NOTE: .EOP STAFF WILL NOT RECIEVE A FAX COPY OF THE ATTACHED.
---------------------- Forwarded by Robert J. Pellicci/OMB/EOP on 02/08/99
09:00 AM ---------------------------
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LRM ID: RJP16
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF MANAGEMENT AND BUDGET
Washington, D.C. 20503-0001
Monday, February 8, 1999
LEGISLATIVE REFERRAL MEMORANDUM
TO: Legislative Liaison Officer - See Distribution below
FROM: Janet R. Forsgren (for) Assistant Director for Legislative
Reference
OMB CONTACT: Robert J. Pellicci
PHONE: (202) 395-4871 FAX: (202) 395-6148
SUBJECT: HHS Testimony on the Department's FY 2000 Budget
DEADLINE: 10:00 a.m. Tuesday, February 9, 1999
In accordance with OMB Circular A-19, OMB requests the views of your
agency on the above subject before advising on its relationship to the
program of the President. please advise us if this item will affect
direct spending or receipts for purposes of the "Pay-As-You-Go" provisions
of Title XIII of the Omnibus Budget Reconciliation Act of 1990.
COMMENTS: Hearing is before the Senate Budget Committee on Thursday,
February 11th. Secretary Shalala is the witness.
DISTRIBUTION LIST
AGENCIES:
6-AGRICULTURECONG AFFAIRS - Vince Ancell (Testimony) - (202) 720-7095
61-JUSTICE - Dennis Burke - (202) 514-2141
62-LABOR - Robert A. Shapiro - (202) 219-8201
95-0ffice of Science and Technology Policy - Jeff Smith - (202) 456-6047
110-Social Security Administration - Judy Chesser - (202) 358-6030
114-STATE - Paul Rademacher - (202) 647-4463
118-TREASURY - Richard S. Carro - (202) 622-0650
EOP:
Daniel N. Mendelson
Barbara Chow
Joshua Gotbaum
Victoria A. Wachino
JENNINGS C
Devorah R. Adler
Jeanne Lambrew
Barry T. Clendenin
Mark E. Miller
Richard J. Turman
Thomas Reilly
Ann Kendrall
Barry White
Jack A. Smalligan
Todd A. Summers
Wendy A. Taylor
Lori Schack
Michele Ahern
Jennifer Friedman
Joanne Cianci
Cynthia A. Rice
Charles E. Kieffer
James J. Jukes
Janet R. Forsgren
LRM ID: RJP16 SUBJECT: HHS Testimony on the Department's FY 2000 Budget
RESPONSE TO
LEGISLATIVE REFERRAL
MEMORANDUM
If your response to this request for views is short (e.g., concur/no
comment), we prefer that you respond bye-mail or by faxing us this
response sheet. If the response is short and you prefer to call, please
call the branch-wide line shown below (NOT the analyst's line) to leave a
message with a legislative assistant.
You may also respond by:
(1) calling the analyst/attorney's direct line (you will be
connected to voice mail if the analyst does not answer); or
(2) sending us a memo or letter
Please include the LRM number shown .above, and the subject shown below.
TO: Robert J. Pellicci Phone: 395-4871 Fax: 395-6148
Office of Management and Budget
Branch-Wide Line (to reach legislative assistant): 395-7362
FROM: (Date)
(Name)
(Agency)
(Telephone)
The following is the response of our agency to your request for views on
the above-captioned subject:
Concur
No Objection
No Comment
See proposed edits on pages
Other:
FAX RETURN of _____ pages, attached to this response sheet
SECRETARY SHALALA'S STATEMENT FOR THE BUDGET COMMITTE
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Hex-Dump Conversion
Testimony of
Donna E. Shalala
U.S. Secretary of Health and Human Services
Before the
Senate Budget Committee
February 11, 1999
Autom8ted Recor d5, ana",
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Chainnan Domenici, Senator Lautenberg, and members of the Committee:
It is with great pleasure that I appear before you today to discuss the President's fiscal
year 2000 budget for the Department of Health and Human Services.
As the President said when he released his budget on February 1, the FY 2000 budget
charts a progressive but prudent path to our future. For the second year in a row, it is a balanced
budget that makes vital investments in the people ofthis country.
Nowhere is that more evident than in the budget of the Department of Health and Human
Services. It is a budget designed to meet the very real challenges of the 21 st century. And it is a
budget that honors America's values without breaking America's bank.
Our budget contains $400 billion in outlays, a 6.6 percent increase over the FY1999
budget approved by the Congress last year. Within that framework, we seek to keep some very
important promises to American families.
The promise of retirement with dignity for all Americans.
The promise of high-quality, affordable health care for every working Jamily.
The promise of a safe and healthy childhood.
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And, the promise to mobilize America's scientific genius to make our country a healthier
and safer place to live.
As we stand on the crest of the new century, the combination of our fiscal discipline, the
expanding economy, and the unprecedented advancement occurring in the scientific community
provide us with a unique opportunity to meet these challenges.
Let me tum first to the needs of older Americans and those who are living with
disabilities. We all know that the number of Americans over the age of 65 will double by the
year 2030. Providing proper care to those who will be in that group is an essential part of
meeting the challenges of the new century. The President's long-term care initiative is an
important step toward that objective.
Our proposal includes an historic $1,000 tax credit for people with long-term care needs
or their family members who welcome them into there own homes and provide them with care.
We estimate that this will help more than two million Americans, including over one million
older persons. But let me be clear, this initiative will not just help older Americans the tax
credit will also benefit large numbers of working age adults with disability as well as severely
disabled children.
But a tax credit is not sufficient to meet all ofthe needs of older and disabled Americans.
That is why the HHS budget includes a $125 million annual investment by the Administration
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on Aging in a new National Family Caregiver Support Program. This will provide direct
assistance to those who are caring for elderly relatives. We are also proposing a five-year $110
million expansion of the Home and Community-Based Care program that helps to expand
alternatives to institutional care for older and younger people with disabilities. And the Health
Care Financing Administration will launch a new $10 million national campaign t6 help inform
and educate Medicare beneficiaries about their own long-term care options.
Taken together, we believe that these can be the first steps in a national effort to address
the very real needs of some of our most vulnerable citizens. We look forward to working with
members of both parties to assure quick approval of bipartisan legislation in this area.
Mr. Chairman, I know that you and I and the members of the committee agree that one of
the cornerstones of our national commitment to older Americans is the Medicare program. In
the three and a half decades since this landmark program was enacted into law, the health and
security of our nation's senior citizens has markedly improved. We have raised both the length
and the quality of life for our parents and our grandparents. As we look ahead to the new
century, we owe it to the next generation of seniors - including you and me - to make sure that
Medicare remains a rock-solid guarantee of high-quality health care.
To ensure that the promise of Medicare remains unbroken, the President has asked
Congress to earmark 15 percent of the projected budget surplus for Medicare over the next 15
years. Two years ago, we worked together to extend the solvency of the Hospital Insurance
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Trust Fund for another 10 years. The President's proposal to invest one in every six dollars of
the surplus in Medicare will assure solvency of the trust fund for an additional decade, keeping it
in the black until 2020.
The President also believes that there are additional steps that we can and should take on
a bipartisan basis to modernize Medicare and achieve additional savings to strengthen the
program. Like you, we look forward to seeing the final recommendations of the National
Bipartisan Commission on the Future of Medicare. We also look forward to working with the
Congress to ensure that any steps we take in the future meet the four main principles the
President outlined last week: dedicate a portion ofthe surplus to secure Medicare until 2020;
modernize the Medicare program to make it more competitive and efficient; guarantee a defined
set of benefits without excessive new cost to beneficiaries; and use the savings from these
changes to help fund a prescription drug benefit.
I am very proud of the work that the Department has done to reinvent the Health Care
Financing Administration. We have tried to transform HCFA from an agency that simply paid
the bills and rarely asked any questions into a prudent purchaser of health care services. We
have set tough new standards for quality and patient protection. We have worked hard to inform
and educate our customers about the new choices available to them. And we have worked with
the Congress to update the Medicare benefit package to include important preventive services
ranging from mammograms to bone density screening. We hope to work with Congress this
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year to ensure that HCFA has the statutory authority necessary to adopt the best management,
payment, and competitive practices used in the private sector.
We will also continue the war we have fought against waste, fraud, and abuse in both
Medicare and Medicaid. With Operation Restore Trust we have instituted a policy of zero
tolerance toward those who would rip offthe Medicare program and its beneficiaries. The
President's budget continues those efforts by asking Congress, once again, to enact new steps to
fight fraud that will save the Medicare trust fund $2.9 billion over the next five years. Our
budget also includes $165 million to ensure that all of our computers are prepared for the year
2000.
While we take care of older Americans, we also must make sure that we continue to assist
working families. An estimated 43 million Americans are living day to day without the
protection of health insurance. More than 80 percent of those uninsured people are full-time
workers and their dependents. Two years ago, we worked with the Congress on a bipartisan
basis to enact the historic Child Health Insurance Program. This year, we are asking the
Congress to take another important step toward reducing the number of uninsured in this country.
We again propose to allow uninsured workers between the ages of62 and 65 to buy into
Medicare at an actuarially sound premium. We also want Americans between the ages of 55 and
62 who have lost their jobs and their insurance to have a similar opportunity.
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The President also is proposing a tax credit for small businesses that seek to insure their
workers through a voluntary health insurance purchasing cooperative.
Taken together, we anticipate that these proposals will reduce the number of Americans
who are living without health insurance.
While we must do all that we can to reduce the number of uninsured, we also must pay
attention to the needs of those who remain uncovered. I am very proud of our new five-year $1
billion initiative to improve health care access for uninsured Americans. The money would go
to community health clinics, public hospitals, and academic health centers to help them establish
the infrastructure necessary to provide coordinated, comprehensive care for the working
uninsured. This is a relatively small investment but it is a vital one if we are to assure that all
Americans get high-quality care at .the right place at the right time.
This new initiative will complement existing efforts to reach out to the uninsured and
provide them with the care they need. The President's budget also includes $945 million dollars
for two major programs in the Health Resources and Services Administration. An increase of
$20 million - for community, migrant and other health centers and a total of$1.5 billion for
the Ryan White CARE Act, an increase of$100 million dollars over last year.
We reaffirm our commitment to mental health, with a $70 million increase - a 24 percent
boost - in the mental health block grant to expand community-based programs.
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While we help millions of working Americans get health insurance, we also should help
millions of other Americans with insurance go back to work. Today, nearly 75 percent of
working-age Americans with disabilities are unemployed. One ofthe major reasons they are
staying out of the job market is their understandable fear of losing their health insurance -
specifically their Medicare and Medicaid coverage. Last year, we all came very close to
agreeing on landmark bipartisan legislation to allow Americans with disabilities to go back to
work and keep their health care coverage. This year, the President is determined that we
complete that task and pass a law allowing these men and women to take jobs and keep their
Medicare or Medicaid coverage.
This budget provides the Indian Health Service with $2.8 billion, including $2.4 billion
for clinical, preventive, facilities and environme~tal health programs. That's a $170 million
increase over last year. And we're changing the Medicaid reimbursement rate, which will infuse
another $80 million into Indian Health Service over the next two years.
Mr. Chairman, as you know I have spent most of my career as an educator and an
advocate for children. That is why I am so proud of the investments this budget makes in the
health and welfare of the youngest Americans.
