[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]







                        POLICIES AND PROCEDURES
                       OF THE U.S. DEPARTMENT OF
                       HEALTH AND HUMAN SERVICES

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

                                HEARING

                               before the

                         COMMITTEE ON EDUCATION
                           AND THE WORKFORCE
                     U.S. HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

              HEARING HELD IN WASHINGTON, DC, MAY 5, 2011

                               __________

                           Serial No. 112-20

                               __________

  Printed for the use of the Committee on Education and the Workforce









                   Available via the World Wide Web:
                       www.gpo.gov/fdsys/browse/
           committee.action?chamber=house&committee=education
                                   or
            Committee address: http://edworkforce.house.gov

                                _____

                  U.S. GOVERNMENT PRINTING OFFICE

 65-963 PDF               WASHINGTON : 2012
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing 
Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC 
area (202) 512-1800 Fax: (202) 512-2104  Mail: Stop IDCC, Washington, DC 
20402-0001










                COMMITTEE ON EDUCATION AND THE WORKFORCE

                    JOHN KLINE, Minnesota, Chairman

Thomas E. Petri, Wisconsin           George Miller, California,
Howard P. ``Buck'' McKeon,             Senior Democratic Member
    California                       Dale E. Kildee, Michigan
Judy Biggert, Illinois               Donald M. Payne, New Jersey
Todd Russell Platts, Pennsylvania    Robert E. Andrews, New Jersey
Joe Wilson, South Carolina           Robert C. ``Bobby'' Scott, 
Virginia Foxx, North Carolina            Virginia
Duncan Hunter, California            Lynn C. Woolsey, California
David P. Roe, Tennessee              Ruben Hinojosa, Texas
Glenn Thompson, Pennsylvania         Carolyn McCarthy, New York
Tim Walberg, Michigan                John F. Tierney, Massachusetts
Scott DesJarlais, Tennessee          Dennis J. Kucinich, Ohio
Richard L. Hanna, New York           David Wu, Oregon
Todd Rokita, Indiana                 Rush D. Holt, New Jersey
Larry Bucshon, Indiana               Susan A. Davis, California
Trey Gowdy, South Carolina           Raul M. Grijalva, Arizona
Lou Barletta, Pennsylvania           Timothy H. Bishop, New York
Kristi L. Noem, South Dakota         David Loebsack, Iowa
Martha Roby, Alabama                 Mazie K. Hirono, Hawaii
Joseph J. Heck, Nevada
Dennis A. Ross, Florida
Mike Kelly, Pennsylvania
[Vacant]

                      Barrett Karr, Staff Director
                 Jody Calemine, Minority Staff Director













                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held on May 5, 2011......................................     1

Statement of Members:
    Barletta, Hon. Lou, a Representative in Congress from the 
      State of Pennsylvania, question submitted for the record...     7
    Kline, Hon. John, Chairman, Committee on Education and the 
      Workforce..................................................     1
        Prepared statement of....................................     3
        Questions submitted for the record.......................     7
    McCarthy, Hon. Carolyn, a Representative in Congress from the 
      State of New York, question submitted for the record.......     9
    Miller, Hon. George, senior Democratic member, Committee on 
      Education and the Workforce................................     4
        Prepared statement of....................................     6
        Additional submission: Letter from David Rosnick, Center 
          for Economic and Policy Research                            9
    Roe, Hon. David P., a Representative in Congress from the 
      State of Tennessee, question submitted for the record......     8
    Walberg, Hon. Tim, a Representative in Congress from the 
      State of Michigan, questions submitted for the record......     7
    Woolsey, Hon. Lynn C., a Representative in Congress from the 
      State of California, questions submitted for the record....     8

Statement of Witnesses:
    Sebelius, Hon. Kathleen, Secretary, U.S. Department of Health 
      and Human Services.........................................    10
        Prepared statement of....................................    12
        Responses to questions submitted for the record..........    59

 
                        POLICIES AND PROCEDURES
                       OF THE U.S. DEPARTMENT OF
                       HEALTH AND HUMAN SERVICES

                              ----------                              


                         Thursday, May 5, 2011

                     U.S. House of Representatives

                Committee on Education and the Workforce

                             Washington, DC

                              ----------                              

    The committee met, pursuant to call, at 10 a.m., in room 
2175, Rayburn House Office Building, Hon. John Kline [chairman 
of the committee] presiding.
    Present: Representatives Kline, Petri, Biggert, Foxx, Roe, 
Walberg, DesJarlais, Hanna, Rokita, Bucshon, Gowdy, Barletta, 
Ross, Kelly, Miller, Kildee, Payne, Andrews, Scott, Woolsey, 
Hinojosa, McCarthy, Tierney, Kucinich, Wu, Davis, Grijalva, and 
Hirono.
    Staff Present: Andrew Banducci, Professional Staff Member; 
Katherine Bathgate, Press Assistant/New Media Coordinator; 
James Bergeron, Director of Education and Human Services 
Policy; Casey Buboltz, Coalitions and Member Services 
Coordinator; Heather Couri, Deputy Director of Education and 
Human Services Policy; Daniela Garcia, Professional Staff 
Member; Ed Gilroy, Director of Workforce Policy; Benjamin Hoog, 
Legislative Assistant; Amy Raaf Jones, Education Policy Counsel 
and Senior Advisor; Marvin Kaplan, Professional Staff Member; 
Barrett Karr, Staff Director; Ryan Kearney, Legislative 
Assistant; Brian Newell, Deputy Communications Director; 
Krisann Pearce, General Counsel; Molly McLaughlin Salmi, Deputy 
Director of Workforce Policy; Ken Serafin, Workforce Policy 
Counsel; Linda Stevens, Chief Clerk/Assistant to the General 
Counsel; Alissa Strawcutter, Deputy Clerk; Loren Sweatt, 
Professional Staff Member; Joseph Wheeler, Professional Staff 
Member; Aaron Albright, Minority Communications Director for 
Labor; Tylease Alli, Minority Hearing Clerk; Jody Calemine, 
Minority Staff Director; Ruth Friedman, Minority Director of 
Education Policy; Brian Levin, Minority New Media Press 
Assistant; Jerrica Mathis, Minority Legislative Fellow, Labor; 
Megan O'Reilly, Minority General Counsel; Julie Peller, 
Minority Deputy Staff Director; Meredith Regine, Minority Labor 
Policy Associate; Laura Shifter, Minority Senior Education and 
Disability Advisor; and Michele Varnhagen, Minority Chief 
Policy Advisor and Labor Policy Director.
    Chairman Kline. A quorum being present, the committee will 
come to order.
    Well, good morning, everybody.
    Good morning, Madam Secretary, welcome. We are delighted 
that you are here. I believe this is your first appearance 
before the committee, and we certainly appreciate the 
opportunity to meet with you today.
    I realize your time is valuable, and we only have a small 
window to discuss a small range of topics. As we discussed 
earlier, it is likely that we will be interrupted by votes 
pretty quickly, so an administrative comment for all of my 
colleagues: Mr. Miller and I and the Secretary are going to all 
try to get our opening statements done, and at least Mr. Miller 
and I, depending upon how quickly they call votes.
    By any definition, the Department of Health and Human 
Services is a massive Federal agency. It employs nearly 76,000 
workers and maintains an annual operating budget in excess of 
$800 billion, the largest of any agency in the Federal 
Government.
    While a great deal of the Department's resources is 
directed to Medicare and Medicaid, more than $100 billion in 
taxpayer money is spent on various social service programs. 
Many of these programs fall within the jurisdiction of this 
committee, such as welfare, the Community Services Block Grant, 
and provisions of the Child Abuse Prevention and Treatment Act.
    No doubt these programs are well intended. They reflect our 
Nation's ongoing commitment to serving those in need. In recent 
years, however, the Federal budget has been placed on an 
unsustainable path taxpayers can no longer afford. This growth 
has forced us to take a hard look at every facet of the Federal 
Government as we consider how to reign in spending.
    I realize the administration has offered some modest 
proposals for scaling back the cost of your Department, Madam 
Secretary. However, these proposals fail to rise to the 
challenges we face. If we adopt the President's plan, the 
Congressional Budget Office reports the Federal Government will 
spend $46.2 trillion, impose $1.5 trillion in new taxes, and 
add roughly $9 trillion to the national debt over the next 
decade.
    This is unacceptable.
    In health care, the news is just as disappointing. It has 
been a little more than a year since the President signed his 
health care bill into law, yet already the price tag for the 
new law has increased by more than 50 percent. A plan that 
supporters promised would reduce costs, will instead charge 
taxpayers more than $2.6 trillion when fully implemented, and 
add more than $700 billion to the deficit.
    Our national conversation has become so consumed by 
trillions and billions, that it is almost impossible to 
comprehend the magnitude of the crisis we face. These reckless 
policies affect not only the Nation's bottom line, they 
undermine confidence in our economy and harm job creators' 
ability to expand businesses or hire new workers.
    The current fiscal crisis demands we examine every program 
to ensure every taxpayer dollar is spent efficiently and 
effectively. Every Federal agency must be part of that effort. 
If we fail to promote responsible reforms and make tough 
choices, our Nation will no longer be able to provide 
assistance to those who need it most. Those who argue for a 
timid response threaten the very safety net many Americans rely 
upon.
    We know many of the decisions we must make will be 
unpopular. Writing about the spending cuts in the final 
appropriations bill, the President's communications director 
noted ``Many will be painful, and are to programs that we 
support, but the fiscal situation is such that we have to act. 
``And I couldn't agree more.
    The Nation faces an historic moment: We can continue the 
status quo of more spending, more taxes, and more debt that 
will ultimately lead to our Nation's decline, or we can make 
the tough, yet necessary, choices to preserve the promise of 
our country and the prosperity of our children. That is the 
course the majority of this House has supported and one that I 
believe an overwhelming majority of the American people expect 
us to take.
    [The statement of Chairman Kline follows:]

            Prepared Statement of Hon. John Kline, Chairman,
                Committee on Education and the Workforce

    A quorum being present, the committee will come to order.
    Good morning and welcome Madam Secretary. I believe this is your 
first appearance before the Committee, and we certainly appreciate the 
opportunity to meet with you today. I realize your time is valuable and 
we only have a small window to discuss a wide range of topics. I will 
keep my opening remarks brief to help ensure all members have ample 
opportunity to discuss with you the department's policies and 
priorities.
    By any definition, the Department of Health and Human Services is a 
massive federal agency. It employs nearly 76,000 workers and maintains 
an annual operating budget in excess of $800 billion, the largest of 
any agency in the federal government.
    While a great deal of the department's resources are directed to 
Medicare and Medicaid, more than $100 billion in taxpayer money is 
spent on various social service programs. Many of these programs fall 
within the jurisdiction of this Committee, such as welfare, the 
Community Services Block Grant, and provisions of the Child Abuse 
Prevention and Treatment Act.
    No doubt these programs are well intended. They reflect our 
nation's ongoing commitment to serving those in need. In recent years, 
however, the federal budget has been placed on an unsustainable path 
taxpayers can no longer afford. This growth has forced us to take a 
hard look at every facet of the federal government as we consider how 
to rein in spending.
    I realize the administration has offered some modest proposals for 
scaling back the costs of your department. However, these proposals 
fail to rise to the challenges we face. If we adopt the president's 
plan, the Congressional Budget Office reports the federal government 
will spend $46.2 trillion, impose $1.5 trillion in new taxes, and add 
roughly $9 trillion to the national debt over the next decade. This is 
unacceptable.
    In health care, the news is just as disappointing. It has been a 
little more than a year since the president signed his health care bill 
into law, yet already the price tag for the new law has increased by 
more than 50 percent. A plan that supporters promised would reduce 
costs will instead charge taxpayers more than $2.6 trillion when fully 
implemented and add more than $700 billion to the deficit.
    Our national conversation has become so consumed by ``trillions'' 
and ``billions'' that it's almost impossible to comprehend the 
magnitude of the crisis we face. These reckless policies affect not 
only the nation's bottom line, they undermine confidence in our economy 
and harm job-creators' ability to expand businesses or hire new 
workers.
    The current fiscal crisis demands we examine every program to 
ensure every taxpayer dollar is spent efficiently and effectively. 
Every federal agency must be part of that effort. If we fail to promote 
responsible reforms and make tough choices, our nation will no longer 
be able to provide assistance to those who need it most. Those who 
argue for a timid response threaten the very safety net many Americans 
rely upon.
    We know many of the decisions we must make will be unpopular. 
Writing about the spending cuts in the final appropriations bill, the 
president's communications director noted, ``Many will be painful, and 
are to programs that we support, but the fiscal situation is such that 
we have to act.'' I couldn't agree more.
    The nation faces a historic moment: We can continue the status quo 
of more spending, more taxes, and more debt that will ultimately lead 
to our nation's decline, or we can make the tough yet necessary choices 
to preserve the promise of our country and the prosperity of our 
children. That is the course a majority of this House has supported, 
and one that I believe an overwhelming majority of the American people 
expect us to take.
                                 ______
                                 
    Chairman Kline. At this time I would like to recognize Mr. 
Miller, the senior Democratic member of the committee, for his 
opening remarks.
    Mr. Miller. Thank you, Mr. Chairman. Thank you for having 
this hearing. I want join you in welcoming Secretary Sebelius 
to the committee.
    From educating our youngest children in Head Start to 
ensuring seniors' access to health care and Medicare, your 
Department administers programs that have unquestionably made 
our families and communities healthier and our country 
stronger. In recent months, we have seen an unprecedented 
attack on these programs that help millions of American 
families.
    While we must address our Nation's long-term deficits, the 
budget priorities pursued by the Republican majority have put 
much of the sacrifice directly on the backs of children and 
seniors. Cutting 130,000 children from Head Start isn't about 
rebuilding our economy. The repealing of the historic health 
care reform law won't help families and businesses get costs 
under control.
    You and your Agency, Madam Secretary, have primary 
responsibility for the implementation of the Affordable Care 
Act. A year after its enactment, the reform bill is still doing 
the right thing. It is the right thing to do to help families 
struggling with affordable coverage; it is the right thing to 
do for businesses crushed by skyrocketing premiums over the 
last decade; and it was the right thing to do to finally end 
the worst abuses of the insurance industry.
    The Affordable Care Act also makes significant strides in 
combating fraud and abuse in the Medicare and Medicaid system, 
and it includes key health care cost controllers, identified by 
top experts, as critical to getting costs under control without 
rationing care.
    And this is part of keeping the bargain, the bargain and 
the promise that this country made to our Nation's seniors, and 
it is a promise and a bargain than this Nation must keep to our 
seniors. However, the same cannot be said about the 
Republicans' budget. They achieved savings not by making 
Medicare work better, but by shifting costs onto seniors.
    In fact, according to the report we released this morning, 
seniors would have to shoulder approximately $6,400 more in 
health care costs in 2022. The typical 65-year-old in 2022 will 
spend half of their Social Security on health insurance 
premiums under the Republican budget plan, and that cost 
increases with each passing year.
    Using the CBO numbers, the Center for Economic Policy and 
Research has found that to buy a Medicare-equivalent policy 
under the Republican plan, the median 85-year-old in 2050 would 
have to spend twice their annual income.
    In this committee, we should be concerned about what this 
means for workers today. Based upon further analysis by the 
Center, which I submit for the record, the 54-year-old today 
would have to save an additional--an additional $182,000 over 
the next 11 years just to pay for the increased health care 
costs under the Republican budget.
    This is over and above what they are already putting away 
every month in their savings, in their 401(k)s and in their 
retirement plans. So these workers will have to find around an 
extra $1,000 to $1,300 a month to put in their IRAs or their 
401(k) plans, and that is contingent on the market not crashing 
right before they retire.
    This committee has been concerned for years about the 
sufficiency of workers' retirement plans. In 2007, before the 
recent crisis, the Census Bureau found that half of all the 
workers had no retirement savings. In 2010, the Employee 
Benefit Research Institute found that the average retirement 
savings shortfall was over $47,000 per individual, and all of 
that was counting on Medicare.
    So how do these workers find another $182,000, especially 
since for middle-class workers in this country, wages have 
essentially been stagnant since the 1970s and labor protections 
for workers who try to organize and do better on the job for 
their families and for their communities, their ability to 
organize is now under attack. Under the Republican plan, 
seniors will go into debt and they will be forced to sell their 
homes that they have spent a lifetime paying off, and they will 
have to rely on their children just to pay basic medical care.
    This is not what anyone envisioned as a dignified 
retirement. This was not the bargain. This was not the promise 
that this Nation made with its seniors. And I say that, clearly 
understanding the need for additional reforms to make sure that 
Medicare is sustainable for seniors in the future and 
sustainable for taxpayers.
    I am very encouraged to see that as the Republican 
negotiators go to the White House today, they are reconsidering 
the idea that they would split Medicare, that they would put 
the 65-year-old in the jeopardy that I outlined under the 
economic policy study, and they would put this burden on the 
savings of middle-class Americans today. And they also have the 
ability, as they go to the White House, to think about whether 
or not Medicare is going to be included in the discussions 
around the debt limit. It sounds like they are reconsidering 
that. I hope they are.
    They can also understand that they can build on the 
trillion, about 700, or is it--a little over $700 billion that 
they have adopted in Medicare savings for their budget that are 
in the Affordable Care Act. And so hopefully we can continue to 
build on those kinds of savings that come from bending the cost 
curve for health care for seniors in this country and for the 
cost of the Medicare program.
    Again, I welcome you to the committee and thank you so much 
for your service to our country.
    Chairman Kline. I thank the gentleman.
    [The statement of Mr. Miller follows:]

  Prepared Statement of Hon. George Miller, Senior Democratic Member, 
                Committee on Education and the Workforce

    I am pleased that we are having a hearing on the critically 
important work of our nation's employment and workforce training 
programs. I would like to thank our distinguished panel of witnesses 
for joining us today.
    While our economy is moving in the right direction, in my 
congressional district and across our nation, millions of American 
workers continue to struggle to find good jobs and make ends meet.
    In order to thrive in today's workforce, American workers, 
particularly those adults and youth who are unemployed, dislocated, or 
disadvantaged, need education and training, counseling, guidance, and 
support to secure family-sustaining jobs, achieve their educational 
goals, and improve their lives.
    In part, today's hearing will focus on recent reports released by 
GAO on federal programs that provide some form of employment and 
training services. In these reports, GAO has recommended co-locating 
and consolidating administrative structures to avoid duplicating 
services.
    In addition, the GAO recommended that the Secretaries of Labor and 
HHS work together to develop and disseminate information to encourage 
such efforts.
    While my colleagues on the other side of the aisle support the 
consolidation of administrative structures and funding streams and 
argue that any savings should be applied to the deficit, I believe that 
consolidation should be used to improve the quality and accessibility 
of employment and job training services.
    If the process of co-locating or consolidating programs leads to a 
savings, I strongly believe that these resources should be reinvested 
into our public workforce and adult education system and be used to 
address the needs of those workers who are hardest to serve. Those who 
are jobless desperately need our help to improve their lives.
    In the R!o Grande Valley of South Texas, we have waiting lists for 
adult education and employment and training services and are unable to 
meet the needs of our most vulnerable workers and youth due to limited 
resources.
    As Ranking Member of the Subcommittee on Higher Education and 
Workforce Training, reauthorizing and improving the Workforce 
Investment Act (WIA) and adequately funding our nation's public 
workforce and adult education system are top priorities for me. In my 
view, our public workforce and adult education system has been starved 
for far too long.
    It is my hope that we, the members of this committee, can identify 
areas of common ground and work in a bipartisan manner to reauthorize 
WIA in the 112th Congress.
                                 ______
                                 
    Chairman Kline. Pursuant to committee rule 7(c) all 
committee members will be permitted to submit written 
statements to be included in the permanent hearing record.
    Without objection, the hearing record will remain open for 
14 days to allow statements, questions to the record, and other 
extraneous material referenced during the hearing to be 
submitted in the official hearing record.
    [The information follows:]

