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• 

  Senator Specter

  At 00:02:31
  7 minutes

  Good morning, ladies and gentlemen. The
  hearing for the Appropriations Subcommittee on Labor, Health
  and Human Services, Education, and Related Agencies will now
  proceed. I regret a little late start here, but we have been
  conferring with the distinguished Secretary of Health and Human
  Services, and we wanted to get some background information
  before coming into the public hearing. This is a very important
  hearing because it involves the budget for the Department of
  Health and Human Services, and health is our number one capital
  asset. Without health, none of us can function.
  I could give an extensive testimonial to that over the past
  year, but I'll save that for another day and instead focus on
  the proposals for Federal expenditures. I say at the outset, as
  I have said privately to the Secretary, that I am very
  disturbed at the reduction in funds for his Department. There
  is a $1.6 billion reduction in funding for the Department of
  Health and Human Services, and that follows a pattern of
  reductions for--the other departments which are within the
  purview of this subcommittee. There have been reductions of
  some $2.2 billion for the Department of Education, reductions
  for the Department of Labor so that effectively, from the
  year--fiscal year 2005 until the present time, we have a
  reduction of $15.7 billion, and that means that there are vital
  programs for health, vital programs for human services which
  are inadequately funded to start with and are now really
  effectively starved.
  The National Institutes of Health (NIH), which is the crown
  jewel of the Federal Government, is level funded, and that
  means taking into account inflation, there will be fewer grants
  made, and there have been enormous advances made by NIH. The
  leadership's been provided really from this subcommittee long
  before you became Secretary, Mr. Secretary. When we took the
  NIH budget from $12 to $29 billion, there have been remarkable
  advances in the research on Alzheimer's and Parkinson's and
  heart disease and cancer, but not enough.
  As we speak, a very distinguished Federal jurist who has
  been named the 101st Senator as suffering from prostate cancer,
  and I lost my Chief of Staff, Carey Lackman, a beautiful young
  woman of 48 recently from breast cancer. In 1970, President
  Nixon declared war on cancer. If we had devoted the resources
  to the war on cancer which we devote toward other wars, we
  would have conquered cancer. In the past year, I have made the
  Kleenex industry wealthy, Mr. Secretary. This is a lingering
  aspect of chemotherapy treatment, and that brings me back to
  personalizing it just for a paragraph or two, but had the war
  on cancer been fought vigorously, I wouldn't have gotten
  Hodgkin's, I believe. The chances are good I wouldn't have.
  Well, that's the backdrop of these hearings and my views.
  As I told you privately a few moments ago and I think it's
  worth repeating publicly, the President called in a number of
  committee chairmen last week for our views on what ought to be
  done, and when I had the opportunity to talk to the President,
  and I have had the opportunity to get to know President Bush
  rather well, he was in Pennsylvania 44 times in 2004 when he
  ran for reelection and I was up too, and I was with him on most
  of those occasions, and I have a very high regard for the
  President and the job he is doing notwithstanding the poll
  figures. Up close, he is very much engaged, very much on top of
  the job. The persona that comes through the news media is very
  very different. But at any rate, he is prepared to hear candid
  views even if they don't agree with his, and I told him about
  the $15.7 billion reduction in spending and told him what was
  happening in the National Institutes of Health. I know that you
  are not the President, and as you reminded me, you are not even
  the Director of the Office of Management and Budget (OMB), but
  you are the Secretary of Health and Human Services. What I am
  calling upon all of the candid officers where I have a
  chairmanship and can make a constructive suggestion is to carry
  this fight to the Director of OMB and carry this fight to the
  President, and no department is more important than yours. To
  have level funding for NIH and to have cuts in the Centers for
  Disease Control and Prevention (CDC) with all the work CDC has
  to undertake is just unacceptable.
  Well, I appreciate your being here, Mr. Secretary, and I
  genuinely appreciate the job you are doing--leaving the
  Governorship of Utah, coming to Washington, tackling really big
  issues, and this matter of pandemic flu is of gigantic
  importance. Senator Harkin has been the leader, and I have
  worked with him as his partner, and we have moved ahead against
  some problems to produce $6.6 billion in funding. The potential
  for the pandemic flu if it strikes could be calamitous. When it
  has struck this country and the world in the past, millions of
  people have died. That's a real danger, and I am pleased to see
  what you are doing and what you plan to do even with major
  announcements to come tomorrow. Senator Murray has a time
  conflict, and I will yield to her at this time.
  STATEMENT OF SENATOR PATTY MURRAY
  

• 

  Senator Murray

  At 00:09:55
  3 minutes

  Well, thank you very much, Mr. Chairman. I
  am managing the floor for the Democrats in the supplemental and
  need to get back to the floor, and I appreciate the chairman
  yielding. I would second his statement and thank him for being
  the champion of NIH research, but also education and healthcare
  and all of the things that fall under the purview of this
  budget that you are presenting on behalf of the administration
  and echo his comments that investments in these diseases,
  investments in our future are absolutely critical to our Nation
  and the strength of our Nation in the future. I want to thank
  the chairman for his tremendous work on behalf of this and echo
  his sentiments that I am deeply concerned about the cuts that
  are coming. I can't stay for the questioning. I did want to
  submit some for the record and tell you personally that I have
  been out in the state talking to many seniors about the new
  Medicare Part D prescription drug benefit.
  MEDICARE PART D DEADLINE EXTENSION
  Although I voted against it, I want it to work. I want our
  seniors to be able to sign up for this and make it work. I am
  very concerned about what I am hearing from seniors as this May
  15 deadline looms from seniors who can't get access or think
  they have signed up for something find out several weeks later
  they haven't. Many seniors are holding back signing up for it
  because they are worried about whether or not it's going to
  cover their drugs. I mean, you have heard all of it as well,
  and I hope that we can be thoughtful in our approach, and I
  would encourage you to look at extending the deadline--at least
  for those whose benefits don't begin until January of next year
  at the very minimum so that we don't cause a lot of seniors
  harm in the process. What I see is people signing up for these
  plans out of fear rather than out of knowledge. I think in the
  long run, we will all be hurt if that occurs, and I wanted to
  encourage you to work with us and continue to work with us. I
  know you are hearing some of the same things we are and really
  would like to see this--and to talk with you about that, but I
  specifically wanted to ask because we are now seeing seniors
  who signed up January 1 fall into the donut hole.
  There is tremendous concern about those seniors who had
  pharmacy assistance plans who had drugs before who signed up
  for a drug are now falling into that donut hole. Are they
  considered uninsured, or are they considered insured for the
  purposes of being covered under the pharmacy assistance plans--
  and would like to get you or your staff to work with us as we
  try to help those seniors through that challenge right now. But
  Mr. Chairman, I will submit questions for the record, but I
  would like you and all of us to seriously look at this May 15
  deadline and try and accommodate many of these seniors who are
  really having challenges who I think we don't want to lose in
  this process, and we want to make sure that we have given them
  a benefit and not given them some dire circumstances. So I
  appreciate the opportunity to throw that out there and look
  forward to working with you, Mr. Secretary.
  

• 

  Senator Specter

  At 00:13:03
  24 seconds

  Thank you, Senator Murray. Before yielding
  to Senator Craig, let me call upon our current distinguished
  ranking member for an opening statement. Before you walked in,
  Senator Harkin, I was praising you behind your back for your
  leadership--the number one leader on the funding for pandemic
  flu, and I said I was your partner, and the floor is yours.
  STATEMENT OF SENATOR TOM HARKIN
  

• 

  Senator Harkin

  At 00:13:27
  1 minute

  Well, that's kind of you, Mr. Chairman, but
  I just follow your lead--that's all. If some of the reflective
  glory comes up, I am--that's all right, that's fine with me.
  Mr. Chairman, first of all, I want to thank you for your great
  leadership in so many areas--of course in this area of health.
  There is no stronger champion for the National Institutes of
  Health than the Senator from Pennsylvania.
  I have been by his side in--well, it's now going on about
  16 years now. If it weren't for Senator Specter's great
  leadership, we would never have doubled the funding for NIH
  that we did in the late 1990s and put it up where it is. Now,
  of course, we have some problems now in making sure we continue
  that funding, and of course that's one of the problems that I
  have with the President's budget, and I am sure the chairman
  does also.
  Welcome the Secretary, and then we'll just get to some
  questions in at that time.
  

• 

  Senator Specter

  At 00:14:31
  

  Okay. Thank you very much, Senator Harkin.
  Senator Craig?
  STATEMENT OF SENATOR LARRY CRAIG
  

• 

  Senator Craig

  At 00:14:31
  2 minutes

  Well, Mr. Chairman, I want to welcome the
  Secretary, and I must say that these two gentlemen struggle
  mightily with a very tough budget that Congress and this Senate
  have always supported, but your environment and our environment
  is one that we are being increasingly squeezed out of
  discretionary monies by mandatory spending. Someday, we'll get
  brave enough to take it on in a responsible way. But until that
  time, the struggle of the chairman and the ranking member and
  this member will continue to go on because there has to be a
  sense of fiscal responsibility. I just came from the floor
  suggesting that the supplemental that we have got out there
  deserved to be vetoed by a President who had sent a message
  because it was about $10 billion out of line, and that's
  because we can't quit spending around here without a collective
  pressure being brought upon us. At the same time, there are
  priorities of spending that we get squeezed away from. I will
  say, Mr. Secretary, when I was home in the last recess, the
  good news--even though the Senator from Washington expresses
  continued concern about prescription drugs--is that you are
  having a phenomenal success, and I hope you will speak about it
  today. To stand up and bring on line a massive new program that
  this one is and to already be able to register the kinds of
  successes--someone said to me well, gee, it must have been
  pushed off the front page by the price of oil. I said no, it
  was pushed off the front page because there was less criticism
  today and more praise as the results come in. I hope you will
  share those with us. Deadlines are important to cause people to
  react and to analyze and to decide on decisions that are
  necessary for them to make in a confused world. I will lastly
  say a couple of weeks ago, I am walking through the security
  line at the Boise Airport, and the fellow checking my ID said
  Senator, there are too many decisions, too many choices in
  prescription drugs, and I said well, then you would have
  preferred that we would have mandated a single program for you?
  Oh no, not at all.
  Then I said you need to get with it. He said I am and
  laughed. I said you saving money? He said, a lot of money, but
  it was a tough choice. He said I really had to force myself to
  do a little studying. Thank you. I yield the floor.
  

