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



 
 A FINANCIAL REVIEW OF THE DEPARTMENT OF HEALTH AND HUMAN SERVICES AND 
                      ITS FISCAL YEAR 2014 BUDGET 

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

                                HEARING

                               BEFORE THE

                         SUBCOMMITTEE ON HEALTH

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             APRIL 18, 2013

                               __________

                           Serial No. 113-33


      Printed for the use of the Committee on Energy and Commerce

                        energycommerce.house.gov

                               ----------
                         U.S. GOVERNMENT PRINTING OFFICE 

82-186 PDF                       WASHINGTON : 2013 
-----------------------------------------------------------------------
 For sale by the Superintendent of Documents, U.S. Government Printing 
  Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800 
        DC area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC, 
                         Washington, DC 20402-0001


                    COMMITTEE ON ENERGY AND COMMERCE

                          FRED UPTON, Michigan
                                 Chairman
RALPH M. HALL, Texas                 HENRY A. WAXMAN, California
JOE BARTON, Texas                      Ranking Member
  Chairman Emeritus                  JOHN D. DINGELL, Michigan
ED WHITFIELD, Kentucky                 Chairman Emeritus
JOHN SHIMKUS, Illinois               EDWARD J. MARKEY, Massachusetts
JOSEPH R. PITTS, Pennsylvania        FRANK PALLONE, Jr., New Jersey
GREG WALDEN, Oregon                  BOBBY L. RUSH, Illinois
LEE TERRY, Nebraska                  ANNA G. ESHOO, California
MIKE ROGERS, Michigan                ELIOT L. ENGEL, New York
TIM MURPHY, Pennsylvania             GENE GREEN, Texas
MICHAEL C. BURGESS, Texas            DIANA DeGETTE, Colorado
MARSHA BLACKBURN, Tennessee          LOIS CAPPS, California
  Vice Chairman                      MICHAEL F. DOYLE, Pennsylvania
PHIL GINGREY, Georgia                JANICE D. SCHAKOWSKY, Illinois
STEVE SCALISE, Louisiana             JIM MATHESON, Utah
ROBERT E. LATTA, Ohio                G.K. BUTTERFIELD, North Carolina
CATHY McMORRIS RODGERS, Washington   JOHN BARROW, Georgia
GREGG HARPER, Mississippi            DORIS O. MATSUI, California
LEONARD LANCE, New Jersey            DONNA M. CHRISTENSEN, Virgin 
BILL CASSIDY, Louisiana                  Islands
BRETT GUTHRIE, Kentucky              KATHY CASTOR, Florida
PETE OLSON, Texas                    JOHN P. SARBANES, Maryland
DAVID B. McKINLEY, West Virginia     JERRY McNERNEY, California
CORY GARDNER, Colorado               BRUCE L. BRALEY, Iowa
MIKE POMPEO, Kansas                  PETER WELCH, Vermont
ADAM KINZINGER, Illinois             BEN RAY LUJAN, New Mexico
H. MORGAN GRIFFITH, Virginia         PAUL TONKO, New York
GUS M. BILIRAKIS, Florida
BILL JOHNSON, Missouri
BILLY LONG, Missouri
RENEE L. ELLMERS, North Carolina
                         Subcommittee on Health

                     JOSEPH R. PITTS, Pennsylvania
                                 Chairman
MICHAEL C. BURGESS, Texas            FRANK PALLONE, Jr., New Jersey
  Vice Chairman                        Ranking Member
ED WHITFIELD, Kentucky               JOHN D. DINGELL, Michigan
JOHN SHIMKUS, Illinois               ELIOT L. ENGEL, New York
MIKE ROGERS, Michigan                LOIS CAPPS, California
TIM MURPHY, Pennsylvania             JANICE D. SCHAKOWSKY, Illinois
MARSHA BLACKBURN, Tennessee          JIM MATHESON, Utah
PHIL GINGREY, Georgia                GENE GREEN, Texas
CATHY McMORRIS RODGERS, Washington   G.K. BUTTERFIELD, North Carolina
LEONARD LANCE, New Jersey            JOHN BARROW, Georgia
BILL CASSIDY, Louisiana              DONNA M. CHRISTENSEN, Virgin 
BRETT GUTHRIE, Kentucky                  Islands
H. MORGAN GRIFFITH, Virginia         KATHY CASTOR, Florida
GUS M. BILIRAKIS, Florida            JOHN P. SARBANES, Maryland
RENEE L. ELLMERS, North Carolina     HENRY A. WAXMAN, California (ex 
JOE BARTON, Texas                        officio)
FRED UPTON, Michigan (ex officio)
  


                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Joseph R. Pitts, a Representative in Congress from the 
  Commonwealth of Pennsylvania, opening statement................     1
    Prepared statement...........................................     3
Hon. Frank Pallone, Jr., a Representative in Congress from the 
  State of New Jersey, opening statement.........................     4
Hon. Fred Upton, a Representative in Congress from the State of 
  Michigan, prepared statement...................................     5
Hon. Henry A. Waxman, a Representative in Congress from the State 
  of California, opening statement...............................     6

                               Witnesses

Kathleen Sebelius, Secretary, Department of Health and Human 
  Services.......................................................     8
    Prepared statement...........................................    10
    Answers to submitted questions...............................    52


 A FINANCIAL REVIEW OF THE DEPARTMENT OF HEALTH AND HUMAN SERVICES AND 
                      ITS FISCAL YEAR 2014 BUDGET

                              ----------                              


                        THURSDAY, APRIL 18, 2013

                  House of Representatives,
                            Subcommittee on Health,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10 a.m., in room 
2123 of the Rayburn House Office Building, Hon. Joe Pitts 
(chairman of the subcommittee) presiding.
    Present: Representatives Pitts, Burgess, Murphy, Gingrey, 
Lance, Cassidy, Guthrie, Griffith, Bilirakis, Ellmers, Barton, 
Upton (ex officio), Pallone, Dingell, Engel, Capps, Schakowsky, 
Matheson, Green, Butterfield, Barrow, Christensen, Castor, 
Sarbanes, and Waxman (ex officio).
    Staff present: Clay Alspach, Chief Counsel, Health; Sean 
Bonyun, Communications Director; Matt Bravo, Professional Staff 
Member; Brenda Destro, Professional Staff Member, Health; Paul 
Edattel, Professional Staff Member, Health; Steve Ferrara, 
Health Fellow; Julie Goon, Health Policy Advisor; Debbee 
Hancock, Press Secretary; Sydne Harwick, Legislative Clerk; 
Sean Hayes, Counsel, Oversight and Investigations; Robert 
Horne, Professional Staff Member, Health; Carly McWilliams, 
Professional Staff Member, Health; Katie Novaria, Professional 
Staff Member, Health; John O'Shea, Professional Staff Member, 
Health; Monica Popp, Professional Staff Member, Health; Andrew 
Powaleny, Deputy Press Secretary; Krista Rosenthall, Counsel to 
Chairman Emeritus; Heidi Stirrup, Health Policy Coordinator; 
Lyn Walker, Coordinator, Admin/Human Resources; Alli Corr, 
Democratic Policy Analyst; Amy Hall, Democratic Senior 
Professional Staff Member; Elizabeth Letter, Democratic 
Assistant Press Secretary; Karen Nelson, Democratic Deputy 
Committee Staff Director for Health; Anne Morris Reid, 
Democratic Professional Staff Member; and Matt Siegler, 
Democratic Counsel.

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

    Mr. Pitts. The time of 10 o'clock having arrived, the 
subcommittee will come to order. The chair will recognize 
himself for an opening statement.
    First, I would like to thank Secretary Sebelius for 
appearing before the subcommittee to discuss the 
Administration's fiscal year 2014 budget request for the 
Department of Health and Human Services.
    While the budget request is 65 days late, and both the 
House and Senate have already passed their respective budget 
resolutions, it is still important that the country know what 
the Administration's priorities are for the upcoming fiscal 
year.
    As implementation of the Affordable Care Act is now a major 
item in the President's request, this hearing will allow 
members to ask the Secretary questions about the law on behalf 
of our constituents.
    The law is simply not working as advertised. It was sold to 
the American people as a job creator. The Administration put 
forward an estimate that 4 million jobs would be created. 
Instead, red tape and a new employer mandate are discouraging 
companies from creating new full-time jobs. In many instances, 
workers are seeing their hours cut to part-time or only finding 
part-time jobs available. Even the Federal Reserve has noted 
that the uncertainty being created by the law is holding back 
hiring. I have personally heard from constituents who have been 
harmed by the mandate.
    When the government makes it more expensive and more 
complex to hire workers, companies will hold back on hiring. 
That is just a simple economic principle. However, that doesn't 
seem to matter with many government regulators. The law was 
sold as saving the American people money. Yet today, wherever I 
go I hear from individuals and businesses facing insurance 
premiums that are growing by double digits.
    Now, you may say that this is because everyone is going to 
have gold standard, government-approved insurance. Let me 
remind you that the American people were told by the President 
that each family would save $2,500 a year. Now, that wasn't a 
promise that came with a caveat. In fact, that promise was made 
with a deadline that it would happen in the first term. That 
first term is over, and the nonpartisan PolitiFact rates that 
as a broken promise.
    Businesses and individuals are seeing their premiums rise 
as a direct result of the law. I know that some may shake their 
heads and wonder why Republicans don't just move along and 
learn to tolerate the ACA. Well, we should not tolerate a 
government law that makes it harder for our constituents to 
find and keep a full-time job. Congress should not tolerate 
regulations that drive up costs for struggling businesses. 
Finally, we should not stand by and watch Americans with 
preexisting conditions be left out of the plan that was 
intended to give them coverage.
    I will continue to look for ways to make health care more 
affordable, more accessible and simpler for the American 
people. While it might be best if we could start by repealing 
the ACA, that law will not stop me and my colleagues from 
proposing constructive health care reforms.
    Madam Secretary, we hope that you will stay in order to 
answer all of our questions, and, with only 5 minutes of 
questions per member, we ask that you try to keep your answers 
concise and to the point.
    The constituents we hear from every day, including those 
who are able to be here in the audience today, deserve answers.
    [The prepared statement of Mr. Pitts follows:]

               Prepared statement of Hon. Joseph R. Pitts

    The subcommittee will come to order.
    The Chair will recognize himself for an opening statement.
    First, I would like to thank Secretary Sebelius for 
appearing before the Subcommittee to discuss the 
Administration's FY2014 budget request for the Department of 
Health and Human Services.
    While the budget request is 65 days late, and both the 
House and Senate have already passed their respective budget 
resolutions, it is still important that the country know what 
the Administration's priorities are for the upcoming fiscal 
year.
    As implementation of the Affordable Care Act is now a major 
item in the President's request, this hearing will allow 
Members to ask the Secretary questions about the law on behalf 
of our constituents.
    The law is simply not working as advertised. It was sold to 
the American people as a job creator. The administration put 
forward an estimate that 4 million jobs would be created.
    Instead, red tape and a new employer mandate are 
discouraging companies from creating new full time jobs. In 
many instances, workers are seeing their hours cut to part-time 
or only finding part-time jobs available.
    Even the Federal Reserve has noted that the uncertainty 
being created by the law is holding back hiring. I have 
personally heard from constituents who have been harmed by the 
mandate.
    When the government makes it more expensive and more 
complex to hire workers, companies will hold back on hiring. 
That's just a simple economic principle. However, that doesn't 
seem to matter with government regulators.
    The law was sold as saving the American people money. Yet 
today, wherever I go, I hear from individuals and businesses 
facing insurance premiums that are growing by double digits.
    Now, you may claim this is because everyone is going to 
have gold standard, government-approved insurance. The American 
people were told by the President that each family would save 
$2,500 a year. That wasn't a promise that came with a caveat. 
In fact, that promise was made with a deadline, that it would 
happen in the first term. That first term is over, and the non-
partisan Politifact rates that as a broken promise.
    Businesses and individuals are seeing their premiums rise 
as a direct result of the law.
    I know that some may shake their heads and wonder why 
Republicans don't just move along and learn to tolerate the 
ACA.
     We should not tolerate a government law that makes 
it harder for our constituents to find and keep a full-time 
job.
     Congress should not tolerate regulations that 
drive up costs for struggling businesses.
     Finally, we should not stand by and watch 
Americans with pre-existing conditions be left out of the plan 
that was intended to give them coverage.
    I will continue to look for ways to make health care more 
affordable, more accessible, and simpler for the American 
people. While it would be best if we could start by repealing 
the ACA, that law will not stop me and my colleagues from 
proposing constructive health care reforms.
    Madam Secretary, we hope that you will stay in order to 
answer all of our questions, and, with only five minutes of 
questions per Member, we ask that you keep your answers concise 
and to the point.
    The constituents we hear from every day, including those 
who are able to be here in the audience today, deserve answers.
    Thank you, and I yield back. The Chair now recognizes the 
Ranking Member, Mr. Pallone, for five minutes for his opening 
statement.
    Thank you. The Chair now recognizes the Chairman of the 
full Committee, the gentleman from Michigan, Chairman Upton for 
five minutes for his opening statement.
    Thank you. The Chair now recognizes the Ranking Member of 
the full Committee, Mr. Waxman for five minutes for his opening 
statement.

    Mr. Pitts. Thank you, and I yield back and the chair now 
recognizes the ranking member, Mr. Pallone, for 5 minutes for 
his opening statement.