                                             U.S. Congress,
                                     Washington, DC, June 28, 2011.
Hon. Kathleen G. Sebelius, Secretary,
U.S. Department of Health and Human Services, 200 Independence Ave., 
        SW, Washington, DC 20201.
    Dear Secretary Sebelius: Thank you for testifying at the Committee 
on Education and the Workforce's May 5, hearing on ``Policies and 
Priorities of the U.S. Department of Health and Human Services.'' I 
appreciate your participation.
    Enclosed are additional questions submitted by Committee members 
following the hearing. Please provide written responses that answer the 
questions posed no later than July 12, 2011, for inclusion in the 
official hearing record. Responses should be sent to Benjamin Hoog of 
the Committee staff, who can be contacted at (202) 225-4527.
    Thank you again for your contribution to the work of the Committee.
            Sincerely,
                                                John Kline,
                                                           Chairman
                  questions from representative kline
    1. HEAD START FRAUD AND ABUSE. Last year, the U.S. Government 
Accountability Office (GAO) conducted an undercover investigation of 15 
Head Start programs, acting in response to tips from former and current 
employees at two separate Head Start centers. Undercover GAO applicants 
tried to enroll children in these programs and presented the centers 
with pay stub data that demonstrated they were above income eligibility 
requirements. Nine of the 15 sites enrolled the students by encouraging 
applicants not to submit the pay stubs that would put them over the 
income threshold. Some of the programs continued to count the students 
as enrolled, even though the students never actually participated in 
the program. At a May 2010 hearing before this Committee, the Assistant 
Secretary for Children and Families stated that the Department was 
taking immediate corrective action and was undertaking a ``top-to-
bottom'' review of its program oversight responsibilities. Can you give 
us an update on the Department's effort to combat waste, fraud, and 
abuse in the Head Start program? How many unannounced monitoring visits 
has the Department conducted since the release of the GAO report?\1\
---------------------------------------------------------------------------
    \1\ http://www.gao.gov/new.items/d10733t.pdf.
---------------------------------------------------------------------------
    2. RECOMPETITION OF HEAD START GRANTEES. In 2007, Congress passed 
the Improving Head Start for School Readiness Act, which requires the 
Secretary of Health and Human Services to establish a new, 
comprehensive system to recompete Head Start and Early Start grants. 
The Department is currently in the process of finalizing regulations on 
recompetition to ensure that Head Start grantees are meeting the 
requirements of the law and preparing pre-school-aged children for 
entry into kindergarten. Please provide us with an update on this 
process. When will the first grantees be re-evaluated?
    3. EFFECTIVENESS OF THE COMMUNITY SERVICES BLOCK GRANT PROGRAM. The 
President's FY2012 budget request includes a $388 million cut to the 
Community Services Block Grant program, which is geared toward anti-
poverty activities. Over the last 10 years, a number of independent 
studies and research activities, including those conducted by the U.S. 
Government Accountability Office (GAO), have questioned the program's 
effectiveness in combating poverty in local communities. What changes 
do you think the Committee should make to the program to make it more 
effective? When was the last time the program was evaluated and what 
were the results?
    4. HEALTH INSURANCE EXCHANGES: You claim in your testimony that in 
2014, state health insurance exchanges will provide new options for 
consumers. However, it has been reported that several governors have 
vetoed bills intended to implement the new law's requirement for state-
based Health Insurance Exchanges, and many states are not working 
toward establishing such exchanges. Also, one governor rejected a $54 
million ``early innovator'' grant for an exchange partly on the basis 
that states do not want to be subjected to federal regulation. Assuming 
some states will not create health insurance exchanges by 2014, at what 
point will HHS develop the federal insurance exchange option that would 
be available to consumers in those states? Can you elaborate on the 
structure of this option?
                 questions from representative walberg
    For nearly 20 years, the National Institute for Occupational Safety 
and Health (NIOSH) along with the National Cancer Institute (NCI) 
conducted a study on the potential effects of diesel exhaust in 
underground mines. The Mining Awareness Resources Group (MARG) 
voluntarily participated in the study by providing access and 
information for NIOSH to conduct the study; however this was done with 
the understanding that NIOSH would be providing the study data to the 
group in order to review the studies. Two federal court orders have 
ordered NIOSH to provide the data to MARG and the Committee on 
Education and the Workforce, yet the institute has not fully complied.
    1. Why has NIOSH not complied with the court orders of two federal 
judges?
    2. When will the data be made available to all parties involved?
                 question from representative barletta
    1. A number of smaller pharmacies in my district in Northeastern 
Pennsylvania have raised concerns regarding the impact of ``rapid 
refills'' on patient care. As you know, an increasing number of doctors 
are issuing prescriptions for 90 day supplies of medication. However, 
the patient's condition may change, forcing a doctor to modify the 
prescription prior to the patient exhausting the huge supply. 
Additionally, the patient loses out on valuable and more frequent in-
person counseling offered by local brick and mortar pharmacies. Can you 
give the Agency's perspective on the challenges to patient care 
associated with so-called ``rapid refills''? How has the Patient 
Protection and Affordable Care Act interfered with this process?
                    question from representative roe
    1. During our dialogue at the May 5, 2011, hearing of the Education 
and the Workforce Committee, you stated that of the 30 million to 35 
million Americans who will receive coverage as a result of PPACA, ``* * 
* about 15 million are likely to be Medicaid-eligible.'' However 
Medicare's chief actuary has indicated that the number of new Medicaid 
enrollees could rise as high as 25 million given that Social Security 
benefits will not be counted as income for the purpose of determining 
Medicaid eligibility.\2\ How then, is PPACA not just a massive 
expansion of Medicaid?
---------------------------------------------------------------------------
    \2\ See http://republicans.energycommerce.house.gov/Media/file/
Hearings/Health/033011/Foster.pdf.
---------------------------------------------------------------------------
                 questions from representative woolsey
    1. The HHS FY 12 budget proposes to zero out two programs in the 
National Institute for Occupational Safety and Health (NIOSH): the 
Education & Research Center (ERC) program and the Agriculture, Fishing 
and Forestry (AFF) program. Combined, these two programs total less 
than $50 million. The ERCs were established to implement Section 21 of 
the Occupational Safety and Health Act's (OSHAct) requirement to train 
``an adequate supply'' of occupational safety and health professionals 
to implement the law.
    A. With regard to the AFF program, fatality rates in agriculture, 
fishing and forestry are more than seven times the average--and cost 
our economy $4 billion per year. NIOSH has developed technology to save 
lives and property in these industries. The National Academy of 
Sciences (NAS) found this program conducts high priority, sound 
research, but indicated that there were opportunities for improvement. 
The HHS FY 12 budget request zeroes out the program, claiming the 
program was ineffective, and asserts that the Agriculture Department 
and the Labor Department can pick up the slack when this program is 
zeroed out. The NAS panel members have written to Congress contending 
that the HHS budget justification misrepresents their 2007 report.
    i. What specific authorization and funding is available in the 
Labor Department or Agriculture Department in the President's FY 12 
budget to replace the NIOSH AFF research program?
    ii. Will you be willing to review the budget justification for the 
AFF program to determine if it is valid and factually supported?
    iii. Would you be willing to work with the Committee to identify 
funds within HHS's operating divisions that could be reallocated to 
allow this priority NIOSH work to continue?
    B. With regards to the ERC program, the HHS FY 12 budget request 
justifies termination on the grounds that NIOSH had planned to sunset 
funding after 5 years; however, neither the Centers for Disease Control 
nor OMB can find any documents to back this up. Congress never intended 
to sunset this program after 5 years, and the Institute of Medicine 
recommended continuing this program.
    i. Has HHS conducted a recent assessment of whether the ERC program 
has fulfilled its mission pursuant to Section 21 of the OSHAct? If so, 
has such assessment determined that there is an adequate supply of 
occupational safety and health professionals?
    ii. If such study had not been done, why would HHS terminate this 
program before such assessment has been completed?
    iii. Will you be willing to undertake a review to determine if the 
budget justification for the ERC program is valid and fully supported?
    iv. Would you be willing to work with the Committee to identify 
funds within HHS's operating divisions that could be reallocated to 
allow this priority NIOSH work to continue?
                 question from representative mccarthy
    1. Congress included a provision in the Patient Protection and 
Affordable Care Act requiring that patients receiving Medicare home 
health services have a face-to-face encounter with a referring 
physician prior to certification for home health services.
    Having heard from both home health care providers and physician 
groups alike, I am concerned that in implementing the provision, CMS 
has gone beyond Congressional intent. In doing so, the agency has 
created significant additional administrative paperwork and 
documentation burdens on physicians for which they are not reimbursed. 
The requirement also creates obstacles to care for patients, who are by 
definition homebound, and may not have convenient access to physician 
offices.
    I am very concerned that the outcome of this will be that patients 
are denied access to the care they need, and that is provided in both 
the lowest cost and most desired setting--one's own home.
    We will continue to work with the agency, but would appreciate your 
attention and thoughts on this matter as well. Would you support 
efforts to streamline and simplify the process for documenting the face 
to face encounter so that we address concerns of referring physicians, 
home health providers, and the patients they serve?
                                 ______
                                 
    [Additional submission of Mr. Miller follows:]

                   Center for Economic and Policy Research,
                                                    Washington, DC.
Hon. George Miller, 2205 Rayburn House Office Building Washington, DC.

    Dear Representative Miller: Thank you for your interest in our 
report ``Representative Ryan's $30 Trillion Medicare Waste Tax.''
    According to Figure 1 of the Congressional Budget Office's letter 
to Paul Ryan, the cost of purchasing private health insurance 
equivalent to that which Medicare provides is 12 percent higher than 
the cost to Medicare in 2011. CBO projects that the additional cost 
from providing care through private insurers will grow to 67 percent of 
the total cost of Medicare by 2030.
    Consequently, under the Ryan plan, a person born in 1957 must spend 
approximately $16,900 (in today's dollars) to purchase Medicare-
equivalent insurance in 2022. Through Medicare, the insurance would 
cost only $11,200. This implies $5,700 of waste.
    As this beneficiary ages, both the general increase in health care 
prices and the increased burden of providing health care with age will 
conspire to raise this person's cost of insurance. At age 65, a person 
born in 1957 will require an additional $182,000 in retirement 
savings--earning 3 percent real interest--in order to purchase private 
insurance rather than accept coverage through Medicare through age 84.
    In part, this $182,000 reflects additional sharing of costs imposed 
the Ryan plan. The Ryan plan would shift approximately $20,800 in costs 
from the government to this beneficiary between 2022 and 2041. Thus, 
the shift requires the beneficiary to set aside $14,000 in retirement 
savings by age 65 as well as $6,800 in interest income in order to make 
up for the reduced support from the government.
    The remaining $168,000 in required retirement savings--again 
generating annual interest at a rate 3 percentage points above 
inflation--reflects the additional cost of private insurance. The total 
cost of private insurance would be $557,300, compared to $322,200 
through Medicare. The principal and interest on $168,000 would suffice 
to cover this $235,100 difference in insurance costs from age 65 
through age 84.
    Please do not hesitate to contact me if you have further questions.

                                             David Rosnick,
                           Center for Economic and Policy Research.
                                 ______
                                 
    Chairman Kline. Again, before I introduce our distinguished 
witness, I want to make an administrative announcement. The 
Secretary has a hard stop time at 12:30. I want to encourage my 
colleagues, when we get into questions and answers, that you 
try to abide by the 5-minute clock so that everybody has a 
chance. And, again, we expect to be called to votes 
momentarily.
    So let me move to the introduction. The Honorable Kathleen 
Sebelius was sworn in as the 21st Secretary of the Department 
of Health and Human Services on April 28, 2009.
    I got the wave down here. Everybody knows who the Secretary 
is. So in the interest of time, Madam Secretary, you are 
recognized.

    STATEMENT OF HON. KATHLEEN G. SEBELIUS, SECRETARY, U.S. 
            DEPARTMENT OF HEALTH AND HUMAN SERVICES

    Secretary Sebelius. Chairman Kline and Ranking Member 
Miller, members of the committee, thank you for inviting me 
here to discuss the President's 2012 budget for HHS.
    The President's budget ensures Americans live within our 
means. As a lead-up to the budget, we looked at all of our 
programs, cut waste, eliminated programs that weren't working 
well enough, redesigned our programs to put a new focus on 
result. In some cases, we cut programs we would have kept in 
place in better fiscal times.
    At the same time, our budget protects the investments we 
need to keep Americans prosperous in the years to come, from 
investments in Head Start so our kids can compete with those in 
any nation, to investments in biomedical research that allows 
the U.S. to continue to lead the world in discoveries of 
breakthrough cures and treatments.
    Today I want to focus my oral testimony on some of the 
provisions in our budget that will benefit the youngest and the 
oldest Americans.
    But first a quick update on the implementation of the the 
Affordable Care Act. Thanks to the steps we have taken so far, 
children can no longer be denied coverage because of their 
preexisting health conditions. Families have new protections 
with the Patient's Bill of Rights. Businesses are getting some 
initial relief from the soaring health care costs, and seniors 
have better access to prescription drugs and preventive care.
    Tomorrow we will announce that more than 18,000 Americans 
who have been shut out of the insurance market are now taking 
advantage of the preexisting insurance plans in their States. 
Some States are still reporting figures, so those numbers could 
go higher, but that is about a 50 percent increase in the last 
couple of months as people begin to learn about the program.
    It is encouraging to see that more people who need health 
insurance are getting it, but we know that is not enough, and 
that is why we are continuing to work with States and national 
advocates to reach eligible people and let them know coverage 
is available. We are also working with insurers that have 
chosen to notify people about the preexisting insurance plan 
when their applications are denied, and we are evaluating ways 
to reduce premiums and ease eligibility standards to expand 
access to the plans. For many, these plans provide access to 
lifesaving treatment, so it is vital we continue to find those 
who are eligible and get them enrolled.
    Our budget builds on the momentum of the the Affordable 
Care Act with critical investments that provide for and protect 
our most vulnerable citizens. We know there is nothing more 
important to our future than the healthy development of all of 
our children.
    Science continues to show that success in school is 
significantly enhanced by higher-quality early learning 
opportunities. Earlier this year, we got the results of the 
latest study to look at value of early education. Researchers 
followed children from low-income families enrolled in 
Chicago's early education programs until they turned 26, and 
found that over that child's lifetime the program generated as 
much as $11 in economic benefits for every dollar spent. Now, 
that is a huge payoff. So even in tight budget times, our 
budget makes room for new investments in child care and Head 
Start, which have a long history of bipartisan support.
    But the budget does more than provide additional resources. 
It aims to raise the bar on quality in child care and early 
education by supporting key reforms to transform the Nation's 
early childhood system into one that fosters healthy 
development and gets children ready for school.
    Quality child care is more than just providing baby 
sitting. It supports healthy child development and school 
readiness, and that is why our budget puts forward principles 
for legislation reauthorizing the main child care program, the 
Child Care and Development Block Grant. These include promoting 
better health and safety standards, putting more information 
about the quality of different child care options into parents' 
hands and improving workforce training to make sure that the 
people caring for our kids have the skills they need.
    We look forward to working with this committee, Mr. 
Chairman, as you consider these issues. We are also promoting 
better quality in Head Start, using new evidence-based 
evaluations in classrooms, including a tool that will help Head 
Start programs see what is working and improve what isn't.
    In addition, we have revamped the training we provide to 
Head Start directors and teachers to make sure best practices 
actually reach the classroom. We are proposing new rules to 
require the lowest performing programs, the bottom 25 percent, 
to compete for funding. By giving programs incentives to raise 
the quality of their services and removing the weaker programs, 
we want to ensure that the best programs are the ones serving 
our children.
    Finally, we are pleased that the fiscal year 2011 budget 
included funding to allow States to fund innovation in early 
education, and our 2012 request includes $350 million to 
continue this key investment.
    Taken together, these initiatives are designed to create an 
early learning system that gets every child ready for school, 
supports healthy child development and features high standards, 
whether the child is in a pre-K program, a Head Start center, a 
child care center, or a family day-care home. They will help 
ensure that American children start school as prepared as any 
in the world.
    Our budget also focuses on creating safe environments for 
children and families. We thank the committee for reauthorizing 
the Child Abuse Prevention and Treatment Act and the Family 
Violence Prevention and Services Act last year, and our budget 
includes more than $200 million for the child abuse and 
domestic violence programs authorized by these laws.
    The budget also provides critical support for seniors. It 
invests in the care and services seniors need to stay active 
and engaged in their communities, and it addresses the terrible 
problem of elder abuse and provides funding for caregiver 
services that give families the peace of mind and enable them 
to care for near relatives.
    These goals guide our Department's work on the 
reauthorization of the Older Americans Act coming up later this 
year.
    For more than 45 years, the Older Americans Act has enjoyed 
broad bipartisan support. In the past year alone, the law's 
comprehensive home and community-based system has supported 
nearly 11 million seniors and their family caregivers, but the 
need for this kind of support continues to grow rapidly.
    Every day, more than 9,000 baby boomers turn 65. That is 
nearly 3.3 million a year, many of whom will be ultimately 
cared for by their family members. We need to do all we can to 
help families caring for their loved ones, and the Older 
Americans Act gives us the tool to do just that.
    We look forward to working with this committee to 
reauthorize the Older Americans Act and build upon the law's 
long record of success in serving our families and our 
communities.
    The 2012 budget makes tough choices and smart target 
investments today so we can have a healthy, stronger, and more 
competitive America tomorrow. That is what it takes to win the 
future and that is what we are determined to do.
    Thank you, Mr. Chairman, and I look forward to our 
discussion.
    Chairman Kline. Thank you, Madam Secretary.
    [The statement of Secretary Sebelius follows:]

        Prepared Statement of Hon. Kathleen Sebelius, Secretary,
              U.S. Department of Health and Human Services