• 

  Senator Specter

  At 00:17:12
  

  Thank you very much, Senator Craig.
  Senator Durbin, would you care to make an opening statement?
  STATEMENT OF SENATOR RICHARD DURBIN
  MEDICARE PART D FORMULARY PRICES
  

• 

  Senator Durbin

  At 00:17:12
  4 minutes

  Mr. Chairman, thank you very much. I would
  just say briefly thank you, Mr. Secretary, for being here. I
  think you have an awesome responsibility and some very
  important programs that are under your control and leadership.
  I would say on Medicare Part D that I will not quarrel with the
  premise that offering senior citizens coverage for prescription
  drugs is a good thing. It keeps them healthy and independent,
  strong, and out of hospitals and nursing homes longer. That's
  what they need. I do believe, though, that in my State there
  are still over 300,000 people who haven't made that choice. I
  don't know if that number has come down significantly in the
  last few days, but they only have 2 weeks left before they face
  a penalty for not making a choice. It is also a fact that those
  who have made a choice in terms of their prescription drug plan
  are going to be somewhat surprised to learn that the prices are
  not locked in. The prices of the drugs--in fact, the
  formulary--the available drugs that you can purchase under a
  plan can change on a daily basis, which leads to some
  uncertainty about their future. Many of us felt that it would
  have been a better approach to allow Medicare to offer one
  universal plan which consumers could choose if they like, allow
  Medicare to bargain for deep discounts in drugs and to offer
  them nationwide. Then if private insurers wanted to compete,
  they would be allowed to. That position did not prevail. So, in
  Illinois, it meant some 45 different choices for prescription
  drug plans, and some seniors struggled with them. Many
  pharmacists continue to struggle with them as of today.
  NIH BUDGET CUTS
  I would also want to echo what I know was said earlier by
  Senator Harkin.
  The pride that we have taken in Congress in the
  fact that the research money for the National Institutes of
  Health was doubled over a period of time. A former congressman
  from my State, John Porter, was the chairman of the
  Appropriations subcommittee that led that effort. He couldn't
  have made it without the cooperation and enthusiastic help from
  the Senate side, and I think that Senators Specter and Harkin
  are justifiably proud of that as well. But I am troubled that
  we have seen that growth in NIH research stall in last year's
  budget and this year's budget continues. It's hard for me to
  believe that we are now at full capacity in terms of research
  for new drugs in America. I do believe that we need to expand
  the horizons, expand the opportunities to find cures for
  diseases, and this budget does not reflect that, and I hope
  that you will address that issue.
  MEDICAL PROFESSIONAL AVAILABILITY
  One other issue that troubles me is the availability of
  medical professionals. With an aging American population, with
  increased demands for medical help for all of us, we want to
  make certain that when we push the button in our room, a nurse
  will show up, that a good doctor will be there to tend to our
  needs, and I am worried that we are not keeping up with that
  demand for our society. Sadly, one of the ways that we
  supplement our need for medical professionals is to go
  overseas, and I have done it myself--to go to other countries
  that will send us these medical professionals. In most cases,
  these countries cannot afford to give up their own, but they do
  because of the lure of living in the United States and the
  attractive salaries that might be available for these medical
  professionals. The only morally responsible thing that we can
  do is to increase the number of medical professionals in
  America. When it came to the Nurse Reinvestment Act, which
  Senator Mikulski and others pushed forward, we have not
  adequately funded it, and I think we are going to pay a price
  for it in terms of medical professionals and this continuing
  brain drain on the poorest countries in the world that are
  sending us their medical professionals they desperately need.
  As tough as it may be to practice medicine in the inner
  city of Chicago, it could not compare to practicing it in the
  Congo where there is one doctor for every 160,000 people, one
  surgeon for every 3 million. That is an impossible situation,
  and we make it worse because we bring those medical
  professionals to the United States--many times at the expense
  of these countries. The responsible thing for us to do is to
  develop our own medical professionals to meet the needs in the
  future. I hope that you will be able to tell us that your
  budget addresses that. I look forward to your testimony, and
  thank you for joining us today.
  

• 

  Senator Specter

  At 00:21:53
  48 seconds

  Well, thank you, Senator Durbin. Well, we
  welcome you here, Secretary Leavitt, notwithstanding the
  opening statements of the Senators. You come to this position
  with a very distinguished record in public service--elected
  three times as Governor of the State of Utah, having served as
  Administrator for the Environmental Protection Agency and
  having taken over this very important job at the very beginning
  of the President's second term in late January 2005. We give
  you the floor, Mr. Secretary. Take as long as you like. Do not
  run the clock on the Secretary.
  SUMMARY STATEMENT OF HON. MICHAEL O. LEAVITT
  

• 

  Secretary Leavitt

  At 00:22:41
  8 seconds

  Thank you, Senator. I will submit a
  formal statement for the record.
  

• 

  Senator Specter

  At 00:22:49
  

  Your statement will be made a part of the
  record and any other prepared statement.
  FISCAL YEAR 2007 HHS BUDGET
  

