[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]






                       REVIEWING THE PRESIDENT'S
                    FISCAL YEAR 2014 BUDGET PROPOSAL
                       FOR THE U.S. DEPARTMENT OF
                       HEALTH AND HUMAN SERVICES

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

                                HEARING

                               before the

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

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                               __________

              HEARING HELD IN WASHINGTON, DC, JUNE 4, 2013

                               __________

                           Serial No. 113-20

                               __________

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                COMMITTEE ON EDUCATION AND THE WORKFORCE

                    JOHN KLINE, Minnesota, Chairman

Thomas E. Petri, Wisconsin           George Miller, California,
Howard P. ``Buck'' McKeon,             Senior Democratic Member
    California                       Robert E. Andrews, New Jersey
Joe Wilson, South Carolina           Robert C. ``Bobby'' Scott, 
Virginia Foxx, North Carolina            Virginia
Tom Price, Georgia                   Ruben Hinojosa, Texas
Kenny Marchant, Texas                Carolyn McCarthy, New York
Duncan Hunter, California            John F. Tierney, Massachusetts
David P. Roe, Tennessee              Rush Holt, New Jersey
Glenn Thompson, Pennsylvania         Susan A. Davis, California
Tim Walberg, Michigan                Raul M. Grijalva, Arizona
Matt Salmon, Arizona                 Timothy H. Bishop, New York
Brett Guthrie, Kentucky              David Loebsack, Iowa
Scott DesJarlais, Tennessee          Joe Courtney, Connecticut
Todd Rokita, Indiana                 Marcia L. Fudge, Ohio
Larry Bucshon, Indiana               Jared Polis, Colorado
Trey Gowdy, South Carolina           Gregorio Kilili Camacho Sablan,
Lou Barletta, Pennsylvania             Northern Mariana Islands
Martha Roby, Alabama                 John A. Yarmuth, Kentucky
Joseph J. Heck, Nevada               Frederica S. Wilson, Florida
Susan W. Brooks, Indiana             Suzanne Bonamici, Oregon
Richard Hudson, North Carolina
Luke Messer, Indiana

                    Juliane Sullivan, Staff Director
                 Jody Calemine, Minority Staff Director







































                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held on June 4, 2013.....................................     1

Statement of Members:
    Kline, Hon. John, Chairman, Committee on Education and the 
      Workforce..................................................     2
        Prepared statement of....................................     3
    Miller, Hon. George, senior Democratic member, Committee on 
      Education and the Workforce................................     4
        Prepared statement of....................................     6

Statement of Witness:
    Sebelius, Hon. Kathleen, Secretary, U.S. Department of Health 
      and Human Services.........................................     8
        Prepared statement of....................................     9

Additional Submissions:
    Chairman Kline:
        Article, ``ObamaCare Bait and Switch: The Truth About 
          Those Rate Increases in Oregon and California,'' Wall 
          Street Journal, June 3, 2013...........................    50
        Questions submitted for the record.......................    53
    Mr. Miller, article, ``Affordable Care Act Could Be Good for 
      Entrepreneurship,'' New York Times, May 31, 2013...........    50
    Secretary Sebelius, response to questions submitted for the 
      record.....................................................    58
    Thompson, Hon. Glenn, a Representative in Congress from the 
      State of Pennsylvania, letter dated May 30, 2013, from 
      Pennsylvania Gov. Tom Corbett to Secretary Sebelius........    44
    Questions submitted for the record:
        Barletta, Hon. Lou, a Representative in Congress from the 
          State of Pennsylvania..................................    55
        Brooks, Hon. Susan W., a Representative in Congress from 
          the State of Indiana...................................    56
        Bucshon, Hon. Larry, a Representative in Congress from 
          the State of Indiana...................................    55
        Gowdy, Hon. Trey, a Representative in Congress from the 
          State of South Carolina................................    55
        Hinojosa, Hon. Ruben, a Representative in Congress from 
          the State of Texas.....................................    57
        Hudson, Hon. Richard, a Representative in Congress from 
          the State of North Carolina............................    56
        Messer, Hon. Luke, a Representative in Congress from the 
          State of Indiana.......................................    57
        Petri, Hon. Thomas E., a Representative in Congress from 
          the State of Wisconsin.................................    54
        Polis, Hon. Jared, a Representative in Congress from the 
          State of Colorado......................................    58
        Roby, Hon. Martha, a Representative in Congress from the 
          State of Alabama.......................................    55
        Roe, Hon. David P., a Representative in Congress from the 
          State of Tennessee.....................................    54
        Rokita, Hon. Todd, a Representative in Congress from the 
          State of Indiana.......................................    54
        Scott, Hon. Robert C. ``Bobby,'' a Representative in 
          Congress from the State of Virginia....................    57

 
                       REVIEWING THE PRESIDENT'S
                    FISCAL YEAR 2014 BUDGET PROPOSAL
                       FOR THE U.S. DEPARTMENT OF
                       HEALTH AND HUMAN SERVICES

                              ----------                              


                         Tuesday, June 4, 2013

                     U.S. House of Representatives

                Committee on Education and the Workforce

                             Washington, DC

                              ----------                              

    The committee met, pursuant to call, at 10:04 a.m., in room 
2175, Rayburn House Office Building, Hon. John Kline [chairman 
of the committee] presiding.
    Present: Representatives Kline, Wilson, Foxx, Price, Roe, 
Thompson, Walberg, Salmon, Guthrie, DesJarlais, Bucshon, Gowdy, 
Barletta, Roby, Heck, Brooks, Hudson, Messer, Miller, Andrews, 
Scott, Hinojosa, Tierney, Holt, Davis, Grijalva, Bishop, 
Loebsack, Courtney, Fudge, Polis, Yarmuth, Wilson, and 
Bonamici.
    Staff present: Andrew Banducci, Professional Staff Member; 
Katherine Bathgate, Deputy Press Secretary; James Bergeron, 
Director of Education and Human Services Policy; Casey Buboltz, 
Coalitions and Member Services Coordinator; Owen Caine, 
Legislative Assistant; Molly Conway, Professional Staff Member; 
Ed Gilroy, Director of Workforce Policy; Benjamin Hoog, Senior 
Legislative Assistant; Marvin Kaplan, Workforce Policy Counsel; 
Rosemary Lahasky, Professional Staff Member; Nancy Locke, Chief 
Clerk; Brian Newell, Deputy Communications Director; Krisann 
Pearce, General Counsel; Jenny Prescott, Staff Assistant; Molly 
McLaughlin Salmi, Deputy Director of Workforce Policy; Nicole 
Sizemore, Deputy Press Secretary; Alex Sollberger, 
Communications Director; Todd Spangler, Senior Health Policy 
Advisor; Alissa Strawcutter, Deputy Clerk; Juliane Sullivan, 
Staff Director; Joseph Wheeler, Professional Staff Member; 
Aaron Albright, Minority Communications Director for Labor; 
Tylease Alli, Minority Clerk/Intern and Fellow Coordinator; 
Kelly Broughan, Minority Education Policy Associate; Jody 
Calemine, Minority Staff Director; John D'Elia, Minority Labor 
Policy Associate; Jamie Fasteau, Minority Director of Education 
Policy; Daniel Foster, Minority Fellow, Labor; Scott Groginsky, 
Minority Education Policy Advisor; Brian Levin, Minority Deputy 
Press Secretary/New Media Coordinator; Leticia Mederos, 
Minority Senior Policy Advisor; Megan O'Reilly, Minority 
General Counsel; Michele Varnhagen, Minority Chief Policy 
Advisor/Labor Policy Director; and Michael Zola, Minority 
Deputy Staff Director.
    Chairman Kline. A quorum being present, the committee will 
come to order. Before we start this morning I want to point out 
that our colleague from New York, Mrs. McCarthy, is not with 
us. Some of you probably saw the news this morning--Mr. Miller 
and I were just talking--she has been diagnosed with treatable 
cancer and she will be missing for some time while she is being 
treated. And, of course, our prayers are with here.
    George, if you have any----
    Mr. Miller. Mr. Chairman, just thank you very much. I had 
an opportunity to talk to Carolyn yesterday evening and, as you 
pointed out, she has been diagnosed with what they believe is 
treatable lung cancer but she is in for a rough ride.
    Told her we were all cheering for her and she would see us 
after Labor Day, and so thank you very much and we are going to 
miss her service on the committee in the meantime, but we all 
obviously wish her well. Thank you.
    Chairman Kline. Well, not always the happiest way to start 
off, but good morning, Secretary Sebelius. Welcome back to the 
Education and Workforce Committee.
    Though the economic recovery began 4 years ago, countless 
Americans continue to face serious challenges. Roughly 12 
million are searching for work. Families have recouped less 
than half of the household wealth lost during the recession. 
The economy continues to move along at an anemic pace and the 
national debt will soon reach an astonishing $17 trillion.
    Congress has a responsibility to examine the programs and 
priorities of the federal government, not only to ensure we 
provide the best possible services to those in need and spend 
taxpayer dollars wisely, but also to deter policies that make 
it more difficult for businesses to hire new workers. That 
means asking tough questions to demand accountability for every 
dollar spent and each new rule imposed.
    For example, is Head Start meeting the needs of students 
and taxpayers? Two studies released by the department suggest 
the answer is no. The gains students achieve in the program are 
essentially lost by the time they graduate from the first 
grade.
    These findings are especially informative in light of the 
President's plan to dramatically expand the federal role in 
early childhood education. We should not be adding another 
program onto an already broken system. Our nation's youth 
deserve better.
    Does the administration's welfare waiver scheme serve the 
best interest of low-income families? The answer is no.
    The 1996 bipartisan welfare reform law has helped reduce 
poverty and strengthen the income security of millions of needy 
families. Last year the department announced a plan to end 
welfare reform as we know it by allowing states to waive the 
work requirements central to the law's success. This plan would 
create more dependency when 47 million individuals are already 
trapped in poverty.
    And is the health care law living up to the promises the 
President made to the American people? Once again the answer is 
no.
    The President promised to lower health care premiums for 
the average family by $2,500, but premiums rose 4 percent last 
year and 9 percent the year before. Meanwhile, insurance 
providers are warning of rate shock in the years to come.
    The President also promised if you liked your health care 
plan you could keep it. However, the nonpartisan Congressional 
Budget Office estimates as many as 20 million individuals will 
lose their current plan. Many will be forced to pay more for 
health care they do not want or need in order to meet the 
mandates from Washington.
    Finally, it was promised the law would create millions of 
new jobs, yet barely a day goes by when we don't read reports 
of the law wreaking havoc in workplaces across the country. 
Once small business owner testified the law will lead to either 
higher prices for his customers or fewer hours for employees. A 
human resources professional at a North Carolina community 
college warned they may have to cut the number of courses 
offered to students and described the law as a, ``massive 
administrative burden that comes with unanticipated costs.''
    To prove these aren't just Republican accusations, here are 
a few recent headlines surrounding the law: ``Like your health 
policy? You may be losing it,'' warns the Associated Press. 
``As health law changes loom, a shift to part-time workers,'' 
writes National Public Radio. ``Some unions now angry about 
health care overhaul,'' also by the Associated Press. ``Health 
insurers warn on premiums,'' reports the Wall Street Journal.
    The litany of bad news goes on. As one senior Democrat and 
architect of the law stated, the law is headed for a train 
wreck, and still there are those who want to force every 
American to go along for the ride. Isn't it time for the 
President to admit we can do better than a flawed health care 
law that is raising costs and destroying jobs?
    I look forward to your answers to these and other important 
questions, Secretary Sebelius.
    With that, I will now recognize the senior Democratic 
member of the committee, my colleague, Mr. Miller, for his 
opening remarks?
    [The statement of Chairman Kline follows:]

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

    Good morning. Secretary Sebelius, welcome back to the Education and 
the Workforce Committee. Though the economic recovery began four year 
ago, countless Americans continue to face serious challenges. Roughly 
12 million are searching for work. Families have recouped less than 
half of the household income lost during the recession. The economy 
continues to move along at an anemic pace. And the national debt will 
soon reach a historic $17 trillion.
    Congress has a responsibility to examine the programs and 
priorities of the federal government, not only to ensure we provide the 
best possible services to those in need and spend taxpayer dollars 
wisely, but also to deter policies that make it more difficult for 
businesses to hire new workers. That means asking tough questions to 
demand accountability for every dollar spent and each new rule 
proposed.
    For example, is Head Start meeting the needs of students and 
taxpayers? Two studies released by the department suggest the answer is 
no. The gains students achieve in the program are essentially lost by 
the time they graduate from the first grade. These findings are 
especially informative in light of the president's plan to dramatically 
expand the federal role in early-childhood education. We should not be 
adding another program onto an already broken system; our nation's 
youth deserve better.
    Does the administration's welfare waiver scheme serve the best 
interests of low-income families? The answer is a resounding no. The 
1996 bipartisan welfare reform law has helped reduce poverty and 
strengthen the income-security of millions of needy families. Last year 
the department announced a plan to end welfare reform as we know it by 
allowing states to waive the work requirements central to the law's 
success. This plan would create more dependency when 47 million 
individuals are already trapped in poverty.
    And is the health care law living up to the promises the president 
made to the American people? Once again the answer is no. The president 
promised to lower health care premiums for the average family by 
$2,500, but premiums rose 4 percent last year and 9 percent the year 
before. Meanwhile, insurance providers are warning of rate shock in the 
years to come.
    The president also promised if you liked your health care plan, you 
could keep it. However, the nonpartisan Congressional Budget Office 
estimates as many as 20 million individuals will lose their current 
plan. Many will be forced to pay more for health care they do not want 
or need in order to meet the mandates from a few bureaucrats in 
Washington.
    Finally, it was promised the law would create millions of new jobs. 
Yet barely a day goes by when we don't read reports of the law wreaking 
havoc in workplaces across the country. One small business owner 
testified the law will lead to either higher prices for his customers 
or fewer hours for employees. A human resources professional at a North 
Carolina community college warned they may have to cut the number of 
courses offered to students and described the law as a ``massive 
administrative burden that comes with unanticipated costs.''
    To prove these aren't just Republican accusations, here are a few 
recent headlines surrounding the law:
    ``Like your health care policy? You may be losing it,'' warns the 
Associated Press.
    ``As health law changes loom, a shift to part-time workers,'' 
writes NPR.
    ``Some unions now angry about health care overhaul,'' also by the 
Associated Press.
    ``Health insurers warn on premiums,'' reports the Wall Street 
Journal.
    The litany of bad news goes on. As one senior Democrat and 
architect of the law stated, the law is headed for a train wreck, and 
still there are those who want to force every American to go along for 
the ride. Isn't it time for the president to admit we can do better 
than a flawed health care law that is raising costs and destroying 
jobs?
    I look forward to your answers to these and other important 
questions, Secretary Sebelius. With that, I will now recognize the 
senior Democratic member of the committee, my colleague Representative 
George Miller, for his opening remarks.
                                 ______
                                 
    Mr. Miller. Thank you, Mr. Chairman. And I join you in 
welcoming Secretary Sebelius back to the committee.
    From educating our youngest children in Head Start to 
ensuring seniors access to health care through Medicare, the 
Department of Health and Human Services administers programs to 
make our nation stronger and healthier. The department is 
handling a number of important policies and proposals and I 
would like to focus my comments on just two of these efforts.
    First, I believe that President Obama's child care and 
early childhood education proposals recognize the overwhelming 
evidence that investments in early education more than pay off 
down the line. We know that providing greater access to high-
quality preschool, child care, and voluntary home visitations 
with mothers of newborns are proven ways to close the 
achievement gap and strengthen school readiness. These programs 
and proposals have received bipartisan support in the past and 
they should have bipartisan support today and in the future.
    In the meantime, we should be working hard to stop the 
automatic cuts to the Head Start program. They have been having 
a devastating impact on tens of thousands of children and their 
families.
    Despite this, the Republican majority refuses to restore 
these cuts. They have already voted to double down on the 
sequester with even more cuts in the Republic budget, and when 
there were threats to--excuse me--but when there were threats 
for the waits of members of Congress at the airports we broke 
the land speed record and passed legislation to stop that 
sequester. However, when it comes to 70,000 kids' future, the 
urgency to restore these cuts haven't received the committee 
hearing, let alone a vote. These kids can't afford to lose 
access to Head Start.
    Likewise, playing politics with the Affordable Care Act has 
become something of an Olympic sport for the majority. The 
majority has tried in one way or another to repeal the 
Affordable Care Act 37 times.
    This is outrageous, especially at a time when the 
Affordable Care Act is coming into full effect. Already, more 
than 6 million young adults have been allowed to stay on their 
parents' health plan; 54 million Americans with private health 
insurance have been able to get preventative health screening 
with no copayment; 6.3 million seniors have saved more than $6 
billion in the cost of their prescription drugs; nearly 13 
million Americans have received more than $1 billion in rebates 
and lowered premiums from insurance companies that were 
spending more on overhead rather than on health care.
    The federal government is recovering billions of dollars by 
reducing Medicare fraud, and growth in health care costs have 
slowed and the Affordable Health Care Act has been partially 
responsible for that--so much so that CBO says that we are 
realizing billions of savings in Medicare and the Medicaid 
programs, more expected to come. And beginning in October, 
Americans without access to affordable insurance will be able 
to shop for health care plans in the transparent marketplace 
for the first time.
    And there has been good news on that front from the number 
of states, including California, which has been one of the most 
proactive states implementing reform, and it is going to pay 
off for our citizens. In the states that have published the 
2014 health insurance premiums, where insurance companies are 
competing and offering affordable premiums, contrary to the 
predictions of the majority.
    For instance, in California's published premiums have come 
in or are much lower than plans today and comparable benefits. 
This is all good news and stands in contrast to claims that we 
have been hearing from the other side for 3 years.
    And this also stands in stark contrast to the Republican 
health care agenda. More than 3 years ago House committees, 
including this one, were to report alternative health care 
reform proposals. We have seen none from any committee; all we 
have seen is repeal.
    And in those 3 years we have produced nothing but these 37 
attempts at repeal, and there is more to be done to secure 
Medicare in the long term and there is more to be done to 
ensure the Affordable Care Act is fully implemented, but these 
reforms should be allowed to work because the alternative is 
unacceptable. Repeal is unacceptable because it will take away 
the important benefits already in the law.
    Repeal means working families going bankrupt because of an 
expensive illness like cancer. Repeal means sick children will 
be denied coverage. Repeal means millions of young adults 
losing access to their parents' coverage. And repeal means that 
all of the other patient's rights set to go into law in a few 
months will never happen, like completely ending the use of 
preexisting conditions to deny care or pricing Americans out of 
coverage, like ensuring that all Americans have access to 
quality and affordable health insurance that is not dependent 
on whether or not your employer offers it or not or whether or 
not you become unemployed.
    Mr. Chairman, the Affordable Care Act is already making a 
difference. I applaud Secretary Sebelius for the monumental 
efforts that she has made to implement this law in the face of 
endless obstruction from this House.
    America tried to enact meaningful health care reform for 
nearly a century. We have debated it. Republican Presidents and 
Democratic Presidents have offered proposals for national 
health care. But it couldn't have happened until President 
Obama and the Democratic Congress finally made it happen.
    Now is not the time to reverse course and go back to the 
days when insurance companies were in charge. Our nation's 
businesses, families, and governments can't afford it.
    Once again, thank you, Secretary Sebelius, for making 
yourself available to the committee and I look forward to your 
testimony.
    [The statement of Mr. Miller follows:]

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

    Good morning Mr. Chairman. I join you in welcoming Secretary 
Sebelius back to the committee.
    From educating our youngest children in Head Start to ensuring 
seniors' access to health care through Medicare, the Department of 
Health and Human Services administers programs that make our nation 
stronger and healthier.
    The department is handling a number of important policy priorities 
and proposals. I would like to focus my comments on just two of these 
efforts.
    First, I believe that President Obama's child care and early 
education proposals recognize the overwhelming evidence that 
investments in early education more than pay off down the road.
    We know that providing greater access to high-quality pre-school, 
child care, and voluntary home visitation with mothers with newborns 
are proven ways to close achievement gaps and strengthen school 
readiness.
    These programs and proposals have received bipartisan support in 
the past. And they should have bipartisan support today and in the 
future.
    In the meantime, we should also be working to stop the automatic 
cuts to the Head Start program. They are having a devastating impact on 
tens of thousands of children and their families.
    Despite this, this Republican majority refuses to restore these 
cuts. They have already voted to double-down on the sequester with even 
more cuts in the Republican budget.
    But when there were threats of waits for members of Congress at 
airports, we broke a land-speed record and passed legislation to stop 
it. However, when it comes to 70,000 kids' future, the urgency restore 
these cuts haven't received a committee hearing, let alone a vote.
    These kids can't afford to lose access to Head Start. I hope we can 
get past this fiscal cliff politics and restore funding to this and 
other very important programs.
    Likewise, playing politics with the Affordable Care Act has become 
something of an Olympic sport for the majority. The majority has tried 
in one way or another to repeal the ACA 37 times.
    This is outrageous, especially at a time when the Affordable Care 
Act is coming into full effect.
    Already, more than 6 million young adults have been allowed to stay 
on their parents' health plan. 54 million Americans with private health 
insurance have been able to get preventive health screenings with no 
co-payment. 6.3 million seniors have saved more than $6 billion on the 
cost of their prescription drugs. Nearly 13 million Americans have 
received more than a billion dollars in rebates or lower premiums from 
insurance companies that spent more on overhead rather than health 
care. The federal government is recovering billions more by stopping 
Medicare fraud.
    Growth in health care costs have slowed dramatically since the 
Affordable Care Act became law.
    So much so, that the CBO says that we are already realizing 
billions in savings in the Medicare and Medicaid programs with more 
expected to come.
    And, beginning in October, Americans without access to affordable 
insurance will be able to shop for a health plan in a transparent 
marketplace for the first time.
    There has been good news on that front from a number of states, 
including California, which has been one of the most pro-active states 
implementing reform. And it's going to pay off for our citizens.
    In the states that have published the 2014 health insurance 
premiums, insurance companies are competing and offering affordable 
premiums--contrary to the predictions of the majority. For instance, 
California's published premiums have come in at or much lower than 
plans today with comparable benefits.
    This is all good news and stands in contrast to the claims we've 
been hearing from the other side for three years. And this also stands 
in stark contrast to the Republican health care agenda.
    More than three years ago, House committees--including this one--
were to report alternative health care reform proposals. But three 
years later, we have produced nothing but 37 attempts to repeal the ACA 
and efforts to end the Medicare guarantee.
    There is more to be done to secure Medicare for the long-term, and 
more to do to ensure that the Affordable Care Act is fully implemented. 
No piece of legislation is perfect. There will be bumps in the road. 
But these reforms should be allowed to work because the alternative is 
unacceptable.
    Repeal is unacceptable because it will take away these important 
benefits already in law.
    Repeal means working families going bankrupt because of an 
expensive illness like cancer.
    Repeal means sick children can be denied coverage.
    Repeal means millions of young adults losing access to their 
parents' coverage.
    And repeal means that all of the other patient rights set to go 
into law in a few months will never happen.
    Like completely ending the use of preexisting conditions to deny 
care or pricing Americans out of coverage. Like ensuring all Americans 
have access to quality and affordable health insurance that is not 
dependent on whether your employer offers it or not.
    Mr. Chairman, the Affordable Care Act is already making a 
difference. I applaud Secretary Sebelius' monumental task to implement 
this law in the face of endless obstruction from this House.
    America tried to enact meaningful health reform for nearly a 
century but we couldn't make it happen until President Obama and a 
Democratic Congress finally made it happen.
    Now is not the time to reverse course and go back to the days where 
insurance companies were in charge. Our nation's businesses, families, 
and our government can't afford it.
    Once again, thank you, Secretary Sebelius, for making yourself 
available to the committee.
    I look forward to your testimony.
                                 ______
                                 
    Chairman Kline. Thank the gentleman.
    Pursuant to committee rule 7(c), all committee members will 
be permitted to submit written statements to be included in the 
permanent hearing record. Without objection, the hearing record 
will remain open for 14 days to allow statements, questions for 
the record, and other extraneous material referenced during the 
hearing to be submitted in the official hearing record.
    Again, Madam Secretary, welcome back to the committee. It 
is my pleasure to introduce our witness, but everybody here 
knows who you are and knows your background and we are eager to 
hear your testimony.
    So, Madam Secretary, floor is yours.

