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Testimony on the President's FY 2001 Budget for the Department of Health and Human Services by The Honorable Donna Shalala
U.S. Department of Health and Human Services

Before the House Committee on Appropriations, Subcommittee on Labor, Health and Human Services, and Education
February 8, 2000

Good morning, Chairman Porter, Congressmen Obey, and members of the Subcommittee. I am pleased to appear before you today to discuss the President's FY 2001 budget for the Department of Health and Human Services.


Before I discuss our plans for confronting the challenges that lie ahead, I think it is important first to take a look back at where we have been. Over the past seven years, we have worked together to develop innovative solutions that have improved the health and well being of all Americans. Let me note just a few of these accomplishments:

Working together, we have expanded enrollment in Head Start from approximately 714,000 children in 1993 to an estimated 950,000 in this budget, while at the same time improving the quality of the program, thereby providing a strong foundation for success for hundreds of thousands of low-income children.

Two years ago, the President called for an increase of almost 50 percent over five years in the NIH budget as part of his Research for America Fund. Since that time the NIH budget has increased by over $4.2 billion and, with the funding proposed by the President this year, we will be ahead of schedule in reaching our goal. In addition, we have increased the number of Research Project Grants funded by the National Institutes of Health by over 30 percent, from 23,952 in FY 1993 to 31,524 in this budget. This represents a dramatic expansion of our scientific knowledge base that will pave the way for biomedical advances in the years ahead.

We have nearly tripled the number of people receiving access to combination drug therapy under the Ryan White Care Act AIDS Drug Assistance Program (ADAP), from almost 49,000 in 1994 to approximately 141,000 with this budget.

We have improved the health of our seniors by increasing the number of healthy meals served to older Americans under the Administration on Aging's Nutrition programs from 240 million in FY 1994 to 279 million in this budget year.

With the enactment of the Health Insurance Portability and Accountability Act of 1996, we have helped individuals keep their insurance when they change jobs, guaranteed renewability of coverage, and helped ensure access to health insurance for small business.

Together with the states, we have undertaken the largest health care coverage initiative since Medicare, namely the State Children's Health Insurance Program. In just the two years since its enactment, the number of children enrolled in SCHIP -- now almost 2 million -- has doubled. In addition, the number of states covering children up to 200 percent of poverty has increased by more than sevenfold.

Last year, the President signed into law the bipartisan Ticket to Work and Work Incentives Improvement Act that allows people with disabilities to maintain their Medicare and Medicaid coverage when they go to work. It also includes a new demonstration program that allows people with disabilities who are still working and are not sufficiently disabled to qualify for Medicaid to obtain coverage and reforms the training system for people with disabilities.

We created the Vaccines for Children Program, to finance immunizations for children without private health coverage. Childhood immunization coverage rates in 1998 were the highest ever recorded. Ninety percent of toddlers in 1996, 1997 and 1998 received the most critical doses of each of the routinely recommended vaccines, surpassing the President's 1993 goal.

We also have undertaken a number of new initiatives to target emerging threats and address long-standing problems. We have launched new initiatives to promote research on disease prevention and health care quality, to improve the quality of nursing home care, to provide support for our nation's children's hospitals, and to increase the number of children adopted from our child welfare systems. To educate Medicare beneficiaries about their health care options, we have implemented the largest peacetime outreach campaign ever undertaken by the federal government. We have stepped up efforts to increase the availability of substance abuse treatment, to eliminate racial and ethnic health disparities, and to address the AIDS crisis in minority communities. And we have invested significant resources to prepare the nation to respond to the medical and public health consequences of chemical and bioterrorist attacks. We have launched new initiatives to protect the rights of Americans in managed care and protect the privacy of electronic medical records held by health plans, health care clearinghouses, and health care providers.

While we should be proud of past accomplishments, we must continue to address ongoing health and human services challenges. These include: expanding access to quality health care and extending protections to the uninsured and at-risk; supporting working families and bettering the lives of our nation's children; encouraging greater scientific advancement; and creating a healthier America.

Thanks to our continuing economic prosperity, we have a great opportunity to meet these challenges. In the last two years, we have recorded back-to-back surpluses for the first time since the 1950's. The combination of a strong economy, fiscal discipline, and unprecedented advances in our scientific knowledge give us the opportunity to make the investments needed to build on all of our achievements over the last seven years.

Mr. Chairman, the total HHS budget request for FY 2001 is $421.4 billion (Outlays). The amount before this subcommittee totals $267 billion (BA), of which $44.8 billion is discretionary. This discretionary component represents an increase of $4.5 billion over last year. Let me now highlight the main components of our FY 2001 budget request.