• 

  Secretary Leavitt

  At 00:22:49
  6 minutes

  You acknowledged in a very kind way my
  service--previously as Governor. I will tell you that I value
  every day I had that opportunity. However, I will also confess
  to you that earlier this week, I spoke with my colleagues at
  HHS and told them that I am among the few people I suspect in
  the world who can honestly say I can think of nothing that I
  would rather do in my life right now than exactly what I am
  doing. The issues here are demanding, but they are
  extraordinarily important to the people of this country and,
  may I say, the world. I say that with a sense of gratitude and
  humility with being in a position to have some impact on
  delivering on the most noble of aspirations that our country
  has--our desire to see cancer cured, to see other diseases
  cured as well, to find ways in which we can prepare ourselves
  for a pandemic influenza and to do the other things that are
  currently my responsibility. I just want you to know that these
  are difficult issues, but I am grateful for the opportunity to
  serve the American people. The budget that I'll reflect today
  is a big budget. It's $700 billion. $75.5 billion of that we
  refer to as discretionary. Senator Craig referenced the fact
  that that number is being squeezed by the fact that the rest of
  the budget continues to grow at an alarming rate. I have a new
  grandson. He is now 8 months old. When he turns 35, Medicare
  alone--one of the programs that I am responsible to manage--
  will be 8 percent of our gross domestic product. By the time he
  retires at age 65, it will be 11 percent. I think everyone in
  this room knows that any nation that has one program that pays
  for the healthcare of those who have concluded their careers
  will likely not be on the economic leader board. I am deeply
  concerned about that as others are. It is having the impact of
  constraining our discretionary budgets. The budget I am here
  today to discuss is a deficit reduction budget. It is $1.5
  billion less than the budget that I was here a year ago to
  discuss. You mentioned my 11 years as Governor. During that
  period of time, I was responsible as the chief executive of my
  State to balance that budget, and I know that any time you are
  doing a deficit reduction budget, you are dealing with programs
  that have been on the budget for a very good reason and you are
  having to basically offset good programs against good programs.
  There are no easy choices here. There will be disagreement on
  what the priorities should be. I acknowledge that, and my
  purpose today is only to tell you the basis on which I made
  decisions given the need for this deficit reduction budget. You
  will find new initiatives here, things that I believe are
  extraordinarily important and that are important to the
  President, things that you have talked about.
  One of the things I am concerned about is our investments.
  At NIH, for example, we are seeking level funding at NIH, but
  there are new initiatives at HHS--for example, what we call
  critical path. Despite the fact that we have doubled the NIH
  budget, the number of molecules that we are able to actually
  take into the marketplace has been cut almost in half during
  that period of time. What that tells me is that we have to
  change the regulatory process and find new tools. So, one of
  the new initiatives we call critical path is essentially 76
  science projects, if you will, to find new ways of measuring
  the efficacy and the safety of drugs that will allow us to
  dramatically improve that rather dismal statistic. You will see
  some Presidential initiatives here that will be familiar to
  you, such as a continued expansion of the community health
  centers. You will also see bioterrorism emphasized and pandemic
  influenza preparedness. I hope we'll have a chance to talk at
  some length about our preparation. It is a very important
  matter, and we are giving it the highest level of priority at
  HHS. I have laid out the discretionary budget and asked those
  who helped me prepare it to use a set of principles--some
  things you will see follow through this entire budget. Some of
  those would be a pause in construction of new buildings, for
  example. Another thing you will see is that there are programs
  whose purposes have been addressed in other areas. I have
  discovered, like in many departments of the Federal Government,
  there are silos. There are places that deal in one silo with a
  problem and places that deal with it in another, and I have
  done my best to try to bring them together, and what that has
  allowed me to do is to find a way to be more efficient. You
  will see some programs with carryover funds where I have taken
  those funds and put them into some other purpose.
  PREPARED STATEMENT
  Those are the means by which I have done it. I laid out a
  group of principles. I have tried to target as opposed to
  looking at general problems. I have tried to work at prevention
  as opposed to just ongoing funding of dilemmas. I have tried to
  look for places where there was new innovation. We'll get a
  chance to talk about all of them. I won't take more time. I am
  anxious to get directly to your questions, but I do want to
  tell you how appreciative I am of the chance to serve the
  American people and to be here today to work with you to
  accomplish that same purpose.
  [The statement follows:]
  Prepared Statement of Hon. Michael O. Leavitt
  Good morning, Mr. Chairman, Senator Harkin, and Members of the
  Committee. I am honored to be here today to present to you the
  President's fiscal year 2007 Budget for the Department of Health and
  Human Services (HHS).
  Over the past 5 years, the Department of Health and Human Services
  has worked to make America healthier and safer. Today, we look forward
  to building on that record of achievement. For that is what budgets
  are--investments in the future. The President and I are setting out a
  hopeful agenda for the upcoming fiscal year, one that strengthens
  America against potential threats, heeds the call of compassion,
  follows wise fiscal stewardship and advances our Nation's health.
  In his January 31 State of the Union Address, the President
  stressed that keeping America competitive requires us to be good
  stewards of tax dollars. I believe that the President's fiscal year
  2007 Budget takes important strides forward on national priorities
  while keeping us on track to cut the deficit in half by 2009. It
  protects the health of Americans against the threats of both
  bioterrorism and a possible influenza pandemic; provides care for those
  most in need; protects life, family and human dignity; enhances the
  long-term health of our citizens; and improves the human condition
  around the world. I would like to quickly highlight some key points of
  this budget.
  We are proposing new initiatives, such as expanded Health
  Information Technology and domestic HIV/AIDS testing and treatment that
  hold the promise for improving health care for all Americans. We are
  continuing funding for Presidential initiatives, including Health
  Centers, Access to Recovery, bioterrorism and pandemic influenza; and
  we are also maintaining effective programs such as the Indian Health
  Service, Head Start, and the National Institutes of Health.
  We are a Nation at war. That must not be forgotten. We have seen
  the harm that can be caused by a single anthrax-laced letter and we
  must be ready to respond to a similar emergency--or something even
  worse. To this end, the President's Budget calls for a four percent
  increase in bioterrorism spending in fiscal year 2007. That will bring
  the total budget up to $4.4 billion, an increase of $178 million over
  last year's level.
  This increase will enable us to accomplish a number of important
  tasks. We will improve our medical surge capacity; increase the
  medicines and supplies in the Strategic National Stockpile; support a
  mass casualty care initiative; and promote the advanced development of
  biodefense countermeasures to a stage of development so they can be
  considered for procurement under Project BioShield.
  We must also continue to prepare against a possible pandemic
  influenza outbreak. We appreciate your support of $2.3 billion for the
  second year of the President's Pandemic Influenza plan in the fiscal
  year 2006 Emergency Supplemental Appropriations Act for Defense, the
  Global War on Terror, and Hurricane Recovery. It is vital that this
  funding be allocated in the most effective manner possible to achieve
  our preparedness goals, including providing pandemic influenza vaccine
  to every man, woman and child within six months of detection of
  sustained human-to-human transmission of a bird flu virus; ensuring
  access to enough antiviral treatment courses sufficient for 25 percent
  of the U.S. population; and enhancing Federal, state and local as well
  as international public health infrastructure and preparedness. We also
  want to work with you to ensure that this funding is appropriated prior
  to October 1, 2006.
  The President's fiscal year 2007 budget also provides more than
  $350 million for important ongoing pandemic influenza activities such
  as safeguarding the Nation's food supply (FDA), global disease
  surveillance (CDC), and accelerating the development of vaccines, drugs
  and diagnostics (NIH).
  The budget includes a new initiative of $188 million to fight HIV/
  AIDS. These funds support the objective of testing for three million
  additional Americans for HIV/AIDS and providing treatment for those
  people who are on state waiting lists for AIDS medicine. This
  initiative will enhance ongoing efforts through HHS that total $16.7
  billion for HIV/AIDS research, prevention, and treatment this year.
  The budget maintains the NIH, and includes important increases for
  important crosscutting initiatives that will move us forward in our
  battle to treat and prevent disease--$49 million for the Genes,
  Environment and Health Initiative and $113 million for the Director's
  Roadmap. In addition, it contains an additional $10 million for the
  Food and Drug Administration to lead the way forward in the area of
  personalized medicine and improved drug safety.
  One of the most important themes in our budget is that it increases
  funding for initiatives that are designed to enhance the health of
  Americans for a long time to come. For instance, the President's Budget
  calls for an increase of nearly $60 million in the Health Information
  Technology Initiative. Among other things, these funds support the
  development of electronic health records (to help meet President Bush's
  goal for most Americans to have interoperable electronic health records
  by 2014); consumer empowerment; chronic care management; and
  Biosurveillance.
  The Budget also includes several initiatives to protect life,
  family and human dignity. These include, for example, $100 million in
  competitive matching grants to States for family formation and healthy
  marriage activities in TANF. The President's budget also promotes
  independence and choice for individuals through vouchers that increase
  access to substance abuse treatment.
  In the area of entitlement programs, I want to begin by
  congratulating you and other Members of Congress for having
  successfully enacted many needed reforms by passing the Deficit
  Reduction Act (DRA). DRA supports our commitment to sustainable growth
  rates in our important Medicare and Medicaid programs. It also
  strengthens the Child Support Enforcement program. The Deficit
  Reduction Act also achieves the notable accomplishment of reauthorizing
  Temporary Assistance for Needy Families (TANF), which has operated
  under a series of short-term extensions since the program expired in
  September 2002.
  Medicaid has a compassionate goal to which we are committed. Part
  of our obligation to the beneficiaries of this program is ensuring it
  remains available well into the future to provide the high-quality care
  they deserve. With its action on many of our proposals from last year
  in the Deficit Reduction Act, the Congress has made Medicaid a more
  sustainable program while improving care for beneficiaries. The
  President's Budget proposals build on the DRA and include a modest
  number of legislative proposals, which improve care and will save $1.5
  billion over 5 years in Medicaid and S-CHIP and several administrative
  proposals saving $12.2 billion over 5 years.
  This Administration has also pursued a steady course toward
  Medicare modernization. In just the past 3 years, we have brought
  Medicare into the 21st century by adding a prescription drug benefit
  and offering beneficiaries more health plan choices.
  Medicare's new prescription drug benefit represents the most
  significant improvement to senior health care benefits in 40 years. CMS
  has already exceeded the enrollment target with more than 30 million
  beneficiaries with drug coverage as of April 18, 2006. In addition,
  almost 6 million Medicare beneficiaries get drug coverage from other
  sources such as the Department of Veterans Affairs. This brings the
  total to approximately 35.8 million Medicare beneficiaries who are now
  receiving prescription drug coverage. In most cases, their coverage is
  either completely new or much better and much more secure than it was
  before.
  Savings from the prescription drug benefit have been greater than
  expected. CMS' Office of the Actuary initially estimated beneficiary
  premiums averaging $37 per month. Today, however, the average monthly
  premium is $25 a month. And in some parts of the country, beneficiaries
  are seeing premiums of less than $2 per month. In 2006, the Federal
  government is projected to spend about 20 percent less per person than
  first estimated, and over the next 5 years, payments are projected to
  be more than ten percent lower than first estimated. So taxpayers will
  see significant savings and State contributions will be about 25
  percent lower over the next decade for beneficiaries who are in both
  Medicaid and Medicare. All these savings result from the lower expected
  costs per beneficiary.
  Our work to modernize Medicare is not done. Rapid growth in
  Medicare spending over the long-term will place a substantial burden on
  future budgets and the economy. The President's fiscal year 2007 Budget
  includes a package of proposals that will save $36 billion over 5 years
  and continue Medicare's steady course toward financial security, higher
  quality, and greater efficiency.
  The bulk of these Medicare savings will come from proposals to
  adjust yearly payment updates for providers in an effort to recognize
  and encourage greater productivity. These proposals are consistent with
  the most recent recommendations of the Medicare Payment Advisory
  Commission. To ensure more appropriate Medicare payments, the Budget
  proposes changes to wheelchair and oxygen reimbursement, phase-out of
  bad debt payments, enhancing Medicare Secondary Payer provisions, and
  expanding competitive bidding to laboratory services. Building on
  initial steps in the Medicare Modernization Act, the Budget proposes to
  broaden the application of reduced premium subsidies for higher income
  beneficiaries. Finally, the President's Budget proposes to strengthen
  the Medicare Modernization Act provision that requires Trustees to
  issue a warning if the share of Medicare funded by general revenue
  exceeds 45 percent. The Budget would add a failsafe mechanism to
  protect Medicare's finances in the event that action is not taken to
  address the Trustees' warning. If legislation to address the Trustees'
  warning is not enacted, the Budget proposes to require automatic
  across-the-board cuts in Medicare payments. The Administration's
  proposal would ensure that action is taken to improve Medicare's
  sustainability.
  President Bush proposes total outlays of nearly $700 billion for
  Health and Human Services. That is an increase of more than $58 billion
  from 2006, or more than 9.1 percent.
  While overall spending will increase, HHS will also make its
  contribution to keeping America competitive. To meet the President's
  goal of cutting the deficit in half by 2009, we are decreasing HHS
  discretionary spending. Our non-emergency request for discretionary
  budget authority for programs under the jurisdiction of this
  Subcommittee totals $61.1 billion, a decrease of $1.6 billion below
  fiscal year 2006. The $2.3 billion for the cost of the next phase of
  the President's plan to prepare against an influenza pandemic that I
  discussed earlier is in addition to this amount.
  I recognize that every program is important to someone. But we had
  to make hard choices about well-intentioned programs. I understand that
  reasonable people can come to different conclusions about which
  programs are essential and which ones are not. That has been true with
  every budget I've ever been involved with. It remains true today. There
  is a tendency to assume that any reduction reflects a lack of caring.
  But cutting a program does not imply an absence of compassion. When
  there are fewer resources available, someone has to decide that it is
  better to do one thing rather than another, or to put more resources
  toward one goal instead of another.
  Government is very good at working toward some goals, but it is
  less efficient at pursuing others. Our budget reflects the areas that
  have the highest pay-off potential.
  To meet our goals, we have reduced or eliminated funding for
  programs whose purposes are duplicative of those addressed in other
  agencies. One example of this is Rural Health where we have proposed to
  reduce this program in the Health Resources and Services
  Administration. The Medicare Modernization Act contained several
  provisions to support rural health, including increased spending in
  rural America by $25 billion over 10 years. For example, it increases
  Medicare Critical Access Hospitals (CAH) payments to 101 percent of
  costs and broadens eligibility criteria for CAHs. Moreover, recognizing
  that Congress adopted many of our saving proposals last year, we are
  continuing to make performance-based reductions.
  Our programs can work even more effectively than they do today. We
  expect to be held accountable for spending the taxpayers' money more
  efficiently and effectively every year. To assist you, the
  Administration launched ExpectMore.gov, a website that provides candid
  information about programs that are successful and programs that fall
  short, and in both situations, what they are doing to improve their
  performance next year. I encourage the Members of this Committee and
  those interested in our programs to visit ExpectMore.gov, see how we
  are doing, and hold us accountable for improving.
  President Bush and I believe that America's best days are still
  before her. We are confident that we can continue to help Americans
  become healthier and more hopeful, live longer and better lives. Our
  fiscal year 2007 budget is forward-looking and reflects that hopeful
  outlook.
  Thank you for the opportunity to testify. I will be happy to answer
  your questions.
  HISTORICAL PANDEMICS
  

• 

  Senator Specter

  At 00:29:37
  1 minute

  Thank you very much, Mr. Secretary. We'll
  now go to the questioning by the Senators with 5-minute rounds.
  In the second round, Mr. Secretary, I intend to go into the
  budget cuts on the Centers for Disease Control and the National
  Institutes of Health and others which, as I have outlined
  earlier, I think totally unacceptable, but let me begin with
  the issue of the threat of the pandemic flu. There is a draft
  report, which has appeared publicly, where you are stockpiling
  75 million doses of antiviral drugs and 20 million doses of
  vaccines. There are projections that there could be as much as
  40 percent of the workforce absent. There are guidelines to
  keep people from congregating together. There is even a note
  about local police departments and National Guard would have
  the primary responsibility for keeping order, but the military
  would be available to assist. This sounds like a very, very
  stark situation. We know that when such disasters have occurred
  in the past, there have been millions who have been killed. One
  of the really important matters to be covered is to acquaint
  the public with what the problems are--that it may be difficult
  or dangerous to go to the grocery store, that it is important
  to have a supply of water, that there ought to be provisions
  made for a worst-case scenario. There have been articles, but
  they are buried in the newspapers, and I do not think that
  there is a real public understanding of the seriousness of this
  program. Now, what you are saying here today is going to be
  carried in the news media, and this hearing is being covered
  live on C-SPAN, so it is reaching people as we speak. Stark as
  it is, I think we ought to be very candid, very frank--brutally
  frank with the potential nature of the problem. Now, Mr.
  Secretary, what is the worst-case scenario? If it's as bad as
  it can be, how bad would that be?
  

