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67–590 PDF 2011

FISCAL YEAR 2012 HHS BUDGET AND THE IMPLEMENTATION OF PUBLIC LAWS 111–148 AND 

111–152 

HEARING 

BEFORE THE

SUBCOMMITTEE ON HEALTH 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

MARCH 3, 2011 

Serial No. 112–14 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 

COMMITTEE ON ENERGY AND COMMERCE 

FRED UPTON, Michigan 

Chairman 

JOE BARTON, Texas 

Chairman Emeritus 

CLIFF STEARNS, Florida 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

JOSEPH R. PITTS, Pennsylvania 

MARY BONO MACK, California 

GREG WALDEN, Oregon 

LEE TERRY, Nebraska 

MIKE ROGERS, Michigan 

SUE WILKINS MYRICK, North Carolina 

Vice Chair 

JOHN SULLIVAN, Oklahoma 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

BRIAN P. BILBRAY, California 

CHARLES F. BASS, New Hampshire 

PHIL GINGREY, Georgia 

STEVE SCALISE, Louisiana 

ROBERT E. LATTA, Ohio 

CATHY MCMORRIS RODGERS, Washington 

GREGG HARPER, Mississippi 

LEONARD LANCE, New Jersey 

BILL CASSIDY, Louisiana 

BRETT GUTHRIE, Kentucky 

PETE OLSON, Texas 

DAVID B. MCKINLEY, West Virginia 

CORY GARDNER, Colorado 

MIKE POMPEO, Kansas 

ADAM KINZINGER, Illinois 

H. MORGAN GRIFFITH, Virginia 

HENRY A. WAXMAN, California 

Ranking Member 

JOHN D. DINGELL, Michigan 

EDWARD J. MARKEY, Massachusetts 

EDOLPHUS TOWNS, New York 

FRANK PALLONE, JR., New Jersey 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

LOIS CAPPS, California 

MICHAEL F. DOYLE, Pennsylvania 

JANICE D. SCHAKOWSKY, Illinois 

CHARLES A. GONZALEZ, Texas 

JAY INSLEE, Washington 

TAMMY BALDWIN, Wisconsin 

MIKE ROSS, Arkansas 

ANTHONY D. WEINER, New York 

JIM MATHESON, Utah 

G.K. BUTTERFIELD, North Carolina 

JOHN BARROW, Georgia 

DORIS O. MATSUI, California 

SUBCOMMITTEE ON HEALTH

JOSEPH R. PITTS, Pennsylvania 

Chairman 

MICHAEL C. BURGESS, Texas 

Chairman Emeritus 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

MIKE ROGERS, Michigan 

SUE WILKINS MYRICK, North Carolina 

TIM MURPHY, Pennsylvania 

MARSHA BLACKBURN, Tennessee 

PHIL GINGREY, Georgia 

ROBERT E. LATTA, Ohio 

CATHY MCMORRIS RODGERS, Washington 

LEONARD LANCE, New Jersey 

BILL CASSIDY, Louisiana 

BRETT GUTHRIE, Kentucky 

JOE BARTON, Texas 

FRED UPTON, Michigan (ex officio) 

FRANK PALLONE, JR., New Jersey 

Ranking Member 

JOHN D. DINGELL, Michigan 

EDOLPHUS TOWNS, New York 

ELIOT L. ENGEL, New York 

LOIS CAPPS, California 

JANICE D. SCHAKOWSKY, Illinois 

CHARLES A. GONZALEZ, Texas 

TAMMY BALDWIN, Wisconsin 

MIKE ROSS, Arkansas 

ANTHONY D. WEINER, New York 

HENRY A. WAXMAN, California (ex officio) 

(II) 

(III) 

C O N T E N T S 

Page 

Hon. Joseph R. Pitts, a Representative in Congress from the Commonwealth 

of Pennsylvania, opening statement ................................................................... 2 

Prepared statement .......................................................................................... 2 

Hon. Frank Pallone Jr., a Representative in Congress from the State of 

New Jersey, opening statement .......................................................................... 3 

Hon. Fred Upton, a Representative in Congress from the State of Michigan, 

opening statement ................................................................................................ 4 

Prepared statement .......................................................................................... 5 

Hon. Henry A. Waxman, a Representative in Congress from the State of 

California, opening statement ............................................................................. 7 

Hon. John D. Dingell, a Representative in Congress from the State of Michigan, prepared statement ...................................................................................... 127 

Hon. Edolphus Towns, a Representative in Congress from the State of New 

York, prepared statement .................................................................................... 128 

WITNESSES

Kathleen Sebelius, Secretary, Department of Health and Human Services ...... 8 

Prepared statement .......................................................................................... 11 

Answers to submitted questions ...................................................................... 145 

SUBMITTED MATERIAL

Letter, undated, from Jay Clary, Acting Associate Commissioner, Office of 

Labor-Management and Employee Relations, to James E. Marshall, Spokesperson, SSA/AFGE General Committee, submitted by Mr. Waxman .............. 19 

Democratic Staff Memorandum of March 2, 2011, submitted by Mr. Waxman . 21 

‘‘Medicaid Formula: Differences in Funding Ability Among States Often Are 

Widened,’’ GAO report dated July 2003, submitted by Mr. Cassidy ............... 58 

‘‘The Medicaid Commission Report: A Dissent’’ by Robert B. Helms of the 

American Enterprise Institute for Public Policy Research, dated January 

2007, submitted by Mr. Cassidy ......................................................................... 109 

Letter of February 11, 2011, from Mr. Burgess to Ms. Sebelius ......................... 125 

‘‘Medicaid Long-term Care: The ticking time bomb,’’ undated Deloitte Center 

for Health Solutions report, submitted by Mr. Cassidy .................................... 130 

(1) 

FISCAL YEAR 2012 HHS BUDGET AND THE IMPLEMENTATION OF PUBLIC LAWS 111–148 

AND 111–152 

THURSDAY, MARCH 3, 2011 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON HEALTH, 

COMMITTEE ON ENERGY AND COMMERCE, 

Washington, DC. 

The subcommittee met, pursuant to call, at 9:31 a.m., in room 

2123 of the Rayburn House Office Building, Hon. Joseph R. Pitts 

(chairman of the subcommittee) presiding. 

Members present: Pitts, Burgess, Whitfield, Shimkus, Murphy, 

Blackburn, Gingrey, Latta, McMorris Rodgers, Lance, Cassidy, 

Guthrie, Barton, Upton (ex officio), Pallone, Dingell, Towns, Engel, 

Capps, Schakowsky, Gonzalez, Baldwin, Weiner, and Waxman (ex 

officio). 

Also present: Representative Green. 

Staff present: Ryan Long, Chief Counsel; Howard Cohen, Chief 

Counsel; Clay Alspach, Counsel; Marty Dannenfelser, Senior Advisor; Julie Goon, Health Policy Advisor; Brenda Destro, Professional 

Staff; Paul Edattel, Professional Staff; John O’Shea, Professional 

Staff; Monica Popp, Professional Staff; Heidi Stirrup, Health Policy 

Coordinator; Jimmy Widmer, Health Intern; Alex Yergin, Legislative Clerk; Phil Barnett, Democratic Staff Director; Stephen Cha, 

Democratic Senior Professional Staff Member; Alli Corr, Democratic Policy Analyst; Tim Gronniger, Democratic Senior Professional Staff Member; Purvee Kempf, Democratic Senior Counsel; 

Karen Lightfoot, Democratic Communications Director, and Senior 

Policy Advisor; Karen Nelson, Democratic Deputy Committee Staff 

Director for Health; Rachel Sher, Democratic Senior Counsel; and 

Mitch Smiley, Democratic Assistant Clerk. 

Mr. PITTS. This subcommittee will come to order. In light of the 

interest in hearing from our distinguished witness today, and so 

that every member of this subcommittee may have time to answer 

questions, we will be strict in enforcing our time limits today. That 

is 5 minutes for questioning and that is questioning and answers. 

So don’t ask a 5 minute question and then ask the Secretary to 

then try to respond in the remaining seconds. And we have agreed 

to 3 minute opening statements. And Chair will recognize himself 

for an opening statement. It is 3 minutes. 

2 

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

OF PENNSYLVANIA 

Mr. PITTS. I would like to welcome our distinguished witness 

today, the Honorable Kathleen Sebelius, Secretary of the U.S. Department of Health and Human Services. Madame Secretary, 

thank you for your time and your testimony today. The Department of Health and Human Services is a large department with 

broad authority and jurisdiction. With the enactment of the Patient 

Protection and Affordable Care Act, PPACA, we have found that 

there are several sections of this new law that require mandatory 

funding, hence bypassing the normal appropriations process. 

Today’s hearing will give us a chance to examine these provisions 

and consider the budgetary implications for implementation and 

administration of this new law. One aspect that I am concerned 

with is the Office of Consumer Information and Insurance Oversight, OCIIO. Less than a month after PPACA passed last year, the 

Department moved regulation of health insurance from the Centers 

for Medicare and Medicaid Services where it had been for years to 

a new office OCIIO which reports directly to the Secretary. Then 

in January of this year, the Secretary announced that OCIIO would 

be moving and would now be housed at CMS. This is interesting 

because OCIIO implements and regulates many of the new 

healthcare’s private insurance provisions and CMS runs the Nation’s public health programs. The office has been in the news lately for granting over 900 waivers to private health plans unable to 

meet various standards set by Obamacare. It is important to note 

that the OCIIO was not authorized nor even mentioned in 

Obamacare, yet the President’s budget request includes a $1 billion 

increase for program management discretionary administration at 

CMS. It appears that this additional $1 billion will be funding 

OCIIO. I will be interested in learning more about this new office 

and the role it plays. And I look forward to seeing more transparency in the Department’s budget. And for my remaining time I 

yield to the gentlelady from Tennessee, Ms. Blackburn. 

[The prepared statement of Mr. Pitts follows:] 

PREPARED STATEMENT OF HON. JOSEPH R. PITTS

I would like to welcome our distinguished witness today, the Honorable Kathleen 

Sebelius, Secretary of the U.S. Department of Health and Human Services. Madame 

Secretary, thank you for your time and testimony. 

The Department of Health and Human Services is a large department with broad 

authority and jurisdiction. With the enactment of the Patient Protection and Affordable Care Act (PPACA), we have found there are several sections of this new law 

that require mandatory funding - hence, bypassing the normal appropriations process. 

Today’s hearing will give us a chance to examine these provisions and consider 

the budgetary implications for implementation and administration of this new law. 

One aspect I am concerned with is the Office of Consumer Information and Insurance Oversight (OCIIO). 

Less than a month after PPACA passed last year, the Department moved regulation of health insurance from the Centers for Medicare and Medicaid Services 

(CMS), where it had been for years, to a new office, OCIIO, which reports directly 

to the Secretary. 

Then, in January of this year, the Secretary announced that OCIIO would be 

moving and would now be housed at CMS. 

3 

This is interesting because OCIIO implements and regulates many of 

Obamacare’s private insurance provisions, and CMS runs the Nation’s public health 

programs. 

The Office has been in the news lately for granting over 900 waivers to private 

health plans unable to meet various standards set by Obamacare. 

It is important to note that the OCIIO was not authorized nor even mentioned in Obamacare, yet the President’s budget request includes a $1billion increase for 

′′program management discretionary administration′′ at CMS. It appears that this additional $1 billion dollars will be funding OCIIO. 

I will be interested in learning more about this new Office and the role it plays. 

I look forward to seeing more transparency in the Department’s budget. 

I yield to the gentlelady from Tennessee, Mrs. Blackburn. 

Thank you. 

Mrs. BLACKBURN. Thank you, Mr. Chairman, and I do welcome 

the Secretary and I will pick up right where Mr. Chairman left off 

with transparency. And I think what is astounding to many is the 

lack of transparency in this process and the difficulty with getting 

information. We know that our States have fought the battle indeed; not only companies, but States are receiving waivers. What 

we see in front of us, Madame Secretary, seems to be a confused 

process. Our States are frustrated. We have heard from State Legislators, from Governors—they are all beginning to agree with your 

former colleague Governor Bredesen who called this the mother of 

all unfunded mandates and with others who said, you know, it is 

too expensive to afford and this is something that would bankrupt 

the States. There is just truly a dissatisfaction, and one of the 

things I will highlight with you today and question with you is my 

concern over lack of response and in the adequate response to questions. Yield back. 

Mr. PITTS. Chair thanks gentlelady and yields to the ranking 

member, Mr. Pallone, for 3 minutes. 

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

Mr. PALLONE. Thank you, Chairman Pitts, and I want to welcome Secretary Sebelius. In these tough economic times I recognize 

how difficult budgetary and spending decisions are for the President and this Congress. I commend the President for his responsible budget. I only hope that we can work together to move this 

country forward to create jobs and to foster economic growth. 

And I want to commend Secretary Sebelius for your agency’s 

hard work this past year to implement the Affordable Care Act. I 

will continue to fight against the Republican efforts to defund this 

important landmark law. I can’t agree more with President Obama 

that as we continue to work our way out of the recession towards 

a thriving economy that offers economic opportunities for all Americans that we must out-innovate, out-educate, and out-build the 

rest of the world. And to do that I believe the Federal Government 

has a vital role to play. 

At the core of innovation is research and development. It is R&D 

that propels the science and the business of healthcare. In fact, a 

recent report show that healthcare R&D supports 211,000 jobs, and 

$60 billion in economic activity in my State of New Jersey. But 

R&D requires resources. Investments made by Government can 

help research projects get off the ground and leverage resources off 

4 

the private sector and academia. And that is why I was very 

pleased to see that the President’s budget includes Government investments and healthcare R&D. His budget recognizes that key 

agencies like NIH and FDA are essential to facilitate an environment where Americans can continue to innovate. 

I did want to mention, however, my disappointment in one program. That is the termination of the Children’s Hospital Graduate 

Medical Education Program. This has reverse declines in pediatric 

training programs that had threatened the stability of the pediatric 

work force and the small class of hospitals that receive this funding 

which includes the Children’s Specialized Hospital in my district 

represents about one percent of hospitals nationwide, but trains approximately 40 percent of all pediatricians. Eliminating this program would have a major negative impact on access to primary 

care and impact access to specialty care for children. But—and I 

wanted to mention that I am committed to reauthorizing and funding this program and introducing a bill to do that soon. 

But really, I wanted to stress, Madame Secretary, that I really 

do think that as we move forward with the Affordable Care Act, I 

know the anniversary is coming up I believe on March 23, just in 

a couple of weeks. Already, there are so many of my constituents 

and so many people that I talk to that talk about the benefits of, 

you know, eliminating pre-existing conditions, of being able to put 

their children on the policies, what we have done for seniors in 

terms of cutting back on and eventually eliminating the doughnut 

hole, eliminating co-pays for preventative care. People are very 

much aware of the benefits of this and more and more, I think, as 

it continues to be implemented will be. And I am very much opposed to any efforts to defund the program particularly since we 

see the positive benefits from it. Thank you, Mr. Chairman. 

Mr. PITTS. Thank you. Chair thanks gentleman and yields 3 minutes to the chair of the committee, Mr. Upton. 

OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN 

Mr. UPTON. Thank you, Mr. Chairman. Two days ago, we heard 

from the—some of the Nation’s Governors on the negative impact 

that the new law will have on their States in quality of healthcare. 

What we heard is similar to what most members hear—anytime 

they speak with their Governor, they express their concern that the 

mandates and requirements coming out of D.C. are hindering to 

deal with the State’s problems. 

The President did offer, I think, some flexibility on Monday by 

declaring that the States could opt out of certain aspects of the 

health reform law a few years early as long as they met every one 

of the goals. Well, I am concerned that the States will only be allowed to take advantage of the so-called flexibility if they construct 

a program that looks almost exactly like the system that was set 

up in the healthcare law. States need real flexibility without all the 

strings and caveats attached. 

The President did call on the Governors to come up with a bipartisan proposal on Medicaid. Dozens of Governors have already 

asked for relief from maintenance of effort requirements so that 

they can direct Medicaid funds to those most in need and meet 

5 

their constitutional responsibility to balance their State budgets. If 

States are instead enforced to impose steep reductions out of payments to providers, they will likely drive more doctors and other 

providers out of the Medicaid program and in some cases out of the 

practice of medicine altogether. I believe that is detrimental to both 

patients and to the quality of care that they can expect to receive. 

If the President wants a bipartisan Medicaid proposal, then we 

need to repeal the maintenance of effort is the place to start, and 

I hope that the Administration will work with members of this 

committee to expeditiously repeal those requirements. 

I would also like to hear from the Secretary what programs at 

HHS she believes are redundant and duplicative. With Federal 

deficits as far as the eye can see, $1.6 trillion in the President’s 

budget for 2012, we must go through the budget with a fine tooth 

comb. As yesterday’s report from the GAO revealed that the Subcommittee on Oversight Investigations, the Federal Government is 

wasting tens of billions of dollars on duplication, overlap, and fragmented programs. We cannot simply fund programs because what 

we did last year or the year before. Every program has to be scrutinized and I look forward to working with you, and I yield the balance of my time to Mr. Cassidy from Louisiana. 

[The prepared statement of Mr. Upton follows:] 

PREPARED STATEMENT OF HON. FRED UPTON

Thank you, Mr. Chairman, for holding this hearing today. I remember back almost two years ago when the Secretary was asked to testify on the House health 

care bill, the Committee was told by the Chairman at the time that it would be unfair to ask her to testify on the specifics of the bill because she had not had time 

to read it. The House bill was eventually scrapped and the Senate bill became law. 

So this Committee never had an opportunity pose questions to the Secretary on the 

House bill or have any type of hearing on the bill that became law. 

Although this hearing should have happened a year and half ago, it is important 

that we hear from the Secretary on her Department’s efforts to implement the new 

health law. A quick search of the Patient Protection and Affordable Care Act, known 

as PPACA, shows the phrase ‘‘the Secretary shall’’ 1,051 times. That does not include the additional 24 times that phrase appears in the companion Reconciliation 

bill. 

To be fair, the Secretary will not be making all of these determinations. In fact, 

many of the decisions will be delegated to unelected bureaucrats who will now be 

in charge of every facet of our nation’s health care system. Regardless, Washington 

will determine what benefits are included in your insurance and what benefits you 

will be forced to pay for. Washington will determine if your doctor or hospital provides quality care and if in their determination they do not, then you may not be 

able to see them. 