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

    Secretary Sebelius. Sorry. Chairman Kline, Ranking Member 
Miller, members of the committee, thank you for the opportunity 
to discuss the President's 2014 budget for the Department of 
Health and Human Services.
    This budget supports the overall goals of the President's 
budget by strengthening our economy and promoting middle class 
growth. It ensures that the American people will continue to 
benefit from the Affordable Care Act; it strengthens education 
and services for our children during their critical early years 
to help ensure they can live healthy lives and succeed in a 
21st century economy; provides much-needed support for mental 
health services and takes steps to address the ongoing tragedy 
of gun violence; and it helps reduce the deficit in a balanced, 
sustainable way.
    I look forward to answering the committee members' 
questions about the budget, but first I would like to briefly 
cover a few of the highlights.
    The Affordable Care Act is already benefiting millions of 
Americans and our budget makes sure we can continue to 
implement the law. By supporting the creation of new health 
insurance marketplaces, the budget will ensure that starting 
next January Americans in every state will be able to get 
quality health insurance at an affordable price.
    Our budget also supports the President's call to provide 
every child in America with access to high-quality early 
learning services. It proposes additional investments in new 
Early Head Start child care partnerships. And it provides more 
funding for child care to complement our recent proposed rules 
to strengthen child care health and safety standards.
    Together, these investments will create long-lasting 
positive outcomes for families and provide huge returns for the 
children who benefit from these programs and for society at 
large.
    Our budget also addresses another issue that has been on 
all of our minds recently: mental health services and the 
ongoing epidemic of gun violence. We know that the vast 
majority of Americans who struggle with mental illness are not 
violent. Recent tragedies have reminded us of the staggering 
toll that untreated mental illness can take on our society, and 
that is why this budget proposes a major new investment, to 
help ensure that students and young adults get the mental 
health care they need, including training 5,000 new mental 
health professionals to join our behavioral health workforce.
    Even as our budget invests for the future, it also helps 
reduce the long-term deficit by making sure programs like 
Medicare are put on a more stable fiscal trajectory. Medicare 
spending per beneficiary grew at just four-tenths of 1 percent 
in 2012 thanks in part to the $800 billion in savings already 
in the Affordable Care Act. And the President's 2014 budget 
would achieve even more savings. For example, the budget will 
allow low-income Medicare beneficiaries to get their 
prescription drugs at lower Medicaid rates, resulting in 
savings of more than $120 billion over the next 10 years.
    In total, this budget would generate an additional $371 
billion in Medicare savings over the next decade on top of the 
savings already in the Affordable Care Act.
    To that same end, our budget also reflects our commitment 
to aggressively reducing waste across the department. We are 
proposing an increase in mandatory funding for the Health Care 
Fraud and Abuse Control program, an initiative that saved 
taxpayers nearly $8 for every dollar spent on it last year. And 
we are investing in additional efforts to reduce improper 
payments in Medicare, Medicaid, and CHIP, and to strengthen our 
office of inspector general.
    Now, this all adds up to a budget guided by this 
administration's North Star of a thriving middle class. It will 
promote job growth and keep our economy strong in the years to 
come while also helping to reduce the long-term deficit.
    Now, I am sure many of you have questions and I am happy to 
take them now.
    Thank you again, Mr. Chairman, for inviting me today.
    [The statement of Secretary Sebelius follows:]

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

    Chairman Kline, Ranking Member Miller, and Members of the 
Committee, thank you for the invitation to discuss the President's FY 
2014 Budget for the Department of Health and Human Services (HHS).
    The Budget for HHS provides critical investments in health care, 
disease prevention, social services, and scientific research in order 
to create healthier and safer families, stronger communities, and a 
thriving America.
    The President's fiscal year (FY) 2014 Budget for HHS includes 
investments needed to support the health and well being of the nation, 
and legislative proposals that would save an estimated $361.1 billion 
over 10 years. The Budget totals $967.3 billion in outlays and proposes 
$80.1 billion in discretionary budget authority. With this funding HHS 
will continue to improve health care and expand coverage, create 
opportunity and give kids the chance to succeed, protect vulnerable 
populations, promote science and innovation, protect the nation's 
public health and national security, and focus on responsible 
stewardship of taxpayer dollars.
Improving Health Care and Expanding Coverage
    Expanding Health Insurance Coverage. Implementation of the 
Exchanges, also referred to as Marketplaces, will expand access to 
affordable insurance coverage for 25 million Americans. Marketplaces 
make purchasing private health insurance easier by providing eligible 
consumers and small businesses with one-stop-shopping where they can 
compare across plans. New premium tax credits and rules ensuring fair 
premium rates improve affordability of private coverage. Marketplaces 
will be operational in 2014; open enrollment begins October 1, 2013 for 
the coverage year beginning January 1, 2014. The Budget supports 
operations in the Federal Marketplaces, as well as oversight and 
assistance to State-based and Partnership Marketplaces.
    Beginning in January 2014, Medicaid coverage rules will be 
simplified and aligned with rules for determining eligibility for tax 
credits for private insurance in the Marketplaces, and millions of low-
income people will gain coverage. The Centers for Medicare & Medicaid 
Services (CMS) is committed to working with states and other partners 
to advance state efforts that promote health, improve the quality of 
care, and lower health care costs.
    Also beginning in 2014, consumers will benefit from a number of new 
protections in the private health insurance market. Most health 
insurers will no longer be allowed to charge more or deny coverage to 
people because of pre-existing conditions. These new protections will 
also prohibit most health insurers from putting annual dollar limits on 
benefits and from varying premiums based on gender or any factor other 
than age, tobacco use, family size, or geography. In addition, new 
plans in the individual and small group market will be required to 
cover a comprehensive package of items and services known as Essential 
Health Benefits, which must include items and services within ten 
benefit categories. Finally, most individuals choosing to participate 
in clinical trials will not face limits in health insurance coverage. 
This protection applies to all clinical trials that treat cancer or 
other life-threatening diseases.
    Expanding Access to Care through Health Centers. The FY 2014 Budget 
includes $3.8 billion for the Health Centers program, including $2.2 
billion in mandatory funding provided through the Affordable Care Act 
Community Health Center Fund. In FY 2014, 23 million patients will 
receive health care through more than 8,900 sites in medically 
underserved communities throughout the nation. The Budget funds 40 new 
health center sites for the provision of preventive health care 
services, expanding outreach and care to approximately 1.5 million 
additional patients.
Increasing Access to Mental Health Services
    The FY 2014 Budget includes over $1 billion for mental health 
programs at the Substance Abuse and Mental Health Services 
Administration (SAMSHA), including the $460 million for the Community 
Mental Health Services Block Grant. This block grant provides States 
flexible funding to maintain community based mental health services for 
children and adults with serious mental illnesses, including 
rehabilitation, supported housing, and employment opportunities. The 
Budget also proposes funding within the block grant to encourage States 
to build provider capacity to bill public and private insurance. This 
will support States in an effective transition in the first year of the 
Affordable Care Act, which will include expanded coverage for mental 
health and substance abuse treatment services.
    Expand Prevention and Treatment for Youth and Families. While the 
vast majority of Americans with a mental illness are not violent, and 
are in fact more likely to be the victims of violence, recent tragedies 
have brought to light a hidden crisis in America's mental health 
system. The Budget addresses these issues by investing $130 million to 
help teachers and other adults recognize signs of mental illness in 
students and refer them to help if needed, support innovative state-
based programs to improve mental health outcomes for young people ages 
16- 25, and train 5,000 more mental health professionals with a focus 
on serving students and young adults.
Helping Families and Children Succeed
    In his State of the Union Address, President Obama proposed a 
series of new investments to create a continuum of high-quality early 
learning services for children beginning at birth through age five. As 
part of this initiative, HHS and the Department of Education are 
working together to make high-quality preschool available to four-year 
olds from low- and moderate-income families through a partnership with 
states, expand the availability of high-quality care for infants and 
toddlers, and increase highly-effective, voluntary home visiting 
programs to provide health, social, and education supports to low-
income families. Specifically, the FY 2014 HHS Budget includes:
    Early Head Start--Child Care Partnerships. The Budget proposes $1.4 
billion in FY 2014 for new Early Head Start--Child Care Partnerships 
that will expand the availability of early learning programs that meet 
the highest standards of quality for infants and toddlers, serving 
children from birth through age three. In addition to the new 
Partnerships, the Budget provides $222 million above FY 2012 to 
strengthen services for children currently enrolled in the program, 
avoid further enrollment reductions, and support the Head Start 
Designation Renewal System. Together, these investments total $9.6 
billion, an increase of $1.7 billion over FY 2012.
    Head Start Reform. The Budget proposes a $197 million cost of 
living adjustment in FY 2014 which will strengthen existing services 
for children currently enrolled in Head Start and avoid further 
reductions in enrollment. Additionally, the Budget proposes $25 million 
in FY 2014 to minimize potential service disruptions by providing new 
grantees funding for start-up costs associated with transitioning from 
an incumbent grantee as a result of recompetition in the Designation 
Renewal System. Under the Designation Renewal System, Head Start 
grantees who do not meet quality thresholds established by the 
department have to compete for their continued funding with other 
potential providers from the community. Requiring grantees who are not 
meeting quality benchmarks to compete for funding will improve the 
quality of the program.
    Improving the Safety and Quality of Child Care. The Budget provides 
$500 million above FY 2012 in mandatory funds to serve 1.4 million 
children, approximately 100,000 more than would otherwise be served. In 
addition to this funding, the request includes $200 million above FY 
2012 in discretionary funds to help states raise the bar on quality by 
strengthening health and safety measures in child care settings, 
supporting professional development for providers, and promoting 
transparency and consumer education to help parents make informed child 
care choices.
    The additional funding to improve child care quality also will 
support changes that may come as a result of a new regulation that the 
department recently issued for public comment that will better ensure 
children's health and safety in child care and promote school 
readiness. Under the proposed rule, states, territories and tribes 
would be required to strengthen their standards to better promote the 
health, safety and school readiness of children in federally funded 
child care. While states can use their existing funds to implement 
potential changes in these areas, these new resources dedicated to 
quality improvement would help states that have further to go in 
improving their programs.
    We also will continue to work with Congress to reauthorize the 
Child Care and Development Block Grant, which was last reauthorized in 
1996.
    Child Support and Fatherhood Initiative. Additionally, the Budget 
includes a set of proposals to encourage states to pay child support 
collections to families rather than retaining those payments. This 
effort includes a proposal to encourage states to provide all current 
monthly child support collections to Temporary Assistance for Needy 
Families recipients. Recognizing that healthy families need more than 
just financial support alone, the proposal requires states to include 
parenting time provisions in initial child support orders, to increase 
resources to support, and facilitate non-custodial parents' access to 
and visitation with their children. The Budget also includes new 
enforcement mechanisms that will enhance child support collections.
    Home Visiting. The Budget extends and expands this voluntary 
evidence-based program that has shown to be critical in improving 
maternal and child health outcomes in the early years, leaving long-
lasting, positive impacts on parenting skills; children's cognitive, 
language, and social-emotional development; and school readiness. The 
Budget proposes a long-term $15 billion investment beginning in FY 
2015.
Protecting Vulnerable Populations
    Addressing the Unique Needs of Communities. The Administration for 
Community Living (ACL) was formed in April 2012 as a single agency 
designed to help more people with disabilities and older adults have 
the option to live in their homes and participate fully in their 
communities. The FY 2014 Budget reflects the creation of ACL by 
bringing together the resources for the Administration on Aging, the 
Office on Disability, and the Administration on Intellectual and 
Developmental Disabilities, into a consolidated request. This newly 
organized agency works across HHS to harmonize efforts to promote 
community living, which can both save federal funds and allow people 
who choose to live with dignity in the communities they call home. 
ACL's Older Americans Act programs, as an example, last year served 
nearly 11 million seniors and their caregivers through home and 
community-based services. These critical supports complement medical 
and health care systems, help to prevent hospital readmissions, provide 
transportation to doctor appointments, and support some of life's most 
basic functions, such as assistance to elders in preparing and 
delivering meals, or helping them with bathing. It is important that we 
continue to support alternatives to institutional care that are person-
centered, consumer-driven and support individuals in their homes 
through the best evidence-based practices.
Promoting Science and Innovation
    Advancing Scientific Knowledge. The FY 2014 Budget includes $31.3 
billion for the National Institutes of Health (NIH), an increase of 
$471 million over the FY 2012 level, reflecting the Administration's 
priority to invest in innovative biomedical and behavioral research 
that spurs economic growth while advancing medical science. In FY 2014, 
NIH will focus on investing in today's basic research for tomorrow's 
breakthroughs, advancing translational sciences, and recruiting and 
retaining diverse scientific talent and creativity. Investment in NIH 
also helps drive the biotechnology sector and assure the nation's place 
as a leader in science and technology.
    Alzheimer's Disease Initiatives. The Department continues to 
implement the National Plan to Address Alzheimer's Disease, as required 
by the National Alzheimer's Project Act. In FY 2014, the Budget 
includes a $100 million initiative targeted to expanding research, 
education, and outreach on Alzheimer's disease, and to improving 
patient, family, and caregiver support.
    Included in this initiative is $80 million within the NIH budget to 
be devoted to speeding drug development and testing new therapies. 
Also, the request for the Prevention and Public Health Fund (Prevention 
Fund) includes $20 million for the Alzheimer's Disease Initiative. Of 
this, ACL will use $15 million to strengthen state and local dementia 
intervention capabilities and for outreach to inform those who care for 
individuals with Alzheimer's disease about resources available to help 
them. HRSA will use the other $5 million to expand efforts to provide 
training to healthcare providers on Alzheimer's disease and related 
dementias.
Focusing on Responsible Stewardship of Taxpayer Dollars
    Contributing to deficit reduction while maintaining promises to all 
Americans. The HHS Budget makes the investments the nation needs right 
now, while reducing the deficit in the long term and ensuring the 
programs that millions of Americans rely on will be there for 
generations to come. While it maintains ongoing investments in areas 
most central to advancing the HHS mission to the Budget reduces support 
for lower priority areas, reduces duplication, and increases 
administrative efficiencies. Overall, the FY 2014 Budget includes 
nearly $2.3 billion in discretionary terminations and budget 
reductions.
    The Affordable Care Act has already helped to slow rising costs 
through innovations that tackle the underlying health care costs that 
have been driving Medicare and Medicaid spending. In fiscal year 2012, 
per beneficiary Medicare spending grew by only 0.4 percent, and total 
per beneficiary Medicaid spending actually decreased by 1.9 percent. 
For the first time in a decade, overall health care costs grew more 
slowly than the economy. We are driving down costs while improving 
quality for patients by building a smarter system--for example, after 
decades stuck at 19 percent, avoidable hospital readmissions fell to 
17.8 percent in Medicare last year with the help of payment reforms and 
assistance to hospitals. The Budget invests in programs and policies 
that enable HHS to build on this work.
    Combating fraud, waste, and abuse in health care. The FY 2014 
Budget makes cutting fraud, waste, and abuse a top Administration 
priority. In addition to the base discretionary Health Care Fraud and 
Abuse Control (HCFAC) funding in FY 2013 and FY 2014, the Budget seeks 
new mandatory funding to support these efforts. Starting in FY 2015, 
the Budget proposes that all new HCFAC investments be mandatory 
spending, consistent with levels in the Budget Control Act. This 
investment supports initiatives like the Fraud Prevention System and 
screening for Medicare providers and suppliers to reduce improper 
payments in Medicare, Medicaid and CHIP; and HHS-Department of Justice 
Health Care Fraud Prevention and Enforcement Action Team initiatives, 
including the Medicare Strike Force teams and the Fraud Prevention 
Partnership between the federal government, private insurers, and other 
key stakeholders.
    From 1997 to 2012, HCFAC programs have returned more than $23 
billion to the Medicare Trust Funds, and the current three-year return-
on-investment of 7.9 to 1 is the highest in the history of the HCFAC 
program. The Budget's 10-year HCFAC investment yields a conservative 
estimate of $6.7 billion in Medicare and Medicaid savings.
    The Budget includes $389 million in discretionary and mandatory 
funding for the Office of Inspector General (OIG), an increase of $101 
million above the FY 2012 level. This increase will enable OIG to 
expand CMS Program Integrity efforts for the Health Care Fraud 
Prevention and Enforcement Action Team and improper payments, and also 
enhance investigative efforts focused on civil fraud, oversight of 
grants, and the operation of Affordable Care Act programs.
    The Budget also includes $82 million for the Office of Medicare 
Hearings and Appeals (OMHA), an increase of $10 million from FY 2012, 
to address OMHA's adjudicatory capacity and staffing levels and 
maintain quality and accuracy of its decisions. The increase allows 
OMHA to establish a new field office in the Central time zone supported 
by additional Administrative Law Judge teams and attorneys, and 
operational staff.
    Thank you for the opportunity to testify. I will be happy to answer 
any questions you may have.
                                 ______
                                 
