[Budget of the United States Government]
[IV. Preparing For the 21st Century]
[3. Strengthening Health Care]
[From the U.S. Government Publishing Office, www.gpo.gov]


[[Page 69]]

 
                      3.  STRENGTHENING HEALTH CARE

  ----------------------------------------------------------------------




  We must also keep fighting to extend affordable health care to Americans who lack it. This is a continuing
problem in our Nation, as all of you know. Still there are too many children who lose their hearing because an
ear infection goes untreated, or wind up in the emergency room because they couldn't see a doctor in a more
regular way. Too many patients skimp on their own health to provide coverage for their children; too many missed
chances to prevent illness and prepare young people to lead healthy lives--all these the product of the fact
that tens of millions of Americans still don't have affordable health care.

                                      President Clinton
                                      January 2000


  ----------------------------------------------------------------------
   From the first days of his Administration, President Clinton has 
worked to expand access to affordable quality health care for all 
Americans. When he took office in 1993, workers feared that taking leave 
from work to care for an ill family member could cost them their jobs. 
There were no Federal protections to assure the portability of health 
benefits for workers who changed or lost their jobs or to protect 
workers from discrimination by health plans based on their health 
status. Individuals with disabilities were not able to return to the 
workforce without losing their Medicare or Medicaid health coverage.
   At that time, the ability of the Nation's health care system to 
deliver high quality care was in question. The public health delivery 
system was in badly need of repair: half of two-year-olds did not 
receive immunizations they needed against deadly diseases; cigarette use 
among youth was increasing; teenage pregnancy rates were high; the 
number of new HIV/AIDS infections and deaths was spiraling; and, Federal 
support for mental health was a low priority. Health care costs were 
rising at a rapid rate while the number of uninsured--especially 
uninsured children--was growing. Fraud, abuse, and inefficiency plagued 
the Medicare and Medicaid programs. Moreover, the strains on the 
Medicare program meant that it was projected to enter bankruptcy in 
1999.
   There are still many challenges, but in the past seven years, there 
has been significant progress in improving the Nation's health care 
system. Largely through reforms enacted in the Balanced Budget Act of 
1997, success in curbing fraud, waste, and abuse in the Medicare 
program, and a sound fiscal policy, the Federal Government's success in 
constraining the growth of Medicare and Medicaid has freed resources to 
expand coverage and extend the life of the Medicare trust fund to at 
least 2015, while pursing a responsible and balanced fiscal policy that 
will eliminate the national debt.
   There are other key measures of this progress: today childhood 
immunization rates for the most critical vaccines are at over 80 
percent; the rate of increase in youth smoking slowed over the past two 
years and experts predict that the slowing will continue; teenage 
pregnancy is at an all time low; and, Federal funding for mental health 
has increased by 90 percent.
  The enactment of the Health Insurance Portability and Accountability 
Act means that today Americans who change jobs can maintain their health 
insurance coverage while insurers are now limited in their ability to 
deny coverage due to pre-existing conditions. Last year's enactment of 
the Ticket to Work and Work Incentives Improvement Act enables people 
with disabilities to enter the workforce without losing their critically 
important health coverage. The President continues to vigorously pursue 
efforts to pass a Patients' Bill of Rights before leaving office to 
extend essential patient protections to all Americans, including 
guaranteed access to needed health

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care specialists and emergency room services. By Executive Order last 
year, the President extended these and other essential patient 
protections to the more than 85 million Americans enrolled in Federal 
health plans.
   The State Children's Health Insurance Program (SCHIP) was created in 
1997 to provide coverage for the uninsured children of hard-working, 
low-income parents. SCHIP has doubled its enrollment in the past year to 
two million uninsured children. The success of SCHIP illustrates that it 
is possible, working in partnership with the States, to formulate and 
implement policies to significantly expand coverage to millions of 
uninsured Americans. Support for and the expansion of SCHIP to include 
parents are among the President's key initiatives in the 2001 Budget.
  The budget builds on these accomplishments with initiatives that 
include:
  Preparing for the aging of America: The budget includes the 
          President's Medicare reform proposal, which strengthens and 
          modernizes the program by extending the life of the Medicare 
          trust fund to at least 2025 and provides for the provision of 
          a long overdue and optional prescription drug benefit. The 
          budget also addresses the Nation's growing long-term care 
          needs by expanding the President's long-term care initiative.
  Improving access to affordable health care: The budget 
          includes a major new initiative to decrease the number of 
          uninsured that includes: expanding coverage to the uninsured 
          parents of children eligible for Medicaid and SCHIP; 
          accelerating enrollment of uninsured children in Medicaid and 
          SCHIP; offering 55 to 65 year old Americans the option to buy 
          into the Medicare program; encouraging small businesses to 
          offer health insurance; providing a tax credit for the 
          purchase of health insurance for employees in transition; 
          restoring Medicaid eligibility to legal immigrants; and, 
          extending transitional Medicaid programs for the working poor.

  Assuring and improving quality of care: The budget includes 
          investments to improve the quality of care for patients 
          Nation-wide, including new efforts to prevent medical errors 
          and improve the quality of care through improvements in 
          information technology. It also includes a new initiative to 
          protect patients purchasing prescription drugs over the 
          Internet. These initiatives complement the Administration's 
          support of a strong, enforceable Patients' Bill of Rights. The 
          Norwood-Dingell legislation is representative of such a 
          policy, which has received broad, bipartisan support in the 
          House of Representatives.
  Supporting biomedical research: Building on recent funding 
          increases for the National Institutes of Health (NIH) and 
          investing almost $19 billion at NIH in 2001, this budget 
          includes a $1 billion increase for biomedical research. The 
          Federal investment in biomedical research continues to yield 
          dramatic medical advances that improve health and quality of 
          life. These additional resources will build on existing 
          research in such areas as genomic medicine and bioengineering, 
          that combine knowledge of basic biology with technological 
          advances to produce new, life-saving therapies.
  Safeguarding and improving public health through disease 
          prevention and health promotion: To protect and advance public 
          health, the budget invests in: a stringent tobacco control 
          policy; expanded efforts to combat HIV and AIDS both 
          domestically as well as overseas; food safety programs; 
          additional efforts to combat emerging infectious diseases; a 
          new cancer clinical trials demonstration project for Medicare 
          beneficiaries; family planning efforts Nation-wide; efforts to 
          promote childhood immunizations; mental health and substance 
          abuse prevention activities; improving the public health 
          response to the threat of bioterrorism; a strong Food and Drug 
          Administration (FDA); and, providing quality care for Native 
          Americans and veterans.


