[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]




                 DEPARTMENTS OF LABOR, HEALTH AND HUMAN

               SERVICES, EDUCATION, AND RELATED AGENCIES

                        APPROPRIATIONS FOR 2000

_______________________________________________________________________

                                HEARINGS

                                BEFORE A

                           SUBCOMMITTEE OF THE

                       COMMITTEE ON APPROPRIATIONS

                         HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH CONGRESS
                              FIRST SESSION
                                ________
  SUBCOMMITTEE ON THE DEPARTMENTS OF LABOR, HEALTH AND HUMAN SERVICES, 
                    EDUCATION, AND RELATED AGENCIES
                 JOHN EDWARD PORTER, Illinois, Chairman
 C. W. BILL YOUNG, Florida           DAVID R. OBEY, Wisconsin
 HENRY BONILLA, Texas                STENY H. HOYER, Maryland
 ERNEST J. ISTOOK, Jr., Oklahoma     NANCY PELOSI, California
 DAN MILLER, Florida                 NITA M. LOWEY, New York
 JAY DICKEY, Arkansas                ROSA L. DeLAURO, Connecticut
 ROGER F. WICKER, Mississippi        JESSE L. JACKSON, Jr., Illinois
 ANNE M. NORTHUP, Kentucky
 RANDY ``DUKE'' CUNNINGHAM, 
California                          
                          
 NOTE: Under Committee Rules, Mr. Young, as Chairman of the Full 
Committee, and Mr. Obey, as Ranking Minority Member of the Full 
Committee, are authorized to sit as Members of all Subcommittees.
  S. Anthony McCann, Robert L. Knisely, Carol Murphy, Susan Ross Firth,
                and Francine Salvador, Subcommittee Staff
                                ________
                                 PART 2

                 DEPARTMENT OF HEALTH AND HUMAN SERVICES

                                                                   Page
 Secretary of Health and Human Services...........................    1
 Health Care Financing Administration.............................  143
 Administration for Children and Families.........................  703
 Administration on Aging.......................................... 1321
 Special Tables................................................... 1440

                              

                                ________
         Printed for the use of the Committee on Appropriations
                                ________
                     U.S. GOVERNMENT PRINTING OFFICE
 56-614                     WASHINGTON : 1999






                       COMMITTEE ON APPROPRIATIONS

                   C. W. BILL YOUNG, Florida, Chairman

 RALPH REGULA, Ohio                  DAVID R. OBEY, Wisconsin
 JERRY LEWIS, California             JOHN P. MURTHA, Pennsylvania
 JOHN EDWARD PORTER, Illinois        NORMAN D. DICKS, Washington
 HAROLD ROGERS, Kentucky             MARTIN OLAV SABO, Minnesota
 JOE SKEEN, New Mexico               JULIAN C. DIXON, California
 FRANK R. WOLF, Virginia             STENY H. HOYER, Maryland
 TOM DeLAY, Texas                    ALAN B. MOLLOHAN, West Virginia
 JIM KOLBE, Arizona                  MARCY KAPTUR, Ohio
 RON PACKARD, California             NANCY PELOSI, California
 SONNY CALLAHAN, Alabama             PETER J. VISCLOSKY, Indiana
 JAMES T. WALSH, New York            NITA M. LOWEY, New York
 CHARLES H. TAYLOR, North Carolina   JOSE E. SERRANO, New York
 DAVID L. HOBSON, Ohio               ROSA L. DeLAURO, Connecticut
 ERNEST J. ISTOOK, Jr., Oklahoma     JAMES P. MORAN, Virginia
 HENRY BONILLA, Texas                JOHN W. OLVER, Massachusetts
 JOE KNOLLENBERG, Michigan           ED PASTOR, Arizona
 DAN MILLER, Florida                 CARRIE P. MEEK, Florida
 JAY DICKEY, Arkansas                DAVID E. PRICE, North Carolina
 JACK KINGSTON, Georgia              CHET EDWARDS, Texas
 RODNEY P. FRELINGHUYSEN, New Jersey ROBERT E. ``BUD'' CRAMER, Jr., 
 ROGER F. WICKER, Mississippi        Alabama
 MICHAEL P. FORBES, New York         JAMES E. CLYBURN, South Carolina
 GEORGE R. NETHERCUTT, Jr.,          MAURICE D. HINCHEY, New York
Washington                           LUCILLE ROYBAL-ALLARD, California
 RANDY ``DUKE'' CUNNINGHAM,          SAM FARR, California
California                           JESSE L. JACKSON, Jr., Illinois
 TODD TIAHRT, Kansas                 CAROLYN C. KILPATRICK, Michigan
 ZACH WAMP, Tennessee                ALLEN BOYD, Florida              
 TOM LATHAM, Iowa
 ANNE M. NORTHUP, Kentucky
 ROBERT B. ADERHOLT, Alabama
 JO ANN EMERSON, Missouri
 JOHN E. SUNUNU, New Hampshire
 KAY GRANGER, Texas
 JOHN E. PETERSON, Pennsylvania     
                                    
                 James W. Dyer, Clerk and Staff Director

                                  (ii)




 
DEPARTMENTS OF LABOR, HEALTH AND HUMAN SERVICES, EDUCATION, AND RELATED 
                    AGENCIES APPROPRIATIONS FOR 2000

                                      Wednesday, February 10, 1999.

                DEPARTMENT OF HEALTH AND HUMAN SERVICES

                                WITNESS

HON. DONNA SHALALA, SECRETARY

                       Introduction of Witnesses

    Mr. Porter. The subcommittee will come to order.
    I want to welcome everyone this morning, and in particular, 
I want to welcome Secretary Shalala, one of the stars of this 
administration who brings honor to the department and who 
enhances every day her deserved reputation for management and 
advocacy.
    I think this is your seventh year and eighth appearance 
before our subcommittee, Madam Secretary, and we welcome you. 
We are going to have opening statements by myself and Mr. Obey, 
and then we will be pleased to receive your testimony.
    I want to welcome the new members to our subcommittee, on 
our side, Duke Cunningham of California, who brings to the 
subcommittee a great concern for education where he has 
expertise as, originally, a member of the authorizing committee 
and also a great concern for health issues. And, Duke, we 
welcome you aboard.
    I also want to welcome Jesse Jackson, Jr., an Illinois 
colleague who is the newest member on the Democratic side with 
the retirement of Lou Stokes, and I know that Jesse has a long 
commitment to people at risk, and we want to welcome you.
    Mr. Obey. I just wanted to explain why Jesse Jackson is on 
the subcommittee. There are quite a few people with strong 
views on this subcommittee, and we thought that we needed a 
balance. We wanted to find someone who was fairly reticent in 
expression of his view and someone whose family had 
demonstrated very little interest in politics, and we arrived 
at Jesse.

                          Chairman's Statement

    Mr. Porter. Gee, we are going to count on that.
    I want to alert the members that they have received a 
schedule of our hearings. Obviously, last year we went from 
January through early June. This year our hearings are going to 
be greatly compacted and abbreviated, and I would ask the 
members to do their very best to attend as many of our hearings 
as possible. I know that many members have other 
responsibilities, other subcommittees, but we are going to try 
to do this very quickly.
    I would point out that we have scheduled hearings for 
Tuesday mornings in several instances where we now find that we 
will not be in until noon for votes, and we are not scheduled 
for hearings on Friday mornings where we now find in several 
instances we will be in until 2:00 in the afternoon.
    What I would like each member to do this morning before 
they leave, is check with Tony, our clerk, and tell him whether 
you would rather have the hearings on Tuesday morning or would 
rather move those hearings to Friday morning, where I think we 
have a chance of better attendance; and we will be guided by 
what the members tell the clerk about that.
    We plan to finish our hearings by the middle of April and 
be ready to mark up as soon after that as possible. That, 
hopefully, will put us on proper course with an early budget 
resolution and in getting the bill out of the committee and 
onto the floor for debate.
    Last year, and I want to comment just briefly on last year. 
Last year was a process disaster. I believe that when you can't 
get a bill to the floor, you have a disaster on your hands. 
Members of the subcommittee were not able to debate it on the 
floor. They were not able to come to conference. There was no 
democracy and no participation in the process, and I am going 
to do everything I possibly can to make certain that does not 
happen this year.
    Also, we lost in that process the bipartisanship that this 
committee has always had. Our approach has been to work 
together with the members of the majority and the minority, and 
again I think it was a disaster that we simply cannot allow to 
happen again.
    I would add one other thing. The bill has been loaded with 
legislative riders. We are going to do our very best to 
minimize those riders, and I hope members will take the matters 
that concern them that are legislative in nature to the 
authorizing committees where they belong and not attempt to use 
this appropriations bill as an authorizing vehicle. I am going 
to be very, very resistant to that happening.
    Let me say something that I would have said on the House 
floor had the bill ever been considered. This subcommittee is 
blessed on both sides with staff that are just absolutely 
magnificent, people of great ability, and I want to thank the 
staff for the job that they did last year. We are very blessed 
by having them, and they do a great deal to carry our work to a 
successful conclusion.
    A comment, a brief comment on the budget caps. I believe 
that we have gotten so far away from reality with the budget 
caps, both in terms of our economy and the surpluses that have 
been created, and in terms of the pressures that the budget 
caps bring, that we must come to grips with adjusting them for 
the reality of the situation.
    Now, I realize that there is a lot of danger in saying that 
because people often see political advantage in dealing with 
the budget, but I do not want to be put in the position, and I 
don't think this Congress should be put in the position of 
having to draw bills that are forward funded, use emergencies 
where no emergency exists and do other things that are way away 
from reality in terms of getting a final product.
    I hope that the Budget Committee will come to grips with 
this, will look at the discretionary side of spending and 
determine that we need to make an adjustment in the caps that 
is fair to everyone, still keeping us on course but reflecting 
the fact that we are way away from the reality in the last 
year's appropriations, and we need to be much more realistic 
and honest, it seems to me, in addressing these kinds of 
situations.
    I will do my best to impact our side in determining what 
course the budget resolution takes, and I would urge members on 
the other side, and Mr. Obey particularly, to do the same.
    Finally, a brief comment on the President's budget. We all 
know that presidential budgets are political documents. This 
budget--Madam Secretary, I will say this to you--I think has 
taken that to the highest level perhaps ever seen. I think 
after Congress last year--and I will use NIH as an example--
decided that it was a very high priority for this country to 
double funding for biomedical research over a 5-year term, to 
have the President come back with a budget which pegged NIH at 
2.1 percent next year, and if you take the caps into 
consideration is 1.5 percent, is simply very cynical. It allows 
the President to take the money otherwise committed there and 
declared for other line items and other programs, or to suggest 
new spending with that money.
    But it seems to me, again, it is way away from the reality 
of the situation, and it isn't fair to the budget process or 
even to this committee to come in with a budget like that.
    Yes, it is good to express the concerns about problems in 
our society, but I think it has been carried too far, and again 
we have gotten too far away from what is real and honest and 
necessary to get our work done.
    Now, with that, I am going to call on Mr. Obey and then we 
will ask for your testimony.

                  Ranking Minority Member's Statement

    Mr. Obey. Thank you, Mr. Chairman.
    First of all, I think it is worthy of note that the 
Secretary, as I understand it, is now the longest serving 
Secretary of her department in the history of this Republic. I 
am happy to say that there are no--there is not even a hint of 
term limits for her, and I think the country is well served by 
that fact.
    I would also like to comment on the President's budget and 
the last year's unhappiness. I think this year is truly 
remarkable. I have sat here in the House for 32 years and I 
have served longer in the House than 432 members, and I have 
seen a lot in those years.
    The low point of my service here was to watch budgets being 
rammed through this place in 1981 and in the 2 years 
thereafter, which put this country in a huge deficit hole. It 
has taken us until this year to be able to climb out of that 
hole and the tripling of the debt that occurred over those 
years.
    In my view, we were set on the right course by two events. 
First of all, President Bush had the guts to fight members of 
his own party, one wing of it, and insist that he was going to 
try to take actions to narrow or to reduce the size of those 
deficits. He took extreme criticism from his party, and it may 
have helped cost him the election, but it was the right thing 
to do. And the deficits--even though the economy had sagged at 
that time, the deficits, which would have been occurring had he 
not done that, were very much larger than the deficits that 
were actually produced.
    The second great act of courage was when President Clinton 
followed that up with his budget, which passed both Houses 
without one vote to spare, which helped cost our party the 
control of the Congress, in my view, because that budget and 
those votes were mercilessly demagogued. And yet it was that 
action, combined with the action that was taken under President 
Bush, which enabled us to get out of the path that brings us 
today to a period where we are finally talking about surpluses 
over the long haul rather than a deficit.
    I just want to say that I think this indicates how long 
this country has to live with a disastrous public policy 
mistake when we make one. It took us from 1981 until this year 
to climb out from the God-awful wreckage left by that fiscal 
irresponsibility.
    Now that we have an expected series of surpluses, we are 
being urged by some to swallow the same magic elixir in the 
form of 10 percent across-the-board tax cuts that got this 
country into that hole in the first place.
    Now, I think you will find a lot of people on this side of 
the aisle very much in favor of a number of tax cuts that the 
President has laid out in the budget because they are targeted 
to the people who need them the most, the long-term health care 
tax credit, for instance, and others. I think that is the 
proper way to offer tax relief to the American people, focused 
on the people who need it the most and in a way that does not 
get in the way of first fixing Social Security and 
strengthening it for the long haul, coupled with, I would hope 
and expect, also, strengthening Medicare the way the President 
has proposed.
    And then somewhere down the line we finally get to the 
President's recommendations to take a small portion of that--of 
those surpluses and use them to deal with the domestic 
discretionary squeeze which the chairman just referred to with 
the caps that are imposed.
    I think the President's budget and, frankly, the Republican 
reaction especially on the part of those who want higher 
defense numbers is an indication that the budget that was 
agreed to 2 years ago was, in fact, proposed on unrealistic 
numbers which in the end neither party would be willing to 
stick to. I think what is happening today demonstrates that, 
but I want to dissent from the comment that your request on NIH 
is cynical. Quite the contrary.
    I think what was cynical was that last year, when we knew 
that we were facing a bill which was wholly inadequate, I think 
what was cynical was to pour a very large amount of additional 
money into NIH and health programs when people knew that that 
bill could never survive until the cuts that were required in 
education and labor programs in order to finance it were 
corrected. And in the end we wound up correcting those along 
with having a large increase in NIH, but we had to add about 
$6,000,000,000 over the amount that this bill contained when it 
first was brought to the House.
    I think that what the President has recognized in his NIH 
number is that while all of us on this committee have a strong 
record of funding NIH increases, he has recognized that we 
can't fund NIH exclusively at the expense of other programs in 
this budget. And what it demonstrates to me is that--well, 
Madam Secretary, I think you are going to get criticized by 
people who often fall off both sides of the same horse 
depending on what day it is. You will be criticized sometimes 
for not offering enough money in some of these programs and yet 
at the same time the administration will be criticized for not 
buying into the idea that we should automatically blow those 
surpluses by using them for across-the-board tax cuts which 
primarily benefit high-income people and make it certain that 
we can't have the money available to attack some of the 
problems here.
    I congratulate you with everything here. I don't agree with 
everything in your budget--we are going to have some real 
arguments with some of the provisions in your budget--but I 
agree with the general thrust of what the President is trying 
to do.
    I also want real HMO reform, which provides a real patient 
bill of rights rather than a bill of goods, and I hope that you 
stick to your guns on that so we get something that has more 
than a title so that it will actually provide the protections 
that the American people deserve.
    Mr. Porter. Thank you, Mr. Obey.
    Now, Secretary Shalala, would you please proceed.

                     Secretary Shalala's Statement

    Ms. Shalala. Thank you, Mr. Chairman, Congressman Obey, 
members of the subcommittee.
    I am pleased to be with you today to present the 
President's budget for the Department of Health and Human 
Services. I have submitted for the record a long testimony, and 
I am going to read a briefer version this morning.
    As you indicated, Mr. Chairman, this is my seventh year as 
HHS Secretary. I hope that seven is a lucky number. This is the 
second year that I come before you to talk about my 
Department's budget in the context of a balanced Federal 
budget. That is an accomplishment that speaks to the value of 
bipartisan cooperation, and each of us can take pride in this 
important success. The President's fiscal year 2000 budget is 
also the first budget of the new millennium. As such it is an 
important statement about this Nation's priorities as we face 
the challenges of a new century. I would like to discuss four 
such challenges and the ways in which the President's budget 
seeks to address them.
    The first of the challenges is keeping our promise to older 
Americans to allow them to retire with dignity. Thanks to the 
advances in medical science and health care, Americans are 
living longer than ever before. By the year 2030 the number of 
Americans over the age of 65 is projected to double to nearly 
70,000,000. Our success in extending the length of life also 
has created a challenge to improve the quality of life.
    In fact, we have added 30 years, in this century to the 
average person's life. If we do that in the next century, we 
are all going to live to be 100. That is a very different set 
of health care challenges and long-term care challenges. An 
important part of meeting this challenge is offering assistance 
to Americans who need long-term care.
    Our budget includes a multifaceted initiative designed to 
provide support to the 5,000,000 Americans who need long-term 
care and for the millions of working Americans who provide it. 
This is the first time any administration has laid out a long-
term care strategy. You should see it as the outline of the 
strategy, because together we will develop it over time; but we 
have some elements that we think are at the core of any long-
term care strategy.
    Research has now taught us that people who need long-term 
care often do best in their own homes, but that creates a 
tremendous burden on families who struggle to meet the needs of 
their aging relatives. The result is often financial ruin and 
emotional devastation. The President's budget invests 
$125,000,000 in a new National Family Caregiver Support program 
in the Administration on Aging. This will provide assistance to 
about 250,000 families to care for their relatives with chronic 
conditions and disabilities.
    We are also requesting another $10,000,000 in the budget 
for the Health Care Financing Administration to help Medicare 
beneficiaries better understand their long-term care options, 
and we are asking Congress to expand access to home- and 
community-based care to people of all ages who are living with 
disabilities by allowing States to extend Medicaid coverage to 
people with incomes up to three times the Federal poverty level 
who wish to remain in the community.
    Finally, while it is not a part of the HHS budget, I would 
be remiss in not mentioning the President is proposing a 
historic $1,000 tax credit for people with long-term care needs 
and their family caregivers; we estimate, that alone will help 
more than 2,000,000 Americans, most of them elderly or severely 
disabled.
    The President's budget also includes a proposal to allow 
the Office of Personnel Management to offer a nonsubsidized 
private long-term care insurance plan to all Federal employees 
retirees and their families at group rates. This will help us 
to establish quality standards for long-term care insurance 
policies and enable us to demonstrate in almost all of the 
health care plans in the country that you can design good long-
term care insurance policies that people can trust.
    Another important element of keeping our promise to older 
Americans is the Medicare program. In the three and a half 
decades since this landmark program was enacted we have 
improved both the length and quality of life for our parents 
and grandparents. As we look ahead to the new century, we owe 
it to the next generation of seniors, including you and me, to 
make sure that Medicare remains a rock-solid guarantee of high-
quality health care.
    A reinvented Health Care Financing Administration is an 
important part of keeping that promise. Under the leadership of 
Nancy-Ann Min DeParle, the new HCFA administrator, has just 
completed one of the most challenging years in its history. It 
has implemented more than half of the 300 provisions of the 
Balanced Budget Act of 1997 and it has approved 50 State 
children's health insurance plans.
    It has also worked with the States to help implement the 
Health Insurance Portability and Accountability Act, and is 
meeting the serious challenges of the year 2000 computer 
compliance program. The agency has reported 100 percent 
internal mission-critical systems and 54 of its 82 external 
mission-critical systems as Y2K compliant, and thanks to the 
help of Congress in providing supplementary Y2K funding, we 
were able to accelerate our efforts and are now confident that 
100 percent our internal Health and Human Services systems will 
be compliant by March 31, 1999.
    The President's budget builds on the excellent work of 
Administrator DeParle and her staff to modernize HCFA and the 
Medicare program. It includes a five-part reform plan to 
increase HCFA's flexibility and to enable the agency to respond 
to the changing needs of its customers.
    We will also be reviewing legislative proposals to increase 
the stability of HCFA's funding so that all of those resources 
can be in line with the agency's increased statutory 
responsibilities.
    I was very pleased to read the letter recently signed by 
all of the former HCFA administrators and other leaders from 
both parties in support of increasing HCFA's administrative 
budget. We look forward to working with the Congress to 
establish this important goal.
    While we further strengthen HCFA's management, we will also 
continue our fight against waste, fraud and abuse in the 
Medicare program. No administration has done more on this 
issue. In fact, I remember when I first came before this 
committee, everybody said, that is what every Secretary says, 
that they will fight waste, fraud and abuse.
    Since 1993, we have increased health care fraud 
prosecutions by more than 60 percent and increased convictions 
by 40 percent. I would like to thank the members of this 
subcommittee for their unwavering support for these efforts.
    And just this week we reported some dramatic new management 
successes. The Inspector General's annual audit of Medicare has 
found that the estimated Medicare mispayments have gone down 
almost 50 percent in just 2 years. No private sector industry 
has anything comparable. The Medicare payment error rate has 
dropped from an estimated 14 percent in 1996 to 7.1 percent in 
1998.
    Don't get me wrong, we have important work ahead and lots 
of it, but we are moving effectively and we are moving very 
fast. The President's fiscal year 2000 budget includes 
$864,000,000 for the Medicare Integrity Program and the Health 
Care Fraud and Abuse Control Account. We are also resubmitting 
to the Congress a package of proposals designed to close 
loopholes in Medicare payment policies that will save 
$240,000,000 in the next year and $2,900,000,000 over the next 
5 years.
    Let me say, Mr. Chairman, that every time we have said to 
you we are going to reduce waste and fraud and abuse, we have 
come back with clear demonstrations that we have done that if 
we are given the resources, both in reducing the number of 
overpayments, in eliminating fraud from the system and in 
putting money back into the trust fund.
    And so we have delivered on our promise to reduce waste, 
fraud and abuse and we have reorganized ourselves to do that 
with a new team effort by not only the department but the 
Justice Department, the FBI, the U.S. attorneys, and the State 
attorneys general. So we have, in fact, delivered on our 
promise to take on this issue.
    But our second challenge of the new century is the need to 
help America's working families. Nearly 43 million Americans 
are living without health insurance, and more than 80 percent 
of them are working full time or are the dependents of full-
time workers. Most of us don't realize that the people who are 
uninsured in this country are getting up and going to work 
every day.
    The President's budget again seeks to allow uninsured 
workers between the ages of 62 and 65 to buy into Medicare at 
an actuarially sound premium. We also want Americans between 
the ages of 55 and 62 who have lost their jobs and insurance to 
have similar opportunities. We are proposing a tax credit for 
small businesses that seek to insure their workers through a 
voluntary health insurance purchasing cooperative.
    But while we work to expand the number of Americans with 
insurance, we can't forget the health of those who are 
uninsured. Our budget includes a new proposal to help 
communities integrate the care that is already provided to the 
uninsured. It will provide communities with $25 million in the 
next and $250 million annually for 4 years to streamline and 
help coordinate care for uninsured workers and their families. 
Our attempt there is to get people who are working, who have no 
insurance, out of emergency rooms into the right part of the 
care system, particularly community health centers; and then if 
they need a specialist, to public hospitals or academic health 
centers which are part of a larger network, to get the health 
care system for the uninsured to provide health care in the 
right place at the right time.
    We are asking for $1.5 million [Clerk's Note:--Later 
corrected to $1.5 billion] for the Ryan White Care Act, an 
increase of $100 million. Included in that amount is a $35 
million increase in the AIDS drug assistance program to help 
uninsured people with AIDS purchase needed medicines. Our 
budget also includes $171 million to continue our bipartisan 
efforts to address the AIDS crisis in minority communities.
    But while we seek to help working families, we must not 
forget those disabled Americans who want to work, but are 
prevented from doing so by the risk of losing their health care 
coverage. Today--and this number is astounding to me--nearly 75 
percent of working-age Americans with disabilities are 
unemployed. Seventy-five percent of working age Americans with 
disabilities are unemployed. One of the major reasons they are 
staying out of the job market is their understandable fear of 
losing their health insurance, specifically their Medicare and 
Medicaid coverage.
    Last year we all came very close to agreeing on a landmark 
bipartisan legislation to allow Americans with disabilities to 
go back to work and keep their health care coverage. This year 
the President is determined that we complete that task and pass 
a law allowing these men and women to get a job and keep their 
Medicare or Medicaid coverage.
    Many on this committee are committed to small businesses, 
and that is where much of the growth in our economy is going to 
occur. Those companies in particular who might want to employ a 
disabled worker are disadvantaged because they are in small 
pools, and if they take on a disabled worker and give them 
health insurance, as they do for all of their other employees, 
there is no way they can do that; their insurance premiums will 
go up for everyone.
    This will give them an opportunity to employ a disabled 
worker who comes to the job with their health insurance, and it 
will reduce that astounding number of Americans who have 
disabilities. Many of them want to work, but are scared to 
death of losing their health insurance.
    We ought to do it. When people want to work in this 
country, we ought to give them the opportunity to go to work.
    As we enter the new century, we face a third challenge, to 
mobilize America's scientific genius, to make our Nation a 
healthier and safer place to live. Our budget continues the 
bipartisan process we are making towards meeting the 
President's goal of increasing the budget in the National 
Institutes of Health by 50 percent over 5 years.
    We are also proposing a $230 million, four-pronged, 
coordinated initiative to prepare for the medical needs and the 
health consequences of bioterrorism events. This includes 
funding for infectious disease surveillance, the purchase of a 
vaccine stockpile, the local response capability and the 
research and development. We hope we never have to use this 
capacity, which is essentially a combination of a national and 
a local capacity, but it is essential that we be prepared in 
the event that we must use this capacity. This is building up a 
capacity of this country on the public health side to deal with 
a bioterrorism event.
    While I am talking about our role in international health, 
I would be remiss if I didn't mention the importance of the 
President's request for funding for the World Health 
Organization. While I recognize that this item falls outside 
the subcommittee's purview, I hope you will bear with me for a 
moment. Because infectious disease recognizes no borders, it is 
essential that we work with other nations through WHO, through 
UNICEF, to address our global health insurance concerns. Among 
the current efforts by WHO are surveillance and control of 
infectious diseases, the tobacco-free initiative, the fight 
against malaria, polio and tuberculosis.
    TB is a very good example of why we have to keep our 
investments in these international organizations. Thanks to our 
aggressive national program in this country, tuberculosis in 
U.S.-born individuals declined by 24 percent between 1992 and 
1995, but has increased by almost 11 percent among the foreign 
born.
    The only effective strategy for keeping Americans healthy 
is to invest in global TB control. It is cheaper, too--at less 
than a dollar a case--to treat in many parts of the developing 
world compared to thousands or more if we wait to treat the 
cases here. So those of you who sometimes wonder why we are 
investing in these international organizations, let me make it 
very clear. This is in our domestic interest. I lead the U.S. 
delegation to the World Health meetings every year. The World 
Health Organization has new leadership under Dr. Brundtland, 
the former prime minister of Norway; she is a tough manager. 
Mrs. Brundtland is very tough. That agency is going to be a 
very different agency, and we have to continue our support to 
WHO. It does us no good if we simply invest in these infectious 
diseases here, but what we are basically doing is catching some 
of the world's problems here, which are far more expensive for 
us to deal with. So I hope everyone, depending on what other 
subcommittees you are on, will see the connection between our 
international investments, which in my judgment are continually 
better managed than ever before, and in which domestic 
managers, like me, play a major role in our leadership and 
oversight of those organizations.
    Here at home the President's budget seeks to invest in our 
public health infrastructure with important investments in the 
Centers for Disease Control and Prevention. The budget proposes 
$65 million in total to coordinate surveillance activities in 
the initiatives for emerging infectious diseases and 
bioterrorism and food safety through a national electronic 
network, and I know that many of you have met the new leader of 
the CDC, Dr. Jeff Koplan is outstanding, and I know that you 
will enjoy working with him, as I have, in the years ahead.
    Mr. Chairman, the President's budget seeks to keep our 
promise to America's children by helping to provide them with a 
safe and healthy childhood. We were asking for $5.3 billion for 
the Head Start program, an increase of $6,700,000 [Clerk's 
note: Later corrected to $607 million]. Our budget includes 
$1.1 billion for childhood immunization, an increase of $55 
million over last year.
    It proposes $50 million in demonstration project grants to 
the States to improve the treatment of asthma in children, 
again something that dominates our emergency rooms in the major 
children's hospitals in this country. It invests $40 million to 
help children's hospitals train the medical personnel they need 
to care for our most vulnerable children.
    While we are investing in improving the health of children, 
we have to make sure that we have the pediatricians in this 
country well-trained to take care of those children. It 
proposes $1.2 billion over the next 5 years to help States 
reach out to children who are eligible for Medicaid or for CHIP 
but are not yet enrolled.
    Mr. Chairman, I can't talk about the health of our children 
without mentioning tobacco. Our budget reaffirms our commitment 
to combat smoking by children. The President is proposing a 55 
cent increase in the Federal excise tax on cigarettes. Research 
has shown us the best way to keep kids from smoking is to make 
cigarettes too expensive for them to afford. The budget 
includes $101 million for CDC to support State tobacco control 
programs; and $68 million for FDA's efforts to enforce youth 
antismoking efforts.
    Finally, we seek to improve the health and safety of our 
children by improving access to safe and affordable child care. 
The President's budget requests $10.5 billion in mandatory 
funding over the next 5 years for child care programs at the 
department.
    Mr. Chairman, I have laid before you a blueprint for 
preparing our health and social service networks to meet the 
very new challenge of the new millennium. We look forward to 
working with you and the members of this subcommittee to 
achieve a bipartisan bill that meets these challenges and moves 
our Nation forward into the new century.
    I will be more than happy to answer any of your questions.
    [The prepared statement follows:]

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    Mr. Porter. Thank you, Madam Secretary.
    I didn't want to imply that I disagreed with all of the 
President's budget, far from it; and in fact, it may interest 
you that if you give me a chance to vote on a 55-cent increase 
in the tobacco tax, I would do it right now because I think the 
President is exactly right on that.
    I also admire your subtlety in being able to reach three 
members of the Foreign Operations Committee regarding WHO 
funding, including the ranking Democratic member and the senior 
Republican and Democratic members of that committee.
    I began my involvement with WHO when I talked to Jonathan 
Mann about 1985 or 1986, and he asked me to carry a $30 million 
amendment for WHO in Foreign Operations on world AIDS, and I 
did that. I think you are exactly right that it is far past the 
time that the United States lives up to its obligations there 
and elsewhere within international organizations and that Gro 
Brundtland is going to do a terrific job there if we give her 
the resources to do it.
    One of my principal staff members from some years ago is 
now her principal staff member, so I am very much involved in 
working with WHO, and we will do our best to comply with your 
request there.
    I want to tell members who are returning, and inform new 
members, that we will operate under a rule for hearings between 
5 and 10 minutes for each member depending on how many members 
are here. Today it will be under the 5-minute rule. The Chair 
will call on members who are present at the start of the 
hearing, back and forth, Republican and Democrat. Those who 
arrive later will then be added at the end and we will--almost 
all of the members were here at the beginning today. A few came 
in late, and they will be at the end of the list.
    Madam Secretary, let me add one other thing that I meant to 
say, and that is, I think, it is agreed on both the legislative 
and the executive side, and it is always refreshing when you 
come before the subcommittee because I know from your testimony 
and from your answers to our questions that you share this 
philosophy: Both the Congress and the administration are 
looking to identify programs that get results for people and to 
eliminate those that don't work and to support those that do.
    All of our efforts in looking at the evaluation of programs 
and the results legislation, we are all, I think, on the same 
page in trying to do the best that we can with the money that 
we have to help people who are in need. I commend you and other 
members of the administration that bring that philosophy to the 
table and really look hard at the programs to identify the good 
ones and the bad ones and, accordingly, provide support in the 
right places.

                FUNDING THE SOCIAL SERVICES BLOCK GRANT

    Let me ask you a question that confused me and apparently 
the staff as well. There is a large increase in the social 
services block grant, Title XX. The increase is $471 million, 
or 25 percent, above the fiscal year 1999 level. Last year the 
administration proposed a substantial cut in the block grant 
and wanted to cut it by $390 million, or 17 percent, and 
pursued that cut as part of the offset package. How come we 
have done a 180 on this, and what does that mean? Why do we 
have a change of course on the program when the authorized 
level of the program declines in 2001 to $1.7 billion?
    Ms. Shalala. I think, Mr. Chairman, some of this is 
learning our lesson and listening to what people tell us, 
particularly the governors, about the use of that money. 
Particularly in sensitive use for the foster care system that 
continues to trouble us. States are increasingly allocating 
those resources to try to get their foster care systems fixed. 
So I think we are concerned about maintaining the 
infrastructure for them so after listening to everything that 
everybody said to us, we have decided to get that program back 
up.
    You will remember that Mr. Obey insisted that we learn that 
lesson on the LIHEAP program over a period of time. We have 
done this before where we have cut deeply into a program and 
then went back and took a look and decided that it was 
important to bring it back up. So in this case, that is exactly 
what we are doing.
    Mr. Porter. Thank you, Madam Secretary. I asked the clerk 
if he would have it ring in 5 minutes, and he didn't have it 
ring for me.
    I have talked my way through my own questions, so Mr. Obey.