    Chairman Kline. Thank you, Madam Secretary.
    Madam Secretary, it gets very frustrating, of course, for 
us here as we look for information from the departments--all 
the departments--of the administration. We asked in the Child 
Abuse Prevention and Treatment Act--CAPTA--Reauthorization Act 
of 2010 for your department to conduct three studies on child 
abuse prevention and treatment activities.
    One was examining whether state and local laws and 
regulations on immunity from prosecution facilitate or deter 
individuals from cooperating, consulting, or assisting in 
reporting known instances of child abuse and neglect. The 
report was due December 2011.
    Another one was examining efforts to improve coordination 
of child abuse and neglect organizations. The report was due 
December 2011.
    Third was examining the effectiveness of reports of 
programs receiving state grants for child abuse and neglect 
prevention and treatment. That report was due December 2012.
    In July of 2012 Mr. Miller and I sent you a letter asking 
for an update on the status of the reports. At the time just 
two of the three were overdue. In August your department 
responded, stating that it planned to complete them by the end 
of December 2012, and of course, that hasn't happened.
    So some frustration is coming through here, but we put 
these things in law. We need information, we have 
responsibilities here to legislate and provide oversight, and 
we don't get the answers.
    I appreciate there was an apology for not complying. When 
can we expect to get these reports?
    Secretary Sebelius. Mr. Chairman, you will have the three 
reports by the end of the month.
    Chairman Kline. Congressional record. We are writing it 
down. Okay.
    Secretary Sebelius. June 2013 you will have all three 
reports.
    Chairman Kline. I got it. And I certainly hope you are not 
hearing from me on July 1st about that.
    Secretary Sebelius. Me too.
    Chairman Kline. All right.
    Head Start: The first round of the recompetition of Head 
Start grantees is almost complete. After almost a year of 
delays the potential grant winners announced this spring will 
be finalized this summer. I have a couple of questions about 
that.
    The first round of recompetition consists of the lowest-
performing grantees. Is that right?
    Secretary Sebelius. That is correct.
    Chairman Kline. How many of these grantees will receive a 
new grant?
    Secretary Sebelius. I can't tell you the exact number, Mr. 
Chairman, off the top of my head. I know some of the recompeted 
grants were given back to the original grantees; in some cases 
they were the only grantees applying.
    Chairman Kline. Well, we have seen some reports that an 
overwhelming majority of the 125 grantees that compete in the 
first round will continue to receive federal funding. If these 
grantees are the lowest-performing grantees, how does that fit 
in with the rest of the program? If an overwhelming majority of 
the lowest-performing grantees are going forward I am a 
little--you can see where I am going----
    Secretary Sebelius. Sure.
    Chairman Kline. I am a little concerned about how that 
would play out.
    Secretary Sebelius. Well, Mr. Chairman, first of all, as 
you know, the recompetition is a first of its kind effort to 
make sure that grants are just not automatically rolled over, 
which had been the case in the past. I can tell you that in all 
cases the lowest-performing grantees have a series of steps 
that they need to continue to take as well as additional 
oversight visits to make sure that the quality standards are on 
an improvement plan.
    We did have situations where in some cases they were the 
only re-applicant, and the choice of having the children put 
out of a Head Start program or working with the existing 
grantee to improve standards seemed to be a pretty easy 
question to answer.
    I share your concerns that we need to constantly look at 
the quality and improvement. We do have the authority and we do 
take that authority to pull grant applications in the case 
where there are health or safety issues at risk. We will not 
put a child in a program that is putting that child at risk.
    In most of these cases it could be a lack of oversight of 
financial management; it could be that they haven't raised the 
standards in a quality way. And we are putting improvement 
plans and extra visits in place for the recompeting grantees 
that got the awards back.
    Chairman Kline. Well, I am certainly pleased that we are 
going to pay attention to health and safety, but that is not 
the only reason that Head Start exists so I hope that you are 
going to put in place or have in place a system to make sure 
that we are not just throwing money down the drain, that these 
kids are getting the head start that they are supposed to get.
    A reminder to my colleagues: While the secretary has 
unlimited time--and she very graciously limited that time in 
her comments--we don't. My time is expired. I yield back.
    Mr. Miller?
    Mr. Miller. Thank you, Mr. Chairman.
    And welcome, Madam Secretary.
    I would like to pick up a little bit where the chairman 
left off. As one of the major proponents of the recompetition 
of Head Start--and I have got all the arrows in my back to 
prove that I was there at the beginning--I think this is a very 
important thing for us to do. And I recognize that in some 
areas there was nobody to compete, and my understanding is that 
all of the people who will be awarded Head Start will be on a 
5-year timetable, not this idea that you have this program in 
perpetuity and----
    Secretary Sebelius. Correct.
    Mr. Miller [continuing]. There are conditions of monitoring 
going forward.
    I will have to say that in my own area--my district--one of 
our major providers was greatly diminished and a substitute 
provider was brought in because of the issues that were raised, 
and I think it was the right thing to do. I don't think--and I 
think that Head Start got a little of itself--that somehow it 
was the only premier program and they were entitled to just 
continue to run forever, and I think this competition will turn 
out to be a beneficial thing for the kids and the program and 
for the taxpayers.
    I would like to go back a little bit to this argument that 
somehow Head Start doesn't make any difference. What we have 
known all along in the area of early childhood education and 
child care is that good child care, good early childhood 
education is good for the children; bad child care, bad early 
childhood education is not good for you at all.
    And then there is the question of when you leave a high-
quality program that you may have in many areas where you have 
poor schools and you take that child and you put them into a 
poor school, yes, you start to lose some of the benefits of 
child care. We know that in even transferring between schools; 
we know that in the summer session.
    One of the things we worry about is kids in poor schools, 
low-income schools, lose much of what they acquired during the 
year during the summer session. There is a problem of support 
systems. But the idea that somehow all of a sudden that this 
doesn't make any difference when it flies in the face of the 
evidence, and we are not just talking about the Ypsilanti 
study; we are talking about recent evidence that suggests, in 
fact, it makes a difference.
    The other thing I always find interesting is, you know, you 
kind of what to know, what are the rich folks doing. Well, in 
conversations I have with a lot of people of good wealth and 
even upper middle-income people and middle-income people who 
struggle with this question, but others who don't struggle as 
much and can answer it and pay for it, they are looking for the 
very best early childhood education they can find.
    We see almost a scandal on Wall Street: People are trading 
inside information to try to get into a preschool program 
because it is considered to be the best in the development. I 
don't suggest that that is the way they do it, but the fact is 
they know what this means in terms of the acquisition of the 
skills necessary to succeed in school, and studies tell us what 
it means in terms of the acquisition of skills to survive in 
the American economy and to thrive and to go forward.
    And so this idea that some--it is sort of like there is now 
kicking around the idea that college really isn't worth it 
anymore. Oh, yes it is. Oh, yes it is.
    And the fact of the matter is, whether it is dealing with 
unemployment or it is dealing with earnings over lifetime, it 
is worth it. And I just worry that we are building up this sort 
of rhetoric about somehow this really isn't worth it.
    High-quality programs are clearly worth it and clearly pay 
a benefit, but you have to sustain them. If you are going to 
dump them into a school where you have ill-prepared teachers 
and no support systems then you are going to have a problem and 
you are going to fritter away your investment.
    This home visitation is strongly supported by district 
attorneys all over the country, by law enforcement all over the 
country. All of these early childhood efforts are strongly 
supported because of what we see in terms of the outcomes.
    But if you are going to cheat on quality, if you are going 
to cut the Title I schools that these children are going into, 
which we are doing under sequestration, don't look for great 
results in those neighborhoods or those schools. And I just 
want to put that point on the record because I think we are 
getting way off track here in terms of what benefits children.
    If you would like to have a second to respond you are more 
than welcome to, or whatever the yellow light----
    Secretary Sebelius. Well, Mr. Miller, I certainly agree 
that even though there are some indication that in some 
instances benefits of Head Start may fade in first grade or 
third grade, it is once they have left the Head Start. There is 
absolutely unequivocal evidence that Head Start makes a huge 
difference in school readiness, in catching kids up to their 
peers, in making sure that they are able to enter school ready 
to learn.
    And there is a lot of evidence that over time many of the 
payoffs are actually at 18 and 20 and 25, that early childhood 
education is one of the single most positive indicators of less 
drug abuse, less prison time, higher graduation rates, higher 
job acquisition--things that don't show up in the third grade 
but actually follow a child through his or her life. And so I 
think there is a lot of evidence that these are enormously 
important investments, particularly for children who don't have 
those benefits in their home setting.
    Chairman Kline. Gentleman's time has expired.
    Dr. Price?
    Mr. Price. Thank you, Mr. Chairman.
    And I want to welcome you, Madam Secretary, to the 
Education and Workforce Committee. As a physician I like to try 
to focus on patients, as you well know. I want to focus on one 
specific patient. Occasionally we have the opportunity to truly 
affect in a singular and specific way somebody's life and, 
Madam Secretary, I would suggest that you have that opportunity 
with Sarah Murnaghan.
    Sarah Murnaghan, as you know, is a 10-year-old young lady 
in Pennsylvania who has cystic fibrosis. The physicians and 
scientists have all agreed that if she does not receive a lung 
transplant within weeks, she will die. Doctors all agree that 
it is indicated.
    The reason she is unable to receive that right now is 
because of an arbitrary rule that says if you are not 12 years 
old you aren't eligible to receive an adolescent or an adult 
lung.
    Madam Secretary, under Section 121.4(d) you have the 
opportunity. It says, ``Unless the secretary directs otherwise 
based on possible risk to the health of patients or public 
safety.'' Madam Secretary, I would urge you this week to allow 
that lung transplant to move forward.
    Secretary Sebelius. Well, Dr. Price, I appreciate your 
input. First, as a mother and a grandmother I can't imagine 
anything more agonizing than what the Murnaghans are going 
through, and I talked to Janet Murnaghan, the mother of Sarah, 
about this case. What I have also done is look very carefully 
at the history of the rules around lung transplant and organ 
transplant----
    Mr. Price. With all due respect, Madam Secretary, it 
simply----
    Secretary Sebelius. Dr. Price----
    Mr. Price. I am going to reclaim my time. It simply takes 
your signature. It simply takes your signature.
    A study I know you have ordered and I appreciate that, but 
a study will take over a year. This young lady will be dead.
    I want to move on to a concern that many----
    Secretary Sebelius. Others will----
    Mr. Price. Madam Secretary, I want to move on to a concern 
that many folks across this country have about this 
administration and about the things that are being done outside 
the norm and certainly some believe outside legal limits. The 
Washington Post and the New York Times reported last month that 
you were soliciting funds from the health industry officials to 
support the implementation and enrollment in the Affordable 
Care Act. Is that true?
    Secretary Sebelius. No, sir. That is not true.
    Mr. Price. So you didn't communicate--have any discussions 
with folks at the Robert Wood Johnson Foundation or H&R Block 
about donating----
    Secretary Sebelius. You asked me if I solicited funds from 
anyone in the health industry and I said no, that is not true.
    Mr. Price. Did you have any discussions or conversations 
with anyone about providing resources to anybody about 
enrollment or implementation of ACA?
    Secretary Sebelius. Sir, I have had conversations with 
people all across this country including insurance companies, 
pharmaceutical companies, and others using the statutory 
authority that is clearly given to the secretary of health in 
the Public Health Service Act and has been used by my 
predecessors, Republican and Democratic, for every health 
innovation that has gone on. Secretary Thompson and Leavitt 
made public-private partnership outreach efforts to make sure 
Medicare Part D enrollment went well----
    Mr. Price. So you did ask individuals to assist in 
providing contributions for the implementation and enrollment 
of the ACA?
    Secretary Sebelius. I have made two calls involving funding 
with----
    Mr. Price. To whom?
    Secretary Sebelius. To Robert Wood Johnson and H&R Block, 
neither of whom are under the regulatory authority of our 
office. But I would suggest that the Public Health Service Act 
does not limit my authority to entities that are not regulated. 
I chose to do that----
    Mr. Price. What did you request of Robert Wood Johnson 
Foundation and H&R Block?
    Secretary Sebelius. I talked to them both about how 
important this outreach effort was going to be and the fact 
that always we anticipated having public-private partnerships 
on the ground, as has been done in CHIP enrollment and it 
Medicare Part D enrollment----
    Mr. Price. Did you ask them to provide any resources?
    Secretary Sebelius [continuing]. And that they consider----
    Mr. Price. Madam Secretary?
    Secretary Sebelius [continuing]. Making contributions to 
our partner in Enroll America, which is a private, not-for-
profit, nonpartisan organization incorporated in 2012 under the 
umbrella of----
    Mr. Price. Did you ask them to provide resources----
    Secretary Sebelius [continuing]. Families USA.
    Mr. Price. Did you ask them to provide resources for any 
other group at all?
    Secretary Sebelius. I did not, because at that point I did 
not know that there were other groups soliciting funds. I 
talked to them specifically about Enroll America.
    Mr. Price. Did you have any conversation with employees or 
representatives or designees of the pharmaceutical industry?
    Secretary Sebelius. Pardon me?
    Mr. Price. Have any conversations with employees or 
representatives or designees of the pharmaceutical industry to 
contribute resources to Enroll America?
    Secretary Sebelius. Those are the only two conversations I 
have had about contributing resources to Enroll America. I have 
certainly promoted the partnership roll that Enroll America 
will play in an operation on the ground, much similar to--I 
would suggest that you look at the ABC--the coalition that was 
put together for Medicare Part D that Secretary Thompson and 
Secretary Leavitt avidly supported and traveled around with and 
suggested that they were very important public-private 
partners. It is the same kind of effort.
    We are also talking to businesses and pharmaceutical 
companies and hospitals and insurers and faith groups about 
using whatever resources they have to help fulfill what I 
consider to be an incredible opportunity for up to 30 million 
Americans to have affordable, available health----
    Mr. Price. Did you direct any of those other entities to 
Enroll America?
    Chairman Kline. The gentleman's time has expired.
    Mr. Andrews?
    Mr. Andrews. Secretary Sebelius, I want to talk a little 
bit more about the Medicare Part D enrollment process the Bush 
administration used.
    In 2003 the Congress passed, the President signed extension 
of drug benefits for seniors under Medicare. It is my 
understanding that your predecessor, Secretary Thompson, 
actively solicited contributions from groups that would be used 
to encourage Americans to sign up in Medicare Part D. Is that 
correct?
    Secretary Sebelius. That is my understanding, yes. The 
Access to Benefits Coalition was the major on-the-ground 
partner that both Secretary and----
    Mr. Andrews. And the coalition consisted of organizations 
outside the federal government, private, nonprofit, and 
otherwise?
    Secretary Sebelius. Absolutely. And those partnerships have 
been traditionally part of what public health--we have the--
through the Centers for Disease Control and Prevention solicit 
assistance from pharmaceutical companies in----
    Mr. Andrews. So you are doing----
    Secretary Sebelius [continuing]. Global and national health 
issues. We----
    Mr. Andrews. So you and perhaps others under your 
supervision are doing exactly what Secretary Thompson did for 
Medicare Part D, it is my understanding.
    Secretary Sebelius. Well, that is correct, sir. And the, I 
think, secretary of health has very specific statutory 
authority that has existed since 1976 in the Public Health 
Service Act.
    Mr. Andrews. I was here in 2003 when that passed and 2004 
and 2005 was implemented. I can't remember one word from anyone 
on either side of this committee or any other committee 
questioning the propriety of that activity. I think your 
present activity is entirely proper and desirable.
    I would hope that you would--the accusation would turn out 
to be true. I hope the accusation that you are using every 
legal resource at your disposal to get health care for 
Americans who need it is something you are doing. Matter of 
fact, if you are not doing that I would take you to task. I 
think you are doing the right thing.
    The tragedy for the Murnaghan family is heartbreaking on 
every level, and I know you wanted to say more about that 
before you were cut off a few minutes ago. If you would like to 
add to your answer on that I would give you this opportunity.
    Secretary Sebelius. Well, Congressman, what I was just 
going to say is I can't imagine anything more difficult. We 
have far too few donors and far too many desperately ill 
people. That is the national snapshot. That is true in the 
pediatric arena and it is true in the adults arena.
    Unfortunately, there are about 40 very seriously ill 
Pennsylvanians over the age of 12 also waiting for a lung 
transplant, and three other children in the Philadelphia 
hospital at the same acuity rate as Sarah waiting for a lung 
transplant. The decisions of the OPTN, the transplant 
committee, which is not bureaucrats, it is transplant surgeons 
and health care providers who design the protocol, are based on 
their best medical judgment of the most appropriate way to 
decide allocation in an impossibly difficult situation.
    So I have asked them to review the process, yes. That is 
true. I know that that may take some time because it requires 
public comment and it requires review. I would suggest that the 
rules that are in place and reviewed on a regular basis are 
there because the worst of all worlds in my mind is to have 
some individual pick and choose who lives and who dies. I think 
you want a process where it is guided by medical science and 
medical experts.
    Mr. Price. Will the gentleman yield?
    Mr. Andrews. I will not. I will not. You did not give the 
witness a chance to answer; I will not yield to you.
    Mr. Price. Thank you, sir.
    Mr. Andrews. Well, I think that you live by the rules that 
you just created here.
    When the Affordable Health Care was enacted we have heard 
and we have heard since then there would be huge, skyrocketing 
health insurance premiums that would affect millions and 
millions of people. Last week California unveiled the initial 
estimates of what premiums would be under the new health 
insurance law. What did the result of California show us?
    Secretary Sebelius. Well, the California preliminary 
results, and that is before the rates--the final rates--are 
negotiated, is not only will they have a very competitive 
market throughout the state where people will have lots of 
choices, but they are looking at the possibility of fairly 
significant rate decreases--up to 25 percent in some 
instances--and I think the highest rate increase that was 
originally filed was in the 4 to 5 percent level. So you are 
looking at both a competitive market and some preliminary rate 
reviews that look very positive.
    Mr. Andrews. In Maryland, when they released the list of 
insurers bidding for the right to insure exchange enrollees, 
did we have more or fewer bidders than expected?
    Secretary Sebelius. Actually, we have more bidders, which 
again is good news. I am a believer that markets work, but 
markets need to be transparent and there needs to be some 
competition. And what we are seeing is that opening up these 
new markets for, again, individuals who were shopping in the 
individual market where they often had very few choices and 
small business owners are producing much more robust 
competition. New insurers are entering the market in various 
states across the country.
    Mr. Andrews. Thank you.
    I appreciate the time.
    Chairman Kline. Gentleman's time has expired.
    Mr. Gowdy?
    Mr. Gowdy. Thank you, Mr. Chairman.
    Good morning, Madam Secretary. I want to pick back up where 
Dr. Price was.
    You testified--conceded that you made at least two 
solicitations of donations to Enroll America. Did I hear that 
correctly?
    Secretary Sebelius. Yes, sir. At their request I made two 
phone calls, yes.
    Mr. Gowdy. All right. And was there a specific dollar 
amount that you solicited?
    Secretary Sebelius. No.
    Mr. Gowdy. Did you discuss these solicitations with anyone 
that works for Enroll America before or after you made the 
phone calls?
    Secretary Sebelius. Yes.
    Mr. Gowdy. Who?
    Secretary Sebelius. I had a discussion with Anne Filipic, 
who is the director-President of Enroll America.
    Mr. Gowdy. Was there a specific dollar amount that you 
solicited?
    Secretary Sebelius. You just asked me that question and I 
said no.
    Mr. Gowdy. Okay. I just wanted to make sure the answer was 
the same.
    Was Enroll America the only entity you solicited funds for?
    Secretary Sebelius. Yes, sir.
    Mr. Gowdy. To the best of your knowledge, has anyone on 
your staff or anyone employed by HHS solicited funds on behalf 
of Enroll America or any other entity?
    Secretary Sebelius. I really can't answer that question. I 
don't know that.
    Again, there were a very small handful of calls that I made 
at the request and two involved actual fundraising 
solicitations--exactly what my predecessors have done, exactly 
the kind of public-private partnership that we have always 
anticipated would happen, driving funds not to HHS--I am not 
raising money----
    Mr. Gowdy. Who were the other----
    Secretary Sebelius [continuing]. For HHS; I am raising it 
for enrollment and outreach activities so Americans can connect 
with the benefits----
    Mr. Gowdy. Who were the other phone calls to, Madam 
Secretary? You said you made----
    Secretary Sebelius. Pardon me?
    Mr. Gowdy. Who were the other phone calls to? You said you 
made other phone calls.
    Secretary Sebelius. I made a total of 5 phone calls----
    Mr. Gowdy. Okay.
    Secretary Sebelius [continuing]. For Enroll America, and 
three of them were to discuss the organization and suggest that 
the entities look at the organization--to Johnson & Johnson, to 
Ascension health, and to Kaiser.
    Mr. Gowdy. Are any of those groups regulated by your 
department?
    Secretary Sebelius. Yes. All of them are.
    Mr. Gowdy. So if health care officials say they felt 
pressured to make donations to Enroll America your response 
would be what, that they are just too easily pressured or that 
they misunderstood the conversation?
    Secretary Sebelius. Well, I can't answer what they felt. I 
can tell you that I felt that the conversations that I had, as 
I have said in the past, I made fundraising solicitations to 
two groups who are not regulated; I did not discuss funding 
with the other three entities. I did discuss Enroll America.
    And I would tell you that the statutory authority, Section 
1704 in the Public Health Service Act, would not make that 
distinction. I could solicit--legally solicit funds from 
anybody regulated by our office. I chose not to do that, but 
promoting a public-private partnership, you bet.
    Mr. Gowdy. What specific code section are you relying on?
    Secretary Sebelius. Section 1704 of the Public Health 
Service Act, which has been in place since 1976.
    Mr. Gowdy. Is there a legal opinion that you relied upon? 
Is there someone that----
    Secretary Sebelius. Yes. My general counsel's opinion and 
the precedent of former secretaries. I mean, this is not 
something we are inventing----
    Mr. Gowdy. Well, sometimes precedent is accurate and 
sometimes it is not. Would you be willing to make that legal 
opinion available to the committee?
    Secretary Sebelius. Well, I will be able to, yes, make 
whatever memos are available.
    Mr. Gowdy. You would make that available to us?
    Secretary Sebelius. Yes, sir.
    Mr. Gowdy. Okay.
    Secretary Sebelius. And I will also give you the precedent 
that Secretary Thompson followed, that Secretary Leavitt 
followed, that was followed during the Clinton administration 
for the CHIP program. I am happy to make all of that history 
available to you.
    Mr. Gowdy. So if there are published reports that you 
solicited funds from health care companies those would be 
inaccurate?
    Secretary Sebelius. That is correct.
    Mr. Gowdy. And if there are published reports that you 
solicited funds from pharmaceutical companies those would be 
inaccurate?
    Secretary Sebelius. That is correct.
    Mr. Gowdy. You solicited no funds from any entity that is 
regulated by HHS?
    Secretary Sebelius. That is correct.
    Mr. Gowdy. Whose idea was it to solicit the funds?
    Secretary Sebelius. I would say it was a joint idea.
    Mr. Gowdy. Joint among whom?
    Secretary Sebelius. Well, in the discussions that I had 
with colleagues and entities interested in actually fully 
implementing the health care act, it was always recognized from 
the day the President signed the bill that there would never be 
enough government funding and that there would not be enough 
opportunity if this is only a government-run program, so we 
began 3 years ago----
    Mr. Gowdy. I am looking for----
    Secretary Sebelius [continuing]. To reach out for 
partners--business partners, health care providers----
    Mr. Gowdy. I am looking for who the ``we''----
    Secretary Sebelius [continuing]. Hospitals, health 
insurers----
    Mr. Gowdy. I am looking for a name.
    Secretary Sebelius [continuing]. Advocacy groups, disease 
groups, and----
    Mr. Gowdy. Can I get a name? I am looking for a name. When 
you said ``we,'' who is ``we''? Did you ever discuss it with 
anyone at the White House?
    Secretary Sebelius. I have had discussions with people--
about Enroll America, did I discuss with the White House----
    Mr. Gowdy. The solicitation of funds to Enroll America?
    Secretary Sebelius. No, sir.
    Mr. Gowdy. Never discussed it with anyone at the White 
House?
    Secretary Sebelius. No, sir.
    Mr. Gowdy. Mr. Chairman, I am going to yield the remainder 
of my time to Dr. Price in case he has a follow-up question 
with respect to----
    Chairman Kline. Unfortunately, the gentleman's time has 
expired.
    Mr. Holt?
    Mr. Holt. Thank you, Madam Secretary, for coming.
    I would like to turn to the Older Americans Act. With 
10,000 Americans reaching retirement every day and longer 
longevity, complexity grows in the care. And beginning in 
fiscal year 2012, Congress failed to fund Title IV of the Older 
Americans Act, what is known as the research and development 
arm that looks at education and training and improved access 
for seniors into various kinds of services, new approaches for 
coordinating programs and providing aging-in-place 
opportunities.
    The community innovations for aging in place essentially 
was shut down. It had been funded at a few million dollars. It 
seems to me the need is much greater than a few million 
dollars. There were 14 demonstration projects across the 
country; there could easily have been hundreds of high-quality 
projects across the country, but now it is zero.
    Do you see any justification for the defunding of this, and 
do you see any other alternative for funding these programs 
that would allow Americans to age in place with the services 
that they need?
    Secretary Sebelius. Well, Congressman, as you know, in the 
last couple of years we have actually created a new 
administrative entity, the Administration for Community Living, 
which seeks to address exactly what you are talking about--not 
only aging in place for seniors but a fully prosperous and 
engaged life for those Americans with disabilities. Because 
often the services needed at the local level are the same: 
transportation, additional home health care, supportive housing 
in some instances, to allow people to live to the fullest 
extent as independently as possible.
    So one of the issues before this committee, for the first 
time our budget reflects the ACL structure, and what we have 
been trying to do is identify ways that those assets can be 
leveraged both from the disability programs that we are running 
and for the aging programs to build that robust network of 
services on the ground. In some cases I think some of the 
individual programs may have been unfunded because there was a 
larger stream of money running to that same service and 
program. I am not sure I can answer with the specificity you 
are----
    Mr. Holt. Well, let me just say, I hope you will work with 
us to----
    Secretary Sebelius. Sure.
    Mr. Holt [continuing]. Find ways to fund these really very 
valuable programs that will become more and more valuable as 
people age.
    Let me turn to the Affordable Care Act. Much has been said 
about the programs of the Affordable Care Act. Actually, most 
has been said about imaginary programs of the Affordable Care 
Act. There is a lot of misinformation and even disinformation.
    But one thing we do know that has already taken effect are 
provisions of the Affordable Care Act affecting Medicare. Can 
you say what those provisions--what the record is now about 
those provisions that affect seniors on Medicare? What does it 
say about the long-term financial stability of the program? 
What did we learn about the quality of delivered care? What did 
we learn about the cost of that care as modified by the 
Affordable Care Act?
    Secretary Sebelius. Well, in spite of the oft repeated 
accusations that somehow the Affordable Care Act was going to 
destroy Medicare, we, I think, have a very positive record of 
achievements in the last 3 years.
    Millions of seniors are benefiting from preventive health 
benefits with no copays. Millions of seniors are achieving 
discounts in their prescription drug plans--now a 50 percent 
discount for the Part D brand name drugs if they fell into the 
so-called donut hole in the past. Millions have taken advantage 
of the wellness screening, which is now part of the overall 
Medicare beneficial program.
    In addition to that, what we know is that health costs are 
down at the lowest level in the 51 years since Medicare has 
been created. In fact, the four-tenths of 1 percent increase 
per beneficiary this year is historically low; 3.9 percent 
overall growth is historically low. And that is done with 
additional benefits.
    We were able, at the trustees meeting last week, to 
announce that 2 additional years had been added to the Medicare 
Trust Fund. The original passage of the Affordable Care Act 
added additional solvency years, but the trend in the last 3 
years has added additional time, which is all very----
    Mr. Holt. Well, thank you.
    Chairman Kline. The gentleman's----
    Mr. Holt. Our time is expired but that is quite a notable 
factual----
    Chairman Kline. The gentleman's time has expired.
    I have got an unwelcome administrative announcement. I am 
looking at the list of members who want to ask 5-minute 
questions. The secretary has a hard stop time at 12. I have got 
at least 2 hours worth of questions here, so we are going to--I 
am going to limit the members' time to 3 minutes. I will not be 
inclined to support the ``ask the question at 2 minutes and 59 
seconds and then give the secretary another 3 minutes.''
    Madam Secretary, if you could help us just a little bit by 
abbreviating your answers.
    And with that, Mr. Wilson, you are recognized for 3 
minutes?
    Mr. Wilson of South Carolina. Thank you, Mr. Chairman.
    And, Madam Secretary, thank you for being here today.
    The National Federation of Independent Business, NFIB, 
Research Foundation recently released a study on the impact of 
the new health insurance tax created by the health care law. 
The law created a new tax on health insurance policies that 
most small businesses purchase. It is structured as a fee on 
insurers but it is expected to be passed onto consumers.
    This new tax will increase the cost of insurance for small 
businesses and their employees. The NFIB study indicates this 
tax will result in a reduction in private sector employment of 
262,000 jobs. Do you believe increasing the cost of health 
insurance by taxing the policies that small businesses purchase 
make it more or less likely a small business will offer 
insurance to their employees?
    Secretary Sebelius. Well, the tax helps to support setting 
up some new markets which will be hugely beneficial to small 
business owners, including the shop option, which will exist in 
every state in the country. Small business owners currently pay 
18 to 20 percent more for their health coverage and I think 
that the tax to insurers who will have millions of new 
customers is an appropriate way to help set up these new market 
options.
    Mr. Wilson of South Carolina. But the net result will be a 
reduction in private sector jobs.
    Secretary Sebelius. I haven't seen the NFIB study and I 
have no idea how they are--because the tax isn't even in place 
yet so I have no idea what they are extrapolating.
    Mr. Wilson of South Carolina. And as America's largest 
association of small businesses it has extraordinary 
credibility.
    Secretary Sebelius. As you know, they also sued to strike 
down the law and that was not successful, so they haven't been 
huge fans from the outset.
    Mr. Wilson of South Carolina. And I am so grateful for 
their courage.
    Next we have the costs associated with the regulatory 
compliance are particularly high for small businesses since 
they may not have a department to handle benefit issues. Are 
you considering any transition period or relief for employers 
who are acting in good faith to comply with the law but simply 
are unable to comply with the reporting requirements and 
regulations of the health care law, given the lack of 
instruction from the administration?
    Secretary Sebelius. Well again, sir, we are trying to be as 
flexible as possible within our administrative authority. I 
would be happy to take a look at what specifically the 
complaints are. They are not filing anything now so I am not 
quite sure what they are anticipating being burdensome but we 
will sure take a look at it.
    Mr. Wilson of South Carolina. Well, I think that it would 
be great to consider a waiver for small businesses, and I 
appreciate your positive response to that inquiry.
    Secretary Sebelius. Well, I don't know what they want a 
waiver from; if it is a waiver from the law that is not within 
our administrative authority.
    Mr. Wilson of South Carolina. And it may not be a waiver, 
but it is certainly, during the transition period, a level of 
relief so that small businesses who do not have compliance 
offices can not be subject to penalty so that they can continue 
to conduct their business.
    Chairman Kline. The gentleman's time has expired.
    Mr. Grijalva?
    Mr. Grijalva. Thank you, Mr. Chairman.
    And, Madam Secretary, thank you very much. I do appreciate 
the efforts to partner with community allies in promoting 
understanding and enrollment in the health plans, and also 
because all we see, at least in the community, is the private 
carriers promoting their specific product. I think there is a 
need for unbiased, general information that the public can 
understand, and I applaud you for that effort.
    The Supreme Court decision reinforced the ability of ACA to 
move forward with the exception of the state Medicaid 
expansion; that made that optional for states. Some individuals 
decided the federal deficit is a reason not to accept Medicaid 
expansion.
    Madam Secretary, can you talk to us a bit about the impact 
of states choosing not to expand and what would that do to the 
federal deficit?
    Secretary Sebelius. Well, I think that the fear that at 
least has been cited was somehow that either the Congress would 
renege on the funding arrangement or that expanding Medicaid 
would add to the federal deficit, and first of all, the 
Medicaid expansion was contained in the funding for the 
Affordable Care Act, and as you know, at the end of the day the 
Congressional Budget Office indicated that passing the 
Affordable Care Act reduced the deficit by $100 billion over 
the first 10 years and projected an additional reduction of $1 
trillion over the next 10 years. So passing the act that was 
fully funded actually reduced the deficit.
    We do have a new RAND study that came out, I think in the 
last 2 days, that looked at the fiscal impact of 14 states who 
may choose not to expand Medicaid found that the states 
themselves would be bypassing about $8.4 billion of federal 
funding and incurring about $1 billion a year in uncompensated 
health care costs, so I think the return on investment analysis 
that has been done in states across the country indicates that 
Medicaid expansion is not only good for potential beneficiaries 
but could be very financially beneficial for states.
    Mr. Grijalva. Thank you.
    Yield back.
    Chairman Kline. Gentleman yields back.
    Dr. Foxx?
    Ms. Foxx. Thank you, Mr. Chairman.
    Thank you, Secretary Sebelius, for being with us today.
    I want to do one quick follow up on the questions that my 
colleagues asked earlier on Enroll America: You keep saying 
that the Robert Wood Johnson and H&R Block are not regulated by 
HHS. Are you saying they have no interest in the decisions you 
make as secretary?
    Secretary Sebelius. Oh, I am sure that virtually everyone 
has decisions that we make as secretary. They don't have any 
products or entities that come under our jurisdiction.
    But again, Ms. Foxx, I want to make it very clear that this 
is not a statutory line; this was a chosen line that I made. I 
have promoted and discussed outreach and education activities 
not only around partnership with Enroll America but with dozens 
of organizations for a very long time. I made two specific 
fundraising calls.
    Ms. Foxx. Okay. H&R Block is a tax preparation company. 
Isn't it true the tax credits available under the law go 
directly from the government to the insurance company? Is that 
correct?
    Secretary Sebelius. No. They would credit to the 
individual, not to the insurance company.
    Ms. Foxx. Okay.
    Secretary Sebelius. An individual would qualify based on 
his or her income for an accelerated tax credit to purchase 
health insurance.
    Ms. Foxx. Now I would like to switch and ask this question, 
Madam Secretary----
    Secretary Sebelius. Oh, I apologize. They do accrue to the 
individual but they go to the chosen plan. I am sorry. It goes, 
then, to pay for the coverage.
    Ms. Foxx. In July 2012 HHS issued an information memorandum 
to states inviting them to apply for waivers to the work 
requirements under the Temporary Assistance for Needy Families, 
or TANF. At the time HHS claimed it was responding to requests 
from states that wanted more flexibility, but to my knowledge 
no states have applied for the waivers.
    Recently it is been revealed that in late 2009, 2-1/2 years 
earlier, senior officials at HHS had requested a legal opinion 
to a series of questions they put forth on how much authority 
the department had in terms of waiving certain requirements 
even though governors didn't ask for these provisions. It seems 
that the department has had a plan to gut the welfare reform 
law from the beginning.
    Considering that there seems to be little or no support 
from states for your memorandum, shouldn't the administration 
withdraw it and work with Congress to reauthorize TANF?
    Secretary Sebelius. Well, Congresswoman, the discussions 
among governors--and I was one and had these discussions about 
the rules around TANF--have gone on for a very long time, 
during the Bush administration and certainly into this 
administration--a lot of reporting requirements that didn't 
seem to add jobs. What we learned during the Recovery Act was 
that states actually had very innovative programs that could 
put people to work when we could give them some flexibility 
around the use of their funds, so we did have conversations 
based on input from Republican and Democratic governors about 
what might be the authority that we had, not to waive work 
requirements, frankly, but to waive some of the reporting 
requirements that directed people to spend a lot of time 
counting boxes and not putting people to work.
    Chairman Kline. The gentlelady's time has expired.
    Mr. Courtney?
    Mr. Courtney. Thank you, Mr. Chairman.
    Madam Secretary, going back to the small business colloquy 
a few minutes ago, actually something that is about to also 
happen in January is that the small business tax credit is 
actually going to get bigger, isn't that correct?
    Secretary Sebelius. That is correct.
    Mr. Courtney. And it is for firms 25 or less and it is up 
to 50 percent of the----
    Secretary Sebelius. That is correct.
    Mr. Courtney [continuing]. Cost of the premium. And as a 
former small employer, I mean, that is nothing to sneeze at, 
and unfortunately, isn't included in some of these analyses 
that are getting thrown around out there.
    The trustees report which just came out a few days ago, 
which again, was a very powerful document in my opinion in 
terms of the positive trend lines, and particularly in terms of 
the Medicare health spending rates that are out there--again, 
it explicitly identified the Medicare advantage program costs 
that are coming in lower than were projected, isn't that 
correct?
    Secretary Sebelius. That is correct, and that is directly 
part of the structure of the Affordable Care Act.
    Mr. Courtney. And enrollment has gone up, I mean, despite 
all the----
    Secretary Sebelius. Enrollment has gone up, rates have gone 
down, and so beneficiaries also are--not just the Medicare 
program, which pays the government side of the puzzle, but 
beneficiaries themselves who pay a copay are paying less out of 
pocket.
    Mr. Courtney. And again, it seemed like the trustees were 
being kind of careful not to overreach, in terms of ascribing 
too much to the ACA, but as you point out, I mean, between the 
preventive behavior that is now, I think, infusing through the 
system, the ACO incentives that are out there that promote 
collaboration, the hospital readmission incentives--I mean, the 
fact is is that there is real change going on out there in 
delivery reform.
    Secretary Sebelius. Well, I think the first year or two 
people were very cautious about how to attribute that change 
and a lot of it was seen as potentially just a part of the 
recession. We have had four or 5 recent health economists--not 
connected with HHS in any way, but health economists--who say 
while a portion of the downturn in health spending--Medicare, 
Medicaid, and private sector health spending are all down--can 
be attributed to the recession, they think the large part is 
that there is an enormous change underway as part of the 
delivery system, led by the fact that for the first time 
Medicare is beginning to move away from the fee-for-service 
payment and into more of a quality outcome payment, into 
accountable care organizations, into preventing hospital 
readmissions, preventing hospital infections, and those are all 
having a very positive effect on health spending.
    Mr. Courtney. And in fact, they have calculated almost $700 
billion in unexpected savings if you go back in time to 2010 in 
terms of--I mean, if anyone had predicted that at the time the 
President signed it into law they would have called you a 
raving lunatic, but the fact is is that it has consistently 
surpassed----
    Secretary Sebelius. I have been called worse.
    Mr. Courtney. Well, and I know you didn't--you know, you 
were not being that reckless to try and sort of claim that, but 
the fact is is that it is surpassed all the expectations, and 
the fact is if we can continue to, you know, nurture that sort 
of change in the fee-for-service there is more money on the 