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

    Mr. Pallone. Thank you, Chairman Pitts, and I want to 
welcome Secretary Sebelius here this morning.
    Before I address the Secretary, though, I do have to say 
that I do not appreciate the comments about the ACA. I know you 
are saying that you want constructive reforms but I think that 
if the mantra of the Republican leadership is going to continue 
to be that we have to repeal the ACA, it is going to be very 
difficult in that poisoned atmosphere to talk about 
constructive reforms, and the fact of the matter is that even 
after the last November election, we continued to hear the 
Republican leadership both on the committee as well as in the 
full House speak out and say that their priority is repealing 
the ACA, and of course, we see that in the Ryan budget that 
passed the House, and too would like to move towards 
constructive reforms in the health care system but this 
constant notion that the priority is to repeal the ACA and that 
that has to go and that is the most important thing that we 
have to do for constructive reform. It really does poison the 
atmosphere and makes it very difficult for us to sit down on a 
bipartisan level and look at things that we could do together. 
So I will just say that.
    Today we are going to hear about the President's fiscal 
year 2014 Health and Human Services budget proposal. I want to 
commend Secretary Sebelius for your agency's hard work this 
past year to implement the Affordable Care Act. Because of 
these efforts, Americans are enjoying greater access to health 
benefits, and I recognize the challenge your agency faces in 
implementing this law with limited resources.
    When the Affordable Care Act passed, we did not anticipate 
that States would give up the opportunity to tailor programs 
directly to their individual State's needs and opt for federal 
exchanges, and I regret that my State, New Jersey, is one of 
the 26 States that will rely on federal exchanges rather than 
run its own. Again, I think this is pure politics on the part 
of our Republican Governor, but despite this, I urge the 
Administration to remain committed to fully implementing the 
Affordable Care Act.
    I was pleased to see the inclusion of increased funding for 
access to mental health services to protect children and 
communities in the fiscal year 2014 proposal. I said before, it 
is time to focus more attention on improving mental health 
services to make sure troubled kids don't fall through the 
cracks, that the fiscal year 2014 budget proposal is an 
important step towards making mental health issues a national 
priority and adequately funding these efforts.
    I also support the FDA's Food Facility Registration 
Inspection fee and the Food Importer fee included in the 
Administration's proposal. These fees will help ensure that the 
FDA has the resources needed to fully implement the FDA Food 
Safety Modernization Act, which of course originated in this 
committee.
    Along the same lines, I was pleased to see that the budget 
proposal includes new user fees to support FDA's Cosmetic 
Products program. Cosmetics are used extensively throughout the 
United States by all types of people, and last Congress I 
joined with my colleague, Mr. Dingell, to introduce the 
Cosmetic Safety Enhancement Act of 2012 to help address the 
lack of authority at FDA to regulate cosmetics. Like the 
President's budget proposal, our bill included facility 
registration fees to defray the costs of cosmetic safety 
activities. So I hope we can work together on modernizing the 
cosmetic regulations.
    Before I conclude, I would like to note some concerns. 
First, I am disappointed that the funding proposal for the 
Children's Hospital Graduate Medical Education program is only 
$88 million, a two-thirds cut from the fiscal year 2012 level. 
Reducing the federal investment in pediatric will only threaten 
the pediatric workforce and threaten access to primary care. 
The small class of hospitals that receive this funding, which 
includes the Children's Specialized Hospital in my district, 
represents about 1 percent of hospitals nationwide that trains 
approximately 40 percent of all pediatricians. Underfunding 
this program would have a major negative impact on access to 
primary care and a devastating impact on access to specialty 
care for children.
    And finally, I have long advocated for strengthening 
Medicare and Social Security, and I am concerned that this 
budget makes some hurtful cuts to the programs, and I really 
would urge the Administration to do what they can to strengthen 
Medicare and Social Security and move away from some of the 
cuts that the President has proposed.
    I know we are going to have more questions about the ACA 
and some of the funding for implementing your outreach, and I 
want to bring that up during my questions, but thank you, Madam 
Secretary.
    Mr. Pitts. The chair thanks the gentleman and now 
recognizes the chairman of the full committee, the gentleman 
from Michigan, Chairman Upton, for 5 minutes for his opening 
statement.
    Mr. Upton. Well, thank you, Mr. Chairman, and knowing that 
we have votes on the floor in about an hour, I am going to 
yield back my time and submit my statement.
    [The prepared statement of Mr. Upton follows:]

                 Prepared statement of Hon. Fred Upton

    Mr. Chairman, thank you for holding this important hearing. 
I want to welcome Secretary Sebelius back to the committee.
    This morning, we will review the president's proposed 
fiscal year 2014 budget for the Department of Health and Human 
Services, which calls for nearly $1 trillion in spending--a 
budget larger than the estimated 2012 federal expenditures of 
the country of Brazil. With such massive spending levels, and a 
debt topping $16.5 trillion, we owe it to American taxpayers to 
diligently review the administration's proposals.
    Today's hearing will not just be an opportunity to review 
the president's budget proposal, but it will also serve as an 
opportunity to bring the questions and concerns of our 
constituents about the resident's health care law directly to 
the secretary, with the hope of getting answers.
    Even though the majority of Americans oppose Obamacare and 
do not want it implemented, they still need to know what they 
need to do to comply with the law. The administration has had 
three years to provide guidance, but many important questions 
remain unanswered. The lack of answers has caused confusion and 
concern across this country on issues that are central to 
Americans' lives, like whether small business owners can 
continue to provide health care to their employees.
    Take the case of a business in my district. They are a 
family-owned business with a history of good stewardship in the 
community. They treat their employees like family and have been 
proudly protecting them against injury or illness for many 
years. But they are worried about how the health care law 
creates a perverse incentive for employers to stop offering 
health care coverage. In a recent meeting with them back in 
Michigan, they told me that their long history of providing 
health coverage might end if one of their competitors decides 
save money by forcing workers into the exchanges and paying a 
small penalty. If other companies like the one in my district 
do not follow suit, they will not be able to remain competitive 
and their entire business could go under.
    Americans are now faced with many hard choices because of 
this law. With less than nine months until the new health care 
law is fully implemented, Americans are watching closely and 
becoming increasingly concerned about the law's impact on their 
health care, their jobs, and their well-being.
    There is also cause for alarm when those with intimate 
knowledge of the law, its own authors, are predicting a ``huge 
train wreck coming down'' as Senate Finance Chairman Max Baucus 
said just yesterday.
    My hope is that this hearing will be an informed discussion 
on the department's intentions for this budget and the 
implementation of the president's health care law. The American 
people deserve answers, and I hope they get them today.

                                #  #  #

    Mr. Pitts. The chair thanks the gentleman and now 
recognizes the ranking member of the full committee, Mr. 
Waxman, for 5 minutes for his opening statement.

OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Mr. Waxman. Thank you very much, Mr. Chairman. Despite the 
fact that we are going to have votes in an hour, I want to make 
some comments welcoming Secretary Sebelius to our committee. It 
has been a year since you have been here, and it has been a 
productive and busy year, and I want to commend you and your 
team for your tireless efforts on implementing the Affordable 
Care Act.
    It is difficult for most Americans to realize the enormity 
of the task you and others at HHS are undertaking to this law, 
but for the millions of uninsured in our country and those for 
whom insurance fails to provide the security and guarantees 
that they are looking for, there is certainly appreciation for 
the difference this law will bring to their lives as they now 
gain access to health care.
    The President's budget, which is the topic of today's 
hearing, includes key proposals to continue the journey 
forward: additional funding for CMS to support health insurance 
marketplaces, building the infrastructure needed to ensure 
consumer protections and engagement, continuing improvements in 
Medicare, and further investment in the successful Health Care 
Fraud and Abuse Control program.
    The President's budget also expedites the timeline for 
closing the Medicare Part D donut hole, a provision that has 
already brought critical relief, providing $2.7 billion in 
savings to beneficiaries in 2012 alone. The budget proposal 
also recaptures rebates for dually eligible seniors, a proposal 
that I have long supported, enabling us to capture over $120 
billion in savings through better drug prices over 10 years. 
Those are the things that are major pluses, and I support all 
of those effort in the President's budget.
    I am concerned about some of the proposals in the 
President's budget such as raising costs on Medicare 
beneficiaries. I know that this is put in the context to be 
part of a broader balanced package that includes both spending 
cuts and increased revenues. However, Medicare beneficiaries 
have lower incomes than younger Americans, more chronic 
conditions and health care needs, and pay significantly more 
out of pocket already. It makes little sense to shift more 
burden on to their backs. Such policies may inadvertently 
create barriers to appropriate care for vulnerable seniors, and 
I hope we can continue a dialogue on this issue.
    I also have a number of concerns, and have heard from a 
number of constituents, both providers and beneficiaries, 
regarding the dual-eligible pilot programs, especially in 
California. I hope I have your commitment to closely monitor 
and evaluate these dual demonstrations to assure these 
demonstrations for dual-eligibles, to assure protection of our 
vulnerable seniors and people with disabilities.
    I appreciate the Administration's continuing commitment to 
public health. Specifically, I applaud the inclusion of the 
proposal for food safety registration and inspection fees, 
which will provide much-needed resources to support the Food 
and Drug Administration's implementation of the Food Safety 
Modernization Act of 2011. I hope we can work together to get 
those critical fees enacted into law.
    I am also pleased to see a strong investment in biomedical 
and behavioral research at the NIH of and continued support for 
the National HIV/AIDS Strategy, including through prevention, 
surveillance and treatment activities at the Centers for 
Disease Control and Prevention and Health Resources and 
Services Administration.
    The proposals that continue our commitment to community-
based primary care, providing additional funding for Community 
Health Centers and the Title X Family Planning program, are 
also important.
    And finally, as a Nation, we are appropriately focusing 
more of our attention on the impact of gun violence in our 
communities and the critical importance of promoting mental 
health and the early detection and treatment of mental illness. 
I appreciate the President's leadership on this and am pleased 
that his budget reflects these priorities, by expanding support 
for gun violence surveillance and research at the CDC and 
proposing funding for both mental health training in our 
communities and for additional mental health professionals.
    I would be remiss, though, if I didn't mention the need to 
fully implement mental health parity. We are anxiously awaiting 
the final rule on this important legislation, and I appreciate 
your assistance in securing this.
    I certainly do appreciate your being here and look forward 
to your testimony, and I yield back the balance of my time.
    Mr. Pitts. The chair thanks the gentleman. That concludes 
the opening statements of the members. Thank you.
    We have one panel today. Our distinguished witness is the 
Honorable Kathleen Sebelius, Secretary, Department of Health 
and Human Services. Madam Secretary, welcome again. Thank you 
for coming today. You will have 5 minutes to summarize your 
testimony, and your written testimony will be placed in the 
record. Please make sure your microphone is on. Please speak 
clearly into it. You may proceed.

