REMARKS BY:             THE TOMMY G. THOMPSONSECRETARY OF HEALTH AND HUMAN SERVICES

PLACE:                          To the American Enterprise Institute's, Medicare Forum

DATE:                            March 27, 2003

"Medicare and the Administration's Health Agenda"

Good afternoon, everyone, and thank you so very much, Bob Helms, not only for your very kind introduction but for your leadership in health care policy for our country over the years. You've continued the tremendous service you gave during the Reagan Administration at HHS, helping to develop ways to expand access to care for more Americans by building on the private system, not replacing it. We appreciate your great contributions.

It's good to see so many friends here today. You are a group of people who care deeply about the kind of medical care that's available to the citizens of this great country.

Being Secretary of Health and Human Services has been an interesting experience. For example, the first time I was on Capitol Hill after becoming Secretary, I was awed by the grandeur of the buildings and the solemnity of the great dome. And then I saw Ted Kennedy walking toward me.

I extended my hand, and he extended his, but when I tried to shake he pressed some car keys into my palm. "It's the black Mercedes," he said. "Have it out front in five minutes." Now, when Ted Kennedy thinks you're his driver, you know you've really hit the big time .

I'm very pleased to be with you to talk about the release of the Medicare Trustees' Report. As one of those trustees, and as Secretary of Health and Human Services, I take my duty as one of the guardians of the Medicare system very seriously.

There are few things more important to the future of the United States than a fiscally sound, user-friendly and, most importantly, effective Medicare system. We have an obligation to meet the commitments we have made to those who have built our great country. Along with my colleagues who have already spoken to you, I'm here today to reaffirm that commitment.

Let me begin by stressing something that needs to be said up-front: The President's tax reduction package did not deepen the federal budget deficit or adversely affect the Medicare system - period. The President's tax cuts are encouraging economic growth, which itself only broadens the tax base. And as a percentage of our nation's economy, the cuts are modest.

It's bad economics and unfortunate partisanship to argue that reducing taxes on ordinary Americans and the companies where they work was wrong. The President stands proudly by his commitment to lower the tax burden on the American people, as do I.

Now, as to Medicare, we've sought to bring systematic change to the way the system is administered. We've put renewed focus on bringing down the Medicare error rate, which has fallen from 6.8 percent to 6.3 percent over the past year. That's still too high, but it's a good first step.

We've launched a full-scale effort to create a culture of responsiveness to Medicare recipients and providers. We began a program we call our "Open Door Policy Initiative," in which senior managers in CMS meet with providers and other key stakeholders at least once a month to generate ideas for additional program reforms.

We have created a new enrollment form that makes it easier for qualified physicians and other providers to become eligible for Medicare reimbursement.

We've launched improved program integrity operations, provided easier access to beneficiary eligibility information and developed an enhanced role for practicing physicians in the development of Medicare policy.

We are strengthening the Medicare-Plus-Choice option and we want to lift unnecessary restrictions on Medical Savings Accounts and Flexible Spending Accounts.

All of these changes were reflected in something we did early on - we changed the name of the agency from the Health Care Finance Administration to the Centers for Medicare and Medicaid Services. That was intended to convey a message, that business as usual wasn't good enough any more. And, as I've just indicated, we've taken serious steps to make good on that promise.

That same principle - a recognition that the status quo is unacceptable - underlies the President's visionary plan for longer-term Medicare reform. As the report issued yesterday demonstrates, Medicare is in serious fiscal trouble, which will only deepen in coming decades unless we act now.

President Bush has worked with members of Congress from both parties to develop a framework for a modernized Medicare program and for keeping Medicare's benefits secure. The President's framework for bipartisan legislation includes the following principles:

First, all seniors should have the option of a subsidized prescription drug benefit as part of modernized Medicare. Everyone benefits from the new drugs that are being developed, and we must make sure Medicare beneficiaries have access to them.

But it's also clear that if we add a drug benefit without comprehensive modernization of the Medicare system, we will only deepen the financial crisis Medicare faces in coming years. That's why the President's plan touches on every aspect of the Medicare system.

Second, modernized Medicare should provide better coverage for preventive care and serious illnesses. By preventing disease and illness to begin with, we not only save substantial financial resources but also save lives.

Third, today's beneficiaries and those approaching retirement should have the option of keeping the traditional plan with no changes.

Fourth, Medicare should provide greater choices of different insurance options, like those available to all federal employees. For too long, Medicare has been a "one size fits all" program, and we should offer options appropriate to the unique challenges various seniors face.

Fifth, Medicare legislation should strengthen the program's long-term financial security. This will require a commitment to quality, affordable care and fiscal solvency. You just can't have one without the other.

Sixth, the management of the government Medicare plan should be strengthened so that it can provide better care for seniors. That's what we're working to do now at CMS, and I value your ideas as to how we can do better.

