Hearing Of The Labor, Health And Human Service, Education And Related Agencies Subcommitee Of The House Appropriation Committee

Statement

Subject: Department Of Health And Human Services Budget Request

Chaired By: Rep. Dave Obey

Witness: Kathleen Sebelius, Secretary Of Health And Human Services

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REP. OBEY: Madame Secretary, welcome. We're pleased to have you here for your first appearance before this subcommittee.

I note the presence of the Kansas cabal and we welcome that, too, today.

Madame Secretary, when I was in the legislature I served with a fellow by the name of Harvey Dueholm, who was a retired dairy farmer, homely as a basset hound on a bad day. And he was probably the best human being I ever served with anywhere. And one of the things he always said, he said, "You know, one of the problems with this country is that all too often the poor and the rich get the same amount of ice, but the poor get theirs in the wintertime." And it's my understanding that you have the outrageous view that that can change. And it's my understanding that you are coming in here today intending to do something very radical, which is to try to provide health care coverage for every American.

And I would just like to know where you get that crazy idea, because it seems to me that we've already seen hundreds of billions of dollars go out the door to help strengthen banks and insurance companies and auto companies, under both President Bush and under President Obama, but now evidently you have the outrageous gall to come in here thinking that if we're going to have socialism for big people, we ought to provide at least a shadow of socialism for little people. I don't happen to regard it as socialism, but, as you know, some people like to refer to it that way to scare people with those naughty words.

But I just want to say that I hope that your "secretaryship" is marked by our finally achieving that long-sought goal of providing health access and affordable health care to every single American. And I know this hearing is supposed to be largely about your budget, but that is the great issue that hangs over all of our deliberations on this subcommittee this year. And I for one hope that as the administration puts together its plans and establishes its negotiating position that you will fight just as hard as you can, and the president will fight just as hard as he can, to see to it that among the options available to American citizens will be a public plan.

I find it ironic that some of the people in this society, especially in the insurance industry, who talk so vociferously about the need for choice, consumer choice -- I find it interesting that many of those same people would deny consumers the choice of having a government plan. I fully recognized that we are not going to have anything like the Canadian single-payer plan. This is a different country than Canada. And I recognize that in the end, we will be building primarily on a private insurance system. But I would certainly expect that we would have as an option a government plan for those who choose to have it, not imposed on anybody but for those who choose to have it. And I would hope that the administration would hang tough on that issue.

I would also ask -- I know that, I'm told that the administration is probably going to be sending down to us additional requests for funding for pandemic flu. I would simply ask that you convey to the White House that since we're trying to finish the supplemental conference this week, that if the administration is planning to send that down that they do so immediately so that we can give it full consideration in the conference. In my view, President Bush was correct to ask for full funding for that program more than five years ago. This committee, for a variety of reasons, didn't quite measure up to that. I think we've got to get on with that business and so I hope that the administration will send down to us, as quickly as possible, whatever their estimates are of what the true need will be.

I also have some concerns I'd like to express to you with respect to certain aspects of your budget, especially LIHEAP and what I regard to be a peculiar request that they had with NIH, but I'll save that for the question period.

Mr. Tiahrt.

REP. TODD TIAHRT (R-KS): Thank you, Mr. Chairman.

And as a fellow Kansan, I want to provide a warm welcome for Secretary Sebelius. Congratulations on your confirmation. I know that you're getting back to Washington and seeing the traffic -- you're having the same thought that I have: We're not in Kansas anymore.

As secretary of Health and Human Services, you have the responsibility to ensure our nation's health care and social services remain excellent and, indeed, improve. But, like a physician, your philosophy should be first, do no harm. This often is hard for the government, for meddling in access and choice the government does in fact do harm.

I'm interested in hearing how you will balance the desire to improve access to health care and human services while not interfering in the quality of the systems themselves. One of the biggest concerns with government interference in health care delivery system that I have, and I'm sure you have -- health care reform will be a large part of our discussion today -- is that we will limit the innovation to choice and access through this process that we're going through to try to involve more government in the process.

The three areas of concern that I have with the administration's proposals are the utilization of comparative effectiveness to ration health care, the elimination of the conscience protection and the overall concept of moving people from the private health insurance to public health insurance. I believe these three policies will negatively impact the quality and America's access to health care.

First, regarding comparative effectiveness, in the stimulus bill we included money that not only was for comparative effectiveness but also language directing your department to use this research to make decisions about what treatments the government will and won't approve. The government will fund research to decide which medicine or medical treatment works best for most people. Then and only then will they pay for that one option. In other words, comparative effectiveness is just another way to say rationed health care. Who's going to affected by this policy? Unfortunately, I think it's those who can least afford to lose will be the ones who experience the loss.

A fellow Kansan, Jenny Jobe (sp) from Johnson County, was in my office earlier this spring. She has an -- (inaudible) -- disease, and under private insurance she had medication that would allow her to fight off the common cold and the flu. When she visited my office, she was suffering from the flu and was afraid to shake hands. She had left a life where she was completely able to function. She could play with her grandchildren, she could shop, she could be productive.

Unfortunately, when she switched to Medicare, the government would not fund her therapy or her medication so she was forced to take a new medication, which provided her with headaches and backaches, and it did not protect her from diseases such as the common cold. When she came to my office, she was considering wearing a mask and very worried about the H1N1 virus and it was all because of the interference in the decision that was between her physician and herself.

Personalized medicine is a new frontier and developing applications to meet these medical needs of individuals as individuals -- as you know, our own University of Kansas is developing the technologies that can not only detect and analyze an individual's unique physiological response to a disease such as cancer but also tailor the optimum treatment for that person. The outgrowth of the genomics research -- personalized medicine has already seen success and is realized as the direction in which medicine should be moving.

In early February, the FDA announced that the creation of a new position to focus on ushering in new personalized medical methods came about. On one hand, the government promotes this personalized medical research and on the other hand it's stymieing the progress through comparative effectiveness policy. Comparative effectiveness will directly affect a doctor's ability to make the best decision for his patients.

The federal government is the largest customer in the health care industry. Once it no longer pays for certain medicines or treatments, it becomes financially unsound for manufacturers to be able to recoup their cost from research and development and thus limit their development of new products. Similarly, innovative research on gene therapy and other personalized medicine options will be threatened.

Second, I believe that the removal of the conscience protection will threaten our nation's health care access. As Americans, we believe that no one should be forced to act in a way that violates his or her morals or religious beliefs. There are many excellent health care professionals and health care facilities that do not believe abortion is the right -- is a right -- is right and do not provide that procedure. Now the administration wants to remove their right to refuse and provide a service that violates their moral principles and/or religion.

Besides the civil rights aspect of this policy, there will be a severe impact on access to health care. Catholic hospitals, clinics and medical professionals are the bedrock of our health care delivery system in most parts of the nation. In Kansas, it's 40 percent of our hospitals. As not-for-profit hospitals, they take care of all that comes through their doors. They provide excellent care. But if they are forced to close their doors or stop practicing, many Americans and Kansans will be left without a place for medical treatment. I'm interested in hearing how the administration plans to ensure that our health care system doesn't come to a grinding halt if they stop reimbursing medical centers for freedom of choice.

Finally, in this area in which I know you are intimately familiar as former insurance commissioner of the state of Kansas, I would like to hear about your rationale for moving people from private health insurance to the public system. Not only will this exponentially increase the cost to the taxpayer, but it will also further ration health care. The administration has expressed a desire for a public insurance plan that will directly compete with private health insurance plans. Employers will see this as a cost avoidance and move their employees and their costs from their own pocketbook and bank account to the taxpayers. We've seen this already in SCHIP. How will we pay for this as a nation? Have you accounted for the vast enrollment beyond just today's uninsured? Further, current public insurance accounts for about 40 percent of the health care coverage while private insurance covers about 60 percent of it. We all know that the reimbursement rates are much lower than the actual costs when it comes to the public portion. In Kansas, they're experiencing from 25 percent to 70 percent below cost on reimbursement rates. And it's not one entity alone. It's hospitals, clinics and physicians.

They tried to make ends meet by shifting costs from the private insurance payments to cover the shortfalls in the public funding insurance. Today in Kansas, one-third of the physicians will not take any new Medicare or Medicaid patients because of this. If HHS cannot find a way to meet the seniors' health care costs, then how will they be able to pay for the entire populace under government-run health care? The only way this would be feasible would be a rationed health care system similar to what we find in other countries like Canada, the United Kingdom, Norway, anywhere else on the face of the Earth that has a similar program, and I believe this is completely unacceptable. More importantly, I am concerned it will be the downfall of American health care quality and, indeed, the world as we know it, as a standard bearer in health care.

Secretary Sebelius, it's good to have you here today. I look forward to working with you to ensure that every American has the ability to pursue his or her dream, including access to the best health care and wellness programs in the world.

Thank you, Mr. Chairman.

REP. OBEY: Mr. Lewis.

REP. JERRY LEWIS (R-CA): Mr. Chairman, thank you very much. I have no formal statement. I'll wait for the secretary's statement and hope we'll have a chance to ask some questions.

SEC. SEBELIUS: Well, thank you, Mr. Chairman. It's good to be with the committee today.

And I appreciate the greetings from my fellow Kansan, the new ranking member of the subcommittee, Representative Tiahrt.

And it's nice to have Mr. Lewis also here today.

I appreciate the opportunity to come and discuss the president's 2010 budget for the Department of Health and Human Services. And this does mark my first appearance before this committee as secretary and I want to begin by thanking members of this committee for your hard work and your leadership. I know we do face tremendous challenges in our nation today and I hope we can work together to tackle those challenges.

One task we need to complete together is health reform. And as you consider the budget before you, you and your colleagues are working on an historic effort to reform our health care system.

Like you, I know America cannot simply afford the status quo when it comes to health care. We have all heard from people throughout this country who don't know what they will do if they or their children fall ill. Too many families in America are one illness or accident away from financial ruin.

Businesses are suffering as well. Yesterday's bankruptcy of General Motors reminded us that the cost of health care makes it more difficult for American businesses to compete and succeed with their global competitors.

Today there was a report released by the president's Council of Economic Advisers. And it outlines how health care reform can help strengthen our economy and shows us the high cost of doing more of the same.

The report found, if we continue on the path we are on today, by the year 2040, 72 million Americans will be uninsured, and health care costs will be over 34 percent of our gross domestic product. Without reform, that change in action now, the federal deficit will continue to rise, and Americans who receive insurance from their employers will see a larger portion of their salary go to health benefits instead of their take-home pay. This is a problem we can avoid if we act now.

