TYPE: COMMITTEE HEARING

LENGTH: 14854 words

COMMITTEE: HEALTH AND HUMAN SERVICES SUBCOMMITTEE

SUBCOMMITTEE: SENATE APPROPRIATIONS LABOR

HEADLINE: U.S. SENATOR TOM HARKIN (D-IA) HOLDS HEARING ON FY 2003 HEALTH AND HUMAN SERVICES APPROPRIATIONS

SPEAKER:
U.S. SENATOR TOM HARKIN (D-IA), CHAIRMAN

LOCATION: WASHINGTON, D.C.

WITNESSES:

TOMMY THOMPSON, U.S. SECRETARY OF HEALTH AND HUMAN SERVICES

BODY:

 
U.S. SENATE COMMITTEE ON APPROPRIATIONS: SUBCOMMITTEE ON LABOR,
HEALTH AND HUMAN SERVICES, EDUCATION HOLDS A HEARING ON FY 2003
APPROPRIATIONS
 
MARCH 7, 2002
 
SPEAKERS:
U.S. SENATOR TOM HARKIN (D-IA)
CHAIRMAN
U.S. SENATOR ERNEST F. HOLLINGS (D-SC)
U.S. SENATOR DANIEL K. INOUYE (D-HI)
U.S. SENATOR HARRY REID (D-NV)
U.S. SENATOR HERB KOHL (D-WI)
U.S. SENATOR PATTY MURRAY (D-WA)
U.S. SENATOR MARY LANDRIEU (D-CA)
U.S. SENATOR ARLEN SPECTER (R-PA)
RANKING MEMBER
U.S. SENATOR THAD COCHRAN (R-MS)
U.S. SENATOR JUDD GREGG (R-NH)
U.S. SENATOR LARRY CRAIG (R-ID)
U.S. SENATOR KAY BAILEY HUTCHISON (R-TX)
U.S. SENATOR TED STEVENS (R-AK)
U.S. SENATOR MIKE DEWINE (R-OH)
 


*


HARKIN: The hearing of the Labor, Health, Human Services, Education Appropriations Subcommittee will now come to order. I want to welcome Secretary Thompson to this hearing this morning to testify about the fiscal year 2003 budget for the Department of Health and Human Services.

The FY 2003 budget for those departments in Health and Human Services under our jurisdiction is $312.1 billion, an increase of $21.6 billion over FY 2002.

A fiscal year 2003 discretionary spending is $59.5 billion, an increase of $2.3 billion over fiscal year 2002. So, the bulk of the increase is in mandatory spending and not in the discretionary spending that we have here in this committee. Our colleague, Senator Inouye, of Hawaii once said that while the Defense Appropriations Subcommittee is a committee that defends America, he said that this committee is a committee that defines America.

Each year this committee helps to define America's future by the choices it makes in education, Head Start, maternal and child health care programs, Pell grants, job training, worker safety, Medicare, Medicaid, and, of course, biomedical research.

I'm very happy to see the administration's 2003 budget includes a total of $27.3 billion for NIH, an increase of $3.7 billion. This increase will be the fifth and final installment in our effort to double NIH funding over five years.

I say to my friend and my colleague, Senator Specter, who has helped lead this charge to double NIH funding, it's been a major part of our strong partnership on this subcommittee over the years. I might also say that the -- and, I will recognize him next, that the former Chairman of the Full Committee, now the Ranking Member of the Full Committee, Senator Stevens, has also been a driving force behind ensuring that we double the NIH budget over five years.

I look forward to the final passage of this bill and we can finally declare victory in the efforts to double funding for medical research over five years.

The budget also includes significant resources to combat bioterrorism, including $940 million to upgrade state and local public health programs, $518 million to increase the capacity of hospitals to address bioterrorism.

Since September 11, this subcommittee has held a number of hearings on the threats of bioterrorism. It became clear that our nation's hospitals and public health departments were not prepared to adequately respond to a bioterrorism event. To address that need we included a billion dollars in the FY 2002 supplemental appropriations bill.

Mr. Secretary, I'm glad that your budget continues that effort and I look forward to working closely with you on this issue. Mr. Secretary, I'm pleased with the increases you've included for medical research and for bioterrorism. But, I am deeply concerned about cuts in the other HHS programs, particularly cuts to HURSA, HURSA is the access agency, which works to ensure health care assess for all Americans, the uninsured and those with special needs and those in rural areas.

The rural health care programs are of particular interest to me because that's where I was born and raised and that's where I still live in a town of 150 people, Cumming, Iowa. In fact, I still live in the house in which I was born. I said that to a young person the other day and they looked at me and said how old are you anyway? I said, let me put it this way, I was born in the last century, how about that?

While many Americans are rediscovering rural America is a place to live and work and raise a family, we've got to do more to ensure access to health care in our rural areas. Last year, our subcommittee under the leadership first of Senator Specter, and then later me, included a rural health initiative in our bill. It increased support for the National Health Service Corp and the community health centers.

It created a new rural hospital improvement program to provide regulatory relief and quality improvement for small rural hospitals and we increased funding for our state offices of rural health.

So, while I want to commend you for building on this initiative by requesting increases to the National Health Service Corp, and the community health centers, those are two great items, Mr. Secretary, and I really appreciate your requesting increases for that.

But, again, I am disappointed that we don't adequately meet some other needs in rural health areas. The budget cuts funding for the state offices of rural health. It cuts funding for rural health research. It cuts funding for telemedicine programs. Quite frankly, I think that's the wrong direction to take.

While these discretionary programs can make a difference, they are not the only answer. Many problems that arise in rural areas are the result of unfair Medicare payment policies. Rural hospitals are much more dependent on public dollars. And small hospitals are more likely than others to struggle. And, if this isn't enough, people in rural areas are in poorer health.

So, we need to work together to get rid of the myth that is costs less to provide health care in rural areas. There's this old myth that somehow if you work in a rural area hospital they can pay you less. We now know that's not true.

THOMPSON: That's true.

HARKIN: Because if they pay you less they go to the cities and work. And, then we have a vacuum. So, we have to match those payments. It's just not fair to say that's it cheaper. Smaller hospitals, when they buy their pharmaceuticals and they buy their gloves and they buy their equipment, they buy in small quantities, so they pay top dollar.

Large urban hospitals that are joined together, they buy in huge quantities they get it at a cheaper price. So, in many cases the smaller hospitals actually it's more expensive to provide health care than in some of our larger urban hospitals.

Last year, I introduced a bill with Senator Craig from Idaho called the Fair Act, Medicare Fairness in Reimbursement Act to change the payment system so that no state earns more than 105 percent of the national average and no state earns below 95 percent of the national per beneficiary average. And, again, during our questioning period, Mr. Secretary, I want to get into that further and point out some of these discrepancies when I get into the question and answer session. But, I know that Senator Stevens has another commitment he has to make and Senator Specter has been gracious enough to yield to Senator Stevens.

SPECTER: Mr. Chairman, I do yield to our distinguished colleague, Senator Stevens.

STEVENS: You're both very kind. We do have meetings in the Full Committee and I'm delighted to be here to welcome the Secretary. I ask that my statement appear in the record. But, Mr. Secretary, I do thank you for your willingness to look into the problems of rural America, as the chairman has just described. We have some of the most daunting health problems. In the country and I hope we will be able to arrange that you can come up and visit us again in Alaska.

Unfortunately, you want to talk about statistics, we have the highest statistics in child abuse, domestic violence, substance abuse, particularly alcohol, fetal alcohol syndrome, I believe rural America has worse of the health problems than the inner-core city. And, probably it's because of some of the things this chairman has discussed.

STEVENS: I do want you to know that we're really grateful to you for leading the charge on obesity in our country, particularly our young people, and in the last year the Congress enacted a bill I introduced the Carol White Cup Physical Education for Progress, a concept of no child being left behind is a very important part of the education phase of the president's program. And, because of the obesity problem, we want to restore physical education to children on a daily basis in our country.

I would like to very much work with you on that. And, my only comment is in my statement you'll find I am disturbed at the Canalli Commission (ph) was...

THOMPSON: So am I.

STEVENS: ... not funded properly. It is authorized. It's not a congressional add-on. It's something that the president has approved and the past presidents have approved in the past. And, I do hope we can restore that funding.

As I said, Mr. Chairman, I just came by really to pay my respects to my friend, the Secretary, and to tell you he has visited Alaska. As a matter of fact he came up and worked right through the night with us literally. And, then moved on to the West Coast. He's a traveling secretary and he's going to be sort of the ubiquitous one all over the place.

But, we're delighted to know that your enthusiasm and your talents are directed towards improving our health and care in the country, Mr. Secretary.

Thank you very much for allowing me.

THOMPSON: You know, Senator, we will be up there the first week in August with Senior Staff to travel to Alaska again.

STEVENS: Thank you very much.

HARKIN: Thanks, Senator Stevens.

Senator Specter?