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

    Secretary Sebelius. Well, thank you, Chairman Pitts and 
Ranking Member Pallone and Ranking Member Waxman and Chairman 
Upton for having me here this morning 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 
job growth. It ensures that the American people will continue 
to benefit from the Affordable Care Act, and it provides much-
needed support for mental health services.
    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 addresses another issue that has been on 
our minds recently: mental health services and the ongoing 
epidemic of gun violence. While 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. That is why 
our 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 mental health professionals to join 
our behavioral health workforce.
    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 childcare partnerships, and it provides 
additional support to raise the quality of childcare programs 
and promote evidence-based home visiting for new parents. 
Together, these investments will create long-lasting positive 
outcomes for families and provide huge returns for children and 
society at large.
    Our budget also ensures that America remains a world leader 
in health innovation. The significant new investments in NIH 
will lead to new cures and treatments and help create good 
jobs.
    Our budget will further provide support for the development 
and use of compatible electronic health records systems that 
have huge potential for improving care coordination and public 
health.
    Even as the budget invests in the future, it also helps 
reduce the long-term deficit by making sure that programs like 
Medicare are put on a more stable fiscal trajectory. Medicare 
spending per beneficiary grew at just \4/10\ths of 1 percent in 
2012, thanks in part to the $800 billion in savings already 
captured 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 the lower Medicaid rates, resulting in 
savings of more than $120 billion over the next 10 years. In 
total, this budget will 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 our department. We are 
proposing an increase in mandatory funding for our health care 
fraud and abuse control program, an initiative that saved 
taxpayers nearly $8 for every $1 we 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.
    This all adds up to a budget guided by this 
Administration's north star of a thriving middle class that 
will promote job growth and keep our economy strong in years to 
come while also helping to reduce the long-term deficit.
    Now, I know, Mr. Chairman, that many of you have questions 
and I am happy to take those now. Thank you very much.
    [The prepared statement of Secretary Sebelius follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Pitts. The chair thanks the gentlelady for her opening 
statement and will now begin questions from the members, and I 
will begin the questioning and recognize myself 5 minutes for 
that purpose.
    Madam Secretary, the President promised that the ACA would 
help to make health insurance cheaper for the American people, 
but unfortunately, exactly the opposite is happening. That is 
why one of the law's early supporters, the Roofers Union, 
announced this week that they are now calling for the law's 
repeals. I have a couple of guests here with us today. Sam and 
Elaine Stoltzfus are constituents of mine. They are owners of 
Keystone Wood Specialties in Lancaster, Pennsylvania, and their 
company makes kitchen cabinets and similar wood products, so 
Sam and Elaine, welcome. You can identify yourself.
    Sam recently wrote to me to say ``We are faced with a 25 
percent increase in health care insurance for our employees and 
have no idea of where the additional $95,000 is coming from. 
Help.''
    Madam Secretary, can you tell us this morning what help 
does the President's budget either through its implementation 
of the ACA or other programs offer to Americans like Sam, and 
tell us what changes you are proposing in the budget to help 
Sam.
    Secretary Sebelius. Well, Chairman Pitts, we intend to 
complete the implementation of the Affordable Care Act with the 
resources requested in this budget, and one of the things that 
happens is the full implementation includes marketplaces in 
every State in the country, so small business owners, 
individuals who purchase health insurance in the individual 
market will have competitive insurance for the first time. 
Americans with preexisting health conditions will not be locked 
out or priced out of the marketplace, and there will be larger 
risk pools established in every State in the country. As you 
know, insurance regulation remains under State regulation. We 
are seeing nationally a trend that has the lowest level of rate 
increases in the private market that we have seen in over a 
decade, but the insurance marketplaces are not fully 
implemented until January of 2014.
    Mr. Pitts. Madam Secretary, the law passed with a provision 
designed to help small businesses like Sam's, and I am talking 
about the SHOP Act, but there is no funding, there are no 
funding allocations for it in the President's budget. Will that 
provision be able to help them come January 1, 2014?
    Secretary Sebelius. Yes, sir. I have no idea your 
constituent's size or what kind of employer market he may be 
in, but the SHOP Act will be open in every State in--I mean the 
SHOP market--excuse me--will be open in every State in January 
of 2014. Employers will have an opinion to choose among 
competitive plans in every State in 2014.
    Mr. Pitts. Madam Secretary, did you not recently announce a 
delay for implementation of exchanges for small business until 
2015?
    Secretary Sebelius. No, sir. We----
    Mr. Pitts. What did you do?
    Secretary Sebelius. In the federal marketplaces in the 
States where we will be running the market, the portions of the 
SHOP market that will be delayed one year are employers being 
able to offer their employees multiple plans to choose from. 
Every employer will be able to choose from a variety of plans 
and offer the plan of his or her choice to those employees, and 
the employers who qualify for the tax credit because of the 
size of their workforce and the level of the employee's income 
will also get a tax credit in the SHOP market but it won't be 
until year two that that wider employee choice will be 
available only in the federally facilitated marketplaces. 
States may offer it starting in 2014.
    Mr. Pitts. Madam Secretary, I also hear from constituents 
who are being hurt by the ACA two or three times a week. Mostly 
I hear from constituents who had their work hours cut as 
companies try to avoid skyrocketing costs imposed by the law. 
Just yesterday, it was reported that a national movie chain 
with theaters in my district has cut some employees' hours as 
they struggle to provide insurance for full-time employees, and 
right now there are fewer Americans working than at any time 
since 1979.
    My constituents are looking for full-time jobs but the ACA 
is making those jobs harder to come by. I have had another 
constituent from Lancaster County who wrote recently saying he 
retired last year after 26 years as a police officer but still 
needs to work, and his hours have been cut. He can only now 
work 3 \1/2\ days a week. Basically he is saying, and this is 
his quote, ``Obamacare limits me to working 29 hours a week.'' 
Tell us what help the President's fiscal year 2014 provides 
this man.
    Secretary Sebelius. Well, Mr. Chairman, I don't have any 
idea why the employers have restricted hours. There is 
absolutely nothing in place in the Affordable Care Act in the 
year 2013 that would impose any burden on an employer or have 
him cut work hours. What we know is in 2014, there will be new 
markets set up and an employer responsibility. Employers who 
have 50 or more full-time workers or the equivalent of 50 or 
more full-time workers will be responsible for offering health 
insurance to those employees, and what we know, Mr. Chairman, 
is that 94 percent of employers in that market right now offer 
health insurance but often pay 18 to 20 percent more than their 
large competitors because they are in a very volatile and very 
expensive market. Creating competitive options and choices for 
those employers is part of what the Affordable Care Act is all 
about.
    Mr. Pitts. Thank you, Madam Secretary. My time is expired. 
The chair recognizes the ranking member, Mr. Pallone, 5 minutes 
for questions.
    Mr. Pallone. Thank you, Mr. Chairman, but with all respect, 
the Republican leadership on the committee as well as in the 
House just rabidly attacks the ACA every day. It has been going 
on for 3 years, actively trying to defund or undermine its 
implementation. The chairman is asking questions about no 
funding for small businesses and the health exchange, but is 
the Republican leadership willing to fund any of these things? 
I mean, I would be glad to provide more funding in the budget 
or through the appropriations process for implementation but I 
don't believe for one minute I would get any support from the 
GOP. So, you know, it is a little crazy to come here and say we 
should repeal the ACA, we should defund the ACA, we should 
defund the ACA, we should get rid of this and get rid of that 
and then at the same time say oh, you know, you are not 
implementing because you are not providing enough funding.
    I mean, the same thing with jobs. The GOP is saying oh, you 
know, there aren't any jobs. Well, the sequester, which the 
President keeps putting out proposals every day to try to 
eliminate and have some sort of sensible budget proposals here 
is furloughing people left and right. I mean, in my district, I 
don't care where it is, it is not just public jobs, it is 
having an impact on the private sector as well. So you can't 
come in here and say oh, you know, people are working part 
time, meanwhile you support a sequester that furloughs people 
all across the country, tens or hundreds of thousands of 
people. Whatever.
    You know, some Republicans, now of course they are talking 
about the marketplaces and the exchanges won't be ready in time 
and so I wanted you to talk, if you could, about the status of 
implementation of the exchanges, which is on everybody's mind 
and, you know, give you a chance to update what progress you 
are making toward setting up the exchanges and implementing 
them. But again, if you would like to comment on the fact that 
Congress is not providing enough funding for outreach, States 
like New Jersey that rely on federal exchanges may get even 
less funding. So please don't hesitate to say that if you are 
going to do outreach and implement these things that you need 
money that we are not giving you because we are not. I mean, 
that is the reality, but whatever. I am obviously very 
frustrated. Go ahead.
    Secretary Sebelius. Well, Congressman, the budget before 
you has a request for an additional $1.5 billion in 
implementation funding to fully set up marketplaces throughout 
the country. We are definitely going to be open for open 
enrollment in every State in the country starting October 1, 
2013, and we will be beginning plan years and benefit years for 
individuals who currently either don't have insurance or have 
expensive insurance or locked out or priced out of the 
marketplace because of preexisting conditions starting in 
January 2014.
    We are very pleased that 31 States and the District of 
Columbia are running all or part of their partnership programs, 
marketplaces either in partnership with HHS or doing it on 
their own. In the other States where the States had opted not 
to be engaged or involved, we will be running the marketplaces. 
We are setting up as we speak the federal hub with the call 
center and outreach. The resources that we had hoped to get in 
the Continuing Resolution deal with outreach and education, a 
huge issue of or people to actually understand what the reality 
is of the law, what benefits are coming their way, what kind of 
choices they will have, but we have reallocated some resources 
within the Department and fully intend to give people the 
information and the facts about the law as we move forward.
    Mr. Pallone. Well, look, I think it is highly unlikely that 
the House Republicans are going to give you this money for 
outreach that you are asking for, but again, they can't come 
back here and criticize if the outreach doesn't occur if they 
are not funding it.
    Let me ask a question about the GME, the Children's 
Hospital Graduate Medical Education program. I see that the 
White House is proposing $88 million, which is one-third of 
current funding. I don't think that is a good idea given the 
struggles these hospitals have in training of pediatricians. 
Wouldn't scaling back that program take us back to the same 
flawed system we had in the past, and why would the 
Administration seek to reverse the success we have had in this 
area? You know, I always ask you about this, and you don't have 
a lot of time here.
    Secretary Sebelius. Congressman, the funding level 
recognizes the direct costs of training pediatricians, an 
incredibly important task that a lot of children's hospitals 
engage in. What we don't have is the overhead and 
administrative costs as part of that proposal, and in a better 
budget time, we would have included both, but all of the direct 
costs of the residency programs are included in that budget 
recommendation.
    Mr. Pallone. I am hoping that we on a bipartisan basis, Mr. 
Chairman, can address that because I do think that is one thing 
where Democrats and Republicans can come together to avoid that 
cut.
    Thank you, Madam Secretary.
    Mr. Pitts. The chair thanks the gentleman and now 
recognizes the chairman emeritus of the committee, Mr. Barton, 
5 minutes for questions.
    Mr. Barton. I thank the chairman. I want to apologize to 
the chairman and the ranking member and our esteemed witness 
for not being here to hear the opening treatment. We are always 
honored to have you, Madam Secretary, and we look forward to 
dialog.
    My staff and the committee staff encouraged me to tweet and 
ask the American people for a question or two to ask you. I 
guess they decided that I wasn't up to it. I am not sure. But 
in any event, we did it and these are two questions from real 
people who I don't know. We had in the neighborhood of 100 
tweet questions come back in. In the interests of transparency, 
we thought we would give the American people an opportunity to 
ask you a direct question or two. The first one is a tweeter 
named @JoshMertz, and his question is--I assume it is a he--
``How is the typical small business going to be able to comply 
with the thousands of pages of new regulations that Obamacare 
requires? Where are these business owners going to find the 
money to pay for the compliance? Many of them expressed how 
they will have to hire new administrative personnel and spend 
countless hours with their attorneys figuring out just what 
they have to do.'' This is from @JoshMertz.
    Secretary Sebelius. Do you want me to take that and then 
ask the second one?
    Mr. Barton. Well, let us give you a chance to answer that 
one and then we will hold the second one in reserve.
    Secretary Sebelius. Well, Congressman, the small business 
owner tweeter, welcome to Twitter land. I am a new tweeter 
myself. Depending on the size of this small business, the law 
may or may not impact the business at all. So if this employer 
has fewer than 50 full-time or the equivalent of 50 full-time 
employees, there is absolutely no impact except for the fact 
that in the SHOP exchange, in the SHOP market, if he wants to 
provide health insurance for his employees, he will have an 
opportunity to have some competitive plans and one-stop shop 
and go forward.
    Mr. Barton. Let us assume they are just over that limit.
    Secretary Sebelius. And if he falls into the over 50 full-
time equivalent, there will be for the first time ever again a 
one-stop shop coming in through a Web site. He will not have to 
hire administrative personnel. He will be able to determine 
from a choice of plans what plan is best suited to his 
employees, offer that to his employees, and if he indeed 
qualifies for a tax credit, depending on the wages of that 
employees, that will automatically be part of the package 
moving forward.
    Mr. Barton. Your basic answer is, he is not going to have 
any compliance costs?
    Secretary Sebelius. Well, depending on--I mean, there are 
no additional forms and things to fill out. The goal is really 
to make this as seamless as possible for small business owners 
and for individuals so that their experience is relatively 
simple as they come into the market.
    Mr. Barton. Well, let me go to the second one, and you will 
know that I don't know this person when I give the name. It is 
EricTheBanker@YankeesFanatic6, and I am a Ranger and Astro fan 
so there is no way I know this guy. ``How does the Obama 
Administration justify the rising cost of health care including 
rising premiums and a reduction in work hours even before 
Obamacare is fully in effect, even though President Obama and 
your Department specifically promised that premiums would not 
rise and health care costs would go down?'' So his basic 
question is, how do you justify, in spite of what was said 
before the fact, that rising costs of health care including 
rising premiums are going up?
    Secretary Sebelius. Well, as I said to the chairman a few 
minutes ago, first of all, the increases in private health 
insurance are at a slower pace than we have seen in well over a 
decade over the last 3 years, and that has been documented. The 
other kind of good news is that there finally is some stability 
in the small employer marketplace who were shedding policies 
prior to the passage of the ACA for well over a decade, so that 
has stabilized, and there is nothing in place right now in the 
legislation that would require any employer to change work 
hours, and we don't think there is going to be--so whatever is 
happening to work hours, I think, is impossible to tie to the 
Affordable Care Act because there is no connection here in 
2013.
    Mr. Barton. Well, Mr. Chairman, my time is expired. I hope 
the two tweeters that we use will tweet some more questions. I 
think it is good to give the public a chance. And I do want to 