Section 1311 of PPACA actually has a provision that provides the Secretary the 

ability to spend an unlimited amount of money purportedly on State exchange 

grants without the need for Congressional approval or oversight. This point needs 

emphasis because it is unprecedented, that Congress would provide the Secretary 

a direct tap on the Treasury that is completely at her discretion to determine how 

much money she wants to spend. Americans wanted to keep their quality health 

care but lower the costs. Instead they got Washington control and multibillion dollar 

slush funds. 

The Democrats want the American public to believe this law is about ten pages 

long. They talk about taking care of people with pre-existing conditions; they talk 

about ensuring that Americans will not have their insurance taken away when they 

get sick; and they talk about letting young adults up to age 26 stay on their parents’ 

plan. These are all things Republicans have stated a desire to work with the Democrats on. If this was the goal of health reform, there would not have been a need 

for secret deals or a year and a half wasted debating the issue. Instead, the Democrats tacked on another 2,890 pages filled with an unconstitutional mandate, an 

unsustainable ponzi scheme, a thousand ‘‘Secretary shalls,’’ two new, massive 

6 

unaffordable entitlement programs, numerous job-destroying mandates, and $800 

billion in new taxes that will make health care more expensive and jobs harder to 

come by. 

The President has said he doesn’t want to relitigate the past and I don’t either. 

We could talk about Cornhusker kickerbacks and multi-million dollar earmarks that 

were used to get the bill through, but I want to talk about how this law will bankrupt our States and our country. I think it is important to examine why all independent analysts believe this bill will hurt job and wage growth. I want to talk 

about how companies are afraid to invest in new employees because of the uncertainty surrounding this law, and I think all Americans should understand how this 

bill will dramatically harm the quality of health care in this country. I do not think 

that is relitigating the past;I think we owe the American people an open debate 

about how to preserve this country’s future. 

Two days ago we heard from some of the Nation’s Governors on the negative impact the new law will have on their States and the quality of health care. What we 

heard two days ago is similar to what most members hear anytime they speak with 

the Governor of their State. They express their concern that the mandates and requirements coming out of Washington are hindering their ability to deal with their 

State’s problems. 

The President offered a fig leaf of flexibility on Monday by declaring States could 

opt out of certain aspects of the health reform law a few years early as long as they 

meet every one of his goals. This patriarchal perspective is somewhat condescending 

toward the States. In essence, the Administration is treating the States like the 16- 

year-old whose parents offer to buy him a new car. Parents tell their teenager they 

can have any car they want - the only catch is that it must meet every one of the 

parents’ stringent requirements. Low and behold the only car that fits the bill is 

the family’s 15-year-old station wagon. So much for choice. 

It sounds a lot like one of the promises that was central to PPACA: if you liked 

your insurance, you could keep it. Once Americans read the fine print, they realized 

you could keep your plan if you liked it but only if the Secretary feels it meets her 

requirements. It makes me think there was an important caveat to the President’s 

campaign slogan. It seems ′′yes we can′′ really meant, ′′yes, we can if and only if 

Washington and its bureaucrats believe it is best for you.′′ 

The President did call on Governors to come up with a bipartisan proposal on 

Medicaid. Dozens of Governors have already asked for relief from maintenance of 

effort requirements so that they can direct Medicaid funds to those most in need 

and meet their constitutional responsibility to balance their State budgets. If States 

are instead forced to impose steep reductions in payments to providers, they will 

likely drive more doctors and other providers out of the Medicaid program and, in 

some cases, out of the practice of medicine altogether. This will be detrimental to 

patients and to the quality of care they can expect to receive. If the President wants 

a bipartisan Medicaid proposal then repealing the MoE is the place to start, and 

I hope the Administration will work with members of this committee to expeditiously repeal the maintenance-of-effort requirements. 

PPACA established permanent cuts to Medicare providers like hospitals in order 

to create new entitlement programs. During the debate many questioned the wisdom of taking hundreds of billions of dollars out of the Medicare program while failing to address its long-term fiscal issues, not to mention the short-term need to find 

hundreds of billions of dollars to reform the Medicare physician payment system to 

ensure that doctors continue to see seniors. 

The president now proposes a two-year physician payment fix. I agree that we 

must fix the Medicare physician payment system, but I am deeply disappointed with 

those that stated they supported the same goal but then raided the program to establish new entitlements we cannot afford. 

The approaches taken by the Democrats last Congress still confound me. Medicaid 

is bankrupting the States so Congress voted to expand it. Medicare cannot pay doctors so they raided the program to fund new entitlements. Health care is too expensive so they taxed it and increased the cost. Businesses are not hiring so they placed 

more mandates on them to make it more difficult to create jobs. All the while they 

ignored that the fact that most American liked their insurance but they wanted to 

find ways to make it less expensive. We can and should do better. 

Mr. CASSIDY. Governor Duval Patrick testified Tuesday, that 

Massachusetts developed the model for Obamacare and that Massachusetts gives a vision of our future. I agree. We were told almost everything else he said, though, was false. We were told that 

because of this model that ER visits are down. They are not. As 

7 

it turns out, throughout—significantly according to the Urban Institute and 20 percent in western Massachusetts. We were told 

that the private insurance market is unaffected. Actually, fewer 

businesses are offering insurance and premiums are up above the 

national average. We were told that a cost is an issue that is being 

addressed and access is expanding. Actually, according to the Globe 

and the National Journal, people are being disenrolled and ‘‘dental 

benefits are being slashed to hundreds of thousands threatening 

their access to their dentist.’’ Indeed the Democratic State Treasurer said if the United States implements a plan like Massachusetts, we will go bankrupt. Now the question before us today is 

whether we believe the vision of which we were told, or the vision 

that we see. I yield back. 

Mr. PITTS. The Chair thanks the gentleman. Yields 3 minutes to 

the ranking chair of the committee, Mr. Waxman. 

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

Mr. WAXMAN. Madame Secretary, it is a pleasure to welcome you 

back to our committee. First, I want to commend you on the work 

you are doing to implement the Affordable Care Act. That is the 

name of the law. The job you were given by Congress and the 

President is imposing but you have met it with leadership and 

steadfast commitment. Today’s hearing is meant to address the 

President’s budget proposal for HHS for fiscal year 2012. You 

wouldn’t know it from the opening statements. But fiscal year 2012 

seems very far away at this point. I am much more focused on the 

threats from the continuing resolution passed by the House. I believe the cuts proposed by the Republican budget would be just 

devastating to the mission of your department. The Republican proposal would cut 23 percent from the Centers for Medicare and Medicaid services. Well, this will devastate the ability of the agency to 

maintain its basic functions like paying Medicare claims, cracking 

down on fraud, and funding health programs through Medicaid and 

the Children’s Health Insurance Program. 

The FDA would see cuts of 17 percent with enforcement of the 

new food safety law gutted. The Centers for Disease Control would 

be cut by 37 percent leaving Americans more exposed to viruses 

and illnesses. The Community Health Centers Program which has 

strong bipartisan support would be cut by $1 billion closing 127 

health centers and cutting off 11 million patients from care they 

need. Cuts of this magnitude are not belt tightening or doing more 

with less. They go to the heart of the core mission of the agencies 

that comprise HHS, jeopardize access to healthcare, research, and 

the safety of our food and pharmaceuticals. I agree with President 

Obama’s guidance to us yesterday in discussing a final CR for this 

fiscal year. Disagreements should be bipartisan. They should be 

free of any party’s social or political agenda, and it should be 

reached without delay. Thank you, Madame Secretary, for being 

here today and I urge you to continue to work diligently to implement the essential protections of the Affordable Care Act. And I 

would be pleased to yield to any of my colleagues on the Democratic side. Mr. Engel, I yield to you the rest of my time. 

8 

Mr. ENGEL. Yes, I want to second what Mr. Waxman has just 

said. When we look at the Republican budget we see things cut out 

that are really just unimaginable. You know, we heard the Governors and I know, Madame Secretary, you are a former Governor. 

We heard the Republican Governors come here and basically say 

they don’t like the healthcare law. They want Government to get 

out of people’s lives. You know if Governor Barbour is happy with 

Mississippi always being 49th and 50th in education and 

healthcare, then I suppose he will be happy with it. But some of 

us do feel that healthcare, affordable healthcare is a right and that 

is what we tried to do. And the negativity boggles my mind. 

Mr. PITTS. Chair thanks the gentleman and at this time will go 

to our witness. I would like to introduce our witness, the Secretary 

of Health and Human Services, Kathleen Sebelius. Secretary 

Sebelius was first elected to the Kansas House of Representatives 

in 1986. In 1994, Secretary Sebelius was elected State Insurance 

Commissioner for the State of Kansas and in 2002, she was elected 

to be the State’s Governor. Madame Secretary, we welcome you to 

the committee. We look forward to your testimony. 

STATEMENT OF KATHLEEN SEBELIUS, SECRETARY, 

DEPARTMENT OF HEALTH AND HUMAN SERVICES 

Ms. SEBELIUS. Thank you very much, Chairman Pitts, Ranking 

Member Pallone, and members of the committee. Thank you for inviting me here today to discuss the 2012 budget for the Department of Health and Human Services. 

In the President’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 we can give every 

family and business the chance to thrive. And I think our 2012 

budget is a blueprint for putting a portion of that vision into action. 

It makes investments for the future so that we grow our economy 

and create jobs. 

But we also recognize that we can’t build lasting prosperity on 

a mountain of debt. Years of deficits have put us in a position 

where we need to make tough choices. In order to invest for the 

future we need to live within our means. So in developing the 

budget we looked closely at every program in our department, and 

when we found waste we cut it. And when programs weren’t working well we redesigned them to put a new focus on results. And in 

some cases we cut programs we wouldn’t have cut in better fiscal 

times. And I look forward to answering your questions, but Mr. 

Chairman, I would like to start with just sharing some highlights. 

Over the last 11 months we have worked around the clock with 

our partners in Congress and States to deliver on the promise of 

the Affordable Care Act. Thanks to the law, children are no longer 

denied coverage because of their preexisting health conditions. 

Families have protections in the new Patient’s Bill of Rights. Businesses are getting relief from the soaring healthcare costs and seniors have lower cost access to prescription drugs and preventive 

care. 

This budget builds on the progress by supporting innovative new 

models of care that will improve patient’s safety and quality while 

reducing the rising burden of health costs on families, businesses, 

9 

cities, and States. We make new investments in our healthcare 

workforce and community health centers to make quality affordable care available to millions more Americans, and create hundreds of thousands of new jobs across the country. 

At the same time the budget includes additional proposals that 

strengthen program integrity in Medicare, promote lower medicine 

costs, improve Medicare program operations, and reform the quality improvement organizations which help providers improve care. 

The budget also includes saving proposals to strengthen Medicaid. 

It includes funding for the Transitional Medical Assistants Program and Medicare Part B premium assistance for low income 

beneficiaries, programs which help keep health costs down for low 

income individuals and help them keep their vital coverage. 

To make sure America continues to lead the world in innovation, 

our budget includes funding increases for the National Institutes of 

Health. New frontiers of research like cell-based therapies and 

genomics have the promise to unlock transformative treatments 

and cures for diseases ranging from Alzheimer’s to cancer to autism. And our budget will allow the world’s leading scientists to 

continue to pursue discoveries while keeping America at the forefront of biomedical research. And because we know there is nothing 

more important to our future than the healthy development of our 

children, our budget includes significant increases in funding for 

childcare and Head Start. 

Science shows that success in school is significantly enhanced by 

high quality, early learning opportunities. These investments are 

some of the wisest that we can make in our future. But our budget 

does more than provide additional resources. It also aims to raise 

the bar on quality in childcare programs supporting key reforms to 

transform the Nation’s childcare system into one that fosters 

healthy development and gets children ready for school; proposes 

a new early learning challenge fund, a partnership with the Department of Education that promotes State innovation in early education; and these initiatives combined with the quality efforts already underway in Head Start are an important part of the President’s education agenda to help every child reach his or her academic potential and make our Nation more competitive. 

The budget also promotes strong family relationships. It supports 

a child-support-and-fatherhood initiative that encourages fathers to 

take responsibility for their children; changes policies so that more 

of that support reaches the children; and maintains a commitment 

to vigorous enforcement promoting healthy relationships between 

fathers and their children. We also fund new performance driven 

incentives for States to improve outcomes for children in foster care 

such as reducing long term foster stays and the reoccurrence of 

child maltreatment. These children also need to be part of our better future. 

Our budget recognizes that at a time when so many Americans 

are making every dollar count, we need to do the same. That is 

why the budget provides new support for President Obama’s unprecedented push to stamp out waste, fraud, and abuse in our 

healthcare system, an effort that more than pays for itself returning a record of $4 billion to taxpayers last year alone. In addition 

the budget includes a robust package of administrative improveVerDate Nov 24 2008 15:40 Oct 26, 2011 Jkt 037690 PO 00000 Frm 00013 Fmt 6633 Sfmt 6633 F:\112-014 HHS BUDGE-PDF MADE\67590.TXT WAYNE
10 

ments for Medicare and Medicaid. The proposals include prepayment scrutiny, expanded auditing, increased penalties for improper 

actions, and strengthens CMS’s ability to implement corrective actions and address State activities that increase Federal spending. 

Over 10 years on a conservative estimate they should deliver over 

$32 billion in savings. 

Across our department we have made eliminating waste, fraud, 

and abuse a top priority but we know that isn’t enough. So over 

the last few months we have also gone through the Department’s 

budget, program by program, to find additional savings and opportunities where we can make our resources go further. 

In 2009, Congress created a grant program to help States expand 

healthcare coverage and we have eliminated that program because 

it is duplicative. CDC funding has been helping States reduce 

chronic diseases but the funding was split between different diseases: one grant for heart disease, another for diabetes. We thought 

it didn’t make sense since a lot of those conditions have the same 

risk factors like obesity and smoking. And now States will get one 

comprehensive grant that allows them more flexibility to address 

chronic disease in their home territories more effectively. 

The 2012 budget we are releasing today makes tough choices and 

smart targeted investments today so we have a stronger, healthy 

and more competitive America tomorrow. That is what it will take 

to win the future and that is what we are determined to do. So 

thank you, Mr. Chairman. I will look forward to answering your 

questions. 

[The prepared statement of Ms. Sebelius follows:] 

11 


67590.001
12 


67590.002
13 

Mr. PITTS. Chair thanks the gentlelady and recognizes himself 

for 5 minutes for questions. Madame Secretary, Section 4002 of the 

PPACA created a fund to provide funding for programs authorized 

by the Public Health Service Act for prevention, wellness, and public health activities. From the period fiscal year 2012 to fiscal year 

2021, there will be $17.75 billion deposited in fund. My question is 

who has the authority to determine how these funds are spent? 

Ms. SEBELIUS. Mr. Chairman, our department in consultation 

with Congress we—presents a spending plan for the prevention 

fund a year at a time. 

Mr. PITTS. Follow-up on that. Are you authorized to spend this 

money without any further Congressional action? 

Ms. SEBELIUS. Yes, we are. 

Mr. PITTS. Are you authorized to add funds to a program above 

and beyond what Congress appropriated for that program in a 

given year? 

Ms. SEBELIUS. Yes, yes, sir. 

Mr. PITTS. Madame Secretary, like most States nationally, my 

State is struggling with a major projected shortfall in its coming 

budget. The maintenance of effort provision in PPACA for the Medicaid program is removing a major lever for them to consider as 

they try to balance the budget. Can you give me a yes or no answer 

as to whether there will be an opportunity to waive that provision 

to help Pennsylvania and other States close their budget holes? 

Ms. SEBELIUS. Mr. Chairman, the question doesn’t lend itself to 

yes or no. We are—have the ability to grant 1115 waivers to States 

that improve the Medicaid Program and we are working very actively with Governors across the country. I have met with all the 

new Governors. We have been in 19 States so far. We are working 

a budget at a time to look at the flexibility that Governors are requesting. 

Mr. PITTS. Given that the Supreme Court will be looking at this 

new law in the coming months or years, we as a Congress have to 

prepare for the possibility that a portion of PPACA might be invalidated while other parts remain. If the individual mandate were set 

aside and the remaining portions of the bill were left intact, what 

would be the impact in the total number of uninsured and assuming that number would grow would the administration seek to find 

a new way to cover these folks through Medicaid? 

Ms. SEBELIUS. Well, Mr. Chairman, we are confident that the 

personal responsibility portion will be upheld. There are 12 judges 

who have dismissed cases so far: three Federal judges including 

one as recently as last week who have held the entire law constitutional; one Judge in Virginia who found a portion, the individual 

responsibility portion, unconstitutional, but declared it severable 

and refused to grant an injunction; and a Florida judge who has 

ruled another way. So our team is confident at the end of the day 

that the law will be held constitutional. We are looking at a variety 

of options and those were examined as the Affordable Care Act was 

being considered about the best way—if you eliminate preexisting 

conditions to make sure that you have a stable and secure insurance pool—as you know the personal responsibility section actually 

came from the insurance industry, from the American Association 

of Health Insurance Plans who felt that the way to have a solvent 

14 

pool in an insurance market is to make sure that you can balance 

the risk. And that proposal really comes from the insurance industry. 

Mr. PITTS. If you could give me a yes or no—will you approve of 

Medicaid Block Grant Program? 

Ms. SEBELIUS. Mr. Chairman, there isn’t a block grant program 

that is being suggested at this point. But I know that there is some 

interest in that. I can’t tell you what the parameters might be. I 

think a block grant has the real danger of shifting enormous burdens onto already strapped States. 

Mr. PITTS. Thank you. I will yield the balance of my time to Dr. 

Cassidy. 

Mr. CASSIDY. Thank you, Ms. Secretary. One of my concerns is 

how the State Medicaid budgets are going to be supplemented. Mr. 

Waxman the other day spoke about currently there appear to be 

discrepancies how much a State should get and how much they do 

get. Frankly, his State, California, suffers under this. It is important because Jonathan Gruber, I think one of your consultants published an article that says in his State about 1.7 million people will 

be added to Medicaid, so—under this plan—so it is going to stress 

it further. Do you see concerns with how the current FMAP, SMAP 

is constructed equity issues regarding States? I say that because 

Vermont, although a lower FMAP, gets about $7,500 permanent 

resident beneficiary and Mississippi gets—with a higher FMAP, 

about $3,000 per beneficiary. Any thoughts about that? 

