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







                    THE FISCAL YEAR 2013 HHS BUDGET

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

                                HEARING

                               BEFORE THE

                         SUBCOMMITTEE ON HEALTH

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

                             MARCH 1, 2012

                               __________

                           Serial No. 112-121






[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]




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                    COMMITTEE ON ENERGY AND COMMERCE

                          FRED UPTON, Michigan
                                 Chairman

JOE BARTON, Texas                    HENRY A. WAXMAN, California
  Chairman Emeritus                    Ranking Member
CLIFF STEARNS, Florida               JOHN D. DINGELL, Michigan
ED WHITFIELD, Kentucky                 Chairman Emeritus
JOHN SHIMKUS, Illinois               EDWARD J. MARKEY, Massachusetts
JOSEPH R. PITTS, Pennsylvania        EDOLPHUS TOWNS, New York
MARY BONO MACK, California           FRANK PALLONE, Jr., New Jersey
GREG WALDEN, Oregon                  BOBBY L. RUSH, Illinois
LEE TERRY, Nebraska                  ANNA G. ESHOO, California
MIKE ROGERS, Michigan                ELIOT L. ENGEL, New York
SUE WILKINS MYRICK, North Carolina   GENE GREEN, Texas
  Vice Chairman                      DIANA DeGETTE, Colorado
JOHN SULLIVAN, Oklahoma              LOIS CAPPS, California
TIM MURPHY, Pennsylvania             MICHAEL F. DOYLE, Pennsylvania
MICHAEL C. BURGESS, Texas            JANICE D. SCHAKOWSKY, Illinois
MARSHA BLACKBURN, Tennessee          CHARLES A. GONZALEZ, Texas
BRIAN P. BILBRAY, California         JAY INSLEE, Washington
CHARLES F. BASS, New Hampshire       TAMMY BALDWIN, Wisconsin
PHIL GINGREY, Georgia                MIKE ROSS, Arkansas
STEVE SCALISE, Louisiana             JIM MATHESON, Utah
ROBERT E. LATTA, Ohio                G.K. BUTTERFIELD, North Carolina
CATHY McMORRIS RODGERS, Washington   JOHN BARROW, Georgia
GREGG HARPER, Mississippi            DORIS O. MATSUI, California
LEONARD LANCE, New Jersey            DONNA M. CHRISTENSEN, Virgin 
BILL CASSIDY, Louisiana              Islands
BRETT GUTHRIE, Kentucky              KATHY CASTOR, Florida
PETE OLSON, Texas
DAVID B. McKINLEY, West Virginia
CORY GARDNER, Colorado
MIKE POMPEO, Kansas
ADAM KINZINGER, Illinois
H. MORGAN GRIFFITH, Virginia

                                 _____

                         Subcommittee on Health

                     JOSEPH R. PITTS, Pennsylvania
                                 Chairman
MICHAEL C. BURGESS, Texas            FRANK PALLONE, Jr., New Jersey
  Vice Chairman                        Ranking Member
ED WHITFIELD, Kentucky               JOHN D. DINGELL, Michigan
JOHN SHIMKUS, Illinois               EDOLPHUS TOWNS, New York
MIKE ROGERS, Michigan                ELIOT L. ENGEL, New York
SUE WILKINS MYRICK, North Carolina   LOIS CAPPS, California
TIM MURPHY, Pennsylvania             JANICE D. SCHAKOWSKY, Illinois
MARSHA BLACKBURN, Tennessee          CHARLES A. GONZALEZ, Texas
PHIL GINGREY, Georgia                TAMMY BALDWIN, Wisconsin
ROBERT E. LATTA, Ohio                MIKE ROSS, Arkansas
CATHY McMORRIS RODGERS, Washington   JIM MATHESON, Utah
LEONARD LANCE, New Jersey            HENRY A. WAXMAN, California (ex 
BILL CASSIDY, Louisiana                  officio)
BRETT GUTHRIE, Kentucky
JOE BARTON, Texas
FRED UPTON, Michigan (ex officio)

                                  (ii)






















                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Joseph R. Pitts, a Representative in Congress from the 
  Commonwealth of Pennsylvania, opening statement................     2
    Prepared statement...........................................     3
Hon. Frank Pallone, Jr., a Representative in Congress from the 
  State of New Jersey, opening statement.........................     5
Hon. Henry A. Waxman, a Representative in Congress from the State 
  of California, prepared statement..............................    56

                                Witness

Kathleen Sebelius, Secretary, Department of Health and Human 
  Services.......................................................     5
    Prepared statement...........................................     8
    Answers to submitted questions...............................    58

                           Submitted Material

Statement, undated, of Catholic Charities USA, submitted by Mr. 
  Pitts..........................................................    19

 
                    THE FISCAL YEAR 2013 HHS BUDGET

                              ----------                              


                        THURSDAY, MARCH 1, 2012

                  House of Representatives,
                            Subcommittee on Health,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:00 a.m., in 
room 2123 of the Rayburn House Office Building, Hon. Joe Pitts 
(chairman of the subcommittee) presiding.
    Members present: Representatives Pitts, Burgess, Whitfield, 
Rogers, Myrick, Murphy, Blackburn, Gingrey, Latta, McMorris 
Rodgers, Lance, Cassidy, Guthrie, Barton, Upton (ex officio), 
Pallone, Engel, Capps, Schakowsky, Christensen, Markey, and 
Waxman (ex officio).
    Staff present: Clay Alspach, Counsel, Health; Gary Andres, 
Staff Director; Mike Bloomquist, General Counsel; Howard Cohen, 
Chief Health Counsel; Brenda Destro, Professional Staff Member, 
Health; Nancy Dunlap, Health Fellow; Paul Edattel, Professional 
Staff Member, Health; Julie Goon, Health Policy Advisor; Debbee 
Keller, Press Secretary; Ryan Long, Chief Counsel, Health; 
Carly McWilliams, Legislative Clerk; Nika Nour, NewMedia 
Specialist; John O'Shea, Professional Staff Member, Health; 
Monica Popp, Professional Staff Member, Health; Chris Sarley, 
Policy Coordinator, Environment and Economy; Heidi Stirrup, 
Health Policy Coordinator; Phil Barnett, Democratic Staff 
Director; Alli Corr, Democratic Policy Analyst; Eric Flamm, FDA 
Detailee; Amy Hall, Democratic Senior Professional Staff 
Member; Ruth Katz, Democratic Chief Public Health Counsel; 
Purvee Kempf, Democratic Senior Counsel; Elizabeth Letter, 
Democratic Assistant Press Secretary; Karen Nelson, Democratic 
Deputy Committee Staff Director for Health; and Anne Morris 
Reid, Democratic Professional Staff Member.
    Mr. Pitts. This subcommittee will come to order.
    As agreed earlier with the Democrat side of the aisle, each 
side will be recognized for 1 minute for opening statements. 
Then we can move straight to Secretary Sebelius's testimony and 
questions. The Chair reminds the members that pursuant to the 
committee rules, all members' opening statements will be made 
part of the record. The Chair recognizes himself for 1 minute 
for an opening statement.

OPENING STATEMENT OF HON. JOSEPH R. PITTS, A REPRESENTATIVE IN 
         CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA

    First, I would like to thank Secretary Sebelius for being 
here with us today to discuss the fiscal year 2013 budget. One 
of the most striking features of this year's budget is just how 
much of it is not dependent upon Congress.
    For example, the phrase ``ACA Mandatory Funding'' appears 
throughout the budget tables, and this designation means, of 
course, that the Affordable Care Act requires automatic 
appropriations for certain items. The phrase ``Prevention 
Fund'' also appears numerous times, referencing the Prevention 
and Public Health Fund, a multibillion-dollar fund over which 
the Secretary has sole discretion.
    Beyond the absence of Congressional authority over these 
funds, I am deeply troubled by the lack of accountability and 
transparency practiced by the department, and I hope the 
Secretary will be able to explain why her department is so late 
on so many of the rules required by PPACA.
    [The prepared statement of Mr. Pitts follows:]


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    Mr. Pitts. The Chair now recognizes the ranking member of 
the subcommittee, Mr. Pallone, for 1 minute for an opening 
statement.

 OPENING STATEMENT OF FRANK PALLONE, JR., A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF NEW JERSEY

    Mr. Pallone. Thank you, Chairman Pitts, and Secretary 
Sebelius for being here today.
    I know I have to limit my remarks so I just want to say 
with regard to the Affordable Care Act, I think we are making a 
lot of progress and I certainly urge the President and the 
Secretary to continue taking the steps necessary under the ACA 
to improve our health care system.
    But I am also a strong believer in the importance of 
government investment in advancing science and research. That 
is why I was also pleased to see the President's continued 
support towards innovative biomedical and behavioral 
advancements through investments in the NIH and the FDA.
    I was also pleased to see that the administration has 
proposed an expansion of the Small Business Health Care Tax 
Credit that could benefit almost 3 billion workers this year. 
My state of New Jersey has a high cost of living and a high 
wage base, which has made it tougher for New Jersey small 
employers to access this tax. I would like to see the wage base 
in each State included in the calculation for eligibility of 
the tax credit, and therefore I am planning on introducing 
legislation that would remedy this issue, and I hope I can work 
with HHS on this.
    So thank you, Madam Secretary, for being here.
    Thank you, Mr. Chairman.
    Mr. Pitts. The Chair thanks the gentleman.
    Our witness today will be the Secretary of the Department 
of Health and Human Services, the Honorable Kathleen Sebelius. 
Secretary Sebelius, we are delighted to have you back with us 
today, and you are recognized for 5 minutes for an opening 
statement.

STATEMENT OF KATHLEEN SEBELIUS, SECRETARY, DEPARTMENT OF HEALTH 
                       AND HUMAN SERVICES

    Ms. Sebelius. Thank you so much, Chairman Pitts and Ranking 
Members Pallone and Waxman and members of the committee. I am 
pleased to be with you today to discuss the President's 2013 
budget for the Department of Health and Human Services.
    Our budget helps to create an American economy built to 
last by strengthening our Nation's health care, supporting 
research that will lead to tomorrow's cures and promoting 
opportunities for American children and families so everyone 
has a fair shot to reach his or her own potential.
    It makes investments that we need right now while reducing 
the deficit in the long run to make sure that the programs that 
millions of Americans rely on will be there for generations to 
come, and I look forward to answering your questions, Mr. 
Chairman, about the budget, but I want to just take a few 
minutes to share some of the highlights.
    Over the last 2 years, we have worked to deliver the 
benefits of the Affordable Care Act to the American people. 
Thanks to the law, we now have 2.5 million additional young 
millions already getting coverage through their parents' health 
plans. More than 25 million seniors have already taken 
advantage of the free recommended preventive services under 
Medicare, and small business owners are getting tax breaks on 
their health care bills that allow them to hire more employees. 
This year we will build on that progress by continuing to 
support States as they work to establish affordable insurance 
exchanges by 2014. Once these competitive marketplaces are in 
place, they will ensure that all Americans have access to 
quality, affordable health coverage.
    But we know that a lack of insurance isn't the only 
obstacle to care, so our budget also invests in our health care 
workforce. The budget supports training more than 7,100 primary 
care providers and placing them where they are needed most. It 
also invests in America's network of community health centers. 
Our budget helps health centers provide access to quality care 
for 21 million Americans, 300,000 more than were served last 
year.
    This budget also continues the administration's commitment 
to improving the quality and safety of care by spending health 
dollars more wisely, and that means in health information 
technology. It means funding the first-of-its-kind CMS 
Innovation Center, which is partnering with physicians, nurses, 
private payers, hospitals and others who have accepted the 
challenge to develop new, sustainable methods for the health 
care system. In addition, the budget ensures that a 21st 
century America will continue to lead the world in biomedical 
research by maintaining funding for the National Institutes of 
Health.
    At the same time, we recognize the need to set priorities, 
make difficult tradeoffs and ensure we use every dollar wisely. 
That starts with continuing support for President Obama's 
historic push to stamp out waste, fraud and abuse in the health 
care system. Now, over the last 3 years, every dollar we have 
put into health care fraud has returned more than $7. That is a 
pretty good investment. Last year alone, those efforts 
recovered more than $4 billion, which are both in the Medicare 
and Medicaid trust funds around the country. And this week, our 
administration arrested the alleged head of the largest 
individual Medicare and Medicaid fraud operation in history. 
Our budget builds on those efforts, giving law enforcement the 
technology and data to spot perpetrators early and prevent 
payments based on fraud from going out in the first place. The 
budget also contains more than $360 billion in health savings 
over the next 10 years, most of which comes from reforms to 
Medicare and Medicaid. These are significant but they are 
carefully crafted to protect beneficiaries.
    For example, we proposed significant savings in Medicare by 
reducing drug costs, a plan that not only reduces the costs of 
pharmaceuticals but puts money back in the pockets of Medicare 
beneficiaries. The budget makes smart investments where they 
will have the greatest impact, and it puts us all on a path to 
build a stronger, healthier and more prosperous America for the 
future.
    Again, thank you, Mr. Chairman, for this invitation,k and I 
look forward to our conversation.
    [The prepared statement of Ms. Sebelius follows:]