    Chairman Kline, Ranking Member Miller, and Members of the 
Committee, thank you for the invitation to discuss the policies and 
priorities of the Department of Health and Human Services (HHS).
    In President Obama's State of the Union address he outlined his 
vision for how the United States can win the future by out-educating, 
out-building and out-innovating the world so that we give every family 
and business the chance to thrive. His 2012 budget is the blueprint for 
putting that vision into action and making the investments that will 
grow our economy and create jobs.
    At the Department of Health and Human Services this means giving 
families and business owners better access to health care and more 
freedom from rising health care costs and insurance abuses. It means 
keeping America at the cutting edge of new cures, treatments and health 
information technology. It means helping our children get a healthy 
start in life and preparing them for academic success. It means 
promoting prevention and wellness to make it easier for families to 
make healthy choices. It means building a health care workforce that is 
ready for the 21st century health needs of our country. And it means 
attacking waste and fraud throughout our department to increase 
efficiency, transparency and accountability.
    Our 2012 budget does all of this.
    At the same time, we know that we cannot build lasting prosperity 
on a mountain of debt. And we cannot win the future if we pass on 
massive debts to our children and grandchildren. We have a 
responsibility to the American people to live within our means so we 
can invest in our future.
    For every program we invest in, we know we need to cut somewhere 
else. So in developing this budget, we took a magnifying glass to every 
program in our department and made tough choices. When we found waste, 
we cut it. When we found duplication, we eliminated it. When programs 
weren't working well enough, we reorganized and streamlined them to put 
a new focus on results. When they weren't working at all, we ended 
them. In some cases, we cut programs that we wouldn't cut in better 
fiscal times.
    This Budget contributes to deficit reduction and meets the 
President's freeze to non-security programs by offsetting critical 
investments with over $5 billion in targeted reductions. These 
reductions are to real programs and reflect tough choices. In some 
cases the reductions are to ineffective or outdated programs and in 
other areas they are cuts we would not have made absent the fiscal 
situation.
    The Budget proposes a number of reductions and terminations in HHS.
     The Budget cuts the Community Services Block Grant in half 
(by $329 million) and injects competition into grant awards.
     The Budget cuts the Low Income Home Energy Assistance 
Program by $2.5 billion bringing it back to the 2008 level appropriated 
prior to the spike in energy prices.
    The Budget also stretches existing resources through better 
targeting.
     The Budget redirects and increases funding in CDC to 
reduce chronic disease. Rather than splitting funding and making 
separate grants for heart disease, diabetes, and other chronic 
diseases, the Budget proposes one comprehensive grant that will allow 
States to address chronic disease more effectively.
     The Budget proposes refocusing the Senior Community 
Services Employment program to better integrate unemployed seniors into 
their communities through community service employment assisting other 
seniors to stay in their homes.
     The Budget redirects prevention resources in SAMHSA to 
fund evidence-based interventions and better respond to evolving needs. 
States and local communities will benefit from the additional 
flexibility while funds will still be competed and directed toward 
proven interventions.
    These are the two goals that run throughout this budget: making the 
smart investments for the future that will help build a stronger, 
healthier, more competitive, and more prosperous America, and making 
the tough choices to ensure we are building on a solid fiscal 
foundation.
    This Committee has jurisdiction over several important parts of 
HHS, including child care and Head Start, which focus on our youngest 
citizens, programs under the Older Americans Act, which focus on our 
oldest citizens, and certain child abuse, runaway and homeless youth, 
and family violence programs, which focus on some of our most 
vulnerable citizens.
    The budget documents are available on our website. But for now, I 
want to share an outline of the budget, including the areas of most 
interest to this Committee, and how it will help our country invest in, 
and win, the future.
Advance the Health, Safety, and Well-Being of the American People
    Enhancing the Quality of Early Education: The Budget provides $6.3 
billion in combined discretionary and mandatory funding for child care, 
which is a $1.2 billion increase above the FY 2011 funding level. These 
resources will provide child care subsidies to 1.7 million low-income 
children so that their parents can work or attend training or 
education. The funding also supports activities to improve the quality 
of child care to support learning and success for all 12 million young 
children who are in out-of-home care each week.
    The Administration also supports critical reforms to the child care 
program with the goal of helping more children access high quality 
child care, through higher health and safety and quality standards, 
development of the early childhood workforce, increased continuity of 
care, and quality rating improvement systems that provide parents with 
critical information about the quality of their care choices and assist 
providers in reaching higher levels of quality. The Budget also 
supports improvements to program integrity and accountability 
initiatives. Taken together, these reforms will help transform the 
nation's child care system into one that provides safe, nurturing care 
that fosters healthy child development, promotes future academic 
success, and supports parental employment.
    Additionally, the President's Budget includes $8.1 billion for Head 
Start, which will allow us to continue to serve 968,000 children in 
2012. The budget request supports the critical reforms underway to 
raise the bar on quality in the Head Start program, including requiring 
grantees not meeting the standard for automatic noncompetitive renewal 
under the Head Start Act to compete for funding to ensure that children 
and families are served by the most capable providers. The budget also 
supports the redesigned training and technical assistance system which 
would bring current research and the best evidence-informed practice 
into Head Start classrooms, including best practices for local programs 
to work with their local school systems to ensure that children start 
school with the skills they need and that the gains children achieve in 
Head Start are sustained as the children leave Head Start and move on 
to public schools.
    The Administration is engaged in a multi-faceted effort to raise 
the bar on quality in Head Start. The training and technical assistance 
system has been revamped and now features six national centers that 
focus on different elements of quality early education, including 
parent engagement, quality teaching, and financial management. In 
addition, we now have 10 ``Centers of Excellence'' and 130 Head Start 
programs participating in a mentoring program designed to pair programs 
with dedicated mentors who can help them examine their programs and 
implement changes that improve quality.
    Another key element of our efforts to improve quality is the 
creation of a robust re-designation renewal system, called for in the 
most recent Head Start reauthorization legislation. This system will 
inject competition into the Head Start program and require low 
performing programs to compete against other entities for continued 
funding. We issued the proposed rule in September 2010 and received 
many comments from around the country. We are in the process of 
reviewing those comments and writing a final rule. We believe that a 
strong re-competition system will promote quality in two important 
ways. First, it provides new incentives for all Head Start programs to 
improve their programs because programs found to be low performing will 
have to compete for continued funding. Second, it provides a way to 
replace low-performing programs with entities that are able to provide 
higher quality early education to children.
    As we work to finalize the rules for this competitive process, we 
are guided by the goal of the bipartisan reauthorization legislation--
to ensure that children served in Head Start have access to high 
quality early education that promotes healthy child development and 
school readiness.
    In fact, all of our work in early education is devoted to the goals 
of fostering healthy development and school success for children. 
Regardless of whether a child is in a Head Start Center, a family child 
care home, a public pre-K program, or a private preschool, that child 
needs quality teachers, a safe environment, healthy food, and 
activities that fosters her social, emotional, physical, and cognitive 
development. That is why the Administration has proposed the creation 
of the Early Learning Challenge Fund. This proposed competitive grant 
program would be jointly administered by the Departments of Education 
and Health and Human Services and would challenge States to establish 
model, coordinated, Statewide systems of early learning and development 
for children from birth to kindergarten entry by raising program 
standards, forging better linkages between early education programs and 
elementary schools, and improving early learning workforce training so 
that teachers have the skills they need. The overall program goal would 
be to improve health, social, emotional, and educational outcomes for 
young children so that they develop the skills and abilities necessary 
to succeed in school and in life.
    The Administration's agenda on early education--including both 
investments and the focus on quality--are key elements of the broader 
education agenda designed to help every child reach his or her academic 
potential and improve our nation's competitiveness.
Child Abuse Prevention
    The Budget request for child abuse prevention efforts includes 
$26.5 million for grants to States and $41.7 million for grants to 
community-based organizations. The request supports the reauthorization 
of the Child Abuse Prevention and Treatment Act (CAPTA). This Committee 
played a leading role in the successful and bipartisan reauthorization 
effort last year and I appreciate your efforts. Reauthorization 
included new State plan assurances and a focus on collaboration and 
linkages between domestic violence and child abuse and neglect. 
Reauthorization also included a new funding formula adjustment should 
appropriations exceed FY 2009 amounts by more than $1 million. These 
funds will continue to help support improved child protection systems, 
including prevention services for families. Child abuse and neglect 
continues to be a significant problem in the United States. CAPTA funds 
support the efforts in establishing and maintaining effective systems 
of child protection, a critical element in eliminating the tragedy of 
child abuse and neglect, and support direct services to families.
Preventing Domestic Violence
    The President's FY 2012Budget provides $140 million to shelter and 
serve victims of domestic violence and their children, as well as 
prevent domestic abuse before it starts. The request supports the newly 
reauthorized Family Violence Prevention and Services Act, and funds 
over 1,300 battered women's shelters, evidence-based prevention 
strategies, and the National Domestic Violence Hotline. The Hotline 
receives over 24,000 calls per month, with most callers reporting it is 
their first request for help. Again, I would like to thank this 
Committee for its bipartisan work to reauthorize these important 
programs last year.
    Child Support and Fatherhood Initiative: The Budget includes $305 
million in FY 2012 and $2.4 billion over 10 years for the Child Support 
and Fatherhood Initiative. This initiative is designed to promote 
strong family relationships by encouraging fathers to take 
responsibility for their children, changing policies so that more of 
fathers' support reaches their children, and continuing a commitment to 
vigorous enforcement. The Budget increases support for States to pass 
through child support payments to families, rather than retaining those 
payments, and requires States to establish safe access and visitation 
arrangements as a means of promoting father engagement in their 
children's lives. The Budget also provides a temporary increase in 
incentive payments to States based on performance, which continues an 
emphasis on program outcomes and will foster enforcement efforts when 
state budgets are stretched.
    Reform and Reauthorize the Foster Care Financing System: The Budget 
includes an additional $250 million in mandatory funds in FY 2012 and a 
total of $2.9 billion over 10 years to align financial incentives with 
improved outcomes for children in foster care and those who are 
receiving in-home services from the child welfare system in order to 
prevent entry or re-entry into foster care. We look forward to working 
with the Committee to improve outcomes for vulnerable children in our 
child welfare system.
Domestic Sex Trafficking
    Contrary to a common assumption, human trafficking is not just a 
problem in other countries. Cases of human trafficking have been 
reported in all 50 States, Washington D.C., and U.S. territories. 
Victims of human trafficking can be children or adults, U.S. citizens 
or foreign nationals, male or female. The President's FY 2012 budget 
proposed $5 million for training to address sex trafficking of runaway 
and homeless youth and supports for those working with U.S. domestic 
victims in the runaway and homeless youth population (in addition to 
funding currently provided through the Office of Refugee Resettlement 
for foreign trafficking victims in the United States). The 
Administration's proposal would train and support those who work with 
the runaway and homeless youth population to identify, prevent, and 
address sex trafficking of minors in this population. These funds will 
support the training and outreach for a broad range of those who work 
with runaway and homeless youth, including program staff, caseworkers 
and parents. Through collaboration, funds also may support partnerships 
with law enforcement, attorneys, and judges to train individuals on how 
to recognize and address sex trafficking among youth.
    TANF Reauthorization: The President's Budget continues existing 
funding for the TANF program in FY 2012. When TANF reauthorization is 
considered, the Administration would be interested in exploring with 
Congress a variety of strategies to strengthen the program's ability to 
improve outcomes for families and children, including helping more 
parents succeed as workers by building on the recent successes with 
subsidized employment. One area in which HHS is already working to 
improve employment opportunities is by partnering with the Department 
of Labor (DOL). HHS and DOL are exploring a variety of efforts in the 
employment and training area which are aimed at addressing the 
challenges, strategies, incentives, and results for States and 
localities to undertake collaborative initiatives. These collaborative 
efforts include developing joint administrative guidance, providing 
technical assistance and outreach, and leveraging research resources.
    Supporting Older Adults and their Caregivers: The Budget includes 
$60 million, an increase of $21 million over FY 2010, to help seniors 
live in their communities without fear of abuse, and includes an 
increase of $96 million for caregiver services, like counseling, 
training, and respite care, to enable families to better care for their 
relatives in the community. The Budget also proposes to transfer to the 
Administration on Aging (AoA) a Department of Labor program that 
provides community service opportunities and job training to unemployed 
older adults. As part of this move, a new focus will be placed on 
developing professional skills that will enable participants to provide 
services that allow fellow seniors to live in their communities as long 
as possible.
    Reauthorizing the Older Americans Act: For more than 45 years, the 
Older Americans Act (OAA) has enjoyed broad, bipartisan support. The 
programs supported by the Act provide community-based supports that 
assist families caring for their loved ones and help seniors stay in 
their homes for as long as possible. Over the past year, nearly 11 
million seniors and their family caregivers have been supported through 
the OAA's comprehensive home and community-based system. Most funding 
under the Older Americans Act is directed to State units on aging 
which, in turn, send funding to local area agencies on aging. Funding 
is also provided by formula to tribal organizations. These local 
agencies partner with service providers and volunteers in their 
communities to provide services to seniors. These services complement 
the health care system by helping to prevent hospital readmissions, 
providing transportation to doctors appointments, and supporting some 
of life's most basic functions, such as assistance to elders in their 
homes including delivering or preparing meals and helping them with 
bathing. These services are especially critical for the nearly three 
million seniors who receive intensive in-home services, half a million 
of whom meet the disability criteria for nursing home admission but are 
able to remain in their homes, in part, due to these community 
supports.
    The reauthorization of the Older Americans Act provides us with the 
opportunity to work with this Committee to strengthen and build upon a 
long record of success in serving our families and communities. To 
support this process, over the past year the Administration on Aging 
conducted the most open system for providing input on recommendations 
for reauthorizing the Older Americans Act in its history, convening and 
receiving reports from more than 60 reauthorization listening sessions 
held throughout the country, and receiving online input from interested 
individuals and organizations, as well as from seniors and their 
caregivers. This input represented the interests of thousands of 
consumers of the OAA's services.
    Based in part upon this extensive public input process, we think 
that reauthorization can strengthen the Older Americans Act and put it 
on a solid footing to meet the challenges of a growing population of 
seniors. We look forward to working with the Committee on bipartisan 
reauthorization legislation. The following are some examples of areas 
that we would like to discuss with the Committee as you consider 
legislation:
     Ensuring that the best evidence-based interventions for 
helping older individuals manage chronic diseases are utilized. A 
number of evidence-based programs have been shown to be effective in 
helping participants adopt healthy behaviors, improve their health 
status, and reduce their use of hospital services and emergency room 
visits.
     Improving the Senior Community Service Employment Program 
(SCSEP) by integrating it with other seniors programs. The President's 
budget proposes to move this program from the Department of Labor to 
the Administration on Aging within HHS. The goal of this move is to 
better integrate this program with other senior services provided by 
the Older Americans Act. We would like to discuss adopting new models 
of community service for this program with you, including refocusing 
the program to better integrate seniors into their communities through 
real community service employment serving other seniors, which enables 
both to stay in the community longer.
     Combating fraud and abuse in Medicare and Medicaid by 
embedding the Senior Medicare Patrol Program (SMP) in the OAA as an 
ongoing consumer-based fraud prevention and detection program. The SMP 
program serves a unique role in the Department's fight to identify and 
prevent healthcare fraud by using the skills of retired professionals 
as volunteers to conduct community outreach and education so that 
seniors and families are better able to recognize and report suspected 
cases of Medicare and Medicaid fraud and abuse. In FY 2009, the program 
educated over 215,000 beneficiaries in over 40,000 group education 
sessions and one-on-one counseling sessions, resolving or referring for 
further investigation over 4,000 complaints of potential fraud, error, 
or abuse.
Transform Health Care
    The 2012 budget gives Americans more and control over their health 
care choices, so they can get affordable, high-quality care when they 
need it.
    Expanding Access to Coverage and Making Coverage More Secure: The 
Affordable Care Act expands access to affordable coverage to millions 
of Americans, strengthens consumer protections and ends some of the 
worst insurance company abuses. These reforms create an important 
foundation of patients' rights in the private health insurance market 
and put Americans in charge of their own health care. As a result, we 
have already implemented important private market reforms including 
eliminating pre-existing condition exclusions for children; prohibiting 
insurance companies from rescinding coverage and imposing lifetime 
dollar limits on coverage; and enabling many adult children to stay on 
their parent's insurance plan up to age 26. The Affordable Care Act 
also established new programs to lower premiums and support coverage 
options, such as the Pre-Existing Condition Insurance Plans Program and 
the Early Retiree Reinsurance Program. The Act provides Medicare 
beneficiaries and enrollees in private plans access to certain covered 
preventative services free of charge. Medicare beneficiaries also have 
increased access to prescription drugs under Medicare Part D through 
provisions in the Act that close the coverage gap, known as the ``donut 
hole,'' by 2020 so that seniors no longer have to fear being unable to 
afford their prescriptions. Medicare beneficiaries are also eligible to 
receive an annual wellness visit free of charge.
    Beginning in 2014, State-based health insurance Exchanges will 
create affordable, quality insurance options for many Americans who 
previously did not have health insurance coverage, had inadequate 
coverage, or were vulnerable to losing the coverage they had. Exchanges 
will make purchasing private health coverage easier by providing 
eligible consumers and small businesses with ``one-stop-shopping'' 
where they can compare a range of plans. New premium tax credits and 
cost-sharing reductions will also increase the affordability of 
coverage and care. The Affordable Care Act will also extend Medicaid 
coverage to millions of low-income individuals who were previously not 
eligible for coverage, granting them access to affordable health care.
    Ensuring Access to Quality, Culturally Competent Care for 
Vulnerable Populations: The Budget includes $3.3 billion for the Health 
Centers Program, including $1.2 billion in mandatory funding provided 
through the Affordable Care Act Community Health Center Fund, to expand 
the capacity of existing health center services and create new access 
points.
    Improving Health Care Quality: The Affordable Care Act contains 
numerous provisions designed to ensure that patients receive safe, high 
quality care. Innovative payment and delivery reforms such as bundled 
payments for a single episode of care and the formation of Accountable 
Care Organizations will promote better coordinated and more efficient 
care. New value-based purchasing programs for hospitals and other 
health providers will reward those who deliver high quality care, 
rather than simply encouraging a high volume of services. The new 
Center for Medicare and Medicaid Innovation (``Innovation Center'') 
will design, test, and evaluate new models of payment and delivery that 
seek to promote higher quality and lower costs. Similarly, the new 
Centers for Medicare & Medicaid Services' (CMS) Federal Coordinated 
Health Care Office will complement these efforts to provide higher 
quality and better integrated care for those who are eligible for both 
Medicare and Medicaid. Reducing Health Care Costs: New innovative 
delivery and payment approaches will lead to both more efficient and 
higher quality care. For example, provisions in the Affordable Care Act 
designed to reduce health care acquired conditions and preventable 
readmissions will both improve patient outcomes and reduce unnecessary 
health spending. The Innovation Center, in coordination with private 
sector partners whenever possible, will pursue new approaches that not 
only improve quality of care, but also lead to cost savings for 
Medicare and Medicaid. Rate adjustments for insurers participating in 
Medicare Advantage will promote greater efficiency in the delivery of 
care. Meanwhile, new rules for private insurers, such as medical loss 
ratio standards and enhanced review of premium increases, will lead to 
greater value and affordability for consumers.
    Combating Healthcare Associated Infections: HHS will address 
healthcare associated infections through the hospital value-based 
purchasing program, as called for in the Affordable Care Act. In 
addition, the FY 2012 Budget includes $86 million--of which $20 million 
is funded through the Prevention and Public Health fund--to the Agency 
for Healthcare Research and Quality (AHRQ), the Centers for Disease 
Control and Prevention (CDC), and the Office of the Secretary to reduce 
healthcare-associated infections. In FY 2012, HHS will continue 
research on health-care associated infections and tracking infections 
through the National Healthcare Safety Network. HHS will also identify 
and respond to new healthcare-associated infections by conducting 
outbreak and epidemiological investigations. In addition, HHS will 
implement, and ensure adherence to, evidence-based prevention practices 
to eliminate healthcare-associated infections. HHS activities, 
including those that the Innovation Center sponsors and hospital value-
based purchasing, as called for in the Affordable Care Act, will 
further the infection reduction goals of the Department's Action Plan 
to Prevent Healthcare-Associated Infections.
    Health Services for 9/11 World Trade Center Attacks: To implement 
the James Zadroga 9/11 Health and Compensation Act, the FY 2012 Budget 
includes $313 million in mandatory funding to provide medical 
monitoring and treatment to responders of the September 11, 2001 World 
Trade Center attacks and initial health evaluations, monitoring, and 
treatment to others directly affected by the attacks. In addition to 
supporting medical monitoring and treatment, HHS will use funds to 
establish an outreach program for potentially eligible individuals, 
collect health data on individuals receiving benefits, and establish a 
research program on health conditions resulting from the World Trade 
Center attacks.
    Stabilizing Medicare Physician Payments: In December, the 
Administration worked with Congress to offset the cost of legislation 
preventing an imminent decrease in physician payment rates due to the 
Medicare Sustainable Growth Rate (SGR) formula. The Budget goes further 
and proposes to continue the current level of payment, and offset the 
increase above current law for the next two years with specific 
savings. Beyond the next two years, I am determined to work with you to 
put in place a long-term plan to reform physician payment rates in a 
fiscally responsible way, and to craft a reimbursement system that 
gives physicians incentives to improve quality and efficiency, while 
providing predictable payments for care furnished to Medicare 
beneficiaries.
Advance Scientific Knowledge and Innovation
    Accelerating Scientific Discovery to Improve Patient Care: The 
Budget includes $32.0 billion for the National Institutes of Health 
(NIH), an increased investment of $745 million over the FY 2010 enacted 
level, to support innovative basic and clinical research that promises 
to deliver better health and drive future economic growth. In FY 2012, 
NIH estimates it will support a total of 36,852 research project 
grants, including 9,158 new and competing awards.
    Recent advances in the biomedical field, including genomics, high-
throughput biotechnologies, and stem cell biology, are shortening the 
pathway from discovery to revolutionary treatments for a wide range of 
diseases, such as Alzheimer's, cancer, autism, diabetes, and obesity. 
The dramatic acceleration of our basic understanding of hundreds of 
diseases; the establishment of NIH-supported centers that can screen 
thousands of chemicals for potential drug candidates; and the emergence 
of public-private partnerships to aid the movement of drug candidates 
into the commercial development pipeline are fueling expectations that 
an era of personalized medicine is emerging where prevention, 
diagnosis, and treatment of disease can be tailored to the individual 
and targeted to be more effective. To help bridge the divide between 
basic science and therapeutic applications, NIH plans to establish in 
FY 2012 the National Center for Advancing Translational Sciences 
(NCATS), of which one component would be the new Cures Acceleration 
Network. With the creation of NCATS, the National Center for Research 
Resources will be abolished and its programs transferred to the new 
Center or other parts of NIH.
    Advancing Patient-Centered Health Research: The Affordable Care Act 
created the Patient-Centered Outcomes Research Institute to fund 
research and get relevant, high quality information to patients, 
clinicians and policy-makers so that they can make informed health care 
decisions. The Patient-Centered Outcomes Research Trust Fund will fund 
this independent Institute, and related activities within HHS. In FY 
2012, the Budget includes $620 million in AHRQ, NIH and the Office of 
the Secretary, including $30 million from the Trust Fund, to invest in 
core patient-centered health research activities and to disseminate 
research findings, train the next generation of patient-centered 
outcomes researchers, and improve data capacity.
    Advancing Health Information Technology: The Budget includes $78 
million, an increase of $17 million, for the Office of the National 
Coordinator for Health Information Technology (ONC) to accelerate 
health information technology (health IT) adoption and promote 
electronic health records (EHRs) as tools to improve the health of 
individuals and transform the health care system. The increase will 
allow ONC to assist health care providers in becoming meaningful users 
of health IT.
    Improving Health Outcomes of American Indians and Alaska Natives: 
The President is committed to improving health outcomes and providing 
health care for American Indian and Alaska Native communities. The 
Budget includes nearly $5.7 billion, an increase of $589 million over 
FY 2010, which will enable the Indian Health Service (IHS) to focus on 
reducing health disparities, ensuring that IHS services can be 
supplemented by care purchased outside the Indian health system where 
necessary, supporting Tribal efforts to deliver quality care, and 
funding health facility and medical equipment upgrades. These 
investments will ensure continued improvement to support the 
Administration's goal of significantly reducing health disparities for 
American Indians and Alaska Natives. Transforming Food Safety: The 
Administration is committed to transforming our nation's food safety 
system to one that is stronger and more reliable for American 
consumers. This Budget reflects the President's vision of a safer food 
safety system by including $1.4 billion, an increase of $333 million 
over FY 2010 for the Food and Drug Administration (FDA) and the Centers 
for Disease Control and Prevention (CDC) food safety activities. 
Coupled with the enactment of the FDA Food Safety Modernization Act 
(the Act), which was signed into law on January 4, 2011, HHS will 
continue to modernize and implement an integrated national food safety 
system. HHS plans to work with Congress to enact additional food safety 
fees to support the full implementation of the Act. CDC will improve 
the speed and accuracy of food borne illness outbreak detection and 
investigation and FDA will focus on establishing preventive controls 
for facilities and produce safety standards for farms in an effort to 
avoid an outbreak of tainted food.
    Preventing and Treating HIV/AIDS: The Budget supports the goals of 
the National HIV/AIDS Strategy to reduce HIV incidence, increase access 
to care and optimize health outcomes for people living with HIV, and 
reduce HIV-related health disparities. The request focuses resources on 
high-risk populations and allocates funds to State and local health 
departments to align resources to the burden of the epidemic across the 
United States. The Budget includes $2.4 billion, an increase of $85 
million, for HRSA's Ryan White program to expand access to care for 
persons living with HIV/AIDS who are otherwise unable to afford health 
care and related support services. The Budget also includes $858 
million for domestic HIV/AIDS Prevention in CDC, an increase of $58 
million, which will help CDC decrease the HIV transmission rate; 
decrease risk behaviors among persons at risk for acquiring HIV; 
increase the proportion of HIV infected people who know they are 
infected; and integrate services for populations most at risk of HIV, 
sexually transmitted diseases, and viral hepatitis. In addition, the 
Budget proposes that up to one percent of HHS discretionary funds 
appropriated for domestic HIV/AIDS activities, or approximately $60 
million, be provided to the Office of the Assistant Secretary for 
Health to foster collaborations across HHS agencies and finance high 
priority initiatives in support of the National HIV/AIDS Strategy. Such 
initiatives would focus on improving linkages between prevention and 
care, coordinating Federal resources within targeted high-risk 
populations, enhancing provider capacity to care for persons living 
with HIV/AIDS, and monitoring key Strategy targets.
    Addressing the Leading Causes of Death and Disability: Chronic 
diseases and injuries represent the major causes of morbidity, 
disability, and premature death and contribute to the growth in health 
care costs. The Budget aims to improve the health of individuals by 
focusing on prevention of chronic diseases and injuries rather than 
focusing solely on treating conditions that could have been prevented. 
Specifically, the Budget includes $705 million for a new competitive 
grant program in CDC that refocuses targeted disease-specific grants 
into a comprehensive program that will enable health departments to 
implement the most effective strategies to address the leading causes 
of death. Because many chronic disease conditions share common risk 
factors, the new program will improve health outcomes by coordinating 
the interventions that can reduce the burden of chronic disease. In 
addition, the allocation of the $1 billion available in the Prevention 
Fund will improve health and restrain the growth of health care costs 
through a balanced portfolio of investments. The FY 2012 allocation of 
the Fund builds on existing investments and will align with the vision 
and goals of the National Prevention and Health Promotion Strategy 
under development. For instance, the CDC Community Transformation 
Grants create and sustain communities that support prevention and 
wellness where people live, learn, work and play through the 
implementation, evaluation, and dissemination of evidence-based 
community preventive health activities.
    Preventing Substance Abuse and Mental Illness: The Budget includes 
$535 million within the Substance Abuse and Mental Health Services 
Administration (SAMHSA) for new, expanded, and refocused substance 
abuse prevention and mental health promotion grants to States and 
Tribes. To maximize the effectiveness and efficiency of its resources, 
SAMHSA will deploy mental health and substance abuse prevention and 
treatment investments more thoughtfully and strategically. SAMHSA will 
use competitive grants to identify and test innovative prevention 
practices and will leverage State and Tribal investments to foster the 
widespread implementation of evidence-based prevention strategies 
through data driven planning and resource dissemination.
    Ensuring Safety and Improving Access to Medical Products: FDA is 
charged with a significant task: to protect and promote the health of 
the American public. To succeed, they must ensure the safety and 
effectiveness of the medical products that Americans rely on every day, 
and also facilitate the scientific innovations that make these products 
safer and more effective. The Administration is dedicated to this 
critical mission and the Budget provides $1.4 billion for FDA to 
enhance the safety oversight of medical products, facilitate the 
development of innovative products, and establish a pathway for the 
approval of generic biologics thus allowing greater access to life 
saving biological products that are safe and effective.
    Pandemic and Emergency Preparedness: While responding to the 2009 
H1N1 influenza pandemic has been the focus of the most recent pandemic 
investments, the threat of a pandemic caused by H5N1 or other strains 
has not diminished. HHS is currently implementing pandemic preparedness 
activities in response to lessons learned from the H1N1 pandemic in 
order to strengthen the nation's ability to respond to future health 
threats. Balances from the FY 2009 supplemental appropriations are 
being used to support recommendations from the HHS Medical 
Countermeasure Review and the President's Council of Advisors on 
Science and Technology. These multi-year activities include advanced 
development of influenza vaccines and the construction of a new cell-
based vaccine facility in order to quickly produce vaccine in the U.S., 
as well as development of next generation antivirals, rapid 
diagnostics, and maintenance of the H5N1 vaccine stockpile.
    The HHS Medical Countermeasure Review described a new strategy 
focused on forging partnerships, minimizing constraints, modernizing 
regulatory oversight, and supporting transformational technologies. The 
request includes $665 million for the Biomedical Advanced Research and 
Development Authority, to improve existing and develop new next-
generation medical countermeasures and $100 million to establish a 
strategic investment corporation that would improve the chances of 
successful development of new medical countermeasure technologies and 
products by small and new companies. The Budget includes $70 million 
for FDA to establish teams of public health experts to support the 
review of medical countermeasures and novel manufacturing approaches. 
Additionally, NIH will dedicate $55 million to help shepherd 
investigators who have promising, early-stage, medical countermeasure 
products. Finally, the Budget includes $655 million for the Strategic 
National Stockpile to replace expiring products, support BioShield 
acquisitions, and fill gaps in the stockpile inventory. Strengthen the 
Nation's Health and Human Service Infrastructure and Workforce
    Strengthening the Health Workforce: A strong health care workforce 
is key to ensuring that more Americans can get the quality care they 
need to stay healthy. The Budget includes $1.3 billion, including $315 
million in mandatory funding, within HRSA, to support a strategy which 
aims to promote a sufficient health workforce that is deployed 
effectively and efficiently and trained to meet the changing needs of 
the American people. The Budget will initiate investments that will 
expand the capacity of institutions to train over 4,000 new primary 
care providers over five years.
    Expanding Public Health Infrastructure: The FY 2012 Budget supports 
State and local capacity so that health departments are not left 
behind. Specifically, the Budget requests $73 million, of which $25 
million is funded through the Prevention Fund, for the CDC public 
health workforce to increase the number of trained public health 
professionals in the field. CDC's experiential fellowships and training 
programs create an effective, prepared, and sustainable health 
workforce to meet emerging public health challenges. In addition, the 
Budget requests $40 million from the Prevention Fund to support CDC's 
Public Health Infrastructure Program. This program will increase the 
capacity and ability of health departments to meet national public 
health standards in areas such as information technology and data 
systems, workforce training, and regulation and policy development.
Increase Efficiency, Transparency, and Accountability of HHS Programs
    Strengthening Program Integrity: Strengthening program integrity is 
a priority for both the President and me. The Budget includes $581 
million in discretionary funding, a $270 million increase over FY 2010, 
to expand prevention-focused, data-driven, and innovative initiatives 
to improve CMS program integrity. The Budget request also supports the 
expansion of additional Strike Force cities to target Medicare fraud in 
high risk areas, enhanced efforts to achieve the President's goal of 
cutting the Medicare fee-for-service error rate in half by 2012, and 
funding to support implementation of a robust set of legislative 
proposals to expand HHS program integrity efforts. The legislative 
proposals are estimated to produce $32.3 billion in savings over ten 
years.
    In addition, the Affordable Care Act provides unprecedented tools 
to CMS and law enforcement to enhance Medicare, Medicaid, and 
Children's Health Insurance Program (CHIP) program integrity. The Act 
enhances provider screening to stop fraudsters from participating in 
these programs in the first place, gives the Secretary the authority to 
implement temporary moratoria on enrolling new providers or suppliers 
in fraud hot spots, and increases law enforcement penalties. 
Additionally, the continued implementation of the Secretary's Program 
Integrity Initiative seeks to ensure that every program and office in 
HHS prioritizes the identification of systemic vulnerabilities and 
opportunities for waste and abuse, and implements heightened oversight.
    Implementing the Recovery Act: The American Recovery and 
Reinvestment Act provides $138 billion to HHS programs as part of a 
government-wide response to the economic downturn. HHS-funded projects 
around the country are working to achieve the goals of the Recovery Act 
by helping State Medicaid programs meet increasing demand for health 
services; supporting struggling families through expanded child care 
services and subsidized employment opportunities; and by making long-
term investments in health information technology (IT), biomedical 
research and prevention and wellness efforts. HHS made available a 
total of $118 billion to States and local communities through December 
31, 2010; recipients of these funds have in turn spent $100 billion by 
the same date. Most of the remaining funds will support a signature 
Recovery Act program to provide Medicare and Medicaid incentive 
payments to hospitals and eligible health care providers as they 
demonstrate the adoption and meaningful use of electronic health 
records. The first of these Medicaid incentive payments were made 
January 5, 2011. As of March 31, 2011, 660 providers received $64 
million in Medicaid incentives. More than 23,000 grantees and 
contractors of HHS discretionary programs have to submit reports on the 
status of their projects each calendar quarter. These reports are 
available to the public on Recovery.gov. For the quarter ending 
December 31, 2010, 99.6 percent of the required recipient reports were 
filed timely. Recipients that do not comply with reporting requirements 
are subject to sanction.
Conclusion
    This Budget is about investing our resources in a way that pays off 
again and again. By making smart investments and tough choices today, 
we can have a stronger, healthier, more competitive America tomorrow.
    This testimony reflects just some of the ways that HHS programs 
improve the everyday lives of Americans.
    Under this Budget, we will continue to work to make sure every 
American child, family, and senior has the opportunity to thrive.
    And we will take responsibility for our deficits by cutting 
programs that were outdated, ineffective, or that we simply could not 
afford.
    But, we need to make sure we're cutting waste and excess, not 
making across the board, deep cuts in programs that are helping our 
economy grow and making a difference for families and businesses.
    We need to move forward responsibly, by investing in what helps us 
grow and cutting what doesn't.
    My department can't accomplish any of these goals alone. It will 
require all of us to work together.
    I look forward to working with you to advance the health, safety, 
and well-being of the American people. Thank you for this opportunity 
to speak with you today. I look forward to our conversation.
                                 ______
                                 