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  The budget provides significant increases to address global public 
health challenges, such as HIV/AIDS, polio, and infectious diseases.
  Ensuring the fiscal integrity of the Medicare and Medicaid 
          programs: The budget proposes aggressive efforts to reduce 
          Medicare fraud, waste, and abuse, and to improve the 
          management of Medicare and Medicaid.

Preparing for the Aging of America

   Since its creation in 1965, Medicare has provided medical care for 
tens of millions of older and disabled Americans, extending and saving 
lives in the process. Medicare is an essential part of American life--
elderly Americans can be secure in knowing their medical needs will be 
treated while their adult children are not forced to make the difficult 
choice between their parent's medical costs and the needs of their own 
children. However, the demographic changes ahead, associated with the 
aging of America, mean that unless we make the right decisions today, 
the future of Medicare is at risk. Moreover, an aging society will 
strain our current long-term care system--which is already fragmented 
and not meeting the needs of many Americans.
   At the start of a new century, all Americans can take great pride in 
the legacy of the Medicare program. In its 35-year history, Medicare has 
helped to lift elderly Americans out of poverty, while offering health 
care that has extended and improved the quality of their lives. During 
this time, the average life expectancy of Americans at age 65 has 
increased by 20 percent. Poverty among the elderly has dropped by nearly 
two-thirds, and access to care has increased by one-third.
  However, this new century will present Medicare with serious 
challenges. With Americans living longer, the number of Medicare 
beneficiaries is rising much faster than the number of workers paying 
into the system. By about 2015, the Medicare trust fund will be 
insolvent just as the baby boom generation begins to retire and become 
eligible for Medicare. Since Medicare's creation, the world of medicine 
has changed, including increased reliance on prescription drugs to treat 
illness and extend lifespan. If we are to keep the promise of Medicare 
for future generations, the program designed for the 1960s must be 
modernized and strengthened to meet the challenges of the 21st Century.
  The budget includes a comprehensive plan to reform and modernize this 
vitally important program. This historic plan will: (1) modernize 
Medicare's benefits; (2) make the Medicare program more efficient and 
competitive; and, (3) extend the solvency of the Medicare Hospital 
Insurance Trust Fund.

Modernizing Medicare's Benefit Package:

  Creating a prescription drug benefit: The centerpiece of the 
          President's plan is an outpatient prescription drug plan that 
          would be available to all Medicare beneficiaries. The drug 
          plan would have no deductible and pay half of all 
          beneficiaries' prescription drug costs up to $2,000 in 2003 
          and $5,000 when fully phased-in by 2009. The benefit would be 
          administered by private sector pharmaceutical benefit managers 
          (PBMs) or other qualified entities, who rely on market 
          competition to ensure access and quality for Medicare 
          beneficiaries while obtaining lower prices on drugs. Low-
          income beneficiaries with incomes below 135 percent of poverty 
          would not pay premiums or share in the cost of drug coverage 
          and those with incomes between 135 and 150 percent of poverty 
          would receive premium assistance. The plan also proposes to 
          give financial incentives to employers who currently offer 
          retiree prescription drug benefits to encourage the private 
          sector to maintain its important coverage.
  Expanding access to preventive benefits: This plan creates 
          incentives to encourage Medicare beneficiaries to monitor 
          their health and get medical care early, if necessary, which 
          can save lives and minimize the need for more extensive 
          medical treatment later. It would eliminate existing 
          coinsurance and the deductible for Medicare-covered preventive 
          benefits, including colorectal cancer screenings, bone mass 
          measurement, pelvic exams, prostate cancer screening, diabetes 
          self management

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          benefits, and mammographies. The plan also proposes a three-
          year demonstration to provide smoking cessation services to 
          Medicare beneficiaries.
  Rationalizing cost sharing and Medigap: To help offset the 
          costs of benefit improvements, the President's plan proposes 
          to add new cost-sharing requirements for clinical laboratory 
          services and to adjust the Part B deductible by indexing for 
          inflation. It has been fixed at $100 since 1991. The plan also 
          proposes to improve the Medigap market by expanding 
          opportunities and options for individuals to enroll in Medigap 
          plans.
  Reserving additional funds for protections against 
          catastrophic drug costs: The budget includes a reserve fund of 
          $35 billion in on-budget surplus money over 10 years. This 
          funding is reserved for debt reduction or, in the event that 
          the President and Congress agree, a policy that provides for 
          protections against catastrophic drug costs for Medicare 
          beneficiaries, or policies that otherwise strengthen the 
          Medicare program.

Making Medicare More Efficient and Competitive:

  Fee-for-Service (FFS) modernization: The budget proposes to 
          give the traditional fee-for-service Medicare program new 
          purchasing tools to leverage volume discounts from health care 
          providers and improve quality of care. These proposals build 
          on prior successful Medicare demonstrations, and management 
          tools commonly found in the private sector, such as disease 
          management services, which have been found to improve health 
          care outcomes while reducing health care costs.
  Competitive defined benefit proposal: Under current law, 
          Medicare+Choice plans are paid through a complicated 
          administrative pricing structure that sets Government payments 
          to private plans based on the costs of the traditional FFS 
          program. For the first time, beneficiaries will be able to 
          choose their managed care plan based on price and quality. The 
          President's plan proposes to require plans to bid on a defined 
          set of benefits and gives beneficiaries an incentive to choose 
          lower cost plans in the form of lower premiums.
  Medicare management improvements: The President's plan 
          continues its initiative to improve the Health Care Financing 
          Administration's (HCFA's) management of the Medicare program 
          through a continuing reform process that will increase HCFA's 
          flexibility while also increasing accountability.

