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POLICIES AND PROCEDURES 

OF 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 TWELFTH CONGRESS 

FIRST SESSION 

HEARING HELD IN WASHINGTON, DC, MAY 5, 2011 

Serial No. 112–20 

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 

Judy Biggert, Illinois 

Todd Russell Platts, Pennsylvania 

Joe Wilson, South Carolina 

Virginia Foxx, North Carolina 

Duncan Hunter, California 

David P. Roe, Tennessee 

Glenn Thompson, Pennsylvania 

Tim Walberg, Michigan 

Scott DesJarlais, Tennessee 

Richard L. Hanna, New York 

Todd Rokita, Indiana 

Larry Bucshon, Indiana 

Trey Gowdy, South Carolina 

Lou Barletta, Pennsylvania 

Kristi L. Noem, South Dakota 

Martha Roby, Alabama 

Joseph J. Heck, Nevada 

Dennis A. Ross, Florida 

Mike Kelly, Pennsylvania 

[Vacant] 

George Miller, California, 

Senior Democratic Member 

Dale E. Kildee, Michigan 

Donald M. Payne, New Jersey 

Robert E. Andrews, New Jersey 

Robert C. ‘‘Bobby’’ Scott, Virginia 

Lynn C. Woolsey, California 

Rube ́n Hinojosa, Texas 

Carolyn McCarthy, New York 

John F. Tierney, Massachusetts 

Dennis J. Kucinich, Ohio 

David Wu, Oregon 

Rush D. Holt, New Jersey 

Susan A. Davis, California 

Rau ́l M. Grijalva, Arizona 

Timothy H. Bishop, New York 

David Loebsack, Iowa 

Mazie K. Hirono, Hawaii 

Barrett Karr, Staff Director 

Jody Calemine, Minority Staff Director 
(III) 

C O N T E N T S 

Page 

Hearing held on May 5, 2011 ................................................................................. 1 

Statement of Members: 

Barletta, Hon. Lou, a Representative in Congress from the State of Pennsylvania, question submitted for the record ............................................... 7 

Kline, Hon. John, Chairman, Committee on Education and the Workforce 1 

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

Questions submitted for the record ......................................................... 7 

McCarthy, Hon. Carolyn, a Representative in Congress from the State 

of New York, question submitted for the record ........................................ 9 

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

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

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

Additional submission: Letter from David Rosnick, Center for Economic and Policy Research 9 

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

Tennessee, question submitted for the record ............................................ 8 

Walberg, Hon. Tim, a Representative in Congress from the State of 

Michigan, questions submitted for the record ............................................ 7 

Woolsey, Hon. Lynn C., a Representative in Congress from the State 

of California, questions submitted for the record ....................................... 8 

Statement of Witnesses: 

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

Human Services ............................................................................................ 10 

Prepared statement of ............................................................................... 12 

Responses to questions submitted for the record ................................... 59 

(1) 

POLICIES AND PROCEDURES 

OF THE U.S. DEPARTMENT OF 

HEALTH AND HUMAN SERVICES 

Thursday, May 5, 2011 

U.S. House of Representatives 

Committee on Education and the Workforce 

Washington, DC 

The committee met, pursuant to call, at 10 a.m., in room 2175, 

Rayburn House Office Building, Hon. John Kline [chairman of the 

committee] presiding. 

Present: Representatives Kline, Petri, Biggert, Foxx, Roe, 

Walberg, DesJarlais, Hanna, Rokita, Bucshon, Gowdy, Barletta, 

Ross, Kelly, Miller, Kildee, Payne, Andrews, Scott, Woolsey, Hinojosa, McCarthy, Tierney, Kucinich, Wu, Davis, Grijalva, and 

Hirono. 

Staff Present: Andrew Banducci, Professional Staff Member; 

Katherine Bathgate, Press Assistant/New Media Coordinator; 

James Bergeron, Director of Education and Human Services Policy; 

Casey Buboltz, Coalitions and Member Services Coordinator; 

Heather Couri, Deputy Director of Education and Human Services 

Policy; Daniela Garcia, Professional Staff Member; Ed Gilroy, Director of Workforce Policy; Benjamin Hoog, Legislative Assistant; 

Amy Raaf Jones, Education Policy Counsel and Senior Advisor; 

Marvin Kaplan, Professional Staff Member; Barrett Karr, Staff Director; Ryan Kearney, Legislative Assistant; Brian Newell, Deputy 

Communications Director; Krisann Pearce, General Counsel; Molly 

McLaughlin Salmi, Deputy Director of Workforce Policy; Ken 

Serafin, Workforce Policy Counsel; Linda Stevens, Chief Clerk/Assistant to the General Counsel; Alissa Strawcutter, Deputy Clerk; 

Loren Sweatt, Professional Staff Member; Joseph Wheeler, Professional Staff Member; Aaron Albright, Minority Communications Director for Labor; Tylease Alli, Minority Hearing Clerk; Jody 

Calemine, Minority Staff Director; Ruth Friedman, Minority Director of Education Policy; Brian Levin, Minority New Media Press 

Assistant; Jerrica Mathis, Minority Legislative Fellow, Labor; 

Megan O’Reilly, Minority General Counsel; Julie Peller, Minority 

Deputy Staff Director; Meredith Regine, Minority Labor Policy Associate; Laura Shifter, Minority Senior Education and Disability 

Advisor; and Michele Varnhagen, Minority Chief Policy Advisor 

and Labor Policy Director. 

Chairman KLINE. A quorum being present, the committee will 

come to order. 
2 

Well, good morning, everybody. 

Good morning, Madam Secretary, welcome. We are delighted 

that you are here. I believe this is your first appearance before the 

committee, and we certainly appreciate the opportunity to meet 

with you today. 

I realize your time is valuable, and we only have a small window 

to discuss a small range of topics. As we discussed earlier, it is 

likely that we will be interrupted by votes pretty quickly, so an administrative comment for all of my colleagues: Mr. Miller and I and 

the Secretary are going to all try to get our opening statements 

done, and at least Mr. Miller and I, depending upon how quickly 

they call votes. 

By any definition, the Department of Health and Human Services is a massive Federal agency. It employs nearly 76,000 workers 

and maintains an annual operating budget in excess of $800 billion, the largest of any agency in the Federal Government. 

While a great deal of the Department’s resources is directed to 

Medicare and Medicaid, more than $100 billion in taxpayer money 

is spent on various social service programs. Many of these programs fall within the jurisdiction of this committee, such as welfare, the Community Services Block Grant, and provisions of the 

Child Abuse Prevention and Treatment Act. 

No doubt these programs are well intended. They reflect our Nation’s ongoing commitment to serving those in need. In recent 

years, however, the Federal budget has been placed on an 

unsustainable path taxpayers can no longer afford. This growth has 

forced us to take a hard look at every facet of the Federal Government as we consider how to reign in spending. 

I realize the administration has offered some modest proposals 

for scaling back the cost of your Department, Madam Secretary. 

However, these proposals fail to rise to the challenges we face. If 

we adopt the President’s plan, the Congressional Budget Office reports the Federal Government will spend $46.2 trillion, impose $1.5 

trillion in new taxes, and add roughly $9 trillion to the national 

debt over the next decade. 

This is unacceptable. 

In health care, the news is just as disappointing. It has been a 

little more than a year since the President signed his health care 

bill into law, yet already the price tag for the new law has increased by more than 50 percent. A plan that supporters promised 

would reduce costs, will instead charge taxpayers more than $2.6 

trillion when fully implemented, and add more than $700 billion to 

the deficit. 

Our national conversation has become so consumed by trillions 

and billions, that it is almost impossible to comprehend the magnitude of the crisis we face. These reckless policies affect not only 

the Nation’s bottom line, they undermine confidence in our economy and harm job creators’ ability to expand businesses or hire 

new workers. 

The current fiscal crisis demands we examine every program to 

ensure every taxpayer dollar is spent efficiently and effectively. 

Every Federal agency must be part of that effort. If we fail to promote responsible reforms and make tough choices, our Nation will 

no longer be able to provide assistance to those who need it most. 
3 

Those who argue for a timid response threaten the very safety net 

many Americans rely upon. 

We know many of the decisions we must make will be unpopular. 

Writing about the spending cuts in the final appropriations bill, the 

President’s communications director noted ‘‘Many will be painful, 

and are to programs that we support, but the fiscal situation is 

such that we have to act. ‘‘And I couldn’t agree more. 

The Nation faces an historic moment: We can continue the status 

quo of more spending, more taxes, and more debt that will ultimately lead to our Nation’s decline, or we can make the tough, yet 

necessary, choices to preserve the promise of our country and the 

prosperity of our children. That is the course the majority of this 

House has supported and one that I believe an overwhelming majority of the American people expect us to take. 

[The statement of Chairman Kline follows:] 

Prepared Statement of Hon. John Kline, Chairman, 

Committee on Education and the Workforce 

A quorum being present, the committee will come to order. 

Good morning and welcome Madam Secretary. I believe this is your first appearance before the Committee, and we certainly appreciate the opportunity to meet 

with you today. I realize your time is valuable and we only have a small window 

to discuss a wide range of topics. I will keep my opening remarks brief to help ensure all members have ample opportunity to discuss with you the department’s policies and priorities. 

By any definition, the Department of Health and Human Services is a massive 

federal agency. It employs nearly 76,000 workers and maintains an annual operating budget in excess of $800 billion, the largest of any agency in the federal government. 

While a great deal of the department’s resources are directed to Medicare and 

Medicaid, more than $100 billion in taxpayer money is spent on various social service programs. Many of these programs fall within the jurisdiction of this Committee, 

such as welfare, the Community Services Block Grant, and provisions of the Child 

Abuse Prevention and Treatment Act. 

No doubt these programs are well intended. They reflect our nation’s ongoing commitment to serving those in need. In recent years, however, the federal budget has 

been placed on an unsustainable path taxpayers can no longer afford. This growth 

has forced us to take a hard look at every facet of the federal government as we 

consider how to rein in spending. 

I realize the administration has offered some modest proposals for scaling back 

the costs of your department. However, these proposals fail to rise to the challenges 

we face. If we adopt the president’s plan, the Congressional Budget Office reports 

the federal government will spend $46.2 trillion, impose $1.5 trillion in new taxes, 

and add roughly $9 trillion to the national debt over the next decade. This is unacceptable. 

In health care, the news is just as disappointing. It has been a little more than 

a year since the president signed his health care bill into law, yet already the price 

tag for the new law has increased by more than 50 percent. A plan that supporters 

promised would reduce costs will instead charge taxpayers more than $2.6 trillion 

when fully implemented and add more than $700 billion to the deficit. 

Our national conversation has become so consumed by ‘‘trillions’’ and ‘‘billions’’ 

that it’s almost impossible to comprehend the magnitude of the crisis we face. These 

reckless policies affect not only the nation’s bottom line, they undermine confidence 

in our economy and harm job-creators’ ability to expand businesses or hire new 

workers. 

The current fiscal crisis demands we examine every program to ensure every taxpayer dollar is spent efficiently and effectively. Every federal agency must be part 

of that effort. If we fail to promote responsible reforms and make tough choices, our 

nation will no longer be able to provide assistance to those who need it most. Those 

who argue for a timid response threaten the very safety net many Americans rely 

upon. 

We know many of the decisions we must make will be unpopular. Writing about 

the spending cuts in the final appropriations bill, the president’s communications 
4 

director noted, ‘‘Many will be painful, and are to programs that we support, but the 

fiscal situation is such that we have to act.’’ I couldn’t agree more. 

The nation faces a historic moment: We can continue the status quo of more 

spending, more taxes, and more debt that will ultimately lead to our nation’s decline, or we can make the tough yet necessary choices to preserve the promise of 

our country and the prosperity of our children. That is the course a majority of this 

House has supported, and one that I believe an overwhelming majority of the American people expect us to take. 

Chairman KLINE. At this time I would like to recognize Mr. Miller, the senior Democratic member of the committee, for his opening remarks. 

Mr. MILLER. Thank you, Mr. Chairman. Thank you for having 

this hearing. I want join you in welcoming Secretary Sebelius to 

the committee. 

From educating our youngest children in Head Start to ensuring 

seniors’ access to health care and Medicare, your Department administers programs that have unquestionably made our families 

and communities healthier and our country stronger. In recent 

months, we have seen an unprecedented attack on these programs 

that help millions of American families. 

While we must address our Nation’s long-term deficits, the budget priorities pursued by the Republican majority have put much of 

the sacrifice directly on the backs of children and seniors. Cutting 

130,000 children from Head Start isn’t about rebuilding our economy. The repealing of the historic health care reform law won’t 

help families and businesses get costs under control. 

You and your Agency, Madam Secretary, have primary responsibility for the implementation of the Affordable Care Act. A year 

after its enactment, the reform bill is still doing the right thing. It 

is the right thing to do to help families struggling with affordable 

coverage; it is the right thing to do for businesses crushed by skyrocketing premiums over the last decade; and it was the right thing 

to do to finally end the worst abuses of the insurance industry. 

The Affordable Care Act also makes significant strides in combating fraud and abuse in the Medicare and Medicaid system, and 

it includes key health care cost controllers, identified by top experts, as critical to getting costs under control without rationing 

care. 

And this is part of keeping the bargain, the bargain and the 

promise that this country made to our Nation’s seniors, and it is 

a promise and a bargain than this Nation must keep to our seniors. 

However, the same cannot be said about the Republicans’ budget. 

They achieved savings not by making Medicare work better, but by 

shifting costs onto seniors. 

In fact, according to the report we released this morning, seniors 

would have to shoulder approximately $6,400 more in health care 

costs in 2022. The typical 65-year-old in 2022 will spend half of 

their Social Security on health insurance premiums under the Republican budget plan, and that cost increases with each passing 

year. 

Using the CBO numbers, the Center for Economic Policy and Research has found that to buy a Medicare-equivalent policy under 

the Republican plan, the median 85-year-old in 2050 would have to 

spend twice their annual income. 
5 

In this committee, we should be concerned about what this 

means for workers today. Based upon further analysis by the Center, which I submit for the record, the 54-year-old today would 

have to save an additional—an additional $182,000 over the next 

11 years just to pay for the increased health care costs under the 

Republican budget. 

This is over and above what they are already putting away every 

month in their savings, in their 401(k)s and in their retirement 

plans. So these workers will have to find around an extra $1,000 

to $1,300 a month to put in their IRAs or their 401(k) plans, and 

that is contingent on the market not crashing right before they retire. 

This committee has been concerned for years about the sufficiency of workers’ retirement plans. In 2007, before the recent crisis, the Census Bureau found that half of all the workers had no 

retirement savings. In 2010, the Employee Benefit Research Institute found that the average retirement savings shortfall was over 

$47,000 per individual, and all of that was counting on Medicare. 

So how do these workers find another $182,000, especially since 

for middle-class workers in this country, wages have essentially 

been stagnant since the 1970s and labor protections for workers 

who try to organize and do better on the job for their families and 

for their communities, their ability to organize is now under attack. 

Under the Republican plan, seniors will go into debt and they will 

be forced to sell their homes that they have spent a lifetime paying 

off, and they will have to rely on their children just to pay basic 

medical care. 

This is not what anyone envisioned as a dignified retirement. 

This was not the bargain. This was not the promise that this Nation made with its seniors. And I say that, clearly understanding 

the need for additional reforms to make sure that Medicare is sustainable for seniors in the future and sustainable for taxpayers. 

I am very encouraged to see that as the Republican negotiators 

go to the White House today, they are reconsidering the idea that 

they would split Medicare, that they would put the 65-year-old in 

the jeopardy that I outlined under the economic policy study, and 

they would put this burden on the savings of middle-class Americans today. And they also have the ability, as they go to the White 

House, to think about whether or not Medicare is going to be included in the discussions around the debt limit. It sounds like they 

are reconsidering that. I hope they are. 

They can also understand that they can build on the trillion, 

about 700, or is it—a little over $700 billion that they have adopted 

in Medicare savings for their budget that are in the Affordable 

Care Act. And so hopefully we can continue to build on those kinds 

of savings that come from bending the cost curve for health care 

for seniors in this country and for the cost of the Medicare program. 

Again, I welcome you to the committee and thank you so much 

for your service to our country. 

Chairman KLINE. I thank the gentleman. 

[The statement of Mr. Miller follows:] 
6 

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

Committee on Education and the Workforce 

I am pleased that we are having a hearing on the critically important work of 

our nation’s employment and workforce training programs. I would like to thank our 

distinguished panel of witnesses for joining us today. 

While our economy is moving in the right direction, in my congressional district 

and across our nation, millions of American workers continue to struggle to find 

good jobs and make ends meet. 

In order to thrive in today’s workforce, American workers, particularly those 

adults and youth who are unemployed, dislocated, or disadvantaged, need education 

and training, counseling, guidance, and support to secure family-sustaining jobs, 

achieve their educational goals, and improve their lives. 

In part, today’s hearing will focus on recent reports released by GAO on federal 

programs that provide some form of employment and training services. In these reports, GAO has recommended co-locating and consolidating administrative structures to avoid duplicating services. 

In addition, the GAO recommended that the Secretaries of Labor and HHS work 

together to develop and disseminate information to encourage such efforts. 

While my colleagues on the other side of the aisle support the consolidation of administrative structures and funding streams and argue that any savings should be 

applied to the deficit, I believe that consolidation should be used to improve the 

quality and accessibility of employment and job training services. 

If the process of co-locating or consolidating programs leads to a savings, I strongly believe that these resources should be reinvested into our public workforce and 

adult education system and be used to address the needs of those workers who are 

hardest to serve. Those who are jobless desperately need our help to improve their 

lives. 

In the Rφo Grande Valley of South Texas, we have waiting lists for adult education and employment and training services and are unable to meet the needs of 

our most vulnerable workers and youth due to limited resources. 

As Ranking Member of the Subcommittee on Higher Education and Workforce 

Training, reauthorizing and improving the Workforce Investment Act (WIA) and 

adequately funding our nation’s public workforce and adult education system are 

top priorities for me. In my view, our public workforce and adult education system 

has been starved for far too long. 

It is my hope that we, the members of this committee, can identify areas of common ground and work in a bipartisan manner to reauthorize WIA in the 112th Congress. 

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

the official hearing record. 

[The information follows:] 

U.S. CONGRESS, 

Washington, DC, June 28, 2011. 

Hon. KATHLEEN G. SEBELIUS, Secretary, 

U.S. Department of Health and Human Services, 200 Independence Ave., SW, Washington, DC 20201. 

DEAR SECRETARY SEBELIUS: Thank you for testifying at the Committee on Education and the Workforce’s May 5, hearing on ‘‘Policies and Priorities of the U.S. 

Department of Health and Human Services.’’ I appreciate your participation. 

Enclosed are additional questions submitted by Committee members following the 

hearing. Please provide written responses that answer the questions posed no later 

than July 12, 2011, for inclusion in the official hearing record. Responses should be 

sent to Benjamin Hoog of the Committee staff, who can be contacted at (202) 225- 

4527. 
7 

1http://www.gao.gov/new.items/d10733t.pdf. 

Thank you again for your contribution to the work of the Committee. 

Sincerely, 

JOHN KLINE, 

Chairman 

QUESTIONS FROM REPRESENTATIVE KLINE

1. HEAD START FRAUD AND ABUSE. Last year, the U.S. Government Accountability Office (GAO) conducted an undercover investigation of 15 Head Start programs, acting in response to tips from former and current employees at two separate 

Head Start centers. Undercover GAO applicants tried to enroll children in these programs and presented the centers with pay stub data that demonstrated they were 

above income eligibility requirements. Nine of the 15 sites enrolled the students by 

encouraging applicants not to submit the pay stubs that would put them over the 

income threshold. Some of the programs continued to count the students as enrolled, 

even though the students never actually participated in the program. At a May 2010 

hearing before this Committee, the Assistant Secretary for Children and Families 

stated that the Department was taking immediate corrective action and was undertaking a ‘‘top-to-bottom’’ review of its program oversight responsibilities. Can you 

give us an update on the Department’s effort to combat waste, fraud, and abuse in 

the Head Start program? How many unannounced monitoring visits has the Department conducted since the release of the GAO report?1

2. RECOMPETITION OF HEAD START GRANTEES. In 2007, Congress passed 

the Improving Head Start for School Readiness Act, which requires the Secretary 

of Health and Human Services to establish a new, comprehensive system to recompete Head Start and Early Start grants. The Department is currently in the process 

of finalizing regulations on recompetition to ensure that Head Start grantees are 

meeting the requirements of the law and preparing pre-school-aged children for 

entry into kindergarten. Please provide us with an update on this process. When 

will the first grantees be re-evaluated? 

3. EFFECTIVENESS OF THE COMMUNITY SERVICES BLOCK GRANT PROGRAM. The President’s FY2012 budget request includes a $388 million cut to the 

Community Services Block Grant program, which is geared toward anti-poverty activities. Over the last 10 years, a number of independent studies and research activities, including those conducted by the U.S. Government Accountability Office 

(GAO), have questioned the program’s effectiveness in combating poverty in local 

communities. What changes do you think the Committee should make to the program to make it more effective? When was the last time the program was evaluated 

and what were the results? 

4. HEALTH INSURANCE EXCHANGES: You claim in your testimony that in 

2014, state health insurance exchanges will provide new options for consumers. 

However, it has been reported that several governors have vetoed bills intended to 

implement the new law’s requirement for state-based Health Insurance Exchanges, 

and many states are not working toward establishing such exchanges. Also, one governor rejected a $54 million ‘‘early innovator’’ grant for an exchange partly on the 

basis that states do not want to be subjected to federal regulation. Assuming some 

states will not create health insurance exchanges by 2014, at what point will HHS 

develop the federal insurance exchange option that would be available to consumers 

in those states? Can you elaborate on the structure of this option? 

QUESTIONS FROM REPRESENTATIVE WALBERG

For nearly 20 years, the National Institute for Occupational Safety and Health 

(NIOSH) along with the National Cancer Institute (NCI) conducted a study on the 

potential effects of diesel exhaust in underground mines. The Mining Awareness Resources Group (MARG) voluntarily participated in the study by providing access and 

information for NIOSH to conduct the study; however this was done with the understanding that NIOSH would be providing the study data to the group in order to 

review the studies. Two federal court orders have ordered NIOSH to provide the 

data to MARG and the Committee on Education and the Workforce, yet the institute 

has not fully complied. 

1. Why has NIOSH not complied with the court orders of two federal judges? 

2. When will the data be made available to all parties involved? 
8 

2See http://republicans.energycommerce.house.gov/Media/file/Hearings/Health/033011/Foster.pdf. 

QUESTION FROM REPRESENTATIVE BARLETTA

1. A number of smaller pharmacies in my district in Northeastern Pennsylvania 

have raised concerns regarding the impact of ‘‘rapid refills’’ on patient care. As you 

know, an increasing number of doctors are issuing prescriptions for 90 day supplies 

of medication. However, the patient’s condition may change, forcing a doctor to modify the prescription prior to the patient exhausting the huge supply. Additionally, 

the patient loses out on valuable and more frequent in-person counseling offered by 

local brick and mortar pharmacies. Can you give the Agency’s perspective on the 

challenges to patient care associated with so-called ‘‘rapid refills’’? How has the Patient Protection and Affordable Care Act interfered with this process? 