The President's child care initiative is a lifeline of support to working parents. It will
dramatically increase the availability of child care through grants to the states and investments in
improving the quality of child care in this country. The President is also proposing a $6.3
7
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billion tax credit over five years to help parents - including mom or dads who choose to stay at
home - to afford to care for their children.
And the budget includes $5.3 billion for the Head Start program to continue the
wonderful progress we have made in reaching out to infants and toddlers.
As I mentioned earlier, we are making very good progress with the states in
implementing the Child Health Insurance Program. As of January, 50 plans had been approved
along with eight plan amendments. Our budget includes another $1.9 billion in federal funds to
the states to provide coverage to uninsured children. It also proposes a five-year $1.2 billion
initiative to reach out to eligible children and their families to make sure they are aware of the
coverage that is available to them. As part of that we will allow states to use up to 3 percent of
their CHIP money to perform outreach activities in addition to the 10 percent allotment for other
administrative expenses.
We are also proposing $50 million in grants to states to test new pediatric asthma
management methods and another $40 million to support graduate medical education at our
nation's children's hospitals.
Every year, 20,000 young Americans age out of foster care when they turn 18. Too
many of them are not yet ready to face the challenges of adult life. This budget invests in those
8
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young people and gives them some of the basic skills they will need to survive and to thrive.
Part of that means making sure they are insured through Medicaid until they reach 21. At a cost
of only $50 million dollars over five years, we can do that. We must do that.
It is impossible to talk about children's health without talking about tobacco. The
members of this Committee are very familiar with the statistics - 3,000 American kids begin
smoking every day and 1,000 of them will live shorter lives as a result. We must join together to
pass a comprehensive tobacco bill that puts cigarettes out of the reach of young people, helps to
teach them about the dangers of smoking, and confirm the FDA's authority over this deadly drug.
The Department of Health and Human Services also will work with the Justice Department in
preparing federal litigation against tobacco companies to recoup the money spent on treating the
often deadly consequences oftobacco use.
While we help young people to avoid the dangers of tobacco, we also must make sure that
they are fully immunized against the preventable diseases that are, fortunately, becoming
increasingly rare in this country. Working together we have made remarkable progress in
making sure that children are vaccinated at a young age. As a result, cases of polio, mumps,
tetanus, and measles are at an all-time low. Our budget allocates $1.1 billion to the CDC to
make further progress toward the goal of having all our children immunized.
The final area I would like to discuss with you is our investment in science and public
health.
9
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Our budget continues the bipartisan progress we are making toward meeting the
President's goal of increasing the budget for the National Institutes of Health by 50 percent over
five years. Last year, Congress enacted a 15 percent increase in the NIH budget and this year we
make another down payment on that commitment.
We also are proposing, once again, to allow Medicare patients to enroll in cancer clinical
trials so that we can help bring new, effective cancer treatments to all Americans.
We are investing in health care quality by increasing the budget of the Agency for Health
Care Research and Policy by $35 million to $206 million. This is a major commitment to
ensuring that the medical break throughs our scientists create are translated into measurable
improvements in the health of the American people.
Improvement in health must also go hand in hand with providing a sense of security to
Americans in their everyday life. Therefore, the threat that exists today of biological terrorism is
one that we must take seriously. Bioterrorism is not just a problem for the military or for law
enforcement, it's a problem for the entire public health and medical community. That's why this
budget proposes a $72 million increase for medical and public health response and preparedness
for bioterrorism. This amount allows us to improve surveillance, strengthen local medical
response systems and expand research on biological and chemical agents.
10
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Part of this increase will provide $65 million for bioterrorism and emergency response,
including development and implementation of a national electronic disease surveillance system at
CDC. This network will create a critical link to track influenza, food-borne illnesses, and other
infectious diseases.
In addition, we are proposing a 19 percent increase in the budget of the Food and Drug
Administration, the largest increase in recent years.
The requested increase comes at a critical time for the agency, which has been given
many important new responsibilities in recent years but has not been given corresponding
increases in its budget. Under the new leadership of Commissioner Henney, the Food and Drug
Administration will be carrying out high-priority initiatives to improve the safety of the nation's
food supply, to protect our children from becoming addicted to tobacco products, to ensure the
safety and adequacy of the blood supply, and to strengthen agency's scientific capabilities.
Mr. Chairman, members of the Committee, I have put before you today a blueprint for
health and social service systems to meet the challenges ofthe new millennium. The goals of
making health and happiness the defining characteristic of our seniors retirement, of providing a
better future for our children, and of enabling all Americans to live longer and healthier lives are
ones that we all share. And like you, I am committed to achieving these goals while
maintaining the balanced budget discipline we have all worked so hard to create.
11
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Chainnan Domenici and Senator Lautenberg, and members of the committee: I appreciate
the support you have provided us in the past and I look forward to working with all of you to
meet the challenges before us in this budget. I would be pleased to answer any questions you
might have.
12
==================== ATTACHMENT 1 ====================
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Hex-Dump Conversion
Testimony of
Donna E. Shalala
U.S. Secretary of Health and Human Services
Before the
Senate Budget Committee
February 11, 1999
Autom8ted Recor d5, ana",
Hex-Dump Conversion
Chainnan Domenici, Senator Lautenberg, and members of the Committee:
It is with great pleasure that I appear before you today to discuss the President's fiscal
year 2000 budget for the Department of Health and Human Services.
As the President said when he released his budget on February 1, the FY 2000 budget
charts a progressive but prudent path to our future. For the second year in a row, it is a balanced
budget that makes vital investments in the people ofthis country.
Nowhere is that more evident than in the budget of the Department of Health and Human
Services. It is a budget designed to meet the very real challenges of the 21 st century. And it is a
budget that honors America's values without breaking America's bank.
Our budget contains $400 billion in outlays, a 6.6 percent increase over the FY1999
budget approved by the Congress last year. Within that framework, we seek to keep some very
important promises to American families.
The promise of retirement with dignity for all Americans.
The promise of high-quality, affordable health care for every working Jamily.
The promise of a safe and healthy childhood.
1
Hex-Dump Conversion
And, the promise to mobilize America's scientific genius to make our country a healthier
and safer place to live.
As we stand on the crest of the new century, the combination of our fiscal discipline, the
expanding economy, and the unprecedented advancement occurring in the scientific community
provide us with a unique opportunity to meet these challenges.
Let me tum first to the needs of older Americans and those who are living with
disabilities. We all know that the number of Americans over the age of 65 will double by the
year 2030. Providing proper care to those who will be in that group is an essential part of
meeting the challenges of the new century. The President's long-term care initiative is an
important step toward that objective.
Our proposal includes an historic $1,000 tax credit for people with long-term care needs
or their family members who welcome them into there own homes and provide them with care.
We estimate that this will help more than two million Americans, including over one million
older persons. But let me be clear, this initiative will not just help older Americans the tax
credit will also benefit large numbers of working age adults with disability as well as severely
disabled children.
But a tax credit is not sufficient to meet all ofthe needs of older and disabled Americans.
That is why the HHS budget includes a $125 million annual investment by the Administration
2
Hex-Dump Conversion
on Aging in a new National Family Caregiver Support Program. This will provide direct
assistance to those who are caring for elderly relatives. We are also proposing a five-year $110
million expansion of the Home and Community-Based Care program that helps to expand
alternatives to institutional care for older and younger people with disabilities. And the Health
Care Financing Administration will launch a new $10 million national campaign t6 help inform
and educate Medicare beneficiaries about their own long-term care options.
Taken together, we believe that these can be the first steps in a national effort to address
the very real needs of some of our most vulnerable citizens. We look forward to working with
members of both parties to assure quick approval of bipartisan legislation in this area.
Mr. Chairman, I know that you and I and the members of the committee agree that one of
the cornerstones of our national commitment to older Americans is the Medicare program. In
the three and a half decades since this landmark program was enacted into law, the health and
security of our nation's senior citizens has markedly improved. We have raised both the length
and the quality of life for our parents and our grandparents. As we look ahead to the new
century, we owe it to the next generation of seniors - including you and me - to make sure that
Medicare remains a rock-solid guarantee of high-quality health care.
To ensure that the promise of Medicare remains unbroken, the President has asked
Congress to earmark 15 percent of the projected budget surplus for Medicare over the next 15
years. Two years ago, we worked together to extend the solvency of the Hospital Insurance
3
Hex-Dump Conversion
Trust Fund for another 10 years. The President's proposal to invest one in every six dollars of
the surplus in Medicare will assure solvency of the trust fund for an additional decade, keeping it
in the black until 2020.
The President also believes that there are additional steps that we can and should take on
a bipartisan basis to modernize Medicare and achieve additional savings to strengthen the
program. Like you, we look forward to seeing the final recommendations of the National
Bipartisan Commission on the Future of Medicare. We also look forward to working with the
Congress to ensure that any steps we take in the future meet the four main principles the
President outlined last week: dedicate a portion ofthe surplus to secure Medicare until 2020;
modernize the Medicare program to make it more competitive and efficient; guarantee a defined
set of benefits without excessive new cost to beneficiaries; and use the savings from these
changes to help fund a prescription drug benefit.
I am very proud of the work that the Department has done to reinvent the Health Care
Financing Administration. We have tried to transform HCFA from an agency that simply paid
the bills and rarely asked any questions into a prudent purchaser of health care services. We
have set tough new standards for quality and patient protection. We have worked hard to inform
and educate our customers about the new choices available to them. And we have worked with
the Congress to update the Medicare benefit package to include important preventive services
ranging from mammograms to bone density screening. We hope to work with Congress this
4
Hex-Dump Conversion
year to ensure that HCFA has the statutory authority necessary to adopt the best management,
payment, and competitive practices used in the private sector.
We will also continue the war we have fought against waste, fraud, and abuse in both
Medicare and Medicaid. With Operation Restore Trust we have instituted a policy of zero
tolerance toward those who would rip offthe Medicare program and its beneficiaries. The
President's budget continues those efforts by asking Congress, once again, to enact new steps to
fight fraud that will save the Medicare trust fund $2.9 billion over the next five years. Our
budget also includes $165 million to ensure that all of our computers are prepared for the year
2000.
While we take care of older Americans, we also must make sure that we continue to assist
working families. An estimated 43 million Americans are living day to day without the
protection of health insurance. More than 80 percent of those uninsured people are full-time
workers and their dependents. Two years ago, we worked with the Congress on a bipartisan
basis to enact the historic Child Health Insurance Program. This year, we are asking the
Congress to take another important step toward reducing the number of uninsured in this country.
We again propose to allow uninsured workers between the ages of62 and 65 to buy into
Medicare at an actuarially sound premium. We also want Americans between the ages of 55 and
62 who have lost their jobs and their insurance to have a similar opportunity.
5
Hex-Dump Conversion
The President also is proposing a tax credit for small businesses that seek to insure their
workers through a voluntary health insurance purchasing cooperative.
Taken together, we anticipate that these proposals will reduce the number of Americans
who are living without health insurance.
While we must do all that we can to reduce the number of uninsured, we also must pay
attention to the needs of those who remain uncovered. I am very proud of our new five-year $1
billion initiative to improve health care access for uninsured Americans. The money would go
to community health clinics, public hospitals, and academic health centers to help them establish
the infrastructure necessary to provide coordinated, comprehensive care for the working
uninsured. This is a relatively small investment but it is a vital one if we are to assure that all
Americans get high-quality care at .the right place at the right time.