  Extending the Solvency of the Medicare Program: At a time when 
America's prosperity is strong, we need to prepare for the coming 
demographic boom, and strengthen Medicare for future generations. The 
President's plan dedicates part of the budget surplus to Medicare 
solvency--$299 billion over 10 years. This will extend the solvency of 
the Medicare Hospital Insurance Trust Fund to at least 2025, and will 
eliminate the need to radically cut access to and quality of Medicare 
benefits for America's elderly that would be inevitable in the absence 
of new resources. At the same time, by paying down the debt, this will 
ensure that the Government and the Nation are soundly positioned to meet 
the challenge of the retiring baby boomers.
  Improving Long-term Care: The budget proposes a $3,000 tax credit to 
provide support for Americans who care for a disabled or elderly 
relative. The budget also proposes group long-term care insurance for 
Federal employees, annuitants, and their families. Employees would pay 
the full cost of insurance premiums, which, at group rates, are expected 
to be 15 to 20 percent lower than the individual rates otherwise 
available. The budget invests $100 million in an innovative housing 
initiative to integrate assisted living facilities and Medicaid home and 
community-based long-term care and $140 million in a new Medicaid option 
to equalize eligibility for people with long-term care needs in 
community settings. The budget includes $125 million for a new national 
program to provide assistance to families who care for disabled elderly 
relatives by supporting local efforts to provide respite care and 
counseling, information, and other support services.


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  Improving the Quality of Nursing Home Care: The budget invests an 
additional $15.9 million for continuing Nursing Home Initiative 
activities, a 29-percent increase over the 2000 funding level. The 
initiative will help States strengthen nursing home enforcement tools to 
ensure facilities meet Federal quality standards, and increase Federal 
oversight of nursing home quality and safety standards. The initiative 
includes funding to improve and target nursing home inspections and 
respond to resident and family complaints in a timely and effective 
manner. Funding will be provided for more frequent surveys of repeat 
offenders and improving surveyor training, handling increased legal 
advice, litigation, and hearings on nursing home enforcement cases and 
addressing the backlog of nursing home appeals.

Improving Access to Affordable Health Care

  The President remains strongly committed to expanding access to health 
care, particularly to vulnerable groups such as children, the near-
elderly who are not yet eligible for Medicare benefits, families who 
cannot afford health insurance, and legal immigrants. His 2001 Budget 
proposal to expand access to affordable health insurance to working 
Americans represents the most significant investment in health coverage 
in recent years. This proposal addresses the continued rise in the 
number of uninsured, one of the few indicators that has not improved in 
this strong economy. These policies to expand access to affordable 
insurance would be complemented by an investment of an additional $175 
million in community-based efforts to strengthen the health care safety 
net.

  Increasing Children's Enrollment in SCHIP:  The President proposed the 
creation of a State Children's Health Insurance Program in 1997. Passed 
by Congress the same year, the program provides health insurance to 
uninsured, low-income children, increases their access to early 
preventive medicine (including immunizations), and enhances their 
chances of becoming healthy adults. Administered by the States, either 
through Medicaid or a separate SCHIP program, SCHIP has already 
successfully reached two million uninsured, low-income children. Despite 
the success of initial enrollment efforts, however, more must be done to 
provide health insurance coverage to uninsured, low-income children.
   This initiative accelerates enrollment of uninsured children in 
Medicaid and SCHIP by expanding efforts in schools and simplifying 
eligibility. This initiative promotes enrollment in the SCHIP program 
and in Medicaid through schools by: enabling school lunch programs to 
share eligibility information with Medicaid and SCHIP for outreach 
programs; and, allowing additional sites, such as schools, child care 
referral centers, and homeless programs to determine presumptive 
eligibility. The initiative would also simplify the enrollment process 
by requiring states to make Medicaid applications no more complicated 
than their SCHIP applications. Finally, it creates an one-time $10 
million competitive grant program for State demonstrations to coordinate 
programs and increase enrollment of homeless children and families in 
Medicaid, SCHIP, and other social service programs.

  Covering the Uninsured Parents of Children in Medicaid or SCHIP:  At 
the center of the President's 2001 health insurance coverage initiative 
is a proposal to allow States to cover the parents of children eligible 
for Medicaid and SCHIP. Many of the parents of the children eligible for 
Medicaid and SCHIP are themselves uninsured. Expanding Medicaid and 
SCHIP eligibility to parents will help reduce the growing number of low-
income adults who are without health insurance and increase the 
enrollment of their children by enabling entire families to receive 
coverage through the same programs.
  The budget proposes to expand SCHIP to become the FamilyCare program. 
FamilyCare would:
  Provide higher Federal matching payments for expanding 
          coverage to parents.
          States that raise their eligibility levels for parents would 
          receive higher Federal matching payments for coverage provided 
          to these parents. Funding for these payments will be provided 
          through increased State allotments.


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  Enroll the parents in the same program as their children.
          Parents would be insured in the same program as their children 
          to improve efficiency and continuity of care. Priority would 
          be given to parents at the lowest end of the income 
          eligibility scale just as lower income children are given 
          priority in SCHIP. States would also be required to show that 
          they are successfully enrolling children below 200 percent of 
          the Federal poverty level in SCHIP before accessing additional 
          funds for adults. Given the experience of SCHIP and the strong 
          State support to extend SCHIP to parents, it is likely that 
          many States will take up this option. If, after five years, 
          however, some States have not expanded coverage of parents to 
          at least 100 percent of poverty ($16,000 for a family of 
          four), a failsafe mechanism would be triggered to require 
          States to go to at least that level of coverage.