The economic advisers' report found that real reform slows the growth rate of health care costs by about 1.5 percent. It would help cut the federal deficit, boost our economy, save jobs and put more money in the pockets of American families.

For a typical family of four, real income would be up about $2,600 by 2020 and $10,000 more in 2030, but only if we make health reform a reality.

Now, the message is clear. Health reform can give us a stronger economy and better health care system and boost families' bottom line. But if we do more of the same we all will pay a heavy price. We need reform that protects what works in health care and fixes what's broken.

The budget we're considering today invests in key priority areas and puts us on the path to health reform.

It builds on the investments already made in a 21st century health system that you all made in the American Recovery and Reinvestment Act. It sends a clear message we can't afford to wait any longer if we want to get health care costs under control and improve our fiscal outlook.

Fraud costs our nation billions of dollars every year, and the budget proposes that we further crack down on individuals who cheat the system. The attorney general and I recently announced and interagency effort to fight and prevent Medicare fraud through improved data sharing, joint strike forces in key areas of the country and increased operations. This budget includes increased funding to help HHS achieve our part of the bargain.

The budget also helps move us toward a central goal of health reform: improving, as Congressman Tiahrt has already mentioned, the quality of care.

Now, thanks to Chairman Obey's leadership, the Recovery Act has already included critical new resources to fight health care- associated infections, as well as new support for prevention and wellness programs that can keep Americans out of the hospital in the first place.

The 2010 budget builds on these investments. The budget includes critical support for patient-centered research that would give doctors and patients access to better information and treatments, as well as quality incentive payments to hospitals and physician groups who have better rates of readmission. It invests $354 million to combat health disparities and improve the health of racial and ethnic minorities and low-income and disadvantaged populations. And the budget recognizes that if we want to ensure that millions of Americans who lack insurance get quality, affordable care, we need to increase the number of health providers in this country.

We're responding to the challenge by including over $1 billion within the Health Resources and Services Administration to support a wide range of programs to strengthen our nation's health care work force. The funding enhances the capacity of nursing schools, increases access to oral health care, targets minority and low-income students and places an increased emphasis on ensuring that America's senior population gets the care and treatment it needs.

Finally, the 2010 budget will support our department as we work to protect health and safety of our citizens.

As the recent outbreak of the new H1N1 flu virus reminded us, HHS has a significant and critical role to play in preparing for and responding to the outbreaks that threaten the health of American people.

The previous investments made in pandemic planning and preparation by this committee and this Congress allowed our department to respond quickly and efficiently to the H1N1 virus when it first presented itself and get Americans the information and resources they needed early in the outbreak.

But we still don't know what's coming later this fall and winter, or what exactly will happen this summer in the Southern Hemisphere as the H1N1 virus mixes with seasonal flu virus.

Putting safety of the American people first, this administration's supplemental request will help support the federal response to the recent outbreak of the H1N1 flu.

These funds, in addition to the funds requested in the 2010 budget, will allow HHS to continue to respond to the current outbreak and remain prepared to protect the American people.

Mr. Chairman, President Obama is committed to creating a safer, healthier and more prosperous America. And this budget will help our department achieve those goals. It invests in reform, will improve the quality of care and continues to provide essential services that so many families depend on.

I look forward to discussing the budget with you and your committee today. And I'm happy to take your questions.

REP. OBEY: Thank you very much.

Just a couple things: First of all, with respect to health care reform, I do hope that as the process moves along, we will not give short shrift to long-term care. I think that has to be a key part of whatever we do.

Secondly, without belaboring it, I do take issue with the administration's request for low-income heating assistance. I understand that the amount that's being requested by the administration is significant in historical terms, but it still represents a reduction below last year. And I would think that that ought to be corrected.

Let me simply express one concern about your budget for NIH. I've been on this committee since 1974, and we have steadfastly -- regardless of which party controlled the White House or the Congress, we have steadfastly insisted that allocations to research on diseases be handled by scientists rather than politicians. And so we have always resisted efforts to direct a specific amount of funding at a specific disease.

As you know -- and I understand this happened before you were appointed, but as you know, in the administration's initial request they have crossed that line. And they have moved to request a specific amount of funding for cancer and autism to the exclusion of almost every other disease.

I don't think there's anybody on this panel who's in love with cancer or autism. I think all of us have a long record, regardless of party, in trying to combat both. But I do think that it's important that we recognize that once we start politically determining funding levels for one disease versus another, then the door is open and every group in society is going to be expecting to be in the front car of the train. Nobody's going to want to be in the caboose. And the result will be political chaos in an area that ought to be determined by science.

So this committee will not follow the lead of the administration on that. And I would urge that you talk to whoever made those decisions and suggest that there's a better way to skin a cat than that one.

The only other thing I would say -- and then I'd invite your comments, if you want, on NIH -- I would again ask that the administration as quickly as possible send us your full request for pandemic flu, because, as you know, we had money in the supplemental that was ridiculed by some of our friends in the Senate. We have now, again, put money in the -- I mean, we put it in the stimulus, initially.

We have now, again, put a significant amount of money in the supplemental. But it's apparent, I think to all of us, that even that amount is not enough. So whatever the amount is the administration's going to request, I would hope that they would do it pronto.

I simply invite your comments before I pass you onto the next questioner.

SEC. SEBELIUS: Well, Mr. Chairman, I will certainly share your interest in avoiding disease-specific funding in the future with the administration. I do know that the president personally feels very strongly about the opportunity to cure cancer in his lifetime and has talked about that for years, based I think in large part on his personal experience. And I think that's a funding initiative that's reflected in this budget priority.

Having said that, there are also -- both in the Recovery Act and again in the 2010 budget is a significant investment in research. And the president also fully supports letting science guide the research. So I think it's a balancing act. And I will share your concerns with him.

It's my understanding that the budget resolution, unlike the initial budget proposal, has retooled the LIHEAP funding in a way that I think is more suitable, in terms of where you feel it's appropriate to go.

I think the goal initially was to provide a little sort of truth in funding and put the trigger in in case the oil prices were not as high as they had been in previous years. But I understand your commitment to the program and assure you that we share that commitment. It's an essential program for really what's lifesaving services for seniors around the country.

And finally, in terms of long-term care, there certainly is already an investment and interest in rebalancing a lot of our long- term-care issues and finding more of a continuity of care system and funding that kind of -- part of the work force funding speaks to the fact that I think for many Americans care in their home, care with some assistance before they would reach a nursing home is much preferable and often provides a much higher quality of care.

So there are some underpinnings of that already in the budget, but I think it's very appropriate in the discussion of health reform overall that we address that issue, because right now, as you know, Medicare does not fund long-term care unless you are impoverished. And that's become somewhat of an industry to try and see that families can save some assets as one or other member of the couple faces that situation.

So I think that has to be part of our discussion going forward. And I look forward to working with you and others on that issue.

REP. OBEY: Thank you.

I'd simply say, with respect to NIH, I think every member of this committee shares the president's concern about cancer and autism. But there are also legitimate and equally important concerns about Parkinson's, about Lou Gehrig's disease, diabetes, et cetera, you name it. And I think virtually all of us are more comfortable with the final decisions being made on the basis of what peer-reviewed process leads us to the best scientific judgments, as opposed to doing a political balancing act.

Mr. Tiahrt.

REP. TIAHRT: Thank you, Mr. Chairman.

I want to go back with you to the first one on comparative effectiveness. It was $400 million that the stimulus bill passed on to your agency, and it's to determine the optimum procedure or pharmaceutical for a given symptom.

As we experienced with Jenny Jobe (sp) when she came to my office, she lost access to the best solution for her symptom because of Medicare. How will you apply comparative effectiveness? Will you allow it to be used like it was for Jenny Jobe (sp) as rationed health care? Or will you use it as an advisory tool for physicians in clinics and hospitals so they can make the best decision how to apply the information they have?

SEC. SEBELIUS: Well, Congressman, let me start by saying I -- in my service as Kansas insurance commissioner for eight years, I spent a lot of time and energy fighting the rationing of health care, which I saw each and every day, frankly, being conducted by private insurers who were making treatment choices and overruling medical decisions of doctors, in terms of drug application, medical procedures. So I share your goal that in transforming the health system we not get to a system of rationed care, that medical providers should make medical decisions, not government bureaucrats, not insurance companies, not others.

As you know, the language around comparative effectiveness research prohibits Medicare from using that research for cost-based decisions, for spending decisions. So it is established as a methodology to do exactly what you just described: identify not only best practices in effective outcomes, but, really, hopefully drive that in some transparent way, inform consumers, inform providers and move us in a direction where we are using more cost-effective treatments but also higher-quality treatments, which are in place in some parts of the country but too often not in place.

REP. TIAHRT: Apparently, CMS hadn't gotten the memo about rationed health care, because they did ration Jenny Jobe's (sp) health care.

Let me move onto the --

SEC. SEBELIUS: That may have been in a formulary that was -- I mean, I have no idea what --

REP. TIAHRT: It's a danger that I think we're facing in America today. And we're seeing it play out in not only Medicare but also Medicaid.

In the public health insurance plan, currently today, 60 percent of health care is privately funded, 40 percent public funded. And every hospital, clinic and every physician in America today covers the shortfall of public-funded health care by cost shifting. They use the term "cost shifting." They budget cost shifting.

As you move towards public health insurance, how are you going to pay for it? How are you going to avoid not having the ability to cost shift as you shrink that portion of privately funded health insurance? Because that's the direction that it's going to go.

And here's how it works: An employer has 10 employees; he pays $500 a month for each employee to have health care. That's $60,000 a year. If you give them the alternative to push them into Medicaid, like we did with SCHIP, he's going to say, "I've got a $60,000 break here." So he says to each and every one of his employees: "You know, like to have you here. We're going to change the benefit package. You're no longer going to get health care, but you do have access to it through Medicaid." And he saves $60,000 a year, and it comes to the taxpayers to pick up that cost.

So how are you going to pay for that public health insurance program that you're department's moving forward, the administration's moving forward?

SEC. SEBELIUS: Well, Congressman, I think that the president starts with the principle that he does not support dismantling the system that we have for employer-based health coverage and recognizes that 180-plus million Americans have coverage they like, have coverage that they want to keep, have a doctor they go to --

REP. TIAHRT: It's not a point about them keeping the coverage. Excuse me for interrupting, because I'm on limited time. It's not like the governor's office, where you have control of all your time.

Today it's going to be an economic advantage for the employer. The individual won't have a choice. It'll be the employer that makes that decision, based on pushing costs to us taxpayers, which will be a cost advantage to him.

