood?
    Mr. Hargan. And Planned Parenthood can comply with the 
rule. They are--they can come and provide these services. And 
we are not intending to box out any particular provider. We 
just have to make sure that the law is implemented, and this 
regulation is intended to implement the intent of that law.
    So if they intend to apply for this, it is not directed to 
prevent them from applying for these things, just that they 
have to comply with the law. So any provider can apply for 
this, as long as they fit within the regulatory framework and 
the statutory framework.
    Chairman Yarmuth. The gentlelady's----
    Ms. Schakowsky. Their concerns are warranted, and I yield 
back.
    Chairman Yarmuth. The gentlelady's time has expired. I now 
recognize the gentleman from Pennsylvania, Mr. Meuser, for five 
minutes.
    Mr. Meuser. Thank you, Mr. Chairman, and thank you to 
Deputy Secretary Hargan, very much, for being here with us this 
morning.
    The President's budget seems to me to be very focused on 
making health care more affordable. In fact, better for 
beneficiaries. For instance, the goal is to make prescription 
drugs far more affordable than over the past.
    It also provides much more responsibility to the states, 
and there is no question--I would say 50 out of 50 states--
appreciate that.
    It also addresses--in, really, an unprecedented manner, and 
I hear this from drug awareness groups in my--throughout my 
district--very strong fixes and support to fight the deadly 
opioid and drug epidemic that many districts and communities 
face.
    So there is a lot of positives. It also has programs such 
as Medicare Advantage, or enhances them by--Medicare Advantage 
has a--has reduced both premiums and deductibles, and I have 
heard this from many constituents, and the data proves that to 
be the case. So there is as number of positives.
    What I would like to ask is my district, on the opioid and 
drug epidemic issue, like many communities throughout the 
country, have some big problems. Can you outline what the 
Department's budget request allocates to address this crisis?
    Mr. Hargan. I am happy to. As I have mentioned, you know, I 
come from a community that has been afflicted by the opioid 
epidemic for decades. In fact, in my own family. The President 
has signaled this as, you know, the foremost public health 
crisis of our time, and the budget invests $4.8 billion, an 
increase over last year, in a difficult environment, of over--
of $123 million. This is to--this shows the seriousness with 
which we have to take this. It is the driver of a three-year 
decline in American life expectancy.
    And the efforts that the Administration has been taking has 
resulted in what we hope to be a flattening and a decline for 
the first time in years of the opioid overdose deaths that we 
are seeing. So we are driving both research into non-addictive 
pain killers, the greater access to medication-assisted 
treatment, more money for states and opioid response grants 
that we have been standing out over the last couple of years to 
really build out the capacity of the states and localities to 
deal with this, and for families to get access to the treatment 
and the recovery services that they need and deserve.
    Mr. Meuser. Thank you. You addressed somewhat the issue of 
rural areas and the support that this budget provides. You did 
mention something about workforce development. Could you expand 
upon that?
    Mr. Hargan. So we have a number of proposals, one of which 
within the Indian Health Service, which addresses a lot of 
rural areas throughout the United States, where we are trying 
to focus on community--the community health aid program. The 
budget advocates for this, which is providing a training for--
to build out a corps of community health aids who can be on the 
ground in rural areas. And also, Indian Health Service is one 
of our foremost agencies identified by us in fighting the 
opioid epidemic, which disproportionately affects tribal 
members.
    So--and we can get lessons learned from a lot of these 
things, in terms of workforce development.
    Mr. Meuser. Great. Can you describe a few of the Medicaid 
reforms that are in this budget?
    Mr. Hargan. Yes. So the Medicaid reforms, as you have 
mentioned, are really dedicated to providing flexibilities for 
states. So we have put forward a block grant program of $1.2 
trillion over 10 years that really is intended to refocus the 
Medicaid program on the populations it was originally intended 
to serve: pregnant women, children, the disabled, the elderly. 
So we are really focusing on the most vulnerable populations, 
and giving states flexibility to deal with their particular 
populations that they uniquely have the knowledge on the ground 
of how to deal with them.
    So we have--it is--so we have actually stood out more 
programs, more flexibilities on that side, and $1.2 trillion on 
a new program to address these issues and provide flexibilities 
for the states.
    Mr. Meuser. Thank you. I just got a couple of seconds here. 
I will just ask quickly. Prescription drugs, are there one or 
two examples of what you are doing effectively to reduce 
prescription drug costs?
    Mr. Hargan. Yeah. We have seen companies reduce in 
cholesterol medicines, in insulin for diabetics, and in 
hepatitis C drugs, where companies actually announced lowering 
drug costs for patients in those areas, and these are widely-
used drugs. Millions of people use cholesterol drugs, as well 
as those dealing with diabetes.
    Mr. Meuser. Thank you.
    Thank you, Mr. Chairman.
    Chairman Yarmuth. Sure. The gentleman's time has expired. I 
now recognize the gentleman from Nevada, Mr. Horsford, for five 
minutes.
    Mr. Horsford. Thank you, Mr. Chairman, and thank you for 
holding this hearing to allow us to discuss the President's 
Health and Human Services 2020 budget proposal. I would like to 
start off with Medicaid.
    Today more than 640,000 Nevadans rely on Medicaid, which 
provides health coverage to children, pregnant women, parents, 
seniors, and individuals with disabilities.
    President Trump promised during his 2016 campaign that he 
would not cut Medicaid funding. In fact, on May 7th, 2015 then-
candidate Trump tweeted--and I quote--``I was the first and 
only potential GOP candidate to state there will be no cuts to 
Social Security, Medicare, and Medicaid.''
    Deputy Secretary, can you tell me and my constituents back 
in Nevada why the President is now breaking his promise and 
proposing to cut Medicaid by $1.5 trillion over the next 10 
years?
    Mr. Hargan. The budget does not propose to cut. It cuts and 
adds in $1.2 trillion, as I mentioned, in new grants that allow 
flexibilities for states to respond. So, whereas----
    Mr. Horsford. And those new cuts----
    Mr. Hargan. Whereas----
    Mr. Horsford. Those new programs are being paid for through 
cuts to the existing Medicaid program, correct?
    Mr. Hargan. So there--it shifts--the budget shifts the 
money from being paid as it currently is to more flexibilities 
on a different line. So it might appear to say it cuts Medicaid 
by a certain amount, but actually the money is mostly shifted 
into a more flexible budget line.
    So we are standing up the market-based health care grants 
to the states, which is going to allow them to focus the 
program more flexibly. So----
    Mr. Horsford. Yes. As a former state legislator, having 
worked on budget issues, we understand what those block grants 
to the states would actually mean. For states like Nevada, that 
have population growth, it is not going to actually allow us to 
keep up with our health care needs.
    Let me turn to the HIV eradication. President Trump, in his 
State of the Union speech said it is his goal to end the U.S. 
HIV epidemic. And while that is a very commendable goal, I 
question the approach. Some of my colleagues have talked about 
the $1.2 billion cuts to global health programs, but we can't 
ignore the cuts the Trump Administration is making to domestic 
health care programs that help address HIV.
    You see, Medicaid is the single largest source of coverage 
for all Americans with HIV, and this plan looks to gut the 
program. This will be detrimental in Nevada, which has the 
seventh-highest population of individuals with HIV in the 
nation. Evidence shows that reducing federal funds through a 
per capita or block grant would limit Nevada's ability to 
respond to public health crisis such as the HIV epidemic or the 
opioid epidemic. Without Medicaid coverage, 8,900 people living 
with HIV in Nevada will likely go without any care.
    So Deputy Secretary, how does the Administration plan to 
make up for the loss of care for HIV patients?
    Mr. Hargan. We have proposed to end the HIV epidemic in 
America by 2030. This budget proposes $291 million targeted to 
the areas that account for 50 percent of new diagnoses. We are 
dedicated to ending this scourge for all Americans, and we 
followed the advice of our public health specialists, our 
researchers, that----
    Mr. Horsford. You are not answering my question.
    Mr. Hargan.----we think between----
    Mr. Horsford. Reclaiming my time, can you answer the 
question? How does your plan specifically seek to end the 
eradication of HIV, when you are making these dramatic cuts?
    Mr. Hargan. We are going to be standing out, through the 
community health clinics, more access to PrEP, which will allow 
us to suppress the virus on the front end, prophylactically, 
and then also maintain funding for the Ryan White CARE Act, 
with--which allows us to--which is where we get the ART on 
the--for people who are infected.
    So between PrEP and ART, and through community health 
clinics, and through the state and local-based elements of the 
Ryan White CARE Act, we believe that we will be able to, 
through those and----
    Mr. Horsford. I will look forward to getting more 
information, since it is not very clear.
    I want to just mention on the issue of tele-health--I know 
the budget does factor in $44 million of additional money to 
tele-health grants. I just visited a number of rural health 
care centers in my district last week with FCC Commissioner 
Starks.
    However, based on the need that I heard from those 
providers, $44 million, while an increase, still seems rather 
inadequate, based on the information that I received from those 
health care providers. So I would ask the Administration to 
really look at that, based on the fact that it is an area where 
we may share some agreement. Thank you.
    Mr. Hargan. Thank you, Congressman.
    Chairman Yarmuth. The gentleman's time has expired. I now 
recognize the gentleman from South Carolina, Mr. Timmons, for 
five minutes.
    Mr. Timmons. Thank you, Mr. Chairman. Thank you, Deputy 
Secretary, for taking the time to come before our committee 
today.
    We are hearing a lot from my colleagues across the aisle 
about the changes in spending. The spending priorities that 
have been proposed are different than last year, and these cuts 
that we keep hearing about--I understand some of their 
concerns. But I want to talk to you about a different kind of 
cut.
    We have $22 trillion in debt right now. We passed a $1 
trillion deficit budget. What happens when our credit limit 
runs out? It is not a question of if, it is a question of when. 
So whether it is five, 10, 20 years from now, or next year, I 
want you to give me the scenario of a 20 percent across-the-
board cut to your budget.
    Mr. Hargan. Well, as you have seen, we are trying to 
preserve the viability of these programs. In fact, in the 
budget we are extending the life of the Medicare trust fund by 
eight years, just simply by lowering the rate of growth in the 
program from 7.8 percent to 6.9 percent, and by taking some of 
the elements out of the Medicare trust fund that may not really 
belong there, like graduate medical education or uncompensated 
care--by moving those out into the general fund, we are 
extending the life of the Medicare trust fund by years, which 
helps us keep our promises to American seniors.
    Just by enacting some common-sense reforms to these 
programs, we are going to extend the life and the promises that 
we have made.
    Mr. Timmons. Let's get more specific, though. So next year 
you get 25 percent less dollars. You--just specifically, what 
would you have to do?
    Mr. Hargan. You know, I would say that if we have 
hypothetical scenarios, we work through a lot of these 
different elements in 25 percent to--a scenario would be a huge 
cut this year.
    We have proposed a 12 percent cut in our discretionary 
lines within the budget. It would require a lot of thoughtful 
work on our budget people's behalves to make sure that we can 
balance out the necessary--there is a focus, like, for example, 
this year, opioids, pediatric cancer, where we are trying to 
focus on these areas. But it would require a lot of difficult 
decisions.
    Mr. Timmons. Would Americans see a reduced quality of 
health care?
    Mr. Hargan. With a 25 percent cut, it depends on where we 
would, hopefully, be able to--we would be able to work to make 
sure that there were no lowering in overall care for Americans. 
We would do our best.
    Mr. Timmons. You would do your best, but 25 percent less 
money, it would be catastrophic.
    Mr. Hargan. It would be a blow to have to endure larger and 
larger cuts as time went on.
    Mr. Timmons. So the Budget Committee of the United States 
Congress should take very serious steps to make sure that that 
doesn't happen.
    Mr. Hargan. Yeah, I think that we have laid out some 
common-sense reforms in this budget that would enable us to 
take action in time to prevent--to make moderate changes now 
that would prevent worse decisions taking place later on down 
the line.
    Mr. Timmons. Thank you.
    Thank you, Mr. Chairman.
    Chairman Yarmuth. I thank the gentleman. I now recognize 
the gentleman from Virginia, Mr. Scott, for five minutes.
    Mr. Scott. Thank you.
    Mr. Hargan, if an--does your budget anticipate funding 
agencies that discriminate based on religion?
    Mr. Hargan. We enforce all the civil rights laws, and all 
the constitutional safeguards that are given to us in trust.
    Mr. Scott. Okay. So if an agency said that they are going 
to discriminate in hiring based on religion, and then turned 
around and--say if it is an adoption agency only considers 
certain religions for adoption, would you--would that 
disqualify them from federal funding? Or would you support that 
discrimination in hiring and providing the service?