                            BUDGET DECISIONS

    Mr. Obey. That is a good way to do it, Mr. Chairman.
    Madam Secretary, let me first observe that I find it ironic 
that both parties indicate that they are willing to sing 
Hosanna in order to fix Social Security, a problem that will 
not manifest itself until today's 35-year-olds are 65 years 
old, some 30 years from now. Obviously, we have to do that, but 
I find it interesting at the same time that many in this 
Congress seem to be totally resistant to doing something to fix 
the problem faced by 42 million people in the here and now.
    I would hope, I would simply say to you and the President 
and everyone in Congress, I would hope that in a world where we 
expect to see $4.4 trillion in surpluses, that we could find 
some piece of that to begin in a serious way to deal with 
providing coverage for the uninsured.
    I would also point out that--so people understand how 
difficult it is going to be if we give away any money on the 
tax side, the fiscal 2000 caps for discretionary spending are 
below the amount that would be needed to keep pace with 
inflation by about $28 billion in budget authority and $24 
billion in outlays. By 2002, the last year for which the caps 
have been established, the caps are below inflation by $48 
billion in budget authority and $61 billion in outlays. So we 
are talking about a huge squeeze.
    Even under the administration's assumptions, if they get 
all of the money that they are asking for domestic 
discretionary, the percentage of GDP which will be devoted to 
nondefense discretionary programs will decline from 3.5 percent 
to 2.6 percent. That is considerably lower than that number was 
before LBJ ever had his first dream about the Great Society, 
and so I would ask people to keep that in mind when they start 
shooting at that 11 percent that the President has put in his 
budget to try to close, at least in a small way, the gap that 
we have.

                     HEALTH CARE FOR THE UNINSURED

    Let me ask you one question. On improving health care for 
the uninsured, your budget includes $25 million for planning 
grants and includes health care access for uninsured workers 
and separate authorization for a billion dollars over the next 
few years to try to deal with that problem. That is a tiny, 
tiny amount of dollars to begin to deal with what is a very 
large problem, but in my view it is an essential beginning. Can 
you tell us why you need the separate authorization for the 
billion-dollar piece and whether this subcommittee, in your 
view, has the authority to proceed with at least that $25 
million piece?
    Ms. Shalala. I would have to ask our legal advisers. I 
think because the $25 million is a demonstration and we 
probably have the authority to go forward with that 
demonstration. Obviously, that $25 million is to fund some 
competitive grants for communities that put the networks 
together, put all of the pieces together. The billion dollars 
would help them a little more with glue money to have their 
systems put together.
    Again, what we are talking about here is that we have an 
existing health care system in which people who are uninsured 
or underinsured eventually fall into it, but they often put off 
their health care, end up in an emergency room and don't get to 
the community health center at the right time, or the community 
health center can't connect them up for specialty care.
    We want to see if we can get communities to get together 
with all their health care providers and put all of the pieces 
together. So, someone who walks into a community health center 
or some part of the network, maybe a public hospital that has 
its own clinic, ends up where they need to go, depending on 
their health care needs, at the right time in the right place, 
as opposed to the expensive part.
    Yes, I think this committee does have the authority to do 
the planning grants; this would be money to the communities 
that got together. But we would want to seek broader authority 
for a large investment in this area.
    Mr. Obey. My time has expired. I would ask you to provide 
as soon as you can, for the record, this information.
    We always talk about the number of uninsured. I would like 
to have a more discrete understanding of who they are. Can you 
tell us how many of today's uninsured are suffering from 
cancer, how many are suffering from significant heart ailments, 
and how many are suffering from say Lou Gehrig's disease? Give 
us some specifics so we understand the real numbers.
    Ms. Shalala. We would be happy to provide you with that 
kind of information. Also, some information about who is ending 
up in emergency rooms now and what's happening at community 
health centers as the Medicaid population comes out and goes 
into HMOs, and what their new roles are going to be as part of 
this effort to get everybody to health care even at the same 
time when we're working to get them health insurance.
    [The information follows:]

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    Mr. Porter. Thank you, Mr. Obey.
    In accordance with the Chair's announced order, we will go 
Mr. Miller, Mr. Hoyer, Mr. Wicker, Ms. Pelosi, Mr. Cunningham, 
Mrs. Lowey, Mr. Jackson, Ms. DeLauro and Mrs. Northup in that 
order.
    I neglected to add that where a chairman of another 
subcommittee or ranking member of another subcommittee 
specifically requests going out of order because of demands for 
their presence at their other hearing, we will certainly honor 
that request.
    Mr. Miller.

                               NIH BUDGET

    Mr. Miller. Thank you. This is one of the subcommittees 
that all of us enjoy being on because there are so many good 
programs, I am no longer on the Budget Committee, but on that 
committee we have had the frustrations of having games being 
played with the budget, and I think the chairman talked about 
it already. It is extremely frustrating for us who are strong 
supporters, as you are, of the crown jewel of our government, 
NIH, to sit here and say that you continue the President's 
commitment and 50 percent increase, when really we are cutting 
NIH in your budget. Based on inflation, we have a real dollar 
cut.
    I don't know if you read Al Hunt's editorial in the Wall 
Street Journal last week. Al Hunt is not a friend of the 
Republicans, but he says ``Clinton Strikes Out at Health 
Research.'' What he is saying is, and I agree with him, that 
the President told Ted Kennedy and some other supporters of 
biomedical research that the research money will be there 
because the Republicans are supportive of this issue. And as he 
points out, last year you all requested an 8 percent increase, 
and we put it up at 15 percent.
    When you start at a 2 percent increase, it is hard to go 
very far. What did you originally ask for? I know that you 
didn't ask for a 2 percent increase.
    Ms. Shalala. Congressman Miller, my submissions to the 
President and my discussions with the President and with his 
senior budget people are normally confidential. I think the way 
in which we get to 50 percent is obviously adding up last 
year's percentage, this year's percentage, and what we intend 
to do over the next 3 years. The President is committed to 
getting a 50 percent increase, and he intends to do that over 
the 5-year period where he has pledged to do that.
    I share some of the frustration, obviously, and I have 
already publicly said that going up and down on the NIH budget 
is not, in my judgment, as a former university chancellor, the 
way in which you make long-term commitments to biomedical 
research. But the President does intend to keep his commitment 
to the 50 percent increase over the period of time that we are 
talking about.
    Mr. Miller. Obviously, that gets more difficult with a 
roller coaster where you go up and down. It is just bad 
planning and bad public policy. What it does--because this is 
the largest single item of discretionary spending, that is the 
game for us to try to make that up, because where do we come up 
with it?
    By the way, I agree with the ranking member, Mr. Obey, that 
these budget caps are basically history and we need to be 
careful how we approach them.

             EMPLOYING INNERCITY RESIDENTS AT CENSUS BUREAU

    The Congresswoman, Carrie Meek, and I will be introducing 
legislation today dealing with the census. The issue that we 
are proposing is people undercounted may be from the inner 
cities, minorities and immigrants. We need to make it as easy 
as possible to hire people from those communities to work on 
the census. There are also problems whether it is in the 
American Indian community or with welfare recipients who want 
to temporarily work for the Census Bureau, but who may lose 
benefits. This is also true for retired military officers.
    We are trying to find a way for people who are on welfare 
and Indian programs in other programs to be able temporarily to 
take those jobs but not lose those benefits. We are going to 
propose a legislative solution today which is very difficult, 
as you know, to go through. If there is any way we can, you 
know, this has solid bipartisan support. There is concern by 
Ways and Means that we are going to usurp State power.
    Ms. Shalala. This would require a conversation with the 
governors that you ought to have. I think, which is, whatever 
the income cutoffs for the programs that you are talking about, 
the Medicaid program, whether that work would be counted 
towards the work requirement, are essentially State decisions. 
If people continue to have an income under what the Medicaid 
limit is for that year, they ought to be accommodated through 
the Medicaid program. They probably won't be able to keep up 
their welfare subsidy for that period of time; it just depends 
on where they are in the welfare-to-work cycle, and this can 
only be answered State by State, depending on what the State 
rules are.
    Mr. Miller. It is a temporary situation for a month or two 
in March-April of next year.
    Ms. Shalala. The Congress can urge the governors to be 
accommodating for temporary workers that are going into the 
census system and work something out. Basically, when we did 
the welfare reform, we left the decisions about moving people 
from welfare to work essentially to the States. There are 
numbers of people, of course, that are currently on welfare 
that see that as an opportunity to get their first work 
experience and will be going into the system.
    I noticed in one advertisement you are required to have a 
car and a telephone if you wanted to get a job as a census 
taker, and that may be an obstacle for some people that are 
currently going from welfare to work. But many States are 
accommodating people getting cars so they can get a job as part 
of the formulas that they are working out.
    So I would urge you to have a conversation with the 
Governors Conference. We would be happy to be helpful as a part 
of that discussion. We obviously see the census opportunity as 
an opportunity for people to get work experience.
    Mr. Miller. Would you look into what you all can do to help 
encourage the States to do that?
    Ms. Shalala. I want to look at the State rules and see 
whether if we calculated what a full-time census worker was, 
what they still would be eligible for in most of the States. 
That obviously is a possibility.
    The governors are coming to town. It is a perfect 
opportunity to raise an issue about how they are accommodating 
many people who are starting their first jobs working for the 
census. It is a good issue to raise with them. My guess is that 
you will find considerable sympathy.
    Mr. Porter. Thank you, Mr. Miller.
    Mr. Hoyer.

                               NIH BUDGET

    Mr. Hoyer. Let me join Mr. Porter and Mr. Obey in welcoming 
you to the subcommittee and expressing my thanks for your 
extraordinary job. You are not only the longest serving, but 
also one of the best, if not the best, secretary who has served 
in this post, and I congratulate you on that.
    Let me also join Mr. Obey in his comments. We have 
extraordinarily good economic times in America today. We have 
so, as Mr. Obey indicated, because of two Presidents, President 
Bush who in 1990 confronted Mr. Gingrich and others who savaged 
him in his actions. Unfortunately, he reconsidered those 
actions some 2 years later, did not reverse them, but 
reconsidered whether they were right.
    The 1993 bill under President Clinton, directly led to the 
economic times that we find ourselves in. In that context, let 
me ask you a couple of questions.
    First of all, with respect to NIH and its funding that you 
have just discussed, clearly last year NIH funding--as a 
consequence, we zero funded low-income energy assistance coming 
out of this subcommittee; we zero funded summer jobs for youth 
trying--in trying to get them into the mainstream of employment 
as we cut welfare and expected young people to get into the 
work process, both of which I thought were inappropriate, but 
did allow us to fund NIH more generously. Frankly, can we meet 
the 50 percent target within the caps that now exist--
responsibly, I might add?
    Ms. Shalala. Well, I think it would be very tight to try to 
do that, but as you can see, one of the problems that we had 
this year--the President had, as he was putting together the 
budget, is that because of the limitations and his commitment 
to the balanced budget, he couldn't get everything in. So I 
think that the Administration is prepared to work with the 
Congress in a bipartisan manner to see how we can accommodate 
everything that we need to accommodate, but keeping it in the 
context of a balanced budget.
    Mr. Hoyer. Madam Secretary, I agree with keeping it in the 
context of the balanced budget, but I think I read your answer 
as no.
    Ms. Shalala. I can't commit the Administration to the 
raising of the caps. I do think that the President and the OMB 
Director, Jack Lew, are prepared for the executives to sit down 
with the Congress as we work through all of the things that we 
want to do and to have that conversation, but I certainly can't 
commit them to raising the caps at this time.

                         WASTE, FRAUD AND ABUSE

    Mr. Hoyer. I understand.
    Secondly, let me ask you: You had a chart a number of times 
when you have testified, and you talked about waste, fraud and 
abuse. Americans believe that while they are prepared to invest 
in people, they don't want money wasted or stolen from them. 
They work hard for it. Your administration has probably been as 
successful as any of your predecessors, and probably 
cumulatively, the net effect of all of your efforts in wringing 
waste and fraud out.
    You mentioned a 60 percent increase with prosecutions and 
40 percent increase in convictions. Can you give us a dollar 
figure on what you project as you did in some of your charts as 
to what we have saved as a result of those investigations?
    Ms. Shalala. Yes, I am sure we can.
    Last year we put $1 billion back into the trust fund, and I 
think we have a number of $2.6 billion for this year, but I 
will have to give you a cumulative number. It is sorting out, 
too, the waste piece, the overpaying from the fraud piece. I 
don't want to suggest that all of this is fraud.
    The significant number that we announced yesterday is that 
we are cutting back on the overpayments in the system. The 
health care system itself is beginning to get its own fiscal 
management systems, in place; and it is, as you have heard from 
every part of the health care system--there is a lot of 
unhappiness out there because we have tightened down. The 
results are now seen in a much tighter, better managed health 
care system where we are not overpaying, overspending or 
tolerating fraud.

                        COORDINATION OF SERVICES

    Mr. Hoyer. I am sure that everyone on this committee 
appreciates those efforts.
    Lastly, Madam Secretary, are we increasing our coordinated 
services ability at the Federal level?
    Ms. Shalala. We absolutely are, but more importantly, at 
the local level. I was in Chicago right after the President's 
State of the Union and met with the mayor and with the child 
care providers, both public and private, our Head Start people. 
They told me that at the local level, because of the openness 
in the push from the Federal people who run both child care and 
Head Start, that over the last couple of years, for the first 
time, they are actually coordinating both the building of 
centers, their goal, of course is something you have pushed for 
for so long--a seamlessness system for a child and their 
family--and that is happening at the local level. It is not 
only me telling you that we are doing it at the national level 
to make sure that the system fits together, but at the local 
level; that is where it is happening.
    In a big city like Chicago, they couldn't have been more 
enthusiastic about what was actually happening on the ground.
    Mr. Hoyer. Thank you, Madam Secretary.
    Mr. Porter. Thank you, Mr. Hoyer.
    Mr. Wicker.
    Mr. Wicker. Secretary Shalala, it is always good to have 
you back. You are a delightful witness. Let me start off with a 
parochial point.
    You wrote a letter to the Washington Post recently about my 
alma mater, the University of Mississippi, in which you 
commended us for the progress we have made. You commended the 
faculty, colleagues, alumni and student body for representing a 
new generation of southerners committed to excellence. I am 
sure that the chairman would not object if I entered that 
letter into the record, and hearing no objection, I ask that 
that be done.
    [The information follows:]

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                   SOCIAL SECURITY AND BUDGET SURPLUS

    Mr. Wicker. Let me say that I appreciate you recognizing 
people who are making an effort to turn things around and do 
the right thing, and I appreciate that so much and I commend 
you for the good work that you are doing.
    Let me make an observation about the good economic times. I 
have the greatest regard for my colleagues, Mr. Obey and Mr. 
Hoyer. I think today we have seen a stark difference in 
political philosophies. My good friend, Mr. Obey, mentioned 
that to cut tax rates would be to give the surplus away; and 
clearly my friend, Mr. Hoyer, believes that our prosperity is 
due to tax increases both under a Republican President and a 
Democratic President. I happen to believe that our prosperity 
and these good economic times come more from the tax cuts that 
this Congress has passed, signed by President Clinton, and by 
the balanced budget that we have passed and by the commitment 
shown.
    Let me ask you about Social Security. You said last 
November Social Security must be first in line for any budget 
surplus. Now, this came on the heels of a statement by the 
President of the United States, ``If Congress sends me a bill 
that squanders the surplus before we save Social Security, I 
will veto it.''
    Squandering, I think, in that context meant what my friend 
Mr. Obey said, a tax cut. Taking 10 percent of the surplus last 
year, as proposed by Chairman Archer, saving 90 percent for 
Social Security but devoting 10 percent to tax cuts, according 
to the President would have been squandering that money.
    The President also said last September, ``We must similarly 
be committed to maintaining our fiscal discipline, setting 
aside the surplus, every penny of it until we save Social 
Security first.''
    Now the President seems to think that 62 percent of the 
surplus will be just fine to dedicate to Social Security and 
that we can spend the other, some 38 percent of the surplus. 
What has happened between last September and last November and 
today?
    Ms. Shalala. Well, let me say that the President has been 
consistent here. He has said Social Security first, and he has 
actually detailed the amount that we now think that we need for 
Social Security to add the number of years that gets us through 
the baby boomer population and beyond.
    In addition to that, he has said--as a trustee of both 
systems that we should put 15 percent aside to extend Medicare 
another decade, which would give Medicare two decades of life. 
And as you know, the trust fund Medicare trustees have reported 
that we only have 10 years left in that trust fund.
    Twenty years, from our point of view, is fine. Medicare is 
different from Social Security in the sense that we know what 
our Social Security costs are going to be. We do not know what 
our Medicare costs are going to be because we don't know what 
is going to happen in the health care system because of 
scientific breakthroughs. So a shorter-term investment in 
Medicare is absolutely critical here.
    I think the President has finally pinned down the exact 
amount in this budget that he believes takes care of Social 
Security, takes care of Medicare; and all of the programs that 
I am talking about here, not financed by the surplus, are in 
fact financed within the balanced budget, within the caps 
through offsets. Or in some cases, we have used the tobacco 
tax, although that is not assigned to a specific program as it 
was last time around.
    So I think the President has been very specific this time 
in the number of years and in the amount of money and in the 
two programs which are critical for this country's future.
    Mr. Porter. Thank you, Mr. Wicker.
    Ms. Pelosi.
    Ms. Pelosi. Thank you. I welcome you and join my colleagues 
in congratulating you for the past 7 years in coming before us 
and demonstrating your incredible knowledge and creativity and 
the hard work that is involved with it.
    I want to praise the administration and I commend the 
President for saving Social Security first. I am among those on 
this side who have always thought buying down the debt is a 
good idea and reducing the debt service will give us some 
resources needed for domestic priorities, and I hope that will 
be one of the points of the President's proposal.
    I want to commend you for a budget presentation that 
recognizes the strength of our country and the health and well-
being of our people. I think helping people with disabilities 
join the workforce is great. I commend you as the ranking 
member on the Foreign Ops Committee for initiating the 
discussion on the international aspects of good health for the 
American people. At every meeting we have there, we ask USAID 
what are they doing to coordinate with domestic agencies; and 
similarly here, with Dr. Varmus, the point of international 
collaboration is raised, but I appreciate your putting it in 
your statement, and I am glad the tobacco-free initiative is 
part of that.
    I absolutely support the minority aid initiative. I am 
pleased to work with the Congressional Black Caucus on that.

                               NIH BUDGET

    And on the NIH, I think it is unfortunate that we don't 
have enough money to increase the NIH budget. I don't think 
that we are going to have a small increase in the President's 
proposal; I think there will be a bigger increase. There is 
scientific opportunity, which I think we should fund, but we 
have to find the money in the--as I refer it to all the time--
in this lamb-eat-lamb budget. There are very few places to go 
to find the money, so we are going to have to have a higher 
602(b) allocation. For all of those people not on our committee 
who want higher NIH funding, they have to join with us to make 
it a priority.

                          ENVIRONMENTAL HEALTH

    I want to talk about environmental health issues, 
especially children's environmental health issues. We were able 
to get into the budget, with the cooperation of our chairman, 
increased funding for the environmental health lab. Our 
chairman had a hearing on it--thank you very much, Mr. 
Chairman--and we went from $7 million to $21 million last year. 
You almost have that in the budget. We are hoping for at least 
that or more.
    Lancet magazine reported an association between exposure to 
pesticides and a risk of breast cancer; and last month it was 
indicated that most cases of Parkinson's disease are caused by 
yet unknown chemicals in the environment.
    Can you tell us some of the programs within the department 
that are focusing on understanding the link between environment 
and health; and combining that question with the National 
Institute for Environmental Health Sciences, if you can give us 
an update on the funds that were in the supplemental for breast 
cancer?
    Ms. Shalala. Let me answer the first one, and then if I 
don't have a complete one for the second, I will provide it for 
the record for you.
    Let me say that we share this committee's priority on 
environmental health, particularly the risks for children, as 
well as the safety risks. And in fact Administrator Carol 
Browner and I chair a task force, and we have laid out an 
agenda, and you will see the first results of it in our asthma 
initiative. And that is a very large percentage of the kids who 
end up in emergency rooms in this country; it is because of 
asthma and because of the lack of management of asthma. So 
working with their families, making sure that they are properly 
diagnosed, making sure that the kids and their families are 
trained, and they don't go out without what they need to play, 
and that their families and the kids themselves take 
responsibility for recognizing the symptoms.
    We also, as part of that asthma initiative and our 
initiatives on childhood cancers and developmental disorders 
relating to environment, we are increasing the research in that 
area so that every single one of these initiatives will have a 
research component, a service component and an educational 
component. But asthma is the first big one that we are taking 
on, and I think you will be very pleased with our efforts in 
this regard.
    Let me also say on the environmental breast cancer research 
emergency supplemental, which is $15 million. On March 31, we 
will be awarding a million dollars for a geographical 
information system to identify potential environmental risks. 
On April 1, $3 million is due to be awarded for a study in the 
regional variations in breast cancer risk in the United States, 
which has been a big issue. Why are there higher breast cancer 
rates in one part of the country than in another? $5 million 
will be awarded on July 1 for a set of interdisciplinary 
studies in the genetic epidemiology of cancer and $3 million 
for a workshop this spring on accurate exposure assessments in 
cancer epidemiology from which priorities for research 
applications will emerge. So we have the resources lined up 
with a set of commitments that cover the areas that the 
Congress asked us to commit ourselves to.
    Ms. Pelosi. I believe my time is up, but I want to say that 
I think the National Institute of Environmental Health Sciences 
and the Environmental Health Lab at CDC are two tremendously 
effective institutions that are in furtherance of addressing 
those goals, of addressing children's and environmental health 
issues.
    Our chairman, Chairman Porter, is interested on the 
international side and environmental side, and so I think we 
are fortunate for that. Since my time is up, I won't have time 
to ask about the administration health access plans, and I 
would submit those for the record.
    Ms. Shalala. I am going to be visiting the National 
Institute of Environmental Health Sciences in North Carolina, 
and Ken Olden is the lead staff person on this joint task force 
that Carol Browner and I have.
    Ms. Pelosi. Here we are having our hearing on the first 
issue that I have ever known about in this committee; and, 
secondly, we have a task force within the Congress, we are 
having town meetings on it. There are many pieces of 
legislation relating to this issue, and so we would like to 
coordinate with you.
    Thank you, Mr. Chairman.
    Mr. Porter. Thank you, Ms. Pelosi.
    Mrs. Northup.

                               NIH Budget

    Mrs. Northup. My time is almost up and I have to go vote. I 
will submit most of my questions for the record.
    I do thank you for so many of the programs that I think you 
all do so well. Since I have such limited time, I would like to 
point out that if all of the initiatives are funded that have 
been proposed in your budget, the continual pressure on NIH 
will exist. I would assume that the initiatives that you have 
put forth today are not 1-year initiatives that you would think 
would terminate at the end of this year. And so while you may 
say we are going to make up for the difference in future years, 
this President only has 1 more year after this, and the new 
proposals you make would continue to expand and forever 
jeopardize increasing NIH funding to the level that the 
President has promised, unless the President has decided to 
forgo the budget gaps and not even try to meet those.
    Ms. Shalala. I appreciate that.

                        Community Health Centers

    Mr. Bonilla [presiding]. Sorry I am running late. We have 
conflicting hearings simultaneously.
    I would like to start out with a question about my concern 
for a new initiative proposed in the budget this year versus 
strengthening some existing programs that I have been 
championing for some time. The first one deals with community 
health centers.
    This Year 1 new initiative has a $1 billion price tag over 
the next 5 years and claims to provide health access for the 
uninsured. While the proposal recognizes community health 
centers as valuable safety net providers, it will not add 
anything new.
    Madam Secretary, I know that you will agree that a picture 
in this case is really worth a thousand words, and I have 
brought some pictures from health centers around the country. I 
have been to health centers on many occasions personally over 
the years to see the good work that they are providing for many 
of the impoverished areas in this country. You can see the 
faces of the patients and the baby in the picture, that 
oftentimes this is the answer to the uninsured in many of these 
areas. It is already working very effectively. With over 30 
years of experience in providing primary health care and access 
to the uninsured, the health centers program is already meeting 
the goals of this new initiative, as you have outlined on page 
95 of your fiscal year 2000 budget. In your words, the goal is, 
and I quote, ``to assure that more uninsured people receive 
needed care,'' and that the care received is of a higher 
quality and that the uninsured are served by providers who 
participate in integrated health systems. That is the 
definition of a community health center, and the only thing 
holding them back from serving more uninsured people is a lack 
of resources.
    It simply does not make sense to me to create a new program 
to serve the same purpose of an existing program which our 
budget constraints prevent us from adequately funding. My 
question is, why not target these scarce Federal dollars to 
these existing infrastructures, like health centers, proven to 
deliver immediate access to uninsured patients, instead of 
creating a another layer of bureaucracy that we are not sure 
would work long term?
    Ms. Shalala. That is exactly the point. You have to see our 
new initiative as strengthening community health centers. First 
of all, the budget does have a $20 million increase for 
community health centers. The second initiative that we are 
talking about is an attempt to get the community health 
centers, the public hospitals, the academic health centers into 
community-based networks that allow someone to walk into that 
community health center for their basic care.
    And remember what has happened to the community health 
centers: They are losing their population to HMOs because 
Medicaid recipients are being assigned to HMOs.
    We see the community health centers as a valuable resource, 
a critical resource in covering the uninsured. But for them to 
be able to work effectively, they have to be part of a larger 
network. They don't necessarily have the specialists on site, 
so we see the $25 million to support--them as part of a larger 
network; and the $1 billion over time to fund both services. 
That service money could well be the glue money that links them 
to academic health centers and public hospitals, so that they 
are part of a larger network. And it is exactly what the 
community health centers have been talking to us about; they 
need to be part of a larger network.
    So you have to see this, as we do, as strengthening the 
role of community health centers in the long run so that the 
uninsured person that walks into a community health center gets 
their basic care, as opposed to an emergency room. They walk 
into that community health center, they get their basic health 
care. If they have a chronic disease or need a specialist, they 
get linked automatically to that specialist as part of a larger 
network.
    So we see this very much as strengthening community health 
centers, free clinics around the country, and very much 
strengthening the large number of uninsured in the South, 
Southwest and in the Southeast. We both talked to the community 
health centers, and we think that they are going to be very 
excited about this proposal because it puts them into a larger, 
community-based network.
    The best examples that we have around the country start 
with the community health centers or these clinics and have 
good linkages so that someone can get all of their care in one 
network. And so we see this as strengthening this whole system, 
and community health centers being strengthened as a result of 
this, particularly as they take on more and more of the 
uninsured.
    Mr. Bonilla. I recognize some of the initiatives that you 
are referencing that they are already undertaking. They are 
trying to have more links with specialists and providers in the 
area; and so I would look forward, as they look forward to this 
proposal, that they would give us that feedback in the end and 
say, ``We like this,'' because what I have heard from them 
directly is that they would rather have more direct funding in 
their hands so they can handle the overflow in the waiting 
rooms.
    Ms. Shalala. And we have to do both, but the important 
thing is that we need a seamless health care system for the 
uninsured. If it stops just at the basic care, it stops at a 
kind of basic care. For an individual, it needs to be a 
seamless system. They don't know one institution from another, 
but they ought to be able to walk into their local community 
health center and get all of the care that they need, not just 
whatever that clinic or that hospital network can provide. They 
ought to be able to get to a specialist if they need to get to 
a specialist, or chronic care manager if that is what they 
need.
    We are trying to glue the system creatively together, and 
every community will have a different organization for doing 
it. Some will be the community health centers at the basic care 
level; some will be the clinics that have been put together 
plus the community health centers. We are going to ask the 
communities to use their creativity so that the proposals come 
to us from the communities, Congressman, not from us down. But 
we want to use our muscle to see if we can get these systems 
together nationally, because in the end that is the way that an 
uninsured person is going to get their care.
    Mr. Bonilla. I am glad to hear that because--I certainly 
hope that this will be sort of a bottom-up initiative, because 
they are out on the front line.
    Ms. Shalala. They are going to send the proposals to us. 
Each of these proposals I expect to be quite different. And 
each of the participants is at the community level. My hope is 
that the mayors, county executives and the health providers 
come to the same table, because all of them end up with people 
coming late or going to the wrong place. If I can take you to 
Sunset Park in Brooklyn to show you their system, or a rural 
system in rural Wisconsin, the Marshfield Clinic.
    The kinds of networks we are talking about rural areas, 
urban areas and small towns, and they are communities that are 
making the effort to get all of their health care providers and 
saying if someone doesn't have health insurance, let's figure 
out a way to get them health care.

                     Medicare and Choice User Fees

    Mr. Bonilla. I have a question now about user fees. The 
additional $194.5 million in so-called user fees. I realize 
that some are supposed to replace appropriations if they are 
approved, but in reality no matter what you call it, it is a 
tax and it is an effort to ask more people to cough up more 
money. Some of these are being used to pay for the 
Medicare+Choice Program's rollout.
    However, last year, I understand the initial start-up had 
some bumps in the road. For instance, the hot line, which your 
officials estimated would be deluged with 20,000 calls a day, 
drew only an average of 250 calls a day, according to my 
information. There are also reports that the Medicare 
beneficiary education campaign was plagued by errors and 
problems. It is my understanding that virtually every health 
plan saw errors in the way its plan and plan benefits were 
described in the comparative chart. And do I have your 
commitment, Madam Secretary, to work with Congress to fix this 
program and make it work properly for beneficiaries in a cost-
effective way?
    Ms. Shalala. First of all, I don't know where that 
information came from. We are testing the system out there. We 
tested it in five States. The 800 number is not up yet 
nationally. We have a target date this year in which everything 
is supposed to be up and running, and we chose five States to 
test the materials as well as to test the first calls on an 800 
number.
    We expected there to be bumps. After all, we are talking 
about millions of Americans who are very risk adverse and are 
not used to choices; and some of the choices are not ready to 
go. We have not had MSAs come into the business. We have not 
had contracts. We have not been approached by those companies 
that Congress expected to come in. In some communities there 
are HMOs and in others there are not, and there are not signed 
contracts yet. We expected some bumps. It just has to be 
properly financed. We told the Congress what we thought the 
cost would be of a properly financed system.
    But I would make two final points. Number one, we didn't 
get the money for the whole system. We are now asking Congress 
for that money. Number two, no one in the history of the United 
States has ever tried to inform 40 million people who are over 
65 of this number of choices and this amount of change in a 
system.
    Mr. Bonilla. Do you still expect that figure to hold with 
the 20,000 calls a day?
    Ms. Shalala. I expect, when the system is up. But remember 
what that 800 number does is that it gears people into other 
parts of the system. We are gearing up the system to get 20,000 
calls, and we are testing it.
    I personally talked to Mr. Armstrong, the head of AT&T. 
They have never put a system together for that many calls. 
Their own system gets about 13,000, I think a day, or 
13,000,000 over a period of time. So we expect lots of calls.
    We expect the system to work. We have invested a lot of 
money in that system, but we do expect there to be a transition 
period in which it is going to take some time to get this up. 
Remember, we are dealing with a population that is not used to 
change, with a set of materials that have never been used 
before; and you can't just put together written materials, you 
have to do counseling.
    Your staffs will need to be trained, because you have case 
staffs that are going to be answering questions. So we have to 
put the whole Medicare+Choice system together. It is not just 
the 800 number or the people. It's having imperative 
information to answer questions in the same way so that people 
get the same information; but no one has attempted this on this 
scale.
    I think we are going to do a very good job. Just because in 
our test cases we found some mistakes, that is exactly what you 
want to find out. I want to find out the bumps now before we 
have to actually have the system working.
    Mr. Bonilla. Thank you.
    Mr. Cunningham.
    Mr. Cunningham. Thank you. Madam Secretary, we would like 
to invite you to come to the University of San Diego and write 
the same kind of letter that you did for Mississippi. But I 
enjoy working with you, as we did in the Education Committee 
when you testified before the authorization committee.
    Mr. Obey is not here, but I would speak fondly of him. He 
and I serve on the National Security Committee, and we are 
probably the ying and the yang of it on both issues. But I 
think it is correct to look at history and how we view it. Mr. 
Obey talked about the Bush and the Clinton tax increases and 
the economic package of 1993 that increased taxes on Social 
Security and middle income people. I don't use the term 
``middle class.'' I don't think that there is such a thing as a 
middle class, but Congress increased the taxes on middle income 
people. In 1995, we rescinded that economic tax package. We did 
away with the tax on Social Security. For the first time this 
year, people will get--working men and women will get a $400 
tax deduction per child. Next year, $500. Literally, people who 
sell a home will never pay taxes again with the $250,000 
deduction per individual. And there was relief from the death 
taxes where people won't have to sell their farms.
    So we did away with the Clinton economic stimulus package 
and changed things. The welfare rolls, the average person was 
on welfare 16 years. The President talked about it in his State 
of the Union. That involves a lot of health care issues, as 
well. The President vetoed welfare reform twice, but yet he 
says, we have half the rolls on welfare. Instead of drawing 
from Social Security and Medicare trust accounts, for the first 
time people are now working in Welfare to Work, putting money 
in instead of taking money out. So we view the economic 
stimulus package a lot differently, especially since we 
rescinded most of it.