QUESTION FROM REPRESENTATIVE ROE

1. During our dialogue at the May 5, 2011, hearing of the Education and the 

Workforce Committee, you stated that of the 30 million to 35 million Americans who 

will receive coverage as a result of PPACA, ‘‘* * * about 15 million are likely to 

be Medicaid-eligible.’’ However Medicare’s chief actuary has indicated that the number of new Medicaid enrollees could rise as high as 25 million given that Social Security benefits will not be counted as income for the purpose of determining Medicaid eligibility.2 How then, is PPACA not just a massive expansion of Medicaid? 

QUESTIONS FROM REPRESENTATIVE WOOLSEY

1. The HHS FY 12 budget proposes to zero out two programs in the National Institute for Occupational Safety and Health (NIOSH): the Education & Research 

Center (ERC) program and the Agriculture, Fishing and Forestry (AFF) program. 

Combined, these two programs total less than $50 million. The ERCs were established to implement Section 21 of the Occupational Safety and Health Act’s 

(OSHAct) requirement to train ‘‘an adequate supply’’ of occupational safety and 

health professionals to implement the law. 

A. With regard to the AFF program, fatality rates in agriculture, fishing and forestry are more than seven times the average—and cost our economy $4 billion per 

year. NIOSH has developed technology to save lives and property in these industries. The National Academy of Sciences (NAS) found this program conducts high 

priority, sound research, but indicated that there were opportunities for improvement. The HHS FY 12 budget request zeroes out the program, claiming the program 

was ineffective, and asserts that the Agriculture Department and the Labor Department can pick up the slack when this program is zeroed out. The NAS panel members have written to Congress contending that the HHS budget justification misrepresents their 2007 report. 

i. What specific authorization and funding is available in the Labor Department 

or Agriculture Department in the President’s FY 12 budget to replace the NIOSH 

AFF research program? 

ii. Will you be willing to review the budget justification for the AFF program to 

determine if it is valid and factually supported? 

iii. Would you be willing to work with the Committee to identify funds within 

HHS’s operating divisions that could be reallocated to allow this priority NIOSH 

work to continue? 

B. With regards to the ERC program, the HHS FY 12 budget request justifies termination on the grounds that NIOSH had planned to sunset funding after 5 years; 

however, neither the Centers for Disease Control nor OMB can find any documents 

to back this up. Congress never intended to sunset this program after 5 years, and 

the Institute of Medicine recommended continuing this program. 

i. Has HHS conducted a recent assessment of whether the ERC program has fulfilled its mission pursuant to Section 21 of the OSHAct? If so, has such assessment 

determined that there is an adequate supply of occupational safety and health professionals? 

ii. If such study had not been done, why would HHS terminate this program before such assessment has been completed? 

iii. Will you be willing to undertake a review to determine if the budget justification for the ERC program is valid and fully supported? 

iv. Would you be willing to work with the Committee to identify funds within 

HHS’s operating divisions that could be reallocated to allow this priority NIOSH 

work to continue? 
9 

QUESTION FROM REPRESENTATIVE MCCARTHY

1. Congress included a provision in the Patient Protection and Affordable Care Act 

requiring that patients receiving Medicare home health services have a face-to-face 

encounter with a referring physician prior to certification for home health services. 

Having heard from both home health care providers and physician groups alike, 

I am concerned that in implementing the provision, CMS has gone beyond Congressional intent. In doing so, the agency has created significant additional administrative paperwork and documentation burdens on physicians for which they are not reimbursed. The requirement also creates obstacles to care for patients, who are by 

definition homebound, and may not have convenient access to physician offices. 

I am very concerned that the outcome of this will be that patients are denied access to the care they need, and that is provided in both the lowest cost and most 

desired setting—one’s own home. 

We will continue to work with the agency, but would appreciate your attention 

and thoughts on this matter as well. Would you support efforts to streamline and 

simplify the process for documenting the face to face encounter so that we address 

concerns of referring physicians, home health providers, and the patients they 

serve? 

[Additional submission of Mr. Miller follows:] 

CENTER FOR ECONOMIC AND POLICY RESEARCH, 

Washington, DC. 

Hon. GEORGE MILLER, 2205 Rayburn House Office Building Washington, DC. 

DEAR REPRESENTATIVE MILLER: Thank you for your interest in our report ‘‘Representative Ryan’s $30 Trillion Medicare Waste Tax.’’ 

According to Figure 1 of the Congressional Budget Office’s letter to Paul Ryan, 

the cost of purchasing private health insurance equivalent to that which Medicare 

provides is 12 percent higher than the cost to Medicare in 2011. CBO projects that 

the additional cost from providing care through private insurers will grow to 67 percent of the total cost of Medicare by 2030. 

Consequently, under the Ryan plan, a person born in 1957 must spend approximately $16,900 (in today’s dollars) to purchase Medicare-equivalent insurance in 

2022. Through Medicare, the insurance would cost only $11,200. This implies $5,700 

of waste. 

As this beneficiary ages, both the general increase in health care prices and the 

increased burden of providing health care with age will conspire to raise this person’s cost of insurance. At age 65, a person born in 1957 will require an additional 

$182,000 in retirement savings—earning 3 percent real interest—in order to purchase private insurance rather than accept coverage through Medicare through age 

84. 

In part, this $182,000 reflects additional sharing of costs imposed the Ryan plan. 

The Ryan plan would shift approximately $20,800 in costs from the government to 

this beneficiary between 2022 and 2041. Thus, the shift requires the beneficiary to 

set aside $14,000 in retirement savings by age 65 as well as $6,800 in interest income in order to make up for the reduced support from the government. 

The remaining $168,000 in required retirement savings—again generating annual 

interest at a rate 3 percentage points above inflation—reflects the additional cost 

of private insurance. The total cost of private insurance would be $557,300, compared to $322,200 through Medicare. The principal and interest on $168,000 would 

suffice to cover this $235,100 difference in insurance costs from age 65 through age 

84. 

Please do not hesitate to contact me if you have further questions. 

DAVID ROSNICK, 

Center for Economic and Policy Research. 

Chairman KLINE. Again, before I introduce our distinguished witness, I want to make an administrative announcement. The Secretary has a hard stop time at 12:30. I want to encourage my colleagues, when we get into questions and answers, that you try to 

abide by the 5-minute clock so that everybody has a chance. And, 

again, we expect to be called to votes momentarily. 
10 

So let me move to the introduction. The Honorable Kathleen 

Sebelius was sworn in as the 21st Secretary of the Department of 

Health and Human Services on April 28, 2009. 

I got the wave down here. Everybody knows who the Secretary 

is. So in the interest of time, Madam Secretary, you are recognized. 

STATEMENT OF HON. KATHLEEN G. SEBELIUS, SECRETARY, 

U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES 

Secretary SEBELIUS. Chairman Kline and Ranking Member Miller, members of the committee, thank you for inviting me here to 

discuss the President’s 2012 budget for HHS. 

The President’s budget ensures Americans live within our means. 

As a lead-up to the budget, we looked at all of our programs, cut 

waste, eliminated programs that weren’t working well enough, redesigned our programs to put a new focus on result. In some cases, 

we cut programs we would have kept in place in better fiscal times. 

At the same time, our budget protects the investments we need 

to keep Americans prosperous in the years to come, from investments in Head Start so our kids can compete with those in any nation, to investments in biomedical research that allows the U.S. to 

continue to lead the world in discoveries of breakthrough cures and 

treatments. 

Today I want to focus my oral testimony on some of the provisions in our budget that will benefit the youngest and the oldest 

Americans. 

But first a quick update on the implementation of the the Affordable Care Act. Thanks to the steps we have taken so far, children 

can no longer be denied coverage because of their preexisting 

health conditions. Families have new protections with the Patient’s 

Bill of Rights. Businesses are getting some initial relief from the 

soaring health care costs, and seniors have better access to prescription drugs and preventive care. 

Tomorrow we will announce that more than 18,000 Americans 

who have been shut out of the insurance market are now taking 

advantage of the preexisting insurance plans in their States. Some 

States are still reporting figures, so those numbers could go higher, 

but that is about a 50 percent increase in the last couple of months 

as people begin to learn about the program. 

It is encouraging to see that more people who need health insurance are getting it, but we know that is not enough, and that is 

why we are continuing to work with States and national advocates 

to reach eligible people and let them know coverage is available. 

We are also working with insurers that have chosen to notify people about the preexisting insurance plan when their applications 

are denied, and we are evaluating ways to reduce premiums and 

ease eligibility standards to expand access to the plans. For many, 

these plans provide access to lifesaving treatment, so it is vital we 

continue to find those who are eligible and get them enrolled. 

Our budget builds on the momentum of the the Affordable Care 

Act with critical investments that provide for and protect our most 

vulnerable citizens. We know there is nothing more important to 

our future than the healthy development of all of our children. 

Science continues to show that success in school is significantly 

enhanced by higher-quality early learning opportunities. Earlier 
11 

this year, we got the results of the latest study to look at value of 

early education. Researchers followed children from low-income 

families enrolled in Chicago’s early education programs until they 

turned 26, and found that over that child’s lifetime the program 

generated as much as $11 in economic benefits for every dollar 

spent. Now, that is a huge payoff. So even in tight budget times, 

our budget makes room for new investments in child care and 

Head Start, which have a long history of bipartisan support. 

But the budget does more than provide additional resources. It 

aims to raise the bar on quality in child care and early education 

by supporting key reforms to transform the Nation’s early childhood system into one that fosters healthy development and gets 

children ready for school. 

Quality child care is more than just providing baby sitting. It 

supports healthy child development and school readiness, and that 

is why our budget puts forward principles for legislation reauthorizing the main child care program, the Child Care and Development Block Grant. These include promoting better health and safety standards, putting more information about the quality of different child care options into parents’ hands and improving workforce training to make sure that the people caring for our kids have 

the skills they need. 

We look forward to working with this committee, Mr. Chairman, 

as you consider these issues. We are also promoting better quality 

in Head Start, using new evidence-based evaluations in classrooms, 

including a tool that will help Head Start programs see what is 

working and improve what isn’t. 

In addition, we have revamped the training we provide to Head 

Start directors and teachers to make sure best practices actually 

reach the classroom. We are proposing new rules to require the 

lowest performing programs, the bottom 25 percent, to compete for 

funding. By giving programs incentives to raise the quality of their 

services and removing the weaker programs, we want to ensure 

that the best programs are the ones serving our children. 

Finally, we are pleased that the fiscal year 2011 budget included 

funding to allow States to fund innovation in early education, and 

our 2012 request includes $350 million to continue this key investment. 

Taken together, these initiatives are designed to create an early 

learning system that gets every child ready for school, supports 

healthy child development and features high standards, whether 

the child is in a pre-K program, a Head Start center, a child care 

center, or a family day-care home. They will help ensure that 

American children start school as prepared as any in the world. 

Our budget also focuses on creating safe environments for children and families. We thank the committee for reauthorizing the 

Child Abuse Prevention and Treatment Act and the Family Violence Prevention and Services Act last year, and our budget includes more than $200 million for the child abuse and domestic violence programs authorized by these laws. 

The budget also provides critical support for seniors. It invests 

in the care and services seniors need to stay active and engaged 

in their communities, and it addresses the terrible problem of elder 
12 

abuse and provides funding for caregiver services that give families 

the peace of mind and enable them to care for near relatives. 

These goals guide our Department’s work on the reauthorization 

of the Older Americans Act coming up later this year. 

For more than 45 years, the Older Americans Act has enjoyed 

broad bipartisan support. In the past year alone, the law’s comprehensive home and community-based system has supported nearly 11 million seniors and their family caregivers, but the need for 

this kind of support continues to grow rapidly. 

Every day, more than 9,000 baby boomers turn 65. That is nearly 

3.3 million a year, many of whom will be ultimately cared for by 

their family members. We need to do all we can to help families 

caring for their loved ones, and the Older Americans Act gives us 

the tool to do just that. 

We look forward to working with this committee to reauthorize 

the Older Americans Act and build upon the law’s long record of 

success in serving our families and our communities. 

The 2012 budget makes tough choices and smart target investments today so we can have a healthy, stronger, and more competitive America tomorrow. That is what it takes to win the future and 

that is what we are determined to do. 

Thank you, Mr. Chairman, and I look forward to our discussion. 

Chairman KLINE. Thank you, Madam Secretary. 

[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 policies and priorities of the Department of 

Health and Human Services (HHS). 

In President Obama’s State of the Union address he outlined his vision for how 

the United States can win the future by out-educating, out-building and out-innovating the world so that we give every family and business the chance to thrive. 

His 2012 budget is the blueprint for putting that vision into action and making the 

investments that will grow our economy and create jobs. 

At the Department of Health and Human Services this means giving families and 

business owners better access to health care and more freedom from rising health 

care costs and insurance abuses. It means keeping America at the cutting edge of 

new cures, treatments and health information technology. It means helping our children get a healthy start in life and preparing them for academic success. It means 

promoting prevention and wellness to make it easier for families to make healthy 

choices. It means building a health care workforce that is ready for the 21st century 

health needs of our country. And it means attacking waste and fraud throughout 

our department to increase efficiency, transparency and accountability. 

Our 2012 budget does all of this. 

At the same time, we know that we cannot build lasting prosperity on a mountain 

of debt. And we cannot win the future if we pass on massive debts to our children 

and grandchildren. We have a responsibility to the American people to live within 

our means so we can invest in our future. 

For every program we invest in, we know we need to cut somewhere else. So in 

developing this budget, we took a magnifying glass to every program in our department and made tough choices. When we found waste, we cut it. When we found duplication, we eliminated it. When programs weren’t working well enough, we reorganized and streamlined them to put a new focus on results. When they weren’t working at all, we ended them. In some cases, we cut programs that we wouldn’t cut 

in better fiscal times. 

This Budget contributes to deficit reduction and meets the President’s freeze to 

non-security programs by offsetting critical investments with over $5 billion in targeted reductions. These reductions are to real programs and reflect tough choices. 

In some cases the reductions are to ineffective or outdated programs and in other 

areas they are cuts we would not have made absent the fiscal situation. 
13 

The Budget proposes a number of reductions and terminations in HHS. 

• The Budget cuts the Community Services Block Grant in half (by $329 million) 

and injects competition into grant awards. 

• The Budget cuts the Low Income Home Energy Assistance Program by $2.5 billion bringing it back to the 2008 level appropriated prior to the spike in energy 

prices. 

The Budget also stretches existing resources through better targeting. 

• The Budget redirects and increases funding in CDC to reduce chronic disease. 

Rather than splitting funding and making separate grants for heart disease, diabetes, and other chronic diseases, the Budget proposes one comprehensive grant that 

will allow States to address chronic disease more effectively. 

• The Budget proposes refocusing the Senior Community Services Employment 

program to better integrate unemployed seniors into their communities through 

community service employment assisting other seniors to stay in their homes. 

• The Budget redirects prevention resources in SAMHSA to fund evidence-based 

interventions and better respond to evolving needs. States and local communities 

will benefit from the additional flexibility while funds will still be competed and directed toward proven interventions. 

These are the two goals that run throughout this budget: making the smart investments for the future that will help build a stronger, healthier, more competitive, 

and more prosperous America, and making the tough choices to ensure we are building on a solid fiscal foundation. 

This Committee has jurisdiction over several important parts of HHS, including 

child care and Head Start, which focus on our youngest citizens, programs under 

the Older Americans Act, which focus on our oldest citizens, and certain child abuse, 

runaway and homeless youth, and family violence programs, which focus on some 

of our most vulnerable citizens. 

The budget documents are available on our website. But for now, I want to share 

an outline of the budget, including the areas of most interest to this Committee, and 

how it will help our country invest in, and win, the future. 

Advance the Health, Safety, and Well-Being of the American People 

Enhancing the Quality of Early Education: The Budget provides $6.3 billion in 

combined discretionary and mandatory funding for child care, which is a $1.2 billion 

increase above the FY 2011 funding level. These resources will provide child care 

subsidies to 1.7 million low-income children so that their parents can work or attend 

training or education. The funding also supports activities to improve the quality 

of child care to support learning and success for all 12 million young children who 

are in out-of-home care each week. 

The Administration also supports critical reforms to the child care program with 

the goal of helping more children access high quality child care, through higher 

health and safety and quality standards, development of the early childhood workforce, increased continuity of care, and quality rating improvement systems that 

provide parents with critical information about the quality of their care choices and 

assist providers in reaching higher levels of quality. The Budget also supports improvements to program integrity and accountability initiatives. Taken together, 

these reforms will help transform the nation’s child care system into one that provides safe, nurturing care that fosters healthy child development, promotes future 

academic success, and supports parental employment. 

Additionally, the President’s Budget includes $8.1 billion for Head Start, which 

will allow us to continue to serve 968,000 children in 2012. The budget request supports the critical reforms underway to raise the bar on quality in the Head Start 

program, including requiring grantees not meeting the standard for automatic noncompetitive renewal under the Head Start Act to compete for funding to ensure that 

children and families are served by the most capable providers. The budget also 

supports the redesigned training and technical assistance system which would bring 

current research and the best evidence-informed practice into Head Start classrooms, including best practices for local programs to work with their local school 

systems to ensure that children start school with the skills they need and that the 

gains children achieve in Head Start are sustained as the children leave Head Start 

and move on to public schools. 

The Administration is engaged in a multi-faceted effort to raise the bar on quality 

in Head Start. The training and technical assistance system has been revamped and 

now features six national centers that focus on different elements of quality early 

education, including parent engagement, quality teaching, and financial management. In addition, we now have 10 ‘‘Centers of Excellence’’ and 130 Head Start programs participating in a mentoring program designed to pair programs with dedi-
14 

cated mentors who can help them examine their programs and implement changes 

that improve quality. 

Another key element of our efforts to improve quality is the creation of a robust 

re-designation renewal system, called for in the most recent Head Start reauthorization legislation. This system will inject competition into the Head Start program and 

require low performing programs to compete against other entities for continued 

funding. We issued the proposed rule in September 2010 and received many comments from around the country. We are in the process of reviewing those comments 

and writing a final rule. We believe that a strong re-competition system will promote quality in two important ways. First, it provides new incentives for all Head 

Start programs to improve their programs because programs found to be low performing will have to compete for continued funding. Second, it provides a way to 

replace low-performing programs with entities that are able to provide higher quality early education to children. 

As we work to finalize the rules for this competitive process, we are guided by 

the goal of the bipartisan reauthorization legislation—to ensure that children served 

in Head Start have access to high quality early education that promotes healthy 

child development and school readiness. 

In fact, all of our work in early education is devoted to the goals of fostering 

healthy development and school success for children. Regardless of whether a child 

is in a Head Start Center, a family child care home, a public pre-K program, or a 

private preschool, that child needs quality teachers, a safe environment, healthy 

food, and activities that fosters her social, emotional, physical, and cognitive development. That is why the Administration has proposed the creation of the Early 

Learning Challenge Fund. This proposed competitive grant program would be jointly 

administered by the Departments of Education and Health and Human Services 

and would challenge States to establish model, coordinated, Statewide systems of 

early learning and development for children from birth to kindergarten entry by 

raising program standards, forging better linkages between early education programs and elementary schools, and improving early learning workforce training so 

that teachers have the skills they need. The overall program goal would be to improve health, social, emotional, and educational outcomes for young children so that 

they develop the skills and abilities necessary to succeed in school and in life. 

The Administration’s agenda on early education—including both investments and 

the focus on quality—are key elements of the broader education agenda designed 

to help every child reach his or her academic potential and improve our nation’s 

competitiveness. 

Child Abuse Prevention 

The Budget request for child abuse prevention efforts includes $26.5 million for 

grants to States and $41.7 million for grants to community-based organizations. The 

request supports the reauthorization of the Child Abuse Prevention and Treatment 

Act (CAPTA). This Committee played a leading role in the successful and bipartisan 

reauthorization effort last year and I appreciate your efforts. Reauthorization included new State plan assurances and a focus on collaboration and linkages between 

domestic violence and child abuse and neglect. Reauthorization also included a new 

funding formula adjustment should appropriations exceed FY 2009 amounts by 

more than $1 million. These funds will continue to help support improved child protection systems, including prevention services for families. Child abuse and neglect 

continues to be a significant problem in the United States. CAPTA funds support 

the efforts in establishing and maintaining effective systems of child protection, a 

critical element in eliminating the tragedy of child abuse and neglect, and support 

direct services to families. 

Preventing Domestic Violence 

The President’s FY 2012Budget provides $140 million to shelter and serve victims 

of domestic violence and their children, as well as prevent domestic abuse before it 

starts. The request supports the newly reauthorized Family Violence Prevention and 

Services Act, and funds over 1,300 battered women’s shelters, evidence-based prevention strategies, and the National Domestic Violence Hotline. The Hotline receives over 24,000 calls per month, with most callers reporting it is their first request for help. Again, I would like to thank this Committee for its bipartisan work 

to reauthorize these important programs last year. 

Child Support and Fatherhood Initiative: The Budget includes $305 million in FY 

2012 and $2.4 billion over 10 years for the Child Support and Fatherhood Initiative. 

This initiative is designed to promote strong family relationships by encouraging fathers to take responsibility for their children, changing policies so that more of fathers’ support reaches their children, and continuing a commitment to vigorous en-
15 

forcement. The Budget increases support for States to pass through child support 

payments to families, rather than retaining those payments, and requires States to 

establish safe access and visitation arrangements as a means of promoting father 

engagement in their children’s lives. The Budget also provides a temporary increase 

in incentive payments to States based on performance, which continues an emphasis 

on program outcomes and will foster enforcement efforts when state budgets are 

stretched. 

Reform and Reauthorize the Foster Care Financing System: The Budget includes an additional $250 million in mandatory funds in FY 2012 and a total of $2.9 billion 

over 10 years to align financial incentives with improved outcomes for children in 

foster care and those who are receiving in-home services from the child welfare system in order to prevent entry or re-entry into foster care. We look forward to working with the Committee to improve outcomes for vulnerable children in our child 

welfare system. 

Domestic Sex Trafficking 

Contrary to a common assumption, human trafficking is not just a problem in 

other countries. Cases of human trafficking have been reported in all 50 States, 

Washington D.C., and U.S. territories. Victims of human trafficking can be children 

or adults, U.S. citizens or foreign nationals, male or female. The President’s FY 

2012 budget proposed $5 million for training to address sex trafficking of runaway 

and homeless youth and supports for those working with U.S. domestic victims in 

the runaway and homeless youth population (in addition to funding currently provided through the Office of Refugee Resettlement for foreign trafficking victims in 

the United States). The Administration’s proposal would train and support those 

who work with the runaway and homeless youth population to identify, prevent, and 

address sex trafficking of minors in this population. These funds will support the 

training and outreach for a broad range of those who work with runaway and homeless youth, including program staff, caseworkers and parents. Through collaboration, funds also may support partnerships with law enforcement, attorneys, and 

judges to train individuals on how to recognize and address sex trafficking among 

youth. 

TANF Reauthorization: The President’s Budget continues existing funding for the 

TANF program in FY 2012. When TANF reauthorization is considered, the Administration would be interested in exploring with Congress a variety of strategies to 

strengthen the program’s ability to improve outcomes for families and children, including helping more parents succeed as workers by building on the recent successes 

with subsidized employment. One area in which HHS is already working to improve 

employment opportunities is by partnering with the Department of Labor (DOL). 