This new initiative will complement existing efforts to reach out to the uninsured and
provide them with the care they need. The President's budget also includes $945 million dollars
for two major programs in the Health Resources and Services Administration. An increase of
$20 million - for community, migrant and other health centers and a total of$1.5 billion for
the Ryan White CARE Act, an increase of$100 million dollars over last year.
We reaffirm our commitment to mental health, with a $70 million increase - a 24 percent
boost - in the mental health block grant to expand community-based programs.
6
Hex-Dump Conversion
While we help millions of working Americans get health insurance, we also should help
millions of other Americans with insurance go back to work. Today, nearly 75 percent of
working-age Americans with disabilities are unemployed. One ofthe major reasons they are
staying out of the job market is their understandable fear of losing their health insurance -
specifically their Medicare and Medicaid coverage. Last year, we all came very close to
agreeing on landmark bipartisan legislation to allow Americans with disabilities to go back to
work and keep their health care coverage. This year, the President is determined that we
complete that task and pass a law allowing these men and women to take jobs and keep their
Medicare or Medicaid coverage.
This budget provides the Indian Health Service with $2.8 billion, including $2.4 billion
for clinical, preventive, facilities and environme~tal health programs. That's a $170 million
increase over last year. And we're changing the Medicaid reimbursement rate, which will infuse
another $80 million into Indian Health Service over the next two years.
Mr. Chairman, as you know I have spent most of my career as an educator and an
advocate for children. That is why I am so proud of the investments this budget makes in the
health and welfare of the youngest Americans.
The President's child care initiative is a lifeline of support to working parents. It will
dramatically increase the availability of child care through grants to the states and investments in
improving the quality of child care in this country. The President is also proposing a $6.3
7
" Hex-Dwnp Conversion
billion tax credit over five years to help parents - including mom or dads who choose to stay at
home - to afford to care for their children.
And the budget includes $5.3 billion for the Head Start program to continue the
wonderful progress we have made in reaching out to infants and toddlers.
As I mentioned earlier, we are making very good progress with the states in
implementing the Child Health Insurance Program. As of January, 50 plans had been approved
along with eight plan amendments. Our budget includes another $1.9 billion in federal funds to
the states to provide coverage to uninsured children. It also proposes a five-year $1.2 billion
initiative to reach out to eligible children and their families to make sure they are aware of the
coverage that is available to them. As part of that we will allow states to use up to 3 percent of
their CHIP money to perform outreach activities in addition to the 10 percent allotment for other
administrative expenses.
We are also proposing $50 million in grants to states to test new pediatric asthma
management methods and another $40 million to support graduate medical education at our
nation's children's hospitals.
Every year, 20,000 young Americans age out of foster care when they turn 18. Too
many of them are not yet ready to face the challenges of adult life. This budget invests in those
8
Hcx-Dwl1p Conversion
young people and gives them some of the basic skills they will need to survive and to thrive.
Part of that means making sure they are insured through Medicaid until they reach 21. At a cost
of only $50 million dollars over five years, we can do that. We must do that.
It is impossible to talk about children's health without talking about tobacco. The
members of this Committee are very familiar with the statistics - 3,000 American kids begin
smoking every day and 1,000 of them will live shorter lives as a result. We must join together to
pass a comprehensive tobacco bill that puts cigarettes out of the reach of young people, helps to
teach them about the dangers of smoking, and confirm the FDA's authority over this deadly drug.
The Department of Health and Human Services also will work with the Justice Department in
preparing federal litigation against tobacco companies to recoup the money spent on treating the
often deadly consequences oftobacco use.
While we help young people to avoid the dangers of tobacco, we also must make sure that
they are fully immunized against the preventable diseases that are, fortunately, becoming
increasingly rare in this country. Working together we have made remarkable progress in
making sure that children are vaccinated at a young age. As a result, cases of polio, mumps,
tetanus, and measles are at an all-time low. Our budget allocates $1.1 billion to the CDC to
make further progress toward the goal of having all our children immunized.
The final area I would like to discuss with you is our investment in science and public
health.
9
Hex-Dllmp Conversion
Our budget continues the bipartisan progress we are making toward meeting the
President's goal of increasing the budget for the National Institutes of Health by 50 percent over
five years. Last year, Congress enacted a 15 percent increase in the NIH budget and this year we
make another down payment on that commitment.
We also are proposing, once again, to allow Medicare patients to enroll in cancer clinical
trials so that we can help bring new, effective cancer treatments to all Americans.
We are investing in health care quality by increasing the budget of the Agency for Health
Care Research and Policy by $35 million to $206 million. This is a major commitment to
ensuring that the medical break throughs our scientists create are translated into measurable
improvements in the health of the American people.
Improvement in health must also go hand in hand with providing a sense of security to
Americans in their everyday life. Therefore, the threat that exists today of biological terrorism is
one that we must take seriously. Bioterrorism is not just a problem for the military or for law
enforcement, it's a problem for the entire public health and medical community. That's why this
budget proposes a $72 million increase for medical and public health response and preparedness
for bioterrorism. This amount allows us to improve surveillance, strengthen local medical
response systems and expand research on biological and chemical agents.
10
Ilcx-Dump Conversion
Part of this increase will provide $65 million for bioterrorism and emergency response,
including development and implementation of a national electronic disease surveillance system at
CDC. This network will create a critical link to track influenza, food-borne illnesses, and other
infectious diseases.
In addition, we are proposing a 19 percent increase in the budget of the Food and Drug
Administration, the largest increase in recent years.
The requested increase comes at a critical time for the agency, which has been given
many important new responsibilities in recent years but has not been given corresponding
increases in its budget. Under the new leadership of Commissioner Henney, the Food and Drug
Administration will be carrying out high-priority initiatives to improve the safety of the nation's
food supply, to protect our children from becoming addicted to tobacco products, to ensure the
safety and adequacy of the blood supply, and to strengthen agency's scientific capabilities.
Mr. Chairman, members of the Committee, I have put before you today a blueprint for
health and social service systems to meet the challenges ofthe new millennium. The goals of
making health and happiness the defining characteristic of our seniors retirement, of providing a
better future for our children, and of enabling all Americans to live longer and healthier lives are
ones that we all share. And like you, I am committed to achieving these goals while
maintaining the balanced budget discipline we have all worked so hard to create.
11
Hex-Dump Conversion
Chainnan Domenici and Senator Lautenberg, and members of the committee: I appreciate
the support you have provided us in the past and I look forward to working with all of you to
meet the challenges before us in this budget. I would be pleased to answer any questions you
might have.
12
Message Creation Date was at 8-FEB-1999 09:39:00
NOTE: EOP STAFF WILL NOT RECIEVE A FAX COPY OF THE ATTACHED.
---------------------- Forwarded by Robert J. Pellicci/OMB/EOP on 02/08/99
09:00 AM ---------------------------
Total Pages:
LRM ID: RJP16
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF MANAGEMENT AND BUDGET
Washington, D.C. 20503-0001
Monday, February 8, 1999
LEGISLATIVE REFERRAL MEMORANDUM
TO: Legislative Liaison Officer - See Distribution below
FROM: Janet R. Forsgren (for) Assistant Director for Legislative
Reference
OMB CONTACT: Robert J. Pellicci
PHONE: (202)395-4871 FAX: (202)395-6148
SUBJECT: HHS Testimony on the Department's FY 2000 Budget
DEADLINE: 10:00 a.m. Tuesday, February 9, 1999
In accordance with OMB Circular A-19, OMB requests the views of your
agency on
the above subject before advising on its relationship to the program of
the
President. Please advise us if this item will affect direct spending or
receipts for purposes of the "Pay-As-You-Go" provisions of Title XIII of
the
Omnibus Budget Reconciliation Act of 1990.
COMMENTS: Hearing is before the Senate Budget Committee on Thursday,
February
11th. Secretary Shalala is the witness.
DISTRIBUTION LIST
AGENCIES:
6-AGRICULTURECONG AFFAIRS - Vince Ancell (Testimony) - (202) 720-7095
61-JUSTICE - Dennis Burke - (202) 514-2141
62-LABOR - Robert A. Shapiro - (202) 219-8201
95-0ffice of Science and Technology Policy - Jeff Smith - (202) 456-6047
110-Social Security Administration - Judy Chesser - (202) 358-6030
114-STATE - Paul Rademacher - (202) 647-4463
118-TREASURY - Richard S. Carro - (202) 622-0650
EOP:
Daniel N. Mendelson
Barbara Chow
Joshua Gotbaum
Victoria A. Wachino
JENNINGS C
Devorah R. Adler
Jeanne Lambrew
Barry T. Clendenin
Mark E. Miller
Richard J. Turman
Thomas Reilly
Ann Kendrall
Barry White
Jack A. Smalligan
Todd A. Summers
Wendy A. Taylor
Lori Schack
Michele Ahern
Jennifer Friedman
Joanne Cianci
Cynthia A. Rice
Charles E. Kieffer
James J. Jukes
Janet R. Forsgren
LRM ID: RJP16 SUBJECT: HHS Testimony on the Department's FY 2000 Budget
RESPONSE TO
LEGISLATIVE REFERRAL
MEMORANDUM
If your response to this request for views is short (e.g., concur/no
comment) ,
we prefer that you respond bye-mail or by faxing us this response sheet.
If
the response is short and you prefer to call, please call the branch-wide
line
shown below (NOT the analyst's line) to leave a message with a legislative
assistant.
You may also respond by:
(1) calling the analyst/attorney's direct line (you will be connected to
voice
mail if the analyst does not answer); or
(2) sending us a memo or letter
Please include the LRM number shown above, and the subject shown below.
TO: Robert J. Pellicci Phone: 395-4871 Fax: 395-6148
Office of Management and Budget
Branch-Wide Line (to reach legislative assistant): 395-7362
FROM: (Date)
(Name)
(Agency)
(Telephone)
The following is the response of our agency to your request for views on
the
above-captioned subject:
Concur
______ No Objection
______ No Comment
See proposed edits on pages
______ Other:
FAX RETURN of _____ pages, attached to this response sheet
SECRETARY SHALALA'S STATEMENT FOR THE BUDGET COMMITTE
The following attachments were included with this message:
TYPE FILE
NAME des.bud
================== END ATTACHMENT 1 ==================
Unable to convert ARMS_EXT: [ATTACH.D10]MAIL452258147.036 to ASCII,
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The following attachments were included with this message:
TYPE FILE
NAME des.bud
Hex-Dump Conversion
Testimony of
Donna E. Shalala
U.S. Secretary of Health and Human Services
Before the
Senate Budget Committee
February 11, 1999
. ecor 5 .I'fanagement System
Hex-Dump Conversion
Chainnan Domenici, Senator Lautenberg, and members of the Committee:
It is with great pleasure that I appear before you today to discuss the President's fiscal
year 2000 budget for the Department of Health and Human Services.
As the President said when he released his budget on February 1, the FY 2000 budget
charts a progressive but prudent path to our future. For the second year in a row, it is a balanced
budget that makes vital investments in the people of this country.