We live in an age of remarkable advances in the biomedical sciences. Yet too many of our citizens are denied the benefits of these advances because they lack access to quality, affordable health care. Throughout his Administration, President Clinton has made expanding access to health care one of his most important goals. Working with the Congress, we have had some notable successes, including enactment of the State Children's Health Insurance Program, which today covers nearly 2 million children; the Health Insurance Portability and Accountability Act, which allows workers to keep health insurance coverage when they change jobs and limits the ability of insurers to deny coverage based on pre-existing conditions; and most recently, the Ticket to Work and Work Incentives Improvement Act, which allows disabled Americans to return to work without losing their Medicare and Medicaid coverage.

But even with these successes, approximately one-seventh of the population still lacks health insurance. Our budget seeks to address these problems through a number of initiatives designed not only to expand access to care but to improve the quality of health care as well.

Expanding Coverage under Medicaid and SCHIP

The State Children's Health Insurance Program (SCHIP), enacted in 1997, now provides nearly two million low-income, uninsured children with access to health insurance, preventive medicine, and immunizations. While the success of the SCHIP program has greatly enhanced the health of these children, many of their parents remain uninsured. And there still are many children who are eligible for Medicaid and SCHIP who are not currently enrolled. With the country's resources growing, the economy booming, and the SCHIP program showing great progress, it makes sense to take advantage of this opportunity to implement new options for low-income working families without health insurance. The President's budget includes proposals to create a new "FamilyCare" program that expands coverage to the parents of children eligible for Medicaid and SCHIP, increase outreach efforts, and simplify the enrollment process.

Under FamilyCare, parents would be enrolled in the same programs as their children, and states would receive the higher SCHIP matching payments for expanding coverage to parents. To ensure that the original intent of the SCHIP program is met, states would be required to expand eligibility for children up to 200 percent of poverty before accessing funds to cover parents. As is the case with children, priority in enrollment would be given to lower-income parents before covering higher-income parents.

If, after five years, some states have not expanded coverage of parents to at least 100 percent of poverty, they would then be required to do so. By 2006, all poor parents would be eligible for coverage just as their children are today. We believe that enrolling parents in Medicaid or SCHIP will not only improve their health, but will also make it easier for entire families to access insurance through one source, thereby increasing the number of children participating in the program. This FamilyCare initiative is a practical, targeted approach to encouraging greater insurance coverage. Over eighty percent of parents of uninsured children under 200 percent of poverty are themselves uninsured, while nearly two-thirds of uninsured parents (6.5 million) have children eligible for Medicaid or SCHIP. The budget proposes to extend and improve the transitional Medicaid program, which provides important health insurance coverage for families moving from welfare to work. Our proposals would use existing state administrative and delivery systems and no new bureaucracies would be needed.

In addition to covering parents, states also will be given the option to extend Medicaid coverage to young people ages 19 and 20. If they do, they will also have the option to cover kids up to age 20 under SCHIP. To further increase Medicaid and SCHIP enrollment, the President's budget supports new efforts to simplify eligibility and aggressively expand efforts to enroll eligible children identified through school lunch programs. To ensure that children are not overlooked in States that have different rules and procedures for Medicaid and SCHIP, we also propose to require that States conform certain eligibility rules between Medicaid and SCHIP. Our budget also proposes $10 million in mandatory funding for competitive grants to States that develop innovative plans for outreach to the homeless and the coordination of services across the Medicaid, SCHIP, TANF, Food Stamps, and Mental Health and Substance Abuse programs. If they do, they also will have the option to cover kids up to age 20 under SCHIP.

Finally, our budget seeks to reverse some of the inequities that have resulted from the 1996 welfare reform legislation by giving states the option to provide Medicaid or SCHIP coverage to legal immigrant children and pregnant women. The budget also proposes to restore SSI and Medicaid eligibility to legal immigrants who entered the United States after the enactment of welfare reform, become disabled and live in the U.S. for five years. Parents of legal immigrant children would also be eligible for coverage under our FamilyCare proposal. In addition, the budget seeks to restore Food Stamps eligibility to legal immigrants who were in the country before the enactment of welfare reform and either subsequently reach age 65 or have children who are eligible for Food Stamps.

In addition, the budget will take an important step to improve the health of low-income Americans by ensuring that they have access to drugs that help them quit smoking. The budget will ensure every state Medicaid program covers both prescription and non-prescription smoking cessation drugs, removing a special exclusion now in law, and requiring states to cover these drugs as they cover all other FDA-approved drugs.