HHS and DOL are exploring a variety of efforts in the employment and training 

area which are aimed at addressing the challenges, strategies, incentives, and results for States and localities to undertake collaborative initiatives. These collaborative efforts include developing joint administrative guidance, providing technical 

assistance and outreach, and leveraging research resources. 

Supporting Older Adults and their Caregivers: The Budget includes $60 million, 

an increase of $21 million over FY 2010, to help seniors live in their communities 

without fear of abuse, and includes an increase of $96 million for caregiver services, 

like counseling, training, and respite care, to enable families to better care for their 

relatives in the community. The Budget also proposes to transfer to the Administration on Aging (AoA) a Department of Labor program that provides community service opportunities and job training to unemployed older adults. As part of this move, 

a new focus will be placed on developing professional skills that will enable participants to provide services that allow fellow seniors to live in their communities as 

long as possible. 

Reauthorizing the Older Americans Act: For more than 45 years, the Older Americans Act (OAA) has enjoyed broad, bipartisan support. The programs supported by 

the Act provide community-based supports that assist families caring for their loved 

ones and help seniors stay in their homes for as long as possible. Over the past 

year, nearly 11 million seniors and their family caregivers have been supported 

through the OAA’s comprehensive home and community-based system. Most funding under the Older Americans Act is directed to State units on aging which, in 

turn, send funding to local area agencies on aging. Funding is also provided by formula to tribal organizations. These local agencies partner with service providers and 

volunteers in their communities to provide services to seniors. These services complement the health care system by helping to prevent hospital readmissions, providing transportation to doctors appointments, and supporting some of life’s most 

basic functions, such as assistance to elders in their homes including delivering or 

preparing meals and helping them with bathing. These services are especially crit-
16 

ical for the nearly three million seniors who receive intensive in-home services, half 

a million of whom meet the disability criteria for nursing home admission but are 

able to remain in their homes, in part, due to these community supports. 

The reauthorization of the Older Americans Act provides us with the opportunity 

to work with this Committee to strengthen and build upon a long record of success 

in serving our families and communities. To support this process, over the past year 

the Administration on Aging conducted the most open system for providing input 

on recommendations for reauthorizing the Older Americans Act in its history, convening and receiving reports from more than 60 reauthorization listening sessions 

held throughout the country, and receiving online input from interested individuals 

and organizations, as well as from seniors and their caregivers. This input represented the interests of thousands of consumers of the OAA’s services. 

Based in part upon this extensive public input process, we think that reauthorization can strengthen the Older Americans Act and put it on a solid footing to meet 

the challenges of a growing population of seniors. We look forward to working with 

the Committee on bipartisan reauthorization legislation. The following are some examples of areas that we would like to discuss with the Committee as you consider 

legislation: • Ensuring that the best evidence-based interventions for helping older individuals manage chronic diseases are utilized. A number of evidence-based programs 

have been shown to be effective in helping participants adopt healthy behaviors, improve their health status, and reduce their use of hospital services and emergency 

room visits. 

• Improving the Senior Community Service Employment Program (SCSEP) by integrating it with other seniors programs. The President’s budget proposes to move 

this program from the Department of Labor to the Administration on Aging within 

HHS. The goal of this move is to better integrate this program with other senior 

services provided by the Older Americans Act. We would like to discuss adopting 

new models of community service for this program with you, including refocusing 

the program to better integrate seniors into their communities through real community service employment serving other seniors, which enables both to stay in the 

community longer. 

• Combating fraud and abuse in Medicare and Medicaid by embedding the Senior 

Medicare Patrol Program (SMP) in the OAA as an ongoing consumer-based fraud 

prevention and detection program. The SMP program serves a unique role in the 

Department’s fight to identify and prevent healthcare fraud by using the skills of 

retired professionals as volunteers to conduct community outreach and education so 

that seniors and families are better able to recognize and report suspected cases of 

Medicare and Medicaid fraud and abuse. In FY 2009, the program educated over 

215,000 beneficiaries in over 40,000 group education sessions and one-on-one counseling sessions, resolving or referring for further investigation over 4,000 complaints 

of potential fraud, error, or abuse. 

Transform Health Care 

The 2012 budget gives Americans more and control over their health care choices, 

so they can get affordable, high-quality care when they need it. 

Expanding Access to Coverage and Making Coverage More Secure: The Affordable 

Care Act expands access to affordable coverage to millions of Americans, strengthens consumer protections and ends some of the worst insurance company abuses. 

These reforms create an important foundation of patients’ rights in the private 

health insurance market and put Americans in charge of their own health care. As 

a result, we have already implemented important private market reforms including 

eliminating pre-existing condition exclusions for children; prohibiting insurance 

companies from rescinding coverage and imposing lifetime dollar limits on coverage; 

and enabling many adult children to stay on their parent’s insurance plan up to age 

26. The Affordable Care Act also established new programs to lower premiums and 

support coverage options, such as the Pre-Existing Condition Insurance Plans Program and the Early Retiree Reinsurance Program. The Act provides Medicare beneficiaries and enrollees in private plans access to certain covered preventative services free of charge. Medicare beneficiaries also have increased access to prescription 

drugs under Medicare Part D through provisions in the Act that close the coverage 

gap, known as the ‘‘donut hole,’’ by 2020 so that seniors no longer have to fear being 

unable to afford their prescriptions. Medicare beneficiaries are also eligible to receive an annual wellness visit free of charge. 

Beginning in 2014, State-based health insurance Exchanges will create affordable, 

quality insurance options for many Americans who previously did not have health 

insurance coverage, had inadequate coverage, or were vulnerable to losing the coverage they had. Exchanges will make purchasing private health coverage easier by 
17 

providing eligible consumers and small businesses with ‘‘one-stop-shopping’’ where 

they can compare a range of plans. New premium tax credits and cost-sharing reductions will also increase the affordability of coverage and care. The Affordable 

Care Act will also extend Medicaid coverage to millions of low-income individuals 

who were previously not eligible for coverage, granting them access to affordable 

health care. 

Ensuring Access to Quality, Culturally Competent Care for Vulnerable Popu- lations: The Budget includes $3.3 billion for the Health Centers Program, including 

$1.2 billion in mandatory funding provided through the Affordable Care Act Community Health Center Fund, to expand the capacity of existing health center services and create new access points. 

Improving Health Care Quality: The Affordable Care Act contains numerous provisions designed to ensure that patients receive safe, high quality care. Innovative 

payment and delivery reforms such as bundled payments for a single episode of care 

and the formation of Accountable Care Organizations will promote better coordinated and more efficient care. New value-based purchasing programs for hospitals 

and other health providers will reward those who deliver high quality care, rather 

than simply encouraging a high volume of services. The new Center for Medicare 

and Medicaid Innovation (‘‘Innovation Center’’) will design, test, and evaluate new 

models of payment and delivery that seek to promote higher quality and lower costs. 

Similarly, the new Centers for Medicare & Medicaid Services’ (CMS) Federal Coordinated Health Care Office will complement these efforts to provide higher quality 

and better integrated care for those who are eligible for both Medicare and Medicaid. Reducing Health Care Costs: New innovative delivery and payment approaches will lead to both more efficient and higher quality care. For example, provisions in the Affordable Care Act designed to reduce health care acquired conditions and preventable readmissions will both improve patient outcomes and reduce 

unnecessary health spending. The Innovation Center, in coordination with private 

sector partners whenever possible, will pursue new approaches that not only improve quality of care, but also lead to cost savings for Medicare and Medicaid. Rate 

adjustments for insurers participating in Medicare Advantage will promote greater 

efficiency in the delivery of care. Meanwhile, new rules for private insurers, such 

as medical loss ratio standards and enhanced review of premium increases, will lead 

to greater value and affordability for consumers. 

Combating Healthcare Associated Infections: HHS will address healthcare associated infections through the hospital value-based purchasing program, as called for 

in the Affordable Care Act. In addition, the FY 2012 Budget includes $86 million— 

of which $20 million is funded through the Prevention and Public Health fund—to 

the Agency for Healthcare Research and Quality (AHRQ), the Centers for Disease 

Control and Prevention (CDC), and the Office of the Secretary to reduce healthcareassociated infections. In FY 2012, HHS will continue research on health-care associated infections and tracking infections through the National Healthcare Safety Network. HHS will also identify and respond to new healthcare-associated infections by 

conducting outbreak and epidemiological investigations. In addition, HHS will implement, and ensure adherence to, evidence-based prevention practices to eliminate 

healthcare-associated infections. HHS activities, including those that the Innovation 

Center sponsors and hospital value-based purchasing, as called for in the Affordable 

Care Act, will further the infection reduction goals of the Department’s Action Plan 

to Prevent Healthcare-Associated Infections. 

Health Services for 9/11 World Trade Center Attacks: To implement the James 

Zadroga 9/11 Health and Compensation Act, the FY 2012 Budget includes $313 million in mandatory funding to provide medical monitoring and treatment to responders of the September 11, 2001 World Trade Center attacks and initial health evaluations, monitoring, and treatment to others directly affected by the attacks. In addition to supporting medical monitoring and treatment, HHS will use funds to establish an outreach program for potentially eligible individuals, collect health data on 

individuals receiving benefits, and establish a research program on health conditions resulting from the World Trade Center attacks. 

Stabilizing Medicare Physician Payments: In December, the Administration 

worked with Congress to offset the cost of legislation preventing an imminent decrease in physician payment rates due to the Medicare Sustainable Growth Rate 

(SGR) formula. The Budget goes further and proposes to continue the current level 

of payment, and offset the increase above current law for the next two years with 

specific savings. Beyond the next two years, I am determined to work with you to 

put in place a long-term plan to reform physician payment rates in a fiscally responsible way, and to craft a reimbursement system that gives physicians incentives to 

improve quality and efficiency, while providing predictable payments for care furnished to Medicare beneficiaries. 
18 

Advance Scientific Knowledge and Innovation 

Accelerating Scientific Discovery to Improve Patient Care: The Budget includes $32.0 billion for the National Institutes of Health (NIH), an increased investment 

of $745 million over the FY 2010 enacted level, to support innovative basic and clinical research that promises to deliver better health and drive future economic 

growth. In FY 2012, NIH estimates it will support a total of 36,852 research project 

grants, including 9,158 new and competing awards. 

Recent advances in the biomedical field, including genomics, high-throughput biotechnologies, and stem cell biology, are shortening the pathway from discovery to 

revolutionary treatments for a wide range of diseases, such as Alzheimer’s, cancer, 

autism, diabetes, and obesity. The dramatic acceleration of our basic understanding 

of hundreds of diseases; the establishment of NIH-supported centers that can screen 

thousands of chemicals for potential drug candidates; and the emergence of publicprivate partnerships to aid the movement of drug candidates into the commercial 

development pipeline are fueling expectations that an era of personalized medicine 

is emerging where prevention, diagnosis, and treatment of disease can be tailored 

to the individual and targeted to be more effective. To help bridge the divide between basic science and therapeutic applications, NIH plans to establish in FY 2012 

the National Center for Advancing Translational Sciences (NCATS), of which one 

component would be the new Cures Acceleration Network. With the creation of 

NCATS, the National Center for Research Resources will be abolished and its programs transferred to the new Center or other parts of NIH. 

Advancing Patient-Centered Health Research: The Affordable Care Act created 

the Patient-Centered Outcomes Research Institute to fund research and get relevant, high quality information to patients, clinicians and policy-makers so that 

they can make informed health care decisions. The Patient-Centered Outcomes Research Trust Fund will fund this independent Institute, and related activities within 

HHS. In FY 2012, the Budget includes $620 million in AHRQ, NIH and the Office 

of the Secretary, including $30 million from the Trust Fund, to invest in core patient-centered health research activities and to disseminate research findings, train 

the next generation of patient-centered outcomes researchers, and improve data capacity. Advancing Health Information Technology: The Budget includes $78 million, an increase of $17 million, for the Office of the National Coordinator for Health Information Technology (ONC) to accelerate health information technology (health IT) 

adoption and promote electronic health records (EHRs) as tools to improve the 

health of individuals and transform the health care system. The increase will allow 

ONC to assist health care providers in becoming meaningful users of health IT. 

Improving Health Outcomes of American Indians and Alaska Natives: The President is committed to improving health outcomes and providing health care for 

American Indian and Alaska Native communities. The Budget includes nearly $5.7 

billion, an increase of $589 million over FY 2010, which will enable the Indian 

Health Service (IHS) to focus on reducing health disparities, ensuring that IHS 

services can be supplemented by care purchased outside the Indian health system 

where necessary, supporting Tribal efforts to deliver quality care, and funding 

health facility and medical equipment upgrades. These investments will ensure continued improvement to support the Administration’s goal of significantly reducing 

health disparities for American Indians and Alaska Natives. Transforming Food 

Safety: The Administration is committed to transforming our nation’s food safety 

system to one that is stronger and more reliable for American consumers. This 

Budget reflects the President’s vision of a safer food safety system by including $1.4 

billion, an increase of $333 million over FY 2010 for the Food and Drug Administration (FDA) and the Centers for Disease Control and Prevention (CDC) food safety 

activities. Coupled with the enactment of the FDA Food Safety Modernization Act 

(the Act), which was signed into law on January 4, 2011, HHS will continue to modernize and implement an integrated national food safety system. HHS plans to work 

with Congress to enact additional food safety fees to support the full implementation 

of the Act. CDC will improve the speed and accuracy of food borne illness outbreak 

detection and investigation and FDA will focus on establishing preventive controls 

for facilities and produce safety standards for farms in an effort to avoid an outbreak of tainted food. 

Preventing and Treating HIV/AIDS: The Budget supports the goals of the National HIV/AIDS Strategy to reduce HIV incidence, increase access to care and optimize health outcomes for people living with HIV, and reduce HIV-related health disparities. The request focuses resources on high-risk populations and allocates funds 

to State and local health departments to align resources to the burden of the epidemic across the United States. The Budget includes $2.4 billion, an increase of $85 

million, for HRSA’s Ryan White program to expand access to care for persons living 
19 

with HIV/AIDS who are otherwise unable to afford health care and related support 

services. The Budget also includes $858 million for domestic HIV/AIDS Prevention 

in CDC, an increase of $58 million, which will help CDC decrease the HIV transmission rate; decrease risk behaviors among persons at risk for acquiring HIV; increase the proportion of HIV infected people who know they are infected; and integrate services for populations most at risk of HIV, sexually transmitted diseases, 

and viral hepatitis. In addition, the Budget proposes that up to one percent of HHS 

discretionary funds appropriated for domestic HIV/AIDS activities, or approximately 

$60 million, be provided to the Office of the Assistant Secretary for Health to foster 

collaborations across HHS agencies and finance high priority initiatives in support 

of the National HIV/AIDS Strategy. Such initiatives would focus on improving linkages between prevention and care, coordinating Federal resources within targeted 

high-risk populations, enhancing provider capacity to care for persons living with 

HIV/AIDS, and monitoring key Strategy targets. 

Addressing the Leading Causes of Death and Disability: Chronic diseases and injuries represent the major causes of morbidity, disability, and premature death and 

contribute to the growth in health care costs. The Budget aims to improve the 

health of individuals by focusing on prevention of chronic diseases and injuries rather than focusing solely on treating conditions that could have been prevented. Specifically, the Budget includes $705 million for a new competitive grant program in 

CDC that refocuses targeted disease-specific grants into a comprehensive program 

that will enable health departments to implement the most effective strategies to 

address the leading causes of death. Because many chronic disease conditions share 

common risk factors, the new program will improve health outcomes by coordinating 

the interventions that can reduce the burden of chronic disease. In addition, the allocation of the $1 billion available in the Prevention Fund will improve health and 

restrain the growth of health care costs through a balanced portfolio of investments. 

The FY 2012 allocation of the Fund builds on existing investments and will align 

with the vision and goals of the National Prevention and Health Promotion Strategy 

under development. For instance, the CDC Community Transformation Grants create and sustain communities that support prevention and wellness where people 

live, learn, work and play through the implementation, evaluation, and dissemination of evidence-based community preventive health activities. Preventing Substance Abuse and Mental Illness: The Budget includes $535 million within the Substance Abuse and Mental Health Services Administration 

(SAMHSA) for new, expanded, and refocused substance abuse prevention and mental health promotion grants to States and Tribes. To maximize the effectiveness and 

efficiency of its resources, SAMHSA will deploy mental health and substance abuse 

prevention and treatment investments more thoughtfully and strategically. 

SAMHSA will use competitive grants to identify and test innovative prevention 

practices and will leverage State and Tribal investments to foster the widespread 

implementation of evidence-based prevention strategies through data driven planning and resource dissemination. 

Ensuring Safety and Improving Access to Medical Products: FDA is charged with 

a significant task: to protect and promote the health of the American public. To succeed, they must ensure the safety and effectiveness of the medical products that 

Americans rely on every day, and also facilitate the scientific innovations that make 

these products safer and more effective. The Administration is dedicated to this critical mission and the Budget provides $1.4 billion for FDA to enhance the safety 

oversight of medical products, facilitate the development of innovative products, and 

establish a pathway for the approval of generic biologics thus allowing greater access to life saving biological products that are safe and effective. 

Pandemic and Emergency Preparedness: While responding to the 2009 H1N1 influenza pandemic has been the focus of the most recent pandemic investments, the 

threat of a pandemic caused by H5N1 or other strains has not diminished. HHS is 

currently implementing pandemic preparedness activities in response to lessons 

learned from the H1N1 pandemic in order to strengthen the nation’s ability to respond to future health threats. Balances from the FY 2009 supplemental appropriations are being used to support recommendations from the HHS Medical Countermeasure Review and the President’s Council of Advisors on Science and Technology. 

These multi-year activities include advanced development of influenza vaccines and 

the construction of a new cell-based vaccine facility in order to quickly produce vaccine in the U.S., as well as development of next generation antivirals, rapid 

diagnostics, and maintenance of the H5N1 vaccine stockpile. 

The HHS Medical Countermeasure Review described a new strategy focused on 

forging partnerships, minimizing constraints, modernizing regulatory oversight, and 

supporting transformational technologies. The request includes $665 million for the 

Biomedical Advanced Research and Development Authority, to improve existing and 
20 

develop new next-generation medical countermeasures and $100 million to establish 

a strategic investment corporation that would improve the chances of successful development of new medical countermeasure technologies and products by small and 

new companies. The Budget includes $70 million for FDA to establish teams of public health experts to support the review of medical countermeasures and novel manufacturing approaches. Additionally, NIH will dedicate $55 million to help shepherd 

investigators who have promising, early-stage, medical countermeasure products. Finally, the Budget includes $655 million for the Strategic National Stockpile to replace expiring products, support BioShield acquisitions, and fill gaps in the stockpile 

inventory. Strengthen the Nation’s Health and Human Service Infrastructure and 

Workforce 

Strengthening the Health Workforce: A strong health care workforce is key to ensuring that more Americans can get the quality care they need to stay healthy. The 

Budget includes $1.3 billion, including $315 million in mandatory funding, within 

HRSA, to support a strategy which aims to promote a sufficient health workforce 

that is deployed effectively and efficiently and trained to meet the changing needs 

of the American people. The Budget will initiate investments that will expand the 

capacity of institutions to train over 4,000 new primary care providers over five 

years. 

Expanding Public Health Infrastructure: The FY 2012 Budget supports State and 

local capacity so that health departments are not left behind. Specifically, the Budget requests $73 million, of which $25 million is funded through the Prevention 

Fund, for the CDC public health workforce to increase the number of trained public 

health professionals in the field. CDC’s experiential fellowships and training programs create an effective, prepared, and sustainable health workforce to meet 

emerging public health challenges. In addition, the Budget requests $40 million 

from the Prevention Fund to support CDC’s Public Health Infrastructure Program. 

This program will increase the capacity and ability of health departments to meet 

national public health standards in areas such as information technology and data 

systems, workforce training, and regulation and policy development. 

Increase Efficiency, Transparency, and Accountability of HHS Programs 

Strengthening Program Integrity: Strengthening program integrity is a priority 

for both the President and me. The Budget includes $581 million in discretionary 

funding, a $270 million increase over FY 2010, to expand prevention-focused, datadriven, and innovative initiatives to improve CMS program integrity. The Budget 

request also supports the expansion of additional Strike Force cities to target Medicare fraud in high risk areas, enhanced efforts to achieve the President’s goal of cutting the Medicare fee-for-service error rate in half by 2012, and funding to support 

implementation of a robust set of legislative proposals to expand HHS program integrity efforts. The legislative proposals are estimated to produce $32.3 billion in 

savings over ten years. 

In addition, the Affordable Care Act provides unprecedented tools to CMS and law 

enforcement to enhance Medicare, Medicaid, and Children’s Health Insurance Program (CHIP) program integrity. The Act enhances provider screening to stop 

fraudsters from participating in these programs in the first place, gives the Secretary the authority to implement temporary moratoria on enrolling new providers 

or suppliers in fraud hot spots, and increases law enforcement penalties. Additionally, the continued implementation of the Secretary’s Program Integrity Initiative 

seeks to ensure that every program and office in HHS prioritizes the identification 

of systemic vulnerabilities and opportunities for waste and abuse, and implements 

heightened oversight. 

Implementing the Recovery Act: The American Recovery and Reinvestment Act 

provides $138 billion to HHS programs as part of a government-wide response to 

the economic downturn. HHS-funded projects around the country are working to 

achieve the goals of the Recovery Act by helping State Medicaid programs meet increasing demand for health services; supporting struggling families through expanded child care services and subsidized employment opportunities; and by making 

long-term investments in health information technology (IT), biomedical research 

and prevention and wellness efforts. HHS made available a total of $118 billion to 

States and local communities through December 31, 2010; recipients of these funds 

have in turn spent $100 billion by the same date. Most of the remaining funds will 

support a signature Recovery Act program to provide Medicare and Medicaid incentive payments to hospitals and eligible health care providers as they demonstrate 

the adoption and meaningful use of electronic health records. The first of these Medicaid incentive payments were made January 5, 2011. As of March 31, 2011, 660 

providers received $64 million in Medicaid incentives. More than 23,000 grantees 

and contractors of HHS discretionary programs have to submit reports on the status 
21 

of their projects each calendar quarter. These reports are available to the public on 

Recovery.gov. For the quarter ending December 31, 2010, 99.6 percent of the required recipient reports were filed timely. Recipients that do not comply with reporting requirements are subject to sanction. 

Conclusion 

This Budget is about investing our resources in a way that pays off again and 

again. By making smart investments and tough choices today, we can have a stronger, healthier, more competitive America tomorrow. 

This testimony reflects just some of the ways that HHS programs improve the everyday lives of Americans. 

Under this Budget, we will continue to work to make sure every American child, 

family, and senior has the opportunity to thrive. 

And we will take responsibility for our deficits by cutting programs that were outdated, ineffective, or that we simply could not afford. 

But, we need to make sure we’re cutting waste and excess, not making across the 

board, deep cuts in programs that are helping our economy grow and making a difference for families and businesses. 

We need to move forward responsibly, by investing in what helps us grow and 

cutting what doesn’t. 

My department can’t accomplish any of these goals alone. It will require all of us 

to work together. 