    Chairman Kline. We are getting updates on votes every few 
minutes. It looks like the latest guess is around 10:30, so we 
will start with questions and go until we get called to vote.
    I know there are going to be a lot of questions about 
health care, and I am tempted to jump in and start asking 
those, but I want to go in a little bit different direction, 
Madam Secretary. The most recent Head Start impact study says 
that ``the advantages children gain during their Head Start, 
and age 4 years, yielded only a few statistically different 
differences in outcomes at the end of first grade for the 
sample as a whole.''
    Can you expand that at all? Have you been looking into 
that?
    And then, as a follow-on, I will just get them both out 
there--again, the latest Head Start impact study states that 
there was no strong evidence of impact on children's language, 
literacy, or math measures at the end of kindergarten or at the 
end of the first grade.
    Can you tell us what you are doing to get at that? It is a 
vexing problem we have been looking at for a long time.
    Secretary Sebelius. Well, Mr. Chairman, I think that we 
certainly share the goal of making sure that both the child 
development and the early learning skills are focused on in all 
of our child care and early education programs, and Head Start 
is key among them. Early Head Start and Head Start continue to 
show improvements in child development and in learning skills. 
But how long they last into the school life continues to be 
determined.
    So we are continuing to take that information very 
seriously, as I said in my opening statement, to revamp both 
teacher training, to upgrade the quality standards, to make 
sure that we are reanalyzing the curriculum, the core 
curriculum in child care. But I think studies continue to show 
that early learning programs do make a significant difference, 
and 3-year-olds who spend a year in Head Start have a 
significantly different impact when they go into grade school 
than those who don't. What we need to do is continue that 
progress once they hit school.
    Chairman Kline. Let me follow up just a little bit. I think 
that probably everybody on this committee has observed and 
would agree that early learning is helpful.
    But my question is specifically talking about Head Start 
where the quote was, ``there was no strong evidence of impact 
on children's language, literacy, or math measures at the end 
of kindergarten or at the end of the first grade.'' So those 
efforts that you are undertaking, I hope are focused and will 
prove to be fruitful in Head Start, because I think we have 
been disappointed many times that the Head Start program is not 
really helping that many kids be ready for first grade.
    Secretary Sebelius. Well, I would say, Mr. Chairman, we 
have an unprecedented effort underway right now with the 
Department of Education, where we are working closely with them 
to kind of align standards to make sure that the early 
childhood programs run by the education system have the 
developmental aspects that I think have been a component of 
Head Start, and that the Head Start programs have the 
curriculum-based component that often were more focused on in 
the education programs.
    We think that regardless of where a parent chooses as an 
appropriate out-of-home placement for their child, whether it 
is child care or Head Start or Early Head Start or a public 
pre-K program, we should have the same goals and the same 
alignment of initiatives.
    So we are taking those issues very seriously. We think 
school readiness has to be an important component of Head 
Start, and we continue to upgrade the programs.
    We are also recompeting programs that have the lowest 25 
percent of the impact on children. We think that is an 
important aspect, to make sure that we continue to drive 
improvements and not just continue to fund programs because 
they have historically had funding.
    Chairman Kline. Thank you.
    I am going to move to another subject quickly. Your Agency 
administers the early retiree insurance program, which provides 
money to employment-related retiree benefit plans. An HHS 
report dated March 31, 2011, said the program which was 
supposed to last until 2014 had already spent $1.8 billion and 
is not accepting new applications as of the end of April.
    This is troubling on a number of levels. I would like to 
know if it is true that one plan sponsor, the United Auto 
Workers Retiree Medical Benefits Trust, received $207 million, 
or 11.5 percent of the total amount paid by the program?
    During the plan approval process, did this plan have to 
demonstrate or prove that it needed taxpayer funding to pay 
claims to maintain solvency? I have another number of questions 
relating to this, but I think you can see the point; we are 
concerned how the decisions are made or how this money is 
awarded. Can you address that specific question?
    Secretary Sebelius. I would be glad to, Mr. Chairman. I 
can't answer with specificity about the UAW plan. I will be 
glad to give you the written answer to that.
    Chairman Kline. Would you, please?
    Secretary Sebelius. I just don't have those facts off the 
top of my head. But this program has been enormously both 
popular and helpful, I think, to those companies and programs 
who wanted to continue their early retiree coverage. We have 
seen employers consistently dropping that coverage over a 
period of time and, in fact, one of the largest growing groups 
of uninsured in America were the 55 to 65 years old who had 
retired early, and they and their spouses often lost that 
employer-based coverage when those plans got too expensive.
    This program was widely advertised, announced. There was a 
process where applications were accepted universally. They had 
to present documentation to our office. It wasn't our office 
picking and choosing who got in. The programs qualified if they 
met the statutory qualifications. And the way this works, Mr. 
Chairman, is individual claims are presented that rise above 
the threshold. So it is a stop-loss policy, if you will, for 
early retiree programs.
    The most expensive claims are presented and they are paid. 
We share 80 percent of those costs. So we give employers some 
ability to predict their costs going forward, and that has 
actually stabilized the early retiree plan. So plans are not 
being paid from a presumptive pipeline; we are actually paying 
after the fact, as claims are being presented. And we would be 
happy, again, to share the documentation of how that is 
working. It is paid at 6 months. After the claim is made, they 
come in and the money goes out the door.
    Chairman Kline. Okay. I will present some questions for the 
record.
    Secretary Sebelius. Sure, be glad to.
    Chairman Kline. The example looks like we are going to run 
out of money. And have you requested that money in the 
Presidents's budget and so forth? I will present those for the 
record.
    Secretary Sebelius. I would be glad to answer that.
    Chairman Kline. I recognize Mr. Miller.
    Mr. Miller. Thank you very much. Just on the chairman's 
earlier discussion on Head Start, I don't know the study he is 
referring to, but I know on previous studies the question that 
had to be requested was what was the quality of the program the 
child was entering into in kindergarten or first grade?
    We know that many of these children and, unfortunately, the 
poor performing schools, the poorer schools in our country, 
they can lose a whole year over the summer. And so the idea 
that--you know, it is what do you follow on with after Head 
Start that has to be determined. But I would be glad to look at 
the studies. But I know in the past that has been a significant 
impact on what happens to children afterwards.
    I want to turn to part of the the Affordable Care Act that 
I had a chance to participate in in my district last month, and 
that was the Partnership For Patients Initiative, which is 
really about, as I witness this, is this is an effort to try to 
reduce medical errors to improve care, to stop the accidents 
that take place, improve the sanitary nature of a hospital, 
from washing your hands to a whole range of things that were 
popularized, I think to some extent, by Gawande, and making of 
the list before surgery and what you should be thinking about 
when you are doing that.
    I was quite surprised at the range of support for this 
program from the Chamber of Commerce, the Business Roundtable, 
that after the event the profits, the nonprofits, and public 
facilities all wanted to say how do we get to participate in 
this? And in the San Francisco Bay area, it is quite an array 
of hospitals, from the most successful nonprofits to a Kaiser 
system of a prepaid nature and then the public facilities.
    My understanding is that there is about 90--somewhere, 95-
98,000 people who die in the care of hospitals or shortly, 
thereafter as a result of errors and mistakes that are made; in 
the facility that we visited, a question of hand-washing all of 
the time as you move from room to room and from facility to 
facility.
    They had a simple plan of putting bright red tape behind 
the head of the bed so that those who are on respiratory 
assistance, or the bed is kept at 30 degrees, a dramatic 
reduction in pneumonias in that facility. People who are 
susceptible to slips and falls now have to wear very bright red 
socks and slippers so that people are aware of that. Slips and 
falls have gone down about 50 percent. It has just ricocheted 
through the system in terms of the improvement in the outcomes 
in that facility.
    I think your Agency has said that we look for a savings 
down the road of about $50 billion under this initiative, but 
it is very clear from people who are paying the bill, the 
employers and others who are participating in this, that there 
is a pretty big bet being placed on improving these outcomes. 
There was a piece in the Wall Street Journal last week that, 
even with all of the admonishment, as medical staff moves from 
space to space, there is--over a vast majority of them are 
still not washing their hands.
    Those of us who have visited the veterans at the veterans 
facility know every time you move between one space to another, 
whether you have touched anything, you have to go through the 
sanitizing of your hands as you move around that facility.
    And I would just like your comments on this because this 
seems to me, given the people who are rushing forward to say we 
haven't yet been able to participate, who want to participate 
in this program.
    Secretary Sebelius. Well, Congressman Miller, we have had 
enormous enthusiasm and excitement, as you have indicated, 
across the range of not only health care providers but 
employers, business groups, patient advocates. We do have about 
100 deaths a year, but hundreds and hundreds of thousands of 
people are injured. And, in fact, the most recent study said 
that one out of every three Americans who goes into a hospital 
is injured by care that they receive in the hospital.
    That is a very large number and it not only causes enormous 
injury and death, but it costs an enormous amount of money that 
we shouldn't be spending.
    In the past, Medicare has been a volume purchaser. So 
whether the hospital had a 60 percent infection rate or 0 
percent infection rate, you basically got paid the same way.
    The Affordable Care Act gives us a framework to actually 
begin to head in a very different direction, to use the 
enormous payment system of Medicare and Medicaid to be a cost-
driver to encourage value instead of volume. And we are taking 
that very, very seriously. So the Partnership for Patients has 
two very, very aggressive goals. Reduce hospital-based 
infections by 40 percent over the next 3 years. The ultimate 
goal is zero. We shouldn't be hurting people when they have to 
go to the hospital. That has to be our goal.
    Also, reducing unnecessary hospital readmissions by 20 
percent over the next 3 years. And those goals are achievable 
because there are pockets of that care going on right now in 
the country. So we are going to be providing technical 
assistance, be sharing best practices, helping to encourage.
    But, as you say, we currently have over a thousand 
hospitals who have signed up. We have employer groups, we have 
patient advocate groups, a range of partners. And, frankly, the 
private sector is enormously enthusiastic. They have been 
trying to do this for years, but they don't have enough juice 
in the system. They can't touch every hospital with their 
purchases.
    So joining together on quality outcomes not only improves 
care for Americans, but dramatically lowers cost and it--you 
know, we have two ways to lower the rising costs in Medicare. 
It is improving care and getting a better bang for our buck and 
lowering costs that way, or just cutting off benefits. And I 
think the Partnership for Patients gives us a real pathway to a 
new kind of delivery system change.
    Mr. Miller. Thank you. Thank you, Mr. Chairman.
    Chairman Kline. I thank the gentleman. Dr. Foxx, you are 
recognized.
    Ms. Foxx. Thank you, Mr. Chairman. Thank you, Secretary 
Sebelius, for being with us.
    I was interested in hearing what Mr. Miller was saying, and 
talking about all these wonderful things that have happened 
over using common sense. Just what is astonishing to me is that 
it has taken so long for the Department to be able to put in 
commonsense issues like this.
    It seems the Federal Government doesn't often care about 
costs until our backs are against the wall, and we ought to be 
caring about costs every day in every program. There should be 
accountability in every program every day, and it is 
disappointing to someone like me who cherishes common sense, 
that it has taken so long to get to this point.
    But let me get to my question now. I find it really 
interesting, Madam Secretary, that you and the President said 
over and over and over and over again that if you like it, you 
can keep it. You promised the American people that if they had 
health care, health insurance, that they could keep what they 
had.
    But we now know that, although you promised people to be 
able to be grandfathered in, the regulation that you published 
last year found that 60 percent of employers and 80 percent of 
small employers will lose their grandfather status by 2014. So 
what you said wasn't true because you have established 
regulations that were not in the law to guarantee that people 
can't keep their health insurance.
    So how do you reconcile what you promised with what you 
have put into effect, and the fact that that is going to cost 
so much more money as a result of it?
    Secretary Sebelius. Well, Congresswoman, I first of all 
share your concern that common sense doesn't always drive 
policy.
    The error report came out 10 years ago indicating we had a 
serious safety problem and, frankly, no one paid a lot of 
attention to it in the Medicare agency. And I am pleased that 
finally the the Affordable Care Act presented the platform to 
allow us to have the kind of regulation in place that moves in 
a brand-new direction.
    In terms of the insurance market, as you know, employer 
participation in the market is voluntary, and small business 
owners, and particularly individuals, move in and out on an 
individual basis. And you are absolutely right; the law doesn't 
mandate that employers who had a policy in place in 2010, when 
the bill was signed, must keep that policy in place. That is 
not part of the law, so they still have free will and free 
choice.
    What we did do was create a platform that said basically if 
you keep essentially the same kind of benefit package, if you 
don't shift a huge amount of costs onto your employees, if you 
don't dramatically cut the kinds of benefits that your 
employees now are able to access, then you are grandfathered in 
under the plan.
    And so it is really an employer choice whether or not the 
grandfather status is going to meet them on into the future or 
not. That is really the way the private market works. The 
employers come in voluntarily. They may or may not provide 
coverage.
    We are seeing actually, I think, some good news where small 
employers are beginning to reenter the market for the first 
time in a very long time. We were on a trajectory where if you 
work for a small company--and I certainly saw this as an 
insurance commissioner in Kansas, and I heard about it over and 
over again when I was Governor of Kansas--that the most 
vulnerable people in the marketplace were folks buying 
individual coverage and folks, farm families, and small mom-
and-pop shops who were in the small group market. And that 
market is beginning to stabilize, and I think that is very good 
news.
    Ms. Foxx. But, Madam Secretary, why don't you just leave 
free choice out there, period? It would be up to the employers 
to decide what they can afford to do and it would be up to the 
employees to decide whether they want to go on the private 
market themselves. Why not allow that free choice?
    You all on your side of the aisle have very limited issues 
on free choice.
    Secretary Sebelius. Well, I think, again, the platform of 
the the Affordable Care Act, Congresswoman, is that employers, 
particularly in the small market, have to look forward to a 
new, competitive, lower-cost marketplace. According to the 
Congressional Budget Office, they will have choices and the 
costs for those premiums will go down. They currently have very 
limited choices in the marketplace and often pay 18 percent to 
20 percent more than their large competitors just because of 
the size of their companies. So they will be in a large pool, 
they will have some choices.
    Individuals also will be able to purchase coverage and have 
some assistance purchasing that coverage if they are lower-wage 
workers if they don't have access to employee coverage.
    So we have a market that will be framed by States around 
the country. That doesn't exist right now and gives a lot more 
choice and a lot of cost relief to the most vulnerable folks in 
the marketplace.
    Chairman Kline. Thank you. Mr. Kildee.
    Mr. Kildee. Thank you very much.
    Madam Secretary, Head Start, when it was first authorized 
in 1965, placed the program in HHS rather than the Department 
of Education, because it was more comprehensive than just 
education, to include health and other social skills, among 
others. I was chief sponsor of the 2007 reauthorization of Head 
Start and we tried to enhance those purposes that we first put 
in in 1965.
    How has the fiscal year 2012 budget helped you in your 
efforts to bring these programs, integrate them together, the 
various purposes, beyond the purpose of education in the Head 
Start program?
    Secretary Sebelius. Well, Congressman, I think that the 
President certainly shares your belief that Head Start is a 
very important component of an early childhood framework for 
America, and that is why he has proposed an increase in Head 
Start funding as we move forward and the ability to serve 
additional children.
    I think also the notion that we have a very exciting 
opportunity with the passage of the 2011 framework, the Early 
Learning Challenge Fund, which will be housed in the Department 
of Education but participated in by HHS and Education, which 
actually is a kind of a mirror of ``Race to the Top'' for early 
childhood education, driving quality initiatives, aligning the 
kinds of standards and giving States the opportunity to really 
innovate in early childhood education.
    And what we are seeing around the country is that Head 
Start is no longer operating in a silo, but many Governors have 
put together broad-based early education Cabinets where the 
Head Start folks are very much at the table with the early 
childhood education folks, with the child care folks, which was 
almost unprecedented. And I know I did that, again, when I was 
in Kansas, but that is a mirror of what is happening.
    I think the integration of developmental skills, one of the 
features of Head Start that I think is very critical, that 
again needs to be incorporated into a lot of early childhood 
programs, is involvement of parents. There is a significant 
parental aspect to Head Start, where they participate in a 
child's education at the earliest point and hopefully that 
continues on.
    So there are a number of components which not only look at 
school readiness, but look at the whole developmental readiness 
of the child, that we are trying to improve and actually share 
with our partners in the education system.
    Mr. Kildee. Thank you very much, and I encourage you to 
encourage the Governors and those in the States to continue to 
do that. Thank you very much.
    Chairman Kline. The gentleman yields back.
    I am going to recognize Dr. Roe in about 3 seconds. And for 
everybody's information, his will be the last question as we 
head for the floor to vote. I am just alerting all the members 
of the committee.
    Dr. Roe, you are recognized.
    Mr. Roe. Thank you, Madam Secretary, for being here today 
and to let you know that my background is a physician 
practicing in Tennessee where we had an experiment with an 
expansion of our Medicaid program.
    And the first question I have is how many people will the 
Affordable Care Act cover, do you estimate right now, it will 
cover?
    Secretary Sebelius. How many new people?
    Mr. Roe. Yes.
    Secretary Sebelius. The estimates are in the 30 to 35 
million range.
    Mr. Roe. And it looks like that most of this expansion of 
coverage is just an expansion of Medicaid.
    Secretary Sebelius. Doctor, the data that I have seen, it 
is estimated about half and half. About half will be exchange-
eligible and about half will be Medicaid-eligible. So about 15 
million are likely to be Medicaid-eligible.
    Mr. Roe. Well, what CMS says is that 24.7 million will be 
added, an increase of 5 million, and these are Medicaid. And 
this is not me, this is CMS.
    And CBO estimates 8 million more than we had thought. Do 
you agree with those numbers, what CMS said, or what the CBO 
said about their estimates?
    Secretary Sebelius. Again, the numbers that I am familiar 
with are about half and half. So I am not quite sure what you 
are looking at or quoting.
    Mr. Roe. I will send some----
    Secretary Sebelius. Maybe who is uninsured; and there are a 
portion of uninsured that aren't assumed to be fully insured. I 
mean, I don't know.
    Mr. Roe. Well, I will get those in written form to you.
    Secretary Sebelius. Okay, thank you.
    Mr. Roe. Do you think this bill is simple or is it complex 
to understand, and have you read the whole bill?
    Secretary Sebelius. I have read the bill. I think it is 
very comprehensive because it deals with all aspects of the 
health care system.
    Mr. Roe. Let me get down to just some practical aspects of 
it.
    I have a practice that has about 350 employees, primary 
care doctors. We insure about 300 of them, and everybody is 
eligible, and we have done that for 40 years in our practice, 
very proudly have provided health insurance coverage, 
retirement, and so forth. Right now we pay about $5,500 per 
employee, or somewhere--it may be up to 6,000, I haven't seen 
the numbers for this year.
    If someone goes to the exchange and we decide to pay the 
$2,000 penalty, we save ourselves and our practice a million 
dollars. That is one little business.
    Another business in Tennessee that I have seen and talked 
to those folks, because we don't know what--I know someone, and 
this is another question I am going to have, is who defines 
what affordable care is, what is that, and what is in the 
package? This company will spend, they think, 40 million more 
dollars in their business, complying with these new 
regulations, or they can save $40 million by having those folks 
get their health insurance through the exchange.
    Now, we had a very good presentation--and you probably 
should read this from the Lofton Group. Mr. Brewer came in, the 
president of Lofton Group, and went over case example after 
example about why that will happen. So why wouldn't I do that 
under this situation? And like he said, most of his clients 
told him, I am not going to be the first to do this, but I am 
not going to be third.
    And, finally, what is going to happen is, you are going to 
have a debate between the chief financial officer and the HR 
people. I have done it around the table and find the chief 
financial people win.
    So tell me why that is not going to happen?
    Secretary Sebelius. Well, I think, Congressman, one of the 
things that assumes is that there is no advantage to a business 
owner for keeping great employees and tying those employees to 
the health insurance plan. And what we see right now is a 
voluntary marketplace where people have entered voluntarily. 
Your premise is based on the fact that that employer, you in 
this instance, or someone else, drops all employer coverage.
    Mr. Roe. But if you had--if you were over 200 employees 
now, which we are, almost all of them provide health insurance 
coverage right now. And as you see reimbursements, especially 
in our business with Medicaid going down and with Medicare--I 
hope I have time to get into Medicare--why wouldn't I do that?
    Secretary Sebelius. Well, again, I think that the exchanges 
are particularly being designed for small employers. You, in 
the instance of having the number of employees that you are 
talking about, are likely to be banned from initially entering 
the exchange because of the----
    Mr. Roe. With all due respect, they can.
    Secretary Sebelius. Pardon me?
    Mr. Roe. They can. I mean, I have read this. We can do 
that. If one person goes in there and we decide to drop--
anyway, that is fine. I am not going to get an answer.
    The other question I have is Medicare I am particularly 
worried about because health care decisions, I believe, Madam 
Secretary, shouldn't be made here in Washington, D.C. They 
should be made between patients and their families and their 
doctors, not by insurance companies and not the Federal 
Government.
    Secretary Sebelius. I absolutely agree.
    Mr. Roe. And my concern is we have just taken $500 billion 
out of an already underfunded Medicare plan, and your number is 
3.5, 3.3 million people we are adding per year, that is another 
30, 35 million in the next 10 years, with $500 billion less. 
How does that math work?
    Secretary Sebelius. Well, Congressman, as you have probably 
recognized, the $500 billion is a reduction in the growth rate 
of Medicare from what is estimated to be about 7.8 percent to 
closer--to over 6 percent. So it is not taking money out of the 
program, it actually is trying to slow down the cost growth 
without changing any of the guaranteed benefits. And, indeed, 
there are additional guaranteed benefits.
    I would suggest that the House-passed budget, the House 
Republican budget that suggested that vouchers are the 
appropriate goal for Medicare, and turning over Medicare 
patients to the private insurance market does nothing but shift 
enormous cost onto seniors in this country. You put an 
insurance company between them and their doctor.
    Chairman Kline. Madam Secretary, I hate to interrupt. Dr. 
Roe, the clock is demanding here. We--the committee is in 
recess.
    [Recess.]
    Chairman Kline. The committee is called back to order.
    By agreement with my colleagues, we are going to resume. I 
understand Mr. Miller will be joining us shortly, but I 
recognize Mr. Andrews for 5 minutes.
    Mr. Andrews. Thank you, Mr. Chairman, and welcome, Madam 
Secretary, to the committee. It is very, very wise, Madam 
Secretary, to be listening to Chiquita. I would too. She is a 
very able and wise young lady; and from the right State, I 
might add.
    Madam Secretary, one of the topics of the moment for the 
country is Medicare and how we should respond to the long-term 
bargain our country made with our seniors and persons with a 
disability in 1965. And that bargain, of course, was when the 
person retires or is adjudicated to have a disability, they 
will be guaranteed medical benefits, they will be guaranteed 
the choice of their own physician, and Medicare will pick up 
the lion's share of that bill.
    And that is a system that I think has worked very well for 
this country for a very long period of time.
    As you know, there are proposals that would, in my view, 
end that system. It would say to people 55 years and under that 
they are going to be into a very different system that is 
essentially a subsidy, an inadequate subsidy to buy private 
health insurance.
    A report that Mr. Miller spoke of earlier indicates that if 
one takes the gap which the Congressional Budget Office has 
identified between the premium support that the Republican plan 
would offer and the real out-of-pocket costs for health care 
for retirees and seniors, it would be about $6,000 a year; and 
for a senior to have enough money to cover that gap he or she 
would have to save nearly $200,000 out of their pocket before 
they retire.
    One interesting point of reference is that the average 
401(k) balance for a person when they retire in this country is 
a little less than $100,000 a year. So what that means is if 
you are a senior under the Republican Medicare plan, at least 
the one that existed until yesterday, and you emptied your 
401(k), it would only make up about half of what you need to 
pay your out-of-pocket health care bills, additional out-of-
pocket health care bills because of the Republican plan.
    Now I know that before you came here your experience as 
Governor back in Kansas generally gave you the opportunity to 
be an insurance market regulator. I wonder if you could tell us 
