S. HRG. 110–227

FIELD HEARINGS FOR FISCAL YEAR 

2008

HEARINGS

BEFORE THE

COMMITTEE ON THE BUDGET 

UNITED STATES SENATE

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

February 20, 2007—THE IMPACT OF FEDERAL FUNDING ON LAW 

ENFORCEMENT AND FIRST RESPONDERS

August 7, 2007—AN EXAMINATION OF HEALTH CARE COSTS: 

CHALLENGES AND OPTIONS FOR REFORM

(

Printed for the use of the Committee on the Budget 

FIELD HEARINGS FOR FISCAL YEAR 2008

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37–526pdf 2007

S. HRG. 110–227

FIELD HEARINGS FOR FISCAL YEAR 

2008

HEARINGS

BEFORE THE

COMMITTEE ON THE BUDGET 

UNITED STATES SENATE

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

February 20, 2007—THE IMPACT OF FEDERAL FUNDING ON LAW 

ENFORCEMENT AND FIRST RESPONDERS

August 7, 2007—AN EXAMINATION OF HEALTH CARE COSTS: 

CHALLENGES AND OPTIONS FOR REFORM

(

Printed for the use of the Committee on the Budget 

COMMITTEE ON THE BUDGET 

KENT CONRAD, NORTH DAKOTA, CHAIRMAN

PATTY MURRAY, WASHINGTON 

RON WYDEN, OREGON 

RUSSELL D. FEINGOLD, WISCONSIN 

ROBERT C. BYRD, WEST VIRGINIA 

BILL NELSON, FLORIDA 

DEBBIE STABENOW, MICHIGAN 

ROBERT MENENDEZ, NEW JERSEY 

FRANK R. LAUTENBERG, NEW JERSEY 

BENJAMIN L. CARDIN, MARYLAND 

BERNARD SANDERS, VERMONT 

SHELDON WHITEHOUSE, RHODE ISLAND

JUDD GREGG, NEW HAMPSHIRE 

PETE V. DOMENICI, NEW MEXICO 

CHARLES E. GRASSLEY, IOWA 

WAYNE ALLARD, COLORADO 

MICHAEL ENZI, WYOMING 

JEFF SESSIONS, ALABAMA 

JIM BUNNING, KENTUCKY 

MIKE CRAPO, IDAHO 

JOHN ENSIGN, NEVEDA 

JOHN CORNYN, TEXAS 

LINDSEY O. GRAHAM, SOUTH CAROLINA 

MARY ANN NAYLOR, Majority Staff Director

SCOTT B. GUDES, Minority Staff Director

(II) 

iii

C O N T E N T S 

HEARINGS 

Page 

February 20, 2007—The Impact of Federal Funding on Law Enforcement 

and First Responders ........................................................................................... 1

August 7, 2007—An Examination of Health Care Costs: Challenges and Options for Reform .................................................................................................... 49

STATEMENTS BY COMMITTEE MEMBERS 

Chairman Conrad....................................................................................................... 1, 49

WITNESSES 

Candace Abernathy, Patient, Minot, ND ............................................................... 81, 84

Burch Burdick, State’s Attorney, Cass County...................................................... 11, 13

Janis Cheney, State Director, AARP North Dakota, Bismarck, ND ................... 78

Ken Habiger, President, Casselton Ambulance Service........................................ 40, 42

Terry G. Hoff, Chief Executive Officer and President, Trinity Health, Minot, 

ND.......................................................................................................................... 91, 94

Bruce Hoover, Fire Chief, Fargo Fire Department ............................................... 27, 29

Mark A. Johnson, Executive Director, North Dakota Association of Counties ......................................................................................................................... 32, 34

Paul Laney, Sheriff, Cass County Sheriff’s Department, Cass County............... 19, 22

L. John MacMartin, President, Minot Area Chamber of Commerce, Minot, 

ND.......................................................................................................................... 88, 90

Keith Ternes, Chief of Police, Fargo Police Department ...................................... 15, 17

Terry Traynor, Assistant Director, North Dakota Association of Counties ........ 32

Mary K. Wakefield, PhD, RN, Associate Dean for Rural Health and Director, 

Center for Rural Health University of North Dakota, Grand Forks, 

ND.......................................................................................................................... 58, 63

Hon. Dennis Walaker, Mayor, City of Fargo, ND ................................................. 9

(1)

THE IMPACT OF FEDERAL FUNDING ON LAW 

ENFORCEMENT AND FIRST RESPONDERS 

TUESDAY, FEBRUARY 20, 2007

U.S. SENATE, 

COMMITTEE ON THE BUDGET, FARGO, N.D. 

The committee met, pursuant to notice, at 1:32 p.m., in room 

201, Fargodome, Hon. Kent Conrad, chairman of the committee, 

presiding. 

Present: Senator Conrad. 

Staff Present: Mike Jones, John Fetzer, Sean Neary, and Jolene 

Thorne. 

OPENING STATEMENT OF CHAIRMAN CONRAD 

Chairman Conrad. The hearing before the Senate Budget Committee will come to order. 

First of all, I want to thank the witnesses for being here. I want 

to especially thank the very distinguished panels that we have to 

talk about the resources needed for law enforcement and first responders. 

As you know, we face now the challenge of writing a budget for 

the United States, and we have to do that in the next 30 days. So 

this is a critically important time to get input from those who are 

especially affected by these decisions. 

Let me just start and talk about the budget the President has 

sent to us and how it affects law enforcement and first responders. 

There are parts of the President’s proposals that I must find—I 

must say I find startling.

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The first is the COPS program that the President has proposed 

cutting by 94 percent; from $553 million to $32 million. 

A second area the President has proposed major reductions is the 

Byrne grants; so important to local law enforcement. $530 million 

provided in 2007 by the Congress, and the President has proposed 

cutting that 34 percent. 

On State Homeland Security Program funded at $535 million for 

fiscal year 2007, the President proposes cutting that 65 percent. 

And we are not talking about here Washington talk about cuts 

where they talk about reduction in the increase. I am talking about 

real cuts. I am talking about dramatic reductions from the amount 

of money we had last year. 

On Law Enforcement Terrorism Prevention Program. $382 million last year. The President proposes 263 million; a 31 percent cut. 

Firefighter grants. Last year Congress provided $675 million. 

The President has proposed $300 million; a 56 percent cut. Let me 

just say the needs of law enforcement, the needs of first responders 

have not been reduced. If anything, the need for law enforcement, 

the need for Homeland Security, the need for first responders’ resources, has increased in the country. Certainly not been reduced. 

Let me go to the next slide, if we could. In terms of the funding, 

these programs have provided North Dakota.

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The COPS program from 1994 to 2006 has provided over $36 million. 

The Byrne grants and local and law enforcement block grants 

from 1988 to 2006 have provided $42 million to North Dakota. 

State Homeland Security Program from 2003 to 2006 has 

brought over $48 million to North Dakota. 

And the Law Enforcement Terrorism Prevention Program from 

2004 to 2006 has brought $12 million to North Dakota. 

Now I know in Washington sometimes they ridicule the notion 

that North Dakota gets terrorism-prevention grants. I just say to 

those people you are only as strong as your weakest link. This is 

the United States of America. It is not just the East and West 

Coast of America. 

And anybody who has watched how terrorists think about coming 

into this country know that they search and probe for a weakness, 

for an area of vulnerability, and that is where they seek to come 

through the border. 

So yes, we should have less funding—we understand that—than 

in New York or Los Angeles or San Francisco or in Washington, 

D.C. 

They are the high-threat areas. They have to get a disproportionate share of the funding. But the notion that none of the rest 

of the country gets anything, frankly, makes very little sense, at 

least to me. 

Let’s go to the next slide because I want to focus on the COPS 

program.

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This is the President’s—one of the President’s proposals that I 

find most disturbing, to cut the COPS program 94 percent when 

crime is rising across the country. This is a program that has put 

a hundred thousand police officers on the street. In North Dakota 

it has put 274 officers on the street. 

It just makes no sense to me to take these officers off the street. 

Not only in North Dakota, but right around the country. We need 

these officers on the street. 

We know that it works to have officers on the street. We know 

that it suppresses crime. We know that it leads to a more effective 

law enforcement environment to have more sworn officers available, on patrol, meeting the needs of communities. 

So the proposal here to cut the COPS program by 94 percent 

just—I do not think is supported by any of the facts, and I hope 

we will be able to establish today the importance of the COPS program in North Dakota. 

Let’s go to the next.

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Let me just deal with the question of priorities, because a budget 

is fundamentally about priorities. How do we use the resources 

that the taxpayers provide us in a way that is most efficient and 

most effective. 

In the President’s budget, the cost of the tax cuts for those earning over a million dollars a year for 2008 alone is $55 billion. That 

is the cost of the tax cuts in the President’s proposal for those earning over a million dollars a year. 

The cost of the tax cuts in 2008 alone is $54.9 billion. The cost 

to restore the COPS program is $521 million. Now to me that is 

a priorities that just do not make much sense. 

I think it would be reasonable to ask those who are the very 

wealthiest among us to give up a tiny proportion of their tax cuts, 

a very tiny part, in order to restore COPS funding. Frankly, I think 

it would be in the interest of those people to make certain that the 

COPS program is restored. But we will have a chance to raise 

these questions and these issues as we go forward with this hearing. 

I want to first call on our mayor, mayor of Fargo. I am delighted 

that he is here, and I thought it would be most appropriate to 

begin this Budget Committee hearing by getting the perspective of 

a mayor, somebody who is responsible for budgeting, for determining what the priorities are and where the resources should go. 

So, Mayor Walaker, we are delighted that you are here. We especially appreciate your attendance, and if you would just give us 

your perspective on, being the chief administrative officer of this 

city, the importance of law enforcement and other first responder 

Federal resources. 

STATEMENT OF HON. DENNIS WALAKER, MAYOR, CITY OF 

FARGO, NORTH DAKOTA 

Mayor Walaker. Well, the No. 1 priority has always been the 

same, and that is what we need, is a safe and a healthy community. 

In 2005 we put together the budget, and it made a lot of sense 

to do some things to assist our police chief in early hiring and so 

forth, and that is what we did and we put on new—two new police 

officers in Fargo without the COPS grant. 

The COPS grant basically allows us to transition in our budget. 

They pay basically for police officers for the first year, and then it 

dwindles down after 3 years. Then it becomes a city obligation, but 

it allows you to transition. 

When I saw Senator Conrad’s process there on the people making over a million dollars, and we are talking about 1 percent of 

that to restore COPS grants, it just befuddles me that there is that 

kind of exposure. 

What is going to happen in the next budget is we are going to 

be struggling, and I mean struggling, to hire new people to meet 

our needs once again. 

Our fire chief, which is also a first responder, is going to try and 

staff a new fire station. Our transit facility that we just put on will 

ask for some people, andour new library is going to come. So it is 

going to be a difficult time for us to do it locally. 

10

We need people, because our community continues to expand, 

and, first of all, there is no one among us that does not understand 

the need for safety. It is No. 1. 

Back in the middle 1990’s, we had some serious problems with 

gangs infiltrating our basic area, Moorhead, Fargo, and we put a 

foot down and we stopped it and it has been pretty decent, but it 

can come back. They are getting smarter all the time. They are not 

going to identify themselves, but they look just like any other business. They want to expand from Chicago and so forth and they are 

looking for new markets and so forth, and it will happen if we are 

not forward in that whole process. 

I would hate to think that I cannot go for a walk in my community, in my neighborhood at any time of the day or night without 

feeling relatively safe. 

So we have some huge challenges here in the future, and the 

COPS grants do an awful lot. 

We were criticized some time ago about the money that we took 

from Homeland Security and we spent it on communications. Well, 

now many of the areas of the United States are finally understanding how important communications is, and they are looking 

for additional funding to do that. 

Well, where that is going to come from in this very, very extremely sparse budget that Senator Conrad has put before us, we 

are going to be above that. We are going to have our—are they 

going to take the money then from our area and use it for other 

areas that did not do communications first? I hope not. I sincerely 

hope not. 

But we need to restore some funding, and I know everybody’s 

taxes right now in North—especially in Fargo, they feel they are 

at the brink and so forth, but we have a safe community and we 

need to extend that. 

So I applaud Senator Conrad for bringing this issue to us from 

a national level. And the testimony that you are going to hear from 

the people that are on the front line will only bolster those needs 

to our Congressional, and we spent some time out there in January 

and priorities are, because there is not enough money for everything. So you have to prioritize, and to me safety is No. 1. Thank 

you. 

Birch Burdick, our State’s Attorney, Cass County State’s Attorney; somebody who has deep experience in law enforcement. 

Our police chief, Keith Ternes; somebody who is respected not 

only in this community, but regionwide. Weare delighted that you 

are here. 

Paul Laney, our new Cass County sheriff, who has already acquitted himself very well and is earning respect across the State 

for the way he has conducted his department. So welcome. We are 

delighted to have the three of you. 

I know, Mayor Walaker, that you have other responsibilities, so 

we will excuse you, but we thank you very, very much for coming 

and providing testimony to the Senate Budget Committee. 

Mayor Walaker. It has been a pleasure. Thank you. 

Senator CONRAD. Thank you, Mayor Walaker. Mr. Burdick. Good 

to have you here. 

Mr. BURDICK. Senator Conrad, glad to be here. 

11

Senator CONRAD. Please proceed with your testimony, and we 

will go right through this panel. We have a second panel as well 

made up of, I probably should indicate at this time, Bruce Hoover, 

our fire chief here in town; Terry Traynor, the assistant director of 

the North Dakota Association of Counties, who is filling in for 

Mark Johnson, I understand, who had a little accident over the 

weekend; and Ken Habiger, the president of Casselton Volunteer 

Ambulance Service, who will be part of our second panel as well. 

With that, again, welcome to our Cass County State’s Attorney, 

Birch Burdick. 

STATEMENT OF BURCH BURDICK, STATE’S ATTORNEY, CASS 

COUNTY 

Mr. BURDICK. Thank you, Senator. 

Cass County is, of course, the home, the crossroads of Interstates 

94 and 29. It is home to about a fifth of the State’s population, and 

as a result, we have all the benefits that that entails and some of 

the crime that, unfortunately, accompanies that level of population 

and that kind of travel intersection that we have here. 

And as Cass County State’s Attorney, my office prosecutes everything from essentially traffic violations to murder, and we have all 

of that going on in Cass County. 

In the past, Federal funding has been beneficial to our office, 

both directly and indirectly. We have had in our office Byrne grant 

funds, then later JAG funds that help support part of one prosecutor that we dedicated to drug prosecution. That is half of three 

people that we actually have working full-time on drug prosecution. 

So we have benefited from that very directly. 

And we have also benefited indirectly, because all of the money 

that comes in to support the law enforcement officials, either 

through the sheriff’s office, through the Fargo police chief’s office 

or otherwise, help put feet on the street that help put cases in our 

hands. But as a result of having those cases in our hands, again, 

we havegot a heavier caseload. 

And I would like to talk really just about two areas of primary 

interest for me: One relates to drug cases. We have had a growing 

drug caseload in this jurisdiction. 

The drug caseload doubled in the course of about five or 6 years 

during—since the year 2000, and as a result, as I said, I went from 

having one person working on drug crimes full time to three people 

doing nothing but drug prosecution. 

And the North Dakota Legislature has responded to the kind of 

drug issues that they have seen here and particularly the meth 

issues that have arisen here in the Midwest, throughout the Midwest. They have increased the penalties associated with meth-related crimes. There is no misdemeanor meth crime. They are all 

felony meth crimes. 

As a result, defendants are fighting harder because the penalties 

are more severe, which has a corresponding impact on our office. 

We are able to get stronger sentences. We send them to the penitentiary, and, of course, we have had problems with having enough 

room at the inn in Bismarck in order to accommodate the people 

that we are sending there. 

12

But the Byrne grant funds, the JAG funds have helped us not 

only in providing additional support to our prosecution effort, but 

also in the asset forfeiture area. Not only can we punish somebody 

by sending them off to the penitentiaryfor committing drug crimes, 

but we can also take from them the assets that were related to 

their drug crimes so that we remove some of the profit incentive 

from those crimes. 

