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Testimony

Statement by
Michael Leavitt
Secretary
U.S. Department of Health and Human Services

on
FY 2008 Budget 

before
Committee on Appropriations
Subcommittee on Labor, Health and Human Services, Education, and Related Agencies
U.S. House of Representatives


Tuesday February 27, 2007

Good afternoon Mr. Chairman, Congressman Walsh, and members of the Subcommittee. I am honored to be here today to present to you the FY 2008 President's Budget for the Department of Health and Human Services (HHS).

For the past six years, this Administration has worked hard to make America a healthier, safer and more compassionate nation. Today, we look forward to building on our past successes as we plan for a hopeful future.

The President and I have set out an aggressive, yet responsible, budget that defines an optimistic agenda for the upcoming fiscal year. This budget reflects our commitment to bringing affordable health care to all Americans, protecting our nation against public health threats, advancing medical research, and serving our citizens with compassion while maintaining sensible stewardship of their tax dollars.

To support those goals, President Bush proposes total outlays of nearly $700 billion for Health and Human Services. Our proposed FY 2008 discretionary budget authority totals $67.6 billion. Within this total, our request for discretionary budget authority for programs under the jurisdiction of this Subcommittee totals $62.6 billion.

For 2008, our budget reflects sound financial stewardship that will put us on a solid path toward the President's new goal of achieving a balanced budget by 2012.

I will be frank with you. There will never be enough money to satisfy all wants and needs, and we had to make some tough choices.

We take seriously our responsibility to make decisions that reflect our highest priorities and have the highest pay-off potential. We recognize that others may have a different view, and there are those who will assume that any reduction signals a lack of caring. But reducing or ending a program does not imply an absence of compassion. We have a duty to the taxpayers to manage their money in the way that will benefit America the most.

I would like to spend the next several minutes highlighting some of the key programs and initiatives that will take us down the road to a healthier and safer nation.

Transforming the Health Care System

  • Helping the Uninsured
    • The President has laid out a bold path to strengthen our health care system by emphasizing the importance of quality, expanded access, and increasing efficiencies.
    • The President's Affordable Choices Initiative would help States make basic private health insurance available and would provide additional help to Americans who cannot afford insurance or who have persistently high medical expenses.
    • It moves us away from a centralized system of Federal subsidies; and,
    • It allows States to develop innovative approaches to expanding basic health coverage tailored to their populations
    • The President's plan to reform the tax code with a standard deduction ($15,000 for families; $7,500 for individuals) for health insurance will make coverage more affordable, allowing more Americans to purchase insurance coverage.
  • Value-driven and Personalized Health Care
    • The Budget provides funds to accelerate the movement toward personalized medicine, in order to provide the best treatment and prevention for each patient, based on highly-individualized information.
    • It provides $15 million for expanding efforts in personalized medicine using information technology to link clinical care with research to improve health care quality while lowering costs; and,
    • It will expand the number of Ambulatory Quality Alliance Pilots from 18 sites in FY 2007.
  • Health IT
    • The President's budget proposes $118 million for the Office of the National Coordinator for Health Information Technology to keep us on track to have personal electronic health records for most Americans by 2014 by supporting our efforts to:
      • Implement agreed upon public-private health data standards.
      • Initiate projects in up to twelve communities based on recommendations of the American Health Information Community. These projects will demonstrate the value of widespread availability and access of reliable and interoperable health information.
      • Develop the Partnership for Health and Care Improvement, a new, permanent non-governmental entity to effect a sustainable transition from the AHIC.

Addressing the Fiscal Challenge of Entitlement Growth
The single largest challenge we face is the unsustainable growth in entitlement programs such as Medicare and Medicaid. The Administration is committed to strengthening the long-term fiscal position of Medicare and Medicaid and to moderating the growth of entitlement spending. The FY2008 Budget begins to address Medicare and Medicaid entitlement spending growth by proposing a package of reforms to promote efficiency, encourage beneficiary responsibility, and strengthen program integrity.

Medicaid

Medicaid is a critical program that delivers compassionate care to more than 50 million Americans who cannot afford it. In 2008 we expect total Federal Medicaid outlays to be $204 billion, which is an increase of $12 billion over last year.

The Deficit Reduction Act (DRA) that President Bush signed into law last year has already transformed the Medicaid program. The DRA reduced Medicaid fraud and abuse and also instituted valuable tools for States to reform their Medicaid programs to resemble the private sector. While these changes made a positive impact, more change is needed.

In FY 2008, we are also proposing a series of legislative and administrative changes that will result in a combined savings of $25.3 billion over the next five years, which will keep Medicaid up to date and sustainable in the years to come. Even with these changes, Medicaid spending will continue to grow on average more than 7 percent per year over the next five years.

Along with the fiscally responsible steps we are taking with Medicaid, we are following the same values in modernizing Medicare.

Medicare

Gross funding for Medicare benefits, which will help 44.6 million Americans, is expected to be nearly $454 billion in FY 2008, which is an increase of $28 billion over the previous year.