SPECTER: Thank you, Mr. Chairman.

I join my colleagues, Mr. Secretary, in welcoming you to this hearing. The department, which you head, is second to none in importance in the federal government. I'm glad to see that the administration has recognized the importance of NIH. That is a battle which this subcommittee had initiated many years ago, could not scrape an extra dollar out of the administration, and now it's become recognized, which is very much to the country's advantage.

While there are, sir, important increases in a number of important fields; some of these cuts just can't be accommodated. If you take a look at the CDC buildings and facilities, there is a cut of $186 million. That was an addition in which this subcommittee undertook two years ago, adding $170 million to the ramshackle operation. And, last year, I believe, the figure was $255 million.

And, you know the facilities there and I know the facilities. We both visited them. And, you simply can't have people working in the quarters. The distinguished scientists having materials which could be very dangerous not under appropriate security precautions as they do research.

So, we're going to have to do a lot of juggling in this subcommittee to try to make ends meet there. There's been a significant cut in children's grants for medical education. There's an enormous constituency for that, community services block grants, to LIHEAP. And, I'm not exactly sure where we go, but we're going to have to make accommodations on those matters.

I see the press reports about the new head of NIH, which is long overdue. Of course, a good bit of the delay was due to the prior administration as well. It's been taking since January of the year 2000, but more than a year into this administration, the Commissioner on FDA vacant since September of 1999, a very important agency. I hear a lot of major concerns that there are matters pending there that the subordinates won't sign off on. I guess they don't want to take the chances. And, that's the job of somebody at the top. We just have to have a person. Whenever the other directorships are vacant for the Institute of Neurological Disorders, Institute of Biomedical Imaging, Institute on Drug Abuse, Institute on Mental Health, Institute on Alcohol Abuse, Institute on General Medical Sciences, I've got to ask you what your progress is on moving ahead there.

And, then just a word or two on homeland defense, very vital. I'm glad to see the increase of $1.3 billion up to $4.3 billion. This subcommittee, Senator Harkin and I held a hearing last year, October 5, and we had to go to the bowels of the capital because we couldn't operate over here. And, we got more than $3 billion to move ahead there. And, that's just indispensable because of the great concern. And the president has been very blunt about the threat of some continuing risk any day something could happen or mammoth proportions, worse than 9/11. So, that's got to be a top speed project.

Just a brief comment or two about stem cells and about the current controversy on therapeutic cloning, I'm not quite sure where we go here about the ideology of the new director of NIH. I'm hopeful we can keep ideology out, but I don't know if that's possible to do.

We initiated here, tried to get federal funding for the stem cells and we collected 64 senators in writing last spring who wanted to have more federal involvement, 12 more in reserve didn't want to sign a paper. And, then the president acted on August the 9th. But, on the facts, I think it's insufficient and time will tell us more about that that it's been put on the back burner by 9/11.

And, now we have the issue of therapeutic cloning, which is a misnomer. It's not cloning at all. We're all against reproductive cloning. But, if you don't the process where you take a cell from a person, for example, who has Parkinson's, put it in the egg and get stem cells which won't be rejected, medical science is going to be set back tremendously. And, we're going to fight that battle on the Senate Floor.

So, perhaps it's not going to be a matter for you, and I know your constraints to follow White House directives or the NIH Director to follow White House constraints to get an appointment. So, it's in the lap of the Senate. And, if we do the wrong thing, God help America on the export of science and scientists of foreign countries in thwarting what could be really very, very important medical research.

So, all of our hands are full. And, the issues which you face as the Secretary, and which we face on this subcommittee level are gigantic and we'll work together to try to see to it that the public interest is carried out.

Thank you, Mr. Chairman.

HARKIN: Thank you, Senator Specter.

Senator Cochran?

COCHRAN: Mr. Chairman, thank you. I join you in welcoming the Secretary to our hearing. I look forward to his testimony. I'm very impressed with the way he is taking up the challenge of serving in the cabinet in this important position. I've been able to meet with him as others on the committee have in talking about homeland security issues and particularly the responsibilities of the Food and Drug Administration and other agencies that he is interested in helping to supervise and direct.

I know that there are big challenges in terms of personnel. We've had NIH with a vacancy and FDA. We have a new acting director there, CDC you're looking for a new director to run that agency. These are all very important research and administrative functions. And, I know that the Secretary is giving his personal attention to these challenges as well.

I want to add one comment about the stem cell research debate. I think it's really important for us to move to issuing regulations in this area to show that we are not going to shut off useful research using the stem cells if it can be done without any question about leading to cloning.

I think in the area of diabetes, particularly, Parkinson's disease, we have two clear examples of possible beneficial uses for stem cell research, and I hope we can resolve this dilemma.

I'm clearly opposed to human cloning and I think we can agree on that. But, we ought be able to find a way to describe and restrict permissible research in this area without getting into the cloning activities that would trouble many in our country. And, it would trouble me greatly as well.

So, I hope that we can devote some attention and make this one of the highest priorities of our government at this time. I'm also worried that we're not recognizing the plight of small towns and rural communities in terms of the discriminatory reimbursement of hospitals and health care professionals in those areas.

I don't know we continue to make it impossible to have dependable medical care in the small towns and rural communities of our country because of this discriminatory policy of low reimbursements. And, this is particularly true in the Deep South.

And, I don't know, we've had hearings and our subcommittee's appropriations and in other committees as well on this topic and some changes have been made. But, I think we need to take a new look at some of the deficiencies that continue to be manifested in this area.

And, I'm hopeful, Mr. Secretary, that you can help us figure out what to do to relieve those problems.

Mr. Chairman, thank you very much.

HARKIN: Thank you, Senator Specter.

Senator DeWine?

Secretary Thompson is the 19th secretary of the department that oversees the health and welfare of this nation. His career in public service began in 1966 as a Representative in Wisconsin's State Assembly. Most recently served as Governor in the State of Wisconsin from 1987 to 2000, making him the longest serving governor in Wisconsin state history.

Secretary Thompson is well known as a leader in welfare reform and expanding access to health care for low-income children. He has served as the National Governor's Association, the Education Commission of the States and the Midwestern Governor's Conference. Secretary Thompson received both his BS and BA Degree in the University of Wisconsin in Madison.

Mr. Secretary, welcome again to the committee.

THOMPSON: Thank you and good morning Governor Harkin, Governor as Chairman Harkin, I'm sorry about that, Chairman Harkin, Senator Specter, thank you both for your hospitality and willingness to work with my department and with me personally and I thank you both for your leadership.

Members of the subcommittee, I thank you as well.

It's an honor for me to come before you to discuss the president's fiscal year 2003 budget request for Health and Human Services.

Mr. Chairman, the past 13 months have witnessed some significant achievements at HHS. I will detail some of them in the course of my testimony.

As to our budget proposal itself, the total HHS request for fiscal year 2003 is $489 billion, the discretionary component before this committee, as you indicated, is $59.5 billion in budget authority, an increase of $2.3 billion or 4.1 percent over the comparable fiscal year 2000 budget.

After 9/11 I appointed Dr. D.A. Henderson, the physician who spearheaded the successful drive to eliminate smallpox worldwide. He'll head a newly created office in my department of public health preparedness. And about 20-feet from my office we have set up a 24- hour a day, seven-day a week command center where we receive information and dispense information to individuals and to communities and to states all over the country for any word about possible bioterrorism attacks. And we also dispense the pharmaceutical supplies to New York and Washington, D.C., from that office.

In a word, we've been very aggressive. We've been prudent in our work to prepare for any biological or chemical threat our enemies could use against us. To prepare further, President Bush and I are requesting an additional $4.3 billion, an increase of 45 percent over the current fiscal year, to support a variety of critical activities to prevent, identify and be able to respond to incidents of bioterrorism.

Right now we're providing $1.1 billion, thanks to you and members of both political parties in this Congress that have provided $1.1 billion to state governments to help them strengthen their capacity to respond to bioterrorism and other public health emergencies. We're working to hook up every state and very major country health system in the nation electronically through the Health Alert Network. And we should hope to have 90 percent of all the counties hooked up by the year 2003.

In addition, we're requested more than $500 million for our hospital preparedness program, which will strengthen local hospital preparation for biological and chemical attacks and be able to withstand regional surge capacity.

THOMPSON: The NIH is researching better anthrax, plague, botulism, and the hemorrhagic fever vaccines. And, we're purchasing an additional 154 million doses of smallpox vaccine so that every man, woman and child in this nation will be able to have a vaccine that he or she needs by the end of this year.

When it comes to bioterrorism, we're growing stronger in our preparedness each and every day. We're also advancing important biomedical research. The budget provides $5.5 billion for research on cancer throughout NIH, I know that's a subject that both you, Senator Harkin and Senator Specter, are very interested in. And a total of $3.7 billion for HIV/AIDS related research.