Ms. SEBELIUS. Well, I know there are constant concerns about 

the formula that is the allocation formula for FMAP. Mississippi 

actually has the highest match rate of any State. 

Mr. CASSIDY. But they only get $3,000 from the Federal Government. So they have an 83 percent FMAP, but they only get $3,000 

per beneficiary. 

Ms. SEBELIUS. And I won’t dispute that. I don’t know the numbers. I do know they have the highest FMAP rate in the country. 

I think that there is a constant analysis of changing demographics, 

changing populations. I know in your State of Louisiana it became 

an issue after Katrina in New Orleans and the changing demographics of that city changed dramatically their share of the Federal budget. So there have been concerns over the past and we 

would work with Congress to look at updating the FMAP on a regular basis. 

Mr. PITTS. My time is expired. Yield 5 minutes to the Ranking 

Member, Mr. Pallone. 

Mr. PALLONE. Thank you, Mr. Chairman. I would mention to you 

that if you would entertain the possibility of upping F map or doing 

more with F map I would be glad to oblige. Just so you had any 

doubt about where I stand on that issue—would be more than willing to do another F map bill and increase the F map funding. 

I wanted to ask about innovation, Madame Secretary. America’s 

competitiveness depends on our ability to innovate and keep America number one but instead the Republicans included over a billion 

dollars in cuts to NIH and over 240 million to the Food and Drug 

Administration in their 2011 CR, and I believe this represents a 

significant setback because key agencies like NIH and FDA are essential to facilitating an environment where Americans can conVerDate Nov 24 2008 15:40 Oct 26, 2011 Jkt 037690 PO 00000 Frm 00018 Fmt 6633 Sfmt 6633 F:\112-014 HHS BUDGE-PDF MADE\67590.TXT WAYNE
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tinue to innovate. For instance, at a medical device hearing last 

week we heard about CDRH’s newly announced medical device innovation initiative and this is a new Voluntary Priority Review 

Program by FDA for new breakthrough medical devices to help innovator companies bring their products to market. But in the cuts, 

if the cuts in the Republican’s CR are enacted, FDA did not think 

they would have the funds to implement this initiative. And this 

is just an example of the dangerous impacts we would see if FDA’s 

budget is cut by over $240 million. So Madame Secretary, I believe 

a cut of 17 percent will slow the approvals for devices, drugs, and 

other innovative products, isn’t that correct? I mean, isn’t that 

what we are going to face with the FDA if this CR becomes law? 

Ms. SEBELIUS. Well I think, Congressman, the President shares 

your belief that investments in both the Food and Drug Administration and in the National Institutes of Health are wise and strategic investments for the safety and security of our food supply, 

and our acceleration of devices and drugs getting to the market, 

and to keep America at the forefront of the biomedical industry 

which we have been for decades. So he has made recommendations 

about investments, enhancements to both the National Institutes of 

Health budget and for the Food and Drug Administration and believes strongly that that is really keeping a commitment with the— 

not only the American public, but growing jobs in the economy that 

we desperately need. And that the failure to fund those agencies 

to the full extent both jeopardize some of the important responsibilities they have as well as threaten—I think the last detail I saw 

from Dr. Collins at NIH is that for every dollar in research grants, 

seven dollars is generated in a local community. So that it has an 

enormous ripple effect when research grants are put out in university communities across this country as well as the life saving cure 

possibility that results. 

Mr. PALLONE. And I mean, the same is true—I mean, the CR 

with the NIH, the CR proposes over a billion dollars in cuts to the 

NIH budget. For innovation the CR is worse. It appears the majority of the cuts will come out of the small percent of the budget for 

new NIH grants—about 640 million from the budget of 3.9 billion. 

That would mean thousands of fewer NIH awards this year. Again, 

I mean, the cut to the NIH would be devastating on the cuttingedge research into new cures and treatments for diseases. If you 

would just comment on that briefly, because then I do want to ask 

about the Children’s Graduate Medical Education. 

Ms. SEBELIUS. Well, as you know, Congressman, the NIH budget 

had a dramatic increase in funding thanks to the investment in the 

Recovery Act, feeling that scientific investment was a major innovation effort for the United States. So they are already struggling 

with that grant funding which is coming to an end. And I can tell 

you it will have a very chilling impact on research grants across 

this country if indeed the NIH budget is not adequately funded in 

2012. 

Mr. PALLONE. All right, let me ask you this about the Children’s 

Graduate Medical Education because the President has budget zeroed that out. In my home State of New Jersey, we have the highest rate of autism in the country, one in 94 children. In my district, 

Children Specialized Hospital provides services to children with 

16 

disabilities and clinical services to like 4,000 kids. My concern is 

that you know we have very few subspecialties in pediatrics right 

now and in the budget, the President’s budget, it basically justifies 

zeroing it out by saying that they want to focus on primary care. 

But we actually need more subspecialists, not you know more so 

by every, you know, physician’s group. So how do you justify that? 

I mean, it seems to not make sense to me. 

Ms. SEBELIUS. Well, I would say, Mr. Chairman, I—your concern 

about this program we have heard from a number of people and 

I can assure you in any different budget time this would not have 

been one of the recommendations. The goal was to try and focus 

as many GME dollars as possible into the work force for primary 

care, gerontology, and to put it into the programs where the vast 

majority is training primary care doctors. But this trade-off is very 

difficult. 

Mr. PALLONE. OK. Thank you, Madame Secretary. Thank you, 

Mr. Chairman. 

Mr. PITTS. Gentleman’s time has expired. Recognizes the chairman of the full committee, Mr. Upton, for 5 minutes. 

Mr. UPTON. Thank you, Mr. Chairman. I want to just start off 

initially by following up on a question that you asked regarding the 

maintenance of effort. Now, the President said earlier this week 

that if the States could present a bipartisan proposal on Medicaid 

that he would like to support it and if there is broad bipartisan 

support to repeal the maintenance of effort, would that be something that you would like to work with us on to see it happen? 

Ms. SEBELIUS. Well, the President has directed me, Chairman 

Upton, to work with the Governors around this proposal, so I will 

be very actively involved. And he is eager to see their ideas. I think 

what we are eager to do and have pointed out to a number of Governors is the focus of the—a lot of the cost drivers is the so-called 

dual-eligible, which is why at—Congress was wise enough to include a new office of dual-eligibles as part of the Affordable Care 

Act structure. It is about 15 percent of the population of Medicaid 

beneficiaries and over close to 40 percent of the cost nationwide. So 

we are really eager to work on those issues. 

Mr. UPTON. Now, I know that the President—this happened earlier this week so there has not been a lot of time, but have you 

identified a subset of Republican and Democratic Governors that 

will be the lead that you are going to work with yet? 

Ms. SEBELIUS. That is not—believe me, I am very deferential to 

my former colleagues. 

Mr. UPTON. I know you are. 

Ms. SEBELIUS. The National Governors Association, Governor 

Gregoire chairs it and Governor Heineman from Nebraska is the 

vice chair this year. They have been asked to put together a Governor’s group. 

Mr. UPTON. OK. Let me ask you. In your testimony you discussed the State-based health insurance exchanges that were created by the new law. As noted in your budget you are provided a 

mandatory appropriation, not simply an authorization of such sums 

as necessary to issue grants to States. Is there any monetary limitations to the grant making authority? 

Ms. SEBELIUS. No, sir. 

17 

Mr. UPTON. The—— 

Ms. SEBELIUS. With the exception that the exchanges have a series of legal parameters that have to be met in order to draw down 

funds. 

Mr. UPTON. Under Section 1311H, it authorizes your department 

to force doctors, hospitals, and other providers to meet new quality 

requirements or face expulsion from contracting with any qualified 

health plans offered in the exchange. Has HHS started to draft any 

regulations yet on that—those provisions that you are aware of? 

Ms. SEBELIUS. Mr. Chairman, I am not aware of any mandatory 

provider provisions or expulsion. I will be glad to answer that question in writing. I don’t—I am not familiar with the section that you 

are speaking of off the top of my head—— 

Mr. UPTON. OK. 

Ms. SEBELIUS. I am sorry. 

Mr. UPTON. Before the House Budget Committee two weeks ago, 

I want to say a Richard Foster CMS was asked about two of the 

main claims that the supporters of PPACA talked about. First he 

was asked about whether the claim that the law would hold down 

cost—whether it was true or false. He said false more so than true. 

And second, he was asked whether Americans, whether they could 

keep their health care plans if they like them and he indicated that 

it was not true in all cases. So those are his words. Do you agree 

or disagree with some of the things that he said? 

Ms. SEBELIUS. Mr. Chairman, I have read Mr. Foster’s testimony 

and I think that what he has indicated is that he does not feel it 

is likely that Congress follow the outlines of the law. I—if indeed 

the law has changed there will be a different result. We believe the 

Congressional Budget Office analysis that—which was updated just 

I think 10 days ago—that $230 billion would be saved over the next 

10 years and a trillion dollars over the two decades is an accurate 

assessment. If indeed the laws change there needs to be a different 

assessment. 

Mr. UPTON. Last question I have is regarding the grandfather 

status on the healthcare plans. By some estimates provided in your 

department’s rule anywhere between 87 million and 117 million 

Americans will not be able to keep their healthcare plan. Does the 

Administration continue to claim that the healthcare law will in 

fact allow their plan—allow Americans to keep their plan if they 

like it? 

Ms. SEBELIUS. Mr. Chairman, the law is built around the private 

insurance market and as you know employers voluntarily enter 

that market and make decisions a year at a time on plan design, 

on provider issues, on network issues. The grandfather clause is 

designed to make sure that as much as possible, without shifting 

major financial burdens onto consumers or dramatically changing 

benefits, that plans can indeed keep exactly the plan moving forward, making adjustments in premiums as they go along. But 

nothing precludes what has been part of a dynamic market in the 

private sector all along which is that employers choose year in and 

year out, moving in and out of a marketplace. 

Mr. PITTS. The gentleman’s time has expired. Chair recognizes 

the Ranking Member of the Full Committee, Mr. Waxman, for 5 

minutes. 

18 

Mr. WAXMAN. Thank you, Mr. Chairman. Madame Secretary, as 

I mentioned in my opening statement I am deeply concerned about 

the cuts proposed by the Republicans for the remaining seven 

months of this fiscal year and their continuing resolution H.R. 1. 

I have a letter, Mr. Chairman, I would like to insert in the record 

by unanimous consent from the Social Security Administration to 

its employees. 

Mr. PITTS. Without objection, so ordered. 

[The information follows:] 

19 


67590.003
20 

Mr. WAXMAN. This letter states that the Social Security Administration may have to initiate furloughs if the budget cuts being considered by the House become law. Why would that matter to Medicare, Madame Secretary? 

Ms. SEBELIUS. That the Social Security Administration? 

Mr. WAXMAN. Right, well the Social Security Administration 

processes the new enrollments into Medicare. Furloughs at the Social Security Administration would lead to backlogs in processing 

new enrollment and gaps in coverage for nearly half a million new 

Medicare beneficiaries. So that should be of concern not just for Social Security, but for the Medicare Program. 

Ms. SEBELIUS. Well, and Mr. Waxman, as you know the first of 

the baby boomers became Medicare eligible so we are seeing an expanded Medicare beneficiary class this year and every year of the 

immediate future. So enrolling people in a timely and accurate 

fashion is hugely important. 

Mr. WAXMAN. So that would really bop the baby boomers who are 

becoming Medicare—— 

Ms. SEBELIUS. 2011 is the first baby boomer Medicare-eligible 

class. 

Mr. WAXMAN. Mr. Chairman, I have an analysis from the Democratic Staff that I would like to ask for unanimous consent to insert 

into the record. 

Mr. PITTS. Without objection, so ordered. 

[The information follows:] 

21 


67590.004
22 


67590.005
23 


67590.006
24 


67590.007
25 


67590.008
26 


67590.009
27 


67590.010
28 


67590.011
29 


67590.012
30 


67590.013
31 

Mr. WAXMAN. This memo documents the size of the cuts proposed 

by the Republicans—funding for CMS, the agency that runs the 

Medicare, Medicaid, and the Children’s Health Insurance Program 

by 23 percent once you consider the fact that the year is almost 

halfway finished. This is not a little haircut or matter of finding 

some efficiencies. That kind of a cut could prevent CMS from performing its core duties, paying for the healthcare needs of seniors, 

persons with disabilities, mothers, and kids in Medicare, Medicaid, 

and CHIP. Madame Secretary, would you be concerned about the 

impact on Medicare beneficiaries of a proposed 23 percent cut combined with delays in processing the new enrollments? 

Ms. SEBELIUS. Mr. Chair—I mean, yes, Congressman. It would 

be very difficult to continue the services to the American people. As 

you know, the administrative costs for Medicare in the budget year 

2010 included no Affordable Care Act implementation because 

there was no Affordable Care Act. So what we are talking about 

is an enormous reduction in the overall ability to administer Medicare, Medicaid, the Children’s Insurance Program at a time when 

there are significantly more beneficiaries in each of those programs 

around the country. 

Mr. WAXMAN. And it is not limited to CMS across your department. Vital public health, vital public safety functions would be 

jeopardized. For instance, FDA would be cut and face an effective 

cut of 17 percent for the remainder of this year. Wouldn’t this be 

a cut of that—wouldn’t a cut of this magnitude seriously undermine FDA’s responsibilities to rapidly identify and respond to food 

related health threats and its mission to protect patients from 

faulty or substandard drugs or devices? 

Ms. SEBELIUS. Well Congressman, the President has recommended about a 31 percent increase in the Food and Drug Administration because of the new responsibilities with the Historic 

Food Safety Act and public initiatives. 

Mr. WAXMAN. But he didn’t anticipate this kind of a cut in this 

year. He was proposing more—— 

Ms. SEBELIUS. No, sir. 

Mr. WAXMAN [continuing]. Money for next year. The Republicans 

are proposing to cut a billion dollars in funding to the community 

health centers as part of a shocking nearly 50 percent reduction for 

programs administered by the Health Resources and Services Administration, HRSA. That cut to health centers could result in the 

closure—no, would result in the closure of 127 health centers and 

countless layoffs. Wouldn’t that jeopardize access to patient care? 

Ms. SEBELIUS. Well, community health centers have long been a 

bipartisan effort to build a public health infrastructure delivering 

low-cost, high-quality preventive care around the country, and that 

would seriously impact people’s health services. 

Mr. WAXMAN. And for my last question about Medicaid, every 

State has a different Medicaid Program. There is flexibility already 

in that program. At Tuesday’s hearing Governor Barbour and Herbert asserted the need for total flexibility. Governor Barbour said 

the problem is Federal regulations don’t allow for—allow a provider 

to deny services to an individual on the basis of the individual’s 

ability to pay. In addition, no cost sharing measures can be imposed on many Medicaid enrollees including children. Madame SecVerDate Nov 24 2008 15:40 Oct 26, 2011 Jkt 037690 PO 00000 Frm 00035 Fmt 6633 Sfmt 6633 F:\112-014 HHS BUDGE-PDF MADE\67590.TXT WAYNE
32 

retary, can you talk about the flexibility that is already in the system and how that is balanced against the minimal levels of beneficiary and provider protections with regard to cost sharing access 

to providers and more? 

Ms. SEBELIUS. The Medicaid Program as you say is a Federal/ 

State partnership and the program does look different in States 

around the country. The program already has enormous flexibility 

in the Affordable Care Act gives even more significant flexibility 

designing benefit packages, designing for some of the upper income 

beneficiaries cost sharing, making sure that optional services in 

some States are part of the package and other States they are not. 

So there is a wide variety of program designs. Some are entirely 

in managed care. Others are not. We are working actively—as you 

know, the Nation has a host of brand-new Governors and working 

actively with each of those States to not only give them a snapshot 

of what their program looks like but also the strategies that have 

been implemented in other parts of the country that have been 

very effective in delivering care and saving costs. 

Mr. PITTS. Thank you. The gentleman’s time is expired and will 

yield 5 minutes to the vice chairman of the committee, Dr. Burgess. 

Mr. BURGESS. Thank you, Mr. Chairman. And I don’t want to 

take up too much time, but I would just point out to the Ranking 

Member of the Full Committee that the Democrats did have an entire year with which to come up with their budget and their appropriations. And it is only because they failed to do their work that 

we are doing the CR right now. Let me direct your attention once 

again—— 

Mr. PALLONE. The House asked that the Senate and public had 

stopped it—— 

Mr. BURGESS. I know Chairman gets—the time—reclaiming my 

time. Chairman Pitts referenced Judge Vinson’s ruling in Florida 

from earlier in February and I sent you a letter on February 10 

asking you about the implementation plans of HHS to which I have 

not yet received an answer. My concern is Judge Vinson in his ruling said that a declaratory judgment is the functional equivalent 

of an injunction and he went on to say that officials of the executive branch will adhere to the law as declared by the court. 

As a result the declaratory judgment is a functionally equivalent—a declaratory judgment is the functional equivalent of an injunction. There is no reason to conclude that this presumption 

should not apply here. You apparently feel differently and we 

heard from our Governors earlier this week that they are in fact 

feel like they are on—I think Governor Herbert said shifting sands. 

You feel that ultimately the individual mandate will be upheld as 

constitutional by the Supreme Court. Judge Vinson felt otherwise. 

We are in a period where I wish we could accelerate or expedite 

the Supreme Court, but apparently I don’t get my wish. 

The Supreme Court will likely rule in June 2012 and that is a 

long time for the States to look at this and wonder which direction 

do we go. You could certainly provide some guidance and some help 

by saying you know we are going to look seriously at what Dr.— 

at what Judge Vinson said. So I still await a response from your 

letter but could you briefly give me some comfort that you are 

going to comply with the judge’s order? 

33 

Ms. SEBELIUS. Congressman, I think it is far from clear what 

Judge Vinson’s order indicates, so the Justice Department has gone 

back to the judge to ask him for a clarification of his order that—— 

Mr. BURGESS. Yes, reclaiming my time. Again, I think he stated 

it as clearly as he could. He is going to restate that and I look forward to his decision as well. But honestly, the decision of a member of the executive branch not to adhere to the directive of the 

court is—I think troubling. 

