    [House Hearing, 116 Congress]
    [From the U.S. Government Publishing Office]

                    DEPARTMENT OF HEALTH AND HUMAN SERVICES
                            FISCAL YEAR 2020 BUDGET

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

                                    HEARING

                                   BEFORE THE

                            COMMITTEE ON THE BUDGET
                            HOUSE OF REPRESENTATIVES

                         ONE HUNDRED SIXTEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                HEARING HELD IN WASHINGTON, D.C., MARCH 26, 2019

                                   __________

                                Serial No. 116-6

                                   __________

               Printed for the use of the Committee on the Budget

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                           Available on the Internet:
                                www.govinfo.gov

                                   __________

                        U.S. GOVERNMENT PUBLISHING OFFICE
    36-985                  WASHINGTON : 2019

    --------------------------------------------------------------------------------------

                            COMMITTEE ON THE BUDGET

                      JOHN A. YARMUTH, Kentucky, Chairman
    SETH MOULTON, Massachusetts,         STEVE WOMACK, Arkansas,
      Vice Chairman                        Ranking Member
    HAKEEM S. JEFFRIES, New York         ROB WOODALL, Georgia
    BRIAN HIGGINS, New York              BILL JOHNSON, Ohio,
    BRENDAN F. BOYLE, Pennsylvania         Vice Ranking Member
    RO KHANNA, California                JASON SMITH, Missouri
    ROSA L. DELAURO, Connecticut         BILL FLORES, Texas
    LLOYD DOGGETT, Texas                 GEORGE HOLDING, North Carolina
    DAVID E. PRICE, North Carolina       CHRIS STEWART, Utah
    JANICE D. SCHAKOWSKY, Illinois       RALPH NORMAN, South Carolina
    DANIEL T. KILDEE, Michigan           CHIP ROY, Texas
    JIMMY PANETTA, California            DANIEL MEUSER, Pennsylvania
    JOSEPH D. MORELLE, New York          WILLIAM R. TIMMONS IV, South
    STEVEN HORSFORD, Nevada                  Carolina
    ROBERT C. ``BOBBY'' SCOTT, Virginia  DAN CRENSHAW, Texas
    SHEILA JACKSON LEE, Texas            KEVIN HERN, Oklahoma
    BARBARA LEE, California              TIM BURCHETT, Tennessee
    PRAMILA JAYAPAL, Washington
    ILHAN OMAR, Minnesota
    ALBIO SIRES, New Jersey
    SCOTT H. PETERS, California
    JIM COOPER, Tennessee

                               Professional Staff

                          Ellen Balis, Staff Director
                      Dan Keniry, Minority Staff Director
                                    CONTENTS

                                                                       Page
    Hearing held in Washington D.C., March 26, 2019..................     1

        Hon. John A. Yarmuth, Chairman, Committee on the Budget......     1
            Prepared statement of....................................     3
        Hon. Steve Womack, Ranking Member, Committee on the Budget...     5
            Prepared statement of....................................     7
        Hon. Eric D. Hargan, Deputy Secretary, Department of Health
          and Human Services.........................................     9
            Prepared statement of....................................    11
        Hon. Scott H. Peters, Member, Committee on the Budget,
          summary submitted for the record...........................    39
        Hon. Pramila Jayapal, Member, Committee on the Budget, letter
          submitted for the record...................................    53
        Hon. Sheila Jackson Lee, Member, Committee on the Budget,
          statement submitted for the record.........................    84
        Hon. John A. Yarmuth, Member, Committee on the Budget,
          questions submitted for the record.........................    92
        Hon. George Holding, Member, Committee on the Budget,
          questions submitted for the record.........................    93
        Hon. Jason Smith, Member, Committee on the Budget, questions
          submitted for the record...................................    94
        Hon. Chip Roy, Member, Committee on the Budget, questions
          submitted for the record...................................    95
        Hon. William R. Timmons IV, Member, Committee on the Budget,
          questions submitted for the record.........................    96
        Answers to questions submitted for the record................    97

                         DEPARTMENT OF HEALTH AND HUMAN
                        SERVICES FISCAL YEAR 2020 BUDGET

                                  ----------

                            TUESDAY, MARCH 26, 2019

                              House of Representatives,
                                       Committee on the Budget,
                                                       Washington, D.C.
        The Committee met, pursuant to notice, at 10:05 a.m., in
    Room 210, Cannon House Office Building, Hon. John A. Yarmuth
    [Chairman of the Committee] presiding.
        Present: Representatives Yarmuth, Moulton, Jeffries,
    Higgins, Khanna, Doggett, Schakowsky, Morelle, Horsford, Scott,
    Jackson Lee, Jayapal, Omar, Sires, Peters; Womack, Woodall,
    Smith, Stewart, Roy, Meuser, Timmons, Hern, and Burchett.
        Chairman Yarmuth. The--this hearing on the--thank you to
    the Ranking Member--this hearing on the HHS fiscal year 2020
    budget--I would like to welcome Deputy Secretary Eric Hargan,
    and thank you for joining us.
        I yield myself now five minutes for my opening statement.
        Today we will discuss the President's 2020 budget for the
    Department of Health and Human Services and its impact on
    American families.
        There are many concerning parts of the Administration's
    proposal, but the budget for HHS is particularly troubling
    because the line between massive funding cuts and severe
    consequences for American families, between policy changes and
    life or death outcomes, is so direct.
        The Trump budget cuts more than $12.1 billion from HHS'
    discretionary budget; $4.5 billion from NIH, which includes
    research on the prevention, treatment, and care of diabetes,
    cancer, heart disease, Alzheimer's, and nearly every other
    disease or disorder facing Americans. It embraces austerity
    level spending caps, and the resulting cuts to health care
    investments, even though these caps have been repeatedly
    rejected by Congress on a bipartisan basis.
        The budget also cuts $1.4 trillion from mandatory health
    care spending, including Medicare and Medicaid, which are the
    only sources of health care coverage for tens of millions of
    Americans.
        The budget repeals the Affordable Care Act and replaces it
    with an inferior plan that would leave millions of families
    without meaningful insurance, while failing to continue
    guaranteed protections for people with pre-existing conditions.
    It ends the Medicaid expansion under the ACA, terminating
    health coverage for millions more.
        In my home state of Kentucky, with total population of just
    over four million, nearly half-a-million people gained health
    care coverage thanks to the ACA's Medicaid expansion. All this
    before the Administration's abhorrent decision last night to
    ask the 5th Circuit to completely invalidate the Affordable
    Care Act, making it crystal clear to the American public that
    this President has zero interest in protecting their health
    care in any form.
        The budget also converts base Medicaid funding into a block
    grant or per-capita cap. This will force states to eliminate or
    drastically reduce services for low-income children, people
    with disabilities, and seniors, or, in the alternative, to
    raise billions of dollars to cover the cost--the loss of
    federal resources, which we all know states don't have.
        In addition, the budget requires all states to implement
    work requirements for Medicaid enrollees, putting yet another
    barrier between Americans and quality health care. In
    Arkansas--wonderful home of my ranking member--which
    implemented the first work requirement in the country last
    year, more than 16,000 people have already lost their health
    insurance with no evidence that they found new employment.
    Expanding this policy nationwide would undoubtedly result in
    hundreds of thousands, if not millions, of Americans losing
    their health care coverage.
        Deputy Secretary Hargan, it is clear that this budget
    jeopardizes the health care security of millions of Americans
    and their families. So it is hard for me and my Democratic
    colleagues to understand how that meets HHS' mission to
    ``enhance the health and well-being of all Americans.'' Given
    the severity of the funding cuts and the extreme nature of the
    policy changes, this seems much more like an irresponsible way
    of offsetting our Republican colleagues' deficit-financed tax
    cuts for millionaires and big corporations than a true budget
    you or Secretary Azar would have crafted for your agency to
    succeed. I hope to discuss that further today.
        There are some other areas of the budget that don't add up
    either, where the message doesn't match the math.
        For example, the budget includes a $291 million investment
    in HIV/AIDS, but cuts the National Institute of Allergy and
    Infectious Diseases, which is responsible for most HIV/AIDS
    research at the National Institutes of Health, by $769 million.
        The budget provides an additional $50 million for pediatric
    cancer research--sounds good--but cuts funding for the National
    Cancer Institute by $897 million.
        The budget requests $1.5 billion for state opioid response
    grants--again, something I think we all favor--but it cuts
    Medicaid, the source of coverage for four in 10 adults with
    opioid addiction, by $1.5 trillion.
        When you compare these small funding increases to the large
    cuts they are paired with, it is not hard to see them for what
    they are: token investments designed to get a good headline. If
    there is another explanation, Deputy Secretary, we would
    welcome it.
        I know my Democratic colleagues have other questions about
    the choices made in this budget and the resulting consequences,
    about promises made by the President that are broken in this
    document. We want to know more.
        So once again, thank you, Deputy Secretary Hargan, for
    being here today. We look forward to your testimony.
        [The prepared statement of John A. Yarmuth follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Chairman Yarmuth. I now welcome, and I recognize the
    Ranking Member for five minutes for his opening statement.
        Mr. Womack. Apologies for running just a little bit late.
    But thank you, Mr. Chairman, and thank you, Deputy Secretary
    Hargan, for joining us.
        Today we are here to examine the President's budget request
    for the Department of Health and Human Services for fiscal year
    2020. This is an important conversation. Your agency is
    responsible for administering programs on which millions of
    Americans rely, including Medicare; Medicaid; Temporary
    Assistance for Needy Families, or TANF; Head Start.
        Further, your agency is at the forefront of combating some
    of our country's biggest health crises, including the opioid
    epidemic which claims the lives of 115 Americans every day.
    Now, let's put that in context. Assuming we are here for two
    hours this morning, 10 people--10 people--will die because of
    this epidemic.
        The growth in spending has been caused by several factors
    that require our attention in Congress. Health care spending is
    growing faster than any other sector of the economy. In 2017,
    the U.S. spent $3.5 trillion in health care. By 2007 [sic]
    health care spending is projected to reach nearly $6 trillion,
    just under 20 percent of GDP, according to a recent report of
    the Centers for Medicare and Medicaid Services' actuary.
        The cost of care is increasing. According to Bureau of
    Labor Statistics, in 2018 the price of hospital services
    increased by 3.7 percent, the price of medical care by 2
    percent, both of which were higher than the rate of inflation.
        The second contributing factor? Americans are living
    longer. Thanks to advancements in modern medicine, the average
    life expectancy has increased by more than nine years since
    Medicare was created in 1965. It is projected to continue
    increasing. That is good news, but it does have an impact on
    growing health care spending.
        Finally, the ratio of retirees to workers is shrinking,
    with an average of 10,000 Baby Boomers a day leaving the
    workforce. Unfortunately, the laws governing how our health
    care programs work do not reflect the dynamics we face today.
    As a result, there is increasing pressure on programs like
    Medicare, which today provides care to about 15 percent of our
    population.
        As an example, Medicare Part A, which covers inpatient
    hospital care, skilled nursing facilities, Hospice, and lab
    tests, is expected to be insolvent by 2026, threatening the
    health benefits many expect to receive in the future--2026.
    That is just eight years away.
        Congress and the Administration together have a shared
    responsibility to address these challenges and put our health
    care spending back on a sustainable path. That requires taking
    a hard look at what is working and what is not. It requires the
    courage to make tough choices that preserve and strengthen
    programs for Americans today and in the future.
        The President's budget takes important steps to do just
    that, investing in the long-term health of the American people,
    while also advancing proposals that will help rein in health
    care spending.
        For example, the President's budget continues historic
    funding to fight the opioid epidemic by expanding access to
    prevention, treatment, support services, and research. This
    includes efforts to prevent improper or abusive prescription
    practices that have dangerously and unnecessarily exposed
    patients to opioids.
        It also aims to dramatically decrease the number of people
    affected by HIV, with the goal of reducing new infections by 90
    percent within a decade.
        At the same time, the budget includes several common-sense
    reforms that have been proposed by Republicans and Democrats to
    make Medicare work better for patients by cutting waste, fraud,
    and abuse, increasing competition, and lowering drug prices and
    out-of-pocket costs.
        All told, these efforts achieve roughly a trillion of
    savings in mandatory spending. That is important progress. But
    with $22 trillion in debt, and annual deficits nearly a
    trillion, there is much more work to do.
        As I have said before, mandatory spending accounts for 70
    percent of all federal spending, and the glide path we are on
    takes it to 78 percent by 2029. Until we make structural
    reforms to mandatory spending like Medicare, discretionary
    spending--including funds for defense and border security--we
    will continue to feel the squeeze, and Congress will continue
    to have the same battles year after year over what programs to
    fund, and how to handle our debt.
        I am fearful that my colleagues on the other side of the
    aisle may double-down on this approach, proposing ideas that
    will make our nation's grim fiscal reality even worse. We have
    already seen a proposal that would radically disrupt our health
    care system, adding trillions of dollars to our national debt,
    while eliminating patients' choice and raising taxes. And there
    is no plan to pay for it.
        We have a responsibility to put forward serious solutions,
    not catchy slogans, to improve our health care system and rein
    in spending.
        I look forward to hearing more from the deputy secretary
    this morning as we work through these questions in Congress.
        Mr. Womack. And with that, Mr. Chairman, I am proud to be
    here, and I yield back my time.
        [The prepared statement of Steve Womack follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Chairman Yarmuth. I thank the Ranking Member. And in the
    interest of time, if other members have opening statements, you
    may submit those statements in writing for the record.
        Deputy Secretary Hargan, the Committee has received your
    written statement, and it will be made part of the formal
    hearing record. You will have five minutes to deliver your oral
    remarks, and you may begin when you are ready.