We're also working hard to improve patient safety, as many as 98,000 Americans die annually due to medical errors. So, in the 2003 budget President Bush is proposing $10 million in new funding to improve patient safety and reduce medical errors. The increased funding will bring the total HHS budget for improving patient safety to $84 million in fiscal year 2003.

The funds will support efforts to put known safety technologies into wider use, develop new approaches and support a stronger system for rapid reporting of adverse medical events. We're also requesting $20 million for a healthy communities initiative, which is a new innovation. It's a new interdisciplinary service effort that will concentrate the department-wide expertise on the prevention of diabetes, asthma, obesity and health disparities in minority communities.

Let me note who concerned I am and how concerned all of us should be about how obesity is affecting our health as people. Roughly three out of every five adults are overweight. And approximately 300,000 U.S. deaths a year currently are associated with obesity and simply weighing too much.

The total direct and indirect cost attributed to being overweight and to obesity amount to $117 billion in the year 2003. We've also got a serious problem with diabetes. Nearly 16 million Americans have diabetes and 800,000 more fall victim to this disease annually.

This epidemic is witnessing a terrible increase, tripling within the last three decades. Yet, we've got solid research that shows that if exercise just 30 minutes a day and walking is a perfectly suitable form of exercise and lose to 10 to 15 pounds, your risk of getting diabetes falls by nearly 60 percent.

So, the president and I are committed to our across the board prevention initiative. Preventive health care saves huge amounts of money. But, more importantly, it can save untold thousands of lives.

We're also helping prepare low-income Americans for their future. That's why welfare reform remains so important. The good news is that since 1996, when congress passed the TANF 1 Bill, nearly 7 million fewer individuals are on welfare today than in 1996 and 2.8 million fewer children are in poverty in large part because welfare has been transforming.

The president's budget boldly takes the next step, which requires us to work closely with states to help families that have left welfare to climb the career ladder. The foundation of welfare reform success still remains work, for work is the only way to leave poverty and be able to become independent.

Let me also make crystal clear that the news reports yesterday about a plan to change the minimum wage law were absolutely false and incorrect. President Bush and I will insist that welfare recipients receive at least the minimum wage for the hours that they work, including community service jobs.

This is an important principle that I fought for as Governor of Wisconsin and one the president and I remain committed to today as we take the next step in welfare reform.

The president's budget allocates $16.5 billion for block grant funding, provides supplemental grants to address historical disparities in welfare spending among states and strengthens work participation requirements. The budget provides another $350 million in Medicaid benefits for those in the transition from welfare to work.

We're calling for a continued committed, also, to child care, including $2.7 billion for entitlement child care funding and $2.1 billion for discretionary funding. We're giving states the flexibility they need to mix effective education and job training programs with work, as well as the money to strengthen families and reduce illegitimacy.

Strengthening Medicare is another component of our across the board effort to broaden our country's health care system. The 2003 budget dedicates $190 billion over 10 years for targeted improvements and comprehensive modernization.

As we reach out to those still reliant on welfare and work to strength Medicare, we cannot ignore the roughly 40 million Americans who lack health insurance. Since January 2001, I've been able to approve state plan amendments in Medicaid and SCHIP waivers that have expanded opportunity for health coverage to 1.8 million Americans, and improved existing benefits to 4.5 million individuals.

The 2003 budget also seeks $1.5 billion to support the president's plan to impact 1,200 communities with new or expanded health centers by 2006. This is a $114 million increase over fiscal year 2002 and would support 170 new and expanded health centers and provide services to 1 million additional patients.

And, we will soon be issuing 27 grants totally $12 million under President Bush's Health Center's initiative to help more Americans get access to quality health care. The awards of a second round of fiscal year 2002 grants under the president's initiative and will help bring needed health services to some 157,000 Americans in 17 states.

The president's budget includes $89 billion in new health credits to help American families buy health insurance, which will provide health coverage for many low-income families.

Finally, Mr. Chairman, I want to note that when I accepted my post at HHS, the president charged me to make significant management reforms in my department. I have taken the president's charge seriously. And, in implementing reforms that will enable HHS to serve the American people even better in the coming years.

To that end, we will reduce the number of HHS personnel offices from 46 to four. We're realigning and consolidating throughout the department brining better stewardship to our use of taxpayer dollars and we've launched a regulatory reform initiative to reduce the paperwork burden on physicians, hospitals and other health providers.

For HHS to truly be compassionate, we have to be effective. That means running our programs well and honoring the taxpayers with the best possible services that we can provide.

Mr. Chairman, this comprehensive, aggressive budget addresses the most pressing public health challenges that face our nation from bioterrorism preparedness to coverage for the uninsured in order to ensure that we have a save and healthy America.

I am confident that by working together in a bipartisan fashion, we can continue to improve the health and well being of our fellow citizens.

Thank you, again, Mr. Chairman, and members for letting me come before you today. I look forward, now, to your questions.

HARKIN: Thank you very much, Mr. Secretary. Mr. Secretary, picking up a little on what Senator Specter talked about, Senator Cochran mentioned also. There's an article that's in the newspaper this morning, The Washington Post, that basically is -- if it's true, I don't know if it is, I think it's highly disturbing, about the new pick to be the head of NIH. Now, as I understand it, no name has come forward, this is just sort of touting.

The name of this person Alias Zuhuni (ph) has not been submitted yet, is that correct?

THOMPSON: That is correct, Senator.

HARKIN: So, again, I don't know if what in here's true, but I'm just saying if it is, it's very disturbing that the person would have to pass some philosophical test before they could be appointed the head of the NIH. That he had to agree to oppose all stem cell research that could lead to cures for things like Alzheimer's and Parkinson's and juvenile diabetes.

It's just disturbing to me that the NIH, the premier medical research agency in the world, might be led by someone with a closed mind about this promising avenue of research. As I said, I don't know if this is true or not, but it is very disturbing if it is.

THOMPSON: If it was true, I would be very disturbed too, but it is not true, Senator.

HARKIN: This story that is in the Post is not true?

THOMPSON: The conclusions of that story are not true.

HARKIN: It quoted an unknown, you always have to ask questions when it's an unknown, an unknown Congressional Republican who's working to enact the Anti-cloning legislation said, "He's one of us. He supports Brownback and we support him."

I guess we'll have to find out if his name comes up. But, I mean, are you saying that that's not true either?

THOMPSON: I don't know his position on the Brownback Bill, but I would like to point out, Senator, if I might, that there's no litmus test, and I would be very disturbed if there was. There is not.

Secondly, the President of the United States has not chosen, has not advanced the name yet, but I know the president is reviewing the names that are over in the White House and I'm very hopeful and quite confident that a name will be coming forth relatively soon.

HARKIN: Mr. Secretary, I don't know...

THOMPSON: And, I've had a chance to interview all of the candidates and I can assure you, none of the candidates that are in the White House have a closed mind about stem cells and about research. And, I think once you get a chance to meet any of the three candidates that are over there, you will be very satisfied after you get a chance to discuss it with them.

HARKIN: Well that is reassuring. And, of course, we will meet with them. I mean, they'll have to come back to our committee...

THOMPSON: That is correct.

HARKIN: ... for confirmation. I just say publicly for the record, that, again, you say you assure me this is not true. I'm just saying if it is, if there's substance to that and such a person were appointed to be the head of the NIH, I think you would see a mass exodus of scientists out of NIH, mass exodus.

To think that somehow you're going to have a Director of NIH that had a closed mind on a legitimate, and I think, promising source of research would be something that has never happened at NIH. And, here we've just doubled the funding for it. We've put all that money into it. We want to attract the best and the brightest minds to NIH.

THOMPSON: You do and I so as well, Senator, and I can assure that the person that will be nominated, when its nominated by the president will have an open mind about research and that you will feel comfortable with them. I am fairly confident about that.

HARKIN: Well, I hope so. Again, there are rumors around -- I can only say they're rumors, I don't know if there's any substance to them.

THOMPSON: I read the article myself this morning. And I would like to have you point out that Mr. Barmus (ph), who was the NIH director, spoke very highly of the individual in question.

HARKIN: He said, well, he said down while Zahuni (ph) is not widely known among basic researchers, he is a talented scientist with the ability to instill confidence in the agency.

Well, I heard a disturbing report that one of the candidates for the NIH director position was interviewed by a certain United States Senator who turned thumbs down and that ended it. Again, I don't know if that's true or not, but it was on the basis of his opposition to -- that he wouldn't be opposed to stem cell research.

THOMPSON: I know full well about that individual and I have the utmost confidence, as you do, of that person. He's an outstanding scientists and the question was would he give up his institute in order to take the NIH Directorship and he said no, and that was the question.

HARKIN: But, that person did not meet with a United States Senator regarding his position on stem cell research?

THOMPSON: I am sure he met with the Senators. I don't know how many he met with, but I know he did because I requested that he do that.

HARKIN: That he meet with Senators?

THOMPSON: Yes.

HARKIN: He didn't meet with me.

THOMPSON: I think...