Seventh, the President's plan calls for Medicare's regulations and administrative procedures to be updated and streamlined, while the instances of fraud and abuse should be reduced. We're already acting on this principle, very aggressively and effectively.

And eighth and finally, Medicare should encourage high-quality health care for all seniors. Quality care should be available to everyone in Medicare, period. In a nation as prosperous and compassionate as ours, that's not too much to ask..

President Bush is taking the initiative to move ahead right now. Our 2003 budget dedicates $190 billion over ten years for immediate targeted improvements and comprehensive Medicare modernization, including a subsidized prescription drug benefit, better insurance protection and better private options for all beneficiaries.

This Administration is acting now to help seniors obtain prescription drug coverage. Our budget provides $8 billion through the year 2006 for states to expand drug-only coverage to low-income Medicare recipients whose income is 150 percent of the federal poverty level or less. We are committed to making sure that all of these people will be able to get their drugs in the same way as all seniors once the full Medicare benefit is implemented, so that they can all enjoy the competitive prices and quality services that private plans will provide.

Our effort to give Medicare beneficiaries more discretion in the way they obtain health care is rooted in a principle the President articulated in his speech earlier this year in Milwaukee - we trust patients and their physicians. We don't believe government knows best. We want to give patients more choices about their doctors, plans and treatment options.

The President's proposals for America's health future are wide-ranging. For example, we are being aggressive in our work to prepare for any biological or chemical threat our enemies could use against us. To prepare further, in the 2003 budget we are requesting an additional $4.3 billion - an increase of 45 percent over the current fiscal year - to support a variety of critical activities to prevent, identify and respond to incidents of bioterrorism.

We've launched a major preventive health initiative to discourage obesity, diabetes and asthma. If we can reduce the risks of getting these diseases, we will save billions of dollars - and, more importantly, save untold numbers of lives.

We're also working to reduce medical errors and cut excessive regulations. Up to 98,000 Americans die annually from receiving the wrong kinds or wrong quantities of medication and from other procedural problems. We're developing a hospital technology initiative to bring today's technology to the way we dispense and administer medicines.

We have already taken some significant steps. For example, the FDA changed the label requirements on all over-the-counter drugs to make it easier for people to locate information when choosing a product.

And the Agency for Healthcare Research and Quality, the lead HHS agency on improving health care quality, is looking at how information technology can be used to make patient care safer.

Last October, I announced that AHRQ would fund $50 million worth of patient safety projects, 22 of which will examine how computers, hand-held devices like Palm Pilots and high-tech information systems can help make sure that patients get exactly the kind of treatment they need. One of these projects addresses bar coding.

Bar coding offers real promise. For example, physicians and nurses would be able to scan the bar code on a bracelet worn by a patient to monitor what medications he or she is getting to help effectively administer medicines and track all the medicines the patient receives.

Bar coding would also reduce stress on overworked nurses and provide real cost savings. In fact, the health care industry has projected that broad use of bar coding across the medical supply chain could save billions of dollars and help companies crack down on fraud.

More important than saving money, though, bar coding could save lives. And, soon, the FDA will issue a new regulation on bar codes for drugs that will be an important first step in making the use of bar codes possible. In a word, grocery stores shouldn't have better technology - electronic scanners - than hospital pharmacies. And, as we go forward with our new efforts, they won't.

As to the huge web of federal rules governing medicine, in December I created a blue- ribbon panel designed to help ferret out unneeded regulations. When we flood doctors and hospitals with excessive paperwork, patients suffer the consequences.

This new panel will help us restore common sense to the regulatory process so that Americans can receive higher-quality health care without creating unnecessary hassles for doctors and other health care professionals and businesses. The bottom line is that it is important that doctors spend more time with patients and less on paperwork.

We are not ignoring the roughly 40 million Americans who lack health insurance. Since January 2001, we've approved state plan amendments and Medicaid and SCHIP waivers that have expanded opportunity for health coverage to 1.8 million Americans and improved existing benefits to 4.5 million individuals.

We have also substantially expanded community health centers, and the President is calling for even greater funding for this important outreach to the nation's underserved families.

But most exciting of all is our health tax credit proposal. The President's budget also includes $89 billion in new health credits to help American families choose, buy and own their health insurance. This is a tremendous initiative - it does not involve government funding but, instead, encourages personal responsibility by empowering people to make wise and necessary choices about their own health care.

To sum up, we cannot afford to debate endlessly. So, we're acting now even as we plan and work for the future.

It was Winston Churchill who reminded us that, and I quote, "Courage is what it takes to stand up and speak; courage is also what it takes to sit down and listen." We need to do both - to speak the truth about a system in dire need of constructive change, and listen to one another's concerns about how we implement those changes effectively.

That's a commitment the President and I have made and one I intend to keep. Thank you so much for letting me come talk with you today. I look forward to your questions.

###