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Federal Document Clearing House
Congressional Testimony
March 13, 2002 Wednesday
SECTION: CAPITOL HILL HEARING TESTIMONY
LENGTH: 4873 words
COMMITTEE:
HOUSE ENERGY AND COMMERCE
SUBCOMMITTEE: HEALTH
HEADLINE:
FISCAL YEAR 20032 BUDGET: HEALTH CARE PROGRAMS
TESTIMONY-BY: HONORABLE TOMMY G. THOMPSON, SECRETARY
AFFILIATION: DEPARTMENT OF HEALTH AND HUMAN SERVICES
BODY: The Honorable Tommy G. Thompson Secretary
Department of Health and Human Services
The Committee on Energy and
Commerce
March 13, 2002
Good Morning Mr. Chairman and members of
the Sub-Committee. I am honored to appear before you today to discuss the
President's FY 2003 budget for the Department of Health and Human Services. I am
confident that a review of the full details of our budget will demonstrate that
we are proposing a balanced and responsible approach to ensuring a safe and
healthy America.
The budget I present to you today fulfills the promises
the President has made and proposes creative and innovative solutions for
meeting the challenges that now face our nation. Since the September 11th
attacks we have dedicated much of our efforts to ensuring that the nation is
safe. HHS was one of the first agencies to respond to the September 11th attacks
on New York City, and began deploying medical assistance and support within
hours of the attacks. Our swift response and the overwhelming task of providing
needed health related assistance made us even more aware that there is always
room for improvement. The FY 2003 budget for the Department of Health and Human
Services builds on President Bush's commitment to ensure the health and safety
of our nation. The FY 2003 budget places increased emphasis on protecting our
nation's citizens and ensuring safe, reliable health care for all Americans. The
HHS budget also promotes scientific research, builds on our success in welfare
reform, and provides support for childhood development while delivering a
responsible approach for managing HHS resources. Our budget plan confronts both
the challenges of today and tomorrow while protecting and supporting the well
being of all Americans.
Mr. Chairman, the HHS budget request for FY 2003
totals $488.8 billion in outlays, an increase of $29.2 billion or +6.3 percent
over the comparable FY 2002 budget. The discretionary component totals $64.0
billion in budget authority, an increase of $2.4 billion , or +3.9 percent over
FY 2002. Let me now discuss some of the highlights of the HHS budget and how we
hope to achieve our goals.
PROTECTING THE NATION AGAINST BIOTERRORISM
Mr. Chairman, as you know, the Department of Health and Human Services
is the lead federal agency in countering bioterrorism. In cooperation with the
States, we are responsible for preparing for, and responding to, the medical and
public health needs of this nation. The FY 2003 budget for HHS bioterrorism
efforts is $4.3 billion, an increase of $1.3 billion, or 45 percent, above FY
2002. This budget supports a variety of activities to prevent, identify, and
respond to incidents of bioterrorism. These activities are administered through
the Centers for Disease Control and Prevention (CDC), the National Institutes of
Health (NIH), the Office of Emergency Preparedness (OEP), the Substance Abuse
and Mental Health Services Administration (SAMHSA), the Health Resources and
Services Administration (HRSA) and the Food and Drug Administration (FDA). These
efforts will be directed by the newly established Office of Public Health
Preparedness (OPHP).
On January 31, 2002, HHS announced plans for making
$1.1 billion available to States. This funding is available for hospital
preparedness, laboratory capacity, epidemiology, and emergency medical response.
Approximately 20 percent of this total either has already been provided (or will
be provided within the next few weeks) for immediate expenditure to all eligible
entities in base awards that will be used to establish core programs and address
current needs for bioterrorism preparedness. The remaining 80 percent will be
made available for expenditure once the Secretary has approved the States' work
plans for their awarded funds. States will submit plans which will be reviewed
by the HHS staff to ensure that funding is used wisely for bioterrorism efforts.