what you think would happen--in addition to this financial 
disaster, what you think would happen to people 65 and over and 
people with a disability if they were thrown into the private 
insurance market with this kind of inadequate subsidy? What 
would that mean to a senior citizen or a person with a 
disability?
    Secretary Sebelius. Well, Congressman, I have seen the same 
analysis that you have.
    First of all, Medicare as a program has one of the lowest 
administrative costs of any health program I would suggest in 
the world. So we know that, according to CBO, according to any 
economist, that the administrative costs of an average health 
insurer are significantly higher. So you take the same amount 
of dollars and you have less buying power if you are doing it 
through the private market than you do through Medicare.
    Secondly, to have a fixed dollar amount, as opposed to 
guaranteed benefits, I think is, as you suggest, a very 
different kind of commitment to seniors and leaves an enormous 
cost shift on to seniors and those with disabilities.
    Mr. Andrews. If I could just interrupt for a minute, what 
might that cost shift and lack of guaranteed benefit mean for 
an oncology patient or a person with cancer? Give me an example 
of what it might do there.
    Secretary Sebelius. Well, I think there is no question, if 
you take a snapshot, people will run out of money very quickly. 
And if you run out of the government voucher and then you run 
out of your own money, you are really left to scrape together 
charity care, go without care, die sooner. There aren't really 
a lot of options.
    But it is estimated according to the CBO analysis that by I 
think it is 2030 you would have about 70 percent of the cost of 
medical care shifted onto individuals. A pretty dramatic--right 
now, it is about 25/75, and that would flip pretty 
dramatically. And most people--a number of people, working 
families and others, don't have the wherewithal to come up with 
that kind of cash, particularly in their later years when they 
are likely to have more serious and more expensive care.
    Mr. Andrews. It is true, isn't it, that the Republican plan 
that was adopted by the House majority about 2 weeks ago really 
isn't a cost reduction plan, it is a cost shifting plan, that 
as health care costs go up, seniors pay more and Medicare goes 
away?
    Secretary Sebelius. I think the combination of the votes on 
repealing the Affordable Care Act, which would not only get rid 
of the new tools we have to crack down on fraud and abuse but 
limit the closure--eliminate the closing of the donut hole, go 
after some of the new guaranteed benefits, combined with the 
voucher program, would basically destroy the commitment to 
ongoing health care.
    As you say, one of the promises made in 1965--and a little 
personal anecdote--my father was actually on the Energy and 
Commerce Committee serving in Congress and helped write the 
Medicare law. He just had his 90th birthday, and he is pretty 
happy with those benefits right now.
    Mr. Andrews. We will tell Mr. Dingell that.
    Secretary Sebelius. Well, he served with Mr. Dingell, and 
he knows Mr. Dingell.
    Chairman Kline. So do we all.
    Secretary Sebelius. Indeed. But I think it is a very 
different kind of commitment that we would be making to 55-
year-olds about their future in the United States.
    Mr. Andrews. Thank you, Madam Secretary.
    Chairman Kline. I thank the gentleman.
    Mr. Walberg, you are recognized.
    Mr. Walberg. Thank you, Mr. Chairman; and thank you for 
joining us, Madam Secretary.
    As you may probably may already know, since 1992 the 
National Institute for Occupational Safety and Health and 
National Cancer Institute have been working on a study that 
determined the potential health affects of diesel exhaust on 
miners. Members of the mining industry voluntarily provide 
NIOSH with access and information to conduct this study.
    Initially, NIOSH agreed to share data with the companies 
and volunteered access and information. However, since that 
time, NIOSH has not honored that agreement on more than one 
occasion. As a result, Federal judges twice ordered NIOSH to 
share these materials with the concerned parties, which include 
this committee. Yet full compliance has yet to be seen. And so 
the questions I would ask, I would like to know why NIOSH has 
not complied with these orders of two Federal judges and would 
also like to know what assurances you can give me that the data 
will be released as required by the courts. In other words, 
basically, do you want NIOSH to comply?
    Secretary Sebelius. Well, Congressman, I must confess I am 
not familiar with either the studies that were done or the 
Federal cases, but I will commit to you that I will learn about 
them quickly and work with you to get you the information that 
you have requested. I just can't respond about why they haven't 
done it. I am not--I wasn't aware that they had not, but it 
will be something that I will----
    Mr. Walberg. But if the court has ordered this, I would 
hope I could conclude that you would want them to comply.
    Secretary Sebelius. Well, as I say, Congressman, I am not 
familiar with the situation. I will get very familiar with the 
situation, and I will get an answer back to you quickly.
    Mr. Walberg. I appreciate that.
    Secretary Sebelius. Yes.
    Mr. Walberg. Moving back to the Chairman's lead-off 
questions with Head Start, last year, the U.S. Government 
Accountability Office conducted an undercover investigation of 
15 Head Start programs, acting in response to tips from former 
and current employees at two separate Head Start centers. 
Undercover GAO applicants tried to enroll children in these 
programs and presented the centers with pay stub data that 
demonstrated they were above income eligibility requirements. 
Nine of the 15 sites enrolled the students anyway by 
encouraging applicants not to submit the pay stubs that would 
put them over the income threshold. Some of the programs 
continued to count students as enrolled, even though the 
students never actually participated in the program.
    At a May, 2010, hearing before this very committee, the 
Assistant Secretary for Children and Family stated that the 
Department was taking immediate corrective action and was 
undertaking a top-to-bottom review of its program oversight 
responsibilities. So the questions I would ask are these: Can, 
first, you give us an update on the Department's effort to 
combat waste, fraud, and abuse in the Head Start program? And, 
secondly, how many unannounced monitoring visits has the 
Department conducted since the release of the GAO report?
    Secretary Sebelius. Congressman, I, first of all, want to 
tell you that I share your dismay at the GAO report and, more 
than the GAO report, the practices that were under way; and we 
do take program integrity very seriously. In fact, I have for 
the first time created a Secretary's Program Integrity Council 
which operates across all of our agencies and departments to 
try and actually get out ahead of any practices, any lax 
oversight, any issues that we should know about.
    We did very quickly go into--first of all, we have had, I 
think I was told yesterday, 160 unannounced visits, to answer 
your question with some specificity; and those are ongoing 
efforts to make sure we are complying with that. We have 
conducted retraining of Head Start directors, we have issued 
new guidance on compliance with program integrity and 
guidelines, and reminded people about their legal 
responsibilities.
    We are recompeting, as I say, the--we put out a rule about 
recompeting the lowest 25 percent of the program. We are 
conducting overall reviews and ongoing training initiatives. 
But we are taking this very seriously, reminding people that 
these are taxpayers' dollars and being used to educate some of 
our must vulnerable children, and we want to make sure that 
that is exactly where the dollars go.
    Mr. Walberg. I appreciate that, and we will look forward to 
receiving fuller information on that. In a time of vanishing 
dollars for our education systems in my State as well as your 
State we can't suffer this to take place, so thank you.
    Secretary Sebelius. I agree.
    Mr. Walberg. Thank you, Mr. Chairman.
    Chairman Kline. I thank the gentleman.
    Mr. Payne.
    Mr. Payne. Thank you.
    Let me commend you on the outstanding job you are doing.
    I think one thing we need to keep in mind is that it is 
great that the United States of America has moved into the 
nations around the world of developed countries to provide 
universal health care. As you know, we were one of the only 
developed countries in the world that did not provide it.
    Let me just say about Head Start, we know it is a vital 
program. It helps to level the playing field for low-income 
preschoolers and improve academic outcomes. We know there are 
some problems striving towards a more perfect union, so to 
speak.
    In your testimony, you mentioned the Department's endeavor 
to strengthen the Head Start program, and I commend you for 
efforts as well as your continued support of childhood 
education in fiscal year 2012 requests.
    Our Republican colleagues propose a $690 million cut to 
Head Start this year, as you know, which would have removed 
130,000 low-income children and families from the program, 
closed 10,000 Head Start classrooms, and laid off 33,000 
teachers and related staff. This measure is contrary to our 
goals of increasing employment and strengthening educational 
outcomes. Thankfully, this measure did not become law.
    And our children, like a little fellow named Matthew in my 
district, sent me a constituent letter saying, Dear 
Congressman, it's my future, hands off Head Start funding. As a 
matter of fact, little Matthew had his little hand print to 
just keep your hands off our funding, so I have to have a 
meeting with him. I hope he doesn't come to a town hall meeting 
to run me out of the place.
    So we know that it is a very important, and so I really 
commend the administration and support your fiscal year 2012 
budget.
    Let me just say, in addition to proposing cuts for 
Medicaid, my Republican colleagues supported a spending plan 
that would turn Medicaid into a block grant program. Medicaid 
provides health care for the most vulnerable population--the 
elderly, disabled, children, low-income adults. Madam 
Secretary, can you explain the impact of this action? Would it 
have become--had other beneficiaries in the States if it had 
gone into effect?
    Secretary Sebelius. Well, Congressman, our analysis of the 
budget proposal is that, as you know, not only does it propose 
a block grant but there is a significant and very dramatic 
decrease in the funding level. So it is a fixed cap that 
decreases over time. And, frankly, again as a former Governor 
who administered a Medicaid program, one of the things that you 
can't anticipate is 2 years out what the economic downturn is 
going to do.
    So just a little bit of hindsight, if we had had a block 
grant in place for Medicaid recipients over the last number of 
years and the increase in services needed based on the number 
of people who lost their jobs, lost their health care, needed 
reliance on that, I think most States would have been in a 
very--a more dire situation than they are right now.
    As you know, the vast majority of the Medicaid population 
are children. The most expensive part of the population are 
older Americans who are poor enough to qualify for Medicare but 
often are in nursing homes. And you don't have a lot of--the 
people don't go away when the money goes away.
    So I have met with mayors and some governors and county 
supervisors and others who find this proposal to be very 
alarming, because they will still deal with folks coming 
through the doors of emergency rooms without care. They would 
be dealing with people in nursing homes without the support 
that Medicaid currently provides for that very critical nursing 
home care.
    What we think is a much more strategic way to deal with 
this is 5 percent of the Medicaid beneficiaries account for 
about 50 percent of the cost. They are the most chronically 
ill, often disabled. Many of them are getting very erratic 
care. They are often in two systems, Medicare and Medicaid, at 
the same time. And we are working very closely with States and 
with a proposal that is going to come out of our new center for 
innovations that will focus on the so-called dual eligibles and 
give States a lot of flexibility of using the best possible 
practices to coordinate care and actually drive those costs 
down. If we can cut those costs by 10 to 15 percent, States 
will save billions of dollars; and the Federal Government, 
frankly, will save billions of dollars.
    Mr. Payne. Thank you very much. I don't know if I have time 
for another question. It is still on yellow.
    Well, during the debate on H.R. 1, Republicans adopted nine 
riders intended to block implementation of all or components of 
ACA. If enacted, these amendments would have brought 
implementation of the ACA to a halt, eliminated benefits that 
people throughout the Nation are already enjoying, including 
many of my Republican colleagues and constituents. Can you 
quickly mention some of the benefits that already have been 
experienced as a result of ACA?
    Secretary Sebelius. Certainly, Congressman. I mentioned the 
children with pre-existing health conditions, which I think is 
a huge step forward for families who have been struggling with 
that, being locked out of the insurance market for years. We 
have already seen the reports of just the last month are that 
hundreds of thousands of young adults are now covered. One of 
the most uninsured populations in the United States is now 
coming into the marketplace, thanks to the provision that 
allowed young adults to stay on a family policy for an extended 
period of time.
    We know that seniors are beginning to get relief from their 
prescription drug benefits. A number of them got the one-time 
$250 check, but this year they will have a 50 percent decrease 
that is going into affect; and, at the same time, they are 
experiencing lower rates on Medicare Advantage plans, thanks to 
the negotiating power that the ACA provided for us.
    There is a new bill of rights for patients that ensures 
that new plans have preventive health care, that new oversight 
powers for State insurance departments to do rate reviews, the 
medical loss ratio goes into effect this year. So $0.80 of 
every health care dollar has to be spent on health costs and 
not overhead and CEO salaries. Those are just kind of snapshots 
of what is beginning to be under way. The preexisting condition 
plan, where we now have 18,000 Americans who had been locked 
out of the market are now able to buy market-based coverage and 
really often in life-saving situations.
    Mr. Payne. Thank you.
    Chairman Kline. The gentleman's time has expired.
    Dr. DesJarlais, you are recognized.
    Mr. DesJarlais. Thank you, Mr. Chairman.
    Secretary Sebelius, thank you for being here today.
    Like my colleague from Tennessee, I am also a physician. 
Prior to coming to Congress in January, I practiced primary 
care medicine for the past 18 years in Tennessee and was also 
witness to the failed attempt at a government-run model in the 
State or Medicaid program, was known as TennCare. I would love 
to discuss that, but I think right now what is on a lot of 
people's minds is the issues with Medicare. So I would like to 
start with that.
    Would you agree that Medicare is an example of government-
run health care?
    Secretary Sebelius. Congressman, Medicare provides for----
    Mr. DesJarlais. Yes or no on that one. Is it run by the 
government?
    Secretary Sebelius. Yes.
    Mr. DesJarlais. Okay. Are you in agreement with my 
colleague across the aisle that said Medicare has been doing a 
great job for many years now, 40 plus years?
    Secretary Sebelius. I think it has delivered essential 
benefits to seniors for 40 plus years, yes, sir.
    Mr. DesJarlais. I just want to share a few concerns that 
have been brought forth to us in the past few months.
    One of great concern is that the CBO has estimated that the 
program will be bankrupt in 9 years if left unchanged. So when 
we get challenged that our attempts to make changes to this 
program to secure it and protect it for future generations, 
sometimes I take issue with that.
    Also----
    Secretary Sebelius. You know, Congressman, the slowdown and 
the cost grow was estimated to add a number of additional years 
onto the Medicare trust fund. That was provided by the ACA.
    Mr. DesJarlais. We are going to get into that, because we 
are going to talk about slowdown and cost grow. But, also, as 
you stated, we are entering 9,000 new members into the Medicare 
program each day or roughly 3.3 million per year. So we are 
greatly expanding the program, and we are talking about 
bringing down costs. And it is obvious this is a great thing. 
Just back from the '70s you all remember the average life 
expectancy was much less. We are all living 10 years longer 
than we were just a few years ago. But that also has to be 
accounted for. We have to pay for that. That has been 
occurring. Baby boomers, as we mentioned, are coming through 
the program now. So we have huge volume issues.
    Also, it is noted that right now that an average family, 
average couple that makes about 43,000 a year per person has a 
Medicare tax liability over a lifetime of approximately 
$100,000. But yet the average utilization for the same couple 
is about $300,000, so we have a 3 to 1 ratio there. And all 
those things kind of point towards disaster, especially when we 
talk about bringing more people in, yet we are going to reduce 
cost and somehow we are going to maintain quality of care.
    What would be your concerns, based on those facts I just 
gave you.
    Secretary Sebelius. Well, I think that there are ways that 
certainly health care providers have suggested that we can 
reduce costs, not tamper with the guaranteed benefits, and 
deliver better care at the same time. And that is really the 
strategy of looking at the underlying rise in health care 
costs. Whether it is Medicare or the private insurance market 
or somebody whose paying out-of-pocket, the trajectory of 
health care costs, paying more for everything that we are 
doing, continues to rise at well above the rate of inflation. 
And yet, as you know, Doctor, in the United States our health 
results don't show that kind of expenditure. We are not getting 
the kind of health results we should get. So I think there are 
all the kinds of delivery systems.
    Congressman Miller mentioned just one----
    Mr. DesJarlais. I don't mean to interrupt, but we have so 
little time.
    One of the things that was----
    Secretary Sebelius. I would like to get you that answer in 
writing.
    Mr. DesJarlais. Thank you, ma'am. I would appreciate that.
    One of the plans when ObamaCare was passed on Christmas Eve 
in the middle of the night was that physicians were going to 
assume a 21 percent cut in Medicare. Is that still your intent?
    Secretary Sebelius. As you know, the President has 
suggested since he came into office that the SGR has to be 
fixed permanently. He has proposed again in the 2012 budget 
that it be fixed. He has got 2-and-a-half years of offset and 
looks forward to working with Congress to fix it.
    The SGR I think remains as a major barrier to Medicare 
beneficiaries, predated the Affordable Care Act, continues to 
be an issue that I look forward to working with Congress to 
fixing.
    Mr. DesJarlais. In your testimony, I am reducing health 
care costs and increasing quality--you mention several times 
these innovation centers. You are going to pursue whenever 
possible new approaches that will improve quality of care and 
lead to savings. As I read through this, I see a lot of 
assumptions and theories, but I don't see anything based on 
fact.
    What exactly are innovation centers and how can you assure 
the American people when the health care system as we know now 
is going bankrupt that we should just take a blind leap of 
faith is that these things are going to work?
    Secretary Sebelius. Well, there is one innovation center 
umbrella, and there are already some programs that have been 
put out in terms of regulation. So the accountable care 
organizations is an opportunity for health care providers to 
voluntarily come together around the care delivery system 
focused on Medicare beneficiaries. And if indeed there are 
savings achieved, they get to share in those savings. If there 
are no savings, it is a net wash. We don't expend additional 
funding. There is enormous enthusiasm among hospital systems 
and providers groups for doing just that.
    Mr. DesJarlais. You agree these are unproven, untested 
theories?
    Secretary Sebelius. They have never existed before.
    Chairman Kline. The gentleman's time has expired. I thank 
the gentleman.
    I am looking at the clock, and we have less than an hour 
before the Secretary has to leave, so I am going to be a little 
bit more stringent on the 5-minute clock in order to give all 
of our colleagues a chance to ask questions.
    Mr. Grijalva, you are recognized.
    Mr. Grijalva. Thank you, Mr. Chairman; and thank you, Madam 
Secretary, for being with us.
    First, an acknowledgement. Then I will raise a request and 
just one question.
    The acknowledgment is to your staff. They have been very 
attentive to our office, and we appreciate that very much. Some 
of the questions that came up regarding the waiver process in 
Arizona, they have been very diligent about communicating with 
us and giving us the information. We are very appreciative of 
that. We have been persistent, and they have been equally 
gracious, and so I appreciate that.
    The concern I have is some of the proposed regulatory 
changes to Head Start and early Head Start. I am concerned 
there could be an impact on dual-language children. As you 
know, this group of children, Latinos in particular, have a 
proportionately low enrollment in Head Start and early Head 
Start. As you work through those regulatory changes to diminish 
fraud and abuse within those programs that should be 
eliminated--my office looks forward to working with you so 
there is no unintended consequences relative to the 
participation of those children that desperately need to be 
part of that program.
    Secretary Sebelius. We would look forward to that.
    Mr. Grijalva. A question just for historical purposes. Talk 
about, if you would, talk about what you perceive to be the 
original objectives of the Medicaid Act.
    Secretary Sebelius. The Medicaid Act was clearly aimed at 
providing health care services for some of the most vulnerable 
Americans. Those who are the lowest income, children, pregnant 
women, the disabled who qualify for Medicaid are primarily the 
beneficiaries of that program.
    Mr. Grijalva. Thank you----
    Secretary Sebelius. And a partnership with State and local 
government to deliver those services.
    Mr. Grijalva. And I ask that question because those 
objectives continue to be I think the guiding principle behind 
Medicaid. But do you feel that some of the current attempts by 
the majority in the House to change the program by rolling back 
eligibility, the block grant process, making it more difficult 
for those vulnerable populations to get access to health care 
both at the State level and at the Federal level, how do they 
match up with those objectives?
    Secretary Sebelius. Well, Congressman, I am very 
sympathetic to my former colleagues who are governors around 
this country and are in very tough budget times. And balancing 
a budget is never easy. Medicaid nationally is about 16 percent 
of State budgets, and it is always something to look at.
    We have been very diligent, working with States, around 
giving maximum flexibility within the law, working on sharing 
the best practices. We have got a lot of new governors who have 
not been in that office before, and we have sent teams into 20 
different States to work on what their snapshot looks like in 
ways to save dollars.
    I think the administration is continuously committed to 
providing health care services to those very vulnerable 
populations. We want to do it in the most cost-effective and, 
frankly, the most high-value method possible, and that isn't 
going on in every State around the country. So what we can do 
is work with States to try and figure out ways to stretch those 
dollars but provide those essential services.
    Because the folks aren't going to go away. If the Federal 
Government decides to shift costs, they just shift on to 
States, to local governments, and, ultimately, on to people who 
end up on the streets or in a jail or under a bridge because 
they don't have the support system that they need to stay 
healthy and stay productive.
    Mr. Grijalva. Thank you.
    In the collaboration with the Education Department around 
Head Start--because Head Start is more than education. It is a 
whole child program. And one of the discussions I think is 
important, if I may suggest, is programs like Even Start that 
extends that literacy to the whole family. One of the programs 
that Education has indicated that they want to eliminate is 
part of a component that I think merits discussion.
    And thank you very much. I yield back.
    Chairman Kline. I thank the gentleman.
    Dr. Bucshon, you are recognized.
    Mr. Bucshon. Thank you, Mr. Chairman; and thank you, 
Secretary Sebelius, for being here today.
    I am also a physician, cardiothoracic surgeon for the last 
15 years. I have a bunch of questions, so I will try to brief.
    You stated that Congressman Ryan's plan puts seniors on the 
open market. Are you aware that it is designed after the same 
type of health care plan that Members of Congress currently 
have? And would you call that the government putting Members of 
Congress onto the wide-open private health care market?
    Secretary Sebelius. Yes. I mean, you are in a negotiated 
Federal Employee Health Benefit Plan----
    Mr. Bucshon. What I am saying is----
    Secretary Sebelius. You don't have a fixed amount of 
money----
    Mr. Bucshon. Do I have to go to my local insurance agent 
with government money and pick my health care plan? Or do I 
have a book about this thick with a multitude of options from 
which I can choose that have had--let me finish--that have had 
negotiated rates that are competitive because to participate in 
a program as a health insurer you have to be competitive?
    This is the same proposal that Chairman Ryan has for 
seniors, and it is clearly deceptive to say to the American 
people that this is putting seniors into an open health care 
market when in fact you know that that is not true.
    Secretary Sebelius. Well, I do think it is putting 
seniors--right now, they can choose a doctor, they can choose a 
program----
    Mr. Bucshon. So can I, actually.
    Secretary Sebelius. And do multiple--in an insurance plan, 
often the doctor is chosen for you, the health plan is chosen 
for you.
    I would suggest also, though, Congressman, one of the key 
differences is the Federal Government is a much more generous 
partner to Members of Congress in the Federal employee health 
plan than Congressman Ryan suggests to be the seniors in the 
plan that they would go into. Their voucher system has a much 
lower buying power that the Federal employees do right now. It 
in fact decreases over time, according to the Congressional 
Budget Office. So rather than having the lion's share of the 
program paid for by the Federal Government, you would actually 
have the lion's share of the program paid for by seniors.
    Mr. Bucshon. Well, I think that is still to be elucidated, 
and I disagree with that premise.
    Secretary Sebelius. That is not my analysis. That is the 
Congressional Budget's analysis.
    Mr. Bucshon. Let's move on.
    You talk about Medicare savings and the Affordable Care Act 
being against future growth. And you are aware that the 
Medicaid proposal to the States for block granting, that what 
you are calling cuts is actually also savings against an 
unsustainable growth rate and has actually what you describe as 
not cuts to Medicare but preventing further growth and that the 
block grants are the same thing and that it would be deceptive 
to say that this is actually a cut in the Medicaid program if 
you are calling it savings in the Medicare program under the 
Affordable Care Act. It is the same thing, right?
    Secretary Sebelius. Well, the block grant is really the 
administration of the program which, if I understand it 
correctly, would get rid of the direction to protect vulnerable 
populations. So States basically could pick and choose who to 
cover and who not to cover. The fixed----
    Mr. Bucshon. Excuse me, they have that ability now, don't 
they?
    Secretary Sebelius. No, sir. There are some mandatory 
populations in Medicaid that they cannot drop.
    Mr. Bucshon. Okay. I want to move on to is a different 
subject.
    NIOSH is under your jurisdiction in HHS, and under certain 
responsibilities to the Federal Mine Safety and Health Act of 
1977 they are the technical advisor to MSHA, mine safety. 
Recently, MSHA has proposed a new rule on coal dust limitations 
within underground coal mines. And my dad, by the way, was a 
United Mine Worker for 37 years. We have asked for the 
background medical information from MSHA and from others, and 
they have said that that is being denied by Health and Human 
Services because of patient privacy regulations.
    And, first of all, is that true? Is that the reason why 
this committee----
    Secretary Sebelius. Congressman, I really have no--you are 
saying this is a mine safety standard?