Modernizing and Strengthening Medicare

For the last thirty-five years, Medicare has been the cornerstone of our efforts to ensure that all seniors have access to the quality health care they need and deserve. However, since its enactment in 1965, much in the health care system has changed, not only the types of care provided and the setting in which these services are performed, but also the makeup of the population that receives Medicare. These changes have dramatically increased the financial strains on the Medicare program, and current actuarial projections show that by approximately 2015, just as the large baby-boom generation is becoming eligible, Medicare may be faced with insolvency.

The Clinton-Gore Administration budget also dedicates $432 billion over ten years to Medicare to extend the solvency of the Trust Fund until at least 2025 and to create a voluntary, affordable prescription drug benefit. It includes a new, multi-billion dollar reserve fund that can be used to add protections against catastrophic drug costs to the President's proposed drug benefit. This financing commitment is part of a comprehensive plant to modernize and strengthen Medicare to ensure that it can continue to deliver high quality, affordable care in the 21st Century. These steps include making the program more competitive; introducing private sector purchasing and management tools; and continuing our historic fight against fraud, waste, and abuse.

Over the last thirty-five years, the development of new prescription drugs to treat a variety of conditions has helped Americans to live longer and higher quality lives. The centerpiece of the President's plan to modernize Medicare is a voluntary prescription drug benefit that would be affordable and accessible to all beneficiaries. This benefit, which would rely on market competition to obtain lower prices, would have no deductible, and would pay half of all costs up to $2,000 in FY 2003, increasing to $5,000 by FY 2009. The plan would fully pay for costs for beneficiaries with incomes below 135 percent of the poverty level, and provide premium assistance for those with incomes between 135 and 150 percent of the poverty level, while providing financial incentives to employers to continue offering prescription drug benefits to current retirees.

The President's budget also proposes much-needed incentives to increase the utilization of preventive services by Medicare beneficiaries. Our plan would eliminate existing coinsurance and deductibles for covered preventive benefits, including colorectal and prostate cancer screenings, pelvic exams, mammographies, bone mass measurement, and diabetes self-management. The President also is planning to develop a three-year demonstration for smoking cessation services. By lowering the cost and expanding the availability of these services, we will not only save lives, but will minimize the need for more extensive, and expensive, treatments in the future.

While we work to strengthen Medicare to better serve current beneficiaries, our budget also includes proposals to expand access to Medicare to groups who face barriers to health insurance coverage. These proposals will allow Americans ages 62 to 65 to buy into Medicare by paying a premium, provide a similar buy-in option for displaced workers ages 55 to 62 who have lost employer-provided health coverage, and provide COBRA coverage to retirees between the ages of 55 and 65 whose companies have reneged on their promise to provide health benefits. To make these buy-in options more affordable, the budget includes a proposal for a tax credit, available to displaced workers over age 55 as well as all eligible persons ages 62 to 64, that would be equal to 25 percent of the buy-in premiums.

As important as our efforts to modernize the Medicare benefit package are, Medicare recipients will be able to realize the full benefits of these new services only when we give equal attention to strengthening and modernizing the management of our health programs. The President's budget continues efforts to improve the Health Care Financing Administration's (HCFA) management, building on the five-part reform plan advanced last year to increase flexibility while also increasing accountability. Our budget also maintains our commitment to fighting fraud and abuse, investing in a new Medicare contractor oversight initiative to address a number of concerns outlined in OIG and GAO reports last year. This initiative includes funding to improve evaluation of program operations, establish financial management controls at each contractor, develop an integrated general ledger accounting system that will ensure clean audit opinions into the future, and monitor and oversee these changes at all contractors.

These actions will augment our already successful efforts at combating fraud, waste, and abuse in the Medicare and Medicaid programs. As many of you may already be aware, the Department of Justice recently announced that, in conjunction with HHS, it had achieved a $486 million settlement with a national health provider that had been defrauding the Medicare program. This action is in addition to results reported in latest Health Care Fraud and Abuse Control account report that indicated that $490 million had been collected as a result of successful prosecutions in 1999. Of that amount, $369 million was returned to the Medicare trust funds. In addition, the Medicare Integrity Program reported an increase of 25 percent in total overpayments prevented and identified in the first six months of FY 1999 compared to the same period the year before. These successful efforts are why the latest Medicare Trustees' Report included this Administration's fraud and abuse efforts as a contributing factor in slowing the rate of growth of the Medicare program.