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    Mr. Pitts. The Chair thanks the gentlelady and we will now 
begin questioning, and I will recognize myself for 5 minutes 
for that purpose.
    Regardless of one's opinion of the health care law, I think 
everyone can agree there is a lot of regulatory uncertainty 
regarding the rules of the road moving ahead. States, health 
providers, small businesses and patients have been asking HHS 
for final or even just proposed Federal rules as they relate to 
PPACA's exchanges. The stakes are high since taxpayers are on 
the hook for a new $1 trillion entitlement. With that in mind, 
I would like to ask you about the status of PPACA rules 
required by the statute, and given my limited amount, I would 
respectfully ask that you answer yes or no. I have a series of 
questions.
    First, has HHS released a final rule as it relates to the 
individual market exchange?
    Ms. Sebelius. The State-based market exchange, a final 
rule? No, sir.
    Mr. Pitts. Has HHS released a final rule detailing what 
States must do to receive Federal approval for their exchange?
    Ms. Sebelius. We have not issued a final rule, sir, but we 
have certainly put out bulletins and guidance. We are preparing 
an interim final rule. We want feedback at every point along 
the way and we are actively working with States around the 
country----
    Mr. Pitts. But a bulletin has no real guidance for the 
State. You have not proposed a final rule?
    Ms. Sebelius. We have not proposed a final rule, sir, but 
they have a lot of guidance and are very actively engaged in 
the process of helping us shape the final rule.
    Mr. Pitts. Thank you. Has HHS released a final rule related 
to the establishment and operation of a Federal exchange?
    Ms. Sebelius. Again, no, Mr. Chairman, but we are in the 
process. I don't think you would want us to do that without 
actively engaging stakeholders along the way, and that is 
exactly what we are doing including the last weekend when the 
governors were in town and we spent hours with state officials 
talking about----
    Mr. Pitts. So the answer is no. Has HHS released a final 
rule related to Federal accreditation requirements for health 
plans?
    Ms. Sebelius. Regarding? I am sorry.
    Mr. Pitts. Federal accreditation of health plans.
    Ms. Sebelius. No, sir.
    Mr. Pitts. Has HHS released a final rule related to 
guaranteed issue and community rating bands?
    Ms. Sebelius. We do not have the final rules released at 
this point.
    Mr. Pitts. Has HHS released even a proposed rule for cost 
sharing or federally mandated benefits, otherwise known as 
essential health benefits?
    Ms. Sebelius. We have released guidance. Most recently we 
are talking to States about the interim final rule. We have 
given them a strategy with a----
    Mr. Pitts. But not a final rule?
    Ms. Sebelius [continuing]. Benchmark plan, and we are 
preparing the rules as we speak, Mr. Chairman.
    Mr. Pitts. No final rule. The Federal requirements on 
benefit coverage and cost sharing are two of the most basic and 
critical pieces of information needed for States to implement 
an exchange. We are less than 18 months from when plans are 
supposed to enroll customers in exchange plans yet HHS has not 
even issued a proposed rule on these fundamental pieces of law. 
Is that correct?
    Ms. Sebelius. Mr. Chairman, again, we are actively engaged 
in benchmark plans. We have released guidance. We are getting 
input on that. We are trying to make sure that when we release 
an interim rule and when we move to final rules that these are 
workable arrangements with States, with markets around the 
country. So that guidance is very much underway. We are engaged 
in dialog and----
    Mr. Pitts. I understand.
    Ms. Sebelius [continuing]. They are beginning to frame 
their plans but----
    Mr. Pitts. My time is limited.
    Ms. Sebelius [continuing]. We would agree that we need 
rules to monitor them.
    Mr. Pitts. Let me continue. I would submit this is symbolic 
with the state of regulation in Washington. States, small 
businesses and individuals are shoved aside and told that a 
Federal agency is needed to meddle around in their lives and 
then we pass a law giving Washington almost universal control 
over one-sixth of the economy and then Washington writes some 
vague rules for some parts of the law and delays rules for 
other parts of the law. Deadlines are not met. States, health 
care providers and consumers are left in the dark and 
Washington thinks it can just dump a thousand requirements on 
States and the private sector at the last minute with no 
consequences for patient health.
    I have just 35 seconds left. Yesterday, I was contacted by 
Catholic Charities, and I was asked if I would read into the 
record their actual position on this so-called accommodation 
because they believe some have mischaracterized where they 
stand, and upon the announcement of the so-called 
accommodation, Reverend Larry Snyder, President and CEO of 
Catholic Charities USA, stated ``Catholic Charities USA 
welcomes the administration's attempt to meet the concerns of 
the religious community and we look forward to reviewing the 
final language. We are hopeful that this is a step in the right 
direction. We are committed to continuing our work to ensure 
that our religious institutions will continue to be granted the 
freedom to remain faithful to our beliefs while also being 
committed to providing access to quality health care for our 
70,000 employees and their families across the country.'' 
However, upon actually seeing what was proposed and having 
their position mischaracterized as if they believed the 
accommodation was sufficient to protect religious liberty, they 
posted the following clarification: ``In response to a great 
number of mischaracterizations in the media, Catholic Charities 
USA wants to make two things very clear: One, we have not 
endorsed the accommodation to the HHS mandate that was 
announced by the administration on February 10. Two, we 
unequivocally share the goal of the U.S. Catholic Bishops to 
uphold religious liberty and will continue to work with the 
USCCB towards that goal. Any representation to the contrary is 
false.''
    [The information follows:]