In order to create a blanket of preparedness against bioterrorism, the
FY 2003 budget provides funding to State and local organizations to improve
laboratory capacity, enhance epidemiological expertise in the identification and
control of diseases caused by bioterrorism, provide for better electronic
communication and distance learning, and support a newly expanded focus on
cooperative training between public health agencies and local hospitals.
Funding for the Laboratory Response Network enhances a system of over 80
public health labs specifically developed for identifying pathogens that could
be used for bioterrorism. Funding will also support the Health Alert Network,
CDC's electronic communications system that will link local public health
departments in covering at least ninety percent of our nations' population.
Funding will be used to support epidemiological response and outbreak control,
which includes funding for the training of public health and hospital staff.
This increased focus on local and state preparedness serves to provide funding
where it best serves the interests of the nation.
An important part on
the war against terrorism is the need to develop vaccines and maintain a
National Pharmaceutical Stockpile. The National Pharmaceutical Stockpile is
purchasing enough antibiotics to be able to treat up to 20 million individuals
in a year for exposure to anthrax and other agents by the end of 2002. The
Department is purchasing sufficient smallpox vaccines for all Americans. The FY
2003 budget proposes $650 million for the National Pharmaceutical Stockpile and
costs related to stockpiling of smallpox vaccines, and next-generation anthrax
vaccines currently under development.
Another important aspect of
preparedness is the response capacity of our nation's hospitals. Our FY 2003
budget provides $518 million for hospital preparedness and infrastructure to
enhance biological and chemical preparedness plans focused on hospitals. The FY
2003 budget will provide funding to upgrade the capacity of hospitals,
outpatient facilities, emergency medical services systems and poison control
centers to care for victims of bioterrorism. In addition, CDC will provide
support for a series of exercises to train public health and hospital workers to
work together to treat and control bioterrorist outbreaks.
The FY 2003
budget also includes $184 million to construct, repair and secure facilities at
the CDC. Priorities include the construction of an infectious
disease/bioterrorism laboratory in Fort Collins, Colorado, and the completion of
a second infectious disease laboratory, an environmental laboratory, and a
communication and training facility in Atlanta. This funding will enable the CDC
to handle the most highly infectious and lethal pathogens, including potential
agents of bioterrorism. Within the funds requested, $12 million will be used to
equip the Environmental Toxicology Lab, which provides core lab space for
testing environmental samples for chemical terrorism. Funding will also be
allocated to the ongoing maintenance of existing laboratories and support
structures.
The FY 2003 budget also includes $60 million for the
development of new Educational Incentives for Curriculum Development and
Training Program. The goals of this program will be the development of a health
care workforce capable of recognizing indications of a bioterrorist event in
their patients, that possesses the knowledge and skills to best treat their
patients, and that has the competencies to rapidly and effectively inform the
public health system of such an event at the community, State and national
level.
INVESTING IN BIOMEDICAL RESEARCH
Advances in scientific
knowledge have provided the foundation for improvements in public health and
have led to enhanced health and quality of life for all Americans. Much of this
can be attributed to the groundbreaking work carried on by, and funded by, the
National Institutes of Health (NIH). Our FY 2003 budget enhances support for a
wide array of scientific research, while emphasizing and supporting research
needed for the war against bioterrorism.
NIH is the largest and most
distinguished biomedical research organization in the world. The research that
is conducted and supported by the NIH offers the promise of breakthroughs in
preventing and treating a number of diseases and contributes to fighting the war
against bioterrorism. The FY 2003 budget includes the final installment of $3.9
billion needed to achieve the doubling of the NIH budget. The budget includes
$1.75 billion for bioterrorism research, including genomic sequencing of
dangerous pathogens, development of zebra chip technology, development and
procurement of an improved anthrax vaccine, and laboratory and research
facilities construction and upgrades related to bioterrorism. With the
commitment to bioterrorism research comes our expectation of substantial
positive spin-offs for other diseases. Advancing knowledge in the arena of
diagnostics, therapeutics and vaccines in general should have enormous impact on
the ability to diagnose, treat, and prevent major killers-diseases such as
malaria, TB, HIV/AIDS, West Nile fever, and influenza.