    Mr. Hargan. We can balance the needs of grantees and their 
religious expression with--that is one of the constitutional 
guardrails----
    Mr. Scott. Is that a yes or a no?
    Mr. Hargan.----that we are given to enforce.
    Mr. Scott. Would that agency be disqualified by virtue of 
the fact that they intend to discriminate in hiring with the 
federal money, only hiring, say, Christians, other religions 
need not apply; and then only considering for adoption services 
Christian families, other religions need not apply? Would they 
be disqualified from federal funding?
    Mr. Hargan. So I assume you are dealing with the Miracle 
Hill----
    Mr. Scott. I am not--I am just asking a general question.
    Mr. Hargan. We have to protect both religious expression--
--
    Mr. Scott. Is that a yes, you would fund such an agency?
    Mr. Hargan. We have to protect all the constitutional 
rights----
    Mr. Scott. Is that a yes, you would fund such an agency?
    Let me ask it another way. Is it yes, you have funded such 
an agency?
    Mr. Hargan. South Carolina approached us with a request for 
an exception for--to allow them to place more children with 
foster care and loving homes----
    Mr. Scott. Is that a yes? Wait, wait, wait a minute. Wait. 
An agency intends to discriminate based on religion in hiring, 
and then based on religion they are going to disqualify 
families from participating in adoption services.
    Mr. Hargan. No, no family is disqualified for participating 
in adoption services. Any time that an organization like 
Miracle Hill----
    Mr. Scott. They----
    Mr. Hargan. It--they are referred back to the state, and--
the state or another agency. So anyone who wants to participate 
in that as a foster parent can apply to the state, they can 
apply to another agency----
    Mr. Scott. But not that agency. That agency is going to 
discriminate. Is that right?
    Mr. Hargan. The agency is allowed to----
    Mr. Scott. To discriminate.
    Mr. Hargan.----to express----
    Mr. Scott. And you will--and they can use federal funds 
doing that?
    Mr. Hargan. The agency is allowed to express its 
religious----
    Mr. Scott. I am just trying to get a straight answer. I 
mean this is a very straightforward question.
    Mr. Hargan. No one is prevented from participating in that 
foster care program.
    Mr. Scott. They are--but the agency can disqualify them--
they are not going to consider any non-Christian adoptive 
parents, is that right? And you are going to give them federal 
money?
    Mr. Hargan. The state agency----
    Mr. Scott. Excuse me. You gave them federal money?
    Mr. Hargan. The state agency will not turn away anyone who 
wants to apply to----
    Mr. Scott. Answer--this is----
    Mr. Hargan.----be a foster----
    Mr. Scott. Did you fund--are they spending federal money 
and discriminating? Yes or no.
    Mr. Hargan. We give money to the state----
    Mr. Scott. Yes, okay.
    Mr. Hargan. We give money to the state, and the state gives 
it to the agency----
    Mr. Scott. Yes, okay. I think we have gotten the point. You 
have funded an agency that has the express intention--I do not 
know if they are doing it or not--but discriminating in hiring 
with federal money, and disqualifying, that agency, parents who 
are not the right religion from participating, and they are 
using federal money.
    Mr. Hargan. I could not as a Catholic participate as a 
foster family with that organization.
    Mr. Scott. And you gave them federal money?
    Mr. Hargan. I could not participate.
    Mr. Scott. You gave them federal money. Let me get to 
another one, talking about block grants. Is it true that a 
community services block grant that reduces poverty, did they 
get zeroed out?
    Mr. Burchett. I believe that we have not allocated money 
for that program.
    Mr. Scott. And Social Services' block grant, supportive 
services for families, did they get zeroed out?
    Mr. Hargan. Like other programs where we have sort of low 
results for the program----
    Mr. Scott. Is that a yes?
    Mr. Hargan.----we zero them out.
    Mr. Scott. And you are going to a block grant with - in 
terms - after the Affordable Care Act. Your plan anticipates 
ending the Affordable Care Act and replacing it with a block 
grant, and the block grant will increase annually with 
inflation; is that right?
    Mr. Hargan. Yes, we have the whole provision set out.
    Mr. Scott. Okay. And the inflation, is that regular 
inflation or is medical inflation?
    Mr. Hargan. I would have to get back to you. I believe it 
is regular inflation.
    Mr. Scott. And so what is the difference between regular 
inflation and medical inflation?
    Mr. Hargan. There are lots of different calculations for 
different kinds of----
    Mr. Scott. Medical inflation is a lot higher than regular 
inflation. So every year you would be falling behind. The 
purchasing power of that block grant would be eroding every 
year based on the difference in inflation; is that right?
    Mr. Hargan. If the inflation rate that year were higher 
than regular inflation.
    Mr. Scott. Oh, come on. The inflation rate for medical 
inflation has been higher than regular inflation. When was the 
last time it was not higher?
    Mr. Hargan. I do not know. We would have to get back to 
you.
    Mr. Scott. Okay.
    Chairman Yarmuth. The gentleman's time has expired.
    I now recognize the gentleman from Oklahoma, Mr. Hern, for 
five minutes.
    Mr. Hern. Thank you, Chairman, Ranking Member Womack.
    Deputy Secretary Hargan, I want to thank you for your work 
you do in promoting and enhancing the health and well-being of 
the American people. I appreciate your work and this 
Administration's commitment to lowering the cost of 
prescription drugs, protecting the unborn, combating the opioid 
crisis, and many other ideals.
    This Administration's equal commitment to health and fiscal 
responsibility is commendable.
    First, I would like to express my support for the 
Department of Health and Human Services' final rule separating 
abortion from family planning. Until now, the Title X program 
accounted for hearing 60 percent of Planned Parenthood 
expenditures from all agencies reported between 2013 and 2015.
    During this time frame, Planned Parenthood received $170 
million of taxpayer money through the Title X program, an 
average of $56 million annually.
    While previous regulations violated longstanding conscience 
laws and required all Title X recipients to refer for abortion, 
the final rule ensures that none of the funds appropriated for 
Title X may be used in programs where abortion is a method of 
family planning.
    The elimination of the egregious abortion referral mandate 
appropriately protects the conscience rights of health care 
providers. Abortion is not family planning, and I am grateful 
for this Administration's acknowledgement of the fact.
    So really briefly, I would like to know what else this 
department is doing to ensure that they are allowing our great 
medical care providers to protect the religious freedoms and 
consciences while on the job.
    Mr. Hargan. Thank you, Congressman.
    We have set out in our Office of Civil Rights a Division 
for Conscience and Religious Expression to be able to protect, 
to be able to investigate potential violations by our 
conscience rule, that is, to protect people's conscience rights 
and their religious rights when they are providing medical 
care.
    There are a number of statutes that have been put in place 
over years, some stretching back decades into the 1970s that 
protect Americans who are in the health care sector, that 
protect both their conscience and their religious expression 
rights.
    So under this Administration, we now have staff that are 
going to be dedicated to making sure that those rights are not 
violated.
    Mr. Hern. Thank you, Mr. Secretary.
    I would also like to ask you about the medical device tax. 
This fundamentally flawed public policy was put into place in 
an effort to pay for the unaffordable health care act. This 
punitive tax punishes businesses in a specific industry for 
innovation. It is the epitome of the war on business and is 
already having a major negative impact on the competitiveness 
of vital, world-leading, American industry.
    According to data from the U.S. Department of Commerce, the 
U.S. medical technology industry saw its job ranks fall by 
nearly 29,000 while the medical device tax was in effect. In a 
2017 study by the American Action Forum, assessed that this 
rate of job losses would likely return if the tax goes back 
into effect.
    Those workers earn an average of $58,000 annually, well 
above the national average for manufacturing.
    First, do you support the repeal of the medical device tax?
    Mr. Hargan. Yes, I and we do.
    Mr. Hern. And what is your department doing, working with 
Congress, urging them to--let me just rephrase it this way.
    What is your department urging Congress to do to keep the 
health care industry competitive?
    Mr. Hargan. Yes. We are supporting innovation on all 
fronts, not just through medical research that we are doing on 
NIH, but we are also going to try to enact a series of 
regulatory reforms.
    For example, I am chairing something called the Regulatory 
Sprint which is going to hopefully help de-burden a lot of 
areas around coordinated care, that is going to allow there to 
be more innovation in this area.
    We think that innovation is really in many ways a solution 
to some of the health care problems that we have, and it is a 
way in which we can kind of solve some of the problem, whether 
cost, and also help American industry. If we can support 
innovation in this country, we are really going to support the 
position of the entire United States.
    It is the largest sector of the American economy, and 
whatever we can do to help enhance innovation in this country, 
it is going to help not just the Americans as patients, but 
also American industry as well in the health care sector.
    Mr. Hern. Thank you, Mr. Secretary.
    Mr. Chairman, I yield back.
    Chairman Yarmuth. The gentleman's time has expired.
    I do not know what is going on with the mikes here. Still 
working out the kinks.
    I recognize the gentlelady from Texas, Ms. Jackson Lee, for 
five minutes.
    Ms. Jackson Lee. Mr. Chairman and Ranking Member, thank you 
so very much.
    And to the Deputy Secretary, thank you for your service to 
the Nation.
    I am going to ask very quick questions, and I would 
appreciate, as best you can, answers that would move as quickly 
as possible because my time is limited.
    Let me start out by saying in 2012 there were 45.6 million 
people that were uninsured. As the Affordable Care Act began to 
do its work, 2018, 28.3 million, 8.8 percent uninsured.
    I think every life, every child is valuable and should have 
access to health care. Do you believe that, yes or no?
    Mr. Hargan. Yes.
    Ms. Jackson Lee. Thank you very much.
    Let me, with that in mind, let me begin methodical 
questions. It is my understanding that the President's budget 
includes $1.5 trillion in Medicaid cuts over 10 years. Part of 
the work of Medicaid is cutting HIV transmission. Part of its 
work is dealing with prescriptions. The Part D plans must cover 
all HIV drugs.
    But the Administration now is limiting the coverage of 
drugs, when we are seeing a surge of HIV. Is that giving a 
death knell to people who are suffering from HIV?
    What mindset would cause you to engage in cuts in people 
who are fighting for their lives?
    Mr. Hargan. As you know, the President is dedicated to 
ending the HIV epidemic in American by 2030.
    Ms. Jackson Lee. By his works, not his words, by his deeds.
    Mr. Hargan. We are putting $291 million more, million new 
dollars, into fighting HIV. Both are expanding access to prep 
and as well as ART. So the main forms by which people fight 
this terrible scourge, we are enabling people to have actually 
more access to----
    Ms. Jackson Lee. I am interested in your answer about the 
fact that HIV transmissions and drugs that are going to be 
excluded are going to be lost. That opportunity is going to be 
lost. Do you admit that?
    Mr. Hargan. We hope that access to effective HIV therapies 
is not just not lost, but it's going to be enhanced.
    Ms. Jackson Lee. But we are hoping that.
    Let me move on to indicate that you are cutting $130 
billion from Medicaid over 10 years. What is your estimate of 
the people who will lose Medicaid coverage?
    Mr. Hargan. Well, we believe that what we are doing in this 
budget is, first of all, as I indicated earlier, while there 
are cuts in the budget, there is also $1.2 trillion in grants 
that are going to go to states to enable them to focus
    Ms. Jackson Lee. In block grants.
    Mr. Hargan.----to focus on the most vulnerable.
    Ms. Jackson Lee. And that is a challenge.
    Do you know how many people in your new work formula will 
lose Medicaid because of the mandatory work requirement? And 
these people are unable to work.
    Do you know how many people will lose it because of that?
    Mr. Hargan. We believe that we are going to look for the 
effects of the community engagement requirements that we have 
in states right now. We are hopeful with the strong economy 
that we have right now and that has been enabled by President 
Trump's reforms----
    Ms. Jackson Lee. Forgive me for reclaiming my time or 
restoring my time. I know you are believing in hope. I want you 
to see the picture of devastation.
    Let me also say coming from Texas, we were the poster child 
for the uninsured. Now the Administration is going in to 
implode, blow up, and destroy the Affordable Care Act with his 
position on the Texas v. Azar decision.
    Were you involved in that decision making?
    Mr. Hargan. Litigation strategy is with the Department of 
Justice.
    Ms. Jackson Lee. Do you agree with throwing out the 
Affordable Care Act that has been a lifeline to many people?
    Mr. Hargan. President Trump wants to make sure that people 
with preexisting conditions and all the----
    Ms. Jackson Lee. That will be impossible if he blows up the 
Affordable Care Act. What is his substitute right now? Does he 
have bill that is going through the House and Senate that he is 
going to pass and sign?
    Mr. Hargan. We have spelled out in the budget a----
    Ms. Jackson Lee. You have no legislation that will deal 
with that.