Senator CONRAD. Let me ask you this, if I could. Does it make 

sense to you to cut the Byrne/JAG grants by 34 percent or the 

COPS program by 94 percent? 

Mr. BURDICK. It does not make sense to me. I mean, as my perspective is that of a prosecutor. As a prosecutor, we have a lot of 

drug crimes going on here, and we need to throw strong resources 

at it, and cutting those resources at this time makes no sense to 

me. 

I have to admit that my vision of what is needed is somewhat 

limited by the scope of my work, but in what I see, this is no time 

to be lessening the impact, lowering the number of feet on the 

street or cutting back on funds that may be available to prosecutors to help support processing and prosecuting the cases that the 

law enforcement folks put together. 

Senator CONRAD. OK. 

Mr. BURDICK. So I think that—and I think that there is a Federal aspect here. I mean, some could say isn’t this just a State 

issue, and my response to that would be no, because drug crimes, 

people who commit drug crimes are no respecters of State lines, 

lines on the map. 

We have drugs that come into this State across all fourborders. 

We have people who are committing crimes within our jurisdiction 

and living in Minnesota or South Dakota or wherever. 

So because of the nature of where the drugs come from, the nature of the impact that they have on our community, I think it is 

really a shared responsibility between State and Federal agencies, 

and I think that our Cass County folks are throwing a lot of resources at it, but we welcome the Federal resources that are also 

available to supplement those. 

I would add one other area, and this is a little different and has 

not come from a Byrne grant in the past, but in addition to the 

drug cases, we see an unfortunate level of sex crimes here in our 

community. Those sex crimes, always odious, are particularly reprehensible when they are perpetrated on young children. 

And in the not-distant past, we created here a Multidisciplinary 

Child Advocacy Center, and the purpose of the Advocacy Center is 

to put all these people together, to work together on these cases in 

one facility, essentially, to both enhance our investigative capability, but also to minimize the footprint that law enforcement and 

criminal justice makes on the spirit of those child victims. 

And we do that by limiting the number of interviews that have 

to be done, by consolidating those resources, byworking together on 

those cases. 

I think that the Child Advocacy Center is a remarkable resource 

to our community and is one also that I would like the Congress 

to think about when it is looking at funding for law enforcement 

13

purposes, because I think that that Advocacy Center in this community serves a vital role. 

So I welcome the opportunity to share those couple of ideas with 

you and your willingness to come and speak with us about Federal 

funding for law enforcement. 

[The prepared statement of Mr. Burdick follows:]


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Senator CONRAD. Thank you very much. Now we will turn to 

Chief Ternes. Welcome, Keith. Good to have you here. 

STATEMENT OF KEITH TERNES, CHIEF OF POLICE, FARGO 

POLICE DEPARTMENT 

Mr. TERNES. Thank you very much, Senator. It is an honor and 

a privilege to be here and offer testimony relative to this issue. 

As the city of Fargo continues to grow, both economically and 

geographically, the challenges associated with maintaining a safe 

and secure environment for the city also continues to grow, and although Fargo is a community free from most forms of violent crime, 

the city is experiencing an increase in crime similar to that of other 

cities across the country. 

Challenged predominantly by property crime, the Fargo Police 

Department remains committed to keeping our city one of the 

safest in the Nation. The continuous effort that is put forth by the 

men and women of the Fargo Police Department, however, has 

been adversely impacted by the ever-diminishing financial support 

received from the Federal Government. 

With the drastic reductions in funding for the COPS program, 

Byrne grants and other law enforcement programs, many police 

agencies, including the Fargo Police Department, are no longer able 

to readily obtain the resources needed to effectively address the increasing crime rate. 

Without question, the most pressing need for mydepartment is 

personnel. Regardless of the crime issue we are attempting to resolve, whether it be the continuous challenges associated with 

methamphetamine use, crimes against children via the Internet, 

gang-related crime or petty thefts, I need police officers to do the 

work. The ability to add officers at a rate, which, at a minimum, 

parallels Fargo’s growth, is absolutely essential for maintaining a 

safe environment within the community. 

And although the city’s elected officials recognize the need to 

fund this resource on the local level, there is still a need for the 

Federal Government’s financial support. 

In the mid to late 1990’s, when the COPS program was adequately funded, the city of Fargo took full advantage of the financial assistance offered through this program and was able to add 

a number of the much-needed police officers to its understaffed police force. 

In fact, during this time, the department was able to add nearly 

20 officers to the force, which would have been virtually impossible 

without the financial aid of the COPS program. 

Since the Federal Government’s shift in focus in priority from 

providing support to local law enforcement agencies to Homeland 

Security, the Fargo Police Department has found it increasingly 

difficult to add police officers. 

The policymakers in Washington, D.C. have repeatedlytold local 

officials that the concept and strategy of Homeland Security starts 

at the local level, but as the support received from the Federal Government becomes less and less available, it becomes increasingly 

difficult for police agencies such as mine to effectively follow this 

plan. 

16

What has become even more frustrating is that the one thing I, 

as the city’s police chief, need more than anything else, personnel, 

it is the one resource I cannot seem to get my hands on, while 

other resources which I do not need are readily available. 

I do not need any more gas masks, flashlights, generators or duct 

tape. What I need is people. What the city of Fargo and its police 

force needs is the reestablishment of the funding of the COPS program and Byrne grants, which allows the Fargo Police Department 

and other law enforcement agencies to be successful in keeping our 

community safe. 

And in that regard, I respectfully ask that these programs receive their due consideration and an appropriate allocation of funding, and I sincerely appreciate your efforts, Senator Conrad, in assisting us in that endeavor. 

[The prepared statement of Mr. Ternes follows:]

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Senator CONRAD. Well, let me just say, one night I had the opportunity to ride with the Fargo Police Department, and I was so 

impressed by the professionalism of the way your officers conducted 

themselves. And I saw them in a lot of different situations, and 

they were just such first-rate professionals, so you are to be commended for what you have done here. 

Let me just ask you this question: Does it make sense to you to 

cut the COPS program by 94 percent, to cut the Byrne/JAG grants 

that are used for law enforcement by 34 percent, to cut the State 

Homeland Security Program by 65 percent? 

Chief Ternes. Senator, absolutely and unequivocally, no, it does 

not. It makes no sense to me. 

The one thing that we have here, not only in the city of Fargo, 

but throughout the State of North Dakota, is something that I 

think many, many other jurisdictions around the country envy, and 

that is, a climate of safety. But it is only because the people who 

live and work in our communities are committed to that. 

As I mentioned earlier and as the mayor mentioned earlier, our 

elected officials have and continue to make public safety the top 

priority. But the resources are not unlimited on the local level. 

And so what we need, what we desperately need is thecontinued 

financial support from the Federal Government to not only keep existing programs in place, but really to maintain that atmosphere of 

safety and security in our State. 

Senator CONRAD. Let me ask you this, Chief, because one of the 

reasons that has been given for these really draconian cuts is that 

agencies around the country have used these funds for gold plating. 

That these moneys have flowed to local departments and they have 

been used for extravagant uses that are unneeded and unrelated 

to effective law enforcement. Would you just comment for the 

record with respect to how those funds have been used locally and 

in your department? 

Chief Ternes. Well, within the Fargo Police Department, we have 

used those funds in what I would describe as a very, very responsible way. We do not ask for things and we do not purchase things 

that we do not need. 

Like I mentioned, my—the one resource that I need more than 

anything else is people, and if there are other jurisdictions which 

have misused funds, then I am all for having the Federal Government hold those people accountable. But for those of us that have 

acted responsibly, to cutoff a resource that is much needed is not 

only incredibly unfair, but it really puts us at risk of being able to 

maintain that safety. 


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Senator CONRAD. Well, thank you for that. And I think you have 

hit the nail on the head. I think agencies across North Dakota have 

been very responsible in the way they have used these funds. 

Are there places in the country that have abused it? Yes. Let us 

make no mistake about it. We have done our due diligence. We 

know there are places in the country, and, unfortunately, mostly on 

the East Coast and the West Coast, that have squandered funds 

that were provided to them, and I might be swift to say not just 

Federal money. They have squandered some of their own money. 

That is a much larger problem than this question before us. 

The question before us is, does it make sense for the Federal 

Government to dramatically cut back in its support for law enforcement around the country? Does it make sense to cut back on these 

Byrne grants and JAG grants that have been very essential to the 

fight against meth? Does it make sense to cut back on the State 

Homeland Security Program? I just say my experience in North 

Dakota is those moneys have been used wisely and well and responsibly. 

Sheriff Laney, good to have you here. This is the first chance we 

have had an opportunity to meet, but your reputation precedes you 

and I have heard very good things from within your department 

and from other departments about the way you have conducted 

your business. So welcome, andplease proceed with your testimony. 

STATEMENT OF PAUL LANEY, SHERIFF, CASS COUNTY 

SHERIFF’S DEPARTMENT, CASS COUNTY 

Mr. LANEY. Well, thank you, Senator. It is truly an honor to be 

here, and I truly appreciate your kind words as well. 

Each year the demands on local law enforcement agencies grow. 

As we enter a time when we are asked to become more involved 

in all aspects of society, we are also seeing proposed cutbacks in 

our support from the Federal Government. 

As the protectors of our communities, we are committed to doing 

whatever it takes to keep our citizens safe. 

We have law enforcement officers in schools, we are involved in 

senior programs, neighborhood watch programs, drug awareness 

programs, youth programs, leadership programs, drug courts and a 

myriad of safety awareness programs to include drug interdictions, 

removing alcohol-impaired drivers and seat belt blitz. 

We also provide law enforcement officers to Federal programs 

such as the Drug Enforcement Administration’s Drug Task Force 

and the Federal Bureau of Investigation Joint Terrorism Task 

Force. 

With all of these programs, we are also asked to step up to the 

plate and take on larger roles in Homeland Security. 

We are active in development of the buffer zone protection plans 

for local businesses designated as potential terrorist targets, we develop training and are active in preparing for terrorist attacks on 

our infrastructure. 

We are also developing action plans to deal with security at the 

Points of Dispensing for the Center of Disease Control’s Strategic 

National Stockpile through the City Readiness Initiative. We do all 

of this——

20

Senator CONRAD. Let me just stop you there, Paul, on that point, 

because I do not want that point to be lost. 

Let me just say that all of us know one of the great potential 

threats to our country is the threat of avian flu or some other epidemic. 

We have just held a hearing in the Senate Budget Committee 

about that matter. We are spending billions of dollars in preparation for some kind of pandemic. 

We all know the 1918 flu epidemic was devastating to our country and devastating in North Dakota. We know that we are overdue for some kind of similar incident. We know that there is the 

potential with avian flu. 

If, God forbid, something like that were to occur, the dispensing 

of medicine would be absolutely critical, because the whole strategy 

and plan is if there is an outbreak, to attack that outbreak, to keep 

it from spreading. 

This requires close coordination with law enforcement, and that 

is what Sheriff Laney is just referencing with respect to working 

with the Centers for Disease Control in the case of such an outbreak. 

And one thing we know with air travel, with people being highly 

mobile, that a disease that might start in Asia could come here, 

could come right here to Fargo, North Dakota. 

Mr. LANEY. Absolutely. 

Senator CONRAD. And the whole strategy is to kill it before it 

spreads, and that is why what he is referencing is very important. 

Mr. LANEY. Yes, sir. I agree. 

We do all of this while also providing critical members of our 

agencies to National Guard units who are regularly being called up 

and deployed. This puts a strain on our ability to meet our everyday service needs, much less support the requests put on us from 

the State and Federal Government. 

The support we receive from the Federal Government is critical 

to our success in all of the above-mentioned programs. The following Federal grant programs assist us daily in serving our communities. 

The Byrne/JAG grants. They allow us to participate in drug task 

forces that attack the ever-growing and 

changingmethamphetamine problem. 

The Law Enforcement Community Block Grants. These grants 

allow us local law enforcement agencies to identify a critical need 

and apply funding to meet these needs. This grant assisted our region in 2003 by allowing us to purchase a SWAT command post 

transport vehicle. Our team serves a seven-county area in southeastern North Dakota. These funds benefit the entire region. 

The COPS grants. The COPS grants have allowed so many law 

enforcement agencies to add additional personnel to meet the demands placed upon us. It has put more law enforcement officers on 

the streets, in the schools and on State and Federal task forces, 

while allowing local governments the ability to budget over a period of time for the additional personnel. 

Local Law Enforcement Terrorism Grants. These grants have allowed agencies required to respond to terrorist incidents the ability 

to purchase the proper equipment and training necessary to ensure 

21

our personnel are equipped and trained to respond to a terrorist incident. 

Local law enforcement has always stepped up when called upon 

to meet the needs of our citizens. You will never hear from us we 

cannot do it. We continually meet the demands asked of us, and 

we will continue to do so. But we need the partnership and the 

funding from the Federal Government tocontinue to meet these demands. 

With the proper Federal support and our local can-do attitude, 

we will be ready to meet the needs of our region, our State, and 

our country. 

Thank you, and thank you, Senator, for allowing me to testify 

today. 

[The prepared statement of Mr. Laney follows:]

22


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Senator CONRAD. Thank you, Sheriff, for really very important 

testimony. 

Let me ask you, for the record, what I have asked the others, because I want to—we are, in part, trying to establish a record here 

that I can take to my colleagues as we prepare our answer to the 

President’s budget. 

Does it make any sense to you to cut the COPS program 94 percent or the Byrne/JAG grants by 34 percent or to cut the State 

Homeland Security Program by 65 percent or the Law Enforcement 

Terrorism Prevention Program by 31 percent? Do those priorities 

make sense to you? 

Mr. LANEY. No, Senator, they do not make sense to me. You 

know, there is an old saying that every American knows: If it isn’t 

broke, don’t fix it. 

We have been proving year after year after year in the law enforcement community that these funds make a difference in our 

local communities. 

We have been able to demonstrate by the numbers on the street, 

by the way we have been able to go after the methamphetamine 

problems, the way we have been able to meet the needs asked of 

us for these terrorism situations and to be ready for an attack on 

the infrastructure. We have stepped up and we have done it because of these grants. It is working. 

So to see it go away is like taking a step backwardand where—

you know, at a time when every region struggles to meet its financial needs, to lose that support is critical to us. 

Senator CONRAD. Well, I thank you for that. I would ask Chief 

Ternes, if I could. Some are saying look, this is not a Federal obliVerDate 0ct 09 2002 09:15 Jan 23, 2008 Jkt 000000 PO 00000 Frm 00029 Fmt 6633 Sfmt 6601 C:\DOCS\37526.TXT SBUD1 PsN: TISH

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gation or responsibility. The Federal Government has got no obligation for these local resources. What would be your response to 

those who advance that argument? 

Mr. TERNES. Well, Senator, I do think that the Federal Government does have at least some responsibility to support first responders and public safety on a local level. 

It is interesting, at least speaking for my own agency, how this 

seems to work in reverse. Since the—since September 11th of 2001, 

my department has been called upon time after time after time to 

supply officers to meet the Federal needs. In other words, in the 

form of National Guardsmen, the troops who have been summoned 

to overseas military duty. 

And repeatedly those individual officers and the organization as 

a whole have stepped up and met that need for the Federal Government. 

Now what I need, what this community needs, is assistance in 

the form of financial assistance to pay for additional police officers, 

and to have those——

Senator CONRAD. How many of your officers, Chief, have been 

called up for Guard duty overseas? 

Mr. TERNES. Well, many, many have been called on several occasions, and so to go back the better part of 5 years, I would have 

to say upwards of 30 to 35 as a rough guess. 

Senator CONRAD. And how big is your department? 

Mr. TERNES. I have one hundred and—I am authorized to have 

129 officers. 

Senator CONRAD. And I recall at one point you had eight or ten 

gone at one time. Is that not the case? 