SEC. SEBELIUS: Well, I would suggest the biggest cost shift that's going on right now is the uninsured Americans who come through the doors of that hospital in Wichita and in Topeka and in Kansas City every day. And those costs are shifted directly onto private employers who are desperately trying to keep their employer coverage.

REP. TIAHRT: And the --

SEC. SEBELIUS: The system of providing a payment for every American of having preventive care, of driving wellness care reduces the kind of cost shift that we have right now, which falls most often on small-business owners and small coverage. So as the health plan is being debated and really constructed in Congress, I think that having a fair payment system, having shared responsibility and making sure that all Americans have access to more affordable but more effective health care treatment at the front end prevents the kind of cost shifting that you have just described.

REP. TIAHRT: Yeah and health care reform does need to occur. I think we should have a good open debate about whether we use a different alternative rather than just a single-payer system that we're moving towards now. And I'm glad that you're open to that debate. And I look forward to the alternatives.

SEC. SEBELIUS: Well, I am. And I don't know -- Congressman, I can assure you that I don't support and the president doesn't support a single-payer system. He wants to build on the system that we have, recognizing that 180 million Americans have coverage they like and they want to keep it. We're trying to deal with how to get more effective and affordable coverage for everyone else.

REP. OBEY: (Off mike.)

REP. ROSA DELAURO (D-CT): Thank you very much, Mr. Chairman.

And welcome, Madame Secretary. What a delight to have you here today, knowing of your interest in health care and also your record as a governor.

I want to say a particular thank you. We've had a chance to work together, whether it was with regard to what was happening in rural American and your focus in that area, but also in this job is how in fact with your leadership and the president's leadership we'd be able to provide affordable health care for every American. It has been a long time in coming.

And we didn't succeed in 1993, and the problems have only gotten worse. We cannot fail this time around. And I believe the president believes that, as do you.

I want to first associate myself with the comment on health care that the chairman pointed out. I'm a very strong proponent of a public plan as part of the options that we provide to people today, that it helps us to level the playing field, and it does provide real choice there.

I also would remark on the issue of this committee and on a bipartisan basis I think what we've tried to do is to not pick and choose the various diseases or illnesses that are focused out at the NIH and our other research institutes so that while -- and I, too, have a personal interest in cancer as a survivor, but the, if you will, earmarking of autism and of cancer -- I think we're best if we're not picking and choosing.

I'm going to go to another question, and hopefully in the second round I'll come back to health care. But I wanted to just briefly talk about early childhood and Head Start, if I might. And the recovery program did provide funding for Head Start and -- as part of a safety net. But the dollars, as you know, don't increase the base funding for the program. The Recovery Act also provided resources for child care and development block grant. But again, it isn't a part of, really, the 2010 budget, which only included a slight increase for the block grant program.

And what I wanted to do was to check in with you about your plans for working to ensure that the increased Recovery Act funding is sustained in 2011 and beyond, with regard to early childhood and health care and how in fact you plan to work with the secretary -- Secretary Duncan to look at the coordination of services for children who are under five.

SEC. SEBELIUS: Well, thank you, Congresswoman.

As you just said, the 2010 budget does include an increase in funding for Head Start and Early Head Start that would start with a platform that was put in place by the enormous investment of the Recovery Act money. And I think that's so essential.

I've had the opportunity to do a lot of work in early childhood education, and I take very seriously the notion that this is probably the best single investment we could make in America. And the research on brain development is pretty clear, that between birth and three years old, particularly, is an enormous growth period.

We have already -- Secretary Duncan and I have already had several preliminary conversations. In fact, I had the first one when I was still governor of Kansas and he was already the secretary, about how the work we were doing in Kansas could be expanded with some early education money.

And I've circled back around now, as the new secretary, to talk about ways that we can have a very collaborative and coordinated strategy. I think it's important to have all the early childhood providers at the table, to have a mutual goal about where this money is best directed based on the science and evidence-based research, and also to recognize that all children don't thrive in identical programs, that we need a variety of programs for parents and children to succeed.

But I can assure you those conversations are very much under way. And it's a passion that both of us share.

REP. DELAURO: The $300 million Early Learning Challenge Grants -- do you have any though as about how that is going to be implemented with regard to states and how we're going to look at that?

SEC. SEBELIUS: I think, again, those conversations are just under way. But I think that what's important is to set up some kind of a platform for a program basis that is based on what we know works in the long run, what gets children ready to go to school.

We did an alarming study in Kansas a couple of years ago, conducted by the board of education hat found that about 50 percent of the five-year-olds who hit kindergarten were not ready for kindergarten, for a variety of reasons.

And so early childhood education, I think, needs to aim toward school readiness and hopefully close that learning gap so kids are really ready to learn when they hit kindergarten years.

REP. DELAURO: Thank you.

Thank you, Mr. Chairman.

REP. OBEY: Mr. Lewis.

REP. LEWIS: Thank you very much, Mr. Chairman.

Once again, welcome, Madame Secretary.

SEC. SEBELIUS: Thank you.

REP. LEWIS: It's a pleasure to be with you.

The last time we had a major review of the nation's health care system and raised questions and discussed what the federal government might be doing about it was when Secretary of State Hillary Clinton was then associated with the president of the United States, William Clinton. And he formed a commission that she headed. And they spent considerable time and energy reviewing where we should go with our health care system.

Once the product was developed itself, I think many a message was sent to the Congress that we would be well served by reflecting upon. For that package hung out there long enough that essentially the people got a chance to understand what was in it. And they didn't want it very much. And they sent messages back to us that were very clear and rather direct. They said, first, that which the chairman suggested and I believe your statement suggested, that people want first to be able to keep what they have. And then above and beyond that they want to ensure that they maintain choice as we go forward with such a package.

I do not know what a government single-payer system might lead us to. But a lot could be learned by also not just looking at the Hillary Clinton commission but some of that which John Maynard Keynes may have taught us about what socialized processes deliver in the final analysis. All of that will be a part of the discussions ahead of us. It'll be a healthy one and an important one.

The chairman and I have spent some energy attempting to figure out what we do with the thing called pandemic flu. I want to commend the department for taking on H1N1 virus seriously and going forward with a program that will attempt to make sure that we're ready and we benefit from that which we've learned so far as a result of work by people like Julie Gerberding and the like.

I note that within your budget there's a request that includes $354 million for public health and social service emergency funds. At the same time I'm concerned that there are plans to move BioShield money from flu vaccine -- for flu vaccine production.

Within that mix, it's awfully important that we make sure we're not stealing from Peter to pay Paul, that we have enough money to ensure that we are protecting the public and our country from difficulties with BioShield chemical, biological, radiological problems, et cetera.

Could you tell me what your thinking is presently regarding that funding and if you agree that there are conflicts that could lead to funding difficulty?

SEC. SEBELIUS: Well, Congressman, I don't think there's any question that the investment made over the past five years by this Congress and the previous administration in preparation and planning and beginning to work on the new vaccines that potentially are needed for a variety of deadly diseases have been critically important.

And I know this committee and Chairman Obey and others have been in a real leadership role on pushing that ahead.

I think that as a governor I was able to see some of the results of that, because we were able to do planning and put a pandemic plan together, do cross-state preparation, bring private industry in, do a whole series of initiatives to really get ready for an outbreak, which would not have been possible with state-only funds.

So I've seen it both at the, you know, federal level, but also experienced what those investments have done. I know that currently we are in the process of evaluating steps forward with H1N1, at the same time recognizing that we need to keep the planning stages in place with BioShield for whatever eventuality might hit next.

So I think that they budget reflects -- and the current actions of the administration, to ask for supplemental funding to deal specifically with H1N1 -- reflect a notion that safety and security is first.

We know what's facing us right now with a whole series of uncertainties with H1N1. We know we have a new virus. We know we have a need to take a look at the potential vaccine program. But we also know that there are a series of other outbreak potentials and terrorist acts that still are looming. And we need to both simultaneously. And I think that's what's reflected in the budget before you and in the supplemental request.

REP. LEWIS: Mr. Chairman, could I just proceed with one more question?

REP. OBEY: (Off mike.)

REP. LEWIS: Thank you, Mr. Chairman.

I can't help but be concerned by the fact that we have within the stimulus package increased NIH funding significantly, like a $10 billion adjustment in that baseline. As we go forward -- I know that your department is making a request that is a pretty modest request of 1.3 percent, I believe, in the projected year ahead of us. There's kind of a cliff out there that involves the $10 billion. And it's bound to create pressures and a shift in priorities, et cetera. I'd appreciate your letting the committee know what your thinking is, how you're going to deal with that very real $10 billion problem.

SEC. SEBELIUS: Well, Congressman, I would love to tell you I know what the request will be in 2011. I have -- I'm aware that there is a significant investment in the Recovery Act, which I think is very appropriate and will pay enormous dividends. And I can assure you that we are going to begin to work and look forward to working with this committee and the committees in the Senate side about the future, about a multiyear planning strategy, because I think that everyone is aware that there has been a significant investment. It's basically out there, but the worst of all worlds is to, I think, key up a number of new initiatives and then actually take a huge step back. So I do look forward to your ideas and suggestions and working with you as we look at the out years.

REP. OBEY: Mr. Jackson.

REP. JESSE JACKSON JR. (D-IL): Thank you, Mr. Chairman.

Let me first begin by welcoming the secretary to our subcommittee and thanking her for her testimony.

I also want to associate myself with Chairman Obey and other members who've spoken on the question of specific earmarks for health- related diseases in this bill.

Every member of this subcommittee has a personal story to tell. Every member of the subcommittee has a case to be made for their constituents that drove us to seek an appointment to the subcommittee in the first place, from cancer to mental health to meditation and other forms of health-related practices that could improve the nation's health.

And there's a constant battle on this committee, for years that I've been on it, to try and find and appropriate the necessary resources to address each of our individual and collective concerns.

One of my central projects since I've been on the subcommittee has been addressing the issues of health disparities. When I first got appointed to the subcommittee, then Chairman Porter of the subcommittee, while I was trying to advance what I thought would close profound gaps that exist in our society, insisted on good science. And he said, "Congressman, as much as I want to be supportive, it needs to be driven by good science."

So I put language in an appropriations bill many years ago to address ethnic and racial health disparities. And the language charged the top scientists, doctors, Nobel laureates around the country, at the institutes of medicine, to come up with an approach, a scientific approach that would justify spending on this committee for addressing some of the profound gaps that exist in treatment.

The scientists named the report "Unequal Treatment." And for as long as I've been on the committee, since the report was released, this committee has basically, essentially, attempted to follow the path, the road map laid out by these scientists, in terms of the appropriations requests that we make to close these gaps.