    So let me deal with the unaccompanied children. How many 
unaccompanied children does HHS anticipate needing services for 
in 2020? How much are you asking for?
    Mr. Hargan. We are asking for an expansion of our ability 
to transfer to 20 percent and then a $2 billion contingent fund 
that will enable us to deal with influxes and surges into 
this----
    Ms. Jackson Lee. And do you have an accounting? I have 
asked almost every administration representative that comes 
before my Committees, plural. What is the number that you have 
right now?
    Mr. Hargan. It is between 11 and 12,000.
    Ms. Jackson Lee. And that 11 to 12,000 has been a steadfast 
number of holding and incarcerating children. Aren't you part 
of the process of getting connected to their family members?
    Mr. Hargan. We want to make sure that process takes place 
as quickly as possible.
    Ms. Jackson Lee. Then can I ask you to ask the President to 
cease and desist incarcerating these children?
    I wrote the legislation. So let me just say I understand. 
We in the judiciary tried to find alternative places for 
children as opposed to the detention conditions, but now it has 
become an industry, and you are asking for another $2 billion.
    Mr. Hargan. We want to make sure that the children's 
welfare and safety is at the center of everything we do at HHS.
    Ms. Jackson Lee. I will be back in touch with you.
    Let me quickly ask. Head Start, you are lowering the Head 
Start funding. With the Head Start funding you are going to be 
able to serve one-third less eligible children, and we know 
that it is only reaching less than one-third of eligible 
children, and you are proposing to reduce it.
    How are you going to help the children that need to be in 
Head Start with reducing the budget?
    Mr. Hargan. We are actually focusing our efforts on making 
sure we preserve programs that have demonstrable effects like 
Head Start and the child care programs. We are putting forward 
actually new proposals on child care, I think $1 billion more 
into a child care fund.
    Ms. Jackson Lee. Mr. Hargan, you are losing slots, and the 
parents are begging. I would beg that to be revisited as we 
will revisit it in terms of all these questions that I asked.
    These are desperate situations, desperate times, and they 
need the help of the federal government as it relates to health 
care, HIV/AIDS, and, of course, Head Start, and many others. So 
I beg of you to be a voice of reason for this Administration.
    I yield back.
    Chairman Yarmuth. The gentlelady's time is expired.
    I now recognize the gentleman from Tennessee, Mr. Burchett 
for five minutes.
    Mr. Burchett. Thank you, Mr. Chairman.
    And thank you for being here, Ranking Member. Thank you, 
sir.
    I will not beleaguer questions that have already been 
asked. Being number 436 out of 435, I am going to wing it on a 
couple of things that I was curious about.
    On these deductions or supposed cuts to Medicare-Medicaid, 
but you say that, in fact, you are going to basically--correct 
me if I am wrong--you are going to take the bureaucracy out of 
it and send it to the states and allow them to share in the 
responsibility of providing this care and maybe the aspect of a 
local control is best.
    Is that primarily what I understand you saying, sir?
    Mr. Hargan. Yes, it is.
    Mr. Burchett. Okay. I wanted to get that straight.
    Two other issues I was concerned about. The pediatric 
cancer investment, I salute you for that. That along with the 
HIV investment, I guess my biggest concern is I have seen up 
here both parties do it. So it is not like it is any big 
secret, but it seems that in funding bills we reward and we 
punish, and you see funding for research for things possibly 
spread out among members who may be more cordial with others 
than some are, than some that aren't.
    And I am wondering, and I guess my biggest concern is for 
things like pediatric cancer, you know, we have got St. Jude's 
in Memphis, which is on the other end of the state, but they 
clearly do the Lord's work. I'm wondering if you all are 
looking at areas where there could be duplication.
    Because in that funding, it seems a lot of times it has 
very little to do, at least in my layman's view, of the ones 
that are actually delivering the goods, but it is going to the 
more prestigious areas and it may be that more prominent 
members represent those districts. And I am concerned of 
duplication.
    I would just like to get to the bottom of it, get to the 
cures, take care of these sick folks, and quit with all of the 
politics. I don't care if they do it in Dan Crenshaw's district 
or Tim Burchett's district, but if they're solving the problem, 
that is where the money needs to go, and I hope you all are 
addressing that duplication that I see a lot in research.
    Because it seems to me that, you know, we just keep 
reinventing the wheel on some of these things, and if we could 
consolidate and maybe have some collaboration within these 
institutions that we could solve some of these problems.
    If you would, just comment on that.
    Mr. Hargan. I think that is probably the central case that 
we are trying to deal with here. Pediatric cancer has been very 
fragmented and siloed in a number of different places that we 
think has sort of dragged at the ability to make as much 
progress in this area as we would like.
    So us being able to kind of gather information on the data, 
get it together into a single place, and determine where we are 
seeing better results within pediatric cancer is kind of 
central to the problem that we have articulated to ourselves.
    So the President's initiative on pediatric cancer, a lot of 
it is going to be addressed precisely with what you are talking 
about, which is the fragmentation and siloing of pediatric 
cancer research in the past.
    Mr. Burchett. You used the term ``silo.'' I understand what 
that means, but could you explain that to Mr. Crenshaw because 
I am not sure that he understands exactly what that means.
    Mr. Hargan. Yes, there is often a development straight up 
in a particular area. They do not talk to each other, right?
    Mr. Burchett. Honestly, I do not know what ``siloed'' 
means. So if you can just explain it to me.
    [Laughter.]
    Mr. Burchett. That was me saying that, you know, trying to 
look a little smoother, but you did not catch onto that, but go 
ahead.
    Mr. Hargan. I guess coming from a farm, I did use a rural 
term. So, yes, so siloing, we often find that people do not 
talk to each other within this area. They do not share data 
collaboratively within this area, and it is just the 
development of these longstanding ways of doing business that 
we hope to be able to overcome.
    Mr. Burchett. Okay.
    Mr. Hargan. To bring the information together, stop the 
fragmentation, stop the non-sharing of data, and prepare a 
single data resource that is available more broadly that will 
allow us to kind of make some steps forward in this area.
    Mr. Burchett. Thank you, brother.
    I yield the rest of my time, Mr. Chairman. Thank you for 
your indulgence.
    Chairman Yarmuth. Well, I thank you, sir.
    The chair now recognizes the gentleman from California, Mr. 
Peters, for five minutes.
    Mr. Peters. Thank you, Mr. Chairman.
    And thank you, Deputy Secretary Hargan, for coming to join 
us today.
    One of the challenges in health care is keeping premiums 
down, and I think you would agree that one of the ways we do 
that is to make sure we get young people into the pool. Would 
you agree with that?
    Mr. Hargan. There are lots of ways to address those issues 
with the pool.
    Mr. Peters. I just it was one of the ways, is to get 
younger----
    Mr. Hargan. It is possible one of the ways is to bring 
lower cost people into the pool.
    Mr. Peters. Right. And you know, we did have a mechanism in 
the Affordable Care Act which was enacted before I got here. So 
I have no pride of authorship. The individual mandate was 
intended to get people to come in, and now after you are 26 and 
you come off your parents' insurance, assuming you have it from 
them, there is no real incentive to get you to get in the pool.
    And I notice that one of the things that the proposed 
budget would do would be to cut advertising by 90 percent and 
in-person consumer assistance by more than 80 percent, close to 
$150 million.
    Don't you think it would be useful to help get the word out 
that insurance is available in terms of as one mechanism at 
least to get young people who are healthy into the pool and 
keep insurance premiums down?
    Mr. Hargan. We have seen torts as the ACA enrollment has 
developed. We have seen less and less use of navigators, for 
example; that they were not really connecting people at some 
point.
    We had one result where we had spent $200,000, and there 
was a single person enrolled by a navigator in one area. That 
is an area where it seems like there was some waste going on.
    Mr. Peters. I certainly think we should root out the waste. 
I will just tell you that California's experience has been at 
variance with that.
    According to Covered California, Mr. Chairman, without 
objection, I would ask that the Covered California summary of 
marketing matters be added to the record.
    Chairman Yarmuth. Without objection.
    [The information follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Peters. They will spend about $111 million on marketing 
outreach for just one state, although we are 40 million people, 
and they believe that the amount that they have spent has kept 
premiums down by 6 to 8 percent, and that if the federal 
government would go ahead with its 72 percent reduction in 
marketing, there will likely be one fewer Americans getting 
insurance, a less healthy risk pool, and premiums will be 2.5 
percent higher now than they were in 2019.
    They also say that the premium savings from expenditures on 
advertising would yield more than a 500 percent return on 
investment for the federal government. We know that getting 
folks in, and if there is no mechanism to do this through a 
requirement like the individual mandate, all we've got is 
advertising, and it has worked well in California.
    I just do not understand the logic of bringing us to this 
point.
    Mr. Hargan. When we previously had reduced some of the 
advertising and navigator money, we saw, really, very little 
effect on enrollment, and we have seen that the private plans 
had themselves advertised for their own product and that we 
were seeing a lot of brokers and agents that had appeared 
privately to guide people into the plan.
    So we did not really see a lack of enrollment; that there 
had been kind of a period where those navigators and the 
advertisement that had been done had been useful in the early 
stages when people were less familiar with the ACA, but now we 
have seen that really being transitioned into the plans 
themselves, the brokers and agents guiding people.
    Mr. Peters. Again, that is at variance with California 
which has had the most successful uptake rates in the country. 
I guess I would suggest we learn a lesson.
    I wanted also just to comment generally on someone 
mentioned the New York Times editorial on Medicaid cuts, that 
we should work together.
    I want you to know that I am someone who was not here when 
the Affordable Care Act was passed. I believe it is a 
tremendous undertaking to remake the entire health care system 
in the United States. It is going to need tweaks.
    But it is hard for us to talk, on one hand, to you about 
these changes when, on the other hand, the President's Justice 
Department is out there trying to sabotage the whole thing. It 
puts us in a very defensive position.
    And I know this was not something that was up to you. I 
appreciate your work on the Affordable Care Act, on making it 
right and making it work for people, but if the Administration 
is trying to cut out the whole thing, it makes it very, very 
difficult for us to feel like we are in a cooperative mood or 
feel that we can trust it.
    And I ask that you take that back to the Administration.
    Finally, I want to just point out that your budget would 
cut funding by $4.5 billion on NIH, the National Science 
Foundation by 13 percent. This is a devastating blow to 
biomedical research, particularly devastating in San Diego 
where the life sciences industry is a major driver of economic 
growth, home to more than 1,000 biotech companies, 80 
independent research and university-affiliated research 
institutions.
    According to NIH, investments in research focus on a 
particular area stimulate increased private investment in the 
same area. A $1 increase in basic public research stimulates 
$8.38 of industry investment after eight years. A $1 increase 
in public clinical research stimulates an additional $2.35 of 
industry R&D investments after three years.
    Have you estimated the devastating impact that these cuts 
would have on our economy?
    Mr. Hargan. Well, we are fully behind the medical research 
mission of NIH, and we know that the things that are done by 
the staff at NIH and by our grantee network is very important 
for the health of the American people.
    Mr. Peters. Well, I would suggest that this is extremely 
counterproductive, and I think it should be opposed.
    Mr. Chairman, I yield back.
    Chairman Yarmuth. Thanks. The gentleman's time has expired.
    I now recognize the gentleman from Texas, Mr. Crenshaw, for 
five minutes.
    Mr. Crenshaw. Thank you, Mr. Chairman.
    And thank you, Deputy Secretary, for being here on this 
very important subject as we have a hearing about what is 
almost a third of our budget.
    Under HHS, tell us again how much of that budget do you 
manage, mandatory and discretionary?
    Mr. Hargan. Yes. It is about a $1.3 trillion budget, about 
a quarter, a little over a quarter of the federal budget.
    Mr. Crenshaw. It is an enormous amount, and we don't have 
an infinite amount of resources. So any time we budget, this is 
always about choices.
    And I want us to recognize the fact that as politicians, we 
often get elected by promising action, by promising more. We 
take advantage of the human preference for more things, 
especially if somebody else might pay for those things and we 
don't have to.
    It is a cultural trend that is going on in this country, 
and it affects everything. It is an unsustainable cultural 
trend, this idea that someone else should take action so that 
you do not have to.
    And it is also this idea that the states are completely 
incapable of managing their own systems of government.
    This unsustainable cultural trend also leads to completely 
unsustainable policies, and Medicare is one of those. Medicare 
is completely unsustainable, and that greatly affects a 
generation like mine. I just turned 35, and I have really 
little hope that I will see Medicare in my lifetime.
    But there is a good chance that you will have to raise my 
taxes considerably to pay for this unsustainable program, and 
it frustrates me that on the Republican side we often have to 
be the adults in the room and say, ``Hold on. We cannot promise 
all of these things.''