Mr. TERNES. Actually, immediately following September 11th, I 

was missing upwards of 15 officers to active military duty. As we 

sit here today, I am missing six. Over the course of the last four 

or 5 years, on average, it has been between six and ten police officers that are absent for that. 

Senator CONRAD. How long does it take you to train an officer? 

Mr. TERNES. Approximately 9 months. 

Senator CONRAD. And so when there is a call-up like occurred, 

I assume it is very hard for you to fill those slots quickly. 

Mr. TERNES. Police officers, sheriff’s deputies do not grow on 

trees. I cannot simply walk out, put an ad in thepaper and expect 

somebody to fill that position in 2 weeks. It takes the better part 

of 9 months to hire and train a police officer so they are out on the 

street, functioning as a full-fledged police officer. 

Senator CONRAD. OK. Sheriff Laney, what would you say in answer—again now, this is a question I am going to get from my colleagues when I present my budget. I am going to have colleagues 

of mine say, well, Senator, what are you talking about? This is not 

a Federal issue. This is not a Federal Government responsibility. 

Law enforcement is a local responsibility. What would you say? 

Mr. LANEY. I would say the Federal Government is the representative of its citizens, and we are its citizens. We are the ones 

that—we are the Federal Government, and we are telling them 

that we need this support. It is our tax dollars that go in there in 

the first place. It is our money going to the Federal Government, 

and we are asking for it to be reinvested back in our people. 

25

Senator CONRAD. Well, that is a pretty powerful answer. You 

know, one of the things I say to my colleagues is crime does not 

respect borders. These criminals, they do not say, well, we are just 

doing crime in Fargo. Doesn’t work that way. We have gangs coming in here, peddling drugs. I have seen intelligence that says they 

are going from Mexico all the way to Fargo, North Dakota. 

And we know that if, God forbid, we faced a pandemic, a pandemic can come to our towns, our State from half a world away in 

24 hours. We have seen the modeling of what could happen in a 

pandemic. 

That would put enormous demands on law enforcement all 

around the country. And, you know, that is not just a local matter. 

That is a matter that affects every American everywhere, because 

to the extent we are able to prevent it from spreading is critical 

to a successful strategy. 

So, Birch, how long have you been State’s Attorney now? 

Mr. BURDICK. Just over 8 years. 

Senator CONRAD. Is crime—are you seeing a dramatic reduction 

in crime? Are people giving up on a criminal lifestyle? 

Mr. BURDICK. You know, you learn in law school that one of the 

theories behind criminal justice is deterrence. If you punish somebody for committing a crime, you have a couple of kinds of deterrents. 

You deter them from committing the crime again because you are 

making an example of them that they do not want to repeat. 

Two, you are taking them off the street for a period of time so 

they cannot commit that crime again. 

And, three, hopefully somebody else will see what happened to 

them and not want to commit that crime. 

I believe that is out there in theory. I am not sure how well it 

is working in practice. I would like to think it has some value, but 

I am not seeing a reduction. I am certainly not seeing a reduction 

in drug crimes. 

We have seen a little leveling maybe in the last year or last half 

a year or so, but the drug crimes, as I said, since about the year 

2000 or so, have doubled, at least through our office, the ones we 

are prosecuting. 

And as you noted, I think two things are important about that: 

One, a lot of it is meth. The meth we have here, a very small portion of that is homegrown. It has come in from Mexico or California 

or the West Coast. It is coming here in a variety of ways. It is not 

being developed in our backyard. 

So there is an interstate, certainly an international—national 

and certainly international aspect to drug crimes. And that is why 

I think, among other things, there is a relationship here between 

Federal, State, and local agencies. 

And second, we work hand in glove with the U.S. Attorney’s office here. They handle a certain kind of drug crime. We handle 

other drug crimes. 

And we figure out who is going to handle what crime often by 

picking up the telephone and just chatting about where it might 

best be prosecuted. That relationship is important, but it also outlines the sort of integrated nature of the Federal and State agencies dealing with drugs. 

26

Senator CONRAD. And really, it is a partnership. 

Mr. BURDICK. It is. 

Senator CONRAD. To be effective, everything we have seen, if you 

want to effectively combat crime, you want to effectively combat 

drug supply, that you have to have a coordinated effort. 

It involves Federal, it involves the U.S. Attorney, it involves the 

FBI, it involves DEA at the Federal level, it involves local law enforcement, police chief, the sheriff, the State’s Attorney. 

And that if you do not have a strong partnership to take on these 

criminal elements that are clearly growing, and they are energized 

by massive flows of money. It is truly startling how much money 

goes through the drug trade in this country. 

So if we want to fight that, you have to have a partnership just 

like they do. The drug networks, they are not operating just on a 

local level. They are operating nationally and internationally. 

And if you want to fight them effectively, you better have a partnership. That is one thing we have learned with these drug task 

forces. 

I would just ask you, Chief Ternes, do you find these drug task 

forces to be effective? Are they an important part of your arsenal? 

Mr. TERNES. Very much so. You know, you just mentioned how 

we have to have this partnership, and I think my colleagues here 

would agree that the one thing that we have that, again, many 

other jurisdictions around the Nation are envious of, and that is, 

a phenomenal amount of cooperation that takes place between both 

the Federal law enforcement agencies, the local law enforcement 

agencies, the prosecutors, and the street cops. 

And so what is befuddling to me is the fact that we have something here that is working, and in many other places it does not 

work. Our drug task forces are incredibly important to keep our 

ability to combat that issue. 

And so for the Federal Government to throw a wrench into this 

and withdraw or withhold financial support has a potential, at 

least, to make what is a very functional, working thing, dysfunctional. 

Senator CONRAD. Well, I think that is pretty powerful. 

Let me just say, I referenced earlier that I have ridden with the 

Fargo police, and I noticed the officer that I rode with is in the 

back, Grant Benjamin. And at the risk of embarrassing him, I tell 

you, that is absolutely a professional officer. We are incredibly 

lucky to have somebody of that skill to be willing to put on the uniform. 

And if we are going to be effective, we better have partnerships, 

because these guys are not giving up bringing in illicit drugs. 

These guys are not giving up engaging in every kind of scam. 

By the way, a couple years ago I was informed I had won the Spanish lottery. They told me I had won $974,000, and all I had 

to do was immediately send 10,000 to some guy over in Europe and 

I would get my money very soon thereafter. 

And, well, it was obvious to me it was a complete scam. It was 

pretty good, though. I mean, it was very impressive. The envelope 

I got, it had seals on it. 

We had the postal inspectors come in and wired up the phone, 

and I called the people I was supposed to call and had an interVerDate 0ct 09 2002 09:15 Jan 23, 2008 Jkt 000000 PO 00000 Frm 00032 Fmt 6633 Sfmt 6601 C:\DOCS\37526.TXT SBUD1 PsN: TISH
27

esting conversation. I said, you know, I said, ‘‘One of the things 

that is most interesting to me is that you claim you are the Spanish lottery, and yet the phone number I have called is in Germany.’’ 

I said, ‘‘How does that work?’’ And the guy said, ‘‘Well, that is the 

way all these operations are being run now. They are outsourced.’’ 

The Spanish lottery is now outsourced to Germany. That is a good 

one. 

Anything the three of you would want to add? Anything I have 

not asked that I should ask? Anything that you would want to add 

for the record? 

Mr. BURDICK. Not I. Thank you. 

Mr. TERNES. No, sir. Thank you. 

Senator CONRAD. All right. If not, I want to thank each of you 

for your contribution to the work of this committee. 

I have an obligation to present a budget proposal to my colleagues early in March, and this testimony will be very helpful as 

we address these specific issues. And I can tell you, no budget that 

I will present will have these kinds of reductions in these very important law enforcement accounts. 

If there is one thing I have learned in my time, first as tax commissioner in North Dakota and as a U.S. Senator, is this partnership in law enforcement has been very effective, and we have faced 

a really tough change in the tactics and strategy of the criminal 

elements. 

And we certainly see that in meth, where, as you say, Birch, we 

have seen a big reduction in terms of local production, but we have 

seen a tremendous influx of this stuff from elsewhere. 

And everybody I have talked to has talked about how toxic meth 

is, how devastating it is for a society and a culture, and how devastating it is to families. 

This is not the time to let up on the pressure against those people who would just undermine our communities and our families. 

You got to be taking these guys on tough, and it is not tough to 

cut the resources 90 percent. That makes no sense. 

Thank you very much. I appreciate it. 

I will now call the second panel. Bruce Hoover, the Fargo fire 

chief; Terry Traynor, the assistant director of the North Dakota Association of Counties; and Ken Habiger, the president of Casselton 

Volunteer Ambulance Service. 

Again, I appreciate very much all of you being here for this hearing. I appreciate your willingness to testify. 

You know, sometimes in Washington we put the witnesses under 

oath. I do not feel any need to do that with North Dakota witnesses. 

One of the wonderful things about North Dakota people is, by 

and large, the vast majority of them are honest, and one thing I 

know for certain is these officials, their word can be counted on. 

That is one reason I asked them to come here and testify. 

Chief Hoover, good to have you here. Please go forth with your 

testimony. 

STATEMENT OF BRUCE HOOVER, FIRE CHIEF, FARGO FIRE 

DEPARTMENT 

Mr. HOOVER. Thank you, Senator. 

28

I just want to reiterate what the first panel said about the spirit 

of cooperation we have in North Dakota. In North Dakota, as emergency responders, we know that there is no political subdivision in 

the State that has the resources to survive on our own. So we have 

to cooperate just to survive. 

Senator CONRAD. Maybe if you draw that microphone closer, it 

would be great. 

Mr. HOOVER. So, you know, part of that cooperation is that on 

subdivisions like Fargo, cities like Fargo, it does really strain our 

resources. Communities throughout the State have the expectation, 

if they have a major incident, they have resources from larger cities 

that are going to come and assist them with that. 

And we want to be a good neighbor, but we have difficulty not 

only providing for our own needs, much less the needs of political 

subdivisions that we do not receive taxes from. 

And the cost of specialized equipment, it is very high, and so 

when we are expected to have this equipment that is used not only 

in our own city, but in other jurisdictions as well, it is nice to have 

an external source of funds to assist us with that. 

So, you know, it is important to us to have these funds coming 

in so that we can cooperate between jurisdictions. 

[The prepared statement of Mr. Hoover follows:]

29


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37526.009
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Senator CONRAD. And, Bruce, the firefighter grants, are they 

something that you think have merit? 

Mr. HOOVER. Oh, actually firefighter grants are very helpful to 

States like North Dakota inasmuch as they are need-based grants, 

and in areas like North Dakota, there is a tremendous need. And 

so those jurisdictions that have the greatest need have the greatest 

likelihood of getting those grants. 

So in rural States, I think they are more valuable than they are 

in other States because we do not have the capability to tax for a 

lot of the resources that we need. 

Senator CONRAD. Bruce, when we see one of those bright, red fire 

engines responding to an emergency, I see them go by me. In fact, 

as we drove downtown today, I saw one of your engines out. It 

would help people understand, I think. What does an engine like 

that cost? 

Mr. HOOVER. Well, the fire engine that responds to a residential 

dwelling is—probably start at $400,000. 

Senator CONRAD. $400,000. 


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Mr. HOOVER. $400,000 and upwards from there. A ladder truck 

is in the neighborhood of three-quarters of a million dollars and upwards from there. 

Senator CONRAD. So a ladder truck, something that would respond downtown to something that would occur, $750,000. 

Mr. HOOVER. Will get you an entry level. 

Senator CONRAD. For an entry level. What is the most expensive 

truck that you would have? 

Mr. HOOVER. Right now it is our ladder truck, and we have had 

that for several years. We do try to extract the maximum out of 

our equipment. And we paid about $600,000 for that a number of 

years ago we got it. 

We also have—we need heavier rescue rigs and apparatus to respond to hazardous materials incidents, and those are in that $350- 

to $400,000 range for a modest piece of equipment. 

Senator CONRAD. So this is an expensive business. 

Mr. HOOVER. It is very expensive. 

Senator CONRAD. All right. Terry, welcome. Good to have you 

here. I know you are filling in for Mr. Johnson, who had an unfortunate injury over the weekend. 

STATEMENT OF MARK A. JOHNSON, EXECUTIVE DIRECTOR, 

NORTH DAKOTA ASSOCIATION OF COUNTIES, PRESENTED 

BY TERRY TRAYNOR, ASSISTANT DIRECTOR, NORTH DAKOTA ASSOCIATION OF COUNTIES 

Mr. TRAYNOR. Yes. And he apologizes for not being here, but I 

thank you for allowing me to sit in for him. It is a great honor to 

be here. 

I want to start out by saying that the county officials and the 

counties that I represent are very concerned about the Byrne/JAG 

and the COPS grant reductions; that working with them on a daily 

basis are essential. 

What I really came today prepared to talk more about, the 

Homeland Security, something that our agency is involved with directly and how vital we feel this funding is to terrorism prevention, 

disaster preparedness, and public safety, really from a local government perspective. 

Just like to note a couple things that have happened since this 

money has been available to local governments. 

Cities, counties, their first responders, including firefighters, law 

enforcement, emergency medical service, public works, have received about $22.9 million in North Dakota just for response/protection equipment. 

About $21.8 million has been distributed for communications 

equipment; something that we really need in North Dakota to get 

all of us communicating better as we are called more often to back 

up and to cooperate with each other on incidents. We need to have 

that integrated communication. 

Communities and emergency management personnel have utilized about 2.1 million of this money for planning, firefighters, law 

enforcement personnel, and other first responders have spent about 

$3.1 million for training and over $600,000 in exercise to be ready. 

33

Today over 32,000 individuals across the State have participated 

in Homeland Security funded training. 32,000 individuals I think 

is a huge, remarkable number for a State the size of North Dakota. 

I would like to point out, as you know and as everyone knows, 

that Homeland Security funding for States like North Dakota has 

decreased already. 

In 2004, we had $19 million, and in 2006, we are down to $10 

million. That is about a 50 percent decrease in 2 years, with additional mandates that we are responsible for, requirements to meet, 

as well as restrictions on how the money is spent. 

The current budget, talking about cutting another $300 million 

from Homeland Security grants, is just going to be devastating to 

our efforts. 

A couple of things that we would hope that you would take back 

to Congress is that, first, we feel that there must not be a decrease 

in Homeland Security funding for the State Homeland Security 

Program or the Law Enforcement Terrorism Prevention Program. 

These programs place resources in the hands of those that are 

there to respond on a daily basis to both natural disasters as well 

as terrorism threats. 

And second, we feel that States should be guaranteed at least a 

minimum allocation of three-quarters of 1 percent of the funds 

rather than some of the discussion about reducing that minimum 

allocation. 

States like North Dakota, it is not a lot of money when you look 

at it from a State like California or New York, but it is so vital 

to a State like North Dakota. 

We in North Dakota, we have heard it talked about here about 

the cooperation. Our State has developed a Disaster Emergency 

Advisory Committee, or DESAC, as they call it, which brings together local governments, first responders from all across the 

State, to help prioritize this money, and I feel like it is a very good 

process. It is proven that we can collectively do what is best with 

this money. 

We feel that North Dakota has been very responsible. We are 

very good stewards of this money and we will continue to do that. 

So we need your Congressional committee’s support for stabilizing 

the formulas and the methodology for future Homeland Security 

grants to facilitate multiyear funding that supports North Dakota’s 

strategic plan. 

The constant fluctuation and our uncertainty we have experienced in the past makes it difficult for planning long-term investments and setting benchmarks. 

So thank you, Senator Conrad, for coming to listen to this, and 

we are very hopeful that in the future we can retain this important 

funding. 

[The prepared statement of Mr. Johnson follows:]

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37526.015
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37526.016
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37526.017
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37526.018
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Senator CONRAD. Thank you very much for your testimony. 

Maybe I could just ask you, as it is important we establish for 

the record, do you believe it makes sense to cut the State Homeland Security Program by 65 percent or the Law Enforcement Terrorism Prevention Grants by 31 percent? 