• 

  Secretary Leavitt

  At 00:31:22
  30 seconds

  Mr. Chairman, pandemics happen. They
  have happened through all-time. You can date back to ancient
  Athens--25 percent of that city was wiped out because of
  disease. You can roll forward, and virtually every century, you
  will see two or three pandemics. In the 14th century--Black
  Death, perhaps the best known, killed 25 million people across
  Europe.
  

• 

  Senator Specter

  At 00:31:52
  

  How many people died in the pandemic in
  the United States not long into the 20th century?
  

• 

  Secretary Leavitt

  At 00:31:52
  46 seconds

  Your point is a very good one. We have
  had 10 pandemics in the last 300 years. We have had three
  pandemics in the last 100 years. In 1968 and 1957--a lot of
  people got sick. Not many people died. In 1918, however, many
  people got sick and regrettably, millions died. If we were to
  have a pandemic of equal proportion to that which occurred in
  1918, roughly 90 million people in the United States would
  become ill. About half of those--45 million would become sick
  enough that they would require some form of serious medical
  attention, and about 2 million people, regrettably, would die.
  

• 

  Senator Specter

  At 00:32:38
  15 seconds

  Well, those are pretty stark figures--90
  million, about one-third--almost one-third of the population,
  and you say millions would die. What basic precautions should
  people take?
  PANDEMIC INFLUENZA PREPAREDNESS
  

• 

  Secretary Leavitt

  At 00:32:53
  18 seconds

  Well, for that reason, the President has
  asked that we mobilize the country. I have committed that we
  would hold pandemic summits in all 50 States. So far, we have
  had 46 of them. We are mobilizing State and local governments.
  We are also working to develop a global monitoring system.
  

• 

  Senator Specter

  At 00:33:11
  10 seconds

  What should individual citizens do? Should
  individual citizens stock up on water? Should individual
  citizens stock up on food?
  

• 

  Secretary Leavitt

  At 00:33:21
  50 seconds

  Mr. Chairman, the preparation for a
  pandemic is essentially the same preparation that needs to
  occur in any disaster. It's a good idea to have some
  nonperishable food stored at your home. That would be true for
  a hurricane or a tornado. It would be a good idea for a
  bioterrorism event or a nuclear event. It would be true as well
  for a pandemic. It's a good idea to have a first aid kit and to
  have prescription drugs stocked up in a way that if you were to
  need your supply and couldn't get to the drug store that you
  would have it. It's a good idea to have thought through how you
  would deal with your children--if you had to alternate going to
  work with your spouse or if they both needed to stay home and
  you had to have some kind of caregiving process. It's a good
  idea to take the same precautions as in any other emergency
  situation.
  

• 

  Senator Specter

  At 00:34:11
  13 seconds

  The red light went on in the middle of
  your answer, and I intend to observe the red light meticulously
  because I ask all the members of the panel to do the same, and
  now I yield to Senator Harkin.
  PANDEMIC INFLUENZA VACCINE STOCKPILE
  

• 

  Senator Harkin

  At 00:34:24
  2 minutes

  Thank you very much, Mr. Chairman. Again,
  welcome Mr. Secretary. Again, I just want to point out that
  this committee--the Senate went on record 73 to 27 on an
  amendment offered by Senator Specter on the budget to increase
  our budget allocation by $7 billion for health and education
  programs, much of which would go to this Department to make up
  for a lot of the cuts that we see in this budget. Of course, we
  don't have a budget yet. The House can't seem to pass one. So,
  I don't know what's going to happen on that later on down the
  pipe, but I am hopeful that that $7 billion that Senator
  Specter and 72 other Senators voted to support stays in there.
  If that's the case, then we can make up for some of the cuts
  that are in your budget that I think are just devastating--the
  cuts to Social Services Block Grants by $500 million,
  eliminating the Community Services Block Grant programs, the
  cuts--as you said, the level funding for NIH, which translates
  into cuts for some of NIH and for the Centers for Disease
  Control, the cuts on rural health programs, poison control
  centers, health professions trainings programs--all of these
  things all got cuts--all got cuts. Quite frankly, with the
  needs that we have out there, these cuts cannot stand, and
  that's why I am hopeful that we can get that $7 billion. Now, I
  want to follow up a little bit on the Avian Flu. I want to see
  if we can clarify the issue of stockpiling of antivirals. The
  World Health Organization recommended that countries stockpile
  sufficient antivirals to treat 25 percent of their populations.
  In your written statement, you concur with that goal. That
  would equate to about 80 million Americans. I understand that
  your Department has ordered or has on hand enough antivirals to
  treat about 26 million individuals, so that leaves about 50
  million--60 million short. I understand that you anticipate
  States will order 30 million courses of antivirals. The
  Government will subsidize that at 25 percent of the cost.
  States have been asked to place their orders with you by July--
  by this July. The final course of treatment will be ordered
  using pending funds--2007--next year funds. Well now, again, I
  laid that groundwork to say that--are there any States that
  have indicated that they will not be able to order these
  medications because they have a lack of funds or a lack of
  legislative authority to do so?
  

• 

  Secretary Leavitt

  At 00:37:07
  

  No State has made that statement to us
  at this point.
  

• 

  Senator Harkin

  At 00:37:07
  11 seconds

  Okay. What is your plan if States don't
  order these treatments by July?
  

• 

  Secretary Leavitt

  At 00:37:18
  

  We intend to acquire 50 million courses
  of antivirals.
  

• 

  Senator Harkin

  At 00:37:18
  10 seconds

  You mean 50 million over the 20 you have?
  

• 

  Secretary Leavitt

  At 00:37:28
  17 seconds

  Let me reconcile the entire amount and
  then give you the timeframes. We will have by the end of 2006
  the 26 million that you have spoken of. We will have by 2008,
  50 million that will have been purchased by Federal money and
  that will be available for distribution.
  

• 

  Senator Harkin

  At 00:37:45
  

  Okay.
  PANDEMIC INFLUENZA VACCINE DISTRIBUTION
  

• 

  Secretary Leavitt

  At 00:37:45
  51 seconds

  We will make a distribution of that 50
  million among the States on essentially a proportionate basis.
  So they will have that available to them in its entirety by the
  end of 2007. Each of the States then has an opportunity to
  supplement that--their proportionate share of that 50 million,
  and we will subsidize it by 25 percent up to their
  proportionate share of the remaining 31 million. We anticipated
  originally that we would ask States to make that decision by
  July. Since that information was provided to you, we have made
  a decision that we will allow them to buy off of our order and
  at the same time, deal directly with the manufacturer so that
  they could be more efficient rather than go through us.
  

• 

  Senator Harkin

  At 00:38:36
  16 seconds

  My time is running out. Mr. Secretary, in
  the case of a pandemic, State, and local health departments
  will have to distribute the vaccines. Are you encouraging
  States to organize mass vaccination exercises during this next
  flu season to get ready for that?
  

• 

  Secretary Leavitt

  At 00:38:52
  

  We are.
  

• 

  Senator Harkin

  At 00:38:52
  10 seconds

  If so, will you allow the States to use a
  portion of the $350 million that we allocated for that to
  purchase annual flu vaccine?
  

• 

  Secretary Leavitt

  At 00:39:02
  13 seconds

  Actually, we would prefer that they
  utilize the $350 million to build up the public health
  infrastructure and to reach deep into the community to be able
  to do the kinds of things that Senator Specter was talking
  about.
  

• 

  Senator Harkin

  At 00:39:15
  

  But isn't one way to do that is to purchase
  annual flu vaccine and put in place an infrastructure----
  

• 

  Secretary Leavitt

  At 00:39:15
  

  Oh.
  

• 

  Senator Harkin [continuing]

  At 00:39:15
  11 seconds

  To distribute it? That's what
  I am saying.
  That's what I am talking about.
  

• 

  Secretary Leavitt

  At 00:39:26
  

  I misunderstood your question.
  

• 

  Senator Harkin

  At 00:39:26
  

  Yeah.
  

• 

  Secretary Leavitt

  At 00:39:26
  16 seconds

  At this point, we have not begun to
  distribute the stockpile of vaccine that we have. It is
  relatively small, but we will not release it until such time as
  we have seen person-to-person transmission.
  

• 

  Senator Harkin

  At 00:39:42
  7 seconds

  No, now we're--my time is running out, and
  that's not what I am talking about. What I am talking about is
  the annual flu vaccine.
  

• 

  Secretary Leavitt

  At 00:39:49
  

  Oh.
  

• 

  Senator Harkin

  At 00:39:49
  19 seconds

  Is we put $350 million for--to build up
  State and local structures in case of a pandemic. One of the
  ways to test that to see if it works, to do it is to buy the
  annual flu vaccine and say okay, we are going to set up
  processes and methodologies to get that annual flu vaccine out.
  

• 

  Secretary Leavitt

  At 00:40:08
  

  Third time is the charm, Senator. You
  got it.
  

• 

  Senator Harkin

  At 00:40:08
  

  Okay.
  

• 

  Secretary Leavitt

  At 00:40:08
  6 seconds

  I think you finally reached me.
  

• 

  Senator Harkin

  At 00:40:14
  11 seconds

  So, my question--would they be allowed to
  use some of that $350 million to purchase the annual flu
  vaccine to test modalities out there to--how to get it out?
  

• 

  Secretary Leavitt

  At 00:40:25
  

  I hadn't thought of that.
  

• 

  Senator Harkin

  At 00:40:25
  

  Oh.
  

• 

  Secretary Leavitt

  At 00:40:25
  

  It's a really interesting idea----
  

• 

  Senator Harkin

  At 00:40:25
  

  Okay.
  