Nowhere is that more evident than in the budget of the Department of Health and Human
Services. It is a budget designed to meet the very real challenges of the 21 sl century. And it is a
budget that honors America's values without breaking America's bank.
Our budget contains $400 billion in outlays, a 6.6 percent increase over the FY1999
budget approved by the Congress last year. Within that framework, we seek to keep some very
important promises to American families.
Thepromise of retirement with dignity for all Americans.
The promise of high-quality, affordable health care for every working family.
The promise of a safe and healthy childhood.
1
Hex-Dump Conversion
And, the promise to mobilize America's scientific genius to make our country a healthier
and safer place to live.
As we stand on the crest of the new century, the combination of our fiscal discipline, the
expanding economy, and the unprecedented advancement occurring in the scientific community
provide us with a unique opportunity to meet these challenges.
Let me tum first to the needs of older Americans and those who are living with
disabilities. We all know that the number of Americans over the age of 65 will double by the
year 2030. Providing proper care to those who will be in that group is an essential part of
meeting the challenges of the new century. The President's long-term care initiative is an
important step toward that objective.
Our proposal includes an historic $1,000 tax credit for people with long-term care needs
or their family members who welcome them into there own homes and provide them with care.
We estimate that this will help more than two million Americans, including over one million
older persons. But let me be clear, this initiative will not just help older Americans the tax
credit will also benefit large numbers of working age adults with disability as well as severely
disabled children.
But a tax credit is not sufficient to meet all of the needs of older and disabled Americans.
That is why the HHS budget includes a $125 million annual investment by the Administration
2
Hex-Dump Conversion
on Aging in a new National Family Caregiver Support Program. This will provide direct
assistance to those who are caring for elderly relatives. We are also proposing a five-year $110
million expansion of the Home and Community-Based Care program that helps to expand
alternatives to institutional care for older and younger people with disabilities. And the Health
Care Financing Administration will launch a new $10 million national campaign to help inform
and educate Medicare beneficiaries about their own long-term care options.
Taken together, we believe that these can be the first steps in a national effort to address
the very real needs of some of our most vulnerable citizens. We look forward to working with
members of both parties to assure quick approval of bipartisan legislation in this area.
Mr. Chairman, I know that you and I and the members of the committee agree that one of
the cornerstones of our national commitment to older Americans is the Medicare program. In
the three and a half decades since this landmark program was enacted into law, the health and
security of our nation's senior citizens has markedly improved. We have raised both the length
and the quality oflife for our parents and our grandparents. As we look ahead to the new
century, we owe it to the next generation of seniors - including you and me - to make sure that
Medicare remains a rock-solid guarantee of high-quality health care.
To ensure that the promise of Medicare remains unbroken, the President has asked
Congress to earmark 15 percent of the projected budget surplus for Medicare over the next 15
years. Two years ago, we worked together to extend the solvency of the Hospital Insurance
3
Hex-Dump Conversion
Trust Fund for another 10 years. The President's proposal to invest one in every six dollars of
the surplus in Medicare will assure solvency of the trust fund for an additional decade, keeping it
in the black until 2020.
The President also believes that there are additional steps that we can and should take on
a bipartisan basis to modernize Medicare and achieve additional savings to strengthen the
program. Like you, we look forward to seeing the final recommendations of the National
Bipartisan Commission on the Future of Medicare. We also look forward to working with the
Congress to ensure that any steps we take in the future meet the four main principles the
President outlined last week: dedicate a portion of the surplus to secure Medicare until 2020;
modernize the Medicare program to make it more competitive and efficient; guarantee a defined
set of benefits without excessive new cost to beneficiaries; and use the savings from these
changes to help fund a prescription drug benefit.
I am very proud of the work that the Department has done to reinvent the Health Care
Financing Administration. We have tried to transfonn HCFA from an agency that simply paid
the bills and rarely asked any questions into a prudent purchaser of health care services. We
have set tough new standards for quality and patient protection. We have worked hard to infonn
and educate our customers about the new choices available to them. And we have worked with
the Congress to update the Medicare benefit package to include important preventive services
ranging from mammograms to bone density screening. We hope to work with Congress this
4
Hex-Dump Conversion
year to ensure that HCFA has the statutory authority necessary to adopt the best management,
payment, and competitive practices used in the private sector.
We will also continue the war we have fought against waste, fraud, and abuse in both
Medicare and Medicaid. With Operation Restore Trust we have instituted a policy of zero
tolerance toward those who would rip off the Medicare program and its beneficiaries. The
President's budget continues those efforts by asking Congress, once again, to enact new steps to
fight fraud that will save the Medicare trust fund $2.9 billion over the next five years. Our
budget also includes $165 million to ensure that all of our computers are prepared for the year
2000.
While we take care of older Americans, we also must make sure that we continue to assist
working families. An estimated 43 million Americans are living day to day without the
protection of health insurance. More than 80 percent of those uninsured people are full-time
workers and their dependents. Two years ago, we worked with the Congress on a bipartisan
basis to enact the historic Child Health Insurance Program. This year, we are asking the
Congress to take another important step toward reducing the number of uninsured in this country.
We again propose to allow uninsured workers between the ages of62 and 65 to buy into
Medicare at an actuarially sound premium. We also want Americans between the ages of 55 and
62 who have lost their jobs and their insurance to have a similar opportunity.
5
Hex-Dump Conversion
The President also is proposing a tax credit for small businesses that seek to insure their
workers through a voluntary health insurance purchasing cooperative.
Taken together, we anticipate that these proposals will reduce the number of Americans
who are living without health insurance.
While we must do all that we can to reduce the number of uninsured, we also must pay
attention to the needs of those who remain uncovered. I am very proud of our new five-year $1
billion initiative to improve health care access for uninsured Americans. The money would go
to community health clinics, public hospitals, and academic health centers to help them establish
the infrastructure necessary to provide coordinated, comprehensive care for the working
uninsured. This is a relatively small investment but it is a vital one if we are to assure that all
Americans get high-quality care at the right place at the right time.
This new initiative will complement existing efforts to reach out to the uninsured and
provide them with the care they need. The President's budget also includes $945 million dollars
for two major programs in the Health Resources and Services Administration. An increase of
$20 million - for community, migrant and other health centers and a total of $1.5 billion for
the Ryan White CARE Act, an increase of $1 00 million dollars over last year.
We reaffirm our commitment to mental health, with a $70 million increase - a 24 percent
boost - in the mental health block grant to expand community-based programs.
6
Hex-Dump Conversion
While we help millions of working Americans get health insurance, we also should help
millions of other Americans with insurance go back to work. Today, nearly 75 percent of
working-age Americans with disabilities are unemployed. One of the major reasons they are
staying out of the job market is their understandable fear oflosing their health insurance-
specifically their Medicare and Medicaid coverage. Last year, we all came very close to
agreeing on landmark bipartisan legislation to allow Americans with disabilities to go back to
work and keep their health care coverage. This year, the President is determined that we
complete that task and pass a law allowing these men and women to take jobs and keep their
Medicare or Medicaid coverage.
This budget provides the Indian Health Service with $2.8 billion, including $2.4 billion
for clinical, preventive, facilities and environmental health programs. That's a $170 million
increase over last year. And we're changing the Medicaid reimbursement rate, which will infuse
another $80 million into IndianHealth Service over the next two years.
Mr. Chairman, as you know I have spent most of my career as an educator and an
advocate for children. That is why I am so proud of the investments this budget makes in the
health and welfare of the youngest Americans.
The President's child care initiative is a lifeline of support to working parents. It will
dramatically increase the availability of child care through grants to the states and investments in
improving the quality of child care in this country. The President is also proposing a $6.3
7
Hex-Dump Conversion
billion tax credit over five years to help parents - including mom or dads who choose to stay at
home - to afford to care for their children.
And the budget includes $5.3 billion for the Head Start program to continue the
wonderful progress we have made in reaching out to infants and toddlers.
As I mentioned earlier, we are making very good progress with the states in
implementing the Child Health Insurance Program. As of January, 50 plans had been approved
along with eight plan amendments. Our budget includes another $1.9 billion in federal funds to
the states to provide coverage to uninsured children. It also proposes a five-year $1.2 billion
initiative to reach out to eligible children and their families to make sure they are aware of the
coverage that is available to them. As part of that we will allow states to use up to 3 percent of
their CHIP money to perform outreach activities in addition to the 10 percent allotment for other
administrative expenses.
We are also proposing $50 million in grants to states to test new pediatric asthma
management methods and another $40 million to support graduate medical education at our
nation's children's hospitals.
Every year, 20,000 young Americans age out offoster care when they tum 18. Too
many of them are not yet ready to face the challenges of adult life. This budget invests in those
8
H ecor s Management System
eX-Dump Conversion
young people and gives them some of the basic skills they will need to survive and to thrive.
Part of that means making sure they are insured through Medicaid until they reach 21. At a cost
of only $50 million dollars over five years, we can do that. We must do that.
It is impossible to talk about children's health without talking about tobacco. The
members of this Committee are very familiar with the statistics - 3,000 American kids begin
smoking every day and 1,000 of them will live shorter lives as a result. We must join together to
pass a comprehensive tobacco bill that puts cigarettes out of the reach of young people, helps to
teach them about the dangers of smoking, and confirm the FDA's authority over this deadly drug.
The Department of Health and Human Services also will work with the Justice Department in
preparing federal litigation against tobacco companies to recoup the money spent on treating the
often deadly consequences of tobacco use.
While we help young people to avoid the dangers of tobacco, we also must make sure that"
they are fully immunized against the preventable diseases that are, fortunately, becoming
increasingly rare in this country. Working together we have made remarkable progress in
mak~ng sure that children are vaccinated at a young age. As a result, cases of polio, mumps,
tetanus, and measles are at an all-time low. Our budget allocates $1.1 billion to the CDC to
make further progress toward the goal of having all our children immunized.
The final area I would like to discuss with you is our investment in science and public
health.
9
Hex-Dump Conversion
Our budget continues the bipartisan progress we are making toward meeting the
President's goal of increasing the budget for the National Institutes of Health by 50 percent over
five years. Last year, Congress enacted a 15 percent increase in the NllI budget and this year we
make another down payment on that commitment.
We also are proposing, once again, to allow Medicare patients to enroll in cancer clinical
trials so that we can help bring new, effective cancer treatments to all Americans.
We are investing in health care quality by increasing the budget ofthe Agency for Health
Care Research and Policy by $35 million to $206 million. This is a major commitment to
ensuring that the medical break throughs our scientists create are translated into measurable
improvements in the health of the American people.
hnprovement in health must also go hand in hand with providing a sense of security to
Americans in their everyday life. Therefore, the threat that exists today of biological terrorism is
one that we must take seriously. Bioterrorism is not just a problem for the military or for law
enforcement, it's a problem for the entire public health and medical community. That's why this
budget proposes a $72 million increase for medical and public health response and preparedness
for bioterrorism. This amount allows us to improve surveillance, strengthen local medical
response systems and expand research on biological and chemical agents.
10
lIex-Dwnp Conversion
Part of this increase will provide $65 million for bioterrorism and emergency response,
including development and implementation of a national electronic disease surveillance system at
CDC, This network will create a critical link to track influenza, food-borne illnesses, and other
infectious diseases,
In addition, we are proposing a 19 percent increase in the budget of the Food and Drug
Administration, the largest increase in recent years.