Mr. TRAYNOR. Absolutely not. I think maintaining the money 

that is there, as I said, we have already experienced cuts, and I 

think the level that we are at now is essential to maintain and continue to improve our communication infrastructure and keep our 


37526.019
40

people well-trained and exercised so they can respond to the emergencies that sooner or later we will probably have to deal with. 

Senator CONRAD. Chief Hoover, if I could ask you the question 

on firefighter grants. Do you believe it makes sense to cut the firefighter grants 56 percent? 

Mr. HOOVER. Well, see, from my perspective, the scope of fire department activities is growing all the time. You know, we are getting more responsibilities as time goes on, and with that responsibility comes added expenses. 

So from my perspective, of course, I would like to see more funding go into the SAFER grants to help us with that personnel and 

these responsibilities, more money into the fire grants, because, 

you know, the scope of our job is growing, and so——

Senator CONRAD. The fact of the matter is, you are getting asked 

to do more. Isn’t that the case? 

Mr. HOOVER. Right, and the expectations of the citizens is that 

we provide more services, and then here is the funding stream that 

is drying up on us. So it is very problematic. 

Senator CONRAD. You know, it is interesting. If you look at what 

the Federal Government is sending out in terms of guidelines and 

requirements and responsibilities for first responders, for local law 

enforcement, for sheriffs, for emergency medical services, for fighter departments, dramatic increase in what they are asking local 

law enforcement, local first responders, to do. Isn’t that the truth? 

I would ask you, Chief Hoover. Aren’t you being asked to do more? 

Mr. HOOVER. Well, that is exactly correct. The expectations and 

the responsibilities that are coming down to the local jurisdiction 

have increased and, you know, at the very time that the support 

we are getting is going away. 

Senator CONRAD. Yeah. I must say it just makes no sense to me. 

Ken, welcome. Good to have you here. Ken Habiger, who is the 

president of the Casselton Volunteer Ambulance Service. We know 

in North Dakota volunteer ambulance service is critically important to being able to deliver health services. 

Please proceed with your testimony. 

STATEMENT OF KEN HABIGER, PRESIDENT, CASSELTON 

AMBULANCE SERVICE 

Mr. HABIGER. Thank you, Senator, for allowing me to be here 

today to testify. 

As the Senator said, I am the president of the Casselton Volunteer Ambulance Service in Casselton, North Dakota, and also a 

former Casselton fireman. I have been an emergency medical technician since we started the Casselton Volunteer Ambulance Service 

in 1978. I am here today to represent the emergency service providers in the State of North Dakota, many of whom are volunteers. 

I have been involved with the ambulance service starting at a 

very early age when funeral homes provided this service and have 

been part of the evolution of ambulance services to be the professional healthcare providers they are today. 

Our services, along with three other volunteer basic life support 

services and Fargo-Moorhead advanced life support services, provide medical services throughout Cass County, where the main 

railroad freight line and two interstate highways cross. 

41

We operate under medical direction in a tiered response system 

starting with 911 dispatch, first responders, then moving up into 

basic life support and ALS ambulance services, LifeFlight, police 

and fire departments. 

Our main support in North Dakota starts with the North Dakota 

Department of Health Emergency Medical Services and moves 

down through the county government and the county emergency 

manager. 

The reason we are here today is our concern for the cutbacks in 

funding through the President’s budget, which may cause our inability to fill all of our needs that Homeland Security and other 

agencies require and mandate of ambulance services in the field of 

preparedness—? 

EMS gets a small portion of Homeland Security and other 

sources of funding. In Cass County, I sit on the Cass-Fargo Emergency Planning Committee that assists in identifying concepts for 

preparedness, prevention, mitigation, response, and recovery from 

natural and man-made disasters. 

Nationally EMS funding is around 4 percent of the money made 

available. EMS also has a difficult time getting on national boards 

and on down that are involved in planning and funding of EMS. 

These findings were the result of a large number of participants 

from the EMS and medical community through a study done 

through New York’s Center for Catastrophe Preparedness and Response. EMS is part of what is called ‘‘The Forgotten Responder.’’

Funding we have been able to access provided us a new interoperable digital radio system and soon-to-come digital paging 

equipment. 

This leaves us short in funding for equipment, even with help 

from the North Dakota Department Emergency Medical Service. 

We are unable to fully implement the North Dakota Regional Response Plan for our services. 

Senator CONRAD. You do not have sufficient resources now——

Mr. HABIGER. Right. 

Senator CONRAD [continuing]. To do that. Well, how about a 65 

percent cut? 

Mr. HABIGER. Oh, that 4 percent will be gone that we are getting 

now. 

Senator CONRAD. Yeah. Two-thirds of it would be gone. Does that 

make any sense to you? 

Mr. HABIGER. No. No. It is tremendous. Statistics show the population of North Dakota is aging. We see funding for this aging population cut through the President’s budget. Also, we see beneficial 

programs like emergency medical services for children and many 

other programs suffering drastic cuts. 

Across the Nation, every State is dealing with a looming crisis 

to attract volunteers to its services. I believe the last figure that 

was presented showed that in the 1980’s, the average volunteer 

ambulance squad had more than 35 volunteers. Today that figure 

is down to 12 members. 

I thank you for allowing me to be here today. We are grateful 

for the support and funding we have received, but we realize we 

have a long way to go to move up from that 4 percent figure of 

funding. 

42

[The prepared statement of Mr. Habiger follows:]


37526.011
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37526.012
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Senator CONRAD. Well, I thank you for that, Ken. And I thank 

each of these witnesses. 

I just think we are headed in the direction here that would be 

a profound mistake. If these proposed cuts were actually implemented, I think the effect on local law enforcement, I think the effect on fire departments, the effect on emergency responders and 

the effect on counties would be very dramatic, especially over a 

number of years. 

I went through before the amount of money that has come to 

North Dakota through these programs over the last several years, 

and we are talking, as I had indicated, $36 million for the COPS 

program from 1994 to 2006. $42 million through Byrne and JAG 

local law enforcement grants from 1988 to 2006. $48 million from 

the State Homeland Security Program from 2003 to 2006. Terry, 

you especially referenced those. That is over a 4-year period. $48 

million. $48 million makes a big difference in North Dakota. Law 

enforcement terrorism prevention, $12 million from 2004 to 2006. 

The firefighter grants that have been important to communities 

across North Dakota and now are proposed to be cut by 56 percent. 

Let me just conclude this panel by asking each of you, if you 

could speak to my colleagues on the Senate Budget Committee, because we will be in markup within the next month, what would you 

say to them? What would you want them to understand before they 

cast their votes on these questions? Chief? 


37526.013
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Mr. HOOVER. Well, I guess I would say that, you know, I would 

like you to realize that the services the citizens expect from the fire 

service today are far greater than they were even 10 years ago. 

And they get greater every day. And so as that demand for service 

grows, the needs grow as well. So it seems incongruent to me to, 

at a time of growing need——

Senator CONRAD. Let me just say, if you used the word ‘‘incongruent’’ with some of my colleagues, you will really——

Mr. HOOVER. It does not make any sense to me. 

Senator CONRAD. Yeah, that we can understand. 

Mr. HOOVER. You know, it does not make any sense to reduce 

funding during a time of growing need. 

Senator CONRAD. Yes, sir. Terry. 

Mr. TRAYNOR. I just want to reflect back on what you had said 

in your opening remarks about Homeland Security and North Dakota. 

We have this huge, 320-mile border, international border, that oftentimes local law enforcement is called to help bolster the resources there. We do a lot of exercises on the border with Federal 

officials, Canadian officials, State and local. 

We are constantly working together to keep our State and our 

Nation safe, and I think we have a big role in that here in North 

Dakota. And I hope that your colleagues can understand how important it is to keep the funding there so we can be ready to respond to any emergency that comes along. 

Senator CONRAD. Thank you, Terry. Ken. 

Mr. HABIGER. Well, I think a lot is expected of EMS in North Dakota, especially with things that—like a pandemic flu attack here 

or a major—something happened to our food-supply chain and a lot 

of people got sick. You could go on and on with the preparedness 

and having the necessary stuff to attack what you have to do. 

And then I think when we see the population of the ambulance, 

you know, declining, less and less ambulance services, more demands put on, and if something major happens, part of the State 

response plan that we are in now, we are expected, our services, 

to be able to take care of about 10, 12 people at one major event. 

So you multiply that to something major coming through, why——

Senator CONRAD. We would have our hands full. 

Mr. HABIGER. Right. 

Senator CONRAD. Let me just conclude this by saying those who 

say there is no Federal responsibility here deny the nature of the 

threat with respect to law enforcement in the first order. 

One of the great threats we face is these drug gangs that operate 

not just locally. These drugs are not coming just locally. These 

drugs are coming both nationally and internationally. And anybody 

that does not see a Federal responsibility for a partnership to combat that threat I think is just missing reality. 

I would say on the question of the threat of pandemic, we have 

just had the Secretary of Health and Human Services before the 

Budget Committee. One part of his testimony talked about the very 

real threat of a pandemic at some point and the strains that that 

would put on us all nationally. And nobody can tell you where it 

might break out. 

46

It could break out here in North Dakota. It could break out in 

Casselton, North Dakota, could be the first place we see it. Somebody could fly here on a plane from some Asian country and come 

here and first have the symptoms in Casselton, North Dakota. 

If that were to occur, they would have to cordon off the area and 

immediately try to identify everyone exposed, every animal exposed, treat them with vaccine, treat them with antivirals, close 

them off so they didn’t infect others. 

That would be a demand that would be put on all first responders. EMS would have a role, local law enforcement would have a 

role, firefighters would have a role. I mean, this is the plan. 

So to suggest that there is no national or Federal responsibility 

or role is to deny the reality of the threats we face. We are in a 

world that is globalizing, and these threats have become global in 

nature, and you cannot respond just locally. You have to respond 

locally and regionally and nationally and even internationally, and 

that requires partnerships. 

And if we are going to have partnerships, we have to partner up 

on the funding. That is just the reality. Some of these things are 

already in place and are working well. 

For the life of me, I do not understand what sense it makes to 

cut the COPS program 64 percent, or to cut the Homeland Security 

program 65 percent, or to cut firefighter grants 56 percent, or to 

cut the Byrne/JAG grants 34 percent, or the Law Enforcement Terrorism Prevention Program 31 percent. 

I do not think the record sustains those proposals, and I can say, 

without equivocation, they will not be included in any budget that 

I submit. I just think those are the wrong priorities for the country. 

With that, I want to thank each of you. If you have anything you 

would like to add, I would certainly want to give you that opportunity before we close the hearing. Chief? 

Mr. HOOVER. Well, you know, not in terms of local funding, but, 

you know, looking at the President’s budget, the National Fire 

Academy is a very valuable resource to a fire service in an area 

like North Dakota, because we do not have the resources to develop 

our own site-specific programs and training. So we rely heavily on 

it. 

And as the demand on the fire services increases, you know, I 

see a decrease in your budget or this year a very incremental increase. And so we depend on them for training programs to help 

us train, and they are really not keeping up with the changing demand. And I feel a little bad about saying positive things about a 

Federal bureaucracy, but——

Senator CONRAD. That’s OK. After that incongruent, you have totally flummoxed them down there. 

Mr. HOOVER. Thank you, Senator. 

Senator CONRAD. Yes. 

Mr. TRAYNOR. I just want to comment. From reviewing the President’s budget, there appears to be more of a shift away from formula funding to a discretionary, grant-based, and too often we do 

not fare very well in North Dakota. 

A lot of the Homeland Security money is based on a risk assessment that we do not control locally. It is a national risk assessment, and we do not have—we have very little input into that. So 

47

we do not fare well on those sorts of things, and to move away from 

the formula type funding is pretty difficult for us. 

Senator CONRAD. You know, the truth is—must be very blunt—

when they make the decisions in someplace far removed from rural 

America, rural America never does well, because, frankly, we are 

out of sight, out of mind. 

They do not understand our part of the country. They have almost no conception of what it is like. They really do not. They are 

good people, they are well-intentioned, but many of them have 

never been anywhere close to here. So they really do not understand parts of the country they are not familiar with. I guess that 

is just human nature. 

But shame on us if we do not develop a policy that allows the 

threat, wherever it exists, to be met with resources that are sufficient to combat it. 

And that goes whether it is a fire threat, or a disaster threat, or 

a law enforcement challenge, or the potential, God forbid, of a pandemic. You know, we have an obligation to kind of think ahead 

here, look over the horizon to see what is out there and how we 

can best prepare ourselves. That is an obligation we all have. 

Ken, any last——

Mr. HABIGER. Well, I guess the issue we are dealing with is, and 

it is a nationwide issue, is the lack of volunteers because of the 

time constraints and the lack of anything of a financial reward a 

lot of times, and we are dealing with budget cuts on top of that. 

And we are—I think in our area we talk a lot about this pandemic 

flu. You know, hospitals, will they be able to take care of the people? 

Senator CONRAD. And this is something we have experienced before. My own grandmother died in that flu epidemic of 1918, and 

you know, you look at the statistics. Anybody thinks this was confined to the East Coast or West Coast, no, no, no. We were very 

hard hit by a pandemic flu in 1918. And, you know, we have an 

obligation to be ready, and, of course, EMS is being very hard hit 

by the demographic changes. 

We are an aging population. Rural areas, more and more of the 

people are going to the cities. So we have fewer people to volunteer, 

and yet we have more elderly people who are vulnerable, that may 

well, you know, rely on for saving their lives by an ambulance service that is volunteer. 

Let me just conclude by thanking each of you. Thanks for your 

contribution to the work of this committee. Thanks for what you do 

in our communities and our State. We appreciate very, very much 

the contributions that you make. 

With that, we will conclude the hearing. 

[Whereupon, at 2:49 p.m., the committee was adjourned.] 

(49)

AN EXAMINATION OF HEALTH CARE COSTS: 

CHALLENGES AND OPTIONS FOR REFORM 

TUESDAY, AUGUST 7, 2007

U.S. SENATE, 

COMMITTEE ON BUDGET, 

Minot, North Dakota 

The committee met, pursuant to notice, at 4:02 p.m., in Grand 

Ballroom, The Grand International, 1505 North Broadway, Minot, 

North Dakota, Hon. Kent Conrad, chairman of the Committee, presiding. 

Present: Senator Conrad. 

OPENING STATEMENT OF HON. KENT CONRAD, U.S. SENATOR 

FROM NORTH DAKOTA 

The CHAIRMAN. We’ll bring this hearing before the Senate Budget Committee to order. I want to thank everybody for being here, 

especially thank our distinguished witnesses and thank all of you 

for attending as well. 

This is really one of the great challenges to our country. We’re 

facing a health care crisis. I think all of us recognize that we’re on 

a course that is unsustainable. As I have said many times in Washington, this is the 800-pound gorilla. This is the problem that could 

swamp the boat in terms of our budget. It is also the 800-pound 

gorilla that can swamp employers and those who require health 

care. I think all of us understand that the health care system in 

this country is in crisis.

50

Probably the most daunting challenge that we face is this demographic tidal wave of the baby boom generation, and in very short 

order is going to double the number of people that are eligible for 

our programs that provide for health care, Medicare, Medicaid, Veterans health. 

And let’s go to the next slide if we could, Lindsey. Let me introduce Lindsey Henjum, who is with me. She is my health legislative 

assistant. She is a Minot native. The Henjum family, I think, is 

known to many of you here. Lindsey has done a very superb job 


37526.022
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in Washington and has a very good reputation, so Minot can be 

proud of her. 

Also assisting me today is Chris Gaddie, who is also a Minot native. He is my deputy communications director. He is in the back. 

I think many of you know the Gaddie family. So Minot is well represented here today. 

This gives you some measure of the problem that we confront. 

We all know about the shortfall in social security. That’s estimated 

to be just under $5 trillion over the next 75 years. But look at the 

difference. Look at the shortfall in Medicare. About $34 trillion. 

That is truly a stunning amount of money. And trillion, that’s with 

a T. We’re not talking about billions here. We’re talking about trillions.