HARKIN: So, I don't know what Senators he met with.

THOMPSON: I don't know either, sir.

HARKIN: Well, there is that story out there that he met with a Senator who turned thumbs down on him because he wouldn't commit to being opposed to stem cell research. Now, again, that's just a rumor.

THOMPSON: All I know from inside information that it was not that decision that affected his appointment. It was whether or not he would turn now -- whether or not he could handle his institute and the directorship of NIH. And, we wanted to do both. I thought he could, and, after previewing it, the decision was made that -- well, the decision hasn't been made yet, but that's the question. It's not his philosophical position. It's whether or not he could handle both positions, Senator.

HARKIN: Well, that's reassuring.

Senator Specter?

SPECTER: Thank you, Mr. Chairman.

Mr. Secretary, these appointments raise very difficult considerations for Senate confirmation.

SPECTER: It is not unexpected that the president would seek appointees who share his views on stem cells and so-called therapeutic cloning. And, there's even been some suggestion that you don't agree totally with the president on some of those issues, but you're following the administration policy. I'm not going to ask you to comment on that. But, leave that as an option for you, if you want to comment on it.

OK. The option is on the table. There are...

THOMPSON: Sometimes discretion is the better sense of valor, Mister.

SPECTER: Especially, after you're confirmed.

Well, that's a political fact of life and it is recognized and respected. One assurance that I do want to be on the record is that when this subcommittee seeks information on these controversial subjects that we will get in an unvarnished way. Now, you and I had a difference of opinion last year when this subcommittee wrote to the directors of all the institutes asking for their views on stem cells. And, their responses were edited at HHS.

So, that you do have directors of quite a number of the institutes who were there institutionally. And, they're not being appointed by the administration, which is going to ask for ideological agreement. They're there in the long haul.

The new directors may well have to pass the same sort of a test that the NIH Director is, at least as recorded in the media in the pass the ring of authenticity.

Will you assure this subcommittee, Mr. Secretary, that when we ask for information from these directors, the scientists, and NIH that we will get their views without any editing or any ideological review?

THOMPSON: I can assure you without any equivocation whatsoever that will be the case, Senator.

SPECTER: Well, OK, that's very important so we can at least go back to the directors who have been appointed in the past and they may have views similar to the president's. And, if they do, that's fine, or they may not.

THOMPSON: Everything scientifically based should be given to you in an unvarnished fashion.

SPECTER: OK.

THOMPSON: Any way that you want it.

SPECTER: That's what we want to do.

THOMPSON: And, I can assure that is the course of action.

SPECTER: OK. That's very important in evaluating what to do with the nominees, which the president submits. And, of course, he's the president party, as well as...

THOMPSON: Yes.

SPECTER: ... as your party. On to some of these items, Mr. Secretary, do you endorse the cut of $186 million for the CDC building facilities?

THOMPSON: Senator, I was faced with a difficult situation, as you are, in this budget. And, the first priority is the war. The second priority is bioterrorism and we got a 45 percent increase in there. I was allocated so much money, as is the case in the budget resolution in your house and in the House of Representatives. And, I had to put in -- I had to make the tough decisions and those are the decisions that are in here and some of those have been changed by OMB, but I think that the budget request of $184 million, I would of much rather had $250 million, which is the figure that you and I have discussed many times before at CDC.

SPECTER: You're putting in $64 million.

THOMPSON: It's $184 million. It's in the budget request, Senator.

SPECTER: The (inaudible) said that -- well, I'm told by Senator Chandler that 100 million is for Fort Collins. Of all the experts in the field, Secretary, she knows more than anybody. Maxine knows more than everybody combined.

THOMPSON: Fort Collins is part of CDC and that's part of the building program and we put in $184 million.

SPECTER: But, that isn't...

THOMPSON: Fort Collins is one of the laboratories that deals with...

SPECTER: Fort Collins, Colorado?

THOMPSON: That is correct.

SPECTER: That's a long way from Atlanta, Georgia.

THOMPSON: But, it's part of the CDC building program.

SPECTER: I know, but those buildings in Atlanta are crumbling, Mr. Secretary.

THOMPSON: I understand that. You've been there and I have been there. We have three campuses of CDC in Atlanta and we are renting 24 other buildings. My objective, as yours is, is to consolidate them, get all those rented buildings into one of those new buildings into one of the...

SPECTER: Mr. Secretary, they had an awards ceremony down in one of the Senator building, Senator SC-6 last spring and they gave you an award for the money for CDC. Now, frankly, I had some doubts as to whether they should of given you that award because all that money came from Senator Harkin. I thought he should have gotten the award.

THOMPSON: He probably should have.

SPECTER: Do you know that if you...

THOMPSON: He started it.

SPECTER: ... It's easier for me to say it should have gone to Senator Harkin then to me. That would be self-serving if I said it other than to Senator Harkin.

But, the point that I'm making here is that if you stand by this $64 million instead of 250, you're not going to get an award next spring. Do you realize that?

THOMPSON: I probably realize that full well. I also fully realize that I had to make some decisions, as you will, Senator, and we had to put the money in bioterrorism and the war effort first. And, this is what we were able to come up with.

SPECTER: OK. But, the war on bioterrorism requires a building to do the research.

THOMPSON: That is correct.

SPECTER: And, if you don't have a building, you're not going to be able to fight to war. But, as long as you factored in the consideration that you wouldn't get an award when you put this figure on, I'll let you go now.

THOMPSON: OK.

SPECTER: Temporarily, because my time is up.

THOMPSON: Thank you, Senator.

HARKIN: Senator DeWine?

DEWINE: Thank you, Mr. Chairman.

Welcome, Mr. Secretary, good to see you.

THOMPSON: Good morning, Senator, how are you?

DEWINE: Good morning. Let me turn your attention to Title 4E and I want to talk a little bit about a proposed change that you have that's causing a great deal of concern in my home state of Ohio and I imagine around the country.

HHS has announced a policy change for prohibiting Title 4E reimbursement for administrative and training costs associated with the placement of children in unlicensed foster homes. It's my understanding this policy change was made due to what your department deemed were inconsistencies with the old policy and a law that I was very much involved in writing, the Adoption and Safe Families Act, in particular a provision that I wrote that requires the health and safety of the child always to be paramount, to be the paramount concern when deciding whether to remove a child from the home and then in making placement decisions.

In my home state of Ohio, this change, Mr. Secretary, is going to cost about $22 million in funding. Now, it can't be replaced anyplace else. To put it in simpler terms, what we have is many times grandparents, we have aunts and uncles, these are unlicensed foster care homes. And, what your rule would do is it would say we could no longer count those in regard for reimbursement for administrative and training. We're not talking about direct reimbursement, putting them in the home, we're talking about just the overall counting them for training for the caseworkers for the training and the administrative cost.

And, I just would ask you to look at that. I wrote the provision of the bill that apparently has caused the problems in the bureaucracy. And, it was not my intention to cause that problem. I'll absolutely guarantee you this was the farthest thing from my mind that you're department would interpret it that way. So, I would ask you to take a look at that. It's just not our intention.

THOMPSON: Senator, it's certainly not my intention to in anyway adversely impact your district by $22 million. And, it's not our intention to do that at all.

DEWINE: But, I think, Mr. Secretary, it goes beyond, you know, I understand budget cuts, but this decision wasn't made on the point of view of budget cuts. And, I think we also understand the philosophy that we want licensed.

THOMPSON: This is...

DEWINE: We want licensed homes.

THOMPSON: That's right.

DEWINE: We want that. But, the reality is that for any number of reasons in the real world, an aunt or an uncle or a grandparent doesn't go through the process to have that home licenses and what we are simply saying is those kids still have to be monitored...

THOMPSON: Absolutely.

DEWINE: ... and the state has still got the costs of doing it. And, the direct result of this, it's not of money, the direct result is we're going to have fewer caseworkers out there. And, that's the last thing we want to do.

So, if you'll look at it. If you could just...

THOMPSON: Senator, I will look at it the beginning of next week and I will get back to have an answer with you within 10 days.

DEWINE: I appreciate it.

THOMPSON: Because...

DEWINE: That's fine. It's all I can ask.

THOMPSON: OK.

DEWINE: Let me turn to another issue and that's the poison control centers, and this is something that I've worked on for a number of years. We made great progress. We now have a national 1- 800 number. We had for the last few years a small amount of money that goes into the budget that is administered to help the poison control centers around the country.

The president's budget proposes $21.3 million, which I certainly appreciate. What the question I have is, though, that I noticed that in the fiscal year '03 budget the poison control center budget line was moved to your budget for purposes for of supporting our nation's bioterrorism preparedness efforts.

I don't have any problem with that. I think that one of the things that we need to understand is that the poison control centers, in the event of a horrible disaster would be right there in the front line. We would be using them. And we have to have them. And, frankly, I think we have to invest a little more.