        STATEMENT OF THE HON. ERIC D. HARGAN, DEPUTY SECRETARY,
                DEPARTMENT OF HEALTH AND HUMAN SERVICES

        Mr. Hargan. Thank you. Chairman Yarmuth and Ranking Member
    Womack, thank you for inviting me here to discuss the
    President's budget for HHS for fiscal year 2020.
        It is an honor to be here today, and it is an honor to
    serve as deputy secretary of HHS. The men and women of HHS
    delivered remarkable results since the release of our last
    budget, including record new and generic drug approvals at FDA,
    the beginnings of a sea change in drug pricing behavior,
    opening up new affordable personalized insurance options, and
    initial signs that the trend in drug overdose deaths is
    beginning to flatten and decline.
        The budget proposes $87.1 billion in FY 2020 discretionary
    spending for HHS, while making important reforms to help our
    discretionary and mandatory programs work more effectively and
    efficiently. While this budget delivers on our mission, it is
    important to realize that HHS had the largest discretionary
    budget of any non-defense department in 2018, which means that
    staying within the cap set forth by Congress has required
    difficult choices about the investments we make. Today I will
    highlight some budget proposals around four priorities
    Secretary Azar has identified for the Department: increasing
    the affordability of individual health insurance; bringing down
    drug prices; transforming our health care system into one that
    pays for value; and combating the opioid crisis.
        First, the budget proposes reforms to help deliver
    Americans truly patient-centered, affordable health care. It
    would empower states to create personalized health care options
    that put the American patient in control and ensure he or she
    is treated like a human being, not a number. That means giving
    more responsibility back to states, and increasing options for
    patients, while promoting fiscal responsibility and maintaining
    protections for people with pre-existing conditions.
        Second, the budget supports access to affordable
    prescription drugs through the four pillars of the President's
    drug pricing blueprint: more competition, improved negotiation,
    better incentives around list prices, and lower out-of-pocket
    costs. The budget will boost competition through fostering
    efficient approvals of generic drugs and biosimilars, ending
    anti-competitive practices, delaying or restricting these
    drugs' market entry, and reforming incentives to increase their
    adoption. The budget proposes that historic modernization of
    Medicare Part D to lower seniors' out-of-pocket costs, improve
    incentives for Part D plans that negotiate on their behalf, and
    save money for the program.
        Third, President Trump is focused on the broader goal of
    delivering Americans better care at a lower cost. This means
    ensuring our federal health programs are driving value for
    patients, and living up to the promises that we have made to
    our seniors. The budget proposes a value-based payment system
    for hospital out-patient departments and ambulatory surgical
    centers; expands site neutrality and payments; reduces burdens
    on providers; and addresses overpayments to post-acute care
    facilities. These reforms will mean lower cost for seniors and
    a stronger, more sustainable Medicare program. The budget, in
    total, will extend the life of the Medicare trust fund by eight
    years.
        As you all know, the Administration has worked with
    Congress to make historic investments to address our country's
    opioid crisis, a crisis that, years ago, hit the town I grew up
    in, and it struck my own family.
        The budget fully supports HHS's five-point strategy to
    improve access to prevention, treatment, and recovery services;
    to better target the availability of overdose-reversing drugs;
    to strengthen our understanding of the crisis through better
    data; to support research on pain and addiction; and to improve
    pain management practices.
        The budget provides us four--provides $4.8 billion towards
    these efforts. This investment builds on appropriations
    Congress made in 2018, and ensures that the Substance Abuse and
    Mental Health Services Administration will continue all its
    opioid activities at the same funding level as fiscal year
    2019. That includes the $1 billion state opioid response
    program, which we have focused on access to medication assisted
    treatment, behavioral support, and recovery services. The
    budget proposes to provide a full year of Medicaid benefits for
    pregnant women diagnosed with an opioid use disorder, and takes
    steps to reduce inappropriate prescribing within federal health
    care programs.
        Finally, the budget invests in other important public
    health priorities, including fighting infectious disease at
    home and abroad. In particular, it proposes $291 million in new
    funding for the first year of President Trump's plan to use the
    effective treatment and prevention tools we have today to end
    the HIV epidemic in America by 2030.
        This budget will advance American health care and help
    deliver on the promises we have made to the American people. I
    look forward to working with this Committee on our shared
    priorities this year, and I look forward to the Committee's
    questions today.
        [The prepared statement of Eric D. Hargan follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Chairman Yarmuth. Very good. I thank you for your
    testimony. The Ranking Member and I will defer our questions
    until the end.
        So with that I recognize the gentleman from New York, Mr.
    Higgins, for five minutes.
        Mr. Higgins. Thank you, Mr. Chairman. And thank you for
    being here, Mr. Hargan.
        Firstly, I just wanted to point out that the National
    Cancer Institute was seeking a $400 million increase in funding
    over this year for next year. This was intended to bring
    promising new cancer treatments, particularly in the area of
    immunotherapy, to market.
        As you may know, that drug discovery is a process that
    takes some 10 or 15 years. So when funding is delayed,
    promising new treatments are delayed, and those promising new
    treatments are denied for people that are in desperate need of
    new, effective therapies.
        So the President's budget proposes to cut $900 million from
    the National Cancer Institute. What is the rationale behind
    that cut, which is enormous, based on anybody's view of it?
        Mr. Hargan. When we work within the caps that--on the
    budget, which were set forth by President Obama and this
    Congress years ago, we face a tough budgetary environment this
    year.
        We fully support medical research and the NIH. We know that
    this is very important to the American people, and particularly
    the National Cancer Institute is important to ongoing research
    in oncology and cancer area.
        Within that we are also proposing, as I am sure you have
    seen, increases for pediatric cancer. So we have attempted to--
    --
        Mr. Higgins. What is that amount?
        Mr. Hargan.----focus on----
        Mr. Higgins. Is that $50 million?
        Mr. Hargan.----on pediatric cancer?
        Mr. Higgins. Is that initiative $50 million dollars more
    for pediatric?
        Mr. Hargan. Yes.
        Mr. Higgins. Okay.
        Mr. Hargan. So we are proposing new money for pediatric
    cancer.
        Mr. Higgins. So it is still a cut of $850 million,
    generally, to the National Cancer Institute. Does that concern
    you, as a----
        Mr. Hargan. Within the discretionary budget that we have,
    we had its--the NIH is the largest component of our
    discretionary side of our budget. And we have attempted to be
    evenhanded in how we approached the--approached it. We have a
    lot of different initiatives within the Department, and we
    wanted to make sure that it--we were as evenhanded as we could,
    and as thoughtful as we could when we were confronting----
        Mr. Higgins. Well, here is what I would say to you, that
    government funding is--has been involved in about 97 percent of
    the basic science and research toward the goal of bringing
    promising new cancer treatments to market. In fact, the last
    100 major products, from Herceptin for metastatic breasts
    cancer, and many of the vaccines for immunotherapy are a direct
    result of government involvement in the financing of clinical
    trials that test both efficacy and safety.
        And a cut of this amount, even when you take into account
    the increased funding for pediatric cancer, is still $850
    million. That will have a devastating impact on what NCI is
    able to fund to the various cancer institutes throughout the
    country, including in Buffalo, New York, the nation's first
    cancer center, Roswell Park. So that is of concern.
        Secondly, on the issue of Alzheimer's, Alzheimer's is a
    horrible disease. It inflicts pain not only on the afflicted,
    but those who love and care for the afflicted. Some 3.5 million
    new cases will be diagnosed this year. And the primary
    treatment is a drug called Aricept. And it was developed
    probably two decades ago. And in 60 percent of cases, it may
    delay the onset of Alzheimer's by maybe six months. This
    problem is growing, and we don't seem to have a handle on it.
        I would ask you what are the Administration's initiatives,
    as it relates to developing new treatments for Alzheimer's,
    beyond the Aricept era of those drugs?
        Mr. Hargan. We definitely see the impact of Alzheimer's on
    our--directly on our--the beneficiaries of our programs.
    Obviously, a disease like that falls straight into many
    elements of the Medicare program that we administer. So we--and
    we take the issue of medical research very seriously across the
    Department to develop new therapies, new modalities to treat
    it.
        It has proven a difficult disease to solve, but we are
    committed to standing behind our researchers that are working
    on that, both at NIH and then in the grantee community that is
    served with the money that is given generously by Congress to
    NIH.
        Chairman Yarmuth. Okay, the gentleman's time has expired. I
    now recognize the gentleman from Missouri, Mr. Smith, for five
    minutes.
        Mr. Smith. Thank you, Mr. Chairman. Thank you, Deputy
    Secretary Hargan, for being here.
        Labor HHS has been one of the most difficult funding bills
    to get through Congress. In fact, the fiscal year 2019 Labor/
    HHS being passed by the Republican House, the Republican
    Senate, and then signed by President Trump was the first time
    that a Labor/HHS bill had passed in over 20 years. And I think
    it is very noteworthy that the last time that a Labor/HHS bill
    was passed and funded was in 1996, the prior time that the
    Republicans were in power.
        And so, I find it to be very ironic that my colleagues on
    the other side may throw arrows at you, and may criticize your
    budget, but yet they have failed to ever, in the last 20 years,
    to pass their own Labor/HHS budget. It is easy to point blame,
    but it is their turn to govern. And let's see if they govern
    this Congress in being able to pass a budget, and whether they
    will be able to appropriate a Labor/HHS.
        I do want to say, Secretary, where did you grow up?
        Mr. Hargan. I was actually born in Cape Girardeau,
    Missouri.
        Mr. Smith. What a wonderful city.
        [Laughter.]
        Mr. Hargan. Absolutely.
        Mr. Smith. It is home of Rush Limbaugh, as well.
        [Laughter.]
        Mr. Smith. So two great people from southeast Missouri. And
    it is the great congressional district that I get to represent.
        So we definitely are very interested of your rural
    upbringing. How has that affected how you have helped mold this
    budget?
        Mr. Hargan. Well, I didn't just grow up in a rural area in
    deep southern Illinois after being born in southeast Missouri,
    but my mother was actually an x-ray technician in a small
    hospital outside the town of 800 that I grew up in. She was an
    x-ray tech there for 58 years. So, yes, my late mother was
    there from 1953 to 2011.
        So this is--the area--the issue of rural health is
    something that is extremely close to my heart. Having grown up
    underfoot in a hospital like that, you see the real challenges
    that are faced by rural hospitals and rural providers close up,
    and really, for my entire life.
        I was very gratified that Secretary Azar last year
    instituted a rural health task force that brings together a lot
    of the elements of the Department to focus on rural health,
    particularly. In many cases, agencies deal specifically with
    their parts of the rural health landscape, and being able to
    unify that and focus on it when we have a lot of shared issues
    across the different agencies, I think, is going to result in
    some good effects that we are going to be able to have. And
    also, allowing more flexibilities around the use of tele-health
    and other sort of technological areas that I think are going to
    be important to solving rural health issues as we go forward.
        We are going to need a lot of imagination to deal with the
    issues that are coming forward, a lot of good thinking about
    what is going--about how we solve the problems with rural
    health.
        Mr. Smith. We have nine critical-access hospitals in
    southeast Missouri, nine qualified health centers that serve
    almost 130,000 patients in 51 different sites. So when you are
    looking at a geographic area of 20,000 square miles, access to
    quality, affordable health care in rural America is big. So, I
    appreciate the Administration's effort on that. I appreciate
    your background.
        Earlier I stated the fiscal year 2019 appropriations and
    budget passing for the first time in 20 years. Mr. Hargan, what
    benefits did you see from the certainty of fully funding HHS?
        Mr. Hargan. Yes, well, it was tremendous. As you say, the
    first time in 22 years that we have had a budget pass for the
    Department. So it creates a lot of confidence on our part to be
    able to plan for the future.
        We were able to work through a lot of the issues to stand
    out the new initiatives--say the Ending HIV Epidemic in America
    initiative that the President announced in the State of the
    Union Address. It allows us to focus on--rather than focus on
    funding issues, we really focused on new initiatives to help
    the American people, to allow us to promote new ideas that we
    are going to--that we are standing out right now.
        Mr. Smith. I do want to state real quickly that proposal on
    the investment for eliminating HIV in the President's State of
    the Union is something that I applaud. And also investment in
    pediatric cancer research.
        So thank you for being here, thank you for representing the
    Show Me State very well. Even though you were just born in Cape
    Girardeau, we adopt you. So----
        [Laughter.]
        Mr. Hargan. I appreciate it. Thank you. Thank you,
    Congressman.
        Chairman Yarmuth. The gentleman's time has expired. The
    love fest for Missouri will continue at some point.
        The Chair now recognizes the gentleman from Texas, Mr.
    Doggett, for five minutes.
        Mr. Doggett. Thank you very much for being with us, Mr.
    Hargan. But as to health, how is Secretary Azar? Is he ill this
    morning?
        Mr. Hargan. I don't have any knowledge of----
        Mr. Doggett. Well, I know he has offered all week to be
    here. This is the second week he has been offered an
    opportunity to come. And it is almost as if the Administration
    has a policy of being fearful of sending its cabinet members to
    be questioned, indeed, on the tax bill. We couldn't get anyone
    at any level of the Trump Administration to come and answer
    questions and be held accountable about the hypocrisy in the
    bill.
        So I do find it troubling that he has not come to respond
    on some of these issues, and all the more so because of what
    happened yesterday. And that is the decision of the
    Administration down in my home state of Texas to, once again,
    throw in the towel with our indicted Attorney General, and not
    only to go after pre-existing conditions, which you have been
    doing, but to say that you favor, as our Republican colleagues
    did 60 or 70 times, the total repeal of the Affordable Care
    Act. And I don't see anything in your budget that would provide
    comparable care for the tens of millions of people that will
    lose out if you and the Texas Attorney General are successful
    in destroying the Affordable Care Act, which our Republican
    colleagues tried so often but were unable to do anything about.
        Let me ask you, since I am sure we are not going to agree
    on that, about one issue that I would hope we could agree on,
    that you referred to in your testimony, though I don't see it
    anywhere in the fine print, and that is this whole question of
    prescription drug costs, and whether we can save taxpayers and
    seniors anything on that.
        Candidate Trump made it very clear that he could save
    hundreds of billions of dollars on prescription drugs, and it
    seems to me that this budget really abandons that. It goes
    around the edges. It does not deal with what candidate Trump
    said on January 11th of 2017, among other times, that we are
    the largest buyer of drugs in the world, and yet we don't bid
    properly. And he said we could save hundreds of billions of
    dollars, and of course, he is right. The estimates are up to
    half-a-trillion dollars in annual--excuse me, in 10-year
    savings that could be had by negotiating drug prices.
        I don't see anything in this proposal that calls for the
    negotiation of drug prices, and I would just ask you if the
    Administration is abandoning candidate Trump's promise that we
    bid, as he talked about it, that we negotiate drug prices in
    order to protect seniors and to protect taxpayers.
        Mr. Hargan. We welcome all of this, we welcome this issue.
    The President is very dedicated to lowering drug prices for
    Americans----
        Mr. Doggett. So far he hasn't been too successful. But I
    am--he has reiterated his desire, and I hope there could be
    some bipartisan action on this.
        Mr. Hargan. We have the first lowering of drug price
    inflation in 46 years.
        Mr. Doggett. Well, he didn't run on a promise that he would
    keep prices from going up quite as much as they had before. He
    said he was going to do something to lower them and save us
    hundreds of billions of dollars. And there is nothing in this
    budget to do that.
        Mr. Hargan. We have seen the actions that have been taken
    that resulted in companies lowering drug costs for cholesterol
    medicine, for diabetes medicine----
        Mr. Doggett. They've lowered it where they had competition
    to meet. And I agree with you that competition is a good way to
    deal with this problem. But unless there is a negotiation, as
    the President himself pointed out when he was a candidate, you
    don't get where we need to be.
        And in that regard, I will move from prescriptions directly
    into one specific prescription and another issue you mentioned,
    which is the opioid crisis.
        We know that the price of Naloxone from one provider went
    up about 700 percent at the same time our first responders all
    over the country were being told to stock it. Chris Christie,
    who headed the President's opioid commission, and more recently
    the Office of National Drug Control Policy, Jim Carroll, in
    testimony to the Oversight Committee here within the last
    month, have agreed that what we need to do is at least, if we
    can't get comprehensive negotiation through Medicare, we ought
    to at least negotiate down the price of Naloxone, which can
    help respond to the fact that we are seeing so many Americans
    every day--an average of 115 every day--die of overdose.
        Do you agree with Mr. Carroll and Chris Christie and his
    commission, that we ought to be negotiating on the prices for
    these overdose drugs?
        Mr. Hargan. We believe that the most popular form of
    Naloxone, which is Narcan, the nasal spray, is highly
    affordable, that there are other forms of Naloxone that have
    higher prices. But we believe that it is widely available to
    all states and first responders.
        Mr. Doggett. While I don't agree with you, I thank you for
    your candor. You don't really think there is a problem on
    Naloxone that needs to be negotiated.
        Mr. Hargan. We believe that it is highly affordable for----
        Mr. Doggett. Thank you very much.
        Chairman Yarmuth. The gentleman's time has expired. I now
    recognize the gentleman from Utah, Mr. Stewart, for five
    minutes.
        Mr. Stewart. Thank you, Mr. Chairman.
        Deputy Secretary, thanks for being here. You have a
    difficult job, but it is important work. And I think you take a
    very serious approach to that. I want to thank you for that.
        And the proposal that you have before us that you are here
    to defend today, I would like to point out before I get to my
    main point and my question, many parts of it are bipartisan. I
    was interested to see a New York Times, which is hardly a
    bastion of conservative thought--even the New York Times in the
    last day had an editorial scolding the Democrats for
    disparaging it and putting aside some of the proposals that you
    and the President have put forward, saying that many of them
    make sense, that many of them should have bipartisan support,
    and they are just practical reforms that will drive down costs.
    And I could go into that, but again, that is not where I want
    to spend my time.
        But I will conclude by saying this. We will hear again and
    again and again--we are going to be told the Administration
    wants to cut $845 billion from Medicare, and $1.5 trillion from
    Obamacare. But again, it is not true. It is just simply not
    true. About a third of that $845 billion is being shifted out