  Providing Medicare Buy-In for Certain 55 to 65 Year Olds: The fastest 
growing group of uninsured are those ages 55 to 65. Between 1997 and 
1998, the proportion of people in this age group who were uninsured 
increased by seven percent. As the baby boom generation enters this age 
group, this problem will only get worse. This initiative expands the 
health options available for older Americans by: enabling Americans aged 
62 to 65 to buy into Medicare; providing a similar Medicare buy-in for 
vulnerable displaced workers ages 55 and older; and providing COBRA to 
Americans ages 55 and older whose companies reneged on their commitment 
to provide retiree health benefits. To help people afford the Medicare 
buy-in, a new tax credit of 25 percent of the cost of the premium would 
be created. It would be available to both people ages 62 to 64 and 
displaced workers ages 55 to 65. Those in this group accessing COBRA 
would qualify for the 25 percent credit for COBRA (described below).
  Encouraging Small Businesses to Offer Health Insurance: Workers in 
small businesses are more likely to be uninsured. This initiative would 
encourage small businesses to offer health insurance through: a new tax 
credit for small businesses who join coalitions; tax-exempt status for 
foundation contributions to create coalitions; and, technical 
assistance. It would be different from last year's proposal because the 
credit would be increased to 20 percent of the employer contribution, 
and the credits would be available for eight years.
  Providing a Tax Credit for COBRA Continuation Coverage: Currently, 
employers must offer departing employees the option of buying into their 
health plan at a premium of 102 percent. Intended to ensure coverage 
during the transition to new jobs, this policy has proven unaffordable 
to some people and burdensome to some employers. To address these 
concerns, the new proposal would provide a tax credit of 25 percent for 
this coverage to departing employees who take this option.
  Extending Transitional Medicaid Extension: The budget proposes to 
extend and improve the transitional Medicaid program, which provides up 
to one year of coverage to those in transition, including welfare 
recipients who get jobs. This eases the transition to work and removes a 
critical disincentive--the immediate loss of Medicaid coverage. Without 
this extension, the program would end in October 2001.
  Providing a New Medicaid Option to Cover Certain Low-Income Uninsured 
Women with Breast or Cervical Cancer: The budget includes a proposed 
State option to provide Medicaid coverage to low-income, uninsured women 
who screen positive under the CDC Breast and Cervical Cancer Early 
Detection Program.
  Expanding State Options to Insure Children Through Age 20:  Nearly one 
in three people ages 18 to 24 are uninsured, mostly because they are no 
longer dependents but often do not have jobs that offer affordable 
coverage. The budget would allow States to cover people ages 19 and 20 
in Medicaid and SCHIP.
  Restoring Medicaid Eligibility for Legal Immigrants: The budget would 
restore Medicaid benefits to three vulnerable groups of legal 
immigrants: children; pregnant women; and, disabled immigrants whose 
eligibility for SSI would also be restored. In addition, parents of 
legal immigrant children who have benefits restored would also be 
covered under the

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Medicaid/SCHIP family coverage policy described above. As the President 
has pledged, and has achieved for other groups so affected, this would 
reverse an inequity enacted in welfare reform.
  Reinforcing the Nation's Safety Net: To continue to address the health 
care needs of people who remain uninsured, the Administration's budget 
strengthens funding for the direct delivery of health care services and 
improves access to the health care system. The budget proposes $125 
million, a 400-percent increase, to improve health care access for the 
uninsured by coordinating systems of care, increasing the number of 
services delivered, and establishing accountability in the system to 
assure adequate patient care. Additionally, the budget proposes an 
increase of $50 million for a total of over $1 billion to support and 
enhance the network of community health centers that serve millions of 
low-income and uninsured Americans.

Assuring and Improving Quality of Care

  President Clinton has forcefully advanced efforts to promote patients' 
rights and ensure the delivery of high quality health care. Last year, 
the House of Representatives passed the Norwood-Dingell legislation 
which provides a strong enforceable Patients' Bill of Rights. The 
President encourages Congress to finish this job and pass legislation 
that includes critical patients protections such as: guaranteed access 
to needed health care specialists; access to emergency room services 
when and where the need arises; continuity of care protections so that 
patients will not have an abrupt transition in care if their providers 
are dropped; access to a fair, unbiased and timely internal and 
independent external appeals process to address health plan grievances; 
and, an enforcement mechanism that ensures recourse for patients who 
have been harmed as a result of a health plan's actions. These 
protections are now guaranteed for the 85 million Americans in Federal 
health plans. In the budget, the President has included a number of 
initiatives to improve health care quality.


  Preventing Medical Errors and Improving Quality of Care: As many as 
90,000 Americans die each year as the result of medical errors. The 
budget includes new funding at HHS, VA, and DOD to develop new avenues 
for the prevention of medical errors, including new funding to increase 
medical errors prevention, patient safety research, and information 
dissemination. In addition, in 2001, the Office of Personnel Management 
(OPM) will require Federal Employees Health Benefits Program 
participating carriers to institute initiatives to improve health care 
quality through the prevention of medical errors and enhancements in 
patient safety. The budget will also take steps to improve health care 
quality and reduce medical errors by investing in the development of 
information technology in the health care system, one of the most 
effective ways to improve the quality and efficient delivery of 
healthcare. This initiative will also ensure a coordinated Federal focus 
on health information confidentiality and security data standards.
  Protecting Patients Purchasing Prescription Drugs Over the Internet: 
This initiative will invest $10 million in new funds in the 
investigation, identification, and prosecution of websites selling 
unapproved new drugs, counterfeit drugs, prescription drugs without a 
valid prescription, expired or illegally diverted pharmaceuticals, and 
the marketing of products based on fraudulent health claims. It will 
also establish new Federal certification requirements for all Internet 
pharmacy sites, increase current civil penalties, and provide FDA with 
new administrative subpoena authority.
  Improving Health Care Quality: The budget proposes a $51 million 
increase for the Agency for Healthcare Research and Quality to enhance 
research on the uses and tools of health information technology, conduct 
clinical prevention research in the area of medical error reduction, 
expand research on worker safety issues, and otherwise enhance research 
on health care services, outcomes, effectiveness, cost, and quality.