                               NIH Budget

    But I agree with you on the problems outside. The border 
States have a big problem with TB, especially San Diego, and 
probably even in the north coming out of Canada, because those 
countries don't have the same health care that we do, and TB 
and hepatitis are big issues. I am a cancer survivor, and I am 
alive today because of technology that was there.
    And breast cancer is an issue. I have a large family of 
women--three grandmas, a mom, a wife. I don't think that the 
research that we have in, say, breast cancer is enough for 
promoting self-examination. And we are on the edge of so many 
findings. Forty-four thousand males die of prostate cancer 
every year and yet the Technology, from rods to radiation 
control, is so important not only to the quality of life, 
saving lives, but saving dollars. And so I would hope, Madam 
Secretary, that you support the increases in medical research 
for NIH.
    Could you provide for the record, Senator Breaux's task 
force on different reforms for Medicare, how that would affect 
and the different issues and the different reforms in the 
Medicare plan?
    Ms. Shalala. I would be happy to. Let me tell you the 
difficulty of doing that.
    Senator Breaux's commission has not yet detailed the 
proposals in a way in which we could analyze the impact. The 
actuaries haven't reported yet. So I think that after the 
actuaries say something--the proposal I have seen is about six 
pages. That is not big enough, given the size of the Medicare 
program, for me to give you a careful analysis of what we think 
the impacts are. I think he actually put off meeting because 
they didn't have the kinds of details that they needed on the 
actuarial impacts of the alternatives that they are talking 
about. I think when that is available we would be happy to come 
by and see you and talk about some of the impacts, but we don't 
have enough yet to actually make intelligent comments on it.
    Mr. Cunningham. Most of us have seen different snippets or 
read the review, and I agree with some and disagree with some. 
But I would like to see from the administration's view what 
they agree with or disagree with as far as the reforms.
    Ms. Shalala. I appreciate that, Congressman Cunningham, and 
I would be happy to. I don't disagree or agree with snippets. 
When I get something hefty enough, we can analyze it and see 
what the impacts are.
    Mr. Cunningham. If you can provide that.
    [The information follows:]

                            Medicare Reform

    At this point, we still do not have any detailed 
information on any proposals from the Bipartisan Commission on 
the Future of Medicare, chaired by Senator John Breaux of 
Louisiana. I would anticipate that the Administration will 
respond officially to the report after it has been released and 
we have had a chance to analyze its contents.

    Ms. Shalala. We do have some fundamentals here and they are 
consistent with some of the things you have said.
    Most people on Medicare and Social Security are not very 
well off. What we don't want at the end of the day is to make 
Americans who are over 65 poorer or to give them more burdens. 
And you remember your Medicare premium is actually deducted 
from your Social Security. So people see the connection between 
Medicare and Social Security. So at the end of the day, the 
Administration is going to look at these proposals on Medicare 
to see whether they actually strengthen the program in the same 
direction we have been going, driving down some of the costs, 
making the program more businesslike.
    I have repeatedly submitted to Congress proposals to allow 
us to pay competitive prices for everything from drugs to 
wheelchairs and have been rebuffed, frankly, over a period of 
time. I am submitting those proposals again because we should 
not be paying more than the Veterans Administration or the 
Defense Department is paying. We ought to be getting the kinds 
of discounts that a large purchaser gets in the system. We 
ought not to be protecting certain parts of the health care 
industry at the expense of taxpayers in this country.
    So you are going to find me very hard-nosed about those 
proposals in terms of protecting beneficiaries who, as they get 
older, are getting poorer, making sure that we are running this 
program in a businesslike manner, and that we are not spending 
one dime more of taxpayers' money than we should be spending.
    Mr. Cunningham. I hope when we look back at history in a 
different view, when we rescinded the 1993 economic stimulus 
package and gave back the taxes to people, that that stimulated 
the economy. In the direction that we are going right now, it 
actually puts more money in the coffers to balance the budget 
rather than deficits.
    Mr. Porter [presiding]. Thank you, Mr. Cunningham.
    Ms. DeLauro.

                              FOOD SAFETY

    Ms. DeLauro. Thank you for being here and thanks to you and 
for your work that you do for men and women and children in 
this country. We are grateful.
    My colleagues have mentioned the opportunity for those who 
are uninsured to have an opportunity to be insured. I think 
that is an area that we have gone past somewhat, but I am not 
going to take my time to do that. My hope is that we will have 
an opportunity to talk through that.
    Let me mention another area, which is food safety. Mrs. 
Lowey and myself are going to introduce the Safe Food Act, 
which will streamline the fight against the 81 million cases of 
food-borne illnesses every year. The efforts are the combined 
efforts of USDA, FDA, CDC, Commerce; and my concern here is how 
we safeguard our population and the health and safety from 
food-borne illnesses. As I was getting ready to come in this 
morning, I was listening to NPR where they were discussing a 
listeria outbreak at the Bilmont plant in Michigan. It 
apparently has been closed. CDC has had some involvement with 
this and has indicated how potentially dangerous this is and 
much worse than E-coli, et cetera.
    I don't know what role CDC plays at the moment, but when we 
have something like this that is found, immediately we should 
deal with a shutdown or recall; and I don't have all of the 
facts yet, but it is upsetting to find out that apparently this 
plant, which is a subsidiary of Sara Lee, was continually open; 
it has only recently been closed.
    But my concern is, what are the enforcement mechanisms that 
you view we can use to address this issue, which in my view is 
a serious one for health and safety.
    Ms. Shalala. I appreciate that. We would be happy to look 
at your proposal, but both FDA and CDC have jurisdiction in 
this area. We have effectively cut the time for tracing food-
borne illnesses dramatically over the last 5 years through 
improving the scientific infrastructure around the country, the 
quality of the labs, the better reporting systems, and these 
systems are integrated with our infectious disease tracking 
systems, I have not yet seen your bill. I have in other places 
at other times cautioned people against thinking that a 
structural change separating the science from the regulatory 
function, is a good idea.
    What I would like to do is to be able to come in and 
thoughtfully show you how we coordinate our efforts, show you 
how much success we have had over the last 5 years in actually 
cutting the time significantly on the identification and 
tracking system, and actually showing you that this is not 
unrelated to these new investments in bioterrorism and in the 
public health infrastructure. In the end, it is on-the-ground 
people in local communities and the surveillance systems that 
they have in place, their lab capabilities. They are the 
frontline fighters for this. With oversight by both the FDA and 
the CDC, and in some cases the Department of Agriculture, this 
coordination works, I think increasingly effectively. Let us 
come in and show you the jurisdiction.
    As I made the point about the World Health Organization, I 
do not want to cut the CDC out of its international 
responsibilities in this area for food-borne illnesses. You 
remember the CDC's activities in relationship to advising the 
Japanese when they had a very serious issue. Many people from 
other countries are trained at the CDC in tracking both 
infectious disease and food borne illnesses, I think we want to 
show you how these agencies work together, know what their 
national and international roles are. We have been able to 
significantly, over the last 6 years, improve the system that 
we have in the United States so that we get a very transparent 
system in which we have quick reporting. Increasingly, industry 
itself is cooperative in withdrawing a food product very 
quickly once notified, and is anxious to raise quality 
standards. The chairman of McDonald's was in to see me last 
week, talking about the safety system they are putting in place 
and how they want to improve their system.
    So I think that working with industry, improving our 
surveillance system, improving our lab capabilities and our 
turnarounds, in fact, we have a system that is very 
transparent. We hide nothing from the public but give them 
clear information about what we have got and what they have to 
be careful about.
    I am happy to talk to you about your bill.
    Mr. Porter. Thank you.
    Mr. Istook.

                      NOTIFICATION OF ABUSE CASES

    Mr. Istook. Thank you. Madam Secretary, I am sorry that I 
was delayed in being here. We had a defense briefing regarding 
troops in Kosovo, and things never happen with the best timing.
    I appreciate your being here, and there are three things 
that I would like to discuss with you.
    One, I appreciate the support of Chairman Porter on this, 
and the administration's. The President signed into law a 
provision as part of the Omnibus Appropriations Act, section 
219, specifying Title X providers under the Public Service Act 
should comply with any State law requiring notification or 
reporting of child abuse, child molestation, sexual abuse, rape 
and incest. And I am aware that approximately a month ago you 
sent a memo to the regional health administrators specifying, 
of course, that they need to make sure that grantees comply 
with the State law, it being, of course, State laws with which 
they must comply.
    I wanted to inquire whether before or since you sent that 
memorandum if any difficulties have surfaced of which you are 
aware or any sort of resistance or problems with initiating 
what was passed into law last fall?
    Ms. Shalala. I know of no problems myself, but I will 
check. We will make sure that the law is very clear about our 
grantees are expected to do.
    Mr. Istook. I appreciate that. Obviously, different States 
phrase things different ways. Just like you have ``rape'' and 
``statutory rape,'' it may not be called ``sexual abuse,'' it 
may be called ``taking indecent liberties with a minor.'' But 
it is your understanding it is within that scope?
    Ms. Shalala. If we need to provide technical assistance 
through our regional offices, we will do that.

                         WELFARE REFORM SURPLUS

    Mr. Istook. I would appreciate being kept informed of any 
technical assistance provided.
    The second thing, with the welfare reform that has been 
initiated, many States are building up a surplus in the 
accounts that they may receive from the Federal Government in 
the different aspects of welfare assistance and funding. I 
wanted to ask, what is your assessment of that situation, how 
much might we anticipate would be accumulating in those over 
what period of time; and if there are any proposals or 
prospects that the administration would see fit to try to 
recapture any of that, as opposed to leaving it available to 
the States, depending on how much might accumulate?
    Ms. Shalala. First of all, half of the States have already 
allocated their money, so we are talking about the rest of the 
States. I think there was a reported number of $7 million, but 
it is actually $3 million.
    Mr. Istook. Is that 7,000,000,000 or 7,000,000?
    Ms. Shalala. $3 billion; the $7 billion was a misleading 
figure because it was actually cash balances.
    Our numbers actually show that half of the States have 
obligated all of their 1998 TANF funds. We expect the other 
States either to have made those decisions or be putting money 
into their rainy day funds.
    When Congress made the decision to give the States the 
flexibility, they also gave them the authority to make 
decisions; like putting away a rainy day fund. I don't consider 
that a surplus. We also wanted them to spend the money 
thoughtfully. States are holding back some of the money because 
they know the next population that they are dealing with, the 
welfare population, is going to require more intensive services 
and more money spent.
    So I am going to be very protective with this committee and 
with the Congress of the States' ability both to use their 
flexibility to spend their money, since half already have 
obligated the money in some way. I think those who haven't, our 
next quarterly report is going to show that there has been a 
lot more activity as they have actually designated the funds. 
But if some are putting funds in a rainy day fund in case there 
is a downturn in the economy, I don't think that there is 
anything inappropriate in that. I think Congress intended that 
the States make decisions that would support their efforts at 
Welfare to Work.
    Mr. Istook. Should I understand that to mean that, to your 
understanding, there is no contingency plan to try to recapture 
any of those so-called ``rainy day funds''?
    Ms. Shalala. There may be a way, to recapture some of that, 
depending on what their spending ends up to be and how 
expensive the next population is. Let me give you an example of 
that.
    Many of the States, because some of the population that 
they are trying to move from Welfare to Work have substance 
abuse problems, they are going to have to combine their 
substance abuse with their TANF money in more intensive 
services for the whole family. People are getting substance 
abuse help and training to move into a job. We expected the 
States to have to spend more money once they got through the 
first part of the population, because they are people who have 
been on welfare for a longer period of time or have other kinds 
of problems that will make it more difficult for them to get 
into the work force.
    Mr. Istook. Thank you.
    Mr. Porter. Thank you, Madam Secretary. We have discussed 
this with your staff, and we are going to continue for another 
15 minutes with your permission.
    Ms. Shalala. That is fine.
    Mr. Porter. My understanding is that myself, Mr. Obey and 
Mr. Wicker have questions remaining.
    Mr. Hoyer. And I would like to make a quick observation.

                  ORGAN ALLOCATION AND TRANSPLANTATION

    Mr. Porter. Madam Secretary, I raised this issue privately, 
and I will do it publicly also, and that is the issue of organ 
allocation and transplantation. They have plagued this 
subcommittee for the last year, and I would urge you to put 
this at a high priority, and we will do the same, because I 
don't think that there is a legislative solution to this 
problem. I think it has to be negotiated out through parties 
willing to find common ground.
    We would be happy to offer our good offices if we can be of 
help to this process. I don't want to see a legislative rider 
being offered at some point, so let me urge you to put this at 
a high priority and work with the transplantation community to 
find a good solution that everyone can live with.
    Ms. Shalala. Mr. Chairman, if I might respond quickly, as 
you know, our regulation does not mandate a specific organ 
allocation policy or require a national waiting list. The rule 
asks the transplant community to establish a medically sound 
policy which is fair to patients in the current system. As you 
know, the new statistics show even wider gaps on waiting times 
for people with the same condition.
    We look forward to working with Members of Congress, and we 
need your help in transmitting to the transplant community that 
as a result of the National Organ Transplant Act, Congress has 
determined that organs are a national resource, that it is 
taxpayer dollars--Medicare, Medicaid and other governmental 
programs--that pay for a very large proportion of these 
transplants. We recognize the very strong donation records of 
the States like Wisconsin, where Mr. Obey comes from. We 
believe that they can take that into account when they design 
these systems that are fairer, but that we will work with the 
transplant community.
    But we would very much appreciate your sending them a 
message at the same time that they are expected to work with us 
and that these are a national resource, these are taxpayer 
dollars that are being spent here.

                             BUDGET SURPLUS

    Mr. Porter. We would like to send a message to both you and 
the community.
    Let me take issue with what several of what our members 
said about the reason why we have this surplus. It is nice to 
think that government did it all. In my own opinion, maybe 
government did 10 percent. The reason that we have a surplus in 
our Treasury is that we have an economy that is growing, 
because the private sector took the steps earlier with a great 
deal of pain to everyone to downsize and become competitive in 
a way that our friends in Europe and in parts of Asia did not 
do, and we are gaining the benefits of their good work and the 
sacrifice of many, many people, the working American, through a 
period of time that was very tough on everyone to put ourselves 
in a competitive position and be much more efficient providers 
of goods and services than we ever had before.
    Yes, government had something to do with that and aimed us 
in the right direction, but I believe it is mostly the result 
of a well-organized and efficient private sector.
    Ms. Shalala. Mr. Porter, I appreciate that comment and I 
hope you heard in my comments that what we are trying to be is 
a more efficient government. We have restraints put on us by 
executives and by the Congress that prevent us from being more 
businesslike in our practices. We are overpaying for a whole 
set of things that we don't want to continue to overpay for.

                  Waste and fraud abuse in health care

    Mr. Porter. I did hear that and it is well taken.
    Madam Secretary, finally, we heard you testify regarding 
waste and fraud, but I am confused by the numbers. If I 
understand correctly, in fiscal year 1998 we spent $660,000,000 
by HHS and the Justice Department to combat fraud and abuse in 
health care. That was mandated by the Health Insurance 
Portability and Accountability Act of 1996.
    I read in the budget summary as a result of the 
administration's efforts, as well as prior-year judgment 
settlements and administrative impositions, only $271 million 
was returned to the Medicare trust fund in 1998, and that 
confused me--it wouldn't be a good return on a $661 million 
investment, obviously--and I wonder if you can tell us what we 
are missing in all of this, because this is what we read from 
the budget justification.
    Ms. Shalala. What I have is the savings on the Medicare 
integrity program, expenditures in 1998 of $500 million and 
savings of $5.7 billion.
    Mr. Porter. Where did they go? We only see a small portion 
of that returned to the trust fund.
    Ms. Shalala. It must have been cost avoidance, and that is 
not in your numbers.
    Mr. Porter. Oh, projected cost avoidance from prosecutions 
and recoveries?
    Ms. Shalala. Yes.
    Mr. Porter. So it is not actual dollars in the trust fund 
at all?
    Ms. Shalala. It is cost of waste. It is money they 
otherwise would have spent except for MIP.
    Mr. Porter. It is not money in the Treasury?
    Ms. Shalala. But one of the things that you have to see--
what is beginning to happen, and I hope that the spring 
trustees will reveal this--is the slowing down of the rate of 
growth in the Medicare program is increasingly being attributed 
to a number of things: the balanced budget decisions that the 
Congress made, but also this extraordinary effort to get the 
system to pay accurately and not to overpay.
    So it is not just the amount of money from settlements we 
actually put back into the trust fund, but it is the slowing 
down of the growth, it is money we would have otherwise spent; 
and you have to put all of those pieces together. So even 
though we spend it on one side, it won't be reflected in 
dollars put directly back into the trust fund, although the 
trust fund has less demands on it because we have slowed down 
growth as a result of this.
    What is happening now is not the old-fashioned going after 
the fraud and getting them to pay back some money in the 
settlements, but people avoiding getting themselves into those 
situations by putting their own systems in place in the private 
sector, so they are not being investigated and so we are more 
accurately paying as part of the system and so that people are 
not pushing the outer edges of the envelope to charge us more.
    We will give you this specifically, and I think we need to 
lay it out in a different way to show you the effects of these 
investments of putting these systems in place.
    [The information follows:]
                    Medicare Waste, Fraud and Abuse
    Secretary Shalala: There is some confusion over savings figures. In 
FY 1998, the Departments of Health and Human Services (HHS) and Justice 
(DoJ) spent a total of $660 million to combat health care fraud, waste, 
and abuse. The $271,000,000 documents savings from deposits to the 
Medicare Trust Fund, OIG audit disallowances, and recovered 
restitution/compensatory damages. These savings are the result of OIG, 
DoJ, and other agency spending from the Health Care Fraud and Abuse 
Control (HCFAC) account which totaled $104 million of the $660 million 
authorized for HHA and DoJ fraud and abuse control activities in FY 
1998. These figures come from Treasury and reflect OIG and DoJ court 
settlements only. This information is reported to Congress as required 
by the Health Insurance Portability and Accountability Act of 1996 
(HIPAA). About $500 million of the $660 million for fraud, waste, and 
abuse control activities was spent in the Medicare Integrity Program 
(MIP) which is estimated to date to generate $5.8 billion in savings in 
FY 1998 in collections, denials, and recoveries.
                             HCFAC SAVINGS
    In FY 1997, HCFAC activities established under the HIPAA reported 
$1 billion in collections to the Government. In FY 1998, the 
collections were just under $300 million despite a $16 million increase 
in funding.
    There were a total of only four cases that accounted for the 
difference in collections realized from health care fraud enforcement 
during the first 2 years of operation of the HCFAC Program. Notably, FY 
1997 saw the largest single settlement of a health care fraud case in 
history, in which SmithKline Beecham Clinical Laboratories agreed to 
pay $325 million in settlement of potential civil liability for false 
claims. The other three were: Damon Laboratories ($119 million), 
Laboratory Corporation of America ($187 million) and ABC Home Health 
Care (total settlement of $255 million, of which $112 million was paid 
during FY 1997). The three laboratories did not pay on an installment 
basis, but transferred the total settlement amounts immediately. As a 
result, there was a significant ``spike'' in collections during FY 
1997.
    With only 2 years of the Program completed, we can't yet tell 
whether there will be a ``normal'' range of collections--it may be that 
the collections will continue to vary widely. In part, this is 
attributable to the fact that collections are often not realized in the 
year in which the investigative, audit and prospective work is 
conducted. The huge laboratory settlements in FY 1997, for example, 
reflected the culmination of work begun years earlier. Similarly, work 
done in FY 1998 will reap collections in future years. A clear example 
of this is our settlement of liability on the part of the Medicare 
contractor Health Care Services Corporation. Though this investigation 
and audit were ``worked'' in FY 1998 and the actual settlement was 
signed in FY 1998, the payment of $144 million was not transferred to 
the Government until the criminal sentencing in December 1998. Thus, 
this large collection will not be posted in the HCFAC Annual Report 
until FY 1999.
                              MIP SAVINGS
    As previously mentioned, almost $500 million of the $660 million 
was spent under MIP. These savings reflect actual denials and 
recoveries due to medical review, Medicare secondary payer, and 
provider audit activities. HCFA relies on MIP to prevent overpayments 
from leaving the door in the first place and has placed a special 
emphasis to prevent overpayments before they happen through pre-payment 
review. These amounts are recorded in HCFA's semi-annual reports to 
your Subcommittee. The next report is due April 1, 1999. We currently 
estimate that at least $5.8 billion will be collected, denied, or 
recovered in FY 1998.
                               CONCLUSION
    We express a final caution. While measuring the cash recoveries 
generated by the HCFAC and MIP Programs is an understandable means of 
assessing the success of the Program, I urge that we not rely on it too 
exclusively as the most important measure of our success. We run the 
risk that we will be viewed as ``bounty hunting,'' worried more about 
payability and collections than the merits of the cases we pursue. 
There are vital reasons to undertake enforcement action other than just 
making the Medicare Trust Funds whole--protecting the quality of care 
provided to beneficiaries; preventing future fraud by excluding corrupt 
providers; and deterring fraud by others through a responsible 
enforcement effort. We should not lose sight of these goals.

                               NIH BUDGET

    Mr. Porter. Let me add one thing. Last year's budget said, 
``The budget proposed sustained increases in NIH over 5 years. 
By the year 2003, funding for biomedical research will increase 
to over $20,000,000,000, or by nearly half.'' That was last 
year's budget, 5-year spending tables in the budget reflect 
this commitment.
    This year, the budget refers to ``the President's 
commitment to a 50 percent increase in NIH,'' and states, 
``This year the budget renews that commitment to biomedical 
research.'' However, this year the 5-year tables are flat, 
which means, in effect, cutting $6,500,000 out of your 
projected spending from the year 2000 to 2003. In effect, the 
budget retains the President's rhetoric, but none of the money.
    Ms. Shalala. That is in part because what the President has 
said is, the surplus must first be spent on Social Security, 
and he is not going to do anything about the outyears of the 
budget until we have settled the Social Security-Medicare 
issue.
    So the commitment that the administration is making is that 
we will adjust those outyears each year to hit our target of 50 
percent, but the President in this budget isn't doing any of 
that until the Social Security and the Medicare pieces are 
taken care of.
    Mr. Porter. Thank you.
    Mrs. Lowey has not had round one.

                    CHANGES IN THE MEDICARE PROGRAM

    Mrs. Lowey. Thank you, and I appreciate your indulgence in 
spending so much time with us, and I want to thank you, as did 
my colleagues, for the energetic and creative leadership that 
you have shown.
    I was pleased that you mentioned the issue of Medicare 
waste, fraud and abuse because every dollar counts, and I know 
in the New York area there are so many senior groups that are 
singing your praises and that of the administration.
    Ms. Shalala. The hospitals are less enthusiastic because we 
have tightened up.
    Mrs. Lowey. With regard to hospitals and the cuts in 
Medicare, I have been very concerned about teaching hospitals 
in New York and around the country, because they have been hit 
hard with recent changes in the Medicare program. As you know, 
teaching hospitals are really the backbone of medical education 
in this country, and if you don't have good teaching hospitals, 
you are not going to have good doctors.
    What are you doing to ensure that these teaching hospitals 
are not adversely affected by these changes?
    Ms. Shalala. I think we are doing a number of things. 
Obviously, with the New York hospitals in particular, we have 
worked out an agreement, as you know, to reduce the number of 
residencies so they can get more efficient as part of their 
organization.
    In addition to that, the future of the teaching hospitals 
is very much part of this broader discussion of Medicare, 
because part of that discussion is that the core of their 
support for things like residencies is built within the 
Medicare system; that is, it is in the mandatory side of the 
budget, and that is critical money for them in the future.
    Many people have suggested that we take that money out and 
put it on the discretionary side of the budget because Medicare 
and the Medicare trust fund are in fact financing a core of 
specialties that are not necessarily related to the elderly or 
senior citizens of the Medicare program directly, but we have 
traditionally supported that.
    The cuts that the teaching hospitals have sustained and 
that other hospitals are sustaining as part of the balanced 
budget have not been easy for them. We are obviously working 
with them in trying to fine-tune. But for the most part, 
teaching hospitals are in a little better shape than they were 
some time ago. I think in the long run we are going to have to 
find a way to protect our investments in their training 
programs.
    The NIH increases have helped dramatically. They are very 
much the players. But don't underestimate, for their long-term 
future, the feeder effect of a well-designed network. That 
little $25 million that we are talking about for the uninsured 
is, in fact, critical to their future, because they need to be 
tied better to an entry-level system. The teaching hospitals 
are the major places where uninsured workers are treated, but 
they often get them too late, or they end up in some emergency 
room, and it is much more expensive for the teaching hospitals.
    So a seamless system that feeds uninsured workers from the 
moment they walk into a community health center or a teaching 
hospital's own clinic, so they can be--an individual or a 
family can be taken care of right through the system is in fact 
part of their future.
    Many of them are struggling with their accounts because of 
the HMO relationship. We need to tie those teaching hospitals, 
public hospitals, community health centers and other kinds of 
free clinics more closely together in a seamless system. We 
need to find secure funding for their residency programs.
    You will notice the other program that we have put in--not 
in the Medicare budget, but because of the Medicare discussion 
outside of it, I hope temporarily--is funding for pediatricians 
in children's hospitals. Again, we haven't been funding 
pediatricians because those hospitals can't account for 
Medicare patients; and the way the formula is set up, they 
can't get Medicare money for residency programs because the 
kids tend not to be on Medicare in the system.
    So I hope that you appreciate the wisdom with which we have 
put in a small categorical program, until the Medicare 
discussion is completed, because we need to make a thoughtful 
decision on the future of teaching hospitals, of those 
residencies and the way that they are going to be funded in the 
future, and where they are going to get their patients from and 
whether they come in at the right time.
    Our need is to get this system to work better, all the 
parts of it, and this is not--usually we come trotting into 
Congress and say, we just need to expand insurance for 
everybody. But one of the advantages of staying so long is you 
start to see the holes in the system and how you can put these 
pieces together without developing whole new systems, and 
starting to fill in the gaps and getting the health care system 
to work more seamlessly together. That is how I see the future.
    No one can be more sympathetic to teaching hospitals than 
me. I spent most of my career in institutions which had 
teaching hospitals, but they too have needed to modernize and 
become more competitive, and they need to see themselves as 
part of an overall system, and we need to work with them to get 
there.
    Mrs. Lowey. I heard my buzzer go off.
    I will save my other questions. I thank you for your 
indulgence.
    Mr. Porter. The Secretary has advised that she can stay 
until 25 after, but that is the absolute latest. I have Mr. 
Obey and Mr. Wicker on the list, and the Chair would recognize 
Mr. Wicker.

                         SAVING SOCIAL SECURITY

    Mr. Wicker. Madam Secretary, thank you so much for staying 
for a few extra minutes.
    We had an exchange earlier about Social Security and saving 
Social Security first. Last year, the President said that every 
penny of the surplus must be devoted toward saving Social 
Security first. This year, it is 62 percent, and I understand 
from your answer that is based on a specific dollar amount that 
62 percent of the surplus generates.
    I wanted to give you an opportunity to respond to some 
testimony yesterday before the Senate Finance Committee by the 
Comptroller General David Walker and by Edward Gramlich, who 
chaired the study commission and is currently a member of the 
Federal Reserve Board. According to the Comptroller General, 
the President's proposal will not save Social Security first. 
He points out that using the budget surplus will not address 
the program's long-term financial viability nor will some 
proposals made by Members of Congress. He also criticizes the 
unprecedented move of using for the first time general 
government revenues for the projected shortfalls between 
payroll taxes and benefits.
    I wanted to give you an opportunity this afternoon to 
respond to that testimony on behalf of the administration.
    Ms. Shalala. Thank you very much. I think I will decline 
the opportunity. I just saw the article as I was walking in. I 
will leave it to the Budget Director and the Secretary of the 
Treasury to comment in detail.
    As you know, there has been considerable debate over how 
the trust funds are being set up and the bonds that are going 
in and out of the system, and I think I will leave it to the 
senior economic members of the Administration to respond 
officially, which I am sure that they will do today or 
tomorrow.
    Mr. Porter. Thank you, Mr. Wicker.
    Mr. Hoyer had a brief comment and then Mr. Obey.
    Mr. Hoyer. I just wanted to make the observation that Mr. 
Wicker raised, and then Mr. Cunningham, and then you did as 
well, Mr. Chairman.

                             BUDGET SURPLUS

    Obviously, there are philosophical differences here, but 
from a fiscal standpoint, CBO under Dr. O'Neill observed that 
the reasons that we have this budget surplus are, yes, the 
private sector has performed well and about $210 billion, 
according to the July figures last year, were attributed to 
that; $141 billion, however, of the reduction in the $360 
billion-some-odd projected deficit was directly attributable to 
the 1993 program passed in 1993 and 1994.
    Furthermore, it is instructive, I think, that CBO then 
said, under the Congress from 1995 to July of last year, 1998, 
there was a net effect of the policies adopted during those two 
Congresses of $11 billion-plus added back to the deficit.
    I say that only--not to argue the political, but from the 
appropriations standpoint, it ought to be clear when you cut 
taxes deeply in 1981, you have created what I think Mr. Obey is 
going to talk about, a real spike-up in the deficit. That 
happened. Those are the figures and those are the facts. That 
is what happened.
    In 1993, we started to get a handle on that, and in fact 
for the first time in this century we have had 6, now 7, years 
of declining deficits straight in a row, so that for us to, as 
an Appropriations Committee, say we want to do all of these 
good things in our bill, and then to say in addition, however, 
we want to cut revenues, I suggest to you that we are creating 
a situation which is dysfunctional. And in order to be honest 
with ourselves and those who testify before us on the needs of 
the American public, we ought to ensure that we know what we 
are talking about in terms of the consequences of our actions, 
whether it is cutting taxes, raising taxes, cutting spending or 
raising spending, because it does have a direct effect on what 
this subcommittee can do in funding NIH, funding child care or 
Head Start, funding whatever items in this bill that each and 
every one of us thinks are important to the American public.
    Mr. Wicker. If the gentleman would yield, someone is going 
to have to get the last word in today on this issue.
    Mr. Hoyer. My suggestion is that Dr. O'Neill did that.
    Mr. Wicker. When taxes were cut, tax revenues did increase 
and the facts are undisputed in that regard. Also, the deficit 
went up because spending went up, and that is a fact.
    The other fact and it is a matter of political rhetoric--
    Mr. Hoyer. I will reclaim my time, Mr. Chairman.
    Another fact is that President Reagan asked for more 
spending than the Congress gave him in his 8 years as 
President. The reason that fact is important is, it was not the 
Congress that went on the spending jag that caused the deficit, 
because Mr. Reagan asked for more spending than the Congress 
ultimately appropriated.
    So if your point is that the tax cuts resulted in more 
revenues, revenues went up as they have pretty continuously, 
historically, as our GDP has expanded.
    Mr. Porter. I will leave that debate for the floor.
    Mr. Obey.
    Mr. Obey. This is not a debate about spilled milk, it is a 
debate about dried milk.
    This is what happened. From 1946 until 1978, roughly, we 
had a steady decrease of the public debt as a percentage of our 
total national income under a succession of Democratic and 
Republican Presidents and under a Democratic Congress most, but 
not all of the time. Then we hit the energy crisis the last 3 
years of Carter's term, and that stalled out.
    Then we passed the Reagan budget in 1981, and we began to 
see an unfortunate reversal of that debt-to-GDP ratio climbing 
back up to a significantly higher level.
    President Clinton became President in 1992, at this point 
and the budget action that was taken in 1993 put us back on an 
historic downward trend. Regardless of who shot John or who 
didn't, we shouldn't argue about the necessity to stay on this 
downward track and we will get off this downward track if we 
buy the same snake oil that was sold to us in 1981.
    The idea that you can afford 10 percent tax cuts across the 
board, a huge percentage of which goes to high-income people 
and still take care of Social Security first and still fix 
Medicare and still correct this downward crunch on 
discretionary spending that everybody in this committee says we 
have to correct, they have to be smoking something which is 
illegal.
    That is the question. Regardless of who did what, the 
question is, what should we do now; and the President puts us 
on the downward trend in terms of our debt, which we should not 
get off of.
    With respect to NIH, I would simply like to say that rather 
than having this committee and the administration jockey over 
that issue ad nauseam, we need to have a common agreement 
between the administration and this committee, so we know about 
where we want to go over the next 5 years so you don't have the 
budget for NIH yinging 1 year and yanging the next, so that 
your medical researchers can plan, the program managers can 
plan and the politicians just blow heap.
    Mr. Hoyer. What?
    Mr. Obey. If you were from cow country, you would 
understand.
    All I would say is, the fact is that the President last 
year proposed a track for a 50 percent increase over 5 years.
    His budget request this year is still, as I understand it, 
asking for $272,000,000 more than he proposed last year for 
NIH, which I think means that the President has followed a 
consistent line. To those who think that it is possible to 
provide a huge increase in NIH within the constraints of the 
budget caps that we now have to operate under, we think that we 
can do that without gutting education, without gutting job 
programs, as this committee did last year in order to try to 
fund NIH, I would simply say that is not realistic; and I would 
simply say that--those who want to see NIH funded at a higher 
level, I would simply say this, I may not have voted for every 
dime that those folks ever wanted, but by God, I voted for 
every dime you ever got. There is a message in there somewhere, 
and the President has also supported every dime that you have 
ever gotten for NIH.
    It seems to me that NIH has to be increased consistently 
over time, but not by playing a beggar-to-thy-neighbor approach 
which in the process ruins our ability to meet our obligations 
in education and health budgets and in job budgets.
    If you want the economy run well enough so that we can 
afford to put an extra dime in anybody's budget, then by God, 
you had better not play the me-only game. You had better 
recognize that we are all in this together and we have got to 
have measured and balanced support for increases in all of 
these high-priority areas--NIH, job training, education--
otherwise, the economy is crippled, and we don't have the 
resources to do any of this except issue press releases that 
are phony.
    Mr. Porter. If I may respond to the gentleman, obviously 
what I said at the very beginning is, we need to realistically 
adjust the caps. Without doing that, we run into huge problems 
of working through--that we ran into last year.
    Our job is to choose priorities. There are some programs 
which I think, while they are icons in certain ways, they are 
less of a priority than others. We were forced to make some 
cuts in some programs that I think were of lesser priority. 
Reasonable minds can differ on that, obviously, but I think all 
of us can agree that what we need to do is realistically 
address the budget caps and make them fit the situation with 
our budget surpluses and the needs of all of the priorities 
before the subcommittee, and I think all of the members of the 
subcommittee are dedicated to doing exactly that.
    Madam Secretary, you have been wonderful and very patient 
and thank you for staying extra time. Everything you said today 
is reflective of the judgment that I said earlier, that you are 
a star of management and advocacy and do a wonderful job as 
Secretary.
    Ms. Shalala. Thank you very much, Mr. Chairman; and I thank 
you and all of the members of the committee, particularly Mr. 
Obey, for all of your thoughtful comments.
    I do want to say that the department is on record as 
officially being opposed to anyone smoking anything, legal or 
illegal.
    Mr. Porter. The subcommittee stands in recess until 2:00 
p.m.
    [The following questions were submitted to be answered for 
the record:]

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


                                    Wednesday, February 10, 1999.  

