DEPARTMENTS OF LABOR, HEALTH AND HUMAN SERVICES, AND EDUCATION, AND RELATED AGENCIES APPROPRIATIONS FOR FISCAL YEAR 1998 TUESDAY, MARCH 4, 1997 U.S. SENATE, SUBCOMMITTEE OF THE COMMITTEE ON APPROPRIATIONS, Washington, DC. The subcommittee met at 10:01 a.m., in room SD-192, Dirksen Senate Office Building, Hon. Arlen Specter (chairman) presiding. Present: Senators Specter, Gregg, Faircloth, Hutchison, Stevens, Harkin, Bumpers, Kohl, and Murray. DEPARTMENT OF HEALTH AND HUMAN SERVICES OFFICE OF THE SECRETARY STATEMENT OF HON. DONNA E. SHALALA, SECRETARY OPENING REMARKS OF SENATOR ARLEN SPECTER Senator SPECTER. Ladies and gentlemen, the hour of 10 a.m., having arrived, we will begin the hearing of the Appropriations Subcommittee on Labor, Health and Human Services, and Education. This morning, we greet the distinguished Secretary of Health and Human Services, Hon. Donna Shalala. Welcome, Madam Secretary. The budget for the Department of Health and Human Services is an enormous one, amounting to some $200 billion in entitlements and discretionary programs, and included in that is a discretionary budget request of $31.7 billion, which is a virtual freeze on the funds from last year. The Department has an enormous number of vital programs in the health field, an evolving field with enormous changes, even before the introduction of the President's health care program in 1993. The health care field was seeing enormous changes with the President's program having been introduced and the analysis of that program, which ultimately did not result in legislation but has had profound changes, with the private sector responding in a variety of ways. With managed care programs and other efforts to try to contain costs we have seen tremendous changes in this field. The advent of managed care has brought a new array of concerns: the so-called gag rule, the so-called capitation response by Congress with legislation on drive-by deliveries, requiring that women stay at least 48 hours in the hospital, and now legislation to determine hospitalization coverage for mastectomies. There is a real area of concern that there may be micromanagement by the Congress. This subcommittee and others in the Congress are searching for ways to have a generalized approach to these issues so that the decisions will be made by doctors, as opposed to insurance companies, and certainly not by Congress. PREPARED STATEMENT There is quite a long list of very important items to be covered in our hearings. So I will put my formal statement in the record, without objection, and we will turn at this time to our distinguished witness, the Secretary of Health and Human Services. [The statement follows:] PREPARED STATEMENT OF SENATOR SPECTER This morning the Subcommittee on Labor, Health and Human Services and Education convenes the first of several hearings on the fiscal year 1998 appropriations requests. I want to once again welcome Secretary Shalala to the subcommittee. Madam Secretary, your Department is charged with a formidable task: overseeing over $200 billion in entitlement and discretionary programs that Congress appropriates to your Department for meeting the Health and Human Service needs of our Nation's citizenry. No other Federal Department has more at stake in the balanced budget negotiations than yours. If the Congress and the President fail to reach agreement on entitlement reforms that stem the growth in spending for Medicaid and Medicare, these programs will soon consume virtually the entire Federal budget, leaving no room for funding medical research, preventive and primary health services and Head Start. This committee will be taking a careful look at your recommendations for fiscal year 1998. Your Department's budget request for discretionary spending for this coming fiscal year totals $31.7 billion, virtually a freeze in spending. I am sure you agree that something as critical as the health of our citizens deserves no less than the most reasoned review. In the year ahead, this Congress is expected to take action to assure: Medicare is financially sound; Poor children have health coverage; Health maintenance organizations provide quality care to beneficiaries; Women have access to regular mammography screening; Continued progress in fighting disease through prevention and medical research; and A comprehensive review of the implications of genetic research. We have an extremely tough job ahead of us, Madam Secretary. I look forward to working with you in the coming months to craft an appropriations bill that maintains the commitment to balancing the budget while preserving funding for high priority health and human service programs. This will necessitate each Federal agency within this subcommittee's jurisdiction sharing in spending reductions through identifying further efficiencies and savings. SUMMARY STATEMENT OF SECRETARY DONNA SHALALA Secretary SHALALA. Thank you very much, Mr. Chairman. I apologize for changing the time of the hearing. I am pleased to appear before you today to discuss the President's 1998 budget for the Department of Health and Human Services. Theodore Roosevelt once said nine-tenths of wisdom consists of being wise on time. This country remains the oldest and the finest democracy, not because we always agree but because we know when it is time to agree. These are the moments that have always defined generations. Mr. Chairman, we have reached one of those moments. Leaders on both sides of the aisle agree that we must balance the budget. The question is how. At a time when our population is rapidly aging and our health delivery system is rapidly changing, a time when advances in technology and medical research offer new hope and new ethical dilemmas, how can we put our budget in the black and meet our health care challenges