I look forward to working with you to advance the health, safety, and well-being 

of the American people. Thank you for this opportunity to speak with you today. 

I look forward to our conversation. 

Chairman KLINE. We are getting updates on votes every few 

minutes. It looks like the latest guess is around 10:30, so we will 

start with questions and go until we get called to vote. 

I know there are going to be a lot of questions about health care, 

and I am tempted to jump in and start asking those, but I want 

to go in a little bit different direction, Madam Secretary. The most 

recent Head Start impact study says that ‘‘the advantages children 

gain during their Head Start, and age 4 years, yielded only a few 

statistically different differences in outcomes at the end of first 

grade for the sample as a whole.’’ 

Can you expand that at all? Have you been looking into that? 

And then, as a follow-on, I will just get them both out there— 

again, the latest Head Start impact study states that there was no 

strong evidence of impact on children’s language, literacy, or math 

measures at the end of kindergarten or at the end of the first 

grade. 

Can you tell us what you are doing to get at that? It is a vexing 

problem we have been looking at for a long time. 

Secretary SEBELIUS. Well, Mr. Chairman, I think that we certainly share the goal of making sure that both the child development and the early learning skills are focused on in all of our child 

care and early education programs, and Head Start is key among 

them. Early Head Start and Head Start continue to show improvements in child development and in learning skills. But how long 

they last into the school life continues to be determined. 

So we are continuing to take that information very seriously, as 

I said in my opening statement, to revamp both teacher training, 

to upgrade the quality standards, to make sure that we are reanalyzing the curriculum, the core curriculum in child care. But I 

think studies continue to show that early learning programs do 

make a significant difference, and 3-year-olds who spend a year in 

Head Start have a significantly different impact when they go into 
22 

grade school than those who don’t. What we need to do is continue 

that progress once they hit school. 

Chairman KLINE. Let me follow up just a little bit. I think that 

probably everybody on this committee has observed and would 

agree that early learning is helpful. 

But my question is specifically talking about Head Start where 

the quote was, ‘‘there was no strong evidence of impact on children’s language, literacy, or math measures at the end of kindergarten or at the end of the first grade.’’ So those efforts that you 

are undertaking, I hope are focused and will prove to be fruitful in 

Head Start, because I think we have been disappointed many times 

that the Head Start program is not really helping that many kids 

be ready for first grade. 

Secretary SEBELIUS. Well, I would say, Mr. Chairman, we have 

an unprecedented effort underway right now with the Department 

of Education, where we are working closely with them to kind of 

align standards to make sure that the early childhood programs 

run by the education system have the developmental aspects that 

I think have been a component of Head Start, and that the Head 

Start programs have the curriculum-based component that often 

were more focused on in the education programs. 

We think that regardless of where a parent chooses as an appropriate out-of-home placement for their child, whether it is child 

care or Head Start or Early Head Start or a public pre-K program, 

we should have the same goals and the same alignment of initiatives. 

So we are taking those issues very seriously. We think school 

readiness has to be an important component of Head Start, and we 

continue to upgrade the programs. 

We are also recompeting programs that have the lowest 25 percent of the impact on children. We think that is an important aspect, to make sure that we continue to drive improvements and not 

just continue to fund programs because they have historically had 

funding. 

Chairman KLINE. Thank you. 

I am going to move to another subject quickly. Your Agency administers the early retiree insurance program, which provides 

money to employment-related retiree benefit plans. An HHS report 

dated March 31, 2011, said the program which was supposed to 

last until 2014 had already spent $1.8 billion and is not accepting 

new applications as of the end of April. 

This is troubling on a number of levels. I would like to know if 

it is true that one plan sponsor, the United Auto Workers Retiree 

Medical Benefits Trust, received $207 million, or 11.5 percent of 

the total amount paid by the program? 

During the plan approval process, did this plan have to demonstrate or prove that it needed taxpayer funding to pay claims to 

maintain solvency? I have another number of questions relating to 

this, but I think you can see the point; we are concerned how the 

decisions are made or how this money is awarded. Can you address 

that specific question? 

Secretary SEBELIUS. I would be glad to, Mr. Chairman. I can’t 

answer with specificity about the UAW plan. I will be glad to give 

you the written answer to that. 
23 

Chairman KLINE. Would you, please? 

Secretary SEBELIUS. I just don’t have those facts off the top of my 

head. But this program has been enormously both popular and 

helpful, I think, to those companies and programs who wanted to 

continue their early retiree coverage. We have seen employers consistently dropping that coverage over a period of time and, in fact, 

one of the largest growing groups of uninsured in America were the 

55 to 65 years old who had retired early, and they and their 

spouses often lost that employer-based coverage when those plans 

got too expensive. 

This program was widely advertised, announced. There was a 

process where applications were accepted universally. They had to 

present documentation to our office. It wasn’t our office picking and 

choosing who got in. The programs qualified if they met the statutory qualifications. And the way this works, Mr. Chairman, is individual claims are presented that rise above the threshold. So it is 

a stop-loss policy, if you will, for early retiree programs. 

The most expensive claims are presented and they are paid. We 

share 80 percent of those costs. So we give employers some ability 

to predict their costs going forward, and that has actually stabilized the early retiree plan. So plans are not being paid from a 

presumptive pipeline; we are actually paying after the fact, as 

claims are being presented. And we would be happy, again, to 

share the documentation of how that is working. It is paid at 6 

months. After the claim is made, they come in and the money goes 

out the door. 

Chairman KLINE. Okay. I will present some questions for the 

record. 

Secretary SEBELIUS. Sure, be glad to. 

Chairman KLINE. The example looks like we are going to run out 

of money. And have you requested that money in the Presidents’s 

budget and so forth? I will present those for the record. 

Secretary SEBELIUS. I would be glad to answer that. 

Chairman KLINE. I recognize Mr. Miller. 

Mr. MILLER. Thank you very much. Just on the chairman’s earlier discussion on Head Start, I don’t know the study he is referring to, but I know on previous studies the question that had to 

be requested was what was the quality of the program the child 

was entering into in kindergarten or first grade? 

We know that many of these children and, unfortunately, the 

poor performing schools, the poorer schools in our country, they can 

lose a whole year over the summer. And so the idea that—you 

know, it is what do you follow on with after Head Start that has 

to be determined. But I would be glad to look at the studies. But 

I know in the past that has been a significant impact on what happens to children afterwards. 

I want to turn to part of the the Affordable Care Act that I had 

a chance to participate in in my district last month, and that was 

the Partnership For Patients Initiative, which is really about, as I 

witness this, is this is an effort to try to reduce medical errors to 

improve care, to stop the accidents that take place, improve the 

sanitary nature of a hospital, from washing your hands to a whole 

range of things that were popularized, I think to some extent, by 
24 

Gawande, and making of the list before surgery and what you 

should be thinking about when you are doing that. 

I was quite surprised at the range of support for this program 

from the Chamber of Commerce, the Business Roundtable, that 

after the event the profits, the nonprofits, and public facilities all 

wanted to say how do we get to participate in this? And in the San 

Francisco Bay area, it is quite an array of hospitals, from the most 

successful nonprofits to a Kaiser system of a prepaid nature and 

then the public facilities. 

My understanding is that there is about 90—somewhere, 95- 

98,000 people who die in the care of hospitals or shortly, thereafter 

as a result of errors and mistakes that are made; in the facility 

that we visited, a question of hand-washing all of the time as you 

move from room to room and from facility to facility. 

They had a simple plan of putting bright red tape behind the 

head of the bed so that those who are on respiratory assistance, or 

the bed is kept at 30 degrees, a dramatic reduction in pneumonias 

in that facility. People who are susceptible to slips and falls now 

have to wear very bright red socks and slippers so that people are 

aware of that. Slips and falls have gone down about 50 percent. It 

has just ricocheted through the system in terms of the improvement in the outcomes in that facility. 

I think your Agency has said that we look for a savings down the 

road of about $50 billion under this initiative, but it is very clear 

from people who are paying the bill, the employers and others who 

are participating in this, that there is a pretty big bet being placed 

on improving these outcomes. There was a piece in the Wall Street 

Journal last week that, even with all of the admonishment, as medical staff moves from space to space, there is—over a vast majority 

of them are still not washing their hands. 

Those of us who have visited the veterans at the veterans facility 

know every time you move between one space to another, whether 

you have touched anything, you have to go through the sanitizing 

of your hands as you move around that facility. 

And I would just like your comments on this because this seems 

to me, given the people who are rushing forward to say we haven’t 

yet been able to participate, who want to participate in this program. 

Secretary SEBELIUS. Well, Congressman Miller, we have had 

enormous enthusiasm and excitement, as you have indicated, 

across the range of not only health care providers but employers, 

business groups, patient advocates. We do have about 100 deaths 

a year, but hundreds and hundreds of thousands of people are injured. And, in fact, the most recent study said that one out of every 

three Americans who goes into a hospital is injured by care that 

they receive in the hospital. 

That is a very large number and it not only causes enormous injury and death, but it costs an enormous amount of money that we 

shouldn’t be spending. 

In the past, Medicare has been a volume purchaser. So whether 

the hospital had a 60 percent infection rate or 0 percent infection 

rate, you basically got paid the same way. 

The Affordable Care Act gives us a framework to actually begin 

to head in a very different direction, to use the enormous payment 
25 

system of Medicare and Medicaid to be a cost-driver to encourage 

value instead of volume. And we are taking that very, very seriously. So the Partnership for Patients has two very, very aggressive goals. Reduce hospital-based infections by 40 percent over the 

next 3 years. The ultimate goal is zero. We shouldn’t be hurting 

people when they have to go to the hospital. That has to be our 

goal. 

Also, reducing unnecessary hospital readmissions by 20 percent 

over the next 3 years. And those goals are achievable because there 

are pockets of that care going on right now in the country. So we 

are going to be providing technical assistance, be sharing best practices, helping to encourage. 

But, as you say, we currently have over a thousand hospitals 

who have signed up. We have employer groups, we have patient 

advocate groups, a range of partners. And, frankly, the private sector is enormously enthusiastic. They have been trying to do this for 

years, but they don’t have enough juice in the system. They can’t 

touch every hospital with their purchases. 

So joining together on quality outcomes not only improves care 

for Americans, but dramatically lowers cost and it—you know, we 

have two ways to lower the rising costs in Medicare. It is improving care and getting a better bang for our buck and lowering costs 

that way, or just cutting off benefits. And I think the Partnership 

for Patients gives us a real pathway to a new kind of delivery system change. 

Mr. MILLER. Thank you. Thank you, Mr. Chairman. 

Chairman KLINE. I thank the gentleman. Dr. Foxx, you are recognized. 

Ms. FOXX. Thank you, Mr. Chairman. Thank you, Secretary 

Sebelius, for being with us. 

I was interested in hearing what Mr. Miller was saying, and 

talking about all these wonderful things that have happened over 

using common sense. Just what is astonishing to me is that it has 

taken so long for the Department to be able to put in commonsense 

issues like this. 

It seems the Federal Government doesn’t often care about costs 

until our backs are against the wall, and we ought to be caring 

about costs every day in every program. There should be accountability in every program every day, and it is disappointing to someone like me who cherishes common sense, that it has taken so long 

to get to this point. 

But let me get to my question now. I find it really interesting, 

Madam Secretary, that you and the President said over and over 

and over and over again that if you like it, you can keep it. You 

promised the American people that if they had health care, health 

insurance, that they could keep what they had. 

But we now know that, although you promised people to be able 

to be grandfathered in, the regulation that you published last year 

found that 60 percent of employers and 80 percent of small employers will lose their grandfather status by 2014. So what you said 

wasn’t true because you have established regulations that were not 

in the law to guarantee that people can’t keep their health insurance. 
26 

So how do you reconcile what you promised with what you have 

put into effect, and the fact that that is going to cost so much more 

money as a result of it? 

Secretary SEBELIUS. Well, Congresswoman, I first of all share 

your concern that common sense doesn’t always drive policy. 

The error report came out 10 years ago indicating we had a serious safety problem and, frankly, no one paid a lot of attention to 

it in the Medicare agency. And I am pleased that finally the the 

Affordable Care Act presented the platform to allow us to have the 

kind of regulation in place that moves in a brand-new direction. 

In terms of the insurance market, as you know, employer participation in the market is voluntary, and small business owners, and 

particularly individuals, move in and out on an individual basis. 

And you are absolutely right; the law doesn’t mandate that employers who had a policy in place in 2010, when the bill was signed, 

must keep that policy in place. That is not part of the law, so they 

still have free will and free choice. 

What we did do was create a platform that said basically if you 

keep essentially the same kind of benefit package, if you don’t shift 

a huge amount of costs onto your employees, if you don’t dramatically cut the kinds of benefits that your employees now are able to 

access, then you are grandfathered in under the plan. 

And so it is really an employer choice whether or not the grandfather status is going to meet them on into the future or not. That 

is really the way the private market works. The employers come 

in voluntarily. They may or may not provide coverage. 

We are seeing actually, I think, some good news where small employers are beginning to reenter the market for the first time in a 

very long time. We were on a trajectory where if you work for a 

small company—and I certainly saw this as an insurance commissioner in Kansas, and I heard about it over and over again when 

I was Governor of Kansas—that the most vulnerable people in the 

marketplace were folks buying individual coverage and folks, farm 

families, and small mom-and-pop shops who were in the small 

group market. And that market is beginning to stabilize, and I 

think that is very good news. 

Ms. FOXX. But, Madam Secretary, why don’t you just leave free 

choice out there, period? It would be up to the employers to decide 

what they can afford to do and it would be up to the employees to 

decide whether they want to go on the private market themselves. 

Why not allow that free choice? 

You all on your side of the aisle have very limited issues on free 

choice. 

Secretary SEBELIUS. Well, I think, again, the platform of the the 

Affordable Care Act, Congresswoman, is that employers, particularly in the small market, have to look forward to a new, competitive, lower-cost marketplace. According to the Congressional Budget Office, they will have choices and the costs for those premiums 

will go down. They currently have very limited choices in the marketplace and often pay 18 percent to 20 percent more than their 

large competitors just because of the size of their companies. So 

they will be in a large pool, they will have some choices. 
27 

Individuals also will be able to purchase coverage and have some 

assistance purchasing that coverage if they are lower-wage workers 

if they don’t have access to employee coverage. 

So we have a market that will be framed by States around the 

country. That doesn’t exist right now and gives a lot more choice 

and a lot of cost relief to the most vulnerable folks in the marketplace. 

Chairman KLINE. Thank you. Mr. Kildee. 

Mr. KILDEE. Thank you very much. 

Madam Secretary, Head Start, when it was first authorized in 

1965, placed the program in HHS rather than the Department of 

Education, because it was more comprehensive than just education, 

to include health and other social skills, among others. I was chief 

sponsor of the 2007 reauthorization of Head Start and we tried to 

enhance those purposes that we first put in in 1965. 

How has the fiscal year 2012 budget helped you in your efforts 

to bring these programs, integrate them together, the various purposes, beyond the purpose of education in the Head Start program? 

Secretary SEBELIUS. Well, Congressman, I think that the President certainly shares your belief that Head Start is a very important component of an early childhood framework for America, and 

that is why he has proposed an increase in Head Start funding as 

we move forward and the ability to serve additional children. 

I think also the notion that we have a very exciting opportunity 

with the passage of the 2011 framework, the Early Learning Challenge Fund, which will be housed in the Department of Education 

but participated in by HHS and Education, which actually is a kind 

of a mirror of ‘‘Race to the Top’’ for early childhood education, driving quality initiatives, aligning the kinds of standards and giving 

States the opportunity to really innovate in early childhood education. 

And what we are seeing around the country is that Head Start 

is no longer operating in a silo, but many Governors have put together broad-based early education Cabinets where the Head Start 

folks are very much at the table with the early childhood education 

folks, with the child care folks, which was almost unprecedented. 

And I know I did that, again, when I was in Kansas, but that is 

a mirror of what is happening. 

I think the integration of developmental skills, one of the features of Head Start that I think is very critical, that again needs 

to be incorporated into a lot of early childhood programs, is involvement of parents. There is a significant parental aspect to Head 

Start, where they participate in a child’s education at the earliest 

point and hopefully that continues on. 

So there are a number of components which not only look at 

school readiness, but look at the whole developmental readiness of 

the child, that we are trying to improve and actually share with 

our partners in the education system. 

Mr. KILDEE. Thank you very much, and I encourage you to encourage the Governors and those in the States to continue to do 

that. Thank you very much. 

Chairman KLINE. The gentleman yields back. 

I am going to recognize Dr. Roe in about 3 seconds. And for 

everybody’s information, his will be the last question as we head 
28 

for the floor to vote. I am just alerting all the members of the committee. 

Dr. Roe, you are recognized. 

Mr. ROE. Thank you, Madam Secretary, for being here today and 

to let you know that my background is a physician practicing in 

Tennessee where we had an experiment with an expansion of our 

Medicaid program. 

And the first question I have is how many people will the Affordable Care Act cover, do you estimate right now, it will cover? 

Secretary SEBELIUS. How many new people? 

Mr. ROE. Yes. 

Secretary SEBELIUS. The estimates are in the 30 to 35 million 

range. 

Mr. ROE. And it looks like that most of this expansion of coverage is just an expansion of Medicaid. 

Secretary SEBELIUS. Doctor, the data that I have seen, it is estimated about half and half. About half will be exchange-eligible and 

about half will be Medicaid-eligible. So about 15 million are likely 

to be Medicaid-eligible. 

Mr. ROE. Well, what CMS says is that 24.7 million will be added, 

an increase of 5 million, and these are Medicaid. And this is not 

me, this is CMS. 

And CBO estimates 8 million more than we had thought. Do you 

agree with those numbers, what CMS said, or what the CBO said 

about their estimates? 

Secretary SEBELIUS. Again, the numbers that I am familiar with 

are about half and half. So I am not quite sure what you are looking at or quoting. 

Mr. ROE. I will send some—— 

Secretary SEBELIUS. Maybe who is uninsured; and there are a 

portion of uninsured that aren’t assumed to be fully insured. I 

mean, I don’t know. 

Mr. ROE. Well, I will get those in written form to you. 

Secretary SEBELIUS. Okay, thank you. 

Mr. ROE. Do you think this bill is simple or is it complex to understand, and have you read the whole bill? 

Secretary SEBELIUS. I have read the bill. I think it is very comprehensive because it deals with all aspects of the health care system. 

Mr. ROE. Let me get down to just some practical aspects of it. 

I have a practice that has about 350 employees, primary care 

doctors. We insure about 300 of them, and everybody is eligible, 

and we have done that for 40 years in our practice, very proudly 

have provided health insurance coverage, retirement, and so forth. 

Right now we pay about $5,500 per employee, or somewhere—it 

may be up to 6,000, I haven’t seen the numbers for this year. 

If someone goes to the exchange and we decide to pay the $2,000 

penalty, we save ourselves and our practice a million dollars. That 

is one little business. 

Another business in Tennessee that I have seen and talked to 

those folks, because we don’t know what—I know someone, and 

this is another question I am going to have, is who defines what 

affordable care is, what is that, and what is in the package? This 

company will spend, they think, 40 million more dollars in their 
29 

business, complying with these new regulations, or they can save 

$40 million by having those folks get their health insurance 

through the exchange. 

Now, we had a very good presentation—and you probably should 

read this from the Lofton Group. Mr. Brewer came in, the president of Lofton Group, and went over case example after example 

about why that will happen. So why wouldn’t I do that under this 

situation? And like he said, most of his clients told him, I am not 

going to be the first to do this, but I am not going to be third. 

And, finally, what is going to happen is, you are going to have 

a debate between the chief financial officer and the HR people. I 

have done it around the table and find the chief financial people 

win. 

So tell me why that is not going to happen? 

Secretary SEBELIUS. Well, I think, Congressman, one of the 

things that assumes is that there is no advantage to a business 

owner for keeping great employees and tying those employees to 

the health insurance plan. And what we see right now is a voluntary marketplace where people have entered voluntarily. Your 

premise is based on the fact that that employer, you in this instance, or someone else, drops all employer coverage. 

Mr. ROE. But if you had—if you were over 200 employees now, 

which we are, almost all of them provide health insurance coverage 

right now. And as you see reimbursements, especially in our business with Medicaid going down and with Medicare—I hope I have 

time to get into Medicare—why wouldn’t I do that? 

Secretary SEBELIUS. Well, again, I think that the exchanges are 

particularly being designed for small employers. You, in the instance of having the number of employees that you are talking 

about, are likely to be banned from initially entering the exchange 

because of the—— 

Mr. ROE. With all due respect, they can. 

Secretary SEBELIUS. Pardon me? 

Mr. ROE. They can. I mean, I have read this. We can do that. 

If one person goes in there and we decide to drop—anyway, that 

is fine. I am not going to get an answer. 

The other question I have is Medicare I am particularly worried 

about because health care decisions, I believe, Madam Secretary, 

shouldn’t be made here in Washington, D.C. They should be made 

between patients and their families and their doctors, not by insurance companies and not the Federal Government. 

Secretary SEBELIUS. I absolutely agree. 

Mr. ROE. And my concern is we have just taken $500 billion out 

of an already underfunded Medicare plan, and your number is 3.5, 

3.3 million people we are adding per year, that is another 30, 35 

million in the next 10 years, with $500 billion less. How does that 

math work? 

Secretary SEBELIUS. Well, Congressman, as you have probably 

recognized, the $500 billion is a reduction in the growth rate of 

Medicare from what is estimated to be about 7.8 percent to closer— 

to over 6 percent. So it is not taking money out of the program, it 

actually is trying to slow down the cost growth without changing 

any of the guaranteed benefits. And, indeed, there are additional 

guaranteed benefits. 
30 

I would suggest that the House-passed budget, the House Republican budget that suggested that vouchers are the appropriate goal 

for Medicare, and turning over Medicare patients to the private insurance market does nothing but shift enormous cost onto seniors 

in this country. You put an insurance company between them and 

their doctor. 

Chairman KLINE. Madam Secretary, I hate to interrupt. Dr. Roe, 

the clock is demanding here. We—the committee is in recess. 

[Recess.] 

Chairman KLINE. The committee is called back to order. 

By agreement with my colleagues, we are going to resume. I understand Mr. Miller will be joining us shortly, but I recognize Mr. 

Andrews for 5 minutes. 

Mr. ANDREWS. Thank you, Mr. Chairman, and welcome, Madam 

Secretary, to the committee. It is very, very wise, Madam Secretary, to be listening to Chiquita. I would too. She is a very able 

and wise young lady; and from the right State, I might add. 

Madam Secretary, one of the topics of the moment for the country is Medicare and how we should respond to the long-term bargain our country made with our seniors and persons with a disability in 1965. And that bargain, of course, was when the person 

retires or is adjudicated to have a disability, they will be guaranteed medical benefits, they will be guaranteed the choice of their 

own physician, and Medicare will pick up the lion’s share of that 

bill. 

And that is a system that I think has worked very well for this 

country for a very long period of time. 

As you know, there are proposals that would, in my view, end 

that system. It would say to people 55 years and under that they 

are going to be into a very different system that is essentially a 

subsidy, an inadequate subsidy to buy private health insurance. 