    Mr. Bucshon. It is a coal dust mine safety standard. They 
are trying to cut the standard down under MSHA.
    Secretary Sebelius. I would be delighted to get you a full 
and complete answer. I really have no idea.
    Mr. Bucshon. Mr. Main also told me he would give us the 
medical background information on that, and we haven't seen it 
yet.
    Secretary Sebelius. Mr. Who?
    Mr. Bucshon. And he is saying that that is because Health 
and Human Services with NIOSH is denying that because it is 
private health information that you can't give under HIPPA 
regulation. But we publish medical studies every day with 
groups of patients.
    Secretary Sebelius. As I say, Congressman, I will talk to 
Dr. John Howard, who heads NIOSH, and get you a full answer. I 
don't know about the mine safety regulation.
    Mr. Bucshon. What I would appreciate is if we could get the 
information from NIOSH, giving all of the background on the 
proposed rule that they submitted to MSHA that justifies this 
change in a long-standing regulation which in my view has as a 
physician has no medical solid information that is necessary. 
And let me say in my district in Indiana would be devastating 
because of the many coal mines and others in my State would 
likely not be able to comply and may have to close, again 
resulting in a significant amount of job loss. I would 
appreciate that information.
    Chairman Kline. The gentleman's time has expired.
    We can take that for the record. It is a follow-on 
question.
    Secretary Sebelius. I would be glad to. Thank you.
    Chairman Kline. Ms. Woolsey.
    Ms. Woolsey. Thank you, Mr. Chairman.
    I thought I would take the opportunity before I ask our 
wonderful Secretary a question to respond to the gentleman from 
Tennessee in his question of how the Republicans could be 
challenged over their proposal to privatize Medicare.
    The answer is simple. And the answer is, when their plan 
increases the tax cuts for the wealthiest Americans, when oil 
companies continue to get tax breaks and subsidies, when 
corporations, successful corporations, pay absolutely no taxes, 
they are proposing to privatize Medicare and at the same time 
asking seniors to take a blind leap of faith that, by 
privatizing Medicare, the private insurers will actually take 
care of the senior citizens in this country. And that is why 
there is so much pushback to their proposal.
    So now I want to go to my question which has to do with--
you mentioned, Secretary Sebelius, a healthy development of all 
of our children, which of course I support 100 percent. And I 
think part of that healthy development is ensuring that when 
they enter the classroom they are well, their mental and 
physical health is being cared for. Otherwise, these kids can't 
learn. They can't succeed.
    Well, last week, the House voted to eliminate funding for 
the construction of school health centers, under the pretense 
of the Republican bill that there are other sources of funding 
laying around this country that could pay for these school 
health centers. So you know better than I do that 8 million 
children lack access to any primary health care, and they need 
this in order to get through school. So could you expand on the 
value of investing in school health systems and what that means 
to the future of our children and our country?
    Secretary Sebelius. Well, Congresswoman, we are doing two 
things right now to expand access to coverage for children. One 
is to take advantage of the opportunity given by the CHIP 
reauthorization of 2009 to do some very extensive outreach. We 
think there are likely still about 5 million children who are 
eligible but not enrolled. So we have a very robust outreach 
effort going on with school districts and health care 
providers, using sport stars and coaches, others, to try and 
reach the parents and enroll those kids.
    But there is no question I think that one of the most 
effective strategies is actually, since schools are often in 
the hearts of neighborhoods, that a school-based clinic not 
only deals with the children's health needs but often the 
family health needs of the neighborhood. So the Affordable Care 
Act designated as one of the sites for expansion of community 
health centers school-based clinics, which was a recognition 
that moving into underserved areas, outreach in a very easy way 
for people to access health services was often very productive 
and certainly for parents and children to access services 
together is very effective.
    So I think that the funding goal of expanding the school-
based health clinic footprint was a wise strategy to make sure 
that we are reaching into many of these underserved communities 
and figuring out ways to have accessible health care during the 
time that families would most likely be able to access health 
care providers.
    Ms. Woolsey. So can you think of any pockets of funding 
where there are excess monies that could be--without our 
funding these school-based health centers?
    Secretary Sebelius. Well, we are embarked on an expansion 
of the community health center footprint. Unfortunately, that 
got decreased a bit by the CR 2011, but we will continue I 
think to do that. Because community health centers actually 
have been proven over and over again to be enormously effective 
in lower-cost, high-quality preventive care. And if we want to 
stop paying $0.70 out of every health dollar on chronic 
disease, getting to conditions very early and certainly getting 
to kids very early. You don't learn well if you are not 
healthy. You can't study in school if you are not well. So 
getting a productive workforce starts with having highly 
educated kids, and kids won't be well educated unless they are 
healthy.
    Ms. Woolsey. Thank you.
    Chairman Kline. The gentlelady's time has expired, and I 
was so hoping the Secretary could identify one of those 
untouched pots of money.
    Secretary Sebelius. If I find it, I will tell you, Mr. 
Chairman.
    Chairman Kline. I will hold you to it.
    Mr. Kelly, you are recognized.
    Mr. Kelly. Thank you, Mr. Chairman.
    I would like to yield my time to my colleague, Dr. Roe.
    Mr. Roe. I thank the gentleman for yielding.
    Madam Secretary, I think we could have approached--and I 
read the bill as you did. It is a hard read. And I think we 
could have approached getting where you wanted to be by doing 
exactly one of the things you just said. Which if we go sign up 
the young--the children, 5 million of them I think was what you 
said who are currently eligible for SCHIP, the people who are 
currently eligible for Medicaid--and the part about the bill I 
like a lot is to allow your adult age children pick your 
number--25, 26, or 27, you could have covered almost as many 
people doing those two things as you are talking about doing 
right now with a 2,500 page bill and is so complex that nobody 
understands it. I just want to make that point.
    I want to get into something near and dear to my heart, 
which is my fear of rationing of health care.
    The Independent Payment Advisory Board, as you know, was 
not in the House version of the Affordable Care Act. It did get 
in the Senate version. And many of my colleagues on the other 
side of the aisle opposed this. How do I go answer to my 
constituents and to patients at home that I have been seeing 
that, okay, we are going get to a certain spending level, and 
not based on quality we are going to make a decision about how 
the money is spent. How is that not going to affect rationing 
of care in the future, when you have more services chasing 
fewer dollars, which is exactly the train wreck I see coming.
    Secretary Sebelius. Well, Congressman, the way the 
Independent Payment Advisory Board is set up is it is 15 
individuals who have to have expertise as either health care 
providers or health economists, experts in health who actually 
are forbidden by law to ration care. That is part of the 
statutory framework.
    Mr. Roe. Let me stop you right there. Who ends up rationing 
it is me when I can't give it in the examining room. We have 15 
bureaucrats appointed up here. It is not called rationing, but 
when you get up to a certain dollar limit and you can't spend 
any more money, you can't provide the service. So I am in my 
examining----
    Secretary Sebelius. Well, I would share your dismay about a 
fixed-income level, and that is exactly what the House budget 
proposed for Medicare. We will give you a fixed amount of 
money, and you figure out what services you get. That is not 
what the Independent Payment Advisory Board is about. It is 
about making recommendations for strategies, for new services, 
for new----
    Mr. Roe. I beg to differ.
    Secretary Sebelius [continuing]. Research and that comes to 
Congress. Congress has the intermediary role with--the 
Independent Payment Advisory Board's recommendations do not go 
into effect unless Congress chooses to allow them to go into 
effect.
    Mr. Roe. They do go into effect unless we pick some other 
way to----
    Secretary Sebelius. Unless you say no.
    Mr. Roe. Exactly. No, unless you pick some other way not to 
spend the money, it is going to end up--I am certainly very 
familiar with NICE in England. The National Institute of 
Clinical Excellence is exactly the same type board.
    So you would support the IPAB when most of the Congress on 
the House side did not support the IPAB, including my 
colleagues on the other side of the aisle. As a matter of fact, 
several of them have signed onto a bill to repeal that, 
because----
    Secretary Sebelius. I do very much support the notion that 
we would have an independent group making recommendations about 
cost-effective strategies. We have it now.
    Mr. Roe. It is an advisory board now.
    Secretary Sebelius. It is an advisory board. It would 
continue to be the Independent Payment Advisory Board. The 
recommendations would come to Congress--and, again, they are 
not implementing medical decisions, and there is no global cap 
that they are working under. And, again, I----
    Mr. Roe. I think we have a difference of opinion there.
    A question I have on the Mini-Med plans. Why were 1,100 
exemptions given? And what will happen to them after those 
exemptions expire? When they can't afford the government-
decided plan, what happens then?
    Secretary Sebelius. Well, Dr. Roe, the waivers are a part 
of keeping your plan in at least the time between now and the 
new marketplace in 2014. Unfortunately, lots of people have 
some form of coverage that often is not very comprehensive, and 
they are in a situation where currently in 2011 and 2012 and 
2013 something is better than nothing.
    So the Congress directed us to take a look at the one 
provision of the plan that talks about getting to an annual 
limit that would cover comprehensive medical expenses, but 
suggesting that if indeed a plan can't meet that annual limit 
without major disruption in the marketplace between now and 
2014 when there is a new exchange, a new opportunity to buy a 
comprehensive policy at lower cost, that we should indeed look 
at waivers.
    And basically 97 percent of the folks who came in the door 
who gave us the documentation saying we can't get to this point 
because we have such, frankly, low coverage and modest 
applicability we decided that some coverage was better that no 
coverage. And those plans will not exist after 2014.
    Mr. Roe. I yield back. I recommend you read this.
    Chairman Kline. The gentleman's time has expired.
    Mrs. Davis, you are recognized.
    Mrs. Davis. Thank you, Mr. Chairman; and thank you, Madam 
Secretary, for being here today and for your service as well.
    As you are aware, this week the majority singled out and 
cut funding to create insurance exchanges where Americans could 
go to buy affordable coverage without discrimination. And we 
know in California--and thanks to Governor Schwarzenegger in 
this--California has been one of the first States really to get 
out of the gate essentially to establish the exchanges. So when 
it comes to States like California that are already in the 
middle of this process, what kind of difficulties do you see as 
a result of cutting off the funding that this action would 
actually cause?
    I am also wondering how the effort would block funding for 
health exchanges across the country. Would there be some delays 
and what impact is it likely to have on reducing the number of 
uninsured Americans?
    Secretary Sebelius. Congresswoman, if the provision passed 
by the House would be passed by the Senate and signed into law 
by the President, I don't think there is any question that 
there would be serious inability of States to move forward with 
creating a new marketplace, particularly for small business 
owners and individuals who currently are not only paying more 
but many of them are uninsured.
    We are actually working with governors around the country 
to set up State-based exchanges and the resources are being 
used to do everything from planning to put together IT systems 
so that you would have a seamless way to come into a market as 
an uninsured American, with the goal being that every American 
should have available, affordable health insurance. Whether you 
end up as a Medicaid beneficiary in a private market, an 
employer market, that that is the goal to have a fairly 
seamless system.
    Defunding the exchanges would mean that we freeze the 
status quo where more and more Americans every year are 
uninsured, where insurance rates continue to rise at an 
alarming rate and families and small business owners would face 
either increasing costs or bankruptcy for health conditions 
which they have no insurance to pay for.
    Mrs. Davis. Is it anticipated that there would be a delay 
in this, perhaps a few years, or that they would actually be 
frozen in place?
    Secretary Sebelius. Well, if the funding goes away, I 
really don't know--take the case of California--how indeed 
California would put together an exchange system that would be 
operational by 2014. So I think it stops the process unless 
they find some of that money that we are looking for to fund 
the school-based health clinics that we haven't found yet. If 
that appears, we could do this. But, absent that funding 
stream, I think most States would just stop working on the 
exchange program.
    Mrs. Davis. Thank you very much. I appreciate that.
    I think that we want--at least in California I know they 
are continuing to have these intense discussions, as you noted 
earlier, in terms of the accountable care organizations and 
others. It certainly is impacting those discussions, but we are 
hoping that they at least will continue to have them.
    I wanted to also just mention briefly the disease 
prevention issues that we are all I think very concerned about. 
Certainly singling out the national diabetes prevention program 
as well, building on evidence-based methods, give individuals 
at risk guidance on how to prevent type II diabetes. That is 
eligible for funding from the Prevention and Public Health Fund 
at HHS. And so are you saying that this issue is really going 
to be established as a national priority in many ways? And how 
does that dovetail with the work that you are doing with this?
    Secretary Sebelius. Well, I don't think there is any 
question that the historic investment in the prevention fund is 
one that we see yielding significant dividends as you go 
forward.
    Again, the snapshot right now is $0.70 out of every health 
dollar is spent on dealing with chronic disease. If we indeed 
can lower the smoking rate, if we can have a healthier 
population heading into their 50s and 60s by significantly 
making a dent in everything from diabetes to heart disease, we 
will have dramatic impact on not only the health costs of this 
country but on the health of this country.
    So lower costs, better health is the goal of the prevention 
fund. And we have some very exciting programs under way across 
this country in tribes, in farm communities, in cities that are 
really looking at measurable ways to change behavior, to change 
practices, knowing that that is an enormously important step. 
If we can have a healthier population, invest in primary care 
and prevention, we wouldn't be spending the dollars that----
    Mrs. Davis. As a member of Armed Services, it is also a 
national security issue.
    Chairman Kline. The gentlelady's time has expired.
    Mr. Ross.
    Mr. Ross. Thank you, Mr. Chairman.
    Madam secretary, thank you for being here.
    I want to address health care and jobs, because we note 
that with the mandates that are in the Patient Protection and 
Affordable Health Care Act there is going to be some burdens 
put on employers here. Specifically in the area of service 
industries in the last 10 years they have been the most 
predominant and most productive types of jobs we have seen in 
Florida--agriculture, retail, restaurants, hotels--intensely 
labor but low profit per employee.
    My concern is that that when we understand there is going 
to be a per employee cost of about $2,000 for health care that 
is going to be have to be provided by these employers, these 
employers may not be able to continue to either keep the 
employment that they have, won't be able to expand. While I 
appreciate that in the Act there are exemptions for employers 
with 50 or fewer employees, my specific question is, would you 
consider exemptions based on a low profit per employee?
    Secretary Sebelius. Well, Congressman, we are working 
within the framework of the law, but my experience is that, 
currently, most employers who talk to me and particularly most 
employers who are struggling in the marketplace find health 
insurance to be the best way to keep talented employees----
    Mr. Ross. I agree. But when it becomes a cost that exceeds 
what the market will bear, they are either going to have to 
release employees or scale back their time.
    Secretary Sebelius. But right now they are competing 
against folks who often are playing on an unlevel playing 
field. Often, the big employers can find health benefits, and 
they are losing their best workers going down the street or 
around the corner. I would suggest this creates a framework, 
and the lowest income employees actually gets help with 
subsidies in the exchange program that they currently don't 
have. So it is kind of a win/win.
    Mr. Ross. You think then that the lower employees--the 
lower-income-earning employees? But if it is mandated that the 
employer provide the coverage and their coverage is $2,000 per 
employee and they only have a margin of $2,400 per employee, 
that margin is going to be reduced to $400. So these are the 
businesses that will be most concerned about the impact of this 
care, this Act.
    Secretary Sebelius. Again, I am not sure we are talking 
about a large employer who----
    Mr. Ross. It would have to be more than 50.
    Secretary Sebelius. If a large employer is not providing 
coverage and has an employee who then takes access of the 
coverage in the exchange, there will be an employer 
contribution to help pay the taxpayer burden that is being 
picked up. A small employer will be able to participate in the 
exchange and have an opportunity to get lower cost coverage for 
employees that they are not covering right now.
    Mr. Ross. Let's talk about the exchange for a second. 
Because I appreciate the fact that, as a former insurance 
commissioner, you understand the dynamics of insurance and the 
markets of insurance. And of course the private companies sell 
insurance for a reason, to make a profit, but they do so with 
private capital. That is what is going to back the risk that 
they insure. And that capital is global. They get it from 
certain areas. They don't consolidate their risk, and it is 
actuarially assessed in terms of their risk.
    But when the government gets in the business of insurance, 
they don't have that capital. What they have is assessments and 
taxes with which to go after to satisfy any claims. 
Unfortunately, in the assessment of that risk, it is more 
politically assessed, as opposed to actuarially assessed.
    So that being said, would you not agree then that when the 
government gets in the business of insurance that what they are 
putting at risk are taxpayer dollars and assessments as opposed 
private capital that is spread globally?
    Secretary Sebelius. I would say there is certainly more 
taxpayer dollars involved in the government-based plans, but I 
would also suggest that private insurers right now participate 
actively in Medicare Advantage programs. Most States run their 
CHIP programs through the private market. They are Medicaid 
beneficiaries. So there is not a line drawn between government 
plans and the private market.
    Mr. Ross. There is, though; and I think that is something 
we have to talk about. If we are going to talk about health 
insurance, because our President said at the outset of his 
lobbying on this bill that we had a health insurance crisis. 
And, as you know, each State under the McCarran-Ferguson Act 
regulates their insurance market. We have got fewer insurance 
companies in the State of Florida because of mandates in 
Florida, fewer in Alabama, but yet we have over 1,200 insurance 
companies who want to sell throughout this country. Would you 
not agree then that for consumers, for a market that wants to 
be based on capital and not taxpayer dollars supporting it, we 
should open up the barriers and allow for the interstate sale 
of health insurance?
    Secretary Sebelius. Congressman, as you know, companies can 
now sell in any State that they want. They have to be licensed 
by the State and have to follow the State laws, but----
    Mr. Ross. But they have a different mandates. In other 
words, you have got 51 mandates in Florida. You may have three 
in Alabama. You may have so many more in Pennsylvania.
    Secretary Sebelius. The elected legislators in Florida pass 
laws that the governor signed. That is the Florida----
    Chairman Kline. The gentleman's time has expired.
    Mr. Scott. Thank you, Mr. Chairman.
    Madam Secretary, just a quick civil rights question. Is it 
possible for any sponsors of programs run in your Department of 
private organizations to get grants to run programs to 
discriminate based on religion? That is to say, you would have 
been a good applicant for this job, but we don't hire people of 
your religion. Is that possible?
    Secretary Sebelius. To my knowledge, that would violate the 
civil rights umbrella that we operate under, Congressman.
    Mr. Scott. So that if a faith-based organization were 
running a program and said we don't hire Catholics, Jews, or 
Muslims, you wouldn't think they could get funded under your 
administration, do you?
    Secretary Sebelius. To my knowledge, no.
    Mr. Scott. Thank you. Under the essential benefit 
definition of--under the ACA, it is my understanding that the 
Institute of Medicine is currently working on recommendations.
    In terms of children, the EPSDT program under Medicaid is 
considered a good standard for care for children. Would it be 
your recommendation that that be the essential benefit package 
for children under policies under ACA?
    Secretary Sebelius. Well, Congressman, the way that 
actually the essential benefit portion of the discussion is 
framed in the ACA, there are multiple steps. The Department of 
Labor has just given us the results of a survey that they did 
on private-market plans, the typical benefits in a private-
market plan, looking at large employers and small employers. So 
that is a step mandated by the law.
    What the Institute of Medicine is doing is sort of step 
two, which is looking at the process for putting together an 
essential benefit package and how often that criteria would be 
updated.
    Step three is really for HHS then to do extensive listening 
and outreach to everybody from provider groups to disease 
groups to patient advocates in terms of getting input on what 
an essential benefit package should look like, and then a rule 
will be promulgated. So IOM is actually really more on the 
process side. They are not doing the health benefits side.
    Mr. Scott. The EPSDT package of benefits, do you consider 
that something worth recommending?
    Secretary Sebelius. Well, I think it certainly sets a 
standard for an effective package for children; and, currently, 
the Affordable Care Act would say that the preventive care that 
is offered needs to be part of all insurance policies going 
forward if it is recommended as part of the prevention 
protocol.
    Mr. Scott. The GOP budget makes certain spending cuts--Pell 
Grants, education, transportation like high-speed rail, law 
enforcement, Food and Drug Administration--a list of cuts that 
total about $800 billion, which they totally offset with 
extending tax cuts for that portion of your income over 
$250,000. So that is a complete wash.
    All of their net savings come from Medicare and Medicaid, 
cuts in those program. Are you familiar with their little 
voucher program, with the voucher program in the Medicare?
    Secretary Sebelius. In the Medicare proposal, yes, sir.
    Mr. Scott. Does it provide any limit on what the private 
industry can charge?
    Secretary Sebelius. Not to my knowledge. I haven't seen the 
underlying details. Maybe they exist, but I haven't at least 
seen them. I have seen the outlines.
    Mr. Scott. Do you know if there is any guaranteed issue if 
you get one of these vouchers that you can actually buy some 
insurance somewhere?
    Secretary Sebelius. There is, I think, a limitation--a ban 
on eliminating people because of pre-existing conditions, but 
whether or not the dollar amount itself would allow you to buy 
a plan, I don't know.
    Mr. Scott. If you can't afford it, are there any subsidies 
to help you buy the insurance?
    Secretary Sebelius. There are, if I understand it 
correctly, additional resources available to the lowest income. 
So there is some sliding scale that would increase the buying 
power of the voucher depending on income.
    Mr. Scott. As I understand it, when it starts off, the 
senior citizens will be paying about $6,000 more of their 
income towards this policy, and after about 10 more years it 
gets up to about $12,000, which would be about half the average 
Social Security check; is that right?
    Secretary Sebelius. Yes, I think there is a dramatic shift 
of costs onto seniors.
    Mr. Scott. Thank you, Mr. Chairman.
    Chairman Kline. I thank the gentleman.
    Mr. Gowdy.
    Mr. Gowdy. Thank you, Mr. Chairman.
    Madam Secretary, do you believe the commerce clause has 
sufficient elasticity to allow Congress to mandate individuals 
purchase health insurance?
    Secretary Sebelius. I try not to practice law without a 
license, but I have listened closely to our legal team, and I 
think they believe strongly that the bill stands on solid 
constitutional grounds.
    Mr. Gowdy. You would have to believe that or you wouldn't 
be able to support the President's health care reform, right?
    Secretary Sebelius. That is correct.
    Mr. Gowdy. And because you believe that, you also would 
necessarily have to believe that Congress can also pass medical 
malpractice reform because we would use that same commerce 
clause. And I found it instructive that this administration has 
not proposed any medical malpractice reform, so perhaps we can 
take this opportunity and identify what medical malpractice 
reform initiatives you would support.
    Secretary Sebelius. Actually, Congressman, that last 
statement is not accurate. The President asked me during the 
course of the health care debate to actually use the powers 
that have been with HHS for a period of time to put in place 
some targeted programs around the country.
    Mr. Gowdy. I am not talking about targeted programs, Madam 
Secretary.
    Secretary Sebelius. Sir, they are looking at what kind of 
medical malpractice actually has the following criteria: It 
increases patient safety, lowers liability costs.
    Mr. Gowdy. Has this administration proposed specific 
medical malpractice reform initiatives?
    Secretary Sebelius. I have just explained to you what is 
under way right now. They are actually in place.
    Mr. Gowdy. Give me one. Give me a specific. Joint and 
several liability. Have you proposed reforming that?
    Secretary Sebelius. Are you saying have we proposed the law 
to change and preempt State law?
    Mr. Gowdy. Have you championed the cause of medical 
malpractice reform?
    Secretary Sebelius. Actually, right now, we have across the 
country health care systems and court systems putting in place 
malpractice reforms that meet criteria to see and measure what 
exactly works. Because the data is pretty inclusive whether or 
not you can increase patient safety and lower liability rates 
by a variety of strategies.
    So those are in place right now. They were put in place by 
our budget with our authority that had actually never been used 
before by anybody but President Obama.
    Mr. Gowdy. Do you support reforming joint and several 
liability?
    Secretary Sebelius. Do I support preempting State law by 
Congress? No, sir.
    Mr. Gowdy. Well, ma'am, and therein lies the issue, right. 
Because why would that be a preemption of State law in any 
greater degree than any other Federal initiative? You think if 
we were to reform joint and several liability that that would 
preempt State law?
    Secretary Sebelius. I think State, at a time, they have 
taken on that issue and dealt with it, yes, sir.
    Mr. Gowdy. What about a different standard of care for 
emergency medicine. Would you support----
    Secretary Sebelius. I have no idea what is the different 
standard of care. What does----
    Mr. Gowdy. There is not. So if a physician is treating 