The FY 2003
budget also provides $5.5 billion for research on cancer throughout all of NIH.
Currently, one of every two men and one of every three women in the United
States will develop some type of cancer over the course of their lives. New
research indicates that cancer is actually more than 200 diseases, all of which
require different treatment protocols. Promising cancer research is leading to
major breakthroughs in treating and curing various forms of cancer. Our budget
continues to expand support for these research endeavors. The FY 2003 budget
also includes a total of $2.8 billion for HIV/AIDS-related research. NIH
continues to focus on prevention research, therapeutic research to treat those
already infected, international research, and research targeting the
disproportionate impact of AIDS on minority populations in the United States.
PRESCRIPTION DRUG USER FEES
As a result of our investment in
biomedical research through the NIH, new breakthrough drugs and medical
treatments will be discovered to treat and cure serious diseases afflicting
millions of Americans. A major mission for the Food and Drug Administration is
to determine which of these therapies are safe and effective and to get these on
the market quickly. The Prescription Drug User Fee Program known as PDUFA,
enacted by Congress in 1992, has been enormously successful in speeding up drug
approval times. This program is due for reauthorization this year and is one of
the top priorities of the Administration. I commend you, Mr. Chairman, and the
Members of this Committee, for your leadership in this area and we appreciate
your bipartisan commitment to act quickly to reauthorize this key program during
this fiscal year and to ensure that enactment of this legislation is not put at
risk by the inclusion of controversial provisions.
As you are aware, the
FDA and the drug and biologics representatives have agreed upon a blueprint
containing the proposed specifications for the reauthorization of PDUFA III with
input from consumer and patient groups, health professionals, and other
organizations. This proposal calls for significant increases in user fees to put
the program on sound financial footing and make the collection of fees more
predictable. The proposed drug user fee amount would be $222.9 million in FY
2003 with increases in the out years to $259.3 million in FY 2007. The FY 2003
request is approximately a $90 million increase over the $133 million that was
collected for FY2001. The PDUFA III proposal includes several important new
initiatives. One of the more significant among these is the agreement to use
industry fees to significantly expand the capacity of FDA to conduct risk
management activities during the first few years after drugs are approved. We
expect that this will lead to more targeted and effective drug prescribing
patterns by physicians and fewer adverse effects for patients.
SUPPORTING HEALTHY COMMUNITIES
The FY 2003 budget includes $25
million for a Healthy Communities Innovation Initiative - a new
interdisciplinary services effort that will concentrate Department-wide
expertise on the prevention of diabetes and asthma, as well as obesity. Of this
amount, $20 million is available in HRSA. The purpose of the initiative is to
reduce the incidence of these diseases and improve services in 5 communities
through a tightly coordinated public/private partnership between medical,
social, educational, business, civic and religious organizations. These chronic
diseases were chosen because of their rapidly increasing prevalence within the
United States. In addition there is $5 million in CDC for a national media
campaign to promote physical fitness activities, with an emphasis on families
and communities.
More than 16 million Americans currently suffer from a
preventable form of diabetes. Type II diabetes is increasingly prevalent in our
children due to the lack of activity. In a recent study conducted by NIH,
participants that were randomly assigned to intensive lifestyle intervention
experienced a reduced risk of getting Type II diabetes by 58 percent. HHS plans
to reach out to women and minorities to help make this initiative a success.
INCREASING ACCESS TO HEALTHCARE
Of all the issues confronting
this Department, none has a more direct effect on the well being of our citizens
than the quality and accessibility of health care. Our budget proposes to
improve the health of the American people by taking the steps to increase and
expand the number of Community Health Centers, strengthen Medicaid, and ensure
patient safety.