The requested increase comes at a critical time for the agency, which has been given
many important new responsibilities in recent years but has not been given corresponding
increases in its budget. Under the new leadership of Commissioner Henney, the Food and Drug
Administration will be carrying out high-priority initiatives to improve the safety of the nation's
food supply, to protect our children from becoming addicted to tobacco products, to ensure the
safety and adequacy of the blood supply, and to' strengthen agency's scientific capabilities.
Mr. Chairman, members of the Committee, I have put before you today a blueprint for
health and social service systems to meet the challenges of the new millennium. The goals of
making health and happiness the defining characteristic of our seniors retirement, of providing a
better future for our children, and of enabling all Americans to live longer and healthier lives are
ones that we all share. And like you, I am committed to achieving these goals while
maintaining the balanced budget discipline we have all worked so hard to create.
11
Hex-Dump Conversion
Chainnan Domenici and Senator Lautenberg, and members of the committee: I appreciate
the support you have provided us in the past and I look forward to working with all of you to
meet the challenges before us in this budget. I would be pleased to answer any questions you
might have.
12
==================== ATTACHMENT 1 ====================
ATT CREATION TIME/DATE: 0 00:00:00.00
TEXT:
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TYPE FILE
NAME des.bud
==================== ATTACHMENT 2 ====================
ATT CREATION TIME/DATE: 0 00:00:00.00
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ATT CREATION TIME/DATE: o 00:00:00.00
TEXT:
The following attachments were included with this message:
TYPE FILE
NAME des.bud
Hex-Dump Conversion
Testimony of
Donna E. Shalala
U.S. Secretary of Health and Human Services
Before the
Senate Budget Committee
February 11, 1999
. ecor 5 .I'fanagement System
Hex-Dump Conversion
Chainnan Domenici, Senator Lautenberg, and members of the Committee:
It is with great pleasure that I appear before you today to discuss the President's fiscal
year 2000 budget for the Department of Health and Human Services.
As the President said when he released his budget on February 1, the FY 2000 budget
charts a progressive but prudent path to our future. For the second year in a row, it is a balanced
budget that makes vital investments in the people of this country.
Nowhere is that more evident than in the budget of the Department of Health and Human
Services. It is a budget designed to meet the very real challenges of the 21 sl century. And it is a
budget that honors America's values without breaking America's bank.
Our budget contains $400 billion in outlays, a 6.6 percent increase over the FY1999
budget approved by the Congress last year. Within that framework, we seek to keep some very
important promises to American families.
Thepromise of retirement with dignity for all Americans.
The promise of high-quality, affordable health care for every working family.
The promise of a safe and healthy childhood.
1
Hex-Dump Conversion
And, the promise to mobilize America's scientific genius to make our country a healthier
and safer place to live.
As we stand on the crest of the new century, the combination of our fiscal discipline, the
expanding economy, and the unprecedented advancement occurring in the scientific community
provide us with a unique opportunity to meet these challenges.
Let me tum first to the needs of older Americans and those who are living with
disabilities. We all know that the number of Americans over the age of 65 will double by the
year 2030. Providing proper care to those who will be in that group is an essential part of
meeting the challenges of the new century. The President's long-term care initiative is an
important step toward that objective.
Our proposal includes an historic $1,000 tax credit for people with long-term care needs
or their family members who welcome them into there own homes and provide them with care.
We estimate that this will help more than two million Americans, including over one million
older persons. But let me be clear, this initiative will not just help older Americans the tax
credit will also benefit large numbers of working age adults with disability as well as severely
disabled children.
But a tax credit is not sufficient to meet all of the needs of older and disabled Americans.
That is why the HHS budget includes a $125 million annual investment by the Administration
2
Hex-Dump Conversion
on Aging in a new National Family Caregiver Support Program. This will provide direct
assistance to those who are caring for elderly relatives. We are also proposing a five-year $110
million expansion of the Home and Community-Based Care program that helps to expand
alternatives to institutional care for older and younger people with disabilities. And the Health
Care Financing Administration will launch a new $10 million national campaign to help inform
and educate Medicare beneficiaries about their own long-term care options.
Taken together, we believe that these can be the first steps in a national effort to address
the very real needs of some of our most vulnerable citizens. We look forward to working with
members of both parties to assure quick approval of bipartisan legislation in this area.
Mr. Chairman, I know that you and I and the members of the committee agree that one of
the cornerstones of our national commitment to older Americans is the Medicare program. In
the three and a half decades since this landmark program was enacted into law, the health and
security of our nation's senior citizens has markedly improved. We have raised both the length
and the quality oflife for our parents and our grandparents. As we look ahead to the new
century, we owe it to the next generation of seniors - including you and me - to make sure that
Medicare remains a rock-solid guarantee of high-quality health care.
To ensure that the promise of Medicare remains unbroken, the President has asked
Congress to earmark 15 percent of the projected budget surplus for Medicare over the next 15
years. Two years ago, we worked together to extend the solvency of the Hospital Insurance
3
Hex-Dump Conversion
Trust Fund for another 10 years. The President's proposal to invest one in every six dollars of
the surplus in Medicare will assure solvency of the trust fund for an additional decade, keeping it
in the black until 2020.
The President also believes that there are additional steps that we can and should take on
a bipartisan basis to modernize Medicare and achieve additional savings to strengthen the
program. Like you, we look forward to seeing the final recommendations of the National
Bipartisan Commission on the Future of Medicare. We also look forward to working with the
Congress to ensure that any steps we take in the future meet the four main principles the
President outlined last week: dedicate a portion of the surplus to secure Medicare until 2020;
modernize the Medicare program to make it more competitive and efficient; guarantee a defined
set of benefits without excessive new cost to beneficiaries; and use the savings from these
changes to help fund a prescription drug benefit.
I am very proud of the work that the Department has done to reinvent the Health Care
Financing Administration. We have tried to transfonn HCFA from an agency that simply paid
the bills and rarely asked any questions into a prudent purchaser of health care services. We
have set tough new standards for quality and patient protection. We have worked hard to infonn
and educate our customers about the new choices available to them. And we have worked with
the Congress to update the Medicare benefit package to include important preventive services
ranging from mammograms to bone density screening. We hope to work with Congress this
4
Hex-Dump Conversion
year to ensure that HCFA has the statutory authority necessary to adopt the best management,
payment, and competitive practices used in the private sector.
We will also continue the war we have fought against waste, fraud, and abuse in both
Medicare and Medicaid. With Operation Restore Trust we have instituted a policy of zero
tolerance toward those who would rip off the Medicare program and its beneficiaries. The
President's budget continues those efforts by asking Congress, once again, to enact new steps to
fight fraud that will save the Medicare trust fund $2.9 billion over the next five years. Our
budget also includes $165 million to ensure that all of our computers are prepared for the year
2000.
While we take care of older Americans, we also must make sure that we continue to assist
working families. An estimated 43 million Americans are living day to day without the
protection of health insurance. More than 80 percent of those uninsured people are full-time
workers and their dependents. Two years ago, we worked with the Congress on a bipartisan
basis to enact the historic Child Health Insurance Program. This year, we are asking the
Congress to take another important step toward reducing the number of uninsured in this country.
We again propose to allow uninsured workers between the ages of62 and 65 to buy into
Medicare at an actuarially sound premium. We also want Americans between the ages of 55 and
62 who have lost their jobs and their insurance to have a similar opportunity.
5
Hex-Dump Conversion
The President also is proposing a tax credit for small businesses that seek to insure their
workers through a voluntary health insurance purchasing cooperative.
Taken together, we anticipate that these proposals will reduce the number of Americans
who are living without health insurance.
While we must do all that we can to reduce the number of uninsured, we also must pay
attention to the needs of those who remain uncovered. I am very proud of our new five-year $1
billion initiative to improve health care access for uninsured Americans. The money would go
to community health clinics, public hospitals, and academic health centers to help them establish
the infrastructure necessary to provide coordinated, comprehensive care for the working
uninsured. This is a relatively small investment but it is a vital one if we are to assure that all
Americans get high-quality care at the right place at the right time.
This new initiative will complement existing efforts to reach out to the uninsured and
provide them with the care they need. The President's budget also includes $945 million dollars
for two major programs in the Health Resources and Services Administration. An increase of
$20 million - for community, migrant and other health centers and a total of $1.5 billion for
the Ryan White CARE Act, an increase of $1 00 million dollars over last year.
We reaffirm our commitment to mental health, with a $70 million increase - a 24 percent
boost - in the mental health block grant to expand community-based programs.
6
Hex-Dump Conversion
While we help millions of working Americans get health insurance, we also should help
millions of other Americans with insurance go back to work. Today, nearly 75 percent of
working-age Americans with disabilities are unemployed. One of the major reasons they are
staying out of the job market is their understandable fear oflosing their health insurance-
specifically their Medicare and Medicaid coverage. Last year, we all came very close to
agreeing on landmark bipartisan legislation to allow Americans with disabilities to go back to
work and keep their health care coverage. This year, the President is determined that we
complete that task and pass a law allowing these men and women to take jobs and keep their
Medicare or Medicaid coverage.
This budget provides the Indian Health Service with $2.8 billion, including $2.4 billion
for clinical, preventive, facilities and environmental health programs. That's a $170 million
increase over last year. And we're changing the Medicaid reimbursement rate, which will infuse
another $80 million into IndianHealth Service over the next two years.
Mr. Chairman, as you know I have spent most of my career as an educator and an
advocate for children. That is why I am so proud of the investments this budget makes in the
health and welfare of the youngest Americans.
The President's child care initiative is a lifeline of support to working parents. It will
dramatically increase the availability of child care through grants to the states and investments in
improving the quality of child care in this country. The President is also proposing a $6.3
7
Hex-Dump Conversion
billion tax credit over five years to help parents - including mom or dads who choose to stay at
home - to afford to care for their children.
And the budget includes $5.3 billion for the Head Start program to continue the
wonderful progress we have made in reaching out to infants and toddlers.
As I mentioned earlier, we are making very good progress with the states in
implementing the Child Health Insurance Program. As of January, 50 plans had been approved
along with eight plan amendments. Our budget includes another $1.9 billion in federal funds to
the states to provide coverage to uninsured children. It also proposes a five-year $1.2 billion
initiative to reach out to eligible children and their families to make sure they are aware of the
coverage that is available to them. As part of that we will allow states to use up to 3 percent of
their CHIP money to perform outreach activities in addition to the 10 percent allotment for other
administrative expenses.
We are also proposing $50 million in grants to states to test new pediatric asthma
management methods and another $40 million to support graduate medical education at our
nation's children's hospitals.
Every year, 20,000 young Americans age out offoster care when they tum 18. Too
many of them are not yet ready to face the challenges of adult life. This budget invests in those
8
H ecor s Management System
eX-Dump Conversion
young people and gives them some of the basic skills they will need to survive and to thrive.
Part of that means making sure they are insured through Medicaid until they reach 21. At a cost
of only $50 million dollars over five years, we can do that. We must do that.
It is impossible to talk about children's health without talking about tobacco. The
members of this Committee are very familiar with the statistics - 3,000 American kids begin
smoking every day and 1,000 of them will live shorter lives as a result. We must join together to
pass a comprehensive tobacco bill that puts cigarettes out of the reach of young people, helps to
teach them about the dangers of smoking, and confirm the FDA's authority over this deadly drug.