In its first year, the Medicare prescription drug benefit has been an unparalleled success. On average, beneficiaries are saving more than $1,200 annually when compared to not having drug coverage, and more than 75 percent of enrollees are satisfied with their coverage. Because of competition and aggressive negotiating, payments to plans over the next ten years will be $113 billion lower than projected last summer.

We also plan a series of legislative reforms to strengthen the long-term viability of Medicare that will save $66 billion over five years and slow the program's growth rate over that time period from 6.5% to 5.6%.

Similarly, we are proposing a host of administrative reforms to strengthen program integrity; improving efficiency and productivity; and reduce waste, fraud and abuse---all of which will save another $10 billion over the next five years.

Reducing Health Care Fraud and Abuse
Reducing health care fraud and abuse is a major priority of this Administration and additional resources are necessary if this Department is to maintain current efforts as well as extend those efforts to the new Medicare drug benefit and Medicare Advantage programs. The President's Budget proposes to expand funding for this essential work by $183 million. We estimate this would save almost double that amount in trust fund dollars. We seek your help in assuring this proposal is fully funded.

Promoting Health and Preventing Illness
We are also taking steps in other ways to transform our health care system. Helping people stay healthy longer also helps to reduce our nation's burden of health care costs. The President's Budget will fund $17 million for CDC's Adolescent Health Promotion Initiative to empower young people to take responsibility for their personal health.

Providing Health Care to Those in Need
SCHIP expires at the end of FY 2007 and the President's budget proposes to reauthorize SCHIP for five more years, to increase the program's allotments by about $5 billion over that time, to refocus the program on low-income uninsured children, and to target SCHIP funds more efficiently to States with the most need.

The President's budget proposes nearly $2 billion to fund health center sites, including funding supporting the President's High Poverty County Initiative. In FY 2008, these health center sites will serve more than 16 million people.

We are also proposing nearly $3 billion to support the health care needs of those living with HIV/AIDS and to expand HIV/AIDS testing programs nationwide.

In addition, we are requesting that Congress fund $25 million in FY 2008 for treating the illnesses of the heroic first responders at the World Trade Center.

Protecting the Nation Against Threats
We must continue our efforts to prepare to respond to bioterrorism threats and a potential influenza pandemic.

Some may have become complacent in the time that has passed since the anthrax-laced letters were delivered in 2001, but we have not. Others may have become complacent because a flu pandemic has not yet emerged, but we have not.

  • The President's budget calls for nearly $4.3 billion for bioterrorism spending.
  • In addition, we are requesting $154 million in funding to expand, train, exercise, and coordinate medical emergency teams to respond to a real or potential threat.
  • The President's budget requests $1.2 billion to continue our pandemic flu preparedness efforts to increase vaccine production capacity and stockpiling; buy additional antivirals; develop rapid diagnostic tests; and enhance our rapid response capabilities. Included within this total is $870 million in no-year funding for developing and purchasing countermeasures, and $322 million to support critical agency efforts to prepare for a pandemic.
  • In FY 2008, the Advanced Research and Development program is requested within the Office of the Assistant Secretary for Preparedness and Response (ASPR). Total funding of $189 million will improve the coordination of development, manufacturing, and acquisition of chemical, biological, radiological, or nuclear (CBRN) Medical Countermeasures (MCM).

Advancing Medical Research
The research sponsored by NIH has led to dramatic reductions in death and disease. New opportunities are on the horizon, and we intend to seize them by requesting $28.9 billion for NIH.

Our proposal in FY 2008 will allow NIH to continue to place a high priority on promoting new research ideas, chosen competitively, as well as continuing to support innovative, crosscutting endeavors through the Roadmap for Medical Research, and encouraging talented scientists in this field.

Protecting Life, Family and Human Dignity
Our budget request would fund $884 million in activities to help those trying to escape the cycle of substance abuse; children who are victims of abuse and neglect; those who seek permanent, supportive families through adoption from foster care; and the thousands of refugees that come to our country in the hopes of a better life.

Our budget request also includes $1.3 billion to help millions of elderly individuals and their family caregivers to remain healthy and independent in their own homes and communities for as long as possible, including the $28 million for our Choices for Independence initiative that will help states create more cost-effective and consumer-driven systems of long-term care.

Improving the Human Condition Around the World
If we are to improve the health of our own people, we must reach out to help other nations to improve the health of people throughout the world.

Our budget requests $1.5 million to launch a new Latin America Health initiative to develop and train a cadre of community health care workers who can bring much needed medical care to rural areas of Central America.

CDC and NIH will continue to work internationally to reduce illness and death from a myriad of diseases, and in so doing will support the President's Malaria Initiative; the Global Fund to Fight HIV/AIDS, Tuberculosis, and Malaria; and the President's Emergency Plan for AIDS Relief.

These are just some of the highlights of our budget proposal. Both the President and I believe that we have crafted a strong, fiscally responsible budget at a challenging time for the federal government, with the need to further strengthen the economy and continue to protect the homeland.

We look forward to working with Congress, States, the medical community, and all Americans as we work to carry out the initiatives President Bush is proposing to build a healthier, safer and stronger America.

Thank you for the opportunity to testify. I will be happy to answer your questions.

Last revised: June 18, 2013