But, I appreciate what your budget does provide. My question, though, is will HURSA still administer the distribution of the grant dollars and will these dollars still be used for the purposes established under our original legislation?

THOMPSON: Absolutely. It's in the bioterrorism line, Senator, so that we are able to have a more comprehensive plan for all the bioterrorism dollars, be able to bring all of our assets together to be able -- in case of a tragedy, be able to bring all those assets to bear.

DEWINE: Which I applaud.

THOMPSON: But, the HURSA will still be responsible for the $21.3 million for giving out the grants. I know this is something that is of interest to you. You have fought very hard for it. They do an excellent job throughout America. And, I for one applaud you and applaud the job that they're doing.

DEWINE: I appreciate it. One last comment and question, I was disappointed, I know you have tough budget decisions, but I was disappointed to see the graduate medical education account, the children's hospital graduate medical education, reduced from 285, which is where we've been able to get it for the last couple of years, down to $200 million. That is really going to impact on our children's hospitals around the country. And, so I just want to bring that to your attention and I hope that we're going to be able to find the money here on Capital Hill to...

THOMPSON: The reason for that...

DEWINE: ... restore that.

THOMPSON: The reason for that decision, Senator, is that in fiscal year 2000, this budget was starting with $40 million, then it was raised to $200 million, and last year it was raised to $285 million. And, we thought that $200 million is still a huge increase from what the base year of fiscal year 2000. And, it goes from, instead of a stipend of 72,000 per pediatric doctor and children hospital to 52,000, we think a subsidy of 52,000 is quite adequate.

DEWINE: And, I appreciate that. The reality is...

THOMPSON: I understand.

DEWINE: ... that the only reason we're having this discussion is because of, what I call at least, a quirk in the law many years ago that children's hospitals were not included under the formula to begin with. And, we have to fight over this every year. It's not your fault. It's not my fault. It's history. But, we have to fight over this every year because this has to come out of the discretionary funds and doesn't come into some sort of entitlement. It just goes through and we never have to worry about it or think about it, and it just automatically happens.

So, I know my time is up. And, Mr. Secretary, I appreciate your comments.

THOMPSON: Thank you, Senator DeWine. We'll look at that administrative function on the children's...

DEWINE: Thank you. I appreciate it.

THOMPSON: And, get back to you.

HARKIN: Thank you, Senator.

Senator Kohl?

KOHL: I thank you very much, Mr. Chairman.

THOMPSON: Senator, my friend, how are you?

KOHL: It's good to see you.

THOMPSON: It's good seeing you.

KOHL: Governor, there's no doubt that today one of the highest priorities is obviously winning the war on terrorism aboard while keeping Americans safe at home. But, we also have the continuing responsibility of meeting the health and human services needs of our nation, as you know.

I'm concerned that some areas of the president's HHS budget fall short in this regard and I hope that we can work together to address those problems over the coming months. As you know, on Monday, the Aging Committee held a hearing on abuse in nursing homes. We heard, not for the first time, stories of patients being beaten, raped and even killed by employees who are supposed to care for them.

KOHL: While the vast majority of nursing homes workers do a great job, it only takes a few to terrorize patients. I have introduced legislation to create a national registry of abusive workers and also to require the FBI to conduct a criminal background check before hiring an employee. The bill is supported by both patient advocates and the nursing home industry. The HHS Inspector General's Office, GAO, local prosecutors and state officials have all called for a national background check system.

I would like to hope that you and the administration will be supportive of this legislation. I know, if you will, we will have an outstanding chance this year of getting it passed. I would like to solicit, most respectively, your support for this legislation.

THOMPSON: Senator, first let me point out unequivocally that I personally support your legislation. I think it's needed. And I think it would be good step forward. In short of that, what we've done through CMS is we have put in place 10 states as demonstration states and which we're trying to increase the quality in nursing homes and use it as demonstrations. And, then to post on the web how these 10 states are doing with those particular homes to improve the quality.

We also in January started posting and will have this data up so that individuals will be able to look at the web site at CMS and be able to determine nursing homes in their particular states, on the information that we received, the information that we get, the kinds of quality care, as well as some of the problems that you've indicated.

And, we're hoping that people will look through this web site and when they chose the correct nursing home, because you, as well I do, there's excellent nursing homes out there and some that are not measuring up and we want to get those, and, if possible, improve their quality and so that every person that goes to a nursing home, receives the kind of care that you and I would like them to receive.

KOHL: Does that mean you would support my legislation?

THOMPSON: I said that at the beginning, yes. I said that at the beginning, but short of that, in the meantime we are proceeding through administrative functions while you're working on your legislation to do other things to improve the quality.

KOHL: Well, I thank you and I thank, what I believe, will be your support. I think that's great.

THOMPSON: Thank you.

KOHL: Governor, at last year's hearing we talked about the importance of getting state survey agency enough funding so that they can inspect nursing homes, annual complaint investigations and make sure residents get safe and quality care. It's also important that the state long-term care ombudsmen have to enough resources to handle the increasing number of nursing home complaints.

Each year I fought to increase funding for these programs and so I was disappointed to see that the president's budget actually cuts survey funding by $6 million and flat lines the ombudsmen funding despite the fact that complaints have jumped quite a bit last year.

It's clear to me that we need to increase and not decrease our efforts to make sure all nursing home residents are safe. And, I asked the question, how can expect states and ombudsman to carry out these critical duties, which I know you regard as important while at the same time decreasing their funding?

THOMPSON: All I can you, Senator, is that number one we had so much money. We had a 45 percent increase in bioterrorism, $4.3 billion. We increased NIH by $3.7 billion and everything else we had to make some tough decisions. And, those tough decisions are reflected in this budget bill. And, we are also trying to do other things other than the ombudsman program and the survey program, and that's by putting information up on the web sites so people can look at that to find out nursing homes so they have an opportunity to compare nursing homes and the quality patients are receiving in those nursing homes.

I know that is not the answer you would like, but it's as candid as I possibly can be.

KOHL: OK. I appreciate that. The last question, Governor, I'd like you for what I'm sure was your influence in making sure that president's budget included child support distribution reform. You and I worked together...

THOMPSON: That's right.

KOHL: ... on this issue in Wisconsin for many years and with great success. Our State of Wisconsin has had this policy due to your efforts, since 1997. And, as you know, Wisconsin is seeing great results with the program. That's why I myself sponsored legislation that would let all states follow the example that you set up in Wisconsin.

I was pleased to see that the president's budget included similar child support proposals, but even though we're all in agreement on this, we still face a tight budget this year. Can I hope that you will be able to get this program enacted on a national level this year?

THOMPSON: I'm hopeful because it's the right thing to do for the nation, but we have a lot of things that are on our plate, Senator. All I can tell you is that I will try.

KOHL: I thank you so much. I thank you for being here today and I cannot help but think, as I look to you, how important you have always been to the State of Wisconsin and for the people Wisconsin. Any chance you'll ever return, Governor?

THOMPSON: Absolutely, Senator, without a doubt. Thank you so very much and good luck to the Bucks.

KOHL: Thank you.

THOMPSON: Thank you, sir.

HARKIN: Mr. Secretary, I just have a couple more questions I'd like to put down to you, one, and it has, as I mentioned, one of the biggest obstacles in effecting rural state's ability to provide services is the discrepancy in Medicare payment rates. And, let me draw your attention, I gave you that chart at the desk, I think, didn't I?

THOMPSON: You didn't give it to me. You showed it to me, Senator. I don't have it in front of me, but that's all right.

HARKIN: Well, here's a picture.

THOMPSON: I can see that.

HARKIN: You can see out there?

THOMPSON: Almost.

HARKIN: It's a big one. What this is is this is the variation among the 50 states.

THOMPSON: I bet Iowa's down at the bottom, sir.

HARKIN: I bet you're right. That's a very good guess. But, here we are 50 states, from $7,336 per beneficiary in Louisiana to $3,053 in Iowa. Now, our people pay the same taxes, exactly as the people in Florida, Louisiana, New York, Texas, Connecticut, Pennsylvania, Rhode Island, et cetera. We pay the same.

THOMPSON: Sure.

HARKIN: Why are we penalized so much? And, again, and just look at Iowa and here's Nebraska up here someplace, Nebraska. Iowa gets $3,053 per beneficiary, Nebraska gets $4,856 per beneficiary. What could possibly be the reason that Nebraska would get 63 percent more per beneficiary than Iowa?

Now, this variation is simply unjustifiable and unacceptable. And, I understand there might be some variances. There might be some reasonable differences in cost someplace. But, differences of this magnitude are just unacceptable.

It's been estimated that Iowa every year, just if you took the national average, what we lose if we were just at the national average is about a billion dollars a year that we're being penalized in the State of Iowa. It's a billion dollars a year. The people wonder why we're having trouble getting doctors in our rural areas. They wonder why our small hospitals are closing. They wonder why other health care professionals like nurses and nurse practitioners and others are leaving.