Increasing Access to Health Care for Uninsured Individuals

Those who lack health insurance are often forced to rely on emergency rooms or ad-hoc networks of facilities and individual health professionals for whatever care they are able to receive, or to forgo any health care at all. Last year, the President's budget requested $25 million to launch a new initiative to help community health clinics, public hospitals, academic health centers, and other institutions serving the poor to create new systems of comprehensive and coordinated care that uninsured workers and their families could depend on, and this Committee responded by fully funding this request. To continue this effort, this year the President is proposing to increase funding for this initiative to $125 million. This increase will allow as many as 40 to 60 additional communities to receive grants to improve the capacity of safety-net providers. The President's budget also continues to provide strong support for the nation's Community Health Centers, which provide care to nearly 10 million low-income and uninsured individuals in rural and inner city areas. Our budget requests $1.1 billion to support Community Health Centers, an increase of $50 million over last year.

Long-Term Care

With more Americans now living longer than ever before, one of the most pressing demands we face is the increasing need for long-term care services. Studies show that the great majority of individuals who need long-term care prefer to remain in their own homes and communities rather than receive care in institutional settings, but this places a heavy burden on the family members and friends who must provide supports for them. More than half of these caregivers are women, and one-third have full time jobs. Our budget seeks to address the pressing need for new long-term care solutions through a multi-faceted initiative designed to help both the millions of Americans who require long-term care and those who care for them.

Our budget invests $125 million to support family caregiver activities in the Administration on Aging (AoA). This initiative will provide States and local communities with the flexibility to design and provide caregiver support activities to approximately 250,000 families nationwide who are caring for elderly relatives with chronic diseases and disabilities. Services provided will include quality respite care, information about local services, counseling, and training for complex care needs.

The budget also proposes $140 million over five years to expand access to home and community-based care services under Medicaid through an option to equalize income eligibility standards for those who need institutional care but choose to live in the community. This long-term care initiative also includes a $3,000 tax credit to provide support for those with long term care needs and those who care for a disabled or elderly relative; an innovative housing initiative to integrate assisted living facilities and Medicaid home and community based care settings; and a program to provide Federal employees and their families with the opportunity to purchase private long-term care insurance though a group plan.

Nursing Home Quality Initiative

As we begin to develop a support system for those who choose to receive long term-care in home and community-based settings, we must also continue to ensure that nursing home residents are receiving the highest quality care possible. The FY 2001 budget includes $71 million for continuing quality monitoring activities in last year's budget to improve federal and state oversight of nursing homes. Now in its third year, this initiative supports the efforts of states to strengthen enforcement and oversight of nursing home quality and to crack down on those who repeatedly violate program standards. Expanding on activities already underway, funding will support increased surveys of repeat offenders, improved training for surveyors, and enhanced legal services including resolution of the backlog of appeals.


Mr. Chairman, these investments in health care access and quality, in improving our public health system, and in broadening our scientific knowledge, are all fundamental to making sure that the new century is a time of good health and prosperity for all Americans. But just as we honor our commitments in the health arena, we also keep our commitments to improving the lives of the nation's children and families. The President's budget keeps our promise to work toward an America where every child, and every family, has the opportunity to succeed at work, at school, and at home.

Improving Access, Affordability, and Quality of Child Care

For the millions of American families in which parents must work to support their children, the availability of child care is often the difference between self-sufficiency and dependency. But even though funding for child care has doubled under the Clinton Administration, recent studies showed that in FY 1998 only ten percent of the children potentially eligible for federal child care subsidies received them. As we have said before, no parent should be forced to choose between the job they need and the child they love. We must take steps to close this gap and help all parents find child care that is safe, reliable, and affordable.

As we close this gap, we also must continue to improve child care quality. Study after study has shown that safe, quality child care is essential to the healthy development of our children. But the lack of quality care has forced too many parents to place their children in less than desirable settings, and even low quality care can place a heavy financial burden on low-income families. The President's budget builds on our ongoing efforts to remedy these deficiencies with a comprehensive initiative designed to not only make child care more affordable but also to improve the quality of care.

Our FY 2001 budget requests an additional $817 million, for a total of $2 billion, for the Child Care and Development Block Grant. This increase will provide child care subsidies to almost 150,000 additional low-income children. Also included in the $2 billion total is $223 million to improve the quality of care, of which $50 million is for infant and toddler quality care efforts; $19 million is for school-aged care and resource and referral activities; and $10 million is for ongoing research, demonstration, and evaluation programs. Our budget also proposes an increase of $3 billion in mandatory funding over five years, including $600 million in FY 2001, to establish an Early Learning Fund. This fund will provide money to states to offer community level challenge grants for programs that improve childhood development and school readiness and the quality and safety of care. The President's Child Care Initiative also includes critical increases for activities in the Departments of Treasury and Education.