A report that Mr. Miller spoke of earlier indicates that if one 

takes the gap which the Congressional Budget Office has identified 

between the premium support that the Republican plan would offer 

and the real out-of-pocket costs for health care for retirees and seniors, it would be about $6,000 a year; and for a senior to have 

enough money to cover that gap he or she would have to save nearly $200,000 out of their pocket before they retire. 

One interesting point of reference is that the average 401(k) balance for a person when they retire in this country is a little less 

than $100,000 a year. So what that means is if you are a senior 

under the Republican Medicare plan, at least the one that existed 

until yesterday, and you emptied your 401(k), it would only make 

up about half of what you need to pay your out-of-pocket health 

care bills, additional out-of-pocket health care bills because of the 

Republican plan. 

Now I know that before you came here your experience as Governor back in Kansas generally gave you the opportunity to be an 

insurance market regulator. I wonder if you could tell us what you 

think would happen—in addition to this financial disaster, what 

you think would happen to people 65 and over and people with a 

disability if they were thrown into the private insurance market 

with this kind of inadequate subsidy? What would that mean to a 

senior citizen or a person with a disability? 
31 

Secretary SEBELIUS. Well, Congressman, I have seen the same 

analysis that you have. 

First of all, Medicare as a program has one of the lowest administrative costs of any health program I would suggest in the world. 

So we know that, according to CBO, according to any economist, 

that the administrative costs of an average health insurer are significantly higher. So you take the same amount of dollars and you 

have less buying power if you are doing it through the private market than you do through Medicare. 

Secondly, to have a fixed dollar amount, as opposed to guaranteed benefits, I think is, as you suggest, a very different kind of 

commitment to seniors and leaves an enormous cost shift on to seniors and those with disabilities. 

Mr. ANDREWS. If I could just interrupt for a minute, what might 

that cost shift and lack of guaranteed benefit mean for an oncology 

patient or a person with cancer? Give me an example of what it 

might do there. 

Secretary SEBELIUS. Well, I think there is no question, if you 

take a snapshot, people will run out of money very quickly. And if 

you run out of the government voucher and then you run out of 

your own money, you are really left to scrape together charity care, 

go without care, die sooner. There aren’t really a lot of options. 

But it is estimated according to the CBO analysis that by I think 

it is 2030 you would have about 70 percent of the cost of medical 

care shifted onto individuals. A pretty dramatic—right now, it is 

about 25/75, and that would flip pretty dramatically. And most people—a number of people, working families and others, don’t have 

the wherewithal to come up with that kind of cash, particularly in 

their later years when they are likely to have more serious and 

more expensive care. 

Mr. ANDREWS. It is true, isn’t it, that the Republican plan that 

was adopted by the House majority about 2 weeks ago really isn’t 

a cost reduction plan, it is a cost shifting plan, that as health care 

costs go up, seniors pay more and Medicare goes away? 

Secretary SEBELIUS. I think the combination of the votes on repealing the Affordable Care Act, which would not only get rid of 

the new tools we have to crack down on fraud and abuse but limit 

the closure—eliminate the closing of the donut hole, go after some 

of the new guaranteed benefits, combined with the voucher program, would basically destroy the commitment to ongoing health 

care. 

As you say, one of the promises made in 1965—and a little personal anecdote—my father was actually on the Energy and Commerce Committee serving in Congress and helped write the Medicare law. He just had his 90th birthday, and he is pretty happy 

with those benefits right now. 

Mr. ANDREWS. We will tell Mr. Dingell that. 

Secretary SEBELIUS. Well, he served with Mr. Dingell, and he 

knows Mr. Dingell. 

Chairman KLINE. So do we all. 

Secretary SEBELIUS. Indeed. But I think it is a very different 

kind of commitment that we would be making to 55-year-olds about 

their future in the United States. 

Mr. ANDREWS. Thank you, Madam Secretary. 
32 

Chairman KLINE. I thank the gentleman. 

Mr. Walberg, you are recognized. 

Mr. WALBERG. Thank you, Mr. Chairman; and thank you for joining us, Madam Secretary. 

As you may probably may already know, since 1992 the National 

Institute for Occupational Safety and Health and National Cancer 

Institute have been working on a study that determined the potential health affects of diesel exhaust on miners. Members of the mining industry voluntarily provide NIOSH with access and information to conduct this study. 

Initially, NIOSH agreed to share data with the companies and 

volunteered access and information. However, since that time, 

NIOSH has not honored that agreement on more than one occasion. As a result, Federal judges twice ordered NIOSH to share 

these materials with the concerned parties, which include this committee. Yet full compliance has yet to be seen. And so the questions 

I would ask, I would like to know why NIOSH has not complied 

with these orders of two Federal judges and would also like to 

know what assurances you can give me that the data will be released as required by the courts. In other words, basically, do you 

want NIOSH to comply? 

Secretary SEBELIUS. Well, Congressman, I must confess I am not 

familiar with either the studies that were done or the Federal 

cases, but I will commit to you that I will learn about them quickly 

and work with you to get you the information that you have requested. I just can’t respond about why they haven’t done it. I am 

not—I wasn’t aware that they had not, but it will be something 

that I will—— 

Mr. WALBERG. But if the court has ordered this, I would hope I 

could conclude that you would want them to comply. 

Secretary SEBELIUS. Well, as I say, Congressman, I am not familiar with the situation. I will get very familiar with the situation, 

and I will get an answer back to you quickly. 

Mr. WALBERG. I appreciate that. 

Secretary SEBELIUS. Yes. 

Mr. WALBERG. Moving back to the Chairman’s lead-off questions 

with Head Start, last year, the U.S. Government Accountability Office conducted an undercover investigation of 15 Head Start programs, acting in response to tips from former and current employees at two separate Head Start centers. Undercover GAO applicants tried to enroll children in these programs and presented the 

centers with pay stub data that demonstrated they were above income eligibility requirements. Nine of the 15 sites enrolled the students anyway by encouraging applicants not to submit the pay 

stubs that would put them over the income threshold. Some of the 

programs continued to count students as enrolled, even though the 

students never actually participated in the program. 

At a May, 2010, hearing before this very committee, the Assistant Secretary for Children and Family stated that the Department 

was taking immediate corrective action and was undertaking a topto-bottom review of its program oversight responsibilities. So the 

questions I would ask are these: Can, first, you give us an update 

on the Department’s effort to combat waste, fraud, and abuse in 

the Head Start program? And, secondly, how many unannounced 
33 

monitoring visits has the Department conducted since the release 

of the GAO report? 

Secretary SEBELIUS. Congressman, I, first of all, want to tell you 

that I share your dismay at the GAO report and, more than the 

GAO report, the practices that were under way; and we do take 

program integrity very seriously. In fact, I have for the first time 

created a Secretary’s Program Integrity Council which operates 

across all of our agencies and departments to try and actually get 

out ahead of any practices, any lax oversight, any issues that we 

should know about. 

We did very quickly go into—first of all, we have had, I think I 

was told yesterday, 160 unannounced visits, to answer your question with some specificity; and those are ongoing efforts to make 

sure we are complying with that. We have conducted retraining of 

Head Start directors, we have issued new guidance on compliance 

with program integrity and guidelines, and reminded people about 

their legal responsibilities. 

We are recompeting, as I say, the—we put out a rule about recompeting the lowest 25 percent of the program. We are conducting 

overall reviews and ongoing training initiatives. But we are taking 

this very seriously, reminding people that these are taxpayers’ dollars and being used to educate some of our must vulnerable children, and we want to make sure that that is exactly where the dollars go. 

Mr. WALBERG. I appreciate that, and we will look forward to receiving fuller information on that. In a time of vanishing dollars for 

our education systems in my State as well as your State we can’t 

suffer this to take place, so thank you. 

Secretary SEBELIUS. I agree. 

Mr. WALBERG. Thank you, Mr. Chairman. 

Chairman KLINE. I thank the gentleman. 

Mr. Payne. 

Mr. PAYNE. Thank you. 

Let me commend you on the outstanding job you are doing. 

I think one thing we need to keep in mind is that it is great that 

the United States of America has moved into the nations around 

the world of developed countries to provide universal health care. 

As you know, we were one of the only developed countries in the 

world that did not provide it. 

Let me just say about Head Start, we know it is a vital program. 

It helps to level the playing field for low-income preschoolers and 

improve academic outcomes. We know there are some problems 

striving towards a more perfect union, so to speak. 

In your testimony, you mentioned the Department’s endeavor to 

strengthen the Head Start program, and I commend you for efforts 

as well as your continued support of childhood education in fiscal 

year 2012 requests. 

Our Republican colleagues propose a $690 million cut to Head 

Start this year, as you know, which would have removed 130,000 

low-income children and families from the program, closed 10,000 

Head Start classrooms, and laid off 33,000 teachers and related 

staff. This measure is contrary to our goals of increasing employment and strengthening educational outcomes. Thankfully, this 

measure did not become law. 
34 

And our children, like a little fellow named Matthew in my district, sent me a constituent letter saying, Dear Congressman, it’s 

my future, hands off Head Start funding. As a matter of fact, little 

Matthew had his little hand print to just keep your hands off our 

funding, so I have to have a meeting with him. I hope he doesn’t 

come to a town hall meeting to run me out of the place. 

So we know that it is a very important, and so I really commend 

the administration and support your fiscal year 2012 budget. 

Let me just say, in addition to proposing cuts for Medicaid, my 

Republican colleagues supported a spending plan that would turn 

Medicaid into a block grant program. Medicaid provides health care 

for the most vulnerable population—the elderly, disabled, children, 

low-income adults. Madam Secretary, can you explain the impact 

of this action? Would it have become—had other beneficiaries in 

the States if it had gone into effect? 

Secretary SEBELIUS. Well, Congressman, our analysis of the 

budget proposal is that, as you know, not only does it propose a 

block grant but there is a significant and very dramatic decrease 

in the funding level. So it is a fixed cap that decreases over time. 

And, frankly, again as a former Governor who administered a Medicaid program, one of the things that you can’t anticipate is 2 years 

out what the economic downturn is going to do. 

So just a little bit of hindsight, if we had had a block grant in 

place for Medicaid recipients over the last number of years and the 

increase in services needed based on the number of people who lost 

their jobs, lost their health care, needed reliance on that, I think 

most States would have been in a very—a more dire situation than 

they are right now. 

As you know, the vast majority of the Medicaid population are 

children. The most expensive part of the population are older 

Americans who are poor enough to qualify for Medicare but often 

are in nursing homes. And you don’t have a lot of—the people don’t 

go away when the money goes away. 

So I have met with mayors and some governors and county supervisors and others who find this proposal to be very alarming, because they will still deal with folks coming through the doors of 

emergency rooms without care. They would be dealing with people 

in nursing homes without the support that Medicaid currently provides for that very critical nursing home care. 

What we think is a much more strategic way to deal with this 

is 5 percent of the Medicaid beneficiaries account for about 50 percent of the cost. They are the most chronically ill, often disabled. 

Many of them are getting very erratic care. They are often in two 

systems, Medicare and Medicaid, at the same time. And we are 

working very closely with States and with a proposal that is going 

to come out of our new center for innovations that will focus on the 

so-called dual eligibles and give States a lot of flexibility of using 

the best possible practices to coordinate care and actually drive 

those costs down. If we can cut those costs by 10 to 15 percent, 

States will save billions of dollars; and the Federal Government, 

frankly, will save billions of dollars. 

Mr. PAYNE. Thank you very much. I don’t know if I have time 

for another question. It is still on yellow. 
35 

Well, during the debate on H.R. 1, Republicans adopted nine riders intended to block implementation of all or components of ACA. 

If enacted, these amendments would have brought implementation 

of the ACA to a halt, eliminated benefits that people throughout 

the Nation are already enjoying, including many of my Republican 

colleagues and constituents. Can you quickly mention some of the 

benefits that already have been experienced as a result of ACA? 

Secretary SEBELIUS. Certainly, Congressman. I mentioned the 

children with pre-existing health conditions, which I think is a 

huge step forward for families who have been struggling with that, 

being locked out of the insurance market for years. We have already seen the reports of just the last month are that hundreds of 

thousands of young adults are now covered. One of the most uninsured populations in the United States is now coming into the marketplace, thanks to the provision that allowed young adults to stay 

on a family policy for an extended period of time. 

We know that seniors are beginning to get relief from their prescription drug benefits. A number of them got the one-time $250 

check, but this year they will have a 50 percent decrease that is 

going into affect; and, at the same time, they are experiencing 

lower rates on Medicare Advantage plans, thanks to the negotiating power that the ACA provided for us. 

There is a new bill of rights for patients that ensures that new 

plans have preventive health care, that new oversight powers for 

State insurance departments to do rate reviews, the medical loss 

ratio goes into effect this year. So $0.80 of every health care dollar 

has to be spent on health costs and not overhead and CEO salaries. 

Those are just kind of snapshots of what is beginning to be under 

way. The preexisting condition plan, where we now have 18,000 

Americans who had been locked out of the market are now able to 

buy market-based coverage and really often in life-saving situations. 

Mr. PAYNE. Thank you. 

Chairman KLINE. The gentleman’s time has expired. 

Dr. DesJarlais, you are recognized. 

Mr. DESJARLAIS. Thank you, Mr. Chairman. 

Secretary Sebelius, thank you for being here today. 

Like my colleague from Tennessee, I am also a physician. Prior 

to coming to Congress in January, I practiced primary care medicine for the past 18 years in Tennessee and was also witness to the 

failed attempt at a government-run model in the State or Medicaid 

program, was known as TennCare. I would love to discuss that, but 

I think right now what is on a lot of people’s minds is the issues 

with Medicare. So I would like to start with that. 

Would you agree that Medicare is an example of government-run 

health care? 

Secretary SEBELIUS. Congressman, Medicare provides for—— 

Mr. DESJARLAIS. Yes or no on that one. Is it run by the government? 

Secretary SEBELIUS. Yes. 

Mr. DESJARLAIS. Okay. Are you in agreement with my colleague 

across the aisle that said Medicare has been doing a great job for 

many years now, 40 plus years? 
36 

Secretary SEBELIUS. I think it has delivered essential benefits to 

seniors for 40 plus years, yes, sir. 

Mr. DESJARLAIS. I just want to share a few concerns that have 

been brought forth to us in the past few months. 

One of great concern is that the CBO has estimated that the program will be bankrupt in 9 years if left unchanged. So when we 

get challenged that our attempts to make changes to this program 

to secure it and protect it for future generations, sometimes I take 

issue with that. 

Also—— 

Secretary SEBELIUS. You know, Congressman, the slowdown and 

the cost grow was estimated to add a number of additional years 

onto the Medicare trust fund. That was provided by the ACA. 

Mr. DESJARLAIS. We are going to get into that, because we are 

going to talk about slowdown and cost grow. But, also, as you stated, we are entering 9,000 new members into the Medicare program 

each day or roughly 3.3 million per year. So we are greatly expanding the program, and we are talking about bringing down costs. 

And it is obvious this is a great thing. Just back from the ’70s you 

all remember the average life expectancy was much less. We are 

all living 10 years longer than we were just a few years ago. But 

that also has to be accounted for. We have to pay for that. That 

has been occurring. Baby boomers, as we mentioned, are coming 

through the program now. So we have huge volume issues. 

Also, it is noted that right now that an average family, average 

couple that makes about 43,000 a year per person has a Medicare 

tax liability over a lifetime of approximately $100,000. But yet the 

average utilization for the same couple is about $300,000, so we 

have a 3 to 1 ratio there. And all those things kind of point towards disaster, especially when we talk about bringing more people 

in, yet we are going to reduce cost and somehow we are going to 

maintain quality of care. 

What would be your concerns, based on those facts I just gave 

you. 

Secretary SEBELIUS. Well, I think that there are ways that certainly health care providers have suggested that we can reduce 

costs, not tamper with the guaranteed benefits, and deliver better 

care at the same time. And that is really the strategy of looking 

at the underlying rise in health care costs. Whether it is Medicare 

or the private insurance market or somebody whose paying out-ofpocket, the trajectory of health care costs, paying more for everything that we are doing, continues to rise at well above the rate 

of inflation. And yet, as you know, Doctor, in the United States our 

health results don’t show that kind of expenditure. We are not getting the kind of health results we should get. So I think there are 

all the kinds of delivery systems. 

Congressman Miller mentioned just one—— 

Mr. DESJARLAIS. I don’t mean to interrupt, but we have so little 

time. 

One of the things that was—— 

Secretary SEBELIUS. I would like to get you that answer in writing. 

Mr. DESJARLAIS. Thank you, ma’am. I would appreciate that. 
37 

One of the plans when ObamaCare was passed on Christmas Eve 

in the middle of the night was that physicians were going to assume a 21 percent cut in Medicare. Is that still your intent? 

Secretary SEBELIUS. As you know, the President has suggested 

since he came into office that the SGR has to be fixed permanently. 

He has proposed again in the 2012 budget that it be fixed. He has 

got 2-and-a-half years of offset and looks forward to working with 

Congress to fix it. 

The SGR I think remains as a major barrier to Medicare beneficiaries, predated the Affordable Care Act, continues to be an issue 

that I look forward to working with Congress to fixing. 

Mr. DESJARLAIS. In your testimony, I am reducing health care 

costs and increasing quality—you mention several times these innovation centers. You are going to pursue whenever possible new 

approaches that will improve quality of care and lead to savings. 

As I read through this, I see a lot of assumptions and theories, but 

I don’t see anything based on fact. 

What exactly are innovation centers and how can you assure the 

American people when the health care system as we know now is 

going bankrupt that we should just take a blind leap of faith is 

that these things are going to work? 

Secretary SEBELIUS. Well, there is one innovation center umbrella, and there are already some programs that have been put 

out in terms of regulation. So the accountable care organizations is 

an opportunity for health care providers to voluntarily come together around the care delivery system focused on Medicare beneficiaries. And if indeed there are savings achieved, they get to 

share in those savings. If there are no savings, it is a net wash. 

We don’t expend additional funding. There is enormous enthusiasm 

among hospital systems and providers groups for doing just that. 

Mr. DESJARLAIS. You agree these are unproven, untested theories? 

Secretary SEBELIUS. They have never existed before. 

Chairman KLINE. The gentleman’s time has expired. I thank the 

gentleman. 

I am looking at the clock, and we have less than an hour before 

the Secretary has to leave, so I am going to be a little bit more 

stringent on the 5-minute clock in order to give all of our colleagues a chance to ask questions. 

Mr. Grijalva, you are recognized. 

Mr. GRIJALVA. Thank you, Mr. Chairman; and thank you, 

Madam Secretary, for being with us. 

First, an acknowledgement. Then I will raise a request and just 

one question. 

The acknowledgment is to your staff. They have been very attentive to our office, and we appreciate that very much. Some of the 

questions that came up regarding the waiver process in Arizona, 

they have been very diligent about communicating with us and giving us the information. We are very appreciative of that. We have 

been persistent, and they have been equally gracious, and so I appreciate that. 

The concern I have is some of the proposed regulatory changes 

to Head Start and early Head Start. I am concerned there could be 

an impact on dual-language children. As you know, this group of 
38 

children, Latinos in particular, have a proportionately low enrollment in Head Start and early Head Start. As you work through 

those regulatory changes to diminish fraud and abuse within those 

programs that should be eliminated—my office looks forward to 

working with you so there is no unintended consequences relative 

to the participation of those children that desperately need to be 

part of that program. 

Secretary SEBELIUS. We would look forward to that. 

Mr. GRIJALVA. A question just for historical purposes. Talk about, 

if you would, talk about what you perceive to be the original objectives of the Medicaid Act. 

Secretary SEBELIUS. The Medicaid Act was clearly aimed at providing health care services for some of the most vulnerable Americans. Those who are the lowest income, children, pregnant women, 

the disabled who qualify for Medicaid are primarily the beneficiaries of that program. 

Mr. GRIJALVA. Thank you—— 

Secretary SEBELIUS. And a partnership with State and local government to deliver those services. 

Mr. GRIJALVA. And I ask that question because those objectives 

continue to be I think the guiding principle behind Medicaid. But 

do you feel that some of the current attempts by the majority in 

the House to change the program by rolling back eligibility, the 

block grant process, making it more difficult for those vulnerable 

populations to get access to health care both at the State level and 

at the Federal level, how do they match up with those objectives? 

Secretary SEBELIUS. Well, Congressman, I am very sympathetic 

to my former colleagues who are governors around this country and 

are in very tough budget times. And balancing a budget is never 

easy. Medicaid nationally is about 16 percent of State budgets, and 

it is always something to look at. 

We have been very diligent, working with States, around giving 

maximum flexibility within the law, working on sharing the best 

practices. We have got a lot of new governors who have not been 

in that office before, and we have sent teams into 20 different 

States to work on what their snapshot looks like in ways to save 

dollars. 

I think the administration is continuously committed to providing health care services to those very vulnerable populations. 

We want to do it in the most cost-effective and, frankly, the most 

high-value method possible, and that isn’t going on in every State 

around the country. So what we can do is work with States to try 

and figure out ways to stretch those dollars but provide those essential services. 

Because the folks aren’t going to go away. If the Federal Government decides to shift costs, they just shift on to States, to local governments, and, ultimately, on to people who end up on the streets 

or in a jail or under a bridge because they don’t have the support 

system that they need to stay healthy and stay productive. 

Mr. GRIJALVA. Thank you. 

In the collaboration with the Education Department around 

Head Start—because Head Start is more than education. It is a 

whole child program. And one of the discussions I think is important, if I may suggest, is programs like Even Start that extends 
39 

that literacy to the whole family. One of the programs that Education has indicated that they want to eliminate is part of a component that I think merits discussion. 

And thank you very much. I yield back. 

Chairman KLINE. I thank the gentleman. 

Dr. Bucshon, you are recognized. 

Mr. BUCSHON. Thank you, Mr. Chairman; and thank you, Secretary Sebelius, for being here today. 

I am also a physician, cardiothoracic surgeon for the last 15 

years. I have a bunch of questions, so I will try to brief. 

You stated that Congressman Ryan’s plan puts seniors on the 

open market. Are you aware that it is designed after the same type 

of health care plan that Members of Congress currently have? And 

would you call that the government putting Members of Congress 

onto the wide-open private health care market? 

Secretary SEBELIUS. Yes. I mean, you are in a negotiated Federal 

Employee Health Benefit Plan—— 

Mr. BUCSHON. What I am saying is—— 

Secretary SEBELIUS. You don’t have a fixed amount of money—— 

Mr. BUCSHON. Do I have to go to my local insurance agent with 

government money and pick my health care plan? Or do I have a 

book about this thick with a multitude of options from which I can 

choose that have had—let me finish—that have had negotiated 

rates that are competitive because to participate in a program as 

a health insurer you have to be competitive? 

This is the same proposal that Chairman Ryan has for seniors, 

and it is clearly deceptive to say to the American people that this 

is putting seniors into an open health care market when in fact you 

know that that is not true. 

Secretary SEBELIUS. Well, I do think it is putting seniors—right 

now, they can choose a doctor, they can choose a program—— 

Mr. BUCSHON. So can I, actually. 

Secretary SEBELIUS. And do multiple—in an insurance plan, 

often the doctor is chosen for you, the health plan is chosen for you. 