The Department of Health and Human Services also will work with the Justice Department in
preparing federal litigation against tobacco companies to recoup the money spent on treating the
often deadly consequences of tobacco use.
While we help young people to avoid the dangers of tobacco, we also must make sure that"
they are fully immunized against the preventable diseases that are, fortunately, becoming
increasingly rare in this country. Working together we have made remarkable progress in
mak~ng sure that children are vaccinated at a young age. As a result, cases of polio, mumps,
tetanus, and measles are at an all-time low. Our budget allocates $1.1 billion to the CDC to
make further progress toward the goal of having all our children immunized.
The final area I would like to discuss with you is our investment in science and public
health.
9
Hex-Dump Conversion
Our budget continues the bipartisan progress we are making toward meeting the
President's goal of increasing the budget for the National Institutes of Health by 50 percent over
five years. Last year, Congress enacted a 15 percent increase in the NllI budget and this year we
make another down payment on that commitment.
We also are proposing, once again, to allow Medicare patients to enroll in cancer clinical
trials so that we can help bring new, effective cancer treatments to all Americans.
We are investing in health care quality by increasing the budget ofthe Agency for Health
Care Research and Policy by $35 million to $206 million. This is a major commitment to
ensuring that the medical break throughs our scientists create are translated into measurable
improvements in the health of the American people.
hnprovement in health must also go hand in hand with providing a sense of security to
Americans in their everyday life. Therefore, the threat that exists today of biological terrorism is
one that we must take seriously. Bioterrorism is not just a problem for the military or for law
enforcement, it's a problem for the entire public health and medical community. That's why this
budget proposes a $72 million increase for medical and public health response and preparedness
for bioterrorism. This amount allows us to improve surveillance, strengthen local medical
response systems and expand research on biological and chemical agents.
10
lIex-Dwnp Conversion
Part of this increase will provide $65 million for bioterrorism and emergency response,
including development and implementation of a national electronic disease surveillance system at
CDC, This network will create a critical link to track influenza, food-borne illnesses, and other
infectious diseases,
In addition, we are proposing a 19 percent increase in the budget of the Food and Drug
Administration, the largest increase in recent years.
The requested increase comes at a critical time for the agency, which has been given
many important new responsibilities in recent years but has not been given corresponding
increases in its budget. Under the new leadership of Commissioner Henney, the Food and Drug
Administration will be carrying out high-priority initiatives to improve the safety of the nation's
food supply, to protect our children from becoming addicted to tobacco products, to ensure the
safety and adequacy of the blood supply, and to' strengthen agency's scientific capabilities.
Mr. Chairman, members of the Committee, I have put before you today a blueprint for
health and social service systems to meet the challenges of the new millennium. The goals of
making health and happiness the defining characteristic of our seniors retirement, of providing a
better future for our children, and of enabling all Americans to live longer and healthier lives are
ones that we all share. And like you, I am committed to achieving these goals while
maintaining the balanced budget discipline we have all worked so hard to create.
11
Hex-Dump Conversion
Chainnan Domenici and Senator Lautenberg, and members of the committee: I appreciate
the support you have provided us in the past and I look forward to working with all of you to
meet the challenges before us in this budget. I would be pleased to answer any questions you
might have.
12
Message Creation Date was at 8-FEB-1999 09:39:00
NOTE: EOP STAFF WILL NOT RECIEVE A FAX COPY OF THE ATTACHED.
---------------------- Forwarded by Robert J. Pellicci/OMB/EOP on 02/08/99
09:00 AM ---------------------------
Total Pages: ____
LRM ID: RJP16
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF MANAGEMENT AND BUDGET
Washington, D.C. 20503-0001
Monday, February 8, 1999
LEGISLATIVE REFERRAL MEMORANDUM
TO: Legislative Liaison Officer - See Distribution below
FROM: Janet R. Forsgren (for) Assistant Director for Legislative
Reference
OMB CONTACT: Robert J. Pellicci
PHONE: (202) 395-4871 FAX: (202) 395-6148
SUBJECT: HHS Testimony on the Department's FY 2000 Budget
DEADLINE: 10:00 a.m. Tuesday, February 9, 1999
In accordance with OMB Circular A-19, OMB requests the views of your
agency on
the above subject before advising on its relationship to the program of
the
President. Please advise us if this item will affect direct spending or
receipts for purposes of the "Pay-As-You-Go" provisions of Title XIII of
the
Omnibus Budget Reconciliation Act of 1990.
COMMENTS: Hearing is before the Senate Budget Committee on Thursday,
February
11th. Secretary Shalala is the witness.
DISTRIBUTION LIST
AGENCIES:
6-AGRICULTURECONG AFFAIRS - Vince Ancell (Testimony) - (202) 720-7095
61-JUSTICE - Dennis Burke - (202) 514-2141
62-LABOR - Robert A. Shapiro - (202) 219-8201
95-0ffice of Science and Technology Policy - Jeff Smith - (202) 456-6047
110-Social Security Administration - Judy Chesser - (202) 358-6030
114-STATE - Paul Rademacher - (202) 647-4463
118-TREASURY - Richard S. Carro - (202) 622-0650
EOP:
Daniel N. Mendelson
Barbara Chow
Joshua Gotbaum
Victoria A. Wachino
JENNINGS C
Devorah R. Adler
Jeanne Lambrew
Barry T. Clendenin
Mark E. Miller
Richard J. Turman
Thomas Reilly
Ann Kendrall
Barry White
Jack A. Smalligan
Todd A. Summers
Wendy A. Taylor
Lori Schack
Michele Ahern
Jennifer Friedman
Joanne Cianci
Cynthia A. Rice
Charles E. Kieffer
James J. Jukes
Janet R. Forsgren
LRM ID: RJP16 SUBJECT: HHS Testimony on the Department's FY 2000 Budget
RESPONSE TO
LEGISLATIVE REFERRAL
MEMORANDUM
If your response to this request for views is short (e.g., concur/no
comment) ,
we prefer that you respond bye-mail or by faxing us this response sheet.
If
the response is short and you prefer to call, please call the branch-wide
line
shown below (NOT the analyst's line) to leave a message with a legislative
assistant.
You may also respond by:
(1) calling the analyst/attorney's direct line (you will be connected to
voice
mail if the analyst does not answer); or
(2) sending us a memo or letter
Please include the LRM number shown above, and the subject shown below.
TO: Robert J. Pellicci Phone: 395-4871 Fax: 395-6148
Office of Management and Budget
Branch-Wide Line (to reach legislative assistant): 395-7362
FROM: (Date)
(Name)
(Agency)
(Telephone)
The following is the response of our agency to your request for views on
the
above-captioned subject:
_ _ _ Concur
_ _ _ No Objection
_ _ _ No Comment
_ _ _ See proposed edits on pages
_ _ _ Other:
FAX RETURN of ___ pages, attached to this response sheet
SECRETARY SHALALA'S STATEMENT FOR THE BUDGET COMMITTE
The following attachments were included with this message:
TYPE FILE
NAME des.bud
================== END ATTACHMENT 1 ==================
Unable to convert ARMS_EXT: [ATTACH.D73]MAIL47445814Z.036 to ASCII,
The following is a HEX DUMP:
FF575043BB040000010A02010000000205000000404E0000000200004BC7569689DB9478EE66CO
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9D15548A25588572124BED3D08608EA222B80272E529DDBE84C1D771BC65071F2A640D54452249
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ATT CREATION TIME/DATE: o 00:00:00.00
The following attachments were included with this message:
TYPE FILE
NAME des.bud
Hex-Dump Conversion
Testimony of
Donna E. Shalala
u.s. Secretary of Health and Human Services
Before the
Senate Budget Committee
February 11, 1999
Hex-Dump Conversion
Chainnan Domenici, Senator Lautenberg, and members ofthe Committee:
It is with great pleasure that I appear before you today to discuss the President's fiscal
year 2000 budget for the Department of Health and Human Services.
As the President said when he released his budget on February I, the FY 2000 budget
charts a progressive but prudent path to our future. For the second year in a row, it is a balanced
budget that makes vital investments in the people of this country.
Nowhere is that more evident than in the budget of the Department of Health and Human
Services. It is a budget designed to meet the very real challenges of the 21 st century. And it is a
budget that honors America's values without breaking America's bank.
Our budget contains $400 billion in outlays, a 6.6 percent increase over the FYI999
budget approved by the Congress last year. Within.that framework, we seek to keep some very
important promises to American families.
The promise of retirement with dignity for all Americans.
The promise of high-quality, affordable health care for every working family.
The promise of a safe and healthy childhood.
1
lIex-Dump Cunl asion
And, the promise to mobilize America's scientific genius to make our country a healthier
and safer place to live.
As we stand on the crest of the new century, the combination of our fiscal discipline, the
expanding economy, and the unprecedented advancement occurring in the scientific community
provide us with a unique opportunity to meet these challenges.
Let me tum first to the needs of older Americans and those who are living with
disabilities. We all know that the number of Americans over the age of 65 will double by the
year 2030. Providing proper care to those who will be in that group is an essential part of
meeting the challenges of the new century. The President's long-term care initiative is an
important step toward that objective.
Our proposal includes an historic $1,000 tax credit for people with long-term care needs
or their family members who welcome them into there own homes and provide them with care.
We estimate that this will help more than two million Americans, including over one million
older persons. But let me be clear, this initiative will not just help older Americans the tax
credit will also benefit large numbers of working age adults with disability as well as severely
disabled children.
But a tax credit is not sufficient to meet all of the needs of older and disabled Americans.
That is why the HHS budget includes a $125 million annual investment by the Administration
2
Hex-Dump Conversion
on Aging in a new National Family Caregiver Support Program. This will provide direct
assistance to those who are caring for elderly relatives. We are also proposing a five-year $110
million expansion of the Home and Community-Based Care program that helps to expand
alternatives to institutional care for older and younger people with disabilities. And the Health
Care Financing Administration will launch a new $10 million national campaign to help inform
and educate Medicare beneficiaries about their own long-term care options.
Taken together, we believe that these can be the first steps in a national effort to address
the very real needs of some of our most vulnerable citizens. We look forward to working with
members of both parties to assure quick approval of bipartisan legislation in this area.
Mr. Chairman, I know that you and I and the members of the committee agree that one of
the cornerstones of our national commitment to older Americans is the Medicare program. In
the three and a half decades since this landmark program was enacted into law, the health and
security of our nation's senior citizens has markedly improved. We have raised both the length
and the quality of life for our parents and our grandparents. As we look ahead to the new
century, we owe it to the next generation of seniors - including you and me - to make sure that
Medicare remains a rock-solid guarantee of high-quality health care.
To ensure that the promise of Medicare remains unbroken, the President has asked
Congress to earmark 15 percent of the projected budget surplus for Medicare over the next 15
years. Two years ago, we worked together to extend the solvency of the Hospital Insurance
3
Hex-Dump Conversion
Trust Fund for another 10 years. The President's proposal to invest one in every six dollars of
the surplus in Medicare will assure solvency of the trust fund for an additional decade, keeping it
in the black until 2020.