                  HEALTH CARE FINANCING ADMINISTRATION

                               WITNESSES

NANCY-ANN MIN DePARLE, ADMINISTRATOR, HEALTH CARE FINANCING 
    ADMINISTRATION
DENNIS P. WILLIAMS, DEPUTY ASSISTANT SECRETARY, BUDGET, DEPARTMENT OF 
    HEALTH AND HUMAN SERVICES

                       Introduction of Witnesses

    Mr. Porter. The subcommittee will come to order. We have 
before us this afternoon the Health Care Financing 
Administration. We are very pleased to welcome Nancy-Ann Min 
DeParle, the Administrator, and to say that we have been 
reading that there are not enough resources for you to do the 
job that we are asking you to do. Let me assure you that I will 
do everything that I can to get you the resources you need. You 
have a terribly important job. The administration, in a fair 
way, of providing health care to people couldn't be a higher 
priority, and we want you to have what you need to do it well.
    I think you have been doing an excellent job there. We may 
differ on some of the policies that the President has 
suggested, but I think all of us are committed to seeing that 
the American people get the highest quality of health care, the 
most access to the health care system, and that it is 
administered in a fair and efficient way, and surely we can 
find common ground to get that job done. So we thank you for 
being here to testify this afternoon.
    I hesitate a moment because we don't have any Member from 
the Minority here, but I am told that Nancy Pelosi has been 
here and will be right back. So I think we can proceed and 
catch up with her.

                           Opening Statement

    Ms. DeParle. Thank you. I want to start by thanking this 
committee for the Health Care Financing Administration and the 
programs that we administered last year. You not only gave us 
the amount that the President requested, Mr. Chairman, but, in 
fact, you added a little bit to it to help us meet our 
responsibilities in the area of trying to improve our 
enforcement of nursing home standards, and we appreciate that.
    This committee set the tone and set the standard early on 
last year that the programs that we administer are a priority 
and that we needed the funding to do them properly. I want to 
thank each and every member of the committee for their support.

                         HCFA'S ACCOMPLISHMENTS

    Last year was an incredible year for the Health Care 
Financing Administration. I don't know that we have ever had a 
busier year, and I think most people would agree. We were in 
the thick of implementing the Balanced Budget Act. As you all 
know, there were some 300 different provisions of the Balanced 
Budget Act that HCFA had to implement. We made a lot of 
progress there. We published 92 regulations, most of which were 
Balanced Budget Act requirements. We approved 50 Chip plans, 
Children's Health Insurance plans, part of the new bill that 
the Congress passed in 1997 to give low-income children access 
to health care.
    We brought 25 of our mission-critical internal computer 
systems into compliance with the year 2000, and as of December 
31 of this year, we had brought 54 of 78 external computer 
systems, the systems run by our contractors, into compliance 
for the year 2000.
    We also made significant strides in the fight against 
fraud, waste and abuse in the Medicare program. Yesterday the 
Inspector General released her assessment of that for fiscal 
year 1998, and she determined that we reduced by half the error 
rate identified in 1996, that was there the first year that 
this was done. It is now 7 percent. I am not satisfied with 
that. I want it to be even better. But we thank you again for 
the resources you provided, and, frankly for the support that 
you have provided in the Congress to help us keep doing the job 
we need to do here to oversee this program.
    We have also made some progress in the last year towards 
our Government Performance and Results Act goals, and we are 
going to continue working really hard on that.

                       ADMINISTRATOR'S PRIORITIES

    I have now been at HCFA for about a year. What I have tried 
to do over the last year is three things: First, to set forth 
clear goals for the agency. There are hundreds of things that 
we could be doing, but I have focused on the four or five top 
priorities and really kept to those. For me those were 
implementing the Balanced Budget Act, bringing our computer 
systems into compliance with the year 2000, implementing the 
Children's Health Insurance Program, and improving the survey 
and enforcement of nursing home standards.
    The second thing that I have tried to do in the last year 
is bring in the right people to help me do the job. Many of the 
people who have been brought in over the last year are from the 
private sector to try to help us become a more prudent 
purchaser.
    We now have a physician, who had been a practicing 
internist and ran a managed care company, who is the head of 
the Center for Health Plans and Providers and our chief 
Medicare policy person.
    We have a geriatrician who is the chief clinical officer 
for the agency. We have a veteran of the Inspector General's 
Office who is running our program integrity efforts. We have 
really tried to bring in people who have expertise. That is 
something that I feel very strongly about.
    The third thing that I have tried to do is provide 
leadership on the central goals in achieving this vision. My 
vision for the agency is a more efficient, responsive and 
accountable agency. It is an enormous job, as you acknowledge, 
Mr. Chairman, and our work is far from done.

                            FY 2000 REQUEST

    What we are asking for this year and what we hope the 
committee will consider is a 3.6 percent increase for the 
fiscal year 2000 to help keep us on track. That does not 
include what we are asking for the year 2000 computer fixes 
because we need a tranche of money there, and we are asking for 
$150,000,000. We need to continue the progress that we are 
making in implementing the Balanced Budget Act and program 
integrity, in the year 2000 compliance and in nursing homes. I 
appreciate the support that the committee has shown us in the 
past and look forward to your questions and hope to be 
responsive. Thank you very much.
    [The prepared statement follows:]

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


                       ADEQUACY OF BUDGET REQUEST

    Mr. Porter. Thank you Ms. DeParle. Let me see if I 
understand something correctly. Is the 3.6 percent in the 
President's budget deemed to be inadequate by some of your 
predecessors, or were they talking about past years?
    Ms. DeParle. I think, Mr. Chairman, what you are referring 
to is the article that was in Health Affairs in December.
    Mr. Porter. Yes.
    Ms. DeParle. I think what they were referring to was a 
period of years in the past. And as you know, they said that 
they felt that both the Administration and the Congress hadn't 
given these programs the resources they needed. I don't know if 
the article noted, but it should have, that last year is an 
exception. I think anyone would have to agree that an 11 
percent increase is a very healthy percent increase for any 
agency, and I was very proud to get it and hope to show you 
that we can do good things with it.
    Mr. Porter. What I am asking, I guess, is if the increase 
that the administration is suggesting, will that do the job?
    Ms. DeParle. Yes, sir, it will, and I was happy with it.

              PROGRESS IN REDUCING FRAUD, WASTE AND ABUSE

    Mr. Porter. You mentioned, as one of your major priorities, 
fraud, waste and abuse and the progress that has been made in 
that effort.
    This morning when the Secretary testified, we raised this 
question, and my understanding from what she said is that the 
estimates of progress include not only money that goes into the 
trust fund, but the cost savings from fraud, waste and abuse 
that might otherwise have occurred had these efforts not been 
undertaken. Is that the same thing that you are talking about?
    Ms. DeParle. Not exactly, but I think I can respond.
    Mr. Porter. Maybe I didn't understand what she said.
    Ms. DeParle. I wasn't here, but when I talk about progress, 
what I mean is through the additional efforts that the Congress 
has made, which I date back to when the Medicare Integrity 
Program was founded. What that essentially did was enable us to 
go from reviewing about 5 percent of the claims, where a lot of 
providers thought we were never going to look at it, which, 
frankly, is why I think the problem was growing, to now where 
we are reviewing 13 or 14 percent of claims. That additional 
funding helped a great deal, and I believe that is why you are 
seeing the error rate come down by half.
    The Secretary may have been talking about return on 
investment, and that is a complicated calculation. As I 
understand it, return on investment is not just actual cash 
dollars that come back to the trust fund, but also the amount 
of dollars that we didn't spend; not deterrence, not the 
sentinel effect because I don't think that they include that; 
but where we reviewed a claim before we paid it so we found 
that we would have paid a thousand dollars to a hospital, but 
because we found the claim before we paid it, we didn't. But I 
don't believe that they count the so-called sentinel effect, 
although when I say the error rate is by coming down by half, I 
think that is there. I think what you have enabled us, the 
Justice Department, and the Inspector General to do is create a 
different climate of compliance.
    Mr. Porter. I think that is undoubtedly the way that the 
Secretary did depict it, and I think your answer and hers are 
in agreement. You actually cut the error rate in half?
    Ms. DeParle. Since 1996.
    Mr. Porter. Do you think that you will continue to see it 
go down?
    Ms. DeParle. 1996 was the first year that they calculated 
the error rate, and it was 14 percent that year. HCFA's goal 
was to get it to 10 percent by 2000. We came down to 11 percent 
last year, and I decided that wasn't an aggressive enough goal, 
so I set a goal of getting it to 5 percent by 2002. Now I am 
looking at that to see if I should be more aggressive.
    I believe we can continue to bring it down, and the 
Inspector General says that she thinks so, too. In looking at 
yesterday's report, we are seeing much greater compliance by 
physicians with our request for documentation of their claims. 
So I think all of those are trends that mean that people are 
paying more attention to make sure that Medicare pays right. I 
think that is a very healthy thing.

                    Cooperation with Law Enforcement

    Mr. Porter. There was some concern about the fact that both 
the IG and HCFA go after this problem. Do you do this in 
coordination with one another and the Justice Department? How 
do you interface, so you are not duplicative but you are 
cooperative?
    Ms. DeParle. I think we are cooperative. We attempt to pay 
all claims right the first time. This may be an unrealistic 
goal. There will always be a need for law enforcement. But I 
will be happy if we have a way of paying it right the first 
time so you seldom need to get to law enforcement. Those audits 
show that when the claim comes in, it looks okay. What it takes 
is going behind the claim to find if something is wrong.
    The money you have given us has enabled us to check more 
claims and to get it right before we pay money out the door, 
because once you have paid it, then you have to bring in the 
Inspector General and the Justice Department to go after 
people. But I do believe that we work cooperatively. Certainly 
that can all be improved, but over the past 3 years it has 
become a good relationship.

                          Private Sector Firms

    Mr. Porter. You talked about using a private sector firm or 
firms and paying them a percentage of what they find. Has that 
idea ever gotten off the ground?
    Ms. DeParle. Legislation, was proposed a couple of years 
ago to do that. That hasn't happened. Some people regard that 
as paying a bounty out of the trust fund.
    Mr. Porter. It definitely would be.
    Ms. DeParle. What you did do, though, in the same Health 
Insurance Portability and Accountability Act that provided the 
additional funding is you allowed us the authority to go out 
and hire special contractors in the private sector who might be 
able to help with specific aspects of this. We are in the 
process of trying to get some of those on board.

                              Y2K Funding

    Mr. Porter. I have a question about Y2K. The Public Health 
and Social Services Emergency Fund includes $150,000,000 for 
Y2K activities at HCFA. I believe this is the only Y2K money 
being requested by the Department, and it is all for HCFA. Why 
is it in the fund rather than in your budget? Or is that not 
so?
    Ms. DeParle. I think it is so, and I will defer to my 
colleague, Dr. Williams.
    Dr. Williams. I think last year the Y2K supplemental was 
provided, and the funds were provided through this account last 
year, and so we just continued that in the presentation of the 
budget. I don't think that there is anything other--
    Mr. Porter. It all goes to HCFA?
    Dr. Williams. It is all going to go to HCFA. I would say 
there is about $15,000,000 more in the request of the other 
agencies that are just part of their normal operating expenses. 
We estimate that they will be spending about that on Y2K, but 
all of this money will go directly to HCFA.
    Mr. Porter. We can declare it an emergency when we get 
there; is that the idea?
    Dr. Williams. Yes, sir.
    Mr. Porter. I just wanted to understand it.
    Mr. Miller.

                              HCFA'S IMAGE

    Mr. Miller. Thank you, Mr. Chairman.
    My district in Florida has a very high percentage of senior 
citizens, and we are all concerned about the concerns of fraud, 
waste and abuse, but I have been getting more and more 
complaints about HCFA, and I am going to share them, and then 
you can respond.
    Last year we addressed the IRS, and IRS is one of the most 
disliked agencies in the government. I think HCFA is moving in 
that direction. The image is that HCFA doesn't care. Yesterday 
a woman from Sarasota lost her HMO. They are being told by 
AAPPC, Miami makes all of the money; and Sarasota and 
Bradenton, tough.
    I think it does irreparable harm to allow HMOs to continue 
to operate this way. People are going to be afraid to join an 
HMO because next year they may be forced out by policies of 
HCFA.
    Let me go to the next area of people who dislike HCFA, and 
that is physicians. I had to go before the medical society to 
accept a speaking engagement, and I thought I was going to be 
shot up there. That is not the way that it should be. They are 
talking about--everybody agrees we should police fraud, waste 
and abuse, no question, but their impression is that you send 
armed people into offices. I don't know if that is true or not. 
They say, you are guilty until proven innocent. That was the 
problem with the IRS. They have a threat of jail time now for 
some policy. The image out there is going from not too good to 
really bad.
    And then the hospitals were in town the other day, and you 
may have spoken to them. They are saying we had the biggest 
impact of BBA, and this year you are proposing to cut us more. 
We can't do it. The patients are losing HMOs because of HCFA 
policy. The physicians think you are armed terrorists. These 
are family practice doctors who did better, and the hospital is 
saying that. How do you respond to some of these?
    Ms. DeParle. I am very concerned about how people perceive 
us and what kind of job we are doing. I have spent some time 
myself in Florida. I went down with Mr. McCollum to talk to the 
medical society in Orlando, and I heard some of the same 
things. There are no armed agents from HCFA. But there has been 
a crackdown. We have gotten tougher about reviewing claims and 
making sure that we are paying right. We are starting to see 
some results. But there is no question that some physicians 
have been very offended by the fact that we have asked 
questions about their bills and audited them and that kind of 
thing.
    One thing that we are doing that I think you would be 
particularly interested in is we piloted an education program 
in Florida and Texas to make sure that we educate them up front 
about what the right procedures are. It showed dramatic 
results. They went into some of the residency programs with the 
young doctors and gave them information about how to bill 
properly, and they showed a 20 to 30 percent increase in their 
ability to do it properly. We are going to take that nationwide 
and try to provide education to providers as opposed to just 
reviewing them and auditing them.
    On the HMO problem, on the BBA and to our popularity in 
general, I should have thought about that before I took this 
job. My timing wasn't that great. I came in after we cut 
[Clerk's Note: Later corrected to $115 billion] out of the 
Medicare program. There are 1.6 million providers that Medicare 
does business with. That has affected virtually every one of 
them. We did that because we had to save the trust funds.
    I know that we have relationships that need to be repaired. 
The HMO payment rates were less than they had been in the past. 
That inequity in Florida is one of the worst in the whole 
country because of Miami. I have met people whose sister lives 
in Miami, and they live in Sarasota. My brother lives down 
there and his in-laws are in that situation. They don't 
understand why they have a premium in Sarasota and the people 
in Miami don't have one. It is very hard to explain. That is 
something that we will need to work together on in the coming 
years to figure out if there is a way to equalize that in some 
way without necessarily creating further inequities. As you 
know, this is very hard to do.
    You heard me say one of my goals is to make us more 
responsive. I appreciate your being candid with me about the 
problems, and I would like to work with your office to make 
sure we are being more responsive.

                      Personnel Carrying Firearms

    Mr. Miller. You went to Bill McCollum's medical society, 
and you are welcome to come to mine. I wouldn't encourage it. 
They can be very hostile, and all of these people forced out of 
the HMOs, they are irate. Another bureaucratic problem is where 
people couldn't get their supplemental and all of that.
    What is the situation with the Justice Department people 
going into the doctors' offices? Do they do that sometimes? Are 
they armed? I want to understand this armed issue. I understand 
there are some organized crime problems.
    [The information follows:]

                      Office of Inspector General

    Ms. DeParle. The use of firearms is confined to personnel 
with the job description ``Criminal Investigators,'' Federal 
job series 1811. As this relates to the Office of Inspector 
General and the criminal investigator position, corresponding 
use of firearms is limited to the Office of Investigations. The 
use of firearms is not permitted by auditors, evaluators, or 
other personnel holding similar positions. The criminal 
investigator position is not applicable to staff at the Health 
Care Financing Administration.
    The criminal investigator position requires specialized 
training, including recurring training and ongoing 
qualification in the use of firearms. Specific training 
requirements vary by Federal agency. Information about the 
specific training requirements, policies, and practices of the 
Federal law enforcement agencies may be obtained directly from 
the particular agency.

    Ms. DeParle. I don't know about the armed part, but I know 
in this most recent audit that the Inspector General did, they 
requested medical records to check claims, and they requested 
them three times. If they don't get them, sometimes they send 
somebody over, and whether they are armed or not, I don't know. 
In a couple of cases, when they got there, the people had left 
town, and there was no one on the premises. They do find that 
sometimes. I would like to look into that further because that 
is certainly not the way that we want to do business. You will 
be comforted to know that we don't have anybody with firearms.

                            Medicare+Choice

    Mr. Miller. One family practice doctor says that he gets 
five or six requests a day for all of these records, and it 
takes an hour to process. The frustration level is getting so 
high. What are they going to do in an area with mainly senior 
citizens?
    And switching a little here, the Medicare+Choice system, 
that has been a failure. There are no choices from what the 
original goal in the Balanced Budget Act was. We are going in 
the opposite direction when HMOs are pulling out of Sarasota 
and the only choices they have are the traditional Medicare. 
Why did they fail?
    Ms. DeParle. I am not willing to say that it has failed 
yet. Let me tell you what I think happened. When the Balanced 
Budget Act was enacted, Congress's vision was to give Medicare 
beneficiaries more choices. Essentially you created those new 
choices in the Balanced Budget Act--the MSAs, the PPOs--and 
then you had the traditional HMOs like you have in Sarasota.
    Last year we had the traditional HMOs, and we had about 45 
other types of plans apply, although no MSAs yet. We are not 
quite sure why that is. We approved one of the new PSOs, and I 
suspect over time there will be more. But when you think about 
it, when you look at what is happening in health care, take 
Medicare and the reductions that occurred in Medicare last year 
and then look at what is happening in the commercial sector, 
HMO enrollment is declining, premiums are going up, 
prescription drug prices are rising. It is a very volatile 
marketplace. I think anyone going into business is going to 
look at that and be a little bit cautious.
    I think it can still be successful, and when I look at 
people like us who are familiar with HMOs and who are going to 
want that as a choice, there will be more plans as this goes 
along. I think we will have to work together to make sure that 
it happens. It couldn't have come at a more volatile time, but 
I still think we can make it work.
    Mr. Miller. This image is real, and doctors and nurses and 
hospital administration are real people, too. And just as IRS 
developed this attitude that made people seem irrelevant and we 
are all-powerful, and I know that you are fighting fraud, waste 
and abuse, but you have an image problem. Thank you.
    Ms. DeParle. Thank you.
    Mr. Porter. Mr. Wicker.

                 Skilled Nursing Facility Reimbursement

    Mr. Wicker. Thank you, Mr. Chairman.
    Ms. DeParle, I appreciate having you back. I know that you 
do have a very difficult job in implementing the Balanced 
Budget Act. Sometimes I wonder if it is the Act so much that is 
the problem or the interpretation. I know that you probably 
agree with me that refinements need to be made. In particular 
let me start with the issue of skilled nursing facility 
services and the term RUGs, resource utilization groups.
    In my State I believe there are six of these skilled 
nursing facility services that have actually just shut down. 
They are no more. They closed their doors because they couldn't 
provide the services with the type of reimbursement they were 
receiving. I know that Chairman Bill Thomas of the Ways and 
Means Subcommittee on Health has written you about this and 
received an interim response. But as I understand it, in 
transitioning to a prospective pay system, the resource 
utilization groups are just not effectively measuring the cost. 
I know, you listen to the complaints that I am hearing and 
oftentimes with a grain of salt, but when they actually close 
the door and quit offering the service, I have to conclude that 
the complaint is real.
    Do you agree that it is time to refine the current RUGs 
model, and can you tell me when we can expect some relief?
    Ms. DeParle. I agree that the model that we had to use to 
implement the prospective payment system needs refinement to 
it. I believe the issue you are referring to is that it doesn't 
reflect perhaps all of the costs of caring for higher acuity 
patients, so some nursing facilities which specialize in 
carrying for the really sick and chronic patients are concerned 
that the RUGs don't fully reflect those costs.
    Mr. Wicker. That is correct.
    Ms. DeParle. We are in the middle of some research right 
now which we contracted for back in the fall to have some 
further refinements done. I don't believe those will be 
completed before the end of this fiscal year, though. I think 
it will be something that we will be ready to put in for the 
fiscal year 2000. I have been meeting with some of these same 
facilities, not any in Mississippi that I am aware of, but 
others which have been affected by this.
    You should know, though, that there are other skilled 
nursing facilities which don't specialize in this which don't 
want anything to happen because they are afraid that will take 
money away from them, so it is a difficult situation. I do 
agree with you that we need to make sure that these RUGs 
reflect accurately the cost of caring for these acutely ill 
patients, and we are moving to try to fix that as quickly as we 
can.

            GEOGRAPHIC VARIATION IN MEDICARE COVERAGE POLICY

    Mr. Wicker. I certainly hope so, because I think what we 
are going to find out before the end of the fiscal year is that 
more of these facilities will close their doors.
    You and I have discussed the need to move toward a national 
consistency in Medicare reimbursement policies. As I noted last 
year, while I fully support the concept of federalism, human 
physiology doesn't change from State to State. The specific 
complaint that I discussed with you last year was the 
frustration of oncologists in Mississippi who are prohibited 
from using drugs and diagnoses which are used in Alabama and 
Georgia. Unfortunately this situation has not changed. It has 
not improved at all. Can you update me on your efforts to move 
toward evidence-based decisionmaking or some other initiative 
that might solve the problem and allow our cancer doctors in 
Mississippi to use the same types of treatment that are being 
approved and paid for in other States?
    Ms. DeParle. My response would have two parts. On the 
specific issues, since we last talked, I brought on board a 
geriatrician who is our chief clinical officer and heads our 
Office of Clinical Standards and Quality. I would like to ask 
him to call the folks in Mississippi and talk to them about 
this issue. Sometimes we can intervene on a specific basis to 
help move things along.
    The basic problem that I think you and I talked about last 
year is that in the 1965 Medicare statute, the number one 
section of the law says nothing shall interfere with the local 
practice of medicine.
    And so each of our carriers, the people who pay claims, has 
a medical director and the one from Mississippi makes those 
decisions for Mississippi, and the one from Alabama make those 
decisions for Alabama. They are contractors, not HCFA 
employees. The way to do something on a national basis is to 
establish national coverage policy.
    When I arrived, there were problems with the way that HCFA 
had been doing that. We had a committee that was not compliant 
with the Federal Advisory Committee Act that was meeting to 
establish coverage policies. I abolished that.
    We just published in December in the Federal Register a 
notice about a new process, the Medicare Coverage Advisory 
Committee, that will involve experts from around the country. 
It will be more of a process like the FDA has. We hope that 
that will lead us to more evidence-based, more national 
decisionmaking, and, in fact, I have invited all Members of 
Congress to make recommendations to us about who ought to be on 
that group as well.
    So over the long term I believe that will help address this 
problem, but in the short term the only thing I can do is ask 
the physician who heads this group to talk to the person who 
heads this group in Mississippi and the carrier to see perhaps 
if they can have the benefit of what others are doing and maybe 
move this in the right direction.
    Mr. Wicker. Thank you, Mr. Chairman.
    Mr. Porter. Thank you, Mr. Wicker.
    Mrs. Northup.

                             LONG-TERM CARE

    Mrs. Northup. I am delighted to have you here today. There 
are so many different aspects of HCFA that affects the health 
of our community that I hardly know where to start. I know that 
I will have some questions to submit for the record, but I 
would like to start, first of all, with some big picture 
issues, and one is the long-term care.
    I do believe that the President is right that long-term 
care is probably the 800-pound gorilla that is casting the 
shadow over them and creating financial crises within them.
    In particular, most Americans are confused about long-term 
care and the availability of long-term care needs. They don't 
purchase insurance policies, and they don't have the resources 
readily available. And because of that, it seems to me that 
there is a great deal of pressure on Medicare and Medicaid to 
provide for services that were really never envisioned as being 
part of those programs. I refer to home health services and 
physical therapy.
    You know, many of those needs fall under long-term care, 
and it would be great if those of us in Congress could pass a 
bill and say from now on Medicare is going to cover long-term 
care. Of course, we would go bankrupt tomorrow because we have 
never withheld the money to cover those needs as we try to 
define long-term care, and so therefore Medicare doesn't 
properly cover that.
    It seems to me that there is a confusion that exists that 
really it was to save money in Medicare rather than the fact 
that it is a chronic need or long-term care need. Specifically 
I would refer to the therapy and home health, and I wonder if 
HCFA couldn't do a better job in educating the American people 
and providers that, for example, when we set a $1,500 limit on 
therapy, we are not saying that people might not need more than 
that. We are not saying that there are not some patients who 
might need it for the rest of their life. What we are saying is 
that falls under the responsibility of long-term care. That is 
a different issue. That is something that Americans provide for 
themselves if they are able.
    The therapists seem to be very confused about this. And 
there are other areas which fall under long-term care needs; 
for example, home health. Many Americans depend on home health 
services. And unless you are in Medicaid, Medicare cannot 
assume that responsibility indefinitely, or, again, we will go 
bankrupt.
    So, number one, I wish as you define the limitations on 
services, you would do it more like every insurance company 
needs to. We are not saying that somebody doesn't need it, we 
are saying under the responsibilities of Medicare, there are 
limitations on it.
    Number two, if it would be possible for you to help engage 
the American people in the conversation about what their long-
term care needs might cost them; the fact that the Federal 
Government has never withheld money from their paychecks to 
meet these needs, and the importance of long-term health care 
policies, so that they can help be prepared and don't have this 
sort of real bad experience when their parent or they 
themselves first need it and find that it is not available.
    Ms. DeParle. I think that is a great idea. One of the 
things the President's budget includes is funding for us to 
begin doing some education. That funding is for education for 
the Medicare beneficiary population, and it is in conjunction 
with the information that we are sending out every year now 
about Medicare, but you are right that it needs to be earlier. 
We need to start planning this earlier, and it is a big gap.

               EDUCATING THE PUBLIC ABOUT LONG-TERM CARE

    Mrs. Northup. We need to leverage huge new amounts of money 
into private long-term care so that we take the financial 
pressure off of the systems that are there to take care of the 
needs day to day. I can't see how that would be possible until 
we leverage it through people getting insurance. Unfortunately, 
and most people aren't even aware that they are going to need 
it until they are out of the workforce--and it is exceptionally 
expensive to pick up that health insurance when you become 70 . 
So I would ask you to help participate in that conversation 
because many people would want to step up to the plate, but 
didn't know that they needed to. It is a defining way for us to 
begin to take the pressure off of the systems that were never 
meant to provide long-term care.
    Ms. DeParle. I think that is right.
    Another thing that we are trying to do for those who do 
need long-term care and are going to be in Medicare and 
Medicaid facilities is to improve the consistency and the 
quality of enforcement of standards for nursing homes, and this 
committee has been helpful to us in providing us the resources 
to do this. The Secretary may have mentioned that the 
Administration on Aging also has an initiative to try to 
respond to one of the first things that you said, which was 
when you do need this, where do you find it, and they are going 
to try to establish in communities around the country an 
``800'' number, sort of a one-stop shopping idea so people can 
get those resources.
    Mrs. Northup. In 1997, we included in the Balanced Budget 
Act a tax credit for those seniors that purchased long-term 
care, and I wonder how many seniors that you communicate with 
every day even know about it. My parents were shocked to find 
out that it was available. If they took that tax credit, you 
would have the protection of knowing that they would never be 
expecting you to step up and provide those services. That just 
seems like a simple----
    Ms. DeParle. It is probably not conveyed to them except 
through their tax filing materials.

                        DOUBLE STANDARD FOR HMOS

    Mrs. Northup. Let me ask one other question, and you may 
not be in a position to answer this, but I am a little 
discouraged to hear you, who understands so much how difficult 
it is for providers to walk that line between asserting that 
fraud, waste and abuse and overuse of medical services and 
payments aren't incurred, and yet this administration beats up 
on HMOs that are trying to do the same thing. As we go through 
the debate about managed care reform, it is how dare they ask 
questions, how dare they withhold services, how dare they set 
priorities. In other words, I guess it would be best practices 
parameters. If you have a hip replacement, you need this many 
days in the hospital and so forth. And yet when HMOs do that, 
they tell their horror stories as somehow they aren't acting in 
the best interests of the patients.
    Basically both problems are identical. It is stretching the 
limited medical dollars to cover the most essential and best 
medicine that we can possibly purchase. If there are unlimited 
dollars, we have to make sure that we target those dollars. 
There there are some that overstep, absolutely. Are there some 
of your inspectors that probably overstep and are too 
aggressive? Yes, there are. But we are all struggling in good 
faith trying to make medical dollars stretch as far as they 
can, and I think it is a little hypocritical to be in the same 
practice that HMOs, yet villainize what they do, even as we do 
the exact same thing in government.
    Ms. DeParle. I hear you, and I certainly would not 
villainize HMOs myself. I think they try to do a good job.
    Mr. Porter. We are operating under the 8-minute rule.
    Mrs. Northup. No wonder my time lasted so long.
    Mr. Porter. Mr. Istook.

                      MEDICARE REIMBURSEMENT RATES

    Mr. Istook. Thank you, Mr. Chairman.
    Certainly we can all add to our concerns regarding 
reimbursement rates. I keep thinking of one community in my 
district, with geriatric care they have to subsidize doctors to 
be able to do it. I have been stopped by doctors who told me 
that they did not want to treat senior citizens because their 
reimbursement rates are so below their costs, and this is in 
Oklahoma, and even there they cannot make ends meet. I know of 
another hospital within my district that is on the verge of 
closing because, again, a huge part of their clientele is 
Medicare, and reimbursement rates are below their costs.
    In doing so is there someone within HCFA that is the person 
in charge of the complaints? Have you prepared any sort of 
analysis of providers; you may put physicians in one category 
or clinics or hospitals, whatever it may be, but have you made 
a collection of the providers that complain that the 
reimbursement rates are below the cost of delivering services? 
I am not talking about what you have done at the formal 
process, but after you have set the rates, how many come back 
to you in total numbers or percentage and say to HCFA, you 
know, this reimbursement rate is below the cost of delivering 
the services? Do you have such a number?
    Ms. DeParle. I don't think that I do. What we do have which 
relates to this, that I can provide is, every year we do a 
survey of physicians participating in Medicare, to see what 
their satisfaction levels are, and I think I could look back at 
that.
    One interesting thing to me is that in the last couple of 
years, some of them have actually said that they preferred 
Medicare to some other managed care arrangements.
    Mr. Istook. That is like between the devil and the deep 
blue sea.
    Ms. DeParle. Maybe so, but it is a very volatile situation. 
There is no question that they feel very troubled by what is 
happening.

                        PROVIDER CORRESPONDENCE

    Mr. Istook. I am not talking about a formal survey process. 
I am talking about the number of providers who have taken it 
upon themselves to contact HCFA or HHS and say, what I am being 
paid, the reimbursement rate, is below the cost of delivering 
the services, I would think that somebody would have compiled 
that at one time. I don't know who is in charge of receiving 
complaints.
    Ms. DeParle. I think I am.
    Mr. Istook. I would appreciate it, and maybe we ought to 
seek some sort of formal report on this, Mr. Chairman.
    Ms. DeParle. I don't review all of our correspondence, but 
I review everything from Congress, and many of you send me 
letters like that asking me to respond to a constituent. I 
don't know that we categorize them that way, but we might be 
able to look through them.
    One of my indicia of Mr. Miller's concern about our image 
is that we had a 25 percent increase in letters last year, and 
I think we are averaging almost a thousand letters a month just 
from Members from Congress. So you are hearing it, and we are 
hearing it, too.