    of Medicare, but it is being shifted into other programs. The
    money is still going to be spent, it is just being spent more
    efficiently.
        And again, I appreciate your being here to defend that, and
    I hope you do so vigorously, because these are defensible
    positions that you and the Administration have taken.
        Now, if I could get to my point, and that is, like you, I
    grew up in a small town. In fact, I have you beat on this. You
    grew up in Mounds, which has 800 people. That was a big city to
    me. I grew up in a town of 295. It had two bars. I don't
    understand how that quite adds up.
        But in my district--I represent Salt Lake City, but also
    very rural parts of Utah, some incredibly beautiful places--
    Zion National Park and Bryce's and Canyonlands--but these are
    rural, difficult places to get to here in the country. About a
    third of my district lives very rural. They drive up to an
    hour, just--not to see a specialist--just to see a family
    doctor.
        So talk to me a little bit about tele-health. I mean we
    think it is incredibly important to providing our rural
    communities with better health care. We know you are interested
    in this. Take a few minutes and tell us how we are going to
    help our rural communities, especially in the West.
        Mr. Hargan. Sure. We think that it is one thing that has
    got to be one of the keys. We have to get more specialty care.
    We have to have more access to more sophisticated care to be
    provided at the rural locations. And with--between that and the
    development of a health care workforce that can get the
    information once we are able to use tele-health to provide
    information to a rural setting, I think we will be able to see
    there to be just much more and better provision of health care
    in rural areas.
        So we have allowed there to be much more flexibility in CMS
    for the use of tele-health, and we are looking forward to kind
    of building out on that, and----
        Mr. Stewart. Elaborate on that, if you would, the
    flexibility and, you know, practical application, what that
    means to a family.
        Mr. Hargan. So a practical application would be that--how
    do you--if you have somebody who is going to be prescribing to
    you, can you use a--can you use tele-health to be able to--for
    a patient in one location to be able to have a screen in front
    of them, to be able to talk to a doctor. A doctor can then
    analyze something, make a prescription, then the prescription
    can be sent by tele-health, and then sent bar-coded to a
    pharmacy, and they can dispense it there, so that you can
    actually do prescriptions remotely.
        You can actually provide--with the sophistication of the
    cameras and the technology we have now, you can have a lot of
    things that are done, a lot of visits, virtual visits that are
    done by doctors that can provide really good and sophisticated
    care and diagnoses to a patient which can then be used locally
    to provide care.
        Mr. Stewart. So, Mr. Hargan, I would be curious, and I
    don't know the answer to this.
        One of the benefits--again, my district and others--is to
    make it more accessible. It can be difficult, especially for
    someone on a fixed income, someone who has some limited
    capabilities, to travel an hour to see a doctor. That is a
    great thing. Get that--you just indicated that that was
    possible.
        I am curious whether this is also more efficient. Do we
    actually save money by some of these processes, where the
    doctor is able to see the patient more quickly and more
    effectively?
        Mr. Hargan. We have been doing research on that. We look
    forward to sort of further developing that with Congress about
    what the cost impacts are going to be. But we definitely want
    to have them move from higher-cost settings like hospitals into
    being able to take care of themselves at home.
        I personally have sponsored this thing called the Patient
    Empowering Technology Summit that--we are looking to advocate
    for more tele-health, more wearable technologies, and things
    where patients can have technology for themselves in their own
    homes, in their own settings, that allow them to have better,
    more sophisticated care for themselves at home or in local
    settings like community health centers.
        Mr. Stewart. And thank you. I am out of time, but I
    appreciate your answers.
        Chairman Yarmuth. Thank you. The gentleman's time is
    expired. I now recognize the gentlelady from Illinois, Ms.
    Schakowsky, for five minutes.
        Ms. Schakowsky. Thank you, Mr. Chairman, and thank you,
    Deputy Secretary. I want to talk to you about Title X, which is
    the only federal program dedicated to contraceptive health care
    and family planning services. The program has operated
    successfully for about half a century, and serves 4.1 million
    low-income individuals, which is why I think its funding
    actually should be increased. Right now it is--in the budget it
    is $280 million. I think $400 million would be better.
        But my concern right now is the way that a--an executive
    order was issued, and a regulation that would dramatically
    change Title X and the organizations that are possible
    recipients of Title X funding, providing a tremendous service.
        I wonder if you could describe in--perhaps more
    specifically what we see, many of us, including providers, as a
    domestic gag rule preventing physicians and providers from
    giving the full story of the full range of health care
    services, including even recommending or referring for abortion
    services.
        Mr. Hargan. The final rule is not a gag rule. It is--it
    does not prohibit. In fact, it affirmatively permits
    counseling, non-directive counseling, about abortion. So it
    is--in this way it is different than the Reagan
    Administration's Title X rule that was upheld in the Supreme
    Court.
        What we are trying to do is to make sure that the Title X,
    the statute we have to obey, says none of the funds
    appropriated under this title shall be used in programs where
    abortion is a method of family planning. This rule is intended
    to safeguard the requirements in the law that require us not to
    fund abortions or to--in the program.
        Ms. Schakowsky. Well, you know that under current law,
    under the Hyde amendment, no dollars can be spent for abortion
    services. But what we are concerned about--and correct me if I
    am wrong--that organizations like Planned Parenthood, who
    provide many preventative services, the single largest
    organization to receive Title X funding, believes that their
    programs would have to dramatically change, not just a matter
    of providing abortions, but my understanding is that counseling
    about abortions, leaving it as a potential option, or for--with
    other money, not federal dollars, providing abortion.
        Are you saying that Planned Parenthood is misinformed, and
    that they will continue to receive funding from the federal
    government under Title X?
        Mr. Hargan. I don't know the details of Planned
    Parenthood's internal finances or how they arrange their
    centers. I know as long as they comply with the law, that they
    will be entitled to apply for the funds under Title X, as long
    as they comply with the rules and regulations----
        Ms. Schakowsky. Well, how would you define them, complying
    with the law? That is what I want to get at, because many of us
    feel that the--preventing qualified providers who--the Planned
    Parenthood itself sees about five million people a year, often
    for screening for cancer, STDs, for basic health care, that
    they would be prevented from getting Title X, which is very
    important.
        Mr. Hargan. Well, the final rule is there to help provide
    high-quality, comprehensive family----
        Ms. Schakowsky. No, no, no. I want to know, regarding
    abortion, how this affects organizations like Planned
    Parenthood.
        Mr. Hargan. I would have to refer you to them for the
    impacts that they think the rule would have for that
    particular----
        Ms. Schakowsky. No, except that you--aren't you the person
    that is speaking on behalf of the Administration on a dramatic
    change?
        In your view, do you think these changes in Title X will
    lessen the number of people who get served by Title X?
        Mr. Hargan. I don't believe that--we have lots of
    federally-qualified health centers located all over the
    country, 1,400 health centers----
        Ms. Schakowsky. Other than what? You said we have many
    other.
        Mr. Hargan. Other providers.
        Ms. Schakowsky. Than Planned Parenthood?
        Mr. Hargan. And Planned Parenthood can comply with the
    rule. They are--they can come and provide these services. And
    we are not intending to box out any particular provider. We
    just have to make sure that the law is implemented, and this
    regulation is intended to implement the intent of that law.
        So if they intend to apply for this, it is not directed to
    prevent them from applying for these things, just that they
    have to comply with the law. So any provider can apply for
    this, as long as they fit within the regulatory framework and
    the statutory framework.
        Chairman Yarmuth. The gentlelady's----
        Ms. Schakowsky. Their concerns are warranted, and I yield
    back.
        Chairman Yarmuth. The gentlelady's time has expired. I now
    recognize the gentleman from Pennsylvania, Mr. Meuser, for five
    minutes.
        Mr. Meuser. Thank you, Mr. Chairman, and thank you to
    Deputy Secretary Hargan, very much, for being here with us this
    morning.
        The President's budget seems to me to be very focused on
    making health care more affordable. In fact, better for
    beneficiaries. For instance, the goal is to make prescription
    drugs far more affordable than over the past.
        It also provides much more responsibility to the states,
    and there is no question--I would say 50 out of 50 states--
    appreciate that.
        It also addresses--in, really, an unprecedented manner, and
    I hear this from drug awareness groups in my--throughout my
    district--very strong fixes and support to fight the deadly
    opioid and drug epidemic that many districts and communities
    face.
        So there is a lot of positives. It also has programs such
    as Medicare Advantage, or enhances them by--Medicare Advantage
    has a--has reduced both premiums and deductibles, and I have
    heard this from many constituents, and the data proves that to
    be the case. So there is as number of positives.
        What I would like to ask is my district, on the opioid and
    drug epidemic issue, like many communities throughout the
    country, have some big problems. Can you outline what the
    Department's budget request allocates to address this crisis?
        Mr. Hargan. I am happy to. As I have mentioned, you know, I
    come from a community that has been afflicted by the opioid
    epidemic for decades. In fact, in my own family. The President
    has signaled this as, you know, the foremost public health
    crisis of our time, and the budget invests $4.8 billion, an
    increase over last year, in a difficult environment, of over--
    of $123 million. This is to--this shows the seriousness with
    which we have to take this. It is the driver of a three-year
    decline in American life expectancy.
        And the efforts that the Administration has been taking has
    resulted in what we hope to be a flattening and a decline for
    the first time in years of the opioid overdose deaths that we
    are seeing. So we are driving both research into non-addictive
    pain killers, the greater access to medication-assisted
    treatment, more money for states and opioid response grants
    that we have been standing out over the last couple of years to
    really build out the capacity of the states and localities to
    deal with this, and for families to get access to the treatment
    and the recovery services that they need and deserve.
        Mr. Meuser. Thank you. You addressed somewhat the issue of
    rural areas and the support that this budget provides. You did
    mention something about workforce development. Could you expand
    upon that?
        Mr. Hargan. So we have a number of proposals, one of which
    within the Indian Health Service, which addresses a lot of
    rural areas throughout the United States, where we are trying
    to focus on community--the community health aid program. The
    budget advocates for this, which is providing a training for--
    to build out a corps of community health aids who can be on the
    ground in rural areas. And also, Indian Health Service is one
    of our foremost agencies identified by us in fighting the
    opioid epidemic, which disproportionately affects tribal
    members.
        So--and we can get lessons learned from a lot of these
    things, in terms of workforce development.
        Mr. Meuser. Great. Can you describe a few of the Medicaid
    reforms that are in this budget?
        Mr. Hargan. Yes. So the Medicaid reforms, as you have
    mentioned, are really dedicated to providing flexibilities for
    states. So we have put forward a block grant program of $1.2
    trillion over 10 years that really is intended to refocus the
    Medicaid program on the populations it was originally intended
    to serve: pregnant women, children, the disabled, the elderly.
    So we are really focusing on the most vulnerable populations,
    and giving states flexibility to deal with their particular
    populations that they uniquely have the knowledge on the ground
    of how to deal with them.
        So we have--it is--so we have actually stood out more
    programs, more flexibilities on that side, and $1.2 trillion on
    a new program to address these issues and provide flexibilities
    for the states.
        Mr. Meuser. Thank you. I just got a couple of seconds here.
    I will just ask quickly. Prescription drugs, are there one or
    two examples of what you are doing effectively to reduce
    prescription drug costs?
        Mr. Hargan. Yeah. We have seen companies reduce in
    cholesterol medicines, in insulin for diabetics, and in
    hepatitis C drugs, where companies actually announced lowering
    drug costs for patients in those areas, and these are widely-
    used drugs. Millions of people use cholesterol drugs, as well
    as those dealing with diabetes.
        Mr. Meuser. Thank you.
        Thank you, Mr. Chairman.
        Chairman Yarmuth. Sure. The gentleman's time has expired. I
    now recognize the gentleman from Nevada, Mr. Horsford, for five
    minutes.
        Mr. Horsford. Thank you, Mr. Chairman, and thank you for
    holding this hearing to allow us to discuss the President's
    Health and Human Services 2020 budget proposal. I would like to
    start off with Medicaid.
        Today more than 640,000 Nevadans rely on Medicaid, which
    provides health coverage to children, pregnant women, parents,
    seniors, and individuals with disabilities.
        President Trump promised during his 2016 campaign that he
    would not cut Medicaid funding. In fact, on May 7th, 2015 then-
    candidate Trump tweeted--and I quote--``I was the first and
    only potential GOP candidate to state there will be no cuts to
    Social Security, Medicare, and Medicaid.''
        Deputy Secretary, can you tell me and my constituents back
    in Nevada why the President is now breaking his promise and
    proposing to cut Medicaid by $1.5 trillion over the next 10
    years?
        Mr. Hargan. The budget does not propose to cut. It cuts and
    adds in $1.2 trillion, as I mentioned, in new grants that allow
    flexibilities for states to respond. So, whereas----
        Mr. Horsford. And those new cuts----
        Mr. Hargan. Whereas----
        Mr. Horsford. Those new programs are being paid for through
    cuts to the existing Medicaid program, correct?
        Mr. Hargan. So there--it shifts--the budget shifts the
    money from being paid as it currently is to more flexibilities
    on a different line. So it might appear to say it cuts Medicaid
    by a certain amount, but actually the money is mostly shifted
    into a more flexible budget line.
        So we are standing up the market-based health care grants
    to the states, which is going to allow them to focus the
    program more flexibly. So----
        Mr. Horsford. Yes. As a former state legislator, having
    worked on budget issues, we understand what those block grants
    to the states would actually mean. For states like Nevada, that
    have population growth, it is not going to actually allow us to
    keep up with our health care needs.
        Let me turn to the HIV eradication. President Trump, in his
    State of the Union speech said it is his goal to end the U.S.
    HIV epidemic. And while that is a very commendable goal, I
    question the approach. Some of my colleagues have talked about
    the $1.2 billion cuts to global health programs, but we can't
    ignore the cuts the Trump Administration is making to domestic
    health care programs that help address HIV.
        You see, Medicaid is the single largest source of coverage
    for all Americans with HIV, and this plan looks to gut the
    program. This will be detrimental in Nevada, which has the
    seventh-highest population of individuals with HIV in the
    nation. Evidence shows that reducing federal funds through a
    per capita or block grant would limit Nevada's ability to
    respond to public health crisis such as the HIV epidemic or the
    opioid epidemic. Without Medicaid coverage, 8,900 people living
    with HIV in Nevada will likely go without any care.
        So Deputy Secretary, how does the Administration plan to
    make up for the loss of care for HIV patients?
        Mr. Hargan. We have proposed to end the HIV epidemic in
    America by 2030. This budget proposes $291 million targeted to
    the areas that account for 50 percent of new diagnoses. We are
    dedicated to ending this scourge for all Americans, and we
    followed the advice of our public health specialists, our
    researchers, that----
        Mr. Horsford. You are not answering my question.
        Mr. Hargan.----we think between----
        Mr. Horsford. Reclaiming my time, can you answer the
    question? How does your plan specifically seek to end the
    eradication of HIV, when you are making these dramatic cuts?
        Mr. Hargan. We are going to be standing out, through the
    community health clinics, more access to PrEP, which will allow
    us to suppress the virus on the front end, prophylactically,
    and then also maintain funding for the Ryan White CARE Act,
    with--which allows us to--which is where we get the ART on
    the--for people who are infected.
        So between PrEP and ART, and through community health
    clinics, and through the state and local-based elements of the
    Ryan White CARE Act, we believe that we will be able to,
    through those and----
        Mr. Horsford. I will look forward to getting more
    information, since it is not very clear.
        I want to just mention on the issue of tele-health--I know
    the budget does factor in $44 million of additional money to
    tele-health grants. I just visited a number of rural health
    care centers in my district last week with FCC Commissioner
    Starks.
        However, based on the need that I heard from those
    providers, $44 million, while an increase, still seems rather
    inadequate, based on the information that I received from those
    health care providers. So I would ask the Administration to
    really look at that, based on the fact that it is an area where
    we may share some agreement. Thank you.
        Mr. Hargan. Thank you, Congressman.
        Chairman Yarmuth. The gentleman's time has expired. I now
    recognize the gentleman from South Carolina, Mr. Timmons, for
    five minutes.
        Mr. Timmons. Thank you, Mr. Chairman. Thank you, Deputy
    Secretary, for taking the time to come before our committee
    today.
        We are hearing a lot from my colleagues across the aisle
    about the changes in spending. The spending priorities that
    have been proposed are different than last year, and these cuts
    that we keep hearing about--I understand some of their
    concerns. But I want to talk to you about a different kind of
    cut.
        We have $22 trillion in debt right now. We passed a $1
    trillion deficit budget. What happens when our credit limit
    runs out? It is not a question of if, it is a question of when.
    So whether it is five, 10, 20 years from now, or next year, I
    want you to give me the scenario of a 20 percent across-the-
    board cut to your budget.
        Mr. Hargan. Well, as you have seen, we are trying to
    preserve the viability of these programs. In fact, in the
    budget we are extending the life of the Medicare trust fund by
    eight years, just simply by lowering the rate of growth in the
    program from 7.8 percent to 6.9 percent, and by taking some of
    the elements out of the Medicare trust fund that may not really
    belong there, like graduate medical education or uncompensated
    care--by moving those out into the general fund, we are
    extending the life of the Medicare trust fund by years, which
    helps us keep our promises to American seniors.
        Just by enacting some common-sense reforms to these
    programs, we are going to extend the life and the promises that
    we have made.
        Mr. Timmons. Let's get more specific, though. So next year
    you get 25 percent less dollars. You--just specifically, what
    would you have to do?
        Mr. Hargan. You know, I would say that if we have
    hypothetical scenarios, we work through a lot of these
    different elements in 25 percent to--a scenario would be a huge
    cut this year.
        We have proposed a 12 percent cut in our discretionary
    lines within the budget. It would require a lot of thoughtful
    work on our budget people's behalves to make sure that we can
    balance out the necessary--there is a focus, like, for example,
    this year, opioids, pediatric cancer, where we are trying to
    focus on these areas. But it would require a lot of difficult
    decisions.