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    Mr. Pitts. Now the Chair recognizes the ranking member, Mr. 
Pallone, for 5 minutes for questions.
    Mr. Pallone. Thank you, Mr. Chairman.
    Madam Secretary, I apologize but I have to try to get in 
two questions, one on Children's Graduate Medical Education and 
the other is on cosmetic user fees, so if I cut you short on 
the first one, it is only because I want to get to the second 
one.
    I want to say I am pleased that the administration has come 
to its senses and included funding for the Children's Graduate 
Medical Education, or CHGME, in this year's budget. However, I 
am dismayed that the White House only proposes $88 million, 
approximately one-third the amount which Congress appropriated 
for the program last year. As you know, there are serious 
national shortages in many pediatric specialties, shortages 
which the CHGME program has been crucial in helping to address. 
Children's Specialized Hospital in New Jersey has told me that 
significant reductions to the program would exacerbate these 
shortages and create additional barriers to access to specialty 
care for children.
    So I wanted to ask you, if the CHGME is not adequately 
funded, which obviously I don't think it is, how do you expect 
to train these providers, not only for the shortage in primary 
care pediatrics but also in the specialties with this level of 
funding essentially?
    Ms. Sebelius. Well, Mr. Pallone, we have had this 
discussion before, and I know we share your interest in 
training of primary care providers and particularly pediatric 
providers. There are other streams of funding available. We are 
trying to use what are relatively limited resources to focus on 
a broad array of primary care training programs, and in a 
better budget time, we clearly would have proposed additional 
resources but this reflects tough decisions made at a very 
difficult time.
    Mr. Pallone. No, and I appreciate that. I just wanted to 
stress that I just don't think the investments in the pediatric 
specialty loan repayment program alone will be enough to 
compensate for the cuts, and I know that the budget eliminates 
the IME costs and only funds the direct medical expenses for 
pediatric GME, but the problem is, and again, I am very 
conscious of this and I am not saying this to you personally, 
but I always think that we worry about adults, particularly 
senior citizens, and then at the same time we were not doing 
what we should for kids. And so the administration has not 
proposed to completely cut the IME funding for adults in the 
Medicare population but eliminates this funding that directly 
benefits the health of kids, and it just seems like the kids 
are always taking the back seat. It is not just here, it is in 
so many other aspects of the budget, and I just think the 
consequence of that is that, you know, we are really going to 
threaten the already vulnerable pediatric health care 
workforce.
    But let me get to my second question on cosmetic user fees. 
The President's budget for the FDA includes a proposed new user 
fee that would address cosmetic safety, and that fee would 
cover activities relating to the establishment of registration 
fees, cosmetic standards and refine inspections and sampling of 
imported and domestic products. You know that myself, Mr. 
Dingell and Mr. Waxman have been working on a proposal that 
would require registration of cosmetic facilities and listing 
of products requiring substantiation of the safety of cosmetic 
products, requiring adverse-event reporting and giving FDA the 
authority to recall cosmetic products. It is obvious the 
administration agrees that the cosmetics program is in need of 
resources because your budget includes fees for activities like 
registration and standard setting, but if we were to adopt my 
proposal and add on more responsibilities in the cosmetic area, 
do you agree that there would be an even greater need for 
additional fees? That is my question.
    Ms. Sebelius. Mr. Pallone, we do share your interest in 
this important area. I think that the fees in the budget would 
support, according to the FDA, a cosmetic registration program. 
We would be very eager to work with you looking at other areas 
that might be appropriate but are reluctant to do that without 
additional resources, giving the FDA lots of assignments 
without the resources to carry them out effectively. But this 
is an area that I think needs attention, which is why the 
President has proposed the cosmetic registration program and it 
would allow us to implement and standardize and collect 
information that just isn't available right now for consumer 
safety.
    Mr. Pallone. And I appreciate that. I mean, we all want the 
FDA to do a good job ensuring the safety of cosmetic products, 
and I think it is critical that we ensure that they have the 
resources to do it, and I appreciate your----
    Ms. Sebelius. And we would be eager to work with you to do 
that.
    Mr. Pallone. Thank you.
    Thank you, Mr. Chairman.
    Mr. Pitts. The Chair thanks the gentleman and now 
recognizes the chairman of the full committee, Mr. Upton, for 5 
minutes for questions.
    Mr. Upton. Thank you, Mr. Chairman.
    Welcome, Madam Secretary. A couple things that I would like 
to ask this morning. I am seeing different numbers in the 2013 
budget than the spending levels that you provided to the 
committee a year ago, and I don't know if you want to respond 
by letter in response back, but let me just walk you through a 
couple things. Last year, you stated that HHS was estimated to 
spend $400 million on State exchange grants in fiscal year 2012 
but according to your latest budget, your department will have 
spent $900 million plus on these very same grants in fiscal 
year 2012, more than double your estimate from a year ago. Is 
that correct?
    Ms. Sebelius. Mr. Chairman, we have spent so far out of the 
allocation 2 years of a billion dollars about $475 million, and 
261 of that was spent by HHS.
    Mr. Upton. No, this is specifically the State exchange 
grants.
    Ms. Sebelius. Oh, the State exchange grants.
    Mr. Upton. You might want to come back to us.
    Ms. Sebelius. And I would be happy to get back. I want to 
make sure we get all these details.
    Mr. Upton. As a former budget official, we look forward to 
a written response.
    Now, Congress in the President's health care law 
appropriated a billion dollars for the implementation yet in 
this year's budget you estimated that the fund will be 
exhausted by the end of 2012 and you have asked for another 
billion to implement the law. Is that correct?
    Ms. Sebelius. Yes, Mr. Chairman, and that is the question I 
was answering. I apologize. We had an original $1 billion in 
the Affordable Care Act when it was passed.
    Mr. Upton. Now it is two.
    Ms. Sebelius. Pardon me?
    Mr. Chairman. And now it is two.
    Ms. Sebelius. Well, the CBO estimate in March of 2010 was 
that it would cost about a billion dollars a year to implement. 
We have actually well underspent that estimate so we are now in 
fiscal year 2012. We have spent at HHS about $261 million, 
total with our other agency partners of $475 million but we 
think by the end of 2012 that original billion dollars will be 
spent and 2-1/2 years will have expired. So we are 
significantly underspending what the estimates were.
    Mr. Upton. Let me put this then in writing and let me point 
some of these out. I want to get to a question as it relates to 
my State and my district.
    This committee, we received a memo from CRS, Congressional 
Research Service, outlining possible penalties for religious 
employers if they failed to comply with the HHS mandate to 
cover drugs and services that they have religious or moral 
objections toward, and according to CRS, those penalties of 
$100 per day per affected individual could be levied against 
the institution for following their conscience. In my State and 
in my district, I have a hospital, Borgess Hospital, a pretty 
large institution. It is part of the Ascension Hospital System 
in Michigan. They employ throughout the State 31,000 people. So 
according to this CRS memo, Ascension is likely to be subject 
to fines of over a billion dollars--that is B as in big--
because of that mandate. So my question, Ascension, like many 
religious-affiliated organizations in fact is self-insured, so 
the so-called accommodation announced by the White House on 
February 10th doesn't attempt, as I understand, to address the 
violation of conscience against self-insured employers. So what 
are your plans for accommodating self-insured employers with 
conscience issues like Borgess Hospital?
    Ms. Sebelius. Mr. Chairman, the accommodation that the 
President talked about on the 10th of February would apply to 
the non-exempted employers who currently do not offer 
contraception because of religious objections. As you know, 
churches, church auxiliaries, we think many parochial and 
Catholic elementary schools and high schools are likely to 
already be totally exempted. Grandfathered plans are totally 
exempted. The accommodation----
    Mr. Upton. So schools are totally exempted?
    Ms. Sebelius. If a parochial school meets the definition 
that is in the IRS where they have a majority of Catholic 
employees, serve a majority of--or religious employees, serve a 
majority of----
    Mr. Upton. So how would this impact an institution like 
Borgess Hospital?
    Ms. Sebelius. Well, I am getting to that, Mr. Chairman. So 
that the rule that we intend to propose, we will propose a rule 
in the near future after reaching out and having dialog with 
folks. It would require insurance companies in a directly 
insured plan to provide contraceptive coverage so that a 
religious employer who had objections would not have to either 
pay for or provide or refer people for contraception. We are 
confident that similar arrangements can be made with self-
insured institutions who work with third-party administrators. 
There is an independent body outside the board. There are a 
variety of arrangements already in place in the 28 States that 
have this already in place, and we intend to be informed by 
that when we propose the rules. So whether it is through a 
third-party administrator, which would not be the employer 
group, or a side-by-side plan as operates in Georgetown or many 
other hospital arrangements, we will offer a variety of 
strategies to make sure that religious liberties are respected 
at the same time that millions of women who work in these 
institutions and spouses of employees and daughters of 
employees have access to these important health----
    Mr. Upton. I know my time is expired but I am not sure that 
that is going to work, but I yield back.
    Mr. Pitts. The Chair thanks the gentleman. We are voting. 
We are going to go one more 5-minute break and come back 
immediately after the vote. The Chair recognizes the ranking 
member of the full committee, Mr. Waxman, for 5 minutes for 
questions.
    Mr. Waxman. Thank you very much, Mr. Chairman.
    Madam Secretary, welcome to the committee.
    Ms. Sebelius. Thank you.
    Mr. Waxman. I must say, in the decades that I have been in 
the Congress, you are one of the finest Secretaries we have had 
for Health and Human Services, and I am somewhat amused at the 
questions you are going to get and have already gotten today 
because you almost can't win. If you came in with rules and 
regulations that spelled them out, you would be criticized for 
dumping a lot of regulations on the table without consulting, 
and now that you are consulting, you are being criticized for 
not having the rules already in place
    I know there is a lot of work to be done leading up to 2014 
to create a transparent and competitive marketplace where 
consumers will be offered quality insurance products that cover 
their health care needs. Insurers, consumer groups, States and 
others have been encouraging the administration to share their 
thoughts early to allow for maximum planning and preparation. I 
recognize the need to share information early. I also recognize 
the need to work through issues thoroughly. That is why I was 
pleased with the issuance of subregulatory guidance on the 
formation of the essential health benefits package and on the 
actuarial value and cost sharing and qualified health plans. 
This starts the conversation early. It allows for input before 
more formal and lengthy rulemaking is released. You have been 
criticized for this position, wrongly, in my view. Can you tell 
us what you see as the advantage of this approach and confirm 
whether you intend to continue towards formal notice and 
comment rulemaking process?
    Ms. Sebelius. Mr. Waxman, I think you have spelled out what 
has been part of the strategy, which is to actually put in 
place around framework issues where States need to know, so we 
do have proposed rules, in answer to the chairman's questions 
earlier, around the exchange setup. We have proposed rules for 
Medicaid expansion, both of which were informed by active 
conversations from the States. We have now put out lengthy 
guidance on a strategy toward the essential health benefits and 
are having many conversations trying to reach the balance 
between affordable coverage and comprehensive coverage, making 
sure that we are mindful of the law but know that having a 
product priced and able to be operated in a State is also an 
essential piece of the puzzle. So we fully intend to put out 
interim rules and final rules. You can't enforce without final 
rules in place. But we want to be informed by State insurance 
commissioners, employers on the ground, our colleagues in 
governors' offices across this country, and that dialog is 
very----
    Mr. Waxman. Well, that sounds like to me a very reasonable 
approach.
    This hearing is about the budget, although you are going to 
be asked about the budget, although you are going to be asked 
about everything, but the budget includes important funding to 
ensure effective administration of Medicare, Medicaid, child 
health program, continued implementation of the health care 
law. The budget request includes an increase of a billion 
dollars over the fiscal year 2012 level. That includes a 
request for $864 million for establishing insurance exchanges 
in the States.
    Now, it is essential that Congress meet the President's 
budget request. Some of my colleagues may wish to deny your 
agency this funding in an effort to halt the progress of the 
health reform law. I think this political approach would 
jeopardize all the progress we made. More than 2.5 million 
young adults under the age of 26 now have health insurance 
under their parents' plan. More than 85 million people 
including those in Medicare and private health insurance plans 
have access to free preventive coverage. More than 30 States 
have begun to plan health exchanges, helping make good on the 
promise of affordable coverage for all, and more premium 
dollars going to health benefits, not corporate overhead. So 
this will help consumers get the value for their dollar.
    Can you address the critics that are claiming that your 
budget request for implementation money for the Affordable Care 
Act is a wasteful overspending by the government? Can you 
describe the kinds of initiatives that money will be used for?
    Ms. Sebelius. Well, Mr. Waxman, the additional billion 
dollars in Medicare and Medicaid is for really two categories. 
One is about $800 million that actually is for the one-time 
build-out of the federally operated exchange program--IT, 
consumer outreach, the variety of services that will be needed 
for those areas in the country where the State has chosen not 
to set up a State-based exchange or wants a State-based 
exchange in partnership with the Federal government, and we 
will be picking up the other pieces. So part of the dollars are 
for that. Part of the dollars actually about $200 million are 
directed toward increases and enhancements in the Medicare and 
Medicaid programs themselves. So the overall administration of 
these two efforts where we have about 118 million people 
currently enrolled in either Medicare or Medicare and needs to 
continue to update. I will tell you, Mr. Chairman, even with 
that additional request, our overall administrative costs for 
the largest insurance programs in the world are running just 
under 3 percent, even with that billion-dollar increase.
    Mr. Waxman. That is very impressive. Thank you.
    Mr. Pitts. The Chair thanks the gentleman. The committee 
will stand in recess until the end of the last vote, and we 
will reconvene immediately. The committee stands in recess.
    [Recess.]
    Mr. Pitts. The committee is reconvened, and the Chair 
recognizes the vice chairman of the subcommittee, Dr. Burgess, 
for 5 minutes for questions.
    Mr. Burgess. Thank you, Mr. Chairman, and Secretary, 
welcome back to our committee.
    I have a lot of stuff to ask today. I know we have 5 
minutes, so I will of necessity be having to submit a lot of 
questions for the record and I really would appreciate a 
thoughtful yet timely response to those questions, but let me 
follow up on where Chairman Upton was going a few moments ago. 
We have got the 2013 budget from the President on the 
Refundable Premium Assistance Tax Credits, and the line items 
between the fiscal year 2012 budget as submitted and the fiscal 
year 2013 budget as submitted are different year by year, and 
in fact, the total increase in this year's President's budget 
is $111 billion. So what has happened that accounts for this 
change? Are you having to reassess the number of people that 
perhaps might be driven out of employer-sponsored insurance 
onto an exchange?
    Ms. Sebelius. Mr. Burgess, the one issue that I think has 
changed definitively is that there was a legislative change 
dealing with the adjusted gross income for people in Medicaid 
versus the exchange, which we feel will actually have an impact 
on fewer people eligible for Medicaid and more people eligible 
for the exchange. Much of the changes in those numbers are also 
again in the Treasury Department budget, not in our budget. I 
would be glad to get you a very specific answer in writing but 
I am not as familiar with some of the Treasury issues, but I 
can tell you that legislative change has impacted the estimates 
of how many people will be eligible for the exchange, the MAGI 
rule.
    Mr. Burgess. Fair enough, but this is a budget hearing and 