Yet, in Iowa we have the highest proportion of elderly over 85 of any state in the nation, and I think we're either second or third, something like that, maybe, in proportion of elderly over 65.

And, it's the small rural hospitals that are burdened the most with Medicare patients, disproportionate shares of.

I'm told that in some of these states above the line up there, they'll get three or four times the doctor visits for the same illness when the person down here gets one. How do I tell my people in Iowa that this is somehow fair? And this is equitable...

THOMPSON: You can't.

HARKIN: ... when they pay the states...

THOMPSON: You can't.

HARKIN: I can't say that.

THOMPSON: You can't.

HARKIN: But, my question is, what are we going to do about it?

THOMPSON: Let's change the law. The law requires us, we're implementing the law as it is. The biggest difference, Senator...

HARKIN: Has the administration proposed a change in the law?

THOMPSON: No.

HARKIN: Well, will the administration propose a change in the law?

THOMPSON: I will help you.

HARKIN: Well, I hope so.

THOMPSON: I will help you a lot. What the biggest difference is, 71 percent of the difference is of the wage index. When the law was set up it was based upon the wage index, 71 percent, 24 percent on top of the 71 percent is based upon utilization.

So, 95 percent of the rate that goes into the Medicare reimbursement is based upon the wage index and the utilization. In Iowa, when the law was passed, Iowa's wages were lower, as was Wisconsin, as is Nebraska.

HARKIN: Wisconsin's right here.

THOMPSON: Yes, Wisconsin's not doing much better.

HARKIN: Not doing much better.

THOMPSON: Not much better, but better. And the utilization and you're state is healthier, evidenced by the fact that you're the number one state with individuals over the age of 85. And the utilization, people in Iowa and Wisconsin don't go in and use the hospital and the clinics as much as other people do in the large urban areas.

I guess it's one of the things that you grow up with, you know, we suffered more, maybe, I don't know. I don't know what the reason is, but utilization is down and it's been documented that it's down, and when you add 24 percent, which is part of the factor for utilization, 71 percent for the wage index, 95 percent and that's the difference. The law's got to be changed.

We do not have the power to change the law up there. I wish we did, because I think there needs to be a look at that. Hopefully, this year, on a bipartisan basis we could sit down and do something to strengthen Medicare, change the reimbursement formula, put a prescription drug in there and come out of here with a bipartisan bill. And, that's my dream, but I don't know if that's entirely possible.

HARKIN: We'll get into prescription drugs another time, but this is gotten to the point now that we can't just say, well maybe next year or the year after, the year after, we've got to change this right away.

Now, as I said in my opening statement, Senator Craig and I have a bill in that would basically say no state over 105, no state under 95. So, it would still leave a 10 percent variation.

THOMPSON: Yes, it would.

HARKIN: But, for various things, but it still wouldn't leave 100 percent variations. Now, two things that would just respond to -- you're right on the wage and the utilization. I'm doing some research to find out when these wage things were set and what was the rationale for it.

But, there is this myth that somehow it's cheaper in a rural area to provide the same...

THOMPSON: It isn't.

HARKING: ... of course, you know that, Mr. Secretary, you know that from Wisconsin.

THOMPSON: I come from a big city compared to yours. My city is 1,500. Yours is 150. So...

HARKIN: Yes, right.

THOMPSON: But, we both know the needs of small rural hospitals.

HARKIN: As I said, you know, they buy in small quantities. They pay more money.

THOMPSON: Yes.

HARKIN: And, in terms of wages, though, if they don't pay their nurses and their doctors and their administrators equivalent to what the city will pay, they lose them. And, so what happens is it just degenerates down. And, you're losing on it. And, that's the wage myth.

Now, the utilization myth is another thing. The utilization goes down because what's happening is the hospitals and the doctors are not taking any more Medicare patients. They're saying we can't take any more because this is charity work. It goes on our fee for pay people or managed care people or insurance people, that's where it goes. And, they're picking up the burden.

And, they can't pick it all up. So, what happens is if the utilization rate was low at one time, it just keeps getting lower and lower and lower as more and more hospitals say we can't take any more Medicare patients.

THOMPSON: And, that impacts on the reimbursement program.

HARKIN: And, that impacts the reimbursement. And, so it just keeps spiraling down.

THOMPSON: We have to modernize it.

HARKIN: Yes, and I would hope that, again, I'm looking forward to some legislation. I mean we have our bill in. If you don't like that, come up with something else. I mean, I'm not saying that what Larry Craig and I put in is the absolute way we've got to go, maybe there's another way. If there is, I'd like to work you and this administration to address this inequity that we have here.

THOMPSON: Senator, I want to work with you because when I was Governor, I used to complain like you're complaining, maybe not as eloquently as you are, but I was -- I could explain precipitously the fact that Wisconsin was not getting reimbursed properly. And, I think that, hopefully, we can work together and come up with a change. But, it's going to be difficult.

HARKIN: Well, it may be difficult, but it is grossly unfair, grossly unfair for the people that live in these states down in here, grossly unfair that they have these kinds of discrepancies.

And, I look forward to working with you on it, but I just wanted to make that -- yes, you may go next. And, my time is out.

THOMPSON: Thank you, Senator.

HARKIN: Senator Specter?

SPECTER: Mr. Secretary, just a few more questions because other of our colleagues have arrived. The budget of $2.982 billion, almost $3 billion, was added for homeland defense in the Department of Defense supplemental last year.

SPECTER: Now, I don't know quite how all the arithmetic works out here, but it seems to me that you have the context where the increase for HHS is only $2.3 billion that homeland defense really ought to be a part of the Department of Defense budget as Congress legislated putting the $3 billion in the DOD, Department of Defense supplemental appropriation bill last year.

And, if that money were charged to defense, which has an increase of about $28 billion for a total budget, we had those hearings in this room last week, around $390 billion, we would have more leeway in the HHS budget. And, that would enable us to accommodate some of these cuts like graduate medical education.

There was a real struggle to get it up to 285. And, it's just not adequate to cut it by 85, or the community service block grants for the chronic disease prevention. I know your position is you had to make to hard choices, and I understand that. But, I would ask for your assistance in trying to get OMB or the administration generally to acknowledge that this money for homeland defense ought not to come out of the domestic programs, which, in effect it does.

Will you help us on that?

THOMPSON: Nobody's ever asked that question of me before, Senator. I am...

SPECTER: That's the first time I ever asked a question nobody else had asked.

THOMPSON: Are you talking about the $4.3 billion that comes...

SPECTER: Yes.

THOMPSON: The problem with it is is that most of the money actually goes into research, $900 million of that goes into NIH for new researches for vaccines, for hemorrhagic viruses, botulism, the plague and a new anthrax vaccine. And, so that money definitely is.

And, $1.1 billion -- one billion dollars of that goes back to the states through CDC to develop a really strong local and state public health systems, something that we have disinvested in in the past.

We have a great opportunity, Senators, to build a real vibrant, strong, local and state public health system.

And, then there is $518 million of that that goes into hospital preparedness and that's all really health and human services so I can't imagine the administration or the Department of Defense being willing to take that as a responsibility.

SPECTER: Well, I'm all for that, Mr. Secretary, but not if it involves cuts in children's graduate medical education or community service block grants. Those funds are in response to 9/11. And, they're an important response, but they are really a Department of Defense response.

Just like the money we added in the Department of Defense supplemental last year. We'll take a look at that. My times about to expire and I want to cover one other subject with you.

HARKIN: I just wanted -- if the Senator would just yield so I could address what he's saying.

SPECTER: If you stop the clock.

HARKIN: We'll stop the clock. Senator Specter's right on target on this. As I had looked at the bioterrorism overview, there's a number of items in there that rightfully should be in defense. I mean, you're talking about anthrax for 18? They're already doing that. These all add up, well; you might say well it's only 18 million. If you add that up...

THOMPSON: I didn't hear that, Senator, I'm sorry.

HARKIN: The anthrax vaccine, I'm saying that the Department of Defense is already doing a lot of that.

THOMPSON: Yes.

HARKIN: So, I think that ought to be in their purview. You've got down here command control...

THOMPSON: I just would like to add I argued for the $250 million on the purchase of anthrax should be the Department of Defense. I lost that fight.

HARKIN: Well, let's look at it again here in our Appropriations Committee, perhaps. That's where we've got to argue it again here, Mr. Secretary.

National security and early warning surveillance, $10 million, biological detection and assessment teams, we've got $3 million in here for the Olympics. You know, I really don't think that should come out when we're curing community service block grants and child...

THOMPSON: Well, the $2 million for Olympics actually really rightfully, because we had to inspect all of the food. We had a lot of our doctors and health officers out there. We had a 400-personnel during the Olympics.

HARKIN: All right. I'll give you that one.

THOMPSON: OK.

HARKIN: But, there's a lot more in here I think that we could pick out.

THOMPSON: I'd be more than happy to work with you, Senator.

HARKIN: All right. Thank you very much.

Senator Specter...