52

Let’s go to the next slide if we could, Lindsey. And we know that 

our country is spending far more on health care than any other 

country in the world. We’re spending about 16 percent of gross domestic product on health care. If these trend lines continue, Medicare and Medicaid spending, as a percentage of our gross domestic 

product, will be over 20 percent by 2050. That’s if these current 

trend lines continue. So we know that’s unsustainable because 

that’s more than we spend on the entire Federal Government 

today. And here we are, we’re just talking about two programs, just 

Medicare and Medicaid. No money for social security. No money for 

national defense. No money for parks. No money for education. No 


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money for law enforcement. No money for any of the other things. 

So we know we can’t stay on this course.

Let’s go to the next. Then we know that while demographics play 

a big role in this cost explosion, the biggest factor is health care 

costs themselves. When we look at rising Medicare costs, the biggest factor is not demographics, although that’s significant, as that 

first chart showed, but even bigger is health care costs themselves. 

Underlying health care costs are driving this equation, and that’s 

something we need to know.


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Let’s go to the next if we could. And this goes back to the point 

I was making earlier. Here’s where we stack up with the rest of 

the major industrialized countries. You can see in this slide we’re 

at 2003, because that’s the last year for which we have data for all 

these other countries. We were at 15.2 percent of GDP then. The 

next highest was Switzerland with 11 percent of GDP. We already 

know we’ve gone to 16 percent of GDP now for health care. That 

means one in every $6 in this economy is going for health care. 

One in every $6 is going for health care. And you have to ask 

where does it stop.

We know that this is a challenge not only for government and 

these government programs. It is a big challenge for employers. It 

is a big challenge for employees who are paying part of their health 

care, and certainly for those who don’t have employment, those 

who are trying to pay for health care on their own. 

This rising health care cost places enormous pressure on businesses. Let’s go to that slide, if we could. I think we’ve left that 

slide out. But the point I wanted to make is rising health care preVerDate 0ct 09 2002 09:15 Jan 23, 2008 Jkt 000000 PO 00000 Frm 00060 Fmt 6601 Sfmt 6601 C:\DOCS\37526.TXT SBUD1 PsN: TISH

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miums are putting enormous pressure on business. Health care 

premiums for business are rising twice as fast as the rate of inflation. 

I had a businessman stop me the other day in Bismarck, and he 

came up to me and he said, ‘‘Kent, I just got my latest premium 

increase, 18 percent.’’ He said, ‘‘Last year my premium increase 

was 18 percent.’’ He said, ‘‘The year before that my premium increase was 18 percent.’’ He said, ‘‘I’ve had 3 years in a row where 

my premiums rose by 18 percent.’’ He said, ‘‘I don’t know if that’s 

the magic number or they’ve just targeted me.’’ I said, ‘‘No, you 

haven’t been targeted, you’re not alone.’’ I think John MacMartin 

here, representing the Chamber, will be able to confirm that our 

employers are seeing their costs rise and rise geometrically. 

Health care providers themselves are feeling the pinch. They’re 

feeling it from uncompensated care. That’s increased from $21.5 

billion in 2001 to $28.8 billion in 2005. You think of these numbers. 

They’re staggering, aren’t they? $28 billion of uncompensated care. 

You know, some have said we’ve got the most expensive health 

care system in the world partly because we provide health care in 

the most expensive way. That is, when we have 45 million people 

who are uninsured, that doesn’t mean they don’t get health care. 

That means they go to the emergency room for their health care, 

and that is the most expensive way to provide health care. So, 

goodness, we have to do a better job of this. And I’m sure Terry 

Hoff, who runs our hospital here, will be able to give us an insight 

in terms of how these numbers translate locally as well.

56

So what do we do about it? Well, I’ve argued to my colleagues 

one of the first things we have to do is focus like a laser on 5 percent of our patient population that uses half of the money. Hard 

to believe, isn’t it? Five percent of the patient population uses half 

of the money. They’re the chronically ill, they’re people with multiple serious conditions. And we’re doing a very poor job of coordinating their care. The result is that they’re taking too many prescription drugs. They’re being subjected to multiple tests not because, you know, somebody’s got bad motive or evil design, but because there’s a lack of coordination of care. 

We just did a study with some 20,000 patients, a pilot study. We 

went into their homes. We had case managers go into their homes. 

First thing they did was get all the prescription drugs out on the 

table. And what they found was on average they were taking 16 

prescription drugs. After reviewing them, they were able to conclude half of those were unnecessary. They were able to reduce it 

from 16 prescriptions to eight. 

I did this with my own father-in-law in his final illness. We went 

to his house, got all the prescriptions out on the table. I got on the 


37526.028
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phone to the doctor and sure enough, he was taking 16 prescription 

drugs. And I went down the list with the doctor, and I got to the 

third drug, and he said, ‘‘Kent, he shouldn’t be taking that, he 

shouldn’t be taking that the last 3 years.’’ I get a little further 

down the list, he said, ‘‘Kent, he should never be taking those together, they work against each other.’’ I said to the doctor, ‘‘How 

does this happen?’’ He said, ‘‘Very simple how it happened. He’s got 

a lung doctor, lung specialist, he’s got a heart specialist, he’s got 

an orthopedic specialist, he’s got me as his family practice doctor, 

and while I’m the one that should know what’s happening, I don’t 

know.’’ And the result is he’s taking prescriptions. He’s getting 

them far and wide. He’s getting them at the corner pharmacy, getting them at the hospital pharmacy, he’s getting them mail order. 

He’s sick and confused, his wife is sick and confused, and we’ve got 

a mess. Same thing with tests. He had three MRIs in a 6-month 

period. You know, hospital in New York, hospital in Richmond, Virginia, hospital down at the beach. 

And, you know, this is costing us a ton of money. And we’re not 

getting better health care outcomes as a result. That’s one of the 

things that jumps out at you that in parts of the country they’re 

doing five times as many procedures as in other parts of the country and getting worse health care results. So another thing we need 

to look at is researching the effectiveness of different treatments, 

medical devices, and drugs, so that we can know that we’re using 

best practices. 

We also need to encourage better life-styles and screening tests. 

You know, we’ve got a health care system that’s focused on illness 

rather than wellness. And we really need to kind of change the way 

we approach it and create incentives to keep people healthy, to encourage people to exercise and eat responsibly, drink responsibly. 

This is going to be an area where there’s personal responsibility, 

you know. This is not all on somebody else. We’ve got to do a better 

job of managing our own health. We’ve got to get much more serious about exercising, we’ve got to get more serious about how we 

eat and what we drink. 

And then I mentioned adopting health information technology to 

avoid medical errors and to improve the efficiency and the effectiveness of the health care we deliver. One of the things that jumps 

out at you in the studies that have been done, things like the Rand 

study that showed you can save $81 billion a year if you fully deploy information technology in health care. 

So those are some ideas of things we could do and probably need 

to do. But we won’t do it until we’ve really reached conclusion on 

the direction we’re going to take. The thing we know now is we’re 

on a course that’s unsustainable. That I think is beyond dispute. 

Now the question becomes what choices do we make, what direction do we turn. And for that reason we have I think really excellent witnesses with us today, five witnesses to testify before the 

Senate Budget Committee. 

Let me just indicate we are operating under the rules of the Senate Budget Committee. We have a stenographer here. All of this 

will go in the record of the Senate Budget Committee and will be 

provided to the other committees of jurisdiction. So this is a hearVerDate 0ct 09 2002 09:15 Jan 23, 2008 Jkt 000000 PO 00000 Frm 00063 Fmt 6601 Sfmt 6601 C:\DOCS\37526.TXT SBUD1 PsN: TISH
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ing that will have resonance beyond the borders of Minot, beyond 

the borders of North Dakota. 

Our first witness will be Dr. Mary Wakefield. Mary is the director of the UND Center for Rural Health and is a commissioner on 

the Commonwealth Funds Commission on the High Performance 

Health System. She’s also a member of the esteemed Institute of 

Medicine. Mary has done an extraordinary amount of research on 

the health care system, its successes, its failures. She is also an expert on the health care system in North Dakota, and also for a 

shining moment in time was my chief of staff in Washington. 

Thank you, Mary Wakefield, for being with us, and please proceed. 

STATEMENT OF MARY K. WAKEFIELD, PHD, RN, ASSOCIATE 

DEAN FOR RURAL HEALTH AND DIRECTOR, CENTER FOR 

RURAL HEALTH UNIVERSITY OF NORTH DAKOTA, GRAND 

FORKS, NORTH DAKOTA 

Dr. WAKEFIELD. Pleasure. Thank you and good afternoon. 

I was asked to comment on the national and state level challenges facing health care and to identify potential solutions to 

those challenges. The challenges that I’ll discuss stand in the way 

of creating a health care system that consistently delivers high 

quality care, every day, to every person, everywhere. This goal 

sounds pretty simple, but as we know, the strategies to achieve a 

high performing health care system are quite complex. 

Across our nation, we have some of the most advanced technology and the best educated health care providers in the world. 

Yet the United States performs worse than other industrialized nations in a number of important areas, including poorer health outcomes on some key measures and large pockets of people without 

health insurance, all at considerably greater expense. To illustrate 

how we compare, this line shows U.S. average spending on health 

per capita, which clearly far outstrips the next nearest countries. 

And this slide just reinforces your slide, Senator Conrad. Additionally, expenditures——

The CHAIRMAN. I like your slide even better. 

Dr. WAKEFIELD. Thank you. We’ll get it to you. Actually, this is 

showing both average spending on health per capita, and then the 

other point you make, Senator Conrad, the total expenditures of 

health as a percentage of GDP. Additionally, expenditures for some 

of our largest programs, Medicare, for example, are not projected 

to level off any time soon. You can see from the 2007 Medicare 

Trustees’ Report that expenditures are projected to continue to 

steeply rise. 

This slide and the next slide shows you how well the United 

States does in terms of deaths that, with appropriate medical care, 

would likely be preventable. This is just one indicator of what we 

are getting for some of the money that we’re spending. Here the 

United States is 15th out of 19 countries in terms of deaths per 

100,000 people. Of these 19 countries, only four do more poorly 

than we do. 

These data that you’re looking at right now have been updated 

using 2002–2003 data and that new information will be published 

next month. But I can already tell you what the new slide is going 

to show. It’s going to show improvement in the United States on 

59

this measure and it’s going to show more rapid improvements in 

the other countries. So in the new data that will be published next 

month, the U.S. will no longer be 15th out of 19 countries; rather, 

we will be in 19th place. That is last place. Again, this slide is 

showing you how well we do in terms of deaths that, with appropriate medical care, would likely be preventable deaths. 

What has happened elsewhere in these intervening years, in the 

United Kingdom, for example, they have mounted a massive campaign to address heart disease. They’ve raised standards in hospitals, they’ve provided technical assistance and so on. So other 

countries are moving much more rapidly to improve. We’re improving as well, but at a slower pace. 

Additionally, we have troubling variation within the United 

States. On the right-hand side of this slide, you’ll see that some 

states do extremely well on this same measure within the United 

States and some do quite poorly. On the next slide you see how 

North Dakota compares again on this measure. That’s the red bar. 

And we actually do quite well. 

To achieve a consistently high performing system, the Commonwealth Commission, of which I’m a member, advocates focusing efforts in four core areas. First, we need to focus on delivering high 

quality care. Second, we need to ensure access to care for everyone. 

Third, we need to provide care that is efficient and of high value. 

And, fourth, we need to re-engineer the health care system so that 

it has capacity to improve. I’ll comment about these areas from 

both the national and state perspective. 

First, delivering high quality care. When care is well coordinated 

with information readily available to clinicians and patients, the 

quality of the care is better. Let’s look at just a few international 

comparisons and then I’ll go across states. 

In terms of coordinated care, this slide indicates when compared 

to four other countries the U.S. consistently performs more poorly 

on care coordination measures such as test results and patient 

records being unavailable at the time of appointment. 

This next slide indicates that we have more medical errors than 

in five other comparable countries, and that when you have more 

doctors treating you, the likelihood of medical error increases in the 

United States and in other countries as well. Patients report errors, though, most frequently in the U.S. While seeing four patients 

over 2 years might seem like a lot of physician visits, 20 percent 

of Medicare beneficiaries in the U.S. with five or more conditions 

receive services from an average of almost 14 doctors per year. 

Given the tools and structures that are available in our current 

system, this is a recipe for fragmented care. In spite of these findings, we have some evidence that certain care coordination efforts 

underway in the U.S. markedly improve patient outcomes and care 

quality. 

Coordinated care is a fundamental underpinning of a concept 

gaining a lot of attention—medical homes. In North Dakota we 

have one award winning example that I just want to mention to 

you this afternoon of collaboration between two stakeholders, 

MeritCare and, the payer, Blue Cross Blue Shield of North Dakota. 

They’ve collaborated in terms of payment reinforcement and the 

creation of a medical home to build on at its core care coordination 

60

for patients. And their data are now showing improved health outcomes, improved clinician satisfaction, improved patient satisfaction with care, and decreases in costly interventions like that that 

you mentioned, emergency room visits in a group of diabetic patients. 

The next slide. In addition to testing new models, delivering high 

quality of care is also evident in measures of quality that help us 

see how we’re doing in North Dakota. Here are just a few slides 

to give you an example. This slide provides one example of the 

variations—the previous one, actually—variation in quality, readmission rates to hospitals. North Dakota does better than the national average on readmissions to hospital within 30 days, although 

we’re not the very best on that particular measure, on this measure. 

On the next slide, using data reported to CMS, we can see how 

our hospitals do on a different set of measures, those that focus on 

care for specific conditions. This one is a measure of care for heart 

failure patients, a costly disease. On this measure, on average, 

North Dakota hospitals do better than the national average. On the 

next slide, care for pneumonia patients. I put this up here because 

I wanted to show you that one rural hospital in North Dakota does 

exceptionally well and well above the national average. 

On to the second point or second focus in terms of areas on which 

we need to pay attention, and that is ensuring access to care. The 

national numbers on uninsured across the U.S. are, while disconcerting, well known, so I’m not going to spend time on those. 

However, I do want to comment on two special populations that are 

very important when we think about ensuring access to care. Those 

populations are children and farm families. 

Regarding children, your work on the Budget and Finance Committee was critical to the recent Senate passage of the State Children’s Health Insurance Program. This program expansion is extremely important for all kids, but particularly for rural children. 

National studies tell us that more rural children than urban children live in economically vulnerable families. In fact, over 1.3 million rural children are uninsured. 

Compared to other states, North Dakota does well on health insurance coverage with about 85 percent of our state insured. However, that 15 percent uninsured includes about 11,000 kids. 

In terms of coverage for another important population, farm and 

ranch families, at the Center for Rural Health, we’ve recently undertaken a survey of non-corporate farmers and ranchers in seven 

states, including North Dakota, to get a better sense of affordability of medical bills and medical debt in this population. I don’t 

have all the data for you. We’re about 3 weeks away from having 

all that completely analyzed. But what is interesting is that almost 

one in four farmers across those seven states indicate that health 

care expenses contribute to their financial problems, including difficulty paying other bills. And about 27 percent of respondents with 

debt owed money to hospitals, and almost half had debts to individual providers, physicians and dentists. 

This brings me to the third of four areas on which I think we 

need to focus, and the Commonwealth Commission members agree, 

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ciencies in care. I’m going to briefly comment on three dimensions 

of high performing systems, primary care, health information technology, and comparable effectiveness. 

In terms of primary care, the medical program, as you know, gets 

a very good deal in terms of value in North Dakota. North Dakota 

ranks second across all states in Medicare reimbursements per enrollee. Part of what is going on in North Dakota is what this graph 

shows. North Dakota is in the top 15 or so states that has a higher 

proportion of primary care inputs and associated higher quality of 

health care. There are a lot of reasons for this finding, but it’s 

worth noting that North Dakota is higher than the national average in the number of primary care providers to population, and primary care is key to many things, including providing chronic care, 

care for illnesses such as diabetes. 

