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REVIEWING THE PRESIDENT’S 

FISCAL YEAR 2014 BUDGET PROPOSAL 

FOR THE U.S. DEPARTMENT OF 

HEALTH AND HUMAN SERVICES 

HEARING 

BEFORE THE

COMMITTEE ON EDUCATION 

AND THE WORKFORCE 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

HEARING HELD IN WASHINGTON, DC, JUNE 4, 2013 

Serial No. 113–20 

Printed for the use of the Committee on Education and the Workforce 

( 

Available via the World Wide Web: 

www.gpo.gov/fdsys/browse/committee.action?chamber=house&committee=education 

or 

Committee address: http://edworkforce.house.gov 

(II) 

COMMITTEE ON EDUCATION AND THE WORKFORCE 

JOHN KLINE, Minnesota, Chairman 

Thomas E. Petri, Wisconsin 

Howard P. ‘‘Buck’’ McKeon, California 

Joe Wilson, South Carolina 

Virginia Foxx, North Carolina 

Tom Price, Georgia 

Kenny Marchant, Texas 

Duncan Hunter, California 

David P. Roe, Tennessee 

Glenn Thompson, Pennsylvania 

Tim Walberg, Michigan 

Matt Salmon, Arizona 

Brett Guthrie, Kentucky 

Scott DesJarlais, Tennessee 

Todd Rokita, Indiana 

Larry Bucshon, Indiana 

Trey Gowdy, South Carolina 

Lou Barletta, Pennsylvania 

Martha Roby, Alabama 

Joseph J. Heck, Nevada 

Susan W. Brooks, Indiana 

Richard Hudson, North Carolina 

Luke Messer, Indiana 

George Miller, California, 

Senior Democratic Member 

Robert E. Andrews, New Jersey 

Robert C. ‘‘Bobby’’ Scott, Virginia 

Rube ́n Hinojosa, Texas 

Carolyn McCarthy, New York 

John F. Tierney, Massachusetts 

Rush Holt, New Jersey 

Susan A. Davis, California 

Rau ́l M. Grijalva, Arizona 

Timothy H. Bishop, New York 

David Loebsack, Iowa 

Joe Courtney, Connecticut 

Marcia L. Fudge, Ohio 

Jared Polis, Colorado 

Gregorio Kilili Camacho Sablan, 

Northern Mariana Islands 

John A. Yarmuth, Kentucky 

Frederica S. Wilson, Florida 

Suzanne Bonamici, Oregon 

Juliane Sullivan, Staff Director 

Jody Calemine, Minority Staff Director 

(III) 

C O N T E N T S 

Page 

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

Statement of Members: 

Kline, Hon. John, Chairman, Committee on Education and the Workforce 2 

Prepared statement of ............................................................................... 3 

Miller, Hon. George, senior Democratic member, Committee on Education 

and the Workforce ......................................................................................... 4 

Prepared statement of ............................................................................... 6 

Statement of Witness: 

Sebelius, Hon. Kathleen, Secretary, U.S. Department of Health and 

Human Services ............................................................................................ 8 

Prepared statement of ............................................................................... 9 

Additional Submissions: 

Chairman Kline: 

Article, ‘‘ObamaCare Bait and Switch: The Truth About Those Rate 

Increases in Oregon and California,’’ Wall Street Journal, June 

3, 2013 .................................................................................................... 50 

Questions submitted for the record ......................................................... 53 

Mr. Miller, article, ‘‘Affordable Care Act Could Be Good for Entrepreneurship,’’ New York Times, May 31, 2013 ........................................................ 50 

Secretary Sebelius, response to questions submitted for the record ............ 58 

Thompson, Hon. Glenn, a Representative in Congress from the State 

of Pennsylvania, letter dated May 30, 2013, from Pennsylvania Gov. 

Tom Corbett to Secretary Sebelius .............................................................. 44 

Questions submitted for the record: 

Barletta, Hon. Lou, a Representative in Congress from the State 

of Pennsylvania ...................................................................................... 55 

Brooks, Hon. Susan W., a Representative in Congress from the State 

of Indiana ............................................................................................... 56 

Bucshon, Hon. Larry, a Representative in Congress from the State 

of Indiana ............................................................................................... 55 

Gowdy, Hon. Trey, a Representative in Congress from the State 

of South Carolina ................................................................................... 55 

Hinojosa, Hon. Rube ́n, a Representative in Congress from the State 

of Texas ................................................................................................... 57 

Hudson, Hon. Richard, a Representative in Congress from the State 

of North Carolina ................................................................................... 56 

Messer, Hon. Luke, a Representative in Congress from the State 

of Indiana ............................................................................................... 57 

Petri, Hon. Thomas E., a Representative in Congress from the State 

of Wisconsin ........................................................................................... 54 

Polis, Hon. Jared, a Representative in Congress from the State of 

Colorado .................................................................................................. 58 

Roby, Hon. Martha, a Representative in Congress from the State 

of Alabama ............................................................................................. 55 

Roe, Hon. David P., a Representative in Congress from the State 

of Tennessee ........................................................................................... 54 

Rokita, Hon. Todd, a Representative in Congress from the State 

of Indiana ............................................................................................... 54 

Scott, Hon. Robert C. ‘‘Bobby,’’ a Representative in Congress from 

the State of Virginia .............................................................................. 57 

(1) 

REVIEWING THE PRESIDENT’S 

FISCAL YEAR 2014 BUDGET PROPOSAL 

FOR THE U.S. DEPARTMENT OF 

HEALTH AND HUMAN SERVICES 

Tuesday, June 4, 2013 

U.S. House of Representatives 

Committee on Education and the Workforce 

Washington, DC 

The committee met, pursuant to call, at 10:04 a.m., in room 

2175, Rayburn House Office Building, Hon. John Kline [chairman 

of the committee] presiding. 

Present: Representatives Kline, Wilson, Foxx, Price, Roe, Thompson, Walberg, Salmon, Guthrie, DesJarlais, Bucshon, Gowdy, 

Barletta, Roby, Heck, Brooks, Hudson, Messer, Miller, Andrews, 

Scott, Hinojosa, Tierney, Holt, Davis, Grijalva, Bishop, Loebsack, 

Courtney, Fudge, Polis, Yarmuth, Wilson, and Bonamici. 

Staff present: Andrew Banducci, Professional Staff Member; 

Katherine Bathgate, Deputy Press Secretary; James Bergeron, Director of Education and Human Services Policy; Casey Buboltz, 

Coalitions and Member Services Coordinator; Owen Caine, Legislative Assistant; Molly Conway, Professional Staff Member; Ed 

Gilroy, Director of Workforce Policy; Benjamin Hoog, Senior Legislative Assistant; Marvin Kaplan, Workforce Policy Counsel; Rosemary Lahasky, Professional Staff Member; Nancy Locke, Chief 

Clerk; Brian Newell, Deputy Communications Director; Krisann 

Pearce, General Counsel; Jenny Prescott, Staff Assistant; Molly 

McLaughlin Salmi, Deputy Director of Workforce Policy; Nicole 

Sizemore, Deputy Press Secretary; Alex Sollberger, Communications Director; Todd Spangler, Senior Health Policy Advisor; Alissa 

Strawcutter, Deputy Clerk; Juliane Sullivan, Staff Director; Joseph 

Wheeler, Professional Staff Member; Aaron Albright, Minority 

Communications Director for Labor; Tylease Alli, Minority Clerk/ 

Intern and Fellow Coordinator; Kelly Broughan, Minority Education Policy Associate; Jody Calemine, Minority Staff Director; 

John D’Elia, Minority Labor Policy Associate; Jamie Fasteau, Minority Director of Education Policy; Daniel Foster, Minority Fellow, 

Labor; Scott Groginsky, Minority Education Policy Advisor; Brian 

Levin, Minority Deputy Press Secretary/New Media Coordinator; 

Leticia Mederos, Minority Senior Policy Advisor; Megan O’Reilly, 

Minority General Counsel; Michele Varnhagen, Minority Chief PolVerDate Nov 24 2008 16:36 Apr 23, 2014 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 G:\DOCS\113TH\FC\113-20\81276.TXT DICK
2 

icy Advisor/Labor Policy Director; and Michael Zola, Minority Deputy Staff Director. 

Chairman KLINE. A quorum being present, the committee will 

come to order. Before we start this morning I want to point out 

that our colleague from New York, Mrs. McCarthy, is not with us. 

Some of you probably saw the news this morning—Mr. Miller and 

I were just talking—she has been diagnosed with treatable cancer 

and she will be missing for some time while she is being treated. 

And, of course, our prayers are with here. 

George, if you have any—— 

Mr. MILLER. Mr. Chairman, just thank you very much. I had an 

opportunity to talk to Carolyn yesterday evening and, as you pointed out, she has been diagnosed with what they believe is treatable 

lung cancer but she is in for a rough ride. 

Told her we were all cheering for her and she would see us after 

Labor Day, and so thank you very much and we are going to miss 

her service on the committee in the meantime, but we all obviously 

wish her well. Thank you. 

Chairman KLINE. Well, not always the happiest way to start off, 

but good morning, Secretary Sebelius. Welcome back to the Education and Workforce Committee. 

Though the economic recovery began 4 years ago, countless 

Americans continue to face serious challenges. Roughly 12 million 

are searching for work. Families have recouped less than half of 

the household wealth lost during the recession. The economy continues to move along at an anemic pace and the national debt will 

soon reach an astonishing $17 trillion. 

Congress has a responsibility to examine the programs and priorities of the federal government, not only to ensure we provide the 

best possible services to those in need and spend taxpayer dollars 

wisely, but also to deter policies that make it more difficult for 

businesses to hire new workers. That means asking tough questions to demand accountability for every dollar spent and each new 

rule imposed. 

For example, is Head Start meeting the needs of students and 

taxpayers? Two studies released by the department suggest the answer is no. The gains students achieve in the program are essentially lost by the time they graduate from the first grade. 

These findings are especially informative in light of the President’s plan to dramatically expand the federal role in early childhood education. We should not be adding another program onto an 

already broken system. Our nation’s youth deserve better. 

Does the administration’s welfare waiver scheme serve the best 

interest of low-income families? The answer is no. 

The 1996 bipartisan welfare reform law has helped reduce poverty and strengthen the income security of millions of needy families. Last year the department announced a plan to end welfare reform as we know it by allowing states to waive the work requirements central to the law’s success. This plan would create more dependency when 47 million individuals are already trapped in poverty. 

And is the health care law living up to the promises the President made to the American people? Once again the answer is no. 

3 

The President promised to lower health care premiums for the average family by $2,500, but premiums rose 4 percent last year 

and 9 percent the year before. Meanwhile, insurance providers are 

warning of rate shock in the years to come. 

The President also promised if you liked your health care plan 

you could keep it. However, the nonpartisan Congressional Budget 

Office estimates as many as 20 million individuals will lose their 

current plan. Many will be forced to pay more for health care they 

do not want or need in order to meet the mandates from Washington. 

Finally, it was promised the law would create millions of new 

jobs, yet barely a day goes by when we don’t read reports of the 

law wreaking havoc in workplaces across the country. Once small 

business owner testified the law will lead to either higher prices for 

his customers or fewer hours for employees. A human resources 

professional at a North Carolina community college warned they 

may have to cut the number of courses offered to students and described the law as a, ‘‘massive administrative burden that comes 

with unanticipated costs.’’ 

To prove these aren’t just Republican accusations, here are a few 

recent headlines surrounding the law: ‘‘Like your health policy? 

You may be losing it,’’ warns the Associated Press. ‘‘As health law 

changes loom, a shift to part-time workers,’’ writes National Public 

Radio. ‘‘Some unions now angry about health care overhaul,’’ also 

by the Associated Press. ‘‘Health insurers warn on premiums,’’ reports the Wall Street Journal. 

The litany of bad news goes on. As one senior Democrat and architect of the law stated, the law is headed for a train wreck, and 

still there are those who want to force every American to go along 

for the ride. Isn’t it time for the President to admit we can do better than a flawed health care law that is raising costs and destroying jobs? 

I look forward to your answers to these and other important 

questions, Secretary Sebelius. 

With that, I will now recognize the senior Democratic member of 

the committee, my colleague, Mr. Miller, for his opening remarks? 

[The statement of Chairman Kline follows:] 

Prepared Statement of Hon. John Kline, Chairman, 

Committee on Education and the Workforce 

Good morning. Secretary Sebelius, welcome back to the Education and the Workforce Committee. Though the economic recovery began four year ago, countless 

Americans continue to face serious challenges. Roughly 12 million are searching for 

work. Families have recouped less than half of the household income lost during the 

recession. The economy continues to move along at an anemic pace. And the national debt will soon reach a historic $17 trillion. 

Congress has a responsibility to examine the programs and priorities of the federal government, not only to ensure we provide the best possible services to those 

in need and spend taxpayer dollars wisely, but also to deter policies that make it 

more difficult for businesses to hire new workers. That means asking tough questions to demand accountability for every dollar spent and each new rule proposed. 

For example, is Head Start meeting the needs of students and taxpayers? Two 

studies released by the department suggest the answer is no. The gains students 

achieve in the program are essentially lost by the time they graduate from the first 

grade. These findings are especially informative in light of the president’s plan to 

dramatically expand the federal role in early-childhood education. We should not be 

adding another program onto an already broken system; our nation’s youth deserve 

better. 

4 

Does the administration’s welfare waiver scheme serve the best interests of lowincome families? The answer is a resounding no. The 1996 bipartisan welfare reform 

law has helped reduce poverty and strengthen the income-security of millions of 

needy families. Last year the department announced a plan to end welfare reform 

as we know it by allowing states to waive the work requirements central to the 

law’s success. This plan would create more dependency when 47 million individuals 

are already trapped in poverty. 

And is the health care law living up to the promises the president made to the 

American people? Once again the answer is no. The president promised to lower 

health care premiums for the average family by $2,500, but premiums rose 4 percent last year and 9 percent the year before. Meanwhile, insurance providers are 

warning of rate shock in the years to come. 

The president also promised if you liked your health care plan, you could keep 

it. However, the nonpartisan Congressional Budget Office estimates as many as 20 

million individuals will lose their current plan. Many will be forced to pay more for 

health care they do not want or need in order to meet the mandates from a few 

bureaucrats in Washington. 

Finally, it was promised the law would create millions of new jobs. Yet barely a 

day goes by when we don’t read reports of the law wreaking havoc in workplaces 

across the country. One small business owner testified the law will lead to either 

higher prices for his customers or fewer hours for employees. A human resources 

professional at a North Carolina community college warned they may have to cut 

the number of courses offered to students and described the law as a ‘‘massive administrative burden that comes with unanticipated costs.’’ 

To prove these aren’t just Republican accusations, here are a few recent headlines 

surrounding the law: 

‘‘Like your health care policy? You may be losing it,’’ warns the Associated Press. 

‘‘As health law changes loom, a shift to part-time workers,’’ writes NPR. 

‘‘Some unions now angry about health care overhaul,’’ also by the Associated 

Press. 

‘‘Health insurers warn on premiums,’’ reports the Wall Street Journal. 

The litany of bad news goes on. As one senior Democrat and architect of the law 

stated, the law is headed for a train wreck, and still there are those who want to 

force every American to go along for the ride. Isn’t it time for the president to admit 

we can do better than a flawed health care law that is raising costs and destroying 

jobs? 

I look forward to your answers to these and other important questions, Secretary 

Sebelius. With that, I will now recognize the senior Democratic member of the committee, my colleague Representative George Miller, for his opening remarks. 

Mr. MILLER. Thank you, Mr. Chairman. And I join you in welcoming Secretary Sebelius back to the committee. 

From educating our youngest children in Head Start to ensuring 

seniors access to health care through Medicare, the Department of 

Health and Human Services administers programs to make our nation stronger and healthier. The department is handling a number 

of important policies and proposals and I would like to focus my 

comments on just two of these efforts. 

First, I believe that President Obama’s child care and early childhood education proposals recognize the overwhelming evidence that 

investments in early education more than pay off down the line. 

We know that providing greater access to high-quality preschool, 

child care, and voluntary home visitations with mothers of 

newborns are proven ways to close the achievement gap and 

strengthen school readiness. These programs and proposals have 

received bipartisan support in the past and they should have bipartisan support today and in the future. 

In the meantime, we should be working hard to stop the automatic cuts to the Head Start program. They have been having a 

devastating impact on tens of thousands of children and their families. 

5 

Despite this, the Republican majority refuses to restore these 

cuts. They have already voted to double down on the sequester 

with even more cuts in the Republic budget, and when there were 

threats to—excuse me—but when there were threats for the waits 

of members of Congress at the airports we broke the land speed 

record and passed legislation to stop that sequester. However, 

when it comes to 70,000 kids’ future, the urgency to restore these 

cuts haven’t received the committee hearing, let alone a vote. These 

kids can’t afford to lose access to Head Start. 

Likewise, playing politics with the Affordable Care Act has become something of an Olympic sport for the majority. The majority 

has tried in one way or another to repeal the Affordable Care Act 

37 times. 

This is outrageous, especially at a time when the Affordable Care 

Act is coming into full effect. Already, more than 6 million young 

adults have been allowed to stay on their parents’ health plan; 54 

million Americans with private health insurance have been able to 

get preventative health screening with no copayment; 6.3 million 

seniors have saved more than $6 billion in the cost of their prescription drugs; nearly 13 million Americans have received more 

than $1 billion in rebates and lowered premiums from insurance 

companies that were spending more on overhead rather than on 

health care. 

The federal government is recovering billions of dollars by reducing Medicare fraud, and growth in health care costs have slowed 

and the Affordable Health Care Act has been partially responsible 

for that—so much so that CBO says that we are realizing billions 

of savings in Medicare and the Medicaid programs, more expected 

to come. And beginning in October, Americans without access to affordable insurance will be able to shop for health care plans in the 

transparent marketplace for the first time. 

And there has been good news on that front from the number of 

states, including California, which has been one of the most 

proactive states implementing reform, and it is going to pay off for 

our citizens. In the states that have published the 2014 health insurance premiums, where insurance companies are competing and 

offering affordable premiums, contrary to the predictions of the majority. 

For instance, in California’s published premiums have come in or 

are much lower than plans today and comparable benefits. This is 

all good news and stands in contrast to claims that we have been 

hearing from the other side for 3 years. 

And this also stands in stark contrast to the Republican health 

care agenda. More than 3 years ago House committees, including 

this one, were to report alternative health care reform proposals. 

We have seen none from any committee; all we have seen is repeal. 

And in those 3 years we have produced nothing but these 37 attempts at repeal, and there is more to be done to secure Medicare 

in the long term and there is more to be done to ensure the Affordable Care Act is fully implemented, but these reforms should be allowed to work because the alternative is unacceptable. Repeal is 

unacceptable because it will take away the important benefits already in the law. 

6 

Repeal means working families going bankrupt because of an expensive illness like cancer. Repeal means sick children will be denied coverage. Repeal means millions of young adults losing access 

to their parents’ coverage. And repeal means that all of the other 

patient’s rights set to go into law in a few months will never happen, like completely ending the use of preexisting conditions to 

deny care or pricing Americans out of coverage, like ensuring that 

all Americans have access to quality and affordable health insurance that is not dependent on whether or not your employer offers 

it or not or whether or not you become unemployed. 

Mr. Chairman, the Affordable Care Act is already making a difference. I applaud Secretary Sebelius for the monumental efforts 

that she has made to implement this law in the face of endless obstruction from this House. 

America tried to enact meaningful health care reform for nearly 

a century. We have debated it. Republican Presidents and Democratic Presidents have offered proposals for national health care. 

But it couldn’t have happened until President Obama and the 

Democratic Congress finally made it happen. 

Now is not the time to reverse course and go back to the days 

when insurance companies were in charge. Our nation’s businesses, 

families, and governments can’t afford it. 

Once again, thank you, Secretary Sebelius, for making yourself 

available to the committee and I look forward to your testimony. 

[The statement of Mr. Miller follows:] 

Prepared Statement of Hon. George Miller, Senior Democratic Member, 

Committee on Education and the Workforce 

Good morning Mr. Chairman. I join you in welcoming Secretary Sebelius back to 

the committee. 

From educating our youngest children in Head Start to ensuring seniors’ access 

to health care through Medicare, the Department of Health and Human Services 

administers programs that make our nation stronger and healthier. 

The department is handling a number of important policy priorities and proposals. 

I would like to focus my comments on just two of these efforts. 

First, I believe that President Obama’s child care and early education proposals 

recognize the overwhelming evidence that investments in early education more than 

pay off down the road. 

We know that providing greater access to high-quality pre-school, child care, and 

voluntary home visitation with mothers with newborns are proven ways to close 

achievement gaps and strengthen school readiness. 

These programs and proposals have received bipartisan support in the past. And 

they should have bipartisan support today and in the future. 

In the meantime, we should also be working to stop the automatic cuts to the 

Head Start program. They are having a devastating impact on tens of thousands 

of children and their families. 

Despite this, this Republican majority refuses to restore these cuts. They have already voted to double-down on the sequester with even more cuts in the Republican 

budget. 

But when there were threats of waits for members of Congress at airports, we 

broke a land-speed record and passed legislation to stop it. However, when it comes 

to 70,000 kids’ future, the urgency restore these cuts haven’t received a committee 

hearing, let alone a vote. 

These kids can’t afford to lose access to Head Start. I hope we can get past this 

fiscal cliff politics and restore funding to this and other very important programs. 

Likewise, playing politics with the Affordable Care Act has become something of 

an Olympic sport for the majority. The majority has tried in one way or another 

to repeal the ACA 37 times. 

This is outrageous, especially at a time when the Affordable Care Act is coming 

into full effect. 

7 

Already, more than 6 million young adults have been allowed to stay on their parents’ health plan. 54 million Americans with private health insurance have been 

able to get preventive health screenings with no co-payment. 6.3 million seniors 

have saved more than $6 billion on the cost of their prescription drugs. Nearly 13 

million Americans have received more than a billion dollars in rebates or lower premiums from insurance companies that spent more on overhead rather than health 

care. The federal government is recovering billions more by stopping Medicare 

fraud. 

Growth in health care costs have slowed dramatically since the Affordable Care 

Act became law. 

So much so, that the CBO says that we are already realizing billions in savings 

in the Medicare and Medicaid programs with more expected to come. 

And, beginning in October, Americans without access to affordable insurance will 

be able to shop for a health plan in a transparent marketplace for the first time. 

There has been good news on that front from a number of states, including California, which has been one of the most pro-active states implementing reform. And 

it’s going to pay off for our citizens. 

In the states that have published the 2014 health insurance premiums, insurance 

companies are competing and offering affordable premiums—contrary to the predictions of the majority. For instance, California’s published premiums have come 

in at or much lower than plans today with comparable benefits. 

This is all good news and stands in contrast to the claims we’ve been hearing from 

the other side for three years. And this also stands in stark contrast to the Republican health care agenda. 

More than three years ago, House committees—including this one—were to report 

alternative health care reform proposals. But three years later, we have produced 

nothing but 37 attempts to repeal the ACA and efforts to end the Medicare guarantee. 

There is more to be done to secure Medicare for the long-term, and more to do 

to ensure that the Affordable Care Act is fully implemented. No piece of legislation 

is perfect. There will be bumps in the road. But these reforms should be allowed 

to work because the alternative is unacceptable. 

Repeal is unacceptable because it will take away these important benefits already 

in law. 

Repeal means working families going bankrupt because of an expensive illness 

like cancer. 

Repeal means sick children can be denied coverage. 

Repeal means millions of young adults losing access to their parents’ coverage. 

And repeal means that all of the other patient rights set to go into law in a few 

months will never happen. 

Like completely ending the use of preexisting conditions to deny care or pricing 

Americans out of coverage. Like ensuring all Americans have access to quality and 

affordable health insurance that is not dependent on whether your employer offers 

it or not. 

Mr. Chairman, the Affordable Care Act is already making a difference. I applaud 

Secretary Sebelius’ monumental task to implement this law in the face of endless 

obstruction from this House. 

America tried to enact meaningful health reform for nearly a century but we 

couldn’t make it happen until President Obama and a Democratic Congress finally 

made it happen. 

Now is not the time to reverse course and go back to the days where insurance 

companies were in charge. Our nation’s businesses, families, and our government 

can’t afford it. 

Once again, thank you, Secretary Sebelius, for making yourself available to the 

committee. 

I look forward to your testimony. 

Chairman KLINE. Thank the gentleman. 

Pursuant to committee rule 7(c), all committee members will be 

permitted to submit written statements to be included in the permanent hearing record. Without objection, the hearing record will 

remain open for 14 days to allow statements, questions for the 

record, and other extraneous material referenced during the hearing to be submitted in the official hearing record. 

8 

Again, Madam Secretary, welcome back to the committee. It is 

my pleasure to introduce our witness, but everybody here knows 

who you are and knows your background and we are eager to hear 

your testimony. 

So, Madam Secretary, floor is yours. 

STATEMENT OF HON. KATHLEEN SEBELIUS, SECRETARY, 

U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES 

Secretary SEBELIUS. Sorry. Chairman Kline, Ranking Member 

Miller, members of the committee, thank you for the opportunity 

to discuss the President’s 2014 budget for the Department of 

Health and Human Services. 

This budget supports the overall goals of the President’s budget 

by strengthening our economy and promoting middle class growth. 

It ensures that the American people will continue to benefit from 

the Affordable Care Act; it strengthens education and services for 

our children during their critical early years to help ensure they 

can live healthy lives and succeed in a 21st century economy; provides much-needed support for mental health services and takes 

steps to address the ongoing tragedy of gun violence; and it helps 

reduce the deficit in a balanced, sustainable way. 

I look forward to answering the committee members’ questions 

about the budget, but first I would like to briefly cover a few of the 

highlights. 

The Affordable Care Act is already benefiting millions of Americans and our budget makes sure we can continue to implement the 

law. By supporting the creation of new health insurance marketplaces, the budget will ensure that starting next January Americans in every state will be able to get quality health insurance at 

an affordable price. 

Our budget also supports the President’s call to provide every 

child in America with access to high-quality early learning services. 

It proposes additional investments in new Early Head Start child 

care partnerships. And it provides more funding for child care to 

complement our recent proposed rules to strengthen child care 

health and safety standards. 

Together, these investments will create long-lasting positive outcomes for families and provide huge returns for the children who 

benefit from these programs and for society at large. 

Our budget also addresses another issue that has been on all of 

our minds recently: mental health services and the ongoing epidemic of gun violence. We know that the vast majority of Americans who struggle with mental illness are not violent. Recent tragedies have reminded us of the staggering toll that untreated mental 

illness can take on our society, and that is why this budget proposes a major new investment, to help ensure that students and 

young adults get the mental health care they need, including training 5,000 new mental health professionals to join our behavioral 

health workforce. 

Even as our budget invests for the future, it also helps reduce 

the long-term deficit by making sure programs like Medicare are 

put on a more stable fiscal trajectory. Medicare spending per beneficiary grew at just four-tenths of 1 percent in 2012 thanks in part 

to the $800 billion in savings already in the Affordable Care Act. 

9 

And the President’s 2014 budget would achieve even more savings. 

For example, the budget will allow low-income Medicare beneficiaries to get their prescription drugs at lower Medicaid rates, resulting in savings of more than $120 billion over the next 10 years. In total, this budget would generate an additional $371 billion in 

Medicare savings over the next decade on top of the savings already in the Affordable Care Act. 

To that same end, our budget also reflects our commitment to aggressively reducing waste across the department. We are proposing 

an increase in mandatory funding for the Health Care Fraud and 

Abuse Control program, an initiative that saved taxpayers nearly 

$8 for every dollar spent on it last year. And we are investing in 

additional efforts to reduce improper payments in Medicare, Medicaid, and CHIP, and to strengthen our office of inspector general. 

