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Statement by
Kathleen Sebelius, 
Department of Health and Human Services

The President’s FY 2011 Budget  

Senate Finance Committee Hearing
United States Senate

Wednesday, February 03, 2010

Chairman Baucus, Ranking Member Grassley, and Members of the Committee, thank you for inviting me here to discuss the President’s FY 2011 Budget for the Department of Health and Human Services.

The FY 2011 Budget builds on the themes President Obama laid out in his State of the Union: strengthening security and opportunity for America’s working families, investing to build a foundation for future growth, and bringing a new level of accountability and transparency to government.  And it abides by President Obama’s pledge to root out programs that are redundant, obsolete, or ineffective.

Under this budget, we will provide the health and human services that Americans depend on more effectively, slashing waste and focusing programs on results.  And we’ll make many of the necessary investments our country has been putting off for years, including investments in fighting health care fraud, strengthening our public health infrastructure, and getting serious about health and wellness. 

Today, I’d like to give you a broad overview of my department’s budget priorities, focusing specifically on areas like Medicare, Medicaid and CHIP where we’ll have the chance to work closely together in the coming years.  Then I’ll look forward to taking some of your questions.

Fighting Waste and Fraud

HHS is guided by a constant vigilance about using taxpayer dollars wisely.  At a time when many families are scraping together every last dollar to pay their medical bills, fraud, waste, and abuse in our health care system are unacceptable.

That’s why our budget contains a historic investment in cracking down on the health care fraudsters who steal from taxpayers, endanger patients, and jeopardize Medicaid and Medicare’s future. 

This investment will allow us to build on efforts that began last May, when President Obama instructed Attorney General Holder and me to create a new Health Care Fraud Prevention and Action Task Force, known as HEAT for short. 

HEAT is an unprecedented partnership that brings together high-level leaders from both departments so that we can share information, spot trends, coordinate strategy, and develop new fraud prevention and prosecution tools.

For example, we have new systems that allow us to identify likely fraud by analyzing suspicious patterns in claims data.  This budget sends a clear message to those who commit fraud: stop stealing from seniors and taxpayers, or we’ll put you behind bars.

Quality and Access to Health Care

Almost one year ago, we expanded access to health care to millions of children with the CHIP Reauthorization Act.  In 2009, we know that more than two and half million kids who were previously uninsured got health care coverage from Medicaid or CHIP.

Now, as part of that landmark legislation, our budget contains funds to help us find the estimated five million remaining children who are eligible for CHIP or Medicaid but haven’t signed up, and get them enrolled so they can start getting the health care they need.

Our budget also extends the Recovery Act’s Federal Medical Assistance Percentage (FMAP) increase through June, 2011 to give states some needed relief and help them continue to support critical health care services for the children and families who depend on Medicaid.

The budget ensures access to up-to-date health care for seniors and people with disabilities who depend on Medicare.  New, targeted investments in the Centers for Medicare and Medicaid Services (CMS), will help the agency to meet the demands of a growing beneficiary population, and speed its transformation from claims processing to actively purchasing quality care. 

We’re investing in next-generation health care technologies to help providers raise the quality of care for all Americans. We’re investing in electronic health records, which reduce medical errors, help coordinate care and cut costs, and paperwork.

We’re funding patient-centered research projects, which will put the best and most up-to-date information in the hands of doctors and patients when they make important health decisions.

And, the budget assumes a zero percent update for physician payments.  Everyone agrees that the scheduled Medicare physician payment cuts are not sustainable and would damage access to care for our Medicare beneficiaries.  So we’re recognizing that with an honest budget that reflects Congress’s actions in this area.  And we look forward to working with you to reform payment policy to give physicians incentives to improve quality and efficiency.

Beyond these essential investments, the budget expands access in other ways, including—

  • An investment in neighborhood community health centers that will give them the resources to provide high-quality primary care for 20 million people a year – 3 million more than were served in 2008.
  • And investment in our health care workforce that will increased capacity at nursing schools, and help to more low-income and minority students so they can realize their dreams of becoming doctors.
  • And increased funds for the Indian Health Service.  American Indians and Alaska Natives historically haven’t gotten the care they deserve, but we are working to change this.  This is the principle that we are trying to establish throughout our healthcare system - that regardless of race, ethnicity, gender, disability, or geography every American deserves high quality and affordable care.