                               USER FEES

    Mr. Istook. I think it would be good to know how many 
letters a month or year are coming from providers making the 
complaints that I have characterized. I think that would be 
very telling, regardless of what your survey shows. If you are 
getting 10,000 providers a month saying, this is below the cost 
of delivering services, I think that would tell you that there 
is something wrong. We will help you prepare a protocol for it, 
to get that information to us. It would be very useful.
    In line with this, there is nothing worse than having 
someone say, every time I handle one of your claims, I lose 
money, and then they find out that you are talking about 
charging them for handling the claim on which they lose money. 
I am talking about your user fee request throughout your 
budget.
    I am not quite sure, because sometimes there is a number 1 
spot for handling a paper transaction, or if you want to come 
into the system or if you want to be an HMO or a managed care 
provider, I can't really tell how much you are planning on 
charging those folks, but it is probably going to be a six-
digit fee for application, the best I can tell on that. When 
you have people who say, we are losing money, and then have a 
user fee imposed for the privilege of losing money, and yet, 
according to your testimony on page 6, your request for fiscal 
year 2000 is $244,500,000 in proposed user fees and 
$145,000,000 in current law user fees, that together will 
finance almost 18 percent of your budget request. If you don't 
get those user fees, what do you want us to do with your 
appropriation? Do you have a plan B if we don't get the user 
fees, this is what we want you to do on our appropriation?
    Ms. DeParle. We discussed this last year, Mr. Istook. I 
know there are many philosophical views about user fees. 
Regarding the user fee for providers, what we propose is to 
charge a hundred dollars for providers for us to check them out 
before they come into the system.
    Mr. Istook. With managed care applications, you propose to 
raise $36 million through that.
    Ms. DeParle. I believe we charge a fee for that.
    Mr. Istook. What is the proposed fee?
    Ms. DeParle. I don't remember the exact figure, but I can 
get that. It is a substantial fee because for managed care 
organizations, we do a lot of checking to make sure that they 
have a network, they are solvent, and that kind of thing.
    [The information follows:]

    Under the President's Budget proposal, Medicare+Choice 
plans would pay HCFA a user fee of approximately $55,000 for 
processing initial HMO applications. Plans would pay an annual 
renewal fee of approximately $41,000.

    Ms. DeParle. The ones for new providers are about a hundred 
dollars per physician. There are a lot of views whether user 
fees are an appropriate way to pay for our programs.
    Mr. Istook. What would you do on your appropriations 
without user fees since you incorporated them into your budget? 
Where do we find guidance?
    Ms. DeParle. Last year we had the same user fees, and the 
committee saw fit to find funding for our program level without 
enacting the user fees. This is complicated because the 
authorizers have to be involved in this as well, and I would 
have to say there is very little interest up here. I made 
probably 50, 60 visits myself to talk to Members about the user 
fees, and I was worried, frankly, what happens if we don't get 
them. The committee saved us, and I hope that you will do it 
again.
    Mr. Istook. The difficulty in staying within the objective, 
keeping the budget balanced, and not proposing unless we do the 
user fees, do we have any submission from you saying, this is 
how we would expect our budget to be treated if we do not 
receive any user fees?
    Ms. DeParle. I can tell you right now that it would be a 
real problem to run the program with less than the program 
level that we have requested. I want to work with you on this. 
I don't have a way for you to come up with the money, but I 
want to work with you on it.
    Mr. Istook. Do you have a revised submission that you can 
provide to us that says, if we don't get the user fees, here is 
where we would suggest making the adjustment to stay within the 
balanced budget?
    Otherwise I think whatever we do, you are bound to complain 
about, and we don't know how we can minimize the complaints and 
do it responsively. I would certainly hope that the Chairman 
will make a request that you all do something along that line.
    Mr. Porter. Would the gentleman yield on that?
    Mr. Istook. Certainly.

              TREATMENT OF USER FEES IN PRESIDENT'S BUDGET

    Mr. Porter. Ms. DeParle, it seems to me, and I am not going 
to speak for the Subcommittee, but if you talked to 50 or 60 
people on the Hill, and you have gotten no good response to 
user fees, and you take that back to the Administration and the 
OMB and you tell them, and they still put it in the budget, 
that is another good example of a political budget that allows 
you then to take the money that otherwise would be derived from 
those fees and put it into other programs to make the budget 
look better than it should. It seems to me that OMB should have 
said, let's leave the user fees out, but they don't. I wonder 
why that is the case. Is that just a political decision to plus 
up other numbers? Is that what we are looking at?
    Ms. DeParle. Well, Mr. Chairman, that is a very difficult 
question. I think that the Administration was faced with a lot 
of priorities and difficult caps.
    Mr. Porter. It has ignored the caps and put new money into 
lots of places using these same kinds of devices that really 
make us here very cynical about what the President has offered 
us.
    We talked this morning about the Administration's 2.1 
percent increase for NIH when Congress last year provided what 
they felt was a down payment on doubling it over 5 years at 15 
percent. And the actual amount because of the tap would amount 
to about 1.5 percent, which is below inflation. That to me is a 
very cynical way of offering a budget when we know that that 
allows the Administration to take the money that otherwise they 
should put into that line item or those line items and put it 
into other programs and suggest to lots of concerns and special 
interests in our country that they are somehow in sync with 
them, knowing that the money is not really there. It is very 
frustrating to get a political document like this. All budgets 
are political documents, but this one really gets the prize.
    Dr. Williams. There is one important change in the way that 
the budget is requested this year, and that is in the 
appropriation language to this Committee for HCFA. The 
appropriation language requested the full amount of the budget 
request. It then says, if these fees are enacted, there is a 
provision which would deduct the fees from that request. But 
the budget is open and honest in that sense, and it brings to 
the Committee the full request, not a reduced request.
    So there is that important change from the way that it was 
requested last year. The overall budget sees user fees as a 
proposed law request, but the current law request to you is the 
full amount.
    Ms. DeParle. I understand that the Committee has a 
difficult challenge, and I appreciate the way that you 
supported us last year, and we will work with you in any way 
that we can.
    Mr. Porter. Thank you.
    The Committee is pleased to welcome a Democratic member.
    Ms. DeLauro. Let me just state so that I am clear, the fact 
is that you have asked for an appropriation that covers the 
full funding so that in no way is there any shortchanging of 
this request and user fees? I just want to be clear about that. 
Please repeat it so it is understood.
    Dr. Williams. The appropriation language requests the full 
amount. There is a trigger that says if these are enacted, 
there is a provision for deducting from that amount, but the 
full amount is asked for.
    Ms. DeLauro. Okay.
    Mr. Porter. If the gentlelady would yield on that?
    Ms. DeLauro. So in that sense, it is not a political 
document, it is a very straightforward document in what it is 
asking.
    Mr. Porter. If the gentlelady would yield. The language 
does not help the situation. In a sense it helps, but the 
numbers are still supported by $195,000,000 or more of funding 
that the Administration well knows is not going to be there.
    Ms. DeLauro. Let me ask you one question which has to do--
first of all, welcome.
    Ms. DeParle. Thank you.

                           USE OF RESTRAINTS

    Ms. DeLauro. In October of 1998--you may know this, and I 
hope it is not brand new information, and if it is, I will send 
you the background--the Hartford Courant ran a series of 
articles detailing the deaths of 146 people in psychiatric 
hospitals as a result of the improper use of restraints. 
Because there are no reporting requirements, the actual number 
is likely to be higher than this, and I understand from the 
National Alliance for the Mentally Ill that they have been 
receiving reports from their members on more unreported deaths 
at a rate of about one a year.
    Again, my understanding is that section 1875(b), of the 
Social Security Act requires HCFA to continually study the 
validation of the Joint Commission on Accreditation of Health 
Care Organizations. Those processes are for the purposes of 
deeming status under Medicare and Medicaid. Many of the deaths 
that are reported to have occurred with restraints are taking 
place in HCFA-funded, accredited facilities. I don't know the 
extent to which you are aware of all of this. It was news to 
me, and this series of articles, which I would be happy to get 
to you, created a firestorm. I was astounded by what I was 
reading. What measures come under this section 1875 to ensure 
the proper implementation with regard to restraints? I would be 
happy to sit with you and to look at this issue because it is 
of great concern to me, and I think it is a great----
    Ms. DeParle. I am willing to do that. My understanding is 
that someone for National Alliance for the Mentally Ill sent me 
some of the articles. This may be an area where there is a gap 
in the law, because my understanding is that these were 
psychiatric hospitals as opposed to nursing facilities, and in 
psychiatric hospitals I don't believe that there is any 
restriction on the use of restraints.
    The other issue that you raised which is very relevant to 
today's hearing is that most of these facilities are, in fact, 
accredited, which is legitimate under the law, by the joint 
commission. We are supposed to oversee the joint commission and 
one of the things that I have been concerned about, and we have 
been looking at is whether our oversight of those deemed 
hospitals and other facilities has been adequate, and there may 
be an issue there as well. I would be very eager to work with 
you on that.

                        MEDICARE HMO WITHDRAWALS

    Ms. DeLauro. What we are finding is that this is mainly the 
deaths are occurring amongst children. It came to light in 
Connecticut because of some deaths, and there appears to be no 
recourse, for patients or families and again a lack of 
reporting. I will pursue that with you.
    Secondly in terms of Connecticut, several Medicare HMO 
plans have dropped their participation in the program. 
Thousands of seniors were just scrambling to find new health 
care opportunities, and it is not easy for a senior to find a 
new health care opportunity. I believe this has happened all 
over the country.
    What is HCFA doing to help seniors with regard to this 
problem, and is there any action to deal with the HMOs and stop 
the cherry-picking? We know in looking at these programs they 
are deciding that they are not making the profit that they had 
intended to make and then are just leaving these folks high and 
dry and walking away from the plan.
    Ms. DeParle. We had some discussion about that before you 
got here. Your district and Mr. Miller's area were both 
particularly hard hit by this because they happened to have 
areas where the payment rates under the law are lower than 
other areas. At the same time you had other commercial 
pressures; in Connecticut, some of the plans were having 
difficulty putting together a provider network. In looking at 
your area, I was surprised to see that there were some areas 
where plans pulled out because they only had two enrollees in a 
county or some small number, and I guess their market 
penetration wasn't very high, and they just determined that 
they are not going to be able to make any money, and so they 
pulled out. These were business decisions that they made. We 
were surprised by it.
    What we tried to do, and I know that the Secretary came up 
to Connecticut, we had town hall meetings in a number of 
different places around the State. We tried to communicate 
directly with beneficiaries. Frankly, it is a new thing for us. 
What we had to do is establish networks, that probably should 
have been there before, but were not, with the aging agencies, 
with the senior groups, to help us get the work done of dealing 
directly with the seniors and trying to reassure them.
    For next year the President is proposing some changes in 
the law, including some changes that will strengthen Medigap 
protections for seniors in case there are further withdrawals. 
Also, we want to try and make some refinements to the time 
lines that were in the Balanced Budget Act so we can give plans 
more time to assess the market before they have to turn in 
their submissions to us.
    Under the law it is May right now, and the problem last 
year is that there were a number of price increases that 
occurred, particularly in prescription drugs, which is why a 
lot of seniors like HMOs. The plans didn't have time to assess 
that before they had to give us their submissions. That is why 
many of them at the last minute decided to pull out. We also 
want to make sure that they give beneficiaries earlier notice 
if they are going to change. We want to work with you and all 
of the other members in trying to refine this.
    Ms. DeLauro. It creates havoc for those who have lost their 
insurance and those people who are fearful about losing it.
    Ms. DeParle. I am concerned about that, too. Mr. Miller was 
talking about that, too. It undermines their trust in Medicare. 
That is not good for anybody, so we have to work on that.
    Ms. DeLauro. Thank you.
    Mr. Porter. Thank you, Ms. DeLauro.
    Mr. Bonilla.

                        HOME HEALTH CARE PAYMENT

    Mr. Bonilla. Welcome once again. I think I can speak for 
every Member up here in saying that there are those of us in 
our offices who probably have a person or two assigned full 
time to deal with questions and problems that our folks back 
home have with HCFA. Certainly home health care was the one 
that people desperately came seeking our help and seeking for 
us to communicate with HCFA about the interim payment system 
which has been so controversial.
    I know that these initial changes were designed to weed out 
fraud, waste and abuse, and I am for that, but there are hard-
working people for home health care agencies, and they come 
with tears in their eyes and say, we can't operate anymore. We 
have to put these people out on the street.
    I find it incomprehensible that your agency decides not to 
do its job and all due to the so-called Y2K problem, and I will 
ask you to elaborate on that in a second, because we all know 
that Y2K has to be resolved. There is no question about that. 
We have spent hundreds of millions of dollars on the Y2K 
problem, and now you are asking for another $150,000,000. 
Moreover, we had assurance that there were no Y2K HCFA problems 
in the first place. So my question is: Is there any way that 
HCFA will develop home health care PPS by this fall as directed 
by law?
    Ms. DeParle. No, sir.
    Mr. Bonilla. Why?
    Ms. DeParle. Because of Y2K. And as you know, the law was 
changed last year to allow us until October 2000, and we are on 
track now to have it implemented by October of 2000.
    Mr. Bonilla. So assuming the Y2K problem was resolved in 
time for 2000, that seems to be a short period of time once it 
is resolved to make it by the fall of 2000. Do you think that 
you could still do it even if you have a target date that far 
down the road?
    Ms. DeParle. The problem is this: Late last spring we hired 
some outside computer experts to oversee this process of our 
becoming compliant and making sure that we were doing the right 
thing. They came to me and said that it is impossible for our 
contractors, the people who run the external systems in Texas 
or wherever, to make all of the changes in the millions of line 
of computer code that they had to make and test them to make 
sure that they could pay bills on January 1, 2000, at the same 
time they were making the incredible changes that they have to 
make to move from the old cost-based system, where you pay the 
agency based on their cost, to a prospective payment capitated 
system. They said it was not possible to do both. I had to make 
a choice between being sure that there would be no disruptions 
in services and claims payment on January 1, 2000, or doing 
some of those provisions in the Balanced Budget Act, with the 
home health PPS being one of them.
    Let me assure you if there is anything that I didn't want 
to delay, it was that, and also there was the outpatient 
department payment system.
    I felt I had no choice. That is why we had to delay it. We 
talked to the Congress, and you have extended the deadline 
until October of 2000. We are on track to meet that deadline. 
By then any bugs in the system which would have occurred after 
January 1, 2000, should be ironed out, and we should be able to 
make the computer changes in time to have it go into effect.

                        HOME HEALTH CARE PAYMENT

    Mr. Bonilla. It is just tragic so many of these small 
businesses will be long gone or are already long gone and are 
suffering as a result.
    Are you getting any input from these home health care 
agencies in developing the PPS, and what are you doing to make 
sure that this new situation is workable and to prevent the 
same disastrous situation as in the IPS?
    Ms. DeParle. Yes, we have had meetings with trade 
associations and with individual home health agencies. In fact, 
the Secretary sent a group of people out to New Mexico to look 
into the situation there because there was concern about access 
in that State, and we have been talking to them about how we 
would go about doing the implementation. I want to assure you 
that we will continue to do that.

                               USER FEES

    Mr. Bonilla. I hope you understand it that this has been 
one of the most difficult issues that a lot of us have dealt 
with, and we had to learn about it when it wasn't on the radar 
screen until a year and a half ago. So it is something very 
important out there.
    I would like to move on to user fees. The unauthorized user 
fees which have been referred to by a couple of members here 
already today include charges for things like filing paper with 
the agency when electronic means are an option. However, there 
are reports that the agency cannot accept and process all forms 
of the electronic data necessary to implement the BBA. What is 
your capability to accept the electronic data that you require, 
because if you can't accept it and then a user fee is 
suggested, it would seem almost contradictory.
    Ms. DeParle. That wouldn't make sense, I agree with you. I 
am not aware of any problems that we have in accepting 
electronic claims. If you know something specific, I want to 
look into that because I am not aware of any such problems.
    We had a discussion of user fees before you got here, and I 
remember you asked me some questions about this last year, and 
I understand your views on them. I think it is safe to say that 
they are not very popular up here.
    Mr. Bonilla. My general philosophy, and I am probably--go 
ahead.
    Ms. DeParle. Dennis Williams was just pointing out to me 
that because of the millennium conversion and the need to make 
sure that we keep the system stable from the first of January 
for a few months, that the user fees for paper claims and 
duplicate or unprocessable claims, were they to be enacted, 
would not even take effect until around April of 2000.

                 MEDICARE BENEFICIARY EDUCATION PROGRAM

    Mr. Bonilla. I was going to say that the problem a lot of 
us have with user fees is that it is mind-boggling for some of 
us to think that we have a budget surplus, yet we are trying to 
figure out how to raise more money. I know there is a lot of 
controversy about that among many agencies.
    I have a technical question about the collection and 
dissemination of data for the beneficiary education program 
which is a real challenge. The errors contained in the limited 
five-State distribution were appalling. In the fiscal year 2000 
request, HCFA exceeds the authorized amount for Medicare+Choice 
user fees by $50,000,000 to, quote, maintain the current level 
of effort. My question is: Does the current level of effort 
mean five States, or are you planning to expand the program in 
the fiscal year 2000; and if an expansion is planned, which 
States will be included? And if no expansion is planned, why do 
you need the additional $50,000,000 in unauthorized user fees 
to top the authorized amount?
    Ms. DeParle. We are expanding right now. We started off in 
five States to pilot the Medicare education program last year, 
and you referred to the inaccurate booklets. This goes back to 
the questions that Mrs. DeLauro had.
    What happened was under the law, plans had to submit to us 
in May what their premiums and benefits were going to be. And 
then, in order to print 5,000,000 of these booklets, we had to 
go to the printers in the summer, in July, which we did. The 
booklets were then supposed to go out in early November, and by 
that point a number of plans had changed and decided to pull 
out. There was one in your district in particular which I 
remember.
    Next year we are trying to change the deadline, and we want 
to work with Congress. The deadline was in the law, so we need 
your help with this. We would like to give the plans a little 
more time to submit, because I agree with you it is terribly 
important that the booklets be accurate, and somehow we have 
got to build more time in. To go to the printers for 39,000,000 
people, you can imagine that is an early print date. So we are 
going to have to work together on that.
    We are expanding right now. In fact, the toll-free lines 
were available first in five States. By the end of this month 
we are going to be in five or six more States, and coming this 
October, the Medicare education program will be in all 50 
States.
    We will be doing that with $95,000,000 in user fees, which 
is the amount that Congress authorized last year. We had 
requested more last year, and we didn't get it. In order to 
make up the difference between what it really costs to do this 
effort and the user fees we collect, we take money out of other 
places in our program management account, and we will work with 
you on that.
    What we are asking for, for year 2000, is what we think we 
need to do this campaign.
    Mr. Bonilla. We will be checking on that as we go along.
    Ms. DeParle. Thank you.
    Mr. Porter. Thank you, Mr. Bonilla.
    Ms. DeParle, we are advised that the other Democrats are 
not coming.
    Ms. DeParle. Should I take it personally?

                        HOME HEALTH CARE PAYMENT

    Mr. Porter. I would. I was going to filibuster in hopes 
that some of them would arrive. I do have additional questions 
to ask, if I may.
    I met not long ago with a home health care provider who 
advised me that there were caps on the amount per capita that 
could be spent for physical therapy, and that the caps were 
based on historic data relating back, I think they said, to 
1994 and maybe before, and that their cap was something like 
$1,500, whereas other caps in place in other parts of the 
country were as high as $7,500. What they said was that what 
this basically does is to reward the inefficient provider, 
because if someone was providing the same services that they 
were providing at a much higher cost elsewhere, they would be 
able to get reimbursed for that, but they would bounce up 
against the cap at $1,500, they had a much lower cap. It just 
seemed to me that it was nonsensical that we would be perhaps 
rewarding inefficiency. Can you comment on that?
    Ms. DeParle. Yes, I can. This is one of the very difficult 
aspects of the interim payment system that Mr. Bonilla was 
referring to.
    The way that it is set up, there is a per beneficiary cap, 
there are caps on certain types of therapy services. There are 
several different caps as a way of reducing the growth and 
spending on home health before you get to prospective payment.
    To deal with some of those inequities that were already 
existing around the country, there were a couple of ways to 
amend the law. One would be to bring down the agencies that 
have been spending more drastically and bring the ones that 
have perhaps been more efficient down a little less; or you 
could try to more or less maintain the status quo and try to 
cut everybody. And the way that the law does it is it cuts 
everybody pretty much the same.
    It has a regional effect, actually. In general the New 
England agencies tended to be older. There are some agencies in 
Connecticut that have been there for 99 years, which is way 
before Medicare started. They tended to be more efficient, so 
their costs were lower, and the way that the Balanced Budget 
Act and the interim payment system worked is that it kept them 
at those levels. Other agencies had spent more. Some of them 
would argue, we spent more because we had more difficult cases, 
whatever, but they spent more. They were frozen at that level 
or with a slight reduction to that. So if they had been 
inefficient or built a cushion in somehow, they did get a bit 
of reward from it.
    Last summer in the appropriations bill, there were some 
adjustments made to the interim payment system to try to 
account for that a little bit, but I think the basic inequity 
is probably still there.
    Mr. Porter. I think it illustrates what Representative 
Miller was talking about earlier, and that is if you are going 
to try to run a health care system, from a public standpoint 
you have to make all of these adjustments all of the time, and 
if you are under the budgetary gun, which you always are, some 
of them are very much budgetarily driven.
    This particular individual said, if we have to live under 
this cap, we won't last until there is a prospective pay 
system, we are going to go out of business. They then cited a 
number of agencies which they said had gone out of business.
    I think it is a very difficult way to structure, and the 
faster we get to a prospective pay system where people get 
rewarded for efficiency, the better off we are. So I think Mr. 
Bonilla is exactly right.
    Ms. DeParle. I agree.

                             Y2K READINESS

    Mr. Porter. You mentioned that 58 [Clerk's note.--Later 
corrected to 54] of 74 [Clerk's note.--Later corrected to 78] 
systems of contractors were in Y2K compliance?
    Ms. DeParle. Yes, as of December 31.
    Mr. Porter. Now, you administer Medicaid as well from the 
Federal standpoint?
    Ms. DeParle. Right.
    Mr. Porter. What about the States. I assume that you are 
not referring to the States?
    Ms. DeParle. No, I am talking about Medicare.
    Mr. Porter. So, what about the States that administer 
Medicaid that have to have an interface with; where are they?
    Ms. DeParle. That is a very good question. In November. We 
hired an independent verification and validation contractor to 
go into each of the States and look at their systems. The 
reason we did that was, as you may know, the information we 
were getting, and even the GAO information, was just self-
reported from States. And even at that, it was somewhat 
troubling because some States didn't turn anything in or they 
didn't tell us exactly where they were.
    Medicaid will pay for IV&V for them. In fact, we pay for 
most of the renovations for them because, as you know, there 
are matching costs for their administrative costs. But most 
States were not acquiring an independent contractor to help 
them, and since they weren't doing it, we decided to do it 
instead.
    So we started going into States. I think we have been into 
13 or 14 now. We are producing reports to give to the States. 
We are in the process of getting those out now. What we are 
finding on the eligibility side is that most of the States are 
in good shape. They can process people, and their systems tend 
to be compliant in getting people into the system.
    The concern is on the payment side, that there are 
weaknesses, and they have a ways to go. While I don't think 
that we can be responsible for every State provider, we have 
identified some problems there that we are going to have to 
work with all of you on and your individual States.
    Mr. Porter. It seems to me that the most worrisome thing is 
that we reach this point and we have some kind of a breakdown, 
and then everybody is pointing at everyone else for the blame. 
I think we ought to get out front and put some pressure on the 
States and let people know who is doing well and who isn't and 
who needs to bring their systems into compliance.
    [The information follows:]

                          Y2K STATUS OF STATES

    Ms. DeParle. By the end of the first quarter of calendar 
year 1999, 35 State site visits have been completed by the (IV 
& V) contractor with assistance from Regional and Central 
Office staff. Five site visits are being conducted during the 
week of March 29--April 2. Based upon the results of the 
visits, which include both preliminary and final assessments, 
and using the results of the GAO/AIMD-99-28 State Welfare 
Programs; November 1998 publication of year 2000 Computing 
Crisis--Readiness of State Automated Systems to Support Federal 
Welfare Programs to compare with and a universe of 35 States, 
18 of the 35 States visited show an improvement in the overall 
status of their Medicaid Management Information System (MMIS). 
Fourteen States show no change in MMIS status while three 
States show an increase in risk. Site visits conducted for the 
same States show that 14 States have shown an improvement in 
the overall status of their TANF systems, while 13 others show 
no change, and 8 States show a higher risk rate than reported 
in the GAO report.
    Visits scheduled for April include the following States: 
Nevada, Minnesota, Rhode Island, Tennessee, Hawaii, Indiana, 
Illinois, Vermont, Kentucky, and Nebraska.
    By the end of April visits to all 50 States, including the 
District of Columbia, will have been completed.
    Site visits for the month of April include: Nevada, 
Minnesota, Rhode Island, Indiana, South Dakota, Nebraska, 
Vermont, Tennessee, Hawaii, Illinois, and Kentucky.
    Follow-up IV & V on-site visits will begin in May 1999 to 
medium and high-risk States and will continue through October 
1999.
    Correspondence is sent to all State Medicaid Directors 
(SMDs) on the findings of the IV & V team assessment resulting 
from the on-site visits. States have been asked to respond to 
the IV & V findings via correspondence back to HCFA. These 
letters will be used in focusing on the follow-up visits to 
States during the May--October 1999 visits. Phase I completion 
date for mail-out of letters to SMDs will be completed during 
the latter part of May 1999.
    In early April, a phased mailing of the first set of 
letters to each State Governor, attaching the detailed reports 
for those States in which SMDs have been notified of the 
results of HCFA's IV & V assessments, will be sent. We have 
been working with the Department to provide language and 
detailed background materials for the Y2K letters to be sent by 
the Secretary to each Governor. These letters and attachments 
will be coordinated and mailed out by the Department.

    Ms. DeParle. That is what we intend to do, and we are 
working with Mr. Koskinen to actually deal directly with the 
Governors. I was a former State official myself, and I think 
that sometimes the Governor needs to know where his or her 
systems are. We will work with you and provide you with the 
information about where Illinois is and where other States are.
    Mr. Porter. This is a question in the dark, and maybe I 
shouldn't ask this kind of a question.
    Ms. DeParle. I don't remember myself sitting here, so we 
can be in the dark for now. I will get you the information.
    Mr. Porter. It is a great concern. The agencies that this 
subcommittee funds, their administrative costs are probably the 
ones that most people depend upon more than others, like yours 
and Social Security. If we have breakdowns there, there will be 
real problems. I have been pushing, as you know, everyone to do 
everything they possibly can to not only get their own systems 
into compliance, but all of those that they interface with, 
because a breakdown there is going to mean the same lack of 
service or reimbursement as if it were here in Washington.
    Ms. DeParle. If I can ask for your help, last month I wrote 
a letter to every one of the Medicare providers that does 
business with us. We never do that. That is 1.6 [Clerk's 
note.--Later corrected to 1.3] million providers. Our 
contractors normally deal with them.
    The reason that I did that directly is because of my 
concern that the providers all be ready, and we have sent the 
letter out to all Members of Congress so they are aware of it. 
We are ready to talk to providers in your States to make sure 
that they have done everything that they need to do. We are 
doing everything that we can do, and you have given us support 
to make sure that our systems are ready, but they have to be 
ready to submit claims. So any help you can give us there in 
raising awareness we would appreciate, as well as with the 
States.

                              Y2K FUNDING

    Mr. Porter. Is any of the $150,000,000 for State systems? 
Are we using some of that money to do what the States ought to 
be doing themselves?
    Ms. DeParle. No, sir. The $150,000,000 is mostly 
contingency money, and I don't know to what extent any of that 
is being contemplated to be used for States. I can tell you 
that of the money that you made available for us last year, and 
the money for fiscal year 1999, we are devoting funding to 
State systems. The way that I hired the IV&V contractor was 
through the funding that you provided.
    Mr. Porter. But all you are doing is making an evaluation 
of the State system. You are not correcting the systems for 
them where you find problems?
    Ms. DeParle. No, sir, we are not, but we will pay for it 
through the appropriation because we match their----
    Mr. Porter. Pay for what?
    Ms. DeParle. Their renovation and other systems work the 
stuff that they need to do. Under Medicaid, we match their 
expenditures. So their State legislatures have to come up with 
some money, but we pay [Clerk's note.--Later corrected to 75 
percent] 50 percent for maintenance and operation of automated 
claims processing systems. We are a participant in helping them 
get anything that they need to get done.

                         APPEALS BOARD WORKLOAD

    Mr. Porter. As part of the request there is $2.8 million 
for the Department's appeals board. An article in the Wall 
Street Journal last month brought to light the fact that there 
are 670 appeals cases waiting to be heard, and the appeals 
board only renders about 22 decisions per year. It is safe to 
assume that with more audits and investigations, there will be 
more appeals filed. What impact will $2,800,000 have on the 
existing backlog as well as the increased number of new cases 
that might occur?
    Ms. DeParle. I am going to ask Dennis Williams to respond 
to that question.
    Dr. Williams. This money is requested in the context of the 
President's nursing home initiative and increased enforcement 
in this area where we expect additional legislation to ensue. 
So we are providing resources both to the Department's appeals 
board and to the Office of the General Counsel to try to handle 
that workload and avoid the kind of backlogs that exists now in 
other areas. The money is designed to handle that workload. It 
may turn out to also alleviate some of the existing backlog, 
but it is not primarily designed to do that.
    Mr. Porter. Why are there 670 appeals cases pending and 
they are rendering only 22 decisions a year? That sounds like 
they are 30 years behind.
    Dr. Williams. I don't know the precise answer to that 
question, but I will give you that answer for the record.
    [The information follows:]

           Departmental Appeals Board's Nursing Home Caseload

    Although the number of nursing home cases on the 
Departmental Appeals Board (DAB) docket is high and increasing 
rapidly, the statistics cited in the Wall Street Journal 
article do not fairly describe the DAB's circumstances or 
accomplishments. The data presented in the article is accurate 
but incomplete, and therefore misleading on several points. In 
particular:
    The article depicted the DAB's entire docket of 670 open 
cases as a ``backlog.'' This is misleading in that it 
necessarily takes time to hear and decide any case. Many of 
these open cases are new, so pre-hearing procedures are not 
completed and the parties are not yet ready to go to hearing.
    The article also did not mention that a large majority of 
the open cases (more than 70%) are ``stayed'' at the request of 
the parties involved. The vast majority of stayed cases await 
actions by the parties (e.g., decisions about settlement), not 
action by DAB. In addition, much of the millions of dollars in 
uncollected civil monetary penalties (CMP) is tied up in cases 
which are stayed in order for HCFA to consider a settlement 
officer.
    The article omitted information about the many cases 
disposed of by means other than a formal written decision--
i.e., settled, abandoned, withdrawn, or dismissed by order of 
an Administrative Law Judge (ALJ). In fact, 303 nursing home 
appeals cases were closed without written decisions in FY 1998, 
bringing the total number of cases closed to 325.
    The article's statement that new cases ``can't even get on 
the calendar'' is misleading. All new cases are docketed and 
processed (e.g., parties contacted; pre-hearing conference and 
briefing dates scheduled). New cases do not require a hearing 
date until pre-hearing procedures are completed and all parties 
are ready to present their cases. Furthermore, hearing dates 
constantly become available as cases settle or are dismissed or 
postponed, and cases ready for scheduling replace those that 
drop off.
    The bar graph in the article, comparing 22 decisions 
rendered to 670 ``backlogged'' cases, implies that the ALJs are 
unproductive. All DAB ALJs manage large caseloads. Moreover, 
nursing home cases can be extremely complex and require 
substantial pre-hearing preparation (including telephone 
conferences and substantive rulings) and post-hearing 
briefings. Also, cases that are dismissed by order of an ALJ 
sometimes require decision-length rulings to resolve 
substantial disputed legal issues.
    Since FY 1996, DAB has seen the number of incoming nursing 
home appeals cases increase from 30 per year to 442 in FY 
1998--with further dramatic increases expected in the future. 
Yet only three ALJs are available to hear these cases. While 
current DAB staff are indeed ``stretched'' by this burgeoning 
workload, the $2.8 million proposed in the President's FY 2000 
budget specifically for these cases should ameliorate the 
situation.

    Mr. Porter. What you are telling me, Dennis, is they might 
not make any progress on the backlog at all and will just 
handle the new cases with the money that you are asking for. It 
seems to me that we ought to get that cleared up.
    Dr. Williams. We will provide that information.

                                  GPRA

    Mr. Porter. I understand that HCFA will submit its first 
performance report under GPRA in March of 2000. This report 
will tell us how the agency is doing with respect to its fiscal 
year 1999 goals.
    Ms. DeParle. Yes, sir.
    Mr. Porter. I look forward to receiving the report, but in 
the interim can you give us an update where you are in the 
process? Can you tell us what has been accomplished since this 
time last year; and what problems, if any, you are having 
either internally or externally?
    Ms. DeParle. We identified 30 goals that relate very 
specifically to our programs. One area where we have already 
made some progress is in Medicaid, where initially we didn't 
have any goal because of this tension between its being a 
State-run program and we are just overseeing it, so what would 
be a legitimate goal to look at. Since the original plan, we 
have come up with a goal for the Medicaid program as well.
    We have divided them into three major categories: Core 
beneficiary-related goals; beneficiary-related goals; and 
administrative output goals. One thing that we are trying to 
do, which I think represents some progress, is to incorporate 
these goals into the performance appraisal plans of the senior 
leadership of the agency so that the goals that relate to 
improving heart attack survival rates and those sorts of things 
would be part of the performance plan of the chief clinical 
officer of the agency and of his staff. I think that will help 
us make a difference here.
    We have already made progress on a number of these. For 
instance, improving the efficiency of medical review of claims. 
As I told you, we are making progress on our error rate, and 
this is a part of that.
    Reducing the percentage of improper payments made under the 
Medicare fee-for-service program, we are making progress there 
as well.
    The GPRA is going to be a very useful tool to us in 
managing the program, identifying clearly what the goals are, 
and holding people more accountable. I think it will in the end 
help--perhaps help our image problem that Mr. Miller identified 
as well.
    Mr. Porter. I said to the Secretary this morning that I 
think one of the things that is very clear to me is that both 
Congress and the administration share the goals of getting good 
results for people, and, where we find we are not getting 
results, to look at different ways of approaching those 
problems and terminating programs that are ineffectual and 
spending the money more wisely. I think that is exactly what 
you have in your sights as far as your agency is concerned.
    Ms. DeParle. I fully support that. As I said, all of these 
things are things which we should have been doing, but I think 
if it hadn't been for the GPRA there wouldn't have been as 
clear a focus on it, and we wouldn't be having meetings every 
month talking about where are we on flu vaccines. I think it 
has been a very positive tool.
    Mr. Porter. Yes, and we couldn't hector you on all of this 
as you come before us.
    Ms. DeParle. You could hector us, but maybe not as 
effectively.