Community Health Centers provide family oriented
preventive and primary health care to over 11 million patients through a network
of over 3,400 health sites. The FY 2003 budget will increase and expand the
number of health center sites by 170, the second year of the President's
initiative is to increase and expand sites by 1,200 and serve an additional 6.1
million patients by 2006. We propose to increase funding for these Community
Health Centers by $114 million in FY 2003. Our long-term goal is to increase the
number of people who receive high quality primary healthcare regardless of their
ability to pay. With these new health centers, we hope to achieve this goal.
In addition to expanding Community Health Centers, we are seeking to
expand the National Health Service Corps by $44 million. Currently, more than
2,300 health care professionals are providing service to health centers patients
and others in under- served communities.
The Medicaid program and the
State Children's Health Insurance Program (SCHIP) provide health care benefits
to low-income Americans, primarily children, pregnant women, the elderly, and
those with disabilities. The FY 2003 budget we propose strengthens the Medicaid
and SCHIP programs by implementing essential reforms in the way we pay for
prescription drugs, by extending expiring SCHIP funds, and by testing solutions
to barriers in community living for disabled children and adults.
We
propose to extend coverage of Medicare Part B premiums for people with incomes
between 120 and 135 percent of the Federal poverty level, also known as
Qualifying Individuals (QI-1s), for one year until September 2003. Currently,
States through the Medicaid program must pay for the Medicare premiums and cost
sharing for certain low-income Medicare beneficiaries. The funding to pay for
Part B premiums for QI-1s expires in September 2002. This proposal would ensure
no interruption of current benefits while discussions take place about how
better to integrate the QI-1 programs with other Medicaid programs that also pay
Medicare premiums.
For FY 2003, we propose to continue Transitional
Medicaid Assistance for an additional year and provide families with an
important incentive to work. Currently, States are required to provide up to one
year of Medicaid for families who, due to work, would otherwise lose Medicaid
eligibility. The provision is due to expire in September 2002. We propose to
allow families to continue to take those first steps toward self-sufficiency -
often in jobs without health insurance - without fear that their medical bills
will leave them worse off than before. The initiative would cost $350 million.
Also, we propose to work with stakeholders to develop legislative
proposals that build on the Health Insurance Flexibility and Accountability
(HIFA) demonstration in order to give states the flexibility they need to design
innovative ways of increasing access to health insurance coverage for the
uninsured. The Administration's plan also would allow at State option those who
receive the President's health care tax credit to increase their purchasing
power by purchasing insurance from private plans that already participate in
their State's Medicaid, Children's Health Insurance, or State employees'
programs. This could help keep costs down and provide a more comprehensive
benefit than plans in the individual market. Further, this will give tax credit
recipients a range of choices among insurance products, which the new tax credit
program will make affordable.
Additionally, as part of the New Freedom
Initiative, a nationwide effort to support community based models of care that
help remove the barriers of equality that face individuals with disabilities, we
propose four demonstrations to test solutions to many of the barriers to
community living for disabled children and adults. Two demonstrations will
provide Medicaid respite services to caregivers of disabled adults and to
caregivers of significantly disabled children. A third demonstration will allow
home and community-based services as an alternative for children receiving care
in a residential treatment facility. All three of these demonstrations will help
the Administration evaluate the feasibility of providing such services under the
Medicaid program. A fourth demonstration will address the shortage of direct
service workers.
We also need to make an effort to narrow the drug
treatment gap. As reflected in the National Drug Control Strategy, Substance
Abuse and Mental Health Services Administration estimates that 4.7 million
people are in need of drug abuse treatment services. However, fewer than half of
those who need treatment actually receive services, leaving a treatment gap of
3.9 million individuals. Our budget supports the President's Drug Treatment
Initiative, and to narrow the treatment gap. We propose to increase funding for
the initiative by $127 million. These additional funds will allow State and
local communities to provide treatment services to approximately 546,000
individuals, an increase of 52,000 over FY 2002.