that is a 30 percent increase and----
    Ms. Sebelius. I just----
    Mr. Burgess. We would like----
    Mr. Sebelius. There is a legislative change. I would be 
delighted to get additional details from the Department of 
Treasury.
    Mr. Burgess. From the standpoint of the oversight function 
of this committee, I think we have to have that.
    Now, speaking of the Treasury, can you give us a line item 
on how much money has been transferred to the Internal Revenue 
Service for their role in the Affordable Care Act?
    Ms. Sebelius. Mr. Chairman, let me see if I can get the 
Treasury number up. I know that of the $474 million, $261 
million has been spent by our department, and the rest is our 
partners. Treasury dollars, we have transferred $210 million to 
the Treasury Department. In terms of how they have allocated 
those funds, I cannot answer that question.
    Mr. Burgess. And that was my next question. Do you require 
for them to provide you with the allocation numbers?
    Ms. Sebelius. Yes, we do.
    Mr. Burgess. And when do you expect to receive those from 
Treasury?
    Ms. Sebelius. Again, I would be happy to get you that 
answer in writing. I know that is $210 million, and I will give 
you the detailed report of what we have so far.
    Mr. Burgess. I think it is important.
    Ms. Sebelius. We get a quarterly report from them in terms 
of how they are expending and what dollars, and I would be 
happy to answer that for you.
    Mr. Burgess. Well, they are your partners on this. After 
all, they are the enforcers who are going to enforce the 
individual mandate, so I think it is important that you share 
that information with the committee.
    Now, last year, you were asked whether Section 1311(h) of 
the Patient Protection and Affordable Care Act provided you the 
authority to exclude doctors and other health professionals 
from participating in exchange plans. Are you prepared to 
answer that question today?
    Ms. Sebelius. Sir, what is the question?
    Mr. Burgess. Section 1311(h) of the Patient Protection and 
Affordable Care Act that deals with exchanges, (h) starts out, 
``Beginning January 1, 2015, a qualified health plan may 
contract with--it goes through A, which is hospitals. Paragraph 
B is ``may contract with a health care provider only if such 
provider implements such mechanisms to improve health quality 
as the Secretary may by regulation require.'' So are you 
prepared to exclude providers from the exchange? Are you 
developing that set of criteria? Are providers to see the day 
soon where they would be prohibited from participating in an 
exchange if they don't comply with all the things that you set 
forth?
    Ms. Sebelius. Mr. Burgess, we see that issue as one that at 
the State level will be decided between the board of the 
exchange and the issuers who----
    Mr. Burgess. How about a State that doesn't do an exchange? 
My State is not right now, as you know, and there will be a 
Federal exchange.
    Ms. Sebelius. Pardon me?
    Mr. Burgess. And there may be a Federal exchange if we can 
get through the problems with the tax code.
    Ms. Sebelius. We will again make decisions at the Federal 
exchange level about which issuers who have networks of their 
own to include based on their quality performance, based on 
their----
    Mr. Burgess. But the Congress in its wisdom said that you 
would decide, not that the State would decide.
    Ms. Sebelius. I am telling you, for the Federal exchange, 
we will be making decisions about issuers. We do not intend to 
reach into a State exchange. They will be making the 
determinations at the State level.
    Mr. Burgess. Well, are you asking us for a change in 
legislative language in the Affordable Care Act to allow you 
the freedom to do that?
    Ms. Sebelius. I am not, Mr. Burgess.
    Mr. Burgess. But it says in statute that you will make that 
decision, correct?
    Ms. Sebelius. Well, I am just telling you how I will make 
the decision. We will be working with the State-based exchanges 
so they will make determinations based on their issuers. If for 
some reason there was an outlier, we could have a conversation, 
but we intend to work with the States as the law intends so the 
State will set up a State-based exchange. We will at the same 
time be establishing a program for a Federal exchange.
    Mr. Burgess. And will you exclude providers from an 
exchange?
    Ms. Sebelius. This is not an issue of providers, this is an 
issue of which plans will be able to be operated. Plans have 
their own networks, and we will be----
    Mr. Burgess. So if you don't belong to a particular ACO, 
you may not be able to see your patient of long standing. Is 
that correct?
    Ms. Sebelius. Mr. Burgess, that is not at all what I said. 
Clearly, determinations will be made about how many providers, 
how many plans.
    Mr. Burgess. We might infer that from what you said.
    Mr. Pitts. The gentleman's time is expired.
    Mr. Burgess. I thank the Chairman.
    Mr. Pitts. The Chair recognizes the gentlelady from 
California, Ms. Capps, for 5 minutes for questions.
    Mrs. Capps. Thank you, Honorable Kathleen Sebelius, 
Secretary of Health and Human Services, for your testimony.
    You know, we are all so aware of the challenging economic 
climate in which we are living. However, I believe on the whole 
that the President's budget does strike an important balance 
between curbing spending and promoting the public's health. As 
a nurse, I know that we cannot reach our health care goals 
without a strong health care workforce made up of a range of 
health care professionals. So I would like to ask a couple of 
questions, if you could discuss briefly what steps have been 
taken in the budget to ensure that we have a health care 
workforce well equipped, diverse and large enough so as to help 
us successfully reach these goals. It is a tall order.
    Ms. Sebelius. Well, I think you are absolutely right, Ms. 
Capps, about the workforce being a critical part of this effort 
to transform the health care system, and certainly primary care 
providers become essential, not just physicians but nurses, 
nurse practitioners, mental health technicians, dental 
assistants. We are very pleased that this budget continues the 
progress we have made. So far in this administration, we have 
tripled the number of National Health Service Corps providers. 
This budget intends to continue the training of 7,100 new 
health care providers who will be serving in the most 
underserved areas, and I have the privilege of meeting with 
some of these young people every day who are thrilled with the 
idea they can both provide service to their communities or 
underserved communities as well as having their loans paid off 
so they don't emerge with so much debt.
    We are also, as you know, part of the Affordable Care Act 
is encouraging more providers to deal with Medicaid patients so 
changing Medicaid rates to Medicare, using our graduate medical 
resources to focus on slots for primary care, so we are very 
aware of the looming issue. If we are going to change from a 
sick care system to a health care system, the primary care 
workforce and an additional community care workforce is 
essential, and we are trying to use all the leverage that we 
have, many of which were part of the Affordable Care Act.
    Mrs. Capps. Thank you. And I want to just highlight the 
commitment to the nursing workforce, which has clearly been 
expanded in the Affordable Care Act including funds to train 
advanced practice nurses, which can take some of the expensive 
care costs away and transform them into excellent care that can 
be delivered by nurses and others.
    I am going to be circulating a letter in support of these 
nursing programs and urge my colleagues to join me in support 
of them.
    Just one other topic I would like to get to. In addition to 
a robust health care workforce, we all know that improving 
public health requires investments in research, in development 
and in innovation. However, during the recent economic 
downturn, I have heard from researchers, many in my district, 
about the lack of reliable grant funding now available, 
especially in the private sector. And this limits their ability 
to pursue the kind of scientific achievements and advancements 
that we need, and I think it also highlights the importance of 
the National Institutes of Health, NIH, which has traditionally 
been such a bipartisan issue. The President's budget only 
includes flat funding for NIH. However, reports indicate that 
management streamlining is going to free up money for 8 percent 
more grants to be awarded. Would you please expound on that a 
bit and explain what will go into that process and how it can 
actually improve the economic situation in many of our 
Congressional districts?
    Ms. Sebelius. Well, I certainly share your view that 
biomedical research is a critical component of not only saving 
lives but lowering costs and improving strategies so that the 
leadership at the National Institutes of Health led by Dr. 
Francis Collins I think have reorganized the resources at that 
very critical institution so that we anticipate with this 
budget funding 672 new research grants. New research grants 
will be funded.
    Mrs. Capps. Wow.
    Ms. Sebelius. About a 7.7 percent, almost an 8 increase in 
current grant funding. As you know, there is also a new Center 
for Translational Science thanks to work that we were able to 
do with Members of Congress that focuses on some of the most 
promising areas, a Cure Acceleration Network that is in place, 
again, moving resources to the most promising strategies. So 
yes, funding is flat. About 40 percent of our discretionary 
budget is in the National Institutes of Health so we found ways 
to make sure that those critical programs go on and I would say 
that the administrative costs will be diminished and more of 
those resources will be focused on the research that needs to 
go forward.
    Mrs. Capps. Thank you very much.
    Mr. Pitts. The Chair thanks the gentlelady and recognize 
the gentleman from Kentucky, Mr. Whitfield, for 5 minutes for 
questions.
    Mr. Whitfield. Madam Secretary, in the health care act, 
2010-2011, it provided for basically $1,250,000,000 for the 
Prevention Fund, and under the Prevention Fund, you have the 
authority I guess almost unilaterally to move that money into 
various accounts at HHS. So I would like to ask you to provide 
to the committee for the year 2010 and 2011 the amounts of 
money that were transferred to which particular accounts, and 
then from those accounts if grants were made to grantees around 
the country, the name of the grantee, the amount of the money, 
the purpose of the grant and the date of the grant. Would you 
be able to do that for us?
    Ms. Sebelius. I would be happy to do that.
    Mr. Whitfield. Thank you. Thank you very much.
    Now, one of the things that is a little bit troublesome to 
me in the President's 2013 budget is that he in essence 
eliminates part of the anti-lobbying provisions of the use of 
Federal funds. As you know, in the appropriation bills since 
the mid-1970s, we have had prohibitions against using Federal 
funds for lobbying, and to define it more specifically, 
prohibits using Federal funds to influence in any manner an 
official of any government to favor, adopt or oppose by vote or 
otherwise any legislation, law, ratification or policy. Why 
would the President want to omit that from his fiscal year 2013 
budget?
    Ms. Sebelius. Mr. Whitfield, I have to confess, I am not 
sure exactly what is being referred to. I know that our fiscal 
year 2012 budget, our budget, and there may be other statements 
in other budgets that I am not as familiar with, but our fiscal 
year 2012 budget actually included additional lobbying 
restrictions which we are actively working to comply with which 
not only apply to our department, which have been in place 
traditionally for years and we have complied with in terms of 
lobbying but also now apply to downstream grantees who receive 
money through the Prevention Fund. So we are updating our grant 
language, enhancing our oversight of grantees, retraining----
    Mr. Whitfield. Well, I mean, I----
    Mr. Sebelius. So I am not----
    Mr. Whitfield. I think that is commendable and I do 
appreciate it, but the prohibition has been very specific about 
using those funds at the Federal level, State level or local 
level, and the President explicitly in his 2013 budget allows 
those funds to be used at the local level, and my question to 
you would be, do you know why that action was taken by the 
White House?
    Ms. Sebelius. Again, I would be--I will provide a more 
thorough answer in writing. What I have just been told by our 
staff is that the language that we are proposing be eliminated 
is duplicative of existing law, that it already exists in 
statute. I will verify that and get back to you, but I am not 
aware of any new measures that we are talking about.
    Mr. Whitfield. So from your perspective, you are already 
doing that?
    Ms. Sebelius. That is what----
    Mr. Whitfield. Now, the reason I am asking the question is 
because I have seven pages here of 25 specific instances where 
grantees of HHS receiving money from HHS are explicitly trying 
to influence laws at the State and local levels relating to all 
sorts of issues. For example, in one town in California, 
Baldwin Park, they are using these--the entity, the grantee, is 
using this money to reduce the density of fast food 
establishment and convenience stores, for example, and we have 
seven pages of this, and it looks to me just on the surface 
that it is explicitly violating the law as set out in the 
Appropriation Act.
    Ms. Sebelius. Again, Mr. Whitfield, the new language in our 
budget for fiscal year 2012, we have not issued any new grants 
where that new language would be applicable. We are updating 
our grantee advice. We are updating but the prospective 
language has not impacted any of the grants in place. We are 
going to comply with the law. The language that has been 
statutory applied to our use of our Federal funds. We have also 
complied with that law for years. So I can assure you that the 
new language attached to the fiscal year budget, and it did go 
beyond statutory language, is one that we are currently 
updating and updating grantees about but there have been no 
grant releases where that new language would apply.
    Mr. Whitfield. Mr. Chairman, I might just make the comment 
that it was my understanding that this prohibition also applied 
to fiscal year 2010 and 2011, so----
    Ms. Sebelius. Not by grantees, Mr. Whitfield. It applied to 
us but not our grantees.
    Mr. Pitts. The Chair thanks the gentleman.
    The gentlelady from Illinois, Ms. Schakowsky, is recognized 
for 5 minutes for questions.
    Ms. Schakowsky. Thank you, Mr. Chairman.
    Just in regard to family budgets, I wanted to point out and 
thank you for the fact that 54 million Americans were provided 
at least one preventive service in 2011 through their private 
health insurance plan for no cost, and I think that the 
consequences of that are probably priceless in terms of 
colonoscopy screenings and flu shots and all the disease that 
has been prevented, so this is one of the consequences of the 
Affordable Care Act.
    But I also wanted to tell you that I had the privilege of 
going out with the Fraud Prevention and Enforcement Action Team 
on a drive-around, which was very interesting, where there is 
this real effort to make sure that we are spending all the 
taxpayer dollars correctly, although we didn't have anything 
quite as exciting as what we learned earlier this week about a 
Dallas doctor arrested for a shocking $375 million in health 
care fraud schemes.
    So what I wanted to ask is how the Affordable Care Act 
contributed to greater oversight and enforcement and what kind 
of additional--how much money was found through that effort, 
and that is it.
    Ms. Sebelius. Well, Ms. Schakowsky, I think there is no 
question that the Affordable Care Act contains provisions that 
are probably the toughest anti-fraud provisions ever in the 
history of the Medicare program. Criminal penalties were 
enhanced. Civil penalties were enhanced. We were given tools to 
re-credential providers in some of the most fraud-ridden areas, 
new resources for these law enforcement teams that are a 
Justice Department-HHS partnership on the ground. We now have 
teams in seven cities. We are expanding to nine. We intend to 
continue that. Probably as important as anything are the 
resources that allow us to for the first time ever catch up 
with the private sector and put together a data system where 
real data is pulled together in real time. In the past, 12 
different billing systems had various parts of CMS billing data 
so you could never identify the provider in Texas in one space. 
It was coming through too many portals. So data analysis is now 
in 2 years significantly better than it was in the past and we 
now have a predictive modeling system to look at billing 
errors--not errors, billing anomalies and be able to target our 
resources on the ground to immediately investigate and stop 
money from going out the door.
    So the Attorney General and I were able to announce a 
couple of weeks ago that $4 billion, the largest amount ever, 
came back to the taxpayers and to the trust funds because of 
these anti-fraud efforts, and yesterday alone, as you 
identified, a provider--I am sorry--on Tuesday in Texas, a 
provider was arrested who has been fraudulently billing we 
think 28 or 29 home health agencies. We knew that that was an 
area fraught with problems and we targeted that area, used the 
new analytics, identified this provider, but I think it is the 
first of many, many that will follow.
    Ms. Schakowsky. So did the additional resources and tools 
in the ACA, was it responsible for this increase in recovery, 
the $4 billion that were recovered?
    Ms. Sebelius. I think it was enormously helpful. There is 
an ongoing underlying fraud program but the new resources and 
the new tools we have allowed us to for the first time put 
together some of these technology advances that really have 
been used by the private sector very effectively for a long 
time but missing in our critical health care programs.
    Ms. Schakowsky. In the moments remaining, there are two 
issues that I would like to work with you and your staff on. 
One is, Medicare beneficiaries are often designated as being in 