    So on Medicare specifically I want to talk about some of 
those things that are driving those costs. What are some of the 
main elements driving the unsustainability of Medicare?
    And what are you doing to fix that?
    Mr. Hargan. Well, some of the things were really things 
that were put into Medicare Trust Fund that really did not 
belong there, things like uncompensated care, things like 
graduate medical education. Simply moving those out into the 
general fund means that Medicare Trust Fund is the sort of the 
reckoning that is delayed by a number of years.
    Also, just lowering the amount spent from 7.8 percent 
growth to 6.9 percent has a tremendous effect overall.
    Then we also address some of the issues where some of the 
payment rules have kind of gotten to making things more neutral 
between sites of care.
    Mr. Crenshaw. Okay. And how does this affect the consumer 
of Medicare, our senior citizens relying on it? Will they see 
these changes?
    Mr. Hargan. They will not see these changes. These changes 
are not to beneficiaries. They are not going to increase out-
of-pocket costs to seniors. They are not going to affect the 
beneficiaries' access to any one of these things.
    Mr. Crenshaw. Thank you for that. That is a very important 
point. Thank you.
    I also had an interesting note from a group of nurses in my 
district. They said, ``We do not need Medicare for All. We need 
primary care for all.'' It is an interesting look at things.
    Are you familiar with direct primary care?
    Mr. Hargan. Yes.
    Mr. Crenshaw. What is the Administration doing to foster 
more direct primary care, this market-based solution to gain 
more access for people for primary care?
    Mr. Hargan. So one of the things that we are doing is by 
allowing more money to be put into health savings accounts and 
allowing people to manage their care more through either health 
reimbursement accounts, health savings accounts.
    So if they are able to do this, they are able to be able to 
access direct primary care, we are able to provide more 
flexibilities in the budget at the state level, but also at the 
patient level, that is going to allow people to be able to have 
access to direct primary care.
    Mr. Crenshaw. Excellent. It is amazing what can be 
accomplished in our markets if we let people take back their 
own money and use it for things like direct primary care.
    I also want to ask you about the pay for delay regarding 
generics and biosimilars and what the Administration is doing 
on that front.
    Mr. Hargan. Yes. So we are proposing a whole suite of 
reforms in this area. So in the case of pay for delay, we 
intend to actually reduce payment for drugs where a company has 
engaged in gaming of the system, like pay for delay, where they 
pay another company to keep a competing drug off the market.
    Mr. Crenshaw. Okay. The last question I want to ask you 
about is graduate medical education. You have made some reforms 
to that. In Texas, we are unfairly discriminated against 
compared to other states when it comes to GME. We have less 
spots according to our size and on our needs.
    Does this help states like Texas? Does this equalize it 
across the board?
    It is unclear what these reforms will do.
    Mr. Hargan. So by consolidating some of the fragmented 
programs that we have right now, we are going to be able to put 
them into a single overall graduate medical education program, 
and we hope that is going to allow for a more rational approach 
to GME. It could include things like allowing places that are 
under-resourced to be resourced.
    Mr. Crenshaw. Thank you.
    Thank you, Mr. Chairman.
    Chairman Yarmuth. The gentleman's time has expired.
    I now recognize the gentlelady from Washington, Ms. 
Jayapal, for five minutes.
    Ms. Jayapal. Thank you, Mr. Chairman.
    And thank you so much for being here.
    Just to my colleague across the aisle, when you talk about 
adults in the room, perhaps I wish you were here last year when 
we were talking about the GOP tax cut, and we clearly said at 
the time that this was a three-step dance, that the Republicans 
were going to cut taxes for the rich; that that would then 
explode the deficit, and in fact, it has, estimates of $1.9 
trillion; and then that would lead to demanding big cuts to the 
things that Americans really care about like Medicaid and 
Medicare.
    And I think, Mr. Chairman, that we are right at that place 
here. And I hope that I will have a chance to talk about my 
Medicare for All bill that really takes on a broken health 
insurance marketplace. I believe we will on Budget Committee, 
and I look forward to telling my Republican colleagues about 
exactly what that looks like.
    Mr. Hargan, I wanted to start with questions about HIV and 
Medicaid. There are over 955,000 individuals living with 
diagnosed HIV, and it continues to be a significant health 
concern in the United States, but thanks to the gains of our 
scientific and public health community that we have seen in 
improved screening and treatments, over 90 percent of 
individuals with HIV survive for more than three years after 
the diagnosis.
    In his State of the Union address, President Trump 
announced a new initiative to end HIV transmissions by the end 
of the decade, and the President's budget provides $291 million 
to support that initiative.
    However, it is very important for the American people to 
understand it includes $1.5 trillion in Medicaid cuts over the 
next 10 years, and Medicaid is the largest source of insurance 
coverage for people living with HIV.
    And that is because as of 2017, 32 states expanded Medicaid 
coverage to include individuals with HIV who were previously 
excluded. And so now more than 40 percent of people with HIV 
who are receiving treatment are covered by Medicaid.
    How is the goal of ending HIV transmissions achievable when 
the Administration is simultaneously proposing to cut roughly a 
quarter of the Medicaid budget?
    Mr. Hargan. So while we had moved a reduction in one line, 
we actually plussed up $1.2 trillion in flexible grant money 
for states in Medicaid. So the shift is really from one type of 
program to another, to allow there to be more flexibility for 
the states in Medicaid and allow them to concentrate on the 
traditional vulnerable Medicaid populations: the elderly, the 
pregnant women, children, the disabled.
    So we are really moving the money from----
    Ms. Jayapal. But you are talking about converting Medicaid 
into a block grant or a per capita cap and then requiring 
states to implement so-called work requirements, all of which 
would strip Medicaid as we know it. That is essentially what 
you are talking about.
    Let me move on to public health in the United States, 
comprised of federal agencies, state health agencies, tribal 
and territorial departments, and more than 2,500 local health 
departments. These are systems that protect us not only from 
emerging health threats, but also serve our everyday needs, 
like immunization, food safety, and delivery of health 
services.
    And that is why the CDC, our Nation's health protection 
agency, dedicates 85 percent of its domestic funding to state 
and local public health departments. And yet, the President's 
budget proposes cutting the CDC's budget, that is, the Center 
for Disease Control, by nearly 20 percent.
    What is your justification for cutting this major source of 
funding for local and state public health agencies, and an 
agency that is central to the prevention and transmission of 
disease in the United States?
    Mr. Hargan. Well, we had just proposed in terms of CDC 
funding there is really only a net decrease of 1 percent from 
FY2019. So our net decrease in funding for it is really just 
about 1 percent for CDC.
    In a difficult environment, we really did preserve public 
health funding for CDC among our agencies.
    Ms. Jayapal. Maybe my numbers are wrong. So it is not a cut 
of nearly 20 percent?
    Mr. Hargan. No. We had moved from $12.1 billion in fiscal 
year 2019 to $12.0 billion in 2020.
    Ms. Jayapal. Well, that is good. If that is true, that is 
great, and I apologize for getting that wrong. I hope that we 
actually see an increase in CDC funding, which would be even 
better.
    Actually, I do not have time. I wanted to just put on the 
radar the public charge rule that we are deeply concerned about 
and that would strip care for a number of people across the 
country who might be seeking care that is legitimately provided 
through state programs and introduce for the record a letter 
signed by 111 members of Congress around the public charge 
rule.
    Mr. Chairman, I ask unanimous consent to introduce that 
letter.
    Chairman Yarmuth. Without objection.
    [The information follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Ms. Jayapal. Thank you.
    Thank you, Mr. Hargan. I will follow up with you on the CDC 
thing because I do not usually get those things wrong, but if I 
did, I apologize.
    Thank you.
    Chairman Yarmuth. Thank you. The gentlelady's time has 
expired.
    I now recognize the gentleman from Georgia, Mr. Woodall, 
for five minutes.
    Mr. Woodall. Thank you, Mr. Chairman.
    I would like to endorse what my friend Ms. Jayapal said. 
She rarely gets things wrong. So I hope you will share it us, 
too, when you find out what that is.
    Ms. Jayapal. I will do that.
    Mr. Woodall. CDC sits in my backyard, and so I tend to 
associate myself with the numbers Mr. Hargan has in front of 
him, and we are also proud of that mission, but it was not 
always that way. CDC was woefully underfunded in the 1980s and 
1990s, and only when we realized what we had missed out on did 
we finally redouble those efforts. So I appreciate your focus 
on that.
    Mr. Hargan, I want to talk about some things that I think 
went right and some things that could go even better. I know 
you have already gotten an earful about things folks don't like 
and they don't think we are moving in the right direction on. I 
want to move in the right direction.
    You have done some work on pressure ulcers as it results to 
hospital discharges. That is something that is near and dear to 
me personally, but it is also near and dear to me as a budget 
hawk because we throw away a lot of money on preventable 
hospital-acquired illnesses.
    When the Appropriations Committee last cycle asked HHS to 
go back and look at pressure ulcers to see if we were doing all 
that we could do, you came back with a new model that was based 
on a ten-factor scale and used pressure ulcers as one of those 
to say we can do better than the 58 percent increase in 
pressure ulcer discharges and do better down the road.
    We have got a lot of great groups. One is in my district, 
Molnlycke, that has an amazing technology that we can do more, 
not do more with less, but do more and prevent more bad 
outcomes, and thus, we end up spending less.
    The entire Pressure Ulcer Association is working along 
those lines, and you all have I would say moved with the 
efficiency one would expect from a government agency. You can 
take that as you see fit, but there is some good work that is 
happening there. There is more good work that can be done, but 
I want to thank you for that.
    I also want to put on your radar screen, and I know you 
have been busy preparing for this hearing, the General Assembly 
in Georgia yesterday passed a bill that will give our governor 
permission to ask for two waivers, one is an Affordable Care 
Act waiver. Another is a Medicaid waiver.
    I listened to Mr. Peters as he challenged your numbers, 
talking about all of the good work that California does. I have 
no doubt that California is doing good work, and I have no 
doubt that the failures that you observed in the case of a 
$200,000 program only signing up one individual; I have no 
doubt about the accuracy of that either.
    We can do better in Georgia. No offense to the federal laws 
and statutes, regulations that are on the books. We just have 
more experience in rural Georgia than you do. We have more 
experience in metropolitan Atlanta than you do, and so when 
those waiver proposals come forward, I just want to encourage 
you to look favorably upon those.
    There are limited resources. Can you tell me a little bit 
about the resources dedicated to approving those waivers?
    And either or not we'll be able, I know so many are coming 
across your desk. Will we be able to proceed on those 
expeditiously?
    Mr. Hargan. I would say that, you know, we very much look 
forward to if Governor Kemp bringing the proposal forward to 
us. We would very much look forward to engaging with him.
    We know that states and localities know a lot more about 
their unique needs than we do here in Washington. So we know 
that they are going to be in the best position to know the 
unique needs of their populations there, and we applaud states 
for bringing creative proposals forward to us.
    So we are going to look forward to engaging with him if he 
brings it forward after the passage of the bill.
    Mr. Woodall. I do not see my timer. Oh, there I am up on 
the wall. Let me re-ask that specifically.
    When we get to the appropriations cycle, folks will take 
money out of administrative accounts and put them into things 
that feel better, like NIH funding, like CDC funding, and so 
on.
    Are we at risk, underfunding the administrative account at 
HHS, of not seeing those applications acted on as quickly as we 
would all like to see them acted on?
    Mr. Hargan. I think that the Administrator at CMS is going 
to focus what she needs to focus on having a swift analysis and 
resolution on whatever we have, whatever is brought forward by 
Governor Kemp or anyone else creatively in the 1115 space.
    Mr. Woodall. I do not know if you have been down to the CDC 
recently. It is always a good excuse to go to Atlanta. Security 
is one of the things that troubles me. We spend a lot of money 
on science, but we do not spend as much money on security.
    You're in a difficult space. Health is the focus, but bad 
security leads to bad health outcomes from time to time. Is 
that an issue that rises to your C Suite level?
    Mr. Hargan. Particularly cybersecurity is an issue that we 
take very seriously. We deal a lot with data, with science, 
with new ideas, with new science and intellectual property, and 
so cybersecurity is a big issue both for Americans, to make 
sure that their health data is kept secure for researchers.
    So we have actually stood up a Health Sector Cybersecurity 
Coordination Center at HHS that is going to help facilitate 
maintaining security over a lot of the information that 
Americans entrust to their doctors, to the health care system, 
and to HHS.
    Mr. Woodall. Mr. Chairman, as I look at the pictures on the 
wall, I see that only Mr. Panetta was brave enough to leave 
Congress and go and serve in the Administration afterwards. So 
thank you, Mr. Hargan, for what you are doing. Clearly, it is 
not something that we choose to do.