someone at a ball game or at a church, doesn't know the patient 
history, there is no different standard by which their practice 
will be judged than if they had a 20-year-long history with 
that particular patient.
    So my question is, would you support a different----
    Secretary Sebelius. Sir, I would be delighted to look at 
any proposal. I think it is impossible to answer a question 
when I haven't seen the specifics of what is being talked about 
and how it would impact, but I would be happy to take a look at 
it.
    Mr. Gowdy. I have read your comments about the debt, and I 
have read the President's comments about the debt, and I assume 
you would agree that, because you have said, that our debt is 
stifling. So my question is, given the fact that we agree on 
that, why was there no proposal for an entitlement reform in 
this administration's initial budget?
    Secretary Sebelius. Well, Congressman, I would suggest that 
the Affordable Care Act had a significant step toward 
entitlement reform with a $500 billion reduction in growth rate 
of Medicare. That was a big step forward. That was not 
supported by many in this Congress, but it was the President's 
first step.
    I would also suggest that the IPAP proposal, which is part 
of the Affordable Care Act, is also another big step in terms 
of entitlement reform that actually doesn't potentially cause 
harm to our seniors but makes us make more strategic decisions 
about cost-effectiveness of proposals.
    We are currently working on proposals around dual-
eligibles, which is the most significant cost driver in 
Medicaid, and have a proposal under way in our innovation 
center where 15 States are going to be participating to see if 
we can really find health strategies that look at that highest-
cost population. So there are significant steps under way.
    Mr. Gowdy. Well, let me ask you this, because the light 
just went off.
    If the President's initial health care reform bill was 
sufficient, why did he then come out with a second budget after 
Paul Ryan took on entitlement reform? Why did you come out with 
a second budget that dealt with it?
    Chairman Kline. The gentleman's time has expired.
    Ms. Hirono.
    Ms. Hirono. Thank you, Mr. Chairman and Madam Secretary.
    I just would like to make a comment regarding medical 
malpractice reform. I would like to see the evidence that 
connects malpractice reform with lowering of medical 
malpractice insurance. There has never been--that, I don't 
think, has been shown; and, therefore, you know, I would like 
to see that evidence. Because States all across the country 
have enacted medical malpractice reform, and the doctors are 
still paying huge premiums for medical malpractice.
    I think in both education and health care, early 
intervention and prevention are the keys. Because we save money 
in the long run. And that is why we should be supporting 
programs such as school-based health centers and Head Start and 
quality early education. I have been a major proponent of 
quality early education.
    Madam Secretary, I understand that you had responded to a 
question regarding the third round of Race to the Top where 
your Department and the Department of Education will be working 
together to, I hope, come up with an early learning competition 
that is kind of like the Early Learning Challenge Fund, and so 
I am glad to hear that. I did send a letter to both you and our 
Education Secretary, Arne Duncan, to that point, and I await 
your response.
    I want to go on to the Medicare changes that the 
Republicans would like to propose. During the 2 weeks that I 
was in Hawaii, I met with hundreds of seniors, and they are 
very concerned about what the Republicans have in mind for 
Medicare.
    For one thing, they are totally astounded that they would 
have to wait until age 67 before they qualify for Medicare. And 
I know that they are thinking about when they were 65 and 
finally got on Medicare, health insurance, and I know that they 
were thinking what if we had to go 2 years to 67 without any 
insurance.
    So then the next area that they are really concerned about 
is, even if they are currently on Medicare, they care about 
those who are under 55 who are going to be in this new plan, as 
the Republicans would like to enact.
    So this voucher system--you responded to some questions 
about the voucher system, and I am not clear exactly how that 
is supposed to work. You are a 67-year-old senior, you get a 
voucher and what? What is supposed to happen? What are you 
supposed to do to get health insurance?
    Secretary Sebelius. Congresswoman, I don't pretend to have 
all the details, but my understanding is it would essentially 
operate as a subsidy to purchase private insurance coverage. 
There would be some rules around, as I said, the limitation on 
pre-existing conditions, so you couldn't be locked out of the 
marketplace.
    I don't know that there is any framework of what you could 
purchase with that coverage. So I assume that companies would 
put together packages. Somebody would make a choice about 
whether that package would be sufficient. I really don't know 
how it works.
    Ms. Hirono. Madam Secretary, thank you. Because I am 
wondering what kinds of packages a private insurance company 
will put together for 67-year-olds and older with all these 
pre-existing conditions, even if they cannot deny insurance 
because of pre-existing conditions. I am wondering whether all 
these private insurance companies will stand in line to put 
together these kinds of programs for 67-year-olds. And, in 
fact, when I asked that question of the hundreds of seniors 
that I talked to, they couldn't even--they were just--I know 
that they were very scared as to how this was supposed to 
happen.
    So would you share that kind of concern that I have as to 
whether the private insurance industry can be counted on to 
come up with all these different plans that our seniors could 
avail themselves of?
    Secretary Sebelius. Well, we currently have some model of 
the private market in Medicare space with Medicare Advantage 
programs that have been in operation for over a decade. On 
average, they are more costly than fee-for-service Medicare, 
with no perceptible health improvements whatsoever after 10 
years.
    We know that the companies have done somewhat effective 
jobs of doing a bit of cherry-picking in the marketplace, and I 
think that that is really how you make a profit in health 
insurance, is that you hopefully get a population that is less 
sick than more sick. And what I think is of great concern is 
that the amount of money identified as the fixed benefit 
nowhere nearly matches the potential cost of the services to 
the average Medicare beneficiary right now, much less down the 
road, and that buying power diminishes over time.
    Ms. Hirono. And I think that seniors across our country are 
understanding that with regard to the Ryan budget.
    Thank you.
    Chairman Kline. The gentlelady's time has expired.
    Mr. Barletta.
    Mr. Barletta. Thank you, Mr. Chairman.
    Madam Secretary, as you know, the PPACA has made 
significant changes to the laws governing insurance markets and 
employer-sponsored health care, many of which have the effect 
of increasing costs for employers, workers, and their families.
    In an effort to pay for the new subsidy entitlement 
program, PPACA reduces Medicare expenditures by more than $500 
billion and imposes hundreds of billions of dollars in new 
taxes and penalties, which will likely raise the cost of 
coverage and increase the financial pressures on employers 
struggling to grow their businesses and create jobs.
    For small business, home health care providers, this is a 
huge burden. I have specifically heard from my constituents 
about the 2.3 percent excise tax on manufacturers and importers 
of certain medical devices. How can you justify this tax, 
especially for small businesses, home care providers who work 
in rural areas?
    Secretary Sebelius. Well, Congressman, I think that one of 
the features of the Affordable Care Act, which is different, 
frankly, from the Prescription Drug Act that was passed in a 
prior administration, is that it is paid for and it does not 
add to the deficit. In fact, the Congressional Budget Office 
has estimated that about $230 billion in the first decade and 
over a trillion dollars in the second decade will be decreased 
from the deficit. So there are pay-fors in the bill.
    I think the trade-off that you are talking about with a tax 
on home health manufacturers is that they are also anticipating 
additional customers along the way, so there is some additional 
revenue that will be generated and the return is that they will 
have access to a far more significant market, who will have, 
actually, the ability to pay for home health services where 
they don't right now.
    Mr. Barletta. Moving on to another question, in response to 
questions I have received from small business pharmacists in 
northeastern Pennsylvania, would you be able to address the 
rapid refill of prescription medicine? More specifically, many 
in my community are concerned that prescriptions are being 
offered in 90-day increments by certain large-scale stores, 
even though their primary care physician may modify the 
prescription prior to its expiration. Is this a new process 
allowed by the Department of Health and Human Services as a 
result of PPACA?
    Secretary Sebelius. I can tell that you there is no new 
process about prescription refills that is part of the 
Affordable Care Act. I don't know what is causing what you are 
talking about, but I would be happy to go talk to our folks and 
see if they have heard about it or know about it.
    But there is absolutely no--nothing that has been put into 
effect in the year that has any impact on prescription drug 
refills.
    Mr. Barletta. As a former mayor of a city in northeastern 
Pennsylvania, Hazleton, I have witnessed firsthand the benefits 
of the human services programs operated by HHS. I am 
specifically familiar with and interested in the Community 
Services Block Grant Program. The President's 2012 budget 
request includes a $388 million cut to the Community Services 
Block Grant Program which, as you know, is geared toward anti-
poverty activities.
    Over the last 10 years, a number of independent studies, 
including those conducted by GAO, have questioned the program's 
effectiveness in combating poverty in local communities. In my 
community, the Commission on Economic Opportunity, an 
organization committed to combating local poverty, they use the 
Community Services Block Grant funding to help promote self 
sufficiency among low-income populations in Luzerne County.
    In February, I had the privilege of meeting with the 
officials of this organization; and I toured their after-school 
program that ensures children get healthy meals throughout the 
year. In fact, this organization's food bank, which also 
assists the elderly population in Luzerne County, has provided 
over 4 million pounds of foods to 160 agencies over the past 
year.
    And while I have seen the good of this program and others 
like it, I am supportive in finding ways to make the CSBG 
program even stronger. What changes do you think the committee 
should make to the Community Services Block Grant Program to 
make it more effective, and when was the last time this program 
was evaluated?
    Secretary Sebelius. Congressman, first of all, let me say I 
would look forward to working with you to do just that. I think 
that there is no question at all that the reduction in funding 
that is being proposed is not one that would have been proposed 
if the budget times were better. Let me start there.
    I also think that it has been our experience that the funds 
administered through the State and to a variety of community 
action agencies, some are very competent and effective, others 
have been less effective. And we are currently in the process 
of reviewing, knowing that we are likely to have diminished 
resources, what are the kinds of criteria to put in place that 
would actually drive the best practices around the country. 
Because I would say that the program impact has been really 
mixed. But we would look forward to working with you around 
what that strategy looks like.
    Mr. Barletta. Thank you.
    Chairman Kline. The gentleman's time has expired.
    Mr. Tierney.
    Mr. Tierney. Thank you, Mr. Chairman.
    Madam Secretary, thank you for being here today.
    Let me just start with a couple of very brief questions 
about low-income home fuel assistance. On that, can you give me 
an idea of when that money is going to be released to the 
States? Because we have reports of people fearing the loss of 
their utilities if that money doesn't get released to the 
States so that they can distribute it.
    Secretary Sebelius. I am trying to get my experts back here 
to give me----
    Mr. Tierney. Well, if you could give me that answer, if you 
can't give it to me right now, if you could get that to us when 
you can.
    Secretary Sebelius. We will get it to you.
    Mr. Tierney. Thank you.
    Secretary Sebelius. And what we tried to do up until this 
moment, I can tell you, is put the money out the door as soon 
as we had the authorization. So I can get you the precise date 
that we will try to push the rest of the fiscal year 2011 money 
out.
    Mr. Tierney. I appreciate that.
    In the President's proposal for 2012, he proposed a 40 
percent cut in those funds, premised on the idea that the costs 
are going to be somewhere around--somewhat lower in the future. 
Now the costs are back up to what they were in 2008 for oil, 
and they are increasing for gas. Are you going to revisit that 
decision?
    Secretary Sebelius. Well, Congressman, as you know, the 
budget has been proposed. We would look forward to working with 
you.
    I know it is a vital program. It was a snapshot that looked 
like we were in times that could return to the historic level, 
but I think we need to look at the challenges and that impact 
on particularly the low-income families who rely on it.
    Mr. Tierney. We would appreciate that. Thank you. We will 
work with you on that as well.
    Just a quick comment on the medical malpractice, as we do 
quite a bit of looking at that. Are you aware of any study at 
all that indicates that even if all the medical malpractice 
reforms proposed went into effect it would do anything more 
than save a minuscule fraction of the national health care 
costs?
    Secretary Sebelius. Well, I think, right now, malpractice 
premiums are far less than 1 percent of any health care costs; 
and, unfortunately, the data is very erratic. States that have 
put in place every kind of tort reform possible and States that 
have no tort reform possible seem to have about the same 
malpractice rates. So there doesn't seem to be a corollary 
impact between the legal framework and what docs are paying.
    It is difficult to assess and measure what defensive 
medicine costs. It is also, I think, very difficult to measure 
what a lack of patient safety costs. And those--you know, we 
talked about errors that occur in the medical system right now 
which kill about 100,000 people a year, so I think that balance 
is very critical.
    Mr. Tierney. And it is a State-regulated insurance 
industry; is that correct?
    Secretary Sebelius. That is correct, sir.
    Mr. Tierney. Lastly, I do see reports, however, that draw a 
correlation between the return on investment from reserve funds 
by insurance companies and the increase in premiums. I think 
that would be a more appropriate place to look for some 
correlation; is that correct?
    Mr. Tierney. Well, I think the malpractice market has been 
very lucrative.
    Mr. Tierney. It has indeed.
    The community health centers, in H.R. 1, the original 
proposal for the continuing resolution, there was a proposal to 
substantially cut the funding for those centers. It would have 
closed about 127 centers if it had been passed. It would have 
cut off about 11 million participants. It would have caused 
thousands of people to lose their jobs. In the end, there was a 
much less severe reduction in that.
    But can you talk to us just for a second about the value of 
community health centers, what used to be a bipartisan 
priority? I can remember working with President Bush on this as 
well, how important it is or isn't to our system, and what 
attention we should be giving to those centers?
    Secretary Sebelius. Well, I don't think there is any 
question that the current community health center footprint is 
an enormously important infrastructure for low-cost, high-
quality delivery of health care in the most underserved rural 
and urban areas. The training of docs in community health 
centers is a terrific training ground, and over and over again 
they are proven to be enormously effective.
    The trajectory that this administration proposed was, 
actually, moving from the opportunity from 20 million Americans 
served by community health centers to 40 million Americans, 
starting with the investment in the Recovery Act and moving on 
through the Affordable Care Act. That has taken a little bit of 
a bump in the road, but we still feel that having an expansion 
of community health centers and matching them to the most 
underserved area is the most effective, most efficient, most 
cost-effective way of getting high-quality health services to 
people who now have limited access to doctors.
    Mr. Tierney. Thank you.
    Let me just close with the notion that the Medicare and the 
Affordable Care Act reduced monies. I think we have made the 
point. We want to reiterate it. It would slow the growth of 
costs, and I note that in the Republican proposal they don't 
change that fact. They like the savings of those costs, and 
they understand that that was, in fact, addressing an 
entitlement by slowing the growth in costs without reducing the 
number of defined benefits, is that correct?
    Secretary Sebelius. Well, that is absolutely correct. In 
fact, the language in the bill, as you know, re-emphasizes the 
fact that no defined benefit can be tampered with. So, in fact, 
the Affordable Care Act increased the benefits so seniors now 
will have the donut hole closed over time and not fall into the 
gap in drug coverage, will have an annual wellness benefit, 
will have preventive care without co-pays. So there are some 
significant enhancements as part of the guaranteed Medicare 
benefits, along with the reduction in the costs over time.
    Mr. Tierney. Thank you.
    Chairman Kline. The gentleman's time has expired.
    Madam Secretary, we have two final questioners, and we 
would like to allow both of them to have an opportunity. So, 
Mr. Rokita, you are recognized.
    Mr. Rokita. Thank you, Mr. Speaker, and thank you, Madam 
Secretary. I am one of the last questioners, so hopefully we 
will be able to respect your time. We appreciate your being 
here.
    With regard to this medical malpractice that has popped up 
fairly late, of course you understand that, at least for many 
Americans, many of us that I represent, it is not the premium 
that the doctors pay that is the concern, it is the defensive 
medicine costs. And you have indicated that it might be a hard 
cost to determine.
    I don't know if I agree with that. I think we have been 
able to determine in this country a lot of other things. And my 
doctor colleagues, including the two that sit on either side of 
me on this committee, when I asked them before they left, they 
say it could be anywhere between 100 and 500 billion a year in 
defensive medicine costs. And they do this every day, as 
specialists at least. So I wanted to let you know about that.
    And then as a member of the Budget Committee, in case you 
are asked these things again, I need you to know that the 
plan--because you said you saw some outline of the budget but 
not necessarily the details--- it is not a voucher. It doesn't 
go to the person. It goes to the insurance companies who would 
want to participate.
    And on our Federal plan, as Dr. Bucshon was explaining, 
there are at least nine or so different kinds of plans 
depending on what part of life we are in that we can choose 
from. And to the extent the Congress is a microcosm of the 
people, generally, I really don't understand why that couldn't 
work.
    Secretary Sebelius. Well, part of it is the Federal 
Government is paying 70 percent of the cost of your health care 
right now and--assuming that you are in the Federal employee 
benefit package. This plan is significantly less generous for a 
more, I would say, likely to be sick population, more difficult 
conditions, and the growing--it doesn't rise with the cost of--
--
    Mr. Rokita. No, I think that wasn't in your outline. 
Because if you look at our plan, we are looking for a needs 
test and we are calling for a risk test. Those of us who are 
sicker would get more of it. Those of us who need less of it, 
because of our stage in life or state in life, would get less 
of a subsidy.
    Secretary Sebelius. But, again, according to the 
Congressional Budget Office, it is significantly less buying 
power than Medicare provides right now for seniors. And, 
actually, the buying power decreases over time, again, 
according to the Congressional Budget Office. And they are 
saying 10 to 15 years out 70 percent of the costs of health 
care would be borne by the seniors themselves, not the----
    Mr. Rokita. Right, but you come from State government like 
I do. I was part of the executive branch of the Indiana 
government. And so, you know, I come to this place not 
believing everything CBO says, especially how they are 
chartered. They are only allowed to look at exactly what is put 
in front of them. And so we both know----
    Secretary Sebelius. This was, if I understand it, the specs 
given to them by the House Republicans, by Congressman Ryan. 
Those were the only specs.
    Mr. Rokita. As set forth in a previous act that they are 
chartered by, and we can argue around all of that. But we both 
know that we have a program that works for the Congress and we 
both know people clamor and talk about how much or how good we 
have it here in the Congress. And to see us argue now against 
that for the rest of the American people, you know, I don't 
understand----
    But let me get on with some of my time.
    Secretary Sebelius. Well, again, there is no evidence at 
all that Medicare Advantage, which operates through private 
market strategy, gives seniors choices, is either more cost 
effective or more health effective. For seniors, in fact, the 
cost is significantly higher and the health benefits are lower.
    Mr. Rokita. Well, let me get on to an issue that you 
didn't--as Dr. Bucshon was explaining you didn't seem to 
understand the details. Here are some of the details.
    Joe Main is the Assistant Secretary for Mine Safety, not 
under your jurisdiction, of course, but he apparently used 
something from a set of data from NIOSH to go after the coal 
dust rule and to propose some things. Now he, on March 28, 
wrote your office and said, please release this data. It is not 
mine to release, but please get this to this committee and the 
stakeholders involved so that we can participate better in this 
rulemaking.
    And so what I want to ask for you on the record, I think 
you said it with Dr. Bucshon, you would be helpful in trying to 
get that, right?
    Secretary Sebelius. Absolutely. I don't know about that 
issue.
    Mr. Rokita. Understood. But, again, sharing your executive 
experience, I can tell you have people behind you that you can 
easily turn around to and say, what date can we get Congressman 
Rokita some answers on this? Can you tell me how long----
    Secretary Sebelius. I can't give you a date certain until I 
know what it is that we are looking for, but I can guarantee 
you all of us heard the question four or five times. We 
understand there is a letter, and I will try to get it----
    Mr. Rokita. You can get me a date as to when you will get 
me the answer.
    Secretary Sebelius. Sir, I really don't know what it is 
that we are being asked to produce. I will get you an answer 
very quickly.
    Mr. Rokita. Yes, this is an answer about when it would 
come. That is simple. So if it was me in your seat I would say, 
you know, 24 hours or so. But give me whatever answer--just 
tell me when you will give me that answer on when this stuff 
might come.
    Secretary Sebelius. I don't know what it is that you are 
looking for, so I can't possibly give you--I will give you an 
answer about when it will come, you know, within a couple of 
days once I can talk to Dr. Howard.
    Mr. Rokita. That is all I am looking for. I appreciate it.
    Chairman Kline. The gentleman's time has expired.
    Mr. Hinojosa, you are recognized.
    Mr. Hinojosa. Thank you, Mr. Chairman.
    Secretary Sebelius, thank you for joining us today to 
discuss your priorities and to respond to the Ryan budget 
proposal put forward by the Republican Party.
    I am troubled by the Republican plan to end Medicare as we 
know it. For my constituents in South Texas, the Republican 
plan would be disastrous. It would force seniors into the 
private sector for insurance, and it would force them to spend 
more and more of their limited income on health care.
    In regards to our Nation's youngest, just yesterday I sat 
down in my office with a pediatric anesthesiologist struggling 
to treat some of my district's most impoverished and vulnerable 
youth, many of which are Medicaid beneficiaries. The Republican 
plan slashing Medicaid is not the answer that providers or 
children are looking for because it would unjustifiably hurt 
access to quality care.
    I wish to ask two questions. As the former insurance 
commissioner and Governor of Kansas, you understand the heavy 
burden of health care costs on seniors and families with 
children in poverty. What is the Obama administration doing to 
help bear that burden and what new strategies are being pursued 
to help our most vulnerable populations?
    Secretary Sebelius. Well, Congressman, I think the 
President shares your concern about the access to care for the 
most vulnerable Americans, and that is why I think he has 
stated an opposition to the block grant idea with a fixed 
amount of money available, knowing that you can't predict 
recessions, you can't predict disasters, and you certainly 
can't predict how many people are needing to access programs at 
a difficult time, as we have just seen in this country.
    The same would be true for Medicare, to change from what is 
a guaranteed benefit program to a fixed-income situation, I 
think, could provide an enormous cost shift onto seniors at a 
time where they could least afford it and make it very, very 
difficult to access life-saving care.
    Mr. Hinojosa. With respect to Head Start, HHS is in the 
process of implementing the new performance standards. Seeing 
more parent and family engagement in our early education 
services is very important to me. Will you please tell us how 
these performance standards will strengthen the Head Start 
program?
    Secretary Sebelius. Well, Congressman, we are taking the 
report on program integrity very seriously, and we think it is 
important that the Head Start grantees follow the law, follow 
the guidelines.
    In addition, we are working closely with our education 
partners to look at the range of skills that children need to 
be school ready and making sure that, in addition to social 
development, that there is a curriculum development as part of 
the Head Start program. And certainly the parental involvement 
piece, which has always been a hallmark of Head Start, is 
something that is going to be strengthened and very critical 
moving forward.
    Mr. Hinojosa. Mr. Chairman, thank you for letting me ask 
those questions. I yield back.
    Chairman Kline. I thank the gentleman.
    The timing is near perfect. I would like to thank the 
Secretary for being with us and spending the time with us today 
and putting up with the interruptions from the votes.
    I would like to recognize Mr. Miller for any closing 
comments he might have.
    Mr. Miller. Thank you very much.
    I want to thank the Secretary very much for being here.
    I just want to say, after listening to your explanations 
and your defense of the Affordable Care Act and when I see the 
excitement and the response across the medical community and 
the employer community to this legislation and to the 
initiatives that you have started to roll out, it is really 
very, very encouraging.
    After the Affordable Care Act passed the Congress, 
President Obama called me and said that I should be very proud, 
as being one of the chairs of the committees for the major 
jurisdiction on this legislation. I obviously told him I was 
very proud.
    But listening to your defense and your explanations here 
and your initiatives on behalf of the law and the government, I 
am even more proud than at that moment when we passed this 
legislation. Because this is the kind of implementation that we 
were hoping to see now. Hundreds of thousands of employees 
being offered insurance by small businesses because of the tax 
credit for the first time being reported all over the country 
is really very exciting for those individuals and their 
families. So thank you very much for your appearance here 
before the committee.
    Chairman Kline. I thank the gentleman.
    It is always interesting. He and I must always talk to 
different businessmen and women and different care providers. I 
am not yet seeing that excitement on their part, and I don't 
share that excitement with him, but I again very much 
appreciate your time and your testimony here today.
    There being no further business, the committee is 
adjourned.
    [Response to questions submitted for the record follow:]