compliment you, Madam Secretary, for coming before the 
committee. I know it is difficult, and your time is limited, 
but we do appreciate you coming.
    With that, Mr. Chairman, I yield back.
    Mr. Barton. The chair thanks the gentleman and now 
recognizes the ranking member of the full committee, Mr. 
Waxman, for 5 minutes.
    Mr. Waxman. Well, thank you, Mr. Chairman, and Madam 
Secretary, it is a tweet to have you here.
    Secretary Sebelius. That is so bad.
    Mr. Waxman. That is terrible. Wait until you hear my 
question. That was the high point of my 5 minutes.
    The Republicans fought against the Affordable Care Act. In 
fact, Republicans fought against Medicare, but they certainly 
hated the Affordable Care Act. I never could understand that 
because it is based on a lot of Republican principles, 
proposals that Senator Dole and others had put forward, and 
they would love to repeal it. They would have liked the Supreme 
Court to throw it out. They would have liked for the election 
to go otherwise. And so they are making life as difficult as 
possible for you moving forward to implement the law.
    But I would just like to ask you, what would the world be 
like for health insurance if we let the insurance companies be 
in charge? Because that is what the Republicans would have if 
they repealed the Affordable Care Act. Insurance companies are 
businesses, and for them, it is better to get healthier insured 
patients than the sickest. So they try to exclude people who 
are sick. If you have got a preexisting condition, they don't 
want you. They can discriminate against you. They can charge 
you a lot more. In fact, if you a woman, they think just being 
a woman is a preexisting condition.
    Secretary Sebelius. And I am.
    Mr. Waxman. That is almost as bad as my comment. So they 
would allow insurance companies to discriminate against people 
they look at as maybe costing them money, and then not only 
that, they could raise the rates if you got sick, they could 
drop you, they have these rescissions they were doing. They 
have all sorts of way of making it difficult for people who are 
not just healthier enough to cover. So tell us, what would 
happen to American families, consumers, seniors, particularly 
those with preexisting conditions, if Republicans repeal health 
reform and put the insurance companies back in charge?
    Secretary Sebelius. Well, Congressman, as you know, I 
served for 8 years as the elected insurance commissioner in 
Kansas and have worked on the insurance side of this puzzle for 
a long time, and what I saw and what we continued to see, 
frankly, until 2010 was from the industry point of view, a 
death spiral. That is terminology used by insurers, which means 
they had fewer and fewer customers and the prices continued to 
rise because the people who stayed in the marketplace were 
older and sicker and needed the coverage. The people who 
dropped out were younger and healthier.
    Mr. Waxman. Well, you really can't blame the insurance 
companies. They are in business to make a profit.
    Secretary Sebelius. Well, and they were experiencing, or 
consumers were experiencing double-digit rate increases year in 
and year out in that market, and being locked out and priced 
out if you had a preexisting condition----
    Mr. Waxman. I want to move forward because there are some 
other questions and I am looking at the clock tick by. There is 
a Prevention and Public Health Fund that we set up in the 
Affordable Care Act. This fund is there to help fund a lot of 
important efforts to keep people well and yet there has been an 
ongoing attack on its since its creation. The Republicans have 
sought to repeal, rob and otherwise destroy this fund. Just 
yesterday in this committee, Republicans argued that the fund 
is merely a slush fund, its resources are being used 
inappropriately to pay for public lobbying efforts, for 
example, that the Obama Administration itself is guilty of 
stealing from the fund to support activities related to the 
implementation of the Affordable Care Act, and in brief, they 
contend that the fund is not being used as intended and 
therefore should be available to support other worthy health-
related initiatives such as an extension of the PCIP program. I 
would like you to take this opportunity to set the record 
straight on exactly how the Prevention Fund is and isn't being 
used and why we need it even though you had to borrow money 
from it because the Republicans wouldn't give the 
Administration the funds to go forward and fully implement the 
Affordable Care Act.
    Secretary Sebelius. Well, Congressman, I think there is a 
great track record so far with the Prevention Fund, the first 
time ever in the United States that we have focused serious 
dollars on preventing people from getting sick in the first 
place, a great track record on our anti-tobacco efforts, quit 
lines around the country, smoking-cessation efforts and those 
are beginning to show up in the drop in smokers. Work on 
chronic disease in communities continues, and you are right, we 
did this year appropriate about $340 million from the 
Prevention Fund for 2013 to outreach and education around the 
Affordable Care Act. In the long run, that will ensure that 
lots of Americans who currently have no primary health home, 
who have no insurance coverage, who have no ability to get 
preventive care will indeed be connected with the benefits of 
the Affordable Care Act.
    Mr. Waxman. Well, nothing is more important than preventing 
disease and promoting good public health, and I hope this fund 
can be used for the purpose for which it was intended.
    Mr. Pitts. The gentleman's time is expired. The chair 
thanks the gentleman and now recognizes the vice chairman of 
subcommittee, Dr. Burgess, 5 minutes for questions.
    Mr. Burgess. I thank the chairman for the recognition. Let 
me just start off, it has been a tough morning. We all 
acknowledge that our friends and neighbors down in the town of 
West, Texas, just 100 miles north of Waco are suffering this 
morning as they dig out from under that rather horrific 
explosion that occurred last night, so we continue to pray for 
the people in Boston. We also need to pray for the citizens of 
West.
    Now, Madam Secretary, I also appreciate you being here 
because it has been almost a year since we have had an 
opportunity to talk. It has been too long. Please come back to 
our committee frequently. In fact, I would recommend to the 
chairman that we do have frequent visits because, as you know, 
October 1st becomes a very important day in the history of our 
country where your exchanges are going to go live online by 
statute. They are to go live online on October 1st. And I guess 
the question on everyone's mind this morning is, will you be 
ready?
    Secretary Sebelius. Yes, sir, and the exchanges----
    Mr. Burgess. I will take that as a yes.
    Secretary Sebelius [continuing]. Won't be October 1st. Open 
enrollment will start October 1st. The exchanges will be up and 
running on January 1st.
    Mr. Burgess. Open enrollment?
    Secretary Sebelius. Yes.
    Mr. Burgess. Now, I do have to ask you a question about the 
Prevention Fund. I had difficulty finding that in your budget 
in the expected outlays for the Prevention Fund, but it is 
written in statute. It is in the so-called Affordable Care Act, 
section 4002, and it lays out the monies that will be available 
for successive fiscal years up to fiscal year 2014 where it is 
$1.5 billion and then for 2015 and every year thereafter it is 
$2 billion, so it is a significant amount of money even in 
Washington, D.C. Is that not correct?
    Secretary Sebelius. Yes, sir.
    Mr. Burgess. And you have pretty broad transfer authority 
within that fund. Is that not correct?
    Secretary Sebelius. Transfer authority within the fund?
    Mr. Burgess. That is what it says, subsection D, transfer 
authority, that the transfer of funds in the fund to be for 
eligible activities under this section subject to subsection C, 
which delineated the activities you could fund and one of those 
activities----
    Secretary Sebelius. You can expend funds within the fund, 
if that is what you are asking, yes, sir.
    Mr. Burgess. Yes, you can transfer funds to spend for 
education and outreach, for example. Education and outreach is 
going to be a big part of what happens with the Affordable Care 
Act this summer, is it not?
    Secretary Sebelius. Yes.
    Mr. Burgess. So in other words, to implement the Affordable 
Care Act, you are going to take funds from the Prevention Fund 
for advertising for the benefits of the elysian fields of 
Obamacare that start this fall. Is that not correct?
    Secretary Sebelius. We are going to reach out to people who 
currently have no health insurance and who are underinsured or 
uninsured and inform them about the benefits of the Act and 
connect them with the Act.
    Mr. Burgess. And how much money are you going to spend on 
that informing activity?
    Secretary Sebelius. Sir, we transferred about $332 million 
from the Prevention Fund to be used for outreach activities.
    Mr. Burgess. This is an important point, and I want people 
who are watching to understand this. The Prevention Fund 
actually is like a bankbook that you can use and make a 
withdrawal to pay for advertising to advertise about the 
Affordable Care Act, correct?
    Secretary Sebelius. Sir, we are not talking about 
advertising. We have recently put out, for instance, a grant 
that will be available to community organizations, faith-based 
groups, provider groups in States around the country so that 
they will actually work--I don't know if you are familiar with 
the Senior Health Insurance Patrol program. Individuals work 
with----
    Mr. Burgess. Reclaiming my time because our time is 
limited. We do need to talk about these people who are----
    Secretary Sebelius. I am trying to.
    Mr. Burgess [continuing]. In the preexisting-condition 
program, which unfortunately ended. Chairman Pitts had a 
hearing----
    Secretary Sebelius. It hasn't ended, sir.
    Mr. Burgess. Well, enrollment has been suspended.
    Secretary Sebelius. That is correct. We are----
    Mr. Burgess. So Chairman Pitts has a hearing and we hear 
from a young woman who is a lawyer in private practice, 
unfortunately contracted lymphoma. She has been paying her 
claims as best she can, waiting to fulfill the 6-month 
uninsured requirement to get into the preexisting-condition 
program, and the day before she is to enroll, she is told 
sorry, sister, we are now closed. So is it Obamacare or Obama 
don't care? Tell me which it is.
    Secretary Sebelius. Well, for the individual you are 
talking about, the good news for her and millions of Americans 
is that beginning January 1, 2014, no American ever again will 
be locked out of an insurance pool because of a preexisting 
health condition, and that will benefit millions of people 
including the woman that you have discussed.
    Mr. Burgess. Here is the question: rather than spend the 
money on advertising for a program that may not even work come 
October 1st or January 1st, why should we not transfer money 
from that fund to actually help the people that you promised to 
help, the people with preexisting conditions?
    Secretary Sebelius. Well, sir, the preexisting-condition 
pool, as you know, was always designed to be a temporary bridge 
to full insurance coverage. What I hear from people all over 
this country is they are eager for the day when the rules will 
change once and for all for insurance companies. They will 
never again be able to lock anyone out because a preexisting 
health condition, and that is very different from segregating 
them into a high-risk pool, which most people cannot afford.
    Mr. Burgess. But the important thing is that this 
individual and many individuals like her are essentially lost 
at sea until January 1st at the very least, and we have----
    Secretary Sebelius. The good news is----
    Mr. Burgess. And we have the ability to prevent that from 
happening, which would be the Prevention Fund.
    Thank you, Mr. Chairman. I will yield back.
    Mr. Pitts. The chair thanks the gentleman and now 
recognizes the ranking member emeritus, Mr. Dingell, 5 minutes 
for questions.
    Mr. Dingell. Mr. Chairman, thank you for your courtesy.
    Madam Secretary, thank you for being here today to talk to 
the committee about the Administration's 2014 budget. I want to 
take a moment to thank you for the fine work you have been 
doing to implement the Affordable Care Act in the face of some 
rather nasty opposition by all kinds of folks including some 
members of this committee. You and your staff have worked 
tirelessly to implement health reform, a historic undertaking, 
and I look forward to continuing to work with you as this 
process continues.
    I would also like to note that you are the daughter of a 
former member of this committee, and you are always welcome. I 
am sure you view this as something of a home too, so welcome.
    Secretary Sebelius. Thank you.
    Mr. Dingell. In any event, Madam Secretary, yes or no 
questions. You are working now on the FDA Food Safety 
Modernization Act. The legislation made historic improvements 
in our food safety system and provided new authorities to help 
FDA to prevent food safety problems before they occur 
throughout the food supply. This legislation, which I authored, 
included a dedicated source of funding for the implementation 
of food safety through a facility fee, a reinspection and 
recall fee and a fee for importers and exporters. 
Unfortunately, some of our friends on the other side of the 
Capitol did not see the wisdom of the fees that they passed 
overwhelmingly here in the House. The President's fiscal 2014 
budget requests $225 million in resources through fees to help 
fund the implementation of the food safety law. Is that 
correct?
    Secretary Sebelius. Yes, sir.
    Mr. Dingell. Now, these proposed fees include a food 
facility registration and inspection fee and a food importer 
fee. Is that correct?
    Secretary Sebelius. Yes, sir.
    Mr. Dingell. Madam Secretary, can you explain briefly what 
these activities and these fees will be used for?
    Secretary Sebelius. Well, there is no question that in the 
70 years between the time that Congress passed the new food 
safety measure a few years ago and the last time food safety 
measures were updated that the market has changed dramatically. 
We have a global market. About half of our fruits and 
vegetables and two-thirds of our seafood come in from overseas. 
We have a different kind of----
    Mr. Dingell. Huge imports occupy a very high proportion of 
American consumption.
    Secretary Sebelius. Yes, sir.
    Mr. Dingell. And we are finding that that seems to be about 
the only way we can get the FDA properly funded to carry out 
its mission. Is that right?
    Secretary Sebelius. They definitely need new resources to 
build a new food safety system.
    Mr. Dingell. Particularly in the area of new drug 
approvals. Is that right?
    Secretary Sebelius. That is correct.
    Mr. Dingell. Now, Madam Secretary, do you believe these 
fees help FDA to implement the food safety law effectively and 
in a timely manner? Yes or no.
    Secretary Sebelius. I do.
    Mr. Dingell. Another area of interest to me is cosmetics. 
FDA's authorities over this industry are woefully outdated. The 
industry itself has requested improved authority for the FDA in 
this area to better ensure the safety of cosmetics, and I know 
the industry has requested this to their great and lasting 
credit. The Administration has proposed a cosmetic user fee of 
$19 million. Is this correct?
    Secretary Sebelius. Yes, sir.
    Mr. Dingell. Madam Secretary, can you explain the fees' 
purposes and the activities that this user fee will be used to 
support?
    Secretary Sebelius. Again, it will be used to really update 
the regulatory capacity and add new technical expertise. As you 
say, it is requested by the cosmetics industry so we are very 
hopeful to work with Congress on implementing this update to 
the reinventing cosmetic fee initiative.
    Mr. Dingell. Now, Madam Secretary, this business of fees 
for FDA began when this committee worked out a deal with the 
pharmaceutical industry to enable the pharmaceutical industry 
to get better service from FDA on new drug applications. Is 
that right?
    Secretary Sebelius. New drug applications and new device 
applications, yes, sir.
    Mr. Dingell. Well, actually it has moved through new drug, 
new devices, over-the-counter and all kinds of things, and that 
has worked out very, very well from the standpoint of industry 
and the standpoint of government and consumers. Is that right?
    Secretary Sebelius. It has definitely expedited the ability 
to put things on the market more quickly.
    Mr. Dingell. And it is actively supported by the industry?
    Secretary Sebelius. Yes, sir.
    Mr. Dingell. And prior to the time of that legislation, it 
is interesting to note that Food and Drug would take as much as 
10 years of the 17-year period on the patent, the end result of 
which was that the industry lost hundreds of millions or even 
billions of dollars. People were denied the availability of 
useful new pharmaceuticals, which could help deal with some of 
the serious medical and health problems in the country. Is that 
right?
    Secretary Sebelius. That is correct. We were losing to 
global competitors because of the pace of approvals.
    Mr. Dingell. Madam Secretary, thank you for being here, and 
good luck in implementing the legislation that is so important, 
the Affordable Care Act. Thank you.
    Thank you, Mr. Chairman.
    Mr. Pitts. The chair thanks the gentleman and now 
recognizes the gentleman from Pennsylvania, Dr. Murphy, 5 
minutes for questions.
    Mr. Murphy. Thank you.
    Madam Secretary, I appreciate you being here today. I have, 
first of all, a question, and I recognize in your position you 
may not get the letters that we send over, but there was a 
bipartisan letter sent to your office signed by myself, 
Chairman Upton, Ranking Member Waxman, Diana DeGette and others 
regarding a follow-up on number of mental health issues. I am 
not sure if you saw that, but we had asked for a response in 
February. We have not received a response yet. I brought 
another copy here. Can I get that to you and get it right to 
your desk?