Ms. SEBELIUS. He did not file an injunction, as you know, which 

is the standard procedure if we have asked him—— 

Mr. BURGESS. But attorneys—— 

Ms. SEBELIUS [continuing]. To clarify and look forward to his—— 

Mr. BURGESS. But Governors all across this country right now including my State of Texas and I know Attorney General Greg Abbott is very concerned about what do—you know, what do we do 

now because we don’t know. Let me—— 

Ms. SEBELIUS. But there isn’t anything now that is being done 

with the individual responsibility portion. 

Mr. BURGESS. Well, I look forward to your written response to 

the letter I sent you a month ago and I hope that you will provide 

that for us. 

Ms. SEBELIUS. We will. 

Mr. BURGESS. We heard some of the questions have already centered around some of the issues of mandatory funding within the 

law that was signed last year and I am particularly concerned 

about Section 4101 both A and B. 4101A provides mandatory 

spending for the construction and only the construction of school 

clinics. 4101B creates new discretionary funding for paying the doctor and nurses who are going to work in those school clinics. So I 

guess the question is why is the construction mandatory and paying the staff discretionary? 

Ms. SEBELIUS. That is the way the bill was constructed by members of Congress. 

Mr. BURGESS. By members of the Senate Finance Committee 

Staff. And to take up where Chairman Upton was talking just a 

moment ago I would draw your attention in the law to Section 

1311. It is on page 79, 78 of my copy of the law where under Enhancing Patient Safety beginning on January 1, 2015, a qualified 

health plan may contract with part B, a healthcare provider only 

if such provider implements such mechanisms to improve 

healthcare quality as the Secretary may by regulation require. I 

mean that is pretty specific, too. So where are you going with this? 

What have you directed your staff to look at? I mean again, providers all over the country are asking me what does this mean for 

us. Well, again, perhaps I could get that response in writing. 

Ms. SEBELIUS. I am—— 

Mr. BURGESS. But you know I think—look, we switched sides 

here in January and the reason we switched sides was because of 

this law. It is precisely because of this type of language in this law 

that the American people looked at this and rejected the notion of 

what was forced upon them last year. There is unprecedented 

power now that goes to your office, unprecedented spending that 

goes to your office. These are decisions that are made exclusively 

by the Secretary of Health and Human Services. At no other time 

34 

in our history has so much power gone to one Federal agency. Can 

you understand why the American people are understandably concerned by what has happened to them? 

Ms. SEBELIUS. Congressman, I think that the American public 

should be alarmed if we are paying taxpayer dollars to any provider or a hospital bed of over 50 which doesn’t have a quality system in play. I—— 

Mr. BURGESS. But quality determined by the Secretary. Quality 

determined by the Secretary and no other—no right of appeal, no 

secondary motion may be made—only by the Secretary. That is 

what is affecting—— 

Ms. SEBELIUS. It would be in the CMS guidelines in terms of 

payments for Medicare, payments that, when that rule is promulgated, there will be plenty of public input. But again, I think it 

would be alarming if we paid taxpayer dollars without the quality 

measurement. 

Mr. BURGESS. May I just add, the 10 rules have gone without 

public comment. Ten rules have gone into action. 

Mr. PITTS. Gentleman’s time is expired. Yield 5 minutes to the 

Ranking Member Emeritus, Mr. Dingell. 

Mr. DINGELL. Thank you for you courtesy. Welcome Madame Secretary. It is a pleasure to see you here. 

Ms. SEBELIUS. Sir. 

Mr. DINGELL. Your old dad who served on this committee with 

me and worked in this room would be very proud of what you are 

doing. Thank you. Questions with regard to the Affordable Care 

Act, the continuing resolution H.R. 1 makes a number of blunt, 

reckless cuts in programs that are critical to the health and 

wellbeing of the American people. At the same time, the Affordable 

Care Act has begun implementing historic consumer protections including insuring coverage for children with pre-existing conditions, 

prohibiting rescissions on coverage by insurance companies, allowing children up to 26 to stay on their parents’ insurance, amongst 

others. Under H.R. 1, CMS would receive a cut of 458 million or 

more than 23 percent of that agency’s 2010 budget. Will H.R. 1 

delay or impede the implementation of the consumer protection 

provisions of the health reform act, yes or no? 

Ms. SEBELIUS. Yes, sir. 

Mr. DINGELL. Madame Secretary, would you please give us for 

the record a statement as to how and where these cuts will come 

and what will be the affect on the programs involved? Madame 

Secretary, the Affordable Care Act provides seniors on Medicare 

with a 50 percent discount on brand name drugs, a critical step towards increasing the coverage under Medicare Part D. Will H.R. 1 

delay or prevent the seniors from receiving this discount, yes or no? 

Ms. SEBELIUS. Mr. Chairman, the cuts to Medicare services 

will—— 

Mr. DINGELL. But it is a danger? 

Ms. SEBELIUS. Pardon me? 

Mr. DINGELL. But it is a danger that it will affect those provisions? 

Ms. SEBELIUS. Yes, sir, yes sir. 

Mr. DINGELL. All right, Madame Secretary, just yesterday we 

heard from Medicare Program Integrity Group Director John SpieVerDate Nov 24 2008 15:40 Oct 26, 2011 Jkt 037690 PO 00000 Frm 00038 Fmt 6633 Sfmt 6633 F:\112-014 HHS BUDGE-PDF MADE\67590.TXT WAYNE
35 

gel regarding the anti-fraud efforts at CMS including the new tools 

provided by ACA to prevent fraud before it occurs. Will H.R. 1 

delay or harm efforts to prevent fraud, waste, and abuse in Medicaid or Medicare, yes or no? 

Ms. SEBELIUS. Yes, sir. 

Mr. DINGELL. Would you submit for the record a statement as to 

how and why? 

Ms. SEBELIUS. I will. 

Mr. DINGELL. Madame Secretary, with regard to food safety as 

you know another important undertaking is the implementation of 

FDA Food Safety Modernization Act. This legislation made historic 

investments in our food safety system and provided new authorities 

to help FDA to prevent food safety programs before they occur 

throughout the food supply. H.R. 1 included $241 million in cuts 

from the FDA. Will this cut or these cuts impede FDA’s ability to 

implement the Food Safety Modernization Act, yes or no? 

Ms. SEBELIUS. Yes, sir, they will. 

Mr. DINGELL. Would you please explain that for the record if you 

please, Madame Secretary? 

Ms. SEBELIUS. Yes, sir. 

Mr. DINGELL. Madame Secretary, last Congress I enjoined with 

my colleagues Mr. Waxman, Mr. Pallone, and Mr. Stupak to introduce drug safety legislation that would give the FDA the authorities and resources it needs to adequately protect consumers from 

unsafe drugs and to monitor our food safety or rather the safety 

of our drug supply. Will H.R. 1 impede FDA center for drug evaluation and research from evaluating and monitoring drugs for safety 

and effectiveness, yes or no? 

Ms. SEBELIUS. Yes, sir. 

Mr. DINGELL. Madame would you submit an explanation as to 

why that is so? Madame Secretary, the FDA is consistently and 

chronically underfunded and I continue to hope that FDA will get 

needed registration fees to help fully implement the food safety 

law. I note that those fees would have—were approved by and supported by the industry. Do you believe that registration fees are 

necessary to implementing the Food Safety Modernization Act, yes 

or no? 

Ms. SEBELIUS. Yes, sir. 

Mr. DINGELL. Madame Secretary, you have been requested or the 

department has been requested to produce documents of the benefit 

of this committee. I would note Madame Secretary that HHS has 

produced over 50,000 documents I note a significant expense in response to the committee’s requests related to the waiver process 

and the creation of CCIO. Would you submit to the statement or 

rather submit to the committee a statement as to how you have 

complied with that request for papers and documents and what 

seem to be the problems if any that exist with regard to the committee’s requests for information? 

Ms. SEBELIUS. I would be happy to submit that. 

Mr. DINGELL. Madame Secretary, we have completed our business with 11 seconds. Thank you. Thank you. 

Mr. PITTS. The gentleman’s time is expired and Chair recognizes 

chair emeritus of the committee, Mr. Barton. 

36 

Mr. BARTON. Thank you, Mr. Chairman. Welcome, Secretary— 

Madame Secretary. Congratulations to your Jayhawks for beating 

my Texas Aggies last night in basketball. I hated to see it, but you 

all were the better team. 

I think Dr. Burgess asked this question, but I am going to—I 

may ask it in a little bit different way. I think you are very well 

aware that a Federal court has recently ruled that the healthcare 

law that became law last year is unconstitutional. As the Chief Administrative Executive in charge of implementing that law what is 

your position on agreeing to the court order and ceasing to implement the new law? Do you intend to agree with it? Are you going 

to ignore it? Or are you going to appeal it? Could you enlighten us 

as to what your position is on this recent court ruling? 

Ms. SEBELIUS. Well, Congressman Barton, thank you on behalf 

of the Hawks. We have sought a clarification from Judge Vinson 

about the implication both for the plaintiff States as well as the 

membership of the NFIB which is one of the plaintiffs in the Florida case. Once we get that clarification we intend then to take next 

steps. In the meantime we are actively implementing the law because, as you know, Judge Vinson is now an outlier in terms of 

what the other Federal judges—the four other judges who have 

ruled, have ruled very differently than the judge. So we are seeking 

clarification and continuing to move ahead. 

Mr. BARTON. What is your timeline on that? 

Ms. SEBELIUS. Well, the plaintiffs and the—we expect to hear 

back from the judge soon. The DOJ has filed their clarification request. The plaintiffs have responded this week, and the judge indicated that he would rule very quickly. 

Mr. BARTON. Is it once that information is received from the 

judge is—whose decision is it? Is it your decision? Is it the Attorney 

General’s decision? Is it the President’s decision or all of the above 

on how to proceed? 

Ms. SEBELIUS. Well, our legal team is led by the Department of 

Justice so we defer to their legal counsel. 

Mr. BARTON. Do you have official input into the decision? In 

other words—— 

Ms. SEBELIUS. Into the legal counsel’s decision? 

Mr. BARTON. Well, you are the Secretary of Health and Human 

Services. 

Ms. SEBELIUS. I understand. I—our legal counsel is involved with 

the justice team, but they are proceeding to have this dialogue with 

the court. 

Mr. BARTON. OK. I would disagree with you that the judge’s decision was an outlier. My understanding is that if you are keeping 

score it is 2 to 2. So I don’t—— 

Ms. SEBELIUS. No, it is 3 to 2. 

Mr. BARTON. We had—have we had another one? 

Ms. SEBELIUS. I have to keep an accurate score and as I say 

there are 12 who have dismissed the case outright, so. 

Mr. BARTON. All right. 

Ms. SEBELIUS. And Congressman, the clarification I would make 

is that in the other decision which came out of a court in Virginia 

where the judge found an individual responsibility to be the one 

portion of the law that he found unconstitutional, he disagreed 

37 

with Judge Vinson’s description that it was essential to strike down 

the entire law and so that is what I meant—— 

Mr. BARTON. Yes, I am aware of that. 

Ms. SEBELIUS [continuing]. In terms of the outlier. 

Mr. BARTON. And I guess one more—one last question on that. 

Is it conceivable that the Obama administration would appeal directly if the decision is to appeal—would appeal directly to the Supreme Court so that we get this thing solved hopefully before the 

next presidential election? 

Ms. SEBELIUS. Congressman, the Attorney General of the State 

of Virginia has filed an expedited appeal to the United States Supreme Court asking them to grant cert in the case in Virginia. The 

Administration has opposed that decision to expedite, but that is 

now before the court. So that is ripe and the court will make a decision on whether or not they intend to expedite this case. 

Mr. BARTON. My time has just about expired. I have got a number of questions for the record I will submit in writing. My final 

question is on NIH. Several years ago we passed an NIH Reform 

bill through this committee that was signed into law. That bill was 

a reauthorization bill. It lapsed several years ago and it is up for 

renewal. I am going to encourage Chairman Upton to have a hearing and hopefully do a reauthorization on that later this year or 

next year, but in that was the creation of a Common Fund to try 

to get more cross-semination, insemination between the various 

NIH organizations. Have you followed that? And if so, could you 

give us an update on how you believe that common fund is operating? 

Ms. SEBELIUS. Well, Mr. Chairman, I know that the new director 

of the National Institutes of Health has taken a great interest in 

the Common Fund and has actively involved in not only seeking to 

fill gaps in research but directing it to the most promising options 

he feels in the research field. So I think it has been something that 

has been definitely a stream of funding that has been very important and one that I would be happy to get some detail from Dr. Collins on exactly where those funds are being directed. But it is 

something that he takes very seriously. 

Mr. BARTON. Thank you, Madame Secretary. And thank you. 

Mr. PITTS. Gentleman’s time is expired. Chair yields 5 minutes 

to the gentleman from New York, Mr. Engel, for questions. 

Mr. ENGEL. Well, thank you. Thank you, Mr. Chairman. You 

know I have been listening to the whining and complaining on the 

other side of the aisle and it just really boggles my mind, Madame 

Secretary. But the bottom line is do we want to provide American 

citizens with healthcare or don’t we? I know there hasn’t been any 

enthusiasm for the Affordable Care Act on the other side of the 

aisle, but you know let us try to improve it rather than try to destroy it. 

I noted with a bit of a chuckle the assault on the Massachusetts 

law. The fact is that the Governor of Massachusetts came here and 

said that the law is working and I wonder if Governor Romney is 

going to run on his strong implementation of that law in the Republican primaries when he runs for president. Madame Secretary, 

what are the most dangerous things in the Republican cuts as you 

see it from your very important point of view of providing 

38 

healthcare for Americans and all the other things that are in the 

Republican plans for funding the Government? What do you see as 

the most draconian of the cuts and how would it affect the health 

of the American people? 

Ms. SEBELIUS. Congressman, the President feels strongly that 

education, innovation, building are key blocks for the future. So the 

investment in early childhood education, which pays huge dividends down the road; the investment into scientific research to 

keep us at the front of biomedical innovation; the infrastructure for 

public health delivery with community health centers; and funding 

the training of providers—all of those are jeopardized without, you 

know, having adequate funding in the future as well as essential 

services. The centers for Medicare and Medicaid and—are looking 

at increased beneficiaries in a very restrictive budget and our efforts to have new fraud, waste, and abuse efforts which are really 

paying off are very much in jeopardy. 

Mr. ENGEL. You know what I see in terms of the Republican for 

funding the Government, it is not a matter of the fact that we need 

to cut to balance a budget. We do need to balance our budget and 

I find it odd that we are giving these huge tax breaks to wealthy 

people and that blows a hole in the budget. And I find that very 

interesting, but it is an attempt as I can see it to get rid of all the 

programs Republicans having liked for all these years and to try 

to tie it in and kind of use the budget problems to do that. You 

know we see it on a State level in Wisconsin. We see it all over 

the country. And we see it on a national level as well. We had Governor Barbour here and he complained that he didn’t like the Affordable Care Act and he would agree to block a grant. Do you 

think the people of Mississippi would be better off four years from 

now under Governor Barbour’s blocked grant program or under the 

Affordable Care Act? 

Ms. SEBELIUS. Congressman, I don’t know a lot of the details 

about the Mississippi healthcare situation. I do know that they 

have a population that, by poverty level, qualifies them for the 

highest FMAP rate. And one of the challenges of any kind of block 

grant is if you would look at the recent economic downturn when 

millions more Americans qualified for Medicaid because they lost 

their jobs or their incomes took a drastic downturn. No State would 

have any help from the Federal Government in responding to that. 

It shifts huge burdens frankly onto State bases and doesn’t have 

a Federal partnership moving forward. 

Mr. ENGEL. Let me ask you this. There have been a number of 

criticisms of the Pre-existing Condition Insurance Program and I 

would like to just review the facts. First there was concern over 

whether there won’t be enough money for all the people that will 

enroll. Then we heard that very few have enrolled and both criticisms were asserted as failures. How many people have enrolled 

and what changes have you made to the program in response? And 

let me throw out another question tying in with this. Governor 

Barbour at Tuesday’s hearing asserted they were unable to run the 

program. So were States given the opportunity to run the program? 

Could they have run it in combination with existing high risk pools 

in the States? And the irony as I see it is that a high risk pool was 

essentially a tattered feature in the Republican proposal for health 

39 

reform debated right in this very committee last year. So I wonder 

if you can comment on those things. 

Ms. SEBELIUS. Well, there are now approximately 12,000 people 

across this country who are enrolled in their State or the Federal 

high risk pool and the enrollment increased by about 50 percent 

over the last couple of months. Many States are—finally got their 

program set up, are doing aggressive outreach, are informing people but as you know there are some pretty strict requirements. You 

have to be uninsured for six months which is a barrier to a lot of 

folks. And the insurance, even though it is capped at market rates 

is still not inexpensive coverage. This was always designed as a 

bridge strategy to try and get to 2014 when the market rules will 

change and for the first time ever in the history of this country we 

will have insurance available without regard to people’s pre-existing health condition. They will be able to participate in a broad 

based pool. 

Mr. PITTS. Gentleman’s time has expired. Chair recognizes the 

gentleman from Illinois, Mr. Shimkus, for 5 minutes for questions. 

Mr. SHIMKUS. Thank you, Mr. Chairman. Madame Secretary, 

welcome. We have been waiting to visit with you for a long time. 

I would just—I would state that you know it is funny that you 

mention that NFIB which is a National Federation of Independent 

Businessmen were plaintiffs. When I thought they got such great 

small business tax credits that I wouldn’t really expect them to be 

in opposition to this law. I—it is just I am surprised to hear that. 

The other thing—you were a Governor of a State and I would imagine that had you been governing—did you ever pass—under governorship was budgets passed? Did you pass budgets when you were 

Governor? 

Ms. SEBELIUS. Yes, sir. 

Mr. SHIMKUS. Was the chambers held by just Democrats in the 

Senate and the House or did you have—— 

Ms. SEBELIUS. Never. 

Mr. SHIMKUS. What is that? 

Ms. SEBELIUS. Never. 

Mr. SHIMKUS. Never. And you passed budgets? 

Ms. SEBELIUS. We did. 

Mr. SHIMKUS. And then the last Congress we held—Democrats 

held the House of Representatives. That is true, right? 

Ms. SEBELIUS. And the house passed a budget. 

Mr. SHIMKUS. And they also held the Senate. 