                    NATIONAL CRIMINAL ABUSE REGISTRY

    Mr. Porter. You are asking for funds, $10,000,000, to 
reimburse the Inspector General to fund the development of a 
national criminal abuse registry. I wonder if you can explain 
what that is exactly, and tell us, do you need an authorization 
for it?
    Ms. DeParle. I believe this was the program that was 
authorized in the appropriations bill last summer. It relates 
to the nursing home initiative that we announced last July, and 
I think that is why the timing was that it came out in the 
appropriations bill.
    There has been a lot of concern about people working in 
nursing homes that have a criminal background. There is a 
recent OIG report about this. I think they looked at the State 
of Maryland, and I think they found something like 10 percent 
of the people working in the nursing homes had prior criminal 
records for things like assault. These were not just financial 
crimes, not that that is okay either, but it is pretty serious. 
And so the notion is that there should be criminal background 
checks before people become employees of some of these 
providers. I think that is the purpose.
    Would you care to add anything, Mr. Williams?
    Dr. Williams. That is exactly what it is for. I am not sure 
whether it requires authorization, but I believe we do have the 
authorization, and it is just a question of funding it and 
getting the system designed and operating.

                             LONG-TERM CARE

    Mr. Porter. Let me finish with this. We were discussing 
both current health care and long-term care. It seems to me 
that as our economy expands, as it has been for some time now, 
and we are, I think, doing a better job across government in 
providing services, we really ought to look at the way in which 
we can put into place a program or system when people start a 
working career, such as we do with retirement through Social 
Security, and have that in the hands of the American workers 
rather than a government promise. We ought to look at how we 
can get people to save money for long-term care, to save money 
for health care generally and to save money for higher 
education so we have some kind of a forced savings system for 
the major expenses of life that begins at an early age and 
prepares people, rather than trying to patch it on at the end 
when people don't have the resources and have made no provision 
for them.
    It seems to me, we need to get out front on these kinds of 
issues. I believe that if we had the resources in 1935 when we 
created Social Security, we would have put it in a fully vested 
system that the American worker owns. I think we are in a 
position today to do that over a period of time, to get a 
system that really is in the hands of not us in Washington who 
can continually change the rules, but in an investment book for 
every American worker.
    I think we ought to think about how we can do that for 
education, higher education I am talking about, and for long-
term care and health care. If we try to patch on a system that 
makes up for things now that should have been done earlier, we 
will simply get off on the wrong foot on those kinds of 
concerns as well. We really ought to think in terms of starting 
a new system that will work and come into place over a long 
period of time that will help people get over these huge 
burdens that sometimes they can't handle.
    Ms. DeParle. As I look at the future of Medicare, and of 
course the Commission is trying to deal with the demographic 
changes that are coming, at least we have a program there. I 
worry as you do about what happens when the baby boomers start 
needing some form of long-term care, whether home care or 
community care or nursing home care, and the financing is just 
not there right now.
    Mr. Porter. We do have a system in place, but it is a 
system that is centered on a tax that is collected on wages and 
the promise to deliver services. We find problems in doing 
that, budgetary problems particularly, and it seems to me that 
we could do a much better job in putting a system in place that 
puts the individual in control of their destiny with the 
resources to purchase wisely for themselves if we only look 
ahead far enough instead of trying to continually work on a 
system that really isn't based upon that individual kind of 
control over your destiny.
    That is my sermonette. Thank you for coming to testify 
today. You have answered our questions very, very well, and we 
thank you for being here and for the fine job that you are 
doing.
    The subcommittee will stand in recess until 10:00 a.m. 
tomorrow.
    Ms. DeParle. Thank you, Mr. Chairman.
    [The following questions were submitted to be answered for 
the record:]

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                                        Tuesday, February 23, 1999.

                ADMINISTRATION FOR CHILDREN AND FAMILIES

                               WITNESSES

OLIVIA GOLDEN, ASSISTANT SECRETARY, ADMINISTRATION FOR CHILDREN AND 
    FAMILIES
WILLIAM R. BELDON, DIRECTOR, DIVISION OF DISCRETIONARY PROGRAMS

                        Introduction of Witness

    Mr. Porter. The subcommittee will come to order.
    We continue our hearings on the budget of the Department of 
Health and Human Services with the Administration for Children 
and Families. We are pleased to welcome Dr. Olivia Golden, the 
Assistant Secretary.
    It is nice to see you, Dr. Golden.
    Dr. Golden. Thank you.
    Mr. Porter. Why don't you proceed with your testimony, and 
then we will go to questions. Hopefully, we will be joined by 
some other members of the panel.
    Dr. Golden. Thank you.

                           Opening Statement

    Mr. Chairman and members of the subcommittee, I am pleased 
to present the President's budget request for the 
Administration for Children and Families for Fiscal Year 2000. 
I am accompanied by Bill Beldon, who is the Division Director 
for Budget for the Department.
    President Clinton has presented to Congress a budget that 
is balanced for the second straight year. The budget for the 
Administration for Children and Families invests in human 
services that will benefit all Americans, focusing on programs 
to promote healthy development of our Nation's children and 
economic security and independence for families and 
communities.
    We are also proud that our Fiscal Year 2000 budget request 
supports our citizens and people from around the world, 
including assistance for refugees fleeing persecution and 
victims of torture who need special assistance in rebuilding 
their lives here in America.
    The Fiscal Year 2000 budget for the Administration for 
Children and Families is $42 billion, of which $23 billion is 
being requested in new budget authority. The remaining $19 
billion is available through the Personal Responsibility and 
Work Opportunity Reconciliation Act of 1996.
    Entitlement programs represent approximately $33 billion of 
this budget, with increases for Child Care, Independent Living, 
Safe and Stable Families, and the Social Services Block Grant.
    Over 68 percent of ACF's $9.4 billion discretionary budget 
request support programs serving young children and their 
families through the Child Care and Development Block Grant and 
the Head Start program. For Fiscal Year 2000, we are requesting 
a substantial increase in the Head Start program, and will 
maintain the increased level that was advance funded in the 
Fiscal Year 1999 appropriations for the Child Care and 
Development Block Grant.
    Other discretionary increases include those requested for 
Transitional Living for Runaway and Homeless Youth, Violent 
Crime Reduction, Individual Development Accounts, Victims of 
Torture, and Adoption Opportunities.
    In addition, the Administration for Children and Families 
is seeking continued funding for a wide range of programs that 
serve some of this Nation's most vulnerable populations, 
including Low-Income Home Energy Assistance, Community Services 
Block Grant, programs for persons with developmental 
disabilities, Native Americans, and refugees.
    Let me briefly highlight a few key programmatic initiatives 
in our Fiscal Year 2000 request. First, Child Care: The Clinton 
administration has been committed to making work pay through a 
variety of supports for working families, including the Earned 
Income Tax Credit, Family and Medical Leave, and child health 
insurance. In this year's budget proposal, the President 
continues his commitment to working families. We very much 
appreciate, Mr. Chairman, the committee's advance appropriation 
last year of more than a billion dollars for the Child Care and 
Development Block Grant, including an increase of $173 million 
to improve the quality of child care and $10 million for 
research demonstration and evaluation. The Fiscal Year 2000 
request proposes to maintain this level of support into 2001.
    However, affordable and adequate child care remains out of 
reach for many working families. While the average family pays 
about 7 percent of its income for child care, child care 
consumes about a quarter of the income of low-income families 
who pay for care. In addition, research shows that, when 
children are in better quality child care programs; they have 
stronger language, pre-mathematics and social skills, better 
relationships with their teachers; and stronger self-esteem. 
Despite the link between quality of care and a good education, 
serious concerns about the quality of child care that many 
children receive have emerged, including concerns about the 
basic health and safety and care.
    Of the 10 million children in working families with incomes 
below 200 percent of poverty, we were able to serve only about 
1.25 million in Fiscal Year 1997, slightly more than 10 percent 
of those eligible. In response to this great need, the Fiscal 
Year 2000 budget includes increases of nearly $2 billion under 
child care entitlement programs, of which $1.2 billion will 
expand child care subsidies. Combined with the child care funds 
provided under welfare reform, this will enable the program to 
serve an additional 500,000 children in Fiscal Year 2000.
    We also are requesting $600 million to create the Early 
Learning Fund, which will enable States to provide challenge 
grants to communities to protect the health and safety of the 
youngest and most vulnerable children in child care, and 
promote their early learning and development. Funds requested 
for child care will provide services to approximately 2 million 
children by 2004.
    Head Start: Head Start has been, and continues to be, one 
of the Administration's top priorities. The Head Start Program 
fosters the development of young children from low-income 
families to enable them to function at their highest potential. 
An increasing body of evidence supports the advantages that 
accrue to disadvantaged children and families in Head Start. 
Studies have demonstrated, for example, that Head Start 
programs produce immediate gains in areas like cognitive 
functioning, academic readiness and achievement, self-esteem, 
social behavior, and physical health. Studies have also 
demonstrated that Head Start children have better high school 
attendance rates, are less frequently retained in-grade, and 
have less need for special education. Head Start has been shown 
to help parents improve their parenting skills and, in many 
cases, help them on the road to self-sufficiency. In short, 
Head Start works.
    Head Start has made dramatic progress toward developing an 
outcome-oriented accountability system that can be used to 
determine the quality and effectiveness of Head Start, and our 
work there owes a lot, Mr. Chairman, to your commitment to GPRA 
and to accountability.
    The Head Start Family and Child Experiences Survey is a 
periodic longitudinal data collection that will provide 
information about children as they enter the program, their 
experience in Head Start and their status both at school entry 
and after a year of kindergarten. The full study, launched in 
1997, will follow 3,200 children and families in 40 Head Start 
programs and this ongoing effort will continue to help Head 
Start chart its progress in meeting GPRA goals and improving 
services to children and families.
    The first results, based on a field test conducted in 1997 
with a nationally representative sample of 2,400 children and 
families in 40 programs, gives reason for encouragement. The 
quality in most Head Start programs is good. No programs scored 
in the poor range, and perhaps most important, program quality, 
small class size, and richer teacher-child interactions is 
related to child development outcomes.
    Because Head Start makes such a difference, we are 
requesting $5.3 billion for Fiscal Year 2000, a $607 million 
increase. This level will provide a total of 877,000 infants, 
toddlers, and pre-school children and their families with a 
Head Start experience, an increase of 42,000 children over the 
number supported in Fiscal Year 1999, moving us closer to the 
President's goal of enrolling 1 million children by the year 
2002. The total children served in Fiscal Year 2000 will 
include 45,000 infants and toddlers in Early Head Start.
    Programs to reduce Violent Crime: The Fiscal Year 2000 
request includes $102 million for Grants for Battered Women's 
Shelters, an increase of $13.5 million. Violence against women 
is a serious problem. Nearly 2 million American women 
experience domestic or sexual violence each year.
    The increase requested is part of a $28 million 
Departmental initiative within HHS to curtail violence against 
women, and the initiative is intended to enhance the services 
provided to women and their families, as well as to change the 
social norms that permit violence to occur.
    The total requested for ACF will provide an additional 
35,000 survivors of domestic violence and sexual assault with 
counseling, shelter, and other services. We will encourage the 
funding and establishment of shelters in underserved urban and 
rural areas, including Indian tribes and Alaska Native 
villages. In addition, we will provide culturally-appropriate 
services for underserved populations, like ethnic minority 
populations, as well as services for persons with disabilities.
    Individual Development Accounts: The Assets for 
Independence Act of 1998 authorized funds for a new program to 
empower low-income individuals to save for a home, for post-
secondary education, or for a new business, at a match rate 
ranging from 50 cents to $4 for every dollar saved. In Fiscal 
Year 1999, $10 million was appropriated for this new program, 
and an additional $10 million is requested in Fiscal Year 2000. 
The total of $20 million requested will support grants to 60 
nonprofit organizations, in partnership with financial 
institutions, to administer IDA demonstrations, serving 13,500 
low-income individuals.
    Victims of Torture: The budget request for the Refugee and 
Entrance Assistance program includes $7.5 million to fully fund 
the domestic treatment activities that have been newly 
authorized by the Torture Victims Relief Act. These resources 
allow for the provision of treatment services to the many 
survivors of torture now in the United States.
    Independent and Transitional Living programs: As part of 
the President's adoption initiative, and in implementing the 
Adoption in Safe Families Act, we are focusing on eliminating 
barriers to finding children permanent placements, including 
the adoption of children in foster care who are legally free 
for adoption. But, unfortunately, there are children who will 
never be adopted, and by age 18 they are ineligible for foster 
care. Each year, 16,000 youth age out of foster care and lack 
the resources and support required to attain self-sufficiency. 
These youth require assistance in developing skills that will 
allow them to live independently.
    As a result, the Fiscal Year 2000 request includes a 
package of proposals aimed at assisting former foster care 
youth transition to living on their own. The proposals include 
an increase in the authorization for Independent Living from 
$70 million to $105 million along with an additional $5 million 
for a new grants to States program to support the living 
expenses for youth in transitional living programs.
    An increase in discretionary spending of $5 million for 
Runaway and Homeless Youth transitional living also is 
requested to provide similar services to those youth who have 
been pushed out of their homes or runaway. These increases will 
foster independence and a successful transition to adulthood, 
helping youth avoid long-term dependency on social services.
    Finally, the Social Services Block Grant and Promoting Safe 
and Stable Families: The Fiscal Year 2000 budget request 
includes the full authorized level for both the Social Services 
Block Grant, $2.38 billion and Promoting Safe and Stable 
Families, $295 million. These programs provide critical social 
services and resources that link human service delivery systems 
and provide essential family support.
    In conclusion, I would like to emphasize our commitment to 
achieving results, measuring results, and jointly working with 
our partners in developing and refining measurable goals and 
objectives, as required under the Government Performance and 
Results Act. Our performance measures are an integral part of 
the ACF budget and have been included as part of our budget 
document submitted to the Committee. We look forward to working 
with the Congress on achieving these goals.
    Thank you, Mr. Chairman, and I will be happy to answer any 
questions.
    [The information follows:]

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                               HEAD START

    Mr. Porter. Dr. Golden, thank you very much.
    I just attended a conference put on by the Aspen Institute 
down in Florida dealing with children, and particularly the 
transition into adulthood. But there was a discussion at one 
point where the chairman of the Education and the Workforce 
Subcommittee said that there was no discernible difference in 
Head Start kids in terms of their measurable performance in 
school later on. In other words, not while they are in Head 
Start, but after they leave the Head Start Program, there was 
no difference between a Head Start child and any other. From 
what I gather from your testimony, you are saying something 
quite different.
    You have testified before the authorizing committee, have 
you not?
    Dr. Golden. Yes.
    Mr. Porter. Where is the chairman looking for that kind of 
conclusion, and where are you looking, and are they different 
places? Or why is there a difference?
    Dr. Golden. Let me tell you where I think the areas of 
agreement are, where the differences are, and then what we are 
doing about it. The reauthorization process, as you know, is a 
thoughtful and bipartisan process, and it led us to some next 
steps for addressing the remaining research issues.
    I believe there is quite broad agreement across researchers 
on the key points that I mentioned in my testimony: that there 
are immediate school readiness effects from Head Start, and 
that there are medium-term effects that have to do, for 
example, with less retention in-grade, less special education, 
all of which I would describe as very important school impacts.
    We are getting added information from the FACES study that 
we have engaged in, in part because of the GPRA requirements, 
but also because results information is so important to us. 
What we have learned from that pilot study is about the early 
impacts. It shows children performing on a set of key 
indicators of school readiness better than children from low-
income families' national norms. So it is more evidence of the 
positive effects of Head Start.
    I think that one of the technical areas where the 
researchers have disagreed--and this is an area that may have 
been on the chairman's mind and is an issue that the GAO is 
focused on--is the question of, what is the best way 
technically to do a rigorous evaluation of impacts? The 
researchers, very distinguished researchers, come out on 
different sides of the question of whether, in a situation like 
Head Start, you ought to use random assignment as your way of 
assessing impacts. Because Head Start already serves close to 
40 percent of children in that situation, the technical 
question about how you do the best comparisons is a hard one to 
answer, and is one that people of good faith with great 
knowledge don't always agree on.
    So what we agreed to in the reauthorization, because we 
think there is this large amount of evidence, but the standards 
of rigor for it are under discussion, is that we would convene 
an advisory committee of distinguished researchers. We have 
actually already done a little bit of funding of specific 
projects to address some of these technical questions. We will 
be convening an advisory committee, which is to give the 
Secretary advice on designing the next wave of Head Start 
outcome research, and I am planning to stay personally involved 
because I do believe it is very important.

                        TRANSITION TO ADULTHOOD

    Mr. Porter. Thank you. As part of the conference that I 
mentioned, we were talking about the importance of young people 
making a successful transition to adulthood, of having at least 
one caring adult that follows them and can advise them, whether 
it is a parent or another relative or just a friend, someone 
who cares about them. As you were testifying regarding the 
question of transitioning of young people who were not adopted 
from foster care into adulthood, do we have any kind of a 
program that--I am aware of some in the private sector, but 
does the Government have anything that it does that hooks up 
some way of finding that one caring person for that young 
person who is highly at risk and in need of someone who cares? 
What do we do in that area?
    Dr. Golden. That is an interesting question. I think you 
are right to highlight it as a critical support. Young people 
of 18 or 19 who haven't gone through all the things that 
children in foster care have gone through still need that 
connection, and the foster care child needs it so much more.
    One of the possible ways States could use these independent 
living resources is for a variety of services that would help 
with the transition, including personal connections and 
mentoring strategies. From the young people I have talked to, I 
think these strategies are part of what works. So that is one 
possible approach. It is not a required approach. I mean, 
States might choose to engage, for example, in more teaching 
about budgeting and financial management or job training.
    But I do share your sense, in part, from the personal 
stories that I have heard, both of young people and foster 
parents who went above and beyond to keep that contact, that 
that is likely to be a key piece of successful transition. But 
I would say that both in independent living and in the 
transitional living programs that we are proposing to increase 
for runaway and homeless youth, having staff who make that kind 
of connection is a key part of having the program work.
    Mr. Porter. The academics who were there--and I can't 
remember necessarily where they were from, whether it was 
Columbia or Yale or where, but all said, and they agreed 
without any argument, they all said that this is not just an 
important part; this is vital; this is absolutely the bottom 
line for a young person who might otherwise find themselves in 
trouble and end up in prison--that you really needed to find 
this one--each one of them needed to find this one person.
    We have programs like Big Brother, Big Sister, and others, 
and mentoring programs, that try to do something along those 
lines, but I really wonder whether we have enough focus on this 
ingredient to say that we are really doing something, except 
maintaining young people, that can find them leaning in the 
right direction. I am not saying that a young person can't 
succeed without it, but it seems to be, in most cases, a very, 
very important aspect of their growing up and successful 
transitioning to adulthood.
    Dr. Golden. I agree, and I think that is worth looking at 
some more. Another place in our request where I would say that 
idea is important is in the adoption request. Because, clearly, 
the most central connection is to have as few young people as 
possible grow up constantly shifting from one foster care 
setting to another. So it does underline the importance of 
that.
    The other thing that I would note is that we have tended to 
split up thinking about child care and thinking about youth 
programs. But, both our child care resources the subsidy 
dollars that we provide to parents, through ACF, and those that 
the administration is requesting for after-school programs in 
the Department of Education, often fund after-school kinds of 
settings that the Boys and Girls Club or others might do. I do 
think, as a sort of implementation activity, we have been 
trying to hook up those different communities, because that is 
another place where a young person who couldn't find that 
connection at home might find a person that really remains a 
constant in his or her life.
    Mr. Porter. Yes, we shouldn't assume that just because 
there are two parents or even one parent at home that that 
parent is necessarily fulfilling that role. In many cases it 
doesn't happen.
    Dr. Golden. Right.
    Mr. Porter. And there is such alienation that the young 
person never gets that caring adult, for one reason or another.

                                TITLE XX

    I guess we are going to have to talk about the numbers here 
a little bit. You are proposing a large increase this year in 
the Social Services Block Grant. The increase is $471 million, 
or 25 percent above the Fiscal Year 1999 level. Last year, as 
you recall, you proposed a substantial cut in this block grant. 
You wanted to cut it by $390 million, or 17 percent, last year. 
We reluctantly went along with that big cut in conference last 
fall. You seem to have done a 180-degree turn on this program. 
Why do we have this sudden change of course?
    Dr. Golden. You are correct, Mr. Chairman. Our proposal is 
for the fully authorized level for the Social Services Block 
Grant; it is $2.83 billion [Clerk's note.--Later corrected to 
$2.38 billion] at the fully authorized level.
    We believe that at that level States will be able to make a 
range of important investments; for example, investments in 
child protective services and child welfare programs. This year 
we were able to accommodate that need.
    Mr. Porter. Well, why wasn't that important last year, 
then?
    Dr. Golden. I think we are always making the choices in the 
context of a balanced budget. We have also heard a lot from a 
variety of people about the way in which these resources meet 
State investment needs, fill gaps, and are available for 
services like child protective services and child welfare.
    Mr. Porter. Well, maybe you could tell me what you are 
doing in this regard, then? In Fiscal Year 2001, as you know, 
the authorized level for title XX drops clear down to $1.7 
billion. If we do as you ask for this Fiscal Year, the States 
would be going from $1.9 billion in Fiscal Year 1999 to $2.4 
billion in Fiscal Year 2000, and back down to $1.7 billion in 
2001. Does that make any good budgetary sense?
    Dr. Golden. We looked at the numbers. We thought that 
funding at the full authorized level would give States this 
year to restructure their human services funding and make those 
investments that they need to make.
    Mr. Porter. Okay. Ms. DeLauro.
    Ms. DeLauro. Welcome. It is good to see you. Sorry I wasn't 
here for the testimony, but the Agriculture Subcommittee is 
meeting at the same time.
    Let me just ask one or two questions about child care.
    Dr. Golden. Right.

                               CHILD CARE

    Ms. DeLauro. We have all seen the scientific breakthroughs 
in the last several years about the early years being the most 
crucial, and that is the period of important brain growth. We 
conclude that high quality care during this period of time is 
crucial.
    Dr. Golden. Yes.
    Ms. DeLauro. Yet, we are taking a look at national surveys 
that show as much as 40 percent of child care for infants/
toddlers is so substandard that it threatens babies' health and 
safety. The Post today had an article on a National Institute 
of Child Health and Human Development study into early child 
care. It concludes fewer than 1 in 10 youngsters ages 3 and 
under are likely to receive excellent care. Eight percent of 
care was deemed poor, while 53 percent ranked fair. Nearly one-
third, or 30 percent, of care was good. So the statistics are a 
little startling with what is happening to our youngest kids.
    The President has proposed an early learning fund. I am 
presuming that that was proposed to address this issue. Now is 
that directed toward children ages zero to 5?
    Dr. Golden. Yes.
    Ms. DeLauro. Talk to us about how the fund works and how 
you see us addressing what seems to me to be a very serious 
problem that we have today, given all that we know and given 
all the work that we are trying to do in this area.
    Dr. Golden. I couldn't agree with you more about both the 
importance of the early years and the importance of addressing 
those issues in child care. We really do know a lot from 
research about how the settings children are in in those early 
years affect their later learning. A baby or a toddler who is 
spending the whole day in front of the TV with no adult 
interaction is not likely to be as ready for school and as 
ready to succeed; in addition to the cases you cite, where 
there are health and safety concerns, it is a critical issue.
    That is the reason that the President's proposal includes 
two parts. As you note, the part specifically focused on 
quality is the Early Learning Fund, and our proposal includes 
$3 billion over five years, $600 million this year. In 
addition, the President is proposing an investment in making 
child care more affordable for working families, which helps 
parents make their own choice--$1.2 billion this year.
    The Early Learning Fund will draw from a variety of State 
experience, including, for example, North Carolina with its 
Smart Start Program. The idea is that we need to get dollars 
out to communities in order to upgrade the quality of child 
care. Babies and toddlers and pre-schoolers are cared for in a 
lot of different settings, in family homes, in centers. What we 
need to do is make sure that we are improving the quality of 
that care wherever it is. We need to make sure that caretakers 
are trained, that they have support, that there aren't too many 
children for one caregiver.
    I had a fascinating conversation. I visited a program in 
Virginia about a year ago, and talked to a mother whose baby 
had previously been in a family home that was not very good, 
and had moved to one that had the kind of supports that you 
could purchase through the Early Learning Fund--somebody 
visiting and helping her. She told me about the difference for 
that child. It wasn't abstract or jargon to her. It was that 
her little girl no longer cried before she went and after she 
came back; that she could tell that the new caregiver was on 
the floor with the kids playing, not leaving them in front of 
the TV all day, and she could already see the difference and 
the impact. That is what I think we want to achieve for all 
children.
    Ms. DeLauro. How are we going to look at accountability? 
How are we going to take a measure of whether or not we are 
succeeding in this effort? Are we licensing providers? What are 
we going to demand from this effort, so that we have some 
indication that we are changing these percentages?
    Dr. Golden. As we move forward, we want to demand quality, 
but we also want to maintain the fact that child care, by its 
nature, involves a lot of different choices by parents about 
the kinds of settings, especially for the youngest children. 
Parents want their children to be cared for in all kinds of 
different settings--from homes, to centers, to neighbors.
    What we have proposed is that States distribute the money 
to communities in challenge grants, and that we work out 
benchmarks in terms of quality. I think you are right to note 
that something like accreditation is a kind of benchmark that 
might make sense for centers; for family homes, it might have 
more to do with the kinds of training and support and quality 
of the interaction in the home. So we want to work that out, as 
States see what would work best in their communities, not 
requiring something that was standardized from Washington.
    Ms. DeLauro. But, still, with a center or with care in the 
home, would the people who are providing the care have to 
demonstrate their qualification or their certification of 
training? It is very difficult to get qualified people to care 
for our babies, and I am just trying to get a sense of how we 
will do that.
    Dr. Golden. Right, and there is a range of approaches. What 
communities could choose to do with the money might include 
investing in training, investing in scholarships, investing in 
family--somebody who is caring for babies in their home can be 
very isolated. You connect them to a center which has a 
specialist who can go out and help with a particular issue. 
There are a lot of different things that you could do with 
those resources to upgrade the quality of care.
    Ms. DeLauro. I just want to keep in touch on that effort.
    Dr. Golden. I would be delighted to.
    Ms. DeLauro. We haven't spent the kind of time or resources 
in this area of zero to 3, or zero to 5. If we are going to 
begin to do that, let's try to make fewer mistakes. We don't 
need to reinvent the wheel here in terms of what is quality and 
what isn't, because we have moved forward with Head Start. It 
is critical to get it right at the outset given the data that 
we have in terms of the learning environment.
    Dr. Golden. As you know, when I was in Connecticut and 
testified on Early Head Start, I had the chance to meet with 
some of the people who have drafted Connecticut's proposal, 
which does focus on either accreditation or adoption of the 
Head Start performance standards. That is a high standard, and 
it would be wonderful if we were able to achieve it in at least 
some States and communities.
    Ms. DeLauro. You also mention in your testimony that we 
serve only slightly more than 10 percent of children in low-
income working families who are eligible for child care. For 
people who are trying to get off of welfare and lack affordable 
child care, these are unbelievable barriers.
    Connecticut has unbelievable waiting lists to qualify for 
child care, and I have to imagine that this problem exists 
across the country.
    Some would argue that there is a lot of money around for 
child care. Do we have enough subsidized child care to move 
families from welfare to work? And how does the President's 
initiative help to alleviate the problem?
    Dr. Golden. What we absolutely don't have, as you cited the 
10 percent number there, is enough child care to meet the needs 
of low-income working families. We have people--your experience 
in Connecticut is not solely Connecticut's; that is, 
nationally, there are families struggling in low-wage jobs who 
cannot afford or do not have access to quality child care.
    Ms. DeLauro. And this is to get people from welfare to 
work. We are not, then, addressing the need for working middle-
class families to enable them to avail themselves of child 
care?
    Dr. Golden. The President's proposal focuses on low-income 
working families, perhaps a family making $20,000 or $25,000 a 
year and struggling to pay for child care.
    In many States the immediate need, that first move from 
welfare to work, is paid for, but over time families need to be 
able to sustain their child care in order to stay at work, and 
we have got to have child care for families who don't come 
through the welfare rolls. We need people who are working and 
struggling to hold onto those jobs, to have access to child 
care.
    So, nationally, as I said in the testimony, we are serving 
about 1.25 million children, out of about 10 million who are 
eligible at the 200 percent of poverty level, which is only a 
little bit more than 10 percent. I have been traveling a lot 
and talking to people about child care. What struck me is the 
need not only from parents, providers and human service agency 
heads, but from employers. Employers are seeing that in low-
wage jobs, they are losing people who can't afford to maintain 
their child care and keep employment, and that is not what we 
want. We want to make sure, in the President's words, that no 
one has to choose between the job they need and the child they 
love.
    Ms. DeLauro. Thank you, Mr. Chairman.
    Mr. Porter. Thank you, Ms. DeLauro. We will have a second 
round, and we have been operating under the 8-minute rule. We 
should be able to do that for the second round as well.
    Mr. Hoyer.
    Mr. Hoyer. Thank you very much.
    Ms. Golden, I apologize; we have another hearing across the 
hall, and I am the Ranking Member, so I need to be there.
    But I wanted to come over. As you know, I am very, very 
interested in what you do. I think your job is one of the most 
important that we have in the Federal Government, which is to 
make sure that our children and families are whole, healthy, 
and ready to face the future.

                          COORDINATED SERVICES

    Also, one of the things, as you well know, that I am very 
concerned about is coordinated services. We are going to have 
on the floor tomorrow a bill sponsored by Mr. Portman and 
myself. I think it will be relatively noncontroversial. What it 
seeks to do is to heighten the simplification of application 
forms for financial aid to the Federal Government and to 
encourage those of us at the Federal level to coordinate our 
efforts as well and focusing our efforts to make it easier for 
local governments to get resources. So I would ask you to 
focus-in on that, if I could.
    And let me ask you about your administration's efforts to 
work with the other two departments to provide such 
coordination of services for families. In other words, what are 
you doing to facilitate the coordination?
    Dr. Golden. With a range of other agencies.
    Mr. Hoyer. Yes, with a range of other agencies.
    Dr. Golden. First of all, I always look forward to 
preparing to talk to you about this question because it is so 
much a focus of mine. Having a chance to think about what we 
have done this year that I could report to you on was 
beneficial.
    Mr. Hoyer. I was set to come over here and give you that 
opportunity.
    Dr. Golden. Thank you. I would highlight three things that 
seem to me particularly important, as I look back at the year 
since I spoke to you last. The first is that we have done a lot 
of work with community-based and nonprofit providers, as well 
as other Federal agencies, who focus on the needs of families 
who are going to have a hard time moving to work, like 
substance abuse providers, domestic violence services, mental 
health, disability. Because, as you know, with the TANF 
resources, States have, I think the obligation, as well as the 
opportunity, to invest some resources in those services for 
hard-to-serve families. But at the community level, people 
don't always know each other--the welfare agency, the mental 
health services, the substance abuse services. Your own State 
of Maryland I think has set some examples in some of those 
areas, but I do find nationally that often services are not 
coordinated.
    So we have been doing a lot of convening. I have been 
meeting with people myself, and we have been doing conferences, 
trying to provide technical assistance, information, and 
working, for example, with the Substance Abuse and Mental 
Health Services Administration to build those linkages, as well 
as with the Department of Labor in that area.
    A second area which I know is of great interest to you, is 
Head Start/child care linkages, through both our funding 
strategies and through technical assistance. I had the chance, 
in Cincinnati, to visit a child care program in the community 
that had been part of a Head Start expansion strategy, that 
essentially signed on to become a Head Start program and 
upgrade their services, really the same issue that 
Congresswoman DeLauro mentioned. They signed on to upgrade 
their services to the Head Start level.
    What they told me was that the biggest thing--and this, I 
think, comes back to the integration issue--the single biggest 
improvement they saw was that they now had access to real 
specialists on health and disability and speech therapy issues. 
They saw that as a huge need for their children.
    And a third area--go ahead.
    Mr. Hoyer. Let me stop you a second, because I came in, as 
I am coming in with you, when HRSA was here this morning, and 
asked that question, as you recall, Mr. Chairman, specifically 
in health care services, dealing with children, either in 
schools or in community-based service providers.
    Dr. Golden. It is very important, and I think the Head 
Start model is one that, as we encourage child care programs to 
adopt that, can make those connections more powerfully. The 
third example I was going to give you was with HRSA and HCFA. 
We have been very involved in planning CHIP outreach, outreach 
for the Children's Health Insurance Program, and have been 
trying to make sure that our grantees are involved in different 
States in the development of State plans and in outreach to 
families. There is a lot more to be done, as you know, but 
those are some of the examples.
    Mr. Hoyer. Great. I think we have a lot more to do on this. 
I am pleased with your enthusiasm and realization of how we can 
maximum services to people, if we coordinate our efforts better 
and simplify their access to those, both communities and those 
who we serve.