(CROSSTALK)

SPECTER: The last question I have for Mr. Secretary relates to the NIH stem cell registry. It now identifies 78 stem cell lines, which were purportedly in existence at 9 o'clock on August 9, the magic time line. What I would like you to provide for the record is how many stem cell lines there were on August 9 at 9 o'clock, which is the bewitching hour set by the president.

And, what level of development these stages are in development and characterization. And, how many of these stem cell lines are immediately available to U.S. researchers, because that issue has been put on the back burner with a lot of concern immediately after the president's speech on August 9 that there were insufficient research lines available.

I'd like to see an update on that because when our focus shifts from 9/11, we're going to come back to that question as to whether it is adequate. We had 64 Senators sign letters that there ought to be more NIH participation and research on stem cells and another 12 were in agreement but wouldn't put it in writing, which was a factor in leading to the president to make the changes he did. And, there are many of us who feel that, while those changes were helpful, but they aren't enough.

So, if you would update this so we have specific information on what are the lines now available for research, we would appreciate it.

THOMPSON: Senator, there are 78 -- there were 62 the night that the president made his announcement. There are 78 today that met with the requirements. But, of the 78, 70 are distinct. The additional eight above the 70 are derivations and further characterizations of the 70.

So, actually I think you should really look at 70.

SPECTER: Are you saying that those 70 lines are immediately available to U.S. researchers?

THOMPSON: They are all on the registry. I don't know if they're all ready for research. I think they are. I can get that information for you.

SPECTER: If we'd get that information I'd appreciate it.

THOMPSON: I'd be more and happy to. Do you want to know about the applications that we have in?

SPECTER: Yes.

THOMPSON: OK. We have, right at the present time; the registry was posted November 7.

SPECTER: Secretary, would you provide for the record, because other colleagues are waiting for questions here.

THOMPSON: Sure. I'd be more than happy too.

SPECTER: Thank you.

HARKIN: Thank you, Mr. Secretary.

Senator Murray?

THOMPSON: And I will get that information, Senator Specter, as to how many of the...

SPECTER: Thank you.

HARKIN: Senator Murray?

MURRAY: Thank you very much, Mr. Chairman.

Mr. Secretary, it's good to have you hear today.

THOMPSON: Thank you, Senator.

MURRAY: I walked in as we were having a discussion on the regional inequities in Medicare reimbursement. And, wholeheartedly support what Senator Harkin was showing us in terms of the regional inequities.

This isn't just a rural health problem, or a rural reimbursement problem. Washington state is 45th on the list and the reason we are 45th is because we had a very efficient delivery system before this was enacted and we are being penalized for that.

So, we are being kept down at the bottom and seniors in my state are furious about this. They feel very strongly that their ability to have good care shouldn't depend on where they live in this country.

But, it certainly is when you look at his chart and if you live in one of the states on the bottom here and you're a senior citizen you are looking at doctors leaving the state as we are in ours, health care facilities closing, and they don't think they should move to, as much as they love my friend, Senator Landrieu, move to Louisiana, Florida or New York in order to have better care.

So, we have to deal with this issue. And, I hope that you look at Harkin's proposal and work with all of us on this very, very critical some.

THOMPSON: Senator Murray, if I could quickly respond. I want too. You know, I fought this fight when I was Governor. I've discussed this with you before. I've discussed it with Senator Harkin. The law is the law. We can't change the law in the Department of Health and Human Services. The law says that you base the reimbursement on wage index, which is 71 percent of it and utilization, which is 24 percent.

Now, it should be upgraded, but we can't do that without the change in the law. And, I want to work with you. I think we need to do that.

The problem is is that when you change, increase your reimbursement, does that mean that the reimbursements for Louisiana are going to go down? And, I don't think Senator Landrieu is going to be excited about voting for that.

MURRAY: Well, if there's additional money it should go into the states at the bottom.

Well, let me move on and ask you about the upper payment limit.

THOMPSON: Yes.

MURRAY: In Washington state, that's used to provide health care services to the most vulnerable. It is not about supplying dollars. It's not about redirecting funds. It really is about providing health care. And, I am very concerned that the administration is looking to rollback funding on that.

It's my understanding that the administration's efforts on Upell (ph) are intended to improve the integrity of Medicare and to ensure that these funds aren't being misused.

And, I would just tell you, if you have any concerns about how Washington state is using this money, I'd be more than happy to sit down with you and my governor and to walk through this. But, what I want to remind you today that Washington state for years has been ahead of what most of the states have in this country in expanding access for children. In 1994, my state provided coverage up to 200 percent of the FPL. That's better than some states are providing now even with CHIP. So, we have really gone out of our way to do that, and pulling the rug out from Washington state right now when we're facing a billion dollar shortfall, really is going to jeopardize the care we can provide for low-income families and in particular, the children in the state of Washington.

So, Mr. Secretary, if you could respond and just let me know how you propose states like Washington will be able to meet their obligation under this program?

THOMPSON: The upper payment limit has been something that has been a very controversial subject that has been abused in the past. And, the administration feels that 100 percent is 100 percent. And, you should not be reimbursing above that 100 percent. And, that's what the proposed rule is.

Congress passed the law, I think, last year or two years ago before I came out here, two years ago that allowed for a declining period for various states. I don't know where the state of Washington is, I know the state of Illinois and California have a glidepath of eight years. I don't know where Washington is, but that was lot. What?

MURRAY: We are as well.

THOMPSON: You've got a glide path of eight years as well?

MURRAY: But, cutting the rug out from underneath us right now is going to create a critical impact on our ability to provide...

THOMPSON: The glide path is still in the law.

MURRAY: But, the reimbursement is going to be pulled out from under us, this year, it's my understanding.

THOMPSON: It's my understanding that the glide path is still in place.

MURRAY: Well, Mr. Secretary, what I would like to suggest is that perhaps you and my governor and I can sit down and walk through this because...

THOMPSON: Absolutely.

MURRAY: ... it is really a critical challenge.

THOMPSON: Your governor's been in and I'll be more than happy to see him again. In fact, he was in I think last week.

MURRAY: Yes.

THOMPSON: He talked to me on a waiver. And, he said that -- and, I think he said that you supported it.

MURRAY: No, he actually said he was going to talk to me about the first one.

THOMPSON: OK.

MURRAY: Let me ask one other quick question and I know this is a concern I share with Senator Landrieu, she may ask that as well. But, I'm concerned about the TANF proposal that seeks to expand the number of hours a week that a beneficiary must work, up to 40 hours. But, the president's budget doesn't provide any funding for child care. The biggest and most costly hurdle for women in meeting these work requirements is funding safe, affordable, dependable child care.

I am really concerned with the additional work requirements will make it almost impossible for TANF beneficiaries to provide safe, secure child care unless we increase those dollars.

What is your administration going to do about that?

THOMPSON: Well, basically, Senator, your question is right on target. Because there's no question that the child care has got to be appropriate, has got to be funded in order to allow for individuals to leave welfare.

This was one of the things that I argued for way back when. But, I also argued when I was the Chairman of the National Governor's Conference whenever we negotiated the first TANF proposal that is Congress would level fund, we would make due. And, this administration is continuing on with that promise, even thought there was a lot of pressure to reduce the $16.5 billion, lowering that because the case load has been reduced by one-half.

THOMPSON: There was the argument made that we should only put in $8.5 billion to $10 billion rather than $16.5 billion. I argued that we should maintain the commitment of $16.5 billion so that we could go the next step.

We're also putting in the supplemental funding, which is very helpful to a state like Louisiana, $314 million. We're putting in $350 million for going from independence, dependence and giving them a one-year coverage on health care, which is extremely important, plus a contingency fund of $2 billion.

All of these things valid out to well over $19 billion when the case load is in half, as far as child care, we maintained level funding, $2.7 billion in mandatory funding, $2.1 billion in discretionary funding for a total of $4.9 billion.

And, we also allowed in the TANF proposal the flexibility for states to use up to 30 percent of their TANF money for child care. And, then also taking money out of the SSBG, the Social Service Block Grant, for child care, you've got an extremely lot of flexibility to develop a good program.

So, even though it's level funded, we think the discretion is there and with the case load one-half of what it was, we felt that it was adequate funding considering the overall impact of the budget where we had to put 45 percent increase in the bioterrorism out of our budget.

MURRAY: Well, thank you very much, Mr. Secretary. I appreciate your response.

Mr. Chairman, my time is up but I would say if we're going to expand the number of hours that we're requiring beneficiaries to work, we're going to have to increase the dollars for child care or we're simply putting a tremendous burden on women out there and we're going to increase the number of kids who are in unsafe conditions.

HARKIN: Senator, you're absolutely right. And, that's why we've got to do something with this budget on child care. It's totally inadequate. Hopefully, we can work something out on it.

Senator Landrieu?

LANDRIEU: Well, thank you, Mr. Chairman, and let me begin by just following up and welcoming Mr. Secretary.