    Secretary Sebelius. Yes, sir.
    Mr. Murphy. I appreciate that. It is important as we make 
sure. And I appreciate your focus on mental health. I am a 
psychologist myself. I also know in your statements you had 
requested some funding increases in a number of areas.
    Another thing, and I hope you can take this message to the 
President as well is, I have reviewed or tried to review what 
the federal government spends on mental health in a wide range 
of areas: in HHS, Judiciary, Education, Department of Defense, 
Veterans Administration. It appears that no one has a handle on 
how much money we spend in mental health in a broad 
perspective. No one has ever done an inventory on that. So 
Representative DeGette and I sent a letter over to the Office 
of Management and Budget with a copy to the President asking 
for an inventory of all that we do, and I think that would be 
important because we need to know how much we spend, where we 
spend it, and following that, is it even effective such as does 
it get to the level of the patient. When you are talking about 
one in five people at any given time have a mental health 
disorder and that perhaps only 40 percent of those with mental 
illness get treatment, that we heard before during a hearing we 
did post Newtown from the head of NIMH that it is about 112 
weeks before someone even gets treatment for a psychotic 
disorder, and you also pointed out in your testimony that it is 
about ages 14 to 25 when some of these disorders appear and 
that every one of these mass murderers was generally in that 
age range, I think all but one was male, psychotic symptoms and 
other things. We recognize severe mental illness are not all 
violent. A vast majority are not. But it is an area that we are 
all deeply concerned. We need to know what we are doing and are 
we doing the right thing. And so will you be able to get us a 
response to that letter?
    Secretary Sebelius. Yes, sir, we will definitely.
    Mr. Murphy. Thank you. Another issue has to do with mental 
health parity. That bill was passed over 4 years ago, and we 
still have not seen regulations. Do we have a date yet by which 
we might see something?
    Secretary Sebelius. We are committed to finalizing the rule 
this year and are in the process of doing just that. We do have 
interim final rules that have been promulgated 2 years ago and 
so those are in place right now.
    Mr. Murphy. Thank you. And another area, we were talking a 
little bit about the FDA here. I noticed recently a substance 
by the name of Jacked with a backwards 3 and therefore the 
letter E was recently put out as a ban because some substance 
within it was perhaps associated with--we don't have a direct 
link--but perhaps correlated with a couple deaths. I know the 
military has asked that all these products be removed from 
commissaries and exchanges on military bases. I don't know if 
you have had a chance to look at this but my question is, are 
these products still being sold online or in stores, and if you 
could get back to me with information on that, because I 
recognize we don't want a dangerous or potentially dangerous 
substance out there for people to take.
    Another area I wanted to bring to your attention to in 
terms of supplements, the December issue, I think it was 
Military Medicine, said that with regard to supplements, they 
did a survey of supplements sold on military bases. They found 
that only 12 percent of manufactured supplements actually had 
an independent body verify what is in it. We have seen studies 
that said even vitamin D content in vitamin pills may range 
from less than 10 percent of what it is supposed to have 140 
percent of what it is supposed to have. So 12 percent have an 
independent verifier. About 28 percent verify themselves the 
content whatever that is, a mineral, a supplement, a vitamin, 
and the rest, 60 percent, have nobody verifying at all what is 
in them. Somewhere within your agency I am sure someone is 
taking a look at that, and I would appreciate information back 
on that. It is a massive industry in America geared to help 
people stay healthy. We want people to stay healthy. But I sure 
would like to know what is in that.
    Secretary Sebelius. Well, Congressman, I can tell you, we 
would love to work with you around that issue. A lot of these 
supplements and additives fall into a very gray area where they 
are not sold as medical products, they are not sold as 
pharmaceuticals, they are sort of food additives and that often 
is kind of outside the FDA jurisdiction, but we would love to 
pursue that issue with you.
    Mr. Murphy. Thank you. I look forward to meeting with you. 
Thank you very much, Mr. Chairman.
    Mr. Pitts. The chair thanks the gentleman and now 
recognizes the gentlelady from California, Ms. Capps, 5 minutes 
for questions.
    Mrs. Capps. Thank you, Mr. Chairman, and welcome, Madam 
Secretary.
    As you know, my State of California has consistently taken 
a leadership role in health reform implementation, and now I 
have heard concern from hospitals in my district about the 
financial impact of the disproportionate-share hospital, the 
DSH program cuts, and reductions on the providers who are in 
States like California making a good-faith effort to implement 
the Affordable Care Act. Could you speak to the proposed DSH 
reduction schedule and how this proposal will help facilitate a 
smooth transition of full ACA implementation?
    Secretary Sebelius. Congressman, we were hearing similar 
reports from hospital executives around the country, and in the 
midst of an attempt to really fully engage in the health market 
so the determination that we have made recently is that the 
Medicare cuts, which have a specific timeline around DSH, will 
proceed with implementation in 2014. We are committed to fully 
reducing DSH payments by the amount suggested in the ACA 
schedule but not beginning the Medicaid DSH reductions until 
2015.
    Mrs. Capps. When DSH cuts are set to take effect, how is 
CMS going to recalculate the hospital's needs for the funds? 
Will hospitals in States like California where we are embracing 
a Medicaid expansion have a fair shot at the funds when up 
against the--in other words, do we get our fair share? Thank 
you.
    Secretary Sebelius. Well, and the goal, as you know, when 
you authored or helped to author the Affordable Care Act is 
that as additional Americans were able to be covered by health 
insurance or by Medicaid expansion, that would reduce the level 
of uncompensated care that hospitals currently experience. So 
it is designed to be a complement but we are conscious of the 
notion that that won't be a direct match and we are looking 
very carefully and doing a lot of outreach about what is the 
most effective way to implement the cuts that are proposed in 
the law.
    Mrs. Capps. Well, I appreciate that and your willingness to 
do all you can to ensure a smooth transition as the ACA goes 
into full effect. We want to be partners with you, and I want 
to highlight, however, that we are watching carefully. It would 
be unfair if States that are acting in good faith like 
California are harmed because of other States' policies, and I 
am sure you are aware of that and I know you are going to keep 
that in mind.
    One last question. This delay in DSH reductions is just a 
proposal, right?
    Secretary Sebelius. It is proposed in the budget this year.
    Mrs. Capps. Right, a proposal.
    Secretary Sebelius. I know it was proposed. I just wanted 
to make sure.
    Mrs. Capps. Exactly. This is an important distinction. I 
believe as implementation continues to be hampered by politics, 
some governors are using the proposed delay in DSH cuts as an 
excuse to delay in making a decision on Medicaid expansion. I 
think this is irresponsible and pretty cruel to constituents. 
Anyway, while cut delays are just a proposal, the impact of 
delaying the decisions is not.
    There is a little over a minute left. As someone who was 
formerly a visiting nurse myself, I believe the renewed 
commitment to maternal, infant and early childhood home 
visiting programs is just excellent and a good preventive and 
cost-saving way to deliver health services. Their support is 
bipartisan, and they are evidence based. These programs work 
and they are critical to improving health outcomes for women 
and children and really for families. Could you detail the 
proposed investment in these programs over the next 10 years? 
There is not much time to do it but highlight it so we can 
follow up.
    Secretary Sebelius. Well, I think one of the very exciting 
second-term initiatives that the President believes in very 
strongly is an infrastructure around early childhood starts. So 
it includes Health and Human Services, increases in investments 
in home visiting programs which, as you say, are evidence based 
and not only are wonderful for health but also very proven to 
reduce violence and is a great strategy for resilience in 
children, increases in our early Head Start childcare 
partnership effort, and then in the Department of Education 
budget is a significant increase in pre-K programs in 
partnership with States around the country and that 
infrastructure, to make sure that by the time children are 5 
and hit school, they are not only ready to learn but they are 
socially and emotionally ready to be in a classroom we see as a 
critically important investment to make in the future.
    Mrs. Capps. Thank you, and this really gets at our 
disparities in health care as well in a very clear way.
    Thank you, Mr. Chairman.
    Mr. Pitts. The chair thanks the gentlelady and now 
recognizes the gentleman from Dr. Gingrey, for 5 minutes for 
questions.
    Mr. Gingrey. Thank you, Mr. Chairman.
    Madam Secretary, as one of the physician members of the 
committee, you know I have always been unwavering in my 
commitment to the full repeal of Obamacare, but now as we 
approach full implementation, however, I believe that we must 
chip away at the most egregious parts of the law, and to that 
point, Secretary Sebelius, you stated in a speech in 
Philadelphia in late March of this year that some men and 
younger customers could see their insurance rates increase 
because of the Patient Protection and Affordable Care Act. Do 
you think that it is fair that young people will pay higher 
insurance rates because of this law?
    Secretary Sebelius. Sir, I think we don't know what the 
rates will look like until the insurers file their plans, and 
the very good news is that State insurance departments around 
the country have additional resources to review those----
    Mr. Gingrey. In the interest of time, I am asking you a 
simple question. Do you think that it is fair that Obamacare 
asks young people to pay higher insurance rates? I know you 
don't know what they will be but is it fair? Do you think it is 
fair?
    Secretary Sebelius. Well, there is nothing in the law that 
asks young people to pay higher rates.
    Mr. Gingrey. Well, Secretary Sebelius, actuarian Oliver 
Wyman's firm produced a study that identified how wealthy a 
young person had to be before their health costs went up 
because of Obamacare. I ask you this: Do you happen to know how 
wealthy a young person in 2014 when you have fully implemented 
these exchanges will have to be, how wealthy that person would 
have to be to not pay higher out-of-pocket insurance premiums?
    Secretary Sebelius. It is an impossible question, but what 
we know about young people right now who are not insured, a 
number of them are on their parents' plans until age 26.
    Mr. Gingrey. Well, we are talking about, assume that this 
person is 27 years old.
    Secretary Sebelius. Then anyone under 400 percent of 
poverty will quality for a tax subsidy, an upfront tax subsidy, 
and will have insurance policies with far lower copays and 
coinsurance and out-of-pocket----
    Mr. Gingrey. Well, Madam Secretary, the answer, according 
to this actuarial study, is $25,000. Secretary Sebelius, do you 
think that asking a young person who makes $25,500 to pay more 
for their insurance under Obamacare, is that fair?
    Secretary Sebelius. Well, that isn't accurate, 
unfortunately. Somebody who is making $25,500 would definitely 
qualify for a subsidy if he or she is purchasing coverage in 
the individual market so they will not pay more out of pocket 
than----
    Mr. Gingrey. I don't know how much that subsidy might be, 
Madam Secretary, but even with the subsidy, they will be paying 
more under Obamacare than they would be paying 4 years ago for 
the same insurance coverage.
    Secretary Sebelius. That is absolutely not true.
    Mr. Gingrey. That is absolutely true, and let me ask you 
this next question. Has your Department created contingency 
plans in the event that young people like I just described 
choose to pay the penalty instead of purchasing the insurance 
that they can't afford? Have you developed a contingency plan 
in the event that that occurs?
    Secretary Sebelius. No, sir. We intend to implement the 
law, but I think educating young people about what options they 
will have that they do not have now, that they will be in a 
larger pool, that there are subsidies available to them which 
they absolutely do not know and that they will have full 
insurance coverage. Young women know that no longer will it be 
legal for an insurance company to charge 50 or 75 percent more 
for exactly the same coverage.
    Mr. Gingrey. Well, I only mentioned young men because that 
was who you addressed in that speech in Philadelphia. And look, 
you are lot more optimistic obviously about how this is going 
to work in these exchanges on January 1, 2014, than I am, but I 
would highly recommend to you, Madam Secretary, that you do 
develop a contingency plan in the event that so many of these 
young people look at that and say hey, look, here I am straight 
out of college, I am now 27 so I am not on my parents' policy, 
and furthermore, they kicked me out of the basement, I have got 
$250,000 worth of higher education debt, I am engaged, I am 
trying to build a life, I have got a job. I strongly suggest 
that your Department create this contingency plan, and I would 
suggest that you submit that to me and this committee and 
furthermore not let a train wreck or any other excuse slow it 
down, and I yield back the balance of my time.
    Secretary Sebelius. Well, Congressman, the other thing that 
is available to your young person who is engaged is a choice of 
a fully insured plan or a catastrophic plan. What we know is 
putting that young person in a large pool automatically by 
entering the marketplace will be significantly more beneficial 
than he or she shopping in the individual market where they 
have no rules and no protection, and if indeed they get any 
kind of preexisting condition, they could be booted out in a 
heartbeat.
    Mr. Gingrey. Mr. Chairman, since you let her go a little 
bit over, just let me address the issue of age banding because 
of your rules, you are going to force these young people to pay 
higher rates than somebody 58 years old who can well afford to 
pay better than they can, and you ought to let the States 
decide that.
    Mr. Pitts. The gentleman's time is expired. The chair 
recognizes the gentleman from Utah, Mr. Matheson, 5 minutes for 
questions.
    Mr. Matheson. Thank you, Mr. Chairman, and Madam Secretary, 
thanks for coming before the committee today.
    In the Department's fiscal year 2014 budget is included the 
implementation of copayments for Medicare home health 
beneficiaries per MedPAC's recommendations. The new copays on 
home health would be a tool to reduce overutilization and 
create savings for the program. Now, looking at ways to reduce 
the overutilization and create savings is something we all want 
to do. I do have some concerns, though that with the proposals 
that ask beneficiaries to pay more out of pocket, particularly 
those who would be paying are probably a little more sick, less 
financially secure. And allied to that, I have concerns with 
asking seniors to pay more when there are strong indications of 
fraud and abuse in certain geographic areas of our country in 
the home health care industry because MedPAC's March report 
identified--there are basically five big ones, five specific 
geographic areas where there is strong reason to believe that 
fraudulent billing practices are in play in the home health 
care industry. For example, it is a nice comparison, there are 
about 190,000 Medicare beneficiaries in my State and there are 
about that many in Miami-Dade County. In Utah with the same 
number of beneficiaries, we have about 100 home health care 
providers. In Miami-Dade County, it is nearly 700. The average 
benefit per beneficiary in Miami-Dade County is five or six 
times what it is in Utah.
    So we have a situation where in a few geographic areas, 
there seems to be some bad actors, if you will, and it strikes 
me that there is something wrong in places like Miami-Dade 
County. So I guess my point, which I am sure you understand, 
is, in terms of looking for savings and efficiency, it seems to 
me we might be looking at situations where those geographic 
disparities reflect that there may be some activities going on 
that are not right. And I was wondering if you looked at what 
your authority might be or using your authority to limit 
issuance of new provider numbers in these geographic regions 
which have strong indications of this type of overutilization.
    Secretary Sebelius. Well, Congressman, we are doing more 
than looking at re-credentialing providers. We actually have at 
the President's direction really ramped up our antifraud 
efforts around particular durable medical equipment where there 
are very erratic billing patterns. Home health is another high 
target. We recently have seen some mental health services and 
some pharmaceutical services. We have a very active strike task 
force, a HEAT task force including U.S. attorneys and on-the-
ground folks from our Inspector General's office working 
together in Miami-Dade County and a number of other areas. They 
are not in Utah right now because we are not seeing that kind 
of billing practice but fraud and abuse we are taking very 
seriously. We have returned historic returns to the Medicare 
trust fund and in fact to Medicaid programs around our strike 
efforts, which is why we are asking for new mandatory funding, 