To help more Americans live healthy lifestyles, our budget continues the work of rebuilding our public health infrastructure.  What we have today is a sick care system, where we wait until something goes wrong to intervene.  We’re trying to build a true health care system that promotes better health all the time.

This follows a major investment in prevention and wellness in the American Recovery and Reinvestment Act that will support similar programs in communities around the country, and it’s going to allow us to really attack obesity, a problem that costs our health care system almost $150 billion a year.

Our budget also contains a significant increase in funding to help us build a 21st-century food safety system to go with our 21st-century food market, where nearly half our fruit and over three-quarters of our seafood come from overseas.  These funds will help us react quickly to and ultimately prevent outbreaks like the tainted salami that was recently recalled. 

And this budget makes a serious investment in the battle against smoking.  After falling for years, the number of Americans who smoke now hovers right around 20 percent.  This budget provides significant funds for educating our children about the dangers of smoking, and new research to help us develop better ways to stop smoking, building on the progress made with the Family Smoking Prevention and Tobacco Control Act last year.

Public Health Security

While we continue to do the steady work of promoting health on a day-to-day basis, strengthening our public health system bit by bit, we must also prepare for public health emergencies, whether their cause is Mother Nature or our fellow man.   

Some of our best defenses against these threats are medical countermeasures: the vaccines, treatments, and respirators, among other things, that help reduce the spread of infections, reduce health consequences, and ultimately save lives. 

This flu season, we got a wakeup call about the readiness of our countermeasures.  Even as our scientists and their private sector partners scrambled to produce a safe, effective vaccine in 6 months – 3 months faster than it usually takes – we saw temporary vaccine shortages because the vaccine grew slowly in chicken eggs, an unpredictable process we’ve used for the last fifty years.

Our budget includes nearly a half-billion dollars to upgrade these countermeasures.  Just as important, our budget contains significant funds for the NIH research that produces many of the breakthroughs that make these countermeasures possible. We’re also undertaking a comprehensive review of our entire countermeasure production process from the laboratory to the doctor’s office, and we’ll have a report ready a little later this year.

We want to have more promising discoveries, more advanced development, more robust manufacturing, better stockpiling, and more effective distribution practices.  Our ultimate goal is to have the kind of biodefense system that is so dependable and robust that potential terrorists give up and say, “It’s not worth the effort,” and when Mother Nature strikes we are ready to respond.

Economic Security

Strengthening America’s health is one-half of our mission, and this budget goes along way toward restoring health security for Americans.   But the other half of our mission is providing security and opportunity to America’s working families.

The future of America rests with our children.  So our budget nearly doubles Early Head Start, provides enough resources for Head Start to serve 66,000 more young children than it did 2 years ago, and provides incentives and relief for parents to cover the cost of child care.

But middle-class families aren’t just taking care of their children these days.  Often, we’re also dealing with aging parents.  Eighty percent of long-term care services are provided by family members, which is great for older Americans to be cared for by loved ones but can be financially and physically exhausting for the caregivers.

So in our budget, we’re providing significant new support for caregivers.  Last week during a meeting of the Middle Class Task Force, the President and Vice President highlighted several of these programs, whether it’s help with counseling and information about caring for elders, or an adult day care center where they can drop a parent off for the day, or transportation to get a senior to the doctor or a store.

This investment is going to give caregivers relief and help them keep loved ones at home for as long as possible.

Finally, this budget extends the relief we provided last year for states and communities facing devastating budget cuts.  This will help states maintain essential supports and services at a time when working Americans need them most.


In his State of the Union Address, President Obama urged Americans to rise to the challenges posed by our current difficulties, and pledged that as a country we would face these challenges together. I believe this budget lives up to that commitment.

We target relief directly to the working Americans who need it most and make long-overdue investments to strengthen our health care and public health systems, keeping all of us healthy and more secure.

At the same time, we recognize the fiscal challenges facing this nation. We take our responsibility to the American taxpayer seriously.  This budget attacks waste and fraud aggressively and incorporates the hard work by our leadership team to eliminate programs that sound good on paper but don’t get results.

This testimony reflects just some of the ways that HHS programs improve the everyday lives of Americans.  But my department can’t accomplish any of these goals alone. It will require all of us to work together.  And I look forward to working with you to advance the health, safety, and well-being of the American people.

Thank you for this opportunity to speak with you today. I look forward to answering your questions.

Last revised: February 25,2010