Now, this all adds up to a budget guided by this administration’s 

North Star of a thriving middle class. It will promote job growth 

and keep our economy strong in the years to come while also helping to reduce the long-term deficit. 

Now, I am sure many of you have questions and I am happy to 

take them now. 

Thank you again, Mr. Chairman, for inviting me today. 

[The statement of Secretary Sebelius follows:] 

Prepared Statement of Hon. Kathleen Sebelius, Secretary, 

U.S. Department of Health and Human Services 

Chairman Kline, Ranking Member Miller, and Members of the Committee, thank 

you for the invitation to discuss the President’s FY 2014 Budget for the Department 

of Health and Human Services (HHS). 

The Budget for HHS provides critical investments in health care, disease prevention, social services, and scientific research in order to create healthier and safer 

families, stronger communities, and a thriving America. 

The President’s fiscal year (FY) 2014 Budget for HHS includes investments needed to support the health and well being of the nation, and legislative proposals that 

would save an estimated $361.1 billion over 10 years. The Budget totals $967.3 billion in outlays and proposes $80.1 billion in discretionary budget authority. With 

this funding HHS will continue to improve health care and expand coverage, create 

opportunity and give kids the chance to succeed, protect vulnerable populations, promote science and innovation, protect the nation’s public health and national security, and focus on responsible stewardship of taxpayer dollars. 

Improving Health Care and Expanding Coverage 

Expanding Health Insurance Coverage. Implementation of the Exchanges, also referred to as Marketplaces, will expand access to affordable insurance coverage for 

25 million Americans. Marketplaces make purchasing private health insurance easier by providing eligible consumers and small businesses with one-stop-shopping 

where they can compare across plans. New premium tax credits and rules ensuring 

fair premium rates improve affordability of private coverage. Marketplaces will be 

operational in 2014; open enrollment begins October 1, 2013 for the coverage year 

beginning January 1, 2014. The Budget supports operations in the Federal Marketplaces, as well as oversight and assistance to State-based and Partnership Marketplaces. 

Beginning in January 2014, Medicaid coverage rules will be simplified and 

aligned with rules for determining eligibility for tax credits for private insurance in 

the Marketplaces, and millions of low-income people will gain coverage. The Centers 

for Medicare & Medicaid Services (CMS) is committed to working with states and 

other partners to advance state efforts that promote health, improve the quality of 

care, and lower health care costs. 

Also beginning in 2014, consumers will benefit from a number of new protections 

in the private health insurance market. Most health insurers will no longer be allowed to charge more or deny coverage to people because of pre-existing conditions. 

These new protections will also prohibit most health insurers from putting annual 

dollar limits on benefits and from varying premiums based on gender or any factor 

10 

other than age, tobacco use, family size, or geography. In addition, new plans in the 

individual and small group market will be required to cover a comprehensive package of items and services known as Essential Health Benefits, which must include 

items and services within ten benefit categories. Finally, most individuals choosing 

to participate in clinical trials will not face limits in health insurance coverage. This 

protection applies to all clinical trials that treat cancer or other life-threatening diseases. 

Expanding Access to Care through Health Centers. The FY 2014 Budget includes 

$3.8 billion for the Health Centers program, including $2.2 billion in mandatory 

funding provided through the Affordable Care Act Community Health Center Fund. 

In FY 2014, 23 million patients will receive health care through more than 8,900 

sites in medically underserved communities throughout the nation. The Budget 

funds 40 new health center sites for the provision of preventive health care services, 

expanding outreach and care to approximately 1.5 million additional patients. 

Increasing Access to Mental Health Services 

The FY 2014 Budget includes over $1 billion for mental health programs at the 

Substance Abuse and Mental Health Services Administration (SAMSHA), including 

the $460 million for the Community Mental Health Services Block Grant. This block 

grant provides States flexible funding to maintain community based mental health 

services for children and adults with serious mental illnesses, including rehabilitation, supported housing, and employment opportunities. The Budget also proposes 

funding within the block grant to encourage States to build provider capacity to bill 

public and private insurance. This will support States in an effective transition in 

the first year of the Affordable Care Act, which will include expanded coverage for 

mental health and substance abuse treatment services. 

Expand Prevention and Treatment for Youth and Families. While the vast majority of Americans with a mental illness are not violent, and are in fact more likely 

to be the victims of violence, recent tragedies have brought to light a hidden crisis 

in America’s mental health system. The Budget addresses these issues by investing 

$130 million to help teachers and other adults recognize signs of mental illness in 

students and refer them to help if needed, support innovative state-based programs 

to improve mental health outcomes for young people ages 16- 25, and train 5,000 

more mental health professionals with a focus on serving students and young 

adults. 

Helping Families and Children Succeed 

In his State of the Union Address, President Obama proposed a series of new investments to create a continuum of high-quality early learning services for children 

beginning at birth through age five. As part of this initiative, HHS and the Department of Education are working together to make high-quality preschool available to 

four-year olds from low- and moderate-income families through a partnership with 

states, expand the availability of high-quality care for infants and toddlers, and increase highly-effective, voluntary home visiting programs to provide health, social, 

and education supports to low-income families. Specifically, the FY 2014 HHS Budget includes: 

Early Head Start—Child Care Partnerships. The Budget proposes $1.4 billion in 

FY 2014 for new Early Head Start—Child Care Partnerships that will expand the 

availability of early learning programs that meet the highest standards of quality 

for infants and toddlers, serving children from birth through age three. In addition 

to the new Partnerships, the Budget provides $222 million above FY 2012 to 

strengthen services for children currently enrolled in the program, avoid further enrollment reductions, and support the Head Start Designation Renewal System. Together, these investments total $9.6 billion, an increase of $1.7 billion over FY 2012. 

Head Start Reform. The Budget proposes a $197 million cost of living adjustment 

in FY 2014 which will strengthen existing services for children currently enrolled 

in Head Start and avoid further reductions in enrollment. Additionally, the Budget 

proposes $25 million in FY 2014 to minimize potential service disruptions by providing new grantees funding for start-up costs associated with transitioning from an 

incumbent grantee as a result of recompetition in the Designation Renewal System. 

Under the Designation Renewal System, Head Start grantees who do not meet quality thresholds established by the department have to compete for their continued 

funding with other potential providers from the community. Requiring grantees who 

are not meeting quality benchmarks to compete for funding will improve the quality 

of the program. 

Improving the Safety and Quality of Child Care. The Budget provides $500 million above FY 2012 in mandatory funds to serve 1.4 million children, approximately 

100,000 more than would otherwise be served. In addition to this funding, the reVerDate Nov 24 2008 16:36 Apr 23, 2014 Jkt 000000 PO 00000 Frm 00014 Fmt 6633 Sfmt 6621 G:\DOCS\113TH\FC\113-20\81276.TXT DICK
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quest includes $200 million above FY 2012 in discretionary funds to help states 

raise the bar on quality by strengthening health and safety measures in child care 

settings, supporting professional development for providers, and promoting transparency and consumer education to help parents make informed child care choices. 

The additional funding to improve child care quality also will support changes 

that may come as a result of a new regulation that the department recently issued 

for public comment that will better ensure children’s health and safety in child care 

and promote school readiness. Under the proposed rule, states, territories and tribes 

would be required to strengthen their standards to better promote the health, safety 

and school readiness of children in federally funded child care. While states can use 

their existing funds to implement potential changes in these areas, these new resources dedicated to quality improvement would help states that have further to go 

in improving their programs. 

We also will continue to work with Congress to reauthorize the Child Care and 

Development Block Grant, which was last reauthorized in 1996. 

Child Support and Fatherhood Initiative. Additionally, the Budget includes a set 

of proposals to encourage states to pay child support collections to families rather 

than retaining those payments. This effort includes a proposal to encourage states 

to provide all current monthly child support collections to Temporary Assistance for 

Needy Families recipients. Recognizing that healthy families need more than just 

financial support alone, the proposal requires states to include parenting time provisions in initial child support orders, to increase resources to support, and facilitate 

non-custodial parents’ access to and visitation with their children. The Budget also 

includes new enforcement mechanisms that will enhance child support collections. 

Home Visiting. The Budget extends and expands this voluntary evidence-based 

program that has shown to be critical in improving maternal and child health outcomes in the early years, leaving long-lasting, positive impacts on parenting skills; 

children’s cognitive, language, and social-emotional development; and school readiness. The Budget proposes a long-term $15 billion investment beginning in FY 2015. 

Protecting Vulnerable Populations 

Addressing the Unique Needs of Communities. The Administration for Community Living (ACL) was formed in April 2012 as a single agency designed to help 

more people with disabilities and older adults have the option to live in their homes 

and participate fully in their communities. The FY 2014 Budget reflects the creation 

of ACL by bringing together the resources for the Administration on Aging, the Office on Disability, and the Administration on Intellectual and Developmental Disabilities, into a consolidated request. This newly organized agency works across 

HHS to harmonize efforts to promote community living, which can both save federal 

funds and allow people who choose to live with dignity in the communities they call 

home. ACL’s Older Americans Act programs, as an example, last year served nearly 

11 million seniors and their caregivers through home and community-based services. These critical supports complement medical and health care systems, help to 

prevent hospital readmissions, provide transportation to doctor appointments, and 

support some of life’s most basic functions, such as assistance to elders in preparing 

and delivering meals, or helping them with bathing. It is important that we continue to support alternatives to institutional care that are person-centered, consumer-driven and support individuals in their homes through the best evidencebased practices. 

Promoting Science and Innovation 

Advancing Scientific Knowledge. The FY 2014 Budget includes $31.3 billion for 

the National Institutes of Health (NIH), an increase of $471 million over the FY 

2012 level, reflecting the Administration’s priority to invest in innovative biomedical 

and behavioral research that spurs economic growth while advancing medical 

science. In FY 2014, NIH will focus on investing in today’s basic research for tomorrow’s breakthroughs, advancing translational sciences, and recruiting and retaining 

diverse scientific talent and creativity. Investment in NIH also helps drive the biotechnology sector and assure the nation’s place as a leader in science and technology. 

Alzheimer’s Disease Initiatives. The Department continues to implement the National Plan to Address Alzheimer’s Disease, as required by the National Alzheimer’s 

Project Act. In FY 2014, the Budget includes a $100 million initiative targeted to 

expanding research, education, and outreach on Alzheimer’s disease, and to improving patient, family, and caregiver support. 

Included in this initiative is $80 million within the NIH budget to be devoted to 

speeding drug development and testing new therapies. Also, the request for the Prevention and Public Health Fund (Prevention Fund) includes $20 million for the AlzVerDate Nov 24 2008 16:36 Apr 23, 2014 Jkt 000000 PO 00000 Frm 00015 Fmt 6633 Sfmt 6621 G:\DOCS\113TH\FC\113-20\81276.TXT DICK
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heimer’s Disease Initiative. Of this, ACL will use $15 million to strengthen state 

and local dementia intervention capabilities and for outreach to inform those who 

care for individuals with Alzheimer’s disease about resources available to help them. 

HRSA will use the other $5 million to expand efforts to provide training to 

healthcare providers on Alzheimer’s disease and related dementias. 

Focusing on Responsible Stewardship of Taxpayer Dollars 

Contributing to deficit reduction while maintaining promises to all Americans. 

The HHS Budget makes the investments the nation needs right now, while reducing 

the deficit in the long term and ensuring the programs that millions of Americans 

rely on will be there for generations to come. While it maintains ongoing investments in areas most central to advancing the HHS mission to the Budget reduces 

support for lower priority areas, reduces duplication, and increases administrative 

efficiencies. Overall, the FY 2014 Budget includes nearly $2.3 billion in discretionary terminations and budget reductions. 

The Affordable Care Act has already helped to slow rising costs through innovations that tackle the underlying health care costs that have been driving Medicare 

and Medicaid spending. In fiscal year 2012, per beneficiary Medicare spending grew 

by only 0.4 percent, and total per beneficiary Medicaid spending actually decreased 

by 1.9 percent. For the first time in a decade, overall health care costs grew more 

slowly than the economy. We are driving down costs while improving quality for patients by building a smarter system—for example, after decades stuck at 19 percent, 

avoidable hospital readmissions fell to 17.8 percent in Medicare last year with the 

help of payment reforms and assistance to hospitals. The Budget invests in programs and policies that enable HHS to build on this work. 

Combating fraud, waste, and abuse in health care. The FY 2014 Budget makes 

cutting fraud, waste, and abuse a top Administration priority. In addition to the 

base discretionary Health Care Fraud and Abuse Control (HCFAC) funding in FY 

2013 and FY 2014, the Budget seeks new mandatory funding to support these efforts. Starting in FY 2015, the Budget proposes that all new HCFAC investments 

be mandatory spending, consistent with levels in the Budget Control Act. This investment supports initiatives like the Fraud Prevention System and screening for 

Medicare providers and suppliers to reduce improper payments in Medicare, Medicaid and CHIP; and HHS-Department of Justice Health Care Fraud Prevention and 

Enforcement Action Team initiatives, including the Medicare Strike Force teams 

and the Fraud Prevention Partnership between the federal government, private insurers, and other key stakeholders. 

From 1997 to 2012, HCFAC programs have returned more than $23 billion to the 

Medicare Trust Funds, and the current three-year return-on-investment of 7.9 to 1 

is the highest in the history of the HCFAC program. The Budget’s 10-year HCFAC 

investment yields a conservative estimate of $6.7 billion in Medicare and Medicaid 

savings. 

The Budget includes $389 million in discretionary and mandatory funding for the 

Office of Inspector General (OIG), an increase of $101 million above the FY 2012 

level. This increase will enable OIG to expand CMS Program Integrity efforts for 

the Health Care Fraud Prevention and Enforcement Action Team and improper payments, and also enhance investigative efforts focused on civil fraud, oversight of 

grants, and the operation of Affordable Care Act programs. 

The Budget also includes $82 million for the Office of Medicare Hearings and Appeals (OMHA), an increase of $10 million from FY 2012, to address OMHA’s adjudicatory capacity and staffing levels and maintain quality and accuracy of its decisions. The increase allows OMHA to establish a new field office in the Central time 

zone supported by additional Administrative Law Judge teams and attorneys, and 

operational staff. 

Thank you for the opportunity to testify. I will be happy to answer any questions 

you may have. 

Chairman KLINE. Thank you, Madam Secretary. 

Madam Secretary, it gets very frustrating, of course, for us here 

as we look for information from the departments—all the departments—of the administration. We asked in the Child Abuse Prevention and Treatment Act—CAPTA—Reauthorization Act of 2010 

for your department to conduct three studies on child abuse prevention and treatment activities. 

13 

One was examining whether state and local laws and regulations 

on immunity from prosecution facilitate or deter individuals from 

cooperating, consulting, or assisting in reporting known instances 

of child abuse and neglect. The report was due December 2011. 

Another one was examining efforts to improve coordination of 

child abuse and neglect organizations. The report was due December 2011. 

Third was examining the effectiveness of reports of programs receiving state grants for child abuse and neglect prevention and 

treatment. That report was due December 2012. 

In July of 2012 Mr. Miller and I sent you a letter asking for an 

update on the status of the reports. At the time just two of the 

three were overdue. In August your department responded, stating 

that it planned to complete them by the end of December 2012, and 

of course, that hasn’t happened. 

So some frustration is coming through here, but we put these 

things in law. We need information, we have responsibilities here 

to legislate and provide oversight, and we don’t get the answers. 

I appreciate there was an apology for not complying. When can 

we expect to get these reports? 

Secretary SEBELIUS. Mr. Chairman, you will have the three reports by the end of the month. 

Chairman KLINE. Congressional record. We are writing it down. 

Okay. 

Secretary SEBELIUS. June 2013 you will have all three reports. 

Chairman KLINE. I got it. And I certainly hope you are not hearing from me on July 1st about that. 

Secretary SEBELIUS. Me too. 

Chairman KLINE. All right. 

Head Start: The first round of the recompetition of Head Start 

grantees is almost complete. After almost a year of delays the potential grant winners announced this spring will be finalized this 

summer. I have a couple of questions about that. 

The first round of recompetition consists of the lowest-performing 

grantees. Is that right? 

Secretary SEBELIUS. That is correct. 

Chairman KLINE. How many of these grantees will receive a new 

grant? 

Secretary SEBELIUS. I can’t tell you the exact number, Mr. Chairman, off the top of my head. I know some of the recompeted grants 

were given back to the original grantees; in some cases they were 

the only grantees applying. 

Chairman KLINE. Well, we have seen some reports that an overwhelming majority of the 125 grantees that compete in the first 

round will continue to receive federal funding. If these grantees are 

the lowest-performing grantees, how does that fit in with the rest 

of the program? If an overwhelming majority of the lowest-performing grantees are going forward I am a little—you can see 

where I am going—— 

Secretary SEBELIUS. Sure. 

Chairman KLINE. I am a little concerned about how that would 

play out. 

Secretary SEBELIUS. Well, Mr. Chairman, first of all, as you 

know, the recompetition is a first of its kind effort to make sure 

14 

that grants are just not automatically rolled over, which had been 

the case in the past. I can tell you that in all cases the lowest-performing grantees have a series of steps that they need to continue 

to take as well as additional oversight visits to make sure that the 

quality standards are on an improvement plan. 

We did have situations where in some cases they were the only 

re-applicant, and the choice of having the children put out of a 

Head Start program or working with the existing grantee to improve standards seemed to be a pretty easy question to answer. 

I share your concerns that we need to constantly look at the 

quality and improvement. We do have the authority and we do 

take that authority to pull grant applications in the case where 

there are health or safety issues at risk. We will not put a child 

in a program that is putting that child at risk. 

In most of these cases it could be a lack of oversight of financial 

management; it could be that they haven’t raised the standards in 

a quality way. And we are putting improvement plans and extra 

visits in place for the recompeting grantees that got the awards 

back. 

Chairman KLINE. Well, I am certainly pleased that we are going 

to pay attention to health and safety, but that is not the only reason that Head Start exists so I hope that you are going to put in 

place or have in place a system to make sure that we are not just 

throwing money down the drain, that these kids are getting the 

head start that they are supposed to get. 

A reminder to my colleagues: While the secretary has unlimited 

time—and she very graciously limited that time in her comments— 

we don’t. My time is expired. I yield back. 

Mr. Miller? 

Mr. MILLER. Thank you, Mr. Chairman. 

And welcome, Madam Secretary. 

I would like to pick up a little bit where the chairman left off. 

As one of the major proponents of the recompetition of Head 

Start—and I have got all the arrows in my back to prove that I was 

there at the beginning—I think this is a very important thing for 

us to do. And I recognize that in some areas there was nobody to 

compete, and my understanding is that all of the people who will 

be awarded Head Start will be on a 5-year timetable, not this idea 

that you have this program in perpetuity and—— 

Secretary SEBELIUS. Correct. 

Mr. MILLER [continuing]. There are conditions of monitoring 

going forward. 

I will have to say that in my own area—my district—one of our 

major providers was greatly diminished and a substitute provider 

was brought in because of the issues that were raised, and I think 

it was the right thing to do. I don’t think—and I think that Head 

Start got a little of itself—that somehow it was the only premier 

program and they were entitled to just continue to run forever, and 

I think this competition will turn out to be a beneficial thing for 

the kids and the program and for the taxpayers. 

I would like to go back a little bit to this argument that somehow 

Head Start doesn’t make any difference. What we have known all 

along in the area of early childhood education and child care is that 

good child care, good early childhood education is good for the chilVerDate Nov 24 2008 16:36 Apr 23, 2014 Jkt 000000 PO 00000 Frm 00018 Fmt 6633 Sfmt 6602 G:\DOCS\113TH\FC\113-20\81276.TXT DICK
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dren; bad child care, bad early childhood education is not good for 

you at all. 

And then there is the question of when you leave a high-quality 

program that you may have in many areas where you have poor 

schools and you take that child and you put them into a poor 

school, yes, you start to lose some of the benefits of child care. We 

know that in even transferring between schools; we know that in 

the summer session. 

One of the things we worry about is kids in poor schools, lowincome schools, lose much of what they acquired during the year 

during the summer session. There is a problem of support systems. 

But the idea that somehow all of a sudden that this doesn’t make 

any difference when it flies in the face of the evidence, and we are 

not just talking about the Ypsilanti study; we are talking about recent evidence that suggests, in fact, it makes a difference. 

The other thing I always find interesting is, you know, you kind 

of what to know, what are the rich folks doing. Well, in conversations I have with a lot of people of good wealth and even upper 

middle-income people and middle-income people who struggle with 

this question, but others who don’t struggle as much and can answer it and pay for it, they are looking for the very best early childhood education they can find. 

We see almost a scandal on Wall Street: People are trading inside information to try to get into a preschool program because it 

is considered to be the best in the development. I don’t suggest that 

that is the way they do it, but the fact is they know what this 

means in terms of the acquisition of the skills necessary to succeed 

in school, and studies tell us what it means in terms of the acquisition of skills to survive in the American economy and to thrive and 

to go forward. 

And so this idea that some—it is sort of like there is now kicking 

around the idea that college really isn’t worth it anymore. Oh, yes 

it is. Oh, yes it is. 

And the fact of the matter is, whether it is dealing with unemployment or it is dealing with earnings over lifetime, it is worth it. 

And I just worry that we are building up this sort of rhetoric about 

somehow this really isn’t worth it. 

High-quality programs are clearly worth it and clearly pay a benefit, but you have to sustain them. If you are going to dump them 

into a school where you have ill-prepared teachers and no support 

systems then you are going to have a problem and you are going 

to fritter away your investment. 

This home visitation is strongly supported by district attorneys 

all over the country, by law enforcement all over the country. All 

of these early childhood efforts are strongly supported because of 

what we see in terms of the outcomes. 

But if you are going to cheat on quality, if you are going to cut 

the Title I schools that these children are going into, which we are 

doing under sequestration, don’t look for great results in those 

neighborhoods or those schools. And I just want to put that point 

on the record because I think we are getting way off track here in 

terms of what benefits children. 

If you would like to have a second to respond you are more than 

welcome to, or whatever the yellow light—— 

16 

Secretary SEBELIUS. Well, Mr. Miller, I certainly agree that even 

though there are some indication that in some instances benefits 

of Head Start may fade in first grade or third grade, it is once they 

have left the Head Start. There is absolutely unequivocal evidence 

that Head Start makes a huge difference in school readiness, in 

catching kids up to their peers, in making sure that they are able 

to enter school ready to learn. 

And there is a lot of evidence that over time many of the payoffs 

are actually at 18 and 20 and 25, that early childhood education 

is one of the single most positive indicators of less drug abuse, less 

prison time, higher graduation rates, higher job acquisition—things 

that don’t show up in the third grade but actually follow a child 

through his or her life. And so I think there is a lot of evidence 

that these are enormously important investments, particularly for 

children who don’t have those benefits in their home setting. 

Chairman KLINE. Gentleman’s time has expired. 

Dr. Price? 

Mr. PRICE. Thank you, Mr. Chairman. 

And I want to welcome you, Madam Secretary, to the Education 

and Workforce Committee. As a physician I like to try to focus on 

patients, as you well know. I want to focus on one specific patient. 

Occasionally we have the opportunity to truly affect in a singular 

and specific way somebody’s life and, Madam Secretary, I would 

suggest that you have that opportunity with Sarah Murnaghan. 

Sarah Murnaghan, as you know, is a 10-year-old young lady in 

Pennsylvania who has cystic fibrosis. The physicians and scientists 

have all agreed that if she does not receive a lung transplant within weeks, she will die. Doctors all agree that it is indicated. 

The reason she is unable to receive that right now is because of 

an arbitrary rule that says if you are not 12 years old you aren’t 

eligible to receive an adolescent or an adult lung. 

Madam Secretary, under Section 121.4(d) you have the opportunity. It says, ‘‘Unless the secretary directs otherwise based on 

possible risk to the health of patients or public safety.’’ Madam Secretary, I would urge you this week to allow that lung transplant 

to move forward. 

Secretary SEBELIUS. Well, Dr. Price, I appreciate your input. 

First, as a mother and a grandmother I can’t imagine anything 

more agonizing than what the Murnaghans are going through, and 

I talked to Janet Murnaghan, the mother of Sarah, about this case. 

What I have also done is look very carefully at the history of the 

rules around lung transplant and organ transplant—— 

Mr. PRICE. With all due respect, Madam Secretary, it simply—— 

Secretary SEBELIUS. Dr. Price—— 

Mr. PRICE. I am going to reclaim my time. It simply takes your 

signature. It simply takes your signature. 

A study I know you have ordered and I appreciate that, but a 

study will take over a year. This young lady will be dead. 

I want to move on to a concern that many—— 

Secretary SEBELIUS. Others will—— 

Mr. PRICE. Madam Secretary, I want to move on to a concern 

that many folks across this country have about this administration 

and about the things that are being done outside the norm and certainly some believe outside legal limits. The Washington Post and 

17 

the New York Times reported last month that you were soliciting 

funds from the health industry officials to support the implementation and enrollment in the Affordable Care Act. Is that true? 

Secretary SEBELIUS. No, sir. That is not true. 

Mr. PRICE. So you didn’t communicate—have any discussions 

with folks at the Robert Wood Johnson Foundation or H&R Block 

about donating—— 

Secretary SEBELIUS. You asked me if I solicited funds from anyone in the health industry and I said no, that is not true. 

Mr. PRICE. Did you have any discussions or conversations with 

anyone about providing resources to anybody about enrollment or 

implementation of ACA? 

Secretary SEBELIUS. Sir, I have had conversations with people all 

across this country including insurance companies, pharmaceutical 

companies, and others using the statutory authority that is clearly 

given to the secretary of health in the Public Health Service Act 

and has been used by my predecessors, Republican and Democratic, 

for every health innovation that has gone on. Secretary Thompson 

and Leavitt made public-private partnership outreach efforts to 

make sure Medicare Part D enrollment went well—— 

Mr. PRICE. So you did ask individuals to assist in providing contributions for the implementation and enrollment of the ACA? 

Secretary SEBELIUS. I have made two calls involving funding 

with—— 

Mr. PRICE. To whom? 

Secretary SEBELIUS. To Robert Wood Johnson and H&R Block, 

neither of whom are under the regulatory authority of our office. 

But I would suggest that the Public Health Service Act does not 

limit my authority to entities that are not regulated. I chose to do 

that—— 

Mr. PRICE. What did you request of Robert Wood Johnson Foundation and H&R Block? 

Secretary SEBELIUS. I talked to them both about how important 

this outreach effort was going to be and the fact that always we 

anticipated having public-private partnerships on the ground, as 

has been done in CHIP enrollment and it Medicare Part D enrollment—— 

Mr. PRICE. Did you ask them to provide any resources? 

Secretary SEBELIUS [continuing]. And that they consider—— 

Mr. PRICE. Madam Secretary? 

Secretary SEBELIUS [continuing]. Making contributions to our 

partner in Enroll America, which is a private, not-for-profit, nonpartisan organization incorporated in 2012 under the umbrella 

of—— 

Mr. PRICE. Did you ask them to provide resources—— 

Secretary SEBELIUS [continuing]. Families USA. 

Mr. PRICE. Did you ask them to provide resources for any other 

group at all? 

Secretary SEBELIUS. I did not, because at that point I did not 

know that there were other groups soliciting funds. I talked to 

them specifically about Enroll America. 

Mr. PRICE. Did you have any conversation with employees or representatives or designees of the pharmaceutical industry? 

Secretary SEBELIUS. Pardon me? 

18 

Mr. PRICE. Have any conversations with employees or representatives or designees of the pharmaceutical industry to contribute resources to Enroll America? 