the hospital on an outpatient observation status, and they 
could be in the hospital up to 3 days or whatever under that 
status, and they are not really admitted as an inpatient, and 
this affects when they are sent to a nursing home or put in an 
ambulance, and often they don't really understand what 
observation status is. You are in a hospital bed. You think you 
are in the hospital. You think you have full insurance 
coverage. I would like to work with you on that.
    And the other is, the important information, Hospital 
Compare, that is a useful tool for consumers, but there is also 
the feeling that some of the safety-net hospitals for reasons, 
for example, dealing with non-English speakers, that their 
ratings get lowered and that concern has been brought to me. I 
would like to work with you on this. These are little tweaks 
that I think we can fix. And I want to thank you for the fact 
that you are working with the States, you are working with 
Members of Congress to make this a better bill and a better 
policy. Thank you.
    Mr. Pitts. The gentlelady's time is expired.
    The gentleman from Michigan, Mr. Rogers, is recognized for 
5 minutes for questions.
    Mr. Rogers. Thank you, Mr. Chairman.
    Madam Secretary, thank you for being here. I have been 
working with my Democratic colleague Anna Eshoo on the BARDA 
reauthorization bill. I would hope that we could submit some 
questions for the record. It is very important to us and I know 
it is important to you.
    Ms. Sebelius. That would be great.
    Mr. Rogers. And we look forward to working with you on 
that.
    In the 2013 budget, how many employees are dedicated and 
committed to getting the health care law up and implemented and 
coordinated with the States?
    Ms. Sebelius. I do have those numbers here if you could 
give me just a moment to make sure I give you the accurate 
number. We have 210 people in the division that is specifically 
working on exchanges, health insurance reform and others. We 
have about another 146 working on the parts of the Affordable 
Care Act relating to Medicare and Medicaid, and then some 
department-wide folks who have picked up basically some of this 
effort, so about 800 people throughout CMS are actually 
dedicated to this effort.
    Mr. Rogers. And do you expect that number to rise in future 
budgets just for the implementation and management and 
regulatory administration of the health care law?
    Ms. Sebelius. And this is an fiscal year 2013 number that 
we are supporting so it includes any increase that we are 
seeing right now. A lot of what we are doing I think is covered 
by the folks that we have.
    Mr. Rogers. So my concern was, when the chairman went 
through, and there is no Federal-State exchange rule, there is 
no--for States--excuse me. There is no Federal exchange rule. 
There is no guidance and rule on what is an accredited health 
plan, nothing that outlines benefits. We have about 18 months. 
And my concern here is--and I understand what you have been 
saying, but we have insurance agents who have been a bastion 
for small business being laid off. As a matter of fact, I had 
150 workers at one company, 30 of which were in my district 
alone, we think there are thousands and thousands across the 
country, because I think the Medical Loss Ratio rule is wrong. 
We have a very bipartisan effort to fix it. Can you commit to 
fixing that today?
    Ms. Sebelius. We are following the guidance from the very 
bipartisan National Association of Insurance Commissioners. We 
adopted their rule on the MLR and we intend to stay with their 
rule.
    Mr. Rogers. So it is OK that we are going to continue to 
lose these jobs and we are losing them today, we are going to 
lose more tomorrow, and these are the very people who are going 
to try to make some sense out of this massive set of rules that 
is only going to give them a matter of months before they are 
fined by the Federal government. You understand why I am 
concerned, I think.
    Ms. Sebelius. Well, I think that there is a slight 
mischaracterization about our progress on the rules. We do have 
a proposed rule that is out, has been for months, on the 
framework of the exchange, on----
    Mr. Rogers. But I understand that, but----
    Ms. Sebelius [continuing]. Medicaid. We have a very 
detailed bulletin----
    Mr. Rogers. And reclaiming my time. I get it. I have heard 
your answer on that earlier. That does nothing if you are the 
person who actually has to raise the money, sell the money--
excuse me--sell the product, raise the money, hire the people. 
A proposed rule does nothing for certainty for me, nothing, and 
so here is, I guess, my point: It doesn't seem like there is 
any sense of urgency about what is going to hit these very 
companies who are fighting for their very survival, and the one 
sector of that that was at least going to give them some 
guidance are now eliminated. The Federal Government by that law 
and by your rule eliminated these broker agents from even 
having the opportunity to show up at the small cafe and say let 
me guide you through this before you get slapped with a $2,800 
fine.
    Ms. Sebelius. But there is no elimination of brokers and 
agents, and having served as insurance commissioner, I can 
guarantee you that----
    Mr. Rogers. Reclaiming my time----
    Ms. Sebelius [continuing]. They are valuable folks.
    Mr. Rogers. That is great, except they are losing their 
jobs.
    Ms. Sebelius. The Medical Loss Ratio in no way eliminates 
brokers and agents. It didn't define brokers and agents----
    Mr. Rogers. It just adds to their costs so they are 
eliminated through the back door, and Secretary, that is----
    Ms. Sebelius. Exchanges at any point along the way can----
    Mr. Rogers. We ought to at least just be frank with each 
other and admit the fact that these brokers are going away. 
Yes, the law didn't directly say you are going away but the 
impact of this law is, they are going away. I am very, very 
concerned.
    Let me get to the second part here. I don't have much time 
left. Thirty percent of doctors according to the AMA have 
already said they are restricting the number of Medicare 
patients in their practices. Two-thirds of physicians have 
looked into opting out of Medicare for treating patients. We 
see this huge cultural shift in the practice of medicine. They 
are selling to hospitals at an alarming rate. Costs go up. They 
are reducing the number of appointments per week for senior 
citizens and they are stopping to take new patients. How are 
you going to stop this and fix this for the future? This is a 
disaster for our seniors and it is something I hope you are 
spending a lot of time trying to get right.
    Ms. Sebelius. Well, I think the best way to actually make 
sure that the 97, 98 percent of doctors who currently have 
contractual arrangements with Medicare continue those 
contractual arrangements is a long-term discussion and actual 
fix of the payment rate, which over the last 3 years expires a 
week at a time, a month at a time, a year at a time. The 
President has proposed in his budget and paid for in his budget 
a 10-year fix for the Sustainable Growth Rate. That is the 
biggest issue that I hear day in and day out from physicians 
practicing is, they don't know if they are going to get paid. 
Being a good payment partner for the 48 million Americans who 
rely on Medicare benefits I think is the most essential thing, 
and we would love to work with Congress to get that done long 
term.
    Mr. Terry. And I would agree with you on that. Also, if you 
talk to those doctors, the Medicare health care bill has made 
it almost impossible for them to survive.
    Ms. Sebelius. The Medicare health care bill?
    Mr. Rogers. No, excuse me, the health care law, which is 
why you see this cultural shift in the way medicine is 
practiced.
    Mr. Pitts. The gentleman's time is expired.
    Mr. Rogers. And I hope that you get a sense of urgency on 
this, because people are impacted today.
    Thank you. I yield back my time.
    Mr. Pitts. The gentleman's time is expired. The Chair 
recognizes the gentleman from New York, Mr. Engel, for 5 
minutes for questions.
    Mr. Engel. Thank you very much, Mr. Chairman.
    And Madam Secretary, I want to echo the remarks that Mr. 
Waxman made. I think you are doing a fine job as Secretary and 
I want to thank you for the job and the good work that you do.
    I am very proud of the fact that my State, New York, trains 
the largest number of medical residents in this country. We 
have over 15,000 residents developing all kinds of lifesaving 
skills in our State as of 2010 and New York also trains the 
largest number of primary care physicians in the country. Given 
the increasing age of our Baby Boomer generation and 32 million 
newly insured Americans projected to enter into our health care 
system in the next few years, I am concerned about the 
significant physician shortage that this country is facing.
    So I want to echo the statements that Mr. Pallone made 
earlier. I was disappointed to see that the President's budget 
included a 10 percent cut to indirect medical education funding 
and $177 million cut to children's hospital graduate medical 
education funding. I think we need to be training more 
physicians and adequately supporting our teaching hospitals, 
not cutting their funding as they strive to train more 
providers. Hospitals already see significant cuts to bad-debt 
and DSH payments, which disturbs me greatly because we fought 
for DSH payments for New York in the Affordable Care Act. So as 
a result of H.R. 3630, the Middle Class Tax Relief and Job 
Creation Act, bad-debt cuts and DSH payments cuts are there. So 
I would just ask that the administration reconsider additional 
cuts, especially when it comes to training our physicians.
    Ms. Sebelius. Well, again, I share your feeling that a 
critical piece of this puzzle for the United States having 
better health care, better patient care, better health is 
certainly a robust workforce focused on prevention and so we 
would work with you to make sure that we are using all of the 
assets, all of the resources to do just that.
    Mr. Engel. Well, on prevention, one of the best parts of 
the Affordable Care Act, I think, was the establishment of the 
Prevention and Public Health Fund. I think that should be a 
priority, and I was also disappointed to see that significant 
reductions were made to various HHS agencies including the CDC 
as part of the budget request. The rationale which we read was 
that the Prevention Fund would help fund these programs facing 
cuts, but the point of the Prevention Fund was to add to the 
budgets of various public health programs, not to just supplant 
their existing funding. So given the fiscal year 2013 budget 
request and in light of the fact that the Middle Class Tax 
Relief and Job Creation Act cut over $5 billion from the 
Prevention Fund, I am concerned that we won't be able to 
fulfill the goals of the Prevention Fund. So could you please 
explain how the various programs facing cuts, especially those 
at the CDC, will be impacted, given the payroll tax extension 
legislation which is now law?
    Ms. Sebelius. Well, I think that we are eager to not only 
have the basic programs of the Centers for Disease Control and 
Prevention continue on, they are vital, they are vital to 
States around the country. They are vital to the health of all 
Americans and some of the prevention funding, you are correct, 
is paying for those ongoing programs. I would say that also 
there are some innovative and new programs that are showing 
great promise that also are part of that prevention funding and 
we are going to, now that we have an outline for the further 
reduction of $250 million, be working closely with Congress to 
make sure that these initiatives don't take even more disabling 
cuts. Unfortunately, at the State level, as you know, 
Congressman, the States have made some serious reductions in 
their public health budgets. So we are really trying to not 
only make sure that the national efforts go forward but that 
the State workers who are embedded in state departments across 
this country doing vital public health are also continued.
    Mr. Engel. I want to quickly mention dental care. In a 
report, the Pew Center says that preventable dental conditions 
were the main cause for over 830,000 emergency visits in 2009, 
which is a 16 percent increase from 2006, and in New York, we 
estimate $32 million was spent treating children for dental-
related ailments in emergency rooms in 2008 alone.
    I introduced H.R. 1606, the Special Care Dentistry Act, 
which would require Medicaid programs to provide dental 
services to aged, disabled and blind beneficiaries, and I am 
just wondering, is HHS working to address the shortage of 
dentists in both our urban and rural areas, and how can we 
encourage more dentists to serve children and vulnerable adults 
on Medicaid?
    Ms. Sebelius. Well, Congressman, we would be really eager 
to work with you on this. It is an enormously challenging 
problem. I think more so than virtually any other provider 
group, we see a great shortage of dentists who are willing to 
participate in the Medicaid program. We are working actively 
with States and others to figure out strategies to engage more 
dentists but I would say that we would love to have your 
strategies, your ideas because it is a challenge in virtually 
every part of the country, rural and urban, where we see this 
lack of providers who actually deliver incredibly important 
health services.
    Mr. Engel. Thank you, Madam Secretary. I will be in touch 
with your office on this and another bill that I have 
introduced, the Moms and Babies Act.
    Thank you, Mr. Chairman.
    Mr. Pitts. The gentleman's time is expired.
    The Chair recognizes the gentlelady from North Carolina, 
Ms. Myrick, for 5 minutes for questions.
    Mrs. Myrick. Thank you, Mr. Chairman. Thank you, Madam 
Secretary, for being here.
    I want to go back to the Medicaid expansion issue again. I 
know Dr. Burgess touched on it a little bit. Beginning in 2014 
under the health reform law, it will expand to include all non-
elderly individuals with incomes below 133 percent of the 
Federal poverty level, and that accounts for more than half of 
the newly insured population under the law. The CBO, 
Congressional Budget Office, estimates that by 2022, Federal 
outlays for Medicaid are expected to total $605 billion, more 
than twice the 2012 amount. Obviously, many millions of new 
people would be covered by Medicaid at that point but it 
certainly is a pretty disastrous budget outlook.
    So, as you know, the President's budget forces about $60 
billion worth of additional Medicaid burden on to States, and 
States already can't afford their Medicaid programs. I know the 
problems we have in North Carolina. So long as the 
administration doesn't allow the States more flexibility and 
insists on enrolling these millions of new Medicaid recipients, 
how are we going to afford as a country double spending on the 
program in less than a decade? And I don't see that the budget 
really addresses it this year.
    Ms. Sebelius. Well, Congresswoman, the Affordable Care Act 
laid out a program, as you say, that in 2014 regardless of 
where an individual lives in the country, the Medicaid 
enrollment eligibility will be identical so that individuals up 
to 133 percent of poverty will qualify for Medicaid. Those up 
to 400 percent will qualify for tax credits in the exchange 
program. The vast majority of those new enrollees are paid for 
by the Federal Government. They do not add to the State budget. 
In fact, the first several years it is 100 percent Federal 
funding. It decreases over the first 10 years so that the 
highest level a State would be paying for those additional 
enrollees is a 10 percent match. The Congressional Budget 
Office estimated that actual State expenditures on Medicaid 
populations would go down, not up, and States will also be 
saving what is estimated to be about $80 billion that they are 
spending on an annual basis right now in uncompensated care, 
having a payment system under a lot of the individuals who come 
into community hospitals, who come into the health system but 
have no payment strategy whatsoever.
    Mrs. Myrick. Well, most of that money is paid by us, the 
Federal Government, when we pay the hospitals. The States don't 
pay that.
    Ms. Sebelius. We pay some of it, but I can guarantee you as 
a former Governor, States pick up an enormous amount of that 
uncompensated care at the State level also.
    Mrs. Myrick. Right. I yield back, Mr. Chairman.
    Mr. Burgess. Would the gentlelady yield?
    Mrs. Myrick. Yes, I will.
    Mr. Burgess. Madam Secretary, let me just ask you, because 
when the President came out announcing the compromise a couple 
of week ago----
    Ms. Sebelius. I am really having trouble. I am sorry.
    Mr. Burgess. When the President came out and announced the 
compromise on the conscience in contraception a couple of weeks 
ago, he described that he wanted this to be free, and I got to 
tell you, I was a little taken aback by the President's 
seemingly superficial knowledge of health economics. So have 
you tried to help educate him when things are free that they 
are really not free if they have health care or medicine 
stamped on the side of them? Even assume you get the active 
pharmaceutical ingredient for next to nothing, which under some 
generic scenarios you might if you were willing to impose a 
formulary on all the patients in the country, you still have to 
involve a doctor's office. A doctor's time is still involved 
with evaluating the patient and writing the prescription. A 
doctor is still going to be required to manage that patient, 
hear about the complications as they occur, answer their phone 
calls at 2 o'clock in the morning and the doctor still has to 
buy liability insurance. So none of those things looks free to 
me, having practiced medicine for 25 years. Have you tried to 
help educate the President on the fact that health care is 
generally not free?
    Ms. Sebelius. Mr. Burgess, I think what the President was 
referring to, and I think he understands the economics of the 
insurance industry very well, is that this directive first of 
all in the law is to insurers, and in an insurance pool, there 
is a balance of risk. What is estimated by actuaries, by 
Federal actuaries, by company actuaries to be free is the 