[[Page 76]]



Supporting Biomedical Research

  Biomedical research is a foundation for combating disease and 
providing new technologies, from the eradication of smallpox to the 
disappearance of polio in the Western Hemisphere. Funding for biomedical 
research at NIH has increased by 73 percent since the beginning of the 
Clinton Administration. To underscore the Administration's commitment to 
this important research, the President made a commitment in 1999 to 
increase the NIH budget by nearly 50 percent in five years. Since that 
time, the NIH budget has increased by over $4.3 billion. If the Congress 
provides full funding for the President's new $1 billion investment, the 
Administration will be one year ahead of schedule in reaching the 50 
percent goal and will have increased by over 80 percent since 1993. NIH 
now supports the highest levels of research ever for cancer, diabetes, 
heart disease, and nearly all types of disease and health conditions.
  The knowledge gained from investing in biomedical research has already 
yielded a powerful information base that is steadily growing and paving 
the way for concrete advances. For example, major clinical studies have 
demonstrated that if people with diabetes can control their blood sugar 
levels very carefully, they can reduce or prevent development of 
complications of the disease. A sustained investment in NIH will enable 
scientists to seize emerging research opportunities in diabetes and 
other diseases that are a tremendous burden on health in the United 
States and abroad.
  This year, the budget proposes an additional $1 billion for NIH, for a 
total funding level of nearly $19 billion. These resources will allow 
NIH to continue to support new and expanded research that will lead to 
new medical advances such as those referenced in the Diabetes Research 
Working Group study. In addition, the budget proposes to repeal the 
provision enacted for 2000 which would delay the availability of 2000 
funds for NIH and other HHS programs.

  Using Genetic Discoveries to Improve Health Care: The Human Genome 
Project is scheduled to complete a working draft of the genome sequence 
by the spring of 2000, considerably ahead of schedule. New funds 
included in the budget will be used to explore the genetic factors 
associated with:
  Complex chronic diseases: Over the past year, researchers 
          supported by NIH have discovered a number of genes associated 
          with hearing loss, Alzheimers disease, and epilepsy. New funds 
          will be used to continue this research and investigate the 
          genetic causes of complex chronic diseases, including 
          diabetes, heart disease, retinal disorders, and Parkinson's 
          disease.
  Individual response to medical therapies: Genetic discoveries 
          often reveal new strategies for the development of more 
          effective pharmaceuticals because we are able to determine 
          exactly how certain chemicals interact with human cells. New 
          funds will be used to research how an individual's genetic 
          makeup determines the effectiveness of medications, as well as 
          what side effects are likely to occur.

  Translating Research into Practice: Over the past year, researchers 
supported by NIH have discovered a simple, affordable drug to prevent 
transmission of HIV in infants, which could potentially prevent the 
infection of up to 400,000 newborns, and a tissue engineering method to 
grow new arteries, key to the development of new therapies for heart 
disease.
  Funds will be used to develop new clinical trials evaluating therapies 
for cancer, stroke, diabetes, and mental illness and disseminate 
information on the clinical application of scientific breakthroughs to 
the public.

  Eliminating Health Disparities: Racial and ethnic minorities face 
disproportionately high infant mortality, low rates of childhood 
vaccination, high prevalence of cardiovascular disease and diabetes, and 
shorter lifespans than the population as a whole.
  In addition, NIH will establish within the Office of the Director a 
Coordinating Center that will lead NIH's efforts to develop 
multidisciplinary approaches to reducing health disparities. In 
addition, NIH will seek legislative authority for the Coordinating 
Center to award grants for health disparities research under exceptional 
circumstances. The budget includes a $20 million increase for health 
disparities research conducted by NIH Insti

[[Page 77]]

tutes and the Office for Research on Minority Health that will be an 
integral part of the new center.

  Fostering Interdisciplinary Research: New funds will be used to: 
develop and expand competitive grant programs to encourage researchers 
in fields such as mathematics, physics, and computer science to 
contribute to medical research and develop new ways to effectively 
manage data to maximize the scientific discoveries that will spring from 
new biological information.

Safeguarding and Improving Public Health Through Disease Prevention and 
Health Promotion

  The budget affirms the Administration's commitment to improving public 
health, with renewed emphasis on measures to combat smoking, especially 
among young people. The budget also makes additional investments in: 
expanded efforts to combat HIV and AIDS both domestically and 
internationally; food safety programs; efforts to combat emerging 
infectious diseases; efforts to determine the environmental causes of 
disease; family planning efforts nationwide; efforts to promote 
childhood immunizations; supports pediatric physician training; a 
Medicare demonstration project on cancer clinical trials; mental health 
and substance abuse prevention activities; asthma treatment for low 
income children; improving the public health response to the threat of 
bioterrorism; a strong FDA; and, providing quality care for Native 
Americans and veterans.