Secretary SEBELIUS. Those are the only two conversations I have 

had about contributing resources to Enroll America. I have certainly promoted the partnership roll that Enroll America will play 

in an operation on the ground, much similar to—I would suggest 

that you look at the ABC—the coalition that was put together for 

Medicare Part D that Secretary Thompson and Secretary Leavitt 

avidly supported and traveled around with and suggested that they 

were very important public-private partners. It is the same kind of 

effort. 

We are also talking to businesses and pharmaceutical companies 

and hospitals and insurers and faith groups about using whatever 

resources they have to help fulfill what I consider to be an incredible opportunity for up to 30 million Americans to have affordable, 

available health—— 

Mr. PRICE. Did you direct any of those other entities to Enroll 

America? 

Chairman KLINE. The gentleman’s time has expired. 

Mr. Andrews? 

Mr. ANDREWS. Secretary Sebelius, I want to talk a little bit more 

about the Medicare Part D enrollment process the Bush administration used. 

In 2003 the Congress passed, the President signed extension of 

drug benefits for seniors under Medicare. It is my understanding 

that your predecessor, Secretary Thompson, actively solicited contributions from groups that would be used to encourage Americans 

to sign up in Medicare Part D. Is that correct? 

Secretary SEBELIUS. That is my understanding, yes. The Access 

to Benefits Coalition was the major on-the-ground partner that 

both Secretary and—— 

Mr. ANDREWS. And the coalition consisted of organizations outside the federal government, private, nonprofit, and otherwise? 

Secretary SEBELIUS. Absolutely. And those partnerships have 

been traditionally part of what public health—we have the— 

through the Centers for Disease Control and Prevention solicit assistance from pharmaceutical companies in—— 

Mr. ANDREWS. So you are doing—— 

Secretary SEBELIUS [continuing]. Global and national health 

issues. We—— 

Mr. ANDREWS. So you and perhaps others under your supervision 

are doing exactly what Secretary Thompson did for Medicare Part 

D, it is my understanding. 

Secretary SEBELIUS. Well, that is correct, sir. And the, I think, 

secretary of health has very specific statutory authority that has 

existed since 1976 in the Public Health Service Act. 

Mr. ANDREWS. I was here in 2003 when that passed and 2004 

and 2005 was implemented. I can’t remember one word from anyone on either side of this committee or any other committee questioning the propriety of that activity. I think your present activity 

is entirely proper and desirable. 

I would hope that you would—the accusation would turn out to 

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source at your disposal to get health care for Americans who need 

it is something you are doing. Matter of fact, if you are not doing 

that I would take you to task. I think you are doing the right thing. 

The tragedy for the Murnaghan family is heartbreaking on every 

level, and I know you wanted to say more about that before you 

were cut off a few minutes ago. If you would like to add to your 

answer on that I would give you this opportunity. 

Secretary SEBELIUS. Well, Congressman, what I was just going 

to say is I can’t imagine anything more difficult. We have far too 

few donors and far too many desperately ill people. That is the national snapshot. That is true in the pediatric arena and it is true 

in the adults arena. 

Unfortunately, there are about 40 very seriously ill Pennsylvanians over the age of 12 also waiting for a lung transplant, and 

three other children in the Philadelphia hospital at the same acuity 

rate as Sarah waiting for a lung transplant. The decisions of the 

OPTN, the transplant committee, which is not bureaucrats, it is 

transplant surgeons and health care providers who design the protocol, are based on their best medical judgment of the most appropriate way to decide allocation in an impossibly difficult situation. 

So I have asked them to review the process, yes. That is true. 

I know that that may take some time because it requires public 

comment and it requires review. I would suggest that the rules 

that are in place and reviewed on a regular basis are there because 

the worst of all worlds in my mind is to have some individual pick 

and choose who lives and who dies. I think you want a process 

where it is guided by medical science and medical experts. 

Mr. PRICE. Will the gentleman yield? 

Mr. ANDREWS. I will not. I will not. You did not give the witness 

a chance to answer; I will not yield to you. 

Mr. PRICE. Thank you, sir. 

Mr. ANDREWS. Well, I think that you live by the rules that you 

just created here. 

When the Affordable Health Care was enacted we have heard 

and we have heard since then there would be huge, skyrocketing 

health insurance premiums that would affect millions and millions 

of people. Last week California unveiled the initial estimates of 

what premiums would be under the new health insurance law. 

What did the result of California show us? 

Secretary SEBELIUS. Well, the California preliminary results, and 

that is before the rates—the final rates—are negotiated, is not only 

will they have a very competitive market throughout the state 

where people will have lots of choices, but they are looking at the 

possibility of fairly significant rate decreases—up to 25 percent in 

some instances—and I think the highest rate increase that was 

originally filed was in the 4 to 5 percent level. So you are looking 

at both a competitive market and some preliminary rate reviews 

that look very positive. 

Mr. ANDREWS. In Maryland, when they released the list of insurers bidding for the right to insure exchange enrollees, did we have 

more or fewer bidders than expected? 

Secretary SEBELIUS. Actually, we have more bidders, which again 

is good news. I am a believer that markets work, but markets need 

to be transparent and there needs to be some competition. And 

20 

what we are seeing is that opening up these new markets for, 

again, individuals who were shopping in the individual market 

where they often had very few choices and small business owners 

are producing much more robust competition. New insurers are entering the market in various states across the country. 

Mr. ANDREWS. Thank you. 

I appreciate the time. 

Chairman KLINE. Gentleman’s time has expired. 

Mr. Gowdy? 

Mr. GOWDY. Thank you, Mr. Chairman. 

Good morning, Madam Secretary. I want to pick back up where 

Dr. Price was. 

You testified—conceded that you made at least two solicitations 

of donations to Enroll America. Did I hear that correctly? 

Secretary SEBELIUS. Yes, sir. At their request I made two phone 

calls, yes. 

Mr. GOWDY. All right. And was there a specific dollar amount 

that you solicited? 

Secretary SEBELIUS. No. 

Mr. GOWDY. Did you discuss these solicitations with anyone that 

works for Enroll America before or after you made the phone calls? 

Secretary SEBELIUS. Yes. 

Mr. GOWDY. Who? 

Secretary SEBELIUS. I had a discussion with Anne Filipic, who is 

the director-President of Enroll America. 

Mr. GOWDY. Was there a specific dollar amount that you solicited? 

Secretary SEBELIUS. You just asked me that question and I said 

no. 

Mr. GOWDY. Okay. I just wanted to make sure the answer was 

the same. 

Was Enroll America the only entity you solicited funds for? 

Secretary SEBELIUS. Yes, sir. 

Mr. GOWDY. To the best of your knowledge, has anyone on your 

staff or anyone employed by HHS solicited funds on behalf of Enroll America or any other entity? 

Secretary SEBELIUS. I really can’t answer that question. I don’t 

know that. 

Again, there were a very small handful of calls that I made at 

the request and two involved actual fundraising solicitations—exactly what my predecessors have done, exactly the kind of publicprivate partnership that we have always anticipated would happen, 

driving funds not to HHS—I am not raising money—— 

Mr. GOWDY. Who were the other—— 

Secretary SEBELIUS [continuing]. For HHS; I am raising it for enrollment and outreach activities so Americans can connect with the 

benefits—— 

Mr. GOWDY. Who were the other phone calls to, Madam Secretary? You said you made—— 

Secretary SEBELIUS. Pardon me? 

Mr. GOWDY. Who were the other phone calls to? You said you 

made other phone calls. 

Secretary SEBELIUS. I made a total of 5 phone calls—— 

Mr. GOWDY. Okay. 

21 

Secretary SEBELIUS [continuing]. For Enroll America, and three 

of them were to discuss the organization and suggest that the entities look at the organization—to Johnson & Johnson, to Ascension 

health, and to Kaiser. 

Mr. GOWDY. Are any of those groups regulated by your department? 

Secretary SEBELIUS. Yes. All of them are. 

Mr. GOWDY. So if health care officials say they felt pressured to 

make donations to Enroll America your response would be what, 

that they are just too easily pressured or that they misunderstood 

the conversation? 

Secretary SEBELIUS. Well, I can’t answer what they felt. I can tell 

you that I felt that the conversations that I had, as I have said in 

the past, I made fundraising solicitations to two groups who are 

not regulated; I did not discuss funding with the other three entities. I did discuss Enroll America. 

And I would tell you that the statutory authority, Section 1704 

in the Public Health Service Act, would not make that distinction. 

I could solicit—legally solicit funds from anybody regulated by our 

office. I chose not to do that, but promoting a public-private partnership, you bet. 

Mr. GOWDY. What specific code section are you relying on? 

Secretary SEBELIUS. Section 1704 of the Public Health Service 

Act, which has been in place since 1976. 

Mr. GOWDY. Is there a legal opinion that you relied upon? Is 

there someone that—— 

Secretary SEBELIUS. Yes. My general counsel’s opinion and the 

precedent of former secretaries. I mean, this is not something we 

are inventing—— 

Mr. GOWDY. Well, sometimes precedent is accurate and sometimes it is not. Would you be willing to make that legal opinion 

available to the committee? 

Secretary SEBELIUS. Well, I will be able to, yes, make whatever 

memos are available. 

Mr. GOWDY. You would make that available to us? 

Secretary SEBELIUS. Yes, sir. 

Mr. GOWDY. Okay. 

Secretary SEBELIUS. And I will also give you the precedent that 

Secretary Thompson followed, that Secretary Leavitt followed, that 

was followed during the Clinton administration for the CHIP program. I am happy to make all of that history available to you. 

Mr. GOWDY. So if there are published reports that you solicited 

funds from health care companies those would be inaccurate? 

Secretary SEBELIUS. That is correct. 

Mr. GOWDY. And if there are published reports that you solicited 

funds from pharmaceutical companies those would be inaccurate? 

Secretary SEBELIUS. That is correct. 

Mr. GOWDY. You solicited no funds from any entity that is regulated by HHS? 

Secretary SEBELIUS. That is correct. 

Mr. GOWDY. Whose idea was it to solicit the funds? 

Secretary SEBELIUS. I would say it was a joint idea. 

Mr. GOWDY. Joint among whom? 

22 

Secretary SEBELIUS. Well, in the discussions that I had with colleagues and entities interested in actually fully implementing the 

health care act, it was always recognized from the day the President signed the bill that there would never be enough government 

funding and that there would not be enough opportunity if this is 

only a government-run program, so we began 3 years ago—— 

Mr. GOWDY. I am looking for—— 

Secretary SEBELIUS [continuing]. To reach out for partners—business partners, health care providers—— 

Mr. GOWDY. I am looking for who the ‘‘we’’—— 

Secretary SEBELIUS [continuing]. Hospitals, health insurers—— 

Mr. GOWDY. I am looking for a name. 

Secretary SEBELIUS [continuing]. Advocacy groups, disease 

groups, and—— 

Mr. GOWDY. Can I get a name? I am looking for a name. When 

you said ‘‘we,’’ who is ‘‘we’’? Did you ever discuss it with anyone at 

the White House? 

Secretary SEBELIUS. I have had discussions with people—about 

Enroll America, did I discuss with the White House—— 

Mr. GOWDY. The solicitation of funds to Enroll America? 

Secretary SEBELIUS. No, sir. 

Mr. GOWDY. Never discussed it with anyone at the White House? 

Secretary SEBELIUS. No, sir. 

Mr. GOWDY. Mr. Chairman, I am going to yield the remainder of 

my time to Dr. Price in case he has a follow-up question with respect to—— 

Chairman KLINE. Unfortunately, the gentleman’s time has expired. 

Mr. Holt? 

Mr. HOLT. Thank you, Madam Secretary, for coming. 

I would like to turn to the Older Americans Act. With 10,000 

Americans reaching retirement every day and longer longevity, 

complexity grows in the care. And beginning in fiscal year 2012, 

Congress failed to fund Title IV of the Older Americans Act, what 

is known as the research and development arm that looks at education and training and improved access for seniors into various 

kinds of services, new approaches for coordinating programs and 

providing aging-in-place opportunities. 

The community innovations for aging in place essentially was 

shut down. It had been funded at a few million dollars. It seems 

to me the need is much greater than a few million dollars. There 

were 14 demonstration projects across the country; there could easily have been hundreds of high-quality projects across the country, 

but now it is zero. 

Do you see any justification for the defunding of this, and do you 

see any other alternative for funding these programs that would 

allow Americans to age in place with the services that they need? 

Secretary SEBELIUS. Well, Congressman, as you know, in the last 

couple of years we have actually created a new administrative entity, the Administration for Community Living, which seeks to address exactly what you are talking about—not only aging in place 

for seniors but a fully prosperous and engaged life for those Americans with disabilities. Because often the services needed at the 

local level are the same: transportation, additional home health 

23 

care, supportive housing in some instances, to allow people to live 

to the fullest extent as independently as possible. 

So one of the issues before this committee, for the first time our 

budget reflects the ACL structure, and what we have been trying 

to do is identify ways that those assets can be leveraged both from 

the disability programs that we are running and for the aging programs to build that robust network of services on the ground. In 

some cases I think some of the individual programs may have been 

unfunded because there was a larger stream of money running to 

that same service and program. I am not sure I can answer with 

the specificity you are—— 

Mr. HOLT. Well, let me just say, I hope you will work with us 

to—— 

Secretary SEBELIUS. Sure. 

Mr. HOLT [continuing]. Find ways to fund these really very valuable programs that will become more and more valuable as people 

age. 

Let me turn to the Affordable Care Act. Much has been said 

about the programs of the Affordable Care Act. Actually, most has 

been said about imaginary programs of the Affordable Care Act. 

There is a lot of misinformation and even disinformation. 

But one thing we do know that has already taken effect are provisions of the Affordable Care Act affecting Medicare. Can you say 

what those provisions—what the record is now about those provisions that affect seniors on Medicare? What does it say about the 

long-term financial stability of the program? What did we learn 

about the quality of delivered care? What did we learn about the 

cost of that care as modified by the Affordable Care Act? 

Secretary SEBELIUS. Well, in spite of the oft repeated accusations 

that somehow the Affordable Care Act was going to destroy Medicare, we, I think, have a very positive record of achievements in the 

last 3 years. 

Millions of seniors are benefiting from preventive health benefits 

with no copays. Millions of seniors are achieving discounts in their 

prescription drug plans—now a 50 percent discount for the Part D 

brand name drugs if they fell into the so-called donut hole in the 

past. Millions have taken advantage of the wellness screening, 

which is now part of the overall Medicare beneficial program. 

In addition to that, what we know is that health costs are down 

at the lowest level in the 51 years since Medicare has been created. 

In fact, the four-tenths of 1 percent increase per beneficiary this 

year is historically low; 3.9 percent overall growth is historically 

low. And that is done with additional benefits. 

We were able, at the trustees meeting last week, to announce 

that 2 additional years had been added to the Medicare Trust 

Fund. The original passage of the Affordable Care Act added additional solvency years, but the trend in the last 3 years has added 

additional time, which is all very—— 

Mr. HOLT. Well, thank you. 

Chairman KLINE. The gentleman’s—— 

Mr. HOLT. Our time is expired but that is quite a notable factual—— 

Chairman KLINE. The gentleman’s time has expired. 

24 

I have got an unwelcome administrative announcement. I am 

looking at the list of members who want to ask 5-minute questions. 

The secretary has a hard stop time at 12. I have got at least 2 

hours worth of questions here, so we are going to—I am going to 

limit the members’ time to 3 minutes. I will not be inclined to support the ‘‘ask the question at 2 minutes and 59 seconds and then 

give the secretary another 3 minutes.’’ 

Madam Secretary, if you could help us just a little bit by abbreviating your answers. 

And with that, Mr. Wilson, you are recognized for 3 minutes? 

Mr. WILSON OF SOUTH CAROLINA. Thank you, Mr. Chairman. 

And, Madam Secretary, thank you for being here today. 

The National Federation of Independent Business, NFIB, Research Foundation recently released a study on the impact of the 

new health insurance tax created by the health care law. The law 

created a new tax on health insurance policies that most small 

businesses purchase. It is structured as a fee on insurers but it is 

expected to be passed onto consumers. 

This new tax will increase the cost of insurance for small businesses and their employees. The NFIB study indicates this tax will 

result in a reduction in private sector employment of 262,000 jobs. 

Do you believe increasing the cost of health insurance by taxing the 

policies that small businesses purchase make it more or less likely 

a small business will offer insurance to their employees? 

Secretary SEBELIUS. Well, the tax helps to support setting up 

some new markets which will be hugely beneficial to small business owners, including the shop option, which will exist in every 

state in the country. Small business owners currently pay 18 to 20 

percent more for their health coverage and I think that the tax to 

insurers who will have millions of new customers is an appropriate 

way to help set up these new market options. 

Mr. WILSON OF SOUTH CAROLINA. But the net result will be a reduction in private sector jobs. 

Secretary SEBELIUS. I haven’t seen the NFIB study and I have 

no idea how they are—because the tax isn’t even in place yet so 

I have no idea what they are extrapolating. 

Mr. WILSON OF SOUTH CAROLINA. And as America’s largest association of small businesses it has extraordinary credibility. 

Secretary SEBELIUS. As you know, they also sued to strike down 

the law and that was not successful, so they haven’t been huge 

fans from the outset. 

Mr. WILSON OF SOUTH CAROLINA. And I am so grateful for their 

courage. 

Next we have the costs associated with the regulatory compliance 

are particularly high for small businesses since they may not have 

a department to handle benefit issues. Are you considering any 

transition period or relief for employers who are acting in good 

faith to comply with the law but simply are unable to comply with 

the reporting requirements and regulations of the health care law, 

given the lack of instruction from the administration? 

Secretary SEBELIUS. Well again, sir, we are trying to be as flexible as possible within our administrative authority. I would be 

happy to take a look at what specifically the complaints are. They 

25 

are not filing anything now so I am not quite sure what they are 

anticipating being burdensome but we will sure take a look at it. 

Mr. WILSON OF SOUTH CAROLINA. Well, I think that it would be 

great to consider a waiver for small businesses, and I appreciate 

your positive response to that inquiry. 

Secretary SEBELIUS. Well, I don’t know what they want a waiver 

from; if it is a waiver from the law that is not within our administrative authority. 

Mr. WILSON OF SOUTH CAROLINA. And it may not be a waiver, 

but it is certainly, during the transition period, a level of relief so 

that small businesses who do not have compliance offices can not 

be subject to penalty so that they can continue to conduct their 

business. 

Chairman KLINE. The gentleman’s time has expired. 

Mr. Grijalva? 

Mr. GRIJALVA. Thank you, Mr. Chairman. 

And, Madam Secretary, thank you very much. I do appreciate 

the efforts to partner with community allies in promoting understanding and enrollment in the health plans, and also because all 

we see, at least in the community, is the private carriers promoting 

their specific product. I think there is a need for unbiased, general 

information that the public can understand, and I applaud you for 

that effort. 

The Supreme Court decision reinforced the ability of ACA to 

move forward with the exception of the state Medicaid expansion; 

that made that optional for states. Some individuals decided the 

federal deficit is a reason not to accept Medicaid expansion. 

Madam Secretary, can you talk to us a bit about the impact of 

states choosing not to expand and what would that do to the federal deficit? 

Secretary SEBELIUS. Well, I think that the fear that at least has 

been cited was somehow that either the Congress would renege on 

the funding arrangement or that expanding Medicaid would add to 

the federal deficit, and first of all, the Medicaid expansion was contained in the funding for the Affordable Care Act, and as you know, 

at the end of the day the Congressional Budget Office indicated 

that passing the Affordable Care Act reduced the deficit by $100 

billion over the first 10 years and projected an additional reduction 

of $1 trillion over the next 10 years. So passing the act that was 

fully funded actually reduced the deficit. 

We do have a new RAND study that came out, I think in the last 

2 days, that looked at the fiscal impact of 14 states who may 

choose not to expand Medicaid found that the states themselves 

would be bypassing about $8.4 billion of federal funding and incurring about $1 billion a year in uncompensated health care costs, so 

I think the return on investment analysis that has been done in 

states across the country indicates that Medicaid expansion is not 

only good for potential beneficiaries but could be very financially 

beneficial for states. 

Mr. GRIJALVA. Thank you. 

Yield back. 

Chairman KLINE. Gentleman yields back. 

Dr. Foxx? 

Ms. FOXX. Thank you, Mr. Chairman. 

26 

Thank you, Secretary Sebelius, for being with us today. 

I want to do one quick follow up on the questions that my colleagues asked earlier on Enroll America: You keep saying that the 

Robert Wood Johnson and H&R Block are not regulated by HHS. 

Are you saying they have no interest in the decisions you make as 

secretary? 

Secretary SEBELIUS. Oh, I am sure that virtually everyone has 

decisions that we make as secretary. They don’t have any products 

or entities that come under our jurisdiction. 

But again, Ms. Foxx, I want to make it very clear that this is 

not a statutory line; this was a chosen line that I made. I have promoted and discussed outreach and education activities not only 

around partnership with Enroll America but with dozens of organizations for a very long time. I made two specific fundraising calls. 

Ms. FOXX. Okay. H&R Block is a tax preparation company. Isn’t 

it true the tax credits available under the law go directly from the 

government to the insurance company? Is that correct? 

Secretary SEBELIUS. No. They would credit to the individual, not 

to the insurance company. 

Ms. FOXX. Okay. 

Secretary SEBELIUS. An individual would qualify based on his or 

her income for an accelerated tax credit to purchase health insurance. 

Ms. FOXX. Now I would like to switch and ask this question, 

Madam Secretary—— 

Secretary SEBELIUS. Oh, I apologize. They do accrue to the individual but they go to the chosen plan. I am sorry. It goes, then, to 

pay for the coverage. 

Ms. FOXX. In July 2012 HHS issued an information memorandum to states inviting them to apply for waivers to the work requirements under the Temporary Assistance for Needy Families, or 

TANF. At the time HHS claimed it was responding to requests 

from states that wanted more flexibility, but to my knowledge no 

states have applied for the waivers. 

Recently it is been revealed that in late 2009, 2-1/2 years earlier, 

senior officials at HHS had requested a legal opinion to a series of 

questions they put forth on how much authority the department 

had in terms of waiving certain requirements even though governors didn’t ask for these provisions. It seems that the department 

has had a plan to gut the welfare reform law from the beginning. 

Considering that there seems to be little or no support from 

states for your memorandum, shouldn’t the administration withdraw it and work with Congress to reauthorize TANF? 

Secretary SEBELIUS. Well, Congresswoman, the discussions 

among governors—and I was one and had these discussions about 

the rules around TANF—have gone on for a very long time, during 

the Bush administration and certainly into this administration—a 

lot of reporting requirements that didn’t seem to add jobs. What we 

learned during the Recovery Act was that states actually had very 

innovative programs that could put people to work when we could 

give them some flexibility around the use of their funds, so we did 

have conversations based on input from Republican and Democratic governors about what might be the authority that we had, 

not to waive work requirements, frankly, but to waive some of the 

27 

reporting requirements that directed people to spend a lot of time 

counting boxes and not putting people to work. 

Chairman KLINE. The gentlelady’s time has expired. 

Mr. Courtney? 

Mr. COURTNEY. Thank you, Mr. Chairman. 

Madam Secretary, going back to the small business colloquy a 

few minutes ago, actually something that is about to also happen 

in January is that the small business tax credit is actually going 

to get bigger, isn’t that correct? 

Secretary SEBELIUS. That is correct. 

Mr. COURTNEY. And it is for firms 25 or less and it is up to 50 

percent of the—— 

Secretary SEBELIUS. That is correct. 

Mr. COURTNEY [continuing]. Cost of the premium. And as a 

former small employer, I mean, that is nothing to sneeze at, and 

unfortunately, isn’t included in some of these analyses that are getting thrown around out there. 

The trustees report which just came out a few days ago, which 

again, was a very powerful document in my opinion in terms of the 

positive trend lines, and particularly in terms of the Medicare 

health spending rates that are out there—again, it explicitly identified the Medicare advantage program costs that are coming in 

lower than were projected, isn’t that correct? 

Secretary SEBELIUS. That is correct, and that is directly part of 

the structure of the Affordable Care Act. 

Mr. COURTNEY. And enrollment has gone up, I mean, despite all 

the—— 

Secretary SEBELIUS. Enrollment has gone up, rates have gone 

down, and so beneficiaries also are—not just the Medicare program, which pays the government side of the puzzle, but beneficiaries themselves who pay a copay are paying less out of pocket. 

Mr. COURTNEY. And again, it seemed like the trustees were being 

kind of careful not to overreach, in terms of ascribing too much to 

the ACA, but as you point out, I mean, between the preventive behavior that is now, I think, infusing through the system, the ACO 

incentives that are out there that promote collaboration, the hospital readmission incentives—I mean, the fact is is that there is 

real change going on out there in delivery reform. 

Secretary SEBELIUS. Well, I think the first year or two people 

were very cautious about how to attribute that change and a lot 

of it was seen as potentially just a part of the recession. We have 

had four or 5 recent health economists—not connected with HHS 

in any way, but health economists—who say while a portion of the 

downturn in health spending—Medicare, Medicaid, and private sector health spending are all down—can be attributed to the recession, they think the large part is that there is an enormous change 

underway as part of the delivery system, led by the fact that for 

the first time Medicare is beginning to move away from the fee-forservice payment and into more of a quality outcome payment, into 

accountable care organizations, into preventing hospital readmissions, preventing hospital infections, and those are all having a 

very positive effect on health spending. 

Mr. COURTNEY. And in fact, they have calculated almost $700 billion in unexpected savings if you go back in time to 2010 in terms 

28 

of—I mean, if anyone had predicted that at the time the President 

signed it into law they would have called you a raving lunatic, but 

the fact is is that it has consistently surpassed—— 

Secretary SEBELIUS. I have been called worse. 

Mr. COURTNEY. Well, and I know you didn’t—you know, you were 

not being that reckless to try and sort of claim that, but the fact 

is is that it is surpassed all the expectations, and the fact is if we 

can continue to, you know, nurture that sort of change in the feefor-service there is more money on the table there for the program 

without butchering benefits. 

Secretary SEBELIUS. Well, I think one of the big differences is to 

move Medicare, which has a huge—you know, 51 million beneficiaries, has contracts with every doctor, every hospital, every drug 

company, every medical device company, to begin to move Medicare 

from a fee-for-service, the more you do the more you get paid, into 

really a quality provider begins to really transform the market. 

Chairman KLINE. The gentleman’s time has expired. 

Dr. Roe? 

Mr. ROE. Thank the chairman. 

Thank you, Madam Secretary. 

A couple things that we totally agree on is the cost is the biggest 

issue, I think, in health care. If we could lower the cost more people would have access. I think there is no question about that, and 

that has been a concern of mine through my career as a physician 

and one of the reasons I ran for Congress. 

I chair the Subcommittee on Health, Employment, Labor, and 

Pensions, so we look at individual markets and small group markets, and our state insurance commissioner in Tennessee—I spoke 

with her 2 weeks ago and then reconfirmed these numbers: The 

small group market in Tennessee will see an average increase of 

50 to 55 percent and the individual market, depending on your age 

and gender, will be 45 to 70 percent increase. And I asked how 

many plans we had from mountains to Memphis now in our state 

and we have about eight plans that individuals and small groups 

can go to; and we will have, after the first of the year, two and 

maybe one plan. 

So that didn’t expand the number of options. And one of the reasons our governor, Governor Haslam, in Tennessee, didn’t expand 

Medicaid in the state and didn’t—and chose not to expand the exchange was because he couldn’t get answers from HHS so that he 

felt comfortable in doing this because we have had a 20-year history of health care reform—it is called TennCare in our state— 

hasn’t worked out all that well. 