• 

  Secretary Leavitt [continuing]

  At 00:40:25
  

  I'd be happy to give it
  some thought and respond back to you.
  

• 

  Senator Harkin

  At 00:40:25
  16 seconds

  I appreciate that. Thanks, Mr. Secretary.
  All right.
  [The information follows:]
  Pandemic Influenza Infrastructure
  A major component of the $350 million allocated to States for
  pandemic influenza planning is for States to exercise their plans.
  States are permitted to use Public Health Emergency Preparedness
  cooperative agreement funds to purchase vaccine in limited quantities
  for the purpose of conducting drills and exercises. At this time, they
  are not permitted to purchase annual vaccine with the emergency
  supplemental funding for pandemic influenza preparedness. However, they
  may use some of these emergency supplemental funds during the influenza
  season as an opportunity to exercise mass vaccination plans.
  

• 

  Senator Specter

  At 00:40:41
  

  Thank you, Senator Harkin. Senator Craig?
  COMMUNITY HEALTH CENTERS
  

• 

  Senator Craig

  At 00:40:41
  1 minute

  Thank you very much, Mr. Chairman. Mr.
  Secretary, during the Easter recess when I was back in Idaho, I
  visited a community health center, and I do that on a regular
  basis to see how it's working, who they are serving, how they
  are serving, and it is really one of those kind of unsung
  success stories out there that some of us fail to recognize.
  Obviously, this present--President hasn't failed to recognize
  that to lower income Americans, one way to serve them is making
  sure the door is open, and community health centers do that
  very well. This particular community health center in Nampa,
  Idaho told me that in the year, they had served over 25,000
  people, and the place was full, the parking lot was full, and
  the doctors and nurses there were very pleased with the work
  they were doing. Should this committee be concerned that
  expansion of new facilities coupled with a reduction in funds
  for training personnel to work in those facilities will slow
  the service--access to service in communities that need these
  facilities or worse--exacerbate shortages in medical personnel
  across the country?
  

• 

  Secretary Leavitt

  At 00:41:56
  30 seconds

  Mr. Senator, as I indicated earlier,
  this is one of the President's high priorities, and this budget
  includes funds to continue forward in his goal of providing
  1,200 new or expanded community health center sites. This
  includes enough for 300, 80 of which will be in the highest
  poverty counties. This is a passion for the President and for
  me, and we are working with every asset we have to continue
  moving it forward.
  

• 

  Senator Craig

  At 00:42:26
  13 seconds

  Okay. So as I said, funds as it relates to
  the training of personnel, we don't--you don't see that as a
  problem in relation to standing these up and facilitating them
  for service?
  

• 

  Secretary Leavitt

  At 00:42:39
  7 seconds

  As I speak with those who run and
  operate these in the same way that you have, there are always
  needs there.
  

• 

  Senator Craig

  At 00:42:46
  

  Yeah.
  

• 

  Secretary Leavitt

  At 00:42:46
  10 seconds

  I would not want to say that we will
  have quenched that, but we do recognize that training is a
  component of it and want to meet those needs.
  WELLNESS AND DISEASE PREVENTION
  

• 

  Senator Craig

  At 00:42:56
  56 seconds

  Okay. Mr. Secretary, myself and other
  Senators consistently over time have introduced legislation to
  authorize Medicare to cover medical nutritional therapy
  services for some beneficiaries. However, there is generally a
  cost associated with any legislation, and that usually gives us
  problems in this area. I am one who believes that good health
  oftentimes brings down costs as it relates to healthcare and
  that we ought to be increasing advocates of that instead of
  repairs of broken bodies, if you will, after the fact. Can you
  give me your general views based on your experience in
  implementing programs designed for health and wellness as
  opposed to programs designed to intervene or respond to long
  after diseases and ailments have onset?
  

• 

  Secretary Leavitt

  At 00:43:52
  57 seconds

  I believe, Senator, it should become our
  entire focus. When I say entire focus--until we begin to view
  wellness with the same passion we do treatment, not only will
  we not see improvement in our health, we will not see
  improvement in our fiscal health. I believe that is one of the
  reasons--in fact, one of the primary reasons, why the new Part
  D prescription drug benefit is such a historic point in time.
  For the first time, we have begun to provide for seniors the
  prescription drugs they need to stay healthy as opposed to
  simply treating them after they are sick. Over and over again,
  as I have traveled the country meeting with seniors, I have
  heard stories of people who have had heart operations, ulcer
  operations, and osteoporosis treatments that could have been
  prevented with a small amount of prescription drugs at the
  onset as opposed to the treatment at the end.
  MEDICARE PART D ENROLLMENT
  

• 

  Senator Craig

  At 00:44:49
  22 seconds

  Well, my time is up, but you segued nicely
  from my request for a response as it relates to medical
  nutritional therapy and to prescription drugs. Could you for a
  moment give us some of the current figures as to where we are
  with participation as to where we thought we would be and some
  of the savings that are now already appearing on the scene?
  

• 

  Secretary Leavitt

  At 00:45:11
  1 minute

  We anticipated that in the first year,
  we would see 28 to 30 million people enroll. We have now
  exceeded 30 million. We anticipate between now and the 15 of
  May that we will have--I don't know exactly of course, but
  another couple million. If you assume that that's 32 million,
  there are 42 million in total who are eligible. There are 6
  million who are getting coverage from either a private employer
  or some other source. If you add that 6 to the 32, you get 38.
  That would mean we have a shot at being able to have enrolled
  90 percent of every senior who is eligible for this benefit
  during the first year. That is a remarkable achievement in my
  mind, and it's a tribute not just to the Centers for Medicare
  and Medicaid Services (CMS), but to the thousands of
  pharmacists, the thousands of volunteers, the tens of thousands
  of people all over this country who have been involved in
  reaching out to seniors in their homes, in their places of
  worship, in their senior centers. The other good news is the
  cost is coming down. The program is getting better everyday.
  The cost is coming down, and we are getting people enrolled.
  

• 

  Senator Craig

  At 00:46:17
  

  Thank you. It is a success story. We
  appreciate it.
  

• 

  Senator Specter

  At 00:46:17
  10 seconds

  Thank you very much, Senator Craig. Under
  the early bird rule, we turn to Senator Durbin.
  MEDICARE PART D ENROLLMENT DEADLINE
  

• 

  Senator Durbin

  At 00:46:27
  1 minute

  So, Mr. Secretary, there is more to the
  story, and here is the rest of the story. The Bush
  administration says that 35.8 million Medicare beneficiaries
  will have drug coverage as of mid-April. The truth is 75
  percent of those people--more than 26 million--already had
  prescription drug coverage before January 1 of this year
  through their employer, the VA or Medicaid. So there were 16
  million Medicare beneficiaries who previously did not have drug
  coverage. Only half or about 9 million have signed up for the
  benefit. Millions need more time. In my State of Illinois,
  606,000 people have not signed up for Part D, and the clock is
  ticking. It's less than 2 weeks away. Forty-five different plan
  choices, people--some of whom are flat on their back in nursing
  homes and in no position to make these choices--I think we have
  to acknowledge the obvious. Come May 15, the law will impose a
  penalty on a lot of people who did their best and just couldn't
  get this done, and I want to ask you point-blank do you think
  we ought to extend the signup deadline beyond May 15? Number
  two--should you allow senior citizens a do-over if they picked
  a bad plan that dropped the formulary, increased the cost? Do
  you think that that will be a reasonable way to deal with
  clearly a challenge that has not been met?
  

• 

  Secretary Leavitt

  At 00:47:44
  30 seconds

  Senator, millions of people--tens of
  millions of people--have prescription drug coverage who did not
  have it before. That is a great step forward, something I
  believe you would concur with. Let me again say that I believe
  that when May 15 comes, we will have reached roughly 90 percent
  of those who are eligible. Of the remaining 10 percent, about
  half of them will be a population that, granted, is very
  difficult to reach.
  

• 

  Senator Durbin

  At 00:48:14
  

  But----
  

• 

  Secretary Leavitt

  At 00:48:14
  18 seconds

  We have had that problem--I want to
  answer your question. About half of them are in a low-income
  status, and we have granted them the ability if they qualify
  for the extra help--the people that you are most concerned
  about--we will not require that they wait until the next
  enrollment period. They will have no penalty, and they will
  have no wait.
  

• 

  Senator Durbin

  At 00:48:32
  

  So increasing monthly premiums of 1 percent
  for every month past the deadline--are you going to waive that?
  

• 

  Secretary Leavitt

  At 00:48:32
  18 seconds

  If you are in fact a low-income eligible
  person, you will not have a penalty, and you will not be
  required to wait until the next enrollment period.
  

• 

  Senator Durbin

  At 00:48:50
  

  Will the administration support extending
  the deadline beyond May 15?
  

• 

  Secretary Leavitt

  At 00:48:50
  58 seconds

  We believe that a deadline is necessary
  and that it is working. The Government actuary told us if we
  did not have a deadline, we would have substantially fewer
  people. We believe that the plan requires the time to mature.
  We think that the--that half of the people who are--who have
  yet to enroll will be eligible to enroll during that period
  once they have qualified for extra help.
  

• 

  Senator Durbin

  At 00:49:48
  1 minute

  I think that we are missing the point here.
  Of the universe of people who did not have prescription drug
  coverage on January 1, some 25--let me get the figure correct
  here--25 percent of the Medicare beneficiaries, about 15
  percent of that number will have signed up by May 15, and 10
  percent will have not. So 60 percent of our goal will have been
  reached, but 40 percent not. You are shaking your head, but
  those are the numbers, and we get the report from your agency
  county by county. 606,000 people in my State, and we have done
  our best. What I say to you is I hope that you will understand
  their predicament, that the administration will relent and give
  these seniors a second chance to sign up without penalty.
  Second, if they have made a bad choice, I hope you will give
  them a chance to have a do-over, a makeover, support
  legislation that we have introduced. They can pick a plan that
  really is better for them. If I might ask one other question--
  I'm going to run out of time. I am worried about whether or not
  we are doing what we need to do for our children on our watch.
  I go to schools across my State, and I ask a simple question--
  how many here have someone in your family with asthma? You will
  see more than half the hands go up. You can tell by looking at
  the children we are dealing with obesity. We know that one out
  of every 160 children in America have autism at this point. How
  can we deal with these issues when we are facing a budget that
  is going to make such significant cuts in the Centers for
  Disease Control and Prevention, in the National Institutes of
  Health and that eliminates the NIH National Children's Study?
  How can we find out what's happening out there and really
  protect our children against what appears to be an onset of
  some terrible health challenges?
  MEDICARE PART D PLAN CHOICE
  

• 

  Secretary Leavitt

  At 00:51:00
  1 minute

  Senator, we do have an epidemic of
  obesity, particularly among our young people, and the Centers
  for Disease Control and Prevention does have a role as would
  many other agencies at HHS, and we are prepared to join with
  you in every way we can to assure that that occurs. It is a
  very serious problem. I would like to just mention one other
  thing on the choice of plans. A statistic I learned that I
  think you will find interesting--we did develop a standard plan
  that was recommended by the Congress. Only 10 percent of the
  more than 30 million people now have chosen that plan, which
  tells me that it was very important to people that they have a
  choice and that they are able to choose a plan that fits their
  situation. I know from signing a lot of people up that if they
  had just had to deal with the standard plan, no matter what it
  was, it would not have served them well. The plan will be
  simplified in the next version in the same way that the market
  has allowed for it to become better. We are all going to get
  better at this as time goes on. In 1965, Medicare became law.
  It got better in 1966. It got better in 1967. The plans are now
  maturing. The pharmacies are learning how to use the system.
  The consumers are now better informed. We are getting better at
  what we do. This is a very important milestone--undoubtedly the
  most important thing that's happened in healthcare in the last
  40 years.
  