    I yield back.
    Chairman Yarmuth. The gentleman's time has expired.
    I now recognize the gentleman from New York, Mr. Jeffries, 
for five minutes.
    Mr. Jeffries. Thank you, Mr. Chairman, for your leadership.
    And thank you, Deputy Secretary Hargan, for your presence 
here today.
    Medicaid provides health coverage to 7.2 million low income 
seniors who are also enrolled in Medicare; is that correct?
    Mr. Hargan. Medicare, yes. Medicare serves tens of millions 
of people.
    Mr. Jeffries. The answer would be Medicaid provides health 
coverage to 7.2 million low income seniors, correct?
    Mr. Hargan. I will take your number as being accurate.
    Mr. Jeffries. Roughly 60 percent of all nursing home 
residents receive Medicaid coverage; is that correct?
    Mr. Hargan. I will take, again, your number as being 
accurate.
    Mr. Jeffries. Do you think that nursing home care is an 
important part of our health care fabric here in the United 
States of America?
    Mr. Hargan. Yes, all different kinds of post-acute care 
settings are important. Skilled nursing facilities, long-term 
care facilities, home health, we seek to make sure that 
whatever setting Americans want and choose what is best for 
their care is enabled.
    Mr. Jeffries. So nursing home care is important, correct?
    Mr. Hargan. Nursing home care can be important for the 
right senior.
    Mr. Jeffries. Close to half of all long-term care services 
for the elderly are paid for by Medicaid. True?
    Mr. Hargan. Yes, it is an important component for 
individual nursing home payment.
    Mr. Jeffries. Medicaid also covers premiums, deductibles, 
and cost sharing for Medicare beneficiaries; is that correct?
    Mr. Hargan. In certain settings, yes.
    Mr. Jeffries. Medicaid provides coverage to 27 million 
children under the age of 18 in the United States of America. 
True?
    Mr. Hargan. Again, I will take your numbers to be accurate.
    Mr. Jeffries. More than 700,000 children in Medicaid 
expansion states gained coverage between 2013 and 2015; is that 
correct?
    Mr. Hargan. I will take your numbers as accurate.
    Mr. Jeffries. And research shows that children with 
Medicaid coverage have better health care outcomes as adults. 
Is that true?
    Mr. Hargan. Could you repeat the question?
    Mr. Jeffries. Research shows that children with Medicaid 
coverage have better health outcomes as adults than those 
without Medicaid coverage, correct?
    Mr. Hargan. I am not familiar with that research.
    Mr. Jeffries. Okay. But the totality of the import of what 
Medicaid provides, I think, is well established, and you have 
agreed in several different areas that Medicaid is covering a 
substantial number of Americans from children all the way to 
low income seniors and those who are receiving care in nursing 
homes.
    So for the life of me I am struggling to try to figure out 
why this Administration proposes essentially to slash $1.5 
trillion in Medicaid and create a smoke and mirrors block grant 
program that will devastate, devastate the ability of these 
recipients who rely on Medicaid to receive care.
    Now, the President during the campaign promised that he 
would not touch Medicaid; is that correct?
    Mr. Hargan. The President is fully committed to supporting 
the Medicaid program.
    Mr. Jeffries. Why is the President breaking his promise not 
just with respect to Medicaid, but also Social Security and 
Medicare by submitting a budget that would cut approximately $2 
trillion?
    Mr. Hargan. The budget proposes a shift into a $1.2 
trillion new program to allow states to flexibly deal with the 
most vulnerable populations that Medicaid was intended to 
address: the elderly, disabled, pregnant women, children.
    So we are fully committed to that, and that is a $1.2 
trillion new program that we are advocating for in this budget.
    Mr. Jeffries. And you propose creating this $1.2 trillion 
new program because you want to address alleged waste, fraud, 
and abuse in the current Medicaid program; is that right?
    Mr. Hargan. We want to make sure that states have the 
flexibility in the new program to address the unique needs of 
their populations and focus the program on the traditionally 
vulnerable, fragile populations that Medicaid was intended to 
address from its very beginning.
    Mr. Jeffries. Okay. So at minimum, even if we assume that 
this new $1.2 trillion block grant program is going to actually 
reach the people who are currently being served by Medicaid, 
which there is reason to doubt, you are cutting at least $300 
billion from Medicaid.
    Can you give me a single example of the type of waste, 
fraud, and abuse that you are trying to address that would 
justify billions of dollars in cuts, not millions, not tens of 
millions, not thousands, billions of dollars in cuts?
    Can you give me some understanding of the waste, fraud, and 
abuse that you are addressing?
    Mr. Hargan. Actually over 10 years, Medicaid spending goes 
up under this budget plan. So we are not addressing actually a 
lowering in the budget of Medicaid spending, but actually 
increasing it.
    Mr. Jeffries. Can you give me a single example of the 
waste, fraud, and abuse that justifies cutting billions of 
dollars from children, low income seniors, and those receiving 
nursing home care?
    Mr. Hargan. Our Inspector General and our Centers for 
Program Integrity are constantly working to identify areas 
where there are waste, fraud, and abuse that take place 
throughout our programs. We have entire----
    Mr. Jeffries. Reclaiming my time. I assume that is a no.
    I yield back. Thank you.
    Chairman Yarmuth. The gentleman's time has expired.
    I now recognize the gentleman from Texas, Mr. Roy, for five 
minutes.
    Mr. Roy. Thank you, Mr. Chairman.
    I appreciate you coming here to testify today and taking 
the time to join us here.
    Just as a threshold matter, the national debt to today is 
what? Do you know? Twenty-two trillion, over $22 trillion, does 
that sound about right?
    Mr. Hargan. That is my understanding.
    Mr. Roy. I was recently PolitiFact'ed that I made a comment 
in a hearing that we were racking up $100 million of debt per 
hour, and I actually got a mostly true out PolitiFact, which 
basically means it is the Book of Luke in the eyes of 
PolitiFact if I get a mostly true.
    A hundred million dollars of debt per hour, right? So as a 
backdrop for the questions that we are going to ask here.
    With respect to some of the Medicaid questions that were 
just asked, it was alleged that it is smoke and mirrors when we 
talk about block granting Medicaid. Are you familiar with some 
of the studies and some of the state organizations and think 
tanks, for example, the Texas Public Policy Foundation, which 
would suggest that they might be able to save upwards of $4 to 
$5 billion in Texas in administering Medicaid if they were able 
to get the money in the form of a block grant?
    Is that where some of the kinds of savings you were talking 
about are?
    Mr. Hargan. I am not familiar with their particular study, 
but we have certainly seen lots of examples from our program 
integrity initiatives and otherwise where we see examples 
overall of waste in programs.
    Mr. Roy. Well, I appreciate that.
    And also with respect to Medicaid, we talk a whole lot the, 
quote, gains in coverage for Medicaid. Are you also familiar 
with some of the studies in think tanks, for example, the 
Illinois Policy Institute, which pointed out that there are 
literally thousands of people that are on waiting lists in 
Medicaid rolls because of the number of people that were jammed 
onto the Medicaid rolls after Obamacare and the expansion of 
Medicaid so that people for whom Medicaid was originally 
designed are on the outside looking in because of so much 
burden being placed on the Medicaid system?
    Is that an accurate depiction at least in some areas of the 
country?
    Mr. Hargan. That is certainly something that we have heard.
    Mr. Roy. Is it also true that we have had upwards of six 
million or more people who lost private coverage since 
Obamacare has been put in place in the private market?
    Mr. Hargan. I am not sure of the exact number, but we 
certainly had people who lost their plans in the wake of the 
passage of the Affordable Care Act.
    Mr. Roy. Okay. I appreciate that.
    And then one last question on Medicaid that I am just 
curious. With respect to Medicaid expansion, has anybody in the 
Administration, has the Secretary or anybody in the 
Administration, actively encouraged states that have not 
expanded to embrace a partial expansion or expansion now, for 
example, Texas, which has not expanded?
    Mr. Hargan. We only entertain things coming from the states 
as opposed to, say, encourage or discourage. Normally, we are 
responding in that program to initiatives coming from the 
states.
    So, for example, in the Georgia case that was just cited, 
if the Georgia legislature passes that bill and the governor 
brings it to us, we are going to entertain that, within the 
statutory restrictions that we have in the program.
    Mr. Roy. Okay. Thank you for that.
    One last question on budgeting. Do you all ever engage in 
what some people might refer to as zero based budgeting or 
building up from the ground up, or do you basically budget off 
of last year's numbers and so forth when you work with OMB and 
others to get the budgeting process done?
    Mr. Hargan. We work with OMB on any number of different 
scenarios for the budget, but generally, we abide by the rules 
that they give us in order to base off of our budget line.
    Mr. Roy. But you are not aware of that budget. This is not 
what you might refer to as a zero-based budget?
    Mr. Hargan. This is abiding by the caps agreement, which 
President Obama and the Congress passed years ago.
    Mr. Roy. A couple of questions on the $2 billion line in 
the budget with four unaccompanied alien children. Do you know 
how many alien minor children that is meant to try to deal with 
over the next three years?
    And am I correct it is $2 billion allotted for the next 
three years?
    Mr. Hargan. Yes, it is a $2 billion contingent fund for the 
next three years if the program needs it and exceeds the 
transfer authority, and in this case we have asked for 20 
percent transfer authority to the UAC program.
    Mr. Roy. Is this mandatory or discretionary spending?
    Mr. Hargan. I believe this was a mandatory. The $2 billion 
is on the mandatory side, I believe.
    Mr. Roy. Okay. So I guess my question is: do you have any 
estimate on how many UACs were preparing for in coming up with 
that $2 billion number?
    Mr. Hargan. We have to look really within HHS. We deal with 
the children when they are brought to us.
    Mr. Roy. Sure.
    Mr. Hargan. We can look at ins and outs. There are great 
differences year to year. That is why we had a contingent fund 
as opposed to asking for more increased money every year just 
because there are great fluctuations with the number of 
unaccompanied alien children coming over the border year to 
year, month to month, day to day.
    Mr. Roy. Well, and to that point, right, in fiscal year 
2018, CBP apprehended 50,000 unaccompanied alien minor children 
at the southwest border. Just between October and February, we 
saw 26,937, which means we are looking at a higher number.
    We have seen a massive expansion over the last several 
months in February and March. We see the numbers that are 
coming across that we are having to deal with, my point being: 
is it fair to say that the burdens of what is happening at the 
border with our inability to secure the border is putting a 
strain on HHS' budget because we are having to deal with this 
problem in failing to secure our border?
    Mr. Hargan. Fundamentally, this is traced back to a broken 
immigration system, and the fact that we have to deal with a 
tremendous number of children that we are going to care for, we 
are going to advocate and make sure that the child welfare and 
safety is the utmost and that we move them to an appropriate 
sponsor as quickly as we can out of these shelters, but it does 
mean that there are huge numbers of children being sent to us 
to take care of, and that does place a strain on our budget.
    Mr. Roy. Thank you for that. Thanks for being here.
    Chairman Yarmuth. The gentleman's time has expired.
    And now I recognize the gentleman from California, Mr. 
Khanna, for five minutes.
    Mr. Khanna. Thank you, Mr. Chairman. Thank you for your 
leadership.
    Thank you, Secretary Hargan, for being here.
    Secretary Hargan, you worked for President Bush; is that 
correct?
    Mr. Hargan. I did.
    Mr. Khanna. And you were there during his tenure and when 
he was doubling NIH funding; is that correct?
    Mr. Hargan. Yes, I was.
    Mr. Khanna. You probably remember that President Bush ran 
saying that we need to double the NIH budget in five years. Do 
you remember that?
    Mr. Hargan. Yes, we were, I believe, continuing over a 
doubling that was taking place at NIH.
    Mr. Khanna. It is kind of you to give President Clinton 
credit. He started it, and then President Bush continued it.
    Are you aware that when President Bush took over, the NIH 
budget was $17 billion, and when he left, the NIH budget was 
$28.6 billion?
    Mr. Hargan. I will defer to your numbers on the past 
numbers for NIH.
    Mr. Khanna. I was recently with Secretary Condoleezza Rice, 
and she said one of the biggest things we can be doing for this 
country is doubling funding for the NIH and National Science 
Foundation. Would you agree with her comments?
    Mr. Hargan. I believe that, as I said, medical research is 
core to part of the mission of HHS to enhance the health and 
well-being of the American people. We stand fully behind NIH 
and its medical research mission, both for it and for the 
grantees that it enables to do that important work.
    Within the caps agreement and the budget that we have, we 
have to operate within the budgetary environment we have been 
given by the caps agreement that was entered into.