frankly, because we are returning about $8 for every dollar 
that we are appropriated, and I think that is an incredibly 
important investment to make sure that people don't steal from 
these programs and that the services are delivered to people 
who want them and need them.
    Mr. Matheson. Do you feel like you have the appropriate 
authority based on legislation to use data analysis and 
analytics to really target these areas that have these 
problems?
    Secretary Sebelius. Actually, we have finally for the first 
time built over the last couple of years predictive modeling, 
the same kind of computer analysis that credit card companies 
and other banks have used for years. Medicare has never done 
that. So we are actually able not only to target areas where 
they are great billing irregularities but actually target the 
types of services and focus a lot of time and attention with 
our prosecutors, with our investigators, and our goal is to 
shut it down before it happens, not to continue to do the pay 
and chase but actually to move in and shut down these 
operations.
    Mr. Matheson. Are there any particular impediments you see 
in front of you that are limiting your ability to do this?
    Secretary Sebelius. Well, the biggest impediment is 
resources. Ironically, the return is so great and yet for the 
last number of years we have not gotten the appropriation even 
up to our budget limit. So I would just urge the committee, I 
think fraud and abuse is something that people agree on. We 
have a great track record. We can show you dollar for dollar 
what is going on but our restrictions are really on resources.
    Mr. Matheson. Thank you, Madam Secretary. I yield back, Mr. 
Chairman.
    Mr. Pitts. The chair thanks the gentleman and now 
recognizes the gentleman from Louisiana, Dr. Cassidy, for 5 
minute for questions.
    Mr. Cassidy. Thank you, Madam Secretary. As you know, we 
have got 5 minutes, so if I seem like I am speaking like an 
auctioneer, I am, and if I occasionally interrupt, it is not to 
be rude; it is to maximize our time.
    I will start off with a couple yes or no questions. In 
January 2012, the President announced plans to streamline 
government agencies like the Department of Commerce with this 
statement: ``Our economy has fundamentally changed as has the 
world but our government has not. Often it has grown more 
complex.'' He has also stated that he supports reforms to 
federal agencies that result in more efficiency, better service 
and leaner government. Yes or no, do you believe that federal 
agencies should be mindful of our current economy and operate 
in ways that result in more efficiencies?
    Secretary Sebelius. Yes.
    Mr. Cassidy. Second yes or no. The President's fiscal year 
2014 budget proposal for HHS is $967 billion and seeks $80 
billion in discretionary spending, roughly $60 billion more 
than last request. Yes or no, understanding the President's 
commitment to efficient government agencies and knowing the 
difficult budget situation our Nation faces, could you accept a 
2 percent reduction in your agency's total HHS request?
    Secretary Sebelius. No, sir.
    Mr. Cassidy. And if you can't, can you defend all the 
expenditures in the agency as outlined in the President's 
budget, not even a 2 percent cut anyplace?
    Secretary Sebelius. I am happy to do that in a more robust 
conversation but I think the 5 minutes probably won't allow 
that to happen.
    Mr. Cassidy. Well, thank you, and I understand that, and I 
appreciate your sensitivity to the time.
    Next, following up on what Ms. Capps said, my State also 
has a lot of uninsured. Our governor has not yet indicated that 
he is going to accept the Medicaid expansion. It is going to 
cost our taxpayers $1.2 to $1.8 billion in State tax money to 
implement. But I am a doc that takes care of the uninsured. The 
DSH program, as we know, has helped support care for those 
folks. If a State does not accept the Medicaid expansion, 
obviously there is concern that they would lose the DSH based 
upon a decrease in the national uninsured rate, although the 
uninsured rate within the State may still stay higher.
    We sent a letter to your office dated February 11th asking 
for a reply by March 1st. It may have been a tight timeline. I 
apologize. But have really not received a reply since. Can I 
give you a clean copy of this letter and ask if you guys can 
respond to it? I don't mean this as a gotcha. I mean it totally 
as a fellow who is advocating for his uninsured.
    Secretary Sebelius. Certainly.
    Mr. Cassidy. Thank you. Next, my gosh, don't we all still 
have a heartbreak for the issue of mental illness in our 
Nation? There was an article in the Wall Street Journal from 
2006 but apparently still apropos, ``A Death in the Family'' 
regarding William Bruce. Mr. Bruce was hospitalized with severe 
schizoaffective disorder, I believe, and there is an agency 
that got federal dollars, Protection and Advocacy for 
Individuals with Mental Illness who, according to the article, 
and I have been in communication with the father, they actually 
coached the young William as to how to give his answers to 
providers that he could get released. He did. The providers did 
not inform the family that he was still psychotic, and he went 
out and he murdered his mother. Incredible. Now, this agency, 
we have looked to see if they put in reforms to ensure that 
they are no longer doing this, have been unable to. I do see 
that they continue to receive $36 million a year. Can you 
provide us follow-up or some guarantee that the Protection and 
Advocacy for Individuals with Mental Illness receiving $36 
million a year in some way is no longer doing this?
    Secretary Sebelius. Well, Congressman, I have no idea what 
the agency is or does or what they advocate.
    Mr. Cassidy. I accept that.
    Secretary Sebelius. I can tell you, though, that about 65 
million Americans who currently have no mental health or 
substance abuse benefits either through access to new 
marketplaces and new affordable health insurance or Medicaid 
expansion will finally have----
    Mr. Cassidy. I don't mean to interrupt. And that again was 
not a gotcha question and I didn't expect you to know that kind 
of micro level, but I think we all are concerned that this is 
not being funded by our federal government, or if it is, that 
there is some reform. So we will give you some information on 
that if you could reply please.
    Next, in his Now is the Time plan to address gun violence, 
the President promised to do the following: address unnecessary 
legal barriers, particularly related to HIPAA, which may 
prevent States from making information available to background 
check systems; two, releasing a letter to health care providers 
clarifying no federal law prohibits them from reporting threats 
of violence to law enforcement authorities; and three, starting 
a national dialog on mental illness. Can you just give us an 
update of progress as regards these three things?
    Secretary Sebelius. Sure. The letter to providers went out 
fairly immediately after the President's announcement of the 
package of administrative initiatives that we were going to put 
in place, and I would be happy to provide this committee with a 
copy of that letter, reminders providers that there actually is 
a duty to warn and there are no HIPAA barriers against coming 
forward when somebody is likely to be dangerous to themselves 
or others. Secondly, we have just put an ANPRM, an Advanced 
Notice of Proposed Rulemaking, that would ask the States to 
identify what they see as the barriers. Our frustration is, we 
don't think there are barriers to collecting the information 
that is requested. States have said that they see those 
barriers, so we want to know what they are so we can directly 
address them, and that has gone out this week, and we are in 
that dialog, and within the next month or so, we intend to 
launch the national dialog. We already are working with mayors 
and community groups in communities across this country. It 
will be a public-private partnership, privately funded, 
community dialogs, toolkits by our office, meetings in 
communities, but the dialog will be a yearlong effort to really 
bring mental health conditions out of the shadows and make it 
clear to people where they can go for help.
    Mr. Cassidy. If I can help you, please let know.
    Mr. Pitts. The gentleman's time is expired. The chair 
recognizes the gentleman from Texas, Mr. Green, 5 minutes, sir.
    Mr. Green. Thank you, Madam Secretary, for your time, and I 
commend you and the President for writing a budget proposal 
that as a whole puts our country's health system on the right 
path forward.
    My first question, I am a strong supporter of the 
Affordable Care Act and I look forward to the next few months 
to learn how it will be implemented across the country, 
especially in my home State of Texas, and I know you were there 
last year and we talked briefly about this in one of your 
visits to one of our level I trauma centers in Houston. We have 
spoken about the importance of providing a robust exchange in 
States like Texas that opt out of creating their own system. 
Our time today is so short and so it is not necessary to get 
into it now, but in the next few days could you or your office 
provide us in writing a status report on the creation of the 
implementation of the Texas State exchange? Again, you don't 
have a partner so we need to make sure, and I know we are not 
the only State that is in that boat. We may be on Medicaid but 
not on that.
    Secretary Sebelius. We would be glad to do that.
    Mr. Green. My next question is something we haven't 
contacted you about, about the disproportionate share hospital 
payments. It was recently brought to my attention in an 
informal process that CMS changed their DSH payment procedures 
to children's hospitals in certain instances. As I understand 
it, children's hospitals having their DSH payments reduced 
because of commercial insurance revenue is counted as Medicaid 
revenue. It is important to note that despite CMS continuing 
insisting that this is double dipping, it is my understanding 
that this happens even though the patients may be enrolled at 
Medicaid, that their private insurance is paying the bills. 
There is no payment for Medicaid being made and the children's 
hospitals never include these children in their Medicaid cost 
reports in any way because they are never considered Medicaid-
program patients. However, for some reason, CMS determined that 
these are Medicaid payments and reduces their DSH payments. Are 
you familiar with the problem?
    Secretary Sebelius. I am somewhat familiar but would love 
to have a chance to get back to you with specifics.
    Mr. Green. OK. What I would like to do is work HHS to 
remedy the problem, and we have a great hospital and medical 
center in Texas Children's Hospital and we have hospitals all 
over the country that are children's, and erroneous reductions 
have come close to eliminating their DSH payments, and they do 
cover a lot of uninsured children who are not under Medicaid. 
In States like Texas where Medicaid may not expand, DSH is a 
critical revenue stream, so TCH provides a valuable service to 
our community and it should receive all the funding they are 
entitled to under the law, and this is an urgent issue, and I 
don't think it is the intent of HHS to harm our children's 
hospitals, and it cuts across State lines. This is not a Texas-
only problem.
    Secretary Sebelius. We would be very willing to follow up 
with you, Congressman. I think the issue that was trying to be 
addressed was in the dual-eligible area if you double count 
what is happening, but I am a little unclear how exactly that 
impacts children and what is happening in the children's 
hospitals.
    Mr. Green. We will get you some information. I appreciate 
it. My next question deals with sequestration and the effect on 
Part B drug payments to providers such as cancer clinics. It is 
my understanding that because of the sequester and because of 
the way the underlying ASP is calculated to include prompt 
payment discount, many providers have been reimbursed less than 
they pay for the drug. Madam Secretary, does HHS have any 
flexibility if access to providers becomes an issue for 
beneficiaries to modify the payments so that providers are 
reimbursed at a rate that allows them to continue to offer 
those drugs?
    Secretary Sebelius. We do not have any flexibility with the 
sequester implementation.
    Mr. Green. And I understand that the sequester was brought 
on by Congress and we are tasked with finding a way out. On 
this Part B drug matter, my colleagues, both Mr. Whitfield on 
the majority side and Ms. DeGette and I have a bill that we 
have introduced for the last few sessions. This bill would 
exclude the prompt payment discount from the ASP calculation.
    And Mr. Chairman, I think we should seriously consider 
taking this bill up in our committee to mitigate the problems I 
have described, and again, I will yield back 43 seconds to you.
    Mr. Pitts. The chair thanks the gentleman and now 
recognizes the gentleman from Kentucky, Mr. Guthrie, 5 minutes 
for questions.
    Mr. Guthrie. Thank you, Mr. Chairman, and thank you, Madam 
Secretary, for coming today. I appreciate you being here.
    I want to talk about prevention funds in the budget or the 
use of prevention funds, and I have been to a dialysis center. 
As you walk through, and it is not just the numbers of the 
money we are spending in dialysis centers, it is the lives, and 
a lot of that is preventable. So I am for prevention. The last 
time you were here, we spoke specifically about using 
prevention funds for lobbying State and local ordinances.
    Secretary Sebelius. I am sorry. Could I interrupt for one 
second? Dr. Cassidy, I have just learned that the rulemaking 
that I mentioned, it goes out tomorrow, so I just wanted to 
clarify. It isn't out the door yet but it goes out tomorrow. I 
am so sorry.
    Mr. Guthrie. No problem. The prevention funds we talked 
about last time, and I remember you saying that the examples I 
cited were State and local lobbying so therefore it wasn't 
lobbying as prevented by the federal. It was only limited to 
the federal government, which that actually wasn't accurate 
according to the law.
    The second thing that you said that the grants that I cited 
went out prior to the Labor and HHS rider in the appropriations 
bill, therefore, it wasn't covered by the lobbying prevention, 
but actually 18 U.S.C. governed it as well, and we talked about 
that, and your own internal regulation A.R. 12 governs that. 
And so after that exchange, I thought you would go back and 
look at the programs and say OK, these would be covered by 
those, and I was even interviewed. I don't have the transcript 
but somebody asked me about the Department. I said I have all 
faith that they are going to go back and correct the way these 
grantees are behaving, and I don't think they behaving 
incorrectly to themselves because their actual grant proposals 
stated exactly what they were doing. So I sent a letter along 
with Congressman Whitfield, and the letter came back and it 
concerned me because it said the HHS staff has determined that 
they believe the activities are not lobbying, and what is 
frustrating about it, it appears, it is like, OK, these groups 
were advocating for local and State policy. They put it in 
their grant requests, and let us find some interpretation of 
the law that allows them to do it, and the letter quoted a 1989 
DOJ interpretation of 18 U.S. Code 1913 that was updated in 
1992. So we have a 1989 interpretation of a law dated in 1992. 
And even your own A.R. 12 says any activity designed to 
influence action in regard to a particular piece of pending 
legislation would be considered lobbying, and it says federal 
or State levels--so it just seems like we did bring this up and 
brought it to your attention and you said you would address it, 
and then we are back here now saying well, that really didn't 
violate, we have an interpretation and they can continue to go 
the way that they were going. And that was frustrating to me 
because I thought we were going to be able to address that.
    Secretary Sebelius. Well, Congressman, I can tell you that 
CDC, the Centers for Disease Control and Prevention, takes 
their rider that Congress added to the legislation and the 
provisions that govern the anti-lobbying seriously. They have 
revisited the grantees. They have put out new technical 
assistance. They are proceeding to inform people as the money 
goes out the door, there is now language that goes with every 
grant that a grantee has to sign which reminds them about the 
prohibition to do lobbying at the State, local or federal 
level. So we are trying to be very responsive to both the 
Congress direction and the original law.
    Mr. Guthrie. But it is not just--but if you don't define 
what they are doing as lobbying, then they can continue to move 
forward.
    There was one in South Carolina, you said--well, you didn't 
say but the letter we got, there was a South Carolina one that 
was noted as a violation, and it said they sent email message 
and scheduled a press conference for purpose of getting a city 
ordinance, but there was one that wasn't. It was Nevada that 
said they advocated for the passage of Senate Bill 27, and so 
we just want to make sure we know that lobbying, according to 
the regulation, is any activity, not just if it is large scale 
of heavily funded. That is what the interpretation of 1989 
says. I guess that is what was disappointed. We thought we were 
going to get that addressed, and when the letter that I 
received back, and I am sure you have it, was that that really 
didn't violate the law or not.
    Secretary Sebelius. Well, again, I think CDC takes those 
responsibilities seriously and we are trying to make sure that 
grantees do too.
    Mr. Guthrie. And then the letter was about a year late 
coming back--not a year late. It was a year later, so for 
oversight, it would be better if we could do it more promptly. 
I appreciate that very much.
    Mr. Pitts. The gentleman's time is expired. The chair 
recognizes the gentlelady from the Virgin Islands, Dr. 
Christensen, 5 minutes for questions.
    Mrs. Christensen. Thank you, Mr. Chairman, and welcome, 
Madam Secretary. Let me just say before I ask my questions, the 