Ms. SEBELIUS. They did. 

Mr. SHIMKUS. And we have a Democratic President? 

Ms. SEBELIUS. Yes, we do. 

Mr. SHIMKUS. And we didn’t pass a budget? 

Ms. SEBELIUS. I think the House passed a budget. 

Mr. SHIMKUS. So I am—I guess I am trying to be a little cute. 

The point is the Democratic attack on this CR is because of their 

failure to pass a budget. So they can position all they want, you 

know we are in the majority because they can’t pass a budget. 

Mr. PALLONE. Will the gentleman yield? 

Mr. SHIMKUS. No, I will not. We are in the majority because they 

passed this bill—became a law. We are in the majority because 

they passed Cap and Trade. Our frustration is the last time you 

40 

visited this committee was February 4, 2010, the last time. This 

bill was not even the law of the land. I became Ranking Member 

of the Health Subcommittee. After that vote Nathan Deal left and 

I think I asked the then-Chairmen Waxman and Frank Pallone 

who really is a great friend 19 times to ask you to come visit us. 

You never came. Why? Why didn’t you come after the law to help 

us understand the provisions and the implementation of this law? 

Ms. SEBELIUS. Congressman, I responded to the request that I 

got. 

Mr. SHIMKUS. So you are saying we never requested you to come 

back? 

Ms. SEBELIUS. Yes, sir. 

Mr. SHIMKUS. OK. So Chairman Waxman did not ask you to 

come back to help explain this law? 

Mr. PALLONE. Would the gentleman yield? 

Mr. SHIMKUS. No, I will not. 

Mr. PALLONE. He is referencing the Chair and it is not accurate. 

Mr. SHIMKUS. No, I will not. I will not. Will you answer the question, Madame Secretary? Chairman Waxman never asked you—— 

Ms. SEBELIUS. Congressman, I will go back. I need to look at the 

record. 

Mr. SHIMKUS. OK. 

Ms. SEBELIUS. All I can tell you is I respond to the—— 

Mr. SHIMKUS. Will you submit the answer for the record in writing? 

Ms. SEBELIUS. I will be happy to. 

Mr. SHIMKUS. Thank you very much. Let me go—this is really a 

budget—our frustration is there are so many particular problems 

and concerns we haven’t had a chance to really talk to you. This 

is a budget hearing so let us talk about a budget issue. In that February 4, 2010, hearing I asked you a question; it was kind of out 

of the same way. And then you admitted that the $500 billion 

Medicare cuts, there were $500 billion in Medicare cuts. Is that 

correct? 

Ms. SEBELIUS. No, sir, it is not correct. There were $500 billion 

in a slowdown in growth rate spending. 

Mr. SHIMKUS. Well, I would refer—I am reclaiming my time. I 

would refer you to the transcript. 

Ms. SEBELIUS. Sir. 

Mr. SHIMKUS. And I will read it if you want me to. 

Ms. SEBELIUS. The growth rate was projected in Medicare to be 

at 8 percent. 

Mr. SHIMKUS. ‘‘Mr. Shimkus: So the President supports cutting 

$500 billion in Medicare, yes or no? Secretary Sebelius: The President is supportive of the health reform legislation. Is that a yes? 

Secretary Sebelius: I said yes, sir.’’ So our problem in this whole 

debate on Medicare cuts—— 

Ms. SEBELIUS. The health legislation doesn’t include $500 million 

worth of cuts. 

Mr. SHIMKUS. Ma’am, my concern—this is a budget hearing, so 

there is a—there is an issue here on the budget because your own 

actuary has said you can’t double count. You can’t count 500—they 

are attacking Medicare on the CR when their bill, your law cut 

$500 billion in Medicare. Then you are also using the same $500 

41 

billion to what? Say you are funding healthcare. Your own actuary 

says you can’t do both. So my simple question—I have 26 seconds 

left. What is the $500 billion cuts for: preserving Medicare or funding healthcare law? Which is it? 

Ms. SEBELIUS. Sir, the Affordable Care Act adds 12 years to the Medicare Trust Fund according to every actuary and the $500 billion represents a slowdown in the growth rate of Medicare over 10 

years from what was projected at 8 percent to a growth rate of 

six—— 

Mr. SHIMKUS. So is it Medicare? Is he using it to save Medicare 

or are you using it to fund healthcare reform? Which one? 

Ms. SEBELIUS. Both. 

Mr. SHIMKUS. So you are double counting. I yield back my time. 

Mr. PITTS. Gentleman’s time is expired. Chair recognizes 

gentlelady from California, Mrs. Capps, for 5 minutes of questions. 

Mrs. CAPPS. I am pleased to yield 10 seconds to the ranking 

member of the subcommittee. 

Mr. PALLONE. I just wanted to say, Mr. Shimkus, you shouldn’t 

be asking the Secretary about whether we invited her. Fact of the 

matter is that Mr. Waxman and myself did not invite her after the 

healthcare bill passed. And you can simply address that to us and 

the answer is no, we didn’t invite her. So it is not that she failed 

to come, we did not invite her. 

Ms. SEBELIUS. Thank you. 

Mrs. CAPPS. Thank you, Mr. Pallone. Thank you for your testimony, Madame Secretary, and welcome to our subcommittee. I 

want to acknowledge and support the interest that was expressed 

by former Chairman Barton in the Common Fund he was describing and you answered how much the current Secretary of NIH or 

Chairman of NIH is supporting it as well. It was his idea and he 

got it funded in 2006 and point out to my colleagues that H.R. 1, 

the continuing resolution, cuts $48.5 million from the Common 

Fund. You know, these are tight fiscal times and I think the President’s budget identifies areas for smart investments that will pay 

off both in improvements in the Nation’s health and economic stability. The President has called on our Nation to come together to 

out-educate, out-innovate, and out-build our competitors. I support 

this focus and I think the HHS is in a strong position to help reach 

these goals. As nurse, I am concerned about strengthening the 

health work force. We face a primary care shortage now and as we 

move into implementation of health reform we are going to need 

an even more robust healthcare workforce. As you know, the Affordable Care Act lays out a course for creating that workforce, creating a commission to help guide analysis and recommendations of 

workforce enhancement, providing primary care providers a pay increase through both Medicare and Medicaid and providing enough 

service—enough funding to more than triple the National Health 

Service Corp. But we in Congress need to support these programs 

for proper implementation. So I am very concerned that the House 

continued resolution would cut workforce programs by about $145 

million from the fiscal year 2010 level, slashing vital Title VII and 

Title VIII by nearly a third. I am particularly worried about Title 

VIII programs which support the education and training of nurses. 

We have a nursing shortage. Last year over 50,000 qualified appliVerDate Nov 24 2008 15:40 Oct 26, 2011 Jkt 037690 PO 00000 Frm 00045 Fmt 6633 Sfmt 6633 F:\112-014 HHS BUDGE-PDF MADE\67590.TXT WAYNE
42 

cants were turned away from nursing schools due to budget constraints and the lack of faculty to train them. Madame Secretary, 

you understand this. The President’s budget provided an increase 

in these same programs. Can you discuss the steps taken in the 

budget to strengthen our healthcare workforce and increase the 

numbers of jobs which will result from that? 

Ms. SEBELIUS. Well, Congresswoman, I think that there is no 

doubt that the President shares your concern about the health 

workforce of the future which is why he has made it a focus each 

year in his budget and why I think the Affordable Care Act also 

focused on workforce enhancements. So the budget would include 

support as you say to train about 10,600 National Health Service 

Corp providers; train an addition 4,000 new primary care providers 

over the next five years. The Prevention and Public Health Fund 

Allocation would also increase the number of nurse practitioners. 

Six hundred nurse practitioners would be trained. Six hundred new 

physician assistants across the country would be available with the 

establishment of new community health centers there would be 

providers available in the most underserved areas, so there are a 

whole series of workforce enhancements that would be jeopardized 

either by defunding the Affordable Care Act or not passing the recommended President’s budget. 

Mrs. CAPPS. And what concerns me is it the House Continuing 

Resolution would be a reduction of 54 percent cutting our workforce 

programs by more than half in all of the areas that you specified. 

I think this is going to devastate our healthcare workforce. And I 

hope you will quickly agree with me. 

Ms. SEBELIUS. Yes. 

Mrs. CAPPS. Thank you. I needed that for the record. What puzzles me is that I know my colleagues across the aisle have expressed concerns that we don’t have enough healthcare workforce, 

but I shared their concern and this—the key to addressing this 

problem is right in front of us and yet they propose cuts that will 

make the situation worse. Their budget will hamper efforts to fill 

the gaps that we have today and just as the demand for healthcare 

professionals increases. In my last minute, I would like to address 

something you mentioned in your remarks which are the $4 billion 

in waste, fraud, and abuse that HHS and the Department of Justice has recovered just in this past year—$4 billion that was saved 

for American taxpayers. When I am home meeting with my seniors 

in healthcare advocates as well about how they can be active participants now in looking for waste, fraud, and abuse. We want this 

to continue. Some of it is in the Medicare payments. Would you expand upon this $4 billion in savings and ways that we can look to 

increase this amount over the future? 

Ms. SEBELIUS. Well, the President’s budget again has requested 

additional resources. This is an enormous payoff—— 

Mrs. CAPPS. Yes. 

Ms. SEBELIUS [continuing]. In terms of dollars returned for dollars spent. We are building new data systems that can allow us to 

spot billing irregularities in a much more timely fashion, 

recredentialling providers, putting in place strike forces. We would 

like to expand those strike forces which have been enormously 

helpful in the fraud hotspots. But this collaborative effort with not 

43 

only our partners at Justice, but local Attorneys General and 

States has been enormously effective so far and we hope to be able 

to expand and broaden that outreach. 

Mrs. CAPPS. Thank you. 

Mr. PITTS. Gentlelady’s time is expired. Chair recognizes the gentleman from Pennsylvania, Mr.—Dr. Murphy for 5 minutes for 

questions. 

Mr. MURPHY. Thank you. And thank you, Madame Secretary. 

Three things I think I am going to put out that we agree on. First 

of all that first Pitt and Kansas both deserve to be in the final four. 

A yes would be good. I will take that as a yes. 

Ms. SEBELIUS. Yes. 

Mr. MURPHY. Thanks. Number two, this committee worked very 

hard together and my friend and colleague Gene Green and I 

worked together on and it passed the House 417 to one a bill to 

allow doctors to volunteer at community health centers. Now, I 

know the estimates are that huge numbers of more people will go 

to community health centers. With the CBO analysis of this however just said that using the Federal Torts Claim Act and using 

only those numbers because that is all they are allowed to look at, 

I think the cost over several years was 30 million. But I am asking 

if your department could work with us in coming up with a more 

detailed analysis if we allowed the doctors to volunteer at community health centers what would the cost savings be in terms of allowing more patients to go through those centers. Is that something that you could help us come up with an—— 

Ms. SEBELIUS. I would be glad to work with you on that. 

Mr. MURPHY. That would be extremely helpful because you know 

we have huge rates for vacancies of jobs in those centers and that 

would be very helpful. And I have no doubt that this committee 

and this House will pass it again. Will you help the nudge the Senators, help them understand the great value in this as well? We 

don’t try and put pressure on them, but perhaps you could perhaps 

add some wisdom to them. Second thing—or the third thing, in the 

National Child Traumatic Stress Network—it is a group of academic and community based centers that give—that disseminate 

standards in clinical excellence and care of traumatized children. 

It is funded through the Substance Abuse and Mental Health Services Act. When I read your budget proposal, however, it seems like 

the Administration—although you were supportive of the program 

there were some cuts to the program. Actually it cut the funding 

from 40 million to 10 million, but at the same time the SAMSA 

budget is calling for major increases in spending in a number of 

other areas such as increased spending for military families initiatives for service grants, some things for homeless—certainly you 

know that with regard to homelessness there is a high correlation 

between childhood trauma and homelessness. And in my own experience of working with servicemen and women at Bethesda Naval 

Hospital, my own clinical experience as a psychologist also tells me 

that there is a higher risk for people for PTSD and homelessness 

and other trauma if they themselves experience a great deal of 

trauma in their lives when they were younger. And I think that 

you have like 2.37 billion in homeless grants through HUD and 

other things for veterans although I think the VA should be hanVerDate Nov 24 2008 15:40 Oct 26, 2011 Jkt 037690 PO 00000 Frm 00047 Fmt 6633 Sfmt 6633 F:\112-014 HHS BUDGE-PDF MADE\67590.TXT WAYNE
44 

dling some of this. Is this something you are able to relook at and 

see that perhaps we should be spending more in the early treatment and prevention, let the VA handle some of the other things 

for veterans, but to revisit that so make sure we are not cutting 

some of the treatment programs out of the childhood treatment of 

trauma? 

Ms. SEBELIUS. Well, I would be glad to have that discussion with 

Pam Hyde, who is the Director of the Substance Abuse and Mental 

Health Services. I can tell you she is absolutely committed to prevention as being the most effective treatment possibility, so I will 

certainly circle back with her about your concern about that particular program. 

Mr. MURPHY. Thank you. I know that the VA for example has 

14 homeless programs and initiatives and although I do want to 

support all of those I also recognize that we would do well to prevent some of these problems for a lot of them, too. Finally in the 

area of Medicare and Medicaid those programs were designed in 

1965 and I oftentimes liken it to none of us were driving a 1965 

car and if we had one we would put a lot of patches and repairs 

to it over time. Whenever I talk to medical subspecialties in a wide 

range of areas—cardiology being one, I think 40 percent of our 

money is spent on cardiovascular disease. I very often—when we 

ask the question if you were to design Medicare today would it look 

anything like the Medicare of 1965? And I am assuming you would 

agree, no. Could you tell me what major initiatives you have in 

mind that really help us perhaps even redesign this from the 

ground up particularly for some of the major disease entities such 

as cardiovascular disease, lung disease, cancer, et cetera? 

Ms. SEBELIUS. Well, Congressman, the Affordable Care Act actually includes a major direction that the Medicare incentives be redesigned and aligned with quality outcomes and healthcare strategies that we know are not only more patient-centered outcomes like 

medical home models and bundling care to prevent unnecessary 

hospital readmissions, but the Medicare incentives I would say are 

right now aligned to volume and not value. So we are in the process through the centers for innovation, through working with providers across this country to try and capture the best possible patient practices and implement those. Yes. 

Mr. MURPHY. I hope you will do that. I know my time is up, but 

the academies and colleges of various specialties of medicine have 

standards and protocols and I hope you will look to them for some 

guidance on that. 

Ms. SEBELIUS. We are working very closely with them. Thank 

you. 

Mr. MURPHY. Thank you, Mr. Chairman. Thank you, Madame 

Secretary. 

Mr. PITTS. The Chair thanks gentleman. The gentleman’s time 

has expired. Chair recognizes the gentleman from Texas, Mr. Gonzalez, for 5 minutes for questions. 

Mr. GONZALEZ. Thank you very much, Mr. Chairman. Welcome, 

Madame Secretary. I do want to address a comment that was made 

by a fellow Texan that the uncertainty that is out there regarding 

the constitutionality of the mandate and wondering what the Texas 

Attorney General has to do and that he is wondering what he has 

45 

to do as well as our Governor Rick Perry. Those two gentlemen also 

represent me and I do have a suggestion as to what they could be 

doing in the meantime. They could be coming up with a solution 

to make healthcare insurance affordable for Texans so that employers have access to it at a reasonable price to offer it to their employees, and that Texas, its citizens have affordable insurance 

products available to them so that we don’t lead the Nation in the 

uninsured. That is what they could be doing. That is just a suggestion. I am sure they have thought of it. 

We have heard that the American people want us to balance the 

budget, reduce the national debt, and we all agree and I think the 

President’s fiscal year 2012 budget places us in a good place to accomplish that. But I don’t think the American people said and 

while you are doing this expose us to dangerous drugs, or continue 

a healthcare insurance industry that does not provide us adequate, 

affordable, accessible coverage. I don’t think they said that. So I 

join you and I join the administration and I believe that I join 

members on the other side of the aisle in that objective. And we 

may have different plans on how to get there, but the truth is nothing was done until we passed the Affordable Care Act. The discussion is ongoing and it will be a continuing debate, but the need still 

exists, the problem still exists. 

We can debate this thing and just continue to hemorrhage, so I 

will ask you this, Madame Secretary. We hear so much about market forces and just let the free markets take care of all of this. And 

I think in large measure we all agree with that to a point until the 

markets are dysfunctional, until the markets don’t deliver what is 

necessary without the incentives, and the directions, sometimes 

and a push, and a shove, but mostly a collaborative effort which 

I think is what the President is seeking to do. When it comes to 

the FDA why not just let an industry police itself. Why don’t we 

just let them do that? 

Ms. SEBELIUS. Well, Mr. Congressman, we have seen I think the 

results of a lack of regulation in way too many areas that have just 

gone terribly awry. I think the FDA is certainly seeking to make 

sure that the 25 cents of every consumer dollar which comes in a 

product that is under the umbrella of that agency, whether it is 

drugs and devices or our food supply, is safe and secure. And frankly, I think in many cases the industry is very supportive of those 

efforts in the food debate for the new Food Safety bill that we just 

had, the industry ultimately takes the economic hit from an unsafe 

product being available to consumers. There is a huge ripple effect 

that ends up penalizing the food industry. So they are eager for a 

regulatory oversight and they are willing and able to actually help 

finance that regulatory oversight. 

Mr. GONZALEZ. And I do believe it is a collaborative—it is a partnership. But I think Government has a responsibility to protect the 

welfare and safety and health of our constituents. That is what we 

were hired to do and provide them with opportunities. The last 

question is and I am very concerned about NIH because I am having all of my universities, they are all coming and these are Democrats and Republicans and they are all have basically this same request. What is going to happen to replace those particular funds 

that are so essential? Again why is NIH so necessary? Why don’t 

46 

we just allow the public—the private sector to make those funds 

available to our universities? 

Ms. SEBELIUS. Well, Congressman, as you know one of the areas 

that the United States leads the world is biomedical research. And 

it has been an enormously important partnership between the commercial industry and the research that goes on in universities 

across the country funded in large part by NIH which is why I 

think the President has recommended an increase to the NIH 

budget which is already looking at a losing the two years of enhanced funding from the Recovery Act and trying to make sure 

that we continue those breakthroughs that are happening all 

across this country. 