    Mr. Khanna. In your opinion though, when you look at 
President Bush's approach and the approach Condoleezza Rice is 
recommending, I mean, they also have to operate within hard 
budgets. They found the money to double NIH.
    Do you think their approach was better for a 
competitiveness or the current President's approach?
    They are two very different philosophies.
    Mr. Hargan. I have great respect for Ms. Rice, but we also 
have to operate within the legal environment that we have, the 
budgetary rules that are put in place. We can't violate those.
    And we have to prepare our budgets realistically within the 
bounds that are set for us by the law. So in making those 
decisions, we have to abide by the agreements and the laws that 
we are given by the Congress.
    Mr. Khanna. But you know that in the context of the federal 
budget, $4.5 billion, do you think that is a significant 
percentage?
    You just have to guess. I mean, it is probably less than .1 
percent or .5 percent of our federal budget.
    Mr. Hargan. And we are attempting also within the NIH 
budget to preserve focus on a lot of the important focuses that 
we have within opioids, within pediatric cancer, within the HIV 
epidemic. To focus within those and to save those areas within 
NIH, apart from the overall budgetary environment that we are 
in, a tough budgetary environment dealing with the caps 
agreement.
    Mr. Khanna. Would it be fair to say that President Bush and 
Condoleezza Rice put a higher priority on the National 
Institutes of Health than this current President?
    Mr. Hargan. Well, President Bush was not operating in an 
environment where there were discretionary caps, and so there 
were sort of fewer restrictions on this, but we have to operate 
in an atmosphere of discretionary caps.
    Mr. Khanna. Would you say that if you were meeting 
President Bush and he asked you do you think President Trump 
has as much of a priority on the NIH, what would you say to 
him?
    Mr. Hargan. I would hope that President Bush would 
understand as we have just talked about, which is in an 
environment with no discretionary caps versus an environment 
with real discretionary caps, you have to operate in those 
areas.
    There were hard decisions made in the budget under 
President Bush. I was in leadership at HHS at that time, and we 
had hard decisions to make, and we have hard decisions to make 
here, and hopefully we have made them as thoughtfully as we can 
for your consideration when you are working through the budget.
    Mr. Khanna. You stand by the $4.5 billion NIH funding cut 
and the $897 million cut for National Cancer Institute? Given 
your experience, your service in the Bush Administration, your 
views with Condoleezza Rice and her basic view that we ought to 
be doubling, and she understands the budget constraints, I am 
just trying to understand, and I mean this with respect.
    Are you defending this because that is your job? You work 
for the President. He gets to set the direction, or do you 
really think that his vision is better than Bill Clinton's and 
George Bush's and Barack Obama's and every single President 
before him in modern time who wanted to increase funding for 
the NIH?
    Mr. Hargan. Well, I would say we have something around a 
$99 billion discretionary budget at HHS. NIH has been $38 
billion of that. It is the largest single item of discretionary 
spending within our department.
    We have many programs within that, within the caps 
agreement, within the cuts to discretionary funding and the 
caps that we have to abide by. We have to try to be as 
thoughtful as we can be in that environment to make sure we 
comply with the law and the caps that were sent to us.
    Mr. Khanna. Thank you.
    Chairman Yarmuth. The gentleman's time has expired.
    I now recognize the gentleman from New York, Mr. Morelle, 
for five minutes.
    Mr. Morelle. Yes, thank you, Mr. Chairman, for hosting the 
hearing.
    And thanks to the Deputy Secretary for joining us I was 
going to say this morning, just about this morning and 
afternoon.
    Let me just editorialize for just a second. I am new to the 
Congress, and I note that in the budget there are a number of 
changes which have been discussed by my colleagues regarding 
Medicare payment policies. For a number of these changes, 
however, the budget does not indicate how much they would cost 
or save the government, and I am just struck by the footnotes 
that say estimates were not available at the time of budget 
publication.
    And I just note that I find it unusual and strange that you 
could recommend policies without knowing exactly how they would 
affect federal spending on Medicare, both to the government and 
to beneficiaries.
    But if I can, I just want to jump around in the limited 
time. Related to investments, I recognize as many members have 
talked about the impending challenges of Medicare and mandatory 
spending as the population ages, as costs will grow, and there 
is the need to clearly address this.
    I would do it from the point of view of investments and 
looking at key investments and whether spending on those 
investments, do for instance, in the area of health care, what 
the AAA and everyone talks about, better outcomes, better 
experience for patients, and bending the cost curve.
    One of the investments that we make typically is in 
graduate medical education. I represent the University of 
Rochester, which is an academic medical research facility. The 
budget restructures federal support for graduate medical 
education, cuts the funding by a total of $48 billion over a 
10-year period by capping funding, and it grows at less than 
the rate of inflation.
    The population is aging. There is a growing need for 
doctors in areas such as primary care and gerontology. How does 
this proposal improve the health care and the health needs of 
the workforce to meet the needs of that growing senior 
population?
    Mr. Hargan. The reforms that we are advocating for in the 
budget are intended to better focus the federal spending on 
health care professionals because we are consolidating GME 
programs that are currently fragmented into a single program.
    By consolidating these disparate streams of funding, we 
believe that we are going to be able to address shortage areas, 
rural health, making sure that we have better trained 
professionals to build a stronger health care workforce that is 
more targeted to the needs that we have now. When we have these 
different funding streams consolidated, if these reforms are 
undertaken, we will be able to reorient these programs.
    Mr. Morelle. But it does, and I am sorry to interrupt, and 
I appreciate that, but there is a significant cut in dollars 
that accompanies it. It is not only the consolidation, which I 
might argue maybe there are some valid reasons to do that and 
it will give you more authority, but the $48 billion cut is a 
real one even as you combine the programs into a single 
program.
    Mr. Hargan. Yes. Again, we are operating within a tough 
budgetary environment. We do understand the needs to work--to 
make sure that the next generation of the health care workforce 
is in place. We are hoping that by doing these targeted 
reforms, we will be able to kind of sort of skate to where the 
puck is going to be in terms of graduate medical education.
    Mr. Morelle. Okay. Very good. Thank you. Let me jump now 
briefly in the few moments I have left. The budget calls for no 
increase in funding for Head Start, another investment I think 
is very important, particularly as we are trying to get to 
children in poverty, getting them to read at grade level.
    You fund the program at the same level as that of 2019. 
Your own internal documents show funding will support 871,000 
slots, down from 890 funded last year. Head Start currently 
reaches less than one-third of eligible children. Why would we 
reduce the slots in the 2020 budget?
    Mr. Hargan. Holding Head Start level in a tough funding 
environment like this is showing what a priority we place on 
this program. So we have actually attempted within a very tough 
budgetary environment, where we have been--where we have been--
we have had to put cuts into some programs, trying to maintain 
levels----
    Mr. Morelle. Would this be a program--I am sorry to 
interrupt--but would this be a program you would increase if 
you were not in a tough budgetary cycle?
    Mr. Hargan. I think we have to abide by the restrictions on 
the discretionary funding that we have been given by past--by 
the existing law. But we have held it level, and that is 
attempting to make sure that we show the focus that we have on 
programs that we think work.
    Mr. Morelle. I do want to--and you do not need to respond 
to this--but just acknowledge that the budget also eliminates 
$250 million in preschool development grants, which help build 
state and local capacity, and many of my colleagues often talk 
about local and state governments being closer to the people.
    But it reduces their capacity to provide preschool to low 
and moderate income households, and another troubling, in my 
view, cut to a significant investment to people who would be 
far more productive as citizens if we could give them that 
support. And I yield back my time, Mr. Chair.
    Chairman Yarmuth. The gentleman yields back. I now 
recognize the gentleman from New Jersey, Mr. Sires, for five 
minutes.
    Mr. Sires. Thank you, Mr. Chairman. Mr. Hargan, thank you 
very much for being here.
    You know, in New Jersey we have about 1.7 million people 
that take advantage of Medicaid. About 1.4 of those are 
Medicaid; the other is involved in the CHIP program. I see that 
the budget proposes to implement a work requirement for 
Medicaid recipients in all 50 states. Are you aware that when 
they implemented the work requirement program in Arkansas, how 
many people lost their coverage?
    Mr. Hargan. We have seen, I think, the latest numbers of 
people show a sort of average churn in the Medicaid program. We 
have not yet seen--it is very early days in Arkansas's 
implementation of that community engagement requirement. So we 
have seen, so far, the numbers show an average number of people 
passing in and out of the program.
    Mr. Sires. Well, the numbers that I got is about 16,000 
people lost their coverage in Arkansas when they implemented 
the work program. Are you----
    Mr. Hargan. Did you have a question?
    Mr. Sires. Yes. Following up on the question, I understand 
also that you are also cutting $130 billion--you anticipate 
$130 billion in savings--on the Medicaid program?
    Mr. Hargan. We have a number of different ways, places that 
we are showing savings in the Medicaid program.
    Mr. Sires. Well, how much of that do you think is from 
kicking people off the program by requiring them to work?
    Mr. Hargan. I do not know that there is--it is going to 
depend on how different programs are implemented in different 
states. This is ultimately a Medicaid issue, which means that 
it is a state-directed program. So each state is going to come 
in with a different way of dealing with the community 
engagement--with the community engagement requirement that they 
want to put into their own state.
    Some of them, they are going to have different structures. 
They are going to have different ways in which the populations 
deal with the community engagement requirement. Ultimately, it 
is a state--it is a state set of requirements that they come to 
us and----
    Mr. Sires. But you are anticipating that if you ask a work 
requirement, there will be people losing their coverage?
    Mr. Hargan. That could happen because--but it is also--and 
certainly Arkansas has structured some of these things so that 
people have the requirement in there. If they do not obey the 
requirement, it is an issue for them maintaining Medicaid 
coverage.
    There are also other requirements that states put into 
place. If people get work of a certain level, they leave the 
Medicaid program. If people move out of state, if they do not 
return their paperwork--there are other ways in which people 
lose Medicaid coverage as well.
    Mr. Sires. To me, this looks like this is a way of cutting 
the Medicaid programs by requiring people to work, knowing full 
well that you're going to lose coverage on people. So 
therefore, you are slashing.
    Mr. Hargan. Primarily, the community engagement requirement 
is intended to help people. It is----
    Mr. Sires. How can that help people when they----
    Mr. Hargan. We know that there are studies dealing with 
social isolation, dealing with the health--behavioral and 
mental health effects of people who do not engage with their 
community by states that come to us that have a thoughtfully 
structured way in which to encourage people to have community 
engagement, whether it is work or other forms of community 
engagement.
    That is an area where we believe that people are going to 
be well affected, both in their health, and it can have also 
fiscal effects on the state as well, as well as having good 
effects on people for engaging in work to have money in their 
pocket, to have more engagement with their community.
    If that is the way in which the program is structured, we 
think it can have a number of good effects, not just dealing 
with keeping the sustainability of the state Medicaid program 
moving forward from a fiscal point of view. It has other 
effects as well.
    Mr. Sires. So what are the bad effects? What are the bad 
effects? You have all these good effects that you are telling 
me. What are the bad effects that you anticipate?
    Mr. Hargan. Well, we are hoping that any state that comes 
in is going to avoid bad effects by structuring a community 
engagement requirement so that, say, in the case of Arkansas, 
that people who are primary caregivers for children, people who 
are medically frail, people who are full-time students, people 
who a doctor or medical professional says cannot work or should 
not work, are exempted from the program.
    So hopefully, the restrictions on the community engagement 
requirement themselves will help obviate bad effects of the 
program, but also enable people who can engage in the community 
to encourage them to do so.
    Mr. Sires. Thank you, Mr. Chairman. My time is up.
    Chairman Yarmuth. The gentleman's time is expired.
    I now recognize the gentleman from Massachusetts, Mr. 
Moulton, for five minutes.
    Mr. Moulton. Mr. Hargan, thank you very much for joining 
us.
    Does the President believe that individuals should be able 
to deduct healthcare insurance premiums from their taxes?
    Mr. Hargan. I believe that we have stood for a lot of 
different proposals in the budget regarding healthcare. It 
depends on the type of--the type of things. We have certainly 
advocated for greater expansion of health savings accounts 
that----
    Mr. Moulton. Well, if you do not what the President, your 
President, has proposed, he said during the 2016 presidential 
campaign that his reform--excuse me--his plan to reform 
healthcare included allowing individuals to deduct all of their 
insurance premiums from the income tax that they owe.
    Historically, which Americans are most likely to benefit 
from these tax deductions? Wealthy Americans? Poor Americans? 
Middle class?
    Mr. Hargan. I would--for tax issues, I would have to refer 
you to possibly the Department of Treasury for----
    Mr. Moulton. Well, the answer is that wealthy people can 
take advantage of deductions.