So when we held a subcommittee hearing couple of—well, I guess 

a month or so ago, I am going to submit some questions that I got 

there from the businesses, if you don’t mind, so we won’t take the 

time. But one of them was Mr. Silver, who said: I would like to 

challenge the secretary to make a good program, to implement 

changes that would not have a negative impact they have now. It 

is beyond belief how complex—needlessly and how complex this 

program has become, and that is my question. 

I think what he is saying as a businessman—I will give you another example: Mr. Horn has a business over there at 350 employVerDate Nov 24 2008 16:36 Apr 23, 2014 Jkt 000000 PO 00000 Frm 00032 Fmt 6633 Sfmt 6602 G:\DOCS\113TH\FC\113-20\81276.TXT DICK
29 

ees. He is self-insured. He provides total preventative services. If 

you need a mammogram, whatever, he pays for it all. 

Guess what he gets for this? He gets a $63 per person fee to— 

that is charged to him plus an increase in his taxes. He did everything right in his business—in the textile business, which is a 

tough business. So how do you answer his question? What do you 

say to Mr. Horn? 

Secretary SEBELIUS. And his question is, ‘‘Why do I pay this’’—— 

Mr. ROE. He is paying for everything—preventive. He has got the 

gold plan and yet what he gets are increased taxes and increased 

costs to his business. 

Secretary SEBELIUS. Well I think that the way that the law is 

put together there are fees and taxes that pay for the program to 

move ahead. I think in the long run—— 

Mr. ROE. How do you answer him? He is a guy doing everything 

right. 

Secretary SEBELIUS. He also is paying a hidden tax, I would say, 

at this point, because his hospital rates are higher—— 

Mr. ROE [continuing]. Isn’t hidden. I can tell you that. It is out 

there for him; he has got to write a check for it. 

Secretary SEBELIUS. I understand. 

Mr. ROE. One other question I have got—— 

Chairman KLINE. The gentleman’s time has expired. 

Ms. Bonamici? 

Ms. BONAMICI. Thank you very much, Mr. Chairman. 

Thank you, Madam Secretary. 

This is the Education and Workforce Committee where we all 

share the goal of student success in our nation’s public schools. I 

frequently hear comparisons of our students with students in countries like Finland, for example, but they have a near absence of 

poverty in Finland. So I want to recognize the importance in the 

fical year 2014 budget of the anti-poverty programs and policies— 

not only expansion of health care but also LIHEAP and TANF, so 

thank you for that. 

I have two questions. I will ask them together. 

First, I am from Oregon, where we are ahead of the curve in implementation of the Affordable Care Act, and just last month when 

our proposed health premiums for plans went public on the exchange, after seeing their competitors’ proposals two insurers actually requested to lower their rates. So my first question is, how can 

we ensure that other state exchanges and the federal exchange sufficiently foster this type of competition to make health care more 

affordable? 

The second question is about sequestration. My district is very 

concerned about how sequestration is affecting medical research. 

Oregon Health Sciences University, for example, where they are 

making groundbreaking advances, is concerned because you can’t 

put research on hold and the cuts are going to be affecting the junior researchers, which are exactly the type of workforce we need to 

be training. 

So the second question is, how do HHS and NIH plan to continue 

making research progress and how will sequestration impact medical research? 

30 

Secretary SEBELIUS. Well, in terms of the competition in the 

market, Oregon is not only doing some great things now but has 

been for years, and we are trying to use your doctor governor’s expertise to actually talk to a lot of colleagues across the country 

about what sorts of things can be done to improve the quality of 

care and lower costs because Oregon is proving that. And what we 

are seeing in these early marketplace entrants is some very positive signs about competition—new plans entering the market in 

states across the country and opening up what was a monopoly to 

competition for the first time, so I think that is going on and creating a market in many cases. 

In terms of the research question and sequestration, you are absolutely right. Sequestration is a blunt instrument that slashed 

about $15.5 billion from the HHS budget and a big hit was taken 

by NIH, who is our second-biggest agency. 

That will have a very significant impact on new grants going out 

the door. They don’t have the money; they will not be able to accelerate the kind of scientific cures that are possible and have those 

grants, which actually return about $7 to every dollar put out is 

the return on investment. 

So it is a program that, at the time that we should be making 

increased scientific investments, that took a cut through sequestration that really can’t be made up. 

Chairman KLINE. Gentlelady’s time has expired. 

Mr. Walberg? 

Mr. WALBERG. Thank you, Mr. Chairman. 

Madam Secretary, as you are probably aware, yesterday the IRS 

published a final regulation on the shared responsibility payment 

for not maintaining minimum essential coverage, where they estimated that $20,000 would be the cost for yearly premium for a 

family of four or five that want to purchase the cheapest, or the 

bronze, type plan. Is the IRS totally off base with that $20,000 figure as the cheapest possible plan that a family of four or five could 

purchase? 

Secretary SEBELIUS. Sir, I haven’t seen the IRS estimates, and 

as you know, we don’t have any final rates. What I am seeing is 

some very positive rate information that compares favorably to 

what is available right now but I can’t respond. I would be happy 

to in writing but I don’t—I haven’t seen the IRS report. 

Mr. WALBERG. So you can’t confirm to me that there would be 

cheaper plans available than $20,000? 

Secretary SEBELIUS. Well, I know there are cheaper plans available depending on the circumstances and how high the deductible 

is but I can’t give you exact amounts because the rates aren’t set. 

So anyone who is telling you this is the final rates is just not accurate. 

Mr. WALBERG. Well, of course the IRS may have done this after 

a line dance, but they certainly have some responsibility of determining what estimates at the very least these costs will be—— 

Secretary SEBELIUS. As I say, I would be happy to look at what 

they gave you and respond to it. I can’t do that off the top of my 

head. 

Mr. WALBERG. I would appreciate that—— 

31 

Secretary SEBELIUS. Every state is also going to be a little different, so I have no idea what they are capturing. 

Mr. WALBERG. Let me go on. And I will look forward to that response on it because definitely the IRS is intimately involved with 

the cost factor and what they will be assessing. 

Madam Secretary, as you know, the Affordable Care Act defines 

full-time position as consisting of 30 hours per week. Do you know 

of any other federal law that defines full-time status as 30 hours? 

Secretary SEBELIUS. It is my understanding, sir, that when Congress was writing the Affordable Care Act that they took a snapshot of the marketplace and 30 hours—actually it was 28 hours is 

what I am told—was the amount of time that business owners used 

as a calculation of who got benefits and who didn’t get benefits. 

Mr. WALBERG. Well, as I walk through my district I hear constant reports that businesses—small businesses specifically—are 

cutting back on hours, going away from the 40-hour and less as 

being a part time, and going down to 28 hours now. That is costing 

jobs. 

Has the department considered talking with the Department of 

Labor to find out better information on how this is affecting jobs 

and the economy and growth and—as we know, the best way to 

have insurance is to have a job. Is there any effort from your department working with the Department of Labor to remedy this 

problem? 

Secretary SEBELIUS. Well actually, sir, since these benefits don’t 

kick in until January 1st we are really not at all confident that 

some of the speculation of what may or may not happen will actually happen. 

Mr. WALBERG. They are doing it already. 

Chairman KLINE. The gentleman’s time has expired. 

Mr. Tierney? 

Mr. TIERNEY. Thank you, Mr. Chairman. 

Madam Secretary, thank you for the difficult job that you have 

of enforcing and implementing a law that basically was passed 

democratically but is facing an unrelenting effort to delegitimize 

that law day in and day out, so I appreciate how difficult it must 

be. 

There is a lot of cost involved with repealing the Affordable Care 

Act, and just some of the larger points on that would be, of course, 

young adults would no longer be allowed to stay on their parents’ 

health insurance until they are 26; insurers would be able to deny 

coverage because of preexisting conditions; seniors wouldn’t have 

already gotten $6 billion in savings on prescription drugs. 

But also, one larger aspect on that is there is provision in this 

law that says insurance companies actually have to spend the larger portion of the premiums they receive on health care—on health 

services. And if they don’t do that they have to give a rebate—socalled 80-20 rule—or have to lower their premiums going forward. 

How is that working out? 

Secretary SEBELIUS. Well, about $2 billion was sent back to consumers at the end of 2011 based on that law—or 2012, I am sorry. 

The data was collected in 2011; it was sent in 2012. So consumers 

got checks back from their insurance companies, I would say for 

the first time ever. And what we have seen is a lot of rate reformuVerDate Nov 24 2008 16:36 Apr 23, 2014 Jkt 000000 PO 00000 Frm 00035 Fmt 6633 Sfmt 6602 G:\DOCS\113TH\FC\113-20\81276.TXT DICK
32 

lation, so administrative costs are definitely coming down. More 

bang for their buck, more of the dollars collected are being spent 

on health outcomes. 

Mr. TIERNEY. Well, you know, I hear from folks at home that 

they certainly appreciate having the money spent on health services as opposed to lobbyists or CEO bonuses and other things, so 

thank you for implementing that. 

Thought I would switch gears a little bit to education in early 

childhood. I had an opportunity yesterday to be in Billerica, Massachusetts, where they are closing out 85 seats in a daycare—in a 

child care Head Start program; 85 seats and seven employees are 

going to be gone because of sequestration. And that is 85 students 

whose parents will now have to find a way to—either to quit their 

job and stay home with the child or find some other way to do it, 

and seven families that won’t be earning money, paying taxes, and 

paying their bills and supporting small businesses in their district. 

Can you tell us how that plays out across the country if this sequestration isn’t resolved? 

Secretary SEBELIUS. Well, in terms of a per unit cost, about 

70,000 Head Start children could lose their slots based on sequestration, and probably 14,000 teachers, guidance counselors, others 

who are employed. And as you say, that has a ripple effect because 

if the kids don’t have a place to go and some place for their parents 

to be confident they are safe and secure and learning, the parents 

have a much more difficult time going to work every day. So it has 

an effect on the workplace, also. 

Mr. TIERNEY. Thank you very much. 

I yield back. 

Chairman KLINE. Gentleman’s time is expired. 

Mr. Guthrie? 

Mr. GUTHRIE. Thank you, Madam Secretary. Nice to see you here 

today. 

In another committee we talked about the prevention funds and 

the anti-lobbying restrictions—— 

Secretary SEBELIUS. Yes. 

Mr. GUTHRIE [continuing]. And we had some questions before. 

Attorney General Holder sent to Lamar Smith clearly saying that 

state—federal funds can’t be used to lobby federal, state, local. A 

letter from Mr. Esquea, I think your assistant secretary for legislation—— 

Secretary SEBELIUS. Jim Esquea. 

Mr. GUTHRIE. Esquea, I am sorry—said basically the same, acknowledging you can’t use federal funds for federal, state, local, 

and went through the different corrections or things that you put 

in place to deal with some of the things from last year. 

There is one paragraph in that letter, though, that he sent—it 

is in the letter—on April 1st. He said, ‘‘When concerns about any 

grantee are brought to our attention CDC contacts the grantee and 

reviews the allegations, and we have determined through this process that specific grantee activity referenced in your letter and highlighted by Mr. Whitfield and Guthrie did not violate lobbying restrictions.’’ And it does say that, ‘‘applicable lobbying restrictions do 

not prohibit awardees from all interaction with policymakers.’’ 

33 

I know I am—because of time I am quoting, but it is accurate 

what I am quoting. It says, ‘‘However, it would not be permissible 

for awardees to use federal funds to influence a specific piece of 

legislation or pending legislation through the direct lobbying with 

legislators.’’ 

And just a couple of examples—I have several that—the ones 

that he referred to didn’t that—what Mr. Whitfield and I highlighted, and a couple of them—and there is more, and I am reading 

directly from the Web site: executive office of the governor of Delaware 1 million, seeks sponsorship of bill that increases excise tax 

on other tobacco products; meeting with policymakers, stakeholders, and developed to introduce bill for tax equity on OTP products. This bill was tabled. 

Another Nevada Department of Health, 560,000 CDC. Legislation is proposed to increase tax on all tobacco products working 

with Nevada state legislator on the proposed legislation. 

So my question is, I know we are trying to address the lobbying 

and you have got things in place, but why did this not violate the 

lobbying restrictions? And if you say this doesn’t violate the lobbying restrictions there—it appears to me there aren’t really restrictions on lobbying. 

Secretary SEBELIUS. Well, I can guarantee you, Congressman, 

that we are trying to do everything we can to enforce the law, to 

retrain grantees, to remind them. There are certainly instances 

where grantees are invited to present testimony at committees. 

That is not lobbying. To be involved in policy discussions, that is 

not lobbying. So there are specific state and local definitions of 

what lobbying constitutes, when you have to register as a lobbyist—— 

Mr. GUTHRIE. I agree. But when you are getting specific sponsorship for specific bills, I mean, that appears that that—— 

Secretary SEBELIUS. And again, I think that the conversation— 

all I can tell you is I believe that the conversation resulted in one 

of those other categories, so yes, the grantee was involved, but not 

in a lobbying activity that would have constituted registering at the 

local level or declaring themselves as a lobbyist. 

Mr. GUTHRIE. Okay. Well thank you. 

I will yield back. 

Chairman KLINE. Thank the gentleman. 

Mrs. Davis? 

Mrs. DAVIS. Thank you, Mr. Chairman. 

Thank you, Madam Secretary, for being here today. 

I wanted to go back for a second to some of the questioning that 

we have heard, and having been here when Medicare Part D was 

passed, my understanding is that there was no paid-for for Medicare Part D. Is that correct? 

Secretary SEBELIUS. That is correct. 

Mrs. DAVIS. So it had some impact on our deficit, substantially. 

Secretary SEBELIUS. It was definitely added to the deficit, yes. 

Mrs. DAVIS. And in terms of implementation, did the secretary 

at that time under the Bush administration—did he have the ability to pay for implementation and the concerns and questions? I 

know we held a number of meetings out in our community and we 

34 

were provided with individuals that could come and explain to seniors what Medicare Part D looks like. 

Secretary SEBELIUS. I can’t tell you how the budget was constructed or how much additional funding was put in through Part 

D. I do know that there were certainly HHS resources—call center, 

outreach efforts, contracts. In fact, one of the public-private partnerships was with the Benefit Coalition, where HHS money paid 

for an entity very similar to Enroll America to have them conduct 

various outreach and education activities. 

So there were resources. How much of that was designated by 

Congress and how much was within the discretion of the secretary 

I can’t tell you. 

Mrs. DAVIS. Okay. Thank you. Because I know you had suggested that things weren’t so different right now and I wanted to 

just remind myself, as well, about how that was done because I 

don’t remember any of this discussion at that time. 

Secretary SEBELIUS. Well, at every point, I think, in recent history where there has been a significant expansion of health benefits—and the Children’s Health Insurance Program during the 

Clinton administration, Medicare Part D during the Bush administration—there has been a very extensive outreach effort from the 

secretary to private groups, to business entities, to health care providers, to disease groups, to foundations, to whole insurers, drug 

companies, involving and engaging them in outreach efforts, knowing that the federal government could not possibly take on the entire task, that this was an all-hands-on-deck effort. 

Mrs. DAVIS. Well, thank you, Madam Secretary. 

I think that the issue of the NIH grants has been raised. It certainly impacts the community, the larger community of San Diego, 

as well. And how do you think the you can make up some of the 

difference, where we take away all those research dollars? 

Secretary SEBELIUS. Well, I think that the President has proposed in the 2014 budget an increase in NIH funding, but if you 

look at that increase compared to what they lost in the sequestration, only getting rid of sequestration would indeed restore that full 

budget. The increase that the President has suggested would not 

cover the deficit that has been created by sequestration. 

Mrs. DAVIS. So American research jobs could be lost. 

Chairman KLINE. The gentlelady’s time has expired. 

Dr. Bucshon? 

Mr. BUCSHON. Thank you, Mr. Chairman. 

Madam Secretary, Indiana is home to over 300 medical device 

companies with an economic impact of over $10 billion a year, and 

the medical device tax in the Affordable Care Act is damaging the 

industry. Cook Medical has decided not to expand within the state; 

Orthopediatrics in Warsaw, Indiana has shelved two products for 

children. 

The medical device tax repeal passed recently 79 to 20 in the 

Senate during their budget process, as you know, and last Congress 

it passed in the House 270 to 146 with 37 Democrats voting in the 

affirmative to repeal the tax. Does the administration support repealing the medical device tax? 

Secretary SEBELIUS. No, sir. 

35 

Mr. BUCSHON. And if not, why would that be in the face of overwhelming support from Congress? 

Secretary SEBELIUS. Well, at least Congress has not yet fully 

passed legislation to do that. I would say also, Congress voted to 

put the medical device tax in place. That was signed into law. And 

the medical device companies are looking for millions of new customers; as they get enrolled they will be able to purchase and have 

services that include medical devices. 

Mr. BUCSHON. You know, Stryker up in Michigan has already 

laid off 1,000 in their—company-wide. Something like that. So from 

what we are hearing from the medical device industry is just the 

opposite. They don’t expect more patients, so to speak, to make up 

the difference. And I would urge the administration and yourself 

to relook at the medical device tax as a way to fund the Affordable 

Care Act and look for other options. 

Secondly, Healthy Indiana Plan, as you may know, is an HSAbased plan that—to manage the state’s Medicaid dollars, which has 

been shown to save the state about 3 to 4 percent in a way it manages Medicaid patients. Currently covers over 40,000 Hoosiers. 

Our waiver expires—this was an HHS pilot program—our waiver 

expires December 31st, and the enrollees have an over a 90 percent 

approval rating of the program. Would you expect that HHS would 

give us an answer soon on whether or not we will be able to use 

Healthy Indiana Plan as a way to manage our Medicaid dollars? 

Secretary SEBELIUS. Sir, I know conversations are underway 

with the Indiana Medicaid department on a regular basis and I 

don’t know the current status but I can get you an update in writing. 

Mr. BUCSHON. Well, I appreciate that. And the Republican delegation members, at least, from Indiana have sent a letter to you 

requesting an answer, as well as, I know Governor Pence’s administration. I would appreciate an answer fairly soon. Again, the 

waiver expires December 31st. 

Secretary SEBELIUS. Yes, sir. 

Mr. BUCSHON. The last question I have is, do you support a single-payer health care system? 

Secretary SEBELIUS. Do I? 

Mr. BUCSHON. Yes. 

Secretary SEBELIUS. No, sir. I supported the concept that you 

build the gap in coverage based on private insurers. 

Mr. BUCSHON. Okay. Thank you. 

I yield back. 

Chairman KLINE. Thank the gentleman. 

Ms. Fudge? 

Ms. FUDGE. Thank you, Mr. Chairman. 

And thank you, Madam Secretary, for being here today. 

Madam Secretary, I have two questions for you and I will give 

them both to you. 

Under the Ryan fical year 2014 budget the Affordable Care Act 

would be eliminated. That would leave 27 million Americans out of 

any kind of plan, basically. The thought would be to turn Medicare 

into a voucher program and Medicaid into a block grant. Please 

discuss with us how that plan is detrimental to the very people 

that this budget supposedly helps. 

36 

And the second question is, many of my Republican colleagues 

were opposed to the ACA basically on grounds that it would significantly increase costs. Please talk with us about how the Affordable 

Care Act really is going to reduce costs by approximately $1 trillion 

over the next 20 years. 

Secretary SEBELIUS. Well, Congresswoman, I think that the 

President put forward a plan to provide affordable health coverage 

for the approximately 20 percent of Americans who currently have 

no coverage, or are in and out of the market, or are locked out of 

the market or priced out of the market. And that plus the Medicaid 

expansion would, for the first time ever, provide an opportunity for 

most Americans to have affordable health coverage. 

I would say that at least in the other budget proposals there is 

no similar plan. The high-risk pool seems to be the only alternative 

that was put forward during the debate around the Affordable Care 

Act and continues to be an alternative put forward. Just put people 

in a high-risk pool, allow insurance companies to continue to pick 

and choose who gets coverage and who doesn’t, and a little unclear 

what happens to folks who can’t afford either the high-risk pool or 

the health coverage. 

In terms of Medicare and Medicaid, in cost stories, again, there 

is, I think, a very positive story to tell about how you increase benefits, how you increase quality and lower costs at the same time. 

It was said as we talked about that originally that that could never 

happen. It actually is happening. It has happened for 3 years in a 

row. 

And the trend is much faster than the CBO ever anticipated or 

suggested, so that what we are seeing is a transformation in the 

delivery system and an opportunity in the marketplace for the first 

time to create competitive markets and to have people who don’t 

have affordable employee coverage to have access to health insurance, health security for themselves and their families. 

Ms. FUDGE. Thank you. 

Mr. Chairman, I yield back. 

Chairman KLINE. Thank the gentlelady. 

Mrs. Roby? 

Mrs. ROBY. Thank you, Mr. Chairman. 

Thank you, Madam Secretary. In anticipation of your testimony 

here before us today I reached out to my constituents on Twitter 

and Facebook and said, ‘‘If you had an opportunity to ask the secretary a question what would you ask?’’ 

And I just want to share with this committee and with you, 

Madam Secretary, how just unbelievable it was to hear from so 

many individuals and business owners that were afraid to give 

their names in light of the current IRS scandal because of the role 

that the IRS will play in implementing this law, that by asking you 

a question and revealing who they are that they may receive retribution from that agency. And of course, this is in light of everything that we are hearing in the news and that our majority is providing oversight right now. But I am going to submit their questions to you in writing since we have limited time, but I am going 

to redact their names, as requested. 

And one constituent of mine, Mr. Jason Misseldon, of Prattville, 

Alabama, asked the following question that I would like to ask to 

37 

you: He says, ‘‘My employer has provided excellent insurance coverage for over 30 years. It would definitely be classified a Cadillac 

plan. This year we were forced to change coverage. Please tell me— 

Jason—how penalizing or taxing companies that provide excellent 

coverage has anything to do with ensuring everyone has access to 

affordable health care.’’ 

What would you say to Mr. Misseldon? 

Secretary SEBELIUS. Well, Congresswoman, I have no idea why 

he would change plans this year because nothing has impacted his 

health plan this year. But I would just say that insurance companies who are by and large in enormously profitable condition will 

be paying taxes to help support a new infrastructure that in return 

brings them potentially 30 million new customers, and that is a 

part of the funding of the Affordable Care Act moving forward. 

Mrs. ROBY. One other question, because I know my time is about 

to run out, but how are we going to count employees? For example, 

I have got one business that reached out to us and said, ‘‘Tell me 

how it is going to affect my business when we have 52 employees 

but three of those are owners of the business?’’ When it comes to 

the exemption, how does that work out? 

Secretary SEBELIUS. Well, there are some pretty specific rules 

and regs how to count part-time employees, how to count full-time 

employees. Again, we would be happy to answer that question if we 

get some specifics about who exactly—— 

Mrs. ROBY. I am going to give you all of these questions—— 

Secretary SEBELIUS. That is great. 

Mrs. ROBY [continuing]. In writing and we will look forward to 

your in-depth answers. 

Thank you. I yield back. 

Chairman KLINE. Thank the gentlelady. 

Mr. Yarmuth? 

Mr. YARMUTH. Thank you, Mr. Chairman. 

Madam Secretary, it is nice to see you. We talked a little bit earlier about the effect of, or the potential effect of the expansion of 

Medicaid on different states, and in my state Governor Beshear recently announced that he was going to accept the expansion, and 

he did that after a very rigorous analysis of the costs and benefits 

to both the state budget and also to the state economy. And they 

found that over 7 years, expanding Medicaid is expected to provide 

a cumulative economic boost of $15.6 billion through new health 

spending, the addition of 17,000 jobs averaging $43,000 a year, 

local and state taxes generated by those workers. 

The governor also found that expansion would have a positive impact of more than $800 billion on the state budget over that 

same 7-year period, and that is all in addition to providing coverage for more than 300,000 Kentuckians who do not have access 

to insurance at this point. So as you move forward and people ask 

questions about that I certainly would offer that evidence as proof 

that the Affordable Care Act, the expansion of Medicaid is going to 

be a positive for at least many states. 

I have one question I am going to ask and that is in respect to 

my former colleague, Steve Kagen, from Wisconsin, who spent the 

entire debate about the Affordable Care Act talking about the need 

for transparency. And a couple months ago an incredible piece of 

38 

journalism, ‘‘The Bitter Pill,’’ appeared in Time Magazine, Steven 

Brill, talking about the disparity in costs throughout the system, 

particularly at hospitals. Is HHS doing anything to promote transparency both at the hospital and throughout the provider network 

in the country? 

Secretary SEBELIUS. Yes, sir. We have published, a couple 

months after the Steve Brill article, a snapshot of inpatient hospital costs for about 30 different procedures, comparing them hospital to hospital, and found not only enormous countrywide variation but enormous regional and some places enormous local variation. But it has been published and available. 

Yesterday we released additional data, which is the publication 

of some outpatient services for similar procedures, again comparing 

side by side. We have had a process underway really from the beginning of this administration to unlock data, to make sure that 

the data that we are collecting actually is put in the public domain 

in an easy-to-read, easy-to-use way so that consumers can begin to 

ask important questions. Why should a hip transplant cost three 

times as much if I go six blocks away and have no difference in 

outcome? So that information is very much available. 

And yesterday we had the fourth annual—third annual 

Datapalooza, which is a meeting of entrepreneurs and application 

developers and others to come in and look at the data and see what 

kinds of mechanisms they can put together to help drive this data 

for policymakers and patients. It started in a room with 46 people 

3 years ago; yesterday there were 2,000 techies and entrepreneurs 

here from all over the country and a team from the United Kingdom who is really interested in learning what we are doing with 

data and how that can help inform patients and providers. 

Mr. YARMUTH. Great. Thank you very much. 

Chairman KLINE. Mr. Barletta? 

Mr. BARLETTA. Thank you. 

Ten-year-old Sarah Murnaghan is from my home state in Pennsylvania. If Sarah lives she will be 11 on August 7th coming up. 

Do you think it should be legal to deny a organ transplant based 

on somebody’s race? Do you think we should decide because of the 

color of your skin or—— 

Secretary SEBELIUS. No, sir. 

Mr. BARLETTA. Think it should be legal to deny somebody an 

organ transplant because of their gender, because of they are a 

woman or a male? 

Secretary SEBELIUS. Again, I have no idea what the medical evidence might be. I assume that there nay not be a difference, but 

there could be—— 

Mr. BARLETTA. But do you think it should be legal to do that? 

Do you think we should choose between—— 

Secretary SEBELIUS. If there is a medical rationale, yes, sir. But 

if there is not, no. 

Mr. BARLETTA. Why are we going to let a little 10-year-old girl 

die because she is 10 and not 12? Sarah is at the top of the pediatric list—those who are 11 or younger. If Sarah were 12 she would 

be at the top of the adult list. 

Now, transplants should be based, I believe, on the severity of 

the illness and not the person’s age, and I know you agree with 

39 

that because you have asked OPTN to please review the policy. 

Sarah’s parents aren’t asking for special treatment for their daughter. I am the father of four girls myself. They are asking for an equitable organ transplant system. 

And you are the one person who has the authority to suspend the 

current policy until we are confident that children have equal access to lifesaving treatment and aren’t discriminated against because of their age. We wouldn’t do it for any other reason. 

I am begging you. Sarah has 3 to 5 weeks to live. Time is running out. Please, suspend the rules until we look at this policy, 

which we all believe is flawed. 

Secretary SEBELIUS. Well, I would suggest, sir, that, again, this 

is an incredibly agonizing situation where someone lives and someone dies. 

Mr. BARLETTA. Based on their age. 

Secretary SEBELIUS. Sir. 

Mr. BARLETTA. Based on their age. 