Mr. GONZALEZ. Thank you very much. Thank you, Mr. Chairman 

for your indulgence. 

Mr. PITTS. Gentleman’s time is expired. The Chair recognizes the 

gentlelady from Tennessee, Mrs. Blackburn, for 5 minutes for questions. 

Mrs. BLACKBURN. Thank you, Mr. Chairman, and thank you, Madame Secretary for being with us. I found a—your opening statement a little bit curious. You mentioned that you think that it is 

the responsibility of the Administration to give every family and 

business the chance to thrive while making the investments that 

will grow our economy and create jobs. And I just have to tell you 

being out there and holding listening sessions in my district and 

with some of my colleagues the American people do not want to be 

dependent on the Federal Government for their cars, their loans, 

their home loans, their housing, their education, and their 

healthcare. What they would like to do is see the regulation reduced and to see the Federal Government get out of the way. So 

I would ask you, do you have any data that shows that businesses 

are actually getting relief on the cost of the insurance that they are 

paying every year? Do you have any data that is verified that this 

is lowering costs? Because we are hearing the opposite and are actually being shown bills and estimates for that. 

Ms. SEBELIUS. Congresswoman, if you are talking about data as 

a result of the Affordable Care Act—— 

Mrs. BLACKBURN. Yes, of Obamacare. Yes, ma’am. 

Ms. SEBELIUS [continuing]. As you know the law was signed just 

about a year ago. What we have seen with the enhanced rate regulation there are numbers of States that actually have used those 

new tools to lower the impact of rate increases and that is showing—— 

Mrs. BLACKBURN. Could you supply that because we are not seeing that in Tennessee—— 

Ms. SEBELIUS. I would be happy to supply that. 

Mrs. BLACKBURN [continuing]. And I know Tennessee had to 

come to you for one of the 900 waivers. And I know they are appreciative for that. Let me ask you about the 1115 waivers. When you 

grant a waiver and it seem s like you all are doing more of that, 

is that waiver—does that take the elected officials in that State out 

of the decision-making equation? Is that waiver granted to the Governor’s office between CMS and the Governor’s office? Because that 

is the way TennCare was done. We as State legislators were taken 

out of the equation. 

47 

Ms. SEBELIUS. Actually Congresswoman, the traditional 1115 

waiver was a dialogue between CMS and the Governor’s office. The 

Affordable Care Act changes that provision so now there is a notice 

requirement. There are public hearing requirements. There is input 

opportunity, so the waiver process actually has been amended by 

the Affordable Care Act to include far more transparency. 

Mrs. BLACKBURN. OK. I would like to call to your attention this 

is the reason it is so important to me. Today’s Wall Street Journal: 

Obama’s health waiver gambit. And it talks about Ms. Cutter and 

Ms. Deporal saying privately to our liberal interest groups that this 

is a way to increase centralization for instance with a State-based 

public option or even single payer. And I tell you why this is of concern to me. We had Governor Patrick in here this week and his 

Medicaid State Director is on the record having said that when you 

look at the way the market Medicaid works that he is beginning 

to favor a single payer. And I would just submit to you that this 

is not what the American people want. They do not want the Federal Government that can’t tend to the items that are on their 

plate making the decisions for their healthcare and we hear it from 

them every single day and ma’am, it is of concern. If we have—— 

Ms. SEBELIUS. Congresswoman, that is not at all—first of all we 

don’t design any waiver. The State comes to us with a—— 

Mrs. BLACKBURN. I have seen the applications from my State and 

I respect that and I understand that. We want to move on. 

Ms. SEBELIUS. The rules aren’t even developed for the program 

you are referencing. 

Mrs. BLACKBURN. I do want to move on. Fraud, you mentioned 

fraud. We had a hearing on this this week. Are you able to quantify 

the amount of fraud that is there in Medicare and Medicare and 

then—— 

Ms. SEBELIUS. No, ma’am. 

Mrs. BLACKBURN. OK. So the four billion that you feel like you 

saved you don’t have a way to quantify what the problem is and 

how widespread? 

Ms. SEBELIUS. We don’t know how—if we knew how big it was 

we would hopefully shut it down. 

Mrs. BLACKBURN. And what percentage of your energy this year 

is going to go to addressing that fraud? 

Ms. SEBELIUS. What percent of my energy? 

Mrs. BLACKBURN. Yes, your resources and energy. I mean, when 

we hear organized crime getting into Medicare and Medicaid fraud 

I think it should cause us all—so if you could just let us know your 

resources, what you plan to put into that. 

Ms. SEBELIUS. There are significant new resources requested in 

the budget for fraud and abuse. 

Mrs. BLACKBURN. Another question I would like to—your budget 

this year, your request is 891 billion. Your ’08 budget which we 

would love to return to those numbers was 708 billion and you 

mentioned that you have cut in your testimony four programs but 

or you list four programs that you cut. Are those the only cuts that 

you all made or were there others? 

Ms. SEBELIUS. No Congresswoman, there are about $5 billion 

worth of cuts. Our budget proposal is below the 2010 levels. 

Mrs. BLACKBURN. Do you mind submitting that list to us? 

48 

Ms. SEBELIUS. I would be happy to. 

Mrs. BLACKBURN. That would be great. You are below 2010, but 

not down to ’08. I yield back. 

Mr. PITTS. The chair thanks the—— 

Mr. PALLONE. Mr. Chairman—— 

Mr. PITTS [continuing]. Gentlelady. 

Mr. PALLONE. Mr. Chairman, a point of personal privilege here 

or whatever—— 

Mr. PITTS. Yes, let me just say—— 

Mr. PALLONE. The Secretary should be allowed to answer the 

question. 

Mr. PITTS. That is correct. The gentlelady’s time is expired. Madame Secretary, do you wish to add additional response? You may 

continue to respond in writing as well if you feel like you have not 

adequately responded. 

Ms. SEBELIUS. Thank you, Mr. Chairman. 

Mr. PITTS. The Chair recognizes the gentlelady from Wisconsin, 

Ms. Baldwin, for 5 minutes for questions. 

Ms. BALDWIN. Thank you. Thank you, Madame Secretary for 

being here. Earlier I wanted to start by reacting to some of the 

other comments that were made. I think it was Dr. Burgess who 

noted that we switched sides and it was because of this law referring to Affordable Care Act or Healthcare Reform. And I disagree. 

I think the last election was about jobs, jobs, jobs. 

But instead of focusing on jobs, the new majority has made it 

their first order of business to repeal the Affordable Care Act. That 

was one of the first votes we took this session which is already in 

my community providing lifesaving coverage to many who didn’t 

have it before and improving their access and the affordability of 

their healthcare. And instead of focusing on jobs, the new majority 

has attempted also to deny funding to continue implementing the 

Affordable Care Act, the Healthcare Reform bill we passed last session. 

Instead of focusing in on jobs, the new majority has offered 

House Resolution 1 that Moody’s earlier this week said would lead 

to the loss of 700,000 jobs in the United States. And instead of focusing in on jobs, some of our new Governors are presenting budgets imbedded with policies that would gut Medicaid and would 

thwart at the State level the implementation of the Affordable Care 

Act. It is precisely what is happening in my home State of Wisconsin which used to have a reputation as being a leader in 

healthcare and a leader in preparation for the implementation of 

the Affordable Care Act. 

Now I don’t envy you your job right now. It is working to implement these vital, lifesaving, important reforms when so many are 

working so hard to see that legislation thwarted, roadblocks placed, 

et cetera. But I want to focus back on House Resolution 1, the continuing resolution that passed in the House a couple weeks ago. 

I brought an amendment to the floor to restore funding to the 

community health centers. My amendment was fully paid for but 

unfortunately the Republicans barred me from offering that. But 

H.R. 1 slashes over a billion dollars to community health centers 

for the remaining seven months of this fiscal year. If this ultimately is passed and becomes law I guess I would like to hear from 

49 

you how you even go about implementing that. How does this impact the constituents that I represent that rely on the wonderful 

community health centers that provide services in my area? I have 

heard that this will impact coverage to probably 11 million Americans. It will result in job losses and closure of clinics. Do you 

drive—if you were forced to implement such draconian cuts how 

would you go about that? What would we see at the local level? 

Ms. SEBELIUS. Well Congresswoman, I share your view that the 

community health center footprint is incredibly important and both 

with the Recovery Act and the budget investments and the Affordable Care Act that footprint will double over the period of the next 

five years serving closer to 40 million people. We are already seeing 

that increase. There are about 10 million additional Americans 

served thanks to the Recovery Act investments and they are in the 

most underserved areas. And with those community health centers 

are providers and often providing a host of community services. 

So the effort to now deny care, fire healthcare providers who 

would lose their jobs and restrict access in the most underserved 

rural and urban communities to affordable available healthcare 

would just put additional burdens on already strapped city and 

State budgets. Those folks will come through the doors of emergency rooms, enlarge our numbers. They will be sicker on the job. 

They will be unable to take care of their kids. There will be students who won’t do as well in school because their health needs 

won’t be attended to. And I think that has a serious impact not 

only in the health of this Nation but on certainly the prosperity of 

the Nation. 

Ms. BALDWIN. Thank you. 

Mr. PITTS. The gentlelady’s time is expired. Chair recognizes the 

gentleman from Georgia, Dr. Gingrey, for 5 minutes for questions. 

Mr. GINGREY. Mr. Chairman, thank you. Secretary Sebelius, in 

testimony before this committee on January the 26 I asked Mr. 

Cass Sunstein from the White House Office of Regulatory Affairs 

if he knew who had the authority within your administration to 

slip a Medicare end of life service rate into a final rule without first 

allowing for public comment. And he testified under oath that and 

I quote ‘‘the Secretary of HHS has considerable authority over her 

rules.’’ Madame Secretary, in—yes or no, did you make the decision 

to publish this end of life payment rate without allowing for public 

comment? 

Ms. SEBELIUS. Yes, sir. 

Mr. GINGREY. Well, I appreciate your forthrightness on that. I 

really do, but you know it flies in the face of the comment, the response that you just gave to my colleague from Tennessee regarding the 1115 Waiver Program and you described how it formally 

worked between the department and directly with the Governor’s 

office in calling for more oversight and public hearing and transparency. So would you agree that in the future that rather than 

making that decision unilaterally even though you have the power 

to do it, that maybe a little bit of time for public comment would 

have been appropriate in regard to that? 

Ms. SEBELIUS. Congressman, the rule as you know was—followed 

the outline that was directed in the Affordable Care Act in terms 

of the provisions for a wellness visit. In addition we looked at the 

50 

original welcome—welcome to Medicare visit and the one element 

that wasn’t consistent was—— 

Mr. GINGREY. Yes, I wish I had enough time to listen to your full 

answer but—— 

Ms. SEBELIUS [continuing]. End of life—but—well, we did—— 

Mr. GINGREY [continuing]. If you could respond yes or no to that? 

More transparency? More opportunity for public comment? 

Ms. SEBELIUS [continuing]. We got in fact—yes, sir. And that is 

why it is not part of the final rule. We decided that it was better 

to air it. 

Mr. GINGREY. And I would hope that that is a yes answer. Let 

me move on. In the President’s fiscal year 2012 budget, your department requested $93 million for information in education in 

order to sign American workers up for the Class Act. This is that 

same program that you just recently told Senate Finance Committee I guess a few weeks ago that the program was 

unsustainable. Now those are your words. Do you believe it is appropriate for the Administration to solicit money from American 

workers for a health program that is ‘‘totally unsustainable’’? 

Ms. SEBELIUS. Sir, my comment was that it was unsustainable 

as the legislation was crafted, but I was given considerable flexibility and we are in the process of making I think the changes that 

will meet the criteria outlined in the law, which is, that it be sustainable without taxpayer support. 

Mr. GINGREY. Well, thank you. Given the current budget crisis 

that we have in this country and I think everybody on the dais and 

certainly you would agree with this we have a tremendous budget 

crisis. And understanding that you are asking for money to sign 

people up for a program that you say is unsustainable, will you 

pledge here today to work with this committee to ensure that the 

Class Program, the Class Act is truly sustainable before the Administration proceeds with program operations? 

Ms. SEBELIUS. Yes, sir, I would be happy to do that. 

Mr. GINGREY. Thank you, Madame Secretary. And the last thing 

that I wanted to address with you and this is kind of a follow on 

to Chairman Dingell’s line of questioning earlier regarding H.R. 1. 

And he asked you a number of yes or no questions, and I think you 

responded to pretty much everyone of them yes that H.R. 1 and the 

$61 billion worth of cuts would hurt this program and that program and the other program. Do you believe that we need to restore fiscal sanity to our budget? Yes or no? 

Ms. SEBELIUS. Yes, sir. 

Mr. GINGREY. Do you believe then that the $61 billion in discretionary cuts in the CR for fiscal year 2011 contained in H.R. 1 will 

help the Federal Government reduce its current budgetary deficit? 

Yes or no? 

Ms. SEBELIUS. Sir, I believe that the President has put a very responsible budget forward and it is one that—— 

Mr. GINGREY. I am not talking about 2012 now, Madame Secretary. I am talking about H.R. 1, the CR and the $61 billion worth 

of cuts that Chairman—former Chairman Dingell was attacking. 

Ms. SEBELIUS. I support the President’s notion that we have to 

make smart and strategic cuts because we have got budget—— 

51 

Mr. GINGREY. So the answer is yes. I thank you, Madame Secretary. And Mr. Chairman, I will yield back my 13 seconds. 

Ms. SEBELIUS. I don’t think the answer was yes, but—— 

Mr. PITTS. Chair thanks the gentleman. Gentleman’s time is expired and the Chair recognizes the gentleman from New York, Mr. 

Weiner, for 5 minutes for questions. 

Mr. WEINER. Thank you, Madame Secretary. Welcome. As to this 

notion that we didn’t invite you to come testify last year after the 

passage of the bill, having heard these questions all I have to say 

to you is you are welcome. I just wanted—probably no member of 

the Government, maybe even in history, has had to spend so much 

of her time swatting away lies. So let me kind of run through some 

things. Maybe we can cover in four minutes and 33 seconds to try 

to get some truth on some of the big questions of the day. 

First of all, this notion that if you give people a subsidy and incentive to purchase health insurance somehow that they are not 

going to want it, that this individual mandate is somehow this 

huge burden. You might not be aware of this, but I will tell you 

the number of people in Romney Care in Massachusetts which also 

had a mandate that chose not to sign up after they got the subsidy; 

chose instead to pay for the penalty or the tax—whatever we are 

going to call it, was .65 percent. Meaning that when you offer the 

people to get insurance for their families to get better healthcare 

and a better life they take it. 

So the idea that this mandate if it disappears will somehow have 

a dramatic impact, maybe one percent of people would be impacted. 

But just so we understand and you can clear it up for us—the reason there is a requirement that people get insurance when offered 

a subsidy and incentives to get it, it is because if they don’t get it 

and they are uninsured when they need hospital care or healthcare 

costs, they pass it along to the rest of society. Is that right? 

Ms. SEBELIUS. That is correct. That is correct. 

Mr. WEINER. The second thing is we have heard a lot of the— 

in the repeal efforts this being called a job killing bill. If we repeal 

the Healthcare bill would the subsidies going to small businesses, 

the tax credits to provide healthcare for their workers making 

those workers less expensive, would those subsidies disappear if we 

repeal the bill? 

Ms. SEBELIUS. Yes, sir. 

Mr. WEINER. Thank you. Next is this notion about Medicaid providing this enormous unfunded liability in the out years. Is it not 

true that under the bill any additional people covered under Medicaid which are poor people but they are not going to be as poor 

under the new bill since we are going to raise the limit a bit—not 

to a lot, it is still—you have to have a $30,000 family income for 

a family of four. It is not a lot of money. That the—it provides no 

additional cost at all to the States until at least the year 2017. Is 

that correct? 

Ms. SEBELIUS. That is correct. 

Mr. WEINER. And in the year 2018 when there is a marginal difference, if the number of poor people in the States goes down, 

meaning the economy has improved, meaning fewer people are poor 

enough to be eligible for Medicaid, more people are working, those 

52 

costs could go down as well if there are fewer people on Medicaid. 

Could there not? 

Ms. SEBELIUS. That is correct. 

Mr. WEINER. And I assume that all of us believe and we hope 

that the economy is going to keep getting better. We have Republican Governors here saying my costs are going to go through the 

roof. Well, they only go through the roof if you are a crummy Governor and your poverty in your State continues to go up. Is that 

correct? Well, you—never mind, never mind, never mind. 

Ms. SEBELIUS. Thank you. 

Mr. WEINER. You can leave off the crummy Governor part. That 

is me editorializing. Finally, another thing my Republican friends 

have said again and again is this is a trampling of states’ rights, 

that the most powerful Secretary is taking more and more control. 

I am going to give you a couple of things here. First of all, is it 

not true that the exchanges are going to be run by the States? 

Ms. SEBELIUS. If they choose to do so, absolutely. 

Mr. WEINER. If they choose to do so. Is it not true that the tort 

laws which are now States by States—there was a decision made 

in this law by the people who wrote the law not to trample on 

states’ rights with tort laws but now the 50 States still have their 

Tort Laws in effect. Is that correct? 

Ms. SEBELIUS. That is correct. 

Mr. WEINER. Is it also not true that State insurance commissioners and commissions and the State governance of insurance 

was left intact? 

Ms. SEBELIUS. At the State level with additional resources for 

those States. 

Mr. WEINER. Correct. We actually empowered them. They now 

have the ability—— 

Ms. SEBELIUS. Correct. 

Mr. WEINER [continuing]. To do things to hold down rates and so 

forth. So much for this notion of we are centralizing power in your 

office or centralizing the Federal Government. We went in an opposite direction. We did not go the direction I would have like to expanding Medicare which is a much better idea by the way Madame 

Secretary—expanding Medicare little by little. We went a different 

way. 

And one final point on this notion of expanding the office—your 

power of your office. These 1115 waivers that you have been given 

are an effort each one is you saying we are going to be flexible to 

allow to respond to your expression of what is going on in the 

States, in the marketplace, at the business so long as we get to the 

outcome we all aspire to which is more people getting affordable 

coverage, reducing the cost to people along the way. Isn’t it the 

waivers makes the point that this is not this intractable, inflexible, 

centralized monolith, that it is a conversation that is going on between States and businesses and your office to try to make sure we 

get the outcomes we all want? 