THOMPSON: Thank you, Senator.

LANDRIEU: I apologize for being late. I've had four meetings like this already this morning. But, we follow up where...

THOMPSON: It didn't bother me that you didn't come. I would admit.

LANDRIEU: All right, if I ask at least one easy question. But, let me start with the difficult and I think very appropriate one that Senator Murray -- are you suggesting then, that because the federal government has lived up to its commitment of level funding that the states will then have to find savings by their dropping case loads to increase their block grant for child care, is that what you are...

THOMPSON: No, we put a lot of flexibility in there for governors and for state legislators to do. One of those was is under the previous TANF proposal it was only allocated on a year-to-year basis. So, the states had to spend all that money or had to obligate that money one year at a time because they were fearful the federal government would pull back.

We are now allowing for the states to obligate their allotment over the five-year period so that they have much more flexibility. We're also putting a waiver in here that's going to allow for the states to have extremely a lot of flexibility for developing a good program from education and so on.

The third thing is it is not 40 hours a week. It's 40 hours, 24 hours of work; 16 hours can go into education. It can go into job training, job seek or into alcohol or drug treatment rehabilitation. And we think there's flexibility there for the states to meet their obligations.

LANDRIEU: And, I appreciate that. I only suggest that flexibility without money is no flexibility at all. And, so I'm trying to understand if your argument is that we are going to fund the welfare, basically reform effort, at the same level, therefore, all states, as your case loads are reduced, you're going to have to be creative in increasing, you know, your child care block grants, but you're going to have to do that on your own by efficiencies, because if that's the message, we need to take that to the governors and to the locals and see if they buy it.

They very well may be able to, you were a governor and a very effective leader in this area. Perhaps we can convince our states that that's the way those child care block grants are going to be funded in the future. But, I'm not sure they would agree with that approach.

I just don't know. I'll speak to my governor and my legislature immediately about it because we've got to -- if we want people to go to work, particularly women, we also want them to be good at raising their children. And be effective and be nurturing and loving, then we need to meet them more than halfway and help them with these expensive child care arrangements, which I said before this committee, again, Mr. Chairman, it's been awhile since you've raised children. I'm raising them now. One is 10 and one is five. I had quite a shock when I came to Washington to put Mary Shannon in day care and it cost me $7,000 a year. Luckily, I can afford that, but I can think of a lot of women that work in this building that can't afford that, less alone women who don't have the kind of jobs et cetera.

So, point made, let me just thank you for your help.

THOMPSON: If I could just quickly add. You're absolutely correct if the case load was growing. But, the case load is declining. And so level funding should, where they're declining, should be sufficient.

LANDRIEU: Should be adequate. So, we'll hear from our governors about their counter to that about why they're not able to increase...

THOMPSON: I'm sure they will.

LANDRIEU: ... their child care block grants by 20 or 30 or 40 percent, which would really help us.

Let me congratulate you for your focus on this new scholarship program for foster care and the...

THOMPSON: Thank you.

LANDRIEU: ... help that this administration has been to the 25,000 children, a small number, relative to the whole population, but I think we have a special obligation to these kids because the system took their families, original families away, for good reasons, neglect and gross abuse and danger, but we failed to give them another family.

So, we couldn't get them another family, we need to give them at least a chance to create a family of their own. And, that best chance is to give them a college education or training. So, I want to thank you and would only urge you...

THOMPSON: And, I want to thank you because you have been a leader in this and I applaud you. You and I spoke together and I was amazed at your passion on this subject and your knowledge. And I want to thank you.

LANDRIEU: Well, I appreciate that, but I want to work with you closely to make sure that the states, and, Mr. Chairman, I want us to focus, because this is a new program that is standing up, to make sure that the states are not siphoning off this money even for well- intentioned middlemen and middle women and keeping the money as opposed to getting it to these young people, the same age as young people who put on a uniform and are fighting for us in Afghanistan, 18-, 19-year-olds. They are responsible enough to take that money, use if for college et cetera.

My point is there's a great idea floating that's bipartisan called IDA, and I think you're going to be leading that Individual Development Account. It's hooked to the new charity initiative. Something that Senator Lieberman and Senator Santorum have championed and the president has endorsed it.

My point on this is and for the chairman, too, that there's money in the budget to set up this IDA's but it's restricted to buying a home, retirement and starting a business. I want to suggest that we expand it to allowing families or individuals that qualify to put a down payment or to purchase an automobile. The reason being that it connects to our welfare to work.

People need child care and transportation to get to work. And, if we link that, Mr. Secretary, by just expanding the parameters of that, you could be, I think, very successful in helping us to lead a more effective way because with our policies on transportation, as much as we talk about, Mr. Chairman, mass transit, we don't have a whole lot of it. And, for poor people who are living in Suburbs, if they don't have access to an automobile, they can't access the jobs, and there's disconnect from where the jobs are and where they might live.

We keep saying we're going to provide busses and trains. We don't do a good job to it. So, since we've decided automobiles is the way to go, then let's help poor people to purchase an automobile, it could be used, there could be restrictions, to get them the vehicles to get to work.

So, I'm going to send this to you in a letter.

THOMPSON: I appreciate that.

LANDRIEU: I've already approached Senator Lieberman on the idea and I'm going to send something to the president on it. And, my final point is on safeness of adoption. We have a very exciting technology that was developed in the private sector. To use the technologies to try to put a face and a voice now on a computer that can help a family that's looking for a child to find one that they might be willing to raise.

It's very cost effective. It's the only hope that these children have that are lost in this foster care system to really try to find a family. For four years, Mr. Chairman, we've funded in this committee, some money to help do this. And, yet, while we have 100,000 children who are available for adoption, we only have 6,000 of their pictures up on the Internet.

And, my question is why are we moving so slowly? And, if you need extra funding, maybe we can come up with it. Do you have any ideas or are familiar with this?

THOMPSON: No, I'm not, but I will be by next week.

LANDRIEU: Well, could I send it to you in writing and become familiar, because this is a great opportunity for us to do something for foster care children in this country to show a model to the world about how using technology in appropriate ways with not exploiting children or exploiting emotions, but to help these kids find a home.

And, I'll end with as Phil Ram (ph), whose my advocate with me on this, every child that we can place out of foster care into a family to adopt them isn't only the most wonderful thing to do for the family and the child, but it saves the taxpayers a lot of money when we do that.

I know you know it.

THOMPSON: But, it's the right thing to do.

LANDRIEU: The right thing to do. So, let's make those small investments that really make this work. And, thank you, Mr. Chairman.

THOMPSON: I want to work with you on both those subjects and...

LANDRIEU: Thank you, Mr. Secretary.

THOMPSON: ... just send me the letter and I'll be more than happy to respond.

LANDRIEU: Thank you.

THOMPSON: Thank you.

HARKIN: And, before you leave, sir, I just want to respond a little bit to what Senator Landrieu pointed about the child care money. And, as you pointed out that because of the declining case load, we'll have more money in TANF to be able to do some of those things. We'll have to take a close look at that because the case load now, what we've done is we've gotten rid of the easy cases. The easy cases have gotten off welfare. What's left are the hard ones. And, these are the people that maybe in a lot of cases are not going to get off welfare. I was told they've got drug problems, they've got a lot of other problems, medical problems, disability problems, whatever, they have a lot of different problems.

And, so they're the hardest to serve. And, so, I'm not certain, you can stop talking ahead, I'm not certain you're going to be able to find much savings there to be able to use for child care. As I said, the easy ones are gone, now we're down to the hard cases. And, I think trying to look for savings there because of just to make that connection is not necessarily valid. We have to look at that.

THOMPSON: Senator, I made the same argument when I was governor.

HARKIN: Well, wait a minute, then how come I'm making this argument to you?

THOMPSON: Just history revisited.

HARKIN: I guess so. Well, I'm glad you are where you Mr. Secretary. I think you're doing a great job and I really appreciate the openness and all of the work you've done with our committees and your staff has been great and very accessible and we appreciate that very much.

THOMPSON: Thank you.

HARKIN: Thank you, Mr. Secretary.

THOMPSON: And, you got your analysis there. You got the two books.

HARKIN: Yes, yes.

THOMPSON: I want you to read that.

HARKIN: OK. Thank you, yes, tonight.

END

NOTES:
[????] - Indicates Speaker Unknown
   [--] - Indicates could not make out what was being said.[off mike] - Indicates could not make out what was being said.

PERSON:  TOM HARKIN (94%); ERNEST F HOLLINGS (57%); DANIEL K INOUYE (57%); HERB KOHL (56%); HARRY REID (56%); PATTY MURRAY (56%); ARLEN SPECTER (55%); THAD COCHRAN (55%); MARY LANDRIEU (55%); LARRY CRAIG (54%); JUDD ALAN GREGG (54%); KAY BAILEY HUTCHISON (54%); TED STEVENS (53%); 

LOAD-DATE: March 15, 2002