  Fighting Infectious Diseases Overseas: The budget dedicates $50 
million to purchase vaccines for diseases that ravage poor nations, 
including hepatitis B, certain forms of meningitis, and yellow fever, 
helping to save millions of children. Purchasing existing vaccines is 
the first step toward accelerating the development and delivery of 
vaccines for AIDS, malaria, TB, and other diseases disproportionately 
affecting the developing world. Funds will be invested in the Global 
Alliance for Vaccines and Immunizations, a new, collaborative effort of 
UNICEF, the World Bank, the World Health Organization, and other 
governments and private organizations around the world. In addition, a 
new tax credit will encourage the development of vaccines for diseases 
that occur primarily in the developing world (e.g., HIV/AIDS, malaria, 
TB, and other infectious diseases).
  Stopping Youth Smoking: Almost 90 percent of adult smokers began 
smoking by age 18 and today, 4.1 million children aged 12 to 17--37 
percent of all high school students--smoke cigarettes. Tobacco is linked 
to over 400,000 deaths a year from cancer, respiratory illness, heart 
disease, and other problems. To end this public health crisis, the 
budget supports a focused public health effort to reduce youth smoking. 
The 1998 State tobacco settlement was an important step in the right 
direction. The Administration believes additional steps must be taken at 
the national level to reduce youth smoking.
  Cut youth smoking in half by holding the tobacco industry 
          accountable: Public health experts agree that the single most 
          effective way to cut youth smoking is to raise the price of 
          cigarettes. To build on the momentum of the increases already 
          agreed to between the tobacco companies and the States and 
          those already legislated by Congress, the budget includes a 
          combination of excise tax increases and youth smoking 
          assessments. The cigarette excise tax would be increased 25 
          cents per pack beginning October 1, 2000, and the already 
          legislated increases would be moved to that date. In addition, 
          beginning in 2004, tobacco companies would pay a youth smoking 
          assessment, at twice the estimated lifetime profit per 
          underage smoker each year that underaged smoking has not been 
          reduced by 50 percent.
  Reaffirm FDA's full authority to keep cigarettes out of the 
          hands of children: The Administration will continue to support 
          full FDA authority to regulate tobacco products in order to 
          halt advertising targeted at children, and to curb minors' 
          access to tobacco products.
  Support efforts to prevent youth smoking: To support tobacco 
          prevention in States and local communities, the budget 
          includes $39 million for FDA tobacco enforcement activities. 
          The budget also provides $106 million for the Centers for 
          Disease Control and Prevention's (CDC) to

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          bacco control efforts--a tenfold increase from $10.3 million 
          in 1993 to $106 million in 2001.
  Require States to cover smoking cessation drugs under 
          Medicaid:  The budget includes a proposal to require States to 
          cover prescription and non-prescription smoking cessation 
          drugs for Medicaid beneficiaries at the standard Federal 
          match. This proposal furthers the Administration's goal of 
          reducing the incidence of smoking-related diseases and ensures 
          that Medicaid beneficiaries have access to important smoking 
          cessation drugs.
  Protect farmers and farming communities: The Administration 
          fully supports the $5 billion settlement to compensate tobacco 
          farmers, which was agreed to by the States and the industry in 
          1998, and is committed, as Federal litigation proceeds to 
          judgement or settlement, to ensuring funds are set aside for 
          tobacco farmers and their communities.
  Dedicate tobacco recoveries to strengthening Medicare and 
          Social Security, farmers, veterans, and other Federal health 
          programs: Tobacco-related health problems have cost Medicare 
          and other Federal programs billions of dollars each year. To 
          recover these losses, the Department of Justice has brought 
          suit against the tobacco industry, and the budget contains 
          ample resources to pay the necessary legal costs. The 
          Administration will propose that, in addition to any remedies 
          imposed by the court to advance public health, $5 billion of 
          any judgement or settlement be used to assist tobacco farmers 
          and their communities, and to support the Department of 
          Veterans Affairs health programs and other Federal health 
          programs. One hundred percent of the remaining recoveries 
          would be dedicated to the Medicare and Social Security trust 
          funds, two-thirds to Medicare and one-third to Social 
          Security, to enhance the security of these programs for future 
          generations.

  Preventing HIV Transmission: The budget includes an additional $50 
million in community-based prevention interventions and education in the 
United States to reduce the rate of new HIV infections through expanded 
community prevention planning, with a special emphasis on racial and 
ethnic minorities, women, injection drug users and their partners, and 
young gay men. The budget also proposes a $125 million increase in Ryan 
White treatment grants to increase access to quality medical care for 
individuals living with HIV/AIDS including expanded access to life 
saving pharmaceuticals. The budget continues the initiative to reduce 
the spread of HIV/AIDS in racial and ethnic minority communities.
  The Administration secured, in 2000, $100 million to begin a Global 
HIV/AIDS initiative to help prevent the spread of HIV and AIDS in the 
developing world. This year, the budget will invest a total of $342 
million in HIV prevention around the world to build on that commitment, 
adding $100 million to last year's allocation. Funds will be targeted to 
the countries where the disease is most widespread and where our efforts 
will have the greatest impact. Activities include: increasing primary 
prevention efforts; providing care and treatment for individuals 
infected with HIV; caring for children orphaned by AIDS; strengthening 
the public health infrastructure; assisting armed forces in preventing 
the spread of HIV within military organizations; and, initiating HIV 
prevention programs in the workplace.

  Enhancing Food Safety: The budget proposes a $68 million, or 19-
percent, increase over the 2000 level for the Administration's 
interagency food safety initiative (FSI), for a total of $422 million in 
FSI funding in 2001. This includes an additional $30 million to: allow 
the FDA to conduct annual inspections of 100 percent of high-risk food 
establishments; expand the number of imported food exams; complete the 
National Antimicrobial Resistance Monitoring System; increase laboratory 
testing capacity; improve research and risk assessment (particularly in 
the areas of antimicrobial resistance in animals and animal feeds and in 
the development of methods for predicting risk associated with foodborne 
pathogens); and, expand surveillance and education activities. A $10 
million increase would allow CDC to enhance the national network of 
public health laboratories capable of subtyping foodborne pathogen DNA 
for rapid response to disease outbreaks (PulseNet), as well as enhance 
public education efforts. USDA's