Madame Secretary, as you know, many of us on the subcommittee have made it a point to prioritize reducing health disparities through a variety of programs at HHS, as the Office of Minority Health and at the National Center on Minority Health and Health Disparities. We further focus on reducing health disparities by supporting many of these programs that contribute to diversity in the health care work force.

If you could -- and I do understand that the budget lays out specifically another $354 million for combating these issues. Could you lay out for us your thoughts -- and over time we'll get into more specificity -- your thoughts on how the department will approach the issues of health disparities?

Thank you, Mr. Chairman.

And thank you, Madame Secretary.

SEC. SEBELIUS: Well, thank you, Congressman. And again, thank you for your leadership on that critical issue of health disparities. I know you've been working on it for a long time. And the work has paid off to some degree, but there's a lot more work to be done.

In my first week as secretary we released this year's report on health disparities, which is -- continues to be pretty grim, in terms of the appropriate treatment, really, by ethnicity -- is very disparate around the country. And I think that's one effort that can be actually enhanced is just the transparency about what is going on.

I don't think there's any question that the debate that's currently under way about health reform will have an impact on health disparities, because, unfortunately, what we know is that by income and by minority group, the likelihood of un-insurance -- I mean lacking insurance and underinsurance is a predominant case.

And I think having an opportunity for a health home and an ongoing treatment protocol for every American is a step in the right direction. Certainly some of the steps to address also work force issues -- again, not one that we necessarily automatically think is part of health disparities. But there is some investment in the work force money that looks particularly for minority students and combines that with underserved area, because I think cultural competency is an issue with health care delivery, and whether or not folks feel comfortable about seeking out health information, and follow it, is often due to whether or not they feel a relationship with the health provider.

So I think in addition to the funding that you've just cited for specific programs, I think there are another range of investments on work force issues, on health reform that will also help close the gap of disparities that we continue to see.

REP. OBEY: Mr. Alexander.

REP. RODNEY ALEXANDER (R-LA): Madame Secretary, welcome.

SEC. SEBELIUS: Thank you.

REP. ALEXANDER: I spent a great deal of my time last week traveling around the state of Louisiana.

We had several health care summits, if you will. We had panelists made up of physicians, nurses, health care providers, nursing home owners, so forth. They're afraid, they're scared about what lies ahead. I represent the ninth poorest congressional district in the nation, I'm told one of the unhealthiest in the nation.

My question is -- in Louisiana we have had a successful SCHIP program. We call it LaCHIP program in Louisiana. I voted against the expansion of SCHIP, simply because we have not met all the needs in Louisiana yet, although, it's been an effective program compared to other states. I don't know if it's apathy or lack of knowledge about where people can sign up.

But the question is, how now, as we look at the potential of compulsory insurance, what happens? How do we make it work? In Louisiana we still have 100,000 children who are eligible for SCHIP or LaCHIP that are not signed up. So how do we encourage, how do we engage people to care and go sign up? And what happens if -- do we turn them away at hospitals, emergency rooms because they don't have insurance of their own? What happens? How does it work?

SEC. SEBELIUS: Well, Congressman, that's a great question. I think that the -- one of my interests in the CHIP program is certainly taking some of the best practices in enrollment and trying to assist in spreading those throughout the country, because there are states that have done pretty creative work and had great success in enrollment, and there are others who have not. And I think that it's one of the ways that our department -- and that's a key building block for health reform is actually getting folks to enroll and engage in programs that they are currently eligible for and providing that coverage, which Congress and the administration has seen as a high priority.

So outreach strategies, assisting with everything from presumptive enrollment to simplifying enrollment forms, not having the situation where -- I mean, some states still, rather than relying on fairly easy technology or relying on face-to-face visits, which often are complicated for families that are working and juggling opportunities.

So there are, I think, a bunch of strategies that we can engage in the departments of Medicare and Medicaid to make it easier and more seamless for families to actually enroll their children in programs that they qualify for.

But I think that as we move forward, having a discussion and debate about everything from auto-enrollment -- which is, I know, one of the strategies that some members of Congress are taking a look at -- to presumptive enrollment, to how you make it easier for people who are eager to find affordable health coverage, who actually sign up and become engaged, is one of the, I think, discussions that's under way with the committees that are looking at this, because it's no -- the last thing we want is to make, you know, affordable health care have another huge barrier and that be some enrollment that becomes terribly complicated and sets up its own restriction along the way.

But we know what has worked in many areas. We know what has worked for employer care and for other care. And I think we can take those lesson learned and help spread that information as we move forward.

REP. ALEXANDER: Thank you.

REP. OBEY: Ms. Lee.

REP. BARBARA LEE (D-CA): Thank you very much, Mr. Chairman.

Hello, Madame Secretary. Good to see you, and congratulations.

SEC. SEBELIUS: Thank you

REP. LEE: I look forward to working with you. And I just say how delighted I am that you're there in this very, very critical position.

I want to follow up on Congressman Jesse Jackson's point, first of all, with regard to health care disparities. As chair of the Congressional Black Caucus, along with, of course, Congressman Mike Honda as chair of the Asian Pacific American Caucus and Congresswoman Nydia Velazquez who chairs the Hispanic Caucus, we are working on a health care disparities bill, "Closing the Disparities." And you know the problems; you've acknowledged it. But I'm wondering, in this overall health care debate now that's taking place, we don't hear much in the debate about this being a critical element of the health care reform package, whatever package we come out.

So I wanted to raise that with you, because I've raised this with the White House several times. And just know that, you know, in this debate this has got to be front and center for many of us, because our communities, of course, are the ones who are the, you know, unfortunate, you know, beneficiaries of -- the terrible beneficiaries of these disparities.

Secondly, with regard to single payer, I know the realities of single payer as it relates to what ultimately will be the type of health care package that we come up with. But I hope that single payer is on the table for discussion. I don't think we need a health care reform debate without looking at all of the options that exist, and so single payer is an option that needs to be considered on the table as part of our efforts.

Thirdly, I just want to commend you for -- and the president for your proposing to end the ineffective and discredited abstinence-only education programs. For many years, now, Senator Lautenberg and myself have worked on legislation -- that's H.R. 1551, the Responsible Education About Life Act -- that allows for states -- it's very simple -- that allows for the state to use federal money if they want to teach comprehensive sex education. It's abstinence and abstinence- plus. So I hope that you will look at that.

But I want to commend you and the president for that.

Finally, let me just say I want to, on behalf of Congresswoman Roybal-Allard, who comes from California -- Southern California, I'm Northern California -- she was detained in her district until this morning. Unfortunately, she couldn't be back in time, but she wanted you to know that she'd be submitting questions for the record and to extend her welcome to you, Madame Secretary.

SEC. SEBELIUS: Thank you so much.

I definitely think as the, you know, the health reform debate and discussion is firmly here at the Capitol -- under way in both the House and the Senate, three committees in the House and two committees in the Senate. And lots of you have been intimately involved. So whether it's single payer or health disparities, that information that you have the expertise about and the data that you know so well needs to be part of the discussion as the bills move forward. And I think that's not only very appropriate but very important that, you know, the options be looked at.

As you know, the president laid out some principles that he believed in with health care moving forward. And he did feel very strongly that we needed to start with the premise that we build on the current system and not dismantle the employer-based health coverage. But I know there are a number of strong advocates for the single-payer system, particularly here in the House, and that I assume that will be part of the options that you look at as you move along.

REP. LEE: Thank you, Madame -- I have a little bit more time, Mr. Chairman.

Let me just ask you -- make a point with regard to that, though.

Yes, we are going to make sure that here in the House that is laid on the table and that's included as part of the debate -- single payer and health care disparities. But I would hope that we hear from the administration the importance of not letting that slide, because sometimes, you know, we follow, in many ways, what the administration is laying out, in terms of the general parameters.

Finally, the HIV/AIDS travel ban -- I know HHS sent over a proposed rule, but it's taking a long time. Do you have an idea of when we're going to be able to finally lift the ban, as it relates to HIV-positive people coming into the United States?

SEC. SEBELIUS: My understanding is that's very much on the radar screen. And it should be soon.

REP. LEE: Okay. Thank you very much, Madame Secretary.

Thank you, Mr. Chairman.

REP. OBEY: Mr. Cole.

REP. TOM COLE (R-OK): Thank you, Mr. Chairman.

And Madame Secretary, it's great to have you here.

SEC. SEBELIUS: Thanks.

REP. COLE: And I just want to quickly associate myself, I think, probably the common bipartisan sentiment here about directing money toward specific diseases. If I was drawing on personal examples I would talk about Alzheimer's and MS in my family. If I was looking at my district I'd talk about diabetes for the Native American population and what that does to the cost.

So once we go down this slope, I mean, we would have a lot of arguments here that would be well intentioned but probably not productive for us. And I don't see how you open the door for two and not open it up for all.

Let me ask you, specifically -- I think I know the answer, but I want to make sure -- is the president's position on health care now that it would be mandatory that everybody participate? Because that's somewhat of a shift from the campaign. So has he made that decision yet?

SEC. SEBELIUS: He has not, Congressman. He, as you know, in the campaign he supported a mandate with regard to parents with children. He did not support an individual mandate.

I think what he has said pretty consistently, though, is that he is open to engaging in that conversation with Congress. He knows that a number of members of Congress are very committed to an individual mandate, as have been some of the stakeholders at the table. So I think at this point he has not made that part of his proposal, but he is open to it.

REP. COLE: That, as I'm sure you know, is a concern simply because while we use a lot of numbers about the uninsured population, there's always a subset and, you know, 25 percent to a third or whatever that really could afford insurance but choose not to. And so that's going to be a discussion we have.

Second question: Have -- because the single-payer or government plan option is a big impediment for a lot of us and I actually think it makes a bipartisan compromise much more difficult. Have you thought about anything modeled after something like Medicare Part D, which actually has worked pretty well? It came in a lot less than estimated in terms of the cost. It has a high satisfaction rate. The premiums are comparatively low, lower than we estimated -- CBO estimated at the time.

It's an all-private system but obviously has the government framework to operate in. And, you know, while it was a matter of a great deal of contention when we dealt with it, it's been interesting to me that almost nobody's wanted to go back and undo it. It's actually worked pretty well without a government plan as an option.

SEC. SEBELIUS: Well, Congressman, I certainly think that is one of the recent examples of a benefit package that was put on the table. I would suggest that it is not accurate to describe the public option as part of the health exchange as a single-payer plan. I don't think that is an accurate description.

What I think is envisioned is a health exchange where private plans, side by side, compete with public plans, as they do now in many states of the country in state employee health plans, as they do in many states in the country with the children's insurance program, because absent a public option in many parts of the country, you would not have choice and you wouldn't have competition, because one private insurer has a monopoly, essentially, over the marketplace.