country is very fortunate to have you as Secretary at this 
particular time, not only bringing your experience as governor 
but insurance commissioner as we implement the Affordable Care 
Act.
    I am going to try to ask my questions all at once in the 
interest of trying to get through my 5 minutes. We have the 
first-ever national strategy to eliminate health disparities, 
and we thank you for that, but it relies heavily on the Offices 
of Minority Health, both the one in your office and the other 
agencies. So what I would like to know is, how does your budget 
and how do your plans support strengthening the Offices of 
Minority Health and supporting and funding those in the other 
agencies.
    The second one is on REACH. REACH has been widely 
documented as being extremely effective--the Racial and Ethnic 
Approaches to Community Health--in eliminating or reducing 
health disparities, and I know that the Department thinks that 
the community transformation grants and the community putting 
prevention to work initiative are good replacements, or that is 
what I understand the Department thinks. But looking at the 
increasing health disparities in communities of color, I think 
that that requires some specific targeted attention, and so I 
would like to know what evidence the Department has that 
supports that those would be good programs to replace REACH, 
which we don't think they are. There is a non-discrimination 
provision in the Affordable Care Act and we would like to know 
when the regulations for that will be issued.
    Two more, one concerning the Navigator program. Why does it 
only reimburse for recruiting for exchanges and not for 
enrollment in Medicaid? That is one question on that. And also, 
there is a great concern that organizations from inside the 
communities that are going to be approached by the navigators 
are the ones that would be receiving the grants. We have 
experience with the Minority Age Initiative where organizations 
from outside communities came in, and they don't have the trust 
of the communities so we want to be assured of that.
    And the last one is, how are we doing with the health care 
workforce? As a physician, I am particularly interested in 
physicians. For example, the Department projects that 
urologists would be facing a 32 percent deficiency in the 
number of providers needed in 2030.
    So that is OMH, REACH, Navigator program, adequacy of the 
workforce, and non-discrimination provisions.
    Secretary Sebelius. Well, Congresswoman, you know that I 
share your keen interest in not only documenting health 
disparities but closing them. I don't think there is any 
question that the full implementation of the Affordable Care 
Act with Medicaid expansion and affordable health insurance is 
probably the single biggest step we can take to addressing 
health disparities and so we are eager to work with you on that 
full implementation. I know that there is question about 
resource allocation to REACH and to other programs. We have 
targeted the community transformation projects in areas where 
there are large numbers of health disparities as part of the 
criteria for doing this and actually in a better budget time I 
think we would fund everything but we had to pick and choose 
and make some decisions going forward. But again, I think the 
combination of the implementation and the specific community 
projects aimed at communities of color and the National HIV/
AIDS Strategy which, again, is targeting for the first time 
resources to those most in need have great potential for moving 
forward. Health homes around chronic conditions is another 
area, I think, that isn't look at as health disparities but 
will actually impact communities of color significantly.
    We share your concern about navigators coming from the 
community, being of the community, and that will be part of the 
criteria looked at as those funding proposals come in, and you 
will see in the 2014 budget request for resources, particularly 
in HRSA but also now with the mental health professionals to 
not only enhance workforce nurse practitioners, physicians 
assistants, more National Health Service Corps folks but also 
5,000 mental health workers, which are part of the President's 
Now is the Time agenda, so we are keeping a keen eye on 
workforce issues.
    Mr. Pitts. The chair thanks the gentlelady and now 
recognize the gentleman from Virginia, Mr. Griffith, 5 minutes 
for questions.
    Mr. Griffith. Thank you, Mr. Chairman. Thank you, Madam 
Secretary, for being here.
    In an address to the Democratic National Committee in 
September 2012, you stated first if you already have insurance 
you like, you can keep it. Madam Secretary, I hear from 
constituents every week lamenting the fact that they have lost 
or at risk of losing their employer health insurance plan that 
they like because of Obamacare, and here is the dilemma that 
many business folks are being put into. A constituent of mine 
called me and sat down with his accountants and his experts and 
his medical people, and what they said to him was, you have 
three choices. The business that you have owned for 33 years 
that you started out with small and started growing and 
growing, you have 59 employees, so here are your choices. You 
pay the $43,000 fine, you close down the third shift that is 
the least profitable of your three shifts, just get rid of that 
and then you don't have to do anything, or you pay even more 
than the $43,000 to insure all of your employees. Now, most of 
his employees are already covered or a large number of his 
employees he already pays for them, and he pays for them in 
full, and he is struggling with these dilemmas, knowing that 
some of his people won't be able to afford the insurance that 
he is already paying for if he drops it completely, and he has 
not made a decision, but that is the dilemma that businessmen 
and women across the United States are having to go through.
    And again at the DNC you said but for us Democrats, 
Obamacare is a badge of honor because no matter who you are, 
what stage of life you are in, this law is a good thing. And I 
have to ask you, can you really believe that to the 7,000 
employees who are part-time employees for the Commonwealth of 
Virginia who are facing a cutback in the number of hours 
because the Commonwealth has decided based on trying to make 
sure that they keep their costs in control that they are not 
going to allow the part-time employees to have more than 29 
hours, do you really believe that to those people it is a badge 
of honor or that Obamacare is a good thing? Because now their 
hours are going to be cut. Yes or no.
    Secretary Sebelius. Well, sir, I don't like anybody's hours 
to be cut. We need to actually make sure that people get paid 
and work to take care of their families----
    Mr. Griffith. But you do understand----
    Secretary Sebelius [continuing]. But health costs are part 
of that overall----
    Mr. Griffith. I have to move on because I only have a 
limited amount of time, but the examples go on. In my district, 
we have a county, Wythe County, Virginia. They hire retired law 
enforcement folks to work court security as court security 
employees. Now, many of these people already have insurance. 
They are usually retired, or a lot of them are. They have 
insurance or they have Medicare. Now the county is going to 
have to cut back their hours because they don't want to have to 
pick up insurance for people who already have insurance, and so 
they are going to have to cut back their hours, and for many of 
that folks, that translates into a 30 percent pay cut for their 
retirees. I don't believe that is a good thing, and I will take 
your previous answer as the answer to that question as well, 
that you hate to see that happen but sometimes things happen.
    And do you really believe that the 30-year-old----
    Secretary Sebelius. Sir, I didn't answer any question that 
way.
    Mr. Griffith [continuing]. Whose premiums will skyrocket 
next year, do you think he thinks that Obamacare is a good 
thing? And how about my 82--I have to keep going because my 
time is running out. How about my 82-year-old mother enrolled 
in a Medicare Advantage program, which is a highly popular 
program, which has been cut to pay for the ACA, can you really 
believe--deep down in your heart, can you really believe that 
she thinks Obamacare is a good thing?
    Secretary Sebelius. The good news, your mother is paying 
less now than she did. I don't know about your mother's plan 
but Medicare Advantage plans are down 10 percent, enrollment is 
up almost 20 percent, so your mother actually is in better 
shape than she was before the Affordable Care Act.
    Mr. Griffith. Well, and she also got a lot of her stuff 
done. When she saw this coming down the pike, she said anything 
that I know is wrong with me now, I am getting it fixed. And 
how about Susan Zurface, the 42-year-old single mother who was 
recently diagnosed with leukemia and turned away from 
enrollment in the High Risk Pool program because the ACA 
established fund was depleted? I can't believe that she thinks 
that Obamacare is a good thing.
    Secretary Sebelius. If repeal had gone forward, there would 
be no preexisting plan whatsoever.
    Mr. Griffith. And what I would have to say, Madam 
Secretary, is that for so many of these folks who are facing 
uncertainty as to what is going to happen, who may not be able 
to pay, the employers who like to pay for their long-term 
employees who may not be able to afford to do that. They don't 
think Obamacare is a good thing. They don't see it as a badge 
of honor. I have to tell you, Madam Secretary, and I know we 
disagree on this, but when I talk to my constituents, it 
appears to me that thinking that Obamacare is a good thing and 
is a badge of honor is just wrong thinking, and in fact, I 
believe it is going to make a majority of Americans losers in 
the health care arena.
    Mr. Chairman, I thank you so much for the opportunity and I 
yield back.
    Mr. Pitts. The chair thanks the gentleman and now 
recognizes the gentlelady from Florida, Ms. Castor, 5 minutes 
for questions.
    Ms. Castor. Thank you, Mr. Chairman, and welcome. I want to 
thank you, Secretary Sebelius, and the President and your team 
here because what this budget does, it stays true to American 
families, especially our parents and grandparents that stay on 
Medicare. This is very interesting what my colleague has raised 
because what we know about the Republican budget that was 
passed is their plan for Medicare is to turn it into a voucher. 
That doesn't save anybody money. It simply shifts costs to the 
beneficiary, probably including the family members of my 
colleagues, and what it will do over time is really force 
Medicare to wither on the vine. Meanwhile, the contrast here 
with President Obama's budget is it again strengthens Medicare, 
lengthens the life of the Medicare trust fund and does so in a 
smart way. It is something that we have all discussed, and that 
is, by moving from a fee-for-service system that has proven 
wasteful to a new value-based system. Did you all know that 10 
percent of Medicare beneficiaries now are involved in these 
value-based coordinated-care models that are saving significant 
money? These are many times voluntary efforts by doctors and 
hospitals and health systems that have realized now that the 
way we deliver health care in America has to change. So that is 
the good news out of this budget. Sure, you can pick certain 
circumstances and with the implementation of the ACA there are 
a lot of challenges ahead, but we would do better by working 
together to make it happen for our families, to lengthen the 
life of the Medicare trust fund, not turn into a voucher. That 
is the Republican vision. And we haven't even started on 
Medicaid because under the Republican budget for Medicaid, they 
in essence break the promise to our older neighbors and our 
parents and grandparents. What Medicaid means to me, I think of 
my neighbors down the street that are able to stay out of a 
nursing home because Medicaid has been there for them or at the 
end of their life they had to rely on skilled nursing, they 
could go there. But under the Republican budget, in contrast to 
this one before us, the Republicans in essence take that safety 
net away entirely. I mean, have you looked at the numbers of 
the Republican budget cuts when it comes to Medicaid? So I am 
sorry, I sat through budget hearings a few weeks ago and it is 
very apparent to me, so I am sorry, Madam Secretary to take up 
time that I wanted to ask questions on that. But there is a 
very important contrast in the visions for this country for our 
older neighbors, and if it is not apparent after looking at 
these budgets, then you all really need to do some studying.
    Madam Secretary, I want to change the subject a little 
because another piece of good news in this budget is a new 
innovative proposal that I think holds great promise for this 
country, and that is the new innovative plan for brain 
research, the collaboration with our academic institutions, the 
NIH, the private sector on brain research. This is an ambitious 
project that is necessary and important to develop the tools 
now as we confront greater diagnosis of Alzheimer's, mental 
illness, and others. Could you give us an outline of how this 
collaborative effort will work and your vision for the coming 
years here?
    Secretary Sebelius. Well, Congresswoman, I share your 
enthusiasm for this new frontier, and Dr. Collins, who is the 
head of the National Institutions of Health, has 
enthusiastically put together this plan with colleagues in the 
academic sector and the private sector, feeling that it is very 
much like the Human Genome Project, that we need to map the 
brain, we need to understand what is happening and what is not 
happening, and that will lead a much faster pathway to cures 
and identification of how to deal with everything from 
Alzheimer's to autism and, as you say, very parts of mental 
illness. So there are certainly some federal government new 
resources. There are also private partners in foundations 
stepping up, academic researchers, and we put together what Dr. 
Collins describes as sort of the dream team, some of the 
foremost authorities at universities across this country who 
are going to be leading this initiative and effort. Also, our 
colleagues at the Department of Defense are very much involved 
because brain injury is one of the most significant impacts 
from the wars in Afghanistan and Iraq. Returning warriors are 
often suffering everything from post-traumatic stress syndrome 
to issues around the brain, so understanding what is going on 
and having ways to effectively deal with that, I think, help 
our entire country.
    Mr. Pitts. OK. The gentlelady's time is expired. I now 
recognize the gentleman from Maryland, Mr. Bilirakis--or 
Florida. Mr. Bilirakis for 5 minutes.
    Mr. Bilirakis. Thank you very much. I appreciate it. Thank 
you, Madam Secretary, for being here. Thank you, Mr. Chairman.
    Madam Secretary, I am receiving calls, an increasing amount 
of calls and correspondence from my constituents who are 
concerned about what to expect in 2014 with regard to the ACA. 
Many are certain that the law means higher costs, increased 
taxes and less jobs. As a matter of fact, I have a tweet here 
from @TheKipWilson. She wants to know why middle-class workers 
are going to be subject to increased premiums and more taxes 
under Obamacare. I keep hearing that.
    Yesterday in your testimony before the Senate Finance 
Committee, your responses left one of the law's leading 
architects to conclude that the implementation of this law 
might be ``a train wreck.'' I must tell you, that leaves me, my 
constituents and the American taxpayers with even less 
confidence that we had before the law was passed. I guess it is 
beginning, you are going to launch it October 1st. Secretary 
Sebelius, I want to give you an opportunity to respond to the 
questions yesterday by our Senate colleagues. With thousands of 
pages of regulations issued, hundreds of new Washington 
acronyms and uncertainty mounting, can the Department share a 
written timeline and implementation with this Committee and to 
the American people so they can better understand what the 
Administration's intent is and what they can expect. If you can 
elaborate on that, I would appreciate it.
    Secretary Sebelius. Yes, sir. What I said yesterday and 
here today and will continue to say is, starting October 1st in 
every State in the country, new marketplaces will be available 
for open enrollment. Some of those will be federal marketplaces 
but contain private market plans, choices and competition, and 
some are going to be run by the States in advance of that. 
Hopefully this summer there will be individuals trained to 
answer questions and do outreach so people can become aware of 
what is developing and the choices they can make for themselves 
and their family. There is an up-and-running Web site with a 
very clear timeline, healthcare.gov, which gives steps along 
the way. We will have open enrollment by October 1st where 
people by Web site or on paper can pre-enroll in plans that 
will be up and running on January 1, 2014, in every State in 
the country.
    Mr. Bilirakis. What about again the tweet that I just 
received from @TheKipWilson? Are we going to be subject to 
increased premiums and higher taxes under Obamacare?
    Secretary Sebelius. Well, the insurers right now, 
Congressman, are just beginning to file their planned rates for 
the new marketplaces. There is then a negotiation period either 
at the State level or with the federal marketplaces about what 
those rates are, so I think any description of what people will 
be paying I think is just invented at this point. The rates are 
not filed, they are not certain, and we are very confident that 
not from our standpoint but from the Congressional Budget 
Office analysis that the combination of competition, 
elimination of a lot of the overhead costs and subsidies 
available to a lot of these Americans who for the first time 
will have full insurance coverage, they will be looking at a 
much more competitive rate and lower prices than they are 
paying right now if they have insurance coverage.
    Mr. Bilirakis. So you don't anticipate increased premiums 
under Obamacare?
    Secretary Sebelius. I do not anticipate the kind of rate 