I would suggest also, though, Congressman, one of the key differences is the Federal Government is a much more generous partner to Members of Congress in the Federal employee health plan 

than Congressman Ryan suggests to be the seniors in the plan that 

they would go into. Their voucher system has a much lower buying 

power that the Federal employees do right now. It in fact decreases 

over time, according to the Congressional Budget Office. So rather 

than having the lion’s share of the program paid for by the Federal 

Government, you would actually have the lion’s share of the program paid for by seniors. 

Mr. BUCSHON. Well, I think that is still to be elucidated, and I 

disagree with that premise. 

Secretary SEBELIUS. That is not my analysis. That is the Congressional Budget’s analysis. 

Mr. BUCSHON. Let’s move on. 

You talk about Medicare savings and the Affordable Care Act 

being against future growth. And you are aware that the Medicaid 

proposal to the States for block granting, that what you are calling 

cuts is actually also savings against an unsustainable growth rate 

and has actually what you describe as not cuts to Medicare but 
40 

preventing further growth and that the block grants are the same 

thing and that it would be deceptive to say that this is actually a 

cut in the Medicaid program if you are calling it savings in the 

Medicare program under the Affordable Care Act. It is the same 

thing, right? 

Secretary SEBELIUS. Well, the block grant is really the administration of the program which, if I understand it correctly, would get 

rid of the direction to protect vulnerable populations. So States basically could pick and choose who to cover and who not to cover. 

The fixed—— 

Mr. BUCSHON. Excuse me, they have that ability now, don’t they? 

Secretary SEBELIUS. No, sir. There are some mandatory populations in Medicaid that they cannot drop. 

Mr. BUCSHON. Okay. I want to move on to is a different subject. 

NIOSH is under your jurisdiction in HHS, and under certain responsibilities to the Federal Mine Safety and Health Act of 1977 

they are the technical advisor to MSHA, mine safety. Recently, 

MSHA has proposed a new rule on coal dust limitations within underground coal mines. And my dad, by the way, was a United Mine 

Worker for 37 years. We have asked for the background medical information from MSHA and from others, and they have said that 

that is being denied by Health and Human Services because of patient privacy regulations. 

And, first of all, is that true? Is that the reason why this committee—— 

Secretary SEBELIUS. Congressman, I really have no—you are saying this is a mine safety standard? 

Mr. BUCSHON. It is a coal dust mine safety standard. They are 

trying to cut the standard down under MSHA. 

Secretary SEBELIUS. I would be delighted to get you a full and 

complete answer. I really have no idea. 

Mr. BUCSHON. Mr. Main also told me he would give us the medical background information on that, and we haven’t seen it yet. 

Secretary SEBELIUS. Mr. Who? 

Mr. BUCSHON. And he is saying that that is because Health and 

Human Services with NIOSH is denying that because it is private 

health information that you can’t give under HIPPA regulation. 

But we publish medical studies every day with groups of patients. 

Secretary SEBELIUS. As I say, Congressman, I will talk to Dr. 

John Howard, who heads NIOSH, and get you a full answer. I don’t 

know about the mine safety regulation. 

Mr. BUCSHON. What I would appreciate is if we could get the information from NIOSH, giving all of the background on the proposed rule that they submitted to MSHA that justifies this change 

in a long-standing regulation which in my view has as a physician 

has no medical solid information that is necessary. And let me say 

in my district in Indiana would be devastating because of the many 

coal mines and others in my State would likely not be able to comply and may have to close, again resulting in a significant amount 

of job loss. I would appreciate that information. 

Chairman KLINE. The gentleman’s time has expired. 

We can take that for the record. It is a follow-on question. 

Secretary SEBELIUS. I would be glad to. Thank you. 

Chairman KLINE. Ms. Woolsey. 
41 

Ms. WOOLSEY. Thank you, Mr. Chairman. 

I thought I would take the opportunity before I ask our wonderful Secretary a question to respond to the gentleman from Tennessee in his question of how the Republicans could be challenged 

over their proposal to privatize Medicare. 

The answer is simple. And the answer is, when their plan increases the tax cuts for the wealthiest Americans, when oil companies continue to get tax breaks and subsidies, when corporations, 

successful corporations, pay absolutely no taxes, they are proposing 

to privatize Medicare and at the same time asking seniors to take 

a blind leap of faith that, by privatizing Medicare, the private insurers will actually take care of the senior citizens in this country. 

And that is why there is so much pushback to their proposal. 

So now I want to go to my question which has to do with—you 

mentioned, Secretary Sebelius, a healthy development of all of our 

children, which of course I support 100 percent. And I think part 

of that healthy development is ensuring that when they enter the 

classroom they are well, their mental and physical health is being 

cared for. Otherwise, these kids can’t learn. They can’t succeed. 

Well, last week, the House voted to eliminate funding for the 

construction of school health centers, under the pretense of the Republican bill that there are other sources of funding laying around 

this country that could pay for these school health centers. So you 

know better than I do that 8 million children lack access to any 

primary health care, and they need this in order to get through 

school. So could you expand on the value of investing in school 

health systems and what that means to the future of our children 

and our country? 

Secretary SEBELIUS. Well, Congresswoman, we are doing two 

things right now to expand access to coverage for children. One is 

to take advantage of the opportunity given by the CHIP reauthorization of 2009 to do some very extensive outreach. We think there 

are likely still about 5 million children who are eligible but not enrolled. So we have a very robust outreach effort going on with 

school districts and health care providers, using sport stars and 

coaches, others, to try and reach the parents and enroll those kids. 

But there is no question I think that one of the most effective 

strategies is actually, since schools are often in the hearts of neighborhoods, that a school-based clinic not only deals with the children’s health needs but often the family health needs of the neighborhood. So the Affordable Care Act designated as one of the sites 

for expansion of community health centers school-based clinics, 

which was a recognition that moving into underserved areas, outreach in a very easy way for people to access health services was 

often very productive and certainly for parents and children to access services together is very effective. 

So I think that the funding goal of expanding the school-based 

health clinic footprint was a wise strategy to make sure that we 

are reaching into many of these underserved communities and figuring out ways to have accessible health care during the time that 

families would most likely be able to access health care providers. 

Ms. WOOLSEY. So can you think of any pockets of funding where 

there are excess monies that could be—without our funding these 

school-based health centers? 
42 

Secretary SEBELIUS. Well, we are embarked on an expansion of 

the community health center footprint. Unfortunately, that got decreased a bit by the CR 2011, but we will continue I think to do 

that. Because community health centers actually have been proven 

over and over again to be enormously effective in lower-cost, highquality preventive care. And if we want to stop paying $0.70 out 

of every health dollar on chronic disease, getting to conditions very 

early and certainly getting to kids very early. You don’t learn well 

if you are not healthy. You can’t study in school if you are not well. 

So getting a productive workforce starts with having highly educated kids, and kids won’t be well educated unless they are 

healthy. 

Ms. WOOLSEY. Thank you. 

Chairman KLINE. The gentlelady’s time has expired, and I was 

so hoping the Secretary could identify one of those untouched pots 

of money. 

Secretary SEBELIUS. If I find it, I will tell you, Mr. Chairman. 

Chairman KLINE. I will hold you to it. 

Mr. Kelly, you are recognized. 

Mr. KELLY. Thank you, Mr. Chairman. 

I would like to yield my time to my colleague, Dr. Roe. 

Mr. ROE. I thank the gentleman for yielding. 

Madam Secretary, I think we could have approached—and I read 

the bill as you did. It is a hard read. And I think we could have 

approached getting where you wanted to be by doing exactly one 

of the things you just said. Which if we go sign up the young—the 

children, 5 million of them I think was what you said who are currently eligible for SCHIP, the people who are currently eligible for 

Medicaid—and the part about the bill I like a lot is to allow your 

adult age children pick your number—25, 26, or 27, you could have 

covered almost as many people doing those two things as you are 

talking about doing right now with a 2,500 page bill and is so complex that nobody understands it. I just want to make that point. 

I want to get into something near and dear to my heart, which 

is my fear of rationing of health care. 

The Independent Payment Advisory Board, as you know, was not 

in the House version of the Affordable Care Act. It did get in the 

Senate version. And many of my colleagues on the other side of the 

aisle opposed this. How do I go answer to my constituents and to 

patients at home that I have been seeing that, okay, we are going 

get to a certain spending level, and not based on quality we are 

going to make a decision about how the money is spent. How is 

that not going to affect rationing of care in the future, when you 

have more services chasing fewer dollars, which is exactly the train 

wreck I see coming. 

Secretary SEBELIUS. Well, Congressman, the way the Independent Payment Advisory Board is set up is it is 15 individuals 

who have to have expertise as either health care providers or 

health economists, experts in health who actually are forbidden by 

law to ration care. That is part of the statutory framework. 

Mr. ROE. Let me stop you right there. Who ends up rationing it 

is me when I can’t give it in the examining room. We have 15 bureaucrats appointed up here. It is not called rationing, but when 
43 

you get up to a certain dollar limit and you can’t spend any more 

money, you can’t provide the service. So I am in my examining—— 

Secretary SEBELIUS. Well, I would share your dismay about a 

fixed-income level, and that is exactly what the House budget proposed for Medicare. We will give you a fixed amount of money, and 

you figure out what services you get. That is not what the Independent Payment Advisory Board is about. It is about making recommendations for strategies, for new services, for new—— 

Mr. ROE. I beg to differ. 

Secretary SEBELIUS [continuing]. Research and that comes to 

Congress. Congress has the intermediary role with—the Independent Payment Advisory Board’s recommendations do not go into 

effect unless Congress chooses to allow them to go into effect. 

Mr. ROE. They do go into effect unless we pick some other way 

to—— 

Secretary SEBELIUS. Unless you say no. 

Mr. ROE. Exactly. No, unless you pick some other way not to 

spend the money, it is going to end up—I am certainly very familiar with NICE in England. The National Institute of Clinical Excellence is exactly the same type board. 

So you would support the IPAB when most of the Congress on 

the House side did not support the IPAB, including my colleagues 

on the other side of the aisle. As a matter of fact, several of them 

have signed onto a bill to repeal that, because—— 

Secretary SEBELIUS. I do very much support the notion that we 

would have an independent group making recommendations about 

cost-effective strategies. We have it now. 

Mr. ROE. It is an advisory board now. 

Secretary SEBELIUS. It is an advisory board. It would continue to 

be the Independent Payment Advisory Board. The recommendations would come to Congress—and, again, they are not implementing medical decisions, and there is no global cap that they are 

working under. And, again, I—— 

Mr. ROE. I think we have a difference of opinion there. 

A question I have on the Mini-Med plans. Why were 1,100 exemptions given? And what will happen to them after those exemptions expire? When they can’t afford the government-decided plan, 

what happens then? 

Secretary SEBELIUS. Well, Dr. Roe, the waivers are a part of 

keeping your plan in at least the time between now and the new 

marketplace in 2014. Unfortunately, lots of people have some form 

of coverage that often is not very comprehensive, and they are in 

a situation where currently in 2011 and 2012 and 2013 something 

is better than nothing. 

So the Congress directed us to take a look at the one provision 

of the plan that talks about getting to an annual limit that would 

cover comprehensive medical expenses, but suggesting that if indeed a plan can’t meet that annual limit without major disruption 

in the marketplace between now and 2014 when there is a new exchange, a new opportunity to buy a comprehensive policy at lower 

cost, that we should indeed look at waivers. 

And basically 97 percent of the folks who came in the door who 

gave us the documentation saying we can’t get to this point because we have such, frankly, low coverage and modest applicability 
44 

we decided that some coverage was better that no coverage. And 

those plans will not exist after 2014. 

Mr. ROE. I yield back. I recommend you read this. 

Chairman KLINE. The gentleman’s time has expired. 

Mrs. Davis, you are recognized. 

Mrs. DAVIS. Thank you, Mr. Chairman; and thank you, Madam 

Secretary, for being here today and for your service as well. 

As you are aware, this week the majority singled out and cut 

funding to create insurance exchanges where Americans could go 

to buy affordable coverage without discrimination. And we know in 

California—and thanks to Governor Schwarzenegger in this—California has been one of the first States really to get out of the gate 

essentially to establish the exchanges. So when it comes to States 

like California that are already in the middle of this process, what 

kind of difficulties do you see as a result of cutting off the funding 

that this action would actually cause? 

I am also wondering how the effort would block funding for 

health exchanges across the country. Would there be some delays 

and what impact is it likely to have on reducing the number of uninsured Americans? 

Secretary SEBELIUS. Congresswoman, if the provision passed by 

the House would be passed by the Senate and signed into law by 

the President, I don’t think there is any question that there would 

be serious inability of States to move forward with creating a new 

marketplace, particularly for small business owners and individuals who currently are not only paying more but many of them are 

uninsured. 

We are actually working with governors around the country to 

set up State-based exchanges and the resources are being used to 

do everything from planning to put together IT systems so that you 

would have a seamless way to come into a market as an uninsured 

American, with the goal being that every American should have 

available, affordable health insurance. Whether you end up as a 

Medicaid beneficiary in a private market, an employer market, that 

that is the goal to have a fairly seamless system. 

Defunding the exchanges would mean that we freeze the status 

quo where more and more Americans every year are uninsured, 

where insurance rates continue to rise at an alarming rate and 

families and small business owners would face either increasing 

costs or bankruptcy for health conditions which they have no insurance to pay for. 

Mrs. DAVIS. Is it anticipated that there would be a delay in this, 

perhaps a few years, or that they would actually be frozen in place? 

Secretary SEBELIUS. Well, if the funding goes away, I really don’t 

know—take the case of California—how indeed California would 

put together an exchange system that would be operational by 

2014. So I think it stops the process unless they find some of that 

money that we are looking for to fund the school-based health clinics that we haven’t found yet. If that appears, we could do this. 

But, absent that funding stream, I think most States would just 

stop working on the exchange program. 

Mrs. DAVIS. Thank you very much. I appreciate that. 

I think that we want—at least in California I know they are continuing to have these intense discussions, as you noted earlier, in 
45 

terms of the accountable care organizations and others. It certainly 

is impacting those discussions, but we are hoping that they at least 

will continue to have them. 

I wanted to also just mention briefly the disease prevention 

issues that we are all I think very concerned about. Certainly singling out the national diabetes prevention program as well, building on evidence-based methods, give individuals at risk guidance on 

how to prevent type II diabetes. That is eligible for funding from 

the Prevention and Public Health Fund at HHS. And so are you 

saying that this issue is really going to be established as a national 

priority in many ways? And how does that dovetail with the work 

that you are doing with this? 

Secretary SEBELIUS. Well, I don’t think there is any question 

that the historic investment in the prevention fund is one that we 

see yielding significant dividends as you go forward. 

Again, the snapshot right now is $0.70 out of every health dollar 

is spent on dealing with chronic disease. If we indeed can lower the 

smoking rate, if we can have a healthier population heading into 

their 50s and 60s by significantly making a dent in everything 

from diabetes to heart disease, we will have dramatic impact on 

not only the health costs of this country but on the health of this 

country. 

So lower costs, better health is the goal of the prevention fund. 

And we have some very exciting programs under way across this 

country in tribes, in farm communities, in cities that are really 

looking at measurable ways to change behavior, to change practices, knowing that that is an enormously important step. If we can 

have a healthier population, invest in primary care and prevention, 

we wouldn’t be spending the dollars that—— 

Mrs. DAVIS. As a member of Armed Services, it is also a national 

security issue. 

Chairman KLINE. The gentlelady’s time has expired. 

Mr. Ross. 

Mr. ROSS. Thank you, Mr. Chairman. 

Madam secretary, thank you for being here. 

I want to address health care and jobs, because we note that 

with the mandates that are in the Patient Protection and Affordable Health Care Act there is going to be some burdens put on employers here. Specifically in the area of service industries in the 

last 10 years they have been the most predominant and most productive types of jobs we have seen in Florida—agriculture, retail, 

restaurants, hotels—intensely labor but low profit per employee. 

My concern is that that when we understand there is going to 

be a per employee cost of about $2,000 for health care that is going 

to be have to be provided by these employers, these employers may 

not be able to continue to either keep the employment that they 

have, won’t be able to expand. While I appreciate that in the Act 

there are exemptions for employers with 50 or fewer employees, my 

specific question is, would you consider exemptions based on a low 

profit per employee? 

Secretary SEBELIUS. Well, Congressman, we are working within 

the framework of the law, but my experience is that, currently, 

most employers who talk to me and particularly most employers 
46 

who are struggling in the marketplace find health insurance to be 

the best way to keep talented employees—— 

Mr. ROSS. I agree. But when it becomes a cost that exceeds what 

the market will bear, they are either going to have to release employees or scale back their time. 

Secretary SEBELIUS. But right now they are competing against 

folks who often are playing on an unlevel playing field. Often, the 

big employers can find health benefits, and they are losing their 

best workers going down the street or around the corner. I would 

suggest this creates a framework, and the lowest income employees 

actually gets help with subsidies in the exchange program that 

they currently don’t have. So it is kind of a win/win. 

Mr. ROSS. You think then that the lower employees—the lowerincome-earning employees? But if it is mandated that the employer 

provide the coverage and their coverage is $2,000 per employee and 

they only have a margin of $2,400 per employee, that margin is 

going to be reduced to $400. So these are the businesses that will 

be most concerned about the impact of this care, this Act. 

Secretary SEBELIUS. Again, I am not sure we are talking about 

a large employer who—— 

Mr. ROSS. It would have to be more than 50. 

Secretary SEBELIUS. If a large employer is not providing coverage 

and has an employee who then takes access of the coverage in the 

exchange, there will be an employer contribution to help pay the 

taxpayer burden that is being picked up. A small employer will be 

able to participate in the exchange and have an opportunity to get 

lower cost coverage for employees that they are not covering right 

now. 

Mr. ROSS. Let’s talk about the exchange for a second. Because I 

appreciate the fact that, as a former insurance commissioner, you 

understand the dynamics of insurance and the markets of insurance. And of course the private companies sell insurance for a reason, to make a profit, but they do so with private capital. That is 

what is going to back the risk that they insure. And that capital 

is global. They get it from certain areas. They don’t consolidate 

their risk, and it is actuarially assessed in terms of their risk. 

But when the government gets in the business of insurance, they 

don’t have that capital. What they have is assessments and taxes 

with which to go after to satisfy any claims. Unfortunately, in the 

assessment of that risk, it is more politically assessed, as opposed 

to actuarially assessed. 

So that being said, would you not agree then that when the government gets in the business of insurance that what they are putting at risk are taxpayer dollars and assessments as opposed private capital that is spread globally? 

Secretary SEBELIUS. I would say there is certainly more taxpayer 

dollars involved in the government-based plans, but I would also 

suggest that private insurers right now participate actively in 

Medicare Advantage programs. Most States run their CHIP programs through the private market. They are Medicaid beneficiaries. So there is not a line drawn between government plans 

and the private market. 

Mr. ROSS. There is, though; and I think that is something we 

have to talk about. If we are going to talk about health insurance, 
47 

because our President said at the outset of his lobbying on this bill 

that we had a health insurance crisis. And, as you know, each 

State under the McCarran-Ferguson Act regulates their insurance 

market. We have got fewer insurance companies in the State of 

Florida because of mandates in Florida, fewer in Alabama, but yet 

we have over 1,200 insurance companies who want to sell throughout this country. Would you not agree then that for consumers, for 

a market that wants to be based on capital and not taxpayer dollars supporting it, we should open up the barriers and allow for the 

interstate sale of health insurance? 

Secretary SEBELIUS. Congressman, as you know, companies can 

now sell in any State that they want. They have to be licensed by 

the State and have to follow the State laws, but—— 

Mr. ROSS. But they have a different mandates. In other words, 

you have got 51 mandates in Florida. You may have three in Alabama. You may have so many more in Pennsylvania. 

Secretary SEBELIUS. The elected legislators in Florida pass laws 

that the governor signed. That is the Florida—— 

Chairman KLINE. The gentleman’s time has expired. 

Mr. SCOTT. Thank you, Mr. Chairman. 

Madam Secretary, just a quick civil rights question. Is it possible 

for any sponsors of programs run in your Department of private organizations to get grants to run programs to discriminate based on 

religion? That is to say, you would have been a good applicant for 

this job, but we don’t hire people of your religion. Is that possible? 

Secretary SEBELIUS. To my knowledge, that would violate the 

civil rights umbrella that we operate under, Congressman. 

Mr. SCOTT. So that if a faith-based organization were running a 

program and said we don’t hire Catholics, Jews, or Muslims, you 

wouldn’t think they could get funded under your administration, do 

you? 

Secretary SEBELIUS. To my knowledge, no. 

Mr. SCOTT. Thank you. Under the essential benefit definition 

of—under the ACA, it is my understanding that the Institute of 

Medicine is currently working on recommendations. 

In terms of children, the EPSDT program under Medicaid is considered a good standard for care for children. Would it be your recommendation that that be the essential benefit package for children under policies under ACA? 

Secretary SEBELIUS. Well, Congressman, the way that actually 

the essential benefit portion of the discussion is framed in the 

ACA, there are multiple steps. The Department of Labor has just 

given us the results of a survey that they did on private-market 

plans, the typical benefits in a private-market plan, looking at 

large employers and small employers. So that is a step mandated 

by the law. 

What the Institute of Medicine is doing is sort of step two, which 

is looking at the process for putting together an essential benefit 

package and how often that criteria would be updated. 

Step three is really for HHS then to do extensive listening and 

outreach to everybody from provider groups to disease groups to 

patient advocates in terms of getting input on what an essential 

benefit package should look like, and then a rule will be promul-
48 

gated. So IOM is actually really more on the process side. They are 

not doing the health benefits side. 

Mr. SCOTT. The EPSDT package of benefits, do you consider that 

something worth recommending? 

Secretary SEBELIUS. Well, I think it certainly sets a standard for 

an effective package for children; and, currently, the Affordable 

Care Act would say that the preventive care that is offered needs 

to be part of all insurance policies going forward if it is recommended as part of the prevention protocol. 

Mr. SCOTT. The GOP budget makes certain spending cuts—Pell 

Grants, education, transportation like high-speed rail, law enforcement, Food and Drug Administration—a list of cuts that total 

about $800 billion, which they totally offset with extending tax cuts 

for that portion of your income over $250,000. So that is a complete 

wash. 

All of their net savings come from Medicare and Medicaid, cuts 

in those program. Are you familiar with their little voucher program, with the voucher program in the Medicare? 

Secretary SEBELIUS. In the Medicare proposal, yes, sir. 

Mr. SCOTT. Does it provide any limit on what the private industry can charge? 

Secretary SEBELIUS. Not to my knowledge. I haven’t seen the underlying details. Maybe they exist, but I haven’t at least seen them. 

I have seen the outlines. 

Mr. SCOTT. Do you know if there is any guaranteed issue if you 

get one of these vouchers that you can actually buy some insurance 

somewhere? 

Secretary SEBELIUS. There is, I think, a limitation—a ban on 

eliminating people because of pre-existing conditions, but whether 

or not the dollar amount itself would allow you to buy a plan, I 

don’t know. 

Mr. SCOTT. If you can’t afford it, are there any subsidies to help 

you buy the insurance? 

Secretary SEBELIUS. There are, if I understand it correctly, additional resources available to the lowest income. So there is some 

sliding scale that would increase the buying power of the voucher 

depending on income. 