So again, in my insurance commissioner days there -- you can easily design an actuarially level playing field, where it really is a competitive goal. And frankly, I think that having a plan potentially that has, you know, miserable benefits and low provider rates is not likely to attract many Americans to choose that plan if they have a choice of another plan.

So I think the notion of a public plan is to have a health exchange where you actually provide choice and competition -- to me, two great driving features -- and give a number of Americans who right now don't have a choice and there's nobody to compete with some cost competition.

REP. COLE: I'd just suggest a lot of us share Mr. Tiahrt's concern that that's going to move us toward a lot of private employers pulling out and effectively shifting.

I've got very limited time; let me ask you one last question here. You and the chairman, in a dialogue -- and I think appropriately so -- expressed concerns about long-term care. It's obviously a huge problem for the country in terms of how you fund it. There's a lot of folks obviously that clearly started moving assets early.

Have you thought about or are considering any kind of expansion of health care savings accounts, again with the idea that over a lifetime you can build up a certain amount of capital and use that to defray long-term health care costs? I'm not saying it's a solution for everybody, but the more people you pull out of the system that way or that allow to operate that way, the less public cost you might have.

SEC. SEBELIUS: I have not been engaged in that particular discussion. I was engaged over a number of years, and I know it's been a proposal before Congress for years, that looked at everything from tax credits to incentives for individuals to do more purchasing of private long-term care policies. The balance always was that a number of the private long-term care policies did not include very robust consumer protections, and in fact, many of them had cost escalators that had people paying in for a decade and then the (policy was so ?) expensive that they dropped them and ended up with nothing.

But I think we need to look at a variety of strategies, because as you well know, if you are -- you know, end up meeting the income guidelines, then you become eligible for long-term care benefits at basically the state level. And if you don't meet the income guidelines, Medicare does not provide those benefits. So we really do have a significant disparity right now.

REP. COLE: Thank you, Mr. Chairman.

REP. OBEY: Mr. Moran?

REP. JAMES P. MORAN (D-VA): Morning, Madame Secretary. I know you're going to make us all very proud.

The department of which you are secretary used to be called the Department of Health Education and Welfare. When it was set up in the early '50s in the Eisenhower administration, the idea was to address the whole panoply of needs of the individual. And they didn't use the term holistic in those days, but that's really what they meant.

We haven't achieved that objective. I think in large part the Congress is as much to fault as anyone, because we, as the chairman suggested, identify particular needs, fund them, and as a result, we have this vast array of different programs, different people and programs to deal with education. Others deal with health. Others deal with human services. Others deal with nutrition, et cetera, et cetera, all the various needs of the individual.

The problem is it's the same individual. And if we really wanted to achieve the most savings but even more importantly, perhaps most effectively, address the needs of that single person, we would start combining and finding overlapping jurisdictions and find ways that we could better integrate the services that we're trying to offer. In your budget alone, even after we take out education, there's got to be hundreds of programs. And some individuals are eligible for half of them.

One of the things that has been done around the country, for example, is to set up school-based health clinics. I know we had some opposition when I did that as mayor of Alexandria, Virginia, but once it was set up we have reduced the level of teenage pregnancy and, thus, abortions.

We've found any number of cases of cancer that adolescents never would have had a checkup and identified at an early stage, mental health problems, et cetera. And we achieved the kind of coordination collaboration that I think best serves the individual.

Now, I'm wondering how you feel about those kinds of efforts of achieving more overlapping, more integration of all those hundreds, myriads of services that you're responsible for?

SEC. SEBELIUS: Well, Congressman, I think you make a great point, that all too often the same family may have people coming at them from 14, 15 different angles and only four or five hit the mark. As we just talked about, enrollment strategies often fail, so I'm a huge fan and believer in a sort of systemic approach and a collaborative approach.

I can tell you, in my brief tenure in this position, I know the president shares those concerns and has implored Cabinet members to really come together on strategies leveraging assets and opportunities in departments. We've had some robust conversations already on childhood obesity, on -- certainly the look of the Food and Drug Administration combines strategies.

The early -- my first few days in Washington were Cabinet-wide approaches on H1N1 and it was a great illustration of how various members of the Cabinet and various departments needed to collaborate and cooperate, not just in terms of that kind of emergency but I think on a regular basis.

So I really look forward to not only figuring out within our own agency how to break down some of those silos and put people at the table on cross-cutting issues, but then with colleagues in Cabinet agencies -- because often all of us are approaching the same problem but from different lenses and taxpayer dollars will go a lot further, the programs will be a lot more beneficial if we can actually approach them, as you say, in a holistic approach.

REP. MORAN: Thanks very much, Madame Secretary.

Madame Secretary, the president requested over $600 billion as kind of a set-aside seed money for the health reform proposal, although half of that was dependent upon generating revenue by reducing the tax deductibility of charitable contributions. It looks like the Senate has rejected that, so we're probably at about $300 billion, in terms of revenue that would pay for health insurance overhaul. And yet, the cost over 10 years is $1.2 trillion. I should have said the $600 billion was over a 10-year period. The cost is $1.2 trillion over a 10-year period, most people assume. So we're really short about $90 billion a year, $900 billion over the decade.

Are there other ideas that the administration may propose to Ways & Means and Finance, particularly as to means of financing this gap? Are you anticipating any modification of the original goals?

SEC. SEBELIUS: Well, Congressman, I think that discussion is very much under way. I would suggest that the president hasn't retreated from his initial proposals, even on the revenue side. And I find that as members engage in the work of trying to identify where money is available, they're likely to be back on the table for starters.

We have been asked in our agency, as have other agencies, to identify additional opportunities. And we're in the process of doing that right now within the Department of Health and Human Services. I also think that there are opportunities for various savings that, frankly, haven't been scored and whether or not they will end up being scored remains to be seen.

But in the prevention and wellness area, at least in the out years that may have significant payoffs, we know that we're now spending 75 percent of our health costs on chronic disease and some efforts to better manage, better control, better outcomes with chronic disease management have significant payoffs down the road. So we are currently under way working on that.

I think that there's a great belief that investment in health technology, again, will pay huge dividends not just in helping to drive appropriate protocol but in lowering medical errors, again, not quite in the system yet. So there's some work to be done in terms of identifying, I think, some of those out-year savings that most people agree are very much there but just haven't been part of the discussion yet.

REP. MORAN: Thank you, Secretary Sebelius.

Thank you, Mr. Chairman.

REP. OBEY: Ms. Lowey.

REP. NITA M. LOWEY (D-NY): Thank you, Mr. Chairman.

I join my colleagues in welcoming you, Madame Secretary.

Madame Secretary, many of us were shocked and saddened by the horrific murder of Dr. George Tiller over the weekend. And for years, the Bush administration went out of its way to protect doctors from being forced to provide services they found objectionable, yet did nothing to shield physicians providing legal and life-protecting medical care to women from ongoing harassment, threats and violence. This is unconscionable and must change. In my judgment, the federal government must send a message that acts of violence against health care providers will not be tolerated.

I was pleased to learn that Attorney General Holder has indicated that the U.S. Marshals Service will begin protecting certain abortion clinics and doctors and this is a good first step. Today The New York Times also called on Attorney General Holder to revitalize the National Task Force on Violence Against Health Care Providers that was originally established in the 1990s. Now, I realize this task force would be under the jurisdiction of the Department of Justice, not HHS.

I want to know, number one, would you support its revitalization, and how does HHS intend to work with the Department of Justice to ensure that these acts of violence are eliminated? And do you agree that this type of violence could discourage medical schools from teaching doctors how to perform abortions? And how will HHS work with medical schools and provider organizations to ensure that this procedure is being taught?

SEC. SEBELIUS: Well, Congresswoman, I share your interest in making sure that health services are delivered within the law and that providers certainly are protected for their activities. And the attorney general was quick to reach out and make it very clear that acts of violence would not be tolerated, that he would use the assets of the Justice Department to provide protection and I think to also send a very strong message about acts in the future that would be prosecuted.

I am not familiar with the task force that you describe but would look forward to, you know, working with you on that, to taking a look at it if it's revived. I think the jurisdiction, as you note, is really within the Department of Justice. But certainly having, you know, providers be able to deliver health services to men and women across this country is essential.

REP. LOWEY: I thank you.

And following up on another issue, given your experience as the Kansas state insurance commissioner, you understand the threat to quality and affordable care posed by the insurance industry when multiple insurance companies merge or have record profits at the expense of health providers and consumers.

In fact, from 2001 to 2004, health plans in New York state made more than $5 billion in profits while its hospitals lost $600 million. And I think it's interesting that the Westchester County Association, which is run by many of the businesses in Westchester County, point this out in many of their discussions and sessions with us.

So, first of all, do you agree that the relationship between private payers and the financial viability of the health care system needs to be examined? And if you could share with us your experiences battling the insurance industry in Kansas and how that impacted consumers, I'd like to know if there are lessons from this experience that can be applied across the country and included in health care reform legislation?

SEC. SEBELIUS: Well, Congresswoman, I share your concern about oversight. And my colleagues who are serving as insurance commissioners across the country have jurisdiction to review everything from loss ratios to appropriate rate setting.

And some are aggressive and others, frankly, have very little choice because often there is a dominant carrier and a single provider, so the opportunity to have regulatory oversight is fairly limited.

We did have a situation in Kansas when I was commissioner of a proposed takeover of the Blue Cross Blue Shield plan of Kansas by an out-of-state company. And I ended up ruling against that takeover ultimately because after reviewing all the testimony, after having a series of hearings, after having providers and hospitals come before us, it became clear that the only way really to produce the profit statements to the shareholders which the company had promised was to either reduce benefit or reduce payments to providers, all of which would not have been good for Kansas consumers.

So I do think there's an appropriate oversight role. I think it's certainly one that, in the proposal of the public plan, I think is the president's goal and members of Congress' goal that either regulatory oversight or competition within a marketplace work very well. And that's part of the real goal of the public plan option.

REP. LOWEY: Thank you.

REP. OBEY: Ms. McCollum.

REP. BETTY MCCOLLUM (D-MN): Secretary, it is truly a pleasure to have you before the committee today. And the Department of Health and Human Services has a full plate and I am very grateful for your commitment and your team at HHS to work to reform health care and to meet the needs for the services of which millions of Americans depend upon. You have a big job and I know you'll do it well.

And as you know, as Congresswoman Lowey pointed out, on Saturday an assassination took place in your home state of Kansas. A physician was murdered. It was an act of terrorism and it was in his church. This act of an anti-abortionist vigilantism inspires fear and terror for not only health care providers but for women who need those services. The murdered doctor had previously been shot and the clinic in which he had worked had been previously bombed.