shock that people are describing, and again, there are no rates 
filed so anyone who is giving quotes about what rates will be 
paid is just really inventing that.
    Mr. Bilirakis. Thank you, Madam Secretary. Next question. 
According to reports, HHS believes it has the authority to 
shift money from certain accounts to fund any remaining 
expenses related to implementation of the new health care law, 
specifically from any non-reoccurring expense fund. Yes or no, 
do you believe you have such authority to shift funds between 
HHS accounts to cover expenses related to implementation of the 
health care law? Yes or no, please.
    Secretary Sebelius. I do have legal transfer authority that 
is part of and it is limited. The non-recurring expense fund is 
a specific Congress that established within the Department of 
Health and Human Services that is for one-time IT costs, so 
those are two different things.
    Mr. Bilirakis. Can you please provide a list of the 
authorized accounts you believe you have the ability to use to 
make such transfers for implementation purposes and accounting 
of what funds have been transferred or used for such purposes 
and also the legal analysis for such authority?
    Secretary Sebelius. Yes.
    Mr. Bilirakis. Thank you very much. I yield back.
    Mr. Pitts. The gentleman's time has expired.
    We are voting on the floor. We have 8 minutes plus before 
the vote ends. I would like to ask the members if they can be 
as concise as possible. Everybody can then ask a question or 
two. And the gentleman from New York, Mr. Engel, is recognized.
    Mr. Engel. Thank you, Mr. Chairman. Madam Secretary, I have 
watched you as you have been Secretary. You have done an 
outstanding job, and your testimony here today just continues 
it, so thank you very much for the job you are doing.
    I am from New York, and many New York hospitals are working 
hard to move toward more effective and efficient systems by 
participating in ACOs and bundled payment programs. The reality 
is, these reforms are going to take many years to fully 
implement. In the meantime, I think there needs to be a 
recognition that funding streams such as GME DSH or bad-debt 
payments are essential for hospitals investing in delivery 
system or form. Hospitals need these various funding streams to 
treat those who will remain uninsured even after the ACA and 
train our next generation of physicians. Of course, in New York 
we train a lot of physicians. So in the face of significant 
cuts year after year, it adds another layer of certainty to a 
rapidly evolving and challenging health care system for our 
hospitals. So Madam Secretary, what is HHS doing to help ensure 
our Nation's hospitals have the resources, stability and 
flexibility they need for the coverage expansions included in 
the ACA as well as move toward providing higher quality, more 
coordinated care?
    Secretary Sebelius. Well, we are working very closely with 
hospital leaders across the country who are key health care 
leaders, and I think what is incredibly impressive is the 
amount of transformative care underway, trying to get to a 
higher quality of care for every patient and deliver it at an 
affordable cost. I think it is also very good news that the 
President has nominated Marilyn Tavner, who not only was a 
practicing nurse but ran hospital systems and is very closely 
attuned to the needs and economics of hospital care moving 
forward. She has been nominated to be the Administrator of the 
Centers for Medicare and Medicaid Services, and we are hoping 
that she will be confirmed shortly.
    Mr. Engel. Thank you. Let me ask you one other quick 
question and I will yield back some of my time, as the chairman 
asked. I was very pleased with this Administration's efforts to 
develop and implement a national HIV/AIDS strategy. It is a 
roadmap to help us reach the point where new HIV infections are 
rare, and when they do occur, every person has access to high-
quality treatment. We have made strides forward, but with 
approximately 50,000 new HIV infections each year, we still 
have a long way to go. As a member of this committee and as 
ranking member on the House Foreign Affairs Committee, I have 
had the opportunity to work on legislation that has made a 
significant impact in the fight against HIV and AIDS.
    The President's budget recognizes the critical role played 
by the Centers for Disease Control in preventing new HIV 
infections and monitoring the epidemic and also directs vital 
treatment funding provided through the Ryan White program. So 
can you share with us how we are moving forward with the 
National HIV/AIDS Strategy and how this strategy is reflected 
in the President's budget priorities?
    Secretary Sebelius. I think the President shares your 
commitment and concern and also the opportunity to really look 
forward to an AIDS-free generation in the future. So we are 
doing important research at NIH. We will continue and be part 
of the funding that NIH will hopefully receive through the 
allocations in the budget with the CDC work not only in 
communities throughout the United States but internationally 
has been hugely impactful and effective, and I think we 
certainly intend to continue that, and we have re-gathered 
resources and focused them on communities most at risk where 
the infection rate is the highest, where the transmission is 
still underway in an attempt to stop transmission, cut down on 
the number of new infections and really focus on communities 
that need not only initial testing but connection to treatment, 
and the Affordable Care Act again offers a huge step forward 
for a lot of patients right now who have been diagnosed and 
determined but do not have insurance coverage to move forward 
with ongoing treatment.
    Mr. Engel. Thank you, Mr. Chairman. I yield back.
    Mr. Pitts. The chair thanks the gentleman and he yields 
back 27 seconds. And I might say, I was just notified that Mr. 
Griffith's mother just tweeted that her Medicare Advantage 
rates were just increased.
    Secretary Sebelius. I can give her a list of plans that she 
can look for an open enrollment that have gone down.
    Mr. Pitts. The chair recognizes the gentlelady from North 
Carolina, Ms. Ellmers.
    Mrs. Ellmers. Thank you, Mr. Chairman, and Secretary 
Sebelius, thank you for being here, and I have a lot of 
questions for you so I am going to blow through this as quickly 
as possible, so if you can answer with a yes or no, that would 
be very, very helpful because I am being respectful of my 
colleagues.
    Number one: On April 5, the federal court issued a ruling 
requiring that the morning-after pill or Plan B pill can be 
available for all people of all ages including young 
adolescents. Do you plan to appeal this ruling? Yes or no.
    Secretary Sebelius. It isn't a yes or no. I have no 
jurisdiction over a federal judge.
    Mrs. Ellmers. OK. No jurisdiction, so you do not plan to 
approach this in any way?
    Secretary Sebelius. The Justice Department is currently 
evaluating an appeal.
    Mrs. Ellmers. They are evaluating an appeal at this time, 
the Justice Department?
    Secretary Sebelius. Yes. That is not our jurisdiction.
    Mrs. Ellmers. OK. Thank you. I would like to move on. You 
know, there again----
    Secretary Sebelius. I would like answer your question.
    Ms. Ellmers. No, I appreciate that, but I only have so many 
minutes. Now, there again, reaching out, the idea of the ACA, I 
have a constituent back home who just contacted my office 2 
days ago. He has 200 employees. He cannot afford to provide 
health care for them at this time. He knows that he is going to 
be hit with a $2,000-per-person penalty. He basically is saying 
look, 80 percent of my employees are minority, I will have to 
lay off 60 employees just to be able to deal with the penalty 
itself. In doing some research, doing some homework here, 61 
percent increase in insurance rates in North Carolina, there 
will be a 61 percent. According to the Kaiser Family 
Foundation, for a family of 4, there will be a $5,600 for an 
insurance plan with, that is a 20 percent increase as a result 
of the ACA. My staff has done some research as well. For a plan 
for a family of four, the cost would be $271 per month with a 
$25,000 deductible. That is unbelievable.
    My question to you, ma'am, because you have talked about 
this ACA creating a thriving middle class, helping create jobs, 
does what I just laid out to you create a thriving middle 
class? Yes or no.
    Secretary Sebelius. There are no rates filed in the new 
marketplaces so I have no idea what you are quoting.
    Mrs. Ellmers. As it is right now, so what you are saying is 
that the cost----
    Secretary Sebelius. There is no implementation.
    Mrs. Ellmers [continuing]. Of insurance would drop that 
drastically for a family?
    Secretary Sebelius. Ma'am, all I am telling you is, I have 
no idea what rates you are quoting but that is not an effect of 
the Affordable Care Act.
    Mrs. Ellmers. The Kaiser Family Foundation.
    Secretary Sebelius. They may be quoting what is happening 
right now in the marketplace----
    Mrs. Ellmers. OK. Let us move on. I also had my staff reach 
out to the, as you stated it, a one-stop shop Web site. 
Incredibly, non-user-friendly, categorizes Medicaid for the 
poor, under 26, co-op plans. There is one standard plan to 
compare anything to. How can anyone plan for the future, 
employees, individuals? How can anyone plan for the future? I 
know you keep citing the 2014 date. However, we live in real 
time. Americans are scared.
    Secretary Sebelius. And in real time, insurers are 
currently filing rates. Insurers are currently making their 
plans to come to the market.
    Mrs. Ellmers. OK. Let us move on. I have a minute and 30 
seconds. To the issue of the 2 percent sequester, there was an 
OMB memo that went out to federal agencies about the cut asking 
that life, safety and health of Americans be protected. Now, it 
is my understanding, I believe I heard you say that CMS has 
absolutely no ability to act on this, no ability to address the 
2 percent cut. Yes or no.
    Secretary Sebelius. That is correct.
    Mrs. Ellmers. As it is right now?
    Secretary Sebelius. Yes, that is correct.
    Mrs. Ellmers. OK. The reason that I am asking is because 
right now as you know, there are cancer patients who are being 
turned away from community cancer centers who need their 
chemotherapy if they have Medicare. Is that correct? And you 
did--I did hear your Ways and Means testimony and you said that 
right now there are patients who are being turned away.
    Secretary Sebelius. Part of the sequester was a 2 percent 
across-the-board cut for every division of CMS, every program, 
every category. That is what was implemented by the United 
States Congress.
    Mrs. Ellmers. OK. And it affects physicians who are giving 
lifesaving treatments to patients, correct? Because it attacks 
the Part B. Yes or no.
    Secretary Sebelius. A 2 percent cut is in effect because of 
sequester, yes, ma'am.
    Ms. Ellmers. Well, I would like you to know that I have a 
piece of legislation, H.R. 1416, that addresses this issue. 
There are families in crisis right now who have received an 
incredible devastating piece of information. However, I would 
like to further this by saying that the President's budget 
actually increases that formula, decreases payment in 
reimbursement to those physicians by another 1 percent. It 
makes it an ASP plus 3 percent rather than the 4.3 percent. Are 
you aware of this?
    Secretary Sebelius. I am aware of it, but the way the 
President's budget would be implemented is that there would be 
far more flexibility, which we did not have in the sequester, 
to actually----
    Mrs. Ellmers. And by flexibility, are you referring to the 
fact that the manufacturers would be required to provide the 
rebates as directed by the Secretary? Is that the flexibility 
we are talking about?
    Secretary Sebelius. No, we are talking about the ability to 
administer the administrative costs differently than the costs 
of the drug. The important thing is to----
    Ms. Ellmers. So you have that jurisdiction but you do not 
have jurisdiction to----
    Secretary Sebelius. The way the sequester bill was written, 
Congresswoman, we were told to cut across the board every 
program, every category 2 percent for Medicare and that is what 
we did.
    Mrs. Ellmers. Even though the OMB directed to protect life, 
safety and health?
    Secretary Sebelius. OMB directives don't overrule Congress, 
and you passed a bill that----
    Mr. Pitts. The gentlelady's time is expired.
    Mrs. Ellmers. Thank you.
    Mr. Pitts. I apologize for interrupting. The time has run 
out on the floor. We are going to try to wrap this up. The 
chair recognizes the gentleman from Maryland, Mr. Sarbanes.
    Mr. Sarbanes. Thank you, Madam Secretary. I think you are 
doing a terrific job. It is a big challenge. We have run out of 
time all over the place on the floor, in this committee. You 
have to leave, I know.
    We had a hearing the other day with some representatives 
from the business community, and what became clear is, until 
the issue of whether implementation of the Affordable Care Act 
was going to go through was settled by the outcome of the 
election, there were, I think, many small businesses around the 
country that frankly I can understand this didn't really take 
the time to learn the rules and regulations and what was coming 
down because they didn't know whether it would be in place. 
What is happening, I think, is, as they focus in on something 
about which they got a lot of misinformation over time, they 
are discovering to their relief that there really is a lot of 
support there for small businesses, and many of us were 
motivated to support the Affordable Care Act because of the 
relief we thought it would bring to small businesses across the 
country.
    I don't have a question, but I just wanted to make a 
suggestion. I think it would be terrific, and I am sure that 
the Department is working on this, to sort of put together, you 
know, the 1040EZ version of what benefits are now going to be 
available to small businesses out there because they are primed 
now to be looking for that information, and I think we have 
provided them with accurate information about these 
opportunities. It will come as a relief to them, and they can 
really kind of invest in the opportunity that it presents. So I 
hope the Department is working on something like that that we 
can turn around and share with our constituents and small 
businesses across the country.
    Secretary Sebelius. We are working on it. We would be glad 
to provide it to you. And we are doing presentations with the 
colleagues in the Small Business Administration across this 
country. So we are happy to do a number of things. But you are 
absolutely right. I think a lot of the misinformation once it 
is corrected and people understand what the rules are and what 
is going to be available to small business owners who often are 
paying 15 to 20 percent more for insurance right now, they are 
very pleased about what opportunities they may have.
    Mr. Pitts. The chair thanks the gentleman. I have been 
notified, the leader is holding the vote for us. We will have 
one follow-up. Dr. Burgess.
    Mr. Burgess. Thanks for staying with us, Madam Secretary. 
Dr. Gingrey brought up the issue of contingencies. Gary Cohen 
in addressing the AHIP Foundation a couple of weeks ago brought 
up the issue of contingency. So you indicated this morning in 
your answer to Dr. Gingrey's question, there are no contingency 
plans, and yet there is discussion that I am aware of, of 
people talking about actually narrowing the scope of the ACA. 
It is called descoping. So are you in your Department talking 
about descoping or narrowing the scope of ACA provisions?
    Secretary Sebelius. No, sir.
    Mr. Burgess. Are you talking about work-around plans?
    Secretary Sebelius. No, we are not. We are moving ahead. We 
have the federal hub on track and on time. We are moving ahead 
with the marketplaces that we will be individually responsible 
for and we are working very closely with our State partners on 
their plans and their timetable for the State-based 
marketplaces.
    Mr. Burgess. So the federal hub will be available?
    Secretary Sebelius. Yes.
    Mr. Burgess. Unless it is not, and if it is not, you have 
no contingency plans.
    Secretary Sebelius. At this point, our energy and resources 
are focused on getting it up and running, and we are on track 
and the contracts have been led and we are monitoring it every 
step along the way.
    Mr. Burgess. Let me just say that if the promises that you 
will be ready and you are not, I think the United States 
Congress, which does hold the ability to fund things at the 
federal agencies, would have to look seriously about putting 
any other money into that exercise. You have had 3 years and 
billions of dollars. If you are not ready, I think the Congress 
needs to hold your agency accountable.
    Secretary Sebelius. Well, I appreciate that, Congressman. I 
think that the CBO analysis when the bill was passed was that 
we would need about $10 billion in implementation money. One 
billion dollars was appropriated. I can tell you we are on 
track. We have judiciously used those resources and we intend 
to be open for open enrollment around the country October 1st.
    Mr. Burgess. Thank you, Mr. Chairman. I will yield back.
    Mr. Pitts. The chair thanks the gentleman, and thank you, 
Madam Secretary, for your time.
    As we move closer to implementation and enrollment in the 
exchanges, could you please agree to come before the committee 
again before October 1st?
    Secretary Sebelius. We will make every effort.
    Mr. Pitts. Thank you, Madam Secretary. We appreciate your 
information, your testimony today.
    If members have additional questions, I will ask them to 
submit the questions and we will send them to you immediately. 
We ask that you please respond promptly to the questions. 
Members should submit their questions by the close of business 
on Thursday, May 2nd.
    Thank you very much, Madam Secretary. You have been very 
generous with your time. Without objection, the subcommittee is 
adjourned.
    [Whereupon, at 12:10 p.m., the Subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                 