   Secretary Sebelius' Response to Questions Submitted for the Record

                        the honorable john kline
    1. Head Start Fraud and Abuse. Last year, the U.S. Government 
Accountability Office (GAO) conducted an undercover investigation of 15 
Head Start programs, acting in response to tips from former and current 
employees at two separate Head Start centers. Undercover GAO applicants 
tried to enroll children in these programs and presented the centers 
with pay stub data that demonstrated they were above income eligibility 
requirements. Nine of the 15 sites enrolled the students by encouraging 
applicants not to submit the pay stubs that would put them over the 
income threshold. Some of the programs continued to count the students 
as enrolled, even though the students never actually participated in 
the program. At a May 2010 hearing before this Committee, the Assistant 
Secretary for Children and Families stated that the Department was 
taking immediate corrective action and was undertaking a ``top-to-
bottom'' review of its program oversight responsibilities. Can you give 
us an update on the Department's effort to combat waste, fraud, and 
abuse in the Head Start program? How many unannounced monitoring visits 
has the Department conducted since the release of the GAO report? \1\
---------------------------------------------------------------------------
    \1\ http://www.gao.gov/new.items/d10733t.pdf

    Answer: We have enhanced current monitoring procedures by 
partnering with the HHS Office of the Inspector General and conducting 
115 unannounced monitoring visits to Head Start and Early Head Start 
programs, setting up a fraud hotline, and proposing new regulations to 
strengthen the eligibility verification processes. These actions 
include the following activities:
     Completed a top-to-bottom review of our program monitoring 
which includes ongoing oversight by Regional Program Managers and 
staff, triennial reviews by monitoring teams, Erroneous Payment Study 
and risk management process to make improvements in program oversight.
     Established a complaint hotline to help identify problems. 
The Office of Head Start has implemented a process to ensure complaints 
are handled in a timely manner and appropriate actions are taken.
     Proposed a regulation to strengthen the requirements on 
eligibility verification for Head Start programs. Under the proposed 
rule, grantees would be required to maintain the source documentation 
used to verify income and obtain signatures from the person seeking 
services and a grantee staff member attesting to the accuracy of the 
information to the best of the person's knowledge. We expect to issue 
the final rule this fall.

    2. Recompetition of Head Start Grantees. In 2007, Congress passed 
the Improving Head Start for School Readiness Act, which requires the 
Secretary of Health and Human Services to establish a new, 
comprehensive system to recompete Head Start and Early Start grants. 
The Department is currently in the process of finalizing regulations on 
recompetition to ensure that Head Start grantees are meeting the 
requirements of the law and preparing pre-school-aged children for 
entry into kindergarten. Please provide us with an update on this 
process. When will the first grantees be re-evaluated?

    Answer: In September 2010 we issued the Notice of Proposed 
Rulemaking on the recompetition or Designation Renewal System and have 
received over 16,000 comments. We are working expeditiously to review 
those comments and finalize the regulation. We expect to issue the 
final regulation this fall. The first grantees will be evaluated to 
determine whether or not they need to compete for renewed funding 
immediately following the effective date of the rule. We expect to 
conduct the first re-competitions in early 2012.

    3. Effectiveness of the Community Services Block Grant Program. The 
President's FY2012 budget request includes a $388 million cut to the 
Community Services Block Grant program, which is geared toward anti-
poverty activities. Over the last 10 years, a number of independent 
studies and research activities, including those conducted by the U.S. 
Government Accountability Office (GAO), have questioned the program's 
effectiveness in combating poverty in local communities. What changes 
do you think the Committee should make to the program to make it more 
effective? When was the last time the program was evaluated and what 
were the results?

    Answer: The Community Services Block Grant (CSBG) program provides 
a key component in addressing the causes and effects of poverty. For 
grantees with a strong performance history, CSBG provides a valuable 
source of ongoing support that allows local planning and service 
delivery based on a place-based model. The Administration supports the 
important goals of the CSBG and wants to work with Congress to inject 
competition into the block grant in order to strengthen it and target 
resources more effectively to high-performing, innovative 
organizations.
    We would be interested in working with the Congress on CSBG reform 
based on the following principles for overall program direction:
     Maintaining current emphasis on place-based services, by a 
community-based entity to effectively address the causes and impact of 
poverty;
     Holding grantees more accountable for a high standard of 
service delivery and performance;
     Maintaining current CSBG distribution formula to States, 
Territories, and Tribes;
     Supporting State flexibility in designing competition 
based on local need, agency performance records, and quality of 
service, in consultation with the Federal administering agency;
     Directing resources to agencies that can effectively serve 
high need communities;
     Promoting evidence-based practice to achieve results; and
     Strengthening program integrity and accountability.
    There are barriers in the current CSBG statute to this approach. 
Section 676(b)(8) and section 678C require States to provide CSBG 
eligible entities with funds proportional to what they received in a 
prior year. Funds cannot be terminated or reduced unless, after 
providing notice and an opportunity for a hearing on the record, the 
State determines that cause exists. The current process for termination 
is difficult and time consuming. Current law does not provide a 
mechanism to rapidly respond to cases of alleged fraud. States usually 
pursue termination only when there is a determination that the CSBG 
eligible entity is grossly financially negligent. Outside of basic 
financial and organizational management standards, States do not have 
clear criteria for determining the adequacy of agencies' performance, 
and the current process makes it difficult for states to hold grantees 
accountable and target available resources based on need and service 
delivery.
    We continue to help States hold agencies accountable within the 
current confines of the statute. We have issued guidance to States to 
clarify the termination process to the extent possible under current 
statute, and provide extensive technical assistance to States when they 
choose to pursue termination. In addition, we have begun assessing the 
current performance measurement system. However, statutory changes are 
needed to improve both processes. We would like to work with you and 
relevant stakeholders to develop a more efficient and effective system 
to do more to hold grantees accountable and promote high performance.
    We would also like to work with you to expand States' authority to 
award CSBG grant funds through a competitive process and to give states 
the flexibility to target resources based on need. Competition for 
grants is currently allowable under the CSBG Act in certain limited 
circumstances, including replacing agencies that are terminated due to 
performance deficiencies. We believe that we can build on this existing 
process as a method to ensure that high-performing entities receive 
funding, and look forward to working with you and external stakeholders 
to determine the best method for doing so.
Evaluation of CSBG
    The Office of Community Services (OCS) has a study underway to 
document the services provided, challenges addressed and 
accomplishments achieved as a result of the $1 billion in ARRA funds 
provided to the CSBG program. This process evaluation will identify 
promising practices that could inform future Federal, State and local 
program activities. OCS has contracted with the Urban Institute located 
in Washington, D.C. to conduct this study, which will be completed by 
February, 2012.
    The Administration for Children and Families (ACF) has also made 
program changes in response to reviews conducted by the Government 
Accountability Office (GAO). A 2006 GAO report, titled ``Community 
Services Block Grant Program: HHS Should Improve Oversight by Focusing 
Monitoring and Assistance Efforts on Areas of High Risk'' (GAO 06-627) 
called upon ACF to conduct a risk-based assessment of State CSBG 
programs by systematically collecting and using information and to 
establish policies and procedures to help ensure that on-site 
monitoring is focused on States with the highest risk. In addition, the 
GAO recommended that ACF issue additional guidance on State 
responsibilities for monitoring and improve a strategic planning and 
reporting on training and technical assistance efforts. It is important 
to note that the GAO study focused primarily on program administration 
issues, and did not include findings regarding the program's 
effectiveness in combating poverty in local communities
    Based on GAO's report, OCS has restructured its monitoring in a way 
that heeds congressional intent, and improves management, 
accountability and outcomes of State and local agencies in the 
provision of CSBG services. The Health and Human Services (HHS) Office 
of Inspector General (OIG), in studying the program in preparation for 
administering the American Recovery and Reinvestment Act of 2009 (ARRA) 
funding, looked at the adjustments made by OCS since 2006. In August 
2009, the HHS OIG issued a report indicating that in all items included 
in the IG review, the weaknesses cited by GAO had been addressed 
(Source: A-01-09-02502: Status of the Office of Community Services' 
Corrective Actions Resulting from the Government Accountability Office 
Review of the Community Services Block Grant Program).
    Since 1987, OCS has worked in partnership with the National 
Association for State Community Services Programs (NASCSP) to support a 
performance reporting system that aggregates reporting information from 
State CSBG agencies an annual CSBG Information Survey (CSBG-IS). 
Highlights of the 2009 annual survey result are available on the NASCSP 
website at:

   http://www.nascsp.org/data/files/csbg_publications/annual_reports/
       highlights/2009/nascsp%2009%20csbg%20highlights_final.pdf

    According to NASCSP results for 2009, CSBG agencies provided 
services to 20.7 million low-income individuals, including nearly 5 
million children, nearly 2.3 million seniors, and more than 1.7 million 
people with disabilities. Based on an aggregate reporting measure used 
to capture and describe services across 16 outcome areas, NASCSP 
reports that the CSBG Network helped to reduce or eliminate 34.3 
million ``conditions of poverty,'' as measured by outcomes such as: 
gaining employment; building assets; and improving child development. A 
detailed report based on the NASCSP Information Survey is available at: 
http://www.nascsp.org/data/files/csbg_publications/annual_reports/
annual%20report%2009%20final.pdf.
    OCS continues to work with NASCSP, its contract agencies, and other 
partners to refine current performance measurement systems and develop 
improved methodologies for performance measurement and accountability 
in this important program.

    4. Health Insurance Exchanges: You claim in your testimony that in 
2014, state health insurance exchanges will provide new options for 
consumers. However, it has been reported that several governors have 
vetoed bills intended to implement the new law's requirement for state-
based Health Insurance Exchanges, and many states are not working 
toward establishing such exchanges. Also, one governor rejected a $54 
million ``early innovator'' grant for an exchange partly on the basis 
that states do not want to be subjected to federal regulation. Assuming 
some states will not create health insurance exchanges by 2014, at what 
point will HHS develop the federal insurance exchange option that would 
be available to consumers in those states? Can you elaborate on the 
structure of this option?

    Answer: The law requires that Exchanges, whether State-based or 
Federally-facilitated, be operational by January 1, 2014. To date, 49 
States have received exchange planning grants to develop plans for 
Exchange operations. Some States are further along than others, and HHS 
is actively assisting States as they work through implementation. 
Additionally, some States have applied for more assistance through the 
Establishment Grant process.
                       the honorable tim walberg
    For nearly 20 years, the National Institute for Occupational Safety 
and Health (NIOSH) along with the National Cancer Institute (NCI) 
conducted a study on the potential effects of diesel exhaust in 
underground mines. The Mining Awareness Resources Group (MARG) 
voluntarily participated in the study by providing access and 
information for NIOSH to conduct the study; however this was done with 
the understanding that NIOSH would be providing the study data to the 
group in order to review the studies. Two federal court orders have 
ordered NIOSH to provide the data to MARG and the Committee on 
Education and the Workforce, yet the institute has not fully complied.
    1. Why has NIOSH not complied with the court orders of two federal 
judges?

    Answer: The Department has complied with the court orders in 
connection with the litigation commenced by the Mining Awareness 
Resource Group. We also understand that only one Federal court order, 
issued by the U.S. District Court for the Western District of Louisiana 
on June 5, 2001, ordered NIOSH to provide study data.

    2. When will the data be made available to all parties involved?

    Answer: Research data has been provided to the Committee as 
requested and as it has become available. The mine operators that are 
litigants have received research data consistent with their attorney's 
execution of confidentiality agreements.
                       the honorable lou barletta
    1. A number of smaller pharmacies in my district in Northeastern 
Pennsylvania have raised concerns regarding the impact of ``rapid 
refills'' on patient care. As you know, an increasing number of doctors 
are issuing prescriptions for 90 day supplies of medication. However, 
the patient's condition may change, forcing a doctor to modify the 
prescription prior to the patient exhausting the huge supply. 
Additionally, the patient loses out on valuable and more frequent in-
person counseling offered by local brick and mortar pharmacies. Can you 
give the Agency's perspective on the challenges to patient care 
associated with so-called ``rapid refills''? How has the Patient 
Protection and Affordable Care Act interfered with this process?

    Answer: The Affordable Care Act did not include provisions that 
address rapid refills or physicians who provide patients with 
prescriptions for 90-day supplies of medication. Physicians are able to 
determine the appropriate treatment for each patient, including how 
much medication or how many refills a patient should receive before a 
follow up consultation.
                         the honorable phil roe
    1. During our dialogue at the May 5, 2011, hearing of the Education 
and the Workforce Committee, you stated that of the 30 million to 35 
million Americans who will receive coverage as a result of PPACA,'' * * 
* about 15 million are likely to be Medicaid-eligible.'' However 
Medicare's chief actuary has indicated that the number of new Medicaid 
enrollees could rise as high as 25 million given that Social Security 
benefits will not be counted as income for the purpose of determining 
Medicaid eligibility.\2\ How then, is PPACA not just a massive 
expansion of Medicaid?
---------------------------------------------------------------------------
    \2\ See http://republicans.energycommerce.house.gov/Media/file/
Hearings/Health/033011/Foster.pdf
---------------------------------------------------------------------------
    Answer: We understand the Committee is interested in the 
interaction between Social Security benefits and Medicaid for purposes 
of eligibility determination for certain populations under the 
Affordable Care Act, and we will provide more information to the 
Committee under separate cover.
                       the honorable lynn woolsey
    The HHS FY 12 budget proposes to zero out two programs in the 
National Institute for Occupational Safety and Health (NIOSH): the 
Education & Research Center (ERC) program and the Agriculture, Fishing 
and Forestry (AFF) program. Combined, these two programs total less 
than $50 million. The ERCs were established to implement Section 21 of 
the Occupational Safety and Health Act's (OSHAct) requirement to train 
``an adequate supply'' of occupational safety and health professionals 
to implement the law.
    With regard to the AFF program, fatality rates in agriculture, 
fishing and forestry are more than seven times the average-and cost our 
economy $4 billion per year. NIOSH has developed technology to save 
lives and property in these industries. The National Academy of 
Sciences (NAS) found this program conducts high priority, sound 
research, but indicated that there were opportunities for improvement. 
The HHS FY 12 budget request zeroes out the program, claiming the 
program was ineffective, and asserts that the Agriculture Department 
and the Labor Department can pick up the slack when this program is 
zeroed out. The NAS panel members have written to Congress contending 
that the HHS budget justification misrepresents their 2007 report.
    1. What specific authorization and funding is available in the 
Labor Department or Agriculture Department in the President's FY 12 
budget to replace the NIOSH AFF research program?

    Answer: HHS cannot comment on what specific authorization or 
funding is available to other Federal agencies.

    2. Will you be willing to review the budget justification for the 
AFF program to determine if it is valid and factually supported?

    Answer: The budget justification for the AFF program in the FY 2012 
Budget was developed through a collaborative process within the 
Administration and reflects the Administration's perspective.

    3. Would you be willing to work with the Committee to identify 
funds within HHS's operating divisions that could be reallocated to 
allow this priority NIOSH work to continue?

    Answer: The FY 2012 President's Budget represents the policy 
priorities of the President and was developed in the context of 
competing priorities. There are currently no plans within the 
Administration to reallocate funds among HHS operating divisions.

    4. With regards to the ERC program, the HHS FY 12 budget request 
justifies termination on the grounds that NIOSH had planned to sunset 
funding after 5 years; however, neither the Centers for Disease Control 
nor OMB can find any documents to back this up. Congress never intended 
to sunset this program after 5 years, and the Institute of Medicine 
recommended continuing this program.
    Has HHS conducted a recent assessment of whether the ERC program 
has fulfilled its mission pursuant to Section 21 of the OSHAct? If so, 
has such assessment determined that there is an adequate supply of 
occupational safety and health professionals?

    Answer: NIOSH commissioned a national workforce needs assessment 
that was designed and implemented by an independent research firm and 
guided by a multidisciplinary advisory task force of occupational 
safety and health (OSH) professionals and practitioners, and included 
public comment and input from major stakeholder groups. We expect to 
release this assessment soon.

    5. If such study had not been done, why would HHS terminate this 
program before such assessment has been completed?

    Answer: As noted in the response to Question #4, NIOSH commissioned 
a national workforce needs assessment to assess the current supply and 
future demand for OSH professionals in the United States and to 
determine the professional competencies needed in these professions 
over the next five years. The Administration recognizes the vital role 
of occupational safety and health professional training. Within the 
context of a budget that requires tough choices, the Administration put 
forth a proposal to discontinue Federal funding for the ERCs.

    6. Will you be willing to undertake a review to determine if the 
budget justification for the ERC program is valid and fully supported?

    Answer: The budget justification for the ERC program in the FY 2012 
Budget was developed through a collaborative process within the 
Administration and reflects the Administration's perspective.

    7. Would you be willing to work with the Committee to identify 
funds within HHS's operating divisions that could be reallocated to 
allow this priority NIOSH work to continue?

    Answer: The budget justification for the AFF program in the FY 2012 
Budget was developed through a collaborative process within the 
Administration and reflects the Administration's perspective.
                     the honorable carolyn mccarthy
    1. Congress included a provision in the Patient Protection and 
Affordable Care Act requiring that patients receiving Medicare home 
health services have a face-to-face encounter with a referring 
physician prior to certification for home health services.
    Having heard from both home health care providers and physician 
groups alike, I am concerned that in implementing the provision, CMS 
has gone beyond Congressional intent. In doing so, the agency has 
created significant additional administrative paperwork and 
documentation burdens on physicians for which they are not reimbursed. 
The requirement also creates obstacles to care for patients, who are by 
definition homebound, and may not have convenient access to physician 
offices.
    I am very concerned that the outcome of this will be that patients 
are denied access to the care they need, and that is provided in both 
the lowest cost and most desired setting--one's own home.
    We will continue to work with the agency, but would appreciate your 
attention and thoughts on this matter as well. Would you support 
efforts to streamline and simplify the process for documenting the face 
to face encounter so that we address concerns of referring physicians, 
home health providers, and the patients they serve?

    Answer: We constantly strive to strike the delicate balance between 
ensuring the integrity of the program and minimizing the administrative 
burdens that are imposed. In the case of the home health face-to-face 
encounter requirement, CMS made every effort to set up the necessary 
administrative requirements and bounds within which they must be 
completed, while allowing providers the flexibility to fulfill these 
requirements in a manner that is right for them.
    As a condition for payment, the Affordable Care Act mandates that 
prior to certifying a patient's eligibility for the home health 
benefit, the certifying physician must document that he or she, or an 
allowed non-physician practitioner (NPP) has had a face-to-face 
encounter with the patient beginning January 1, 2011.
    CMS recognized that some providers needed additional time to 
establish operational protocols necessary to comply with these 
requirements and provided a measure of leeway for them. In addition, 
CMS developed educational and outreach materials, reached out to state 
and local associations, and held meetings with the industry, as well as 
open door forums, to educate those affected by these requirements 
during the first quarter of CY 2011. Long-standing regulations have 
described the distinct content requirements for the plan of care (POC) 
and certification for a beneficiary requiring home health. Providers 
have the flexibility to implement the content requirements for both the 
POC and certification in a manner that best makes sense for them.
    As part of the certification form itself, or as an addendum to it, 
the physician must document when the physician or allowed NPP saw the 
patient, and document how the patient's clinical condition as seen 
during that encounter supports the patient's homebound status and need 
for skilled services.
    Aside from allowing providers the flexibility to implement the 
content requirements of the both the POC and certification in a manner 
that makes sense for them, in order to reduce any obstacles to care, 
there is an ample timeframe within which the face-to-face encounter 
requirement must be met. The face-to-face encounter must occur within 
the 90 days prior to the start of home health care, or within the 30 
days after the start of care. Additionally, there is additional 
flexibility to accommodate providers and beneficiaries in rural areas. 
The face-to-face encounter can occur via telehealth, in rural areas, in 
an approved originating site.
                                 ______
                                 
    [Whereupon, at 12:45 p.m., the committee was adjourned.]

                                 