We know that countries and states that rely more on primary 

care to manage chronic illness tend to have lower spending and 

they use fewer hospital beds. The people who live in areas with 

higher per capita health resources tend to receive in the United 

States more interventions, such as hospitalizations and diagnostic 

testing, yet there is no evidence, as you indicated, that people who 

receive more care have better health care outcomes. In fact, there’s 

evidence that more care leads to worse outcomes for patients. 

That’s a really important piece of information in terms of helping 

us direct our attention, whether you’re talking about clinical care 

or about public policy. However, there tend to be greater rewards 

for providing specialty care than for primary care and there is no 

incentive to establish medical homes that have at their core primary and the coordination of specialty care. 

The second of the three areas I wanted to mention in terms of 

high value and efficiency is the use of health information technology. HIT is an important contributor to efficient high value care. 

The United States lags behind other industries in the use of HIT, 

as this next slide shows. Compared to other countries, our primary 

care providers in the United States do not have the tools they need 

to make their practices efficient. Electronic medical records help to 

reduce duplicate tests. They help reduce medical errors. They promote coordination and they increase efficiency. 

In North Dakota, as you will recall, Senator, you spearheaded a 

focus on strengthening HIT that you sponsored last year. That 

summit catalyzed the creation of a steering committee that has 

been meeting monthly since then with a focus on improving HIT, 

with improving health care quality and efficiency, but facilitating 

HIT. It’s critically important that in this state we do not lose 

ground in adopting technology that will enhance efficiency and care 

quality. 

Comparative effectiveness research. We noted in the IOM report, 

Crossing the Quality Chasm, that our current approach in organizing and delivering care just doesn’t meet expectations. One of 

the reasons that health care in this country falls short of its potential and costs so much is because we don’t have a very good idea 

about which drugs, devices, and procedures used to treat the same 

conditions are the most effective and most efficient. Senator 

Conrad, you wisely recognized that need and the need to shore up 

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cluded a place in the budget for this important research, and the 

commission has taken note of that. 

Last, building on system capacity to improve. In rural North Dakota, as in other rural areas across the country, necessity is the 

mother of invention, and capacity for innovation, while challenging, 

is often led by rural administrators and rural providers. Rural 

health care is typically nimble and new interventions can be adopted there in a matter of hours and days. Rural facilities, with tools 

and expertise, can be rapid learning organizations that test and 

serve as models for the rest of the country. From a rural perspective, I can tell you, too, that quality improvement organizations 

play a pivotal role in working with all types of providers to help 

them improve the way the care is delivered. 

In summary, not only do we see variation among countries, we 

also see considerable variation within our own country, variation 

that costs money, days lost from work, and even patients’ lives. We 

also find that there is no systematic connection between high 

spending and high quality care. What is needed is a coherent set 

of expectations, tools, and rewards for measuring and improving dimensions of health care that are essential to high performance. 

That means having matrix for health outcomes, matrix for access 

to care, and measures for efficiency and care quality. 

It means realigning payment, to pay more for value and pay less 

for valueless care. We need comparative effectiveness research, 

health information technology, and we need to work to make sure 

that all Americans have health insurance. Using these approaches 

to create high performance health care is a big part of the answer. 

Asking health care providers and administrators to simply work 

harder, doing a lot more of the same isn’t the answer. All of this 

is hard work, but at the end of the day when we invest wisely in 

good health, we get healthy, productive people, we get a strong, vibrant economy, and we get healthy communities in return. 

Thank you, Senator Conrad, for your commitment on so many of 

these critical fronts, all of which, taken together, can help us create 

high performance health care. 

[The prepared statement of Dr. Wakefield follows:]

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The CHAIRMAN. Thank you, Mary Wakefield. You know, we’re 

very lucky to have somebody of her quality. I’ll tell you, Mary 

Wakefield is somebody that is respected around the country, has 

served on MedPAC board nationally, and in these other positions, 

which tells you something about the respect she’s held in nationally, and we’re very fortunate to have you from North Dakota. So 

thank you, Mary Wakefield. 

We’re joined at the witness table as well by Janis Cheney. She’s 

the state director of AARP. Most recently, AARP has joined forces 

with the Business Round Table and the Service Employee International Union to push health care reform and economic securities 

as a national priority. Now, you think about an unusual coalition. 

The Business Round Table and Service Employee International 

Union, that’s an unusual coalition joined with AARP. Janis Cheney 

offers the insight of a consumer trying to afford health care as well 

as an advocate for system change. The Divided We Fail campaign 

has a number of, I think, intriguing ideas for reform, and I welcome your testimony. Good to have you here. 

STATEMENT OF JANIS CHENEY, STATE DIRECTOR, AARP 

NORTH DAKOTA, BISMARCK, NORTH DAKOTA 

Ms. CHENEY. Thank you very much, Senator Conrad. I am delighted to be here and appreciate the opportunity to discuss the 

challenges of rising health care costs. 

Health care costs have risen dramatically in the past few decades. Since 1975, total health care spending as a percentage of 

gross domestic product in the United States has doubled, and it 

now comprises one-sixth of the U.S. economy, or about $2.2 trillion. 

Some of this information echoes what the Senator and Dr. WakeVerDate 0ct 09 2002 09:15 Jan 23, 2008 Jkt 000000 PO 00000 Frm 00084 Fmt 6601 Sfmt 6601 C:\DOCS\37526.TXT SBUD1 PsN: TISH

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field have provided as well. By 2016 some projections show total 

health spending almost doubling to 4.1 trillion and consuming onefifth of the nation’s GDP. A report published by the McKinsey 

Global Institute in January found that the United States spends a 

greater percentage of its national wealth on health care than any 

other country in the world. According to McKinsey, the overriding 

cost of high U.S. health care costs is the double failure of the 

American system to hold down demand-side pressure from patients 

and supply side pressures from hospitals and clinics, doctors, pharmaceutical companies, and insurers. 

Health care costs cannot be measured merely by the impact on 

the general economy, however. The implications of ever-escalating 

health care costs are far-reaching. For instance, employees, large 

and small, are grappling with whether and to what extent they can 

afford to provide health care insurance to their workers and retirees. Over the past several years, employer-sponsored insurance coverage rates have been falling. In 2000, 66 percent of non-elderly 

Americans were insured through the workplace, but by 2004, only 

61 percent were covered by employer-sponsored insurance. Half of 

this decline was the result of employers no longer offering health 

coverage, while a quarter of the decline was due to employees’ inability to afford their share of the premium. The decline in employer-sponsored insurance is most severe for small employers who 

are finding it difficult to even offer health insurance. 

Health care costs cause American businesses to be at a competitive disadvantage with their global competitors because providing 

health insurance adds to the cost of goods and services. For instance, as of 2005, health insurance was calculated to add between 

1100 and 1500 dollars to the price of each automobile manufactured by General Motors, a cost not borne by its foreign competitors. 

Public programs are also grappling with rising health care costs. 

Peter——

The CHAIRMAN. Janis, can I just stop you on that last point and 

just tell you, I have had, as you can imagine, all the auto makers 

in to see me because of the energy legislation before Congress, and 

they all tell me their latest calculation is that there is close to 

$2,000 of health care costs in every automobile. And they told us 

unless we find a way to take that competitive disadvantage away—

because all of their competitors don’t have that cost; right? You 

know, the Japanese, the Germans, the Italians. All the other auto 

makers have some other health care system and it’s not on the employer, it’s not on the manufacturer. And they’ve come and seen me 

in the last 3 weeks and said if a way is not found to avoid these 

health care costs, and, of course, the legacy cost of all their retired 

employees they’re responsible for, if there’s not a way to fix this, 

they don’t think they can be competitive. Now, that was a stunning 

admission by a major sector of the American economy. 

Ms. CHENEY. Thank you for the updated figures. 

Public programs are also grappling with rising health care costs. 

Peter Orszag, director of the Congressional Budget Office, has stated that if health care costs continue growing at the same rate over 

the next four decades as they did over the past four decades, Federal spending on Medicare and Medicaid alone would rise to about 

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20 percent of GDP by 2050, roughly the share of the economy now 

accounted for by the entire Federal budget. This has led Orszag to 

comment that this nation does not face an aging problem, but a 

health care problem. 

And individual Americans are some of the hardest hit. One in 

four Americans have problems paying medical bills. Millions go 

bankrupt every year because of unaffordable medical bills. Retail 

prescription prices have increased three times faster than the cost 

of living in recent years. More than 44 million Americans are uninsured, with middle class families the fastest growing segment. 

About 8.2 percent of North Dakotans are uninsured, 51,920, nearly 

the population of Bismarck. 

Real people are struggling to make ends meet while still having 

access to health coverage. AARP has, as part of our Divided We 

Fail campaign, heard some of these stories from North Dakota and 

across the nation. We’ve heard from a 52-year-old divorced single 

mom raising a son alone. She works in a part-time job that offers 

no benefits and is unable to find reasonably priced coverage even 

though she says she maintains a healthy life-style. There is a story 

from a self-employed couple. The wife’s diagnosis of thyroid cancer 

9 years ago made her uninsurable until they were able to find a 

high risk pool. Even with this safety net protection, they are paying upwards of $1,000 a month each, with a $5,000 deductible. Because nothing is covered until they spend $5,000, the couple tends 

to put off basic preventive and screening services. 

There is no single answer to controlling health care costs, and 

the necessary steps will involve not just government and policymakers, but many players, including patients, providers, pharmaceutical companies, and trade groups. Getting these players together to agree to work on focused strategies for controlling health 

care costs is one reason why AARP, along with the Business Round 

Table and the Service Employees International Union formed Divided We Fail. Accomplishing our goal of affordable quality health 

care and financial security for all Americans will require the efforts 

of us all. The issue is not whether but how solutions can be found. 

The growth in health care costs demands that players come together to find the solutions and make the hard decisions. 

AARP recognizes that changes cannot be made all at once. They 

must be phased in over a number of years. We have identified a 

number of key transitions which must occur in our health care system. 

The next steps or building blocks for Divided We Fail is to identify the solutions to the specific policy and behavior changes we believe will be necessary to drive each key transition. For example, 

health technology and greater use of evidence-based research can 

help bring down health care costs by making the health care system more efficient. Others will have different solutions, and we are 

encouraging all those with a stake in the outcome to join the debate and bring their ideas to the table. 

Ultimately, the President and Congress must act. First, by reaching agreement on the need to put the critical health care building 

blocks into place, and then further action to achieve comprehensive 

health care reform. AARP’s attention will be devoted to making 

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sure that health care is at the top of the agenda of all the candidates in the 2008 election. 

Senator Conrad, we commend you for holding this hearing today 

to draw attention to rising health care costs and the need to transform the entire health care system. Addressing health care costs 

overall will not only help the citizens of North Dakota, but across 

the nation. 

AARP stands ready to work with you and your colleagues to 

enact meaningful health care reforms. 

The CHAIRMAN. Thank you very much. I appreciate that testimony. 

We’ll next hear from Candace Abernathey. I want to thank 

Candace for coming to share her story with us today. She’s a consumer who has dealt with the red tape and inefficiencies of our current health care system. In 1990 she had health insurance and was 

diagnosed with cancer. As the bills were mounting and her health 

was getting worse, she lost her coverage. Her story, I think, illustrates very well at least some of the problems with the health care 

system and why we need to fix it. I want to thank you, Candace, 

and commend you for your courage in coming to testify today. 

Thank you. 

STATEMENT OF CANDACE ABERNATHEY, PATIENT, MINOT, 

NORTH DAKOTA 

Ms. ABERNATHEY. Thank you, Senator Conrad, for the privilege 

of letting me testify here today. 

In June 1990, my world was turned upside down by a simple 

bruise. Unfortunately, that bruise was a signal of far worse to come 

and I was soon bleeding profusely from my mouth. I was immediately referred to the Mayo Clinic. Fortunately, my husband was 

a Boeing employee and we had health insurance. Mayo ran test 

after test, prescribed medication after medication and still I had no 

firm diagnosis. I was told to go home, spend quality time with my 

children and enter hospice care when the time came. 

On top of the death sentence, the bills started coming in from 

Mayo Clinic and in from Trinity. Our co-pay was high, and my husband had no idea how we were going to pay. 

My health just kept getting worse, and I was soon back in the 

hospital receiving blood transfusions, the one thing that was keeping me alive. While I was lying there, my husband marched into 

my room and informed me that he couldn’t afford the medical bills 

and he wanted out. He also wanted my children, but, fortunately, 

the Court didn’t see it that way and did not agree. I had no choice 

but to turn to the State of North Dakota for TANF and Food Stamp 

assistance. 

I was so ill, I was so lost, I was upset, and I never even thought 

about the possibility that my coverage through Boeing would end 

with the divorce. When my grandmother questioned me about that, 

I called Boeing and learned that my ex-husband had terminated 

the coverage not only for me but for my children. I then had the 

option of their COBRA plan as long as I could pay the premiums 

of $380 a month. That was like $3 million a month to me. But, fortunately, my grandmother paid 6 months of premiums and that allowed me time to get on state assistance. 

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By this time, it was obvious that a bone marrow transplant was 

my only hope. If I only had Medicaid, there would be no facility 

that would accept me. Thankfully, Social Services chose to continue 

paying the COBRA premiums as it would be cheaper in the long 

run. 

I was already floundering in medical bills. I was becoming more 

lost, confused, and scared. My health just continued to deteriorate. 

I was spot bleeding in my brain, which caused huge headaches and 

migraines and temporary blindness. I had pleurisy in my lungs and 

my heart. I was bleeding faster than they could replace the blood. 

Finally, a referral was made to the University of Washington 

hospital, but I could not go without approval for the procedure from 

my insurance company and they were giving me the runaround. 

They denied it, saying that it was experimental. I had to involve 

the family’s attorney in order to budge them. And then when the 

Fred Hutchinson Cancer Center had an opening for me, the insurance company again denied it. I can’t tell you how scared I was. 

Something, I’m still not sure what, changed their decision again. 

I was so very sick. I was told I was probably not going to live 

more than a couple weeks. But they started me on Cytoxan chemotherapy. In this case, the treatment was as sickening as the disease I had, but finally on the 45th day of treatment, my blood 

counts started returning. As they increased, I lost the fluid around 

my heart and both my lungs. My bleeding slowly stopped. For the 

first time in over a year I could lay flat on a bed and sleep. 

After the bone marrow transplant on March 31, 1991, I was put 

on cyclosporine, an anti-rejection medication. The cost of this drug 

was $800 a day. And that was just one of the 25 medications that 

I was on. 

I finally felt like I had a new lease on life and I returned to 

Minot with my children. At this point, the State was still covering 

my insurance premiums. As I grew stronger, I moved back to 

Washington state and started working as a social worker. I was 

working. I was making my way. But I still had to file bankruptcy 

because of the mountain of medical bills I had. 

Then in 2004, the chronic grafts versus host disease was affecting my skin, my mouth, my liver, and my memory. Co-workers noticed that I was becoming very forgetful. After 7 years of employment, my supervisor asked me to resign. I went out on long-term 

disability, which pays me $240 a month. 

I returned to Minot to be close to family and because I thought 

it would be cheaper to live here than there. Because I still had children in the home, I was thankfully able to return to the TANF program, and Medicaid continued paying my medical premiums. 

Am I well now? No. The impact of the massive doses of chemotherapy is really showing up. I’m losing the sight in my left eye 

and will likely be blind in both eyes. My teeth are gradually crumbling and I need to guard against chipping at all times. The grafts 

versus host disease continues to take its toll. In addition, because 

none of the over 1,000 blood transfusions I had was filtered, my 

body is being attacked by the extra iron, causing constant pain in 

my arms and legs. I will likely need a liver transplant. 

And the latest blow is my youngest child left my household. 

What does that mean for my continued assistance through the 

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State? It means everything. As of July 31, I lost Medicaid coverage. 

I lost every kind of assistance. 

I’m completely terrified as I cannot qualify for Medicaid help 

again until I have a disability determination from Social Security. 

I applied for disability in 2005 and I was denied at the initial application and the reconsideration level. I am now awaiting an administrative law judge hearing, which, thankfully, you, Senator 

Conrad, were able to expedite for me. 