Abortion in this nation is a legal health care procedure and I support a woman's right to make her own health care choices. The work of the courageous health care providers meet women's needs daily. And they should do so without fearing loss of life.

What America witnessed on Sunday was a Taliban-like tactic to prevent abortions by murdering a doctor. This is terrorism and I hope this administration, as you have pointed out, will continue to extend protection to women's clinics all across this country. And I know that Planned Parenthood in Minnesota -- there was an article in the paper -- has been targeted in the past and they have received protection. Thank you so much and the women in the area that receive the service also thanks you and thanks Mr. Holder.

Madame Secretary, I support comprehensive sex education based on science, comprehensive family planning and reproductive health care for all women and counseling to ensure women of all ages have the best information to make good choices about when they decide to have their children. That's how we reduce abortions. And that's how we empower individuals to prevent the need for abortions.

So I want to thank you so much for your commitment in the 2010 budget to provide women of all ages comprehensive information and reproductive health services. Thank you and you can count on my support to do everything to get that passed.

But I do have a question. As we take on the challenges of health reform, I firmly believe that every American has a right to health care and this should be especially true for every single one of our children. As we reform our health care system, we need to remember that no population stands to gain more from national health care reform than our children. Children insured by Medicaid and CHIP are covered under 50 different state programs and D.C.'s coverage -- 51 different programs. A child's access to health care coverage and health care should not vary by location in this country.

So the question is, how does the federal government ensure that its most important investment, the investment in the health of its children, be standardized in terms of uniform eligibility, national pediatric benefit set and access to pediatric specialists for medical necessary care? How can I work with you on it to make this a reality, Madame Secretary?

SEC. SEBELIUS: Well, Congresswoman, I would love to have a chance to work with you on that critical issue. As you know, there are some mandated benefits for young children in the Medicaid packages which all states must follow. But beyond that, you've correctly identified that eligibility rates vary from state to state for particularly the CHIP program and vary in terms of -- at the very earliest prenatal care. So the likelihood of having -- reducing low birth weight babies and bringing people into the system, again, varies.

So I think it's a huge challenge and I support and I know that the president supports the notion that we -- the system starts with the focus on children. I think that's why he was so enthusiastic during the course of the campaign about a mandate applying to families with children, felt that we need to start universal coverage with children.

So working with you on making sure that all children have access to the benefits you've described is something I would look forward to.

REP. MCCOLLUM: (Laughs.)

SEC. SEBELIUS: And I'm not calling.

REP. OBEY: (Off mike.)

REP. PATRICK J. KENNEDY (D-RI): Thank you, Mr. Chairman.

Welcome.

SEC. SEBELIUS: Thank you.

REP. KENNEDY: Can I ask you -- in terms of health insurance reform, the most basic tenet of health insurance reform is community rating. That means that insurance companies can no longer cherry-pick who they cover based upon who is healthy and who is sick and thereby make their money not by how well they provide the care and manage the care but rather how well they are -- good at, you know, choosing this person versus that person to be in their plan, therefore excluding the sick people and only covering the healthy people.

Is the administration going to commit itself to community rating as an essential part of any health care reform plan?

SEC. SEBELIUS: Well, I definitely think that the commitment that the president has made consistently is to eliminate the pre-existing condition opportunities and to move to a system of affordable coverage for everyone. I haven't seen the specifics around community rating and how wide the bans would be, but certainly that's an essential element of the pre-existing condition discussion you've accurately described.

I think the market, as it often exists, where either a health condition eliminates you entirely or at least puts you in an unaffordable category, so either one, I think, would not be part of the health exchange moving forward.

REP. KENNEDY: That's good to hear.

In terms of the whole issue of insurance oversight, we now know that insurance companies -- it's, like, roughly 30 cents on the dollar for administration versus Medicare and Medicaid, which is 3 cents on the dollar for administrative oversight. What is this plan going to do to go into and do a forensic audit of these insurance companies to ensure that they're not going to be able to pass along these enormous administrative costs they have embedded in the current administration of their plans that they pass on to the consumers? I mean, this is part, I think, of something that, as you already know being an insurance commissioner, is untenable for us. This is where our savings are going to be, is going after these 30 cents on the dollar that never make their way to health care at the bedside.

SEC. SEBELIUS: Well, I think that that is one of the essential elements of having some competition in the new marketplace.

So a health insurance exchange would combine private plan options with a public plan option and they would compete for benefits and for costs. And I think that part of the competition is a way to get to regulatory oversight over the overhead costs.

Thirty cents on the dollar may be high, but I don't think there's any dispute that it's somewhere in the 15, 20, 25, depending on if you're talking about a large-employer plan or a smaller plan. And the -- those are not only not medical dollars being spent, but the estimate is that most Americans who have private health insurance currently are paying another 10 to 15 cents on the dollar for the cost of those coming through emergency room doors without insurance.

So you get close to 50 cents on the dollar that's not buying a drop of medicine or a doctor visit or a wellness visit or a treatment. And I think that's why we need competition and why we need choice.

REP. KENNEDY: Would you not say, when we have this new plan, that we need to have teeth to enforcing regulatory oversight of the insurance companies, whatever happens? I think of what happened recently with AIG and I think if we're going to put out to bid billions and billions of dollars, essentially to manage our dollars and health care for provision of health benefits, what scares me is I see the battle on the Hill between Northrop Grumman and Raytheon for a particular weapons system. I can't imagine the lobbying that's going to go on up here between health care providers when it comes to health care contracts.

So don't you think it's important that we have really strong oversight at Department of Justice to make sure that when it comes to these bidding wars for various health contracts that there's government oversight through the Department of Justice to make sure there are no shenanigans?

SEC. SEBELIUS: Well, I think the appropriate jurisdiction for the Department of Justice is probably any antitrust issues that could come up. I do think that a regulatory framework makes sense. But I'm a believer that competition also goes a long way to help regulate costs and that if you have a competitive marketplace, you don't need as heavy a hand in regulatory oversight, which is why I'm often an enthusiastic supporter of a public option standing side by side with private plans and let competition be the determinant of the price and benefit.

REP. OBEY: Mr. Ryan.

REP. TIM RYAN (D-OH): Thank you, Mr. Chairman.

Thank you, Madame Secretary, who is a Buckeye, I must remind everyone, originally from Ohio and her father was the governor of Ohio at one point in the early '70s.

One issue that has -- (audio break) -- times is the issue of unplanned pregnancies and abortions. And the president -- and I watched with great interest his speech at Notre Dame. And I thought he articulated not only a framework for our public discourse over the next few decades but also a way of approaching these controversial issues that we truly want to find some kind of common ground.

And I know Chairman Obey and some members of this committee have made a large commitment towards reducing unplanned pregnancies and, therefore, reducing the need for abortions and supporting pregnant women. And as you may know, Chairman Obey has in the past directed significant funds towards the purpose -- towards this purpose. And Congresswoman DeLauro and I have been working for a number of years to introduce legislation in the past several Congresses that would help address this issue.

What is the department doing, going to do, to try to implement President Obama's initiative and partner with Congresswoman DeLauro and I to reduce the need for abortions?

SEC. SEBELIUS: Well, Congressman, I think it's an enormous challenge that we face and one that is something I've been working on in my home state of Kansas for a number of years and one that I think brings together people who have varying views on abortion services around some common ground and around the notion that if we can work providing a host of services to reduce unintended pregnancies, we therefore reduce, by anybody's count, the number of abortions that are performed in this country, which is a -- I think a goal that all of us could support.

So we have a range of services in HHS that I think can help toward that end. And it's everything from comprehensive sex education, which has already been discussed; affordable, available health care is an important piece of that puzzle. There are adoption incentives, which work along the way. Early childhood education, support for women, a range of programs for women and girls that really provide an environment where they have options and choices that are so essential to, you know, reducing the situations that produce unintended pregnancies.

So I think that -- I was alarmed by the recent CDC study that says we have an increase now in teen pregnancies again, having had a decrease for the last number of years. That's not good news. We know that 40 percent of births right now are to single parents. That's not the hallmark of good news. So there is a lot of common ground and a lot of work to be done and I think that a lot of the assets to do that work are in the Department of Health and Human Services. And I just look forward to working with you and Congresswoman DeLauro and others, because I think this is an area where some real focused collaborative attention can pay huge dividends in the long run.

REP. RYAN: I appreciate that and I think Congresswoman DeLauro and I and other members of the committee would love to sit down with you and hash this out.

One other topic that I'd like to just touch upon, I feel like when we have these discussions about health care there's always an issue that we never really talk about and it's the issue of stress. And a lot of us are seeing it now in our congressional districts because of the economic situation that we're dealing with.

And the issue of stress leads to, I think -- we know -- increased illness. And, you know, these people who are losing their jobs, losing their health care, it has an affect. And I just want to ask what -- and we had this conversation a little bit with NIH -- the brain research on being able to regulate yourself and regulate your emotions and reduce your level of stress is significant. And so when NIH was here, I asked them specifically about doing more and more research on mindfulness. And Congressman Jackson brought up meditation and this mindfulness-based stress reduction.

They've been studying this for 30 years at University of Massachusetts and different places across the country. And I just, I want to know if you're familiar with this, if it is a part of your approach moving forward here, you know, the physiology of stress, the neuroscience behind it, beginning to -- this is a very inexpensive way to teach kids how to increase their level of -- their attention span, their level of focus, how people can, who were dealing with chronic pain, you mentioned earlier, and how you want that to be a significant savings -- how dealing with chronic pain can be treated with this method as well. So just wanted to see if you're familiar with this and if there's any approach within the department to try to not only increase the research but increase the programming and education of this.

SEC. SEBELIUS: Well, I'm certainly a bit familiar with it but not nearly to the extent that you've just outlined. And again, I think it's a prevention strategy that I know has the potential of paying huge dividends. I've seen it used as a violence prevention technique with kids in school, you know, teaching various kinds of control methodologies. And you see violence levels rise with, as you say, folks becoming unemployed and the stress that is related to that.

So I would just like to have the opportunity. We will have a new leader in the mental health area soon. And certainly, it overlaps with health reform and work that we're doing with early childhood. And I just would like an opportunity to continue that discussion. I'm not precisely sure what exactly is going on now, but I think it is a wonderful strategy.

REP. RYAN: I have some information. I'd like to get it to you. I'd like to -- I don't want to book up your whole calendar, but I'd like to sit down and talk with you in detail about this as well.

REP. OBEY: Mr. Honda.

REP. RYAN: I'm done, I guess. (Laughter.

