Testimony

Statement by
John O. Agwunobi, M.D., M.P.H., M.B.A., 
Assistant Secretary for Health

on
FY 2008 Budget Request for the Department of Health and Human Ser 

before
Committee on Energy and Commerce
United States House of Representatives

Tuesday, February 06, 2007

FY 2008 Budget Announcement

Chairman Dingell and Congressman Barton, thank you for the invitation to discuss the Department of Health and Human Services' budget proposal for fiscal year 2008.

For the past six years, this Administration has worked hard to make America a healthier, safer and more compassionate nation.  Today, we look forward to building on our past successes as we plan for a hopeful future.

The President and I have set out an aggressive, yet responsible, budget that defines an optimistic agenda for the upcoming fiscal year.  This budget reflects our commitment to bringing affordable health care to all Americans, protecting our nation against public health threats, advancing medical research, and serving our citizens with compassion while maintaining sensible stewardship of their tax dollars.

To support those goals, President Bush proposes total outlays of nearly $700 billion for Health and Human Services.  That is an increase of more than $28 billion from 2007, or more than 4 percent.  This funding level includes $67.6 billion in discretionary spending.

For 2008, our budget reflects sound financial stewardship that will put us on a solid path toward the President’s new goal to achieve a balanced budget by 2012. 

I will be frank with you. There will never be enough money to satisfy all wants and needs, and we had to make some tough choices.

We take seriously our responsibility to make decisions that reflect our highest priorities and have the highest pay-off potential.  We recognize that others may have a different view, and there are those who will assume that any reduction signals a lack of caring.  But reducing or ending a program does not imply an absence of compassion.  We have a duty to the taxpayers to manage their money in the way that will benefit America the most.

I would like to spend the next several minutes highlighting some of the key programs and initiatives that will take us down the road to a healthier and safer nation.

Transforming the Health Care System

- Helping the Uninsured

• The President has laid out a bold path to strengthen our health care system by emphasizing the importance of quality, expanded access, and increasing efficiencies.

• The President's Affordable Choices Initiative will help States make basic private health insurance available and will provide additional help to Americans who cannot afford insurance or who have persistently high medical expenses.

• It moves us away from a centralized system of Federal subsidies; and,

• It allows States to develop innovative approaches to expanding basic health coverage tailored to their populations

• The President’s plan to reform the tax code with a standard deduction ($15,000 for families; $7,500 for individuals) for health insurance will make coverage more affordable, allowing more Americans to purchase insurance coverage.  

- Value-driven Health Care

• The Budget provides funds to accelerate the movement toward personalized medicine, in order to provide the best treatment and prevention for each patient, based on highly-individualized information. 

• It provides $15 million for expanding efforts in personalized medicine using information technology to link clinical care with research to improve health care quality while lowering costs; and,

• It will expand the number of Ambulatory Quality Alliance Pilots from 18 sites in FY 2008.

- Health IT

• The President’s budget proposes $118 million for the Office of the National Coordinator for Health Information Technology to keep us on track to have personal electronic health records for most Americans by 2014 by supporting our efforts to:

-         Implement agreed upon public-private health data standards.

-         Initiate projects in up to twelve communities based on recommendations of the American Health Information Community.  These projects will demonstrate the value of widespread availability and access of reliable and interoperable health information.

-         Develop the Partnership for Health and Care Improvement, a new, permanent non-governmental entity to effect a sustainable transition from the AHIC.

Addressing the Fiscal Challenge of Entitlement Growth

The single largest challenge we face is the unsustainable growth in entitlement programs such as Medicare and Medicaid.  The Administration is committed to strengthening the long-term fiscal position of Medicare and Medicaid and to moderating the growth of entitlement spending.  The FY2008 Budget begins to address Medicare and Medicaid entitlement spending growth by proposing a package of reforms to promote efficiency, encourage beneficiary responsibility, and strengthen program integrity.

- Medicaid

Medicaid is a critical program that delivers compassionate care to more than 50 million Americans who cannot afford it.  In 2008 we expect total Federal Medicaid outlays to be $204 billion, a $12 billion increase over last year. 

The Deficit Reduction Act (DRA) that President Bush signed into law last year has already transformed the Medicaid program.  The DRA reduced Medicaid fraud and abuse and also instituted valuable tools for States to reform their Medicaid programs to resemble the private sector.

In FY 2008, we are also proposing a series of legislative and administrative changes that will result in a combined savings of $25.3 billion over the next five years, which will keep Medicaid up to date and sustainable in the years to come.  Even with these changes, Medicaid spending will continue to grow on average more than 7 percent per year over the next five years.

Along with the fiscally responsible steps we are taking with Medicaid, we are following the same values in modernizing Medicare. 

- Medicare

Gross funding for Medicare benefits, which will help 44.6 million Americans, is expected to be nearly $454 billion in FY 2008, an increase of $28 billion over the previous year.

In its first year, the Medicare prescription drug benefit has been an unparalleled success.  On average, beneficiaries are saving more than $1,200 annually when compared to not having drug coverage, and more than 75 percent of enrollees are satisfied with their coverage. Because of competition and aggressive negotiating, payments to plans over the next ten years will be $113 billion lower than projected last summer.

We also plan a series of legislative reforms to strengthen the long-term viability of Medicare that will save $66 billion over five years and slow the program’s growth rate over that time period from 6.5% to 5.6%. 

Similarly, we are proposing a host of administrative reforms to strengthen program integrity; improving efficiency and productivity; and reduce waste, fraud and abuse—all of which will save another $10 billion over the next five years. 

Promoting Health and Preventing Illness

We are also taking steps in other ways to transform our health care system.  Helping people stay healthy longer also helps to reduce our nation’s burden of health care costs.  The President’s budget will:

• Fund $17 million for CDC’s Adolescent Health Promotion Initiative to empower young people to take responsibility for their personal health.

• Strengthen FDA's drug safety efforts and modernize the way we review drugs to ensure patients are confident the drugs they take are safe and effective. 

• Enhance FDA and CDC programs to keep our food supply one of the safest in the world by improving our systems to prevent, detect and respond to outbreaks of food borne illness; and,

• Include $87 million to increase the capacity for the review of generic drugs applications at the FDA and increase access to cheaper generic drugs for American consumers.

Providing Health Care to Those in Need