Remarks as Delivered at the 2008 Budget News Conference

MIKE LEAVITT, SECRETARY, DEPARTMENT OF HEALTH AND HUMAN SERVICES: Thank you. You had a chance to meet Charlie Johnson [Assistant Secretary for Resources and Technology and Chief Financial Officer]. I'm also joined by a number of our other Assistant Secretaries and others who operate various components and parts of our department.

Charlie mentioned the fact that budgets are big and complex. And I also want to acknowledge the fact that this is the composite of literally thousands of hours and hundreds of people who have contributed in various ways to this effort.

In just the last year, more than 39 million people have gained prescription drug coverage. Our nation has mobilized a plan to prepare a pandemic influenza.

Standards are now being put into place that will create health information technology again to move our health care sector into a system - a system that will be connected, a system that will provide for quality assessments, a system that will allow people to prepare costs, a system that will give them some certainty that all of the incentives are moving toward high quality and low cost.

The budget we are releasing today builds on our past successes, and it will continue to create great investment in the future. The President and I have set out an aggressive and yet responsible budget. The budget reflects our commitment to improving the health of all Americans. It also builds our nation's public health infrastructure and advances medical research. And it serves the needs of our citizens with compassion. It puts our nation on a path as well - to a balanced budget by 2012.

For those of you who are not as familiar with the way a budget is constructed, let me give you just a little bit of background and I think some information that will help you see it in a larger context.

Budgets start with a set of assumptions. Given the fact that there are hundreds of people involved and thousands of hours, there has to be a philosophy behind this budget - a very clear priority that this budget has to reach a balance by 2012. That has forced many of the hard decisions that Charlie mentioned earlier. But you might be interested in the direction, generally, that I have given all of those who have constructed parts of our budget.

I told them that as far as adding new projects, we needed to do that when the projects warranted it. But that I expected that we would focus first on high demand and highly effective programs, maintain those demands that are in place. There were certain Presidential initiatives that I wanted to assure were funded.

A good example of that would be the Community Health Centers. The President set a goal of 1,200. I want to make sure we meet that goal. A commitment that we made on HIV and on the pandemic preparedness, all Presidential initiatives, they needed to take priority in terms of our budget making. I told them I wanted pressing new problems that are facing our department and our country to be funded.

And there were some proposals that we had made in years past that had yet to be funded that were priorities that you may find in that new proposal category. When it came to actually making budget decisions, I started off with the assumption that we were moving towards a balanced budget, and that balanced budget would require hard choices. And therefore I asked them to begin looking for six specific areas, and you will see these reflected in our proposal.

The first would be if there are one-time funds that don't need to be replicated.

The second would be emphasizing as a principle the delivery of direct services, not just replacing infrastructure.

The third would be looking for grant activities where we have essentially completed the function or the commitment that was made, that there should be no automatic renewal of a grant simply because it is there.

Next, we would eliminate programs whose purposes might be addressed other place. There are 27 operating divisions of HHS and many other departments of the federal government. And it is not unusual to find that a program is funded in multiple - or a need is met - in multiple departments.

And so we looked to find programs where there were multiple agencies dealing with the same problem.

We looked for underperforming programs - specifically, programs where there was no measurable way for determining whether they succeeded or not. And we were looking for - there were a number of areas that we had proposed reductions in the past that were not in fact enacted.

Those were the basic principles, and for the most part characterize the guidance that would have been given at the beginning of this. And I believe you will see that it was. For the most part, those have been followed.

The President proposes the outlay of $700 billion for Health and Human Services. That is an increase of more than $28 billion for 2007, or more than 4 percent.

The figure includes an increase of $95 million in discretionary spending. The budget reflects priorities and, as I suggested, not always wants and not always needs - but priorities. We had to make difficult choices. As I have indicated a number of times now, it is a priority to balance the budget in 2012.

I will highlight some of the key programs and initiatives that have been evolved through this process that I have alluded to.

The United States has one of the most advanced and innovative health care systems in the world. However, our health care costs are growing at a rate that simply cannot be sustained. In the past 25 years, Medicare, one of the programs that we administer here, has seen spending go from $35 billion to $375 billion. That is a 10-fold increase over that time.

At the same time span, the annual Medicaid spending has grown 13-fold, from $14 billion to $181 billion. If that trend were to continue, it could undermine the commitment that we made as a nation to seniors and low-income Americans. The President and I are committed to strengthening those programs and assuring that they are sustainable into the future. We are taking fiscally responsible steps to modernize and to reform Medicare and Medicaid.

Funding Medicare benefits for 44.6 million Americans is expected to be nearly $454 billion by the fiscal year 2008. I indicated that is an increase of $28 billion over the previous year.

In its first year, the Medicare Prescription Drug benefit has been an unparalleled success. Beneficiaries are saving an average of $1,200. That is occurring because of competition. It is occurring because of aggressive negotiating. The average premium savings for beneficiaries has dropped from $37 a month to $22 a month. The cost of the Medicare Drug Program over the next 10 years will be $113 billion lower than it was originally expected to cost.