)

SEC. SEBELIUS: But in an un-stressful way, right?

REP. RYAN: That's right.

REP. MICHAEL HONDA (D-CA): Thank you, Mr. Chairman.

And welcome, Madame Secretary.

Let me, again, refocus back on a couple of issues that's been mentioned before. And I mention it because it needs to be mentioned, and when it's -- when things are not mentioned, it doesn't exist. And these are the two things: the Minority AIDS Initiative and the issue of health disparities.

On the Minority AIDS Initiative, I met with the National Minority AIDS Council a few months ago and they expressed that the initiative funding has not been reaching the grassroots organizations. Well, it's being redirected to our other priorities within HHS or being redirected to our other priorities, to larger HIV/AIDS organizations that don't focus on minority communities and women, but on the white gay population and not -- and not in the intention of the MAI.

This year, the funding was opened up for competition to the for- profit organizations for the first time. And this puts a lot of pressures on the community organizations and the local community organizations. Understanding this, understanding that the possibility of this pressure on the organizations, what thoughts do you have about that process? Are you thinking of changing that? Or is it your opinion that it's a fair process, that everybody's on an even playing ground?

And would you also commit to meet with the National Minority AIDS Council so that they can also express themselves for themselves the way they see the issue? And I think that those issues will come with them and they'll be able to express that more fully with you. I hope that you would be able to make some time for them.

The other area is the health disparities, the racial, ethnic health disparities. The Tri-Caucus -- and when we say the Tri-Caucus, so you know, I want to emphasize also that there's a recognition that there's a stark disparity and that's evident in the tribal reservations where very few people take time to visit. But it is stark. And I think that it's time for this country (sic) to take a codel through those tribal areas and look at that and understand what's going on, what's not happening in those areas.

Coming back to the other areas of disparities where we look at the needs that the communities have, we always talk about the great expenses that are in the area of health. And a lot of times, it's because we're not paying attention to the gaps and the disparities in our communities.

I think that there needs to be a conscious discussion and attention paid to the issue of disparities that exist in our communities for cultural, social and linguistic reasons. And I think a blueprint on that needs to be together so that it'll always be on people's minds as they discuss the critical issues of health and health care.

I was just hoping that you might have some thoughts about that. I know you mentioned disparities towards the end of your testimony. But it needs to be said up front, very clearly so that people understand that, you know, this is an area that needs to be paid full attention as we move forward.

SEC. SEBELIUS: Well, Congressman, first of all, on the minority AIDS issue, I would welcome the chance to meet with the council. And in preparation for these budget hearings, I -- this change in procedure was brought to my attention, and I must confess, I don't know enough about it to tell you if I'm going to change it or not change it. But it certainly is on my radar screen and I intend to go back and take a look at how it operated in the past and why the change was made and make inquiries.

I do think that competition needs to be not only on a level playing field but make sure that we get resources into the hands of folks most likely to reach out to the population needing to be served. So I think that's a very appropriate question to ask.

Even though it's not in the jurisdiction of this subcommittee, to your latter point about disparities, this 2010 budget does have a significant request for an increase for Indian health services, and one that I would suggest is long overdue.

We have a great new leader who has been confirmed by the Senate, Yvette Roubideaux, a doctor, a Native American who is coming in to lead the Indian Health Service and has worked in this area for a long time. So I think there is a recognition that we haven't lived up to our commitment for appropriate health services to that community for generations and that in the whole overview of health disparity, that is a community very much off the radar screen and one that, I think, not only did the president recognize in the request in the budget for what amounts to almost a 15 percent increase but is one that I will personally commit to paying a lot of attention to. I worked closely with the tribes in Kansas. The first day I was on the job, I went to the tribal leaders' meeting and told them that I want to stay involved and committed and will continue to do that.

REP. OBEY: The gentleman's time has expired.

What I would like to do is to run a two-minute round so that everybody gets a chance to ask one additional question.

Mr. Tiahrt.

REP. TIAHRT: Thank you, Mr. Chairman. I'll try to confine all my questions here into two minutes.

I think we're on a path to single-payer rationed health care. It started with competitive effectiveness, the concept of having a subsidized public insurance company compete with the private sector. I think we'll get further down that path.

You've heard on this committee that many would prefer a single- payer system. I would like to see the -- your organization consider some free-market competitive methods of approaching the problem.

In many states, including Kansas, we require everybody who drives to have car insurance. The result of that is we have a fundamental insurance package for automobile, for car insurance. We could do the same thing for a basic health care policy that included a certain number of visits to physicians, to clinics, including hospital days. We could have an annual physical, which I think would be very good, including counseling for a healthy lifestyle, which would probably avoid a lot of costs in the future. We could have an annual dental visit on it, which many people need as well. And we could provide tax incentives for everybody to purchase a basic health care policy and, if they couldn't afford it, a voucher -- for example, those under the poverty level -- where they could go out and shop for it.

It would have a provision that would, I think, address the need that Mr. Kennedy brought up -- a very compassionate man, who knows that there are some people that get denied coverage. In the example of auto insurance, we have a high-risk pool where each provider takes a turn drawing a name from a pool, which would cover people who have pre-existing conditions.

It's an alternative that would provide competition. It would be lower cost. And if you look at the -- right now, health care is about 20 percent of our gross domestic product. If we did privatize or take the privatized portion and move it into the public sector, it'd cost at least $1.5 trillion a year. That's almost a 50 percent increase in what our current federal budget is. I don't think we can afford that in today's economy.

So for us to provide a insurance plan that would be competitive would be a good alternative. Would you consider developing a basic health care policy that could be considered as part of the debate?

SEC. SEBELIUS: Well, Congressman, those policies really exist across the country. And in most cases, they are not attractive to either employers or employees. And I think that going to a individual market, which is really the description that you are giving, is not what insurance is about. It's about sharing risk.

So people right now are interested in getting in a pool where they are pooling their own health situations with others.

Driving the market, which has been suggested, I would say, strongly, in the last eight years -- it was the administration's primary suggestion for solving the health crisis -- is, essentially, having all Americans move toward individual coverage. And really, dismantling the employer coverage that we have right now is not something that I support. And I know it's not something the president supports.

REP. TIAHRT: Perhaps you misunderstood me. It's not a pool of one. It's a pool of 300 million. It would be a policy that would be applicable to everyone. So I think that's something that I'd like you to consider.

SEC. SEBELIUS: Well, the health exchange, if we're talking about a health exchange that you could join as an employer or an individual, that's exactly, I think, what's being contemplated, with a benefit package that would be affordable.

REP. TIAHRT: Glad to look at it.

Thank you, Mr. Chairman.

SEC. SEBELIUS: Yes.

REP. OBEY: Ms. DeLauro.

REP. DELAURO: Thank you, Mr. Chairman.

Madame Secretary, just make a comment and I'll get the piece of legislation to you. I think my colleague Mr. Kennedy would be interested in this. It's called the Informed Consumer Choices in Health Care Act. Senator Rockefeller has endorsed it in the Senate. Congresswoman Schwartz and myself have introduced it here. It would provide consumers with a coverage facts label similar to the nutrition label, which would streamline, put all -- it would make it consistent as to what was being offered so people could understand what's being offered. Secondly, it creates a federal office of health insurance oversight to deal with oversight and regulation. Obviously, the states have a major portion of that. But at the federal level, it would be helping to monitor to that effort.

I would love to get your thoughts and taking a look at conceptually whether or not this is something that can fit in with the health care debate.

Let me move quickly to food safety. And I know you've had just a little bit of time to settle into the department and you do co-chair the Food Safety Working Group. I was wondering what you see are the, clearly, the most important goals and objectives. How do you believe we ought to measure its success?

A final comment there is you know where I stand on the issue of food safety functions and taking them out of the FDA, in an agency that has its own commissioner and its own agency. Is this an idea that you would be open to considering?

SEC. SEBELIUS: Well, I'm enthusiastic about the work, the collaborative work between the Department of Agriculture and HHS on food safety, and certainly appreciate your passion and leadership on this issue over the years. I would suggest that we have a new commissioner of the Food and Drug Administration, Peggy Hamburg, who has now been confirmed. The deputy is in place.

Redoing the inspections and food safety system is essential. It's got to be a public-private partnership. Whether or not it's a stand-alone agency or in the Food and Drug Administration I think is almost secondary to what the system needs to look at. And I am eager to restore the FDA to its gold standard, which it certainly is a long way from right now.

REP. OBEY: (Off mike.)

REP. LEWIS: Thank you, Mr. Chairman.

Madame Secretary, historically, our health insurance programs and systems have been driven by the individual states. New York state law used to dominate this whole arena. Commissioners across the states play a significant role. You've had that experience yourself.

You have indicated by way of your statement for the record that you intend to begin by building on the system that we have. And in doing that, do you see the federal government's role being one of cooperatively working with the individual states, trying to react and support their challenges and their solutions, or do you see, foresee, a more centralized federal government system?

SEC. SEBELIUS: Well, I met, Congressman, with my former colleagues the other day. The insurance commissioners were here dealing with this very issue and coming to lobby some of you, I'm sure.

I am a strong supporter in the, particularly, the consumer protection role that states play in the health insurance area. And I was engaged in that myself. And I saw firsthand the individuals covered by ERISA plans who really had nobody to turn to if those benefits were denied or if the claim wasn't paid or if the company suddenly ceased offering insurance.

So I am a strong believer that there is a important consumer protection role and also an important oversight role the states will continue to play in the future.

Markets are often regional or local. And I think having somebody in that role who understands that, and not a cookie-cutter approach, that is nationwide makes very good sense. And I would say that nothing I've seen being discussed really runs counter to that at this point.

REP. OBEY: (Off mike.)

REP. JACKSON: Thank you, Mr. Chairman.

Madame Secretary, I've been a long-standing supporter of community health centers because in my congressional district health centers provide access to affordable, high-quality, cultural-competent care to medically underserved individuals who might otherwise go without.

I know that President Obama is well acquainted with the essential role health centers play as health care in Illinois and nationwide. Indeed, the president recently stated, and I quote, "Health centers, primary care and prevention are at the heart of my plan for an affordable, accessible health care system."

My first question: Do you agree that we must continue growth of this important program as we undertake comprehensive health reform?

SEC. SEBELIUS: Yes, I do.

REP. JACKSON: Secondly, the epidemic of HIV and AIDS continues to rage in the African-American community. According to the CDC, even though blacks account for about 13 percent of the population, they account for about half, 49 percent, of people who get HIV and AIDS.

I am pleased to note that while CDC's budget continues to prioritize prevention, testing, and treatment activities among African-Americans, I am concerned that the program entitled, and I quote, the "Heightened National Response to HIV/AIDS Crisis in the African-American Community," has been slow to mobilize to conduct the HIV and AIDS testing activities called for in the initiative.