                         HEAD START CO-LOCATION

    Let me follow up on a question: Can you provide the 
committee, either now or for the record, with the status of the 
effort to co-locate Head Start programs in child care 
facilities on Job Corps campuses?
    Dr. Golden. I can give you an overview now, and then if 
there is more information we need----
    Mr. Hoyer. And you might--the question as written here, but 
let me expand that: as well as co-location with schools, 
school-based as well as community-based facilities, as well as 
Job Corps centers. As you know, we have talked about Job Corps 
to facilitate young moms getting Job Corps services, having 
Head Start facilities available, as well as child care 
facilities are critical.
    Dr. Golden. We have been working together with the Job 
Corps people to make sure that the information is well 
disseminated, and we have also encouraged, in our last round of 
expansion, grantees to look at Job Corps centers and sites. I 
don't think I have the actual number in front of me, and we 
should probably come back to you with a number for the record.
    Mr. Hoyer. You can get back to us on that.
    [The information follows:]

    Ms. Golden. There are currently 13 Head Start projects 
located in Job Corps settings.

    Dr. Golden. In terms of schools, I don't know the co-
location number. School districts in many places are grantees; 
in others they are not.
    Mr. Hoyer. About 25 percent, I think, are school-based.
    Dr. Golden. I think that is the approximate number.
    We also have seen a real increase in the Head Start/child 
care partnerships in terms of numbers. By Fiscal Year 1998, I 
think we had about 104,000 children served in full-day 
services, largely through partnerships, and we are expecting 
that, if we have the President's Fiscal Year 2000 
appropriation, we would add about another 60,000 children to 
that.

                         HEAD START FACILITIES

    Mr. Hoyer. Let me ask you another question. Again, you may 
or may not have this information available to you at this point 
in time. Some years ago--I think maybe four years ago, it 
strikes me, or maybe three years ago--I guess it was four years 
ago when we reauthorized, we extended instruction as an 
available expenditure for Head Start resources. I was, as you 
know, a very skeptical viewer of that, because I thought that 
it went in the direction opposite of what I thought we ought to 
do. Rather than coalescing services, it was providing services 
in separate places. What is the status of that? As you know, I 
included language in there that co-location was a first option.
    Dr. Golden. Right.
    Mr. Hoyer. As a matter of fact, I think it--I don't want to 
speak for the Secretary, but she had a reticence as well about 
the school construction money, on the fear that what you would 
have is a lot of construction money spent--would limit services 
and limit additional children, and also maybe impact on 
quality. I want to ask you--that will be my last question on 
quality.
    Dr. Golden. Okay.
    Mr. Hoyer. But on the construction----
    Dr. Golden. On the construction, first of all, the status 
is that a grantee has to demonstrate that it is the most cost-
effective option, and that has proven to be quite a 
considerable control. In terms of the policies, we have issued 
a proposed rule, an NPRM, on construction, and it is in the 
comment period now. So any comments that you or your staff 
might want to provide would be very useful to see if we have 
walked that balance.
    Mr. Hoyer. Could you just send me a copy of that?
    Dr. Golden. Absolutely.
    Mr. Hoyer. And we will comment on it.
    Dr. Golden. Absolutely. Why don't we do that.
    Mr. Hoyer. Okay, and when you do that, if you could me--
have we had any approved to date?
    Dr. Golden. Any construction approved?
    Mr. Hoyer. Construction.
    Dr. Golden. We have. The number that I have been given is a 
number that covers both construction and purchase, because both 
of those are allowed, though they are separate. It is estimated 
that our total approvals for purchase and construction have 
probably been a couple hundred, out of approximately 15,000 
centers across the country. So not a large number for the total 
across those two.
    Mr. Hoyer. If you would, when you send that information to 
me, if you would also give me the dollar value of those 200 
projects, and if you have a list of the projects, I would like 
to have that. I don't want you to create a list. I don't want 
to give you a lot of work. But if you have a list----
    Dr. Golden. We will look, and we will get you whatever we 
have.
    [The information follows:]

    Ms. Golden. We have approved 182 construction or purchase 
requests that total approximately $60 million. We do not have a 
national database that will provide a listing by project, but 
in FY 1999 we are collecting information, for the first time at 
the national level, that will provide us with that type of 
information. We will be glad to share that with you when it 
becomes available.

                           HEAD START QUALITY

    Mr. Hoyer. The last thing I want to ask, I am a big 
supporter of the President's, and what I perceive to be the 
First Lady's, effective efforts on behalf of an additional 
42,000--you mentioned 60,000--new children.
    Dr. Golden. Forty-two thousand this year.
    Mr. Hoyer. Okay.
    Dr. Golden. For Fiscal Year 2000.
    Mr. Hoyer. What are we doing vis-a-vis quality?
    Dr. Golden. Quality, as you know, and in part through your 
efforts, along with others within the Congress, is central to 
the administration's agenda for Head Start. We have done a 
range of things.
    We have put out new performance standards, as a result of 
the last reauthorization, and set very high expectations. We 
have supported grantees in terms of the resources to train 
staff, and to retain high-quality staff. We have reduced 
turnover, and we have been tough on the monitoring side. I 
think that is critical.
    We have terminated just over a hundred programs since the 
Administration's focus on quality began.
    Mr. Hoyer. Mr. Chairman, as you will recall, since 1965, 
those are the first programs ever terminated under Head Start--
not that I am for terminating programs, but I certainly am for 
terminating programs that pretend that they are helping 
children, when in fact they are not. But they are the first 
programs ever terminated in the 34 years of the programs.
    Mr. Porter. Well, if the gentleman would yield----
    Mr. Hoyer. Yes.
    Mr. Porter [continuing]. I think that this subcommittee 
insisted that they look at the quality of the programs, not 
just expanding them without how the money is being spent. I 
think it is a real credit that the Department responded to 
that, and the Secretary worked with us to ensure that we are 
not just pushing money out and not getting for the kids the 
results we expect.
    Mr. Hoyer. Mr. Chairman, you are absolutely correct on 
that. In addition, the good news is as well, before 
terminating, they put programs on notice, and then worked with 
those programs to try to get them to a status where they are, 
in fact, performing. So it is not just a question of we 
analyzed you and you didn't make the cut; you are done. There 
is really an effort to try to work with the programs.
    I guess my time is long since up. The chairman has been 
tolerant. I apologize. I will run right back now to my other 
hearing, but I appreciate the work you are doing.
    Dr. Golden. Thank you.
    Mr. Hoyer. And I look forward to getting the information 
and working with you further to further coordinate services, so 
we will enhance the services to kids and families.
    Dr. Golden. Thank you.
    Mr. Hoyer. Thank you. Thank you, Mr. Chairman.
    Mr. Porter. Thank you, Mr. Hoyer. Ms. DeLauro. Or, excuse 
me, Ms. Northup.
    I noticed something, and that is that very few of our 
subcommittee members have even noticed that we have new 
microphones for the first time ever on this subcommittee.
    Mr. Hoyer. I noticed that, Mr. Chairman, and I had a 
discussion with Ms. Pelosi about it. I just didn't have an 
opportunity to publicly mention it.
    Mr. Porter. Oh, you did?
    Mr. Hoyer. Making sure that the people in the back row 
heard our golden----
    Mr. Porter. No, no, the chairman was very much opposed to 
this.
    It is Bill Young that should be thanked.
    Mr. Hoyer. All right.
    Mr. Porter. Go ahead.
    Ms. Northup. Thank you. I appreciate the opportunity to 
have you before us today. You certainly affect many of the 
people in my district, and families and children across the 
country.

                                ADOPTION

    I know there is great interest in your programs. We all 
have three hearings going on at once. So we sort of rotate in 
and out. But I do have a number of questions for you.
    First of all, I am particularly interested in adoption, 
especially adoption for children that are not newborns, that 
are harder to place. We have certainly done a lot in Congress 
in the last couple of years to speed up the availability of 
children, so that they could be placed at a younger age, to 
expand adoption opportunities.
    I have an organization in my community; it is called One 
Church-One Child. I believe they are the only organization in 
all of Kentucky that specifically reaches out to African-
American adults and families to seek to find more opportunities 
to place minority children. That has always been a problem 
because, as you know, many of the minority community are not so 
engaged with institutions. So going through the formal adoption 
procedure can be intimidating or something they are not so 
acquainted with.
    This organization reaches out to find potential families 
and, also, to help enter the process. Since we have a 
considerable number of children that are minority children that 
are available for adoption, their role is pretty important.
    They were approved for a grant in 1997, but were not 
funded; approved, but not funded. Then, in 1998, the procedures 
for funding were changed. I think they were actually funded, 
but they were after-the-fact funded, instead of funded as they 
actually went through the process.
    It is even complicated further because they are not funded 
for any children they place within Jefferson County, where the 
minority population is. So much of their work that is 
successful, and actually results in successful adoption, they 
actually never receive funds for. In the end, they closed their 
doors. They are back open today. They have some grants, and I 
think the State has helped them out.
    But I just wondered if you see a need to maybe take another 
look at this and make sure that, since we know that children 
need to be adopted; we know the sooner they are adopted they 
more important it is; we know we have a disproportionate number 
of children that are minority children that are waiting for 
adoption, if it doesn't make sense to target organizations such 
as this for our funds?
    Dr. Golden. I don't know the specific case. We can look at 
it.
    [The information follows:]

    In FY 1997 this organization applied for discretionary 
adoption funds and received an average score of 85 which placed 
it in rank order as the 14th highest scored application in the 
approved/unfunded category. We informed Mrs. Northup that a new 
set of priorities would be published in Spring or Summer of 
1998 and that OCOC could submit an application for funding at 
that time.
    They did apply for FY 1998 funds. The application was 
ranked 6 out of 7 applicants, with a score of 48.6. Apparently, 
they misunderstood the priority area--applying for a local 
project when a national strategy project was requested.
    The discretionary announcement for FY 1999 funds will be 
published before the end of this month, with grant awards 
planned for September. They are welcome to apply under this 
announcement.

    Dr. Golden. As you know, the majority of the dollars for 
direct services would be State dollars. That is, the States 
provide the resources and have the responsibility in terms of 
adoption. I am actually very excited about how, with the 
Congress' work on the Adoption in Safe Families Act, and our 
work to implement it, we are really seeing increases in 
adoptions. That is where the core of the programmatic funding 
is.
    The Adoption Opportunities Program, which is in our budget 
request, and for which we are seeking a modest increase this 
year, offers us the opportunity to support demonstrations. So, 
for example, we will demonstrate new ideas, and implement the 
adoption legislation. The Adoption in Safe Families Act 
legislation encourages us, for example, to focus on cross-
jurisdictional issues--how to place children across geographic 
barriers or State court issues. Adoption Opportunities also is 
our source of technical assistance for States and State 
legislatures, as they are trying to comply with the new law. 
That is the modest source of special initiative funding that we 
have.
    In terms of the broader context, I think you are right to 
highlight the needs of minority children. The Congress has 
identified several different key approaches. One, of course, is 
to make sure there is no discrimination as those children move 
through the system.
    Ms. Northup. Right.
    Dr. Golden. And we are really focused on that.
    A second is to focus on recruitment, as you have 
highlighted. So that is also another piece of the strategy.
    Nationally, what we have found, as we have been moving to 
implement the new legislation, is that, with the focus that the 
President and the Congress placed on adoption, even before the 
Adoption in Safe Families Act was enacted, was an increase in 
adoptions from the foster care system from about 28,000 in 1996 
to 31,000 in 1997. So far 31 States have adopted the 
legislation they need to adopt to comply with the law. We are 
working hard on technical assistance and demonstration 
strategies, to make sure that the good ideas get disseminated 
as much as they can.
    Ms. Northup. Do you have a target of how many children you 
would hope would be adopted each year in the sort of hard-to-
place category, or where we are trying to go this year, much 
less in the future?
    Dr. Golden. The President committed to double adoptions 
over five years. We have some hope that some jurisdictions will 
do better than that.
    What we have been doing this past year is working with the 
States to set baselines, because one of the key elements of the 
Adoption in Safe Families Act--and, again, it goes back to the 
chairman's interest in GPRA and results--is for the first time, 
tying dollars to results. It has incentive dollars for States 
as they increase their adoption from foster care.
    We have been setting the baselines, and we will be, during 
the course of Fiscal Year 1999, providing States with that 
incentive funding, to reward them in those States that have 
increased adoptions. And our early indications suggest we are 
quite pleased. It sounds as though this has really been a 
commitment of yours.
    For those children who cannot return home, we really need 
to raise our expectations for our ability to find them a 
permanent placement, and just not accept that children will 
stay in limbo.
    Ms. Northup. Well, along that line, besides placing 
children, of course, having the adoption be successful is 
extremely important.
    Dr. Golden. Yes.
    Ms. Northup. Since many of these children come from 
traumatic experiences very early in their life, an increased 
number have prenatal exposure to drugs or alcohol, there are 
often problems that might need specific guidance and help. I 
think there are probably many willing families, but they may 
not be able to afford the professional help individually. But, 
even more important, even if you could write a check for any 
amount, specific experienced people who deal with these 
challenges every day, who can help get over the attachment 
disorders, who can help get over the trauma that the child has 
had, seem to me to be very important.
    I wondered if you were--and I am also going to ask NICHD 
about whether or not they are doing any research along this 
line--but I wondered whether your agency is doing anything to 
develop some expertise, some insight, some best practices, and 
to build a professional support staff that can help these 
families not only get through the adoption, but the legal 
barriers, but also the parenting challenges.
    Dr. Golden. I think that is a very important issue. When I 
talk with adoptive families when I travel, I hear a lot about 
that. And I hear about how sometimes just knowing there is 
someone there for you is important. You don't actually need 
very much from them sometimes, but you need the ability to call 
someone who has been through it or has professional expertise.
    I don't want to claim that either we or the States have 
solved that problem, but we are working on it, and there are 
some funding sources in our budget that can support those 
services. The Safe and Stable Families Act, which Congress 
reauthorized, and the Adoption and Safe Families Act; those 
resources can be used by States for post-adoptive services.
    The Adoption and Safe Families Act also authorized us to 
work out demonstration strategies with the States, and Maine 
comes to mind as an example of a State that actually chose to 
focus in their demonstration on post-adoption issues. I 
wouldn't want to promise you that we have solved it, but we are 
thinking about it.
    Ms. Northup. And I know my time is up. I will just finalize 
by saying, I think when you see States that have made progress 
in that area, the advantage to having the Federal Government 
involved at all is that they can help disseminate that 
information and make sure that every State--and I am not saying 
the Federal Government shouldn't be involved, but certainly as 
a clearinghouse for problem-solving that has worked would be 
extremely valuable to other States that are struggling with the 
same challenges.
    Thank you, Mr. Chairman.
    Mr. Porter. Thank you, Ms. Northup.

                                TITLE XX

    Dr. Golden, you are proposing in your budget to reduce the 
amount that the States are permitted to transfer from TANF to 
title XX. That reduction is from 10 percent to 4.25 percent for 
the next Fiscal Year. Why are you proposing to do this?
    Dr. Golden. Mr. Chairman, as you know, that change from 10 
percent to 4.25 percent was enacted by Congress for the year 
2001 in the transportation legislation. And you are correct to 
note that the Administration's proposal would make that change 
in the year 2000.
    I think in light of the proposed increase in the Social 
Services Block Grant that we talked about earlier, we thought 
that States would have the resources to invest in those social 
services, and also be able to make the critical investments in 
hard-to-serve families under TANF and support families as they 
move to work.
    Mr. Porter. To what extent have the States exercised their 
ability to make these transfers up to this point? Have they 
been doing everything every year 10 percent?
    Dr. Golden. No. We can give you the State-by-State 
information.
    [The information follows:]

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    Dr. Golden. States have been exercising the authority. They 
are not, in aggregate, at the limit.
    Mr. Porter. What is the magic of 4.25?--is what I am trying 
to determine. Does that represent a kind of median?
    Dr. Golden. It is the same number as the number enacted by 
the Congress for the following year.
    Mr. Porter. Well, I understand, but do you know where that 
came from? Do you know where that number came from?
    Dr. Golden. Do I know where it came from?
    Mr. Porter. Yes. I don't.
    Dr. Golden. I don't know. No, I don't know the technical 
details behind it.

                               HEAD START

    Mr. Porter. Up until this point, our focus has been on 
increasing access to Head Start. We have been putting more 
money in to get more kids in the program. This year the focus 
seems to change to quality; that is, quality staff and quality 
facilities, because the $607 million increase will only serve 
an additional 41,000 kids. A 13 percent funding increase 
produces only a 5 percent increase in the number of children 
being served.
    Why the change in focus? Isn't access really terribly 
important?
    Dr. Golden. Both are very important. As you know, the 
reauthorization, the bipartisan reauthorization, enacted this 
fall, does change the funding structure, so that this year 50 
percent of the increase is allocated to quality. That means 
that about $240 million of the increase will go to expansion. 
As you noted, that will allow us to reach 42,000 additional 
children, of whom about 7,000 will be infants and toddlers. 
Then $257 million by the reauthorization is allocated to 
quality.
    The kinds of things that we will be able to do with those 
dollars, as you noted earlier in speaking with Congressman 
Hoyer, the next steps in terms of Head Start quality include 
both maintaining the toughness side, but also supporting 
improvements in the credentials of staffing, the 
reauthorization, for example. We have accomplished a goal which 
was set by the Congress earlier in terms of CDA credential, 
Child Development Associate credentialing, but the 
reauthorization focuses us on the next level in terms of 
college credentials for 50 percent of teachers. So we are going 
to need to invest quality money to achieve that.
    We have also made some progress on salaries and progress on 
retention of qualified staff, but we need to go further. So the 
key is that the reauthorization focuses us on doing both over 
the next couple of years.
    Mr. Porter. I mention that only because I have a great 
concern in higher education funding that we keep increasing the 
amounts for Pell Grants and other programs, and the 
institutions of higher education keep increasing their costs of 
tuitions to absorb it all. We don't get an increase in access 
that we want for people to be able to get to higher education. 
I don't want to see that same kind of thing happen in other 
programs, where our goal is to increase access. I do realize, 
in saying that, that you have to attract qualified people to do 
the work, and it takes training and good facilities. Obviously, 
that is important, and the authorizers recognize that. But I 
think we have to be careful we don't get into that same mode 
that we have gotten into in higher education, because we are 
not getting what we set out to get originally.
    The General Accounting Office reported to Congress last 
June that the Department's Head Start research plans were 
somewhat lacking. Specifically, GAO stated that HHS has no 
plans for a research study or set of studies that will 
definitively compare the outcomes achieved by Head Start 
children and their families with those achieved by similar non-
Head Start children and families. Consequently, questions about 
Head Start's impact will remain unanswered.
    Now you answered this in part earlier. You said you are 
convening a panel of experts. But does what you are doing 
respond to those criticisms?
    Dr. Golden. Yes. GAO praised the FACES study as important 
in what it was doing, but they, as I noted earlier, believe 
that the definition of what kind of a study would provide this 
comparison is limited to a specific kind. They have a specific 
technical view that it is only a random assignment control 
group that could provide that information. Because there is a 
wide array of views on that in the research community, the 
reauthorization directs us--and we want to do it, and will do 
it--to convene an advisory committee of a range of 
distinguished researchers to come up with a study or studies 
that will address those questions.
    Mr. Porter. All right. So what you are doing is determining 
which path you are going to take through this committee----
    Dr. Golden. That is right, and it might be a combination 
path or a variety of strategies, depending on what they tell 
us.
    Mr. Porter. GAO also reported last year that the Family and 
Children Experiences Survey, or FACES, as you call it, will 
collect information only at the national level and not at the 
local grantee level. GAO believes that you do not require local 
Head Start grantees to demonstrate that they have achieved 
program outcomes as opposed to just complying with regulations. 
What is your response to that?
    Dr. Golden. That is also a next step that we work through 
in the reauthorization and will be moving forward on. I think 
the accomplishment in the FACES study, which, as I say, I 
believe that not only we, but the committee should take pride 
in, is that it is historic to have a national sample, to have 
agreement on outcomes for young children, which is not easy to 
accomplish, and to have a major national sample that is looking 
at that and relating it to the quality of programs. So we can 
tell from that how quality practices relate to outcomes.
    It is correct that it is a national sample, and we can look 
at it regionally, but it is not enough kids to look at every 
program. What we are doing now is working on the next step that 
we are committed to through the reauthorization, which is to 
figure out how to look more closely at outcomes in our 
monitoring.
    Right now we look at things like health results in the 
monitoring, but we don't do assessments of children's 
development, and the challenge is to figure out a way of doing 
that that won't be so burdensome to the children and the 
teachers that it won't make sense, but that will accomplish 
what we agree is a critical goal--to be able to look at 
outcomes in each program.
    So we now have a working group. We are trying to look at to 
what degree we will do that through our regular monitoring 
approach, to what degree we would fund or create some kind of 
separate data collection, and we are committed to moving 
forward.

                                  NYSP

    Mr. Porter. Once again this year, your budget request 
leaves out any funding for the National Youth Sports Program. 
This program has been funded for many years. It helps 
disadvantaged young people during the summer months. Why does 
the administration oppose this program?
    Dr. Golden. I think, again, it is just an issue of the 
difficult priorities in a balanced budget and ensuring 
resources for the range of priorities I have identified.
    Mr. Porter. I am not going to submit you to my lecture on 
the President's budget. I will let Mr. Beldon tell you what I 
said this morning.
    I assume that the President's budget was put together 
before Mr. Young became chairman of the committee, or, 
otherwise, the program might be put in place, because this is 
one of Chairman Young's important priorities.
    Dr. Golden. Okay, thank you.
    Mr. Porter. We have funded it at his request for some time.

                                 LIHEAP

    What changes are planned for the LIHEAP program for next 
year, if any?
    Dr. Golden. The budget request maintains the LIHEAP 
program, and I think we intend to continue delivering the 
service and then maintaining and improving the quality of our 
data and information.
    Mr. Porter. How many households are receiving assistance 
from the program?
    Dr. Golden. If I don't have that information right in front 
of me, then I will ask to provide it, but I should.
    About 4.5 million.
    Mr. Porter. About 4.5 million? And what is the average 
amount spent per household? Do we know that?
    Dr. Golden. I don't know that now. I suspect it differs 
between the heating--between the different needs.
    Mr. Porter. Yes.
    Dr. Golden. But I don't know.
    Mr. Porter. All right, you can provide that for the record 
then.
    [The information follows:]

    Ms. Golden. The average amount spent per household in the 
LIHEAP program is $198 a year.

                                  TANF

    Mr. Porter. As we understand it, the States have a good 
deal of money available from the TANF program that is currently 
unspent. Can you tell us how much TANF money is currently 
unspent and available at the State level?
    Dr. Golden. Yes. Let me say a little bit about where the 
States are in their spending and also what I expect to happen 
in the future, as I talk with them. Right now, States have 
uncommitted about $3 billion from Fiscal Year 1997 and 1998, in 
the vicinity of 10 percent or so of what the Federal dollars 
have been. Nineteen States have nothing left uncommitted. So 
there are States that have committed the whole thing.
    What I am hearing, as I talk with people in State agencies 
and State legislators around the country, is that part of that 
is about timing. Last year's caseload decreases were sharper 
than many States have predicted in their appropriations 
processes a year ago. That means they have dollars they didn't 
mean to spend on cash assistance. Many State legislatures and 
governors right now are considering how to commit those funds 
to address some of those issues of particularly hard-to-serve 
families, because the families they have left on the caseload 
may well need the investments in a range of areas--substance 
abuse, mental health, disability. So States are right now 
making a series of decisions that I think could substantially 
affect that number in the future.
    Mr. Porter. How long are they permitted to retain unspent 
TANF funds?
    Dr. Golden. Congress, in the legislation, allowed them to 
expend those dollars indefinitely. In part, the idea was that, 
since it is a block grant, it was appropriate for States to 
maintain some rainy day reserve in case of bad economic times 
or other needs.
    Mr. Porter. Presumably, we will have some bad economic 
times ahead, and those funds will be needed.
    Ms. Northup.

                              BLOCK GRANTS

    Ms. Northup. Yes. Thank you, Mr. Chairman.
    First of all, I would like to ask--I know that the chairman 
asked you some questions, too, about block grants versus the 
specific services. But I want to just add my voice to, or at 
least say, that it certainly raises questions about what the 
reason would be to have increases in the Social Service Block 
Grants and then also increase or keep separate money like 
LIHEAP, since they can both go for the same thing. If you think 
that it is not enough, why not roll it all in together? I mean, 
it is one thing to increase the amount of money, and we can 
have a discussion on whether we should. At what level is enough 
for Social Service Block Grants?
    But the other question is, should we continue to have 
programs that are separate when, in fact, the block grants can 
fund those services themselves?
    Dr. Golden. As you know, the Social Services Block Grant is 
a particularly flexible source of funding for the States--
    Ms. Northup. Right.
    Dr. Golden [continuing]. And they use it for a range of 
needs. They use it to fill in gaps. Most of the other programs 
at ACF, most of the other programs that Congress has authorized 
and appropriated at the Administration for Children and 
Families focus on more link to particular results. So that 
while they are, in general, not narrow--for example, the TANF 
resources or the LIHEAP resources or the adoption resources you 
and I were just talking about aren't generally extremely 
narrow, they are tied to particular outcomes for which we in 
the Congress anticipate accountability. So I think that is, in 
general, the reason for the difference.
    Ms. Northup. I would suggest that there was a time when 
LIHEAP was critically necessary, just as I believe that 
adoption--we have a new impetus in this country today to get 
children into stable families as early as possible, and that 
initiative is a national initiative. LIHEAP was formed, I 
believe, back in about 1979, when energy prices were as high as 
they have ever been and were uniquely strangling families. But 
today that is not true. They are not any more disproportionate 
or of necessity to be partitioned out.
    I will tell you why I ask this in particular--because, as I 
go around my community and talk to, whether it is the Homeless 
Coalition, the emerging nonprofits that are available to meet 
really emerging needs or more critical needs, what they are 
finding is great amounts of money are tied up in agencies that 
have had money for years or programs that have had money for 
years. They have done the same thing year-in and year-out, and 
aren't necessarily meeting the most essential needs, but, 
instead, sort of got their feet planted in concrete, sort of in 
a sense of entitlement that goes to entities that aren't really 
addressing the most critical needs. I see this, like I said, 
whether it is the homelessness, whether it is substance abuse.
    It just seems to me like what we really have here are 
organizations of directors of programs that unite to keep money 
frozen into categories, so that their entity stays separate. It 
doesn't mean that it is good public policy or that it solves a 
problem that block grants can't solve, but only that it is more 
self-preservation rather than service-preservation that is 
essential.
    Dr. Golden. Well, I think I guess a couple of reflections 
in response to that. The first is that, on the question of, 
what is it that gets people locked in who aren't very 
effective, my experience in changing that has been the Head 
Start experience, where nationally the vast majority of 
programs were terrific, but there were a few, when we came into 
office, who were not focused on quality and on results. What it 
took was setting clear expectations, doing tough monitoring and 
reviewing, offering support so they could turn it around, and 
then, if you had to, closing a program down.
    So I do think that, as States address this issue that you 
describe of somebody who is kind of locked in and not being 
creative, that actually having clear results and a clear 
accountability focus may actually be helpful to making those 
changes. That might occur sometimes.
    In terms of LIHEAP particularly, I think what I would just 
underline about its importance is that it serves a range of 
vulnerable people who may be particularly vulnerable to heating 
costs, cooling in last summer's heatwave emergency, and so 
forth. It is not, by any means, just people on welfare. It is 
seniors. It is families with people with disabilities. So there 
is a range, I think, of very particular needs and very 
vulnerable people and families.
    Ms. Northup. Well, I have to tell you I am not convinced. I 
do think that there is a range of vulnerable people. I think 
seniors certainly fall into that. But we have senior nutrition 
programs; we have senior LIHEAP programs. I still do not 
believe that the most effective way is to partition out. I have 
to tell you, the majority of letters you get are from the 
people that run the agencies and not the people that are served 
by them.
    Can I just follow up?
    Mr. Porter. I was going to ask you to yield at some point.

                             EARLY LEARNING

    Ms. Northup. Oh, okay. Certainly, I will yield to you.
    Let me just follow up by pointing out that, while I don't 
know that Head Start was held in high enough esteem at one 
time, I have been impressed with the progress, with their focus 
on literacy, with the changes they are making, and believe that 
the direction you went in, while I am not sure it was what I 
would have chosen, in the end I think it has been effective.
    That is why it is, again, surprising to me that we would 
start a new early learning fund that seems to me, if children 
that are most at risk and children that need the stimulation in 
early literacy or preparation for school, if Head Start is 
where we are going to put that money, if we are going to close 
down ineffective programs and contract for new ones, why we 
wouldn't put that money in there, instead of starting a 
separate program. Pretty soon, in five years, I would be 
willing to bet that there will be the National Association of 
Early Learning Fund Directors, and they will make sure that we 
will never combine those funds, even if we decide that they 
should have been combined.
    Dr. Golden. Let me say a little bit about why I think they 
are quite different. I think you are right to note that both 
Early Head Start and resources we get out to child care 
programs under the proposed early learning fund would respond 
to the same body of research, saying that early experiences 
matter. What I think is different is that, as we have talked 
about, Early Head Start is a small program that provides direct 
services to a small number of children, to 45,000, if we gain 
the President's proposal.
    What the early learning fund, as part of the President's 
child care initiative, is meant to do is to reach all those 
children who are out there in child care settings now. As you 
know, parents want to be able to make their own choices about 
where their baby or toddler is cared for. It might be in a 
family home. It might be with a relative. It might be in a 
center.
    We know, I think, from an array of research that a lot of 
those settings are potentially not safe or healthy, and even if 
they are safe or healthy, they may not be good for children's 
development. So the idea in the proposal for the early learning 
fund is dollars that would get out to communities to be used 
flexibly, I think in some of the ways you are talking about, to 
reach children in the settings they are in, to improve the 
quality of those family homes and child care centers. I think 
that that is a really important thing to do, to reach the broad 
array of children who need to be in good, quality settings, if 
they are going to be healthy and safe and be able to learn. So 
that is, I think, how the two ideas are different.
    Mr. Porter. Dr. Golden, we have two votes on the floor now. 
We thank you very much for your testimony and for the fine job 
you are doing.
    The subcommittee will stand in recess for the two votes. 
When we return, we will return to the Administration on Aging 
and their budget.
    [The following questions were submitted to be answered for 
the record:]

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                                         Tuesday, February 23, 1999

                        ADMINISTRATION ON AGING

                               WITNESSES

JEANNETTE C. TAKAMURA, ASSISTANT SECRETARY FOR AGING, DEPARTMENT OF 
    HEALTH AND HUMAN SERVICES
DENNIS P. WILLIAMS, DEPUTY ASSISTANT SECRETARY, BUDGET
WILLIAM R. BELDON, DIRECTOR, DIVISION OF DISCRETIONARY PROGRAMS

                       Introduction of Witnesses

    Mr. Porter. The subcommittee will come to order.
    We continue our hearings on the budget for the Department 
of Health and Human Services with the Administration on Aging. 
We are pleased to welcome Dr. Jeanette Takamura, the Assistant 
Secretary for Aging.
    Dr. Takamura, it is nice to see you again.
    Ms. Takamura. It is good to see you again. Thank you.
    Mr. Porter. Why don't you go ahead and proceed with your 
testimony, and then we will see if we get any more members to 
join us.