        Mr. Timmons. Would Americans see a reduced quality of
    health care?
        Mr. Hargan. With a 25 percent cut, it depends on where we
    would, hopefully, be able to--we would be able to work to make
    sure that there were no lowering in overall care for Americans.
    We would do our best.
        Mr. Timmons. You would do your best, but 25 percent less
    money, it would be catastrophic.
        Mr. Hargan. It would be a blow to have to endure larger and
    larger cuts as time went on.
        Mr. Timmons. So the Budget Committee of the United States
    Congress should take very serious steps to make sure that that
    doesn't happen.
        Mr. Hargan. Yeah, I think that we have laid out some
    common-sense reforms in this budget that would enable us to
    take action in time to prevent--to make moderate changes now
    that would prevent worse decisions taking place later on down
    the line.
        Mr. Timmons. Thank you.
        Thank you, Mr. Chairman.
        Chairman Yarmuth. I thank the gentleman. I now recognize
    the gentleman from Virginia, Mr. Scott, for five minutes.
        Mr. Scott. Thank you.
        Mr. Hargan, if an--does your budget anticipate funding
    agencies that discriminate based on religion?
        Mr. Hargan. We enforce all the civil rights laws, and all
    the constitutional safeguards that are given to us in trust.
        Mr. Scott. Okay. So if an agency said that they are going
    to discriminate in hiring based on religion, and then turned
    around and--say if it is an adoption agency only considers
    certain religions for adoption, would you--would that
    disqualify them from federal funding? Or would you support that
    discrimination in hiring and providing the service?
        Mr. Hargan. We can balance the needs of grantees and their
    religious expression with--that is one of the constitutional
    guardrails----
        Mr. Scott. Is that a yes or a no?
        Mr. Hargan.----that we are given to enforce.
        Mr. Scott. Would that agency be disqualified by virtue of
    the fact that they intend to discriminate in hiring with the
    federal money, only hiring, say, Christians, other religions
    need not apply; and then only considering for adoption services
    Christian families, other religions need not apply? Would they
    be disqualified from federal funding?
        Mr. Hargan. So I assume you are dealing with the Miracle
    Hill----
        Mr. Scott. I am not--I am just asking a general question.
        Mr. Hargan. We have to protect both religious expression--
    --
        Mr. Scott. Is that a yes, you would fund such an agency?
        Mr. Hargan. We have to protect all the constitutional
    rights----
        Mr. Scott. Is that a yes, you would fund such an agency?
        Let me ask it another way. Is it yes, you have funded such
    an agency?
        Mr. Hargan. South Carolina approached us with a request for
    an exception for--to allow them to place more children with
    foster care and loving homes----
        Mr. Scott. Is that a yes? Wait, wait, wait a minute. Wait.
    An agency intends to discriminate based on religion in hiring,
    and then based on religion they are going to disqualify
    families from participating in adoption services.
        Mr. Hargan. No, no family is disqualified for participating
    in adoption services. Any time that an organization like
    Miracle Hill----
        Mr. Scott. They----
        Mr. Hargan. It--they are referred back to the state, and--
    the state or another agency. So anyone who wants to participate
    in that as a foster parent can apply to the state, they can
    apply to another agency----
        Mr. Scott. But not that agency. That agency is going to
    discriminate. Is that right?
        Mr. Hargan. The agency is allowed to----
        Mr. Scott. To discriminate.
        Mr. Hargan.----to express----
        Mr. Scott. And you will--and they can use federal funds
    doing that?
        Mr. Hargan. The agency is allowed to express its
    religious----
        Mr. Scott. I am just trying to get a straight answer. I
    mean this is a very straightforward question.
        Mr. Hargan. No one is prevented from participating in that
    foster care program.
        Mr. Scott. They are--but the agency can disqualify them--
    they are not going to consider any non-Christian adoptive
    parents, is that right? And you are going to give them federal
    money?
        Mr. Hargan. The state agency----
        Mr. Scott. Excuse me. You gave them federal money?
        Mr. Hargan. The state agency will not turn away anyone who
    wants to apply to----
        Mr. Scott. Answer--this is----
        Mr. Hargan.----be a foster----
        Mr. Scott. Did you fund--are they spending federal money
    and discriminating? Yes or no.
        Mr. Hargan. We give money to the state----
        Mr. Scott. Yes, okay.
        Mr. Hargan. We give money to the state, and the state gives
    it to the agency----
        Mr. Scott. Yes, okay. I think we have gotten the point. You
    have funded an agency that has the express intention--I do not
    know if they are doing it or not--but discriminating in hiring
    with federal money, and disqualifying, that agency, parents who
    are not the right religion from participating, and they are
    using federal money.
        Mr. Hargan. I could not as a Catholic participate as a
    foster family with that organization.
        Mr. Scott. And you gave them federal money?
        Mr. Hargan. I could not participate.
        Mr. Scott. You gave them federal money. Let me get to
    another one, talking about block grants. Is it true that a
    community services block grant that reduces poverty, did they
    get zeroed out?
        Mr. Burchett. I believe that we have not allocated money
    for that program.
        Mr. Scott. And Social Services' block grant, supportive
    services for families, did they get zeroed out?
        Mr. Hargan. Like other programs where we have sort of low
    results for the program----
        Mr. Scott. Is that a yes?
        Mr. Hargan.----we zero them out.
        Mr. Scott. And you are going to a block grant with - in
    terms - after the Affordable Care Act. Your plan anticipates
    ending the Affordable Care Act and replacing it with a block
    grant, and the block grant will increase annually with
    inflation; is that right?
        Mr. Hargan. Yes, we have the whole provision set out.
        Mr. Scott. Okay. And the inflation, is that regular
    inflation or is medical inflation?
        Mr. Hargan. I would have to get back to you. I believe it
    is regular inflation.
        Mr. Scott. And so what is the difference between regular
    inflation and medical inflation?
        Mr. Hargan. There are lots of different calculations for
    different kinds of----
        Mr. Scott. Medical inflation is a lot higher than regular
    inflation. So every year you would be falling behind. The
    purchasing power of that block grant would be eroding every
    year based on the difference in inflation; is that right?
        Mr. Hargan. If the inflation rate that year were higher
    than regular inflation.
        Mr. Scott. Oh, come on. The inflation rate for medical
    inflation has been higher than regular inflation. When was the
    last time it was not higher?
        Mr. Hargan. I do not know. We would have to get back to
    you.
        Mr. Scott. Okay.
        Chairman Yarmuth. The gentleman's time has expired.
        I now recognize the gentleman from Oklahoma, Mr. Hern, for
    five minutes.
        Mr. Hern. Thank you, Chairman, Ranking Member Womack.
        Deputy Secretary Hargan, I want to thank you for your work
    you do in promoting and enhancing the health and well-being of
    the American people. I appreciate your work and this
    Administration's commitment to lowering the cost of
    prescription drugs, protecting the unborn, combating the opioid
    crisis, and many other ideals.
        This Administration's equal commitment to health and fiscal
    responsibility is commendable.
        First, I would like to express my support for the
    Department of Health and Human Services' final rule separating
    abortion from family planning. Until now, the Title X program
    accounted for hearing 60 percent of Planned Parenthood
    expenditures from all agencies reported between 2013 and 2015.
        During this time frame, Planned Parenthood received $170
    million of taxpayer money through the Title X program, an
    average of $56 million annually.
        While previous regulations violated longstanding conscience
    laws and required all Title X recipients to refer for abortion,
    the final rule ensures that none of the funds appropriated for
    Title X may be used in programs where abortion is a method of
    family planning.
        The elimination of the egregious abortion referral mandate
    appropriately protects the conscience rights of health care
    providers. Abortion is not family planning, and I am grateful
    for this Administration's acknowledgement of the fact.
        So really briefly, I would like to know what else this
    department is doing to ensure that they are allowing our great
    medical care providers to protect the religious freedoms and
    consciences while on the job.
        Mr. Hargan. Thank you, Congressman.
        We have set out in our Office of Civil Rights a Division
    for Conscience and Religious Expression to be able to protect,
    to be able to investigate potential violations by our
    conscience rule, that is, to protect people's conscience rights
    and their religious rights when they are providing medical
    care.
        There are a number of statutes that have been put in place
    over years, some stretching back decades into the 1970s that
    protect Americans who are in the health care sector, that
    protect both their conscience and their religious expression
    rights.
        So under this Administration, we now have staff that are
    going to be dedicated to making sure that those rights are not
    violated.
        Mr. Hern. Thank you, Mr. Secretary.
        I would also like to ask you about the medical device tax.
    This fundamentally flawed public policy was put into place in
    an effort to pay for the unaffordable health care act. This
    punitive tax punishes businesses in a specific industry for
    innovation. It is the epitome of the war on business and is
    already having a major negative impact on the competitiveness
    of vital, world-leading, American industry.
        According to data from the U.S. Department of Commerce, the
    U.S. medical technology industry saw its job ranks fall by
    nearly 29,000 while the medical device tax was in effect. In a
    2017 study by the American Action Forum, assessed that this
    rate of job losses would likely return if the tax goes back
    into effect.
        Those workers earn an average of $58,000 annually, well
    above the national average for manufacturing.
        First, do you support the repeal of the medical device tax?
        Mr. Hargan. Yes, I and we do.
        Mr. Hern. And what is your department doing, working with
    Congress, urging them to--let me just rephrase it this way.
        What is your department urging Congress to do to keep the
    health care industry competitive?
        Mr. Hargan. Yes. We are supporting innovation on all
    fronts, not just through medical research that we are doing on
    NIH, but we are also going to try to enact a series of
    regulatory reforms.
        For example, I am chairing something called the Regulatory
    Sprint which is going to hopefully help de-burden a lot of
    areas around coordinated care, that is going to allow there to
    be more innovation in this area.
        We think that innovation is really in many ways a solution
    to some of the health care problems that we have, and it is a
    way in which we can kind of solve some of the problem, whether
    cost, and also help American industry. If we can support
    innovation in this country, we are really going to support the
    position of the entire United States.
        It is the largest sector of the American economy, and
    whatever we can do to help enhance innovation in this country,
    it is going to help not just the Americans as patients, but
    also American industry as well in the health care sector.
        Mr. Hern. Thank you, Mr. Secretary.
        Mr. Chairman, I yield back.
        Chairman Yarmuth. The gentleman's time has expired.
        I do not know what is going on with the mikes here. Still
    working out the kinks.
        I recognize the gentlelady from Texas, Ms. Jackson Lee, for
    five minutes.
        Ms. Jackson Lee. Mr. Chairman and Ranking Member, thank you
    so very much.
        And to the Deputy Secretary, thank you for your service to
    the Nation.
        I am going to ask very quick questions, and I would
    appreciate, as best you can, answers that would move as quickly
    as possible because my time is limited.
        Let me start out by saying in 2012 there were 45.6 million
    people that were uninsured. As the Affordable Care Act began to
    do its work, 2018, 28.3 million, 8.8 percent uninsured.
        I think every life, every child is valuable and should have
    access to health care. Do you believe that, yes or no?
        Mr. Hargan. Yes.
        Ms. Jackson Lee. Thank you very much.
        Let me, with that in mind, let me begin methodical
    questions. It is my understanding that the President's budget
    includes $1.5 trillion in Medicaid cuts over 10 years. Part of
    the work of Medicaid is cutting HIV transmission. Part of its
    work is dealing with prescriptions. The Part D plans must cover
    all HIV drugs.
        But the Administration now is limiting the coverage of
    drugs, when we are seeing a surge of HIV. Is that giving a
    death knell to people who are suffering from HIV?
        What mindset would cause you to engage in cuts in people
    who are fighting for their lives?
        Mr. Hargan. As you know, the President is dedicated to
    ending the HIV epidemic in American by 2030.
        Ms. Jackson Lee. By his works, not his words, by his deeds.
        Mr. Hargan. We are putting $291 million more, million new
    dollars, into fighting HIV. Both are expanding access to prep
    and as well as ART. So the main forms by which people fight
    this terrible scourge, we are enabling people to have actually
    more access to----
        Ms. Jackson Lee. I am interested in your answer about the
    fact that HIV transmissions and drugs that are going to be
    excluded are going to be lost. That opportunity is going to be
    lost. Do you admit that?
        Mr. Hargan. We hope that access to effective HIV therapies
    is not just not lost, but it's going to be enhanced.
        Ms. Jackson Lee. But we are hoping that.
        Let me move on to indicate that you are cutting $130
    billion from Medicaid over 10 years. What is your estimate of
    the people who will lose Medicaid coverage?
        Mr. Hargan. Well, we believe that what we are doing in this
    budget is, first of all, as I indicated earlier, while there
    are cuts in the budget, there is also $1.2 trillion in grants
    that are going to go to states to enable them to focus
        Ms. Jackson Lee. In block grants.
        Mr. Hargan.----to focus on the most vulnerable.
        Ms. Jackson Lee. And that is a challenge.
        Do you know how many people in your new work formula will
    lose Medicaid because of the mandatory work requirement? And
    these people are unable to work.
        Do you know how many people will lose it because of that?
        Mr. Hargan. We believe that we are going to look for the
    effects of the community engagement requirements that we have
    in states right now. We are hopeful with the strong economy
    that we have right now and that has been enabled by President
    Trump's reforms----
        Ms. Jackson Lee. Forgive me for reclaiming my time or
    restoring my time. I know you are believing in hope. I want you
    to see the picture of devastation.
        Let me also say coming from Texas, we were the poster child
    for the uninsured. Now the Administration is going in to
    implode, blow up, and destroy the Affordable Care Act with his
    position on the Texas v. Azar decision.
        Were you involved in that decision making?
        Mr. Hargan. Litigation strategy is with the Department of
    Justice.
        Ms. Jackson Lee. Do you agree with throwing out the
    Affordable Care Act that has been a lifeline to many people?
        Mr. Hargan. President Trump wants to make sure that people
    with preexisting conditions and all the----
        Ms. Jackson Lee. That will be impossible if he blows up the
    Affordable Care Act. What is his substitute right now? Does he
    have bill that is going through the House and Senate that he is
    going to pass and sign?
        Mr. Hargan. We have spelled out in the budget a----
        Ms. Jackson Lee. You have no legislation that will deal
    with that.
        So let me deal with the unaccompanied children. How many
    unaccompanied children does HHS anticipate needing services for
    in 2020? How much are you asking for?
        Mr. Hargan. We are asking for an expansion of our ability
    to transfer to 20 percent and then a $2 billion contingent fund
    that will enable us to deal with influxes and surges into
    this----
        Ms. Jackson Lee. And do you have an accounting? I have
    asked almost every administration representative that comes
    before my Committees, plural. What is the number that you have
    right now?
        Mr. Hargan. It is between 11 and 12,000.
        Ms. Jackson Lee. And that 11 to 12,000 has been a steadfast
    number of holding and incarcerating children. Aren't you part
    of the process of getting connected to their family members?
        Mr. Hargan. We want to make sure that process takes place
    as quickly as possible.
        Ms. Jackson Lee. Then can I ask you to ask the President to
    cease and desist incarcerating these children?
        I wrote the legislation. So let me just say I understand.
    We in the judiciary tried to find alternative places for
    children as opposed to the detention conditions, but now it has
    become an industry, and you are asking for another $2 billion.
        Mr. Hargan. We want to make sure that the children's
    welfare and safety is at the center of everything we do at HHS.
        Ms. Jackson Lee. I will be back in touch with you.
        Let me quickly ask. Head Start, you are lowering the Head
    Start funding. With the Head Start funding you are going to be
    able to serve one-third less eligible children, and we know
    that it is only reaching less than one-third of eligible
    children, and you are proposing to reduce it.
        How are you going to help the children that need to be in
    Head Start with reducing the budget?
        Mr. Hargan. We are actually focusing our efforts on making
    sure we preserve programs that have demonstrable effects like
    Head Start and the child care programs. We are putting forward
    actually new proposals on child care, I think $1 billion more
    into a child care fund.
        Ms. Jackson Lee. Mr. Hargan, you are losing slots, and the
    parents are begging. I would beg that to be revisited as we
    will revisit it in terms of all these questions that I asked.
        These are desperate situations, desperate times, and they
    need the help of the federal government as it relates to health
    care, HIV/AIDS, and, of course, Head Start, and many others. So
    I beg of you to be a voice of reason for this Administration.
        I yield back.
        Chairman Yarmuth. The gentlelady's time is expired.
        I now recognize the gentleman from Tennessee, Mr. Burchett
    for five minutes.
        Mr. Burchett. Thank you, Mr. Chairman.
        And thank you for being here, Ranking Member. Thank you,
    sir.
        I will not beleaguer questions that have already been
    asked. Being number 436 out of 435, I am going to wing it on a
    couple of things that I was curious about.
        On these deductions or supposed cuts to Medicare-Medicaid,
    but you say that, in fact, you are going to basically--correct
    me if I am wrong--you are going to take the bureaucracy out of
    it and send it to the states and allow them to share in the
    responsibility of providing this care and maybe the aspect of a
    local control is best.
        Is that primarily what I understand you saying, sir?
        Mr. Hargan. Yes, it is.
        Mr. Burchett. Okay. I wanted to get that straight.
        Two other issues I was concerned about. The pediatric
    cancer investment, I salute you for that. That along with the
    HIV investment, I guess my biggest concern is I have seen up
    here both parties do it. So it is not like it is any big
    secret, but it seems that in funding bills we reward and we
    punish, and you see funding for research for things possibly
    spread out among members who may be more cordial with others
    than some are, than some that aren't.
        And I am wondering, and I guess my biggest concern is for
    things like pediatric cancer, you know, we have got St. Jude's
    in Memphis, which is on the other end of the state, but they
    clearly do the Lord's work. I'm wondering if you all are
    looking at areas where there could be duplication.
        Because in that funding, it seems a lot of times it has
    very little to do, at least in my layman's view, of the ones
    that are actually delivering the goods, but it is going to the
    more prestigious areas and it may be that more prominent
    members represent those districts. And I am concerned of
    duplication.
        I would just like to get to the bottom of it, get to the
    cures, take care of these sick folks, and quit with all of the
    politics. I don't care if they do it in Dan Crenshaw's district
    or Tim Burchett's district, but if they're solving the problem,
    that is where the money needs to go, and I hope you all are
    addressing that duplication that I see a lot in research.
        Because it seems to me that, you know, we just keep
    reinventing the wheel on some of these things, and if we could
    consolidate and maybe have some collaboration within these
    institutions that we could solve some of these problems.
        If you would, just comment on that.
        Mr. Hargan. I think that is probably the central case that