provision of contraception to women balanced against unintended 
and in some cases unhealthy pregnancies. That is not only a no 
cost but estimated by----
    Mr. Burgess. It was already working. Why did we have to 
interfere? Obviously it was in the marketplace in that 
instance.
    I yield back, Mr. Chairman.
    Mr. Pitts. The Chair thanks the gentleman and recognizes 
the gentleman from Georgia, Dr. Gingrey, for 5 minutes for 
questions.
    Mr. Gingrey. Mr. Chairman, thank you.
    Madam Secretary, thank you for being here this morning. 
Ranking Member Waxman was quoted in The Hill newspaper 
yesterday as saying, and this is a quote, ``IPAB is a useful 
backstop to impose some discipline on Congress to stop out-of-
control Medicare health spending.'' Do you agree with that 
statement?
    Ms. Sebelius. I do.
    Mr. Gingrey. Does the President believe we need to save the 
Medicare program from bankruptcy like Ranking Member Waxman 
obviously does and you obviously do?
    Ms. Sebelius. I think the President believes very strongly, 
which is why he has proposed in this budget and supported 
aspects of the Affordable Care Act----
    Mr. Gingrey. And my time is limited, so yes or no is fine 
on this, and your answer to that is yes, and I thank you for 
that, Madam Secretary.
    Ms. Sebelius. I didn't give you an answer, sir.
    Mr. Gingrey. I know the President has used the slogan we 
can't wait to highlight Congressional inaction really on many 
issues. Tell me this, should we take Ranking Member Waxman's 
advice and start showing discipline to reform Medicare this 
year or should we tell our seniors to wait until after the next 
election? Yes or no.
    Ms. Sebelius. The President's budget has a very positive 
proposal for Medicare which not only ensures that the 48 
million people have the benefits that are committed to them but 
that we continue to slow the growth rate, which has happened 
every year since----
    Mr. Gingrey. Well, I understand that, and my time is 
limited, so let me just say this. I asked you the question, 
does the President think that we need to address this issue now 
or----
    Mr. Sebelius. He would ask that you pass his budget, yes, 
sir.
    Mr. Gingrey. And the answer is yes. Thank you.
    Are you aware that the CMS Actuary predicts that the 
Medicare program could become bankrupt as early as 2016?
    Ms. Sebelius. Mr. Gingrey, I think that again action is 
required. We are taking that action. We would ask you to pass 
the budget which has additional slowdown in the growth rate, 
adding another 2 years to the trust fund. As you know, the 
Affordable Care Act added an additional 12 years to the trust 
fund and we would love to engage in a more comprehensive 
discussion as long as we don't blow up the benefits that 48 
million people rely on, which seems to be the alternative.
    Mr. Gingrey. Madam Secretary, I think I just heard you say 
that the Affordable Care Act according to the Medicare trustees 
adds another 12 years.
    Ms. Sebelius. It was according to the Congressional Budget 
Office.
    Mr. Gingrey. According to the CBO, an extra 12 years. Well, 
I think that is possibly based in part, Madam Secretary, with 
all due respect, upon your belief that $500 billion in cuts to 
Medicare under the Affordable Care Act, Obamacare, can be spent 
twice and other disingenuous accounting gimmicks. What do you 
say to that?
    Ms. Sebelius. This was not our number. It was the 
Congressional Budget Office number, sir, and also numbers that 
are included in the Republican proposal that was put forward 
last year. So there seems to be some bipartisan agreement that 
we could slow the growth rate of Medicare by $500 billion over 
the next 10 years.
    Mr. Gingrey. Thank you, Madam Secretary. Let me shift to 
the issue of the individual mandate. In December, actually a 
December 14, 2010, editorial in the Washington Post, you wrote 
with Attorney General Holder, and here is what you stated, ``It 
is essential that everyone have coverage. Imagine what would 
happen if everyone waited to buy car insurance until after they 
got in an accident. Premiums would skyrocket, coverage would be 
unaffordable and responsible drivers would be priced out of the 
market.'' In your opinion, if the individual mandate is found 
to be unconstitutional by the Supreme Court, would premiums 
skyrocket or would the cost curve for PPACA remain unchanged?
    Ms. Sebelius. I can't speculate about that but I am 
confident that given the review by the majority of justices who 
have looked at the bill that the Affordable Care Act will be 
found constitutional.
    Mr. Gingrey. Well, that really wasn't my question. So in 
your opinion, is the individual mandate the linchpin to the 
other insurance reforms in the bill?
    Ms. Sebelius. I think having everyone included in the 
insurance market is an essential component.
    Mr. Gingrey. So in other words, the individual mandate is 
essential to ensuring that everyone has coverage and the 
remainder of the bill of course would not work effectively 
without that coverage?
    Ms. Sebelius. I didn't say that, sir. I think it is an 
essential component of the bill.
    Mr. Gingrey. Close enough, Madam Secretary. Thank you.
    Ms. Sebelius. Sir, you can't----
    Mr. Gingrey. Let me ask you this question about Medicaid.
    Ms. Sebelius. Could I answer your question, or not?
    Mr. Gingrey. You did. I thank you for----
    Ms. Sebelius. I did not.
    Mr. Gingrey. I thank you for your question, and I have only 
got 15 seconds left, but let me address Medicaid, and this is 
going back to what Representative Myrick addressed but taking a 
step further. Can you assess the impact of the provision of 
PPACA requiring States to raise Medicare primary care physician 
rates up to the Medicare level in 2013 and 2014 with Federal 
funding for States and doctors, especially in 2015 when the 
requirement and the funding goes away, resulting in an 
inevitable cut to their reimbursement? Have you thought about 
that?
    Ms. Sebelius. We would hope that Congress would work with 
us to make sure that that cut does not occur in future budgets.
    Mr. Pallone. Mr. Chairman, can I just----
    Mr. Gingrey. Madam Secretary, thank you, and I yield back.
    Mr. Pallone. Mr. Chairman, I just want to ask, you know, I 
think that Mr. Gingrey was asking questions, then not giving 
the Secretary the time to answer them. I know that he has only 
5 minutes, but I really think if she feels that she needs an 
opportunity to answer his questions, I don't mind if----
    Mr. Gingrey. You know, the gentleman, I think I need to 
respond to him, Mr. Chairman. You make a statement in regard to 
my approach, and Mr. Pallone, I think you spent 4-1/2 minutes 
of your 5-minute allotted time giving a speech. So when I ask 
questions and I want a yes or no answer, I expect a yes or no 
answer. It is my time, not hers.
    Mr. Pallone. I didn't----
    Mr. Gingrey. She gave her opening 5 minutes.
    Mr. Pallone. I understand, but if you don't give her an 
opportunity to answer the question and then you go back and 
suggest what she said and she disagrees that she said that, I 
mean, it is really not an opportunity for her to respond, in my 
opinion.
    Mr. Pitts. The Chair thanks the gentleman and recognizes 
Dr. Cassidy for 5 minutes for questions.
    Mr. Cassidy. Hello, Madam Secretary, how are you?
    Ms. Sebelius. Is that a yes or no question?
    Mr. Cassidy. Believe me, that is a greeting, not a true 
inquiry. I can imagine how you are.
    Listen, you said something earlier to Ms. Myrick which I, 
you know, was intrigued by. You suggested that under the ACA 
that Medicaid costs for States will decrease. Now, I know I 
heard that. The reason I find that curious is the New York 
Times just had an article speaking about how Medicaid costs 
have gone from 21 to 23 or 24 percent, expected to rise 
further. There is a blog, Ed Watch, Education Watch, which is, 
you know, obviously not even part of this fight except that 
they are saying that they anticipate continued crowd-out of 
funding for education by the money required for Medicaid 
expenditures. In my own State, even though you speak of the 
newly eligible having 90 percent coverage and at some point 
falling off or 100 percent falling off to 90, my own State, 
Louisiana, predicts that there will be $7 billion State general 
funds required to comply with the ACA over the next 10 years. 
We may quibble whether it is $7 billion or $5 billion but it is 
a significant expense.
    Now, I say that in context, and if I interrupt, I am not 
trying to be rude, it is only because we have limited, when you 
mention that the ACA is going to save the States money, that 
seems to be contrary to objective analyses from those not 
connected with government.
    Ms. Sebelius. Well, Mr. Cassidy, I would love to get you a 
more detailed answer but I can tell you that part of what is 
going on is overall Medicaid expenditure and State portion of 
Medicaid expenditure, two very different numbers. Overall 
Medicaid expenditure will go up with a number of newly insured 
Medicaid beneficiaries. What I was referring to is the State's 
share of that newly insured----
    Mr. Cassidy. So if I may, absolute dollars will increase 
even if these States' percentage of that total spending 
decreases?
    Ms. Sebelius. That is correct.
    Mr. Cassidy. But absolute dollars will still increase?
    Ms. Sebelius. Absolute dollars certainly, sir. If we pay 90 
percent of the costs, I mean the absolute dollars are going up.
    Mr. Cassidy. Now, the next issue that arises though of 
course is important. I am a doctor that works in a public 
hospital for the uninsured, and they always point out that when 
more people are put on Medicaid, my lines get longer because 
the Medicaid dollar is spread more thinly. And California is 
kind of like a case study in this right now. Just for 
everybody--you and I know this--but they receive $2 billion a 
year for the next 5 years to expand Medicaid coverage. Now they 
are paying but since then their deficit has caused them to now 
decrease payments to physicians--Mr. Engel spoke about 
dentists--to $12 a visit that providers have filed lawsuits to 
stop this but your administration, your office has filed a 
friend of the court on behalf of California while acknowledging 
that low reimbursement does affect access. So I have always 
been struck that we have the form of insurance without the 
power of it. Can you respond how if California is paying a 
dentist 12 bucks to see somebody, we don't really have access, 
how do we defend that, number one, and number two, how will 
that improve under the ACA?
    Ms. Sebelius. Well, I think the reference that Mr. Gingrey 
made to the increase for Medicaid providers to Medicare rates 
is part of the strategy. We understand that----
    Mr. Cassidy. Now, of course, it doesn't affect dental 
because dental is not a Medicare-covered benefit, and so dental 
I presume will stay at 12 bucks.
    Ms. Sebelius. Oh, I am sorry. Yes.
    Mr. Cassidy. This is heterogeneous. It doesn't cover 
specialists, for example. It won't cover many other entities. 
It is just primary care in particular.
    Ms. Sebelius. Well, it covers primary care.
    Mr. Cassidy. And that is for 2 years, correct, and then it 
reverts back to----
    Ms. Sebelius. It is built in for 2 years in terms of the 
overall budget but there is no question, I think, that the 
concerns about provider rates and Medicaid are ones that we 
share. As you know, the court case was----
    Mr. Cassidy. I know we share that, but how can the ACA make 
it better if it is, one, increasing cost as an absolute dollar? 
California is already going bankrupt, which is acknowledged by 
the administration. And yet somehow as we increase absolute 
cost and put more people on we are going to somehow improve 
rates. I don't follow that.
    Ms. Sebelius. Well, I would say a lot of those folks right 
now are entering the health care system at various points with 
no reimbursement strategy whatsoever. So Medicaid rates may be 
too low in many instances but I would suggest that it is better 
than no rate at all, which is being absorbed in some way in 
those same budgets that you are talking about.
    Mr. Cassidy. Twelve dollars a doctor's visit is not. Fair 
statement? I mean, $12 is way below the threshold for somebody 
covering their cost and so, again, it seems as if the ACA is 
providing the form of insurance without the power of it.
    Ms. Sebelius. Again, this is, as you know, a State-Federal 
partnership. Decisions about provider rates are made at the 
State basis. We are trying to work with States to make sure 
that they don't deny access to beneficiaries based on slashing 
provider rates.
    Mr. Cassidy. It seems inevitable with the policies, but I 
am out of time. I yield back.
    Mr. Pitts. The Chair thanks the gentleman and recognizes 
the gentleman from Kentucky, Mr. Guthrie, for 5 minutes for 
questions.
    Mr. Guthrie. Thank you very much. Thanks for coming this 
morning.
    I kind of want to touch on what my colleague from Kentucky, 
Congressman Whitfield, was talking about on the grants, the 
community transformation grants, and there is evidence they are 
being used to advocate or lobby pending positions, and I would 
agree that if you look at the language in the budget, you are 
striking the language that was put in the Appropriations Act 
but you do leave ``no part of any appropriation contained in 
this act shall be used to pay the salary, expenses of Federal, 
State'' but you do leave in for local. So it seems that the 
proposal would grant access to the local because it says in the 
law that no money shall be enacted by Congress without express 
authority by Congress. So it appears the way I read this that 
you are asking for authority to do local. But anyway, but the 
current law, the way I read it, now, that is going forward, 
obviously it is not enacted because it is a proposed budget. 
But the grants were put out under the existing laws, as you 
said, and I think you said it applied to you but not the 
grantee at the end of his comment.
    Ms. Sebelius. Pardon me?
    Mr. Guthrie. You said that the language applied to us, I 
guess meaning the government, but not the grantee. I am not 
sure exactly what you meant by that. That is what I was going 
to ask you on that.
    Ms. Sebelius. The original language that has been part of 
the law that we have administered and had our grantees 
administer applied to grantees lobbying the Federal government. 
That has been prohibited. That is part of the underlying law. 
What was added to our appropriation bill in 2012 and what I was 
trying to explain is that no new prevention grants have been 
issued under this new language and we are retraining grantees 
is that a prohibition for grantees to lobby at the local level 
or the State level is now an additional piece of the law that 
was not part of the underlying statute. So that is new. We will 
administer the directives to grantees to comply with that. 
There have been no funds that have been issued under the new 
law, and I think the pages of examples which began to be 
recited were grantees who are lobbying at either the State or 
local level, not lobbying the Federal Government.
    Mr. Guthrie. OK. Well, it says in the current law that you 
cannot use the grant money intended to design or influence in 
an any manner a Member of Congress or jurisdiction or an 
official of any government to favor, adopt or oppose or vote 
otherwise any legislation or ratification, policy or 
appropriation. So I don't think it just limits--current law 
doesn't limit you to Congress. It is any lobbying. And U.S. 
Code 1913. So the point is, that is the way I read it. It says 
a Member of Congress or jurisdiction or any official of any 
government or an official of any government to favor or oppose, 
vote or otherwise, and maybe that is the misunderstanding 
because in the Recovery Act on the Web site in the Recovery 
Act, Connecticut said a grassroots coordinator spent 163 hours 
establishing community support by educating, advocating 
adoption of smoke-free policies. There is several. In Idaho, to 
address obesity through nutrition, and it says working for 
proposals in the 2012 State legislature for vending machines 
for schools. And I can give these to you. And then in the 
grants, so that was Recovery Act money. Now it has gone to 
community transformation grants and the department that has 
been approved actually in their grant proposal says they want 
to pass at least 70 regional local institutional policies to--
and the New York public fund says they want a tax on lobby for 
local--they say advocate but lobby for a tax on sugar-sweetened 
beverages.
    Having said that, my reading of the law is that is a ban on 
any form of government. Does the department think it is only 
Federal Government?
    Ms. Sebelius. Again, Congressman, I apologize. I do not 
have the existing statute here. I would love to answer this 
question in writing. I can tell you fiscal year 2012 
appropriations through Congress that we just have added new 
language.
    Mr. Guthrie. Right.
    Ms. Sebelius. The new language, which was not part of the 
underlying law, applied to grantees lobbying at the local 
level. So----
    Mr. Guthrie. Except you have a grant based on----
    Ms. Sebelius. The underlying law clearly didn't cover some 
of what is covered in the new language.
    Mr. Guthrie. Well, that may be where we are--I am agreeing 
with you that the money that--you haven't seen grants out with 
the appropriation language in section 503 but I think the 
existing law--and maybe that is where we--because it says to 
me--and I know you didn't have a chance to read it, and I agree 
with you, you need the time to read it, but it says any Member 
of Congress, a jurisdiction or an official of any government, 
so I think that would be city governments, State governments. 
And if you all don't think that is the case, I would like to 
have that in writing what your position is.
    Ms. Sebelius. I would be glad to do that.
    Mr. Guthrie. I appreciate that. Thank you.
    Mr. Pitts. The Chair thanks the gentleman and recognizes 
the gentlelady from Tennessee, Ms. Blackburn, for 5 minutes for 
questions.
    Mrs. Blackburn. Thank you, Mr. Chairman.
    Madam Secretary, thank you for staying with us to take 
these questions. I want to ask you about Section 220. And we 
had Section 220. The President supposedly----
    Ms. Sebelius. Section 220 of----