    The President's budget justification states, ``All 
individuals receiving subsidized coverage should contribute a 
portion of their health insurance premium.'' So the President 
believes that individuals making $12,490 or families of four 
with a household income of $25,750 should pay more towards 
healthcare.
    Does the President's budget propose wealthier Americans pay 
more for the cost of health insurance?
    Mr. Hargan. I believe that we are trying to reorient----
    Mr. Moulton. Actually, it is just quite a simple question, 
Mr. Hargan. Does the President's budget propose that wealthier 
Americans pay more of their costs for health insurance?
    Mr. Hargan. We are proposing greater expansions of health 
insurance options to all Americans. We are actually proposing 
areas like where we expand more options that cost less for 
Americans, for example short-term plans----
    Mr. Moulton. That is great. So I have given a chance to 
dodge the question. Now maybe you could just answer it. Is it 
yes or no?
    Mr. Hargan. So short-term--say short-term plans cost 50 to 
80 percent less for Americans. By expanding options, all health 
insurance options----
    Mr. Moulton. The President is not asking wealthy Americans 
to pay more. But he is asking poor Americans to pay more for 
health insurance. My Republican colleagues often state during 
these hearings that there is a philosophical difference between 
Republicans and Democrats on spending.
    And I agree. Apparently Democrats think that the poor 
should pay less, and Republicans think that the poor should pay 
more.
    Mr. Hargan. We are supportive of the ACA exchanges. We have 
been implementing them all along, and they provide a tremendous 
premium subsidy----
    Mr. Moulton. The President supports the Affordable--wait. 
The President supports----
    Mr. Hargan. The Administration has carried out the ACA 
exchanges and those----
    Mr. Moulton. So would you be willing to say that the 
President supports the Affordable Care Act?
    Mr. Hargan. We obey the law within the Administration. We 
have put forward----
    Mr. Moulton. Does the President support the Affordable Care 
Act? You said he supports the exchanges.
    Mr. Hargan. We have put forward alternatives to the ACA. 
But as long as----
    Mr. Moulton. But just does he support it or not?
    Mr. Hargan. But as long as it is the law of the land, we 
are going to provide premium support, a tremendous amount of 
premium support.
    Mr. Moulton. Well, that is hardening to hear--we certainly 
know that we have a President who loves to follow the law of 
the land.
    Mr. Hargan, who famously said that the most terrifying 
words in the American language are, ``I am from the Government 
and I am here to help''?
    Mr. Hargan. I am not sure who the actual originator of that 
quote is.
    Mr. Moulton. It may have been a speechwriter. But of course 
it is attributed to President Ronald Reagan. So even with his 
quest to limit the federal government, he signed into law the 
Low Income Home Energy Assistance Program during his first year 
in the White House, which specifically protects millions of 
low-income households each year from extreme heat and cold when 
high energy bills exceed their ability to pay.
    So how much does President Trump propose for this program 
in fiscal year 2020?
    Mr. Hargan. Zero.
    Mr. Moulton. Okay. And his justification states that it is 
because there are 15 states that offer similar protection. So 
what about the people so unfortunate to live in the other 35 
states?
    Mr. Hargan. Many states make it so that utilities cannot 
cut off service to people during periods of severe weather. 
Also, in 2010, the GAO found that that program was not high-
performing, had lots of problems with waste and fraud. We 
believe that this is not a program that is a very high-
performing program----
    Mr. Moulton. So it sounds like if it is not high-
performing, the problem is not with the poor people who cannot 
afford to heat their homes, but the administrators of that 
program. And as the Administration, you are in charge of the 
administrators of that program.
    So why not reform the program rather than forcing low-
income people to freeze?
    Mr. Hargan. The program----
    Mr. Moulton. Sorry. My time is expired.
    Chairman Yarmuth. I thank the gentleman.
    I now recognize the gentlelady from Minnesota, Ms. Omar, 
for five minutes.
    Ms. Omar. I will just pick up, I think, where my colleague 
left off. I am from the state of Minnesota, and we are very 
much accustomed to having extreme cold weathers. And so I 
understand the need for us to worry about what happens when 
families are not able to heat their homes.
    So the program that my colleague was talking about helps 
6.3 million households. In Minnesota alone, there are 120,000 
families that utilize this particular program. And so my 
question to you is: What do you propose happens to these 
families who now have health and safety problems because of the 
extreme cold weather?
    Mr. Hargan. Well, I am from Chicago, so I understand the 
issue about cold winters. When we have a program that does not 
have strong performance outcomes, and LIHEAP is one of those 
that has had this going all the way back to when I was at HHS 
under President Bush, and when the GAO tells us that it is at 
risk for fraud for improper payments and we look at----
    Ms. Omar. But sir, there is a difference between what my 
colleague is suggesting about us reforming and figuring out the 
best ways to utilize the dollars that we have, and saying zero 
dollars should go to assist people who live in conditions where 
it gets as low 12, 30 negative.
    Mr. Hargan. So all 50 states have protections for people 
who cannot pay their bills in periods of severe weather. So 
every state----
    Ms. Omar. Where would the resources come from if that 
protection exists? Yes, you need by legislation----
    Mr. Hargan. Every state protects people from their 
electricity, their heat, being cut off during periods of severe 
weather. And the LIHEAP program is really duplicating 
protections that are out there, $3.7 billion to duplicate 
protections that people have already who are disadvantaged.
    Now, 15 states have alternative programs that really 
duplicate by providing payments and other things. But all 50 
states protect people against having their----
    Ms. Omar. So let me get this clear. You have 15 states out 
of the 50 states that have programs where there are resources 
to help assist people. Other states just have a protection that 
might say, you might not be able to cut this off, or other 
things.
    But we are deciding that there is no resources from the 
federal government that is going to help any of these people. 
Correct?
    Mr. Hargan. Well, we are--they are protected. So they are 
not going to lose their heat. They are not going to lose their 
cooling in hot weather.
    Ms. Omar. But protection and providing resources for them 
to do that are totally two different things. You know that, and 
you are trying to say otherwise. So we will just move on.
    I wanted to, for the remainder of my time, talk about the 
child care budget within the budget that you proposed. The 
budget includes a one-time temporary funding of $1 billion to 
help address the cost of child care. It is unclear whether this 
approach will ultimately achieve the intended goal. Why are you 
only providing it on a one-time basis?
    Mr. Hargan. Well, this money, which is one-time mandatory 
funding which we put in place due to the caps proposal, it is 
intended to augment what we think of as being the most 
effective parts of our budget in social services, which is 
supporting child care and allowing states to build out capacity 
to provide new ways to provide child care. We also----
    Ms. Omar. And how will the funds be distributed? Is it 
going to be up to the states to determine what regulations they 
will use to meet the definitions of unnecessary?
    Mr. Hargan. Yes. So this is going to be provided as a grant 
to states, to help businesses and localities, to help them 
provide new ways of doing child care, and hopefully to reach 
underserved areas, rural communities, and communities that are 
underserved with child care.
    Ms. Omar. All right. Thank you. I yield back.
    Chairman Yarmuth. The gentlelady's time is expired.
    I now yield 10 minutes to the Ranking Member for his 
questions.
    Mr. Womack. I thank the chairman, and again, Mr. Hargan, 
thank you for being here today. I will say at the outset I 
appreciate you being patient with my friend from Rocky Top, Mr. 
Burchett, who was trying to get a question answered and blaming 
it on Crenshaw's lack of knowledge of something when it was 
actually his own.
    But what can you say about a guy that walks around in a 
Carhartt jacket when it is pretty moderate outside and a big 
hole in the right sleeve? But that is Tim. He is a great guy 
and fellow mayor. So I appreciate him, and he does a very good 
job on this Committee.
    You were asked a few questions in the hearing by two or 
three different members on the other side of the aisle from me, 
questions about HIV initiative, yes or no questions, those 
type, treatment of foster care within the budget request--there 
were a handful of other questions that you were attempting to 
close on with your answers, but because of their quest for yes 
or no answers, not given an opportunity to explain.
    I will give you a chance here for a moment or two, if you 
would like, to finish, maybe, some of those thought processes 
on those subjects and any others that you would care to expound 
on regarding this part of the President's budget.
    Mr. Hargan. Right. Well, thank you for that. I mean, I 
think that some of the questions about the effects that 
Medicaid might have on people with HIV, as I had explained, we 
are actually replacing the cuts or reductions in one line with 
an increase on the other side, and flexibilities.
    So we do not believe that a state would choose to 
disadvantage a particular population or places being served 
just simply because they are given more flexibilities in 
funding. So we are hopeful that to the extent that people are 
fearful that the states would cut Medicaid funding to HIV, we 
do not have any idea that that is what would happen.
    And in the meantime, we are increasing funding for HIV $291 
million. It is clearly one of the primary focuses of this 
department, to address that issue, to end that scourge for 
Americans. So we want to make sure that that focus is really 
clear on that.
    With regard to the issue of Miracle Hill, there is no one 
who is going to be turned down as a foster parent who is 
otherwise suitable as a foster parent by the state of South 
Carolina. If an organization like Miracle Hill has a parent 
like me, for example, as a Catholic, who is not going to 
qualify for that program, they are going to refer me, and they 
are supposed to refer me, to another agency or to the state for 
me to apply and get inside the foster care program.
    We have to. The American people have given HHS a budget of 
$1.3 trillion and tremendous amount of authority in some of the 
most intimate and personal parts of their lives. And in return, 
we have to obey the constitutional safeguards and the legal 
safeguards that the American people expect us to obey. Some of 
those are the Bill of Rights, the constitutional safeguards of 
people's religious expression. That has to be a cornerstone of 
everything that we are doing.
    And so it is important to us that we can do both of these 
things. We can make sure that we both fund important social 
services and healthcare activities and also obey the 
constitution. We have to be able to do both at the same time.
    Mr. Womack. It was said earlier, and I cannot remember 
which one of my colleagues made the comment, but about the 
prospect of healthy kids. Kids that have access to healthcare 
at an early age typically would be better performing physically 
from a health perspective later on in life.
    I can sign onto that. I think that is a rational, 
reasonable approach. But I would also ask whether or not that 
same healthy child early on in life is going to be well served 
if in fact that later on in life, the costs associated with 
what we are doing today are piled on to that generation of 
children in the form of higher taxes in order just to meet the 
daily needs.
    So $22 trillion in debt, I think you would agree, is a 
pretty substantial amount of money that we owe currently.
    Mr. Hargan. Yes.
    Mr. Womack. And that trillion dollar deficit that is going 
to be added to that $22 trillion in debt is also a very 
significant amount of money.
    Mr. Hargan. Yes.
    Mr. Womack. So in your business, when you are preparing a 
budget, you are having to take the--just like people at home. 
People watching this hearing today do this at home. They take 
their income and they take their expenses, they compare the 
two, and then they have to make what I call tough choices.
    So you have to make tough choices. What are some of those 
tough choices?
    Mr. Hargan. So some of the tough choices that we have to 
make are situations where we are seeing that we are going to 
have to reduce the rate of growth in programs. Those are tough 
choices. We have to make choices between making sure that 
different sites of care are equally provided. Those are going 
to impose potential costs on providers, but not beneficiaries.
    We have to maintain the focus that the seniors, the 
beneficiaries of our programs, are taken care of and that they 
do not have an increase in out-of-pocket cost. But at the same 
time we have to have reforms in these programs or they will 
not, as you rightly point out--will they be sustainable for the 
long run?
    We have to make sure that they are and that the child today 
that we are going to endeavor to have the best healthcare 
possible for them, that these programs are around for them. And 
that is why we try to adopt a thoughtful approach in this 
budget that extends the life of the Medicare Trust Fund by 
eight years, and that it does with making thoughtful choices 
within a tough budget environment.
    Mr. Womack. My colleague, Mr. Sires, brought up the state 
of Arkansas, my home state, and changes it has made to its 
Medicaid program regarding the work requirement. Are you 
familiar with a work requirement? What is that work 
requirement?
    Mr. Hargan. Yes. So this is a community engagement 
requirement that we have that we have allowed Arkansas to put 
into place. There are a number of elements of it. But Arkansas, 
while requiring people to engage in community engagement or 
work, also has a lot of safeguards on that program that we have 
built into place to make sure that really this is targeted 
towards people who can engage in work, who can engage in 
community engagement.
    So that people who are caring for a minor child 17 or 
younger are exempted from that program; that we have people--
anyone who is caring for an incapacitated person, people who 
have substance use disorder--those are all categories that are 
exempted from the community engagement requirement by Arkansas.
    Mr. Womack. How many hours are they required to work?
    Mr. Hargan. I believe it is----
    Mr. Womack. It is about 20 hours a week?