• 

  Senator Durbin

  At 00:52:31
  

  Thank you.
  

• 

  Senator Specter

  At 00:52:31
  7 seconds

  Thank you, Senator Durbin. Senator Kohl?
  FDA GENERIC DRUG APPLICATIONS
  

• 

  Senator Kohl

  At 00:52:38
  52 seconds

  Thank you, Mr. Chairman. Mr. Secretary, the
  FDA currently has a backlog of more than 800 generic drug
  applications, which is an all-time high, and FDA officials
  expect a record number of generic applications this year and an
  even larger backlog. The Congressional Budget Office estimates
  the use of generics provides a savings of $8 to $10 billion to
  consumers every year, and that doesn't include the billions of
  dollars more of savings to hospitals, Medicare, and Medicaid. I
  believe it's now more important than ever that we speed less
  expensive generic drugs to market, and I would think that you
  agree. So do you support an increase in the FDA budget to help
  reduce this backlog, and how much do you believe the FDA needs
  to efficiently reduce the backlog and pass along the savings to
  our people and also to the Federal Government?
  

• 

  Secretary Leavitt

  At 00:53:30
  23 seconds

  Senator Kohl, I concur with you that
  there is a need to speed generic drugs to market. It is a good
  thing for consumers. It's a good thing for healthcare. We are
  taking steps to do just that--not only to speed them, but to
  prioritize them. The budget that I have proposed is the budget
  we have proposed. We think we can accomplish that within the
  budget that we have suggested.
  

• 

  Senator Kohl

  At 00:53:53
  

  So you are not proposing any increase in the
  budget to help reduce this backlog?
  

• 

  Secretary Leavitt

  At 00:53:53
  15 seconds

  We are putting substantial focus on it,
  however, I will tell you, at FDA.
  

• 

  Senator Kohl

  At 00:54:08
  12 seconds

  I'd like to hope that's going to happen, that
  in fact we will get the kinds of numbers--increases that we
  need, that I think you believe we need, and you are saying that
  it's going to happen?
  

• 

  Secretary Leavitt

  At 00:54:20
  37 seconds

  Let me suggest one piece of information
  that might at least give you some insight into this. Of the 800
  applications, some of them are essentially for the same
  chemical or same molecule. So, we have begun to focus on those
  on in which there is not one generic or two generics. In other
  words, we want to get new generics into the market as opposed
  to a repeat of existing molecules that have been made available
  in some generic form. Now, we think we can do this better, and
  I think we have to.
  ADMINISTRATION ON AGING (AOA) BUDGET CUTS
  

• 

  Senator Kohl

  At 00:54:57
  1 minute

  Mr. Secretary, some of the most painful cuts
  in the budget are programs under the Administration on Aging,
  which takes a $28 million hit in programs like Meals On Wheels
  and family caregiver support services. That means that--well,
  in my State, Wisconsin senior population continues to grow from
  705,000 senior citizens in 2000 all the way up to 1.2 million
  senior citizens estimated for 2025. The budget does not account
  for the growth and the need for services. In addition, this
  budget proposes to eliminate Alzheimer's demonstration grants.
  In Wisconsin, the Alzheimer's Association is in its first year
  of a 3-year grant where they are working in Jefferson County on
  a program to open a dementia care clinic at a hospital in Fort
  Atkinson in Jefferson County. It is the first of its kind and
  the only one in the area, and they would lose their funding
  after this year should this budget prevail. So how do you
  explain your plan to cut these vital programs while at the same
  time our aging population is growing?
  

• 

  Secretary Leavitt

  At 00:56:07
  56 seconds

  Senator, you have listed a number of
  different areas, so let me do my best to respond to them and to
  give you a sense of what was going on in here when I made these
  decisions. I asked my budget team to essentially use a series
  of principles. One of them I asked them is to look for one-time
  funds. So part of that may be one-time funds where the project
  was completed and hence wasn't repeated. Another principle was
  looking for programs where purposes were involved in a number
  of different places at HHS. So, it's possible that some of
  those were there. There were also some funds that were carried
  over from existing programs that I didn't repeat. Now, I can't
  respond directly. If you'd like me to get to you specifically
  with those, I'd be happy to respond, but my guess is that we'll
  find that those principles are the ones that were involved in
  helping to make the decisions we did.
  

• 

  Senator Kohl

  At 00:57:03
  

  I would like some more information on those
  particular programs.
  

• 

  Secretary Leavitt

  At 00:57:03
  

  We'll be happy to respond to that.
  [The information follows:]
  Alzheimer's Demonstration Grants
  For 14 years under the Alzheimer's Disease Demonstration Grant to
  States Program (ADDGS), demonstrations in almost every State have
  highlighted successful, effective approaches for serving people with
  Alzheimer's. Similar to Preventive Health Services, it is time to put
  these models and the lessons that have been learned to work by moving
  them in AoA's core services programs--especially the National Family
  Caregiver Support Progam--as a number of States have already done.
  The fiscal year 2007 President's budget includes the elimination of
  ADDGS. This reflects that demonstration projects for individual with
  Alzheimer's and their caregivers are ready to be incorporated into the
  core activities of the National Aging Services Network.
  RURAL HEALTHCARE
  

• 

  Senator Kohl

  At 00:57:03
  43 seconds

  There are a number of programs in your
  Department aimed at bolstering rural health. Wisconsin, one of
  the biggest beneficiaries in the country, received over
  $600,000 from the Rural Hospital Flexibility Grant Program just
  last year. This funding is used at over 60 rural hospitals that
  serve anywhere from 10,000 to 12,000 patients every year. The
  President's budget proposes to eliminate the Rural Hospital
  Flexibility Grant Program, the rural and community access to
  emergency devices and area health education centers. So how are
  rural communities expected to meet their unique healthcare
  challenges when these very important resources are being
  severely diminished?
  

• 

  Secretary Leavitt

  At 00:57:46
  37 seconds

  I, like you, come from a State where
  rural medicine is a very important part of the social fabric of
  our State, and so I have become quite sensitive to this. We
  have adopted a slightly different strategy and that is to try
  to bolster the reimbursement rates for providers in those
  areas. I have also begun to look for places, frankly, where I
  wasn't able to justify or I wasn't able to see a result. We
  have invested about $25 billion through higher reimbursements
  in rural areas, and that's the way we are intending for many of
  those funds to be replaced.
  

• 

  Senator Kohl

  At 00:58:23
  

  Thank you, Mr. Chairman.
  CDC BUDGET CUTS
  

• 

  Senator Specter

  At 00:58:23
  2 minutes

  Thank you very much, Senator Kohl. On
  round two, we begin now with Mr. Secretary. With respect to the
  budget cuts, the Centers for Disease Control and Prevention has
  been cut by $67 million this year. They have enormous
  responsibilities in many many areas which I shall not
  enumerate, and now we are looking to give them even greater
  responsibilities if there should be a pandemic flu. Dr. Julie
  Gerberding, a very distinguished Director of CDC, has sat at
  your side testifying, preparing on this item. The physical
  plant of CDC was a shambles when I visited it several years
  ago. Prize-winning scientists were sitting in hallways, toxic
  materials were not under lock and key, and we have carved out
  funds within our existing budget to fund almost a billion and a
  half dollars. Immediately, Senator Harkin and I found $137
  million. Now, the budget has been cut from $159 million to $30
  million--a $129 million cut. I have been lobbied very heavily
  by people in the Atlanta community to find the funds, but I
  can't find money out of thin air. How can CDC be realistically
  cut and their physical plant not improved given the increased
  responsibilities that you as Secretary are calling on them to
  perform?
  

• 

  Secretary Leavitt

  At 01:00:25
  35 seconds

  Senator, may I acknowledge that the work
  that this committee has done to be supportive of CDC is not
  just noticeable, but revered, and I also acknowledge that the
  budget that we are presenting to you is reduced by $179
  million. Within that total reduction, the buildings and
  facilities as far as new construction does make up $129 million
  of that. We have felt in a budget with a reduction or a deficit
  that we have made substantial progress in this area.
  

• 

  Senator Specter

  At 01:01:00
  

  Should we stop the rebuilding?
  

• 

  Secretary Leavitt

  At 01:01:00
  26 seconds

  Well, we believe that we are capable of
  pausing on what will be a long-term strategy to continue to
  improve the facilities. We have made substantial progress. They
  are remarkable facilities, and I want to express my enthusiasm
  for how much the campus has been improved, and I want to
  acknowledge as well the role of you and Senator Harkin in
  accomplishing that.
  

• 

  Senator Specter

  At 01:01:26
  44 seconds

  Let me ask you to submit the balance of
  your answer in writing so I can go onto NIH.
  [The information follows:]
  CDC Physical Plant
  CDC has made remarkable progress on its Master Plan with $1.2
  billion invested to date to upgrade their facilities. Since 2000, CDC
  has initiated or completed the construction of more than 2.7 million
  gross square feet (gsf) of laboratory and facility space. For fiscal
  year 2007, we have included $30 million for repairs and improvements of
  CDC facilities.
  Consistent across HHS, our request focuses on finishing projects
  that are near completion and maintaining existing facilities. No funds
  are requested to initiate new construction.
  NIH RESEARCH GRANTS
  NIH tells us that there are going to be
  more than 800 applications--no, 656 fewer applications, fewer
  ideas submitted. I am worried that there may be some for breast
  cancer in that group or prostate cancer or Hodgkin's. How can
  the crown jewel of the Federal Government--perhaps the only
  jewel of the Federal Government be cut in funds?
  