    we are trying to deal with here. Pediatric cancer has been very
    fragmented and siloed in a number of different places that we
    think has sort of dragged at the ability to make as much
    progress in this area as we would like.
        So us being able to kind of gather information on the data,
    get it together into a single place, and determine where we are
    seeing better results within pediatric cancer is kind of
    central to the problem that we have articulated to ourselves.
        So the President's initiative on pediatric cancer, a lot of
    it is going to be addressed precisely with what you are talking
    about, which is the fragmentation and siloing of pediatric
    cancer research in the past.
        Mr. Burchett. You used the term ``silo.'' I understand what
    that means, but could you explain that to Mr. Crenshaw because
    I am not sure that he understands exactly what that means.
        Mr. Hargan. Yes, there is often a development straight up
    in a particular area. They do not talk to each other, right?
        Mr. Burchett. Honestly, I do not know what ``siloed''
    means. So if you can just explain it to me.
        [Laughter.]
        Mr. Burchett. That was me saying that, you know, trying to
    look a little smoother, but you did not catch onto that, but go
    ahead.
        Mr. Hargan. I guess coming from a farm, I did use a rural
    term. So, yes, so siloing, we often find that people do not
    talk to each other within this area. They do not share data
    collaboratively within this area, and it is just the
    development of these longstanding ways of doing business that
    we hope to be able to overcome.
        Mr. Burchett. Okay.
        Mr. Hargan. To bring the information together, stop the
    fragmentation, stop the non-sharing of data, and prepare a
    single data resource that is available more broadly that will
    allow us to kind of make some steps forward in this area.
        Mr. Burchett. Thank you, brother.
        I yield the rest of my time, Mr. Chairman. Thank you for
    your indulgence.
        Chairman Yarmuth. Well, I thank you, sir.
        The chair now recognizes the gentleman from California, Mr.
    Peters, for five minutes.
        Mr. Peters. Thank you, Mr. Chairman.
        And thank you, Deputy Secretary Hargan, for coming to join
    us today.
        One of the challenges in health care is keeping premiums
    down, and I think you would agree that one of the ways we do
    that is to make sure we get young people into the pool. Would
    you agree with that?
        Mr. Hargan. There are lots of ways to address those issues
    with the pool.
        Mr. Peters. I just it was one of the ways, is to get
    younger----
        Mr. Hargan. It is possible one of the ways is to bring
    lower cost people into the pool.
        Mr. Peters. Right. And you know, we did have a mechanism in
    the Affordable Care Act which was enacted before I got here. So
    I have no pride of authorship. The individual mandate was
    intended to get people to come in, and now after you are 26 and
    you come off your parents' insurance, assuming you have it from
    them, there is no real incentive to get you to get in the pool.
        And I notice that one of the things that the proposed
    budget would do would be to cut advertising by 90 percent and
    in-person consumer assistance by more than 80 percent, close to
    $150 million.
        Don't you think it would be useful to help get the word out
    that insurance is available in terms of as one mechanism at
    least to get young people who are healthy into the pool and
    keep insurance premiums down?
        Mr. Hargan. We have seen torts as the ACA enrollment has
    developed. We have seen less and less use of navigators, for
    example; that they were not really connecting people at some
    point.
        We had one result where we had spent $200,000, and there
    was a single person enrolled by a navigator in one area. That
    is an area where it seems like there was some waste going on.
        Mr. Peters. I certainly think we should root out the waste.
    I will just tell you that California's experience has been at
    variance with that.
        According to Covered California, Mr. Chairman, without
    objection, I would ask that the Covered California summary of
    marketing matters be added to the record.
        Chairman Yarmuth. Without objection.
        [The information follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Mr. Peters. They will spend about $111 million on marketing
    outreach for just one state, although we are 40 million people,
    and they believe that the amount that they have spent has kept
    premiums down by 6 to 8 percent, and that if the federal
    government would go ahead with its 72 percent reduction in
    marketing, there will likely be one fewer Americans getting
    insurance, a less healthy risk pool, and premiums will be 2.5
    percent higher now than they were in 2019.
        They also say that the premium savings from expenditures on
    advertising would yield more than a 500 percent return on
    investment for the federal government. We know that getting
    folks in, and if there is no mechanism to do this through a
    requirement like the individual mandate, all we've got is
    advertising, and it has worked well in California.
        I just do not understand the logic of bringing us to this
    point.
        Mr. Hargan. When we previously had reduced some of the
    advertising and navigator money, we saw, really, very little
    effect on enrollment, and we have seen that the private plans
    had themselves advertised for their own product and that we
    were seeing a lot of brokers and agents that had appeared
    privately to guide people into the plan.
        So we did not really see a lack of enrollment; that there
    had been kind of a period where those navigators and the
    advertisement that had been done had been useful in the early
    stages when people were less familiar with the ACA, but now we
    have seen that really being transitioned into the plans
    themselves, the brokers and agents guiding people.
        Mr. Peters. Again, that is at variance with California
    which has had the most successful uptake rates in the country.
    I guess I would suggest we learn a lesson.
        I wanted also just to comment generally on someone
    mentioned the New York Times editorial on Medicaid cuts, that
    we should work together.
        I want you to know that I am someone who was not here when
    the Affordable Care Act was passed. I believe it is a
    tremendous undertaking to remake the entire health care system
    in the United States. It is going to need tweaks.
        But it is hard for us to talk, on one hand, to you about
    these changes when, on the other hand, the President's Justice
    Department is out there trying to sabotage the whole thing. It
    puts us in a very defensive position.
        And I know this was not something that was up to you. I
    appreciate your work on the Affordable Care Act, on making it
    right and making it work for people, but if the Administration
    is trying to cut out the whole thing, it makes it very, very
    difficult for us to feel like we are in a cooperative mood or
    feel that we can trust it.
        And I ask that you take that back to the Administration.
        Finally, I want to just point out that your budget would
    cut funding by $4.5 billion on NIH, the National Science
    Foundation by 13 percent. This is a devastating blow to
    biomedical research, particularly devastating in San Diego
    where the life sciences industry is a major driver of economic
    growth, home to more than 1,000 biotech companies, 80
    independent research and university-affiliated research
    institutions.
        According to NIH, investments in research focus on a
    particular area stimulate increased private investment in the
    same area. A $1 increase in basic public research stimulates
    $8.38 of industry investment after eight years. A $1 increase
    in public clinical research stimulates an additional $2.35 of
    industry R&D investments after three years.
        Have you estimated the devastating impact that these cuts
    would have on our economy?
        Mr. Hargan. Well, we are fully behind the medical research
    mission of NIH, and we know that the things that are done by
    the staff at NIH and by our grantee network is very important
    for the health of the American people.
        Mr. Peters. Well, I would suggest that this is extremely
    counterproductive, and I think it should be opposed.
        Mr. Chairman, I yield back.
        Chairman Yarmuth. Thanks. The gentleman's time has expired.
        I now recognize the gentleman from Texas, Mr. Crenshaw, for
    five minutes.
        Mr. Crenshaw. Thank you, Mr. Chairman.
        And thank you, Deputy Secretary, for being here on this
    very important subject as we have a hearing about what is
    almost a third of our budget.
        Under HHS, tell us again how much of that budget do you
    manage, mandatory and discretionary?
        Mr. Hargan. Yes. It is about a $1.3 trillion budget, about
    a quarter, a little over a quarter of the federal budget.
        Mr. Crenshaw. It is an enormous amount, and we don't have
    an infinite amount of resources. So any time we budget, this is
    always about choices.
        And I want us to recognize the fact that as politicians, we
    often get elected by promising action, by promising more. We
    take advantage of the human preference for more things,
    especially if somebody else might pay for those things and we
    don't have to.
        It is a cultural trend that is going on in this country,
    and it affects everything. It is an unsustainable cultural
    trend, this idea that someone else should take action so that
    you do not have to.
        And it is also this idea that the states are completely
    incapable of managing their own systems of government.
        This unsustainable cultural trend also leads to completely
    unsustainable policies, and Medicare is one of those. Medicare
    is completely unsustainable, and that greatly affects a
    generation like mine. I just turned 35, and I have really
    little hope that I will see Medicare in my lifetime.
        But there is a good chance that you will have to raise my
    taxes considerably to pay for this unsustainable program, and
    it frustrates me that on the Republican side we often have to
    be the adults in the room and say, ``Hold on. We cannot promise
    all of these things.''
        So on Medicare specifically I want to talk about some of
    those things that are driving those costs. What are some of the
    main elements driving the unsustainability of Medicare?
        And what are you doing to fix that?
        Mr. Hargan. Well, some of the things were really things
    that were put into Medicare Trust Fund that really did not
    belong there, things like uncompensated care, things like
    graduate medical education. Simply moving those out into the
    general fund means that Medicare Trust Fund is the sort of the
    reckoning that is delayed by a number of years.
        Also, just lowering the amount spent from 7.8 percent
    growth to 6.9 percent has a tremendous effect overall.
        Then we also address some of the issues where some of the
    payment rules have kind of gotten to making things more neutral
    between sites of care.
        Mr. Crenshaw. Okay. And how does this affect the consumer
    of Medicare, our senior citizens relying on it? Will they see
    these changes?
        Mr. Hargan. They will not see these changes. These changes
    are not to beneficiaries. They are not going to increase out-
    of-pocket costs to seniors. They are not going to affect the
    beneficiaries' access to any one of these things.
        Mr. Crenshaw. Thank you for that. That is a very important
    point. Thank you.
        I also had an interesting note from a group of nurses in my
    district. They said, ``We do not need Medicare for All. We need
    primary care for all.'' It is an interesting look at things.
        Are you familiar with direct primary care?
        Mr. Hargan. Yes.
        Mr. Crenshaw. What is the Administration doing to foster
    more direct primary care, this market-based solution to gain
    more access for people for primary care?
        Mr. Hargan. So one of the things that we are doing is by
    allowing more money to be put into health savings accounts and
    allowing people to manage their care more through either health
    reimbursement accounts, health savings accounts.
        So if they are able to do this, they are able to be able to
    access direct primary care, we are able to provide more
    flexibilities in the budget at the state level, but also at the
    patient level, that is going to allow people to be able to have
    access to direct primary care.
        Mr. Crenshaw. Excellent. It is amazing what can be
    accomplished in our markets if we let people take back their
    own money and use it for things like direct primary care.
        I also want to ask you about the pay for delay regarding
    generics and biosimilars and what the Administration is doing
    on that front.
        Mr. Hargan. Yes. So we are proposing a whole suite of
    reforms in this area. So in the case of pay for delay, we
    intend to actually reduce payment for drugs where a company has
    engaged in gaming of the system, like pay for delay, where they
    pay another company to keep a competing drug off the market.
        Mr. Crenshaw. Okay. The last question I want to ask you
    about is graduate medical education. You have made some reforms
    to that. In Texas, we are unfairly discriminated against
    compared to other states when it comes to GME. We have less
    spots according to our size and on our needs.
        Does this help states like Texas? Does this equalize it
    across the board?
        It is unclear what these reforms will do.
        Mr. Hargan. So by consolidating some of the fragmented
    programs that we have right now, we are going to be able to put
    them into a single overall graduate medical education program,
    and we hope that is going to allow for a more rational approach
    to GME. It could include things like allowing places that are
    under-resourced to be resourced.
        Mr. Crenshaw. Thank you.
        Thank you, Mr. Chairman.
        Chairman Yarmuth. The gentleman's time has expired.
        I now recognize the gentlelady from Washington, Ms.
    Jayapal, for five minutes.
        Ms. Jayapal. Thank you, Mr. Chairman.
        And thank you so much for being here.
        Just to my colleague across the aisle, when you talk about
    adults in the room, perhaps I wish you were here last year when
    we were talking about the GOP tax cut, and we clearly said at
    the time that this was a three-step dance, that the Republicans
    were going to cut taxes for the rich; that that would then
    explode the deficit, and in fact, it has, estimates of $1.9
    trillion; and then that would lead to demanding big cuts to the
    things that Americans really care about like Medicaid and
    Medicare.
        And I think, Mr. Chairman, that we are right at that place
    here. And I hope that I will have a chance to talk about my
    Medicare for All bill that really takes on a broken health
    insurance marketplace. I believe we will on Budget Committee,
    and I look forward to telling my Republican colleagues about
    exactly what that looks like.
        Mr. Hargan, I wanted to start with questions about HIV and
    Medicaid. There are over 955,000 individuals living with
    diagnosed HIV, and it continues to be a significant health
    concern in the United States, but thanks to the gains of our
    scientific and public health community that we have seen in
    improved screening and treatments, over 90 percent of
    individuals with HIV survive for more than three years after
    the diagnosis.
        In his State of the Union address, President Trump
    announced a new initiative to end HIV transmissions by the end
    of the decade, and the President's budget provides $291 million
    to support that initiative.
        However, it is very important for the American people to
    understand it includes $1.5 trillion in Medicaid cuts over the
    next 10 years, and Medicaid is the largest source of insurance
    coverage for people living with HIV.
        And that is because as of 2017, 32 states expanded Medicaid
    coverage to include individuals with HIV who were previously
    excluded. And so now more than 40 percent of people with HIV
    who are receiving treatment are covered by Medicaid.
        How is the goal of ending HIV transmissions achievable when
    the Administration is simultaneously proposing to cut roughly a
    quarter of the Medicaid budget?
        Mr. Hargan. So while we had moved a reduction in one line,
    we actually plussed up $1.2 trillion in flexible grant money
    for states in Medicaid. So the shift is really from one type of
    program to another, to allow there to be more flexibility for
    the states in Medicaid and allow them to concentrate on the
    traditional vulnerable Medicaid populations: the elderly, the
    pregnant women, children, the disabled.
        So we are really moving the money from----
        Ms. Jayapal. But you are talking about converting Medicaid
    into a block grant or a per capita cap and then requiring
    states to implement so-called work requirements, all of which
    would strip Medicaid as we know it. That is essentially what
    you are talking about.
        Let me move on to public health in the United States,
    comprised of federal agencies, state health agencies, tribal
    and territorial departments, and more than 2,500 local health
    departments. These are systems that protect us not only from
    emerging health threats, but also serve our everyday needs,
    like immunization, food safety, and delivery of health
    services.
        And that is why the CDC, our Nation's health protection
    agency, dedicates 85 percent of its domestic funding to state
    and local public health departments. And yet, the President's
    budget proposes cutting the CDC's budget, that is, the Center
    for Disease Control, by nearly 20 percent.
        What is your justification for cutting this major source of
    funding for local and state public health agencies, and an
    agency that is central to the prevention and transmission of
    disease in the United States?
        Mr. Hargan. Well, we had just proposed in terms of CDC
    funding there is really only a net decrease of 1 percent from
    FY2019. So our net decrease in funding for it is really just
    about 1 percent for CDC.
        In a difficult environment, we really did preserve public
    health funding for CDC among our agencies.
        Ms. Jayapal. Maybe my numbers are wrong. So it is not a cut
    of nearly 20 percent?
        Mr. Hargan. No. We had moved from $12.1 billion in fiscal
    year 2019 to $12.0 billion in 2020.
        Ms. Jayapal. Well, that is good. If that is true, that is
    great, and I apologize for getting that wrong. I hope that we
    actually see an increase in CDC funding, which would be even
    better.
        Actually, I do not have time. I wanted to just put on the
    radar the public charge rule that we are deeply concerned about
    and that would strip care for a number of people across the
    country who might be seeking care that is legitimately provided
    through state programs and introduce for the record a letter
    signed by 111 members of Congress around the public charge
    rule.
        Mr. Chairman, I ask unanimous consent to introduce that
    letter.
        Chairman Yarmuth. Without objection.
        [The information follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Ms. Jayapal. Thank you.
        Thank you, Mr. Hargan. I will follow up with you on the CDC
    thing because I do not usually get those things wrong, but if I
    did, I apologize.
        Thank you.
        Chairman Yarmuth. Thank you. The gentlelady's time has
    expired.
        I now recognize the gentleman from Georgia, Mr. Woodall,
    for five minutes.
        Mr. Woodall. Thank you, Mr. Chairman.
        I would like to endorse what my friend Ms. Jayapal said.
    She rarely gets things wrong. So I hope you will share it us,
    too, when you find out what that is.
        Ms. Jayapal. I will do that.
        Mr. Woodall. CDC sits in my backyard, and so I tend to
    associate myself with the numbers Mr. Hargan has in front of
    him, and we are also proud of that mission, but it was not
    always that way. CDC was woefully underfunded in the 1980s and
    1990s, and only when we realized what we had missed out on did
    we finally redouble those efforts. So I appreciate your focus
    on that.
        Mr. Hargan, I want to talk about some things that I think
    went right and some things that could go even better. I know
    you have already gotten an earful about things folks don't like
    and they don't think we are moving in the right direction on. I
    want to move in the right direction.
        You have done some work on pressure ulcers as it results to
    hospital discharges. That is something that is near and dear to
    me personally, but it is also near and dear to me as a budget
    hawk because we throw away a lot of money on preventable
    hospital-acquired illnesses.
        When the Appropriations Committee last cycle asked HHS to
    go back and look at pressure ulcers to see if we were doing all
    that we could do, you came back with a new model that was based
    on a ten-factor scale and used pressure ulcers as one of those
    to say we can do better than the 58 percent increase in
    pressure ulcer discharges and do better down the road.
        We have got a lot of great groups. One is in my district,
    Molnlycke, that has an amazing technology that we can do more,
    not do more with less, but do more and prevent more bad
    outcomes, and thus, we end up spending less.
        The entire Pressure Ulcer Association is working along
    those lines, and you all have I would say moved with the
    efficiency one would expect from a government agency. You can
    take that as you see fit, but there is some good work that is
    happening there. There is more good work that can be done, but
    I want to thank you for that.