    Mr. Hargan. 20 hours a week. I think it is 20 hours a week.
    Mr. Womack. 20?
    Mr. Hargan. Yes. I think it is 20 hours a week.
    Mr. Womack. Do you think that is reasonable?
    Mr. Hargan. Well, I think that it is probably not a work 
week--a lot of people work a 40-hour work week. We are 
requiring--Arkansas is requiring 20 hours in this case.
    Mr. Womack. In my area, in the 3rd District of Arkansas, 
the unemployment rate is significantly below 4 percent. In my 
home county, it is probably 2, 2.5 percent, which I would 
assert is very close to full employment. Lots of jobs. Lots of 
opportunities.
    In the 16,000 or so people that have lost their Medicaid 
coverage, is it not true that because of the youth of the 
program, so to speak, the fact that it is not a mature program 
yet; we do not have a longitudinal study on its effects--but is 
it not possible that many of those 16,000 people have entered 
the workforce?
    Mr. Hargan. Yes.
    Mr. Womack. Is it possible that many of those 16,000 now 
have acquired some form of health insurance through their 
employer?
    Mr. Hargan. Yes. I mean, we definitely know that this 
economy is the strongest that it has been in years. We are 
seeing unemployment rates that are the lowest they have been in 
50 years, the lowest African American unemployment, Hispanic 
unemployment, female unemployment. We see very--those very high 
numbers.
    We also know that besides employment issues, we also see 
that there are other reasons why people--they move out of the 
state. There are lots of reasons why people leave a Medicaid 
program. And we look forward to engaging with Arkansas on that 
and figuring out exactly why people might drop out of 
enrollment.
    But it is nothing out of the ordinary. The percentages we 
are seeing in terms of what we call ``churn'' within Medicaid, 
people coming in and out of the program, has not yet--we have 
not yet seen a significant effect statistically in that from 
Arkansas.
    Mr. Womack. Mr. Hargan, you have got a tough job in a 
constrained resource environment where we find ourselves 
consistently with trillion-dollar deficits and a $22 trillion 
debt. The country is going to have to look at its spending 
habits and the promises it has made and going to have to make 
some of those tough decisions.
    And I applaud the fact that over in HHS they are looking at 
programs to reform for long-term sustainability because so many 
people rely on the programs, but at the same time with an eye 
toward the future in terms of our fiscal solvency.
    With that, Mr. Chairman, I yield back my time.
    Chairman Yarmuth. I thank the gentleman.
    I now yield myself 10 minutes for my questions. Once again, 
Deputy Secretary, thank you for being here. Thank you for your 
responses.
    You have, on a number of occasions throughout your 
testimony today, talked about the constraints of the budgetary 
caps under the Budget Control Act of 2011. Perfectly 
understandable. You also said, if I remember correctly, that 
you appreciated the spending levels in 2019 that you are 
working under now that was much more adequate for the programs 
that you are trying to manage.
    Can I infer from those comments that you would be 
supportive of raising the budgetary caps for 2020 and 2021?
    Mr. Hargan. We do not formulate budget policy within HHS. 
We only work with the Office of Management and Budget, within 
the caps environment, to present to you what we hope is a 
thoughtful budget that's compliant with the caps agreement. So 
I would refer any questions on overall budgetary policy to OMB.
    Chairman Yarmuth. But you did say that you appreciated the 
spending levels in 2019. It made things easier for the 
department.
    Mr. Hargan. Well, I think we appreciated, for example, the 
opioids, the great support for the opioids initiative of the 
President, and that Congress had great support from the point 
of view of resources and authorities within the opioids 
initiative, the SUPPORT Act, all of which we very much 
appreciate.
    Chairman Yarmuth. Well, if you were to have spending levels 
for 2020 and 2021 that resemble 2019 levels, would you still 
make the cuts that you are proposing to make in this budget?
    Mr. Hargan. Well, we would have to--whatever proposal was 
made by the Congress, we would have to work with OMB and 
throughout the rest of the Administration to come up with, 
hopefully, a wise budget for you, depending on the priorities 
that you all establish and that we have in the Administration.
    Chairman Yarmuth. Thanks. Last night DOJ announced that the 
Administration believes the entire Affordable Care Act should 
be invalidated, adding--sending a message to the federal court 
in Texas where the case is under appeal. Were you or others at 
HHS consulted on this DOJ decision?
    Mr. Hargan. DOJ sets the litigation strategy for the 
federal government. We do not have independent litigating 
authority.
    Chairman Yarmuth. No. But were you consulted as to, for 
instance, what kind of impact that ultimately might have if the 
courts totally invalidated the ACA?
    Mr. Hargan. Well, as things stand now, the judge has not 
issued a stay or enjoined the Affordable Care Act. So it will 
have no impact as it stands on our administration of the 
Affordable Care Act. But this Administration, the Trump 
Administration, stands ready to work with the Congress on 
policy solutions like those in our budget, and then power 
consumers in states to regain control over their healthcare and 
increase affordability and continue to protect individuals with 
preexisting conditions.
    Chairman Yarmuth. I am going to spend most of the rest of 
my time on Medicaid. But I have one question on Medicare--well, 
two questions on Medicare.
    Has anyone in the HHS ever considered increasing the 
Medicare withholding tax?
    Mr. Hargan. The which? Could you repeat that?
    Chairman Yarmuth. Considered increasing the withholding tax 
that funds the Medicare Trust Fund?
    Mr. Hargan. I do not think that the budget sets forth an 
increase in the withholding tax.
    Chairman Yarmuth. Has anybody ever discussed that, to your 
knowledge, in this Administration? We talk about adjustments to 
the program, but we always talk about it on the spending side. 
We never talk about it on the revenue side. I was just 
wondering whether, since it has been a very long time since 
that tax has been changed.
    Mr. Hargan. I do not believe that we have proposed that.
    Chairman Yarmuth. All right. Thank you.
    Mr. Hargan. Any changes would the withholding tax.
    Chairman Yarmuth. Thanks. We talked from time to time 
during the hearing about different things that affect the 
Medicare costs, prescription drugs being one, of course. Are 
there not things in the statute and rules that need to be 
changed because they drive up costs unnecessarily?
    I am referring, for instance, to the Medicare three-day 
rule, that you have to spend three days in a hospital before 
you can get post-acute care paid for by Medicare. Every 
physician I have talked to thinks that is an absurd rule.
    Mr. Hargan. I think we are--we would love to work with you. 
You had mentioned drug pricing. We would love to work with the 
Congress on a lot of issues that have been stood out in the 
blueprint, and that we would very much welcome working with you 
and providing technical assistance to you all on drug pricing 
reform that brings the costs of prescription drugs down in this 
country.
    Chairman Yarmuth. You talked a number of times, again now 
getting to Medicaid, about how you want to increase flexibility 
for the states. In recent years, a number of states with 
Republican administrations that had initially decided not to 
expand Medicaid--thinking about Arizona and thinking about 
Utah; there are several others, referendums and otherwise--and 
they made the decision, after watching what had happened over 
the first few years of the ACA, that it was to the benefit of 
their citizens to expand Medicaid.
    How does your initiative comply with that degree of local 
control that those states exercised?
    Mr. Hargan. Well, states that--when we provide the 
flexibilities, we would hope that the states would welcome the 
amount of flexibilities that we would plan to provide them 
under this initiative, and that they would also welcome the 
fact that Medicaid is oriented towards those vulnerable 
populations that it is intended to cover; that we would have--
we have other programs that are outside of Medicaid and that we 
are proposing that would cover different kinds of populations.
    And we would allow more flexibilities across the board, 
more choice and more competition, among different payers and 
different plans, to allow Americans to purchase the kind of 
coverage that they want to have.
    Chairman Yarmuth. But when you eliminate the ACA's Medicaid 
expansion, you have limited the amount of local control that 
those states have. You have done it in my state. In my state, 
we have roughly a half a million people out of a little over 
four million people covered under Medicaid expansion alone, 
another 800,000 covered by regular Medicaid.
    So I am wondering what that says to those states who are 
trying to do the best thing for their citizens.
    Mr. Hargan. I think that--I think that hopefully they would 
see that individuals--that they are not necessarily required to 
cover the same people under the Medicaid expansion. But we do 
not have a lot of assumptions on how states would use the block 
grants.
    We really are looking to provide more flexibilities for 
those. It would not--so given greater state flexibility with 
regard to eligibility requirements, benefits, the use of the 
block grant funds, we are hopeful that they are going to be 
able to cover their most vulnerable populations under Medicaid 
with the new flexibilities; and really whichever state it is, 
Kentucky or Arkansas or otherwise, that they would be able to 
fashion this and really achieve the ultimate goal that Medicaid 
was originally set out to be, which is a state federal-directed 
program with flexibilities to allow the states to fashion it 
for their own populations.
    Chairman Yarmuth. All right. Is there anything in the 
Medicaid law that defines it as a job program?
    Mr. Hargan. It is not a--it is not a--I don't know that it 
is defined as a job program.
    Chairman Yarmuth. Well, we are fighting this in Kentucky 
because our governor is trying to impose work requirements and, 
actually, also premiums under a Section 115 waiver that 
basically was written by Seema Verma, the now-administrator of 
CMS, and it was approved by her. And how it has already been--
that decision has already been overturned in court once, and it 
is back in court again.
    And one of the things that we have been questioning 
continuously since the effort of the governor--by the way, the 
Section 115 waiver application specifically or explicitly says 
that if it is approved, 95,000 Kentuckians will lose coverage.
    So I think that is a pretty good indication when somebody 
who is actually trying to get a waiver and impose a work 
requirement, or community engagement requirement, admits that 
almost 100,000 people will lose coverage. You extrapolate that 
across the entire country and it is going to have a 
considerable impact, presumably, on the healthcare of our 
country.
    But I was wondering: Do you have any data to show--you said 
that you do not really know what happens, what the exact reason 
is for 16,000 in Arkansas losing their coverage. But when you 
have taken this path, do you have any experiential reasons for 
saying that this is not going to be devastating for people? Do 
you know, for instance, what percentage of people on Medicaid 
across the country are working already or would be otherwise 
exempt from these programs?
    Mr. Hargan. So when--we are really looking for the states 
to come to us with regard to their specific populations to 
determine the parameters of the community engagement 
requirement. So we would look to Kentucky. We would look to 
Arkansas and the other states when they are coming forward to 
us to see what works for their population in terms of the hours 
that they have, in terms of the other requirements of the 
program.
    So in that sense, we do monitor what we are expecting from 
the states. We are certain they are going to send us 
information about how work is going to affect and whether it 
allows the transition off of the program ultimately and into 
the workforce, which I think many people, that's what they are 
trying to achieve here.
    We are looking at it more broadly, as community engagement 
or as work. But I know that a lot of people, that is going to 
be the form that they take. And that is going to have both 
economic effects on them, on their community, on the workforce 
that is allowed to be there.
    And then, at the end of the day, we think on their 
behavioral and their mental health as they engage with their 
community. And I have heard about it as I come across the 
country. I have heard about it many, many times in Kentucky. It 
was one of the places where I met with a group of people with 
substance use disorder.
    And one of them said to me, said that: ``The thing about it 
was, before I was working, I was just a patient. I was a person 
who is an addict. And all I did was sit at home and look for 
the next meeting with my doctor, the next meeting with my 
counselor, the next meeting with my group. When I had work, at 
least for eight hours a day people are treating me as a 
coworker and a colleague, and I did not think about my 
addiction all the time.''
    That took him out of himself and meant that he was not 
always an addict And that was a huge improvement for him, for 
his own feeling about himself. And that has ramifications, and 
I think that as we see these things going forward, whether I 
have heard it from people with mental health issues, for people 
who have substance use disorders, for the disabled, that they 
all look to us and they say--I have heard it from each one of 
those groups, saying, ``It is so important for us to have 
encouragement to work so that people see us not just as a 
disabled person, a person with a mental disorder or an addict, 
but as somebody who can contribute to them, who can be a 
coworker, a colleague, and a fellow American.''
    So I think it is an important--I think it could be a 
tremendous achievement.
    Chairman Yarmuth. I do not want to abuse the power of the 
chair. But I would say I think that maybe makes the case for 
not having work requirements because what it indicates to me is 
that people basically do want to work, and if they can, they 
will. So you do not need to put this unnecessary burden on 
them.
    But with that, I would say thank you so much, Deputy 
Secretary Hargan. I appreciate your testimony. And please be 
advised that members can submit written questions to be 
answered later in writing. Those questions and your answers 
will be made part of the formal hearing record. Any members who 
wish to submit questions for the record may do so within seven 
days.
    Once again, thank you. And with that, without objection, 
this hearing is adjourned.
    [Whereupon, at 12:45 p.m., the Committee was adjourned.]
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