table there for the program without butchering benefits.
    Secretary Sebelius. Well, I think one of the big 
differences is to move Medicare, which has a huge--you know, 51 
million beneficiaries, has contracts with every doctor, every 
hospital, every drug company, every medical device company, to 
begin to move Medicare from a fee-for-service, the more you do 
the more you get paid, into really a quality provider begins to 
really transform the market.
    Chairman Kline. The gentleman's time has expired.
    Dr. Roe?
    Mr. Roe. Thank the chairman.
    Thank you, Madam Secretary.
    A couple things that we totally agree on is the cost is the 
biggest issue, I think, in health care. If we could lower the 
cost more people would have access. I think there is no 
question about that, and that has been a concern of mine 
through my career as a physician and one of the reasons I ran 
for Congress.
    I chair the Subcommittee on Health, Employment, Labor, and 
Pensions, so we look at individual markets and small group 
markets, and our state insurance commissioner in Tennessee--I 
spoke with her 2 weeks ago and then reconfirmed these numbers: 
The small group market in Tennessee will see an average 
increase of 50 to 55 percent and the individual market, 
depending on your age and gender, will be 45 to 70 percent 
increase. And I asked how many plans we had from mountains to 
Memphis now in our state and we have about eight plans that 
individuals and small groups can go to; and we will have, after 
the first of the year, two and maybe one plan.
    So that didn't expand the number of options. And one of the 
reasons our governor, Governor Haslam, in Tennessee, didn't 
expand Medicaid in the state and didn't--and chose not to 
expand the exchange was because he couldn't get answers from 
HHS so that he felt comfortable in doing this because we have 
had a 20-year history of health care reform--it is called 
TennCare in our state--hasn't worked out all that well.
    So when we held a subcommittee hearing couple of--well, I 
guess a month or so ago, I am going to submit some questions 
that I got there from the businesses, if you don't mind, so we 
won't take the time. But one of them was Mr. Silver, who said: 
I would like to challenge the secretary to make a good program, 
to implement changes that would not have a negative impact they 
have now. It is beyond belief how complex--needlessly and how 
complex this program has become, and that is my question.
    I think what he is saying as a businessman--I will give you 
another example: Mr. Horn has a business over there at 350 
employees. He is self-insured. He provides total preventative 
services. If you need a mammogram, whatever, he pays for it 
all.
    Guess what he gets for this? He gets a $63 per person fee 
to--that is charged to him plus an increase in his taxes. He 
did everything right in his business--in the textile business, 
which is a tough business. So how do you answer his question? 
What do you say to Mr. Horn?
    Secretary Sebelius. And his question is, ``Why do I pay 
this''----
    Mr. Roe. He is paying for everything--preventive. He has 
got the gold plan and yet what he gets are increased taxes and 
increased costs to his business.
    Secretary Sebelius. Well I think that the way that the law 
is put together there are fees and taxes that pay for the 
program to move ahead. I think in the long run----
    Mr. Roe. How do you answer him? He is a guy doing 
everything right.
    Secretary Sebelius. He also is paying a hidden tax, I would 
say, at this point, because his hospital rates are higher----
    Mr. Roe [continuing]. Isn't hidden. I can tell you that. It 
is out there for him; he has got to write a check for it.
    Secretary Sebelius. I understand.
    Mr. Roe. One other question I have got----
    Chairman Kline. The gentleman's time has expired.
    Ms. Bonamici?
    Ms. Bonamici. Thank you very much, Mr. Chairman.
    Thank you, Madam Secretary.
    This is the Education and Workforce Committee where we all 
share the goal of student success in our nation's public 
schools. I frequently hear comparisons of our students with 
students in countries like Finland, for example, but they have 
a near absence of poverty in Finland. So I want to recognize 
the importance in the fical year 2014 budget of the anti-
poverty programs and policies--not only expansion of health 
care but also LIHEAP and TANF, so thank you for that.
    I have two questions. I will ask them together.
    First, I am from Oregon, where we are ahead of the curve in 
implementation of the Affordable Care Act, and just last month 
when our proposed health premiums for plans went public on the 
exchange, after seeing their competitors' proposals two 
insurers actually requested to lower their rates. So my first 
question is, how can we ensure that other state exchanges and 
the federal exchange sufficiently foster this type of 
competition to make health care more affordable?
    The second question is about sequestration. My district is 
very concerned about how sequestration is affecting medical 
research. Oregon Health Sciences University, for example, where 
they are making groundbreaking advances, is concerned because 
you can't put research on hold and the cuts are going to be 
affecting the junior researchers, which are exactly the type of 
workforce we need to be training.
    So the second question is, how do HHS and NIH plan to 
continue making research progress and how will sequestration 
impact medical research?
    Secretary Sebelius. Well, in terms of the competition in 
the market, Oregon is not only doing some great things now but 
has been for years, and we are trying to use your doctor 
governor's expertise to actually talk to a lot of colleagues 
across the country about what sorts of things can be done to 
improve the quality of care and lower costs because Oregon is 
proving that. And what we are seeing in these early marketplace 
entrants is some very positive signs about competition--new 
plans entering the market in states across the country and 
opening up what was a monopoly to competition for the first 
time, so I think that is going on and creating a market in many 
cases.
    In terms of the research question and sequestration, you 
are absolutely right. Sequestration is a blunt instrument that 
slashed about $15.5 billion from the HHS budget and a big hit 
was taken by NIH, who is our second-biggest agency.
    That will have a very significant impact on new grants 
going out the door. They don't have the money; they will not be 
able to accelerate the kind of scientific cures that are 
possible and have those grants, which actually return about $7 
to every dollar put out is the return on investment.
    So it is a program that, at the time that we should be 
making increased scientific investments, that took a cut 
through sequestration that really can't be made up.
    Chairman Kline. Gentlelady's time has expired.
    Mr. Walberg?
    Mr. Walberg. Thank you, Mr. Chairman.
    Madam Secretary, as you are probably aware, yesterday the 
IRS published a final regulation on the shared responsibility 
payment for not maintaining minimum essential coverage, where 
they estimated that $20,000 would be the cost for yearly 
premium for a family of four or five that want to purchase the 
cheapest, or the bronze, type plan. Is the IRS totally off base 
with that $20,000 figure as the cheapest possible plan that a 
family of four or five could purchase?
    Secretary Sebelius. Sir, I haven't seen the IRS estimates, 
and as you know, we don't have any final rates. What I am 
seeing is some very positive rate information that compares 
favorably to what is available right now but I can't respond. I 
would be happy to in writing but I don't--I haven't seen the 
IRS report.
    Mr. Walberg. So you can't confirm to me that there would be 
cheaper plans available than $20,000?
    Secretary Sebelius. Well, I know there are cheaper plans 
available depending on the circumstances and how high the 
deductible is but I can't give you exact amounts because the 
rates aren't set. So anyone who is telling you this is the 
final rates is just not accurate.
    Mr. Walberg. Well, of course the IRS may have done this 
after a line dance, but they certainly have some responsibility 
of determining what estimates at the very least these costs 
will be----
    Secretary Sebelius. As I say, I would be happy to look at 
what they gave you and respond to it. I can't do that off the 
top of my head.
    Mr. Walberg. I would appreciate that----
    Secretary Sebelius. Every state is also going to be a 
little different, so I have no idea what they are capturing.
    Mr. Walberg. Let me go on. And I will look forward to that 
response on it because definitely the IRS is intimately 
involved with the cost factor and what they will be assessing.
    Madam Secretary, as you know, the Affordable Care Act 
defines full-time position as consisting of 30 hours per week. 
Do you know of any other federal law that defines full-time 
status as 30 hours?
    Secretary Sebelius. It is my understanding, sir, that when 
Congress was writing the Affordable Care Act that they took a 
snapshot of the marketplace and 30 hours--actually it was 28 
hours is what I am told--was the amount of time that business 
owners used as a calculation of who got benefits and who didn't 
get benefits.
    Mr. Walberg. Well, as I walk through my district I hear 
constant reports that businesses--small businesses 
specifically--are cutting back on hours, going away from the 
40-hour and less as being a part time, and going down to 28 
hours now. That is costing jobs.
    Has the department considered talking with the Department 
of Labor to find out better information on how this is 
affecting jobs and the economy and growth and--as we know, the 
best way to have insurance is to have a job. Is there any 
effort from your department working with the Department of 
Labor to remedy this problem?
    Secretary Sebelius. Well actually, sir, since these 
benefits don't kick in until January 1st we are really not at 
all confident that some of the speculation of what may or may 
not happen will actually happen.
    Mr. Walberg. They are doing it already.
    Chairman Kline. The gentleman's time has expired.
    Mr. Tierney?
    Mr. Tierney. Thank you, Mr. Chairman.
    Madam Secretary, thank you for the difficult job that you 
have of enforcing and implementing a law that basically was 
passed democratically but is facing an unrelenting effort to 
delegitimize that law day in and day out, so I appreciate how 
difficult it must be.
    There is a lot of cost involved with repealing the 
Affordable Care Act, and just some of the larger points on that 
would be, of course, young adults would no longer be allowed to 
stay on their parents' health insurance until they are 26; 
insurers would be able to deny coverage because of preexisting 
conditions; seniors wouldn't have already gotten $6 billion in 
savings on prescription drugs.
    But also, one larger aspect on that is there is provision 
in this law that says insurance companies actually have to 
spend the larger portion of the premiums they receive on health 
care--on health services. And if they don't do that they have 
to give a rebate--so-called 80-20 rule--or have to lower their 
premiums going forward. How is that working out?
    Secretary Sebelius. Well, about $2 billion was sent back to 
consumers at the end of 2011 based on that law--or 2012, I am 
sorry. The data was collected in 2011; it was sent in 2012. So 
consumers got checks back from their insurance companies, I 
would say for the first time ever. And what we have seen is a 
lot of rate reformulation, so administrative costs are 
definitely coming down. More bang for their buck, more of the 
dollars collected are being spent on health outcomes.
    Mr. Tierney. Well, you know, I hear from folks at home that 
they certainly appreciate having the money spent on health 
services as opposed to lobbyists or CEO bonuses and other 
things, so thank you for implementing that.
    Thought I would switch gears a little bit to education in 
early childhood. I had an opportunity yesterday to be in 
Billerica, Massachusetts, where they are closing out 85 seats 
in a daycare--in a child care Head Start program; 85 seats and 
seven employees are going to be gone because of sequestration. 
And that is 85 students whose parents will now have to find a 
way to--either to quit their job and stay home with the child 
or find some other way to do it, and seven families that won't 
be earning money, paying taxes, and paying their bills and 
supporting small businesses in their district.
    Can you tell us how that plays out across the country if 
this sequestration isn't resolved?
    Secretary Sebelius. Well, in terms of a per unit cost, 
about 70,000 Head Start children could lose their slots based 
on sequestration, and probably 14,000 teachers, guidance 
counselors, others who are employed. And as you say, that has a 
ripple effect because if the kids don't have a place to go and 
some place for their parents to be confident they are safe and 
secure and learning, the parents have a much more difficult 
time going to work every day. So it has an effect on the 
workplace, also.
    Mr. Tierney. Thank you very much.
    I yield back.
    Chairman Kline. Gentleman's time is expired.
    Mr. Guthrie?
    Mr. Guthrie. Thank you, Madam Secretary. Nice to see you 
here today.
    In another committee we talked about the prevention funds 
and the anti-lobbying restrictions----
    Secretary Sebelius. Yes.
    Mr. Guthrie [continuing]. And we had some questions before. 
Attorney General Holder sent to Lamar Smith clearly saying that 
state--federal funds can't be used to lobby federal, state, 
local. A letter from Mr. Esquea, I think your assistant 
secretary for legislation----
    Secretary Sebelius. Jim Esquea.
    Mr. Guthrie. Esquea, I am sorry--said basically the same, 
acknowledging you can't use federal funds for federal, state, 
local, and went through the different corrections or things 
that you put in place to deal with some of the things from last 
year.
    There is one paragraph in that letter, though, that he 
sent--it is in the letter--on April 1st. He said, ``When 
concerns about any grantee are brought to our attention CDC 
contacts the grantee and reviews the allegations, and we have 
determined through this process that specific grantee activity 
referenced in your letter and highlighted by Mr. Whitfield and 
Guthrie did not violate lobbying restrictions.'' And it does 
say that, ``applicable lobbying restrictions do not prohibit 
awardees from all interaction with policymakers.''
    I know I am--because of time I am quoting, but it is 
accurate what I am quoting. It says, ``However, it would not be 
permissible for awardees to use federal funds to influence a 
specific piece of legislation or pending legislation through 
the direct lobbying with legislators.''
    And just a couple of examples--I have several that--the 
ones that he referred to didn't that--what Mr. Whitfield and I 
highlighted, and a couple of them--and there is more, and I am 
reading directly from the Web site: executive office of the 
governor of Delaware 1 million, seeks sponsorship of bill that 
increases excise tax on other tobacco products; meeting with 
policymakers, stakeholders, and developed to introduce bill for 
tax equity on OTP products. This bill was tabled.
    Another Nevada Department of Health, 560,000 CDC. 
Legislation is proposed to increase tax on all tobacco products 
working with Nevada state legislator on the proposed 
legislation.
    So my question is, I know we are trying to address the 
lobbying and you have got things in place, but why did this not 
violate the lobbying restrictions? And if you say this doesn't 
violate the lobbying restrictions there--it appears to me there 
aren't really restrictions on lobbying.
    Secretary Sebelius. Well, I can guarantee you, Congressman, 
that we are trying to do everything we can to enforce the law, 
to retrain grantees, to remind them. There are certainly 
instances where grantees are invited to present testimony at 
committees. That is not lobbying. To be involved in policy 
discussions, that is not lobbying. So there are specific state 
and local definitions of what lobbying constitutes, when you 
have to register as a lobbyist----
    Mr. Guthrie. I agree. But when you are getting specific 
sponsorship for specific bills, I mean, that appears that 
that----
    Secretary Sebelius. And again, I think that the 
conversation--all I can tell you is I believe that the 
conversation resulted in one of those other categories, so yes, 
the grantee was involved, but not in a lobbying activity that 
would have constituted registering at the local level or 
declaring themselves as a lobbyist.
    Mr. Guthrie. Okay. Well thank you.
    I will yield back.
    Chairman Kline. Thank the gentleman.
    Mrs. Davis?
    Mrs. Davis. Thank you, Mr. Chairman.
    Thank you, Madam Secretary, for being here today.
    I wanted to go back for a second to some of the questioning 
that we have heard, and having been here when Medicare Part D 
was passed, my understanding is that there was no paid-for for 
Medicare Part D. Is that correct?
    Secretary Sebelius. That is correct.
    Mrs. Davis. So it had some impact on our deficit, 
substantially.
    Secretary Sebelius. It was definitely added to the deficit, 
yes.
    Mrs. Davis. And in terms of implementation, did the 
secretary at that time under the Bush administration--did he 
have the ability to pay for implementation and the concerns and 
questions? I know we held a number of meetings out in our 
community and we were provided with individuals that could come 
and explain to seniors what Medicare Part D looks like.
    Secretary Sebelius. I can't tell you how the budget was 
constructed or how much additional funding was put in through 
Part D. I do know that there were certainly HHS resources--call 
center, outreach efforts, contracts. In fact, one of the 
public-private partnerships was with the Benefit Coalition, 
where HHS money paid for an entity very similar to Enroll 
America to have them conduct various outreach and education 
activities.
    So there were resources. How much of that was designated by 
Congress and how much was within the discretion of the 
secretary I can't tell you.
    Mrs. Davis. Okay. Thank you. Because I know you had 
suggested that things weren't so different right now and I 
wanted to just remind myself, as well, about how that was done 
because I don't remember any of this discussion at that time.
    Secretary Sebelius. Well, at every point, I think, in 
recent history where there has been a significant expansion of 
health benefits--and the Children's Health Insurance Program 
during the Clinton administration, Medicare Part D during the 
Bush administration--there has been a very extensive outreach 
effort from the secretary to private groups, to business 
entities, to health care providers, to disease groups, to 
foundations, to whole insurers, drug companies, involving and 
engaging them in outreach efforts, knowing that the federal 
government could not possibly take on the entire task, that 
this was an all-hands-on-deck effort.
    Mrs. Davis. Well, thank you, Madam Secretary.
    I think that the issue of the NIH grants has been raised. 
It certainly impacts the community, the larger community of San 
Diego, as well. And how do you think the you can make up some 
of the difference, where we take away all those research 
dollars?
    Secretary Sebelius. Well, I think that the President has 
proposed in the 2014 budget an increase in NIH funding, but if 
you look at that increase compared to what they lost in the 
sequestration, only getting rid of sequestration would indeed 
restore that full budget. The increase that the President has 
suggested would not cover the deficit that has been created by 
sequestration.
    Mrs. Davis. So American research jobs could be lost.
    Chairman Kline. The gentlelady's time has expired.
    Dr. Bucshon?
    Mr. Bucshon. Thank you, Mr. Chairman.
    Madam Secretary, Indiana is home to over 300 medical device 
companies with an economic impact of over $10 billion a year, 
and the medical device tax in the Affordable Care Act is 
damaging the industry. Cook Medical has decided not to expand 
within the state; Orthopediatrics in Warsaw, Indiana has 
shelved two products for children.
    The medical device tax repeal passed recently 79 to 20 in 
the Senate during their budget process, as you know, and last 
Congress it passed in the House 270 to 146 with 37 Democrats 
voting in the affirmative to repeal the tax. Does the 
administration support repealing the medical device tax?
    Secretary Sebelius. No, sir.
    Mr. Bucshon. And if not, why would that be in the face of 
overwhelming support from Congress?
    Secretary Sebelius. Well, at least Congress has not yet 
fully passed legislation to do that. I would say also, Congress 
voted to put the medical device tax in place. That was signed 
into law. And the medical device companies are looking for 
millions of new customers; as they get enrolled they will be 
able to purchase and have services that include medical 
devices.
    Mr. Bucshon. You know, Stryker up in Michigan has already 
laid off 1,000 in their--company-wide. Something like that. So 
from what we are hearing from the medical device industry is 
just the opposite. They don't expect more patients, so to 
speak, to make up the difference. And I would urge the 
administration and yourself to relook at the medical device tax 
as a way to fund the Affordable Care Act and look for other 
options.
    Secondly, Healthy Indiana Plan, as you may know, is an HSA-
based plan that--to manage the state's Medicaid dollars, which 
has been shown to save the state about 3 to 4 percent in a way 
it manages Medicaid patients. Currently covers over 40,000 
Hoosiers.
    Our waiver expires--this was an HHS pilot program--our 
waiver expires December 31st, and the enrollees have an over a 
90 percent approval rating of the program. Would you expect 
that HHS would give us an answer soon on whether or not we will 
be able to use Healthy Indiana Plan as a way to manage our 
Medicaid dollars?
    Secretary Sebelius. Sir, I know conversations are underway 
with the Indiana Medicaid department on a regular basis and I 
don't know the current status but I can get you an update in 
writing.
    Mr. Bucshon. Well, I appreciate that. And the Republican 
delegation members, at least, from Indiana have sent a letter 
to you requesting an answer, as well as, I know Governor 
Pence's administration. I would appreciate an answer fairly 
soon. Again, the waiver expires December 31st.
    Secretary Sebelius. Yes, sir.
    Mr. Bucshon. The last question I have is, do you support a 
single-payer health care system?
    Secretary Sebelius. Do I?
    Mr. Bucshon. Yes.
    Secretary Sebelius. No, sir. I supported the concept that 
you build the gap in coverage based on private insurers.
    Mr. Bucshon. Okay. Thank you.
    I yield back.
    Chairman Kline. Thank the gentleman.
    Ms. Fudge?
    Ms. Fudge. Thank you, Mr. Chairman.
    And thank you, Madam Secretary, for being here today.
    Madam Secretary, I have two questions for you and I will 
give them both to you.
    Under the Ryan fical year 2014 budget the Affordable Care 
Act would be eliminated. That would leave 27 million Americans 
out of any kind of plan, basically. The thought would be to 
turn Medicare into a voucher program and Medicaid into a block 
grant. Please discuss with us how that plan is detrimental to 
the very people that this budget supposedly helps.
    And the second question is, many of my Republican 
colleagues were opposed to the ACA basically on grounds that it 
would significantly increase costs. Please talk with us about 
how the Affordable Care Act really is going to reduce costs by 
approximately $1 trillion over the next 20 years.
    Secretary Sebelius. Well, Congresswoman, I think that the 
President put forward a plan to provide affordable health 
coverage for the approximately 20 percent of Americans who 
currently have no coverage, or are in and out of the market, or 
are locked out of the market or priced out of the market. And 
that plus the Medicaid expansion would, for the first time 
ever, provide an opportunity for most Americans to have 
affordable health coverage.
    I would say that at least in the other budget proposals 
there is no similar plan. The high-risk pool seems to be the 
only alternative that was put forward during the debate around 
the Affordable Care Act and continues to be an alternative put 
forward. Just put people in a high-risk pool, allow insurance 
companies to continue to pick and choose who gets coverage and 
who doesn't, and a little unclear what happens to folks who 
can't afford either the high-risk pool or the health coverage.
    In terms of Medicare and Medicaid, in cost stories, again, 
there is, I think, a very positive story to tell about how you 
increase benefits, how you increase quality and lower costs at 
the same time. It was said as we talked about that originally 
that that could never happen. It actually is happening. It has 
happened for 3 years in a row.
    And the trend is much faster than the CBO ever anticipated 
or suggested, so that what we are seeing is a transformation in 
the delivery system and an opportunity in the marketplace for 
the first time to create competitive markets and to have people 
who don't have affordable employee coverage to have access to 
health insurance, health security for themselves and their 
families.
    Ms. Fudge. Thank you.
    Mr. Chairman, I yield back.
    Chairman Kline. Thank the gentlelady.
    Mrs. Roby?
    Mrs. Roby. Thank you, Mr. Chairman.
    Thank you, Madam Secretary. In anticipation of your 
testimony here before us today I reached out to my constituents 
on Twitter and Facebook and said, ``If you had an opportunity 
to ask the secretary a question what would you ask?''
    And I just want to share with this committee and with you, 
Madam Secretary, how just unbelievable it was to hear from so 
many individuals and business owners that were afraid to give 
their names in light of the current IRS scandal because of the 
role that the IRS will play in implementing this law, that by 
asking you a question and revealing who they are that they may 
receive retribution from that agency. And of course, this is in 
light of everything that we are hearing in the news and that 
our majority is providing oversight right now. But I am going 
to submit their questions to you in writing since we have 
limited time, but I am going to redact their names, as 
requested.
    And one constituent of mine, Mr. Jason Misseldon, of 
Prattville, Alabama, asked the following question that I would 
like to ask to you: He says, ``My employer has provided 
excellent insurance coverage for over 30 years. It would 
definitely be classified a Cadillac plan. This year we were 
forced to change coverage. Please tell me--Jason--how 
penalizing or taxing companies that provide excellent coverage 
has anything to do with ensuring everyone has access to 
affordable health care.''
    What would you say to Mr. Misseldon?
    Secretary Sebelius. Well, Congresswoman, I have no idea why 
he would change plans this year because nothing has impacted 
his health plan this year. But I would just say that insurance 
companies who are by and large in enormously profitable 
condition will be paying taxes to help support a new 
infrastructure that in return brings them potentially 30 
million new customers, and that is a part of the funding of the 
Affordable Care Act moving forward.
    Mrs. Roby. One other question, because I know my time is 
about to run out, but how are we going to count employees? For 
example, I have got one business that reached out to us and 
said, ``Tell me how it is going to affect my business when we 
have 52 employees but three of those are owners of the 
business?'' When it comes to the exemption, how does that work 
out?
    Secretary Sebelius. Well, there are some pretty specific 
rules and regs how to count part-time employees, how to count 
full-time employees. Again, we would be happy to answer that 
question if we get some specifics about who exactly----
    Mrs. Roby. I am going to give you all of these questions--
--
    Secretary Sebelius. That is great.
    Mrs. Roby [continuing]. In writing and we will look forward 
to your in-depth answers.
    Thank you. I yield back.
    Chairman Kline. Thank the gentlelady.
    Mr. Yarmuth?
    Mr. Yarmuth. Thank you, Mr. Chairman.
    Madam Secretary, it is nice to see you. We talked a little 
bit earlier about the effect of, or the potential effect of the 
expansion of Medicaid on different states, and in my state 
Governor Beshear recently announced that he was going to accept 
the expansion, and he did that after a very rigorous analysis 
of the costs and benefits to both the state budget and also to 
the state economy. And they found that over 7 years, expanding 
Medicaid is expected to provide a cumulative economic boost of 
$15.6 billion through new health spending, the addition of 
17,000 jobs averaging $43,000 a year, local and state taxes 
generated by those workers.
    The governor also found that expansion would have a 
positive impact of more than $800 billion on the state budget 
over that same 7-year period, and that is all in addition to 
providing coverage for more than 300,000 Kentuckians who do not 
have access to insurance at this point. So as you move forward 
and people ask questions about that I certainly would offer 
that evidence as proof that the Affordable Care Act, the 
expansion of Medicaid is going to be a positive for at least 
many states.
    I have one question I am going to ask and that is in 
respect to my former colleague, Steve Kagen, from Wisconsin, 
who spent the entire debate about the Affordable Care Act 
talking about the need for transparency. And a couple months 
ago an incredible piece of journalism, ``The Bitter Pill,'' 
appeared in Time Magazine, Steven Brill, talking about the 
disparity in costs throughout the system, particularly at 
hospitals. Is HHS doing anything to promote transparency both 
at the hospital and throughout the provider network in the 
country?
    Secretary Sebelius. Yes, sir. We have published, a couple 
months after the Steve Brill article, a snapshot of inpatient 
hospital costs for about 30 different procedures, comparing 
them hospital to hospital, and found not only enormous 
countrywide variation but enormous regional and some places 
enormous local variation. But it has been published and 
available.
    Yesterday we released additional data, which is the 
publication of some outpatient services for similar procedures, 
again comparing side by side. We have had a process underway 
really from the beginning of this administration to unlock 
data, to make sure that the data that we are collecting 
actually is put in the public domain in an easy-to-read, easy-
to-use way so that consumers can begin to ask important 
questions. Why should a hip transplant cost three times as much 
if I go six blocks away and have no difference in outcome? So 
that information is very much available.
    And yesterday we had the fourth annual--third annual 
Datapalooza, which is a meeting of entrepreneurs and 
application developers and others to come in and look at the 
data and see what kinds of mechanisms they can put together to 
help drive this data for policymakers and patients. It started 
in a room with 46 people 3 years ago; yesterday there were 
2,000 techies and entrepreneurs here from all over the country 
and a team from the United Kingdom who is really interested in 
learning what we are doing with data and how that can help 
inform patients and providers.
    Mr. Yarmuth. Great. Thank you very much.
    Chairman Kline. Mr. Barletta?
    Mr. Barletta. Thank you.
    Ten-year-old Sarah Murnaghan is from my home state in 
Pennsylvania. If Sarah lives she will be 11 on August 7th 
coming up.
    Do you think it should be legal to deny a organ transplant 
based on somebody's race? Do you think we should decide because 
of the color of your skin or----
    Secretary Sebelius. No, sir.
    Mr. Barletta. Think it should be legal to deny somebody an 
organ transplant because of their gender, because of they are a 
woman or a male?
    Secretary Sebelius. Again, I have no idea what the medical 
evidence might be. I assume that there nay not be a difference, 
but there could be----
    Mr. Barletta. But do you think it should be legal to do 
that? Do you think we should choose between----
    Secretary Sebelius. If there is a medical rationale, yes, 
sir. But if there is not, no.
    Mr. Barletta. Why are we going to let a little 10-year-old 
girl die because she is 10 and not 12? Sarah is at the top of 
the pediatric list--those who are 11 or younger. If Sarah were 
12 she would be at the top of the adult list.
    Now, transplants should be based, I believe, on the 
severity of the illness and not the person's age, and I know 
you agree with that because you have asked OPTN to please 
review the policy. Sarah's parents aren't asking for special 
treatment for their daughter. I am the father of four girls 
myself. They are asking for an equitable organ transplant 
system.
    And you are the one person who has the authority to suspend 
the current policy until we are confident that children have 
equal access to lifesaving treatment and aren't discriminated 
against because of their age. We wouldn't do it for any other 
reason.
    I am begging you. Sarah has 3 to 5 weeks to live. Time is 
running out. Please, suspend the rules until we look at this 
policy, which we all believe is flawed.
    Secretary Sebelius. Well, I would suggest, sir, that, 
again, this is an incredibly agonizing situation where someone 
lives and someone dies.
    Mr. Barletta. Based on their age.
    Secretary Sebelius. Sir.
    Mr. Barletta. Based on their age.
    Secretary Sebelius. What I have been told by the transplant 
experts--and I don't profess to have any expertise in this 
area--is that the medical evidence and the transplant doctors 
who are making the rule and have had the rule in place since 
2005, making a delineation between pediatric and adult lungs, 
it is--lungs, because lungs are different than other organs----
    Mr. Barletta. But in Sarah's case----
    Secretary Sebelius [continuing]. That it is based on the 
survivability----
    Mr. Barletta. But this is different. This is different. 
Sarah's case is different. Doctors have said that she could 
survive with an adult lung. It can be modified to save her 
life. Why wouldn't we do it? Why, we do so much bull crap 
around this place and we have the chance to save someone's 
life, and because of some kind of--there is no logic to this.
    Secretary Sebelius. Forty people in your home state----
    Mr. Barletta. But she would be first if she was 12.
    Secretary Sebelius [continuing]. Are waiting on----
    Mr. Barletta. But she would be first----
    Secretary Sebelius. Sir, there are 40 people in the highest 
acuity list waiting for a lung in Pennsylvania.
    Mr. Barletta. Sarah would be at the top of that list.
    Chairman Kline. The gentleman's time has expired.
    Mr. Hinojosa?
    Mr. Hinojosa. Thank you, Chairman Kline.
    Madam Secretary, I am concerned that despite past 
bipartisan support for the Head Start programs, the sequester 
threatens more than 70,000 children's access to Head Start. 
Please share your thoughts on why federal investments in early 
learning are needed now more than ever. And the second part to 
this question: How does the President's early learning proposal 
affect Head Start programs, including migrant and seasonal Head 
Start families as well as our Native American children?
    Secretary Sebelius. Well, I think there is a lot of 
evidence, Congressman, that has been developed over decades 
that early childhood education that is a quality program makes 
a lifetime of difference in a young person, not just in school 
readiness and school success and parental involvement, but in 
less drugs, less alcohol, higher graduation rates, more 
likelihood to get a job. So it is an investment early that pays 
off over a lifetime.
    Certainly the--in this very competitive global world we 
want all of our children to be able to live up to their 
potential to be a prosperous nation, to have the full advantage 
of the opportunities that America can have in the 21st century, 
so the President has proposed in his 2014 budget a significant 
expansion of early learning opportunities aimed at lower-income 
kids, but really aimed at all kids, so that you would have more 
home visiting programs, which have proven to be enormously 
successful in families, Early Head Start child care 
partnerships, which would bring some of the parental skills and 
early learning from Head Start into child care settings, 
raising the quality for 100,000 more children; universal pre-K 
in a partnership with states, so that more 4-year-olds would 
have access to high-quality early kindergarten, and then 
hopefully a successful transition into school, which would, I 
think, not only improve the fate of those individual children, 
but when you look at the amount of money schools now spend on 
remedial work even at the very earliest age, at the dropout 
rates, at the lack of success of some kids, making a dent in 
that dismal outcome could save money, make more prosperous 
workers, make for a more prosperous nation.
    So I think the President understands this very well and has 
proposed that one of the biggest investments we should make for 
a 21st century economy is in early childhood education.
    Mr. Hinojosa. Madam Secretary, what you have answered is 
exactly what we hear from other countries that are leading----
    Secretary Sebelius. Yes, sir.
    Mr. Hinojosa [continuing]. The competition in 
interscholastic competition, and so the rule of early reading 
plus writing equals success in school is exactly what you 
have----
    Chairman Kline. The gentleman's time has now expired.
    Mr. Hinojosa. I yield back.
    Chairman Kline. Mr. Salmon?
    Mr. Salmon. Thank you.
    Madam Secretary, we are just about 6 months away from the 
implementation of the Affordable Health Care Act and several of 
the groups that have been very, very supportive of the act when 
it initially passed are now raising red flags and some are 
actually calling for its repeal. In fact, most recently the 
United Union of Roofers, Waterproofers, and Allied Workers--
they came out and asked for its repeal. Several other unions 
have expressed concerns about losing their Taft Hartley 
coverage.
    And so my question would be to you, given the fact that you 
were integrally involved in the negotiating and putting this 
act together, if you had it to do all over again would there be 
any things that you would do differently? And if so, what?
    And then also, why do you believe some of these groups that 
were so supportive in the past are now opposed to it and are 
having problems with it?
    Secretary Sebelius. I would tell you, I was very involved 
from April of 2009 when I got sworn in to March of 2010 when 
the bill was passed, and probably every day along the way there 
was some decision or some discussion that could have gone one 
way or the other.
    I think overall this is a law that has been long overdue in 
this country. For seven decades Republican and Democratic 
Presidents have been trying to pass some kind of comprehensive 
reform. I think the President chose not to blow up the private 
insurance market but, in fact, to build on the private 
insurance market, close the gap that way, not go to a single-
payer system, which a lot of his supporters would have 
preferred but felt this was far less disruptive and a way to 
fill the gap.
    So I think that as we go through time, after full 
implementation, after we see how things are shaking out, there 
are likely to be fixes along the way. But it is impossible 
right now to deal with speculation and that is really what we 
have: this will happen, or this won't happen, or this could 
happen. Medicare doesn't look the same today as it did when my 
father was here and voted for it in 1965. I am sure the 
Affordable Care Act in 50 years will look very different and 
there will be changes along the way based on real experience in 
the marketplace.
    But I think our success so far in the 3 years with 
implementation of pieces of this, with the cost control issues 
underway, with what has happened and not happened to Medicare 
is very, very positive. And I just--I am very excited about the 
next step and fully implementing this law.
    Mr. Salmon. [Off mike.]
    Secretary Sebelius. Sir, I really don't know and I would be 
happy to--I wasn't aware that the union you cited is now saying 
they are opposed, and I don't really know why, if they have a 
particular issue that they were hoping to get a tax credit and 
be part of an exchange at the same time, which I know has been 
the case in some instances. I don't know why they are saying 
that.
    Mr. Salmon. [Off mike.]
    Chairman Kline. The gentleman's time has expired.
    Mr. Polis?
    Mr. Polis. Thank you, Madam Secretary.
    A lot of Coloradans in my district and across my state 
still don't know how Obamacare can help them. It is a 
particular concern among our many residents who don't speak 
English.
    In Colorado our state officials, the health exchange, the 
nonprofit organizations advocacy groups are all channeling 
their efforts into public awareness campaigns focusing on one-
on-one conversations with non-English speakers. We are also 
doing outreach to English and non-English speakers in the 
Latino community through media personalities, nurses, doctors, 
friends and family, and running TV, radio, and print ads in 
Spanish.
    My question is, is a similar effort underway at the federal 
level and what actions have you and the department taken to 
ensure that non-English speakers in Colorado and across the 
country are aware of and can access the new services available 
to them?
    Secretary Sebelius. Well, that is a great question and it 
isn't, as you know, just Spanish language, but there are 
multiple languages spoken across this great, diverse country. 
So we are taking that very seriously. We have put together an 
operation where a call center will open I think later this 
month, and questions will be able to be answered in 150 
languages out of that call center.
    Materials on our Web site are automatically available in 
both English and Spanish because Spanish is the most frequently 
spoken other language here in the United States, so everything 
that we are doing will always be available in English and 
Spanish but we are trying also to be very sensitive to the 
diversity of languages and have--I am hopeful that when we get 
the proposals back for navigators who will be on-the-ground 
helpers in communities, that many of those will come out of 
community groups with cultural sensitivity and language skills 
to reach into some of our more vulnerable populations.
    We are also putting in-person assistance in the community 
health centers across this country, many of whom have personnel 
who speak multiple languages and come out of the neighborhood. 
So we are looking at all the kind of levers that we have.
    Mr. Polis. Thank you. We will look forward to our state 
coordinating with your efforts and helping to publicize your 
multilingual call center and I applaud you for those efforts.
    We don't have much more time. I just want to applaud your 
efforts on early childhood education. I recently introduced the 
Continuum of Learning Act to align early childhood education 
and elementary school standards and I would encourage you to 
continue to work in early childhood with the areas under your 
jurisdiction with the areas under the jurisdiction of Secretary 
Duncan and school districts and states to make sure we have a 
coordinated approach to early childhood education.
    And with that, I will be happy to yield back.
    Chairman Kline. Thank the gentleman.
    Mr. Thompson?
    Mr. Thompson. Thank you, Chairman.
    Madam Secretary, thank you for joining us here today. I 
need to address an issue that is very near and dear to my heart 
as a--actually a couple in Pennsylvania. I just want to just 
briefly weigh in and say that in terms of that little girl that 
is--would reach the age of 11 by August, you are probably the 
one person certainly in this chamber and maybe in this country 
that has the ability to waive a rule to keep her from dying, 
and I really encourage you to do that.
    My remarks really is--the other side is I want to talk 
about the concept behind the State Children's Health Insurance 
Program. As you know, it was born in Pennsylvania. This is a 
one-of-a-kind program to provide coverage to children whose 
families earn too much to qualify for medical assistance but 
not enough to purchase private insurance.
    The federal CHIP program was signed into law in 1997, 
authorized in 2009--one of the first votes I made as a new 
member of Congress. Now, I voted in favor of that 
reauthorization because I saw how Pennsylvania was able to 
provide--excuse me--children private health insurance coverage 
using a market-based approach, not Medicaid. However, I am 
worried that the vote that I cast may have been in vain now 
that Pennsylvania's CHIP program is under threat by the 
Affordable Care Act.
    Madam Secretary, in April 2013--I apologize for this cough; 
I am hoping to get over it before the full implementation of 
the Affordable Care Act----
    Secretary Sebelius. We can find you a good doctor.
    Mr. Thompson. I have got a good doctor.
    April 2013 Pennsylvania's governor, Tom Corbett, met with 
you to ask that you work with the commonwealth to ensure that 
the children will not be affected by the implementation of the 
ACA, and particularly those children enrolled in CHIP. On May 
30th Governor Corbett reiterated his request, writing you and 
expressing serious concern that upwards of 70,000 children will 
be transferred to Medicaid off of CHIP.
    Now, Mr. Chairman, I ask unanimous consent to enter that 
correspondence from Governor Corbett to the secretary into the 
record.
    [The information follows:]
    