The President also believes that there are additional steps that we can and should take on
a bipartisan basis to modernize Medicare and achieve additional savings to strengthen the
program. Like you, we look forward to seeing the final recommendations of the National
Bipartisan Commission on the Future of Medicare. We also look forward to working with the
Congress to ensure that any steps we take in the future meet the four main principles the
President outlined last week: dedicate a portion of the surplus to secure Medicare until 2020;
modernize the Medicare program to make it more competitive and efficient; guarantee a defined
set of benefits without excessive new cost to beneficiaries; and use the savings from these
changes to help fund a prescription drug benefit.
I am very proud of the work that the Department has done to reinvent the Health Care
Financing Administration. We have tried to transform HCFA from an agency that simply paid
the bills and rarely asked any questions into a prudent purchaser of health care services. We
have set tough new standards for quality and patient protection. We have worked hard to inform
and educate our customers about the new choices available to them. And we have worked with
the CO!lgress to update the Medicare benefit package to include important preventive services
ranging from mammograms to bone density screening. We hope to work with Congress this
4
f lex-Dump COIIV~rsion
year to ensure that HCF A has the statutory authority necessary to adopt the best management,
payment, and competitive practices used in the private sector.
We will also continue the war we have fought against waste, fraud, and abuse in both
Medicare and Medicaid. With Operation Restore Trust we have instituted a policy of zero
tolerance toward those who would rip off the Medicare program and its beneficiaries. The
President's budget continues those efforts by asking Congress, once again, to enact new steps to
fight fraud that will save the Medicare trust fund $2.9 billion over the next five years. Our
budget also includes $165 million to ensure that all of our computers are prepared for the year
2000.
While we take care of older Americans, we also must make sure that we continue to assist
working families. An estimated 43 million Americans are living day to day without the
protection of health insurance. More than 80 percent of those uninsured people are full-time
workers and their dependents. Two years ago, we worked with the Congress on a bipartisan
basis to enact the historic Child Health Insurance Program. This year, we are asking the
Congress to take another important step toward reducing the number of uninsured in this country.
We again propose to allow uninsured workers between the ages of 62 and 65 to buy into
Medicare at an actuarially sound premium. We also want Americans between the ages of 55 and
62 who have lost their jobs and their insurance to have a similar opportunity.
5
Hex-Dump Conversion
The President also is proposing a tax credit for small businesses that seek to insure their
workers through a voluntary health insurance purchasing cooperative.
Taken together, we anticipate that these proposals will reduce the number of Americans
who are living without health insurance.
While we must do all that we can to reduce the number of uninsured, we also must pay
attention to the needs of those who remain uncovered. I am very proud of our new five-year $1
billion initiative to improve health care access for uninsured Americans. The money would go
to community health clinics, public hospitals, and academic health centers to help them establish
the infrastructure necessary to provide coordinated, comprehensive care for the working
uninsured. This is a relatively small investment but it is a vital one if we are to assure that all
Americans get high-quality care at the right place at the right time.
This new initiative will complement existing efforts to reach out to the uninsured and
provide them with the care they need. The President's budget also includes $945 million dollars
for two major programs in the Health Resources and Services Administration. An increase of
$20 million - for community, migrant and other health centers and a total of $1.5 billion for
the Ryan White CARE Act, an increase of$100 million dollars over last year.
We reaffirm our commitment to mental health, with a $70 million increase - a 24 percent
boost - in the mental health block grant to expand community-based programs.
6
Hex-Dump Conversion
While we help millions of working Americans get health insurance, we also should help
millions of other Americans with insurance go back to work. Today, nearly 75 percent of
working-age Americans with disabilities are unemployed. One of the major reasons they are
staying out of the job market is their understandable fear of losing their health insurance -
specifically their Medicare and Medicaid coverage. Last year, we all came very close to
agreeing on landmark bipartisan legislation to allow Americans with disabilities to go back to
work and keep their health care coverage. This year, the President is determined that we
complete that task and pass a law allowing these men and women to take jobs and keep their
Medicare or Medicaid coverage.
This budget provides the Indian Health Service with $2.8 billion, including $2.4 billion
for clinical, preventive, facilities and environmental health programs. That's a $170 million
increase over last year. And we're changing the Medicaid reimbursement rate, which will infuse
another $80 million into Indian Health Service over the next two years.
Mr. Chairman, as you know I have spent most of my career as an educator and an
advocate for children. That is why I am so proud of the investments this budget makes in the
health and welfare of the youngest Americans.
The President's child care initiative is a lifeline of support to working parents. It will
dramatically increase the availability of child care through grants to the states and investments in
improving the quality of child care in this country. The President is also proposing a $6.3
7
IIex-Dump Conversion
billion tax credit over five years to help parents - including mom or dads who choose to stay at
home - to afford to care for their children.
And the budget includes $5.3 billion for the Head Start program to continue the
wonderful progress we have made in reaching out to infants and toddlers.
As I mentioned earlier, we are making very good progress with the states in
implementing the Child Health Insurance Program. As of January, 50 plans had been approved
along with eight plan amendments. Our budget includes another $1.9 billion in federal funds to
the states to provide coverage to uninsured children. It also proposes a five-year $1.2 billion
initiative to reach out to eligible children and their families to make sure they are aware of the
coverage that is available to them. As part of that we will allow states to use up to 3 percent of
their CHIP money to perform outreach activities in addition to the 10 percent allotment for other
administrative expenses.
We are also proposing $50 million in grants to states to test new pediatric asthma
management methods and another $40 million to support graduate medical education at our
nation's children's hospitals.
Every year, 20,000 young Americans age out of foster care when they tum 18. Too
many of them are not yet ready to face the challenges of adult life. This budget invests in those
8
Hex-Dump Conversion
young people and gives them some of the basic skills they will need to survive and to thrive.
Part of that means making sure they are insured through Medicaid until they reach 21. At a cost
of only $50 million dollars over five years, we can do that. We must do that.
It is impossible to talk about children's health without talking about tobacco. The
members of this Committee are very familiar with the statistics - 3,000 American kids begin
smoking every day and 1,000 of them will live shorter lives as a result. We must join together to
pass a comprehensive tobacco bill that puts cigarettes out ofthe reach of young people, helps to
teach them about the dangers of smoking, and confirm the FDA's authority over this deadly drug.
The Department of Health and Human Services also will work with the Justice Department in
preparing federal litigation against tobacco companies to recoup the money spent on treating the
often deadly consequences of tobacco use.
While we help young people to avoid the dangers of tobacco, we also must make sure that
they are fully immunized against the preventable diseases that are, fortunately, becoming
increasingly rare in this country. Working together we have made remarkable progress in
making sure that children are vaccinated at a young age. As a result, cases of polio, mumps,
tetanus, and measles are at an all-time low. Our budget allocates $1.1 billion to the CDC to
make further progress toward the goal of having all our children immunized.
The final area I would like to discuss with you is our investment in science and public
health.
9
Hex-Dump Conversion
Our budget continues the bipartisan progress we are making toward meeting the
President's goal of increasing the budget for the National Institutes of Health by 50 percent over
five years. Last year, Congress enacted a 15 percent increase in the NIH budget and this year we
make another down payment on that commitment.
We also are proposing, once again, to allow Medicare patients to enroll in cancer clinical
trials so that we can help bring new, effective cancer treatments to all Americans.
We are investing in health care quality by increasing the budget of the Agency for Health
Care Research and Policy by $35 million to $206 million. This is a major commitment to
ensuring that the medical break throughs our scientists create are translated into measurable
improvements in the health of the American people.
Improvement in health must also go hand in hand with providing a sense of security to
Americans in their everyday life. Therefore, the threat that exists today of biological terrorism is
one that we must take seriously. Bioterrorism is not just a problem for the military or for law
enforcement, it's a problem for the entire public health and medical community. That's why this
budget proposes a $72 million increase for medical and public health response and preparedness
for bioterrorism. This amount allows us to improve surveillance, strengthen local medical
. response systems and expand research on biological and chemical agents.
10
Hex-Dump COllversion
Part of this increase will provide $65 million for bioterrorism and emergency response,
including development and implementation of a national electronic disease surveillance system at
CDC. This network will create a critical link to track influenza, food-borne illnesses, and other
infectious diseases.
In addition, we are proposing a 19 percent increase in the budget of the Food and Drug
Administration, the largest increase in recent years.
The requested increase comes at a critical time for the agency, which has been given
many important new responsibilities in recent years but has not been given corresponding
increases in its budget. Under the new leadership of Commissioner Henney, the Food and Drug
Administration will be carrying out high-priority initiatives to improve the safety of the nation's
food supply, to protect our children from becoming addicted to tobacco products, to ensure the
safety and adequacy of the blood supply, and to strengthen agency's scientific capabilities.
Mr. Chairman, members of the Committee, I have put before you today a blueprint for
health and social service systems to meet the challenges of the new millennium. The goals of
making health and happiness the defining characteristic of our seniors retirement, of providing a
better future for our children, and of enabling all Americans to live longer and healthier lives are
ones that we all share. And like you, I am committed to achieving these goals while
maintaining the balanced budget discipline we have all worked so hard to create.
11
Hex-Dump Conversion
Chainnan Domenici and Senator Lautenberg, and members of the committee: I appreciate
the support you have provided us in the past and I look forward to working with all of you to
meet the challenges before us in this budget. I would be pleased to answer any questions you
might have.
12
==================== ATTACHMENT 1 ====================
ATT CREATION TIME/DATE: 0 00:00:00.00
TEXT:
The following attachments were included with this message:
TYPE FILE
NAME des.bud
==================== ATTACHMENT 2 ====================
ATT CREATION TIME/DATE: 0 00:00:00.00
TEXT:
Unable to convert ARMS_EXT: [ATTACH.D73]MAIL47445814Z.036 to ASCII,
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ATT CREATION TIME/DATE: o 00:00:00.00
TEXT:
The following attachments were included with this message:
TYPE FILE
NAME des.bud
Hex-Dump Conversion
Testimony of
Donna E. Shalala
u.s. Secretary of Health and Human Services
Before the
Senate Budget Committee
February 11, 1999
Hex-Dump Conversion
Chainnan Domenici, Senator Lautenberg, and members ofthe Committee:
It is with great pleasure that I appear before you today to discuss the President's fiscal
year 2000 budget for the Department of Health and Human Services.
As the President said when he released his budget on February I, the FY 2000 budget
charts a progressive but prudent path to our future. For the second year in a row, it is a balanced
budget that makes vital investments in the people of this country.
Nowhere is that more evident than in the budget of the Department of Health and Human
Services. It is a budget designed to meet the very real challenges of the 21 st century. And it is a
budget that honors America's values without breaking America's bank.
Our budget contains $400 billion in outlays, a 6.6 percent increase over the FYI999
budget approved by the Congress last year. Within.that framework, we seek to keep some very
important promises to American families.
The promise of retirement with dignity for all Americans.
The promise of high-quality, affordable health care for every working family.
The promise of a safe and healthy childhood.
1
lIex-Dump Cunl asion
And, the promise to mobilize America's scientific genius to make our country a healthier
and safer place to live.
As we stand on the crest of the new century, the combination of our fiscal discipline, the
expanding economy, and the unprecedented advancement occurring in the scientific community
provide us with a unique opportunity to meet these challenges.
Let me tum first to the needs of older Americans and those who are living with
disabilities. We all know that the number of Americans over the age of 65 will double by the
year 2030. Providing proper care to those who will be in that group is an essential part of
meeting the challenges of the new century. The President's long-term care initiative is an
important step toward that objective.