• 

  Secretary Leavitt

  At 01:02:10
  43 seconds

  Senator, I want to tell you again I
  agree with you that funding new research ideas is a vital,
  important priority and that the fiscal year 2007 budget
  finances 275 more new grants. Now, one of the things you will
  see is that the actual number doesn't reflect it because a lot
  of expiring noncompeting grants diminish the number. When we
  implemented the effort that you instigated in this committee to
  double the amount of funding, there was a huge amount of new
  grants. So, what we are in is the first year where there are
  not as many non-competing continuation grants.
  

• 

  Senator Specter

  At 01:02:53
  49 seconds

  Well, there will be a lot of grant
  applications denied and a lot of existing grant applications
  denied. I get lots of letters, and one illustrates it from
  Pittsburgh--what am I going to do, Senator Specter, on the
  tremendous progress I am making if they are going to cut off
  the funding and the grant's going to be withdrawn? Really, Mr.
  Secretary, this--these are not issues that can be handled
  within the purview of the funds which you are allocated. We are
  going to have to have a fundamental reassessment as to
  priorities.
  My red light just went on, but you--the red light doesn't
  apply to you, Mr. Secretary, just to my questions.
  

• 

  Secretary Leavitt

  At 01:03:42
  47 seconds

  I'd like to acknowledge that we are
  working to find opportunities for new investigators and for new
  innovations, and one of the things we are doing, frankly, is
  reevaluating the grants. After they have been concluded, then
  people must recompete. In some cases, there are research
  projects that simply don't stack up to the opportunities
  because we have essentially been able to get the value from
  them that the peer review process believes would be to our
  advantage. So, we have begun to redeploy that into new grants.
  So, the actual number of new projects is higher than it appears
  because of the decline in the number of noncompeting grants.
  The red light's on, and I am sensitive to it.
  

• 

  Senator Specter

  At 01:04:29
  13 seconds

  Well, I turn now to the second round for
  Senator Harkin, and I am anxious to see if he follows his
  customary pattern of having really tough questions in the
  second round.
  

• 

  Secretary Leavitt

  At 01:04:42
  

  I am going to watch that too.
  NIH FUNDING LEVELS
  

• 

  Senator Harkin

  At 01:04:42
  2 minutes

  You're putting me on the spot here. Just to
  follow up on the distinguished chairman's line of questioning
  on NIH--when we worked hard in a bipartisan fashion with so
  many others to double the funding for NIH, it was not meant to
  just double it and then reach a plateau and plateau off. We did
  this because for years, it had been underfunded, and we wanted
  to get it back up to where it had been maybe 25 years ago and
  continue the funding up. It was not meant to get it up and say
  oh, now we can level off. That's what I see happening, and we
  are falling into the same pattern that we did 30 years ago when
  NIH all of a sudden had--it was getting out maybe 4 or 5 peer-
  reviewed grants per every 10 that came in--30 percent--40
  percent--50 percent. Now, we are getting down to 10 percent
  again. So it's like we're plateauing off again. So we are going
  to do this, and 10 years from now when we are probably gone,
  somebody will be kind of like well, we're going to have to
  double the funding again--not a good way to run things. So, I
  kind of plead with you use your counsels within the executive
  branch to tell them this is just not--this is not good. We--and
  I think that's why we had so much support for the amendment
  that Senator Specter offered on the $7 billion. A lot of it had
  to do with we are not going to let NIH fall into that same rut
  again. Well, that's a statement, and that's not a question--
  darn it. Well, I had another statement too.
  PANDEMIC INFLUENZA VACCINE
  I won't get into that, but on the flu vaccine, I do want to
  follow up a little bit on that. I have legislation in that
  would provide for a free flu shot for everyone every year--free
  flu--the Federal Government just provides a free flu shot. Now,
  why is that? Well, I am thinking about the vaccines and the--we
  have to get the infrastructure up for the pandemic flu that
  may--a lot of signs say is coming. As you point out, we have
  pandemics every so often. The infrastructure is not there to
  deliver it. So, if you had a free flu shot for everyone every
  year, not only do you save 35,000 lives a year perhaps or at
  least a good portion of those, you save a lot of
  hospitalizations, you save a lot of money if everyone got a
  free flu shot every year. Plus you get the States in to think
  about how you get it out there. You know, how do we start
  inoculating people in Wal-Marts and sporting centers, high
  schools, maybe even churches--after church or synagogue, they
  could get inoculated. In other words, to set up a system so
  that if a pandemic hits--bang, you have got it there and you
  can get it out. So I hope that you will take a look at that and
  see if there is any merit to getting a free flu shot for
  everyone out there, and I don't know if you want to respond to
  that or not.
  

• 

  Secretary Leavitt

  At 01:07:37
  14 seconds

  I'd love to respond just briefly. I
  believe one of the side benefits of our pandemic preparedness
  is the ability to take the annual flu vaccine dilemma off the
  table forever.
  

• 

  Senator Harkin

  At 01:07:51
  

  Yeah.
  

• 

  Secretary Leavitt

  At 01:07:51
  11 seconds

  We will have to have new capacity
  developed and have it operating continually to keep our
  capacity warm----
  

• 

  Senator Harkin

  At 01:08:02
  

  That's right.
  

• 

  Secretary Leavitt [continuing]

  At 01:08:02
  

  The best thing to develop--
  

• 

  Senator Harkin

  At 01:08:02
  

  That's right.
  

• 

  Secretary Leavitt [continuing]

  At 01:08:02
  

  Would be new annual flu
  vaccine.
  

• 

  Senator Harkin

  At 01:08:02
  

  That's right.
  

• 

  Secretary Leavitt

  At 01:08:02
  16 seconds

  So, I fully believe that we will see
  substantial increases in the availability of annual flu
  vaccine. How we distribute it, what the cost is and so forth
  will be a matter of policy, but we do need to increase it.
  DISEASE PREVENTION
  

• 

  Senator Harkin

  At 01:08:18
  2 minutes

  Well, I appreciate that. I will continue to
  push that idea that we ought to just provide a free flu shot.
  It's about--I estimated about--well, if you figure the flu
  shot's about $10 for 200 million people, that's about $2
  billion a year, but then the lives you save, the decrease in
  hospitalizations--maybe won't cost that much, so you get a win
  on the other side. Let me follow up on Senator Craig's
  comments. I told him when he walked out I was going to follow
  up on that, and I think I heard you say this was--your primary
  concern is to get prevention out there. When you mentioned the
  Medicare, that 8 percent GDP now going to 11 percent, the
  answer is not just to provide more drugs for the elderly Part
  D, and I don't mean to get into that contest there, but the
  answer is just to start getting prevention earlier in life to
  our kids as they go through life. Now, you know I have been
  very concerned about child obesity, diet-related chronic
  diseases, and one of the areas I am particularly interested in
  is the junk food marketing that targets kids--its impact. Last
  December, the IOM report, ``Food Marketing to Children: Threat
  or Opportunity?'' was released in December. It outlined a
  series of policy recommendations for government, the food and
  beverage industry, schools, parents--designed to limit junk
  food marketing and instead to utilize the power of marketing to
  promote healthier diets. What's that got to do with you? Well,
  the final recommendation of IOM was for the Secretary of Health
  and Human Services to designate a responsible agency to
  formally monitor and report regularly on the progress of all of
  the recommendations in the report. On March 3 of this year, 14
  Members of the Senate wrote to you urging you to implement this
  final recommendation so that Congress can monitor the progress
  made or not made toward the goal to see whether we need to do
  something in that regard. Now again, I am not--don't want to
  put you on the spot. We have not heard back from you, but that
  was only March--that was March 3. But again, Mr. Secretary,
  does HHS have any plans to take the action recommended by the
  Institute of Medicine to appoint a monitoring body on food
  marketing to children? If you don't have that answer, just----
  

• 

  Secretary Leavitt

  At 01:10:41
  

  I think I best respond to you----
  

• 

  Senator Harkin

  At 01:10:41
  

  Respond to me.
  

• 

  Secretary Leavitt [continuing]

  At 01:10:41
  11 seconds

  In writing. I have read
  about your concern about this, and I have begun to make
  inquiries as to what the current status is.
  [The information follows:]
  Institute of Medicine Policy Recommendations
  Obesity prevention is one of my top priorities. I have asked
  Assistant Secretary for Health, Dr. John Q. Agwunobi, to work with all
  of the HHS agencies and offices to explore this issue in depth, and
  consider appropriate actions consistent with existing authorities and
  available resources.
  In addition, last year HHS and the Federal Trade Commission (FTC)
  sponsored a joint workshop on the effects of food marketing on
  children. On May 2, HHS and the Federal Trade Commission released a
  report titled ``Perspectives on Marketing, Self-Regulation and
  Childhood Obesity'' that recognizes that advertising and marketing can
  play a positive role in encouraging sound nutrition and physical
  activity.
  The report includes a series of recommendations for food companies
  and the entertainment industry to assist Americans in identifying more
  nutritious, lower-calorie foods; increase efforts to educate parents
  and children about nutrition and fitness; and to bolster the self-
  regulatory strategies that are currently employed to monitor the
  marketing of food and beverages to youth. In addition, the Council of
  Better Business Bureaus and the National Advertising Review Council
  recently announced the formation of a working group effort to review
  and propose changes to the Children's Advertising Review Unit and its
  self-regulatory guidelines.
  

• 

  Secretary Leavitt

  At 01:10:52
  

  Senator, could I just make one other
  quick statement on a previous matter?
  

• 

  Senator Harkin

  At 01:10:52
  

  Sure.
  NIH RESEARCH
  

• 

  Secretary Leavitt

  At 01:10:52
  1 minute

  I'd just like to acknowledge that--the
  commitment that I feel to maintain the momentum of the research
  we have going at NIH. I'll probably be the only one who will
  say this is a good performance, but I have worked hard in a
  deficit reduction budget to make sure that we kept it at least
  flat. That is maybe good news only to me, but I wanted to tell
  you I have worked hard on it and will continue to. I also
  believe that what Dr. Zerhouni is doing with respect to trans-
  institute projects with his Roadmap is a very important part of
  the future. I would like to see a greater percentage of the $30
  billion that we spend there every year for research on inter-
  institute projects on basic science where all of the Institutes
  will benefit. I think that's a more efficient way than simply
  allocating to whatever disease or body part institute it is to
  have their own project, and I would like at some point to work
  with this committee to create a means by which that could be
  accelerated. We need more cross-institute work. We need to have
  less siloed research, multidisciplined research is clearly
  where we will find success in the future.
  