Secretary SEBELIUS. What I have been told by the transplant experts—and I don’t profess to have any expertise in this area—is 

that the medical evidence and the transplant doctors who are making the rule and have had the rule in place since 2005, making a 

delineation between pediatric and adult lungs, it is—lungs, because 

lungs are different than other organs—— 

Mr. BARLETTA. But in Sarah’s case—— 

Secretary SEBELIUS [continuing]. That it is based on the survivability—— 

Mr. BARLETTA. But this is different. This is different. Sarah’s 

case is different. Doctors have said that she could survive with an 

adult lung. It can be modified to save her life. Why wouldn’t we 

do it? Why, we do so much bull crap around this place and we have 

the chance to save someone’s life, and because of some kind of— 

there is no logic to this. 

Secretary SEBELIUS. Forty people in your home state—— 

Mr. BARLETTA. But she would be first if she was 12. 

Secretary SEBELIUS [continuing]. Are waiting on—— 

Mr. BARLETTA. But she would be first—— 

Secretary SEBELIUS. Sir, there are 40 people in the highest acuity 

list waiting for a lung in Pennsylvania. 

Mr. BARLETTA. Sarah would be at the top of that list. 

Chairman KLINE. The gentleman’s time has expired. 

Mr. Hinojosa? 

Mr. HINOJOSA. Thank you, Chairman Kline. 

Madam Secretary, I am concerned that despite past bipartisan 

support for the Head Start programs, the sequester threatens more 

than 70,000 children’s access to Head Start. Please share your 

thoughts on why federal investments in early learning are needed 

now more than ever. And the second part to this question: How 

does the President’s early learning proposal affect Head Start programs, including migrant and seasonal Head Start families as well 

as our Native American children? 

Secretary SEBELIUS. Well, I think there is a lot of evidence, Congressman, that has been developed over decades that early childhood education that is a quality program makes a lifetime of difference in a young person, not just in school readiness and school 

40 

success and parental involvement, but in less drugs, less alcohol, 

higher graduation rates, more likelihood to get a job. So it is an 

investment early that pays off over a lifetime. 

Certainly the—in this very competitive global world we want all 

of our children to be able to live up to their potential to be a prosperous nation, to have the full advantage of the opportunities that 

America can have in the 21st century, so the President has proposed in his 2014 budget a significant expansion of early learning 

opportunities aimed at lower-income kids, but really aimed at all 

kids, so that you would have more home visiting programs, which 

have proven to be enormously successful in families, Early Head 

Start child care partnerships, which would bring some of the parental skills and early learning from Head Start into child care settings, raising the quality for 100,000 more children; universal preK in a partnership with states, so that more 4-year-olds would 

have access to high-quality early kindergarten, and then hopefully 

a successful transition into school, which would, I think, not only 

improve the fate of those individual children, but when you look at 

the amount of money schools now spend on remedial work even at 

the very earliest age, at the dropout rates, at the lack of success 

of some kids, making a dent in that dismal outcome could save 

money, make more prosperous workers, make for a more prosperous nation. 

So I think the President understands this very well and has proposed that one of the biggest investments we should make for a 

21st century economy is in early childhood education. 

Mr. HINOJOSA. Madam Secretary, what you have answered is exactly what we hear from other countries that are leading—— 

Secretary SEBELIUS. Yes, sir. 

Mr. HINOJOSA [continuing]. The competition in interscholastic 

competition, and so the rule of early reading plus writing equals 

success in school is exactly what you have—— 

Chairman KLINE. The gentleman’s time has now expired. 

Mr. HINOJOSA. I yield back. 

Chairman KLINE. Mr. Salmon? 

Mr. SALMON. Thank you. 

Madam Secretary, we are just about 6 months away from the implementation of the Affordable Health Care Act and several of the 

groups that have been very, very supportive of the act when it initially passed are now raising red flags and some are actually calling for its repeal. In fact, most recently the United Union of Roofers, Waterproofers, and Allied Workers—they came out and asked 

for its repeal. Several other unions have expressed concerns about 

losing their Taft Hartley coverage. 

And so my question would be to you, given the fact that you were 

integrally involved in the negotiating and putting this act together, 

if you had it to do all over again would there be any things that 

you would do differently? And if so, what? 

And then also, why do you believe some of these groups that 

were so supportive in the past are now opposed to it and are having problems with it? 

Secretary SEBELIUS. I would tell you, I was very involved from 

April of 2009 when I got sworn in to March of 2010 when the bill 

was passed, and probably every day along the way there was some 

41 

decision or some discussion that could have gone one way or the 

other. 

I think overall this is a law that has been long overdue in this 

country. For seven decades Republican and Democratic Presidents 

have been trying to pass some kind of comprehensive reform. I 

think the President chose not to blow up the private insurance 

market but, in fact, to build on the private insurance market, close 

the gap that way, not go to a single-payer system, which a lot of 

his supporters would have preferred but felt this was far less disruptive and a way to fill the gap. 

So I think that as we go through time, after full implementation, 

after we see how things are shaking out, there are likely to be fixes 

along the way. But it is impossible right now to deal with speculation and that is really what we have: this will happen, or this won’t 

happen, or this could happen. Medicare doesn’t look the same today 

as it did when my father was here and voted for it in 1965. I am 

sure the Affordable Care Act in 50 years will look very different 

and there will be changes along the way based on real experience 

in the marketplace. 

But I think our success so far in the 3 years with implementation 

of pieces of this, with the cost control issues underway, with what 

has happened and not happened to Medicare is very, very positive. 

And I just—I am very excited about the next step and fully implementing this law. 

Mr. SALMON. [Off mike.] 

Secretary SEBELIUS. Sir, I really don’t know and I would be 

happy to—I wasn’t aware that the union you cited is now saying 

they are opposed, and I don’t really know why, if they have a particular issue that they were hoping to get a tax credit and be part 

of an exchange at the same time, which I know has been the case 

in some instances. I don’t know why they are saying that. 

Mr. SALMON. [Off mike.] 

Chairman KLINE. The gentleman’s time has expired. 

Mr. Polis? 

Mr. POLIS. Thank you, Madam Secretary. 

A lot of Coloradans in my district and across my state still don’t 

know how Obamacare can help them. It is a particular concern 

among our many residents who don’t speak English. 

In Colorado our state officials, the health exchange, the nonprofit 

organizations advocacy groups are all channeling their efforts into 

public awareness campaigns focusing on one-on-one conversations 

with non-English speakers. We are also doing outreach to English 

and non-English speakers in the Latino community through media 

personalities, nurses, doctors, friends and family, and running TV, 

radio, and print ads in Spanish. 

My question is, is a similar effort underway at the federal level 

and what actions have you and the department taken to ensure 

that non-English speakers in Colorado and across the country are 

aware of and can access the new services available to them? 

Secretary SEBELIUS. Well, that is a great question and it isn’t, as 

you know, just Spanish language, but there are multiple languages 

spoken across this great, diverse country. So we are taking that 

very seriously. We have put together an operation where a call cenVerDate Nov 24 2008 16:36 Apr 23, 2014 Jkt 000000 PO 00000 Frm 00045 Fmt 6633 Sfmt 6602 G:\DOCS\113TH\FC\113-20\81276.TXT DICK
42 

ter will open I think later this month, and questions will be able 

to be answered in 150 languages out of that call center. 

Materials on our Web site are automatically available in both 

English and Spanish because Spanish is the most frequently spoken other language here in the United States, so everything that 

we are doing will always be available in English and Spanish but 

we are trying also to be very sensitive to the diversity of languages 

and have—I am hopeful that when we get the proposals back for 

navigators who will be on-the-ground helpers in communities, that 

many of those will come out of community groups with cultural 

sensitivity and language skills to reach into some of our more vulnerable populations. 

We are also putting in-person assistance in the community 

health centers across this country, many of whom have personnel 

who speak multiple languages and come out of the neighborhood. 

So we are looking at all the kind of levers that we have. 

Mr. POLIS. Thank you. We will look forward to our state coordinating with your efforts and helping to publicize your multilingual 

call center and I applaud you for those efforts. 

We don’t have much more time. I just want to applaud your efforts on early childhood education. I recently introduced the Continuum of Learning Act to align early childhood education and elementary school standards and I would encourage you to continue 

to work in early childhood with the areas under your jurisdiction 

with the areas under the jurisdiction of Secretary Duncan and 

school districts and states to make sure we have a coordinated approach to early childhood education. 

And with that, I will be happy to yield back. 

Chairman KLINE. Thank the gentleman. 

Mr. Thompson? 

Mr. THOMPSON. Thank you, Chairman. 

Madam Secretary, thank you for joining us here today. I need to 

address an issue that is very near and dear to my heart as a—actually a couple in Pennsylvania. I just want to just briefly weigh in 

and say that in terms of that little girl that is—would reach the 

age of 11 by August, you are probably the one person certainly in 

this chamber and maybe in this country that has the ability to 

waive a rule to keep her from dying, and I really encourage you 

to do that. 

My remarks really is—the other side is I want to talk about the 

concept behind the State Children’s Health Insurance Program. As 

you know, it was born in Pennsylvania. This is a one-of-a-kind program to provide coverage to children whose families earn too much 

to qualify for medical assistance but not enough to purchase private insurance. 

The federal CHIP program was signed into law in 1997, authorized in 2009—one of the first votes I made as a new member of 

Congress. Now, I voted in favor of that reauthorization because I 

saw how Pennsylvania was able to provide—excuse me—children 

private health insurance coverage using a market-based approach, 

not Medicaid. However, I am worried that the vote that I cast may 

have been in vain now that Pennsylvania’s CHIP program is under 

threat by the Affordable Care Act. 

43 

Madam Secretary, in April 2013—I apologize for this cough; I am 

hoping to get over it before the full implementation of the Affordable Care Act—— 

Secretary SEBELIUS. We can find you a good doctor. 

Mr. THOMPSON. I have got a good doctor. 

April 2013 Pennsylvania’s governor, Tom Corbett, met with you 

to ask that you work with the commonwealth to ensure that the 

children will not be affected by the implementation of the ACA, 

and particularly those children enrolled in CHIP. On May 30th 

Governor Corbett reiterated his request, writing you and expressing serious concern that upwards of 70,000 children will be transferred to Medicaid off of CHIP. 

Now, Mr. Chairman, I ask unanimous consent to enter that correspondence from Governor Corbett to the secretary into the 

record. 

[The information follows:] 

44 


81276-1.eps

THE GOVERNOR 

COMMONWEALTH OF PENNSYLVANIA 

OFFICE OF THE GOVERNOR 

HARRISBURG 

May 30, 2013 

The Honorable Kathleen Sebelius 

Secretary 

United States Department of Health and Human Services 

200 Independence Avenue SW 

Washington, D.C. 20201 

Re: Request to Maintain Pennsylvania's CHIP Program 

Dear SecretarySebelius: 

I am renewing my request made to you in April when we met to not force children from 

Pennsylvania's Children's Health Insurance Program (PA CHIP).into the Medicaid system. I 

am asking you to work with me to prevent possible confusion and disruption for children and 

their families and potentially avoid some children from losing access to their healt.'l care 

provider. 

P A CHIP is a highly effective Title XXI CHIP program that provides health care to 

187,034 Pennsylvania children. PA CHIP was established in 1992 and has long been 

acknowledged as a national model. When the federal CHIP program was created by the Federal 

Balanced Budget Act of 1997, PA CHIP received specific recognition as one of only three child 

health insurance programs nationwide that met Congressional specifications. CHIP continues to 

have broad bipartisan support at the federal and state levels. 

Unlike most states, Pennsylvania's CHIP program is based on a commercial product 

platfonn, not Medicaid, and provides not only a robust array of health insurance benefits but also 

access to more doctors and hospitals than traditional Medicaid. I am concerned that a child in 

P A CHIP may not, in some instances, be able to stay with their current health care provider and 

will not have as broad of a choice of health care provider if moved to Medicaid. As 

policymakers, let's not force a parent to change their child's health care provider needlessly. 

One program that is touted universally as working well in health care is PA CHIT'. As 

one parent said: "Because our kids are able to be enrolled in CHIP, I have been able to provide 

for my family. There is not a product out there that is as good as CHIP, low-cost CHIP. 

Nothing.'" In a survey of our P A CHIP parents, nine out of ten reported satisfaction with their 

I Pennsylvania pro;ides CHIP for free to children below 200% of the federal poverty level (FPL), and at subs:idized 

rates between 201 % and 300% FPL. Families over 300% FPL may purchase PA CHlP at cost. 
45 

Chairman KLINE. Without objection. 

Mr. THOMPSON. Madam Secretary, my question is pretty 

straightforward: Are you going to work with Governor Corbett to 

see that kids enrolled in CHIP are not put into a position where 

they can no longer use the doctor of their choice, not dumped into 

Medicaid, they will continue to have viable access to health providers? 

Secretary SEBELIUS. Well, Congressman, what I can tell you is 

I have had a number of conversations with Governor Corbett and 

I will certainly continue to work with him to make sure that the 

children in Pennsylvania are not disadvantaged, certainly, by this 

next transition. CHIP remains an independent program. Again, off 


81276-2.eps
46 

the top of my head I can’t tell you what all the issues are around 

the Pennsylvania program but I will go back and look them up. 

But we have frequent conversations and I am—— 

Mr. THOMPSON. Well, Madam Secretary, the issue is 170,000 

kids, 70,000 of them right now are going to move out of CHIP, 

which is a program that works—— 

Secretary SEBELIUS. Right. 

Mr. THOMPSON [continuing]. It is market-based—and be put into 

Medicaid. And I would say the majority of folks on Medicaid cannot 

find physicians, let alone specialists such as pediatricians. 

Thank you, Mr. Chairman. 

Chairman KLINE. The gentleman’s time has expired. 

Mr. Scott? 

Mr. SCOTT. Thank you, Mr. Chairman. 

Madam Secretary, we heard about the Cadillac plan being taxed. 

Isn’t it true that the taxes really affect that you only get a deduction on the cost of a basic plan and if you spend more than that 

that is just taxable income, that you pay tax like everybody else? 

Secretary SEBELIUS. That is correct. It is a cap on how much you 

can deduct—— 

Mr. SCOTT. Okay. And—— 

Secretary SEBELIUS [continuing]. And how—the level of the insurance deduction. And again, Congressman, as you know, it is not 

to kick in until 2018 and it was an attempt to put on the horizon 

the need for health plans to actually deliver some lower-cost services. 

Mr. SCOTT. Well, and so they are blaming something on the Affordable Care Act. It could not have had any effect—the Affordable 

Care Act couldn’t have had any effect on that because it hadn’t— 

the tax hadn’t even gone into effect. Is that right? 

Secretary SEBELIUS. That is correct. 

Mr. SCOTT. You mentioned the reason that 20 percent of the people have no insurance and would benefit with the Affordable Care 

Act. Isn’t it true that the 80 percent that have insurance, for them 

we are closing the donut hole, we are—those with preexisting conditions can get and keep insurance and can switch insurances, that 

they get free prevention, that is lower cost to individuals in the individual market, those—we are eliminating insurance abuses like 

rescission for those with insurance, the no limits annual or lifetime 

on what the insurance company has to pay, and we extended the 

cost of Medicare for 8 years—aren’t those benefits that the 80 percent will get? 

Secretary SEBELIUS. Well, I think you are absolutely right. You 

have just outlined some of the market advantages for the 80 percent. But I would say there are some additional ones. 

First of all, the 80 percent right now are paying for the cost of 

care for a lot of the people who don’t have coverage—— 

Mr. SCOTT. And how much—— 

Secretary SEBELIUS [continuing]. Because their hospital bills are 

higher, their doctor bills are higher—— 

Mr. SCOTT. How much is that for the average policy? 

Secretary SEBELIUS. It is estimated by some economists that it is about $1,000 per family on their policies extra that they are paying for uncompensated care. 

47 

Mr. SCOTT. The gentleman from South Carolina raised questions 

about the administration of the program. Can you say a word about 

what the budget cuts and sequester has done to your ability to 

properly and effectively administer the program? 

Secretary SEBELIUS. All of our programs? 

Mr. SCOTT. Putting the Affordable Care Act into effect? 

Secretary SEBELIUS. Well, I think that we certainly have had a 

challenge the last couple of years in terms of resources specifically 

to effectively implement the Affordable Care Act. We did not have 

a budget in 2013 and then we had sequester on top of that so that 

it has made, I think, it very difficult, but we are doing a job to 

make sure the resources go, that the programs are built, and that 

we are ready to implement on October 1st. 

Chairman KLINE. The gentleman’s time has expired. 

Dr. DesJarlais? 

Mr. DESJARLAIS. Thank you, Mr. Chairman. 

Madam Secretary, what, in your opinion, was the biggest reason 

or need for Obamacare or this health care law? 

Secretary SEBELIUS. The biggest reason was that way too many 

of our population had no coverage at all or coverage that was 

unaffordable in and out of the market. 

Mr. DESJARLAIS. How many people? 

Secretary SEBELIUS. It is estimated that it is about a sixth of our 

population. 

Mr. DESJARLAIS. Can you put a number on that? How many people were uninsured? 

Secretary SEBELIUS. I can go back to 2010 and get you the exact 

number. I don’t—— 

Mr. DESJARLAIS. Can you give me a guess? 

Secretary SEBELIUS. Well, a sixth of the—about 20 percent of the 

population, we have about 300 million people. 

Mr. DESJARLAIS. Okay. The President said when he implemented 

the law that there was roughly 31 million uninsured Americans. Is 

that right? 

Secretary SEBELIUS. He may have said that. That is probably a 

little low. 

Mr. DESJARLAIS. Okay. According to the CBO’s recent report, 44 

million people will be uninsured next year and still 31 million people will be uninsured in 2023. This is despite the federal government spending almost $2 trillion to implement this law. 

Now, would you say if the CBO—the Congressional Budget Office’s numbers are correct, that the President’s signature legislation 

at—to achieve universal coverage is a success or is it looking to be 

maybe not so much? 

Secretary SEBELIUS. Well, what we know right now—and I think 

it is safer to deal in fact—— 

Mr. DESJARLAIS. Well, let’s look at the numbers—you can address the numbers that CBO—— 

Secretary SEBELIUS [continuing]. Is that we have got 3 million 

young adults who were not covered in 2010 who now have coverage. We know that. We know that small business owners are 

staying in the marketplace differently than they were in the decade 

before the Affordable Care Act when they were dropping coverage. 

So we start with a baseline that has added 3 million—— 

48 

Mr. DESJARLAIS. Well, Madam Secretary, I know what you are 

saying here, but what about all the concerns of the people who 

have insurance that are going to lose it? Because these numbers 

that CBO aren’t projecting aren’t the ones that you were talking 

about; these are new people. 

These are a bunch of people around the country—the fifth— 

sixth—60 percent of Americans that didn’t want this health care 

law that are going to lose their insurance and have to pay taxes. 

What do you say to those people? I mean, the CBO says it. Do you 

agree with the CBO’s numbers? 

Secretary SEBELIUS. I don’t have any idea what numbers you are 

quoting but I would rather deal with what is happening on the 

ground and I will be glad to come back next year, sir, and—— 

Mr. DESJARLAIS [continuing]. 30 million to 40 million people are 

not going to have insurance with this new signature Obamacare 

and you have to—— 

Secretary SEBELIUS. I have no idea where those numbers come 

from and where the CBO has got them. No idea. 

Mr. DESJARLAIS. Well, we will get you the numbers. Thank you. 

Secretary SEBELIUS. Yes. 

Chairman KLINE. Gentleman yields back. 

Dr. Heck? 

Mr. HECK. Thank you, Mr. Chairman. 

Thank you, Madam Secretary. 

You know, there has obviously, as expected, been a lot of discussion about the Affordable Care Act today and how it is supposed 

to increase access to health care. And I think it is a bit of a 

mischaracterization because the bill really attempts to increase access to health insurance, and increased access to health insurance 

doesn’t necessarily increase access to health care. 

With that in mind, I would like to ask you a question about a 

bipartisan concern, and that is the looming physician shortage. The 

Association of American Medical Colleges projects that by 2020 the 

U.S. will be facing a 91,500-physician shortage that is evenly split 

between specialists and primary care physicians. 

And so I am concerned that at a time when we need to grow the 

physician workforce the administration continues to propose cutting Medicare support for physician training and the critical services provided by teaching hospitals. It is estimated that the President’s proposal to cut Medicare IME by 10 percent could cost America’s teaching hospitals over $700 million annually, including about 

$1.6 million in my home state of Nevada, and would severely impact their ability to train the next generation of physicians. 

As you know, IME is not an overhead payment. In fact, teaching 

hospitals receive IME funding to help compensate them for the 

higher costs because they take care of sicker, more complex patients and provide services that other hospitals cannot, such as 

trauma centers, burn units, and standby capacity. 

Can you tell me, has the administration even considered the impact of this cut on teaching hospitals’ ability to maintain these critical services and thus actually increase access to quality health 

care? 

Secretary SEBELIUS. Yes, sir. I know that the reduction in medical education is potentially difficult for a number of teaching hosVerDate Nov 24 2008 16:36 Apr 23, 2014 Jkt 000000 PO 00000 Frm 00052 Fmt 6633 Sfmt 6602 G:\DOCS\113TH\FC\113-20\81276.TXT DICK
49 

pitals. The cost reduction is estimated based on how much it costs 

to actually provide the residency slots and how much is administrative costs, and the administrative costs are reduced and the costs 

to provide the residential slots are in the President’s budget—were 

in the President’s budget last year. 

In addition, there are a whole variety of additional workforce initiatives that have been underway since the beginning of this administration to provide more health care providers, I mean, more— 

tripling the size—or doubling the size, I am sorry, of the national 

health service corps, which not only is doctors but nurses, mental 

health practitioners, dentists, and others—increasing nurse and 

nurse training programs, looking at moving medical slots from specialty care to primary and geriatric care, knowing that is where the 

providers are going to be needed. 

So there is a constant and, I think, continued look at workforce 

issues, which really have nothing to do with the Affordable Care 

Act but have to do with our aging population and the demographics 

of what we are going to need in terms of health care providers. 

Mr. HECK. Well, I would agree but I would be concerned when 

the Association of Medical Colleges is saying there is not enough 

training slots and we are trying to look at cutting dollars to training slots, that we are going to continue to compound this shortage. 

And I have always said that the greatest single threat to Medicare, 

in my opinion, is SGR—— 

Secretary SEBELIUS. I would agree. 

Mr. HECK [continuing]. And the second-greatest threat is GME. 

And we can have a great program but if there is nobody to take 

care of the seniors then the program really doesn’t do much good. 

Thank you, Mr. Chair. I yield back. 

Chairman KLINE. Gentleman’s time has expired. 

My apologies to those members of the committee who didn’t get 

a chance to answer questions. We have hit the hard stop of 12 

o’clock. 

I would like to yield briefly to my colleague for his closing comments? 

Mr. MILLER. I won’t take time because there are members who 

didn’t get questions because of the secretary’s schedule. 

And I just want to thank you, Madam Secretary, for your presentation here today. I think that, you know this list of successes that 

mount every day, the studies that are done every day that point 

to the positive impacts of the Affordable Care Act is very exciting, 

and I thank you again for the tremendous work you have done in 

implementation of this act. 

Chairman KLINE. I thank the gentleman. 

Of course, I have a different view. It seems to me we are seeing 

an awful lot of bad news that is coming out of the impending implementation of the Affordable Health Care Act and so the debate 

will continue. 

I ask unanimous consent that an article from the Wall Street 

Journal called ‘‘Obamacare Bait and Switch’’ be included in the 

record. Again, I thank the secretary—— 

[The information follows:] 

50 

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

ObamaCare Bait and Switch 

The truth about those rate increases in Oregon and California 

Liberals have spent years claiming that ‘‘rate shock’’ under the Affordable Care 

Act—the 20% to 30% average spike in insurance premiums that every independent 

analyst projects—is merely the political imagination of Republicans and the insurance industry. So they immediately claimed victory when California reported last 

month that the plans that will be available on the state’s new insurance exchange 

next year would be cheaper than they are today. 

Except now it emerges that California goosed the data to make it appear as if 

ObamaCare won’t send costs aloft as the law’s regulations and mandates kick in. 

It will, by a lot. And now liberals have suddenly switched to arguing that, sure, insurance will be more expensive but the new costs are justified. Needless to say that 

was not how Democrats sold health-care reform. 

California reported that the rates would range from 2% above to 29% below the 

current market. ‘‘This is a home run for consumers in every region of California,’’ 

said Peter Lee, the director of the state exchange. ‘‘These rates are way below the 

worst-case gloom-and-doom scenarios we have heard.’’ 

But Mr. Lee and his fellow regulators were making a false comparison. They 

weren’t looking at California’s lightly regulated individual insurance market that 

functions surprisingly well. They were comparing ObamaCare insurance to the 

state’s current small-business market where regulations similar to ObamaCare have 

already been imposed. 

In other words, California wasn’t comparing apples to apples. It wasn’t even comparing apples to oranges. It was comparing apples to ostriches. The conservative analyst Avik Roy consulted current rates on the eHealthInsurance website and discovered that the cheapest ObamaCare plan for a typical 25-year-old man is roughly 

64% to 117% more expensive than the five cheapest policies sold today. For a 40 

year old, it’s 73% to 146%. Stanford economist Dan Kessler adds his observations 

nearby. 

We wouldn’t be shocked if California deliberately abused statistics in the hopes 

that no one would notice that in some cases premiums would more than double. In 

any case, the turn among the liberals who touted the fake results has been educational. 

They now concede that individual costs will rise but claim that it is unfair to compare today’s market to ObamaCare because ObamaCare mandates much richer benefits. Another liberal rationalization is that the cost-increasing regulations are 

meant to help people with pre-existing conditions, so they’re worth it. 

So they’re finally admitting what some of us predicted from the start, but that’s 

also the policy point. Americans are being forced to buy more expensive coverage 

than what they willingly buy today. Liberals also argue that some of the new costs 

will be offset by subsidies, which is great news unless you happen to be a taxpayer 

or aren’t eligible for ObamaCare dollars and wake up to find your current coverage 

is illegal. 

The Affordable Care Act was sold as a tool to lower health costs. In case you 

missed it, the claim is right there in the law’s title. The new Democratic position 

is that the entitlement will do the opposite but never mind, which is at least more 

honest. 

But we wonder how long this new candor will last. If the public reacts badly to 

these higher premiums, the authors of ObamaCare will soon be back to blaming insurance companies and Republicans. 

Mr. MILLER. I ask unanimous consent that an article from the 

New York Times talking about the rise of entrepreneurship 

and—— 

[The information follows:] 

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

Affordable Care Act Could Be Good for Entrepreneurship 

By CATHERINE RAMPELL

The Affordable Care Act is expected to produce a sharp increase in entrepreneurship next year, according to a new report from the Robert Wood Johnson Foundation, the Urban Institute and Georgetown University’s Health Policy Institute. The 

number of self-employed people is expected to rise by 1.5 million—a relative increase of more than 11 percent—as a direct result of the health care overhaul. 

51 

One major barrier to entrepreneurship in the United States—beside the usual 

risks involved with starting a company—is that it has been difficult to get health 

insurance on the individual market. Those who do end up founding or joining a 

start-up are often able to do so because they have a spouse with employer-sponsored 

insurance, or because they are keeping a day job with a bigger company. (This was 

the case, for example, for most of the people involved with Leap2, a Kansas City 

start-up that I profiled last fall.) 

Economists have looked at whether this insurance-related job lock is deterring 

self-employment and the formation of new businesses, and the data suggest it is. 

A Journal of Health Economics paper, for example, found that business ownership 

rates jumped sharply from just under age 65 to just over age 65, when people become newly eligible for Medicare. Using Current Population Survey data, the same 

paper also found that wage and salary workers are more likely to start businesses 

from one year to the next if they have a spouse with employer-based insurance. 