Enhancing Head Start

Since its enactment thirty-five years ago, the Head Start program has been one of our greatest success stories, ensuring that millions of low-income children start school ready to learn. In 1993, the Clinton Administration set the goal of enrolling one million children in Head Start by FY 2002. The President's $6.3 billion request for FY 2001, an increase of $1 billion, will keep us on track to realize this goal, increasing the number of children enrolled to nearly 950,000. A portion of these funds will be reserved for grants to unserved and under-served populations. Consistent with the focus of the 1998 reauthorization of Head Start to improve the quality of services, $418 million of the proposed increase will be targeted for reducing class size, improving facilities, staff training, and school readiness; obtaining safer and better equipment; and attracting and retaining top-quality staff. Finally, our Head Start budget request includes $564 million for the Early Head Start program, which will provide 54,000 infants and toddlers and their families with continuous and comprehensive child development and family support services.

Increasing Parental Responsibility through Child Support Enforcement

One of the key underpinnings of this Administration's support for working families is the idea of encouraging personal responsibility. Nowhere is this more evident than in our actions to step up child support enforcement, which is a critical support for children and families. Child support collections have almost doubled since 1992, reaching an estimated level of $15.5 billion in FY 1999. Our package of child support enforcement proposals is self-financing and it increases collections to families by more than $1.8 billion over five years. These proposals build on our success in the program through changes designed to give states new options to get more money to families and to improve enforcement tools to increase collections. These actions are part of a comprehensive Administration initiative to promote ensure that non-custodial parents who can afford to pay child support do so, and helping lov-income non-custodial parents go to work so that they can support their children through "Fathers Work" grants in the Department of Labor's budget. Under one proposal, we would match State efforts to allow families still working their way off welfare to keep a portion of the child support they are owed, increasing payments to these families by $388 million over five years. A second proposal provides States the option to simplify their rules for distributing child support to a system where families that have left welfare will keep all the child support paid by the non-custodial parent, resulting in increased payments to families of $815 million over five years. Both of these proposals build on our Family First distribution policies. Our package also includes proposals for better enforcement techniques and program improvements that will save the Federal government nearly $600 million over five years while increasing payments to families by over $650 million.

Ensuring Continued Educational Excellence in the Nation's Children's Hospitals

As we move to increase the number of children with health insurance, we also must continue our efforts to ensure that all children receive the highest quality care. Expertly trained pediatricians are a critical ingredient in providing high quality care to children, and children's hospitals play an essential role in their education, training over 25 percent of all pediatricians and the majority of pediatric specialists. Last year, the President proposed, and this committee funded, a new $40 million program to support the vital role children's hospitals play in training physicians. This year, our budget proposes to double this amount, providing $80 million to raise support for approximately 60 free-standing children's hospitals to a level more consistent with other teaching hospitals.

Advancing Innovative Treatments for Asthma

Approximately 5 million of our nation's children suffer with asthma, and children from low-income families are disproportionately affected. What makes this particularly disconcerting is that the number of children afflicted has doubled over the past 15 years, with the sharpest increases in rates among children under age 5. Asthma is a leading cause of school absenteeism, and children who suffer from asthma are often forced to limit their activities. To address this growing health problem, our budget proposes $100 million over two years in demonstration grants to states to test innovative asthma disease management techniques for children enrolled in Medicaid and SCHIP. Through appropriate clinical disease management, these programs will attempt to reduce asthma related incidents and keep children with asthma out of emergency rooms and in school.

Expanding Substance Abuse Activities

Even with all our efforts over the last few years to expand the availability of services to those addicted to drugs and alcohol, there continues to be a significant gap between the need for substance abuse treatment and the capacity available to provide treatment. Estimates by the Office of National Drug Control Policy show that less than half of the five million individuals who need substance abuse treatment actually receive these services. To further close this gap, the President's budget includes a total of $3.3 billion in HHS for substance abuse treatment and prevention, including $2 billion to support SAMHSA's substance abuse prevention and treatment activities. Included in this request is an additional $54 million for Targeted Capacity Expansion grants to support rapid and strategic responses to emerging areas of need. The request also includes an increase of $31 million for the Substance Abuse Block Grant, which will provide funding through the states for over 10,500 community-based treatment and prevention organizations. In all, our budget request will enable more than 16,000 additional individuals to access treatment services.

Providing Heating and Cooling Assistance to Low-Income Families

While we are enjoying an unprecedented wave of economic prosperity, and on average the country has experienced a relatively warm winter season, one area of continuous concern has been the impact that heating and cooling costs have on the lives of the poor. The Low-Income Home Energy Assistance (LIHEAP) program helps protect the health of low-income families by providing assistance in meeting heating and cooling costs to approximately four million households each year. Those households receiving assistance include some of our most vulnerable populations: 35 percent include an elderly member; 28 percent include a person with a disability; and 48 percent include a child under age eighteen. Last year, the Congress recognized the importance of the LIHEAP program to low-income families and provided $1.1 billion in advance appropriations for FY 2001 for the program, and also provided $300 million in contingency funding to meet unexpected needs due to unusually high or low temperatures or natural disasters. Our budget continues to support the LIHEAP program, requesting an advanced appropriation of $1.1 billion in FY 2002, as well as $300 million in contingent emergency funds.