Ms. SEBELIUS. I think the bill recognizes the framework that 

States know their markets best. They are the laboratories of innovation, they work to provide a State—— 

Mr. WEINER. But on those waivers are an expression of that as 

well, are they not? 

53 

Ms. SEBELIUS. Absolutely. 

Mr. WEINER. OK. In 5 minutes we did one, two, three, four, five, 

six, seven, eight, nine lies told by the Republicans. Imagine if we 

had more time but we don’t. Thank you, Madame. 

Mr. PITTS. The gentleman’s time is expired. The Chair recognizes 

the gentleman from Ohio, Mr. Latta, for 5 minutes. 

Mr. LATTA. Well, thank you, Mr. Chairman. Secretary, thank you 

very much for being with us today. And I am going to—I would like 

to change track just a little bit and in reading your testimony on 

page eight under the Advance the Health Safety and Wellbeing of 

the American People it says child support and fatherhood initiative. And the two sentences I am interested in—the budget includes 305 million in fiscal year 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 the father’s support reaches their 

children continuing a commitment to vigorous enforcement. I guess 

my first question, Madame Secretary, is where it states here that 

we are going to encourage fathers to take responsibility for their 

children. What encouragement are we going to be offering them? 

Ms. SEBELIUS. I think it, Congressman, it refers to working with 

States on a more effective and vigorous enforcement of child support orders and seeking child support orders from the outset, and 

making sure that there is a financial connection between fathers 

and their children that they have borne. 

Mr. LATTA. OK. Let me follow up with that. And the reason I 

ask—this really caught my attention because several lifetimes ago 

I was in the Ohio Senate. I chaired the Senate Judiciary Committee and we had a large bill that I had—that I sponsored in dealing on especially juveniles and juvenile crime, et cetera. And one 

of the judges that appeared before us during about I think it was 

like 18 or 19 hearings on that piece of legislation. That as we were 

going through it and we were talking about parents it really came 

down to and I think this one judge really caught the essence of the 

entire day. He said it was really—and what we are looking at is 

an abdication of parental responsibility. And I guess the next question would be then is that do we have any current programs, models that we can base the belief or successes that this is going to 

work with? 

Ms. SEBELIUS. I am sorry, sir. Do we have—— 

Mr. LATTA. Do we have any current programs or any other models out there that is going to show—you know if we are going to 

spend 305 to 2.4 billion over 10 years do we have anything out 

there that is going to show that this is going to work? 

Ms. SEBELIUS. Well, we have—I think this is part of the TANF 

umbrella and I do think we have data that indicates there are 

strategies that are more effective than others and what we are trying to do is improve this effort along the way to make sure that 

child support is not only effectively administered but that more of 

these dollars will actually go to the children and not be siphoned 

off along the way. So it is a double improvement. 

Mr. LATTA. OK. And I guess the—you know it really comes down 

to you know can Government really change some of these folks out 

54 

there, the way that they are parent—I would guess you would say 

non-parenting right now? 

Ms. SEBELIUS. Well—— 

Mr. LATTA. And if I could just—and I am going to pose this too 

even going back on a farther lifetime we used to have what they 

called Bureau Support. And I remember when I was working in the 

prosecutor’s office many moon ago I asked one gentleman if he 

wanted to go to jail for not paying his support and he said I don’t 

care. And those are the kind of—— 

Ms. SEBELIUS. Well, unfortunately, I wish there was a law that 

you could pass that would do just what you are suggesting, but at 

a minimum I think that what we can do is be effective in terms 

of trying to make sure that children are not penalized financially 

by a father who would walk away. But I think this also includes 

fatherhood engagement increases, and increased access in visitation. Often those two things are tied together. If a father is really 

prohibited from connecting with his children, he is less likely to be 

a financial provider. And so I think it looks at the whole, the overall package of family. 

Mr. LATTA. And if I could just—my last minute here going back 

to a question that has come up I know from Mr. Pallone, it is a 

question of—it is in the page 3 the budget limited subsidies to Children’s Hospitals Graduate Medical Education. And it says if—in focusing instead on targeting those investments to increase the primary care work force. I know a lot of the time when people are 

coming in from Children’s Hospitals from Ohio that they say that 

they are the step children, that they are not getting the dollars. 

They are not getting the dollars from NIH. What are we targeting 

then in your testimony it says instead targeted investments to increase primary care workforce? 

Ms. SEBELIUS. Well, the—again, I don’t think this is an easy cut 

to put on the table and I can guarantee you that in a budget that 

we had full resources this would not be a preferred cut. The GME 

dollars are being redirected to, I think, programs that have as an 

exclusive focus the sort of primary care provider network recognizing that we are going to need additional primary care docs looking forward. 

Mr. LATTA. Thank you, Mr. Chairman. My time has expired and 

I yield back. 

Mr. PITTS. Gentleman’s time has expired. Chair recognizes the 

gentlelady from Illinois, Ms. Schakowsky for 5 minutes for questions. 

Ms. SCHAKOWSKY. Thank you, Mr. Chairman. Madame Secretary, 

I want to thank you so much for being here today. We have asked 

you to lead a historic effort and I can’t think of anyone better able 

to do that given your experience as an insurance industry regulator 

and as a Governor. So clearly you have the mindset of Governors 

as you go about your business. 

We have asked you to reign in an out of control private insurance 

industry that on a daily basis denies coverage and benefits to 

healthcare consumers. I am interested that my colleagues on the 

other side of the aisle seem more interested in arranging your office structure than rooting out those abuses. And I am interested 

that they have attacked the size of the new Center for Consumer 

55 

Information and Insurance Oversight. By my calculation the 272 

positions that you have requested to staff CCHO is the equivalent 

of about 16 House offices. I know our staffs work very hard just 

as your staff does, but I don’t think that is an enormous number 

of people when we have tasked them with setting up the new 

standards and structures created under the Affordable Care Act. 

Let me also say you know that we heard from the other side of 

the aisle this notion that all that Americans really want is for government to get out of the way when it comes to their healthcare. 

That is really not my impression in the least. We certainly don’t 

need more evidence than the popularity of Medicare, the importance of Medicaid leaving the Affordable Care Act aside. But is it 

your sense that what the American people want is to reject help 

from the Government to cover their healthcare—— 

Ms. SEBELIUS. Well, as you said, Congresswoman, I think Medicare is—— 

Ms. SCHAKOWSKY [continuing]. To assure their coverage? 

Ms. SEBELIUS [continuing]. Enormously popular and I think 

the—probably the second most popular insurance program may be 

the Children’s Health Insurance Program both of which are Government-based programs delivering vital services to millions and 

millions of Americans. 

Ms. SCHAKOWSKY. And I think it is just important to say over 

and over again that, far from being a Government takeover of 

healthcare, that the Affordable Care Act, though some of us felt 

perhaps it shouldn’t be this way, relies entirely on the private insurance companies with some help from the Government, that this 

is a private-sector-based plan that we do—that we are doing. So let 

me ask a few questions on behalf of my constituents. 

If you were denied funding to implement the Affordable Care 

Act, the Affordable Care, will health insurance purchasers know 

that at least 80 percent of their premium dollars will be spent on 

medical care? Purchasers—will we have any guarantee that that 

will happen? 

Ms. SEBELIUS. It will be very difficult to implement the medical 

loss ratio as you have described. 

Ms. SCHAKOWSKY. In States like Illinois without any rate approval requirements, how would rates that are out of line even be 

enforced? 

Ms. SEBELIUS. Well, again I think it would be—one of the requirements is that we help to identify excessive rates and at least 

post them so consumers have some way of judging. But that would 

not be available to consumers. 

Ms. SCHAKOWSKY. But with the Affordable Care Act, yes, I think 

we would get some help in Illinois. 

Ms. SEBELIUS. Right. 

Ms. SCHAKOWSKY. But without it we are simply—— 

Ms. SEBELIUS. That is correct. 

Ms. SCHAKOWSKY [continuing]. Totally at the mercy of the insurance companies. What does it mean for seniors and people with disabilities who are counting on the phase ‘‘out of the doughnut hole’’ 

if the Affordable Care Act were ultimately repealed? 

Ms. SEBELIUS. Well, clearly those additional benefits to seniors— 

which include, as you know, annual wellness visit, an elimination 

56 

of co-pays for preventive screenings and health and, as you say, a 

gradual elimination of the doughnut hole starting this year with a 

50 percent discount—that would cease to be a Medicare benefit. 

Ms. SCHAKOWSKY. All those things just disappear. Let me quickly 

say, I am wondering, because process has been attacked, can you 

tell us briefly the process through which HHS adopted the rules 

that deal with the 80 percent loss ratio? 

Ms. SEBELIUS. Well, Congresswoman, we were directed and followed this very carefully working with the Nation’s insurance commissioners to ask for their input and advice on the outline of a 

medical loss ratio—what portion, what element should be included 

in the medical portion of the 80 percent and what should be outside 

that. They made a unanimous recommendation to our office. 

This fall we adopted 100 percent of what they recommended to 

us and that is the rule. So this is not an HHS rule in so far as 

we did not design it. The Nation’s 50 insurance commissioners 

made the recommendation which we adopted. 

Mr. PITTS. The gentlelady’s time is expired and Chair recognizes 

gentleman from New Jersey, Mr. Lance, for 5 minutes for questions. 

Mr. LANCE. Thank you, Mr. Chairman, and good morning to you, 

Madame Secretary. 

Ms. SEBELIUS. Good morning. 

Mr. LANCE. I am new to the committee and I look forward to 

working with you on issues of mutual concern. I have the honor of 

representing a district that is arguably the medicine chest of the 

Nation and I would like to think of the entire world. And regarding 

the President’s proposed budget there is a suggestion that the data 

exclusivity be reduced from 12 years to 7 years. I personally oppose 

that and I do not think it is in the best interest of the Nation’s 

health. There has been extensive economic modeling on this at 

Duke University and the modeling indicates that there is a range 

of between 12 and 16 years is the time needed to allow an innovator in bio-pharma to recoup the amount spent in order to bring 

to market needed medicines in this regard. And Madame Secretary, 

I would like your comments regarding the suggested reduction in 

the fiscal year 2012 budget on data exclusivity from 12 to 7 years. 

Ms. SEBELIUS. Congressman, I think there is a great importance 

in making sure that we continue to accelerate our leading position 

in breakthrough science. And certainly your State is renowned for 

being a great leader in that. 

Mr. LANCE. Thank you. 

Ms. SEBELIUS. I think the balance, as you recognize, is not only 

making sure that companies can recoup their investment and are 

profitable—because if they are not profitable, they are not going to 

continue research—but that, as quickly as possible, once that determination has been made, that breakthrough medication is also 

widely available and affordable to the population. And that is attention that I think continues to exist. 

The president believes that based on information—and I know 

that there are competing experts on how long and—— 

Mr. LANCE. Yes. 

Ms. SEBELIUS [continuing]. How much evergreening should go beyond the patent protection, that seven years would indeed accomVerDate Nov 24 2008 15:40 Oct 26, 2011 Jkt 037690 PO 00000 Frm 00060 Fmt 6633 Sfmt 6633 F:\112-014 HHS BUDGE-PDF MADE\67590.TXT WAYNE
57 

plish the goals of both returning the profit and continuing the research but also making the medication widely available. 

Mr. LANCE. Thank you for your response. The last time this committee examined this issue in an overwhelmingly bipartisan fashion the committee chose to retain the 12 years and I look forward 

to continuing discussions with your department on this matter. 

Secondly, Madame Speaker, regarding PADUFA there is the challenge now with its reauthorization and at the most recent reauthorization there was included the REMS, the Risk Management 

and Mitigation Strategies and at least in some instances it is my 

judgment that this has been a challenge. For example, Johnson and 

Johnson had a product on the market for over 20 years and was 

required to submit a REMS that took over 22 months to resolve. 

Your comments, Madame Secretary regarding this as we go about 

reauthorizing PADUFA over the next year? 

Ms. SEBELIUS. Well again, I think it is an area where we are 

mindful of time delays on behalf of not only companies but certainly consumers—at the same time I think mindful of the very important safety efforts and I look forward to working with you on 

that striking the right balance. 

Mr. LANCE. Thank you and I appreciate your comments in both 

of these important areas that I think go to the heart that we have 

to work together in these areas as we make sure that the Nation’s 

health is protected and that we remain the medicine chest of the 

entire world. I yield back the balance of my time. 

Mr. PITTS. Chair thanks gentleman and recognizes gentleman 

from Louisiana, Dr. Cassidy, for 5 minutes for questions. 

Mr. CASSIDY. Hey, Madame Secretary, I am not so hurried now. 

First I want to thank Mr. Pallone because apparently he is committed to working on equity for FMAP payments, or at least Federal support of care for the poor, and I will submit two articles for 

the record with unanimous consent: one from the GAO, one from 

AEI talking about the current inequity in that situation. 

Mr. PITTS. Without objection, so ordered. 

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Mr. CASSIDY. Secondly, Madame Secretary, I have got young children so what I am about to say just strikes me. Sometimes it 

seems like opposite day. So here we have a report from Chairman 

Bernanke saying that Medicaid among other entitlements are driving long-term deficit spending. You in your opening remarks mention how we, the Administration is concerned regarding the deficit, 

and yet when I look at all the literature given I see that here, according to CBO, Federal spending on Medicaid will increase by 

$674 billion over the next 10 years. I see from CMS actuaries that 

Federal—that State spending will go up by 190 billion and if you 

include the latest estimate from CBO that is probably more like 

250 billion over the next 10 years. Now, clearly you are concerned 

about it. 

I have a copy of your letter, which suggests to Governors a way 

that they can do it. For example, you suggest they could eliminate 

optional benefits like pharmacy coverage. And Massachusetts is 

doing that sort of thing because, as their budget chairman says, 

their current Medicaid growth is unsustainable. Mr. Engel—I’m 

sorry he has left, but I have a Deloitte Report which I will submit 

for the record that estimates that under PPACA 50 percent of New 

York’s State budget may go to Medicaid by 2030. Now with all this 

said, first, it does seem like opposite day. It does seem as if there 

is concern for the deficit and yet we are driving the deficit with this 

bill. And secondly, regarding maintenance of effort, you mentioned 

your hands are kind of tied, if you will. Will you commit to working 

with Congress, with us, to help the Governors with this maintenance of effort so that they don’t have to necessarily slash dental 

benefits in Massachusetts or something else in New York? I ask 

your thoughts. 

Ms. SEBELIUS. Well, Congressman, I share your concerns about 

healthcare costs driving the deficit and I don’t think there is any 

question that it is the number one cost driver. I would suggest that 

what we have to do—and I am convinced we have a new platform 

to work on this—is actually also look at the underlying cost drivers 

with which rather—whether you are talking about the public programs, Medicare or Medicaid, or the private sector trying to provide healthcare, we have a trajectory on healthcare costs that is 

simply unsustainable. 

Mr. CASSIDY. Can I—just because I have limited time and I want 

your thoughts. Massachusetts, as the Governor said, is certainly 

the harbinger of how things are going to come. I see over the last 

10 years their State budget going towards healthcare expenses has 

gone from 21 percent to 37 percent. That is why they are now 

slashing benefits. So it seems like, if this is going to control costs, 

when does it begin? 

Ms. SEBELIUS. Well, I think that the Massachusetts program is 

a great example. And I think it is a great example of what is possible on the exchange side and with coverage which Congressman 

Weiner mentioned. But it also had a missing component. Governor 

Romney and certainly Governor Patrick would be the first to tell 

you that when Massachusetts designed their program they focused 

on access and not on cost containment and—— 

Mr. CASSIDY. Now if I can—— 

117 

Ms. SEBELIUS [continuing]. They are revisiting the cost containment phase. 

Mr. CASSIDY. I am with you on that and when I look at what 

they—I am—just know and I have limited time. When I look at 

what they are proposing, none of which has been proven to control 

costs, it is all theoretical but it has not actually been proven. I 

think the Governor at one point proposed provider fee—freezing 

provider fees and that was thrown out by a judge. So it really 

seems as if the cost control mechanisms which again is similarly 

in PPACA have not been established to control costs. 

Ms. SEBELIUS. Well, I think the Affordable Care Act has as an 

underlying premise a huge number of underlying cost control, both 

delivery system changes but I think more importantly—and unfortunately the Congressional Budget Office hasn’t scored this—but 

the effort to look at the drivers of chronic disease, which is where 

we spend about 75 cents of every heath dollar, obesity and smoking 

can have the most enormous effect on your children’s health care. 

Mr. CASSIDY. I wish I had 5 more minutes. Let me interrupt. Let 

me ask one more thing because I am out of time. You mentioned 

that the CLASS Act, you are kind of concerned about it. It is $75 

billion scored by CBO towards the credit side of PPACA. On the 

other hand, you mentioned that it is unsustainable. It seems a little disingenuous for something which really long term is not really 

sustainable to then claim it as kind of a credit in terms of proving 

the costworthiness of a bill. 

Ms. SEBELIUS. The Deficit Commission recommendations were 

that we either should look at repealing the CLASS Act or reforming it, and we have the flexibility administratively to do the latter. 

That is exactly what we intend to do, and I look forward to visiting 

with this committee, as I pledge to do, to tell you the outlines of 

what we think will be a sustainable program. 

Mr. CASSIDY. And could I ask you the one question I asked at the 

beginning. Would you pledge to work with us on helping the States 

on a bipartisan basis for their maintenance of effort? 

Ms. SEBELIUS. We are in the process of doing that right now. 

Yes. 

Mr. PITTS. The gentleman’s time has expired. 

Chair recognizes gentleman from Kentucky, Mr. Guthrie, for 5 

minutes for questions. 

Mr. GUTHRIE. Thank you, Mr. Chairman. Thank you Madame 

Secretary. I think I may be the last one on the panel, so hopefully 

we are moving forward. One thing that Mr. Weiner brought up if 

you expand Medicaid to 100 to 133 percent you are going to bring 

on children and the parents but you also are going to bring on the 

disabled and the elderly in big proportions. And if the economy 

does grow as Governors are looking if you think we can just grow 

out of it the most expensive people who participate in Medicaid are 

the disabled and elderly which are more not as elastic to getting 

jobs if the economy moves forward. They are still going to be with 

us. So the fact that we can just grow out of this is not really necessary. I just want to make that point. 