With only $240 a month income, I am struggling to keep a roof 

over my head, to keep my utilities on, put food on the table. Poor 

health, high medical bills, and now the uncertainty of whether I 

will be able to get any medical help for at least a time keeps me 

up at night. 

I don’t know what the answer is to making our health care system better for average people with serious illnesses, but I do know 

that something has got to be done, and soon. Too many people don’t 

have insurance that are forced into bankruptcy, like me, in order 

to afford the health care they need to live. 

Thank you for letting me be here. 

[The prepared statement of Ms. Abernathey follows:]

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The CHAIRMAN. Well, Candace, thank you. That is unbelievably 

powerful testimony and we salute your courage in going through all 

this. I don’t know how many people could haveten through all that 

you have been through. That says a lot about your strength of 

character. 

But a person shouldn’t have to be swimming against the stream 

of our health care system when confronted with those life threatening challenges. And that’s really what we’re here to talk about. 

Because I think all of us know none of us can predict when we or 

a family member might face something like this. We just learned 

of a family member of ours, my wife’s brother’s wife, sister-in-law, 

just diagnosed with ovarian cancer. Just had an operation and is 

in a desperate struggle for her life. And, you know, thank God they 

have coverage. But you had coverage and lost that coverage and 

then had all these struggles on top of the struggle to defeat the illness. 

So, you know, I very much wanted to have Candace here today 

because that puts a face on the reality of what this all means, you 

know. Sometimes we’re very removed from the reality of what 

these issues are about and how they affect real people’s real lives. 

And I think you put a face on what this could mean to any one of 

us. And there’s nobody sitting here that can be certain that we 

won’t have some terrible diagnosis in the near future. We don’t 

know that. So again, Candace, thank you for your courage. 

I’d like to also welcome John MacMartin. John’s the president of 

the Minot Area Chamber of Commerce. 

Businesses are also struggling. As I have indicated, this friend 

of mine that stopped me, that friend of mine seen me walking down 

the street, he had just gotten his health care premium, 18 percent 

increase, and came down the street. Now, he is somebody that provides insurance, has over a hundred employees, wants to provide 


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insurance, but, you know, he’s caught in a squeeze, too. How does 

he stay competitive when some of his competitors don’t provide 

health insurance and he does? 

John, I know some of your membership faces these struggles as 

well. So it’s an important benefit to potential employees, current 

employees, but we know that businesses are finding it more and 

more difficult to afford these benefits. We’re delighted to have you 

here to speak to those issues. John MacMartin. 

STATEMENT OF L. JOHN MACMARTIN, PRESIDENT, MINOT 

AREA CHAMBER OF COMMERCE, MINOT, NORTH DAKOTA 

Mr. MACMARTIN. Senator Conrad, members of the Budget Committee. I am pleased to be here today to represent the Chamber 

and to provide a brief general overview and comments on health 

care costs and the challenges and options for reform. 

The Minot Chamber is a private not-for-profit business organization in which membership is voluntary and is composed of roughly 

700 members. I have served as the president for the last 17 years. 

During that time, the Minot business community has faced a number of critical issues, including reform of workers compensation, the 

Base Realignment and Closure Commission, and the Northwest 

Area Water Supply, to name just a few. As we’ve recruited new 

members, talked with individual members and surveyed our membership, the issue that is routinely brought up is health care; more 

importantly, affordable insurance. That is not to say that insurance 

companies are not offering coverage, but many small businesses 

are unable to find a group insurance program for which they qualify. As such, those business owners cannot afford the insurance 

premiums on their own. Not being able to join a large group, individuals that are sole proprietors may have real large deductibles, 

2,500 to 5,000 dollars. Some businesses choose simply to go naked. 

The CHAIRMAN. What do you mean by that, John? 

Mr. MACMARTIN. Not have any insurance at all. 

The CHAIRMAN. That’s good to explain that. 

Mr. MACMARTIN. Yes. 

The CHAIRMAN. This is a congressional record. 

Mr. MACMARTIN. Somebody might wonder which business that 

is. 

The issues of health care and health insurance bring up a myriad 

of topics. I believe that the business community wants to see health 

care reform. I believe that the reform has to remain employer 

based and it needs to involve the end user, whether that is a sole 

proprietor of a business or the employees of that business. I believe 

further that the current situation has the end user removed too far 

from the choice for health care providers and for the payment of 

the services received. 

In business, usually the more often something is purchased, the 

price will reflect a downward trend. In health care, I’m not sure 

that that situation follows, except, perhaps, in areas where insurance does not cover the procedure. I would offer the case of RK surgery and elective cosmetic surgery where prices have fallen in response to patients choosing their own provider and also choosing 

the prices that they want to pay. In most insurance models, the patient is removed from both the pricing model and the choice of proVerDate 0ct 09 2002 09:15 Jan 23, 2008 Jkt 000000 PO 00000 Frm 00094 Fmt 6601 Sfmt 6601 C:\DOCS\37526.TXT SBUD1 PsN: TISH
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vider. As such, the market system of supply and demand, as seen 

in RK surgery and elective cosmetic surgery, is not occurring. 

Health care is and will remain a critical issue facing small business. I thank you for the opportunity to appear here today and provide these brief comments to the committee. I would interject, 

given more time, more specific individual data could be obtained, 

and perhaps with the chairman’s indulgence, we could be allowed 

to revise and extend our remarks in the record. 

The CHAIRMAN. You’ve been watching the House. Revise and extend, they love that in the House of Representatives. You know, in 

the Senate, the senators just talk on and on and on and have no 

time limit, for the most part. But in the House, they’re usually 

strictly limited to 2 minutes, so they always want to revise and extend. And we’ll certainly grant you that privilege here today. 

Mr. MACMARTIN. Thank you. 

[The prepared statement of Mr. MacMartin follows:]

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The CHAIRMAN. Our final formal witness is Terry Hoff, the president and CEO of Trinity Hospital, somebody that I have grown to 

know and respect very much and who has been of great help to me 

in our struggles to get more fair reimbursement for our hospitals. 

Not generally well known, but our hospitals typically get one-half 

as much in reimbursement under Medicare as more urban hospitals for treating the very same illnesses. This puts our hospitals 

in a very, very tough squeeze. 

Terry is in an interesting situation because not only is he the region’s largest employer, spending almost $13 million a year on 

health care for its employees, but is also a business that’s feeling 

the pinch of the health care crisis. I’ve indicated they’re getting 

squeezed on the reimbursement side. They’re not getting reimbursed what other hospitals would get if they were in a more urban 

setting. They also are getting squeezed by uncompensated care. 

And so it takes a real management challenge. It is a real management challenge to face all these kind of cost cutting pressures. 

Terry, welcome. Good to have you here. Please proceed. 

STATEMENT OF TERRY G. HOFF, CHIEF EXECUTIVE OFFICER 

AND PRESIDENT, TRINITY HEALTH, MINOT, NORTH DAKOTA 

Mr. HOFF. Thank you, Mr. Chairman. I appreciate the opportunity to speak to you today. 


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I would just comment about Trinity Health. Trinity Health actually operates two hospitals, 22 clinics, two nursing homes, and two 

pharmacies. We have over 140 health care providers providing care 

to the citizens in our area. We have 2,800 employees, a population 

service area of 140,000 people, covering 20,000 square miles. We 

also have referral agreements with ten critical access hospitals in 

North Central and Northwest North Dakota. We provide 315,000 

clinic visits annually, 137,000 outpatient visits, including 25,000 

emergency room visits, 10,600 inpatient days, and 98,000 nursing 

home days. 

As you indicated, and other witnesses have indicated, North Dakota is the best in the Nation for quality, and Trinity consistently 

ranks at or on the top of all of those CMS quality indicators. 

I bring two perspectives, one as an employer as providing health 

care and health care benefits, but also as a provider of health care. 

If I could, I’d address the employer portion first. We do have a 

health insurance plan and it is self-funded. It did not go up 18 percent a year for the last 3 years, but our costs have increased from 

9.5 million to 12.8 million from 2004 to 2007. 

We have done several multiple things to make changes. We’ve 

changed the plan design, we’ve increased deductibles. A few years 

ago we even developed an HMO in an attempt to control the cost 

of our own health insurance premiums. In addition to the health 

insurance premium, we also participate with Workers Safety Insurance program. We offer employee discounts for using our health 

care facilities. And we have an employee sick leave. The sum of 

those totals approximately $1.9 million. 

We’ve focused on trying to keep our work force healthy. One of 

our better programs is what we call Health in Motion, where employees can participate in a wellness program. They meet individually with our exercise physiologists and they establish goals, up 

to six goals. And then they target improvement in those goals, and 

then after a year they’re remeasured again. And if they make a 

sufficient progress toward those individuals goals, then we reimburse them up to 70 percent of their membership in the YMCA for 

that exercise program. That program cost us approximately 

$70,000 in the last year. 

And one thing that I’m particularly proud of now to improve our 

own employees’ health and others is that we just announced that 

we will be going to a tobacco-free environment on all our campuses, 

starting September 15, the day of the Great American Smoke Out. 

Speaking as a provider, health care payment has changed a lot 

over the years. Eight years ago, our board of directors concluded 

that the community of Minot could not support two full service 

community hospitals, so they set in motion a plan which resulted 

in the acquisition of UniMed Medical Center in 2001. And in 2001, 

the combination of the two facilities resulted in approximately a $2 

million loss on operating margin. Since that time, our operating 

margin has increased every year to the year 2004. And after 2004, 

which was the peak year, it’s been declining once again and our 

margin has decreased down to a break even for fiscal year 2007. 

And the question is why is that happening. There’s multiple 

issues that are playing onto that. First of all is driving costs. Nursing salaries alone increased 41 percent over the last 5 years. Our 

93

total payroll went from $100 million to $140 million over that same 

timeframe. Our drug costs increased 67 percent since 2003. That’s 

up $4.8 million. You mentioned earlier charity care. Charity care 

nearly tripled from $560,000 to $1.4 million. And the other part of 

the problem is the payment system. Medicare, Medicaid, and Blue 

Cross Blue Shield of North Dakota are not keeping up with the 

rate of inflation in health care. Our Medicare payments decreased 

from 52 cents on the dollar to 43 cents on the dollar over the last 

4 years. Medicaid decreased from 45 cents to 37 cents. And Blue 

Cross decreased from 61 cents to 52 cents on the dollar. 

We’ve taken some actions to mitigate some of these things. Relating to charity care, we have a full-time resource coordinator that 

assists the uninsured and underinsured to find private or public 

sources of funds to help pay the bills, including drug costs. That 

person saved those people more than $200,000 last year. We support the free clinic in Minot with supplies, equipment, and ancillary testing services. The clinic is staffed by volunteers. 

We have also been working to create a healthier community. We 

do continuous education about health and chronic disease like diabetes, back pain, and heart. And we do screening events. I am 

proud to say we did prostate screening at the fair last month, 

which was co-sponsored by yourself and the Cancer and Research 

Prevention Foundation. We screened over a thousand men during 

that 9-day event. 

The CHAIRMAN. What were the results; do you know? 

Mr. HOFF. I’m not sure I can tell you because it might be a secret. No. Actually, we were surprised. We did find over 70 of the 

men with elevated PSAs, and that’s a pretty high percentage, actually, for a random screening like that. So 70 men will be referred 

to their physician for further action. 

The CHAIRMAN. That’s great. You found 70 people that we may 

have stopped from having something more serious. 

Mr. HOFF. And, finally, in our Garrison community clinic, our 

provider there is sponsoring a Reduce Obesity campaign for the 

Garrison clinic, which just was started this summer and will conclude by late fall. 

We also formed a partnership with the YMCA in Minot. We 

made a significant investment with the Y in new facilities to create 

a healthier community. We have our exercise physiologist there. 

They do prescreening for people who are new members. They help 

individuals develop their own exercise routines through the Y. And 

also we use their facilities for our sports acceleration. 

One of the things I wanted to mention briefly is we have, in the 

last 2 years, invested significantly in electronic health care records. 

We will soon be in the top 15 percent of the hospitals electronically 

in the health care records. 

North Dakota’s health care system is in an extremely fragile 

state. We have declining reimbursement, increasing costs, an aging 

population, work force shortages, and expensive technologies. We 

would be in crisis if it was not for the hard work and efforts of 

yourself. We do appreciate the work you’ve done for rural health 

care and critical access payment, Section 508 for urban hospitals, 

and we know that it was a lot of work and that torch was carried 

by yourself. Solutions are not easy. And with health care reform 

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mentioned frequently, we’re concerned that the remedy is not simply reducing payments to providers for their same services. Thank 

you very much. 

[The prepared statement of Mr. Hoff follows:]


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The CHAIRMAN. Thank you very much. Really five excellent witnesses. I think this lays out very well, in the brief time that we 

have, the extraordinary challenges that we confront. 

I would like to ask each of you to answer this question. In Washington, there is, I think, almost unanimous agreement that we’re 

on a course that is unsustainable. I think that was very clear from 

the witnesses here. We’ve got a train wreck going on here. So what 

do we do about it? I’ve talked about some ideas in terms of health 

IT and in terms of better coordination of care, in terms of identifying most effective practices. But there’s a fundamental underlying question, and that is how do we structure the basic system. 

And let me give it to you in this kind of summary profile. 

There are really three basic options. One is to have a single care 

system. That would be like Canada has, like most of the industrialized countries have. A system that is coordinated by the Federal 

Government with all that implies. That’s one possibility. A second 

possibility is an employer mandate, requiring employers to provide 

health care for their employees. And where people are not employed or where the businesses cannot afford to provide the insurance, that there is government support to fill in the difference. A 

third possibility, just embraced by the state of Massachusetts is for 

an employee mandate. That is that all of us would be required to 


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carry health insurance. And, you know, you could get it at your employer, you could get it somewhere else. But there would be a requirement that we have it, and there would be assistance for those 

that can’t afford it on their own. Those are the three basic structures of providing health care coverage. And there are arguments 

pro and con about each one. 

I would just be interested to the extent you have an opinion—

if you don’t have an opinion, that’s not a problem—but if you have 

an opinion on those three basic approaches, I’d be interested in it. 

I know the committee would. Mary? 

Dr. WAKEFIELD. I think without a doubt there is a role for government, State and Federal Government, in terms of assuring coverage for vulnerable populations. Employers and even employees, 

vehicles for folks who are over age 65 don’t work very well. And 

so there’s clearly a role for Medicare, and I think that’s almost a 

given. There’s also a role for Medicaid. Maximizing efficiency and 

ensuring that we’re aligning payment with high quality care, so 

that we’re not paying for services that don’t buy the consumer anything is really important. And the government, I think, can use its 

leverage to realign payment policies so that we are paying for high 

quality care consistently. 

I’ll just give you a personal example. My mother had gone in to 

have a carpal tunnel surgery done on one hand. Well, whoops, it 

was the wrong hand. Medicare paid twice on one hand to have carpal tunnel surgery done and then done on the other. A couple of 

years later at a different hospital she went in and had an injection 

under fluoro done in one of her hips. Whoops, Medicare paid again, 

it was a wrong hip, different provider, different facility. 

So the point I’m making is that government has a role for vulnerable populations like folks over age 65, like Medicaid. But we need 

to be using those Federal dollars and the strength of that program 

with all the muscle behind it to ensure that the care that people 

are getting through those programs is efficient care and effective 

care. So that role doesn’t, I don’t think, go away. 

With regard to the employee mandates, I agree with Mr. 

MacMartin that employees need to have some skin in the game 

where they can. There have to be private sector pieces to this and 

employees ought not be immune from some of the costs of their 

care. Now, the other piece of that is that a big part of their most 

expensive care is actually not so negotiable. It’s care that they get 

inside a hospital, which is often not an option. You got to be there, 

you have to be there. And what we’re starting to see is a little bit 

of trickle down of bad debt with some of our hospitals now incurring bad debt because those bills aren’t being paid as consistently 

as they have been historically for the big ticket items. Depends on 

the structure of the insurance policy. But we’re going to have to 

watch that very carefully in terms of some of the new planned features. 