As we enter the new millennium, we stand on the cusp of an era of that promises unprecedented scientific advances. However, these breakthroughs will only be realized if we continue to make the necessary investments in biomedical research. Our budget continues along the path we set several years ago by investing in basic biomedical research as well as in research that will lead to improvements in the quality of care, thereby moving important scientific discoveries from the laboratory into our hospitals and clinics.

Investing in Biomedical Research

Biomedical research has been at the center of the unprecedented gains we have made in improving the health and quality of life for all Americans. Breakthroughs that we did not think were possible only a few years ago are now within our reach, but it will require a sustained investment for these endeavors to bear fruit. The President's FY 2001 budget includes almost $19 billion, an increase of $1 billion over last year's funding level, for biomedical research at NIH. This increase will support research in such areas as diabetes, brain disorder, cancer, disease prevention strategies, and development of an AIDS vaccine, and eventually lead to a revolution in our ability to detect, treat, and prevent disease. This request will enable NIH to fund 31,524 research project grants, the highest total in history, and enhance activities in critical areas such as research on racial and ethnic health disparities, biomedical information and technology, clinical research, and genomics.

Using Science to Improve Quality of Care and Reduce Medical Errors

As we make new breakthroughs in biomedical research, we must also work to see that these scientific advances result in better quality health care. Even with all our scientific innovations, a recent study by the National Academy of Sciences' Institute of Medicine estimated that as many as 98,000 Americans die each year due to medical errors. To address this problem, the President's budget makes new investments in error prevention, patient safety research, and information technology.

Our budget invests $250 million in the Agency for Healthcare Research and Quality (AHRQ) to support research activities that will improve quality of care, reduce medical errors, and produce better health outcomes. These resources will be used to step up research efforts on the uses and tools of health information technology; sponsor clinical prevention research and research to enhance patient safety and reduce medical errors; and expand research on issues of workers' health. These activities will help us to learn how best to translate knowledge into daily practice and improve health care for all Americans.

Our budget also invests $20 million to implement a new Health Informatics Initiative designed to improve patient care and health outcomes through the efficient and effective use of data and information. This request will fund a set of cross-cutting and agency-specific investments in information systems and health data, thereby enabling HHS to assume a greater national leadership role in the establishment of health data standards while also strengthening the information base for decision-making, improving the uniformity and ease of transmission of health care data, and protecting the confidentiality of health information. In addition, our budget includes $45 million to enhance the Food and Drug Administration's post-market activities. This includes funds to expand their adverse-event reporting system and to allow FDA to investigate, identify and prosecute those selling prescription drugs over the Internet without proper certification.

Food Safety

Enhancing our capabilities to conduct surveillance will also help us in our ongoing fight against the threat of food borne diseases. Estimates show that food-related hazards are responsible for as many as 76 million illnesses, 325,000 hospitalizations, and 5,000 deaths each year. To combat these outbreaks, the budget seeks a $10 million increase for CDC's Food Safety programs. These funds will support enhanced public education efforts and the continued expansion of the PulseNet network of health labs. This award-winning network preforms DNA "fingerprinting" of disease causing bacteria, enabling public health agencies to identify and respond more rapidly to disease outbreaks. In addition, the Food and Drug Administration (FDA) is seeking an increase of $30 million for its food safety activities. These funds will be used to increase inspections so that all high risk food establishments are covered, expand the number of examinations of imported foods, increase laboratory capacity, broaden efforts to work with states and the industry to make standards more consistent, and in conjunction with the Department of Agriculture and the states, begin to implement the Egg Safety Action Plan prepared by the President's Council on Food Safety.


Expanding access and improving the quality of health care are crucial steps toward ensuring that all Americans live long, healthy lives. But new threats to public health continue to emerge, and many long standing health problems still pose considerable risks. From AIDS prevention and treatment to food safety and the control of infectious disease, our FY 2001 budget continues our work to vigorously safeguard the public health.