        I also want to put on your radar screen, and I know you
    have been busy preparing for this hearing, the General Assembly
    in Georgia yesterday passed a bill that will give our governor
    permission to ask for two waivers, one is an Affordable Care
    Act waiver. Another is a Medicaid waiver.
        I listened to Mr. Peters as he challenged your numbers,
    talking about all of the good work that California does. I have
    no doubt that California is doing good work, and I have no
    doubt that the failures that you observed in the case of a
    $200,000 program only signing up one individual; I have no
    doubt about the accuracy of that either.
        We can do better in Georgia. No offense to the federal laws
    and statutes, regulations that are on the books. We just have
    more experience in rural Georgia than you do. We have more
    experience in metropolitan Atlanta than you do, and so when
    those waiver proposals come forward, I just want to encourage
    you to look favorably upon those.
        There are limited resources. Can you tell me a little bit
    about the resources dedicated to approving those waivers?
        And either or not we'll be able, I know so many are coming
    across your desk. Will we be able to proceed on those
    expeditiously?
        Mr. Hargan. I would say that, you know, we very much look
    forward to if Governor Kemp bringing the proposal forward to
    us. We would very much look forward to engaging with him.
        We know that states and localities know a lot more about
    their unique needs than we do here in Washington. So we know
    that they are going to be in the best position to know the
    unique needs of their populations there, and we applaud states
    for bringing creative proposals forward to us.
        So we are going to look forward to engaging with him if he
    brings it forward after the passage of the bill.
        Mr. Woodall. I do not see my timer. Oh, there I am up on
    the wall. Let me re-ask that specifically.
        When we get to the appropriations cycle, folks will take
    money out of administrative accounts and put them into things
    that feel better, like NIH funding, like CDC funding, and so
    on.
        Are we at risk, underfunding the administrative account at
    HHS, of not seeing those applications acted on as quickly as we
    would all like to see them acted on?
        Mr. Hargan. I think that the Administrator at CMS is going
    to focus what she needs to focus on having a swift analysis and
    resolution on whatever we have, whatever is brought forward by
    Governor Kemp or anyone else creatively in the 1115 space.
        Mr. Woodall. I do not know if you have been down to the CDC
    recently. It is always a good excuse to go to Atlanta. Security
    is one of the things that troubles me. We spend a lot of money
    on science, but we do not spend as much money on security.
        You're in a difficult space. Health is the focus, but bad
    security leads to bad health outcomes from time to time. Is
    that an issue that rises to your C Suite level?
        Mr. Hargan. Particularly cybersecurity is an issue that we
    take very seriously. We deal a lot with data, with science,
    with new ideas, with new science and intellectual property, and
    so cybersecurity is a big issue both for Americans, to make
    sure that their health data is kept secure for researchers.
        So we have actually stood up a Health Sector Cybersecurity
    Coordination Center at HHS that is going to help facilitate
    maintaining security over a lot of the information that
    Americans entrust to their doctors, to the health care system,
    and to HHS.
        Mr. Woodall. Mr. Chairman, as I look at the pictures on the
    wall, I see that only Mr. Panetta was brave enough to leave
    Congress and go and serve in the Administration afterwards. So
    thank you, Mr. Hargan, for what you are doing. Clearly, it is
    not something that we choose to do.
        I yield back.
        Chairman Yarmuth. The gentleman's time has expired.
        I now recognize the gentleman from New York, Mr. Jeffries,
    for five minutes.
        Mr. Jeffries. Thank you, Mr. Chairman, for your leadership.
        And thank you, Deputy Secretary Hargan, for your presence
    here today.
        Medicaid provides health coverage to 7.2 million low income
    seniors who are also enrolled in Medicare; is that correct?
        Mr. Hargan. Medicare, yes. Medicare serves tens of millions
    of people.
        Mr. Jeffries. The answer would be Medicaid provides health
    coverage to 7.2 million low income seniors, correct?
        Mr. Hargan. I will take your number as being accurate.
        Mr. Jeffries. Roughly 60 percent of all nursing home
    residents receive Medicaid coverage; is that correct?
        Mr. Hargan. I will take, again, your number as being
    accurate.
        Mr. Jeffries. Do you think that nursing home care is an
    important part of our health care fabric here in the United
    States of America?
        Mr. Hargan. Yes, all different kinds of post-acute care
    settings are important. Skilled nursing facilities, long-term
    care facilities, home health, we seek to make sure that
    whatever setting Americans want and choose what is best for
    their care is enabled.
        Mr. Jeffries. So nursing home care is important, correct?
        Mr. Hargan. Nursing home care can be important for the
    right senior.
        Mr. Jeffries. Close to half of all long-term care services
    for the elderly are paid for by Medicaid. True?
        Mr. Hargan. Yes, it is an important component for
    individual nursing home payment.
        Mr. Jeffries. Medicaid also covers premiums, deductibles,
    and cost sharing for Medicare beneficiaries; is that correct?
        Mr. Hargan. In certain settings, yes.
        Mr. Jeffries. Medicaid provides coverage to 27 million
    children under the age of 18 in the United States of America.
    True?
        Mr. Hargan. Again, I will take your numbers to be accurate.
        Mr. Jeffries. More than 700,000 children in Medicaid
    expansion states gained coverage between 2013 and 2015; is that
    correct?
        Mr. Hargan. I will take your numbers as accurate.
        Mr. Jeffries. And research shows that children with
    Medicaid coverage have better health care outcomes as adults.
    Is that true?
        Mr. Hargan. Could you repeat the question?
        Mr. Jeffries. Research shows that children with Medicaid
    coverage have better health outcomes as adults than those
    without Medicaid coverage, correct?
        Mr. Hargan. I am not familiar with that research.
        Mr. Jeffries. Okay. But the totality of the import of what
    Medicaid provides, I think, is well established, and you have
    agreed in several different areas that Medicaid is covering a
    substantial number of Americans from children all the way to
    low income seniors and those who are receiving care in nursing
    homes.
        So for the life of me I am struggling to try to figure out
    why this Administration proposes essentially to slash $1.5
    trillion in Medicaid and create a smoke and mirrors block grant
    program that will devastate, devastate the ability of these
    recipients who rely on Medicaid to receive care.
        Now, the President during the campaign promised that he
    would not touch Medicaid; is that correct?
        Mr. Hargan. The President is fully committed to supporting
    the Medicaid program.
        Mr. Jeffries. Why is the President breaking his promise not
    just with respect to Medicaid, but also Social Security and
    Medicare by submitting a budget that would cut approximately $2
    trillion?
        Mr. Hargan. The budget proposes a shift into a $1.2
    trillion new program to allow states to flexibly deal with the
    most vulnerable populations that Medicaid was intended to
    address: the elderly, disabled, pregnant women, children.
        So we are fully committed to that, and that is a $1.2
    trillion new program that we are advocating for in this budget.
        Mr. Jeffries. And you propose creating this $1.2 trillion
    new program because you want to address alleged waste, fraud,
    and abuse in the current Medicaid program; is that right?
        Mr. Hargan. We want to make sure that states have the
    flexibility in the new program to address the unique needs of
    their populations and focus the program on the traditionally
    vulnerable, fragile populations that Medicaid was intended to
    address from its very beginning.
        Mr. Jeffries. Okay. So at minimum, even if we assume that
    this new $1.2 trillion block grant program is going to actually
    reach the people who are currently being served by Medicaid,
    which there is reason to doubt, you are cutting at least $300
    billion from Medicaid.
        Can you give me a single example of the type of waste,
    fraud, and abuse that you are trying to address that would
    justify billions of dollars in cuts, not millions, not tens of
    millions, not thousands, billions of dollars in cuts?
        Can you give me some understanding of the waste, fraud, and
    abuse that you are addressing?
        Mr. Hargan. Actually over 10 years, Medicaid spending goes
    up under this budget plan. So we are not addressing actually a
    lowering in the budget of Medicaid spending, but actually
    increasing it.
        Mr. Jeffries. Can you give me a single example of the
    waste, fraud, and abuse that justifies cutting billions of
    dollars from children, low income seniors, and those receiving
    nursing home care?
        Mr. Hargan. Our Inspector General and our Centers for
    Program Integrity are constantly working to identify areas
    where there are waste, fraud, and abuse that take place
    throughout our programs. We have entire----
        Mr. Jeffries. Reclaiming my time. I assume that is a no.
        I yield back. Thank you.
        Chairman Yarmuth. The gentleman's time has expired.
        I now recognize the gentleman from Texas, Mr. Roy, for five
    minutes.
        Mr. Roy. Thank you, Mr. Chairman.
        I appreciate you coming here to testify today and taking
    the time to join us here.
        Just as a threshold matter, the national debt to today is
    what? Do you know? Twenty-two trillion, over $22 trillion, does
    that sound about right?
        Mr. Hargan. That is my understanding.
        Mr. Roy. I was recently PolitiFact'ed that I made a comment
    in a hearing that we were racking up $100 million of debt per
    hour, and I actually got a mostly true out PolitiFact, which
    basically means it is the Book of Luke in the eyes of
    PolitiFact if I get a mostly true.
        A hundred million dollars of debt per hour, right? So as a
    backdrop for the questions that we are going to ask here.
        With respect to some of the Medicaid questions that were
    just asked, it was alleged that it is smoke and mirrors when we
    talk about block granting Medicaid. Are you familiar with some
    of the studies and some of the state organizations and think
    tanks, for example, the Texas Public Policy Foundation, which
    would suggest that they might be able to save upwards of $4 to
    $5 billion in Texas in administering Medicaid if they were able
    to get the money in the form of a block grant?
        Is that where some of the kinds of savings you were talking
    about are?
        Mr. Hargan. I am not familiar with their particular study,
    but we have certainly seen lots of examples from our program
    integrity initiatives and otherwise where we see examples
    overall of waste in programs.
        Mr. Roy. Well, I appreciate that.
        And also with respect to Medicaid, we talk a whole lot the,
    quote, gains in coverage for Medicaid. Are you also familiar
    with some of the studies in think tanks, for example, the
    Illinois Policy Institute, which pointed out that there are
    literally thousands of people that are on waiting lists in
    Medicaid rolls because of the number of people that were jammed
    onto the Medicaid rolls after Obamacare and the expansion of
    Medicaid so that people for whom Medicaid was originally
    designed are on the outside looking in because of so much
    burden being placed on the Medicaid system?
        Is that an accurate depiction at least in some areas of the
    country?
        Mr. Hargan. That is certainly something that we have heard.
        Mr. Roy. Is it also true that we have had upwards of six
    million or more people who lost private coverage since
    Obamacare has been put in place in the private market?
        Mr. Hargan. I am not sure of the exact number, but we
    certainly had people who lost their plans in the wake of the
    passage of the Affordable Care Act.
        Mr. Roy. Okay. I appreciate that.
        And then one last question on Medicaid that I am just
    curious. With respect to Medicaid expansion, has anybody in the
    Administration, has the Secretary or anybody in the
    Administration, actively encouraged states that have not
    expanded to embrace a partial expansion or expansion now, for
    example, Texas, which has not expanded?
        Mr. Hargan. We only entertain things coming from the states
    as opposed to, say, encourage or discourage. Normally, we are
    responding in that program to initiatives coming from the
    states.
        So, for example, in the Georgia case that was just cited,
    if the Georgia legislature passes that bill and the governor
    brings it to us, we are going to entertain that, within the
    statutory restrictions that we have in the program.
        Mr. Roy. Okay. Thank you for that.
        One last question on budgeting. Do you all ever engage in
    what some people might refer to as zero based budgeting or
    building up from the ground up, or do you basically budget off
    of last year's numbers and so forth when you work with OMB and
    others to get the budgeting process done?
        Mr. Hargan. We work with OMB on any number of different
    scenarios for the budget, but generally, we abide by the rules
    that they give us in order to base off of our budget line.
        Mr. Roy. But you are not aware of that budget. This is not
    what you might refer to as a zero-based budget?
        Mr. Hargan. This is abiding by the caps agreement, which
    President Obama and the Congress passed years ago.
        Mr. Roy. A couple of questions on the $2 billion line in
    the budget with four unaccompanied alien children. Do you know
    how many alien minor children that is meant to try to deal with
    over the next three years?
        And am I correct it is $2 billion allotted for the next
    three years?
        Mr. Hargan. Yes, it is a $2 billion contingent fund for the
    next three years if the program needs it and exceeds the
    transfer authority, and in this case we have asked for 20
    percent transfer authority to the UAC program.
        Mr. Roy. Is this mandatory or discretionary spending?
        Mr. Hargan. I believe this was a mandatory. The $2 billion
    is on the mandatory side, I believe.
        Mr. Roy. Okay. So I guess my question is: do you have any
    estimate on how many UACs were preparing for in coming up with
    that $2 billion number?
        Mr. Hargan. We have to look really within HHS. We deal with
    the children when they are brought to us.
        Mr. Roy. Sure.
        Mr. Hargan. We can look at ins and outs. There are great
    differences year to year. That is why we had a contingent fund
    as opposed to asking for more increased money every year just
    because there are great fluctuations with the number of
    unaccompanied alien children coming over the border year to
    year, month to month, day to day.
        Mr. Roy. Well, and to that point, right, in fiscal year
    2018, CBP apprehended 50,000 unaccompanied alien minor children
    at the southwest border. Just between October and February, we
    saw 26,937, which means we are looking at a higher number.
        We have seen a massive expansion over the last several
    months in February and March. We see the numbers that are
    coming across that we are having to deal with, my point being:
    is it fair to say that the burdens of what is happening at the
    border with our inability to secure the border is putting a
    strain on HHS' budget because we are having to deal with this
    problem in failing to secure our border?
        Mr. Hargan. Fundamentally, this is traced back to a broken
    immigration system, and the fact that we have to deal with a
    tremendous number of children that we are going to care for, we
    are going to advocate and make sure that the child welfare and
    safety is the utmost and that we move them to an appropriate
    sponsor as quickly as we can out of these shelters, but it does
    mean that there are huge numbers of children being sent to us
    to take care of, and that does place a strain on our budget.
        Mr. Roy. Thank you for that. Thanks for being here.
        Chairman Yarmuth. The gentleman's time has expired.
        And now I recognize the gentleman from California, Mr.
    Khanna, for five minutes.
        Mr. Khanna. Thank you, Mr. Chairman. Thank you for your
    leadership.
        Thank you, Secretary Hargan, for being here.
        Secretary Hargan, you worked for President Bush; is that
    correct?
        Mr. Hargan. I did.
        Mr. Khanna. And you were there during his tenure and when
    he was doubling NIH funding; is that correct?
        Mr. Hargan. Yes, I was.
        Mr. Khanna. You probably remember that President Bush ran
    saying that we need to double the NIH budget in five years. Do
    you remember that?
        Mr. Hargan. Yes, we were, I believe, continuing over a
    doubling that was taking place at NIH.
        Mr. Khanna. It is kind of you to give President Clinton
    credit. He started it, and then President Bush continued it.
        Are you aware that when President Bush took over, the NIH
    budget was $17 billion, and when he left, the NIH budget was
    $28.6 billion?
        Mr. Hargan. I will defer to your numbers on the past
    numbers for NIH.
        Mr. Khanna. I was recently with Secretary Condoleezza Rice,
    and she said one of the biggest things we can be doing for this
    country is doubling funding for the NIH and National Science
    Foundation. Would you agree with her comments?
        Mr. Hargan. I believe that, as I said, medical research is
    core to part of the mission of HHS to enhance the health and
    well-being of the American people. We stand fully behind NIH
    and its medical research mission, both for it and for the
    grantees that it enables to do that important work.
        Within the caps agreement and the budget that we have, we
    have to operate within the budgetary environment we have been
    given by the caps agreement that was entered into.
        Mr. Khanna. In your opinion though, when you look at
    President Bush's approach and the approach Condoleezza Rice is
    recommending, I mean, they also have to operate within hard
    budgets. They found the money to double NIH.
        Do you think their approach was better for a
    competitiveness or the current President's approach?
        They are two very different philosophies.
        Mr. Hargan. I have great respect for Ms. Rice, but we also
    have to operate within the legal environment that we have, the
    budgetary rules that are put in place. We can't violate those.
        And we have to prepare our budgets realistically within the
    bounds that are set for us by the law. So in making those
    decisions, we have to abide by the agreements and the laws that
    we are given by the Congress.
        Mr. Khanna. But you know that in the context of the federal
    budget, $4.5 billion, do you think that is a significant
    percentage?
        You just have to guess. I mean, it is probably less than .1
    percent or .5 percent of our federal budget.
        Mr. Hargan. And we are attempting also within the NIH
    budget to preserve focus on a lot of the important focuses that
    we have within opioids, within pediatric cancer, within the HIV
    epidemic. To focus within those and to save those areas within
    NIH, apart from the overall budgetary environment that we are
    in, a tough budgetary environment dealing with the caps
    agreement.
        Mr. Khanna. Would it be fair to say that President Bush and
    Condoleezza Rice put a higher priority on the National
    Institutes of Health than this current President?
        Mr. Hargan. Well, President Bush was not operating in an
    environment where there were discretionary caps, and so there
    were sort of fewer restrictions on this, but we have to operate
    in an atmosphere of discretionary caps.
        Mr. Khanna. Would you say that if you were meeting
    President Bush and he asked you do you think President Trump
    has as much of a priority on the NIH, what would you say to
    him?
        Mr. Hargan. I would hope that President Bush would
    understand as we have just talked about, which is in an
    environment with no discretionary caps versus an environment
    with real discretionary caps, you have to operate in those
    areas.
        There were hard decisions made in the budget under
    President Bush. I was in leadership at HHS at that time, and we
    had hard decisions to make, and we have hard decisions to make
    here, and hopefully we have made them as thoughtfully as we can
    for your consideration when you are working through the budget.
        Mr. Khanna. You stand by the $4.5 billion NIH funding cut
    and the $897 million cut for National Cancer Institute? Given
    your experience, your service in the Bush Administration, your
    views with Condoleezza Rice and her basic view that we ought to
    be doubling, and she understands the budget constraints, I am
    just trying to understand, and I mean this with respect.
        Are you defending this because that is your job? You work
    for the President. He gets to set the direction, or do you
    really think that his vision is better than Bill Clinton's and
    George Bush's and Barack Obama's and every single President
    before him in modern time who wanted to increase funding for
    the NIH?
        Mr. Hargan. Well, I would say we have something around a
    $99 billion discretionary budget at HHS. NIH has been $38
    billion of that. It is the largest single item of discretionary
    spending within our department.