• 

  Senator Harkin

  At 01:12:25
  

  I appreciate that. That's good.
  COMPASSION CAPITAL FUND
  

• 

  Senator Specter

  At 01:12:25
  1 minute

  Thank you very much, Senator Harkin. Just
  one final question before we conclude the hearing--Mr.
  Secretary, I note that you and First Lady Laura Bush were in
  Pittsburgh to talk about the progress on the initiative in
  relating to gang control, a Capital Fund--Compassion Capital
  Fund program--antigang efforts through a community and faith-
  based organization back on March 7, 2005, and I would be
  interested to know what your thinking is on any progress there.
  The problem of gang warfare and shootings is epidemic and
  endemic. Just this morning, two teenagers were shot straight
  across from a high school in Philadelphia. The shootings are
  virtually a daily occurrence. Recently, there was a gunfight.
  Last week, two men were sentenced to life imprisonment for a
  massive gunfight outside an elementary school in February 2004
  which killed a 10-year-old. Are the funds made available
  through this new program that you and First Lady Laura Bush
  announced having any significant impact?
  

• 

  Secretary Leavitt

  At 01:14:04
  26 seconds

  We are nearing the point in our process
  of soliciting proposals. We have an obligation to come up and
  review it with the committee, and we intend to do that. I think
  at that point, we'll be in a position to evaluate together the
  kinds of things those funds are being used for. We are quite
  optimistic about it and hopeful that we can continue the
  momentum of the program.
  

• 

  Senator Specter

  At 01:14:30
  11 seconds

  Well, the announcement was sometime ago--
  March 7, 2005. Have any grants been made under the program in
  the intervening 15 months?
  

• 

  Secretary Leavitt

  At 01:14:41
  21 seconds

  We have not yet received proposals. We
  have an obligation to come to the committee to review them with
  you before we do that, and we will do so.
  

• 

  Senator Specter

  At 01:15:02
  19 seconds

  Well, we have put up a fair amount of
  money last year, and you are asking for $35 million more this
  year in a budget where there are cuts on some very vital
  programs, so we don't want to keep those funds held in
  abeyance. If they can be directed effectively to juvenile gang
  problems, we want to do that.
  

• 

  Secretary Leavitt

  At 01:15:21
  

  Thank you.
  

• 

  Senator Specter

  At 01:15:21
  16 seconds

  But if the money is not going to be
  awarded so that we can see some positive results from those
  funds, we want to use them elsewhere. Mr. Secretary, thank you.
  Senator Harkin?
  AGING SERVICES PROGRAMS
  

• 

  Senator Harkin

  At 01:15:37
  1 minute

  There was one thing I just--thank you, Mr.
  Chairman--that I wanted to bring up before you left, Mr.
  Secretary.
  When we first met when you came into my office when
  your appointment was scheduled, one of the things I remember we
  talked about was Systems Change Grants. Shortly after the
  Olmstead decision by the Supreme Court, Senator Specter and I
  started working to provide funds to help States get
  deinstitutionalized or to prevent institutionalization, but get
  people to deinstitutionalize. The Olmstead decision said you
  know, we had to provide the least restrictive environment. So
  we started this program called Real Systems Change Grants, and
  we started putting money in it to implement these programs. I
  believe, from all that I have known about it, it has been a
  success year after year. But every year, we have to fight to
  put the money into it. Again this year, the budget eliminates
  funding for the grants again--once again, so we fight again to
  put it in. Now, I now read that you have a new program in the
  area--in the administration on aging called Choices for
  Independence. Your budget's notes say, ``It seeks to reduce the
  current systemic bias in favor of institutional care.'' Well,
  that's what we were doing under Systems Change Grants. So
  again, what's the difference? Is this new program meant to
  replace it, to supplement it? I don't understand, and what's
  the difference between the two programs? Why would you
  eliminate the Systemic Change programs that we have been
  funding and now come up with this new program?
  

• 

  Secretary Leavitt

  At 01:17:04
  18 seconds

  Our purpose is to continue a portion of
  it in the Administration on Aging. We do believe, as you have
  stated, the need for us to deinstitutionalize and to have
  people served in the communities and homes, and that's the
  purpose. Perhaps we could provide you with more detail.
  

• 

  Senator Harkin

  At 01:17:22
  35 seconds

  Well, provide me with more details because
  it's not just aging. I mean, these are people with--a lot of
  the time physical disabilities, sometimes with mental
  disabilities, sometimes with both, but which has been proven
  that in many cases can live in a community setting. But a lot
  of times, it takes an initial expenditure made to get that
  done. After they get out, they're fine. As you know, there is a
  bias in Medicaid. Medicaid will pay for someone to be in an
  institution, but that institution wants to live in a community,
  they don't get that Medicaid support.
  

• 

  Secretary Leavitt

  At 01:17:57
  

  Something we'd like to change.
  

• 

  Senator Harkin

  At 01:17:57
  31 seconds

  Well, I would like to change that too.
  That's why we had this program. So I wish you would really look
  at that. We are mandated--Supreme Court mandated. We got to--
  they have got to deinstitutionalize. So, we need to change that
  bias in Medicaid, and I hope we can work with you to do that
  also to provide that, but I would like to know why this is
  different. You put it in aging, but it doesn't just cover
  aging, it covers everybody else. If you don't have it now----
  

• 

  Secretary Leavitt

  At 01:18:28
  

  I have asked my staff to respond as
  quickly as possible.
  

• 

  Senator Harkin

  At 01:18:28
  

  I'd appreciate that. Thank you very much,
  Mr. Secretary.
  

• 

  Secretary Leavitt

  At 01:18:28
  9 seconds

  Thank you.
  [The information follows:]
  Aging Services Programs
  Thank you for this opportunity to clarify my remarks at the recent
  hearing. The Choices for Independence program ``complements'' the Real
  Choice Systems Change initiative. This is a very important distinction.
  Allow me to explain further how the two initiatives fit together.
  Since fiscal year fiscal year 2001, Congress has appropriated over
  $245 million for the Real Choice Systems Change (RCSC) Grants for
  Community Living. In implementing the RCSC program, the Centers for
  Medicare & Medicaid Services (CMS) has awarded over 297 grants to all
  50 States, the District of Columbia (DC), and two territories. In
  fiscal year 2006, Congress appropriated an additional $25 million to
  fund a new round of RCSC grants. States and other eligible
  organizations, in partnership with their disability and aging
  communities, have the opportunity through RCSC to submit proposals to
  design and construct systems infrastructure that will result in
  effective and enduring improvements in community long-term support
  systems. These system changes are designed to enable children and
  adults of any age who have a disability or long-term illness to:
  --Live in the most integrated community setting appropriate to their
  individual support requirements and preferences;
  --Exercise meaningful choices about their living environment, the
  providers of services they receive, the types of supports they
  use, and the manner by which services are provided; and
  --Obtain quality services in a manner as consistent as possible with
  their community living preferences and priorities.
  As one component of their RCSC efforts, beginning in fiscal year
  2003, CMS began partnering with the Administration on Aging (AoA) to
  fund States to develop Aging and Disability Resource Centers (ADRC) to
  streamline access to long-term supports for people with disabilities of
  all ages. Simplified access to services, as represented through the
  ADRC initiative, is a key element of a State's overall systems change
  efforts. AoA resources for the ADRC initiative have come from the Older
  Americans Act Title IV Discretionary funding.
  Choices for Independence builds on the Older American's Act unique
  mission, to help our Nation prepare for the aging of the baby boom
  generation. Like the Real Choice grants, Choices addresses issues
  facing Americans who need comprehensive home and community-based
  systems of long-term care to delay or avoid nursing home placement.
  Choices for Independence, like RCSC, is designed to promote home and
  community-based care. Choices will focus mainly on linking Older
  Americans with available services, improving consumer-directed care,
  promoting evidence-based disease prevention, and targeting individuals
  not yet eligible for Medicaid to help prevent them from spending down
  to eligibility. In this way, Choices will complement the work that Real
  Choice grants have so effectively begun to improve long-term care (LTC)
  service delivery systems at the State level. In fiscal year 2007, as
  CMS works to implement the Deficit Reduction Act of 2005 (DRA), they
  will continue working with States to reform their LTC delivery systems
  by building on the successful aspects of Real Choice Systems Change
  grants.
  The fiscal year 2007 budget for AoA essentially folds ADRCs into
  the Choices for Independence initiative. The fiscal year 2007 budget
  includes $28 million for Choices for Independence, including an
  estimated $12.5 million for ADRCs; at the same time, CMS is requesting
  no new funding for Real Choice Systems Change grants. After 5 years,
  these grants have made great strides in helping States make
  improvements to their home- and community-based health care delivery
  service systems. The initiative provided useful lessons that led to the
  development and implementation of the Money Follows the Person
  demonstration (focus is consumer-directed care) as well as the State
  plan options for home- and community-based services in the Deficit
  Reduction Act (DRA). While Choices for Independence does not currently
  assume funding from other agencies, AoA will continue to work closely
  on this initiative with CMS and the other HHS agencies that have been
  involved in the activities that led to its development.
  

• 

  Senator Specter

  At 01:18:37
  2 minutes

  Thank you very much, Secretary Leavitt.
  Thank you for what you are doing on the pandemic problem, and I
  urge you to do more on acquainting America with the nature of
  the worst-case scenario--how serious it could be and what
  people ought to be doing individually--and your efforts to stir
  up activity by state and local agencies to deal with the
  problem. I would appreciate your assistance, your thought on
  what we can do about these budget shortfalls and about what can
  be done on advocacy within the administration, within the
  Office of Management and Budget which has the final word here
  and really with the President himself. I think that there is
  not a recognition as to what this means on a lot of very
  difficult very important agencies like the Centers for Disease
  Control and Prevention. These cuts on so many of the health
  agencies are just unacceptable. We can't solve that this
  morning, and you can't solve it, and there may be--have to be
  some action on Congress somewhere to find something that can
  give so these cuts are not implemented. Thank you.
  There will be some additional questions
  which will be submitted for your response in the record.
  Thank you all very much. The subcommittee
  will stand in recess to reconvene at 8:30 a.m., Friday, May 19,
  in room SD-192. At that time we will hear testimony from the
  Hon. Elias A.
  Zerhouni, M.D., Director, Department of Health
  and Human Services.