Our proposal includes an historic $1,000 tax credit for people with long-term care needs
or their family members who welcome them into there own homes and provide them with care.
We estimate that this will help more than two million Americans, including over one million
older persons. But let me be clear, this initiative will not just help older Americans the tax
credit will also benefit large numbers of working age adults with disability as well as severely
disabled children.
But a tax credit is not sufficient to meet all of the needs of older and disabled Americans.
That is why the HHS budget includes a $125 million annual investment by the Administration
2
Hex-Dump Conversion
on Aging in a new National Family Caregiver Support Program. This will provide direct
assistance to those who are caring for elderly relatives. We are also proposing a five-year $110
million expansion of the Home and Community-Based Care program that helps to expand
alternatives to institutional care for older and younger people with disabilities. And the Health
Care Financing Administration will launch a new $10 million national campaign to help inform
and educate Medicare beneficiaries about their own long-term care options.
Taken together, we believe that these can be the first steps in a national effort to address
the very real needs of some of our most vulnerable citizens. We look forward to working with
members of both parties to assure quick approval of bipartisan legislation in this area.
Mr. Chairman, I know that you and I and the members of the committee agree that one of
the cornerstones of our national commitment to older Americans is the Medicare program. In
the three and a half decades since this landmark program was enacted into law, the health and
security of our nation's senior citizens has markedly improved. We have raised both the length
and the quality of life for our parents and our grandparents. As we look ahead to the new
century, we owe it to the next generation of seniors - including you and me - to make sure that
Medicare remains a rock-solid guarantee of high-quality health care.
To ensure that the promise of Medicare remains unbroken, the President has asked
Congress to earmark 15 percent of the projected budget surplus for Medicare over the next 15
years. Two years ago, we worked together to extend the solvency of the Hospital Insurance
3
Hex-Dump Conversion
Trust Fund for another 10 years. The President's proposal to invest one in every six dollars of
the surplus in Medicare will assure solvency of the trust fund for an additional decade, keeping it
in the black until 2020.
The President also believes that there are additional steps that we can and should take on
a bipartisan basis to modernize Medicare and achieve additional savings to strengthen the
program. Like you, we look forward to seeing the final recommendations of the National
Bipartisan Commission on the Future of Medicare. We also look forward to working with the
Congress to ensure that any steps we take in the future meet the four main principles the
President outlined last week: dedicate a portion of the surplus to secure Medicare until 2020;
modernize the Medicare program to make it more competitive and efficient; guarantee a defined
set of benefits without excessive new cost to beneficiaries; and use the savings from these
changes to help fund a prescription drug benefit.
I am very proud of the work that the Department has done to reinvent the Health Care
Financing Administration. We have tried to transform HCFA from an agency that simply paid
the bills and rarely asked any questions into a prudent purchaser of health care services. We
have set tough new standards for quality and patient protection. We have worked hard to inform
and educate our customers about the new choices available to them. And we have worked with
the CO!lgress to update the Medicare benefit package to include important preventive services
ranging from mammograms to bone density screening. We hope to work with Congress this
4
f lex-Dump COIIV~rsion
year to ensure that HCF A has the statutory authority necessary to adopt the best management,
payment, and competitive practices used in the private sector.
We will also continue the war we have fought against waste, fraud, and abuse in both
Medicare and Medicaid. With Operation Restore Trust we have instituted a policy of zero
tolerance toward those who would rip off the Medicare program and its beneficiaries. The
President's budget continues those efforts by asking Congress, once again, to enact new steps to
fight fraud that will save the Medicare trust fund $2.9 billion over the next five years. Our
budget also includes $165 million to ensure that all of our computers are prepared for the year
2000.
While we take care of older Americans, we also must make sure that we continue to assist
working families. An estimated 43 million Americans are living day to day without the
protection of health insurance. More than 80 percent of those uninsured people are full-time
workers and their dependents. Two years ago, we worked with the Congress on a bipartisan
basis to enact the historic Child Health Insurance Program. This year, we are asking the
Congress to take another important step toward reducing the number of uninsured in this country.
We again propose to allow uninsured workers between the ages of 62 and 65 to buy into
Medicare at an actuarially sound premium. We also want Americans between the ages of 55 and
62 who have lost their jobs and their insurance to have a similar opportunity.
5
Hex-Dump Conversion
The President also is proposing a tax credit for small businesses that seek to insure their
workers through a voluntary health insurance purchasing cooperative.
Taken together, we anticipate that these proposals will reduce the number of Americans
who are living without health insurance.
While we must do all that we can to reduce the number of uninsured, we also must pay
attention to the needs of those who remain uncovered. I am very proud of our new five-year $1
billion initiative to improve health care access for uninsured Americans. The money would go
to community health clinics, public hospitals, and academic health centers to help them establish
the infrastructure necessary to provide coordinated, comprehensive care for the working
uninsured. This is a relatively small investment but it is a vital one if we are to assure that all
Americans get high-quality care at the right place at the right time.
This new initiative will complement existing efforts to reach out to the uninsured and
provide them with the care they need. The President's budget also includes $945 million dollars
for two major programs in the Health Resources and Services Administration. An increase of
$20 million - for community, migrant and other health centers and a total of $1.5 billion for
the Ryan White CARE Act, an increase of$100 million dollars over last year.
We reaffirm our commitment to mental health, with a $70 million increase - a 24 percent
boost - in the mental health block grant to expand community-based programs.
6
Hex-Dump Conversion
While we help millions of working Americans get health insurance, we also should help
millions of other Americans with insurance go back to work. Today, nearly 75 percent of
working-age Americans with disabilities are unemployed. One of the major reasons they are
staying out of the job market is their understandable fear of losing their health insurance -
specifically their Medicare and Medicaid coverage. Last year, we all came very close to
agreeing on landmark bipartisan legislation to allow Americans with disabilities to go back to
work and keep their health care coverage. This year, the President is determined that we
complete that task and pass a law allowing these men and women to take jobs and keep their
Medicare or Medicaid coverage.
This budget provides the Indian Health Service with $2.8 billion, including $2.4 billion
for clinical, preventive, facilities and environmental health programs. That's a $170 million
increase over last year. And we're changing the Medicaid reimbursement rate, which will infuse
another $80 million into Indian Health Service over the next two years.
Mr. Chairman, as you know I have spent most of my career as an educator and an
advocate for children. That is why I am so proud of the investments this budget makes in the
health and welfare of the youngest Americans.
The President's child care initiative is a lifeline of support to working parents. It will
dramatically increase the availability of child care through grants to the states and investments in
improving the quality of child care in this country. The President is also proposing a $6.3
7
IIex-Dump Conversion
billion tax credit over five years to help parents - including mom or dads who choose to stay at
home - to afford to care for their children.
And the budget includes $5.3 billion for the Head Start program to continue the
wonderful progress we have made in reaching out to infants and toddlers.
As I mentioned earlier, we are making very good progress with the states in
implementing the Child Health Insurance Program. As of January, 50 plans had been approved
along with eight plan amendments. Our budget includes another $1.9 billion in federal funds to
the states to provide coverage to uninsured children. It also proposes a five-year $1.2 billion
initiative to reach out to eligible children and their families to make sure they are aware of the
coverage that is available to them. As part of that we will allow states to use up to 3 percent of
their CHIP money to perform outreach activities in addition to the 10 percent allotment for other
administrative expenses.
We are also proposing $50 million in grants to states to test new pediatric asthma
management methods and another $40 million to support graduate medical education at our
nation's children's hospitals.
Every year, 20,000 young Americans age out of foster care when they tum 18. Too
many of them are not yet ready to face the challenges of adult life. This budget invests in those
8
Hex-Dump Conversion
young people and gives them some of the basic skills they will need to survive and to thrive.
Part of that means making sure they are insured through Medicaid until they reach 21. At a cost
of only $50 million dollars over five years, we can do that. We must do that.
It is impossible to talk about children's health without talking about tobacco. The
members of this Committee are very familiar with the statistics - 3,000 American kids begin
smoking every day and 1,000 of them will live shorter lives as a result. We must join together to
pass a comprehensive tobacco bill that puts cigarettes out ofthe reach of young people, helps to
teach them about the dangers of smoking, and confirm the FDA's authority over this deadly drug.
The Department of Health and Human Services also will work with the Justice Department in
preparing federal litigation against tobacco companies to recoup the money spent on treating the
often deadly consequences of tobacco use.
While we help young people to avoid the dangers of tobacco, we also must make sure that
they are fully immunized against the preventable diseases that are, fortunately, becoming
increasingly rare in this country. Working together we have made remarkable progress in
making sure that children are vaccinated at a young age. As a result, cases of polio, mumps,
tetanus, and measles are at an all-time low. Our budget allocates $1.1 billion to the CDC to
make further progress toward the goal of having all our children immunized.
The final area I would like to discuss with you is our investment in science and public
health.
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Our budget continues the bipartisan progress we are making toward meeting the
President's goal of increasing the budget for the National Institutes of Health by 50 percent over
five years. Last year, Congress enacted a 15 percent increase in the NIH budget and this year we
make another down payment on that commitment.
We also are proposing, once again, to allow Medicare patients to enroll in cancer clinical
trials so that we can help bring new, effective cancer treatments to all Americans.
We are investing in health care quality by increasing the budget of the Agency for Health
Care Research and Policy by $35 million to $206 million. This is a major commitment to
ensuring that the medical break throughs our scientists create are translated into measurable
improvements in the health of the American people.
Improvement in health must also go hand in hand with providing a sense of security to
Americans in their everyday life. Therefore, the threat that exists today of biological terrorism is
one that we must take seriously. Bioterrorism is not just a problem for the military or for law
enforcement, it's a problem for the entire public health and medical community. That's why this
budget proposes a $72 million increase for medical and public health response and preparedness
for bioterrorism. This amount allows us to improve surveillance, strengthen local medical
. response systems and expand research on biological and chemical agents.
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Part of this increase will provide $65 million for bioterrorism and emergency response,
including development and implementation of a national electronic disease surveillance system at
CDC. This network will create a critical link to track influenza, food-borne illnesses, and other
infectious diseases.
In addition, we are proposing a 19 percent increase in the budget of the Food and Drug
Administration, the largest increase in recent years.
The requested increase comes at a critical time for the agency, which has been given
many important new responsibilities in recent years but has not been given corresponding
increases in its budget. Under the new leadership of Commissioner Henney, the Food and Drug
Administration will be carrying out high-priority initiatives to improve the safety of the nation's
food supply, to protect our children from becoming addicted to tobacco products, to ensure the
safety and adequacy of the blood supply, and to strengthen agency's scientific capabilities.
Mr. Chairman, members of the Committee, I have put before you today a blueprint for
health and social service systems to meet the challenges of the new millennium. The goals of
making health and happiness the defining characteristic of our seniors retirement, of providing a
better future for our children, and of enabling all Americans to live longer and healthier lives are
ones that we all share. And like you, I am committed to achieving these goals while
maintaining the balanced budget discipline we have all worked so hard to create.
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Chainnan Domenici and Senator Lautenberg, and members of the committee: I appreciate
the support you have provided us in the past and I look forward to working with all of you to
meet the challenges before us in this budget. I would be pleased to answer any questions you
might have.
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