And when you made your opening remarks you listed a lot of the 

things that people have been listening that people like about the 

healthcare act: preexisting conditions for children, 26-year-olds you 

118 

can stay on, and you also said—and I think I will quote ‘‘businesses 

are getting relieved. They are also—business are getting relieved 

from rising healthcare costs.’’ And I can tell you from businesses 

I know that because of the new benefits that are mandated premiums are rising as they have already started rising. So I just— 

the evidence that business costs are decreasing—I—we haven’t 

seen that. Hopefully you have and I can share it with businesses 

and see what they need to do differently. 

Ms. SEBELIUS. Well, short term, Congressman, as you know, 

small business owners are eligible for a tax credit which helps provide some relief to the costs of covering their employees. And what 

I hear from small business owners across the country is that is 

often their biggest bottom line cost and the way they lose their best 

employees to their larger competitors. So that provides some short 

term relief. Long term relief comes in 2014 with a new market 

where they will finally have the leverage buying power that their 

large competitors have. 

Businesses on average, small business owners, spend about 25 

percent more on exactly the same coverage as does someone with 

market power, and in 2014 those rates—and, again, CBO and other 

actuaries have said—those rates will come down fairly dramatically. 

Mr. GUTHRIE. But medium-sized businesses are seeing—I know 

businesses with 400 employees and they have seen an increase because of the new mandated benefits. I mean that I moving forward 

already reflecting—because you can increase benefits. But if you 

are going to increase benefits you are also going to—there is a cost 

to that and it is reflected in the premiums businesses are paying. 

Ms. SEBELIUS. Well again, the actuarial reports that I have seen 

indicate that there is a relatively insignificant impact at this point 

on the kinds of benefits going forward. And as you know we are 

trying to—the Waiver Program that has been mentioned a number 

of times which dealt with one feature of the bill, the Annual Limit, 

was designed to try and insulate businesses in the short term from 

the kind of rate shock that they may see. So we are in a balancing 

act getting between now and 2014. 

Mr. GUTHRIE. So we need to be mindful—obviously businesses 

plan for their long term success, too. And I don’t—you understand 

that. I know we need to work together. I had a couple of physicians. One that wanted about a minute. Can I give you a minute 

and him a minute? Yield a minute to the gentleman from Texas. 

Mr. BURGESS. Thank you. Madame Secretary, again thank you 

for being here and you know where we are. Don’t make yourself so 

scarce. Going back to 4101A and B for just a moment: the mandatory funding for the construction of the clinics, the discretionary 

funding for the staffing of the clinics. There was no request in the 

budget for the discretionary money for the funding of the clinics. 

So are we likely to be left with a situation where we are required 

to build them under mandatory funding but no one to staff them 

under discretionary funding? These are the school clinics under 

4101A and B? 

Ms. SEBELIUS. Congressman, all I can tell you is the budget does 

include in the Health Resources and Services Administration a request for increased funding with regard to community health cenVerDate Nov 24 2008 15:40 Oct 26, 2011 Jkt 037690 PO 00000 Frm 00122 Fmt 6633 Sfmt 6633 F:\112-014 HHS BUDGE-PDF MADE\67590.TXT WAYNE
119 

ters for the workforce for new National Health Service Corps providers and new primary care providers. 

Mr. BURGESS. It is specifically the school-based clinic. 

Ms. SEBELIUS. But I—those are part of the—— 

Mr. BURGESS. Maybe you could get that answer back to me in 

writing. 

Ms. SEBELIUS. Yes, that is fine. 

Mr. BURGESS. I yield back to the gentleman from Kentucky. 

Mr. GUTHRIE. I want to yield the remainder to the gentleman 

from Louisiana. 

Mr. CASSIDY. Just one more question, Madame Secretary. I am 

sorry. 

Ms. SEBELIUS. OK. 

Mr. CASSIDY. To follow up on Congresswoman Schakowsky’s— 

since it is my understanding that we are raising Medicare premiums to close that doughnut hole, what will the seniors do if they 

are able to keep their own money as opposed to closing the doughnut hole? And of course—— 

Ms. SEBELIUS. I am sorry. We are raising Medicare premiums? 

Mr. CASSIDY. It is my understanding that Medicare Part D premiums are going up to close that doughnut hole. Is that not true? 

Ms. SEBELIUS. No, sir, I don’t think that is accurate. 

Mr. CASSIDY. Well, then I will follow up with that at a later date. 

Ms. SEBELIUS. OK. 

Mr. CASSIDY. Thank you. I yield back. 

Mr. BURGESS. Will you yield to me? 

Mr. CASSIDY. Yes, I yield to the Texan from Texas. 

Mr. BURGESS. We haven’t yet talked about the sustainable 

growth rate formula and that was one of the big omissions from 

PPACA. All of the money taken out of Medicare and not a single 

dime for a down payment for buying us out of the SGR reductions. 

What are your plans for getting us out of the SGR? 

Ms. SEBELIUS. Well, as you know, Congressman, the SGR dates 

back to 2002 and has been an issue that has not been effectively 

dealt with. This President since his first budget has recommended 

a long term fix. He has proposed in this year’s budget not only 

working with Congress for a 10 year resolution, but also put more 

than two years of funding into the budget. So we would look forward to working with this committee to find a long term fix. I 

agree with you it is probably the single most threatening issue to 

Medicare beneficiaries on the horizon. 

Mr. PITTS. The gentleman’s time is expired. Chair recognizes the 

gentleman from New York, Mr. Towns for 5 minutes. 

Mr. TOWNS. Thank you very much, Mr. Chairman. Secretary 

Sebelius, thank you so much for testifying before the committee— 

subcommittee. I know your time is valuable, so I will be brief with 

my questions. 

First, I should note that I am pleased to see the direction that 

the Administration has taken on the budget requests. I am concerned that should the cuts proposed by H.R. 1 pass, HHS would 

not be able to deliver on key services and programs that benefit the 

public. Let me—an area that I am very concerned about is the community health centers. They provide an extremely valuable service 

in my district as I imagine they do for many members on both 

120 

sides of the aisle, even though some might not admit it. I understand that the proposed cuts in H.R. 1 would have a devastating 

impact on community health centers, possibly closing up to 127 

health centers and cutting off 11 million patients over the next 

year. In contrast, how has the HHS budget request dealt with 

these very valuable centers? 

Ms. SEBELIUS. Well, Congressman, I share your appreciation for 

the critical services that health centers provide in our most underserved areas. And between the investment of the Recovery Act, the 

President’s budgets, and the Affordable Care Act, the goal is to 

really double the number of Americans who have access to those 

vital high quality, lower cost, preventive services. And the President has made a budget request for an increased support for community health centers including for providers who serve in that— 

in those centers, training 15,000 new providers over the course of 

the next five years and having those folks available. Absent that 

expanded footprint, we will have far more people accessing 

healthcare in the least expensive—I mean, the most expensive, 

least effective way through the doors of emergency rooms or just 

not getting the health care at all. 

Mr. TOWNS. Let me say I was watching this hearing on TV earlier and I saw a member raising a booklet saying this is why you 

are in the minority—and I hope that you know you are not affected 

by that in any way because you know sometimes, you know it takes 

some people a little longer to figure out what is going on. And I 

think that we need to just move forward because I think that there 

is no question in my mind that this is going to save a lot of lives 

and eventually we are going to save a lot of money. There is no 

question about it. 

So I am hoping that, you know you don’t let this deter you in any 

way. You continue to move forward. Let that encourage you because let us face it, eventually they will get the message as well. 

So I want to thank you very, very much for the work that you are 

doing and we look forward to continuing to work with you. 

I think the only thing I would hoped that we would be able to 

put together some more private and public partnerships maybe 

even around the community health centers to see in terms of what 

we might be able to do to sort of keep them open because they provide such a valuable service in many, many neighborhoods. 

Ms. SEBELIUS. Well Congressman, every place I go I try to visit 

the community health center that is closest and I have seen some 

extraordinary providers across this country who not only are providing life saving medical care, but incredible family support. And 

I don’t disagree that it is proven over and over again to be not only 

very high quality care but at a far lower cost than any variety of 

options. So I would look forward to looking for you to make sure 

that this incredibly important public support stays in place. 

Mr. TOWNS. Thank you very much and on that I yield back. 

Mr. PITTS. Chair thanks gentleman. The gentleman from Kentucky, Mr. Whitfield, is recognized for 5 minutes for questions. 

Mr. WHITFIELD. Well, thank you, Mr. Chairman. And Secretary 

Sebelius, thank you for being with us today. One comment that I 

just wanted to make which probably doesn’t have to be made but 

I am sure you have felt a lot of animosity, even a lot of frustration 

121 

over this whole healthcare bill as many in America has felt. And 

one of the reasons that people have felt that way is that they 

brought a 2,400 page bill to the House floor last year and we were 

not able to offer one amendment on the House floor. 

And I don’t think the American people appreciate bills of that 

magnitude having the impact on this country and the legislative 

body not being able to offer one amendment on the House floor. It 

is certainly not your fault. You were not the Speaker, but from that 

background and because of that process there is still very strong 

feelings about the issue. 

But one of the questions I would like to just ask you, many members of Congress to be honest did not have much of an idea of what 

was even in the bill when we voted on it. And as Secretary of HHS 

I am assumed that in the process of developing the bill you must 

have at least been consulted. You were hopefully able to suggest 

ideas and have some input into the process. 

So my first question would be did you have an opportunity to 

have input into the process? 

Ms. SEBELIUS. Yes, Congressman, I did and as you know there 

were five committees, three in the House and two in the Senate. 

There were numerous hearings and yes—— 

Mr. WHITFIELD. No, I know that now. Just a minute—— 

Ms. SEBELIUS [continuing]. I did—— 

Mr. WHITFIELD. We, in fact, we adopted eight amendments in the 

Energy and Commerce Committee. All of them were stripped out 

before it went to the floor and Democrats and Republicans adopted 

those amendments. They all were stripped about and we were not 

offered—able to offer one amendment on the floor. But here is the 

question I have. We know that there is going to be about 20 million 

more people on the Medicaid program according to all of the numbers that we have seen by the year 2014 or whatever. And every 

Governor that I talk to both Democrat and Republican say that one 

of the reasons they are having financial difficulty in these States— 

not the only reason, but one is the fact of the cost of the Medicaid 

program. Now, the States are having great financial difficulty. The 

Federal Government goes without saying. We have a $14 trillion 

Federal debt. How is it concluded that the Federal Government 

would pick up 100 percent of the cost of those additional 20 million 

people on Medicaid? 

Now I have heard some comment, well, the States are not going 

to be hit with this additional cost. Well, the reason they are not 

going to be hit with it is because the Federal Government is. So 

my question would be, how was it determined that the Federal 

Government should do that when we are in worse shape at the 

Federal level than some of the States are at the State level? 

Ms. SEBELIUS. Well, Congressman, I think it was seen as a way 

to have a partnership going forward and, for the first time ever, 

have a benefit level that, regardless of where you lived in this 

country, you were eligible for health insurance so that uniformly 

now, across the country, at—families at 133 percent of poverty or 

less would qualify and for that additional population some States 

are well above that right now, some States are well below it. But 

for the additional population, at least for the first three years, it 

122 

was seen that the Federal Government should pick up the lion’s 

share and then gradually the State would participate. 

Mr. WHITFIELD. Well, I—I mean if I had been there I think I 

would have disagreed with that but nevertheless that is what it is. 

But the thing that really bothers me—when you talk to primary 

care physicians today they are already upset about the low reimbursement rates for Medicaid patients and I don’t think I am exaggerating we have two doctors here and maybe some over there. 

Most of the primary care physicians I talk to say we are not going 

to take any more Medicaid patients. So if you put a 20 million 

more people on there, they are going to go right back to the emergency room. 

Ms. SEBELIUS. Well, I—at least the doctors who I talk to across 

the country, and I do visit with a lot of them, are not happy with 

the Medicaid reimbursement rates. But the vast majority of the 

people we are talking about have no reimbursement rates, are not 

seeing a doctor, are using the healthcare system in a very inefficient way. I think one of the reasons that, again, the Affordable 

Care Act suggests that Medicaid doctors for at least the first several years will be paid at Medicare rates is a recognition that the 

Medicaid rates across the country are insufficiently low. And that 

is again part of the Affordable Care Act’s structure. 

Mr. PITTS. The gentleman’s time is expired. We have one other 

member who is not a member of the subcommittee. He is a member 

of the Full Committee. He has waited patiently all hearing at our 

times past. Would you stay for 5 minutes? 

Ms. SEBELIUS. Yes. 

Mr. PITTS. Thank you, and the Chair recognizes the gentleman 

from Texas, Mr. Green for 5 minutes. 

Mr. GREEN. Thank you, Mr. Chairman and I appreciate the courtesy. Let me waive on. This is my first term on the Energy and 

Commerce Committee. I haven’t been on the Health Subcommittee 

and so I appreciate the chance to be here. Welcome Madame Secretary. 

Ms. SEBELIUS. Thank you. 

Mr. GREEN. And I just want to remind folks the Medicaid reimbursement rates are set by the States. 

Ms. SEBELIUS. That is correct. 

Mr. GREEN. And we had three Governors here yesterday or a 

couple days ago with our oversight and investigation and they 

wanted more flexibility and they have a lot of flexibility now in reimbursement rates. And there are some decisions that can be made 

because—and I think we are right. We understand that doctors 

Medicaid pays less than Medicare. Frankly, in my part of the country, TriCare pays less than Medicare. So you know, although in the 

Houston area where I am from we don’t have a big base, so a lot 

of physicians won’t take TriCare because it is so—but that is a 

State issue. We don’t want—we definitely don’t want the State— 

Federal Government to set Medicaid rates because we would have 

more Governors up here complaining. 

But the other issue I want to ask is on the Healthcare Reform 

bill, the impact on the teaching health centers, our medical schools 

and that are associated, what is the impact that you are seeing on 

our teaching health centers because we are fortunate at least in 

123 

the Houston area to have three that serve our metropolitan area. 

And my goal is to encourage them to get out to our community 

based health centers and partner with them because that way I 

also want those residents to understand they can make a good living in a community based health center. 

Ms. SEBELIUS. Well, recently I had the chance to visit again with 

the head of the Association of Academic Health Centers and he 

joined a group of providers talking about what he sees as an enormously important opportunity to begin to transform healthcare delivery with the Affordable Care Act. That the patient-centered, provider-centered opportunities with the kind of payment models that 

are a part of the Affordable Care Act, everything from primary 

medical home models which actually reimburse physicians for 

keeping their patients healthy in the first place and you don’t have 

to wait until they go to the hospital to get paid, to bundling care, 

to using the most innovative strategies they see as a wonderful opportunity. And, as you say, in many areas already there is a lot of 

discussion with academic health centers and community health 

centers about becoming Accountable Care Organizations and combining those strategies to deliver better care to more people. 

Mr. GREEN. OK. I know that H.R. 1 cut or proposed to cut 1.3 

billion from the health centers program and I understand the 

Health Centers Services Resource Administration has announced 

its intention to award new access points, new health centers and 

new sites of existing centers. And as you know this funding opportunity to facilitate health centers expansion made possible by provisions in the Health Reform Law and the President’s request. And 

frankly I worked with the Administration under President Bush 

many times expanding health centers funding. Can you tell us how 

many applications for new health centers HRSA has received and 

how many awards HRSA intends to fund, and how many of the 

awards would HRSA make if H.R. 1 if was enacted and 1.3 billion 

were cut? I know that may not be possible now. 

Ms. SEBELIUS. Congressman, I would love to get you those specifics—— 

Mr. GREEN. OK. 

Ms. SEBELIUS [continuing]. In writing, but suffice it to say that 

the loss of the investment in anticipated would severely curtail this 

program. 

Mr. GREEN. You have better information than I do, but we were 

understood that there were about 800 applications for 350 possible 

awards. But again, you have the exact numbers. That is what we 

have heard. So Mr. Chairman, I know I have a little bit left. It is 

well documented health centers provide high cost effective and high 

quality patient directed care and reduces overall costs in the 

healthcare system. Can you describe the overarching impact of the 

healthcare system and the continued healthcare expansion outlined 

in President’s fiscal year 2012 budget request? 

Ms. SEBELIUS. Well I think, Congressman, the anticipation is 

that we would be able to gradually move from serving 20 million 

Americans to 40 million Americans. And as you know the Health 

Services Resource Administration maps pretty carefully where is 

the underserved need, where are the access points that need to be 

filled. Some are in very rural areas, some are in very urban areas 

124 

and that expansion has provided enormously important care to 

families across this country. 

Mr. GREEN. Thank you and I appreciate it. And I know I am almost out of time, but in the Houston area we got—we started on 

community health centers much later than most parts of the country so we are considered I think an under-underserved area. 

But—— 

Ms. SEBELIUS. You putting in a pitch? 

Mr. GREEN [continuing]. But also the community health centers 

are not refusing Medicaid patients. 

Ms. SEBELIUS. That is correct. 

Mr. GREEN. So doctors cannot afford in their practice to take 

them that is why we need expansion of community health centers. 

Ms. SEBELIUS. Some are uninsured, some are Medicaid, but a 

number of people are fully insured and choose a community health 

center as their health home. 

Mr. PITTS. Gentleman’s time—— 

Mr. GREEN. Thank you, Mr. Chairman. 

Mr. PITTS [continuing]. Is expired. In conclusion, I would like to 

thank Secretary Sebelius and the members for participating in today’s hearing. I remind members that they have 10 business days 

to submit questions for the record and I ask Secretary Sebelius to 

respond promptly to the questions. 

Ms. SEBELIUS. Thank you, Mr. Chairman. 

Mr. PITTS. Members should submit their questions by the close 

of business on March 17. 

Mr. BURGESS. Mr. Chairman, would you yield for a moment for 

a unanimous consent request? 

Mr. PITTS. Yes. 

Mr. BURGESS. I have a unanimous consent to add the letter that 

I wrote to Secretary Sebelius on February 10 to the record. 

Mr. PITTS. Without objection it will be entered into the record. 

Mr. BURGESS. Thank you. 

[The information follows:] 

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Mr. PITTS. If there is nothing further before the committee, this 

subcommittee hearing is adjourned. 

[Whereupon, at 12:11 p.m., the subcommittee was adjourned.] 

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