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$28 million increase would extend risk assessment modeling and data 
collection to include the pre-harvest phase for all foods, expand 
education activities, and support bioscience research to develop 
effective methods of handling and treating agricultural products to 
minimize microbial contamination. Funding is also included for HHS and 
USDA to begin implementation of the Egg Safety Action Plan, adopted by 
the President's Council on Food Safety in December 1999.
  Preventing Infectious Diseases: This initiative will dedicate an 
additional $20 million, a 45-percent increase over the 2000 funding 
level, to create a consistent national architecture for infectious 
disease surveillance to link public health clinics, hospitals, and 
health care providers. A standardized national system for collecting and 
analyzing epidemiological data on infectious diseases will also help 
address problems, such as West Nile-like encephalitis and influenza.
  Determining the Environmental Causes of Disease, Including Breast and 
Prostate Cancer: This initiative will invest an additional $10 million, 
a 56-percent increase over the 2000 funding level, for CDC's 
environmental health laboratory to: evaluate the exposure of men, women, 
and children to toxic substances that may cause breast and cervical 
cancer, birth defects, or other diseases; develop new and improved 
methods of measuring human exposure to toxic substances; and, assist 
State and local public health officials to rapidly evaluate the impact 
of public health emergencies, such as chemical spills and groundwater 
contamination, on local residents.
  Increasing Family Planning Efforts Nationwide: The budget will invest 
an additional $35 million, a 15-percent increase over the 2000 funding 
level, for grants to family planning clinics providing reproductive 
health services and clinical care to roughly five million low income 
clients. Family planning funding has contributed to the lowest teenage 
pregnancy in 20 years, the decline in teenage sexual activity, and the 
prevention of over a million unintended pregnancies each year by 
improving the delivery of comprehensive reproductive health services. In 
addition, these clinics provide STD and cancer screening and prevention; 
HIV prevention, education and counseling; educational programs that 
encourage adolescents to postpone sexual activity; access to 
contraceptive counseling and services as well as access to effective 
contraceptives for those in need; and, partnerships with other community 
based providers to conduct outreach to adolescents at risk. The budget 
also continues the requirement that health plans in FEHBP offer the full 
range of contraceptive options.
  Promoting Childhood Immunizations: The budget proposes almost $1 
billion for the childhood immunizations initiative, including the 
Vaccines for Children program and CDC's discretionary immunization 
program. The incidence of vaccine-preventable diseases among children, 
such as diphtheria, tetanus, measles, and polio, is at an all-time low.
  Eradicating Global Polio: The budget includes funds in CDC and the 
U.S. Agency for International Development to continue efforts to 
eradicate polio globally, and provides an additional $15 million through 
CDC in 2000 to expedite and intensify global polio eradication 
activities in those countries where polio still exists.
  Increasing Access to Cancer Clinical Trials Through a Demonstration 
for Medicare Beneficiaries: The budget increases access to cutting-edge 
cancer treatments by establishing a $750 million demonstration program. 
Medicare beneficiaries who participate in certain cancer clinical trials 
will have their routine patient care costs reimbursed by the Federal 
Government.
  Expanding Substance Abuse Activities: The budget includes an $82 
million increase for the prevention and treatment of substance abuse, a 
50-percent increase from the 1993 enacted level. These new funds 
continue the Administration's commitment to expand substance abuse 
treatment for thousands of under-served Americans. To help communities 
address gaps in substance abuse services for emerging areas of need, the 
budget proposes an additional $54 million for Targeted Capacity 
Expansion grants, approximately $10 million of which will be used for 
services to ex-offenders, complementing similar proposals in the 
Departments of Justice and Labor budgets. With this increase and an 
additional $31 million in funding for the Substance Abuse Block

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Grant, the budget will provide treatment for over 15,000 additional 
individuals. This additional $97 million is funded through a combination 
of new resources and redirecting existing resources. In addition, in 
January 2001, the FEHBP's benefit structure will, for the first time, 
provide for parity in the provision of benefits for mental health and 
substance abuse, which have long been given less favorable treatment by 
the health care industry.
  Increasing Federal Support for Improving the Mental Health of All 
Americans: According to the December 1999 Surgeon General's Report on 
Mental Health, one in five Americans is living with a mental health 
disorder. This report states that the fundamental components of 
effective service delivery are broadly agreed upon, but in short supply. 
The budget provides $731 million, an increase of $100 million for mental 
health services, a $349 million, 90-percent increase from 1993. This 
includes a $60 million increase for the Mental Health Block Grant, which 
provides integral support to States for services for people with severe 
mental illnesses. The budget also proposes $30 million for new Targeted 
Capacity Expansion grants to assist those with mental illnesses that the 
Mental Health Block Grant is not authorized to serve.
  Improving Asthma Treatment for Low-Income Children: The budget 
proposes $100 million in demonstration grants to States to test 
innovative asthma disease management techniques for children enrolled in 
Medicaid to help these children receive the most appropriate care, and 
keep their asthma in check. This program serves as an example of how 
core entitlement programs can help to accomplish critical public health 
goals--keeping children with asthma out of emergency rooms through 
appropriate environmental and pharmaceutical disease management.
  Supporting a Strong FDA: The budget proposes an increase of 13 
percent, or $163 million, over the 2000 program level to ensure the 
timely review of important drugs, medical devices, and food additives; 
expand inspection coverage of facilities under their jurisdiction; and, 
improve the quality of information on injuries and medical errors 
associated with FDA-regulated products.
  Improving the Public Health's Response to the Threat of Bioterrorism: 
The budget proposes an increase of $18.5 million, seven percent after 
reductions are taken for one-time activities, for medical and public 
health response and preparedness related to potential terrorist use of 
biological and chemical weapons. The proposed increase would support 25 
new local health care response systems for a total of 97 systems by the 
end of 2001. These activities are part of a broader multi-agency effort 
to address counter-terrorism.
  Promoting Full Participation in the Women, Infants, and Children (WIC) 
Program: Last year, WIC reached over 7.3 million low-income women, 
infants, and children, providing vouchers for nutritional food packages, 
nutrition education and counseling, and health and immunization 
referrals. Due in large part to expansion during this Administration, 
funding has grown by over 40 percent, and the program now helps nearly 
half of America's infants. Funding for 2000 is sufficient to serve 7.4 
million women, infants, and children. This budget proposes $4.1 billion 
to serve 7.5 million people by the end of 2001 in order to fulfill the 
President's goal of full participation, making sure that all who are 
eligible may take part in WIC.
  Providing Quality Health Care to Native Americans: The budget proposes 
an investment of $2.6 billion, an increase of $230 million, or 10 
percent, over the 2000 funding level, that reflects a five-pronged 
funding strategy for the Indian Health Service (IHS) (see Chapter 7, 
``Strengthening the American Community''). This initiative includes new 
efforts to: expand preventive services designed to reduce the need for 
acute medical care; expand patient access to clinical services and 
treatment to help decrease health disparities; improve emergency medical 
services in remote locations common on American Indian and Alaska Native 
reservations; address the environmental conditions in American Indian 
and Alaska Native homes and communities by constructing safer water and 
waste disposal facilities; expand programs that provide substance abuse 
treatment and mental health services; enhance surveillance capabilities; 
provide preventive and corrective dental care and water fluoridation to 
reduce tooth loss; maintain, improve, and construct IHS' health delivery 
infrastruc