        We have many programs within that, within the caps
    agreement, within the cuts to discretionary funding and the
    caps that we have to abide by. We have to try to be as
    thoughtful as we can be in that environment to make sure we
    comply with the law and the caps that were sent to us.
        Mr. Khanna. Thank you.
        Chairman Yarmuth. The gentleman's time has expired.
        I now recognize the gentleman from New York, Mr. Morelle,
    for five minutes.
        Mr. Morelle. Yes, thank you, Mr. Chairman, for hosting the
    hearing.
        And thanks to the Deputy Secretary for joining us I was
    going to say this morning, just about this morning and
    afternoon.
        Let me just editorialize for just a second. I am new to the
    Congress, and I note that in the budget there are a number of
    changes which have been discussed by my colleagues regarding
    Medicare payment policies. For a number of these changes,
    however, the budget does not indicate how much they would cost
    or save the government, and I am just struck by the footnotes
    that say estimates were not available at the time of budget
    publication.
        And I just note that I find it unusual and strange that you
    could recommend policies without knowing exactly how they would
    affect federal spending on Medicare, both to the government and
    to beneficiaries.
        But if I can, I just want to jump around in the limited
    time. Related to investments, I recognize as many members have
    talked about the impending challenges of Medicare and mandatory
    spending as the population ages, as costs will grow, and there
    is the need to clearly address this.
        I would do it from the point of view of investments and
    looking at key investments and whether spending on those
    investments, do for instance, in the area of health care, what
    the AAA and everyone talks about, better outcomes, better
    experience for patients, and bending the cost curve.
        One of the investments that we make typically is in
    graduate medical education. I represent the University of
    Rochester, which is an academic medical research facility. The
    budget restructures federal support for graduate medical
    education, cuts the funding by a total of $48 billion over a
    10-year period by capping funding, and it grows at less than
    the rate of inflation.
        The population is aging. There is a growing need for
    doctors in areas such as primary care and gerontology. How does
    this proposal improve the health care and the health needs of
    the workforce to meet the needs of that growing senior
    population?
        Mr. Hargan. The reforms that we are advocating for in the
    budget are intended to better focus the federal spending on
    health care professionals because we are consolidating GME
    programs that are currently fragmented into a single program.
        By consolidating these disparate streams of funding, we
    believe that we are going to be able to address shortage areas,
    rural health, making sure that we have better trained
    professionals to build a stronger health care workforce that is
    more targeted to the needs that we have now. When we have these
    different funding streams consolidated, if these reforms are
    undertaken, we will be able to reorient these programs.
        Mr. Morelle. But it does, and I am sorry to interrupt, and
    I appreciate that, but there is a significant cut in dollars
    that accompanies it. It is not only the consolidation, which I
    might argue maybe there are some valid reasons to do that and
    it will give you more authority, but the $48 billion cut is a
    real one even as you combine the programs into a single
    program.
        Mr. Hargan. Yes. Again, we are operating within a tough
    budgetary environment. We do understand the needs to work--to
    make sure that the next generation of the health care workforce
    is in place. We are hoping that by doing these targeted
    reforms, we will be able to kind of sort of skate to where the
    puck is going to be in terms of graduate medical education.
        Mr. Morelle. Okay. Very good. Thank you. Let me jump now
    briefly in the few moments I have left. The budget calls for no
    increase in funding for Head Start, another investment I think
    is very important, particularly as we are trying to get to
    children in poverty, getting them to read at grade level.
        You fund the program at the same level as that of 2019.
    Your own internal documents show funding will support 871,000
    slots, down from 890 funded last year. Head Start currently
    reaches less than one-third of eligible children. Why would we
    reduce the slots in the 2020 budget?
        Mr. Hargan. Holding Head Start level in a tough funding
    environment like this is showing what a priority we place on
    this program. So we have actually attempted within a very tough
    budgetary environment, where we have been--where we have been--
    we have had to put cuts into some programs, trying to maintain
    levels----
        Mr. Morelle. Would this be a program--I am sorry to
    interrupt--but would this be a program you would increase if
    you were not in a tough budgetary cycle?
        Mr. Hargan. I think we have to abide by the restrictions on
    the discretionary funding that we have been given by past--by
    the existing law. But we have held it level, and that is
    attempting to make sure that we show the focus that we have on
    programs that we think work.
        Mr. Morelle. I do want to--and you do not need to respond
    to this--but just acknowledge that the budget also eliminates
    $250 million in preschool development grants, which help build
    state and local capacity, and many of my colleagues often talk
    about local and state governments being closer to the people.
        But it reduces their capacity to provide preschool to low
    and moderate income households, and another troubling, in my
    view, cut to a significant investment to people who would be
    far more productive as citizens if we could give them that
    support. And I yield back my time, Mr. Chair.
        Chairman Yarmuth. The gentleman yields back. I now
    recognize the gentleman from New Jersey, Mr. Sires, for five
    minutes.
        Mr. Sires. Thank you, Mr. Chairman. Mr. Hargan, thank you
    very much for being here.
        You know, in New Jersey we have about 1.7 million people
    that take advantage of Medicaid. About 1.4 of those are
    Medicaid; the other is involved in the CHIP program. I see that
    the budget proposes to implement a work requirement for
    Medicaid recipients in all 50 states. Are you aware that when
    they implemented the work requirement program in Arkansas, how
    many people lost their coverage?
        Mr. Hargan. We have seen, I think, the latest numbers of
    people show a sort of average churn in the Medicaid program. We
    have not yet seen--it is very early days in Arkansas's
    implementation of that community engagement requirement. So we
    have seen, so far, the numbers show an average number of people
    passing in and out of the program.
        Mr. Sires. Well, the numbers that I got is about 16,000
    people lost their coverage in Arkansas when they implemented
    the work program. Are you----
        Mr. Hargan. Did you have a question?
        Mr. Sires. Yes. Following up on the question, I understand
    also that you are also cutting $130 billion--you anticipate
    $130 billion in savings--on the Medicaid program?
        Mr. Hargan. We have a number of different ways, places that
    we are showing savings in the Medicaid program.
        Mr. Sires. Well, how much of that do you think is from
    kicking people off the program by requiring them to work?
        Mr. Hargan. I do not know that there is--it is going to
    depend on how different programs are implemented in different
    states. This is ultimately a Medicaid issue, which means that
    it is a state-directed program. So each state is going to come
    in with a different way of dealing with the community
    engagement--with the community engagement requirement that they
    want to put into their own state.
        Some of them, they are going to have different structures.
    They are going to have different ways in which the populations
    deal with the community engagement requirement. Ultimately, it
    is a state--it is a state set of requirements that they come to
    us and----
        Mr. Sires. But you are anticipating that if you ask a work
    requirement, there will be people losing their coverage?
        Mr. Hargan. That could happen because--but it is also--and
    certainly Arkansas has structured some of these things so that
    people have the requirement in there. If they do not obey the
    requirement, it is an issue for them maintaining Medicaid
    coverage.
        There are also other requirements that states put into
    place. If people get work of a certain level, they leave the
    Medicaid program. If people move out of state, if they do not
    return their paperwork--there are other ways in which people
    lose Medicaid coverage as well.
        Mr. Sires. To me, this looks like this is a way of cutting
    the Medicaid programs by requiring people to work, knowing full
    well that you're going to lose coverage on people. So
    therefore, you are slashing.
        Mr. Hargan. Primarily, the community engagement requirement
    is intended to help people. It is----
        Mr. Sires. How can that help people when they----
        Mr. Hargan. We know that there are studies dealing with
    social isolation, dealing with the health--behavioral and
    mental health effects of people who do not engage with their
    community by states that come to us that have a thoughtfully
    structured way in which to encourage people to have community
    engagement, whether it is work or other forms of community
    engagement.
        That is an area where we believe that people are going to
    be well affected, both in their health, and it can have also
    fiscal effects on the state as well, as well as having good
    effects on people for engaging in work to have money in their
    pocket, to have more engagement with their community.
        If that is the way in which the program is structured, we
    think it can have a number of good effects, not just dealing
    with keeping the sustainability of the state Medicaid program
    moving forward from a fiscal point of view. It has other
    effects as well.
        Mr. Sires. So what are the bad effects? What are the bad
    effects? You have all these good effects that you are telling
    me. What are the bad effects that you anticipate?
        Mr. Hargan. Well, we are hoping that any state that comes
    in is going to avoid bad effects by structuring a community
    engagement requirement so that, say, in the case of Arkansas,
    that people who are primary caregivers for children, people who
    are medically frail, people who are full-time students, people
    who a doctor or medical professional says cannot work or should
    not work, are exempted from the program.
        So hopefully, the restrictions on the community engagement
    requirement themselves will help obviate bad effects of the
    program, but also enable people who can engage in the community
    to encourage them to do so.
        Mr. Sires. Thank you, Mr. Chairman. My time is up.
        Chairman Yarmuth. The gentleman's time is expired.
        I now recognize the gentleman from Massachusetts, Mr.
    Moulton, for five minutes.
        Mr. Moulton. Mr. Hargan, thank you very much for joining
    us.
        Does the President believe that individuals should be able
    to deduct healthcare insurance premiums from their taxes?
        Mr. Hargan. I believe that we have stood for a lot of
    different proposals in the budget regarding healthcare. It
    depends on the type of--the type of things. We have certainly
    advocated for greater expansion of health savings accounts
    that----
        Mr. Moulton. Well, if you do not what the President, your
    President, has proposed, he said during the 2016 presidential
    campaign that his reform--excuse me--his plan to reform
    healthcare included allowing individuals to deduct all of their
    insurance premiums from the income tax that they owe.
        Historically, which Americans are most likely to benefit
    from these tax deductions? Wealthy Americans? Poor Americans?
    Middle class?
        Mr. Hargan. I would--for tax issues, I would have to refer
    you to possibly the Department of Treasury for----
        Mr. Moulton. Well, the answer is that wealthy people can
    take advantage of deductions.
        The President's budget justification states, ``All
    individuals receiving subsidized coverage should contribute a
    portion of their health insurance premium.'' So the President
    believes that individuals making $12,490 or families of four
    with a household income of $25,750 should pay more towards
    healthcare.
        Does the President's budget propose wealthier Americans pay
    more for the cost of health insurance?
        Mr. Hargan. I believe that we are trying to reorient----
        Mr. Moulton. Actually, it is just quite a simple question,
    Mr. Hargan. Does the President's budget propose that wealthier
    Americans pay more of their costs for health insurance?
        Mr. Hargan. We are proposing greater expansions of health
    insurance options to all Americans. We are actually proposing
    areas like where we expand more options that cost less for
    Americans, for example short-term plans----
        Mr. Moulton. That is great. So I have given a chance to
    dodge the question. Now maybe you could just answer it. Is it
    yes or no?
        Mr. Hargan. So short-term--say short-term plans cost 50 to
    80 percent less for Americans. By expanding options, all health
    insurance options----
        Mr. Moulton. The President is not asking wealthy Americans
    to pay more. But he is asking poor Americans to pay more for
    health insurance. My Republican colleagues often state during
    these hearings that there is a philosophical difference between
    Republicans and Democrats on spending.
        And I agree. Apparently Democrats think that the poor
    should pay less, and Republicans think that the poor should pay
    more.
        Mr. Hargan. We are supportive of the ACA exchanges. We have
    been implementing them all along, and they provide a tremendous
    premium subsidy----
        Mr. Moulton. The President supports the Affordable--wait.
    The President supports----
        Mr. Hargan. The Administration has carried out the ACA
    exchanges and those----
        Mr. Moulton. So would you be willing to say that the
    President supports the Affordable Care Act?
        Mr. Hargan. We obey the law within the Administration. We
    have put forward----
        Mr. Moulton. Does the President support the Affordable Care
    Act? You said he supports the exchanges.
        Mr. Hargan. We have put forward alternatives to the ACA.
    But as long as----
        Mr. Moulton. But just does he support it or not?
        Mr. Hargan. But as long as it is the law of the land, we
    are going to provide premium support, a tremendous amount of
    premium support.
        Mr. Moulton. Well, that is hardening to hear--we certainly
    know that we have a President who loves to follow the law of
    the land.
        Mr. Hargan, who famously said that the most terrifying
    words in the American language are, ``I am from the Government
    and I am here to help''?
        Mr. Hargan. I am not sure who the actual originator of that
    quote is.
        Mr. Moulton. It may have been a speechwriter. But of course
    it is attributed to President Ronald Reagan. So even with his
    quest to limit the federal government, he signed into law the
    Low Income Home Energy Assistance Program during his first year
    in the White House, which specifically protects millions of
    low-income households each year from extreme heat and cold when
    high energy bills exceed their ability to pay.
        So how much does President Trump propose for this program
    in fiscal year 2020?
        Mr. Hargan. Zero.
        Mr. Moulton. Okay. And his justification states that it is
    because there are 15 states that offer similar protection. So
    what about the people so unfortunate to live in the other 35
    states?
        Mr. Hargan. Many states make it so that utilities cannot
    cut off service to people during periods of severe weather.
    Also, in 2010, the GAO found that that program was not high-
    performing, had lots of problems with waste and fraud. We
    believe that this is not a program that is a very high-
    performing program----
        Mr. Moulton. So it sounds like if it is not high-
    performing, the problem is not with the poor people who cannot
    afford to heat their homes, but the administrators of that
    program. And as the Administration, you are in charge of the
    administrators of that program.
        So why not reform the program rather than forcing low-
    income people to freeze?
        Mr. Hargan. The program----
        Mr. Moulton. Sorry. My time is expired.
        Chairman Yarmuth. I thank the gentleman.
        I now recognize the gentlelady from Minnesota, Ms. Omar,
    for five minutes.
        Ms. Omar. I will just pick up, I think, where my colleague
    left off. I am from the state of Minnesota, and we are very
    much accustomed to having extreme cold weathers. And so I
    understand the need for us to worry about what happens when
    families are not able to heat their homes.
        So the program that my colleague was talking about helps
    6.3 million households. In Minnesota alone, there are 120,000
    families that utilize this particular program. And so my
    question to you is: What do you propose happens to these
    families who now have health and safety problems because of the
    extreme cold weather?
        Mr. Hargan. Well, I am from Chicago, so I understand the
    issue about cold winters. When we have a program that does not
    have strong performance outcomes, and LIHEAP is one of those
    that has had this going all the way back to when I was at HHS
    under President Bush, and when the GAO tells us that it is at
    risk for fraud for improper payments and we look at----
        Ms. Omar. But sir, there is a difference between what my
    colleague is suggesting about us reforming and figuring out the
    best ways to utilize the dollars that we have, and saying zero
    dollars should go to assist people who live in conditions where
    it gets as low 12, 30 negative.
        Mr. Hargan. So all 50 states have protections for people
    who cannot pay their bills in periods of severe weather. So
    every state----
        Ms. Omar. Where would the resources come from if that
    protection exists? Yes, you need by legislation----
        Mr. Hargan. Every state protects people from their
    electricity, their heat, being cut off during periods of severe
    weather. And the LIHEAP program is really duplicating
    protections that are out there, $3.7 billion to duplicate
    protections that people have already who are disadvantaged.
        Now, 15 states have alternative programs that really
    duplicate by providing payments and other things. But all 50
    states protect people against having their----
        Ms. Omar. So let me get this clear. You have 15 states out
    of the 50 states that have programs where there are resources
    to help assist people. Other states just have a protection that
    might say, you might not be able to cut this off, or other
    things.
        But we are deciding that there is no resources from the
    federal government that is going to help any of these people.
    Correct?
        Mr. Hargan. Well, we are--they are protected. So they are
    not going to lose their heat. They are not going to lose their
    cooling in hot weather.
        Ms. Omar. But protection and providing resources for them
    to do that are totally two different things. You know that, and
    you are trying to say otherwise. So we will just move on.
        I wanted to, for the remainder of my time, talk about the
    child care budget within the budget that you proposed. The
    budget includes a one-time temporary funding of $1 billion to
    help address the cost of child care. It is unclear whether this
    approach will ultimately achieve the intended goal. Why are you
    only providing it on a one-time basis?
        Mr. Hargan. Well, this money, which is one-time mandatory
    funding which we put in place due to the caps proposal, it is
    intended to augment what we think of as being the most
    effective parts of our budget in social services, which is
    supporting child care and allowing states to build out capacity
    to provide new ways to provide child care. We also----
        Ms. Omar. And how will the funds be distributed? Is it
    going to be up to the states to determine what regulations they
    will use to meet the definitions of unnecessary?
        Mr. Hargan. Yes. So this is going to be provided as a grant
    to states, to help businesses and localities, to help them
    provide new ways of doing child care, and hopefully to reach
    underserved areas, rural communities, and communities that are
    underserved with child care.
        Ms. Omar. All right. Thank you. I yield back.
        Chairman Yarmuth. The gentlelady's time is expired.
        I now yield 10 minutes to the Ranking Member for his
    questions.
        Mr. Womack. I thank the chairman, and again, Mr. Hargan,
    thank you for being here today. I will say at the outset I
    appreciate you being patient with my friend from Rocky Top, Mr.
    Burchett, who was trying to get a question answered and blaming
    it on Crenshaw's lack of knowledge of something when it was
    actually his own.
        But what can you say about a guy that walks around in a
    Carhartt jacket when it is pretty moderate outside and a big
    hole in the right sleeve? But that is Tim. He is a great guy
    and fellow mayor. So I appreciate him, and he does a very good
    job on this Committee.
        You were asked a few questions in the hearing by two or
    three different members on the other side of the aisle from me,
    questions about HIV initiative, yes or no questions, those
    type, treatment of foster care within the budget request--there