    Mrs. Blackburn. Of the Obamacare bill, you know.
    Ms. Sebelius. The Affordable Care Act? Is that----
    Mrs. Blackburn. Yes, ma'am. The President goes back to 2009 
saying we are going to have transparency, we are going to have 
open government, and this was a major push. Fiscal year 2012 
appropriations bill that the President signed included Section 
220. This was an important thing. We are going to have 
transparency, going to let you know where the money gets spent 
on this bill. Yet we get the 2013 budget and Section 220 has 
been removed in its entirety.
    So we have a lot of concerns about what is happening with 
the transparency components and how the money is going to be 
spent. So I would encourage you to look at this and see if you 
can find out what has happened with the money that was going to 
be designated to transparency. We would like to have an answer 
to that one if you do not mind.
    Ms. Sebelius. I would be glad to do that.
    Mrs. Blackburn. Thank you. I appreciate that.
    In light of that, in trying to keep track of where the 
money is going with this bill, you and I have talked about 
TennCare and the lessons that should have been learned from 
TennCare as the test case for public option health care. One of 
those we repeatedly or I repeatedly discussed, and I know you 
didn't think TennCare was a traditional public option program, 
not sure what we think was a traditional public option, but 
nonetheless, your estimates for the Obamacare bill were to be a 
trillion dollars in spending, and now I am looking at the 
figures for 2014 through 2023 as being a $2 trillion estimate. 
So you are already running ahead of estimates. Forbes is 
looking at these programs, these grant programs being about 30 
percent over budget. Forbes had an article out on that.
    So I just want--you know, our problem with TennCare, Madam 
Secretary, was that within 5 years it had quadrupled in its 
cost over the original estimates. So how do you see this 
playing out and what accommodations are you and your team 
making for this program doubling and then possibly quadrupling 
in its anticipated cost?
    Ms. Sebelius. Well, Congresswoman, I would be happy to try 
and get you an answer. I don't know what you are quoting. I 
don't know what it is based on. So I would be delighted to get 
you a specific answer. We don't think the program will double 
or quadruple in cost. We tried to give as accurate an estimate 
as we could at every point all the way.
    Mrs. Blackburn. Let me ask you----
    Ms. Sebelius. Two years in, we are underspending a lot of 
the estimates----
    Mrs. Blackburn. OK. Let me ask you this. As we worked on 
this legislation, I asked repeatedly if you had any example 
where spending these near-term, ramping up all these near-term 
expenses had resulted in long-term savings. To my knowledge, 
you had no example of any program that showed where ramping up 
these near-term expenses would yield a long-term savings. Were 
you all ever able to find an example? Because you are running 
over budget. You have got a budget that has increased 25 
percent since 2008. Your estimates are running ahead of what 
they have been, and we are at record spending, record deficits, 
record debt in this country. So if you ever came up with that 
example, I sure would like to see it, and I have got some 
constituents that would certainly like to see it.
    Let me shift gears for just a moment. I want to your narrow 
religious exemption rule and what I think is a fee-for-faith 
principle that is out there. USA Today had an op-ed, an 
editorial, and they made the comment that not only had you 
crossed the line on religious liberty but you had galloped over 
it. I just have to ask you, Madam Secretary, did you all 
consult the Department of Justice before you made this 
decision?
    Ms. Sebelius. Which decision are you referring to, 
Congresswoman?
    Mrs. Blackburn. Religious liberty, the First Amendment.
    Ms. Sebelius. Which decision are you referring to?
    Mrs. Blackburn. The mandate to the Catholic churches. I 
think you know what I am talking about.
    Ms. Sebelius. We have consulted with a number of people. 
Did we consult before we finalized the rule on prevention with 
the Department of Justice?
    Mrs. Blackburn. Yes, ma'am.
    Ms. Sebelius. No, we did not.
    Mrs. Blackburn. You did not? OK.
    Thank you. My time is expired. I yield back.
    Mr. Pitts. The Chair thanks the gentlelady.
    The Chair recognizes the gentleman from Pennsylvania, Dr. 
Murphy, for 5 minutes for questions.
    Mr. Murphy. Thank you, Madam Secretary. I want to follow up 
on the religious freedom First Amendment issue as well. I just 
want to be sure. If an employer is saying that he or she cannot 
find it in their conscience in terms of practicing their 
religion that they cannot pay for a plan or have a plan that 
allows for or requires provision of abortifacient drugs and 
they therefore do not provide that plan, just clarify for me, 
do they pay the $2,000 tax for not having it or do they pay the 
$3,000 tax for having a plan that is in violation?
    Ms. Sebelius. There is no penalty attached to the provision 
of preventive care. There certainly are penalties for employers 
who don't comply with the law. There also is no abortifacient 
drug that is part of the FDA-approved contraception. What the 
rule for preventive care----
    Mr. Murphy. Ma'am, that is not true.
    Ms. Sebelius. Well, the scientists----
    Mr. Murphy. Isn't the morning-after pill or something like 
that an abortifacient drug?
    Ms. Sebelius. It is a contraceptive drug, not an 
abortifacient.
    Mr. Murphy. Yes or no, does it----
    Ms. Sebelius. It is not an abortifacient. It does not 
interfere with a pregnancy. If the morning-after pill were 
taken and a female were pregnant, the pregnancy is not 
interrupted.
    Mr. Murphy. Ma'am, I appreciate that is your 
interpretation.
    Ms. Sebelius. That is what the scientists and doctors 
inform me, and----
    Mr. Murphy. We are not talking about scientists, we are 
talking about religious belief.
    Ms. Sebelius. I am telling you that----
    Mr. Murphy. Ma'am, I am asking about a religious belief.
    Ms. Sebelius [continuing]. The definition of an 
abortifacient----
    Mr. Murphy. In a religious belief, that is a violation of a 
religious belief based upon those within a religion.
    Now, let me expand on that then. So if an employer says I 
cannot have this plan provided for by the employer whether it 
is paid for directly or someone says it is going to be paid for 
by somebody else, do they end up paying the $2,000 tax or the 
$3,000 tax per employee?
    Ms. Sebelius. The rule which we intend to promulgate in the 
near future around implementation will require insurance 
companies, not a religious employer but an insurance company to 
provide coverage for contraceptives for employees who choose to 
access that----
    Mr. Murphy. Ma'am, that is not what I am asking about. 
Ma'am, I am not asking about that. This is very important. This 
is a First Amendment issue. You keep talking about these things 
in a different way.
    Let me try and help make this clear, because one of the 
things I think you say is that if an organization has people 
within that organization that are not part of that same faith 
value system, that they therefore couldn't claim an exemption. 
Am I correct in that? So let us say Catholic Charities has 
other employees who are not Catholic or a Jewish hospital may 
have other doctors who are not Jewish or Catholic Charities may 
provide services to non-Catholics that they therefore could not 
claim a religious exemption. Is that accurate?
    Ms. Sebelius. They don't fall under the definition that is 
total exemption from the rule. They will fall under the 
secondary rule of a religious objection to the service and----
    Mr. Murphy. But under that, they would still have to 
provide the objectionable medical services.
    Ms. Sebelius. Absolutely not. The religious employer who 
objects to contraception because of religious beliefs will not 
provide, will not pay for, will not refer employees to an 
objectionable service. On the other hand, the insurance company 
will----
    Mr. Murphy. Ma'am----
    Ms. Sebelius [continuing]. Provide the service to 
employees----
    Mr. Murphy [continuing]. Let me make sure I understand this 
correctly. So if a child in school----
    Ms. Sebelius [continuing]. Upholds religious liberty and it 
makes sure that it doesn't----
    Mr. Murphy. Ma'am, no it doesn't. Ma'am----
    Ms. Sebelius [continuing]. Access to benefits.
    Mr. Murphy. Ma'am, no, you are wrong. You are wrong for 
this reason. You know, you are setting up a rule that not even 
Jesus and his apostles could adhere to. Jesus was Jewish. He 
recruited Jewish people--tax collectors, sinners, Mary 
Magdalene and others--and therefore saying you know what, 
because you are not bringing all Christians into this fold you 
can't do this. What you are missing here is because someone 
else is paying for it, somehow that makes sense. If I go to a 
tire store, which I recently did, it was buy three, one free 
tires, I know I am paying for that extra tire by the other 
three being pumped up or someone else is paying for it by their 
costs going up somewhere else. It is one thing--I have searched 
for ways of trying to help you understand it, and I don't know, 
maybe the administration just refuses to understand so 
therefore can't happen. Whether or not you have someone else 
pay for it or whether something else is under the guise of 
being free, as long as it is imposed upon someone to have this 
available, that it is still a violation of their faith, which 
gets into the First Amendment. I don't understand why this 
isn't clear.
    Ms. Sebelius. Well, first of all, I think the tire analogy 
is not quite accurate. Insurance is----
    Mr. Murphy. Well, who is going to pay for it?
    Ms. Sebelius [continuing]. About a balance of risk----
    Mr. Murphy. Who is going to pay for the----
    Ms. Sebelius [continuing]. We know because it was done in 
the Federal employees----
    Mr. Murphy. Who pays for it? There is no such thing as a 
free service.
    Ms. Sebelius. The reduction in a number of pregnancies 
compensates for the cost of contraception. The overall plan----
    Mr. Murphy. So by not having babies born, we are saving 
money? I just want to get this on the record, Mr. Chairman. So 
you are saying by not having babies born, we are going to save 
money on health care?
    Ms. Sebelius. Providing contraception as a critical 
preventive health benefit for women and for their children 
reduces----
    Mr. Murphy. Not having babies born is a critical benefit. 
This is absolutely amazing to me. I yield back.
    Ms. Sebelius. Family planning is a critical health benefit 
for----
    Mr. Murphy. You said avoiding pregnancy----
    Ms. Sebelius [continuing]. Women in this country according 
to the Institute of Medicine, and that is again----
    Mr. Murphy. I think that is----
    Mr. Pitts. The gentleman's time is expired.
    The Chair recognizes the gentleman from New Jersey, Mr. 
Lance, for 5 minutes for questions.
    Mr. Lance. Thank you very much, Mr. Chairman.
    Madam Secretary, the President's budget requests the level 
of exclusivity for follow-on biologics, reducing it from 12 
years to 7 years, and I think that that might be 
counterproductive and I am wondering whether you would be 
willing to reexamine that. On a bipartisan basis, this 
committee has repeatedly indicated that it favors the 12-year 
period. There was a bipartisan vote of 47 to 11 on that issue 
in this committee.
    Ms. Sebelius. Well, I think, Mr. Lance, this is an 
important and ongoing dialog. The balance of making sure we 
protect research and development, making sure that companies 
can in fact make a profit when they find a successful strategy, 
and opportunities for patients to have an affordable adoption 
that may be lifesaving is, I think, what is at risk here, and 
certainly I think there is a difference of opinion of whether 
12 years is the appropriate time, whether 7 years adequately 
compensates companies and yet makes more cost-affordable 
options available.
    Mr. Lance. Thank you. I would encourage you to work with us 
on that.
    Ms. Sebelius. I would be glad to.
    Mr. Lance. I favor 12 years, and I appreciate any work we 
might be able to do together on that.
    We are hearing from those who have to implement the new 
summary of benefits and coverage requirements that the time 
period may be difficult to meet. Given the fact that employers 
and plans need to get this done and if they don't comply there 
are significant financial penalties, might the Department 
consider any sort of delay of the non-enforcement period?
    Ms. Sebelius. Well, I think, again, the essential health 
benefits are a critical component. We put out very detailed 
guidance because we were hearing from a lot of States, from 
insurers and others saying tell us what is going on. I think 
the strategy of suggesting that a benchmark plan already 
marketed and in place in a State is a really accelerated 
strategy. This is not something that has to be started from the 
ground up. This is an ability at a State level to choose a 
plan, the most popular small employer plan, the Federal health 
benefit plan, a state health benefits plan that is in place, is 
marketed, is priced at the State level. We made it very clear 
in the guidance that this is what we intend to propose. We are 
trying to get as much feedback as possible from insurers, from 
States. We have had a very robust discussion and in the very 
near future will be issuing the interim rule.
    Mr. Lance. Thank you. Regarding the Supreme Court argument 
on the health care legislation, undoubtedly the Solicitor 
General's Office will be arguing that case. Does your 
department also have lawyers who will be involved in the oral 
argument or is it exclusively the Solicitor General?
    Ms. Sebelius. It is the Solicitor General who will be 
involved in the oral argument.
    Mr. Lance. Thank you. I am willing to yield back to any 
member who is interested in further questions. Thank you, Madam 
Secretary.
    I yield to Dr. Burgess.
    Mr. Burgess. Thank you. It is very kind of you to provide a 
little additional time.
    Madam Secretary, you were here before and we talked a 
little bit about the difference between a voucher and premium 
support, and you had some difficulty articulating a difference 
between the two. I am going to try to help you, because of 
course under the exchanges, you will provide a subsidy, but 
that subsidy is not coming in the form of a check or cash to a 
household. There will presumably be some sort of 
acknowledgement that this help is now available to you to help 
you purchase your insurance in the exchange so that might be 
regarded as a voucher, a coupon that you could take to the 
exchange and in return you get a discounted price for your 
health insurance.
    Now, premium support, I don't know, you might have your 
insurance through the Federal Employee Health Benefits Plan. 
Many people in the administration do. That is premium support 
where the FEHBP goes out and takes requests for proposals from 
all these different insurance companies. There is in fact a 
bill, H.R. 360. Members of Congress are going to be required to 
buy their insurance in the exchange after 2014. Members of the 
administration, members of the Federal agencies are exempted 
from that requirement. You in fact could experience the world 
of a voucher versus premium support by supporting H.R. 360, 
which would move all members of leadership, leadership staff 
and the administration and the agencies from the FEHBP into the 
exchanges. Would that be a good idea?
    Ms. Sebelius. We would be happy to look at it.
    Mr. Burgess. I would appreciate your response.
    Mr. Pitts. The Chair thanks the gentleman.
    That concludes the first round of questioning. We will now 
go to Dr. Christensen, who is a member of the full committee, 
who has sat patiently since the beginning of the hearing, for 5 
minutes for questions.
    Mrs. Christensen. Thank you, Mr. Chairman and Ranking 
Member, I really appreciate the opportunity to sit on this 
hearing and your generosity in allowing me to participate.
    Welcome, Madam Secretary.
    Ms. Sebelius. Thank you.
    Mrs. Christensen. Your being here gives me an opportunity 
to formally and publicly thank for you the unprecedented 
efforts that the Department has taken under your leadership to 
end inequalities in health care and health status through your 
national strategy to end health disparities.
    On the other hand, I wanted to say briefly that the 2013 
budget does raise some concerns about our ability to meet the 
goals that you have set out, but I also know that across the 
budget, President Obama has worked with agencies wherever there 
are cuts to take steps to ensure that important programmatic 
activities are not really cut as might appear, that they don't 
suffer but are covered in other ways, and 5 minutes doesn't 
give me the opportunity to go through those areas of concern, 
but would you be willing to meet with the Tri-Caucus to go over 
some of those areas and show us perhaps where steps have been 
taken to make sure that those programmatic activities have not 
been cut?
    Ms. Sebelius. I would be pleased to do that. As you know, 
we have tried to work carefully with Members of Congress who 
share our concern about the health disparities issues present 
around the country, and we have lots of strategies, and 
agencies hard at work closing those gaps, and for the first 
time ever have a national strategy on health disparities that 
is a real action plan. So we would be delighted to go over that 
with you and meet with you about it.
    Mrs. Christensen. Thank you. And the President's budget 
proposes a single blended Federal matching Medicaid rate. I am 
sure there are different opinions about that, but I think that 
the time has come for the territories to have the same 
methodology used for setting our match, and we did have that 
included in the House version of the Affordable Care Act, and 
the Senate actually agreed to it but we weren't able to get it 
done because of just technical reasons and how both bills were 
structured. If given the authority, would you be supportive of 
setting the match according to the way the States are done on 
the average income? Right now we are a 50/50 match in statute, 
and that is very difficult. Would you be supportive of having 