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ture; and, help meet the IHS' Government Performance and Results Act 
goals of providing an additional 20,000 screening breast cancer 
mammographies, increasing access to dental care to an additional 25,000 
patients, and enabling 25 new community-based public health nurses to 
provide an additional 25,000 home-based counseling, monitoring, and case 
management services.
  Caring for Veterans: Building on its commitment to veterans, the 
Administration proposes $20.9 billion for the Department of Veterans 
Affairs medical care system, an increase of $1.4 billion. This funding, 
which includes $0.6 billion in collections, will ensure that the 
Department can aggressively reduce waiting times, provide high quality 
care, and test and treat Hepatitis C.
  The budget provides for the full implementation of expanded benefits 
authorized by the recently passed Millennium Bill including: expanded 
nursing home care for the most disabled veterans and coverage of 
emergency care at non-VA facilities for certain enrolled veterans.

Ensuring the Fiscal Integrity of the Medicare and Medicaid Programs

  The budget proposes improvements to Medicare and Medicaid to improve 
the efficacy and strength of these programs.

  Strengthening Medicare Program Integrity: The budget includes several 
policies to further reduce Medicare fraud, abuse, and overpayment. The 
budget proposes efforts to strengthen our commitment to eliminate fraud 
and abuse, ensure that Medicare payments to hospitals and other 
providers are reasonable, and promote competitive pricing. In addition, 
the budget will eliminate overpayments that facilities receive for drugs 
used to treat anemia, reform outpatient mental health benefits, and 
require insurance companies to provide information that will ensure that 
private insurers pay claims for which they are legally responsible.
  The budget also proposes a new Medicare contractor oversight 
initiative. This initiative will invest $48 million in a comprehensive 
program to improve Medicare contractor internal controls and financial 
accounting, enhance Federal performance measuring and monitoring, and 
establish a structure for overall Federal oversight. The initiative will 
fund additional contractor staff to establish and implement financial 
controls. The initiative will also develop new evaluation protocols and 
management information systems to assess contractor performance. The 
budget also funds new staff to monitor and oversee contractor operations 
and financial management and allows HCFA to contract out to test and 
evaluate contractors internal controls. This initiative was developed in 
response to a GAO report critical of a number of inappropriate practices 
by some Medicare contractors. In a closely related effort, the budget 
invests $7 million to implement a new integrated financial ledger system 
at the contractors to improve financial accountability.

  Maintaining Fiscal Responsibility in Medicaid: The budget includes 
four provisions that will strengthen fiscal integrity and accountability 
in the Medicaid program:
  Ensure appropriate allocation of Medicaid costs: The budget 
          treats shared Medicaid and Temporary Assistance for Needy 
          Families (TANF) administrative costs similar to the way the 
          Agricultural Research Act of 1998 addressed common Food Stamp 
          and TANF costs. The budget proposes a State-by-State approach 
          and retains State flexibility in the use of TANF block grant 
          funds.
  Strengthen HHS' authority to enforce compliance with Medicaid 
          requirements: Separately, the budget also gives the Secretary 
          of Health and Human Services modest new enforcement authority 
          when States fail to comply in a non-substantial manner with 
          Federal requirements.
  Improve Medicaid payment for prescription drugs: The Medicaid 
          rebate statute currently requires brand-name drug 
          manufacturers to pay an additional dollar-for-dollar rebate to 
          the Medicaid program if they increase the prices of their 
          brand-name drugs in excess of the Consumer Price Index (CPI-
          U). This same requirement does not apply to generic drugs. 
          However, the Administration has found that some generic drug 
          prices have increased rapidly in the past few years. The 
          budget proposes

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          to extend to generic drugs the same CPI-U adjustment to the 
          Medicaid rebate that currently applies to brand-name drugs.
  Share the Medicaid prescription drug average manufacturer 
          price (AMP) with States: HCFA has found that prescription drug 
          companies often inflate the prices charged to States on 
          prescription drugs covered by the Medicaid prescription drug 
          program. The prices are inflated relative to the AMP, a 
          measure that must be reported by drug companies to HCFA but 
          may not be shared with States. Since many States use other 
          less accurate information made to set Medicaid reimbursement 
          rates, they often overpay for prescription drugs. The budget 
          proposes to allow HCFA to share the AMP with States so that 
          States can use this data to more accurately set Medicaid drug 
          reimbursement rates.
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