    were a handful of other questions that you were attempting to
    close on with your answers, but because of their quest for yes
    or no answers, not given an opportunity to explain.
        I will give you a chance here for a moment or two, if you
    would like, to finish, maybe, some of those thought processes
    on those subjects and any others that you would care to expound
    on regarding this part of the President's budget.
        Mr. Hargan. Right. Well, thank you for that. I mean, I
    think that some of the questions about the effects that
    Medicaid might have on people with HIV, as I had explained, we
    are actually replacing the cuts or reductions in one line with
    an increase on the other side, and flexibilities.
        So we do not believe that a state would choose to
    disadvantage a particular population or places being served
    just simply because they are given more flexibilities in
    funding. So we are hopeful that to the extent that people are
    fearful that the states would cut Medicaid funding to HIV, we
    do not have any idea that that is what would happen.
        And in the meantime, we are increasing funding for HIV $291
    million. It is clearly one of the primary focuses of this
    department, to address that issue, to end that scourge for
    Americans. So we want to make sure that that focus is really
    clear on that.
        With regard to the issue of Miracle Hill, there is no one
    who is going to be turned down as a foster parent who is
    otherwise suitable as a foster parent by the state of South
    Carolina. If an organization like Miracle Hill has a parent
    like me, for example, as a Catholic, who is not going to
    qualify for that program, they are going to refer me, and they
    are supposed to refer me, to another agency or to the state for
    me to apply and get inside the foster care program.
        We have to. The American people have given HHS a budget of
    $1.3 trillion and tremendous amount of authority in some of the
    most intimate and personal parts of their lives. And in return,
    we have to obey the constitutional safeguards and the legal
    safeguards that the American people expect us to obey. Some of
    those are the Bill of Rights, the constitutional safeguards of
    people's religious expression. That has to be a cornerstone of
    everything that we are doing.
        And so it is important to us that we can do both of these
    things. We can make sure that we both fund important social
    services and healthcare activities and also obey the
    constitution. We have to be able to do both at the same time.
        Mr. Womack. It was said earlier, and I cannot remember
    which one of my colleagues made the comment, but about the
    prospect of healthy kids. Kids that have access to healthcare
    at an early age typically would be better performing physically
    from a health perspective later on in life.
        I can sign onto that. I think that is a rational,
    reasonable approach. But I would also ask whether or not that
    same healthy child early on in life is going to be well served
    if in fact that later on in life, the costs associated with
    what we are doing today are piled on to that generation of
    children in the form of higher taxes in order just to meet the
    daily needs.
        So $22 trillion in debt, I think you would agree, is a
    pretty substantial amount of money that we owe currently.
        Mr. Hargan. Yes.
        Mr. Womack. And that trillion dollar deficit that is going
    to be added to that $22 trillion in debt is also a very
    significant amount of money.
        Mr. Hargan. Yes.
        Mr. Womack. So in your business, when you are preparing a
    budget, you are having to take the--just like people at home.
    People watching this hearing today do this at home. They take
    their income and they take their expenses, they compare the
    two, and then they have to make what I call tough choices.
        So you have to make tough choices. What are some of those
    tough choices?
        Mr. Hargan. So some of the tough choices that we have to
    make are situations where we are seeing that we are going to
    have to reduce the rate of growth in programs. Those are tough
    choices. We have to make choices between making sure that
    different sites of care are equally provided. Those are going
    to impose potential costs on providers, but not beneficiaries.
        We have to maintain the focus that the seniors, the
    beneficiaries of our programs, are taken care of and that they
    do not have an increase in out-of-pocket cost. But at the same
    time we have to have reforms in these programs or they will
    not, as you rightly point out--will they be sustainable for the
    long run?
        We have to make sure that they are and that the child today
    that we are going to endeavor to have the best healthcare
    possible for them, that these programs are around for them. And
    that is why we try to adopt a thoughtful approach in this
    budget that extends the life of the Medicare Trust Fund by
    eight years, and that it does with making thoughtful choices
    within a tough budget environment.
        Mr. Womack. My colleague, Mr. Sires, brought up the state
    of Arkansas, my home state, and changes it has made to its
    Medicaid program regarding the work requirement. Are you
    familiar with a work requirement? What is that work
    requirement?
        Mr. Hargan. Yes. So this is a community engagement
    requirement that we have that we have allowed Arkansas to put
    into place. There are a number of elements of it. But Arkansas,
    while requiring people to engage in community engagement or
    work, also has a lot of safeguards on that program that we have
    built into place to make sure that really this is targeted
    towards people who can engage in work, who can engage in
    community engagement.
        So that people who are caring for a minor child 17 or
    younger are exempted from that program; that we have people--
    anyone who is caring for an incapacitated person, people who
    have substance use disorder--those are all categories that are
    exempted from the community engagement requirement by Arkansas.
        Mr. Womack. How many hours are they required to work?
        Mr. Hargan. I believe it is----
        Mr. Womack. It is about 20 hours a week?
        Mr. Hargan. 20 hours a week. I think it is 20 hours a week.
        Mr. Womack. 20?
        Mr. Hargan. Yes. I think it is 20 hours a week.
        Mr. Womack. Do you think that is reasonable?
        Mr. Hargan. Well, I think that it is probably not a work
    week--a lot of people work a 40-hour work week. We are
    requiring--Arkansas is requiring 20 hours in this case.
        Mr. Womack. In my area, in the 3rd District of Arkansas,
    the unemployment rate is significantly below 4 percent. In my
    home county, it is probably 2, 2.5 percent, which I would
    assert is very close to full employment. Lots of jobs. Lots of
    opportunities.
        In the 16,000 or so people that have lost their Medicaid
    coverage, is it not true that because of the youth of the
    program, so to speak, the fact that it is not a mature program
    yet; we do not have a longitudinal study on its effects--but is
    it not possible that many of those 16,000 people have entered
    the workforce?
        Mr. Hargan. Yes.
        Mr. Womack. Is it possible that many of those 16,000 now
    have acquired some form of health insurance through their
    employer?
        Mr. Hargan. Yes. I mean, we definitely know that this
    economy is the strongest that it has been in years. We are
    seeing unemployment rates that are the lowest they have been in
    50 years, the lowest African American unemployment, Hispanic
    unemployment, female unemployment. We see very--those very high
    numbers.
        We also know that besides employment issues, we also see
    that there are other reasons why people--they move out of the
    state. There are lots of reasons why people leave a Medicaid
    program. And we look forward to engaging with Arkansas on that
    and figuring out exactly why people might drop out of
    enrollment.
        But it is nothing out of the ordinary. The percentages we
    are seeing in terms of what we call ``churn'' within Medicaid,
    people coming in and out of the program, has not yet--we have
    not yet seen a significant effect statistically in that from
    Arkansas.
        Mr. Womack. Mr. Hargan, you have got a tough job in a
    constrained resource environment where we find ourselves
    consistently with trillion-dollar deficits and a $22 trillion
    debt. The country is going to have to look at its spending
    habits and the promises it has made and going to have to make
    some of those tough decisions.
        And I applaud the fact that over in HHS they are looking at
    programs to reform for long-term sustainability because so many
    people rely on the programs, but at the same time with an eye
    toward the future in terms of our fiscal solvency.
        With that, Mr. Chairman, I yield back my time.
        Chairman Yarmuth. I thank the gentleman.
        I now yield myself 10 minutes for my questions. Once again,
    Deputy Secretary, thank you for being here. Thank you for your
    responses.
        You have, on a number of occasions throughout your
    testimony today, talked about the constraints of the budgetary
    caps under the Budget Control Act of 2011. Perfectly
    understandable. You also said, if I remember correctly, that
    you appreciated the spending levels in 2019 that you are
    working under now that was much more adequate for the programs
    that you are trying to manage.
        Can I infer from those comments that you would be
    supportive of raising the budgetary caps for 2020 and 2021?
        Mr. Hargan. We do not formulate budget policy within HHS.
    We only work with the Office of Management and Budget, within
    the caps environment, to present to you what we hope is a
    thoughtful budget that's compliant with the caps agreement. So
    I would refer any questions on overall budgetary policy to OMB.
        Chairman Yarmuth. But you did say that you appreciated the
    spending levels in 2019. It made things easier for the
    department.
        Mr. Hargan. Well, I think we appreciated, for example, the
    opioids, the great support for the opioids initiative of the
    President, and that Congress had great support from the point
    of view of resources and authorities within the opioids
    initiative, the SUPPORT Act, all of which we very much
    appreciate.
        Chairman Yarmuth. Well, if you were to have spending levels
    for 2020 and 2021 that resemble 2019 levels, would you still
    make the cuts that you are proposing to make in this budget?
        Mr. Hargan. Well, we would have to--whatever proposal was
    made by the Congress, we would have to work with OMB and
    throughout the rest of the Administration to come up with,
    hopefully, a wise budget for you, depending on the priorities
    that you all establish and that we have in the Administration.
        Chairman Yarmuth. Thanks. Last night DOJ announced that the
    Administration believes the entire Affordable Care Act should
    be invalidated, adding--sending a message to the federal court
    in Texas where the case is under appeal. Were you or others at
    HHS consulted on this DOJ decision?
        Mr. Hargan. DOJ sets the litigation strategy for the
    federal government. We do not have independent litigating
    authority.
        Chairman Yarmuth. No. But were you consulted as to, for
    instance, what kind of impact that ultimately might have if the
    courts totally invalidated the ACA?
        Mr. Hargan. Well, as things stand now, the judge has not
    issued a stay or enjoined the Affordable Care Act. So it will
    have no impact as it stands on our administration of the
    Affordable Care Act. But this Administration, the Trump
    Administration, stands ready to work with the Congress on
    policy solutions like those in our budget, and then power
    consumers in states to regain control over their healthcare and
    increase affordability and continue to protect individuals with
    preexisting conditions.
        Chairman Yarmuth. I am going to spend most of the rest of
    my time on Medicaid. But I have one question on Medicare--well,
    two questions on Medicare.
        Has anyone in the HHS ever considered increasing the
    Medicare withholding tax?
        Mr. Hargan. The which? Could you repeat that?
        Chairman Yarmuth. Considered increasing the withholding tax
    that funds the Medicare Trust Fund?
        Mr. Hargan. I do not think that the budget sets forth an
    increase in the withholding tax.
        Chairman Yarmuth. Has anybody ever discussed that, to your
    knowledge, in this Administration? We talk about adjustments to
    the program, but we always talk about it on the spending side.
    We never talk about it on the revenue side. I was just
    wondering whether, since it has been a very long time since
    that tax has been changed.
        Mr. Hargan. I do not believe that we have proposed that.
        Chairman Yarmuth. All right. Thank you.
        Mr. Hargan. Any changes would the withholding tax.
        Chairman Yarmuth. Thanks. We talked from time to time
    during the hearing about different things that affect the
    Medicare costs, prescription drugs being one, of course. Are
    there not things in the statute and rules that need to be
    changed because they drive up costs unnecessarily?
        I am referring, for instance, to the Medicare three-day
    rule, that you have to spend three days in a hospital before
    you can get post-acute care paid for by Medicare. Every
    physician I have talked to thinks that is an absurd rule.
        Mr. Hargan. I think we are--we would love to work with you.
    You had mentioned drug pricing. We would love to work with the
    Congress on a lot of issues that have been stood out in the
    blueprint, and that we would very much welcome working with you
    and providing technical assistance to you all on drug pricing
    reform that brings the costs of prescription drugs down in this
    country.
        Chairman Yarmuth. You talked a number of times, again now
    getting to Medicaid, about how you want to increase flexibility
    for the states. In recent years, a number of states with
    Republican administrations that had initially decided not to
    expand Medicaid--thinking about Arizona and thinking about
    Utah; there are several others, referendums and otherwise--and
    they made the decision, after watching what had happened over
    the first few years of the ACA, that it was to the benefit of
    their citizens to expand Medicaid.
        How does your initiative comply with that degree of local
    control that those states exercised?
        Mr. Hargan. Well, states that--when we provide the
    flexibilities, we would hope that the states would welcome the
    amount of flexibilities that we would plan to provide them
    under this initiative, and that they would also welcome the
    fact that Medicaid is oriented towards those vulnerable
    populations that it is intended to cover; that we would have--
    we have other programs that are outside of Medicaid and that we
    are proposing that would cover different kinds of populations.
        And we would allow more flexibilities across the board,
    more choice and more competition, among different payers and
    different plans, to allow Americans to purchase the kind of
    coverage that they want to have.
        Chairman Yarmuth. But when you eliminate the ACA's Medicaid
    expansion, you have limited the amount of local control that
    those states have. You have done it in my state. In my state,
    we have roughly a half a million people out of a little over
    four million people covered under Medicaid expansion alone,
    another 800,000 covered by regular Medicaid.
        So I am wondering what that says to those states who are
    trying to do the best thing for their citizens.
        Mr. Hargan. I think that--I think that hopefully they would
    see that individuals--that they are not necessarily required to
    cover the same people under the Medicaid expansion. But we do
    not have a lot of assumptions on how states would use the block
    grants.
        We really are looking to provide more flexibilities for
    those. It would not--so given greater state flexibility with
    regard to eligibility requirements, benefits, the use of the
    block grant funds, we are hopeful that they are going to be
    able to cover their most vulnerable populations under Medicaid
    with the new flexibilities; and really whichever state it is,
    Kentucky or Arkansas or otherwise, that they would be able to
    fashion this and really achieve the ultimate goal that Medicaid
    was originally set out to be, which is a state federal-directed
    program with flexibilities to allow the states to fashion it
    for their own populations.
        Chairman Yarmuth. All right. Is there anything in the
    Medicaid law that defines it as a job program?
        Mr. Hargan. It is not a--it is not a--I don't know that it
    is defined as a job program.
        Chairman Yarmuth. Well, we are fighting this in Kentucky
    because our governor is trying to impose work requirements and,
    actually, also premiums under a Section 115 waiver that
    basically was written by Seema Verma, the now-administrator of
    CMS, and it was approved by her. And how it has already been--
    that decision has already been overturned in court once, and it
    is back in court again.
        And one of the things that we have been questioning
    continuously since the effort of the governor--by the way, the
    Section 115 waiver application specifically or explicitly says
    that if it is approved, 95,000 Kentuckians will lose coverage.
        So I think that is a pretty good indication when somebody
    who is actually trying to get a waiver and impose a work
    requirement, or community engagement requirement, admits that
    almost 100,000 people will lose coverage. You extrapolate that
    across the entire country and it is going to have a
    considerable impact, presumably, on the healthcare of our
    country.
        But I was wondering: Do you have any data to show--you said
    that you do not really know what happens, what the exact reason
    is for 16,000 in Arkansas losing their coverage. But when you
    have taken this path, do you have any experiential reasons for
    saying that this is not going to be devastating for people? Do
    you know, for instance, what percentage of people on Medicaid
    across the country are working already or would be otherwise
    exempt from these programs?
        Mr. Hargan. So when--we are really looking for the states
    to come to us with regard to their specific populations to
    determine the parameters of the community engagement
    requirement. So we would look to Kentucky. We would look to
    Arkansas and the other states when they are coming forward to
    us to see what works for their population in terms of the hours
    that they have, in terms of the other requirements of the
    program.
        So in that sense, we do monitor what we are expecting from
    the states. We are certain they are going to send us
    information about how work is going to affect and whether it
    allows the transition off of the program ultimately and into
    the workforce, which I think many people, that's what they are
    trying to achieve here.
        We are looking at it more broadly, as community engagement
    or as work. But I know that a lot of people, that is going to
    be the form that they take. And that is going to have both
    economic effects on them, on their community, on the workforce
    that is allowed to be there.
        And then, at the end of the day, we think on their
    behavioral and their mental health as they engage with their
    community. And I have heard about it as I come across the
    country. I have heard about it many, many times in Kentucky. It
    was one of the places where I met with a group of people with
    substance use disorder.
        And one of them said to me, said that: ``The thing about it
    was, before I was working, I was just a patient. I was a person
    who is an addict. And all I did was sit at home and look for
    the next meeting with my doctor, the next meeting with my
    counselor, the next meeting with my group. When I had work, at
    least for eight hours a day people are treating me as a
    coworker and a colleague, and I did not think about my
    addiction all the time.''
        That took him out of himself and meant that he was not
    always an addict And that was a huge improvement for him, for
    his own feeling about himself. And that has ramifications, and
    I think that as we see these things going forward, whether I
    have heard it from people with mental health issues, for people
    who have substance use disorders, for the disabled, that they
    all look to us and they say--I have heard it from each one of
    those groups, saying, ``It is so important for us to have
    encouragement to work so that people see us not just as a
    disabled person, a person with a mental disorder or an addict,
    but as somebody who can contribute to them, who can be a
    coworker, a colleague, and a fellow American.''
        So I think it is an important--I think it could be a
    tremendous achievement.
        Chairman Yarmuth. I do not want to abuse the power of the
    chair. But I would say I think that maybe makes the case for
    not having work requirements because what it indicates to me is
    that people basically do want to work, and if they can, they
    will. So you do not need to put this unnecessary burden on
    them.
        But with that, I would say thank you so much, Deputy
    Secretary Hargan. I appreciate your testimony. And please be
    advised that members can submit written questions to be
    answered later in writing. Those questions and your answers
    will be made part of the formal hearing record. Any members who
    wish to submit questions for the record may do so within seven
    days.
        Once again, thank you. And with that, without objection,
    this hearing is adjourned.
        [Whereupon, at 12:45 p.m., the Committee was adjourned.]
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