The employee mandate in Massachusetts, they’re really the ones 

that are leading the charge, but there are about six or seven other 

states now that are doing some variations on that theme. I think 

that’s absolutely worth experimenting. And it gets it to the point 

about really experimentation. We need to try different models right 

now. I don’t think we’ve got a lot of time. I think ultimately we 

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could well default into what a lot of people are very afraid of, and 

that might be one big payer system, because that always seems to 

be kind of the end game in some people’s mind. If we don’t take 

care of this problem on the front end, business can’t afford it, big 

business can’t afford it, and somebody eventually has to accept the 

responsibility. 

So you often hear that, well, we might default to just an all-government, one single payer program. I don’t think we’re there yet. 

I think we absolutely need private sector approaches. Some experimentation at the state level is really important. Massachusetts, I 

think, is a great idea, because it builds on an orientation we already have. If you’re driving a car, you’ve got to have insurance. 

You generally have to have insurance on your house if you’ve got 

a mortgage on it, on your farm, et cetera, et cetera. So the model, 

the concept, I think is an important one to look at. 

The CHAIRMAN. I want to say this, I’ve always been intrigued by 

the German system. Maybe it’s because I carry a German name 

and am part German. But I’ve always been intrigued by the German system, which is the vast majority of people, like in our country, are insured at their place of employment. And they have large 

purchasing pools that purchase insurance which gives them leverage in getting a good deal. And as I understand it, where the business can’t afford it, or for those people who are not employed and 

can’t afford their own insurance, that’s where government steps in. 

Government provides assistance to very small businesses that can’t 

afford health insurance. They provide assistance to low profit businesses that can’t provide it or they’re in a competitive position that 

doesn’t allow them to provide it. They help those who are not employed, who are disabled, elderly, et cetera. I’ve always been intrigued with that approach. 

Janis, do you have a——

Ms. CHENEY. I think that I certainly don’t have an answer for 

how to structure the basic system, but I think that you’ve touched 

on the point, and as has Dr. Wakefield and others at the table, that 

there is a role for government, there is a role for the private sector, 

there is a role for business and the individuals as well. And that 

is really the genesis of AARP’s Divided We Fail movement. AARP 

representing consumers, nearly 39 million people now nationwide, 

and their families. I think that is an important consideration. 

AARP is not in this just to look out for the interests of our members but all of our members’ families. And we recognize that this 

issue is larger than just Medicare and the senior population. It affects every single one of us and we have to find a solution that will 

work for every single one of us. 

So, you know, I mentioned in my comments relative to key transitions that we see as being necessary to finding some of these solutions, the health promotion and healthy behaviors elements that 

you spoke of are something that AARP has been committed to for 

a long time. Quality procedures and the health IT is something 

that the association has worked on. Coordinating care. I guess personally from my experience with cancer and health issues with my 

children, that kind of coordination has really been missing, and if 

I weren’t a fairly astute recipient of health care with some resources to access, friends and other kind of information, things 

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might have taken different turns at different places. Absolutely the 

individual has a role, government, and business. 

And the other piece that I think AARP is stressing so strongly 

is that all of those voices have to be at the table. Everyone has got 

to realize I’m not going to get the ideal system that’s going to just 

take care of me. We all have to give a little. And that conversation 

has got to go across party lines and across employer and employee 

lines and really start building common understanding that we can 

then use to structure a system that is going to work for everyone. 

The CHAIRMAN. Candace, any thoughts on what kind of a system 

we should have? 

Ms. ABERNATHEY. I have some thoughts, but as you know, obesity has a high cost on our health care. And I, for one, used to 

weigh 350 pounds and I had a gastric bypass surgery. After I had 

gastric bypass surgery and lost 180 pounds, borderline diabetes 

was gone, all of my health care problems as far as related to the 

obesity was gone. But yet insurance companies don’t want to get 

involved with gastric bypass surgeries, and Medicaid doesn’t want 

to get involved with gastric bypass surgeries, which seems to eliminate a lot of the health care problems that go along with the obesity. 

As far as the government being involved, you know, they had to 

remove a lot of my intestines for surgery and I don’t absorb the 

way I used to. My doctors say, OK, they did labs and said Candy 

doesn’t absorb medication the way she used to before this, so now 

we have to give her two instead of one. Well, the Federal Government says, no, she only gets one, only 30 per month, one per day. 

But the doctors say, well, she needs two because Candy has got 

this situation. Doesn’t matter, this is what she gets. 

As far as when I was an employee for the department of social 

and health services in Washington, every year my premiums went 

up, my health care premiums went up, but I only got one cost of 

living allowance the whole time I worked there. You know, I was 

there for 7 years, and I thought, wait a minute now, my paycheck 

is lower. I’m paying more for this but my paycheck is smaller and 

I even got a cost of living increase on this. So I don’t know. 

The CHAIRMAN. I have so many people, you know, from elderly 

people to people who are working, who are seeing more and more 

of their paycheck go for health care to employers who are saying, 

you know, they’re getting squeezed. If there was ever a circumstance in which I think there’s a general recognition we got a 

big problem, this is it. 

John, any thoughts on structuring? 

Mr. MACMARTIN. I don’t know that I can choose any one of the 

three today, Senator Conrad. When we say like Canada or some of 

the European nations, I think we all see many health care professionals that flock to the United States so that they can practice 

under the freedom of the system we have, and correspondingly we 

all read horror stories about perhaps foreign health care professionals that we’ve trained that go back to their home country and 

set up clinics that lure people there. So I’m not sure that an allgovernment system is the answer. Mandates always scare employees, and especially employers. 

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Perhaps it isn’t the right analogy, but North Dakota for a time 

has toyed with requiring ethanol in every gas station, but when 

you apply that broadly across North Dakota—and I know you drive 

through a lot of North Dakota—there’s lots of places that have only 

one gas station, and that gas station has only one pump and it’s 

regular. And to put in a second tank with all the EPA would close 

the station down, you know. So mandates by themselves may not 

be there. And you know this, and you’ve expressed this before, 

what works in urban America doesn’t work in rural America. It is 

going to be some combination. But to say one of those three today 

would work, I can’t do that—

The CHAIRMAN. OK. Terry. 

Mr. HOFF. Thank you, Senator. I guess I’d probably look at a 

combination of employer and employee type situation. I don’t know 

that I can pick one. From the provider perspective, the fear we 

have is the increased burden of bureaucracy of whatever it is. Just 

recently, the new notice requirements for discharging Medicare patients, a small thing, but it’s like a ten-page document that you’re 

handing out to every patient three times. So that part is a mentionable thing. I think they have issues like Candace where we 

have a lot of coverage for a lot of people but there are still people 

who fall through the cracks, and we need to make some solutions 

for those problems. 

And, also, I think that if you’re going to talk about insurance, 

one of the things we need to do is change the payment mechanism, 

particularly for physicians. Because certain specialists are awarded, rewarded way out of proportion to particularly primary care. 

And for us in Minot, North Dakota, and the state of North Dakota, 

it’s becoming nearly impossible to recruit primary care physicians 

because there just aren’t any. 

The CHAIRMAN. I really see that. I’ve got a brother-in-law that’s 

a family practice doctor and, you know, he’s really seriously contemplating getting out of it. He said just trying to get the money 

from the insurance companies, trying to get the money from Medicare, trying to get the money, he’s got so many people chasing 

money that he’s owed. And, you know, he’s in his fifties, very able 

guy, and lots of patients, very popular guy. And he said, ‘‘Kent, I 

sat down and figured out what I’m actually making at the end of 

the day. I’ve got a lot money coming in but I got so much money 

going out.’’ He said, ‘‘I could make a lot more money doing something else.’’ And I’m hearing this with increasing frequency for family practice doctors. 

Mr. HOFF. We have right now in the western part of the state 

two family practice doctors who will be leaving their practice next 

spring and going to radiology residency. Among other things, they 

get paid a heck of a lot more. 

The CHAIRMAN. Mary’s husband’s a family practice doc. What’s 

he telling you? 

Dr. WAKEFIELD. That he’s going to stay in Grand Forks. 

Mr. HOFF. He’s not available to come out and take over these 

practices? 

Dr. WAKEFIELD. I’m sure he’d be happy to help, Terry. 

Mr. HOFF. I think the other thing I could comment to, as John 

mentioned, is one of the problems we’re facing, and as you know 

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for the record, the fixes for Washington, D.C. or New York or Florida are not the same as the fixes for North Dakota. 

The CHAIRMAN. Well, we have seen that repeatedly, this one size 

does not fit all. That’s very, very clear. We live in a totally different 

culture, a totally different economic reality. 

And I tell you, I’ve just had the director of Health and Human 

Services come to see me as we were writing this budget, and he 

showed me results of investigations in Florida of fraud and corruption that is just unbelievable. Shopping center filled with little offices with agencies that were billing Medicare on the average of a 

million and a half dollars a year. You go up in the middle of the 

day and knock on the door, nobody is there because nothing is 

going on there. They’re not providing any services, they’re not 

doing anything. But they have a mill where they’re producing bills, 

and it’s a giant fraudulent operation. It’s not one company like 

that, it’s 80. And they’ve made kind of a boutique out of a shopping 

center where they’re running these fraudulent operations. I tell 

you, that’s so outrageous. This is the kind of scam——

A number of years ago we held a hearing here, a budget hearing, 

in North Dakota, and we found out about a wound kit scam that 

was going on out of Pennsylvania, and they were billing Medicare 

hundreds of million of dollars a year and it was a phony deal, and 

they were actually coming to providers and bribing them, offering 

them bribes to get them to take their wound kits that cost three 

times as much as what a wound kit should cost. We discovered that 

in a hearing here in North Dakota and were able to shut down at 

least part of that operation as a result. 

I know that we’re actually past our time, which I apologize for, 

and we’ll end on this note. I would just ask each of you, in a sentence or two, if you could send one message that would get heard 

by the budget committee, by the finance committee, by the Congress, what would it be? In a sentence or two, what would you most 

want them to know or to act upon? 

Dr. WAKEFIELD. There’s a lot of efficiency in North Dakota. 

There’s a lot of inefficiency in the health care delivery system. And, 

frankly, you can find some of it in the state, I’m certain, too. But 

there is a tremendous amount of inefficiency. I think this is not 

just about putting more money into health care delivery systems. 

It’s about making sure that the money we’re spending right now 

is spent wisely. You made a couple comments to that very point, 

part of what I was trying to illustrate, in terms of using the power 

of the Federal Government to ensure that dollars are spent not just 

as a payer but as a wise purchaser——

The CHAIRMAN. Let me tell you, some of the Presidential candidates have come to me and asked me on the budgetary front 

about putting more money into health care, and I say to them, I 

just don’t think that’s the answer. I mean, just putting more money 

in. One in every six dollars in this economy right now is going into 

health care. I think we’ve got to find a way to make things run 

more efficiently and effectively before we pour more money. I mean, 

I just don’t see how that’s going to work. 

Janis? 

Ms. CHENEY. I think the message I might have, and echoing 

AARP’s perspective in the Divided We Fail campaign, would be to 

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set aside some of the personal and perhaps political interests and 

to really sit down and listen to each other, listen to constituents 

and to employers, to providers, to employees, and start hammering 

out some things that will move us forward. Because certainly we 

have enough money in this country, and resources to take care of 

our citizens. And certainly there are things we can learn from our 

States, other countries. The Medicare system works very efficiently, for example. And so let’s take some of those bright people 

that are there and really start focusing in on this problem. As I indicated, that would be AARP’s perspective over the next months, 

up to and past the 2008 election, would be to really try to make 

sure that every single candidate accepts some responsibility for addressing health care in a serious way. 

The CHAIRMAN. Candace, if you had a message that you wanted 

people to hear. 

Ms. ABERNATHEY. A lot of us aren’t able to work anymore due 

to no fault of our own. And we’re on low fixed incomes. Even senior 

citizens are on low fixed incomes, you know. There should be some 

kind of coverage that we could rely on. Just because I’m not a mom 

anymore, my kids are over a certain age now, where it’s like I don’t 

matter anymore. Yes, I do matter still. I still am a mom. I just 

don’t have the small children anymore, but I’m still a mother to 

three children, one who will be serving in Iraq starting next month, 

you know. 

And if I do get approved for social security disability, well, then 

I find out from social services that my co-pay will be $400 a month. 

I can’t afford $400 a month. So something has to be done for people 

who are, you know, getting social security disability. That $400 a 

month, that’s just impossible. That’s my co-pay before I get any 

help from Medicaid to help me with my prescriptions that I have 

to have, and my oncology appointments, my liver doctor appointments. I mean, all those appointments I have to go through. Recognize that I am still important. I may be a single adult now, but I 

still need medical coverage. And people still need to be able to get 

it at an affordable rate. It needs to be affordable. 

The CHAIRMAN. OK. John. 

Mr. MACMARTIN. I would say please make sure that small business is involved. I know, and I appreciate, comments that you 

made from the auto industry and the problems that they’re facing, 

but please make sure we talk to small business, mom and pop on 

Main Street, because that’s where the bulk of our businesses are. 

And I think the other issue is we as patients or consumers of 

health care are being told to become smarter and engage the doctor. I think we have to be involved as that end consumer in all aspects of it, including the pricing, the insurance, and what is done 

there. 

The CHAIRMAN. OK. Terry. 

Mr. HOFF. Senator, as a provider, I just can’t say that you 

shouldn’t put money into the system. 

The CHAIRMAN. I knew that would get your attention. 

Mr. HOFF. But, you know, I guess the thing is that when I say 

that, half in jest, is that health care costs are increasing a lot, but 

a lot of that is really good stuff. I mean, some of the drugs that 

are really expensive, they do a lot of good things. I think the mesVerDate 0ct 09 2002 09:15 Jan 23, 2008 Jkt 000000 PO 00000 Frm 00120 Fmt 6601 Sfmt 6601 C:\DOCS\37526.TXT SBUD1 PsN: TISH
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sage is that health care is a huge, huge industry and there’s a lot 

of money in it and there are some bad guys in that system. And 

my message would be go after the bad guys and leave the guys that 

are trying to do the job day in and day out honestly and fairly, let 

us be. 

The CHAIRMAN. Yeah. We have a pretty good idea where some 

of those bad guys are, too. The thing that the secretary has just 

shown me on Medicare fraud in Florida, it’s really just outrageous. 

I just gave them in the budget another $200 million to go after 

these guys. And I think that’s in all of our interests. When I say 

don’t put more money in the system, I’m talking collectively. To 

me, it’s very clear that those parts of the country that have been 

unfairly reimbursed, they need an increase. I was just at Dickinson 

hospital today. They are in very serious financial trouble, and in 

part because they have been unfairly reimbursed, like most of the 

hospitals in North Dakota. Unfairly reimbursed. Well, there are 

other hospitals that have been overreimbursed, you know. And 

there are other parts of the health care system where we see fraud 

and abuse and corruption and that’s got to be taken on. That’s got 

to be taken on in a very tough way. And we’re going to endeavor 

to do that in this budget that I’ve helped write for this year. 

Let me just conclude by thanking these witnesses, thank each 

and every one of you. I think you’ve made a real contribution to 

the committee. I want to thank all the people that were here in the 

audience as well. I certainly appreciate your attendance. This is, as 

I indicated, an official hearing of the Senate Budget Committee, 

will go as part of the record. 

We are focusing now on a series of hearings on health care. We 

have just held one in Washington that was extremely interesting 

on a proposal by Senator Wyden and Senator Bennett, a bipartisan 

proposal. And the next hearing is going to be on this question of 

what is the basic structure, and we’re going to listen to a lot of people who are very knowledgeable about that. Then we’re going to be 

talking about comparative effectiveness and what can be done to 

seize on the opportunities there. And then we’re going to talk about 

the use of information technology to improve effectiveness and efficiency. So we have an ambitious schedule of hearings in Washington and some of them will be in other parts of the country as 

well, as we struggle to fashion a policy that makes the most sense 

for the country. 

With that, I declare this hearing to be adjourned. 

[Whereupon, at 5:31 p.m., the hearing was adjourned.]

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