A working paper from the Upjohn Institute looked at a change in the law in New 

Jersey that expanded access to individual health insurance. It found that the law 

seemed to increase self-employment, particularly among ‘‘unmarried, older, and observably less-healthy individuals.’’ 

The report released Friday applies those findings to a model of what will happen 

in 2014, based on the Affordable Care Act’s provisions for ‘‘universal availability of 

non-group coverage, the financial assistance available for it, and other related market reforms.’’ The authors also adjusted their numbers depending on the access that 

residents of various states already have to individual health insurance. (Vermont, 

for example, already has a statute that allows the self-employed to obtain small 

group coverage.) Over all, they found, the ranks of the self-employed are likely to 

rise 11.5 percent, from about 13.1 million to 14.6 million. A table with their stateby-state estimates is below. 

By the way, the paper does not mention this, but the same forces that will make 

it easier for workers to become self-employed may also make it easier for workers 

to retire early. I have heard anecdotally about people in their late 50s or early 60s 

who would like to retire but can’t do so because they’re basically uninsurable (for 

now) on the individual market; I wonder if we’ll notice a wave of retirements in this 

age group come 2014. 

State Self-employment 

absent A.C.A. 

Self-employment 

post-A.C.A. changes 

Increase due to 

A.C.A. 

% Increase due to 

A.C.A. 

Alabama ......................................................... 118,000 134,000 16,000 13.60% 

Alaska ............................................................. 31,000 35,000 4,000 12.90% 

Arizona ............................................................ 301,000 340,000 39,000 13.00% 

Arkansas ......................................................... 99,000 112,000 13,000 13.10% 

California ........................................................ 1,901,000 2,149,000 248,000 13.00% 

Colorado ......................................................... 304,000 331,000 27,000 8.90% 

Connecticut .................................................... 185,000 202,000 17,000 9.20% 

Delaware ......................................................... 31,000 33,000 2,000 6.50% 

District of Columbia ....................................... 21,000 24,000 3,000 14.30% 

Florida ............................................................ 819,000 891,000 72,000 8.80% 

Georgia ........................................................... 432,000 488,000 56,000 13.00% 

Hawaii ............................................................ 58,000 63,000 5,000 8.60% 

Idaho .............................................................. 83,000 94,000 11,000 13.30% 

Illinois ............................................................. 475,000 537,000 62,000 13.10% 

Indiana ........................................................... 224,000 253,000 29,000 12.90% 

Iowa ................................................................ 148,000 167,000 19,000 12.80% 

Kansas ............................................................ 116,000 131,000 15,000 12.90% 

Kentucky ......................................................... 150,000 170,000 20,000 13.30% 

Louisiana ........................................................ 179,000 203,000 24,000 13.40% 

Maine .............................................................. 73,000 79,000 6,000 8.20% 

Maryland ......................................................... 231,000 261,000 30,000 13.00% 

Massachusetts ............................................... 281,000 281,000 0 0.00% 

Michigan ......................................................... 317,000 344,000 27,000 8.50% 

Minnesota ....................................................... 258,000 292,000 34,000 13.20% 

Mississippi ..................................................... 102,000 110,000 8,000 7.80% 

Missouri .......................................................... 242,000 273,000 31,000 12.80% 

Montana ......................................................... 72,000 81,000 9,000 12.50% 

Nebraska ........................................................ 104,000 117,000 13,000 12.50% 

Nevada ........................................................... 104,000 117,000 13,000 12.50% 

New Hampshire .............................................. 74,000 81,000 7,000 9.50% 

New Jersey ...................................................... 304,000 330,000 26,000 8.60% 

52 

State Self-employment 

absent A.C.A. 

Self-employment 

post-A.C.A. changes 

Increase due to 

A.C.A. 

% Increase due to 

A.C.A. 

New Mexico ..................................................... 94,000 106,000 12,000 12.80% 

New York ........................................................ 743,000 808,000 65,000 8.70% 

North Carolina ................................................ 378,000 411,000 33,000 8.70% 

North Dakota .................................................. 52,000 58,000 6,000 11.50% 

Ohio ................................................................ 514,000 581,000 67,000 13.00% 

Oklahoma ....................................................... 173,000 196,000 23,000 13.30% 

Oregon ............................................................ 212,000 240,000 28,000 13.20% 

Pennsylvania .................................................. 464,000 524,000 60,000 12.90% 

Rhode Island .................................................. 43,000 46,000 3,000 7.00% 

South Carolina ............................................... 155,000 176,000 21,000 13.50% 

South Dakota .................................................. 57,000 65,000 8,000 14.00% 

Tennessee ....................................................... 258,000 292,000 34,000 13.20% 

Texas .............................................................. 955,000 1,079,000 124,000 13.00% 

Utah ................................................................ 99,000 112,000 13,000 13.10% 

Vermont .......................................................... 41,000 41,000 0 0.00% 

Virgina ............................................................ 333,000 376,000 43,000 12.90% 

Washington ..................................................... 346,000 376,000 30,000 8.70% 

West Virginia .................................................. 46,000 52,000 6,000 13.00% 

Wisconsin ....................................................... 256,000 290,000 34,000 13.30% 

Wyoming ......................................................... 32,000 36,000 4,000 12.50% 

Copyright 2013 The New York Times Company. 

Chairman KLINE. Without objection, they will both be included 

in the record. 

I thank the secretary for your testimony, for your answering 

questions, and for your presence here today. 

And with that, we are adjourned. 

[Questions submitted for the record follows:] 

53 

CHAIRMAN KLINE

Head Start 

The president’s proposed Preschool for All program would be housed at the Department of Education while HHS plans to continue to operate Head Start and the 

Child Care and Development Block Grant, programs that provide education and 

care services primarily targeted to children ages zero to five. In fact, a 2012 Government Accountability Office (GAO) report found 45 such programs scattered across 

multiple agencies (including yours) costing taxpayers at least $13.3 billion annually. 

Why is the administration proposing to further fragment the federal government’s 

early childhood education and care system? 

Child abuse 

How many HHS programs exist to help states protect children from abuse and 

neglect? How is HHS coordinating these efforts to ensure the best investment of taxpayer funds? 

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


81276-3.eps
54 

Older Americans 

1. How is the Administration for Community Living meeting the needs of both the 

disability and aging communities? How have the constituencies of both groups responded to the consolidation of the Administration on Aging, the Office of Disability, 

and the Administration on Intellectual and Developmental Disabilities? 

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

aging community? 

3. In the president’s 2014 budget request, HHS calls for funding new programs 

and projects at the expense of its current obligations, specifically in nutrition programs for seniors. The budget requests $816 million for Older Americans Act nutrition programs, a reduction from 2013 levels, which is estimated to support meals 

for 2.3 million seniors. These cuts come on top of: (1) state and local budget cuts; 

(2) rising costs for food and transportation; (3) smaller or fewer donations due to 

a slow economy; (4) increased demand for services, as Baby Boomers turn 65 at a 

rate of 10,000 a day (about 12,000 individuals turn 60 everyday); and (5) increased 

need for services. How do you justify the call for funding new programs when current obligations are not being met? 

4. While the committee continues to gather information to inform the reauthorization of the Older Americans Act, when can we expect to see your recommendations, 

if any, for the reauthorization? 

CONGRESSMAN THOMAS PETRI (WI)

1. I have been contacted by several Wisconsin Medicaid-dependent home care providers with over 1,000 employees each. As you know, the ACA requires that these 

entities provide insurance to their employees or pay a fine. While most normal businesses would raise their prices in the face of rising costs, unfortunately these providers are in the unique position of only having one customer—the Medicaid program. As has been well documented, the Medicaid program significantly underpays 

providers relative to their costs, leaving these operators with very little margin. 

Therefore, the ACA puts them in an impossible position as they cannot afford to 

provide the required insurance or pay the fine, but also cannot raise their rates. 

It is my understanding that they have sought relief from your department as well 

as from the Department of the Treasury. While sympathy is expressed, no solution 

has been offered. These personal care providers are vital to our nation’s health care 

infrastructure as they allow individuals to receive care in their homes, rather than 

an institution. What alternative can you offer to these providers besides bankruptcy? 

CONGRESSMAN PHIL ROE (TN)

1. Several hospitals in East Tennessee recently brought to my attention the wide 

disparity in Medicare payments among different regions of the country as a result 

of the wage index. The low payments that hospitals in my state are receiving as 

a result of the wage index are threatening their viability and could lead to diminished access to care. Does your department have any recommendations on how Congress could address this inequity and provide adequate payment to hospitals in 

states like Tennessee? 

2. At a recent committee field hearing in North Carolina, Mr. Chuck Horne, the 

president of a textile company with 350 employees, testified as to the impact that 

the Affordable Care Act will have on his business. Mr. Horne currently offers outstanding insurance benefits—at great cost to the company—because he believes it 

is the right thing to do. Mr. Horne, however, will be punished by the transitional 

reinsurance fee of $63 per covered life even though his company will not benefit 

from it. What would you say to Mr. Horne, who will pay $32,000 to provide a backstop to large insurance companies instead of having that money to reinvest in his 

business? Do you believe this is fair? 

CONGRESSMAN TODD ROKITA (IN)

1. Over 5 million people in the United States have Alzheimer’s disease. Getting 

a timely and accurate diagnosis is an important part of addressing this disease. 

Leading experts & even the Health and Human Services own web site stress the 

value of early diagnosis. 

Early diagnosis allows families to better plan for the course of this disease and 

it allows patients and medical experts to explore various treatments available that 

can help possibly delay or mitigate symptoms common with this disease. 

55 

Far too many people with Alzheimer’s are not diagnosed until their symptoms 

have become severe, making it much more difficult and complex for them and their 

loved ones to plan for the future. What is HHS doing to ensure timely access and 

coverage to new technologies for Alzheimer’s disease as they become available, particularly diagnostic tools that can help individuals to get the care they need before 

it’s too late? 

2. CMS currently reimburses for countless medications and procedures to treat 

patients with Alzheimer’s disease or other forms of cognitive impairment. Given 

that 1 in 5 patients who are diagnosed with Alzheimer’s actually have something 

else, can you comment on why the agency is considering not covering a diagnostic 

agent for this disease state that was approved by the FDA over a year ago? 

CONGRESSMAN LARRY BUCSHON (IN)

1. Secretary Sebelius, the Association of American Medical Colleges and the US 

Health Resources and Services Administration—an agency within HHS—project 

that by 2020 the US will be facing a large physician shortage that is evenly split 

between specialists and primary care physicians. I’m very concerned that at a time 

when there is general agreement that we need to grow the physician workforce because of the aging of the baby boomers, the Administration is actually proposing 

cutting Medicare’s support for teaching hospitals and the critical services they provide. 

The President’s proposal to cut Medicare indirect medical education payments by 

10 percent would cost America’s teaching hospitals millions annually as they try to 

train physicians and would jeopardize these hospitals’ ability to provide care for the 

sickest in their communities, especially seniors and the underserved. Make no mistake, in addition to hindering the training of doctors, cuts to providers will wind 

up leading to cuts to patient services. 

Can you help me understand the rationale behind this cut? 

CONGRESSMAN TREY GOWDY (SC)

1. What section of the Public Health Service Act do you derive your authority to 

solicit funds from private groups in order to fund the implementation of the Patient 

Protection and Affordable Care Act? 

CONGRESSMAN LOU BARLETTA (PA)

As you know, Pennsylvania recently requested that HHS provide flexibility to the 

state to continue the Pennsylvania Children’s Health Insurance Program (CHIP) 

and to exempt the state from having to transfer a significant portion of its enrollees 

into the Medicaid system. Under Obamacare, PA’s CHIP kids would have to be 

added to that population. Because of the law, the state has calculated that of the 

187,000 current enrollees in PA CHIP, they will have to involuntarily transfer approximately 70,000 enrollees onto the Medicaid rolls. 

1. Do you think it is better for those kids to remain in a program that has better 

provider capacity? 

2. How are you going to explain that they can no longer get prompt service because they have been moved to a program that reimburses providers so poorly that 

there aren’t enough providers to take care of everyone in the program? 

CONGRESSWOMAN MARTHA ROBY (AL)

1. Prior to the House Committee on Education and the Workforce hearing on June 

4, 2013, I reached out to my constituents on Twitter and Facebook to see what questions they might ask you if they had the opportunity to do so. I compiled their questions and would like responses to share with each individual. Per their request, personal information has been redacted. 

a. My employer has provided excellent insurance coverage for over 30 years. It 

would definitely be classified as a ’Cadillac Plan.’ This year we were forced to 

change coverage. Please tell me how penalizing or taxing companies that provide excellent coverage has anything to do with ensuring everyone has access to affordable 

healthcare. 

b. The President said if we liked our current plan we could keep it. This has 

turned out to be false. What changes to Obama Care is the administration doing 

to ensure that this statement does not turn out to be a lie? 

c. The plan [PPACA] was touted as a cost saver, but as the details become available we’re seeing the opposite. My question is: if the plan is evolving into something 

it was never intended to be, what is the Secretary intended to do to impose cost 

controls? 

56 

d. Now that we see so many companies reducing work hours of employees to preclude having to pay the higher cost /coverage of insurance for people working over 

30 hrs, what are you going to do to help those people make up the difference in 

lost pay and lost benefits? 

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

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

costs? 

2. As you know, beginning in 2014, businesses with 50 or more full-time equivalent employees will be required to provide health insurance coverage to full-time 

employees or face new tax penalties. 

Many of the businesses Alabama are family owned and operated businesses, 

passed down generation after generation. One specific heating and plumbing company in Montgomery, AL is extremely confused with the current mandate set to go 

into effect in 2014. 

Their business currently has a count of 52 employees; however, three of these individuals are considered businesses owners. Per the law’s mandates, is this business 

required by law to provide coverage to their employees? 

Has the Department issued any specific, in-depth guidance as to how to count 

each employee—including business owners and family members as employees? For 

example, the State of Alabama’s workers compensation regulations do not take into 

account business owners as employees. Does the health care law? 

3. On a similar note, there is much ambiguity regarding coverage for young adults 

who remain on their parent’s insurance plans until they are 26. 

If a young adult is employed part-time at a local grocery store, around 25-30 

hours a week, they are technically be classified as a ‘‘full-time employee’’ per the 

Department’s definition. In this instance, who is primarily responsible to provide 

health care to the young adult—the parent or the business? 

If there is a lack of compliance from such business and they do not provide the 

health insurance mandated by law, what is the penalty associated to this business? 

CONGRESSWOMAN SUSAN BROOKS (IN)

1. Alzheimer’s disease is estimated to cost the nation $200 billion this year alone, 

and about 70 percent of that—$140 billion—is shouldered by taxpayers in Medicare 

and Medicaid costs. If the current trajectory holds, this number will exceed $1 trillion annually in the coming decades. 

Experts as well as our government have stressed the value of an early and accurate diagnosis in treating Alzheimer’s to prevent costly and time-consuming 

misdiagnoses, as well as begin proper care planning earlier. At the same time, companies have been working to create diagnostic tests that could lead to an earlier 

finding of Alzheimer’s. 

As diagnostic technologies for Alzheimer’s and other diseases continue to be developed and gain approval by the FDA, what measures be taken to prioritize coverage 

of diagnostic tools, particularly when early diagnosis of diseases like Alzheimer’s 

and others can lead to dramatically lower costs? 

2. One of the selling points of the health care law to small businesses was the 

ability to offer their employees a range of choices in the new insurance exchanges. 

However, last Friday HHS announced a delay in the implementation of the employee choice component of SHOP in the 33 states where the federal government 

will run the exchange. This delay once again shows the administration is falling behind in implementation of this flawed law. The result is fewer choices and higher 

premiums for small businesses and their employees. Are you at all concerned this 

delay will push more employers to simply drop insurance? 

3. It has been three years since enactment of the health care law, yet the administration has not issued many of the critical rules needed for 2014. When will these 

much-needed rules be released? Open enrollment is expected to begin in October 

2013. Won’t states, employers, and insurers need to know the final rules before they 

can invest the hundreds of millions of dollars required to implement the law? 

CONGRESSMAN RICHARD HUDSON (NC)

1. Madam Secretary, the Congressional Budget Office estimates that job creators 

will pay $140 billion in new taxes because of the employer mandate in the health 

care law 

Last December, Chairman Kline and Dr. Roe, sent you and Sectaries Geithner 

and Solis a letter asking for information about how the employer mandate and its 

penalties will impact employment, specifically part-time workers. Treasury responded on behalf of the three agencies, stating, quote: ‘‘We have not conducted any 

specific analysis of the effects on employment’’. 

57 

In April, our health subcommittee held a hearing in my district in North Carolina 

where we heard from employers struggling to figure out how the law will affect 

their businesses, employees, and customers. Ed Tubel, owner of Sonny’s BBQ, testified that his company’s compliance costs may reach $200,000. Tina Hayes, Chief 

Human Resources Officer at a local community college testified they will have to 

reduce the number of courses they offer because of the new employer mandate. 

Madam Secretary, an employer with 49 workers that cannot afford to buy government approved insurance will face a fine of $40,000 for hiring just one new worker. 

We need job growth and small businesses to lead the way. What would you say to 

the small business owners that testified in North Carolina about the crushing new 

taxes they face for not providing government approved insurance? Or, to the workers who are seeing their hours and take home pay reduced because their employer 

simply cannot afford government-approved insurance? 

Madam Secretary, to confirm for the record, your agency has not conducted any 

specific economic analysis to determine how the new employer mandate will impact 

employment? 

CONGRESSMAN LUKE MESSER (IN)

1. I have been contacted by several superintendents and part-time school employees in my congressional district about the harmful impact the Affordable Care Act 

may have on educational organizations and their employees. 

A. Are you concerned the quality of education provided to students will suffer because schools are reducing the hours of some employees below 30 per week due to 

the harsh tax penalties imposed by the Affordable Care Act? 

B. Do you believe a 30 hour work week is an appropriate amount to be considered 

a full-time employee? 

C. Has the Department analyzed the potential impact on school employees that 

the Affordable Care Act’s employer responsibility provisions may have, particularly 

given Internal Revenue Service guidance regarding the manner in which schools are 

required to calculate their number of full-time employees? 

2. The Administration has made early detection and clinical diagnosis of Alzheimer’s disease a priority under its National Alzheimer’s awareness campaign. 

What specific steps is the Administration undertaking to further this principle? 

A. For example, will you make a diagnostic test that can assess whether a Medicare beneficiary with cognitive impairment actually has Alzheimer’s disease accessible to all the appropriate patients for such a test? 

3. Currently, a significant number of patients with cognitive impairment, possibly 

Alzheimer’s disease, do not receive the right diagnosis. I appreciate that an accurate 

and early diagnosis is one of the continuing goals of the National Plan to Address 

Alzheimer’s Disease. 

Do you agree that ensuring access to accurate diagnosis through FDA approved 

technologies for patients with cognitive impairment would help achieve a major goal 

of the National Plan to Address Alzheimer’s Disease? 

CONGRESSMAN BOBBY SCOTT (VA)

1. Is there currently data available that shows the effects of preventive care without co-pays or deductibles? For example, due to increased access for tests such as 

mammograms, are cancers being detected at an earlier stage than before? 

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

CONGRESSMAN RUBEN HINOJOSA (TX)

1. As you know the rollout of the Affordable Care Act exchanges in January of 

next year is a critical time. In the coming months, my constituents and small business need to be educated as to what they can expect, what is expected of them, and 

they will look to our offices to help guide them through the process. 

With the Republican budget cuts, including the arbitrary sequestration cuts they 

championed and passed into law, what resources are available for HHS employees 

to travel to congressional districts for rollout events, informational town hall meetings and constituent outreach in the months ahead? 

2. As you know in the state of Texas, Governor Parry has put politics above the 

health of Texans and refused to participate in the Medicaid expansion program 

which would have provided health care to over 1.5 million Texans as well as create 

more than three million jobs, according to a report generated by the Perryman 

Group. This is all despite the fact that a recent poll by the Texas Hospital Association shows a majority of Texans are in favor of Medicaid expansion. 

58 

My concern is that because of the Governors short sighted decision hospitals will 

get stuck in the middle. As you know, the Affordable Care Act calls for a reduction 

in Disproportionate Share Hospital (DSH) payments based on an assumption that 

states are expanding Medicaid. Since this expansion is not happening in Texas, how 

will you work with hospitals in Texas to make sure they do not get financially 

harmed by a DSH reduction? 

CONGRESSMAN JARED POLIS (CO)

1. In addition to expanding access to high quality early education programs, it is 

crucial that early education programs such as Head Start work with elementary 

schools to ensure a strong transition. That’s why I introduced a bipartisan, no-cost 

bill, the Continuum of Learning Act, which would align early childhood education 

and early elementary school standards and professional development activities 

through strong child development practices and policies. How would the administration’s preschool proposal strengthen connections between existing early learning 

programs and the elementary grades? 

[Secretary Sebelius’ response to questions submitted for the 

record follows:] 

OFFICE OF THE SECRETARY, 

DEPARTMENT OF HEALTH & HUMAN SERVICES, 

Washington, DC, February 7, 2014. 

Hon. JOHN KLINE, Chairman, 

Committee on Education and the Workforce, House of Representatives, Washington, 

DC 20515. 

DEAR MR. CHAIRMAN: Thank you for the opportunity to complete the record for 

the June 4, 2013 hearing at which Secretary Sebelius testified on the FY 2014 

Budget for the Department of Health and Human Services. Enclosed you will find 

the answers to your questions. 

I hope this information is helpful. If I may be of further assistance, please do not 

hesitate to contact me at 202-690-7627. 

Sincerely, 

JIM R. ESQUEA, 

Assistant Secretary for Legislation. 

Enclosure. 

CHAIRMAN JOHN KLINE (MN)

1. The president’s proposed Preschool for All program would be housed at the Department of Education, but HHS plans to continue to operate Head Start and the 

Child Care and Development Block Grant, programs that provide education and care 

services primarily targeted to children ages zero to five. A 2012 Government Accountability Office (GAO) report found 45 such programs scattered across multiple agencies (including yours) costing taxpayers at least $13.3 billion annually. Why is the 

administration proposing to further fragment the federal government’s early childhood education and care system? 

Answer: The Administration’s proposal represents a coordinated and comprehensive approach to strengthen and expand early childhood education services for our 

nation’s most vulnerable children. The President’s plan will maintain and build on 

current Head Start investments to support a greater share of infants, toddlers and 

three year olds in Head Start centers, while state preschool settings will serve a 

greater share of four year olds using Department of Education preschool funding. 

The net result will be more five year old children entering kindergarten ready to 

succeed. The Preschool for All program focuses on 3 and 4 year olds. Head Start 

(and Early Head Start) will now focus on infants and toddlers. Currently, fewer 

than 5% of infants and toddlers living below the poverty line receive Early Head 

Start Services. 

As part of the President’s Early Education Plan, we would also expand high quality early learning services to over 100,000 infants and toddlers through Early Head 

Start—Child Care Partnerships. These partnerships will build on the strengths of 

Early Head Start and child care investments. Instead of duplicating efforts, HHS 

will purposefully use the existing infrastructure of child care centers and homes in 

partnership with Early Head Start to improve access and quality so that more of 

our nation’s most vulnerable infants and toddlers will receive the high quality, comprehensive full day full year services they need. Additionally, this proposal was deVerDate Nov 24 2008 16:36 Apr 23, 2014 Jkt 000000 PO 00000 Frm 00062 Fmt 6633 Sfmt 6621 G:\DOCS\113TH\FC\113-20\81276.TXT DICK
59 

1See: http://www.medicaid.gov/Federal-Policy-Guidance/Downloads/SMD-13-004.pdf 2See: Report on Efforts to Coordinate Programs and Activities Related to Child Abuse and 

Neglect, June 2013 

veloped in partnership with the U.S. Department of Education and the U.S. Department of Health and Human Services, to ensure that children and families experience successful transitions and continuous high-quality early learning services from 

birth through age five and into the early grades of elementary school. 

2. How many HHS programs help states protect children from abuse and neglect? 

How is HHS coordinating these efforts to ensure the best investment of taxpayer 

funds? 

Answer: Child abuse and neglect is a complex, multidimensional problem. Research confirms that childhood trauma and maltreatment can lead to a range of 

negative effects on physical and mental health that extend into adulthood. Addressing child maltreatment cuts across many disciplines and therefore collaborative efforts are essential to preventing child maltreatment, promoting well-being, and improving the lives of children and families across the United States. There are several programs, both across HHS and other agencies that in some way touch on the 

issue through prevention, intervention, treatment, and law enforcement activities. 

Within HHS, the grant programs authorized by the Child Abuse Prevention and 

Treatment Act (CAPTA) and the programs authorized under titles IV-B of the Social 

Security Act specifically focus on the prevention and treatment of child abuse and 

neglect and the provision of public child welfare services as part of their core mission. CAPTA programs include the Community-Based Child Abuse Prevention Program, Children’s Justice Act, Basic State Grant, and CAPTA research and demonstration grants. 

CAPTA programs focus on collaboration and coordination for upfront prevention 

and improving the investigation and response to child maltreatment. The title IVB programs provide funding for a wide range of child welfare related activities, including child abuse and neglect prevention and family preservation. Under the Title 

IV-B program, states are required to develop a Child and Family Services Plan 

(CFSP), a five-year strategic plan that sets forth the vision and the goals to be accomplished to strengthen the states’ overall child welfare system. A primary purpose 

of the CFSP is to facilitate states’ integration of programs that serve children and 

families into a continuum of services for children and their families. Programs addressed through the CFSP include title IV-B, subparts 1 and 2 of the Social Security 

Act (the Stephanie Tubbs Jones Child Welfare Services Program and the Promoting 

Safe and Stables Families Program, respectively), and the Chafee Foster Care Independence Program and Education and Training Vouchers Program for older and/or 

former foster care youth. States also report on their use of the CAPTA State grant 

in conjunction with their plan submission. The CFSP consolidates plans for these 

programs to help states comprehensively integrate the full array of child welfare 

services, from prevention and protection through permanency. 

In addition to promoting coordinating planning across several key programs, the 

Obama Administration has focused significant attention on bringing together the resources of the Administration for Children and Families, the Substance Abuse and 

Mental Health Services Administration, and the Centers for Medicare & Medicaid 

Services to address trauma and promote well-being.1 Our Department has been 

proactive in reaching out to states to let them know about federal authority and 

funding streams, strategies for coordinating cross-system efforts, and good practices 

for integrating evidence-based screening, assessment, and interventions related to 

complex trauma, including the trauma associated with child abuse and neglect. 

Additionally, it is important to note that HHS chairs the Federal Interagency 

Workgroup on Child Abuse and Neglect, which is a longstanding group that includes 

federal staff from over 40 different agencies across the government and provides an 

ongoing forum for information sharing and facilitating stronger collaboration and coordination across various child maltreatment related programs.2

3. Now that HHS has completed all four reports required by the CAPTA Reauthorization Act of 2010 on important aspects of state and local child abuse prevention 

systems, how do you plan to address some of your findings? 

Answer: HHS will continue to foster partnerships with other federal agencies and 

other partners to address child maltreatment, trauma and other adverse childhood 

experiences. HHS will continue to use the findings from the four CAPTA Reports 

to Congress to support ongoing research, training, technical assistance, and service 

delivery across all our programs. The findings from the reports emphasize the need 

to increase states’ and grantees’ capacity to collect and use data for assessing program performance and continuous quality improvement. HHS is also committed to 

60 

investing more resources towards evidence-based and evidence-informed programs 

across various funding streams. We plan to continue developing opportunities for 

shared learning, knowledge development and dissemination at the federal level. We 

also plan to encourage grantees and community service providers to make similar 

efforts at the state and local level. We believe that interagency coordinated efforts 

throughout HHS and with other federal and non-federal partners are critical for 

preventing child maltreatment and promoting the well-being of children and families. 