STRENGTHENING MEDICARE
The FY 2003 budget dedicates $190 billion over ten years for immediate
targeted improvements and comprehensive Medicare modernization, including a
subsidized prescription drug benefit, better insurance protection, and better
private options for all beneficiaries. Last year, President Bush proposed a
framework for modernizing and improving the Medicare program that built on many
of the ideas that had been developed in this Committee and by other Members of
Congress.
That framework includes the principles that:
All
seniors should have the option of a subsidized prescription drug benefit as part
of modernized Medicare.
Modernized Medicare should provide better
coverage for preventive care and serious illness.
Today's beneficiaries
and those approaching retirement should have the option of keeping the
traditional plan with no changes.
Medicare should make available better
health insurance options, like those available to all Federal employees.
Medicare legislation should strengthen the program's long-term financial
security.
The management of the government Medicare plan should be
strengthened to improve care for seniors.
Medicare's regulations and
administrative procedures should be updated and streamlined, while instances of
fraud and abuse should be reduced
Medicare should encourage high-quality
health care for all seniors.
The President's FY 2003 Budget also
includes a series of targeted immediate improvements to Medicare, which can be
implemented as part of comprehensive Medicare legislation, to provide both
immediate benefit improvements for seniors and to help implement a Medicare drug
benefit and other long-term improvements more effectively.
The
improvements the President and I have proposed include not only a subsidized
drug benefit as part of modernized Medicare, but also providing better coverage
for preventive care and serious illness. The program's lack of drug coverage is
just one example of its outdated benefits and it will have even more difficulty
giving beneficiaries modern and appropriate treatment for their health problems
in the future. We propose that preventive benefits have zero co-insurance and be
excluded from the deductible. We must make these improvements to more
effectively address the health needs of seniors today and for the future.
Let me assure you, the President remains committed to framework he
introduced last summer, and to bringing the Medicare program up to date by
providing prescription drug coverage and other improvements. We cannot wait: it
is time to act. Recognizing that there is no time to waste, the President's
Budget also includes a series of targeted immediate improvements to Medicare.
As you know, last year the President proposed the creation of a new
Medicare-endorsed prescription drug card program to reduce the cost of
prescription drugs for seniors. This year, HHS will continue working to
implement the drug card, which will give beneficiaries immediate access to
manufacturer discounts on their medicines and other valuable pharmacy services.
The President is absolutely committed to providing immediate assistance to
seniors who currently have to pay for prescription drugs.
Assistance,
however, will not come only through the prescription drug card program. The
budget proposes several new initiatives to improve Medicare's benefits and
address cost. This budget proposes additional federal assistance for drug
coverage to low- income Medicare beneficiaries up to 150% of poverty - about
$17,000 for a family of two. This policy would eventually expand drug coverage
for up to 3 million beneficiaries who currently do not have prescription drug
assistance, and it will be integrated with the Medicare drug benefit that is
offered to all seniors once that is in place. This policy helps to establish the
framework necessary for a
Medicare prescription drug benefit
and is essentially a provision that is in all of the major drug benefit
proposals to be debated before Congress. That is, the policy provides new
Federal support for comprehensive coverage of low-income seniors up to 150
percent of poverty. And in all the proposals, the Federal government would work
with the states to provide this coverage, just as we are proposing with this
policy.
In addition, I recently announced a model drug waiver program--
Pharmacy Plus--to allow States to reduce drug expenditures for seniors and
certain individuals with disabilities with family incomes up to 200 percent of
the federal poverty level. This program is being done administratively. The
Illinois initiative illustrates how we can expand coverage to Medicare
beneficiaries in partnership with the federal government. The program we
approved will give an estimated 368,000 low-income seniors new drug coverage.