    
    
    
                                ------                                

    Chairman Kline. Without objection.
    Mr. Thompson. Madam Secretary, my question is pretty 
straightforward: Are you going to work with Governor Corbett to 
see that kids enrolled in CHIP are not put into a position 
where they can no longer use the doctor of their choice, not 
dumped into Medicaid, they will continue to have viable access 
to health providers?
    Secretary Sebelius. Well, Congressman, what I can tell you 
is I have had a number of conversations with Governor Corbett 
and I will certainly continue to work with him to make sure 
that the children in Pennsylvania are not disadvantaged, 
certainly, by this next transition. CHIP remains an independent 
program. Again, off the top of my head I can't tell you what 
all the issues are around the Pennsylvania program but I will 
go back and look them up.
    But we have frequent conversations and I am----
    Mr. Thompson. Well, Madam Secretary, the issue is 170,000 
kids, 70,000 of them right now are going to move out of CHIP, 
which is a program that works----
    Secretary Sebelius. Right.
    Mr. Thompson [continuing]. It is market-based--and be put 
into Medicaid. And I would say the majority of folks on 
Medicaid cannot find physicians, let alone specialists such as 
pediatricians.
    Thank you, Mr. Chairman.
    Chairman Kline. The gentleman's time has expired.
    Mr. Scott?
    Mr. Scott. Thank you, Mr. Chairman.
    Madam Secretary, we heard about the Cadillac plan being 
taxed. Isn't it true that the taxes really affect that you only 
get a deduction on the cost of a basic plan and if you spend 
more than that that is just taxable income, that you pay tax 
like everybody else?
    Secretary Sebelius. That is correct. It is a cap on how 
much you can deduct----
    Mr. Scott. Okay. And----
    Secretary Sebelius [continuing]. And how--the level of the 
insurance deduction. And again, Congressman, as you know, it is 
not to kick in until 2018 and it was an attempt to put on the 
horizon the need for health plans to actually deliver some 
lower-cost services.
    Mr. Scott. Well, and so they are blaming something on the 
Affordable Care Act. It could not have had any effect--the 
Affordable Care Act couldn't have had any effect on that 
because it hadn't--the tax hadn't even gone into effect. Is 
that right?
    Secretary Sebelius. That is correct.
    Mr. Scott. You mentioned the reason that 20 percent of the 
people have no insurance and would benefit with the Affordable 
Care Act. Isn't it true that the 80 percent that have 
insurance, for them we are closing the donut hole, we are--
those with preexisting conditions can get and keep insurance 
and can switch insurances, that they get free prevention, that 
is lower cost to individuals in the individual market, those--
we are eliminating insurance abuses like rescission for those 
with insurance, the no limits annual or lifetime on what the 
insurance company has to pay, and we extended the cost of 
Medicare for 8 years--aren't those benefits that the 80 percent 
will get?
    Secretary Sebelius. Well, I think you are absolutely right. 
You have just outlined some of the market advantages for the 80 
percent. But I would say there are some additional ones.
    First of all, the 80 percent right now are paying for the 
cost of care for a lot of the people who don't have coverage--
--
    Mr. Scott. And how much----
    Secretary Sebelius [continuing]. Because their hospital 
bills are higher, their doctor bills are higher----
    Mr. Scott. How much is that for the average policy?
    Secretary Sebelius. It is estimated by some economists that 
it is about $1,000 per family on their policies extra that they 
are paying for uncompensated care.
    Mr. Scott. The gentleman from South Carolina raised 
questions about the administration of the program. Can you say 
a word about what the budget cuts and sequester has done to 
your ability to properly and effectively administer the 
program?
    Secretary Sebelius. All of our programs?
    Mr. Scott. Putting the Affordable Care Act into effect?
    Secretary Sebelius. Well, I think that we certainly have 
had a challenge the last couple of years in terms of resources 
specifically to effectively implement the Affordable Care Act. 
We did not have a budget in 2013 and then we had sequester on 
top of that so that it has made, I think, it very difficult, 
but we are doing a job to make sure the resources go, that the 
programs are built, and that we are ready to implement on 
October 1st.
    Chairman Kline. The gentleman's time has expired.
    Dr. DesJarlais?
    Mr. DesJarlais. Thank you, Mr. Chairman.
    Madam Secretary, what, in your opinion, was the biggest 
reason or need for Obamacare or this health care law?
    Secretary Sebelius. The biggest reason was that way too 
many of our population had no coverage at all or coverage that 
was unaffordable in and out of the market.
    Mr. DesJarlais. How many people?
    Secretary Sebelius. It is estimated that it is about a 
sixth of our population.
    Mr. DesJarlais. Can you put a number on that? How many 
people were uninsured?
    Secretary Sebelius. I can go back to 2010 and get you the 
exact number. I don't----
    Mr. DesJarlais. Can you give me a guess?
    Secretary Sebelius. Well, a sixth of the--about 20 percent 
of the population, we have about 300 million people.
    Mr. DesJarlais. Okay. The President said when he 
implemented the law that there was roughly 31 million uninsured 
Americans. Is that right?
    Secretary Sebelius. He may have said that. That is probably 
a little low.
    Mr. DesJarlais. Okay. According to the CBO's recent report, 
44 million people will be uninsured next year and still 31 
million people will be uninsured in 2023. This is despite the 
federal government spending almost $2 trillion to implement 
this law.
    Now, would you say if the CBO--the Congressional Budget 
Office's numbers are correct, that the President's signature 
legislation at--to achieve universal coverage is a success or 
is it looking to be maybe not so much?
    Secretary Sebelius. Well, what we know right now--and I 
think it is safer to deal in fact----
    Mr. DesJarlais. Well, let's look at the numbers--you can 
address the numbers that CBO----
    Secretary Sebelius [continuing]. Is that we have got 3 
million young adults who were not covered in 2010 who now have 
coverage. We know that. We know that small business owners are 
staying in the marketplace differently than they were in the 
decade before the Affordable Care Act when they were dropping 
coverage. So we start with a baseline that has added 3 
million----
    Mr. DesJarlais. Well, Madam Secretary, I know what you are 
saying here, but what about all the concerns of the people who 
have insurance that are going to lose it? Because these numbers 
that CBO aren't projecting aren't the ones that you were 
talking about; these are new people.
    These are a bunch of people around the country--the fifth--
sixth--60 percent of Americans that didn't want this health 
care law that are going to lose their insurance and have to pay 
taxes. What do you say to those people? I mean, the CBO says 
it. Do you agree with the CBO's numbers?
    Secretary Sebelius. I don't have any idea what numbers you 
are quoting but I would rather deal with what is happening on 
the ground and I will be glad to come back next year, sir, 
and----
    Mr. DesJarlais [continuing]. 30 million to 40 million 
people are not going to have insurance with this new signature 
Obamacare and you have to----
    Secretary Sebelius. I have no idea where those numbers come 
from and where the CBO has got them. No idea.
    Mr. DesJarlais. Well, we will get you the numbers. Thank 
you.
    Secretary Sebelius. Yes.
    Chairman Kline. Gentleman yields back.
    Dr. Heck?
    Mr. Heck. Thank you, Mr. Chairman.
    Thank you, Madam Secretary.
    You know, there has obviously, as expected, been a lot of 
discussion about the Affordable Care Act today and how it is 
supposed to increase access to health care. And I think it is a 
bit of a mischaracterization because the bill really attempts 
to increase access to health insurance, and increased access to 
health insurance doesn't necessarily increase access to health 
care.
    With that in mind, I would like to ask you a question about 
a bipartisan concern, and that is the looming physician 
shortage. The Association of American Medical Colleges projects 
that by 2020 the U.S. will be facing a 91,500-physician 
shortage that is evenly split between specialists and primary 
care physicians.
    And so I am concerned that at a time when we need to grow 
the physician workforce the administration continues to propose 
cutting Medicare support for physician training and the 
critical services provided by teaching hospitals. It is 
estimated that the President's proposal to cut Medicare IME by 
10 percent could cost America's teaching hospitals over $700 
million annually, including about $1.6 million in my home state 
of Nevada, and would severely impact their ability to train the 
next generation of physicians.
    As you know, IME is not an overhead payment. In fact, 
teaching hospitals receive IME funding to help compensate them 
for the higher costs because they take care of sicker, more 
complex patients and provide services that other hospitals 
cannot, such as trauma centers, burn units, and standby 
capacity.
    Can you tell me, has the administration even considered the 
impact of this cut on teaching hospitals' ability to maintain 
these critical services and thus actually increase access to 
quality health care?
    Secretary Sebelius. Yes, sir. I know that the reduction in 
medical education is potentially difficult for a number of 
teaching hospitals. The cost reduction is estimated based on 
how much it costs to actually provide the residency slots and 
how much is administrative costs, and the administrative costs 
are reduced and the costs to provide the residential slots are 
in the President's budget--were in the President's budget last 
year.
    In addition, there are a whole variety of additional 
workforce initiatives that have been underway since the 
beginning of this administration to provide more health care 
providers, I mean, more--tripling the size--or doubling the 
size, I am sorry, of the national health service corps, which 
not only is doctors but nurses, mental health practitioners, 
dentists, and others--increasing nurse and nurse training 
programs, looking at moving medical slots from specialty care 
to primary and geriatric care, knowing that is where the 
providers are going to be needed.
    So there is a constant and, I think, continued look at 
workforce issues, which really have nothing to do with the 
Affordable Care Act but have to do with our aging population 
and the demographics of what we are going to need in terms of 
health care providers.
    Mr. Heck. Well, I would agree but I would be concerned when 
the Association of Medical Colleges is saying there is not 
enough training slots and we are trying to look at cutting 
dollars to training slots, that we are going to continue to 
compound this shortage. And I have always said that the 
greatest single threat to Medicare, in my opinion, is SGR----
    Secretary Sebelius. I would agree.
    Mr. Heck [continuing]. And the second-greatest threat is 
GME. And we can have a great program but if there is nobody to 
take care of the seniors then the program really doesn't do 
much good.
    Thank you, Mr. Chair. I yield back.
    Chairman Kline. Gentleman's time has expired.
    My apologies to those members of the committee who didn't 
get a chance to answer questions. We have hit the hard stop of 
12 o'clock.
    I would like to yield briefly to my colleague for his 
closing comments?
    Mr. Miller. I won't take time because there are members who 
didn't get questions because of the secretary's schedule.
    And I just want to thank you, Madam Secretary, for your 
presentation here today. I think that, you know this list of 
successes that mount every day, the studies that are done every 
day that point to the positive impacts of the Affordable Care 
Act is very exciting, and I thank you again for the tremendous 
work you have done in implementation of this act.
    Chairman Kline. I thank the gentleman.
    Of course, I have a different view. It seems to me we are 
seeing an awful lot of bad news that is coming out of the 
impending implementation of the Affordable Health Care Act and 
so the debate will continue.
    I ask unanimous consent that an article from the Wall 
Street Journal called ``Obamacare Bait and Switch'' be included 
in the record. Again, I thank the secretary----
    [The information follows:]

              [From the Wall Street Journal, June 3, 2013]

                       ObamaCare Bait and Switch
     The truth about those rate increases in Oregon and California

    Liberals have spent years claiming that ``rate shock'' under the 
Affordable Care Act--the 20% to 30% average spike in insurance premiums 
that every independent analyst projects--is merely the political 
imagination of Republicans and the insurance industry. So they 
immediately claimed victory when California reported last month that 
the plans that will be available on the state's new insurance exchange 
next year would be cheaper than they are today.
    Except now it emerges that California goosed the data to make it 
appear as if ObamaCare won't send costs aloft as the law's regulations 
and mandates kick in. It will, by a lot. And now liberals have suddenly 
switched to arguing that, sure, insurance will be more expensive but 
the new costs are justified. Needless to say that was not how Democrats 
sold health-care reform.
    California reported that the rates would range from 2% above to 29% 
below the current market. ``This is a home run for consumers in every 
region of California,'' said Peter Lee, the director of the state 
exchange. ``These rates are way below the worst-case gloom-and-doom 
scenarios we have heard.''
    But Mr. Lee and his fellow regulators were making a false 
comparison. They weren't looking at California's lightly regulated 
individual insurance market that functions surprisingly well. They were 
comparing ObamaCare insurance to the state's current small-business 
market where regulations similar to ObamaCare have already been 
imposed.
    In other words, California wasn't comparing apples to apples. It 
wasn't even comparing apples to oranges. It was comparing apples to 
ostriches. The conservative analyst Avik Roy consulted current rates on 
the eHealthInsurance website and discovered that the cheapest ObamaCare 
plan for a typical 25-year-old man is roughly 64% to 117% more 
expensive than the five cheapest policies sold today. For a 40 year 
old, it's 73% to 146%. Stanford economist Dan Kessler adds his 
observations nearby.
    We wouldn't be shocked if California deliberately abused statistics 
in the hopes that no one would notice that in some cases premiums would 
more than double. In any case, the turn among the liberals who touted 
the fake results has been educational.
    They now concede that individual costs will rise but claim that it 
is unfair to compare today's market to ObamaCare because ObamaCare 
mandates much richer benefits. Another liberal rationalization is that 
the cost-increasing regulations are meant to help people with pre-
existing conditions, so they're worth it.
    So they're finally admitting what some of us predicted from the 
start, but that's also the policy point. Americans are being forced to 
buy more expensive coverage than what they willingly buy today. 
Liberals also argue that some of the new costs will be offset by 
subsidies, which is great news unless you happen to be a taxpayer or 
aren't eligible for ObamaCare dollars and wake up to find your current 
coverage is illegal.
    The Affordable Care Act was sold as a tool to lower health costs. 
In case you missed it, the claim is right there in the law's title. The 
new Democratic position is that the entitlement will do the opposite 
but never mind, which is at least more honest.
    But we wonder how long this new candor will last. If the public 
reacts badly to these higher premiums, the authors of ObamaCare will 
soon be back to blaming insurance companies and Republicans.
                                 ______
                                 
    Mr. Miller. I ask unanimous consent that an article from 
the New York Times talking about the rise of entrepreneurship 
and----
    [The information follows:]

                [From the New York Times, May 31, 2013]

         Affordable Care Act Could Be Good for Entrepreneurship

                          By Catherine Rampell

    The Affordable Care Act is expected to produce a sharp increase in 
entrepreneurship next year, according to a new report from the Robert 
Wood Johnson Foundation, the Urban Institute and Georgetown 
University's Health Policy Institute. The number of self-employed 
people is expected to rise by 1.5 million--a relative increase of more 
than 11 percent--as a direct result of the health care overhaul.
    One major barrier to entrepreneurship in the United States--beside 
the usual risks involved with starting a company--is that it has been 
difficult to get health insurance on the individual market. Those who 
do end up founding or joining a start-up are often able to do so 
because they have a spouse with employer-sponsored insurance, or 
because they are keeping a day job with a bigger company. (This was the 
case, for example, for most of the people involved with Leap2, a Kansas 
City start-up that I profiled last fall.)
    Economists have looked at whether this insurance-related job lock 
is deterring self-employment and the formation of new businesses, and 
the data suggest it is. A Journal of Health Economics paper, for 
example, found that business ownership rates jumped sharply from just 
under age 65 to just over age 65, when people become newly eligible for 
Medicare. Using Current Population Survey data, the same paper also 
found that wage and salary workers are more likely to start businesses 
from one year to the next if they have a spouse with employer-based 
insurance.
    A working paper from the Upjohn Institute looked at a change in the 
law in New Jersey that expanded access to individual health insurance. 
It found that the law seemed to increase self-employment, particularly 
among ``unmarried, older, and observably less-healthy individuals.''
    The report released Friday applies those findings to a model of 
what will happen in 2014, based on the Affordable Care Act's provisions 
for ``universal availability of non-group coverage, the financial 
assistance available for it, and other related market reforms.'' The 
authors also adjusted their numbers depending on the access that 
residents of various states already have to individual health 
insurance. (Vermont, for example, already has a statute that allows the 
self-employed to obtain small group coverage.) Over all, they found, 
the ranks of the self-employed are likely to rise 11.5 percent, from 
about 13.1 million to 14.6 million. A table with their state-by-state 
estimates is below.
    By the way, the paper does not mention this, but the same forces 
that will make it easier for workers to become self-employed may also 
make it easier for workers to retire early. I have heard anecdotally 
about people in their late 50s or early 60s who would like to retire 
but can't do so because they're basically uninsurable (for now) on the 
individual market; I wonder if we'll notice a wave of retirements in 
this age group come 2014.