Madame Secretary, can you please review the situation and see what needs to be done to facilitate this important testing activity?

SEC. SEBELIUS: Yes, I will.

REP. JACKSON: Thank you, Madame Secretary.

Thank you, Mr. Chairman.

REP. OBEY: (Off mike.)

REP. COLE: Thank you, Mr. Chairman.

We all agree, whatever our stance is, it's an enormously expensive undertaking for health care. If we have a government program, it's expensive for families individually.

So I've got two questions.

One, is the administration considering taxing current health care benefits to pay for the expansion of health care? And second, is the administration considering allowing those who are not in employer- based plans that are paying for health care currently, or insurance, with after-tax dollars to do it with pre-tax dollars, to have the same deductibility that people that are covered governmentally or by private companies have?

SEC. SEBELIUS: Well, Congressman, as you know, during the, at least, course of the campaign, the issue of taxing employer-based health coverage was discussed in a fairly robust fashion. And the president then and continues to oppose taxing employer-based health benefits, feeling it would dismantle the current system that 180-plus million rely on.

Having said that, he also proposed and I think continues to support tax credits for -- particularly for small employers but for a variety of individuals and employers who are currently really struggling in the marketplace. So I think -- and has said he's open to, you know, further discussions about the whole taxing issue. I think there's no question that, looking toward the future, there are a variety of ideas on the table in both the House and the Senate. But at least, he feels at this point that providing a tax to all employer benefits would dismantle the market that so many rely on.

REP. COLE: Thank you.

Thank you, Mr. Chairman.

REP. OBEY: (Off mike.)

REP. LEE: Thank you very much.

Madame Secretary, a couple of things with regard to the Recovery Act funding. One is, as you know, it's very difficult oftentimes for communities of color to access federal funds for grants. And so I appreciate the diligence and the urgency that HHS has placed in putting these funds forward that we provided in the economic recovery package. But I wanted to see if you had any specific outreach efforts for the African-American, Latino, Asian Pacific American and Native American communities to be able to compete with these funds and, if so, how you're coordinating that and also ensuring that minority serving institutions such as Hispanic-serving institutions and historically black colleges have the benefit of being able to understand and compete for these funds so that they can certainly access them.

And then secondly, I wanted to just ask you about mental health services as a part of the economic recovery funding. I know we provided funding for a variety of health care strategies and initiatives, but how does mental health fit into that?

And finally, thanks to Congressman Kennedy and others, his father, Senator -- (audio break) -- parity now is the law of the land. And so have we considered that in the allocation of the funding under the economic recovery act?

SEC. SEBELIUS: Well, I do know that in the recovery act, Congresswoman, there's a new stream of funding that is targeted for capacity building of community and not-for-profit organizations that I think is not exclusively targeted to minority groups but certainly would be an applicable source of funding to build capacity in the kind of neighborhood resource groups that are often so vital to deliver services.

I think that, back to Congressman Jackson's notion, there are also an expansion, as you know, of community health centers and work force in community health centers of minority student loans being paid so we can increase the number of health providers. So I think there are series of strategies that are in that umbrella that are really aimed to drill down services to appropriate populations.

This 2010 budget request does include an increase request for mental health services, particularly for children. It has a grants proposal to serve 11,000 more children and provide services to 35,000 additional parents and siblings, something that I know Congressman Kennedy and others have worked on diligently. So I think expanding those health services is an important feature of this budget request.

REP. OBEY: (Off mike.)

REP. KENNEDY: Thank you.

Madame Secretary, thank you for mentioning that. I think if we could elaborate on the expansion of services for young people, mental health needs, could you explain your work with your counterpart Arne Duncan about early education and how we could better use the monies that are being appropriated for Head Start early education programs from his point of view in his department so that the dollars are really used where they're needed the most, as opposed to across the board? Because frankly, we need to target the dollars, target them toward children who come from families where there's domestic violence, where there's depression, where a parent is in jail, where there is addiction.

We know those are the dollars that are going to go to make the biggest difference, as opposed to trying to blanket the whole country with dollars for every child. We'd love to do that for every child, but frankly, in the metrics of things, those aren't going to be as successful as if we really target the dollars to where they make the most sense. If you could respond to that as one point.

And then the second point is in terms of the prominence of mental health in the administration and where it will figure in to health care reform, obviously there's been no appointment yet to the SAMHSA director. But could you comment on the notion of a medical home as a central part of any health care reform, meaning coordination and integration of services, and mental health being a key part of any medical home that is being adopted under the president's plan, for purposes of reimbursement, and particularly the SBERT (ph) program, which reimburses doctors in the white-coat community through the ICD codes for their work doing brief screening, intervention and treatment for mental health services.

SEC. SEBELIUS: Well, I would just say, Congressman, I know, first of all, you have done extraordinary work in this area and would look forward to learning more about the identification that you've been able to make of what are the most cost-effective strategies and the best practices, because they exist. But I can tell you that there's no question, as we look at overall health costs, focusing on mental health as a strategy is going to be extraordinarily effective.

Depression is often an underlying related link to a number of chronic diseases that we just talked about as being one of the cost drivers and vice versa. If you suffer from depression, you often are more likely to have some of the conditions which create chronic disease. So there's a partnership there that has to be addressed as we look at ways to reduce not only the 75 percent of health dollars we're spending on chronic disease but also to produce healthier lifestyles in the long run.

The earlier focus, the early identification of precursors to mental health issues is done in young children, so having a strong link in the early childhood Head Start community with those warning signals of violence potential and high-stress households and, as you say, substance abuse households and focus on those children as a early prevention strategy also pays huge dividends down the road.

So I'm -- we've had those discussions, I can tell you, with potential SAMHSA directors, and looking for somebody who really understands that this can't be an isolated strategy, a stand-alone or a second or third chapter. It's got to be at the forefront of our dealing with health reform.

REP. KENNEDY: Thank you very much.

REP. OBEY: Ms. McCollum.

REP. MCCOLLUM: Thank you. And thank you for your comments about Indian health care services. I was just with a Ojibwe, the band in Leech Lake, Minnesota and Malax (ph), Minnesota. They're very excited that there was an increase. They're very happy for the other tribes who have seen their health care facilities being listed in the upgrades. They're anxiously awaiting their opportunity as well. So I know that's how we'll be working with you with that.

And I was with some Pueblos in New Mexico, too. In fact, I'll get some information to you. I personally was in a hospital that I thought should have been shut down. I was very concerned about the patients who were there.

And the patients who were there were concerned about the type of health care they were going to get.

One Pueblo had great -- (audio break) -- this one moderate, and another one was awful.

I want to also let you know I'm going to be submitting a question for the record on health care technology. I'm concerned with some of the contracts. And I know the chairman was trying to get copies of all the contracts that had been submitted by the administration for providing many health care services. But I'm very concerned about a health IT contract that was submitted under a previous administration. I'm very supportive of health care, but I don't want the fox watching the henhouse, and that might be happening.

But I would like to just very quickly point out to you that I'm very concerned about low-cost, high-quality states like Minnesota. We're doing everything the Medicare program could ask to have done. We're delivering services in a cost-effective manner. Yet, we are being hammered. We're going to -- we're losing physicians because of the reimbursement formula.

So I applaud you for making high-quality health care, long-term sustainability of Medicare and health care reform a priority, but I urge you, as we move forward, to bring a comprehensive health care reform. I urge you, I can't urge you enough, to carefully craft provisions to avoid having disproportionate impacts on Medicare beneficiaries like states in Minnesota that are doing everything that's asked for them but at times being paid half -- half -- the amount for states with doctors and facilities that are delivering abysmal outcomes compared to what we're doing.

SEC. SEBELIUS: It probably won't come as a great surprise to you that I had just this conversation with Senator Klobuchar an hour or two ago before I came over here. So I'm very well aware of that situation. And the last thing I think we want to do is discourage high-quality lower-cost services from being delivered. In fact, we want to highlight them not only as best practices but drive other systems toward delivering that same kind of care. So whether it's Mayo or others who are at the front of the line, I can assure you we're taking a careful look at how we can make sure that doesn't happen in the future.

REP. OBEY: (Off mike.) Mr. Honda.

REP. HONDA: Thank you, Mr. Chairman.

Two quick things: You have two great experiences in your background. One is being governor, the other is commissioner of insurance.

As the governor's background, in your current position, have you thought about having your department do an internal audit in terms of them asking themselves where are the gaps that we think are there? And perhaps there might be an exercise that can be done administratively where they can do the internal kinds of questions so that they can perhaps just by themselves come up with some identifications of gaps in services and disparities. It could be everything from CDC to medical school and things like that.

Second, as a commissioner of insurance -- I know that there's 50 states and territories. I also know that when I asked the question about antitrust and its role in health costs and other costs in this country, the issue of reimbursements from the federal government to the cost of medical services and doctors being able to afford protecting themselves through insurance premiums, what impact would there be if there were antitrust, if we brought the insurance companies under that federal antitrust laws, as the other corporations are?

And then you, you know, I could get my answer by writing if you want. But it's still on my mind, these kinds of things. And I'm not an expert on these areas, but it certainly seems like the insurance companies are one -- players in a lot of these arguments we have about premiums, rising health costs and things like that.

SEC. SEBELIUS: Well, Congressman, I'm not quite sure what the system is that you're describing for the future, but I can tell you that oftentimes there is a prohibition that currently exists with companies collaborating in terms of sort of price fixing, having discussions prior to submitting rate proposals on what prices should be.

But there are varying degrees of oversight that currently take place in terms of rule submissions and loss ratios. And so I think having -- as we move forward in health insurance and health reform, one of the issues is can you deliver an insurance package to more Americans at a more affordable rate? And again, I'm a believer that not only appropriate oversight is important, but competition is very important. And I've seen that work effectively in marketplace strategies over and over, which, again, is why I think that having some public option side by side with the private plans is the way to, you know, keep a competitive marketplace and give consumers and employers the kind of choice they need.

REP. OBEY: Mr. Tiahrt, did you have one last question before we shut it down?

REP. TIAHRT: (Off mike.)

REP. OBEY: Madame Secretary, let me simply add my voice to the remarks of Congresswoman McCollum on reimbursement rates. These reimbursement disparities are outrageous, in my view. And I would just hope that people putting this bill together in the end will understand they would make a big mistake if they would take for granted the support of people from states like Wisconsin and Minnesota if this outrageous disparity in reimbursements is not corrected to a significant degree.

We -- our states feel like we've been -- (end of available audio).

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