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Statement of
Thomas Scully
Nominee for Administrator of the Health Care Financing Administration
Department of Health and Human Services

Before the
Committee on Finance
United States Senate

May 16, 2001

Chairman Grassley, Senator Baucus and other distinguished Committee Members, it is an honor to appear before you today as President Bush's nominee to be the Administrator of the Health Care Financing Administration (HCFA) at the Department of Health and Human Services. HCFA has the largest budget of any federal agency or Department. And running Medicare, Medicaid, and the State Children's Health Insurance Program effectively, is one of the central functions of the federal government -- delivering health care services to more than 70 million seniors, the disabled, and other needy citizens. I am proud the President decided that I was best suited for this duty, and should you concur, I assure you that I will not let you down.

HCFA is not the most popular agency in the government, nor should it be. With a budget of almost $400 billion, you have to say "no" to a lot of people, including an occasional Senator or Representative, if you want to keep the annual rate of health inflation under control. When I was last in the government, Medicare and Medicaid were both growing at annual rates of almost 15 percent a year, which was -- and still is -- unsustainable. The economy cannot stomach a return to those days nor, I suspect, can Congress. So, by design, HCFA --which means me -- will probably again fail to win public popularity awards during my tenure. However, we can and we will do far better in working with Congress, beneficiaries, and the physicians, providers, and insurers who serve as HCFA's partners in delivering care and providing coverage. That is my commitment to you as Administrator.

One of my top priorities will be greatly enhanced education for beneficiaries, physicians, and providers. I hope to expand our educational efforts to seniors on a number of fronts to further improve their understanding of their options and opportunities under the Medicare program. I will also push the agency to be far more aggressive in its work with physicians, nurses, hospitals, nursing homes, home health agencies, dialysis facilities, and every other provider partner to explain what we are doing in our regulatory efforts. Likewise, I will quickly push to develop a more direct and accountable relationship between HCFA's Medicaid staff and the States they partner with in the Medicaid program. As I mentioned, I do not expect everyone to always like our decisions, but everyone has a right to expect clear, prompt, and thoughtful answers from HCFA.

I have worked with HCFA throughout my career in the Office of Management and Budget (OMB), on the White House staff, and in the private sector. I believe that HCFA is stocked with an exceptionally smart and talented staff. In fact, my regulatory experience with HCFA over the last 15 years has generally been good. However, I have some understanding of the maze that is the HCFA process. This is a skill most taxpayers, seniors, doctors, nurses, and other providers -- not to mention Governors and Members of Congress -- do not have, and probably do not want to have. My first goal is to fix this process, to untangle the web, and to clarify the regulatory mystery that HCFA has become to many of its constituents.

My other primary interest in taking on this job is legislative and I look forward to working with Congress on reforming Medicare. In my most recent years in government service, during the "first" Bush Administration, I worked on a number of very successful bipartisan legislative projects -- most involving the Senate Finance Committee. From physician payment reform in 1989 to child care and the Earned Income Tax Credit (EITC) restructuring in 1990 to Medicaid Disproportionate Share Hospital (DSH) reform and hospital capital reform in 1991 and 1992, a number of significant and important programmatic improvements were made. Enough improvements to make me believe that you really can make a difference in public service.

On the other hand, working for the last 15 years on health care issues, both inside and outside of government, has occasionally made me feel like I am watching the movie "Groundhog Day." Every day I get up and the issues are the same as they were a decade ago. For example, I spent the first half of 1989 trying to "save" the Medicare Catastrophic Coverage Act, which was primarily a Medicare prescription drug and catastrophic benefit. Today, twelve years later, we are only now beginning to refocus on that issue. Medicare reform, as well as Medicaid DSH, and upper payment limit reforms were enormous issues in 1991 and 1992. Little has changed today and, arguably, the situation may be even worse. In addition, we still have over 40 million uninsured, with little national consensus about how we should address the problem.

Clearly, there is a tremendous amount of work to do for anyone, in either party, with a strong interest in fixing health care in America -- both at HCFA and in our nation's health insurance and delivery mechanisms. I enjoy public service, and I am determined to make a difference. I have tremendous respect for the Finance Committee and I have been fortunate enough to make good friends on both sides of the aisle during my many years in Washington. If confirmed, I sincerely hope to work with each of you on this Committee and with the Congress over the next four years to make HCFA work better, but more importantly, to significantly improve our health care system.

Again, thank you for your consideration of my nomination, and for the honor of appearing before you today.


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Last revised: February 12, 2002