Mr. SCOTT. As I understand it, when it starts off, the senior citizens will be paying about $6,000 more of their income towards this 

policy, and after about 10 more years it gets up to about $12,000, 

which would be about half the average Social Security check; is 

that right? 

Secretary SEBELIUS. Yes, I think there is a dramatic shift of costs 

onto seniors. 

Mr. SCOTT. Thank you, Mr. Chairman. 

Chairman KLINE. I thank the gentleman. 

Mr. Gowdy. 

Mr. GOWDY. Thank you, Mr. Chairman. 

Madam Secretary, do you believe the commerce clause has sufficient elasticity to allow Congress to mandate individuals purchase 

health insurance? 

Secretary SEBELIUS. I try not to practice law without a license, 

but I have listened closely to our legal team, and I think they believe strongly that the bill stands on solid constitutional grounds. 
49 

Mr. GOWDY. You would have to believe that or you wouldn’t be 

able to support the President’s health care reform, right? 

Secretary SEBELIUS. That is correct. 

Mr. GOWDY. And because you believe that, you also would necessarily have to believe that Congress can also pass medical malpractice reform because we would use that same commerce clause. 

And I found it instructive that this administration has not proposed any medical malpractice reform, so perhaps we can take this 

opportunity and identify what medical malpractice reform initiatives you would support. 

Secretary SEBELIUS. Actually, Congressman, that last statement 

is not accurate. The President asked me during the course of the 

health care debate to actually use the powers that have been with 

HHS for a period of time to put in place some targeted programs 

around the country. 

Mr. GOWDY. I am not talking about targeted programs, Madam 

Secretary. 

Secretary SEBELIUS. Sir, they are looking at what kind of medical 

malpractice actually has the following criteria: It increases patient 

safety, lowers liability costs. 

Mr. GOWDY. Has this administration proposed specific medical 

malpractice reform initiatives? 

Secretary SEBELIUS. I have just explained to you what is under 

way right now. They are actually in place. 

Mr. GOWDY. Give me one. Give me a specific. Joint and several 

liability. Have you proposed reforming that? 

Secretary SEBELIUS. Are you saying have we proposed the law to 

change and preempt State law? 

Mr. GOWDY. Have you championed the cause of medical malpractice reform? 

Secretary SEBELIUS. Actually, right now, we have across the 

country health care systems and court systems putting in place 

malpractice reforms that meet criteria to see and measure what exactly works. Because the data is pretty inclusive whether or not 

you can increase patient safety and lower liability rates by a variety of strategies. 

So those are in place right now. They were put in place by our 

budget with our authority that had actually never been used before 

by anybody but President Obama. 

Mr. GOWDY. Do you support reforming joint and several liability? 

Secretary SEBELIUS. Do I support preempting State law by Congress? No, sir. 

Mr. GOWDY. Well, ma’am, and therein lies the issue, right. Because why would that be a preemption of State law in any greater 

degree than any other Federal initiative? You think if we were to 

reform joint and several liability that that would preempt State 

law? 

Secretary SEBELIUS. I think State, at a time, they have taken on 

that issue and dealt with it, yes, sir. 

Mr. GOWDY. What about a different standard of care for emergency medicine. Would you support—— 

Secretary SEBELIUS. I have no idea what is the different standard of care. What does—— 
50 

Mr. GOWDY. There is not. So if a physician is treating someone 

at a ball game or at a church, doesn’t know the patient history, 

there is no different standard by which their practice will be judged 

than if they had a 20-year-long history with that particular patient. 

So my question is, would you support a different—— 

Secretary SEBELIUS. Sir, I would be delighted to look at any proposal. I think it is impossible to answer a question when I haven’t 

seen the specifics of what is being talked about and how it would 

impact, but I would be happy to take a look at it. 

Mr. GOWDY. I have read your comments about the debt, and I 

have read the President’s comments about the debt, and I assume 

you would agree that, because you have said, that our debt is stifling. So my question is, given the fact that we agree on that, why 

was there no proposal for an entitlement reform in this administration’s initial budget? 

Secretary SEBELIUS. Well, Congressman, I would suggest that 

the Affordable Care Act had a significant step toward entitlement 

reform with a $500 billion reduction in growth rate of Medicare. 

That was a big step forward. That was not supported by many in 

this Congress, but it was the President’s first step. 

I would also suggest that the IPAP proposal, which is part of the 

Affordable Care Act, is also another big step in terms of entitlement reform that actually doesn’t potentially cause harm to our 

seniors but makes us make more strategic decisions about cost-effectiveness of proposals. 

We are currently working on proposals around dual-eligibles, 

which is the most significant cost driver in Medicaid, and have a 

proposal under way in our innovation center where 15 States are 

going to be participating to see if we can really find health strategies that look at that highest-cost population. So there are significant steps under way. 

Mr. GOWDY. Well, let me ask you this, because the light just 

went off. 

If the President’s initial health care reform bill was sufficient, 

why did he then come out with a second budget after Paul Ryan 

took on entitlement reform? Why did you come out with a second 

budget that dealt with it? 

Chairman KLINE. The gentleman’s time has expired. 

Ms. Hirono. 

Ms. HIRONO. Thank you, Mr. Chairman and Madam Secretary. 

I just would like to make a comment regarding medical malpractice reform. I would like to see the evidence that connects malpractice reform with lowering of medical malpractice insurance. 

There has never been—that, I don’t think, has been shown; and, 

therefore, you know, I would like to see that evidence. Because 

States all across the country have enacted medical malpractice reform, and the doctors are still paying huge premiums for medical 

malpractice. 

I think in both education and health care, early intervention and 

prevention are the keys. Because we save money in the long run. 

And that is why we should be supporting programs such as schoolbased health centers and Head Start and quality early education. 

I have been a major proponent of quality early education. 
51 

Madam Secretary, I understand that you had responded to a 

question regarding the third round of Race to the Top where your 

Department and the Department of Education will be working together to, I hope, come up with an early learning competition that 

is kind of like the Early Learning Challenge Fund, and so I am 

glad to hear that. I did send a letter to both you and our Education 

Secretary, Arne Duncan, to that point, and I await your response. 

I want to go on to the Medicare changes that the Republicans 

would like to propose. During the 2 weeks that I was in Hawaii, 

I met with hundreds of seniors, and they are very concerned about 

what the Republicans have in mind for Medicare. 

For one thing, they are totally astounded that they would have 

to wait until age 67 before they qualify for Medicare. And I know 

that they are thinking about when they were 65 and finally got on 

Medicare, health insurance, and I know that they were thinking 

what if we had to go 2 years to 67 without any insurance. 

So then the next area that they are really concerned about is, 

even if they are currently on Medicare, they care about those who 

are under 55 who are going to be in this new plan, as the Republicans would like to enact. 

So this voucher system—you responded to some questions about 

the voucher system, and I am not clear exactly how that is supposed to work. You are a 67-year-old senior, you get a voucher and 

what? What is supposed to happen? What are you supposed to do 

to get health insurance? 

Secretary SEBELIUS. Congresswoman, I don’t pretend to have all 

the details, but my understanding is it would essentially operate 

as a subsidy to purchase private insurance coverage. There would 

be some rules around, as I said, the limitation on pre-existing conditions, so you couldn’t be locked out of the marketplace. 

I don’t know that there is any framework of what you could purchase with that coverage. So I assume that companies would put 

together packages. Somebody would make a choice about whether 

that package would be sufficient. I really don’t know how it works. 

Ms. HIRONO. Madam Secretary, thank you. Because I am wondering what kinds of packages a private insurance company will 

put together for 67-year-olds and older with all these pre-existing 

conditions, even if they cannot deny insurance because of pre-existing conditions. I am wondering whether all these private insurance 

companies will stand in line to put together these kinds of programs for 67-year-olds. And, in fact, when I asked that question of 

the hundreds of seniors that I talked to, they couldn’t even—they 

were just—I know that they were very scared as to how this was 

supposed to happen. 

So would you share that kind of concern that I have as to whether the private insurance industry can be counted on to come up 

with all these different plans that our seniors could avail themselves of? 

Secretary SEBELIUS. Well, we currently have some model of the 

private market in Medicare space with Medicare Advantage programs that have been in operation for over a decade. On average, 

they are more costly than fee-for-service Medicare, with no perceptible health improvements whatsoever after 10 years. 
52 

We know that the companies have done somewhat effective jobs 

of doing a bit of cherry-picking in the marketplace, and I think that 

that is really how you make a profit in health insurance, is that 

you hopefully get a population that is less sick than more sick. And 

what I think is of great concern is that the amount of money identified as the fixed benefit nowhere nearly matches the potential 

cost of the services to the average Medicare beneficiary right now, 

much less down the road, and that buying power diminishes over 

time. 

Ms. HIRONO. And I think that seniors across our country are understanding that with regard to the Ryan budget. 

Thank you. 

Chairman KLINE. The gentlelady’s time has expired. 

Mr. Barletta. 

Mr. BARLETTA. Thank you, Mr. Chairman. 

Madam Secretary, as you know, the PPACA has made significant 

changes to the laws governing insurance markets and employersponsored health care, many of which have the effect of increasing 

costs for employers, workers, and their families. 

In an effort to pay for the new subsidy entitlement program, 

PPACA reduces Medicare expenditures by more than $500 billion 

and imposes hundreds of billions of dollars in new taxes and penalties, which will likely raise the cost of coverage and increase the 

financial pressures on employers struggling to grow their businesses and create jobs. 

For small business, home health care providers, this is a huge 

burden. I have specifically heard from my constituents about the 

2.3 percent excise tax on manufacturers and importers of certain 

medical devices. How can you justify this tax, especially for small 

businesses, home care providers who work in rural areas? 

Secretary SEBELIUS. Well, Congressman, I think that one of the 

features of the Affordable Care Act, which is different, frankly, 

from the Prescription Drug Act that was passed in a prior administration, is that it is paid for and it does not add to the deficit. In 

fact, the Congressional Budget Office has estimated that about 

$230 billion in the first decade and over a trillion dollars in the second decade will be decreased from the deficit. So there are pay-fors 

in the bill. 

I think the trade-off that you are talking about with a tax on 

home health manufacturers is that they are also anticipating additional customers along the way, so there is some additional revenue 

that will be generated and the return is that they will have access 

to a far more significant market, who will have, actually, the ability to pay for home health services where they don’t right now. 

Mr. BARLETTA. Moving on to another question, in response to 

questions I have received from small business pharmacists in 

northeastern Pennsylvania, would you be able to address the rapid 

refill of prescription medicine? More specifically, many in my community are concerned that prescriptions are being offered in 90-day 

increments by certain large-scale stores, even though their primary 

care physician may modify the prescription prior to its expiration. 

Is this a new process allowed by the Department of Health and 

Human Services as a result of PPACA? 
53 

Secretary SEBELIUS. I can tell that you there is no new process 

about prescription refills that is part of the Affordable Care Act. I 

don’t know what is causing what you are talking about, but I would 

be happy to go talk to our folks and see if they have heard about 

it or know about it. 

But there is absolutely no—nothing that has been put into effect 

in the year that has any impact on prescription drug refills. 

Mr. BARLETTA. As a former mayor of a city in northeastern Pennsylvania, Hazleton, I have witnessed firsthand the benefits of the 

human services programs operated by HHS. I am specifically familiar with and interested in the Community Services Block Grant 

Program. The President’s 2012 budget request includes a $388 million cut to the Community Services Block Grant Program which, as 

you know, is geared toward anti-poverty activities. 

Over the last 10 years, a number of independent studies, including those conducted by GAO, have questioned the program’s effectiveness in combating poverty in local communities. In my community, the Commission on Economic Opportunity, an organization 

committed to combating local poverty, they use the Community 

Services Block Grant funding to help promote self sufficiency 

among low-income populations in Luzerne County. 

In February, I had the privilege of meeting with the officials of 

this organization; and I toured their after-school program that ensures children get healthy meals throughout the year. In fact, this 

organization’s food bank, which also assists the elderly population 

in Luzerne County, has provided over 4 million pounds of foods to 

160 agencies over the past year. 

And while I have seen the good of this program and others like 

it, I am supportive in finding ways to make the CSBG program 

even stronger. What changes do you think the committee should 

make to the Community Services Block Grant Program to make it 

more effective, and when was the last time this program was evaluated? 

Secretary SEBELIUS. Congressman, first of all, let me say I would 

look forward to working with you to do just that. I think that there 

is no question at all that the reduction in funding that is being proposed is not one that would have been proposed if the budget times 

were better. Let me start there. 

I also think that it has been our experience that the funds administered through the State and to a variety of community action 

agencies, some are very competent and effective, others have been 

less effective. And we are currently in the process of reviewing, 

knowing that we are likely to have diminished resources, what are 

the kinds of criteria to put in place that would actually drive the 

best practices around the country. Because I would say that the 

program impact has been really mixed. But we would look forward 

to working with you around what that strategy looks like. 

Mr. BARLETTA. Thank you. 

Chairman KLINE. The gentleman’s time has expired. 

Mr. Tierney. 

Mr. TIERNEY. Thank you, Mr. Chairman. 

Madam Secretary, thank you for being here today. 

Let me just start with a couple of very brief questions about lowincome home fuel assistance. On that, can you give me an idea of 
54 

when that money is going to be released to the States? Because we 

have reports of people fearing the loss of their utilities if that 

money doesn’t get released to the States so that they can distribute 

it. 

Secretary SEBELIUS. I am trying to get my experts back here to 

give me—— 

Mr. TIERNEY. Well, if you could give me that answer, if you can’t 

give it to me right now, if you could get that to us when you can. 

Secretary SEBELIUS. We will get it to you. 

Mr. TIERNEY. Thank you. 

Secretary SEBELIUS. And what we tried to do up until this moment, I can tell you, is put the money out the door as soon as we 

had the authorization. So I can get you the precise date that we 

will try to push the rest of the fiscal year 2011 money out. 

Mr. TIERNEY. I appreciate that. 

In the President’s proposal for 2012, he proposed a 40 percent cut 

in those funds, premised on the idea that the costs are going to be 

somewhere around—somewhat lower in the future. Now the costs 

are back up to what they were in 2008 for oil, and they are increasing for gas. Are you going to revisit that decision? 

Secretary SEBELIUS. Well, Congressman, as you know, the budget 

has been proposed. We would look forward to working with you. 

I know it is a vital program. It was a snapshot that looked like 

we were in times that could return to the historic level, but I think 

we need to look at the challenges and that impact on particularly 

the low-income families who rely on it. 

Mr. TIERNEY. We would appreciate that. Thank you. We will 

work with you on that as well. 

Just a quick comment on the medical malpractice, as we do quite 

a bit of looking at that. Are you aware of any study at all that indicates that even if all the medical malpractice reforms proposed 

went into effect it would do anything more than save a minuscule 

fraction of the national health care costs? 

Secretary SEBELIUS. Well, I think, right now, malpractice premiums are far less than 1 percent of any health care costs; and, 

unfortunately, the data is very erratic. States that have put in 

place every kind of tort reform possible and States that have no 

tort reform possible seem to have about the same malpractice 

rates. So there doesn’t seem to be a corollary impact between the 

legal framework and what docs are paying. 

It is difficult to assess and measure what defensive medicine 

costs. It is also, I think, very difficult to measure what a lack of 

patient safety costs. And those—you know, we talked about errors 

that occur in the medical system right now which kill about 

100,000 people a year, so I think that balance is very critical. 

Mr. TIERNEY. And it is a State-regulated insurance industry; is 

that correct? 

Secretary SEBELIUS. That is correct, sir. 

Mr. TIERNEY. Lastly, I do see reports, however, that draw a correlation between the return on investment from reserve funds by 

insurance companies and the increase in premiums. I think that 

would be a more appropriate place to look for some correlation; is 

that correct? 
55 

Mr. TIERNEY. Well, I think the malpractice market has been very 

lucrative. 

Mr. TIERNEY. It has indeed. 

The community health centers, in H.R. 1, the original proposal 

for the continuing resolution, there was a proposal to substantially 

cut the funding for those centers. It would have closed about 127 

centers if it had been passed. It would have cut off about 11 million 

participants. It would have caused thousands of people to lose their 

jobs. In the end, there was a much less severe reduction in that. 

But can you talk to us just for a second about the value of community health centers, what used to be a bipartisan priority? I can 

remember working with President Bush on this as well, how important it is or isn’t to our system, and what attention we should be 

giving to those centers? 

Secretary SEBELIUS. Well, I don’t think there is any question 

that the current community health center footprint is an enormously important infrastructure for low-cost, high-quality delivery 

of health care in the most underserved rural and urban areas. The 

training of docs in community health centers is a terrific training 

ground, and over and over again they are proven to be enormously 

effective. 

The trajectory that this administration proposed was, actually, 

moving from the opportunity from 20 million Americans served by 

community health centers to 40 million Americans, starting with 

the investment in the Recovery Act and moving on through the Affordable Care Act. That has taken a little bit of a bump in the road, 

but we still feel that having an expansion of community health centers and matching them to the most underserved area is the most 

effective, most efficient, most cost-effective way of getting highquality health services to people who now have limited access to 

doctors. 

Mr. TIERNEY. Thank you. 

Let me just close with the notion that the Medicare and the Affordable Care Act reduced monies. I think we have made the point. 

We want to reiterate it. It would slow the growth of costs, and I 

note that in the Republican proposal they don’t change that fact. 

They like the savings of those costs, and they understand that that 

was, in fact, addressing an entitlement by slowing the growth in 

costs without reducing the number of defined benefits, is that correct? 

Secretary SEBELIUS. Well, that is absolutely correct. In fact, the 

language in the bill, as you know, re-emphasizes the fact that no 

defined benefit can be tampered with. So, in fact, the Affordable 

Care Act increased the benefits so seniors now will have the donut 

hole closed over time and not fall into the gap in drug coverage, 

will have an annual wellness benefit, will have preventive care 

without co-pays. So there are some significant enhancements as 

part of the guaranteed Medicare benefits, along with the reduction 

in the costs over time. 

Mr. TIERNEY. Thank you. 

Chairman KLINE. The gentleman’s time has expired. 

Madam Secretary, we have two final questioners, and we would 

like to allow both of them to have an opportunity. So, Mr. Rokita, 

you are recognized. 
56 

Mr. ROKITA. Thank you, Mr. Speaker, and thank you, Madam 

Secretary. I am one of the last questioners, so hopefully we will be 

able to respect your time. We appreciate your being here. 

With regard to this medical malpractice that has popped up fairly late, of course you understand that, at least for many Americans, 

many of us that I represent, it is not the premium that the doctors 

pay that is the concern, it is the defensive medicine costs. And you 

have indicated that it might be a hard cost to determine. 

I don’t know if I agree with that. I think we have been able to 

determine in this country a lot of other things. And my doctor colleagues, including the two that sit on either side of me on this committee, when I asked them before they left, they say it could be 

anywhere between 100 and 500 billion a year in defensive medicine 

costs. And they do this every day, as specialists at least. So I wanted to let you know about that. 

And then as a member of the Budget Committee, in case you are 

asked these things again, I need you to know that the plan—because you said you saw some outline of the budget but not necessarily the details—- it is not a voucher. It doesn’t go to the person. It goes to the insurance companies who would want to participate. 

And on our Federal plan, as Dr. Bucshon was explaining, there 

are at least nine or so different kinds of plans depending on what 

part of life we are in that we can choose from. And to the extent 

the Congress is a microcosm of the people, generally, I really don’t 

understand why that couldn’t work. 

Secretary SEBELIUS. Well, part of it is the Federal Government 

is paying 70 percent of the cost of your health care right now and— 

assuming that you are in the Federal employee benefit package. 

This plan is significantly less generous for a more, I would say, 

likely to be sick population, more difficult conditions, and the growing—it doesn’t rise with the cost of—— 

Mr. ROKITA. No, I think that wasn’t in your outline. Because if 

you look at our plan, we are looking for a needs test and we are 

calling for a risk test. Those of us who are sicker would get more 

of it. Those of us who need less of it, because of our stage in life 

or state in life, would get less of a subsidy. 

Secretary SEBELIUS. But, again, according to the Congressional 

Budget Office, it is significantly less buying power than Medicare 

provides right now for seniors. And, actually, the buying power decreases over time, again, according to the Congressional Budget Office. And they are saying 10 to 15 years out 70 percent of the costs 

of health care would be borne by the seniors themselves, not 

the—— 

Mr. ROKITA. Right, but you come from State government like I 

do. I was part of the executive branch of the Indiana government. 

And so, you know, I come to this place not believing everything 

CBO says, especially how they are chartered. They are only allowed to look at exactly what is put in front of them. And so we 

both know—— 

Secretary SEBELIUS. This was, if I understand it, the specs given 

to them by the House Republicans, by Congressman Ryan. Those 

were the only specs. 
57 

Mr. ROKITA. As set forth in a previous act that they are chartered by, and we can argue around all of that. But we both know 

that we have a program that works for the Congress and we both 

know people clamor and talk about how much or how good we have 

it here in the Congress. And to see us argue now against that for 

the rest of the American people, you know, I don’t understand—— 

But let me get on with some of my time. 

Secretary SEBELIUS. Well, again, there is no evidence at all that 

Medicare Advantage, which operates through private market strategy, gives seniors choices, is either more cost effective or more 

health effective. For seniors, in fact, the cost is significantly higher 

and the health benefits are lower. 

Mr. ROKITA. Well, let me get on to an issue that you didn’t—as 

Dr. Bucshon was explaining you didn’t seem to understand the details. Here are some of the details. 

Joe Main is the Assistant Secretary for Mine Safety, not under 

your jurisdiction, of course, but he apparently used something from 

a set of data from NIOSH to go after the coal dust rule and to propose some things. Now he, on March 28, wrote your office and said, 

please release this data. It is not mine to release, but please get 

this to this committee and the stakeholders involved so that we can 

participate better in this rulemaking. 

And so what I want to ask for you on the record, I think you said 

it with Dr. Bucshon, you would be helpful in trying to get that, 

right? 

Secretary SEBELIUS. Absolutely. I don’t know about that issue. 

Mr. ROKITA. Understood. But, again, sharing your executive experience, I can tell you have people behind you that you can easily 

turn around to and say, what date can we get Congressman Rokita 

some answers on this? Can you tell me how long—— 

Secretary SEBELIUS. I can’t give you a date certain until I know 

what it is that we are looking for, but I can guarantee you all of 

us heard the question four or five times. We understand there is 

a letter, and I will try to get it—— 

Mr. ROKITA. You can get me a date as to when you will get me 

the answer. 

Secretary SEBELIUS. Sir, I really don’t know what it is that we 

are being asked to produce. I will get you an answer very quickly. 

Mr. ROKITA. Yes, this is an answer about when it would come. 

That is simple. So if it was me in your seat I would say, you know, 

24 hours or so. But give me whatever answer—just tell me when 

you will give me that answer on when this stuff might come. 

Secretary SEBELIUS. I don’t know what it is that you are looking 

for, so I can’t possibly give you—I will give you an answer about 

when it will come, you know, within a couple of days once I can 

talk to Dr. Howard. 

Mr. ROKITA. That is all I am looking for. I appreciate it. 

Chairman KLINE. The gentleman’s time has expired. 

Mr. Hinojosa, you are recognized. 

Mr. HINOJOSA. Thank you, Mr. Chairman. 