Given the unique demographics and cultures of all states, it was challenging to 

generalize findings of states’ use of the CAPTA State grant that might be implemented across all states or to draw conclusions about the effectiveness of states’ use 

of the CAPTA State Grant since the state CAPTA plans focus on state spending 

plans, rather than outcomes. Through the report, we did learn that 37 percent of 

states selected a CAPTA program area because it aligned with the CFSP, and 47 

percent of states selected a CAPTA program area because it aligned with the state’s 

Program Improvement Plan developed to address findings from the federal Child 

and Family Services Review (CFSR). This confirms that most states are already 

working to integrate planning for the title IV-B and CAPTA programs to make 

broader program improvements to better support the state’s comprehensive child 

and family services programs, including child abuse and neglect programs. It also 

confirms that the CFSP is the best vehicle to ensure coordination and integration 

of state child protective services with overall child welfare services in the state. 

In regard to the report on citizen review panels, we understand the panels may 

play a role in improving child protective systems across the states. The report is inconclusive on the effectiveness of citizen review panels in examining how agencies 

are fulfilling their child protective services responsibilities because of the parameters of the study. The report was an exploratory, descriptive report based on the 

analysis of annual reports submitted by citizen review panels and the state child 

protection system responses to those reports. We generally learned about citizen review panel recommendations and state responses to those recommendations and 

that practices vary from state to state. As such, states will continue to need the 

flexibility afforded by the CAPTA provision that mandates the responsibilities of the 

citizen review panels. We would need to conduct a future study with appropriate 

funding if we are to better understand how citizen review panels might be useful 

as a systems improvement in state and local child welfare agencies. Although such 

a study may be informative, the study would not directly meet the critical informational need for child protective service agencies, and is therefore a lower priority 

than other agency activities. We concluded, however, that the public may not be 

able to easily access all of the citizen review panel reports as required by CAPTA. 

Therefore, we plan to address this with states that do not have their reports available on their websites. 

The report on efforts to coordinate the objectives and activities of agencies and 

organizations which are responsible for programs related to child abuse and neglect 

demonstrates that the Administration for Children and Families’ (ACF) Children’s 

Bureau, Office on Child Abuse and Neglect (OCAN) has been consistently engaged 

in significant efforts to meet its coordination responsibility. Through collaborative 

work with federal, state and local agencies, and a network of non-federal partners, 

OCAN manages efforts to share and disseminate information, promote awareness, 

and implement various activities to address child abuse and neglect. We will continue these coordination activities by working with our federal partners on issues 

of child abuse prevention through the Federal Interagency Workgroup on Child 

Abuse and Neglect; interagency agreements and initiatives; conferences, workshops 

and other projects. Very specifically, we will continue our longstanding interagency 

agreements between ACF and other federal agencies to co—fund child abuse and neglect prevention and treatment activities. 

In the report on immunity protections for professionals who consult or assist on 

cases involving child abuse and maltreatment, we concluded all states have universally extended civil immunity to all good faith reporters in law in compliance with 

the requirements in CAPTA. Professionals who consult or assist on child maltreatment cases may have less fear of liability for their actions and potentially cooperate 

more readily if they had immunity for their actions. Although not required by 

CAPTA, states may want to consider whether to enact laws to extend immunity for 

professionals who consult, cooperate, or assist on child maltreatment cases. 

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

and the Administration on Intellectual and Developmental Disabilities? 

61 

Answer: The Administration for Community Living (ACL) is meeting the needs 

of the disability and aging communities primarily through continued implementation of the Older Americans Act and the Developmental Disabilities Assistance and 

Bill of Rights Act at state and local levels. ACL is conducting ongoing assessments 

of the needs of these communities and evaluating and continuously improving our 

performance and seeking efficiencies. Additionally, ACL is working closely with a 

number of partners within HHS, such as the Centers for Medicare & Medicaid Services, the Substance Abuse and Mental Health Services Administration, and others, 

with regard to policies that can better coordinate the provision of long-term services 

and supports for persons with intellectual and developmental disabilities and older 

Americans. 

The communities’ response has been very positive. Since the creation of ACL, both 

communities have seen the benefits of collaboration, alignment of goals, and cooperation in order to achieve greater results. 

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

community? 

Answer: The Assistant Secretary for Aging has found that the two constituencies 

have so many similarities that her joint role as Administrator for Community Living 

has allowed her to become a stronger advocate for enhanced Long Term Service and 

Support Systems that are critical to the communities that ACL represents. 

6. The president’s 2014 budget request calls for funding new programs and projects 

at the expense of its current obligations, specifically related to nutrition programs for 

seniors. The budget requests $816 million for Older Americans Act nutrition programs, a reduction from 2013 levels, which is estimated to support meals for 2.3 million seniors. These cuts come on top of: (1) state and local budget cuts; (2) rising costs 

for food and transportation; (3) smaller or fewer donations due to a slow economy; 

and (4) increased demand for services, as Baby Boomers turn 65 at a rate of 10,000 

a day (about 12,000 individuals turn 60 everyday). How do you justify the call for 

funding new programs when current obligations are not being met? 

Answer: ACL recognizes the critical need for funding for senior nutrition programs. To this end, the President’s FY 2014 budget requests to restore funding for 

these programs to the FY 2012 level of $816 million from the FY 2013 enacted level 

of $768 million after sequestration. In addition to this restoration of funding for senior nutrition and other core services programs, the FY 2014 budget request continues to propose the transfer of three programs for greater alignment and efficiency, continues the focus on prevention through the Alzheimer’s initiative, and 

continues to support Aging and Disability Resource Centers. The President’s budget 

also contains a modest investment of $8 million in discretionary grant funding to 

test innovative approaches to reducing and addressing elder abuse in states and 

tribal settings through Adult Protective Service systems, a need which was documented through two recent reports of the General Accountability Office. 

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

if any, for the reauthorization? 

Answer: ACL continues to support the reauthorization of the Older Americans 

Act, as noted in our previously-submitted statement of principles for reauthorization. These principles were based on listening sessions from the field as to how to 

best serve our communities. ACL has no plans for specific recommendations in the 

form of bill language. However, we are pleased to work with Congress to provide 

technical assistance regarding any specific program area, principle, or proposal. Our 

principles for reauthorization are posted on the ACL website at: http:// 

www.aoa.gov/AoARoot/AoA_Programs/OAA/Reauthorization/Target_Change.aspx. 

CONGRESSMAN THOMAS PETRI (WI)

1. I have been contacted by several Wisconsin Medicaid-dependent home care providers with over 1,000 employees each. As you know, the Patient Protection and Affordable Care Act (PPACA) requires that these entities provide insurance to their employees or pay a fine. While most normal businesses would raise their prices in the 

face of rising costs, unfortunately these providers are in the unique position of only 

having one customer—the Medicaid program. As has been well documented, the Medicaid program significantly underpays providers relative to their costs, leaving these 

operators with very little margin. Therefore, the PPACA puts them in an impossible 

position as they cannot afford to provide the required insurance or pay the fine, but 

also cannot raise their rates. 

62 

It is my understanding that they have sought relief from your department as well 

as from the Department of the Treasury. While sympathy is expressed, no solution 

has been offered. These personal care providers are vital to our nation’s health care 

infrastructure as they allow individuals to receive care in their homes, rather than 

an institution. What alternative can you offer to these providers besides bankruptcy? 

Answer: Thank you for your question regarding payment rates to Medicaid providers. I recognize the critical importance of Medicaid home care providers to enable 

Medicaid beneficiaries to remain in the community. 

States set payment rates with approval from the Centers for Medicare & Medicaid 

Services (CMS), and CMS works with states as they set their payment rates with 

beneficiary access in mind. States have a considerable amount of flexibility when 

it comes to setting rates and can consider as part of that rate setting process any 

relevant factor, including the cost of overhead components such as employee group 

health coverage. CMS reviews state provider payment rates to ensure that such 

rates are in keeping with federal statutory and regulatory guidelines, but states 

have the flexibility to adjust payment rates within those guidelines. To the extent 

that a state wishes to increase payment rates to certain providers, CMS is available 

to work with the state to ensure that such increase meets federal requirements. 

Furthermore, to the extent that the payment increase meets CMS approval, the federal government would provide financial participation (FFP) for the increased payment at the appropriate matching rate. 

Additionally, as you may know, the Administration has announced that it will 

provide an additional year before the Affordable Care Acts mandatory employer reporting requirements begin, which will provide affected businesses with additional 

time as they move towards making health coverage available to their employees. 

CONGRESSMAN PHIL ROE (TN)

1. Several hospitals in East Tennessee recently brought to my attention the wide 

disparity in Medicare payments among different regions of the country as a result 

of the wage index. The low payments that hospitals in my state are receiving as a 

result of the wage index are threatening their viability and could lead to diminished 

access to care. Does your department have any recommendations on how Congress 

could address this inequity and provide adequate payment to hospitals in states like 

Tennessee? 

Answer: Under the current hospital wage index system, hospitals are classified 

into geographically similar labor market areas. The labor market areas are based 

on the Office of Management and Budget delineations of metropolitan statistical 

areas. 

In April of 2012, CMS submitted a Report to Congress entitled, ‘‘Plan to Reform 

the Medicare Wage Index.’’ In that report, CMS discussed a different approach to 

calculating the wage index that we believe would more accurately reflect the labor 

costs incurred by each hospital based on the hospital employees’ commuting patterns. This ‘‘commuting-based wage index’’ would allow for the wage index to be calculated at a more granular level, down to the individual hospital. It could also potentially obviate the need for hospital reclassifications to other labor market areas. 

In the report, we indicated that more data on hospital employee commuting patterns may be necessary before adopting a commuting-based wage index. Additionally, we stated that certain special adjustments to the wage index under current law 

may no longer be applicable and should be reviewed in order to determine if they 

would still be relevant under the new system. Current law is rather prescriptive 

with respect to the wage index; nonetheless, we continue to evaluate whether improvements could be made under existing authority. 

2. At a recent committee field hearing in North Carolina, Mr. Chuck Horne, the 

president of a textile company with 350 employees, testified as to the impact that the 

Patient Protection and Affordable Care Act will have on his business. Mr. Horne currently offers outstanding insurance benefits—at great cost to the company—because 

he believes it is the right thing to do. Mr. Horne, however, will be punished by the 

transitional reinsurance fee of $63 per covered life even though his company will not 

benefit from it. What would you say to Mr. Horne, who will pay $32,000 to provide 

a backstop to large insurance companies instead of having that money to reinvest in 

his business? Do you believe this is fair? 

Answer: The Affordable Care Act has many components that help contain costs, 

hold health insurers accountable to consumers and ensure that American families 

receive value for their health insurance premium dollars. One such mechanism is 

the 80/20 rule, or Medical Loss Ratio (MLR) rule. The 80/20 rule brings consumers 

value, increases transparency and accountability, and promotes better business 

63 

3http://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/107xx/doc10781/11-30-premiums.pdf 

practices and competition among insurance companies. MLR generally requires insurance companies in the individual and small group markets to spend at least 80 

percent of the premium dollars they collect on medical care and quality improvement activities or pay a rebate. Issuers in the large group market also have to comply with MLR requirements by spending 85 percent of premium dollars on medical 

care and quality improvement activities, or else they must pay a rebate. 

The Congressional Budget Office analyzed the net impact of the Affordable Care 

Act reforms on premiums in the individual, small group, and large group markets.3

CBO calculated that premiums in the large group market (50 or more employees) 

will be zero to a 3 percent lower than they would have been without the Affordable 

Care Act. Employers (and their premium paying employees) will benefit from factors 

such as a decrease in uncompensated care, a reduction in fees—such as state highrisk pool assessments—associated with assisting the uninsured, and population improvements in health. 

By combining insurance market reforms, new efficiencies created by the Marketplaces, and programs such as reinsurance that will help stabilize premiums in the 

new Marketplaces, the Affordable Care Act increases competition between health insurance issuers and reduces uncompensated care. 

CONGRESSMAN TODD ROKITA (IN)

1. Over 5 million people in the United States have Alzheimer’s disease. Getting a 

timely and accurate diagnosis is an important part of addressing this disease. Leading experts and even the Department of Health and Human Services’ (HHS) own web 

site stress the value of early diagnosis. 

Early diagnosis allows families to better plan for the course of this disease and 

it allows patients and medical experts to explore various treatments available that 

can help possibly delay or mitigate symptoms common with this disease. 

Far too many people with Alzheimer’s are not diagnosed until their symptoms have 

become severe, making it much more difficult and complex for them and their loved 

ones to plan for the future. What is HHS doing to ensure timely access and coverage 

to new technologies for Alzheimer’s disease as they become available, particularly diagnostic tools that can help individuals to get the care they need before it’s too late? 

Answer: We are actively engaged in reviewing new technology to ensure timely 

access to innovation for our beneficiaries. For example, in October 2012, the Centers 

for Medicare & Medicaid Services (CMS) opened a National Coverage Analysis (the 

first step in the National Coverage Determination (NCD) process) to reconsider a 

prior NCD on the use of Positron Emission Tomography (PET) scans that allowed 

Medicare coverage of PET using only specified radioisotopes for certain indications. 

Reconsideration of this NCD was requested by a stakeholder who advocated coverage of PET using a radiopharmaceutical approved by the FDA in 2012 to image 

beta-amyloid plaques in adult patients with cognitive impairment who are being 

evaluated for Alzheimer’s disease and other causes of cognitive decline. 

To help inform this evidence review, CMS convened a meeting of the Medicare 

Evidence Development and Coverage Advisory Committee (MEDCAC) in January 

2013. A proposed coverage decision is expected by July 2013, with a final decision 

(including consideration of public comments) expected by October 2013. Information 

on the status of this coverage review is available on the CMS website at http:// 

www.cms.gov/medicare-coverage-database/details/nca-details.aspx?NCAId = 

265&NcaName = Beta + Amyloid + Positron + Emission + Tomography + in + De 

mentia + and + Neurodegenerative + Disease&bc = AgBAAAAAAAAAAA%3d%3d&. 

2. CMS currently reimburses for countless medications and procedures to treat patients with Alzheimer’s disease or other forms of cognitive impairment. Given that 

one in five patients who are diagnosed with Alzheimer’s actually have something else, 

can you comment on why the agency is considering not covering a diagnostic agent 

for this disease state that was approved by the Food and Drug Administration over 

a year ago? 

Answer: As noted above, a National Coverage Analysis on beta-amyloid PET scans 

is underway to reconsider a prior National Coverage Determination on Medicare 

coverage of PET scans. CMS’ evidence-based coverage decision-making process is 

separate and distinct from the Food and Drug Administration’s processes for determining a product’s safety and effectiveness; CMS’ coverage decision-making process 

is designed to meet CMS’ statutory obligation to ensure that Medicare covers only 

64 

items and services determined to be ‘‘reasonable and necessary’’ for our beneficiaries. 

CONGRESSMAN LARRY BUCSHON (IN)

1. The Association of American Medical Colleges and the U.S. Health Resources 

and Services Administration—an agency within your department—project that by 

2020 the United States will be facing a large physician shortage, evenly split between 

specialists and primary care physicians. I’m very concerned that at a time when there 

is general agreement that we need to grow the physician workforce because of the 

aging of the baby boomers, the administration is actually proposing to cut Medicare’s 

support for teaching hospitals and the critical services they provide. 

The president’s proposal to cut Medicare indirect medical education payments by 

10 percent would cost America’s teaching hospitals millions annually as they try to 

train physicians, jeopardizing hospitals’ ability to provide care for the sickest in their 

communities, especially seniors and the underserved. In addition to hindering the 

training of physicians, cuts to providers will lead to a reduction in patient services. 

Please explain the rationale behind the president’s proposal. 

Answer: MedPAC has repeatedly found that IME payments are more than twice 

as high as what is empirically justified by teaching hospitals’ actual teaching costs. 

The 10% reduction in IME would reduce (though not eliminate) this disparity. We 

recognize the critical importance of graduate medical education. Nonetheless, like 

any other category of Medicare spending, payments to teaching hospitals must be 

well-justified. We believe this proposal brings these payments closer to the empirically justified level. By supporting the training of more and higher quality primary 

care providers, this proposal also helps fill a key long-term need of the health care 

system. 

CONGRESSMAN TREY GOWDY (SC)

1. From what section of the Public Health Service Act do you derive your authority 

to solicit funds from private groups in order to promote the Patient Protection and 

Affordable Care Act? 

Answer: Within HHS, we are working everyday so that uninsured Americans will 

be able to sign up for healthcare coverage starting October 1. This important mission to extend health insurance coverage to millions of Americans for the first time 

can’t be accomplished by government alone. It takes the support of the business sector, non-profits, community organizations, and others who share this vision. Many 

private organizations share our mission and they are pursuing their own efforts to 

get Americans covered. Because of sections of the Public Health Service Act (42 

U.S.C. §§ 300u-2 to -3) HHS Secretaries since 1976 have had the authority to encourage others to support important health initiatives. For example, previous Secretaries from both parties marshalled private-sector support efforts to enroll eligible 

beneficiaries in two important programs that expand the availability of health insurance: the Medicare prescription drug benefit (Medicare Part D) and the Children’s Health Insurance Program. 

CONGRESSMAN LOU BARLETTA (PA)

1. As you know, Pennsylvania recently requested that the Department of Health 

and Human Services provide flexibility to the state to continue the Pennsylvania 

Children’s Health Insurance Program (CHIP) and to exempt the state from having 

to transfer a significant portion of its enrollees into the Medicaid system. Under the 

Patient Protection and Affordable Care Act, Pennsylvania’s CHIP children would 

have to be added to the Medicaid population. Because of the law, the state has calculated that of the 187,000 current enrollees in Pennsylvania CHIP, approximately 

70,000 enrollees will involuntarily be transferred onto the Medicaid rolls. Do you 

think it is better for those kids to remain in a program that has better provider capacity? How are you going to explain that these children can no longer get prompt 

service because they have been moved to a program that reimburses providers so 

poorly that there aren’t enough providers to take care of everyone in the program? 

Answer: Thank you for your question related to the Affordable Care Act’s provision raising the minimum income eligibility level for children in Medicaid. 

Section 2001(a)(5)(B) of the Affordable Care Act increased the minimum eligibility 

level for children from ages 6 through 18 in the Medicaid program from 100 percent 

to 133 percent of the Federal poverty level (FPL). This reform simplifies coverage 

by eliminating age-based eligibility rules that have resulted in children in the same 

family being eligible for two different programs (Medicaid and CHIP) and that requires children to switch programs, from Medicaid to CHIP, and potentially doctors, 

65 

when they turn 6. Many states had previously extended Medicaid coverage for these 

older children. The Affordable Care Act codifies this successful approach nationwide 

January 1, 2014. 

For some states, including Pennsylvania, this will mean that some children will 

need to transfer from CHIP to Medicaid. Pennsylvania may continue its coverage 

of children from 133 through 300 percent of the FPL under CHIP. It is also important to note that there is no change in the federal support that will be available 

for the children that transfer to Medicaid—the enhanced CHIP matching rate will 

continue to be available for these children even though they will be enrolled in Medicaid. 

I appreciate your concern that this transition could potentially cause families to 

have to change providers. While it is my understanding that most of the plans in 

Pennsylvania serve both Medicaid and CHIP populations, thus reducing the risk of 

disruptions in care, we recognize that transitions will be necessary for some families. States can ease this transition by giving families time to choose their new 

health plans and we will work directly with states to develop transition plans that 

protect patient access to care. 

CONGRESSWOMAN MARTHA ROBY (AL)

1. Prior to the House Committee on Education and the Workforce hearing on June 

4, 2013, I reached out to my constituents on Twitter and Facebook to see what questions they might ask you if they had the opportunity to do so. I compiled their questions and would like responses to share with each individual. Per their request, personal information has been redacted. 

a. My employer has provided excellent insurance coverage for over 30 years. It 

would definitely be classified as a ‘Cadillac Plan.’ This year we were forced to change 

coverage. Please tell me how penalizing or taxing companies that provide excellent 

coverage has anything to do with ensuring everyone has access to affordable 

healthcare. 

Answer: Section 4980I of the Internal Revenue Code is not effective until 2018, 

five years from now, so that does not explain why your coverage changed this year. 

The costs for large employers directly associated with the implementation of the 

Affordable Care Act are far outweighed by the systemic savings of the law. These 

savings are due to greater market transparency and competition and a more stable 

marketplace with more covered Americans. For example, premiums for employersponsored insurance increased by only 3 percent from 2011 to 2012, the lowest rate 

of increase since the data series began in 1996. 

b. The president said if we liked our current plan we could keep it. This has turned 

out to be false. What changes to Obama Care is the administration doing to ensure 

that this statement does not turn out to be a lie? 

Answer: The Affordable Care Act allows health plans that existed on March 23, 

2010, when the law was enacted, to be ‘‘grandfathered’’ and thus be exempt from 

many of the new law’s provisions. It allows insurers and employers to make some 

routine changes without losing grandfather status. Plans relinquish their ‘‘grandfathered’’ status if they choose to significantly cut benefits or increase out-of-pocket 

spending for consumers. Consumers in plans that make such changes and lose their 

‘‘grandfathered’’ status will gain new consumer protections. 

If you are among the 80 percent of Americans who already have health insurance 

through your employer, or through government programs such as Medicare and 

Medicaid, the Affordable Care Act provisions that apply to you are providing you 

with better consumer protections and ensure that you get more value for each dollar 

you spend on your health insurance. However for people ineligible for coverage 

under a government program who do not receive their insurance from their employer, or who are unemployed, the Affordable Care Act is making changes to ensure that they can now find, afford, and keep a plan that they like. Soon, the Marketplaces will provide a new way to shop for coverage for all Americans, that will 

particularly benefit the uninsured, those with pre-existing conditions, and individuals who currently buy coverage on their own. On October 1, Americans will begin 

shopping in the Marketplaces, and they’ll be able to fill out one application to purchase private insurance, qualify for premium tax credits and reduced cost sharing, 

or obtain Medicaid or CHIP coverage. 

c. The plan [PPACA] was touted as a cost saver, but as the details become available we’re seeing the opposite. My question is: if the plan is evolving into something 

it was never intended to be, what does the secretary intend to do to impose cost controls? 

66 

Answer: I disagree. We are already seeing reductions in the growth of healthcare 

spending. From 2010 to 2012, Medicare spending per beneficiary grew at 1.2 percent 

annually, more slowly than the average rate of growth in the Consumer Price Index, 

and substantially more slowly than the per capita rate of growth in the economy. 

This is in sharp contrast to the 7.6% annual growth rate in per beneficiary spending 

from 2000-2010, and health economists recognize that the Affordable Care Act has 

contributed to the slowdown in spending growth. From 2011 to 2012, total spending 

per Medicaid beneficiary actually declined by 1.9%, resulting in substantial savings 

for federal and state taxpayers. 

New elements are reducing costs and saving taxpayer money in the Medicare program. New anti-fraud programs, like the fraud prevention system that uses predictive modeling technology, are helping deter bad actors and saving billions for the 

Medicare program. We are using market-driven solutions, like the competitive bidding program for durable medical equipment, to save tens of billions for taxpayers 

and seniors. Also, in Medicare we’re promoting better coordination of care by hospitals through penalties for excess readmissions and payment tied to value for the 

first time. In 2012, readmissions for Medicare patients dropped significantly, with 

an estimated 70,000 readmissions avoided due to a variety of new incentives for hospitals to keep patients well and avoid these costly events. 

The rate of cost growth is decreasing for private insurance as well. Premiums for 

employer sponsored insurance increased by only 3% from 2011 to 2012, the lowest 

rate of increase since the data series began in 1996. In addition, early evidence 

shows that prices for Marketplace products are lower than expected, and, for small 

businesses, lower on average than current small business rates in the handful of 

states that have released data. In part, this appears to be a result of greater transparency and competition. 

d. Now that we see so many companies reducing work hours of employees to preclude having to pay the higher cost /coverage of insurance for people working over 

30 hours, what are you going to do to help those people make up the difference in 

lost pay and lost benefits? 

Answer: The employer responsibility provision, which applies only to employers 

with 50 or more full-time equivalent employees, will not be enforced until 2015. Furthermore, if you look at the economic data, the suggestion that the Affordable Care 

Act is reducing full-time employment is not supported by the facts. Plus, a Minneapolis Federal Reserve Bank study shows that the vast majority of employers are 

not considering cutting hours. The Affordable Care Act should not cause a leap in 

part-time jobs, since less than 1 percent of employees work 30 to 34 hours, are uninsured, and are employed by businesses affected by the employer responsibility provision. 

In fact, employers are benefitting from the Affordable Care Act, which includes 

a range of cost-saving, quality-improving measures that are contributing to a slowdown in health care cost growth, which should help employers save money. For example, in 2012, premium growth for employer-sponsored insurance was at its lowest 

rate (3 percent) since the Medical Expenditure Panel Survey started in 1996. Additionally, starting in October, small employers in every state will be able to offer coverage to their employees beginning in 2014 from among a variety of plans within 

the Small Business Health Options Program (SHOP) Marketplace in their state. 

SHOP Marketplaces will provide side-by-side comparisons of Qualified Health 

Plans, their benefits, premiums, and quality—expanding options and increasing 

competition. SHOP Marketplaces also can save businesses money by spreading insurers’ administrative costs across more employers. In some states in 2014, and in 

all states in 2015, billing will be consolidated as well; employers can go to the SHOP 

Marketplace as ‘‘one stop shopping’’ in order to offer multiple insurer’s options to 

employees without having to deal with each insurer separately. 

Businesses might be eligible for small business tax credits when they offer health 

coverage to their employees through a SHOP Marketplace. From 2014 to 2016, a 

tax credit of up to 50 percent of the employer-paid premium cost of health insurance 

coverage will be available, if the employer otherwise qualifies for the credit. 

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

Answer: The IRS is the U.S. government agency responsible for tax collection and 

tax law enforcement. It is involved in implementing the portions of the Affordable 

Care Act that contain tax provisions. For a full list of the Affordable Care Act’s tax 

provisions, please see: http://www.irs.gov/uac/Affordable-Care-Act-Tax-Provisions. 

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

Answer: I disagree that health care costs are rising due to the Affordable Care 

Act. In fact, we are already seeing reductions in projected healthcare spending 

67 

growth. From 2010 to 2012, Medicare spending per beneficiary grew at 1.2 percent 

annually, more slowly than the average rate of growth in the Consumer Price Index, 

and substantially more slowly than the per capita rate of growth in the economy. 

This is in sharp contrast to the 7.6% annual growth rate in per beneficiary spending 

from 2000-2010, and health economists recognize that the Affordable Care Act has 

contributed to the slowdown in spending growth. From 2011 to 2012, total spending 

per Medicaid beneficiary actually declined by 1.9%. 

New elements are reducing costs and saving taxpayer money in the Medicare program. New anti-fraud programs, like the fraud prevention system that uses predictive modeling technology, are helping deter bad actors and saving billions for the 

Medicare program. We are using market-driven solutions, like the competitive bidding program for durable medical equipment, to save tens of billions for taxpayers 

and seniors. Also, in Medicare we’re promoting better coordination of care by hospitals through penalties for excess readmissions and payment tied to value for the 

first time. In 2012, readmissions for Medicare patients dropped significantly, with 

an estimated 70,000 readmissions avoided due to a variety of new incentives for hospitals to keep patients well and avoid these costly events. 