We plan a series of legislative and administrative reforms to strengthen the long-term viability of Medicare. Those reforms will save $76 billion over the next five years. And they will slow the program's growth over that time period from 6.5 percent per year to 5.6 percent.

The program will continue to grow. It will have robust growth, but we are proposing to slow the growth of Medicare from 6.5 percent to 5.6 percent - less than 1 percent, but that 1 percent can have a profound impact over time in assuring that we get to a balanced budget and sustainable programs.

We've also begun to successfully transform Medicaid. Medicaid budget for the next 10 years has declined by $200 billion since the last time we put out a President's budget, and that's attributable in large part to the significant reforms implemented by the Deficit Reduction Act in greater collaboration that's occurring between states and the federal government.

We'll build on the success that we've had in past years with this budget. Through a series of proposed legislative and administrative changes, we estimate that another $25.7 billion will be saved over the next five years. This will keep Medicaid sustainable for years to come.

The president also proposes to reauthorize SCHIP for five more years. This budget increases the program's allotment by $5 billion over that time. I might add that there's about $4 billion remaining in that account. It also targets SCHIP funds more efficiently to program, to meet the needs of children who are most in need. Rising health care costs are also making insurance too expensive for our citizens, and the President's budget addresses that as well.

The goal is to ensure that all of our citizens have access to a basic health care policy, health insurance policy, at an affordable rate. In the State of the Union, the President proposed new tools that will help us reach that goal.

States that develop a basic health plan - a basic health care policy and make it affordable to all of their citizens - should receive federal help. We'll work with Congress to make existing federal funds available and to use them to create affordable choice grants for states. These grants would give our nation's governors more money, and give them more flexibility to help their citizens get an affordable basic insurance policy.

The second initiative would deal with the important change in the tax code related to people buying insurance. We want to assure that every citizen has the ability to buy health insurance. Many cannot. And every time a state begins to work to develop a solution that will add more people to the rolls of the insured, they run into a problem that they cannot solve.

That problem is personified by a teacher's aide who works but not long enough to get benefits, or a waitress, or a construction worker, or a student, or someone who works with a daycare center where their employer does not provide insurance.

To buy insurance, they have to do it in dollars that come after they have paid their taxes. For most of them, it is just too heavy a lift to pay an expensive premium and to pay it after they have paid their taxes.

It is simply indefensible that a person buys insurance individually and is treated differently than a person who buys it through an employer. The President's proposal would level the playing field on that equation.

Helping people stay healthy longer also helps us reduce the nation's burden on health care costs.

The President's budget will fund CDC's adolescent health promotion initiative to empower young people to take responsibility for their personal health.

It will improve drug safety and modernize ways that the FDA can review drugs for efficiency and for efficacy and for safety. It will keep our nation's food supply one of the safest in the world by improving our systems to prevent, detect and respond to outbreaks of foodborne illness.

And it will pursue new NIH research opportunities by funding more than 560 additional new and competitive research grants during 2008.

It will accelerate the movement toward personalized medicine through health information technology.

We also need to provide care to those in need. And we'll do this by funding more than 340 new and expanded Community Health Centers. I told you that - I mentioned that is a priority for the President. It will include 120 new sites that will be in high-poverty counties. This will surpass the President's commitment of 1,200 Community Health Centers nationwide.

Increasing funding for Indian Health Service facilities will also be included.

We'll be providing nearly $3 billion to support the treatment of those who are living [with] HIV/AIDS and will extend HIV/AIDS testing nationwide to thousands who have heretofore not been able to achieve it.

We'll be securing new funding for treatment of illnesses that were suffered by the heroic responders at the World Trade Center. Our nation remains at war, and we've got to continue to strengthen our public health system.

The president's budget requests $4.3 billion to increase our efforts on bioterrorism readiness - to accelerate the development of medical countermeasures for Strategic National Stockpiles, and to expand and train and exercise and coordinate medical emergency teams so they are ready to respond to a real and potential threat.

Pandemic flu remains such a threat, and while others may have become complacent, we are not. We are seeking $1.2 billion to continue our preparedness - efforts that will include increasing our domestic vaccine production capacity and completing the purchase of enough antivirals for 25 percent of the population, and enhancing our surveillance detection and our rapid response capabilities.

We have a moral duty to help our most vulnerable citizens, especially those who are unable to help themselves.

Our budget request would fund nearly $884 million in activities that would provide a choice of independent treatment options to those who need to escape a cycle of substance abuse.

It would help reduce the number of children who are abused and neglected, increase the number of children in foster care who are given permanent adoptive homes, and it would meet the need for refugees and unaccompanied alien children who come to our country every year with the hope of a better life.

We're a nation of great generosity and great empathy, but our compassion doesn't stop at our borders. We'll also sustain our international work to reduce illness and death from a myriad of diseases. The President's Malaria Initiative, the Global Fund to fight HIV/AIDS, Tuberculosis and Malaria, and the President's Emergency Plan for AIDS Relief, are simply examples.

These are just a few of the highlights of this budget proposal. Both the President and I believe that we have crafted a strong, fiscally responsible budget at a challenging time in the federal government.

We look forward with working with Congress and the states and all of our partners to build together for a healthier, a safer and a more compassionate America.

Last revised: February 07, 2008