The President's budget also includes an increase in funding to stabilize
and increase choice in Medicare+Choice program by aligning payment rates more
closely with overall Medicare spending and paying incentives for new types of
plans to participate. Over 500,000 seniors lost coverage last year because
Medicare+Choice plans left the program. Today close to 5 million seniors choose
to receive quality health care through the Medicare+Choice program. Because it
provides access to drug coverage and other innovative benefits, it is an option
many seniors like, and an option we must preserve. The President's budget also
proposes the addition of two new Medigap plans to the existing 10 plans. These
new plans will include prescription drug assistance and protect seniors from
high out-of-pocket costs.
Some of these initiatives give immediate and
tangible help to seniors. But, let me make clear: these are not substitutes for
comprehensive reform and a universal drug benefit in Medicare. They are
immediate steps we want to take to improve the program in conjunction with
comprehensive reform, so that beneficiaries will not have to wait to begin to
see benefit improvements. I want to pledge today to work with each and every
member of this Committee to fulfill our promise of health care security for
America's seniors- now and in the future.
IMPROVING MANAGEMENT AND
PERFORMANCE OF HHS PROGRAMS
I am committed to being proactive in
preparing the nation for potential threats of bioterrorism and supporting
research that will enable Americans to live healthier and safer lives. And, I am
excited about beginning the next phase of Welfare reform and strengthening our
Medicare and Medicaid programs. Ensuring that HHS resources are managed properly
and effectively is also a challenge I take very seriously.
For any
organization to succeed, it must never stop asking how it can do things better,
and I am committed to supporting the President's vision for a government that is
citizen-centered, results oriented, and actively promotes innovation through
competition. HHS is committed to improving management within the Department and
has established its own vision of a unified HHS -- One Department free of
unnecessary layers, collectively strong to serve the American people. The FY
2003 budget supports the President's Management Agenda.
The Department
will improve program performance and service delivery to our citizens by more
strategically managing its human capital and ensuring that resources are
directed to national priorities. HHS will reduce duplication of effort by
consolidating administrative management functions and eliminating management
layers to speed decision-making. The Department plans to reduce the number of
personnel offices from 40 to 4 and consolidate construction funding, leasing,
and other facilities management activities. These management efficiencies will
result in an estimated savings of 700 full time equivalent positions, allowing
the Department to redeploy staff and other resources to advance primary
missions.
HHS continues working to improve budget and performance
integration in support of the Government-wide effort. Although we work in a
challenging environment where health outcomes may not be apparent for several
years, and the Federal dollar may be just one input to complex programs, HHS is
committed to demonstrating to citizens the value they receive for the tax
dollars they pay.
By expanding our information technology and by
establishing a single corporate Information Technology Enterprise system, HHS
can build a strong foundation to re-engineer the way we do business and can
provide better government services at reduced costs. By consolidating and
modernizing existing financial management systems our Unified Financial
Management System (UFMS) will provide a consistent, standardized system for
departmental accounting and financial management. This "One Department" approach
to financial management and information technology emphasizes the use of
resources on an enterprise basis with a common infrastructure, thereby reducing
errors and enhancing accountability. The use of cost accounting will aid in the
evaluation of HHS program effectiveness, and the impacts of funding level
changes on our programs.
HHS is also committed to providing the highest
possible standard of services and will use competitive sourcing as a management
tool to study the efficiency and performance of our programs, while minimizing
costs overall. The program will be linked to performance reviews to identify
those programs and program components where outsourcing can have the greatest
impact. Further, the incorporation of performance-based contracting will improve
efficiency and performance at a savings to the taxpayer.
WORKING
TOGETHER TO ENSURE A SAFE AND HEALTHY AMERICA
Mr. Chairman, the budget I
bring before you today contains many different elements of a single proposal;
what binds these fundamental elements together is the desire to improve the
lives of the American people. All of our proposals, from building upon the
successes of welfare reform, to protecting the nation against bioterrorism; from
increasing access to healthcare, to strengthening Medicare, are put forward with
the simple goal of ensuring a safe and healthy America. I know this is a goal we
all share, and with your support, we are committed to achieving it.
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