----------------------------------------------------------------------------------------------------------------
                                                             Self-employment
                  State                    Self-employment     post-A.C.A.     Increase due to   % Increase due
                                            absent A.C.A.        changes           A.C.A.           to A.C.A.
----------------------------------------------------------------------------------------------------------------
Alabama.................................           118,000           134,000            16,000            13.60%
Alaska..................................            31,000            35,000             4,000            12.90%
Arizona.................................           301,000           340,000            39,000            13.00%
Arkansas................................            99,000           112,000            13,000            13.10%
California..............................         1,901,000         2,149,000           248,000            13.00%
Colorado................................           304,000           331,000            27,000             8.90%
Connecticut.............................           185,000           202,000            17,000             9.20%
Delaware................................            31,000            33,000             2,000             6.50%
District of Columbia....................            21,000            24,000             3,000            14.30%
Florida.................................           819,000           891,000            72,000             8.80%
Georgia.................................           432,000           488,000            56,000            13.00%
Hawaii..................................            58,000            63,000             5,000             8.60%
Idaho...................................            83,000            94,000            11,000            13.30%
Illinois................................           475,000           537,000            62,000            13.10%
Indiana.................................           224,000           253,000            29,000            12.90%
Iowa....................................           148,000           167,000            19,000            12.80%
Kansas..................................           116,000           131,000            15,000            12.90%
Kentucky................................           150,000           170,000            20,000            13.30%
Louisiana...............................           179,000           203,000            24,000            13.40%
Maine...................................            73,000            79,000             6,000             8.20%
Maryland................................           231,000           261,000            30,000            13.00%
Massachusetts...........................           281,000           281,000                 0             0.00%
Michigan................................           317,000           344,000            27,000             8.50%
Minnesota...............................           258,000           292,000            34,000            13.20%
Mississippi.............................           102,000           110,000             8,000             7.80%
Missouri................................           242,000           273,000            31,000            12.80%
Montana.................................            72,000            81,000             9,000            12.50%
Nebraska................................           104,000           117,000            13,000            12.50%
Nevada..................................           104,000           117,000            13,000            12.50%
New Hampshire...........................            74,000            81,000             7,000             9.50%
New Jersey..............................           304,000           330,000            26,000             8.60%
New Mexico..............................            94,000           106,000            12,000            12.80%
New York................................           743,000           808,000            65,000             8.70%
North Carolina..........................           378,000           411,000            33,000             8.70%
North Dakota............................            52,000            58,000             6,000            11.50%
Ohio....................................           514,000           581,000            67,000            13.00%
Oklahoma................................           173,000           196,000            23,000            13.30%
Oregon..................................           212,000           240,000            28,000            13.20%
Pennsylvania............................           464,000           524,000            60,000            12.90%
Rhode Island............................            43,000            46,000             3,000             7.00%
South Carolina..........................           155,000           176,000            21,000            13.50%
South Dakota............................            57,000            65,000             8,000            14.00%
Tennessee...............................           258,000           292,000            34,000            13.20%
Texas...................................           955,000         1,079,000           124,000            13.00%
Utah....................................            99,000           112,000            13,000            13.10%
Vermont.................................            41,000            41,000                 0             0.00%
Virgina.................................           333,000           376,000            43,000            12.90%
Washington..............................           346,000           376,000            30,000             8.70%
West Virginia...........................            46,000            52,000             6,000            13.00%
Wisconsin...............................           256,000           290,000            34,000            13.30%
Wyoming.................................            32,000            36,000             4,000            12.50%
----------------------------------------------------------------------------------------------------------------
Copyright 2013 The New York Times Company.

                                 ______
                                 
    Chairman Kline. Without objection, they will both be 
included in the record.
    I thank the secretary for your testimony, for your 
answering questions, and for your presence here today.
    And with that, we are adjourned.
    [Questions submitted for the record follows:]
    
    
                             chairman kline
Head Start
    The president's proposed Preschool for All program would be housed 
at the Department of Education while HHS plans to continue to operate 
Head Start and the Child Care and Development Block Grant, programs 
that provide education and care services primarily targeted to children 
ages zero to five. In fact, a 2012 Government Accountability Office 
(GAO) report found 45 such programs scattered across multiple agencies 
(including yours) costing taxpayers at least $13.3 billion annually. 
Why is the administration proposing to further fragment the federal 
government's early childhood education and care system?
Child abuse
    How many HHS programs exist to help states protect children from 
abuse and neglect? How is HHS coordinating these efforts to ensure the 
best investment of taxpayer funds?
    Now that HHS has completed all four reports as required by the 
CAPTA Reauthorization Act of 2010 on important aspects of state and 
local child abuse prevention systems, how do you plan to address some 
of your findings?
Older Americans
    1. How is the Administration for Community Living meeting the needs 
of both the disability and aging communities? How have the 
constituencies of both groups responded to the consolidation of the 
Administration on Aging, the Office of Disability, and the 
Administration on Intellectual and Developmental Disabilities?
    2. How is the Assistant Secretary on Aging managing the new 
responsibilities related to the disability community, as well as the 
existing responsibilities to the aging community?
    3. In the president's 2014 budget request, HHS calls for funding 
new programs and projects at the expense of its current obligations, 
specifically in nutrition programs for seniors. The budget requests 
$816 million for Older Americans Act nutrition programs, a reduction 
from 2013 levels, which is estimated to support meals for 2.3 million 
seniors. These cuts come on top of: (1) state and local budget cuts; 
(2) rising costs for food and transportation; (3) smaller or fewer 
donations due to a slow economy; (4) increased demand for services, as 
Baby Boomers turn 65 at a rate of 10,000 a day (about 12,000 
individuals turn 60 everyday); and (5) increased need for services. How 
do you justify the call for funding new programs when current 
obligations are not being met?
    4. While the committee continues to gather information to inform 
the reauthorization of the Older Americans Act, when can we expect to 
see your recommendations, if any, for the reauthorization?
                     congressman thomas petri (wi)
    1. I have been contacted by several Wisconsin Medicaid-dependent 
home care providers with over 1,000 employees each. As you know, the 
ACA requires that these entities provide insurance to their employees 
or pay a fine. While most normal businesses would raise their prices in 
the face of rising costs, unfortunately these providers are in the 
unique position of only having one customer--the Medicaid program. As 
has been well documented, the Medicaid program significantly underpays 
providers relative to their costs, leaving these operators with very 
little margin. Therefore, the ACA puts them in an impossible position 
as they cannot afford to provide the required insurance or pay the 
fine, but also cannot raise their rates.
    It is my understanding that they have sought relief from your 
department as well as from the Department of the Treasury. While 
sympathy is expressed, no solution has been offered. These personal 
care providers are vital to our nation's health care infrastructure as 
they allow individuals to receive care in their homes, rather than an 
institution. What alternative can you offer to these providers besides 
bankruptcy?
                       congressman phil roe (tn)
    1. Several hospitals in East Tennessee recently brought to my 
attention the wide disparity in Medicare payments among different 
regions of the country as a result of the wage index. The low payments 
that hospitals in my state are receiving as a result of the wage index 
are threatening their viability and could lead to diminished access to 
care. Does your department have any recommendations on how Congress 
could address this inequity and provide adequate payment to hospitals 
in states like Tennessee?
    2. At a recent committee field hearing in North Carolina, Mr. Chuck 
Horne, the president of a textile company with 350 employees, testified 
as to the impact that the Affordable Care Act will have on his 
business. Mr. Horne currently offers outstanding insurance benefits--at 
great cost to the company--because he believes it is the right thing to 
do. Mr. Horne, however, will be punished by the transitional 
reinsurance fee of $63 per covered life even though his company will 
not benefit from it. What would you say to Mr. Horne, who will pay 
$32,000 to provide a backstop to large insurance companies instead of 
having that money to reinvest in his business? Do you believe this is 
fair?
                      congressman todd rokita (in)
    1. Over 5 million people in the United States have Alzheimer's 
disease. Getting a timely and accurate diagnosis is an important part 
of addressing this disease. Leading experts & even the Health and Human 
Services own web site stress the value of early diagnosis.
    Early diagnosis allows families to better plan for the course of 
this disease and it allows patients and medical experts to explore 
various treatments available that can help possibly delay or mitigate 
symptoms common with this disease.
    Far too many people with Alzheimer's are not diagnosed until their 
symptoms have become severe, making it much more difficult and complex 
for them and their loved ones to plan for the future. What is HHS doing 
to ensure timely access and coverage to new technologies for 
Alzheimer's disease as they become available, particularly diagnostic 
tools that can help individuals to get the care they need before it's 
too late?
    2. CMS currently reimburses for countless medications and 
procedures to treat patients with Alzheimer's disease or other forms of 
cognitive impairment. Given that 1 in 5 patients who are diagnosed with 
Alzheimer's actually have something else, can you comment on why the 
agency is considering not covering a diagnostic agent for this disease 
state that was approved by the FDA over a year ago?
                     congressman larry bucshon (in)
    1. Secretary Sebelius, the Association of American Medical Colleges 
and the US Health Resources and Services Administration--an agency 
within HHS--project that by 2020 the US will be facing a large 
physician shortage that is evenly split between specialists and primary 
care physicians. I'm very concerned that at a time when there is 
general agreement that we need to grow the physician workforce because 
of the aging of the baby boomers, the Administration is actually 
proposing cutting Medicare's support for teaching hospitals and the 
critical services they provide.
    The President's proposal to cut Medicare indirect medical education 
payments by 10 percent would cost America's teaching hospitals millions 
annually as they try to train physicians and would jeopardize these 
hospitals' ability to provide care for the sickest in their 
communities, especially seniors and the underserved. Make no mistake, 
in addition to hindering the training of doctors, cuts to providers 
will wind up leading to cuts to patient services.
    Can you help me understand the rationale behind this cut?
                      congressman trey gowdy (sc)
    1. What section of the Public Health Service Act do you derive your 
authority to solicit funds from private groups in order to fund the 
implementation of the Patient Protection and Affordable Care Act?
                     congressman lou barletta (pa)
    As you know, Pennsylvania recently requested that HHS provide 
flexibility to the state to continue the Pennsylvania Children's Health 
Insurance Program (CHIP) and to exempt the state from having to 
transfer a significant portion of its enrollees into the Medicaid 
system. Under Obamacare, PA's CHIP kids would have to be added to that 
population. Because of the law, the state has calculated that of the 
187,000 current enrollees in PA CHIP, they will have to involuntarily 
transfer approximately 70,000 enrollees onto the Medicaid rolls.
    1. Do you think it is better for those kids to remain in a program 
that has better provider capacity?
    2. How are you going to explain that they can no longer get prompt 
service because they have been moved to a program that reimburses 
providers so poorly that there aren't enough providers to take care of 
everyone in the program?
                     congresswoman martha roby (al)
    1. Prior to the House Committee on Education and the Workforce 
hearing on June 4, 2013, I reached out to my constituents on Twitter 
and Facebook to see what questions they might ask you if they had the 
opportunity to do so. I compiled their questions and would like 
responses to share with each individual. Per their request, personal 
information has been redacted.
    a. My employer has provided excellent insurance coverage for over 
30 years. It would definitely be classified as a 'Cadillac Plan.' This 
year we were forced to change coverage. Please tell me how penalizing 
or taxing companies that provide excellent coverage has anything to do 
with ensuring everyone has access to affordable healthcare.
    b. The President said if we liked our current plan we could keep 
it. This has turned out to be false. What changes to Obama Care is the 
administration doing to ensure that this statement does not turn out to 
be a lie?
    c. The plan [PPACA] was touted as a cost saver, but as the details 
become available we're seeing the opposite. My question is: if the plan 
is evolving into something it was never intended to be, what is the 
Secretary intended to do to impose cost controls?
    d. Now that we see so many companies reducing work hours of 
employees to preclude having to pay the higher cost /coverage of 
insurance for people working over 30 hrs, what are you going to do to 
help those people make up the difference in lost pay and lost benefits?
    e. Why is the IRS involved in anything having to do with 
healthcare?
    f. Why are healthcare costs already rising when the whole goal was 
to reduce costs?
    2. As you know, beginning in 2014, businesses with 50 or more full-
time equivalent employees will be required to provide health insurance 
coverage to full-time employees or face new tax penalties.
    Many of the businesses Alabama are family owned and operated 
businesses, passed down generation after generation. One specific 
heating and plumbing company in Montgomery, AL is extremely confused 
with the current mandate set to go into effect in 2014.
    Their business currently has a count of 52 employees; however, 
three of these individuals are considered businesses owners. Per the 
law's mandates, is this business required by law to provide coverage to 
their employees?
    Has the Department issued any specific, in-depth guidance as to how 
to count each employee--including business owners and family members as 
employees? For example, the State of Alabama's workers compensation 
regulations do not take into account business owners as employees. Does 
the health care law?
    3. On a similar note, there is much ambiguity regarding coverage 
for young adults who remain on their parent's insurance plans until 
they are 26.
    If a young adult is employed part-time at a local grocery store, 
around 25-30 hours a week, they are technically be classified as a 
``full-time employee'' per the Department's definition. In this 
instance, who is primarily responsible to provide health care to the 
young adult--the parent or the business?
    If there is a lack of compliance from such business and they do not 
provide the health insurance mandated by law, what is the penalty 
associated to this business?
                    congresswoman susan brooks (in)
    1. Alzheimer's disease is estimated to cost the nation $200 billion 
this year alone, and about 70 percent of that--$140 billion--is 
shouldered by taxpayers in Medicare and Medicaid costs. If the current 
trajectory holds, this number will exceed $1 trillion annually in the 
coming decades.
    Experts as well as our government have stressed the value of an 
early and accurate diagnosis in treating Alzheimer's to prevent costly 
and time-consuming misdiagnoses, as well as begin proper care planning 
earlier. At the same time, companies have been working to create 
diagnostic tests that could lead to an earlier finding of Alzheimer's.
    As diagnostic technologies for Alzheimer's and other diseases 
continue to be developed and gain approval by the FDA, what measures be 
taken to prioritize coverage of diagnostic tools, particularly when 
early diagnosis of diseases like Alzheimer's and others can lead to 
dramatically lower costs?
    2. One of the selling points of the health care law to small 
businesses was the ability to offer their employees a range of choices 
in the new insurance exchanges. However, last Friday HHS announced a 
delay in the implementation of the employee choice component of SHOP in 
the 33 states where the federal government will run the exchange. This 
delay once again shows the administration is falling behind in 
implementation of this flawed law. The result is fewer choices and 
higher premiums for small businesses and their employees. Are you at 
all concerned this delay will push more employers to simply drop 
insurance?
    3. It has been three years since enactment of the health care law, 
yet the administration has not issued many of the critical rules needed 
for 2014. When will these much-needed rules be released? Open 
enrollment is expected to begin in October 2013. Won't states, 
employers, and insurers need to know the final rules before they can 
invest the hundreds of millions of dollars required to implement the 
law?
                    congressman richard hudson (nc)
    1. Madam Secretary, the Congressional Budget Office estimates that 
job creators will pay $140 billion in new taxes because of the employer 
mandate in the health care law
    Last December, Chairman Kline and Dr. Roe, sent you and Sectaries 
Geithner and Solis a letter asking for information about how the 
employer mandate and its penalties will impact employment, specifically 
part-time workers. Treasury responded on behalf of the three agencies, 
stating, quote: ``We have not conducted any specific analysis of the 
effects on employment''.
    In April, our health subcommittee held a hearing in my district in 
North Carolina where we heard from employers struggling to figure out 
how the law will affect their businesses, employees, and customers. Ed 
Tubel, owner of Sonny's BBQ, testified that his company's compliance 
costs may reach $200,000. Tina Hayes, Chief Human Resources Officer at 
a local community college testified they will have to reduce the number 
of courses they offer because of the new employer mandate.
    Madam Secretary, an employer with 49 workers that cannot afford to 
buy government approved insurance will face a fine of $40,000 for 
hiring just one new worker. We need job growth and small businesses to 
lead the way. What would you say to the small business owners that 
testified in North Carolina about the crushing new taxes they face for 
not providing government approved insurance? Or, to the workers who are 
seeing their hours and take home pay reduced because their employer 
simply cannot afford government-approved insurance?
    Madam Secretary, to confirm for the record, your agency has not 
conducted any specific economic analysis to determine how the new 
employer mandate will impact employment?
                      congressman luke messer (in)
    1. I have been contacted by several superintendents and part-time 
school employees in my congressional district about the harmful impact 
the Affordable Care Act may have on educational organizations and their 
employees.
    A. Are you concerned the quality of education provided to students 
will suffer because schools are reducing the hours of some employees 
below 30 per week due to the harsh tax penalties imposed by the 
Affordable Care Act?
    B. Do you believe a 30 hour work week is an appropriate amount to 
be considered a full-time employee?
    C. Has the Department analyzed the potential impact on school 
employees that the Affordable Care Act's employer responsibility 
provisions may have, particularly given Internal Revenue Service 
guidance regarding the manner in which schools are required to 
calculate their number of full-time employees?
    2. The Administration has made early detection and clinical 
diagnosis of Alzheimer's disease a priority under its National 
Alzheimer's awareness campaign. What specific steps is the 
Administration undertaking to further this principle?
    A. For example, will you make a diagnostic test that can assess 
whether a Medicare beneficiary with cognitive impairment actually has 
Alzheimer's disease accessible to all the appropriate patients for such 
a test?
    3. Currently, a significant number of patients with cognitive 
impairment, possibly Alzheimer's disease, do not receive the right 
diagnosis. I appreciate that an accurate and early diagnosis is one of 
the continuing goals of the National Plan to Address Alzheimer's 
Disease.
    Do you agree that ensuring access to accurate diagnosis through FDA 
approved technologies for patients with cognitive impairment would help 
achieve a major goal of the National Plan to Address Alzheimer's 
Disease?
                      congressman bobby scott (va)
    1. Is there currently data available that shows the effects of 
preventive care without co-pays or deductibles? For example, due to 
increased access for tests such as mammograms, are cancers being 
detected at an earlier stage than before?
    2. Should Members of Congress or Congressional influence affect the 
policies governing organ transplants?
                    congressman ruben hinojosa (tx)
    1. As you know the rollout of the Affordable Care Act exchanges in 
January of next year is a critical time. In the coming months, my 
constituents and small business need to be educated as to what they can 
expect, what is expected of them, and they will look to our offices to 
help guide them through the process.
    With the Republican budget cuts, including the arbitrary 
sequestration cuts they championed and passed into law, what resources 
are available for HHS employees to travel to congressional districts 
for rollout events, informational town hall meetings and constituent 
outreach in the months ahead?
    2. As you know in the state of Texas, Governor Parry has put 
politics above the health of Texans and refused to participate in the 
Medicaid expansion program which would have provided health care to 
over 1.5 million Texans as well as create more than three million jobs, 
according to a report generated by the Perryman Group. This is all 
despite the fact that a recent poll by the Texas Hospital Association 
shows a majority of Texans are in favor of Medicaid expansion.
    My concern is that because of the Governors short sighted decision 
hospitals will get stuck in the middle. As you know, the Affordable 
Care Act calls for a reduction in Disproportionate Share Hospital (DSH) 
payments based on an assumption that states are expanding Medicaid. 
Since this expansion is not happening in Texas, how will you work with 
hospitals in Texas to make sure they do not get financially harmed by a 
DSH reduction?
                      congressman jared polis (co)
    1. In addition to expanding access to high quality early education 
programs, it is crucial that early education programs such as Head 
Start work with elementary schools to ensure a strong transition. 
That's why I introduced a bipartisan, no-cost bill, the Continuum of 
Learning Act, which would align early childhood education and early 
elementary school standards and professional development activities 
through strong child development practices and policies. How would the 
administration's preschool proposal strengthen connections between 
existing early learning programs and the elementary grades?
                                 ______
                                 
    [Secretary Sebelius' response to questions submitted for 
the record follows:]

                           Office of the Secretary,
                     Department of Health & Human Services,
                                  Washington, DC, February 7, 2014.
Hon. John Kline, Chairman,
Committee on Education and the Workforce, House of Representatives, 
        Washington, DC 20515.
    Dear Mr. Chairman: Thank you for the opportunity to complete the 
record for the June 4, 2013 hearing at which Secretary Sebelius 
testified on the FY 2014 Budget for the Department of Health and Human 
Services. Enclosed you will find the answers to your questions.
    I hope this information is helpful. If I may be of further 
assistance, please do not hesitate to contact me at 202-690-7627.
            Sincerely,
                                             Jim R. Esquea,
                               Assistant Secretary for Legislation.

Enclosure.
                        chairman john kline (mn)
    1. The president's proposed Preschool for All program would be 
housed at the Department of Education, but HHS plans to continue to 
operate Head Start and the Child Care and Development Block Grant, 
programs that provide education and care services primarily targeted to 
children ages zero to five. A 2012 Government Accountability Office 
(GAO) report found 45 such programs scattered across multiple agencies 
(including yours) costing taxpayers at least $13.3 billion annually. 
Why is the administration proposing to further fragment the federal 
government's early childhood education and care system?

    Answer: The Administration's proposal represents a coordinated and 
comprehensive approach to strengthen and expand early childhood 
education services for our nation's most vulnerable children. The 
President's plan will maintain and build on current Head Start 
investments to support a greater share of infants, toddlers and three 
year olds in Head Start centers, while state preschool settings will 
serve a greater share of four year olds using Department of Education 
preschool funding. The net result will be more five year old children 
entering kindergarten ready to succeed. The Preschool for All program 
focuses on 3 and 4 year olds. Head Start (and Early Head Start) will 
now focus on infants and toddlers. Currently, fewer than 5% of infants 
and toddlers living below the poverty line receive Early Head Start 
Services.
    As part of the President's Early Education Plan, we would also 
expand high quality early learning services to over 100,000 infants and 
toddlers through Early Head Start--Child Care Partnerships. These 
partnerships will build on the strengths of Early Head Start and child 
care investments. Instead of duplicating efforts, HHS will purposefully 
use the existing infrastructure of child care centers and homes in 
partnership with Early Head Start to improve access and quality so that 
more of our nation's most vulnerable infants and toddlers will receive 
the high quality, comprehensive full day full year services they need. 
Additionally, this proposal was developed in partnership with the U.S. 
Department of Education and the U.S. Department of Health and Human 
Services, to ensure that children and families experience successful 
transitions and continuous high-quality early learning services from 
birth through age five and into the early grades of elementary school.

    2. How many HHS programs help states protect children from abuse 
and neglect? How is HHS coordinating these efforts to ensure the best 
investment of taxpayer funds?

    Answer: Child abuse and neglect is a complex, multidimensional 
problem. Research confirms that childhood trauma and maltreatment can 
lead to a range of negative effects on physical and mental health that 
extend into adulthood. Addressing child maltreatment cuts across many 
disciplines and therefore collaborative efforts are essential to 
preventing child maltreatment, promoting well-being, and improving the 
lives of children and families across the United States. There are 
several programs, both across HHS and other agencies that in some way 
touch on the issue through prevention, intervention, treatment, and law 
enforcement activities.
    Within HHS, the grant programs authorized by the Child Abuse 
Prevention and Treatment Act (CAPTA) and the programs authorized under 
titles IV-B of the Social Security Act specifically focus on the 
prevention and treatment of child abuse and neglect and the provision 
of public child welfare services as part of their core mission. CAPTA 
programs include the Community-Based Child Abuse Prevention Program, 
Children's Justice Act, Basic State Grant, and CAPTA research and 
demonstration grants.
    CAPTA programs focus on collaboration and coordination for upfront 
prevention and improving the investigation and response to child 
maltreatment. The title IV-B programs provide funding for a wide range 
of child welfare related activities, including child abuse and neglect 
prevention and family preservation. Under the Title IV-B program, 
states are required to develop a Child and Family Services Plan (CFSP), 
a five-year strategic plan that sets forth the vision and the goals to 
be accomplished to strengthen the states' overall child welfare system. 
A primary purpose of the CFSP is to facilitate states' integration of 
programs that serve children and families into a continuum of services 
for children and their families. Programs addressed through the CFSP 
include title IV-B, subparts 1 and 2 of the Social Security Act (the 
Stephanie Tubbs Jones Child Welfare Services Program and the Promoting 
Safe and Stables Families Program, respectively), and the Chafee Foster 
Care Independence Program and Education and Training Vouchers Program 
for older and/or former foster care youth. States also report on their 
use of the CAPTA State grant in conjunction with their plan submission. 
The CFSP consolidates plans for these programs to help states 
comprehensively integrate the full array of child welfare services, 
from prevention and protection through permanency.
    In addition to promoting coordinating planning across several key 
programs, the Obama Administration has focused significant attention on 
bringing together the resources of the Administration for Children and 
Families, the Substance Abuse and Mental Health Services 
Administration, and the Centers for Medicare & Medicaid Services to 
address trauma and promote well-being.\1\ Our Department has been 
proactive in reaching out to states to let them know about federal 
authority and funding streams, strategies for coordinating cross-system 
efforts, and good practices for integrating evidence-based screening, 
assessment, and interventions related to complex trauma, including the 
trauma associated with child abuse and neglect.
---------------------------------------------------------------------------
    \1\ See: http://www.medicaid.gov/Federal-Policy-Guidance/Downloads/
SMD-13-004.pdf
---------------------------------------------------------------------------
    Additionally, it is important to note that HHS chairs the Federal 
Interagency Workgroup on Child Abuse and Neglect, which is a 
longstanding group that includes federal staff from over 40 different 
agencies across the government and provides an ongoing forum for 
information sharing and facilitating stronger collaboration and 
coordination across various child maltreatment related programs.\2\
---------------------------------------------------------------------------
    \2\ See: Report on Efforts to Coordinate Programs and Activities 
Related to Child Abuse and Neglect, June 2013

    3. Now that HHS has completed all four reports required by the 
CAPTA Reauthorization Act of 2010 on important aspects of state and 
local child abuse prevention systems, how do you plan to address some 
---------------------------------------------------------------------------
of your findings?

    Answer: HHS will continue to foster partnerships with other federal 
agencies and other partners to address child maltreatment, trauma and 
other adverse childhood experiences. HHS will continue to use the 
findings from the four CAPTA Reports to Congress to support ongoing 
research, training, technical assistance, and service delivery across 
all our programs. The findings from the reports emphasize the need to 
increase states' and grantees' capacity to collect and use data for 
assessing program performance and continuous quality improvement. HHS 
is also committed to investing more resources towards evidence-based 
and evidence-informed programs across various funding streams. We plan 
to continue developing opportunities for shared learning, knowledge 
development and dissemination at the federal level. We also plan to 
encourage grantees and community service providers to make similar 
efforts at the state and local level. We believe that interagency 
coordinated efforts throughout HHS and with other federal and non-
federal partners are critical for preventing child maltreatment and 
promoting the well-being of children and families.
    Given the unique demographics and cultures of all states, it was 
challenging to generalize findings of states' use of the CAPTA State 
grant that might be implemented across all states or to draw 
conclusions about the effectiveness of states' use of the CAPTA State 
Grant since the state CAPTA plans focus on state spending plans, rather 
than outcomes. Through the report, we did learn that 37 percent of 
states selected a CAPTA program area because it aligned with the CFSP, 
and 47 percent of states selected a CAPTA program area because it 
aligned with the state's Program Improvement Plan developed to address 
findings from the federal Child and Family Services Review (CFSR). This 
confirms that most states are already working to integrate planning for 
the title IV-B and CAPTA programs to make broader program improvements 
to better support the state's comprehensive child and family services 
programs, including child abuse and neglect programs. It also confirms 
that the CFSP is the best vehicle to ensure coordination and 
integration of state child protective services with overall child 
welfare services in the state.
    In regard to the report on citizen review panels, we understand the 
panels may play a role in improving child protective systems across the 
states. The report is inconclusive on the effectiveness of citizen 
review panels in examining how agencies are fulfilling their child 
protective services responsibilities because of the parameters of the 
study. The report was an exploratory, descriptive report based on the 
analysis of annual reports submitted by citizen review panels and the 
state child protection system responses to those reports. We generally 
learned about citizen review panel recommendations and state responses 
to those recommendations and that practices vary from state to state. 
As such, states will continue to need the flexibility afforded by the 
CAPTA provision that mandates the responsibilities of the citizen 
review panels. We would need to conduct a future study with appropriate 
funding if we are to better understand how citizen review panels might 
be useful as a systems improvement in state and local child welfare 
agencies. Although such a study may be informative, the study would not 
directly meet the critical informational need for child protective 
service agencies, and is therefore a lower priority than other agency 
activities. We concluded, however, that the public may not be able to 
easily access all of the citizen review panel reports as required by 
CAPTA. Therefore, we plan to address this with states that do not have 
their reports available on their websites.
    The report on efforts to coordinate the objectives and activities 
of agencies and organizations which are responsible for programs 
related to child abuse and neglect demonstrates that the Administration 
for Children and Families' (ACF) Children's Bureau, Office on Child 
Abuse and Neglect (OCAN) has been consistently engaged in significant 
efforts to meet its coordination responsibility. Through collaborative 
work with federal, state and local agencies, and a network of non-
federal partners, OCAN manages efforts to share and disseminate 
information, promote awareness, and implement various activities to 
address child abuse and neglect. We will continue these coordination 
activities by working with our federal partners on issues of child 
abuse prevention through the Federal Interagency Workgroup on Child 
Abuse and Neglect; interagency agreements and initiatives; conferences, 
workshops and other projects. Very specifically, we will continue our 
longstanding interagency agreements between ACF and other federal 
agencies to co--fund child abuse and neglect prevention and treatment 
activities.
    In the report on immunity protections for professionals who consult 
or assist on cases involving child abuse and maltreatment, we concluded 
all states have universally extended civil immunity to all good faith 
reporters in law in compliance with the requirements in CAPTA. 
Professionals who consult or assist on child maltreatment cases may 
have less fear of liability for their actions and potentially cooperate 
more readily if they had immunity for their actions. Although not 
required by CAPTA, states may want to consider whether to enact laws to 
extend immunity for professionals who consult, cooperate, or assist on 
child maltreatment cases.