the authority to set our match as the States are set?
    Ms. Sebelius. Well, we would certainly be happy to work 
with you. I know it is a huge issue for the territories and the 
islands and we are working on that. The framework does not 
allow us to do that, and we do not have the budget to do that 
currently. So we would be happy to pursue that discussion.
    Mrs. Christensen. And if we went into the blended rate, if 
that does take place, it is my understanding you need about 2 
years of history to be able to make the determination, so it 
would be helpful--we wouldn't mind going into the blended rate 
if that takes--if that is the way we are going to go.
    Just one more question. There are two new institutes at the 
NIH. One is the one you mentioned on translational medicine and 
the other one is the National Institute for Minority and Health 
Disparity Research, one created administratively, the latter 
one, and the Minority and Health Disparity Institute by the 
Affordable Care Act. The budget for the National Institute for 
Minority and Health Disparities is one of the lowest of all of 
the institutes, and that is despite the major initiatives that 
we have to eliminate health disparities. Is there language in 
the budget or would you accept language to bring the National 
Institute of Minority and Health Disparity Research on par with 
the other institutes? And I do know that the Research Centers 
of Minority Institutions would--that program was transferred to 
the institute and even funding with it, but even that funding 
was insufficient to support the research centers so it remains 
under underfunded under the institute. So is there language 
that would bring the National Institute on Minority and Health 
Disparity Research on par with the others or would you be 
willing to accept that language?
    Ms. Sebelius. Well, again, Congresswoman, I think you have 
identified that the transfer along with staff and budget 
actually has significantly enhanced this whole effort over 
where we were 2 years ago. We would be happy to work with you 
around ideas and strategies for continuing improvement, but 
there has been kind of a big move forward I would say from 
where we were when we began this conversation.
    Mrs. Christensen. OK, but my understanding it is still 
underfunded even with moving the RCMI in, so we appreciate your 
willingness to work with us, Madam Secretary, and thank you for 
your testimony and your answers.
    Ms. Sebelius. Thank you.
    Mr. Pitts. The Chair thanks the gentlelady.
    Madam Secretary, we have one follow-up on each side, if you 
can stay for that.
    Mr. Pallone. And Mr. Markey too.
    Mr. Pitts. And Mr. Markey has come in and would like to ask 
questions. The gentleman, Mr. Markey, is recognized for 5 
minutes for questions.
    Mr. Markey. Thank you, Mr. Chairman, very much.
    This is my 36th year on the committee, on the health care 
committee, so it has been a long time trying to get to this 
point where we actually have a plan to deal with the long-term 
health care problems of our country, and amongst those includes 
the National Alzheimer's Project Act to deal with this very 
important issue that costs the Federal Government--Medicare and 
Medicaid last year spent $130 billion on Alzheimer's patients 
in America. Unbelievable amount of money, and that is with only 
5 million Americans having it. By the time all the Baby Boomers 
have retired, the cost is going up to maybe $600 billion a year 
just on Alzheimer's patients if we don't find a cure for it, 
and it is obviously a budgetary crisis that is looming.
    And last week, Madam Secretary, we thank you, you issued 
your draft national plan pursuant to the National Alzheimer's 
Project Act, which I am the principal House author of along 
with Congressman Smith, and I think it is great. One thing I 
wanted to talk about here today is that at NIH there is $6 
billion a year spent on cancer research and there is $3 billion 
a year spent on AIDS research but only $489 on Alzheimer's, 
even though 15 million Baby Boomers are going to have it. We 
have to find a cure.
    And so Madam Secretary, I congratulate you and the 
administration on announcing the addition of $80 million more 
in this coming year's budget on the research for Alzheimer's. I 
think that that is absolutely critical, and I congratulate you 
on that and I just think it has to be dramatically higher, and 
if there is one thing we should just single out and just say 
this has to be spared, it is the NIH budget, that just has to 
go up and up and up because the National Institutes of Health 
are really the National Institutes of Hope, and in Alzheimer's, 
there is really going to be a medical catastrophe that hits 
this country when all the diseases that we have been successful 
in helping to cure lead to people living so long that half our 
population winds up in retirement with Alzheimer's. It is going 
to be an absolute disaster and it is going to cost us a 
fortune.
    And the second thing, Madam Secretary, is in the Affordable 
Care Act, I was able to include language for an Independence at 
Home pilot project, and there are now more than three times as 
many applicants, that is, medical institutions, that are 
applying for those slots in order to conduct this experiment. I 
would just like to draw to your attention the fact that the VA 
has already had a wildly successful program that has 10,000, 
11,000 people in it that reduced hospital stays by 60 percent 
and nursing care days by 80 percent, and so I appreciate all of 
your efforts in this area but I think it could help us to 
telescope the time frame that is going to take us in order to 
put together a program to keep people at home, share it with 
the institutions that are working hard in partnership to keep 
them at home, making the patients and their families better 
able to deal with the disease.
    So I was just looking for a little wisdom from you in terms 
of what your agency is doing and how much of an imperative you 
see this for our country.
    Ms. Sebelius. Well, first of all, Mr. Markey, I want to 
thank you for your tenacious leadership on the Alzheimer's 
issue and continuing to raise it and make sure it is an issue 
that is focused on. As you know, not only is there 80 million 
new research dollars in the 2013 budget, there were also 
reallocated another $50 million in the 2012 budget at NIH. So 
it is about a 25 percent increase in Alzheimer's research. We 
also have proposed a portion of those funds, additional funds, 
not those funds, for care giving and at-home care because we 
know family care providers are the largest number of providers 
for family members.
    But I would share your interest, and we look forward to 
working with you on what is the long-term strategy, how fast we 
can get there. As you know, some timetables were set for the 
first time in the National Alzheimer's Plan. There is a lot of 
agreement that we probably need to move ahead of that pace but 
at least we have a pace and a measurable pace outlined and so 
we would look forward to working on getting the resources, 
getting the research, getting the care-giving strategies in 
place.
    Mr. Markey. A fully implemented Independence at Home 
project could save billions of dollars a year if we could just 
get to the point where we verify what the VA has already 
determined.
    Ms. Sebelius. Well, that is a great point, and we will 
definitely work with our partners at the VA.
    Mr. Pitts. The Chair thanks the gentleman.
    Mr. Markey. Thank you for your great work. I appreciate it.
    Mr. Pitts. The Chair thanks the gentleman and recognizes 
Dr. Burgess for one follow-up for 5 minutes.
    Mr. Burgess. Thank you, Mr. Chairman.
    I will just point out to Mr. Markey while he is still here, 
this is one of the rare instances of bipartisanship in the 
Affordable Care Act where we worked with your office on getting 
the Independence at Home language refined and included, so 
perhaps there is hope down the road.
    But actually, going back to State exchanges for a moment, 
some States are concerned that without the final rules on the 
exchanges, they are bumping up against a deadline that is going 
to be pretty tough for them to meet. I mean, they need these 
rules probably within the next couple of months if they are to 
be able to finalize their issues to meet the deadlines.
    Ms. Sebelius. And they will have them shortly. We have the 
interim final rule out and we intend to finalize the rule in 
the very near future.
    Mr. Burgess. So we can look for that by, what, the Ides of 
March? April Fools Day? Tax Day? What day can we----
    Ms. Sebelius. Shortly.
    Mr. Burgess. Shortly? OK.
    Ms. Sebelius. So if they need them in the next couple of 
months, they will definitely have them in the next couple of 
months.
    Mr. Burgess. And then the essential health benefits rule 
also will be coming out in that same very short time span?
    Ms. Sebelius. The essential health benefits rule has not 
yet been proposed as an interim rule. I am talking about 
finalizing the exchange rule. That will happen in the very near 
future. They will have the exchange rule. They will have the 
Medicaid expansion rule. That has been out as interim final 
rule. The essential health benefits rule will be promulgated in 
the near future but there is detailed guidance right now that 
States are working on.
    Mr. Burgess. I will just make a prediction: that won't 
happen until after Election Day in November, but that is just 
me being cynical.
    For a State like--let us say, for example, there is a State 
out there that worries about what is happening under the 
Affordable Care Act and really thinks the Federal Government is 
maybe going a little too far on this so they are reticent to 
set up a State exchange. I mean, I can think of a State that 
might fall into that category. I may be going there this 
afternoon. So you are preparing a national exchange for those 
States that will not either because they haven't had time or 
because they did not have the inclination will not have an 
operational State exchange?
    Ms. Sebelius. There will be a Federal facilitated exchange 
in some cases operating fully the exchange for States and 
others in partnership.
    Mr. Burgess. But the Federal Government will step in and 
provide that operational control. Is that correct?
    Ms. Sebelius. Pardon me?
    Mr. Burgess. The Federal Government will step in and 
provide that?
    Ms. Sebelius. Yes, sir.
    Mr. Burgess. Now, will that be administered through your 
office or through the Office of Personnel Management?
    Ms. Sebelius. It will be administered through the CMS, 
through--we will be operating at HHS the federally funded 
exchange.
    Mr. Burgess. My understanding is, there will be both a for-
profit and a non-for-profit offered under the language of the 
law. Is that correct? Will there be a not-for-profit Federal 
exchange?
    Ms. Sebelius. No, there will not.
    Mr. Burgess. I thought the language of the law said there 
had to be a for-profit----
    Ms. Sebelius. No, I think you are talking about the co-op 
situation.
    Mr. Burgess. No, I am talking about the exchanges, or the 
Federal exchange for public option, whatever we want to call 
it.
    Ms. Sebelius. No, there will not be a not-for-profit. 
States have that option. That is not at the Federal level, sir.
    Mr. Burgess. Let me ask you this. A lot of talk about the 
contraception issue and the essential benefits. When will we 
see--are you proposing that an institution that refuses to 
comply with your contraceptive mandate, what is going to happen 
to them?
    Ms. Sebelius. Sir, I am hopeful that the rule that we 
intend to promulgate in the very near future, which will be 
informed by conversations with not only religious employers but 
labor leaders, women's groups and others and actually greatly 
informed by the 28 States which have a framework like we are 
talking about already in place will indeed satisfy the 
religious liberty issues and make sure these preventive health 
benefits are provided.
    Mr. Burgess. Are the noncompliers going to be fined?
    Ms. Sebelius. Sir, we will get--as you know, this is a 
situation where----
    Mr. Burgess. Well, let me just share with you something. It 
bothers me that for the first time in this country, regardless 
of what the issue is, and I personally support the issue of 
contraception but at the same time it bothers me that there 
might be a fine for faith. I don't think that has ever happened 
before in this country, and I am concerned about the 
direction----
    Ms. Sebelius. No one will be fined for faith. This is an 
issue dealing with insurers----
    Mr. Burgess. Well, why did you propose a two-tier system 
where some churches might be exempt but a Catholic hospital 
might not? I mean, that sounds like that the direction you are 
going.
    Ms. Sebelius. The exemption, which is in the original rule 
finalized in January--I am sorry--in February is the language 
used in the majority of State laws which have some religious 
exemption. That is where we got that language. It is a 
definition that is in the IRS code. It is not something that we 
invented. It is a definition of churches and church-affiliated 
associations.
    Mr. Burgess. If a State required sterilization as a 
condition of citizenship, would you be prepared to do that at 
the Federal level?
    Ms. Sebelius. Sir, I am not going to answer that question.
    Mr. Burgess. Thank you, Mr. Chairman.
    Before we finish up, can I have unanimous consent? Mr. 
Whitfield had a number of observations that he wanted entered 
into the record, and I would ask to enter those now under 
unanimous consent.
    Mr. Pallone. Mr. Chairman, reserving the right to object. I 
know you handed that to us but we haven't had time to really 
look at it, so if we could take a look at it before we agree to 
unanimous consent?
    Mr. Pitts. All right. We will wait until you take a look at 
that, and recognize the Ranking Member, Mr. Pallone, for 5 
minutes for questions in follow-up.
    Mr. Pallone. Thank you.
    Madam Secretary, I just wanted to give you an opportunity 
to address somewhat of a follow-up to Dr. Burgess and others 
have said. Clearly the matter of insurance coverage for FDA-
approved contraceptives under the ACA has become controversial. 
Unfortunately, what I think has been lost in the debate is an 
understanding of how HHS arrived at the decision it has made, 
and I would just ask you to take a few moments--you know, I 
have got 4 minutes or so--to provide the broader picture, to 
tell us about the ACA's provisions on preventive health 
services and women's preventive health services, the role of 
the Institute of Medicine study on coverage of women's 
preventive health services and the HHS's process in developing 
these regulations that are now under attack. I know you started 
to get into that with Dr. Burgess but take the 4 minutes to 
maybe explain it a little more.
    Ms. Sebelius. Well, Mr. Pallone, the Affordable Care Act 
had a provision that as part of a definition of essential 
health benefits various populations should be looked at. The 
recommended strategies for children around immunizations would 
be included. The strategies for preventive health that are 
recommended by the United States Preventive Health Services 
Task Force would be included. And recognizing that too many 
insurance plans often did not include benefits that were 
specifically recommended for women's health, we were asked to 
develop a set of preventive health services for women. We 
turned to the independent scientifically driven Institute of 
Medicine and asked them to make recommendations to us. They 
came back with eight various health benefits--domestic violence 
screening, mental health benefits, well woman visits and the 
full range of scientifically recommended contraception 
services.
    We promulgated their rules as part of the strategy for 
women's health as an interim rule and added a religious 
exemption, and to be informed by what language should be used 
in that religious exemption, we looked at the 28 States which 
have some kind of contraceptive mandate in place right now 
often for a decade or more operationally right now and we 
included language that was used by the States in the majority 
of cases that have an exemption. Many States don't have an 
exemption at all. That language was put out. It was finalized 
in February and an additional accommodation was made. We 
announced that we would have an additional year for religious-
based organizations who had a religious objection to the 
provision of contraceptives so that their implementation date 
would be deferred until August of 2013, and that we would 
promulgate additional rules around their ability to both uphold 
their religious freedoms, not refer, not pay for, not provide 
contraceptive coverage and yet make sure that women who were 
janitors, teachers, nurses, employees, the spouses of 
employees, the daughters of employees would have access to this 
very critical health benefit.
    And so we will be promulgating a rule around the 
implementation strategy for preventive health services, which 
will be a huge step forward for American women, knowing that 
contraception is the most frequently taken prescription drug 
for women 14 to 44. Ninety-nine percent of women of all 
religions use contraceptives at some point in their health 
lives and that often if you purchase contraception out of your 
own pocket, it can be an expensive strategy. If it is provided 
within an insurance pool, it not only is no cost but often 
reduces the cost of the pool.
    Mr. Pallone. Thank you very much. I appreciate it.
    Thank you, Mr. Chairman.
    Mr. Pitts. The Chair thanks the gentleman.
    I think that concludes all of our questioning. Thank you, 
Secretary Sebelius, for again taking time to be with us today 
and for all of your answers.
    I ask unanimous consent that all members' opening 
statements be made part of the record. Without objection, so 
ordered.
    I remind the members that they have 10 business days to 
submit questions for the record, and I ask the Secretary to 
respond to the questions promptly. Members should submit their 
questions by the close of business on Thursday, March 15th.
    Without objection, the subcommittee is adjourned.
    [Whereupon, at 12:40 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]


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