The rate of cost growth is decreasing for private insurance as well. Premiums for 

employer sponsored insurance increased by only 3% from 2011 to 2012, the lowest 

rate of increase since the data started in 1996. In addition, early evidence shows 

that prices for Marketplace products are lower than expected, and, for small businesses, lower on average than current small business rates in the handful of states 

that have released data. While further work is needed to better understand 2014 

rates, the results strongly suggest that greater competition and transparency are 

leading to substantial benefits for both consumers and employers in these markets. 

2. As you know, beginning in 2015, businesses with 50 or more full-time equivalent 

employees will be required to provide health insurance coverage to full-time employees or face new tax penalties. Many of the businesses in Alabama are family owned 

and operated businesses, passed down generation after generation. One specific heating and plumbing company in Montgomery, AL is extremely confused with the current mandate set to go into effect in 2015. Their business currently has a count of 

52 employees; however, three of these individuals are considered businesses owners. 

Per the law’s mandates, is this business required by law to provide coverage to their 

employees? 

Has the department issued any specific, in-depth guidance as to how to count each 

employee—including business owners and family members as employees? For example, the State of Alabama’s workers compensation regulations do not take into account business owners as employees. Does the health care law? 

Answer: In December of 2012, the Department of Treasury released a proposed 

rule Shared Responsibility for Employers Regarding Health Coverage, which can be 

found here: http://www.irs.gov/pub/newsroom/reg-138006-12.pdf. The regulation 

discusses, among other things, methods of calculating what is considered a large employer under the law and the definition of an ‘‘employer’’ versus an ‘‘employee.’’ For 

further clarification, please refer to the Department of the Treasury. 

3. On a similar note, there is much ambiguity regarding coverage for young adults 

who remain on their parent’s insurance plans until they are 26. If a young adult is 

employed part-time at a local grocery store, around 25-30 hours a week, they are 

technically being classified as a ‘‘full-time employee’’ per the department’s definition. 

In this instance, who is primarily responsible to provide health care to the young 

adult—the parent or the business? If there is a lack of compliance from such business 

and they do not provide the health insurance mandated by law, what is the penalty 

associated to this business? 

Answer: The definition of full-time employee is prescribed by statute in section 

4980H(c) (4) of the Internal Revenue Code (the Code) of 1986. The Department of 

Treasury is responsible for regulations implementing Code provisions. In December 

of 2012, the Department of Treasury released a proposed rule Shared Responsibility 

for Employers Regarding Health Coverage, which can be found here: http:// 

www.irs.gov/pub/newsroom/reg-138006-12.pdf. The regulation discusses, among 

other things, methods of calculating the 30 hours of services per week for large employers. For further information, please contact to the Department of the Treasury. 

CONGRESSWOMAN SUSAN BROOKS (IN)

1. Alzheimer’s disease is estimated to cost the nation $200 billion this year alone, 

and about 70 percent of that—$140 billion—is shouldered by taxpayers in Medicare 

and Medicaid costs. If the current trajectory holds, this number will exceed $1 trillion annually in the coming decades. 

68 

4 J. R. Gabel et al. ‘‘Generosity and Adjusted Premiums in Job-Based Insurance: Hawaii is Up, 

Wyoming is Down.’’ Health Affairs, 2006, 25(3): 832-843. 

Experts as well as our government have stressed the value of an early and accurate 

diagnosis in treating Alzheimer’s to prevent costly and time-consuming misdiagnoses, 

as well as begin proper care planning earlier. At the same time, companies have been 

working to create diagnostic tests that could lead to an earlier finding of Alzheimer’s. 

As diagnostic technologies for Alzheimer’s and other diseases continue to be developed and gain approval by the Food and Drug Administration, what measures are 

being taken to prioritize coverage of diagnostic tools, particularly when early diagnosis of diseases like Alzheimer’s and others can lead to dramatically lower costs? 

Answer: We are actively engaged in reviewing new technology to ensure timely 

access to innovation for our beneficiaries. For example, in October 2012, the Centers 

for Medicare & Medicaid Services (CMS) opened a National Coverage Analysis (the 

first step in the National Coverage Determination (NCD) process) to reconsider a 

prior NCD on the use of Positron Emission Tomography (PET) scans that allowed 

Medicare coverage of PET using only specified radioisotopes for certain indications. 

Reconsideration of this NCD was requested by a stakeholder who advocated coverage of PET using a radiopharmaceutical approved by the FDA in 2012 to image 

beta-amyloid plaques in adult patients with cognitive impairment who are being 

evaluated for Alzheimer’s disease and other causes of cognitive decline. To help inform this evidence review, CMS convened a meeting of the Medicare Evidence Development and Coverage Advisory Committee (MEDCAC) in January 2013. A proposed coverage decision is expected by July 2013, with a final decision (including 

consideration of public comments) expected by October 2013. Information on the status of this coverage review is available on the CMS website at http://www.cms.gov/ 

medicare-coverage-database/details/nca-details.aspx?NCAId = 265&NcaName = 

Beta + Amyloid + Positron + Emission + Tomography + in + De mentia + and + 

Neurodegenerative + Disease&bc = AgBAAAAAAAAAAA%3d%3d&. 

2. One of the selling points of the health care law to small businesses was the ability to offer their employees a range of choices in the new insurance exchanges. However, last Friday HHS announced a delay in the implementation of the employee 

choice component of the SHOP Marketplace in the 33 states where the federal government will run the exchange. This delay once again shows the administration is falling behind in implementation of this flawed law. The result is fewer choices and 

higher premiums for small businesses and their employees. Are you at all concerned 

this delay will push more employers to simply drop insurance? 

Answer: In 2014, a SHOP Marketplace will be operational in every state. As you 

know, the SHOP Marketplaces will be competitive private health insurance marketplaces through which small businesses and their employees will have access to affordable coverage. In the current small group market, the smallest businesses nationwide pay about 20 percent more than large companies.4

Through the SHOP Marketplaces, small employers will benefit from leveraging 

the buying power of a larger purchasing pool. They will also have access to a transparent marketplace with online tools to help them make meaningful comparisons 

among qualified health plans (QHPs). Beginning in 2014, if they meet other eligibility requirements, small employers who purchase coverage for their employees 

through a SHOP Marketplace will also receive tax credits of up to 50 percent of the 

employer-paid premium cost of coverage to offset the cost of providing health insurance. 

As we’ve seen in Massachusetts, employer-sponsored insurance increased post-reform, and it makes sense to expect a similar outcome for the rest of the United 

States. We expect the robust employer-sponsored health insurance market to continue. The SHOP Marketplaces will help more employers to offer coverage to their 

employers, and help provide more American workers insurance. Additionally, the 

SHOP Marketplaces will improve information for small employers and employees 

and enable certain eligible employers to access small business health insurance tax 

credits. 

3. It has been three years since enactment of the health care law, yet the administration has not issued many of the critical rules needed for 2014. When will these 

much-needed rules be released? Open enrollment is expected to begin in October 2013. 

Won’t states, employers, and insurers need to know the final rules before they can 

invest the hundreds of millions of dollars required to implement the law? 

Answer: The Affordable Care Act fixes the broken insurance market by helping 

consumers and employers shop for and compare affordable health insurance plans, 

while knowing they won’t be denied or priced out of insurance because of their preVerDate Nov 24 2008 16:36 Apr 23, 2014 Jkt 000000 PO 00000 Frm 00072 Fmt 6633 Sfmt 6621 G:\DOCS\113TH\FC\113-20\81276.TXT DICK
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existing condition, occupation, or gender. HHS and CMS have worked diligently to 

release rules and guidance for states, employers, and insurers in timely manner. 

States, employers, and insurers will have the information they need to ensure that 

the Marketplaces are open for business on October 1. 

CONGRESSMAN RICHARD HUDSON (NC)

1. Madam Secretary, the Congressional Budget Office estimates that job creators 

will pay $140 billion in new taxes because of the employer mandate in the health 

care law. Last December, Chairman John Kline (R-MN) and Chairman Phil Roe (RTN), sent you and Sectaries Geithner and Solis a letter asking for information about 

how the employer mandate and its penalties will impact employment, specifically 

part-time workers. The Department of the Treasury responded on behalf of the three 

agencies, stating, ‘‘We have not conducted any specific analysis of the effects on employment.’’ 

In April, our Health, Employment, Labor, and Pensions subcommittee held a hearing in my district in North Carolina where we heard from employers struggling to 

figure out how the law will affect their businesses, employees, and customers. Ed 

Tubel, owner of Sonny’s BBQ, testified that his company’s compliance costs may 

reach $200,000. 

Tina Hayes, Chief Human Resources Officer at a local community college testified 

they will have to reduce the number of courses they offer because of the new employer 

mandate. 

Madam Secretary, an employer with 49 workers who cannot afford to buy government approved insurance will face a fine of $40,000 for hiring just one new worker. 

We need job growth and small businesses to lead the way. What would you say to 

the small business owners that testified in North Carolina about the crushing new 

taxes they face for not providing government approved insurance? What would you 

say to the workers who are seeing their hours and take home pay reduced because 

their employer simply cannot afford government-approved insurance? 

Answer: As you know, small firms (less than 50 full time equivalents) are exempt 

from employer responsibility provisions in the Affordable Care Act. Instead, small 

firms will gain access to the SHOP Marketplace that provides the purchasing power 

of large businesses. 

Additionally, businesses might be eligible for small business tax credits when they 

offer health coverage to their employees through a SHOP Marketplace. For tax 

years beginning in 2014 or later, a tax credit of up to 50 percent of the employerpaid premium cost of health insurance coverage will be available, if the employer 

otherwise qualifies for the credit. 

The Affordable Care Act fixes the broken insurance market of the past by giving 

small businesses the tools and opportunities to control costs and increase value. We 

believe that most employers want to provide quality health insurance to their employees, because it’s the right thing to do and because it helps them attract and retain the workers they need. A healthy workforce is a more productive workforce, 

with fewer absences. We know that when people have health insurance they are 

more likely to get preventive care and get better care, earlier. A Minneapolis Federal Reserve Bank 5 study shows that the vast majority of employers aren’t even 

considering cutting hours. 

Prior the Affordable Care Act, many insurers had been able to charge more for 

people who are sick, one person with a serious illness can make it impossible for 

small employers to afford to provide coverage. Starting in 2014, premiums for most 

small employers will no longer be based on the employees’ medical history. 

The lack of competition and transparency in the current small group market, has 

allowed some small businesses to be locked into insurance plans that continually 

provide worse benefits at higher premiums. With the availability of the SHOP Marketplaces, small businesses will be able to choose from many plans in a provide sideby-side comparisons of health plans—their benefits, premiums, and quality—expanding options and increasing competition. 

2. Madam Secretary, to confirm for the record, has your agency not conducted, or 

participated in, any specific economic analysis to determine how the new employer 

mandate will impact employment? 

Answer: While HHS has not conducted any economic analysis of its own on the 

impact on employment, it is analyzing several studies of respected independent orVerDate Nov 24 2008 16:36 Apr 23, 2014 Jkt 000000 PO 00000 Frm 00073 Fmt 6633 Sfmt 6621 G:\DOCS\113TH\FC\113-20\81276.TXT DICK
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6http://www.rand.org/pubs/research—briefs/RB9589/index1.html 

7http://www.mercer.com/press-releases/survey-find-few-employers-to-drop-health-plans-afterhealth-care-reform-in-place 8http://www.businessinsurance.com/article/20130410/NEWS03/130419983?template = 

mobileart 

ganizations that confirm that employers will continue to offer coverage. These include: • The Rand Corporation: 6 ‘‘The percentage of employees offered insurance will 

not change substantially, but a small number of employees in small firms (defined 

as those with under 100 employees in 2016) will obtain employer-sponsored insurance through the state insurance exchanges.’’ • Mercer: 7 ‘‘In a survey released today by consulting firm Mercer, employers were 

asked how likely they are to get out of the business of providing health care once 

state-run insurance exchanges become operational in 2014 and make it easier for 

individuals to buy coverage. For the great majority, the answer was ‘not likely.’ ’’ • International Foundation of Employee Benefit Plans Survey: 8 A total one percent of businesses said they are not going to continue coverage. 

CONGRESSMAN LUKE MESSER (IN)

1. I have been contacted by several superintendents and part-time school employees 

in my congressional district about the harmful impact the Patient Protection and Affordable Care Act (PPACA) may have on educational organizations and their employees. Below is a series of questions regarding these concerns: 

a. Are you concerned the quality of education provided to students will suffer because schools are reducing the hours of some employees below 30 per week due to 

the harsh tax penalties imposed by PPACA? 

Answer: The employer responsibility provision, which applies only to employers 

with 50 or more full-time equivalent employees, will not be enforced until 2015. Furthermore, if you look at the economic data, the suggestion that the Affordable Care 

Act is reducing full-time employment is not supported by the facts. Minneapolis 

Federal Reserve Bank study shows that the vast majority of employers are not considering cutting hours. The Affordable Care Act should not cause a leap in part-time 

jobs, since less than 1 percent of employees who work 30 to 34 hours are both uninsured and employed by businesses affected by the employer responsibility provisions. State governments and workers are being hit by reduced budgets and the effects of the sequester. Furloughs, reduced hours, and reduced benefits for government employees are in response to these budget problems—not the Affordable Care 

Act. 

In fact, employers are benefitting from the Affordable Care Act, which includes 

a range of cost-saving, quality-improving measures that are contributing to a slowdown in health care cost growth, which should help employers save money. For example, in 2012, premium growth for employer-sponsored insurance was at its lowest 

rate (3 percent) since the Medical Expenditure Panel Survey started in 1996. Additionally, starting in October, small employers will be able to offer coverage to their 

employees beginning in 2014 from among a variety of plans within the SHOP Marketplace in their state. SHOP Marketplaces will provide side-by-side comparisons of 

Qualified Health Plans, their benefits, premiums, and quality—expanding options 

and increasing competition. SHOP Marketplaces also can save businesses money by 

spreading insurers’ administrative costs across more employers. In some states in 

2014, and in all states in 2015, billing will be consolidated as well; employers can 

go to the SHOP Marketplace as ‘‘one stop shopping’’ in order to offer multiple insurer’s options to employees without having to deal with each insurer separately. Businesses might be eligible for small business tax credits when they offer health coverage to their employees through a SHOP Marketplace. From 2014 to 2016, a tax 

credit of up to 50 percent of the employer-paid premium cost of health insurance 

coverage will be available, if the employer otherwise qualifies for the credit. 

b. Do you believe a 30 hour work week is an appropriate amount to be considered 

a full-time employee? 

Answer: The definition of full-time employee is prescribed by statute in section 

4980H(c) (4) of the Internal Revenue Code (the Code) of 1986. The Department of 

Treasury is responsible for regulations implementing Code provisions. In December 

of 2012, the Department of Treasury released a proposed rule Shared Responsibility 

for Employers Regarding Health Coverage, which can be found here: http:// 

www.irs.gov/pub/newsroom/reg-138006-12.pdf. The regulation discusses, among 

other things, methods of calculating the 30 hours of services per week for large employers. For further information, please contact to the Department of the Treasury. 

71 

c. Has the Department of Health and Human Services analyzed the potential impact on school employees that PPACA employer responsibility provisions may have, 

particularly given Internal Revenue Service guidance regarding the manner in which 

schools are required to calculate their number of full-time employees? 

Answer: The definition of full-time employee is prescribed by statute in section 

4980H(c) (4) of the Internal Revenue Code (the Code) of 1986. The Department of 

Treasury is responsible for regulations implementing Code provisions. In December 

of 2012, the Department of Treasury released a proposed rule Shared Responsibility 

for Employers Regarding Health Coverage, which can be found here: http:// 

www.irs.gov/pub/newsroom/reg-138006-12.pdf. The regulation discusses, among 

other things, methods of calculating the 30 hours of services per week for large employers. For further information, please contact to the Department of the Treasury. 

2. The administration has made early detection and clinical diagnosis of Alzheimer’s disease a priority under its National Alzheimer’s awareness campaign. What 

specific steps is the administration undertaking to further this principle? For example, will you make a diagnostic test that can assess whether a Medicare beneficiary 

with cognitive impairment actually has Alzheimer’s disease accessible to all the appropriate patients for such a test? 

Answer: We are not aware of an FDA approved product to establish a diagnosis 

of Alzheimer’s disease. However, we are actively engaged in reviewing available new 

technology to ensure timely access to innovation for our beneficiaries. For example, 

in October 2012, the Centers for Medicare & Medicaid Services (CMS) opened a National Coverage Analysis (the first step in the National Coverage Determination 

(NCD) process) to reconsider a prior NCD on the use of Positron Emission Tomography (PET) scans that allowed Medicare coverage of PET using only specified 

radioisotopes for certain indications. Reconsideration of this NCD was requested by 

a stakeholder who advocated coverage of PET using a radiopharmaceutical approved 

by the FDA in 2012 to image beta-amyloid plaques in adult patients with cognitive 

impairment who are being evaluated for Alzheimer’s disease and other causes of 

cognitive decline. To help inform this evidence review, CMS convened a meeting of 

the Medicare Evidence Development and Coverage Advisory Committee (MEDCAC) 

in January 2013. A proposed coverage decision is expected by July 2013, with a final 

decision (including consideration of public comments) expected by October 2013. Information on the status of this coverage review is available on the CMS website at 

http://www.cms.gov/medicare-coverage-database/details/nca-details.aspx?NCAId = 

265&NcaName = Beta + Amyloid + Positron + Emission + Tomography + in + De 

mentia + and + Neurodegenerative + Disease&bc = AgBAAAAAAAAAAA%3d%3d&. 

3. Currently, a significant number of patients with cognitive impairment, possibly 

Alzheimer’s disease, do not receive the right diagnosis. I appreciate that an accurate 

and early diagnosis is one of the continuing goals of the National Plan to Address 

Alzheimer’s Disease. Do you agree that ensuring access to accurate diagnosis through 

the Food and Drug Administration approved technologies for patients with cognitive 

impairment would help achieve a major goal of the National Plan to Address Alzheimer’s Disease? 

Answer: While there is value for patients and families in early diagnosis, the evidence continues to develop. We do not currently have a cure or definitive therapeutic treatment for Alzheimer’s disease, but individualized care planning and care 

coordination are essential to maximizing the functioning of the person with the disease and to putting family members at ease. 

We are not aware of an FDA approved product to establish a diagnosis of Alzheimer’s disease (AD). For example, the label for the imaging agent florbetapir F 

18 injection (‘‘florbetapir’’) states that although a negative florbetapir scan reduces 

the likelihood that a patient’s cognitive impairment is due to AD, a positive 

florbetapir scan does not establish a diagnosis of AD or other cognitive disorder. The 

FDA-approved label for florbetapir indicates that it was not evaluated by the FDA 

as a screening tool to predict the development of dementia or other neurologic conditions, nor to monitor the therapeutic response to treatment of these neurological 

conditions. 

When making coverage determinations under Medicare parts A and B, CMS seeks 

evidence that the item or service is reasonable and necessary to diagnose or treat 

an illness or injury or to improve the functioning of a malformed body member. In 

this case we would look for evidence to conclude that the diagnostic technology improves health outcomes for beneficiaries by providing useful information that will 

be used by the treating physician in the management of the patient’s medical condition. Such evidence is customarily sought in the results of published reports of randomized clinical trials that compare the impact of different management on patients’ 

clinical outcomes. We recognize that improvements in health outcomes may be 

72 

brought about by changes in patient management if physicians can employ effective 

treatments or avoid ineffective, burdensome treatment attempts. 

CMS and FDA work closely to support patient access to innovative healthcare 

technologies that are supported by evidence of benefit. For example, the agencies 

have implemented an FDA-CMS parallel review pilot, which operationalizes collaboration and efficiency across the two agencies. In addition, CMS permits Medicare 

payment for Category B devices undergoing clinical investigation under an Investigational Device Exemption (IDE) as well as Medicare payment for routine care in 

FDA-approved IDE trials while collecting safety and effectiveness data. In situations 

when there is not yet enough evidence for a technology or treatment to be otherwise 

covered by Medicare, CMS may allow coverage with evidence development (CED). 

CONGRESSMAN BOBBY SCOTT (VA)

1. Is there currently data available that shows the effects of preventive care without 

co-pays or deductibles? For example, due to increased access for tests such as mammograms, are cancers being detected at an earlier stage than before? 

Answer: Under the Affordable Care Act (ACA), Section 2713 of the Public Health 

Service Act requires non-grandfathered health plans to cover certain recommended 

preventive services without cost sharing. Preventive services to which this requirement applies must be covered, without cost sharing, effective with the first plan or 

policy year that begins on or after the date that is one year after the recommendation is issued; section 2713 and its implementing regulations have required that 

many recommended preventive services be covered, without cost sharing, for plan 

or policy years beginning on or after September 23, 2010. HHS has begun efforts 

to monitor the trends in use of preventive services, such as influenza immunizations, mammograms, Pap smear tests, colonoscopy screenings, and well child checkups. However, the lag time for processing survey data, including the National 

Health Interview Survey (NHIS) and the National Ambulatory Medical Care Survey 

(NAMCS), limits the ability to accurately measure the magnitude of the impact of 

coverage requirements that went into effect as recently as 2011. At this time, available data allow analyses to assess underlying trends in the use of certain preventive 

services prior to the enactment of the Affordable Care Act. HHS agencies will be 

monitoring rates in utilization of recommended preventive services as new data become available for analysis. As we continue to implement the Affordable Care Act, 

HHS will also explore the availability of other non-federal data sources that could 

provide information to help monitor the use of preventive care and screenings on 

an ongoing basis. 

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

Answer: The process of organ donation and allocation of deceased donor organs 

to those in need of life-saving transplants is fundamentally based in public trust 

and, to maintain that public trust, the process for developing organ allocation policies must remain free of political influence. The Organ Procurement and Transplantation Network’s (OPTN) organ allocation policies are, and should continue to be, 

based on current medical and scientific evidence and developed by experts in the 

field through an open and transparent process with input from the general public 

and those directly affected by donation and transplantation (e.g., transplant patients, living organ donors, and deceased donor family members). 

As stated in the preamble to the final regulations governing the operation of the 

OPTN, ‘‘decisions about who should receive a particular organ in a particular situation involve levels of detail, subtlety and urgency that must be judged by transplant 

professionals.’’ 64 Fed. Reg. 56650, 56652 (Oct. 20, 1999). Congress’ intent was clear 

with the passage of the National Organ Transplant Act of 1984, as amended, (42 

U.S.C. § 273, et seq.) (NOTA) that the OPTN was created to ‘‘establish membership 

criteria and medical criteria for allocating organs and provide to members of the 

public an opportunity to comment with respect to such criteria,’’ through its Board 

of Directors, which includes representatives of organ procurement organizations, 

transplant centers, voluntary health associations, and the general public. 42 U.S.C. 

§ 274(b). 

Consistent with statute, HHS oversees the OPTN by contract with a non-profit 

entity with expertise in organ procurement and transplantation. HHS has also further clarified the requirements of the OPTN’s policy making process and organ allocation policies in the OPTN final rule (42 CFR part 121). HHS is tasked with ensuring that OPTN’s policies are consistent with the NOTA and our regulations. 

73 

CONGRESSMAN RUBEN HINOJOSA (TX)

1. As you know the rollout of the Affordable Care Act exchanges in January of next 

year is a critical time. In the coming months, my constituents and small business 

need to be educated as to what they can expect, what is expected of them, and they 

will look to our offices to help guide them through the process. 

With the Republican budget cuts, including the arbitrary sequestration cuts they 

championed and passed into law, what resources are available for HHS employees 

to travel to congressional districts for rollout events, informational town hall meetings and constituent outreach in the months ahead? 

Answer: Implementing the Affordable Care Act is a top priority of the Department. Outreach is a vital component to the law’s success—to ensure that Americans 

in need of healthcare understand how to access it. CMS is engaging a variety of different types of outreach and managing its available funding resources in the best 

manner possible. 

2. As you know in the state of Texas, Governor Perry has put politics above the 

health of Texans and refused to participate in the Medicaid expansion program 

which would have provided health care to over 1.5 million Texans as well as create 

more than three million jobs, according to a report generated by the Perryman 

Group. This is all despite the fact that a recent poll by the Texas Hospital Association shows a majority of Texans are in favor of Medicaid expansion. 

My concern is that because of the Governors short sighted decision hospitals will 

get stuck in the middle. As you know, the Affordable Care Act calls for a reduction 

in Disproportionate Share Hospital (DSH) payments based on an assumption that 

states are expanding Medicaid. Since this expansion is not happening in Texas, how 

will you work with hospitals in Texas to make sure they do not get financially 

harmed by a DSH reduction? 

Answer: We continue to believe that the Medicaid coverage expansion is a good 

deal for states and will ensure that millions of Americans have access to affordable, 

quality health coverage. 

The Medicaid expansion will also help lessen the burden of uncompensated care 

on hospitals throughout the nation. 

As you know, the Affordable Care Act requires aggregate reductions in Medicaid 

disproportionate share hospital (DSH) payments beginning in Fiscal Year (FY) 2014. 

In May 2013, the Centers for Medicare & Medicaid Services (CMS) proposed a rule 

to implement the statutorily required Medicaid DSH reductions for FYs 2014 and 

2015 using statutorily required factors to allocate the reductions among states. CMS 

is currently reviewing comments received during the proposed rule’s comment period and will finalize the rule in the coming months. The proposed rule includes a 

reduction methodology only for FY 2014 and FY 2015. CMS plans to use state data 

obtained in FYs 2014 and 2015 to inform how the reductions should be made in FY 

2016 and beyond. CMS will revisit the methodology and promulgate new rules to 

govern DSH reductions in FYs 2016 and beyond. 

Additionally, the President’s FY 2014 Budget includes a proposal to delay the reductions by one year, with the reductions taking effect in FY 2015, rather than FY 

2014. Should Congress not act to move the President’s proposal forward, the reductions will take effect in FY 2014 as statutorily required. 

CONGRESSMAN JARED POLIS (CO)

1. In addition to expanding access to high quality early education programs, it is 

crucial that early education programs such as Head Start work with elementary 

schools to ensure a strong transition. That’s why I introduced a bipartisan, no-cost 

bill, the Continuum of Learning Act, which would align early childhood education 

and early elementary school standards and professional development activities 

through strong child development practices and policies. How would the administration’s preschool proposal strengthen connections between existing early learning programs and the elementary grades? 

Answer: The President’s Early Learning Initiative will develop a continuum of 

high-quality early learning for children—from birth to age 5. The Initiative will 

align standards across early learning programs and preschool, raising the standards 

throughout the continuum of early learning. The President’s Initiative expands 

high-quality early learning opportunities in the years before preschool, helping children move from Home Visiting, Early Head Start-Child Care Partnerships, and 

Head Start into Pre-kindergarten while maintaining high quality care and education at each step. Congress has provided $1.5 billion to expand home visitation 

to hundreds of thousands of America’s most vulnerable children and families across 

all 50 states, and President Obama has called for a significant investment in a new 

74 

Early Head Start-Child Care partnership. This investment, combined with an expansion of publicly funded preschool education for four-year olds, will ensure a cohesive and well-aligned system of early learning for children from birth to age five. 

ACF is already working with State Advisory Councils to develop and enhance 

high-quality, comprehensive systems that optimize childhood services so children arrive at school ready to learn and prepared to excel. For example, a number of states 

used grant funds to align their Early Learning Standards with the Common Core, 

K-12 standards, so that what children are expected to know is seamless across the 

age spectrum. Additionally, states with Race to the 

Top-Early Learning Challenge (RTT-ELC) funding are working to connect and 

build on existing early learning systems statewide. RTT-ELC states are measuring 

outcomes and progress to inform early learning services whether children are entering kindergarten ready to succeed in elementary school. 

[Whereupon, at 12:01 p.m., the committee was adjourned.] 

Æ