                           Opening Statement

    Ms. Takamura. Thank you. Thank you very much. I have 
abbreviated my testimony for you. I would like to thank you 
once again for this opportunity to discuss with you the 
President's Fiscal Year 2000 budget request for the 
Administration on Aging. Chairman Porter, I am very pleased to 
address you for the second time as Assistant Secretary for 
Aging. Last year you were most gracious in noting that I 
entered the budget process after key decisions had been made, 
and that you anticipated reviewing the first budget prepared 
under my leadership.
    A year ago I shared my commitment to having AOA do 
everything that it can to prepare our Nation for the new 
American century and the demographic revolution which is upon 
us. This can only be done through a strategy that embraces 
policies and programs which meet the challenges and embrace the 
opportunities posed by the gift which is America's of 
longevity.
    Mr. Chairman, I come before this subcommittee today to 
present some important first steps in that strategy--steps 
which appear to have broad popular appeal to families and older 
Americans in communities across our Nation.
    The proposed National Family Caregiver Support Program is 
the centerpiece of the Administration on Aging's Fiscal Year 
2000 budget request. It represents a modest, but important 
policy response to an issue of concern to nearly all American 
families: long-term care.
    Families, not social service agencies or government 
programs, provide most of the long-term care for frail older 
Americans. Seven million people are informal caregivers for 
their spouses, parents, other relatives, and oftentimes 
friends. Families and friends care for 95 percent of disabled 
older persons who need help to live in the community. These 
caregivers, mostly women, many older and vulnerable themselves, 
or workers with multiple responsibilities, are the sole source 
of assistance for almost two-thirds of these older persons.
    The President's proposed $1,000 tax credit offers financial 
support to caregivers and recipients of care. Complementary to 
this, our proposed National Family Caregivers Support Program 
will provide services to help approximately 250,000 families 
who are caring for older relatives. The proposed program will 
establish and develop a nationwide infrastructure for family 
caregiver support that provides information and assistance, 
counseling, respite, and supplemental services to help family 
caregivers. These supportive services will be coordinated and 
provided through the Administration on Aging's national 
network, made up, as you know, of 57 State agencies on aging, 
223 Indian tribal organizations, and 1 Native Hawaiian 
organization, 655 area agencies on aging, and more than 27,000 
service providers throughout the country, which all together 
comprise a delivery system of flexible, far-reaching, and 
reliable services.
    The proposed Administration on Aging budget reflects our 
commitment to be ready for, and responsive to, the mounting 
challenge of caring for our elders now and in the future. 
Seventy-six million baby-boomers born between 1946 and 1964--
and I noted for you last year that I am one of them--one-third 
of our country's population who head up nearly one-half of our 
Nation's households, will soon join the ranks of older 
Americans. In fact, we often say that the equivalent of one 
small American town, 6,000 persons, turn 60 years of age every 
day.
    Mr. Chairman, we note that more than 220 Members of 
Congress are baby-boomers who will become senior-boomers 
beginning in 2011. According to the Census Bureau, one out of 
every nine baby-boomers will survive to at least age 90. Some 
individuals in this generational cohort are actually caring for 
parents and grandparents, and may require similar care and 
assistance in the years ahead.
    Another of our budget initiatives, our proposed Health 
Disparities Intervention Grants, supports the Surgeon General's 
goal; that is, to eliminate health disparities among ethnic and 
cultural minorities by utilizing the strength and the expertise 
of our aging network and organizations.
    The Secretary has aptly noted that most of the complex 
problems of our time require multi-partner, multi-faceted 
responses. Accordingly, we propose to have State and area 
agencies and aging organizations work with State and local 
health departments toward eradicating health disparities among 
ethnic minority elders. In doing so, we will focus on two 
health conditions, cardiovascular disease and diabetes, and 
assist with increasing immunization rates in older ethnic 
minority populations.
    The need for this program is great. The heart disease-
related mortality rate among African-American elders is 
significantly higher--it is about 40 percent higher--than among 
elder whites. Diabetes, which strikes one in four older 
Hispanics, is now at epidemic proportions among Native American 
elders.
    Even modest changes in the health behaviors in the minority 
elders with whom we work on a daily basis can lead to enormous 
health benefits. These health benefits may be expected in the 
long run to produce measurable, positive outcomes and cost 
savings.
    Third, we are requesting a modest, but essential increase 
for our home-delivered meals program. Home-delivered meals are 
an important component, as you know, of our home and community-
based long-term care system. They enable older adults with 
multiple chronic diseases to remain in their homes and 
communities. Unfortunately, the need for adequate food and 
nutrition services by millions of at-risk older adults exceeds 
the capacity of the existing program. Fiscal Year 2000 requests 
will fund approximately 27 million additional meals to help 
close this gap.
    I mentioned earlier our aging network's flexibility and 
ability to target efforts to those most in need. There is great 
diversity among today's older Americans. The network serves a 
high proportion of persons below the poverty line or who are 
minority elders. But another very important dimension of 
diversity among elderly Americans is an immediate consequence 
of the phenomenon of population longevity. Today there are at 
least three different generations of older Americans, each with 
differential needs to which the aging network must respond.
    Chairman Porter, and also, Mr. Cunningham, our Fiscal Year 
2000 budget request is for $1,048,055,000, or $166,035,000 
above the level enacted for Fiscal Year 1999. This amount 
includes items which I have already mentioned, which are 
requests for an increase in our budget; that is--and I will 
only mention the increases--$125 million for the proposed 
National Family Caregiver Support Program; $35 million to 
increase the Home-Delivered Nutrition Program. For some of our 
elders, as you know, the meal delivered to their homes is their 
singular meal for the day. Four million for intervention grants 
aimed at helping to eliminate health disparities among 
minorities, and $2,035,000, the minimum amount required to fund 
mandatory increases in rent, utilities, other fixed costs, and 
to allow for adequate staffing.
    I think you know, Mr. Chairman, that our very small AOA 
staff is responsible for overseeing a vast aging network of 
State, tribal, and local agencies and service providers 
throughout the country. The modest increase in administrative 
funding which we are requesting is the first increase proposed 
for AOA since 1995. Over the last five years, the agency has 
lost one-third of its staff to normal attrition. Meanwhile, 
increases in fixed costs have reduced our ability to replace 
these staff.
    For our Fiscal Year 2000, our GPRA performance plan relies 
on data we receive from States on levels of service provision. 
Mr. Chairman, please note, however, that we are working in 
partnership with eight States and eight area agencies on aging, 
selected through a competitive application process, to develop 
viable GPRA performance measures that identify outcomes rather 
than outputs.
    We are also preparing to build our capacity to obtain 
performance information from such national databases as the 
National Health Interview Survey and the Behavioral Risk 
Factors Surveillance Survey. To help with all of this, we have 
enlisted the assistance of an expert advisory panel, some 
members of whom, in particular, Susan Hughes, Margaret 
Hastings, and Faye Cook, come from your home State of Illinois.
    AOA's Fiscal Year 2000 budget request reflects the 
Administration on Aging's commitment to ensuring that present 
and future older Americans have the opportunity to lead 
independent, productive, healthy, and secure lives. It is clear 
to us that we must modernize aging services and programs, meet 
existing and new life course needs, and continue to make 
available the information, services, and tools that older 
Americans and their families need.
    We believe that America's gift of longevity comes with many 
challenges, but also with many opportunities. Thank you. My 
colleagues and I would be very happy to answer any questions 
that you might have.
    Mr. Porter. Dr. Takamura, last year you did come in in the 
middle of the budget process----
    Ms. Takamura. That is right.
    Mr. Porter [continuing]. So we gave you a pass. This year 
is going to get tough, though.
    Ms. Takamura. I know that.
    Mr. Porter. You knew that?
    Ms. Takamura. Yes.

               NATIONAL FAMILY CAREGIVER SUPPORT PROGRAM

    Mr. Porter. The Family Caregiver Program, you are asking 
for $125 million, but it needs an authorization, I assume?
    Ms. Takamura. That is right.
    Mr. Porter. How sanguine are you about getting an 
authorization?
    Ms. Takamura. Well, let me put it this way: We have been 
working very hard over the last year to put together a new 
reauthorization proposal. One of the pieces of that 
reauthorization proposal is the National Family Caregiver 
Support Program. We have two other, exciting components that we 
are introducing. We are very aware of the fact that last 
congressional session closed with quite a number of Members of 
Congress, as well as Members of the Senate, who were interested 
in seeing to the reauthorization of the Older Americans Act. We 
believe that momentum is still there and building, and so we 
will continue to be optimistic about the reauthorization of the 
Act.

                 HEALTH DISPARITIES INTERVENTION GRANTS

    Mr. Porter. All right. Does the Health Disparities Grant--
does that require an authorization?
    Ms. Takamura. No, that does not.

                         OVERALL FUNDING LEVEL

    Mr. Porter. Okay. And if I look at your budget numbers 
correctly, home-delivered meals is increased and program 
administration is increased, and everything else is at last 
year's level, basically; is that correct?
    Ms. Takamura. That is true.
    Mr. Porter. Now if you don't get the authorization for the 
Family Caregiver Program, you still want everything level-
funded except for the one line item, home-delivered meals; is 
that correct?
    Ms. Takamura. Well, you know, there have been some very 
difficult decisions made in the Department about funding items. 
We will remain optimistic about the National Family Caregiver 
Support Program, and ask you to seriously consider all of the 
other items in our budget. We believe it is a good budget.
    Mr. Porter. Okay. I am not going to give you my lecture 
that I gave this morning. Bill Beldon will fill you in on it, 
if you are interested.
    Ms. Takamura. He already has.
    Mr. Porter. He already has? [Laughter.]
    Well, the reason I ask, though, is that these are basically 
the same numbers for every other program. Except the one, home-
delivered meals, they are identical. I assume that you can live 
with that?
    [No response.]
    She is not answering. [Laughter.]

                 GOVERNMENT PERFORMANCE AND RESULTS ACT

    You mentioned GPRA in your testimony. We expressed, in last 
year's committee report, a concern about what appeared to be 
the agency's lack of adequate performance standards under GPRA. 
You mentioned you are taking some steps to address that. Has 
GPRA made any difference in the way that you put together your 
annual budget request, or are you still doing it the same way 
you did in the past?
    Ms. Takamura. No, actually, Chairman Porter, I think GPRA 
has played a tremendous role in how we put together the budget 
request. In fact, my Deputy Assistant Secretary spent about 
three days chasing one number that we felt was critical in the 
development of the budget request, because we do believe that 
we have got to work off of evidence, and we do believe that we 
have got to always measure outcomes. So I think, if anything, 
the mantra in the agency is ``evidence-based'' and 
``performance outcomes.''
    Mr. Porter. I am glad to hear that.

                       PREVENTIVE HEALTH SERVICES

    Your budget includes $16 million for a preventive health 
services program, which we have funded for a number of years. 
How would this new Health Disparities Program relate to the 
Preventive Health Program, or would it?
    Ms. Takamura. Well, actually, they do relate to each other. 
Part of the reason that we asked for the Health Disparities 
money is because it was very clear that there is such a 
difference, a significant difference, in the health status of 
our minority elders. I think I mentioned some of the statistics 
in my testimony. We know, for example, if you compare elderly 
African-Americans, with elderly Caucasian Americans, elderly 
African-Americans have a much higher prevalence rate just in 
terms of diabetes alone. We know that our Native American 
Indian population is experiencing epidemic proportions of 
diabetes as well.
    Our Preventive Health monies are actually utilized by the 
States for 12 different health promotion/disease prevention 
activities. These are oftentimes delivered, for example, at our 
nutrition sites and through our nutrition programs. The 
emphasis of the preventive health monies is to ensure that our 
elders remain independent, that they know that their health 
behaviors make a difference in their long-term health status. 
But we do feel that there is need for additional monies to 
focus in on some very significant differences in health status 
among our minority elders.

                  AOA FRAUD AND ABUSE PROGRAM FUNDING

    Mr. Porter. Your agency received some funding from the 
Health Care Fraud and Abuse Control Account which was 
established by the authorizing committees a few years ago. I 
believe you received $1.3 million last year. These are funds 
that you receive outside of the annual appropriations process. 
What exactly are you doing with these funds?
    Ms. Takamura. We are using what we call our ORT funds to 
train thousands of older Americans through our network--
actually, to train our aging network, to reach thousands of 
older Americans, so that they are aware of the concerns related 
to Medicare waste, fraud, and abuse.
    I think you know that between 1995 and 1996, through the 
combined efforts of AOA, HCFA, the Office of the Inspector 
General, ORT identified about $187 million, that was owed to 
the Federal Government. What we know right now is that 
activities that we are engaged in--that is, to educate our 
elders about the importance of being very aware of the items in 
their billing statements, about the services that they 
receive--all these things in the long run, we believe, will add 
up to savings in medical care costs.

                ALZHEIMER'S DISEASE DEMONSTRATION GRANTS

    Mr. Porter. Last year we moved the Alzheimer's 
Demonstration Program from the Health Resources and Services 
Administration to your agency.
    Ms. Takamura. That is right.
    Mr. Porter. Have any changes been made in this program 
since it was transferred?
    Ms. Takamura. We have been working in good partnership with 
HRSA, and what we are doing at this point is working very 
closely with our grantees. We are taking some of the findings 
and ensuring that we disseminate the best practices that we are 
able to glean from them, through our aging network, to our 
States and local agencies. We look forward in years ahead to 
working with some new grantees as well, because we do know that 
Alzheimer's Disease is a mounting problem.
    Mr. Porter. What other funds does the agency spend on 
Alzheimer's or Alzheimer's-related activities?
    Ms. Takamura. Well, actually, some of our title 3(b) funds 
are supportive services that can be used to assist people with 
Alzheimer's. And if you start and consider meals programs, 
those are also very supportive of persons with Alzheimer's 
disease.
    Mr. Porter. Thank you.
    Mr. Cunningham.
    Mr. Cunningham. Thank you, Mr. Chairman, and I will be 
brief.
    Dr. Takamura, I roomed in college with a Jim Inouye and a 
Charlie Takamura from Hawaii. Any relation?
    Ms. Takamura. I know Charlie Takamura, but he is not a 
relative.
    Mr. Cunningham. Okay.
    Ms. Takamura. I will tell him you said hello.
    Mr. Cunningham. I never beat him at table tennis.
    Anyway, I once boomed a tower in an F-4 Phantom, but I 
don't think I can stand the handle of a congressional boomer 
that you are talking about. But the Older Americans Act is part 
of your work--I was chairman of K-through-12 education on the 
authorization committee at one time. I know that you are not 
responsible for the section on Senior Community Service 
Employment. We are both trying to take care of the 
chronologically-gifted folks.
    Ms. Takamura. Right.
    Mr. Cunningham. One GAO report, as I remember, talked about 
the 10 national organizations that administered part of the 
SCSEP. I think it was the National Forest Service that had the 
lowest overhead, but most of those organizations were ripping 
off the appropriations dollars because they exceeded extremely 
the administrative costs. Those dollars were not getting down 
to the seniors, The Meals on Wheels, and those kinds of 
programs. I would hope that we can elicit your support in 
trying to tighten up and try to get money down to the seniors 
in need.
    You talked about the meals that you served, or are serving 
in the program. I lost a good friend last week, last Wednesday, 
to cancer at my age. And I am sure like a lot of people in this 
room. It seems like every week I am losing some new friend to 
diabetes or cancer or something. I know that diabetes takes up 
a large portion of the Medicare bill. But we can help that.
    But in these meals nutrition is important. I want to tell 
you, having had prostate cancer surgery five months ago, I have 
learned to eat more fish, more stewed tomatoes, and olive oil. 
My mom is 81 years old, and I tried to get her to eat a 
cheeseburger last week, and she refused. She said, ``What are 
you trying to do, kill me?'' [Laughter.]
    I said, ``Mom, I'm trying to get you to eat a 
cheeseburger.'' But she wouldn't do it.
    But I know many of the meals that we give are not 
necessarily that healthy. Just like in our school systems, if 
you look and see what the children are eating, a lot of times 
the meals are not that good. Are we prescribing, or at least 
trying to encourage healthier eating? It can help with diabetes 
itself, where the care and treatment is quality of life.
    Ms. Takamura. In fact, we do provide therapeutic meals in 
some instances. The other thing that I would like to reassure 
you about is the involvement of nutritionists and dieticians in 
the planning of meals for our older adults. Almost annually, or 
at least fairly regularly, we do, in fact, have many of our 
nutrition providers meet with staff who provide some nutrition 
technical assistance. We are very much concerned about serving 
good, nutritious meals. If anything, I think we sometimes err 
on the side of science and need to reminds ourselves that the 
meals also need to taste good.
    Mr. Cunningham. But they are serving fruits and tomatoes?
    Ms. Takamura. Oh, yes.
    Mr. Cunningham. I know tomato is a fruit.
    Ms. Takamura. That is right. [Laughter.]
    Mr. Cunningham. But they are able, with the budgeting, to 
serve fruits and vegetables and more fish and poultry than red 
meat?
    Ms. Takamura. Yes, absolutely.
    Mr. Cunningham. I yield back the balance of my time, Mr. 
Chairman.
    Thank you, Doctor.
    Ms. Takamura. Thank you.
    Mr. Porter. We very much appreciate your coming to testify, 
and we apologize for the delay that the votes entailed.
    Ms. Takamura. That is fine.
    Mr. Porter. Thank you for the fine job that you are doing.
    Ms. Takamura. Thank you. Thank you very much.
    Mr. Porter. The subcommittee will stand in recess until 
10:00 a.m. tomorrow.

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                           W I T N E S S E S

                              ----------                              
                                                                   Page
Beldon, W.R...................................................703, 1321
DeParle, N.M.....................................................   143
Golden, Olivia...................................................   703
Shalala, Hon. Donna..............................................     1
Takamura, J.C....................................................  1321
Williams, D.P.................................................143, 1321

                                  (i)


                               I N D E X

                              ----------                              

                 Secretary of Health and Human Services

                                                                   Page
Abstinence Education.............................................    96
Abstinence Training..............................................    93
Adoption/Intern Registry for Foster Children.....................   127
American Stop Smoking Intervention Study (ASSIST)................   118
Budget Decisions.................................................    36
Budget Surplus...................................................60, 65
Building and Facilities..........................................   110
Changes in the Medicare Program..................................    63
Child Care.......................................................   128
Clinical Trials and Research.....................................   139
Community Health Centers...................................50, 112, 135
Coordination of Services.........................................    44
Diabetes.........................................................   108
Dietary Supplements..............................................    97
Elimination of Primary Care and Dentistry Programs...............   114
Employing Innercity Residents at Census Bureau...................    42
Employment Diversity.............................................    77
Environmental Health.............................................    48
Family Literacy..................................................   129
Family Planning/Adoption.........................................   126
Food Safety......................................................    56
Freedom of Information...........................................    71
Funding for Social Services Block Grant..........................    35
Funding Programs for the Homeless................................   141
HCFAC Savings....................................................    61
Health Care Access for the Uninsured...................38, 70, 124, 137
Health Care for the Uninsured....................................    37
Health Centers Involvement in Reducing Racial Health Disparities.    78
Health Education.................................................   126
Hepatitis........................................................    86
HHS Guidance to State Title X Grantees on Reporting Abuse........    86
HIV Prevention...................................................    82
Human Embryonic Stem Cell Research...............................   106
Human Papilloma Virus (HPV)......................................    82
Identifying Risks and Benefits of Certain Pharmaceuticals........   141
Introduction of Witnesses........................................     1
Medicare:
    Choice User Fees.............................................    52
    Long-Term Care Information Campaign..........................   123
    Market Basket Freeze.........................................   115
    Reform.......................................................    55
    Waste, Fraud and Abuse.......................................    61
MIP Savings......................................................    62
National Tobacco Control Program.................................    79
NIH Budget..................................41, 43, 48, 50, 54, 62, 134
Notification of Abuse Cases......................................    57
Nurse Anesthetists...............................................   134
Occupational Safety..............................................    74
Organ Allocation and Transplantation.............................    59
Organ Procurement................................................   115
Partnership with States..........................................   132
PHS Commissioned Corps...........................................    69
Preventive Health Services Block Grant...........................   112
Processing of Waiver Requests Arizona............................   105
Promoting Teen Abstinence........................................    95
Public Health....................................................   102
Racial Health Disparities Funding in CDC.........................    78
Report on Lesbian Health.........................................   137
Represenative McKeon Constituent Issue...........................   135
Saving Social Security...........................................    64
Smart Management.................................................   136
Social Security and Budget Surplus...............................    47
Social Security Block Grant......................................   133
Statements:
    Chairman's Statement.........................................     1
    Ranking Minority Member's Statement..........................     3
    Secretary Shalala's Statement................................     5
Stem Cell Research and the Embryo Research Ban...................   139
Sudden Infant Death Syndrome.....................................    72
Tobacco..........................................................   114
Tobacco/Medicaid Allotment to Settlement States..................   130
Tobacco/Synar....................................................   131
User Fees........................................................   131
Violence Against Women...........................................   111
Waste, Fraud and Abuse...........................................    43
Waste and Fraud Abuse in Health Care.............................    60
Welfare Reform Surplus...........................................    58

                  Health Care Financing Administration

Adjusted Community Rates.........................................   221
Administrator's Priorities.......................................   144
Annual Performance Plan.........................................532-701
    Budget Linking Summary......................................537-549
    Context and Environment.....................................561-563
    Executive Summary...........................................550-554
    Integrating with the Budget.................................321-322
    Performance Goals and Measurements..........................564-701
    Performance Goals: Linkages.................................697-701
    Performance Goals: Summary Table............................569-587
Appeals Board Workload..........................................182-183
Appeals and Grievances..........................................643-645
Appropriation History Tables:
    Medicaid.....................................................   460
    Payments to Trust Funds......................................   470
    Program Management...........................................   452
Audit Activity...................................................   187
Audited Financial Statement......................................   490
Balanced Budget Act...............................317-319, 330-332, 379
    Implementing.................................................   317
    Research Initiatives.........................................   407
    Therapy Cap..................................................   295
Budget Authority by Object:
    Medicaid.....................................................   462
    Payments to Trust Funds......................................   468
    Program Management..........................................449-450
Capital Assets Plan..............................................   202
Children's Health Insurance Program.304, 423, 477-479, 512-513, 648-651
Clinical Laboratory Improvement Amendments (CLIA) of 19487-489, 617-620
Commercial Off-The-Shelf Software...............................506-507
Consumer Assessment of Health Plans Study (CAHPS)...............594-596
Coverage of New Technology.......................................   204
Criminal Abuse Registry..........................................   185
Customer Service................................................635-640
Demonstrations.............................................502-505, 526
    Subcontractor Performance....................................   218
    Competitive Bidding by Small Business........................   218
Department of Justice:
    Cooperation With.............................................   162
    Personnel Carrying Firearms..................................   164
Diabetes Test Strips............................................290-291
Diabetic Supplies................................................   282
Diagnosis Related Groups.........................................   298
Durable Medical Equipment........................................   217
End State Renal Disease..........................................   187
Executive Summary................................................   311
Federal Administrative Costs....................................381-389
Financial Statements.......................................490, 664-667
Fraud, Waste and Abuse...........................161, 285, 303, 347-348
    Cooperation with Law Enforcement/DOJ.........................   162
    Private Sector Firms.......................................162, 200
Government Performance and Results Act (GPRA).........156, 183, 550-554
    Medicaid Issues..............................................   553
    National Partnership for Reinventing Government.............698-699
HCFA Budget.....................................................310-353
    Adequacy of Request........................................161, 313
    Appropriation Requests.......................................   324
    Executive Summary...........................................311-322
    Facts in Brief..............................................325-353
    FTEs.........................................................   209
    Funding Requests--FY 2000........................145, 207, 208, 315
    Funding Summary..............................................   310
    Perspective.................................................315-316
    Purchasing Power............................................313-315
HCFA Programs--Oversight.........................................   320
HCFA's Accomplishments...........................................   144
HCFA's Image.....................................................   163
Health Maintenance Organizations (HMOs)..........................   169
    Audits.......................................................   189
    Availability.................................................   276
    Capitation Rate..............................................   277
    Double Standards: HMOs vs. Government........................   169
    Participation.........................................284, 301, 302
    Prescription Benefits........................................   302
HIPAA....................................317, 333-335, 349-352, 646-647
HIV Disease.....................................................529-530
HIV Viral Load Tests.............................................   305
HMO Loan and Loan Guarantee Fund................................473-476
Home Health Care Agencies.......................................393-394
    Access and Quality...........................................   213
    Data Collection..............................................   215
    Delay in Payments............................................   216
    Overpayments/Repayment.................................217, 682-686
    Poor Performance.............................................   194
    Reduction in Claims..........................................   213
    Rural Needs..................................................   215
Home Health Care Payments.............................176-177, 179, 189
Hospital Bad Debt Proposal.......................................   283
Hospital Insurance for the Uninsured.............................   198
Influenza Vaccinations..........................................605-608
Information Systems Security....................................658-660
Information Technology.................................480-484, 655-657
Interim Payment System....................................214, 217, 516
Intermediary-Carrier Directory..................................228-275
Long-Term Care.................................................168, 185
    Educating the Public.........................................   169
Lung Volume Reduction Surgery....................................   201
Managed Care...................................................376, 415
    Appeals Process.............................................643-645
    Plan Choices................................................621-623
    System Redesign..............................................   189
    Timely Enrollments..........................................632-633
Medicaid:
    Asthma Grants Program........................................   211
    Children with Special Health Needs.........................198, 517
    Grants to States.......................................150, 465-466
    PACT Programs................................................   306
    Purchasing.................................................196, 206
    Children's Health Insurance Program..........................   423
    State Estimates.............................................425-428
    State and Local Administration Growth.............197, 416-417, 425
    Summary of Changes...........................................   458
    Surveys and Certification....................................   428
    Vaccines for Children Program.....................195, 428, 613-616
Medicaid Appropriation..........................................409-435
    Appropriation Language.......................................   410
    Composition of Population...................................418-419
    Language Analysis...........................................411-412
    Proposed Legislation...................................428-435, 467
    Section 1115 Waivers........................................419-420
    Service Growth..............................................416-417
    Vaccines.....................................................   428
Medicare and Medicaid Cuts.......................................   227
Medicare Benefits...............................................485-486
Medicare Beneficiaries:
    Access to Care..............................................589-591
    Beneficiary Communication.........................202, 294, 377-378
    Disenrollment................................................   195
    Dually Eligibles............................................694-697
    Education Program......................................178, 624-631
    Health Plan Choices.........................................621-623
    Information Campaign/Information to Beneficiaries.....221, 222, 524
    Mailings.....................................................   295
    Satisfaction with Health Care Services......................592-596
Medicare Changes--Effects on Teaching Hospitals..................   303
Medicare Commission Proposals....................................   286
Medicare Contractors.......................................297, 367-380
    Claims Processing Timeliness................................641-642
    Contractors/Y2K Funding......................................   191
    Contractor and Contractor Fees.............................227, 276
    Contractor Non-Renewals....................................191, 374
    Contractor Payment Requirements..............................   190
    Contractor Role in Reduced Error Rate........................   212
    Contractor Systems Transitions...............................   287
Medicare Coverage Advisory Committee.............................   203
Medicare Handbook................................................   199
Medicare Integrity Program.....................................156, 353
    Audit Recoveries............................................676-678
    Contract Status..............................................   188
    Medical Review..............................................668-672
    Medicare Secondary Payer....................................679-681
    Reduce Improper Payments....................................673-675
Medicare Program:
    1-800 Telephone Service Program..............................   192
    Beneficiary Limits--Exceptions...............................   215
    Cancer Registries..........................................195, 205
    Coverage of New Technology...................................   204
    Coverage Policy/Geographic Variation.........................   167
    Electronic Commerce....................................192, 661-663
    Excluded Providers...........................................   188
    Heart Attack Survival Rates.................................597-599
    HMOs Withdrawals......................................174, 301, 302
    Identifying Fraudulent Claims/Using Private Sector 
      Contractors..............................................162, 200
    Inpatient Operating Margins..................................   289
    Mammograms..................................................609-612
    Payment Systems.............................................687-689
    Payments...................................................188, 225
    Payments for Telemedicine....................................   199
    Per Beneficiary Limit........................................   215
    Program Expansions...........................................   284
    Proposals..................................................283, 289
    Reimbursement Rates..........................................   170
    Rural Hospital Flexibility Program...........................   194
    State Certification..........................................   154
    Teaching Hospitals...........................................   303
    Waste, Fraud and Abuse.....................................285, 303
Medicare+Choice..................................................   165
    FY 1998 Funding..............................................   219
    MSA Line...................................................279, 280
    Payment Systems.............................................687-689
    Rates and Availability.....................................276, 277
    Risk Adjuster...............................................219-221
    Toll-Free Hotline............................................   223
    User Fees..................................................278, 366
Millennium (Y2K)......................................317, 325-329, 563
    Budget and Spending Estimates..............................201, 329
    Compliance...............................317, 327-329, 511, 652-654
    Compliance and Contingency Plans...........................292, 328
    Compliance Target............................................   212
    Contingency Planning.........................................   328
    Funding...............................................163, 182, 326
    Funding for Medicare Contractors.............................   191
    Readiness....................................................   180
    Status of States.............................................   181
National Provider Identifier.....................................   203
National Criminal Abuse Registry.................................   185
Nursing Home Initiative................................336-341, 397-398
    Certification................................................   296
    FTEs.........................................................   198
OASIS Regulation--Publication.............................202, 215, 394
Opening Statement..............................................143, 147
Organ Procurement Organizations.................................209-211
Organization Chart...............................................   309
Orthotic and Prosthetic Devices..................................   281
Pancreas Transplants.............................................   224
Payments to Health Care Trust Funds...............150, 437-443, 468-472
    Appropriation Language.......................................   437
    Appropriations History Table.................................   470
    Authorizing Legislation......................................   469
    Budget Authority......................................438, 443, 468
    Budget Summary of Changes....................................   440
    Hospital Insurance for Uninsured.............................   198
Personnel Staffing--FTEs.........................................   209
Pressure Ulcers.................................................603-604
Private Sector Contractors.......................................   200
Private Sector Firms.............................................   162
Program Integrity..........................................319, 342-353
Program Management................................151, 354-408, 446-455
    Appropriation Summary........................................   359
    Appropriation Language......................................355-356
    Federal Administration.................................155, 381-389
    Information Technology.............................384-385, 480-484
    Language Analysis...........................................357-358
    Medicare Contractors........................................367-370
    Proposed Legislation...................................360-366, 446
    Research, Demonstrations and Evaluations....................400-408
    State Survey and Certification................365-366, 390-399, 508
    Summary of Changes...........................................   447
    Summary Table..............................................359, 362
    User Fee Funding.............................363-366, 368, 382, 391
Provider Correspondence..........................................   171
Rate Proposal--Adjusted Community................................   221
Relocation of Regional Offices...................................   193
Renal Data System and SEER Cancer Registry.......................   205
Research, Demonstrations and Evaluations..........153, 400-408, 690-693
    Budget by Program Areas......................................   408
    Summary Tables...............................................   407
Restraints, Use of.........................................174, 600-602
Rural Hospitals...........................................194, 289, 519
Rural Health..............................................215, 300, 502
Ryan White Care Act..............................................   205
Significant Items in House/Senate Reports.......................491-530
Skilled Nursing Facility Reimbursement...........................   166
Summary of Changes:
    Medicaid.....................................................   458
    Payments to Trust Funds......................................   440
    Program Management...........................................   447
Surety Bonds.....................................................   515
Surveillance, Epidemiology, and End-Results (SEER) Program.......   195
Survey and Certification........................................390-399
    Funding Summary..............................................   390
    Nursing Home Initiative.....................................397-398
    Unit Costs...................................................   191
    User Fees..............................................365-366, 391
Teleconsultations................................................   223
Telemedicine Demonstrations......................................   502
Tobacco Settlement Money.........................................   287
Toll-Free Electronic Media Claims................................   192
User Fees.......................................171, 172, 177, 187, 283
    Federal Administration.....................................364, 383
    Funding......................................................   152
    Medicare Contractors.........................................   363
    Proposal.....................................................   225
    State Survey and Certification...............................   365
    Vaccines for Children Program.....................195, 428, 613-616
    Variance in Survey Unit Costs................................   194
    Venipuncture.................................................   521
    Witness Biographies........................................159, 160
    Witness List.................................................   143
    Workstation Management Initiative............................   192

                Administration for Children and Families

ACF FY99 Welfare Reform and Social Services Research Plan........   758
Adoption.........................................................   730
Adoption Incentives..............................................   753
Adoption Opportunities...........................................   752
Block Grant......................................................   741
Boys Haven.......................................................   767
Child Care.......................................................   723
Child Care and Development Block Grant...........................   749
Coordinated Services.............................................   726
Developmental Disability Programs..............................763, 771
Early Learning...................................................   743
Federal Administration...........................................   760
Head Start.....................................................720, 738
    Co-Location..................................................   727
    Collaboration with Job Corps.................................   769
    Dollars and Enrollment.......................................   748
    Facilities...................................................   728
    Family Literacy..............................................   766
    Outcomes.....................................................   766
    Performance Goals............................................   745
    Quality....................................................729, 747
    Research.....................................................   746
Individual Development Accounts..................................   754
Justification of the FY 2000 Budget Estimates..................776-1319
LIHEAP.........................................................740, 773
LIHEAP Emergency Funds...........................................   769
National Adoption Registry.......................................   751
National Youth Sport.............................................   740
Opening Statement...............................................708-717
Questions and Answers for the Record............................745-775
Social Services Block Grant......................................   768
Social Services Research and Demonstration.......................   757
TANF.............................................................   740
Title XX.......................................................722, 733
Transition to Adulthood..........................................   721
Victims of Torture...............................................   745
Welfare Reform...................................................   765

                        Administration on Aging

Alzheimer's Disease Demonstration Grants.....................1326, 1337
Alzheimer's Victims Vitamin E Study..............................  1348
AoA Fraud and Abuse Program Funding..............................  1326
Careers Related to Elder Care....................................  1342
Centers for Disease Control Prevention's Health Disparities Funds  1346
Congressional Justification......................................  1349
Elder Abuse......................................................  1346
Elder Abuse and Alzheimer's Disease Demonstration Grants.........  1347
Government Performance and Results Acts......................1325, 1332
Health Care Fraud and Abuse Control..............................  1337
Health Disparities Intervention Grants.......................1324, 1332
Introduction of Witnesses........................................  1321
National Family Caregiver Support Program........1324, 1329, 1343, 1345
Needs of the Minority Elderly....................................  1342
Nutrition Programs...............................................  1335
Older Americans Act Funding Preference...........................  1329
Older Americans Act Reauthorization..............................  1333
Opening Statement................................................  1321
Overall Funding Level............................................  1325
Policy Changes to Assure Health..................................  1345
Preventive Health Services...................................1325, 1331
Reducing Health Disparities......................................  1343
Research and Demonstration Spending..............................  1338
Role of the Department of Agriculture............................  1335
Senior Outreach Program..........................................  1341
Staffing Level...................................................  1341
Voluntary Contributions..........................................  1335
Witnesses........................................................  1321
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