    4. How is the Administration for Community Living meeting the needs 
of the disability and aging communities? How have the constituencies of 
both groups responded to the consolidation of the Administration on 
Aging, the Office of Disability, and the Administration on Intellectual 
and Developmental Disabilities?

    Answer: The Administration for Community Living (ACL) is meeting 
the needs of the disability and aging communities primarily through 
continued implementation of the Older Americans Act and the 
Developmental Disabilities Assistance and Bill of Rights Act at state 
and local levels. ACL is conducting ongoing assessments of the needs of 
these communities and evaluating and continuously improving our 
performance and seeking efficiencies. Additionally, ACL is working 
closely with a number of partners within HHS, such as the Centers for 
Medicare & Medicaid Services, the Substance Abuse and Mental Health 
Services Administration, and others, with regard to policies that can 
better coordinate the provision of long-term services and supports for 
persons with intellectual and developmental disabilities and older 
Americans.
    The communities' response has been very positive. Since the 
creation of ACL, both communities have seen the benefits of 
collaboration, alignment of goals, and cooperation in order to achieve 
greater results.

    5. How is the Assistant Secretary on Aging managing the new 
responsibilities related to the disability community, as well as the 
existing responsibilities to the aging community?

    Answer: The Assistant Secretary for Aging has found that the two 
constituencies have so many similarities that her joint role as 
Administrator for Community Living has allowed her to become a stronger 
advocate for enhanced Long Term Service and Support Systems that are 
critical to the communities that ACL represents.

    6. The president's 2014 budget request calls for funding new 
programs and projects at the expense of its current obligations, 
specifically related to nutrition programs for seniors. The budget 
requests $816 million for Older Americans Act nutrition programs, a 
reduction from 2013 levels, which is estimated to support meals for 2.3 
million seniors. These cuts come on top of: (1) state and local budget 
cuts; (2) rising costs for food and transportation; (3) smaller or 
fewer donations due to a slow economy; and (4) increased demand for 
services, as Baby Boomers turn 65 at a rate of 10,000 a day (about 
12,000 individuals turn 60 everyday). How do you justify the call for 
funding new programs when current obligations are not being met?

    Answer: ACL recognizes the critical need for funding for senior 
nutrition programs. To this end, the President's FY 2014 budget 
requests to restore funding for these programs to the FY 2012 level of 
$816 million from the FY 2013 enacted level of $768 million after 
sequestration. In addition to this restoration of funding for senior 
nutrition and other core services programs, the FY 2014 budget request 
continues to propose the transfer of three programs for greater 
alignment and efficiency, continues the focus on prevention through the 
Alzheimer's initiative, and continues to support Aging and Disability 
Resource Centers. The President's budget also contains a modest 
investment of $8 million in discretionary grant funding to test 
innovative approaches to reducing and addressing elder abuse in states 
and tribal settings through Adult Protective Service systems, a need 
which was documented through two recent reports of the General 
Accountability Office.

    7. While the committee continues to gather information to inform 
the reauthorization of the Older Americans Act, when can we expect to 
see your recommendations, if any, for the reauthorization?

    Answer: ACL continues to support the reauthorization of the Older 
Americans Act, as noted in our previously-submitted statement of 
principles for reauthorization. These principles were based on 
listening sessions from the field as to how to best serve our 
communities. ACL has no plans for specific recommendations in the form 
of bill language. However, we are pleased to work with Congress to 
provide technical assistance regarding any specific program area, 
principle, or proposal. Our principles for reauthorization are posted 
on the ACL website at: http://www.aoa.gov/AoARoot/AoA_Programs/OAA/
Reauthorization/Target_Change.aspx.
                     congressman thomas petri (wi)
    1. I have been contacted by several Wisconsin Medicaid-dependent 
home care providers with over 1,000 employees each. As you know, the 
Patient Protection and Affordable Care Act (PPACA) requires that these 
entities provide insurance to their employees or pay a fine. While most 
normal businesses would raise their prices in the face of rising costs, 
unfortunately these providers are in the unique position of only having 
one customer--the Medicaid program. As has been well documented, the 
Medicaid program significantly underpays providers relative to their 
costs, leaving these operators with very little margin. Therefore, the 
PPACA puts them in an impossible position as they cannot afford to 
provide the required insurance or pay the fine, but also cannot raise 
their rates.
    It is my understanding that they have sought relief from your 
department as well as from the Department of the Treasury. While 
sympathy is expressed, no solution has been offered. These personal 
care providers are vital to our nation's health care infrastructure as 
they allow individuals to receive care in their homes, rather than an 
institution. What alternative can you offer to these providers besides 
bankruptcy?

    Answer: Thank you for your question regarding payment rates to 
Medicaid providers. I recognize the critical importance of Medicaid 
home care providers to enable Medicaid beneficiaries to remain in the 
community.
    States set payment rates with approval from the Centers for 
Medicare & Medicaid Services (CMS), and CMS works with states as they 
set their payment rates with beneficiary access in mind. States have a 
considerable amount of flexibility when it comes to setting rates and 
can consider as part of that rate setting process any relevant factor, 
including the cost of overhead components such as employee group health 
coverage. CMS reviews state provider payment rates to ensure that such 
rates are in keeping with federal statutory and regulatory guidelines, 
but states have the flexibility to adjust payment rates within those 
guidelines. To the extent that a state wishes to increase payment rates 
to certain providers, CMS is available to work with the state to ensure 
that such increase meets federal requirements. Furthermore, to the 
extent that the payment increase meets CMS approval, the federal 
government would provide financial participation (FFP) for the 
increased payment at the appropriate matching rate.
    Additionally, as you may know, the Administration has announced 
that it will provide an additional year before the Affordable Care Acts 
mandatory employer reporting requirements begin, which will provide 
affected businesses with additional time as they move towards making 
health coverage available to their employees.
                       congressman phil roe (tn)
    1. Several hospitals in East Tennessee recently brought to my 
attention the wide disparity in Medicare payments among different 
regions of the country as a result of the wage index. The low payments 
that hospitals in my state are receiving as a result of the wage index 
are threatening their viability and could lead to diminished access to 
care. Does your department have any recommendations on how Congress 
could address this inequity and provide adequate payment to hospitals 
in states like Tennessee?

    Answer: Under the current hospital wage index system, hospitals are 
classified into geographically similar labor market areas. The labor 
market areas are based on the Office of Management and Budget 
delineations of metropolitan statistical areas.
    In April of 2012, CMS submitted a Report to Congress entitled, 
``Plan to Reform the Medicare Wage Index.'' In that report, CMS 
discussed a different approach to calculating the wage index that we 
believe would more accurately reflect the labor costs incurred by each 
hospital based on the hospital employees' commuting patterns. This 
``commuting-based wage index'' would allow for the wage index to be 
calculated at a more granular level, down to the individual hospital. 
It could also potentially obviate the need for hospital 
reclassifications to other labor market areas. In the report, we 
indicated that more data on hospital employee commuting patterns may be 
necessary before adopting a commuting-based wage index. Additionally, 
we stated that certain special adjustments to the wage index under 
current law may no longer be applicable and should be reviewed in order 
to determine if they would still be relevant under the new system. 
Current law is rather prescriptive with respect to the wage index; 
nonetheless, we continue to evaluate whether improvements could be made 
under existing authority.

    2. At a recent committee field hearing in North Carolina, Mr. Chuck 
Horne, the president of a textile company with 350 employees, testified 
as to the impact that the Patient Protection and Affordable Care Act 
will have on his business. Mr. Horne currently offers outstanding 
insurance benefits--at great cost to the company--because he believes 
it is the right thing to do. Mr. Horne, however, will be punished by 
the transitional reinsurance fee of $63 per covered life even though 
his company will not benefit from it. What would you say to Mr. Horne, 
who will pay $32,000 to provide a backstop to large insurance companies 
instead of having that money to reinvest in his business? Do you 
believe this is fair?

    Answer: The Affordable Care Act has many components that help 
contain costs, hold health insurers accountable to consumers and ensure 
that American families receive value for their health insurance premium 
dollars. One such mechanism is the 80/20 rule, or Medical Loss Ratio 
(MLR) rule. The 80/20 rule brings consumers value, increases 
transparency and accountability, and promotes better business practices 
and competition among insurance companies. MLR generally requires 
insurance companies in the individual and small group markets to spend 
at least 80 percent of the premium dollars they collect on medical care 
and quality improvement activities or pay a rebate. Issuers in the 
large group market also have to comply with MLR requirements by 
spending 85 percent of premium dollars on medical care and quality 
improvement activities, or else they must pay a rebate.
    The Congressional Budget Office analyzed the net impact of the 
Affordable Care Act reforms on premiums in the individual, small group, 
and large group markets.\3\ CBO calculated that premiums in the large 
group market (50 or more employees) will be zero to a 3 percent lower 
than they would have been without the Affordable Care Act. Employers 
(and their premium paying employees) will benefit from factors such as 
a decrease in uncompensated care, a reduction in fees--such as state 
high-risk pool assessments--associated with assisting the uninsured, 
and population improvements in health.
---------------------------------------------------------------------------
    \3\ http://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/107xx/
doc10781/11-30-premiums.pdf
---------------------------------------------------------------------------
    By combining insurance market reforms, new efficiencies created by 
the Marketplaces, and programs such as reinsurance that will help 
stabilize premiums in the new Marketplaces, the Affordable Care Act 
increases competition between health insurance issuers and reduces 
uncompensated care.
                      congressman todd rokita (in)
    1. Over 5 million people in the United States have Alzheimer's 
disease. Getting a timely and accurate diagnosis is an important part 
of addressing this disease. Leading experts and even the Department of 
Health and Human Services' (HHS) own web site stress the value of early 
diagnosis.
    Early diagnosis allows families to better plan for the course of 
this disease and it allows patients and medical experts to explore 
various treatments available that can help possibly delay or mitigate 
symptoms common with this disease.
    Far too many people with Alzheimer's are not diagnosed until their 
symptoms have become severe, making it much more difficult and complex 
for them and their loved ones to plan for the future. What is HHS doing 
to ensure timely access and coverage to new technologies for 
Alzheimer's disease as they become available, particularly diagnostic 
tools that can help individuals to get the care they need before it's 
too late?

    Answer: We are actively engaged in reviewing new technology to 
ensure timely access to innovation for our beneficiaries. For example, 
in October 2012, the Centers for Medicare & Medicaid Services (CMS) 
opened a National Coverage Analysis (the first step in the National 
Coverage Determination (NCD) process) to reconsider a prior NCD on the 
use of Positron Emission Tomography (PET) scans that allowed Medicare 
coverage of PET using only specified radioisotopes for certain 
indications. Reconsideration of this NCD was requested by a stakeholder 
who advocated coverage of PET using a radiopharmaceutical approved by 
the FDA in 2012 to image beta-amyloid plaques in adult patients with 
cognitive impairment who are being evaluated for Alzheimer's disease 
and other causes of cognitive decline.
    To help inform this evidence review, CMS convened a meeting of the 
Medicare Evidence Development and Coverage Advisory Committee (MEDCAC) 
in January 2013. A proposed coverage decision is expected by July 2013, 
with a final decision (including consideration of public comments) 
expected by October 2013. Information on the status of this coverage 
review is available on the CMS website at http://www.cms.gov/medicare-
coverage-database/details/nca-details.aspx?NCAId = 265&NcaName = Beta + 
Amyloid + Positron + Emission + Tomography + in + De mentia + and + 
Neurodegenerative + Disease&bc = AgBAAAAAAAAAAA%3d%3d&.

    2. CMS currently reimburses for countless medications and 
procedures to treat patients with Alzheimer's disease or other forms of 
cognitive impairment. Given that one in five patients who are diagnosed 
with Alzheimer's actually have something else, can you comment on why 
the agency is considering not covering a diagnostic agent for this 
disease state that was approved by the Food and Drug Administration 
over a year ago?

    Answer: As noted above, a National Coverage Analysis on beta-
amyloid PET scans is underway to reconsider a prior National Coverage 
Determination on Medicare coverage of PET scans. CMS' evidence-based 
coverage decision-making process is separate and distinct from the Food 
and Drug Administration's processes for determining a product's safety 
and effectiveness; CMS' coverage decision-making process is designed to 
meet CMS' statutory obligation to ensure that Medicare covers only 
items and services determined to be ``reasonable and necessary'' for 
our beneficiaries.
                     congressman larry bucshon (in)
    1. The Association of American Medical Colleges and the U.S. Health 
Resources and Services Administration--an agency within your 
department--project that by 2020 the United States will be facing a 
large physician shortage, evenly split between specialists and primary 
care physicians. I'm very concerned that at a time when there is 
general agreement that we need to grow the physician workforce because 
of the aging of the baby boomers, the administration is actually 
proposing to cut Medicare's support for teaching hospitals and the 
critical services they provide.
    The president's proposal to cut Medicare indirect medical education 
payments by 10 percent would cost America's teaching hospitals millions 
annually as they try to train physicians, jeopardizing hospitals' 
ability to provide care for the sickest in their communities, 
especially seniors and the underserved. In addition to hindering the 
training of physicians, cuts to providers will lead to a reduction in 
patient services. Please explain the rationale behind the president's 
proposal.

    Answer: MedPAC has repeatedly found that IME payments are more than 
twice as high as what is empirically justified by teaching hospitals' 
actual teaching costs. The 10% reduction in IME would reduce (though 
not eliminate) this disparity. We recognize the critical importance of 
graduate medical education. Nonetheless, like any other category of 
Medicare spending, payments to teaching hospitals must be well-
justified. We believe this proposal brings these payments closer to the 
empirically justified level. By supporting the training of more and 
higher quality primary care providers, this proposal also helps fill a 
key long-term need of the health care system.
                      congressman trey gowdy (sc)
    1. From what section of the Public Health Service Act do you derive 
your authority to solicit funds from private groups in order to promote 
the Patient Protection and Affordable Care Act?

    Answer: Within HHS, we are working everyday so that uninsured 
Americans will be able to sign up for healthcare coverage starting 
October 1. This important mission to extend health insurance coverage 
to millions of Americans for the first time can't be accomplished by 
government alone. It takes the support of the business sector, non-
profits, community organizations, and others who share this vision. 
Many private organizations share our mission and they are pursuing 
their own efforts to get Americans covered. Because of sections of the 
Public Health Service Act (42 U.S.C. Sec. Sec.  300u-2 to -3) HHS 
Secretaries since 1976 have had the authority to encourage others to 
support important health initiatives. For example, previous Secretaries 
from both parties marshalled private-sector support efforts to enroll 
eligible beneficiaries in two important programs that expand the 
availability of health insurance: the Medicare prescription drug 
benefit (Medicare Part D) and the Children's Health Insurance Program.
                     congressman lou barletta (pa)
    1. As you know, Pennsylvania recently requested that the Department 
of Health and Human Services provide flexibility to the state to 
continue the Pennsylvania Children's Health Insurance Program (CHIP) 
and to exempt the state from having to transfer a significant portion 
of its enrollees into the Medicaid system. Under the Patient Protection 
and Affordable Care Act, Pennsylvania's CHIP children would have to be 
added to the Medicaid population. Because of the law, the state has 
calculated that of the 187,000 current enrollees in Pennsylvania CHIP, 
approximately 70,000 enrollees will involuntarily be transferred onto 
the Medicaid rolls. Do you think it is better for those kids to remain 
in a program that has better provider capacity? How are you going to 
explain that these children can no longer get prompt service because 
they have been moved to a program that reimburses providers so poorly 
that there aren't enough providers to take care of everyone in the 
program?

    Answer: Thank you for your question related to the Affordable Care 
Act's provision raising the minimum income eligibility level for 
children in Medicaid.
    Section 2001(a)(5)(B) of the Affordable Care Act increased the 
minimum eligibility level for children from ages 6 through 18 in the 
Medicaid program from 100 percent to 133 percent of the Federal poverty 
level (FPL). This reform simplifies coverage by eliminating age-based 
eligibility rules that have resulted in children in the same family 
being eligible for two different programs (Medicaid and CHIP) and that 
requires children to switch programs, from Medicaid to CHIP, and 
potentially doctors, when they turn 6. Many states had previously 
extended Medicaid coverage for these older children. The Affordable 
Care Act codifies this successful approach nationwide January 1, 2014.
    For some states, including Pennsylvania, this will mean that some 
children will need to transfer from CHIP to Medicaid. Pennsylvania may 
continue its coverage of children from 133 through 300 percent of the 
FPL under CHIP. It is also important to note that there is no change in 
the federal support that will be available for the children that 
transfer to Medicaid--the enhanced CHIP matching rate will continue to 
be available for these children even though they will be enrolled in 
Medicaid.
    I appreciate your concern that this transition could potentially 
cause families to have to change providers. While it is my 
understanding that most of the plans in Pennsylvania serve both 
Medicaid and CHIP populations, thus reducing the risk of disruptions in 
care, we recognize that transitions will be necessary for some 
families. States can ease this transition by giving families time to 
choose their new health plans and we will work directly with states to 
develop transition plans that protect patient access to care.
                     congresswoman martha roby (al)
    1. Prior to the House Committee on Education and the Workforce 
hearing on June 4, 2013, I reached out to my constituents on Twitter 
and Facebook to see what questions they might ask you if they had the 
opportunity to do so. I compiled their questions and would like 
responses to share with each individual. Per their request, personal 
information has been redacted.
    a. My employer has provided excellent insurance coverage for over 
30 years. It would definitely be classified as a `Cadillac Plan.' This 
year we were forced to change coverage. Please tell me how penalizing 
or taxing companies that provide excellent coverage has anything to do 
with ensuring everyone has access to affordable healthcare.

    Answer: Section 4980I of the Internal Revenue Code is not effective 
until 2018, five years from now, so that does not explain why your 
coverage changed this year.
    The costs for large employers directly associated with the 
implementation of the Affordable Care Act are far outweighed by the 
systemic savings of the law. These savings are due to greater market 
transparency and competition and a more stable marketplace with more 
covered Americans. For example, premiums for employer-sponsored 
insurance increased by only 3 percent from 2011 to 2012, the lowest 
rate of increase since the data series began in 1996.

    b. The president said if we liked our current plan we could keep 
it. This has turned out to be false. What changes to Obama Care is the 
administration doing to ensure that this statement does not turn out to 
be a lie?

    Answer: The Affordable Care Act allows health plans that existed on 
March 23, 2010, when the law was enacted, to be ``grandfathered'' and 
thus be exempt from many of the new law's provisions. It allows 
insurers and employers to make some routine changes without losing 
grandfather status. Plans relinquish their ``grandfathered'' status if 
they choose to significantly cut benefits or increase out-of-pocket 
spending for consumers. Consumers in plans that make such changes and 
lose their ``grandfathered'' status will gain new consumer protections.
    If you are among the 80 percent of Americans who already have 
health insurance through your employer, or through government programs 
such as Medicare and Medicaid, the Affordable Care Act provisions that 
apply to you are providing you with better consumer protections and 
ensure that you get more value for each dollar you spend on your health 
insurance. However for people ineligible for coverage under a 
government program who do not receive their insurance from their 
employer, or who are unemployed, the Affordable Care Act is making 
changes to ensure that they can now find, afford, and keep a plan that 
they like. Soon, the Marketplaces will provide a new way to shop for 
coverage for all Americans, that will particularly benefit the 
uninsured, those with pre-existing conditions, and individuals who 
currently buy coverage on their own. On October 1, Americans will begin 
shopping in the Marketplaces, and they'll be able to fill out one 
application to purchase private insurance, qualify for premium tax 
credits and reduced cost sharing, or obtain Medicaid or CHIP coverage.

    c. The plan [PPACA] was touted as a cost saver, but as the details 
become available we're seeing the opposite. My question is: if the plan 
is evolving into something it was never intended to be, what does the 
secretary intend to do to impose cost controls?

    Answer: I disagree. We are already seeing reductions in the growth 
of healthcare spending. From 2010 to 2012, Medicare spending per 
beneficiary grew at 1.2 percent annually, more slowly than the average 
rate of growth in the Consumer Price Index, and substantially more 
slowly than the per capita rate of growth in the economy. This is in 
sharp contrast to the 7.6% annual growth rate in per beneficiary 
spending from 2000-2010, and health economists recognize that the 
Affordable Care Act has contributed to the slowdown in spending growth. 
From 2011 to 2012, total spending per Medicaid beneficiary actually 
declined by 1.9%, resulting in substantial savings for federal and 
state taxpayers.
    New elements are reducing costs and saving taxpayer money in the 
Medicare program. New anti-fraud programs, like the fraud prevention 
system that uses predictive modeling technology, are helping deter bad 
actors and saving billions for the Medicare program. We are using 
market-driven solutions, like the competitive bidding program for 
durable medical equipment, to save tens of billions for taxpayers and 
seniors. Also, in Medicare we're promoting better coordination of care 
by hospitals through penalties for excess readmissions and payment tied 
to value for the first time. In 2012, readmissions for Medicare 
patients dropped significantly, with an estimated 70,000 readmissions 
avoided due to a variety of new incentives for hospitals to keep 
patients well and avoid these costly events.
    The rate of cost growth is decreasing for private insurance as 
well. Premiums for employer sponsored insurance increased by only 3% 
from 2011 to 2012, the lowest rate of increase since the data series 
began in 1996. In addition, early evidence shows that prices for 
Marketplace products are lower than expected, and, for small 
businesses, lower on average than current small business rates in the 
handful of states that have released data. In part, this appears to be 
a result of greater transparency and competition.

    d. Now that we see so many companies reducing work hours of 
employees to preclude having to pay the higher cost /coverage of 
insurance for people working over 30 hours, what are you going to do to 
help those people make up the difference in lost pay and lost benefits?

    Answer: The employer responsibility provision, which applies only 
to employers with 50 or more full-time equivalent employees, will not 
be enforced until 2015. Furthermore, if you look at the economic data, 
the suggestion that the Affordable Care Act is reducing full-time 
employment is not supported by the facts. Plus, a Minneapolis Federal 
Reserve Bank study shows that the vast majority of employers are not 
considering cutting hours. The Affordable Care Act should not cause a 
leap in part-time jobs, since less than 1 percent of employees work 30 
to 34 hours, are uninsured, and are employed by businesses affected by 
the employer responsibility provision.
    In fact, employers are benefitting from the Affordable Care Act, 
which includes a range of cost-saving, quality-improving measures that 
are contributing to a slowdown in health care cost growth, which should 
help employers save money. For example, in 2012, premium growth for 
employer-sponsored insurance was at its lowest rate (3 percent) since 
the Medical Expenditure Panel Survey started in 1996. Additionally, 
starting in October, small employers in every state will be able to 
offer coverage to their employees beginning in 2014 from among a 
variety of plans within the Small Business Health Options Program 
(SHOP) Marketplace in their state.
    SHOP Marketplaces will provide side-by-side comparisons of 
Qualified Health Plans, their benefits, premiums, and quality--
expanding options and increasing competition. SHOP Marketplaces also 
can save businesses money by spreading insurers' administrative costs 
across more employers. In some states in 2014, and in all states in 
2015, billing will be consolidated as well; employers can go to the 
SHOP Marketplace as ``one stop shopping'' in order to offer multiple 
insurer's options to employees without having to deal with each insurer 
separately.
    Businesses might be eligible for small business tax credits when 
they offer health coverage to their employees through a SHOP 
Marketplace. From 2014 to 2016, a tax credit of up to 50 percent of the 
employer-paid premium cost of health insurance coverage will be 
available, if the employer otherwise qualifies for the credit.

    e. Why is the IRS involved in anything having to do with health 
care?

    Answer: The IRS is the U.S. government agency responsible for tax 
collection and tax law enforcement. It is involved in implementing the 
portions of the Affordable Care Act that contain tax provisions. For a 
full list of the Affordable Care Act's tax provisions, please see: 
http://www.irs.gov/uac/Affordable-Care-Act-Tax-Provisions.

    f. Why are healthcare costs already rising when the whole goal was 
to reduce costs?

    Answer: I disagree that health care costs are rising due to the 
Affordable Care Act. In fact, we are already seeing reductions in 
projected healthcare spending growth. From 2010 to 2012, Medicare 
spending per beneficiary grew at 1.2 percent annually, more slowly than 
the average rate of growth in the Consumer Price Index, and 
substantially more slowly than the per capita rate of growth in the 
economy. This is in sharp contrast to the 7.6% annual growth rate in 
per beneficiary spending from 2000-2010, and health economists 
recognize that the Affordable Care Act has contributed to the slowdown 
in spending growth. From 2011 to 2012, total spending per Medicaid 
beneficiary actually declined by 1.9%.
    New elements are reducing costs and saving taxpayer money in the 
Medicare program. New anti-fraud programs, like the fraud prevention 
system that uses predictive modeling technology, are helping deter bad 
actors and saving billions for the Medicare program. We are using 
market-driven solutions, like the competitive bidding program for 
durable medical equipment, to save tens of billions for taxpayers and 
seniors. Also, in Medicare we're promoting better coordination of care 
by hospitals through penalties for excess readmissions and payment tied 
to value for the first time. In 2012, readmissions for Medicare 
patients dropped significantly, with an estimated 70,000 readmissions 
avoided due to a variety of new incentives for hospitals to keep 
patients well and avoid these costly events.
    The rate of cost growth is decreasing for private insurance as 
well. Premiums for employer sponsored insurance increased by only 3% 
from 2011 to 2012, the lowest rate of increase since the data started 
in 1996. In addition, early evidence shows that prices for Marketplace 
products are lower than expected, and, for small businesses, lower on 
average than current small business rates in the handful of states that 
have released data. While further work is needed to better understand 
2014 rates, the results strongly suggest that greater competition and 
transparency are leading to substantial benefits for both consumers and 
employers in these markets.

    2. As you know, beginning in 2015, businesses with 50 or more full-
time equivalent employees will be required to provide health insurance 
coverage to full-time employees or face new tax penalties. Many of the 
businesses in Alabama are family owned and operated businesses, passed 
down generation after generation. One specific heating and plumbing 
company in Montgomery, AL is extremely confused with the current 
mandate set to go into effect in 2015. Their business currently has a 
count of 52 employees; however, three of these individuals are 
considered businesses owners. Per the law's mandates, is this business 
required by law to provide coverage to their employees?
    Has the department issued any specific, in-depth guidance as to how 
to count each employee--including business owners and family members as 
employees? For example, the State of Alabama's workers compensation 
regulations do not take into account business owners as employees. Does 
the health care law?