Secretary Sebelius, thank you for joining us today to discuss your 

priorities and to respond to the Ryan budget proposal put forward 

by the Republican Party. 
58 

I am troubled by the Republican plan to end Medicare as we 

know it. For my constituents in South Texas, the Republican plan 

would be disastrous. It would force seniors into the private sector 

for insurance, and it would force them to spend more and more of 

their limited income on health care. 

In regards to our Nation’s youngest, just yesterday I sat down in 

my office with a pediatric anesthesiologist struggling to treat some 

of my district’s most impoverished and vulnerable youth, many of 

which are Medicaid beneficiaries. The Republican plan slashing 

Medicaid is not the answer that providers or children are looking 

for because it would unjustifiably hurt access to quality care. 

I wish to ask two questions. As the former insurance commissioner and Governor of Kansas, you understand the heavy burden 

of health care costs on seniors and families with children in poverty. What is the Obama administration doing to help bear that 

burden and what new strategies are being pursued to help our 

most vulnerable populations? 

Secretary SEBELIUS. Well, Congressman, I think the President 

shares your concern about the access to care for the most vulnerable Americans, and that is why I think he has stated an opposition to the block grant idea with a fixed amount of money available, knowing that you can’t predict recessions, you can’t predict 

disasters, and you certainly can’t predict how many people are 

needing to access programs at a difficult time, as we have just seen 

in this country. 

The same would be true for Medicare, to change from what is a 

guaranteed benefit program to a fixed-income situation, I think, 

could provide an enormous cost shift onto seniors at a time where 

they could least afford it and make it very, very difficult to access 

life-saving care. 

Mr. HINOJOSA. With respect to Head Start, HHS is in the process 

of implementing the new performance standards. Seeing more parent and family engagement in our early education services is very 

important to me. Will you please tell us how these performance 

standards will strengthen the Head Start program? 

Secretary SEBELIUS. Well, Congressman, we are taking the report on program integrity very seriously, and we think it is important that the Head Start grantees follow the law, follow the guidelines. 

In addition, we are working closely with our education partners 

to look at the range of skills that children need to be school ready 

and making sure that, in addition to social development, that there 

is a curriculum development as part of the Head Start program. 

And certainly the parental involvement piece, which has always 

been a hallmark of Head Start, is something that is going to be 

strengthened and very critical moving forward. 

Mr. HINOJOSA. Mr. Chairman, thank you for letting me ask those 

questions. I yield back. 

Chairman KLINE. I thank the gentleman. 

The timing is near perfect. I would like to thank the Secretary 

for being with us and spending the time with us today and putting 

up with the interruptions from the votes. 

I would like to recognize Mr. Miller for any closing comments he 

might have. 
59 

1http://www.gao.gov/new.items/d10733t.pdf 

Mr. MILLER. Thank you very much. 

I want to thank the Secretary very much for being here. 

I just want to say, after listening to your explanations and your 

defense of the Affordable Care Act and when I see the excitement 

and the response across the medical community and the employer 

community to this legislation and to the initiatives that you have 

started to roll out, it is really very, very encouraging. 

After the Affordable Care Act passed the Congress, President 

Obama called me and said that I should be very proud, as being 

one of the chairs of the committees for the major jurisdiction on 

this legislation. I obviously told him I was very proud. 

But listening to your defense and your explanations here and 

your initiatives on behalf of the law and the government, I am even 

more proud than at that moment when we passed this legislation. 

Because this is the kind of implementation that we were hoping to 

see now. Hundreds of thousands of employees being offered insurance by small businesses because of the tax credit for the first time 

being reported all over the country is really very exciting for those 

individuals and their families. So thank you very much for your appearance here before the committee. 

Chairman KLINE. I thank the gentleman. 

It is always interesting. He and I must always talk to different 

businessmen and women and different care providers. I am not yet 

seeing that excitement on their part, and I don’t share that excitement with him, but I again very much appreciate your time and 

your testimony here today. 

There being no further business, the committee is adjourned. 

[Response to questions submitted for the record follow:] 

Secretary Sebelius’ Response to Questions Submitted for the Record 

THE HONORABLE JOHN KLINE

1. Head Start Fraud and Abuse. Last year, the U.S. Government Accountability 

Office (GAO) conducted an undercover investigation of 15 Head Start programs, acting in response to tips from former and current employees at two separate Head 

Start centers. Undercover GAO applicants tried to enroll children in these programs 

and presented the centers with pay stub data that demonstrated they were above 

income eligibility requirements. Nine of the 15 sites enrolled the students by encouraging applicants not to submit the pay stubs that would put them over the income 

threshold. Some of the programs continued to count the students as enrolled, even 

though the students never actually participated in the program. At a May 2010 

hearing before this Committee, the Assistant Secretary for Children and Families 

stated that the Department was taking immediate corrective action and was undertaking a ‘‘top-to-bottom’’ review of its program oversight responsibilities. Can you 

give us an update on the Department’s effort to combat waste, fraud, and abuse in 

the Head Start program? How many unannounced monitoring visits has the Department conducted since the release of the GAO report? 1

Answer: We have enhanced current monitoring procedures by partnering with the 

HHS Office of the Inspector General and conducting 115 unannounced monitoring 

visits to Head Start and Early Head Start programs, setting up a fraud hotline, and 

proposing new regulations to strengthen the eligibility verification processes. These 

actions include the following activities: 

• Completed a top-to-bottom review of our program monitoring which includes ongoing oversight by Regional Program Managers and staff, triennial reviews by monitoring teams, Erroneous Payment Study and risk management process to make improvements in program oversight. 
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• Established a complaint hotline to help identify problems. The Office of Head 

Start has implemented a process to ensure complaints are handled in a timely manner and appropriate actions are taken. 

• Proposed a regulation to strengthen the requirements on eligibility verification 

for Head Start programs. Under the proposed rule, grantees would be required to 

maintain the source documentation used to verify income and obtain signatures 

from the person seeking services and a grantee staff member attesting to the accuracy of the information to the best of the person’s knowledge. We expect to issue 

the final rule this fall. 

2. Recompetition of Head Start Grantees. In 2007, Congress passed the Improving 

Head Start for School Readiness Act, which requires the Secretary of Health and 

Human Services to establish a new, comprehensive system to recompete Head Start 

and Early Start grants. The Department is currently in the process of finalizing regulations on recompetition to ensure that Head Start grantees are meeting the requirements of the law and preparing pre-school-aged children for entry into kindergarten. Please provide us with an update on this process. When will the first grantees be re-evaluated? 

Answer: In September 2010 we issued the Notice of Proposed Rulemaking on the 

recompetition or Designation Renewal System and have received over 16,000 comments. We are working expeditiously to review those comments and finalize the regulation. We expect to issue the final regulation this fall. The first grantees will be 

evaluated to determine whether or not they need to compete for renewed funding 

immediately following the effective date of the rule. We expect to conduct the first 

re-competitions in early 2012. 

3. Effectiveness of the Community Services Block Grant Program. The President’s 

FY2012 budget request includes a $388 million cut to the Community Services Block 

Grant program, which is geared toward anti-poverty activities. Over the last 10 

years, a number of independent studies and research activities, including those conducted by the U.S. Government Accountability Office (GAO), have questioned the 

program’s effectiveness in combating poverty in local communities. What changes do 

you think the Committee should make to the program to make it more effective? 

When was the last time the program was evaluated and what were the results? 

Answer: The Community Services Block Grant (CSBG) program provides a key 

component in addressing the causes and effects of poverty. For grantees with a 

strong performance history, CSBG provides a valuable source of ongoing support 

that allows local planning and service delivery based on a place-based model. The 

Administration supports the important goals of the CSBG and wants to work with 

Congress to inject competition into the block grant in order to strengthen it and target resources more effectively to high-performing, innovative organizations. 

We would be interested in working with the Congress on CSBG reform based on 

the following principles for overall program direction: 

• Maintaining current emphasis on place-based services, by a community-based 

entity to effectively address the causes and impact of poverty; 

• Holding grantees more accountable for a high standard of service delivery and 

performance; 

• Maintaining current CSBG distribution formula to States, Territories, and 

Tribes; 

• Supporting State flexibility in designing competition based on local need, agency 

performance records, and quality of service, in consultation with the Federal administering agency; 

• Directing resources to agencies that can effectively serve high need communities; 

• Promoting evidence-based practice to achieve results; and 

• Strengthening program integrity and accountability. 

There are barriers in the current CSBG statute to this approach. Section 676(b)(8) 

and section 678C require States to provide CSBG eligible entities with funds proportional to what they received in a prior year. Funds cannot be terminated or reduced 

unless, after providing notice and an opportunity for a hearing on the record, the 

State determines that cause exists. The current process for termination is difficult 

and time consuming. Current law does not provide a mechanism to rapidly respond 

to cases of alleged fraud. States usually pursue termination only when there is a 

determination that the CSBG eligible entity is grossly financially negligent. Outside 

of basic financial and organizational management standards, States do not have 

clear criteria for determining the adequacy of agencies’ performance, and the current process makes it difficult for states to hold grantees accountable and target 

available resources based on need and service delivery. 
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We continue to help States hold agencies accountable within the current confines 

of the statute. We have issued guidance to States to clarify the termination process 

to the extent possible under current statute, and provide extensive technical assistance to States when they choose to pursue termination. In addition, we have begun 

assessing the current performance measurement system. However, statutory 

changes are needed to improve both processes. We would like to work with you and 

relevant stakeholders to develop a more efficient and effective system to do more 

to hold grantees accountable and promote high performance. 

We would also like to work with you to expand States’ authority to award CSBG 

grant funds through a competitive process and to give states the flexibility to target 

resources based on need. Competition for grants is currently allowable under the 

CSBG Act in certain limited circumstances, including replacing agencies that are 

terminated due to performance deficiencies. We believe that we can build on this 

existing process as a method to ensure that high-performing entities receive funding, and look forward to working with you and external stakeholders to determine 

the best method for doing so. 

Evaluation of CSBG 

The Office of Community Services (OCS) has a study underway to document the 

services provided, challenges addressed and accomplishments achieved as a result 

of the $1 billion in ARRA funds provided to the CSBG program. This process evaluation will identify promising practices that could inform future Federal, State and 

local program activities. OCS has contracted with the Urban Institute located in 

Washington, D.C. to conduct this study, which will be completed by February, 2012. 

The Administration for Children and Families (ACF) has also made program 

changes in response to reviews conducted by the Government Accountability Office 

(GAO). A 2006 GAO report, titled ‘‘Community Services Block Grant Program: HHS 

Should Improve Oversight by Focusing Monitoring and Assistance Efforts on Areas 

of High Risk’’ (GAO 06-627) called upon ACF to conduct a risk-based assessment 

of State CSBG programs by systematically collecting and using information and to 

establish policies and procedures to help ensure that on-site monitoring is focused 

on States with the highest risk. In addition, the GAO recommended that ACF issue 

additional guidance on State responsibilities for monitoring and improve a strategic 

planning and reporting on training and technical assistance efforts. It is important 

to note that the GAO study focused primarily on program administration issues, 

and did not include findings regarding the program’s effectiveness in combating poverty in local communities 

Based on GAO’s report, OCS has restructured its monitoring in a way that heeds 

congressional intent, and improves management, accountability and outcomes of 

State and local agencies in the provision of CSBG services. The Health and Human 

Services (HHS) Office of Inspector General (OIG), in studying the program in preparation for administering the American Recovery and Reinvestment Act of 2009 

(ARRA) funding, looked at the adjustments made by OCS since 2006. In August 

2009, the HHS OIG issued a report indicating that in all items included in the IG 

review, the weaknesses cited by GAO had been addressed (Source: A-01-09-02502: 

Status of the Office of Community Services’ Corrective Actions Resulting from the 

Government Accountability Office Review of the Community Services Block Grant 

Program). 

Since 1987, OCS has worked in partnership with the National Association for 

State Community Services Programs (NASCSP) to support a performance reporting 

system that aggregates reporting information from State CSBG agencies an annual 

CSBG Information Survey (CSBG-IS). Highlights of the 2009 annual survey result 

are available on the NASCSP website at: 

http://www.nascsp.org/data/files/csbg_publications/annual_reports/highlights/2009/ 

nascsp%2009%20csbg%20highlights_final.pdf 

According to NASCSP results for 2009, CSBG agencies provided services to 20.7 

million low-income individuals, including nearly 5 million children, nearly 2.3 million seniors, and more than 1.7 million people with disabilities. Based on an aggregate reporting measure used to capture and describe services across 16 outcome 

areas, NASCSP reports that the CSBG Network helped to reduce or eliminate 34.3 

million ‘‘conditions of poverty,’’ as measured by outcomes such as: gaining employment; building assets; and improving child development. A detailed report based on 

the NASCSP Information Survey is available at: http://www.nascsp.org/data/files/ 

csbg_publications/annual_reports/annual%20report%2009%20final.pdf. 

OCS continues to work with NASCSP, its contract agencies, and other partners 

to refine current performance measurement systems and develop improved methodologies for performance measurement and accountability in this important program. 
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2See http://republicans.energycommerce.house.gov/Media/file/Hearings/Health/033011/Foster.pdf 

4. Health Insurance Exchanges: You claim in your testimony that in 2014, state 

health insurance exchanges will provide new options for consumers. However, it has 

been reported that several governors have vetoed bills intended to implement the 

new law’s requirement for state-based Health Insurance Exchanges, and many 

states are not working toward establishing such exchanges. Also, one governor rejected a $54 million ‘‘early innovator’’ grant for an exchange partly on the basis that 

states do not want to be subjected to federal regulation. Assuming some states will 

not create health insurance exchanges by 2014, at what point will HHS develop the 

federal insurance exchange option that would be available to consumers in those 

states? Can you elaborate on the structure of this option? 

Answer: The law requires that Exchanges, whether State-based or Federally-facilitated, be operational by January 1, 2014. To date, 49 States have received exchange 

planning grants to develop plans for Exchange operations. Some States are further 

along than others, and HHS is actively assisting States as they work through implementation. Additionally, some States have applied for more assistance through the 

Establishment Grant process. 

THE HONORABLE TIM WALBERG

For nearly 20 years, the National Institute for Occupational Safety and Health 

(NIOSH) along with the National Cancer Institute (NCI) conducted a study on the 

potential effects of diesel exhaust in underground mines. The Mining Awareness Resources Group (MARG) voluntarily participated in the study by providing access and 

information for NIOSH to conduct the study; however this was done with the understanding that NIOSH would be providing the study data to the group in order to 

review the studies. Two federal court orders have ordered NIOSH to provide the 

data to MARG and the Committee on Education and the Workforce, yet the institute 

has not fully complied. 

1. Why has NIOSH not complied with the court orders of two federal judges? 

Answer: The Department has complied with the court orders in connection with 

the litigation commenced by the Mining Awareness Resource Group. We also understand that only one Federal court order, issued by the U.S. District Court for the 

Western District of Louisiana on June 5, 2001, ordered NIOSH to provide study 

data. 

2. When will the data be made available to all parties involved? 

Answer: Research data has been provided to the Committee as requested and as 

it has become available. The mine operators that are litigants have received research data consistent with their attorney’s execution of confidentiality agreements. 

THE HONORABLE LOU BARLETTA

1. A number of smaller pharmacies in my district in Northeastern Pennsylvania 

have raised concerns regarding the impact of ‘‘rapid refills’’ on patient care. As you 

know, an increasing number of doctors are issuing prescriptions for 90 day supplies 

of medication. However, the patient’s condition may change, forcing a doctor to modify the prescription prior to the patient exhausting the huge supply. Additionally, 

the patient loses out on valuable and more frequent in-person counseling offered by 

local brick and mortar pharmacies. Can you give the Agency’s perspective on the 

challenges to patient care associated with so-called ‘‘rapid refills’’? How has the Patient Protection and Affordable Care Act interfered with this process? 

Answer: The Affordable Care Act did not include provisions that address rapid refills or physicians who provide patients with prescriptions for 90-day supplies of 

medication. Physicians are able to determine the appropriate treatment for each patient, including how much medication or how many refills a patient should receive 

before a follow up consultation. 

THE HONORABLE PHIL ROE

1. During our dialogue at the May 5, 2011, hearing of the Education and the 

Workforce Committee, you stated that of the 30 million to 35 million Americans who 

will receive coverage as a result of PPACA,’’ * * * about 15 million are likely to 

be Medicaid-eligible.’’ However Medicare’s chief actuary has indicated that the number of new Medicaid enrollees could rise as high as 25 million given that Social Security benefits will not be counted as income for the purpose of determining Medicaid eligibility.2 How then, is PPACA not just a massive expansion of Medicaid? 
63 

Answer: We understand the Committee is interested in the interaction between 

Social Security benefits and Medicaid for purposes of eligibility determination for 

certain populations under the Affordable Care Act, and we will provide more information to the Committee under separate cover. 

THE HONORABLE LYNN WOOLSEY

The HHS FY 12 budget proposes to zero out two programs in the National Institute for Occupational Safety and Health (NIOSH): the Education & Research Center 

(ERC) program and the Agriculture, Fishing and Forestry (AFF) program. Combined, these two programs total less than $50 million. The ERCs were established 

to implement Section 21 of the Occupational Safety and Health Act’s (OSHAct) requirement to train ‘‘an adequate supply’’ of occupational safety and health professionals to implement the law. 

With regard to the AFF program, fatality rates in agriculture, fishing and forestry are more than seven times the average-and cost our economy $4 billion per year. 

NIOSH has developed technology to save lives and property in these industries. The 

National Academy of Sciences (NAS) found this program conducts high priority, 

sound research, but indicated that there were opportunities for improvement. The 

HHS FY 12 budget request zeroes out the program, claiming the program was ineffective, and asserts that the Agriculture Department and the Labor Department can 

pick up the slack when this program is zeroed out. The NAS panel members have 

written to Congress contending that the HHS budget justification misrepresents 

their 2007 report. 

1. What specific authorization and funding is available in the Labor Department 

or Agriculture Department in the President’s FY 12 budget to replace the NIOSH 

AFF research program? 

Answer: HHS cannot comment on what specific authorization or funding is available to other Federal agencies. 

2. Will you be willing to review the budget justification for the AFF program to 

determine if it is valid and factually supported? 

Answer: The budget justification for the AFF program in the FY 2012 Budget was 

developed through a collaborative process within the Administration and reflects the 

Administration’s perspective. 

3. Would you be willing to work with the Committee to identify funds within 

HHS’s operating divisions that could be reallocated to allow this priority NIOSH 

work to continue? 

Answer: The FY 2012 President’s Budget represents the policy priorities of the 

President and was developed in the context of competing priorities. There are currently no plans within the Administration to reallocate funds among HHS operating 

divisions. 

4. With regards to the ERC program, the HHS FY 12 budget request justifies termination on the grounds that NIOSH had planned to sunset funding after 5 years; 

however, neither the Centers for Disease Control nor OMB can find any documents 

to back this up. Congress never intended to sunset this program after 5 years, and 

the Institute of Medicine recommended continuing this program. 

Has HHS conducted a recent assessment of whether the ERC program has fulfilled its mission pursuant to Section 21 of the OSHAct? If so, has such assessment 

determined that there is an adequate supply of occupational safety and health professionals? 

Answer: NIOSH commissioned a national workforce needs assessment that was 

designed and implemented by an independent research firm and guided by a multidisciplinary advisory task force of occupational safety and health (OSH) professionals and practitioners, and included public comment and input from major stakeholder groups. We expect to release this assessment soon. 

5. If such study had not been done, why would HHS terminate this program before such assessment has been completed? 

Answer: As noted in the response to Question #4, NIOSH commissioned a national 

workforce needs assessment to assess the current supply and future demand for 

OSH professionals in the United States and to determine the professional competencies needed in these professions over the next five years. The Administration 

recognizes the vital role of occupational safety and health professional training. 

Within the context of a budget that requires tough choices, the Administration put 

forth a proposal to discontinue Federal funding for the ERCs. 

6. Will you be willing to undertake a review to determine if the budget justification for the ERC program is valid and fully supported? 
64 

Answer: The budget justification for the ERC program in the FY 2012 Budget was 

developed through a collaborative process within the Administration and reflects the 

Administration’s perspective. 

7. Would you be willing to work with the Committee to identify funds within 

HHS’s operating divisions that could be reallocated to allow this priority NIOSH 

work to continue? 

Answer: The budget justification for the AFF program in the FY 2012 Budget was 

developed through a collaborative process within the Administration and reflects the 

Administration’s perspective. 

THE HONORABLE CAROLYN MCCARTHY

1. Congress included a provision in the Patient Protection and Affordable Care Act 

requiring that patients receiving Medicare home health services have a face-to-face 

encounter with a referring physician prior to certification for home health services. 

Having heard from both home health care providers and physician groups alike, 

I am concerned that in implementing the provision, CMS has gone beyond Congressional intent. In doing so, the agency has created significant additional administrative paperwork and documentation burdens on physicians for which they are not reimbursed. The requirement also creates obstacles to care for patients, who are by 

definition homebound, and may not have convenient access to physician offices. 

I am very concerned that the outcome of this will be that patients are denied access to the care they need, and that is provided in both the lowest cost and most 

desired setting—one’s own home. 

We will continue to work with the agency, but would appreciate your attention 

and thoughts on this matter as well. Would you support efforts to streamline and 

simplify the process for documenting the face to face encounter so that we address 

concerns of referring physicians, home health providers, and the patients they 

serve? 

Answer: We constantly strive to strike the delicate balance between ensuring the 

integrity of the program and minimizing the administrative burdens that are imposed. In the case of the home health face-to-face encounter requirement, CMS 

made every effort to set up the necessary administrative requirements and bounds 

within which they must be completed, while allowing providers the flexibility to fulfill these requirements in a manner that is right for them. 

As a condition for payment, the Affordable Care Act mandates that prior to certifying a patient’s eligibility for the home health benefit, the certifying physician must 

document that he or she, or an allowed non-physician practitioner (NPP) has had 

a face-to-face encounter with the patient beginning January 1, 2011. 

CMS recognized that some providers needed additional time to establish operational protocols necessary to comply with these requirements and provided a measure of leeway for them. In addition, CMS developed educational and outreach materials, reached out to state and local associations, and held meetings with the industry, as well as open door forums, to educate those affected by these requirements 

during the first quarter of CY 2011. Long-standing regulations have described the 

distinct content requirements for the plan of care (POC) and certification for a beneficiary requiring home health. Providers have the flexibility to implement the content requirements for both the POC and certification in a manner that best makes 

sense for them. 

As part of the certification form itself, or as an addendum to it, the physician 

must document when the physician or allowed NPP saw the patient, and document 

how the patient’s clinical condition as seen during that encounter supports the patient’s homebound status and need for skilled services. 

Aside from allowing providers the flexibility to implement the content requirements of the both the POC and certification in a manner that makes sense for them, 

in order to reduce any obstacles to care, there is an ample timeframe within which 

the face-to-face encounter requirement must be met. The face-to-face encounter 

must occur within the 90 days prior to the start of home health care, or within the 

30 days after the start of care. Additionally, there is additional flexibility to accommodate providers and beneficiaries in rural areas. The face-to-face encounter can 

occur via telehealth, in rural areas, in an approved originating site. 

[Whereupon, at 12:45 p.m., the committee was adjourned.] 

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