HIV Prevention Initiative

As a nation, we have made substantial progress in our fight to prevent the spread of HIV and AIDS. Thanks to the use of combination anti-retroviral therapy, the AIDS death rates in the United States continue to decline. But in some parts of the world, and in some communities in the United States, the virus continues to spread rapidly. Domestically, the impact of HIV among certain segments of the population, especially minority communities, continues to be severe. In 1997, 45 percent of those newly diagnosed with AIDS were African American and 20 percent were Hispanic. Globally, the AIDS pandemic continues to be a major threat, particularly in developing countries. In sub-Sahara Africa, for example, it is estimated that four million people each year are newly infected with HIV. Internationally, the President's budget includes an increase of $26 million for the Centers for Disease Control and Prevention to continue the initiative undertaken last year to prevent the spread of HIV in developing countries.

Domestically, our budget request supports our ongoing initiative to reduce the spread of HIV and AIDS in minority communities. It provides an increase of $50 million (including $10 million in reallocated funding) for CDC's domestic prevention programs to encourage individuals at risk to avoid behaviors that can result in the transmission of the disease. These funds will be directed to community based interventions designed to reduce the rates of HIV infections, with special emphasis on vulnerable populations including racial and ethnic minorities, women, injection drug users and their partners, and young gay men. Internationally, the President's budget includes $61 million for Centers for Disease Control and Prevention (CDC), an increase of $26 million, to continue the initiative undertaken last year to prevent the spread of HIV in developing nations.

Ryan White

Up to one-third of the 750,000 Americans living with HIV are currently not in care. As we step up our efforts to prevent the spread of AIDS, we must also continue to help those who already suffer from this deadly disease. The President's budget keeps this commitment by providing $1.7 billion for the Ryan White Program, an increase of $125 million. These additional funds will provide primary medical care, pharmaceuticals critical to treatment, and other critical support services for those living with HIV and AIDS. This includes an increase of $26 million for the AIDS Drug Assistance Program (ADAP), which will allow a total of approximately 141,000 individuals to receive combination drug therapy.

Reducing Racial Health Disparities

One of the long-standing priorities of this administration has been making sure that all people receive the highest quality health care, regardless of their race or ethnicity. Unfortunately, members of minority groups, including American Indians and Alaska Natives, continue to bear a disproportionate burden of the nation's disease and illness. The President's budget continues the effort to eliminate these health disparities. A targeted response to this problem is the request of $35 million to expand CDC's program of demonstration projects in six identified areas of health disparities: infant mortality, cancer, heart disease, diabetes, HIV/AIDS, and immunizations. Funds will support the continuation of ongoing projects and the development of projects in two new communities. The budget also proposes increasing funding for the Office for Civil Rights by nine percent, including new program resources to ensure that our racial health disparities initiative has as strong civil rights nondiscrimination component. We also request an increase of $229 million for the Indian Health Service, the largest funding increase in two decades, to implement a multi-pronged effort to improve the quality of care for Native Americans.

Improving Mental Health Services

The Surgeon General's Report on Mental Health, released in December 1999, has focused new attention on the plight of those who suffer from mental illness. While about one in five Americans experiences a mental disorder in the course of a year, many of them will not receive the treatment they need. To address this problem, the President's budget proposes an increase of $100 million for mental health services provided by the Substance Abuse and Mental Health Services Administration (SAMHSA). This includes an increase of $60 million for the Mental Health Block Grant, to support state efforts to create comprehensive, community based systems of care for both adults and children. It also proposes to create a new $30 million Targeted Capacity Expansion Grant program to support prevention and early intervention services, as well as local service expansion.

The budget request also continues funding of $78 million for projects provided by the Congress in FY 2000 for Youth Violence Prevention activities. This includes $50 million for the Safe Schools/Healthy Students program which supports activities to increase school safety, mental illness prevention and treatment, and school violence prevention and early intervention services.

Family Planning

Support for family planning services has been a key factor in preventing over one million unintended pregnancies each year. Family Planning Clinics provide a range of valuable services including sexually transmitted disease and cancer screening and prevention; HIV prevention and education; and contraception services and counseling. As part of our strategy to prevent teen pregnancies, these services have also contributed to reducing the teen pregnancy rate to its lowest level on record (since 1976). Our FY 2001 budget request continues our strong commitment to family planning services, providing an increase of $35 million over FY 2000. These funds will support grants to family planning clinics which will enable approximately 5.75 million low-income clients to receive reproductive health services and clinical care.

Preventing Emerging Infectious Diseases

Thanks to the extraordinary advances in transportation and other technologies and the expansion of international commerce, we truly live in a global community. While these advances have resulted in numerous economic and cultural benefits, they also have placed increasing strains on our public health system. Since 1970, more than 35 new infectious diseases have been identified. More recently, we have begun to see the emergence of drug-resistant bacteria and viruses, and the spread of older diseases to areas where they were previously unseen, such as the recent outbreak of West Nile encephalitis in the New York City area. To combat these threats, our budget requests a total of $202 million to support infectious disease prevention activities at the Centers for Disease Control and Prevention. This includes an increase of $25 million to fight emerging infectious diseases, of which $20 million would be used to support the development of a national electronic disease surveillance system, which will enhance the ability of state and local health offices to respond to multi-state outbreaks of diseases and to share information, both among themselves and with CDC.