for the 21st century? The President's plan will allow us to do just that. It puts us on a straight path to balance the budget by the year 2002, and our Department is playing a leading role in that effort. Overall, the President's 1998 budget for the Department totals $376 billion in outlays, of which $34.7 billion is discretionary. Make no mistake about it-we believe this is a smart budget for a new century. It acknowledges that we live in a time of scarce Federal resources and that government cannot do it all. But it makes it clear that when we target our resources responsibly and innovatively, when we team up with our private and public partners, and when we act as tough, savvy managers, the Federal Government can help lead the way to create a stronger and a healthier Nation, a Nation capable of meeting challenges both old and new. MEDICARE AND MEDICAL CHANGES Our first challenge is that we reserve our Medicare and Medicaid lifelines by modernizing, reforming and strengthening them. The President's plan would reduce projected Medicare spending by a net $100 billion over 5 years and guarantee the solvency of the part A trust fund until the year 2007, a full 10 years. The independent HCFA actuary has written a letter confirming these numbers and I will submit it for the record. [The information follows:] To: Administrator, HCFA. MEMORANDUM DEPARTMENT OF HEALTH AND HUMAN SERVICES, From: Chief Actuary, HCFA. Subject: Estimated Year of Exhaustion for the HI Trust Fund under the Medicare Legislative Proposals in the President's 1998 Budget. This memorandum responds to your request for the estimated year of exhaustion for the Hospital Insurance trust fund under the Medicare legislative proposals developed for the President' 1998 Budget. Based on the intermediate set of assumptions in the 1996 Trustees Report, we estimate that the assets of the HI trust fund would be depleted early in calendar year 2007 under the Budget proposals. In the absence of corrective legislation, trust fund depletion would occur early in calendar year 2001 based on the intermediate assumptions. Thus, the Budget proposals would postpone the year of exhaustion by about 6 years. The financial operations of the HI trust fund will depend heavily on future economic and demographic trends. For this reason, the estimated year of depletion under the budget proposals is very sensitive to the underlying assumptions. În particular, under adverse conditions such as those assumed by the Trustees in their "high cost" assumptions. Asset depletion could occur significantly earlier than the intermediate estimate. Conversely, favorable trends would delay the year of exhaustion. The intermediate assumptions represent a reasonable basis for planning. The estimated year of exhaustion is only one of a number of measures and tests used to evaluate the financial status of the HI trust fund. If you would like additional information on the estimated impact of the Medicare proposals in the President's 1998 Budget, we would be happy to provide it. RICHARD S. FOSTER, F.S.A. MODERNIZING MEDICARE Secretary SHALALA. We are able to achieve these savings with real reforms, not with gimmicks, and without imposing new financial burdens on older Americans and people with disabilities. How? We do this by modernizing Medicare so that it fits the needs of older and disabled Americans both today and tomorrow-which is why we are expanding choices among private plans; which is why we are making sure that government is a more prudent purchaser of health care services; which is why we are tightening reimbursement rules, moving toward a new payment system and investing in prevention benefits like mammograms, vaccines, and colon screening, benefits that we know prevent illness and save lives. Medicaid, too, needs a new look, but not a new soul. We keep Medicaid's historic promise of health care for our most vulnerable Americans. At the same time, the President's budget includes net Medicaid savings of $9 billion over 5 years. Overall, we are saving $22 billion over 5 years. We are able to propose less savings than last year in part because of the great progress we have already made in reducing the Medicaid baseline, progress that could not have happened without strong management, without new legislation, and without increased flexibility, progress that must continue. This is why we are giving the States even more flexibility with Medicaid. We are throwing away mountains of redtape for them and regulations by eliminating managed care waivers. We are also repealing the Boren amendment so States have more freedom to set provider payment rates, and we are dropping archaic payment rules. We are also eliminating regulations that tie States' hands on staffing and other matters. CHILDREN'S HEALTH CARE Our second goal is to lift up the lives of our children, and here the President's plan makes a firm, passionate commitment by, first and foremost, tackling one of this country's most pressing health care challenges, a challenge I know that members on both sides of the aisle want to meet. Today there are more than 10 million children, 1 in 7, without health insurance. Most of these children are in families where parents work hard and play by the rules. This must end. Our administration proposal is designed to cut the number of uninsured children by millions over the next 4 years. Let me outline how we are going to do it. And, Mr. Chairman, I am well aware that you have a significant recommendation in this area. First, we will offer a hand-up to workers between jobs who need health insurance for their families while they get back on their feet. Our budget dedicates $1.7 billion this year to help these families get up to 6 months of health care coverage. That will help to insure 700,000 children. |