    Answer: In December of 2012, the Department of Treasury released a 
proposed rule Shared Responsibility for Employers Regarding Health 
Coverage, which can be found here: http://www.irs.gov/pub/newsroom/reg-
138006-12.pdf. The regulation discusses, among other things, methods of 
calculating what is considered a large employer under the law and the 
definition of an ``employer'' versus an ``employee.'' For further 
clarification, please refer to the Department of the Treasury.

    3. On a similar note, there is much ambiguity regarding coverage 
for young adults who remain on their parent's insurance plans until 
they are 26. If a young adult is employed part-time at a local grocery 
store, around 25-30 hours a week, they are technically being classified 
as a ``full-time employee'' per the department's definition. In this 
instance, who is primarily responsible to provide health care to the 
young adult--the parent or the business? If there is a lack of 
compliance from such business and they do not provide the health 
insurance mandated by law, what is the penalty associated to this 
business?

    Answer: The definition of full-time employee is prescribed by 
statute in section 4980H(c) (4) of the Internal Revenue Code (the Code) 
of 1986. The Department of Treasury is responsible for regulations 
implementing Code provisions. In December of 2012, the Department of 
Treasury released a proposed rule Shared Responsibility for Employers 
Regarding Health Coverage, which can be found here: http://www.irs.gov/
pub/newsroom/reg-138006-12.pdf. The regulation discusses, among other 
things, methods of calculating the 30 hours of services per week for 
large employers. For further information, please contact to the 
Department of the Treasury.
                    congresswoman susan brooks (in)
    1. Alzheimer's disease is estimated to cost the nation $200 billion 
this year alone, and about 70 percent of that--$140 billion--is 
shouldered by taxpayers in Medicare and Medicaid costs. If the current 
trajectory holds, this number will exceed $1 trillion annually in the 
coming decades.
    Experts as well as our government have stressed the value of an 
early and accurate diagnosis in treating Alzheimer's to prevent costly 
and time-consuming misdiagnoses, as well as begin proper care planning 
earlier. At the same time, companies have been working to create 
diagnostic tests that could lead to an earlier finding of Alzheimer's.
    As diagnostic technologies for Alzheimer's and other diseases 
continue to be developed and gain approval by the Food and Drug 
Administration, what measures are being taken to prioritize coverage of 
diagnostic tools, particularly when early diagnosis of diseases like 
Alzheimer's and others can lead to dramatically lower costs?

    Answer: We are actively engaged in reviewing new technology to 
ensure timely access to innovation for our beneficiaries. For example, 
in October 2012, the Centers for Medicare & Medicaid Services (CMS) 
opened a National Coverage Analysis (the first step in the National 
Coverage Determination (NCD) process) to reconsider a prior NCD on the 
use of Positron Emission Tomography (PET) scans that allowed Medicare 
coverage of PET using only specified radioisotopes for certain 
indications. Reconsideration of this NCD was requested by a stakeholder 
who advocated coverage of PET using a radiopharmaceutical approved by 
the FDA in 2012 to image beta-amyloid plaques in adult patients with 
cognitive impairment who are being evaluated for Alzheimer's disease 
and other causes of cognitive decline. To help inform this evidence 
review, CMS convened a meeting of the Medicare Evidence Development and 
Coverage Advisory Committee (MEDCAC) in January 2013. A proposed 
coverage decision is expected by July 2013, with a final decision 
(including consideration of public comments) expected by October 2013. 
Information on the status of this coverage review is available on the 
CMS website at http://www.cms.gov/medicare-coverage-database/details/
nca-details.aspx?NCAId = 265&NcaName = Beta + Amyloid + Positron + 
Emission + Tomography + in + De mentia + and + Neurodegenerative + 
Disease&bc = AgBAAAAAAAAAAA%3d%3d&.

    2. One of the selling points of the health care law to small 
businesses was the ability to offer their employees a range of choices 
in the new insurance exchanges. However, last Friday HHS announced a 
delay in the implementation of the employee choice component of the 
SHOP Marketplace in the 33 states where the federal government will run 
the exchange. This delay once again shows the administration is falling 
behind in implementation of this flawed law. The result is fewer 
choices and higher premiums for small businesses and their employees. 
Are you at all concerned this delay will push more employers to simply 
drop insurance?

    Answer: In 2014, a SHOP Marketplace will be operational in every 
state. As you know, the SHOP Marketplaces will be competitive private 
health insurance marketplaces through which small businesses and their 
employees will have access to affordable coverage. In the current small 
group market, the smallest businesses nationwide pay about 20 percent 
more than large companies.\4\
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    \4\ J. R. Gabel et al. ``Generosity and Adjusted Premiums in Job-
Based Insurance: Hawaii is Up, Wyoming is Down.'' Health Affairs, 2006, 
25(3): 832-843.
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    Through the SHOP Marketplaces, small employers will benefit from 
leveraging the buying power of a larger purchasing pool. They will also 
have access to a transparent marketplace with online tools to help them 
make meaningful comparisons among qualified health plans (QHPs). 
Beginning in 2014, if they meet other eligibility requirements, small 
employers who purchase coverage for their employees through a SHOP 
Marketplace will also receive tax credits of up to 50 percent of the 
employer-paid premium cost of coverage to offset the cost of providing 
health insurance.
    As we've seen in Massachusetts, employer-sponsored insurance 
increased post-reform, and it makes sense to expect a similar outcome 
for the rest of the United States. We expect the robust employer-
sponsored health insurance market to continue. The SHOP Marketplaces 
will help more employers to offer coverage to their employers, and help 
provide more American workers insurance. Additionally, the SHOP 
Marketplaces will improve information for small employers and employees 
and enable certain eligible employers to access small business health 
insurance tax credits.

    3. It has been three years since enactment of the health care law, 
yet the administration has not issued many of the critical rules needed 
for 2014. When will these much-needed rules be released? Open 
enrollment is expected to begin in October 2013. Won't states, 
employers, and insurers need to know the final rules before they can 
invest the hundreds of millions of dollars required to implement the 
law?

    Answer: The Affordable Care Act fixes the broken insurance market 
by helping consumers and employers shop for and compare affordable 
health insurance plans, while knowing they won't be denied or priced 
out of insurance because of their pre-existing condition, occupation, 
or gender. HHS and CMS have worked diligently to release rules and 
guidance for states, employers, and insurers in timely manner. States, 
employers, and insurers will have the information they need to ensure 
that the Marketplaces are open for business on October 1.
                    congressman richard hudson (nc)
    1. Madam Secretary, the Congressional Budget Office estimates that 
job creators will pay $140 billion in new taxes because of the employer 
mandate in the health care law. Last December, Chairman John Kline (R-
MN) and Chairman Phil Roe (R-TN), sent you and Sectaries Geithner and 
Solis a letter asking for information about how the employer mandate 
and its penalties will impact employment, specifically part-time 
workers. The Department of the Treasury responded on behalf of the 
three agencies, stating, ``We have not conducted any specific analysis 
of the effects on employment.''
    In April, our Health, Employment, Labor, and Pensions subcommittee 
held a hearing in my district in North Carolina where we heard from 
employers struggling to figure out how the law will affect their 
businesses, employees, and customers. Ed Tubel, owner of Sonny's BBQ, 
testified that his company's compliance costs may reach $200,000.
    Tina Hayes, Chief Human Resources Officer at a local community 
college testified they will have to reduce the number of courses they 
offer because of the new employer mandate.
    Madam Secretary, an employer with 49 workers who cannot afford to 
buy government approved insurance will face a fine of $40,000 for 
hiring just one new worker. We need job growth and small businesses to 
lead the way. What would you say to the small business owners that 
testified in North Carolina about the crushing new taxes they face for 
not providing government approved insurance? What would you say to the 
workers who are seeing their hours and take home pay reduced because 
their employer simply cannot afford government-approved insurance?

    Answer: As you know, small firms (less than 50 full time 
equivalents) are exempt from employer responsibility provisions in the 
Affordable Care Act. Instead, small firms will gain access to the SHOP 
Marketplace that provides the purchasing power of large businesses.
    Additionally, businesses might be eligible for small business tax 
credits when they offer health coverage to their employees through a 
SHOP Marketplace. For tax years beginning in 2014 or later, a tax 
credit of up to 50 percent of the employer-paid premium cost of health 
insurance coverage will be available, if the employer otherwise 
qualifies for the credit.
    The Affordable Care Act fixes the broken insurance market of the 
past by giving small businesses the tools and opportunities to control 
costs and increase value. We believe that most employers want to 
provide quality health insurance to their employees, because it's the 
right thing to do and because it helps them attract and retain the 
workers they need. A healthy workforce is a more productive workforce, 
with fewer absences. We know that when people have health insurance 
they are more likely to get preventive care and get better care, 
earlier. A Minneapolis Federal Reserve Bank \5\ study shows that the 
vast majority of employers aren't even considering cutting hours.
---------------------------------------------------------------------------
    \5\ http://minneapolisfed.typepad.com/roundup/2013/03/like-it-or-
not-the-affordable-care-act-will-offer-an-interesting-economic-
experiment-on-incentives-or-punishments-dependin.html
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    Prior the Affordable Care Act, many insurers had been able to 
charge more for people who are sick, one person with a serious illness 
can make it impossible for small employers to afford to provide 
coverage. Starting in 2014, premiums for most small employers will no 
longer be based on the employees' medical history.
    The lack of competition and transparency in the current small group 
market, has allowed some small businesses to be locked into insurance 
plans that continually provide worse benefits at higher premiums. With 
the availability of the SHOP Marketplaces, small businesses will be 
able to choose from many plans in a provide side-by-side comparisons of 
health plans--their benefits, premiums, and quality--expanding options 
and increasing competition.

    2. Madam Secretary, to confirm for the record, has your agency not 
conducted, or participated in, any specific economic analysis to 
determine how the new employer mandate will impact employment?

    Answer: While HHS has not conducted any economic analysis of its 
own on the impact on employment, it is analyzing several studies of 
respected independent organizations that confirm that employers will 
continue to offer coverage. These include:
     The Rand Corporation: \6\ ``The percentage of employees 
offered insurance will not change substantially, but a small number of 
employees in small firms (defined as those with under 100 employees in 
2016) will obtain employer-sponsored insurance through the state 
insurance exchanges.''
---------------------------------------------------------------------------
    \6\ http://www.rand.org/pubs/research--briefs/RB9589/index1.html
---------------------------------------------------------------------------
     Mercer: \7\ ``In a survey released today by consulting 
firm Mercer, employers were asked how likely they are to get out of the 
business of providing health care once state-run insurance exchanges 
become operational in 2014 and make it easier for individuals to buy 
coverage. For the great majority, the answer was `not likely.' ''
---------------------------------------------------------------------------
    \7\ http://www.mercer.com/press-releases/survey-find-few-employers-
to-drop-health-plans-after-health-care-reform-in-place
---------------------------------------------------------------------------
     International Foundation of Employee Benefit Plans Survey: 
\8\ A total one percent of businesses said they are not going to 
continue coverage.
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    \8\ http://www.businessinsurance.com/article/20130410/NEWS03/
130419983?template = mobileart
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                      congressman luke messer (in)
    1. I have been contacted by several superintendents and part-time 
school employees in my congressional district about the harmful impact 
the Patient Protection and Affordable Care Act (PPACA) may have on 
educational organizations and their employees. Below is a series of 
questions regarding these concerns:
    a. Are you concerned the quality of education provided to students 
will suffer because schools are reducing the hours of some employees 
below 30 per week due to the harsh tax penalties imposed by PPACA?

    Answer: The employer responsibility provision, which applies only 
to employers with 50 or more full-time equivalent employees, will not 
be enforced until 2015. Furthermore, if you look at the economic data, 
the suggestion that the Affordable Care Act is reducing full-time 
employment is not supported by the facts. Minneapolis Federal Reserve 
Bank study shows that the vast majority of employers are not 
considering cutting hours. The Affordable Care Act should not cause a 
leap in part-time jobs, since less than 1 percent of employees who work 
30 to 34 hours are both uninsured and employed by businesses affected 
by the employer responsibility provisions. State governments and 
workers are being hit by reduced budgets and the effects of the 
sequester. Furloughs, reduced hours, and reduced benefits for 
government employees are in response to these budget problems--not the 
Affordable Care Act.
    In fact, employers are benefitting from the Affordable Care Act, 
which includes a range of cost-saving, quality-improving measures that 
are contributing to a slowdown in health care cost growth, which should 
help employers save money. For example, in 2012, premium growth for 
employer-sponsored insurance was at its lowest rate (3 percent) since 
the Medical Expenditure Panel Survey started in 1996. Additionally, 
starting in October, small employers will be able to offer coverage to 
their employees beginning in 2014 from among a variety of plans within 
the SHOP Marketplace in their state. SHOP Marketplaces will provide 
side-by-side comparisons of Qualified Health Plans, their benefits, 
premiums, and quality--expanding options and increasing competition. 
SHOP Marketplaces also can save businesses money by spreading insurers' 
administrative costs across more employers. In some states in 2014, and 
in all states in 2015, billing will be consolidated as well; employers 
can go to the SHOP Marketplace as ``one stop shopping'' in order to 
offer multiple insurer's options to employees without having to deal 
with each insurer separately. Businesses might be eligible for small 
business tax credits when they offer health coverage to their employees 
through a SHOP Marketplace. From 2014 to 2016, a tax credit of up to 50 
percent of the employer-paid premium cost of health insurance coverage 
will be available, if the employer otherwise qualifies for the credit.

    b. Do you believe a 30 hour work week is an appropriate amount to 
be considered a full-time employee?

    Answer: The definition of full-time employee is prescribed by 
statute in section 4980H(c) (4) of the Internal Revenue Code (the Code) 
of 1986. The Department of Treasury is responsible for regulations 
implementing Code provisions. In December of 2012, the Department of 
Treasury released a proposed rule Shared Responsibility for Employers 
Regarding Health Coverage, which can be found here: http://www.irs.gov/
pub/newsroom/reg-138006-12.pdf. The regulation discusses, among other 
things, methods of calculating the 30 hours of services per week for 
large employers. For further information, please contact to the 
Department of the Treasury.

    c. Has the Department of Health and Human Services analyzed the 
potential impact on school employees that PPACA employer responsibility 
provisions may have, particularly given Internal Revenue Service 
guidance regarding the manner in which schools are required to 
calculate their number of full-time employees?

    Answer: The definition of full-time employee is prescribed by 
statute in section 4980H(c) (4) of the Internal Revenue Code (the Code) 
of 1986. The Department of Treasury is responsible for regulations 
implementing Code provisions. In December of 2012, the Department of 
Treasury released a proposed rule Shared Responsibility for Employers 
Regarding Health Coverage, which can be found here: http://www.irs.gov/
pub/newsroom/reg-138006-12.pdf. The regulation discusses, among other 
things, methods of calculating the 30 hours of services per week for 
large employers. For further information, please contact to the 
Department of the Treasury.

    2. The administration has made early detection and clinical 
diagnosis of Alzheimer's disease a priority under its National 
Alzheimer's awareness campaign. What specific steps is the 
administration undertaking to further this principle? For example, will 
you make a diagnostic test that can assess whether a Medicare 
beneficiary with cognitive impairment actually has Alzheimer's disease 
accessible to all the appropriate patients for such a test?

    Answer: We are not aware of an FDA approved product to establish a 
diagnosis of Alzheimer's disease. However, we are actively engaged in 
reviewing available new technology to ensure timely access to 
innovation for our beneficiaries. For example, in October 2012, the 
Centers for Medicare & Medicaid Services (CMS) opened a National 
Coverage Analysis (the first step in the National Coverage 
Determination (NCD) process) to reconsider a prior NCD on the use of 
Positron Emission Tomography (PET) scans that allowed Medicare coverage 
of PET using only specified radioisotopes for certain indications. 
Reconsideration of this NCD was requested by a stakeholder who 
advocated coverage of PET using a radiopharmaceutical approved by the 
FDA in 2012 to image beta-amyloid plaques in adult patients with 
cognitive impairment who are being evaluated for Alzheimer's disease 
and other causes of cognitive decline. To help inform this evidence 
review, CMS convened a meeting of the Medicare Evidence Development and 
Coverage Advisory Committee (MEDCAC) in January 2013. A proposed 
coverage decision is expected by July 2013, with a final decision 
(including consideration of public comments) expected by October 2013. 
Information on the status of this coverage review is available on the 
CMS website at http://www.cms.gov/medicare-coverage-database/details/
nca-details.aspx?NCAId = 265&NcaName = Beta + Amyloid + Positron + 
Emission + Tomography + in + De mentia + and + Neurodegenerative + 
Disease&bc = AgBAAAAAAAAAAA%3d%3d&.

    3. Currently, a significant number of patients with cognitive 
impairment, possibly Alzheimer's disease, do not receive the right 
diagnosis. I appreciate that an accurate and early diagnosis is one of 
the continuing goals of the National Plan to Address Alzheimer's 
Disease. Do you agree that ensuring access to accurate diagnosis 
through the Food and Drug Administration approved technologies for 
patients with cognitive impairment would help achieve a major goal of 
the National Plan to Address Alzheimer's Disease?

    Answer: While there is value for patients and families in early 
diagnosis, the evidence continues to develop. We do not currently have 
a cure or definitive therapeutic treatment for Alzheimer's disease, but 
individualized care planning and care coordination are essential to 
maximizing the functioning of the person with the disease and to 
putting family members at ease.
    We are not aware of an FDA approved product to establish a 
diagnosis of Alzheimer's disease (AD). For example, the label for the 
imaging agent florbetapir F 18 injection (``florbetapir'') states that 
although a negative florbetapir scan reduces the likelihood that a 
patient's cognitive impairment is due to AD, a positive florbetapir 
scan does not establish a diagnosis of AD or other cognitive disorder. 
The FDA-approved label for florbetapir indicates that it was not 
evaluated by the FDA as a screening tool to predict the development of 
dementia or other neurologic conditions, nor to monitor the therapeutic 
response to treatment of these neurological conditions.
    When making coverage determinations under Medicare parts A and B, 
CMS seeks evidence that the item or service is reasonable and necessary 
to diagnose or treat an illness or injury or to improve the functioning 
of a malformed body member. In this case we would look for evidence to 
conclude that the diagnostic technology improves health outcomes for 
beneficiaries by providing useful information that will be used by the 
treating physician in the management of the patient's medical 
condition. Such evidence is customarily sought in the results of 
published reports of randomized clinical trials that compare the impact 
of different management on patients' clinical outcomes. We recognize 
that improvements in health outcomes may be brought about by changes in 
patient management if physicians can employ effective treatments or 
avoid ineffective, burdensome treatment attempts.
    CMS and FDA work closely to support patient access to innovative 
healthcare technologies that are supported by evidence of benefit. For 
example, the agencies have implemented an FDA-CMS parallel review 
pilot, which operationalizes collaboration and efficiency across the 
two agencies. In addition, CMS permits Medicare payment for Category B 
devices undergoing clinical investigation under an Investigational 
Device Exemption (IDE) as well as Medicare payment for routine care in 
FDA-approved IDE trials while collecting safety and effectiveness data. 
In situations when there is not yet enough evidence for a technology or 
treatment to be otherwise covered by Medicare, CMS may allow coverage 
with evidence development (CED).
                      congressman bobby scott (va)
    1. Is there currently data available that shows the effects of 
preventive care without co-pays or deductibles? For example, due to 
increased access for tests such as mammograms, are cancers being 
detected at an earlier stage than before?

    Answer: Under the Affordable Care Act (ACA), Section 2713 of the 
Public Health Service Act requires non-grandfathered health plans to 
cover certain recommended preventive services without cost sharing. 
Preventive services to which this requirement applies must be covered, 
without cost sharing, effective with the first plan or policy year that 
begins on or after the date that is one year after the recommendation 
is issued; section 2713 and its implementing regulations have required 
that many recommended preventive services be covered, without cost 
sharing, for plan or policy years beginning on or after September 23, 
2010. HHS has begun efforts to monitor the trends in use of preventive 
services, such as influenza immunizations, mammograms, Pap smear tests, 
colonoscopy screenings, and well child checkups. However, the lag time 
for processing survey data, including the National Health Interview 
Survey (NHIS) and the National Ambulatory Medical Care Survey (NAMCS), 
limits the ability to accurately measure the magnitude of the impact of 
coverage requirements that went into effect as recently as 2011. At 
this time, available data allow analyses to assess underlying trends in 
the use of certain preventive services prior to the enactment of the 
Affordable Care Act. HHS agencies will be monitoring rates in 
utilization of recommended preventive services as new data become 
available for analysis. As we continue to implement the Affordable Care 
Act, HHS will also explore the availability of other non-federal data 
sources that could provide information to help monitor the use of 
preventive care and screenings on an ongoing basis.

    2. Should Members of Congress or Congressional influence affect the 
policies governing organ transplants?

    Answer: The process of organ donation and allocation of deceased 
donor organs to those in need of life-saving transplants is 
fundamentally based in public trust and, to maintain that public trust, 
the process for developing organ allocation policies must remain free 
of political influence. The Organ Procurement and Transplantation 
Network's (OPTN) organ allocation policies are, and should continue to 
be, based on current medical and scientific evidence and developed by 
experts in the field through an open and transparent process with input 
from the general public and those directly affected by donation and 
transplantation (e.g., transplant patients, living organ donors, and 
deceased donor family members).
    As stated in the preamble to the final regulations governing the 
operation of the OPTN, ``decisions about who should receive a 
particular organ in a particular situation involve levels of detail, 
subtlety and urgency that must be judged by transplant professionals.'' 
64 Fed. Reg. 56650, 56652 (Oct. 20, 1999). Congress' intent was clear 
with the passage of the National Organ Transplant Act of 1984, as 
amended, (42 U.S.C. Sec.  273, et seq.) (NOTA) that the OPTN was 
created to ``establish membership criteria and medical criteria for 
allocating organs and provide to members of the public an opportunity 
to comment with respect to such criteria,'' through its Board of 
Directors, which includes representatives of organ procurement 
organizations, transplant centers, voluntary health associations, and 
the general public. 42 U.S.C. Sec.  274(b).
    Consistent with statute, HHS oversees the OPTN by contract with a 
non-profit entity with expertise in organ procurement and 
transplantation. HHS has also further clarified the requirements of the 
OPTN's policy making process and organ allocation policies in the OPTN 
final rule (42 CFR part 121). HHS is tasked with ensuring that OPTN's 
policies are consistent with the NOTA and our regulations.
                    congressman ruben hinojosa (tx)
    1. As you know the rollout of the Affordable Care Act exchanges in 
January of next year is a critical time. In the coming months, my 
constituents and small business need to be educated as to what they can 
expect, what is expected of them, and they will look to our offices to 
help guide them through the process.
    With the Republican budget cuts, including the arbitrary 
sequestration cuts they championed and passed into law, what resources 
are available for HHS employees to travel to congressional districts 
for rollout events, informational town hall meetings and constituent 
outreach in the months ahead?

    Answer: Implementing the Affordable Care Act is a top priority of 
the Department. Outreach is a vital component to the law's success--to 
ensure that Americans in need of healthcare understand how to access 
it. CMS is engaging a variety of different types of outreach and 
managing its available funding resources in the best manner possible.

    2. As you know in the state of Texas, Governor Perry has put 
politics above the health of Texans and refused to participate in the 
Medicaid expansion program which would have provided health care to 
over 1.5 million Texans as well as create more than three million jobs, 
according to a report generated by the Perryman Group. This is all 
despite the fact that a recent poll by the Texas Hospital Association 
shows a majority of Texans are in favor of Medicaid expansion.
    My concern is that because of the Governors short sighted decision 
hospitals will get stuck in the middle. As you know, the Affordable 
Care Act calls for a reduction in Disproportionate Share Hospital (DSH) 
payments based on an assumption that states are expanding Medicaid. 
Since this expansion is not happening in Texas, how will you work with 
hospitals in Texas to make sure they do not get financially harmed by a 
DSH reduction?

    Answer: We continue to believe that the Medicaid coverage expansion 
is a good deal for states and will ensure that millions of Americans 
have access to affordable, quality health coverage.
    The Medicaid expansion will also help lessen the burden of 
uncompensated care on hospitals throughout the nation.
    As you know, the Affordable Care Act requires aggregate reductions 
in Medicaid disproportionate share hospital (DSH) payments beginning in 
Fiscal Year (FY) 2014. In May 2013, the Centers for Medicare & Medicaid 
Services (CMS) proposed a rule to implement the statutorily required 
Medicaid DSH reductions for FYs 2014 and 2015 using statutorily 
required factors to allocate the reductions among states. CMS is 
currently reviewing comments received during the proposed rule's 
comment period and will finalize the rule in the coming months. The 
proposed rule includes a reduction methodology only for FY 2014 and FY 
2015. CMS plans to use state data obtained in FYs 2014 and 2015 to 
inform how the reductions should be made in FY 2016 and beyond. CMS 
will revisit the methodology and promulgate new rules to govern DSH 
reductions in FYs 2016 and beyond.
    Additionally, the President's FY 2014 Budget includes a proposal to 
delay the reductions by one year, with the reductions taking effect in 
FY 2015, rather than FY 2014. Should Congress not act to move the 
President's proposal forward, the reductions will take effect in FY 
2014 as statutorily required.
                      congressman jared polis (co)
    1. In addition to expanding access to high quality early education 
programs, it is crucial that early education programs such as Head 
Start work with elementary schools to ensure a strong transition. 
That's why I introduced a bipartisan, no-cost bill, the Continuum of 
Learning Act, which would align early childhood education and early 
elementary school standards and professional development activities 
through strong child development practices and policies. How would the 
administration's preschool proposal strengthen connections between 
existing early learning programs and the elementary grades?

    Answer: The President's Early Learning Initiative will develop a 
continuum of high-quality early learning for children--from birth to 
age 5. The Initiative will align standards across early learning 
programs and preschool, raising the standards throughout the continuum 
of early learning. The President's Initiative expands high-quality 
early learning opportunities in the years before preschool, helping 
children move from Home Visiting, Early Head Start-Child Care 
Partnerships, and Head Start into Pre-kindergarten while maintaining 
high quality care and education at each step. Congress has provided 
$1.5 billion to expand home visitation to hundreds of thousands of 
America's most vulnerable children and families across all 50 states, 
and President Obama has called for a significant investment in a new 
Early Head Start-Child Care partnership. This investment, combined with 
an expansion of publicly funded preschool education for four-year olds, 
will ensure a cohesive and well-aligned system of early learning for 
children from birth to age five.
    ACF is already working with State Advisory Councils to develop and 
enhance high-quality, comprehensive systems that optimize childhood 
services so children arrive at school ready to learn and prepared to 
excel. For example, a number of states used grant funds to align their 
Early Learning Standards with the Common Core, K-12 standards, so that 
what children are expected to know is seamless across the age spectrum. 
Additionally, states with Race to the
    Top-Early Learning Challenge (RTT-ELC) funding are working to 
connect and build on existing early learning systems statewide. RTT-ELC 
states are measuring outcomes and progress to inform early learning 
services whether children are entering kindergarten ready to succeed in 
elementary school.
                                 ______
                                 
    [Whereupon, at 12:01 p.m., the committee was adjourned.]

                                 