Combating Bioterrorism

The recent arrests of suspected terrorists at the Canadian border has reminded us all of the serious threat that terrorism poses to the peace and prosperity of our nation. The threats posed by bioterrorism are particularly deadly because of their communicability and their ability to remain undetected for long periods of time. Continuing our efforts to prepare for and respond to the consequences of a bioterrorist event, the Department's budget includes $265 million for activities across agencies to mount a comprehensive public health effort to combat this deadly threat. This strategy includes four major components. First, our budget strengthens critical components of our public health infrastructure, including our surveillance systems, epidemiological and laboratory capacity, and communications technology. Second, it continues funds for the purchase of a stockpile of the pharmaceuticals needed to treat the most likely biological agents. Third, it provides funds for research, development, and regulatory review of new vaccines and new diagnostic screens for chemical agents. Finally, it would support the establishment of an additional 25 local area health care response teams, bringing the total number of teams around the country to 97.

Investing in HHS Laboratory and Health Infrastructure

To successfully overcome the public health challenges of the 21st century, we must invest now to modernize the infrastructure that provides the foundation for our public health and biomedical research systems. Many of the laboratories at CDC and FDA are overcrowded and outdated, while at the National Institutes of Health (NIH) the fragmentation of laboratory space delays the pace at which new discoveries are made. Our budget requests substantial increases to solidify this foundation and construct state-of-the-art facilities. For CDC, we are requesting a total of $127 million, an increase of $70 million, for laboratory construction at three sites. First, our budget includes $85 million in FY 2001 and additional funding in FY 2002 and FY 2003 to construct a laboratory to handle the most highly infectious and lethal pathogens studied at CDC, as well as housing important work on antibiotic resistant diseases, AIDS, sexually transmitted diseases, and tuberculosis . Second, we request $20 million to complete and equip the Edward R. Roybal infectious disease laboratory. Third, we request $4 million to design a facility to replace our antiquated environmental health laboratory. The remainder of the request will be used for security improvements and maintenance of existing facilities.

For NIH, we are requesting $149 million for intramural buildings and facilities. Intramural projects include $73 million over two years to construct a new facility to house the new National Neuroscience Research Center, and $24 million to begin design and construction of a new centralized animal facility. Our budget also includes $20 million for new lab construction at FDA, as well as $65 million for health facilities construction in the Indian Health Service (IHS).


Our budget request for FY 2001 presents the annual performance information required by the Government Performance and Results Act (GPRA) of 1993. Notably, this includes the first GPRA performance report of HHS and its components, which compares FY 1999 results to the goals in our FY 1999 performance plan. Although GPRA reporting must mature before its full value will be realized, our performance report for this year shows improvements for critical HHS initiatives of the past few years. SAMHSA reports that retailers in more States have complied with rules prohibiting tobacco sales to youth than we had projected in our 1999 performance plan. HCFA achieved its 1999 goal for reductions in Medicare payment errors a year early, and pursues increasingly rigorous goals in FY 2001 and FY 2002. ACF and its program partners, including states, exceeded performance expectations when they moved 1.3 million welfare recipients into new employment. Information like this demonstrates that GPRA can be a valuable tool that will enhance our efforts to improve programs that serve the American people. As our performance measures continue to mature and performance trends emerge, the GPRA data will serve as important program indicators to support the identification of strategies and objectives to continuously improve programs across HHS.


Mr. Chairman, as I look back at the journey we have taken, I feel tremendous pride in what we have been able to accomplish. While there were occasional bumps in the road and we did not reach every destination we set out for, we have made great advances in improving the nation's health and well being. Today I have placed before you a road map for the destinations we have charted - improving health care access, coverage, and quality; making America a healthier and safer place; expanding our scientific knowledge, and giving all our children and families the opportunity for success - and these are destinations we all wish to reach. Thanks to the unprecedented economy, our fiscal discipline, and a new age of scientific breakthroughs, the conditions under which we set out on this road have never been more favorable.

Chairman Porter, Congressmen Obey, and members of the Subcommittee: I would like to thank each of you for all of the hard work you have done to make everything we have accomplished a reality, and I look forward to working with all of you to meet the challenges before us in this budget. The journey is not ending, it is just beginning. I would be happy to address any questions you may have.

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