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STATEMENT
BEFORE THE
U.S. HOUSE OF REPRESENTATIVES
COMMITTEE ON WAYS AND MEANS
TOMMY G. THOMPSON
SECRETARY
DEPARTMENT OF HEALTH AND HUMAN SERVICES
FEBRUARY 6, 2002
Good morning, Mr. Chairman and members of the Committee.
I am honored to appear before you today to discuss the President's
FY 2003 budget for the Department of Health and Human Services
(HHS). I am confident that a review of the full details
of our budget will demonstrate that we are proposing a balanced
and responsible approach to ensuring a safe and healthy
America.
The budget I present to you today fulfills the promises
the President has made and proposes creative and innovative
solutions for meeting the challenges that now face our nation.
Our budget supports the development and well-being of America=s
families; increases access to health care; strengthens Medicare
with a prescription drug benefit and other improvements;
and increases support for bioterrorism research and preparedness,
and supports the President=s Management Agenda through a
number of management reform initiatives within the Department.
The President's budget also includes a $4 billion increase
for biomedical research at the National Institutes of Health
(NIH). This final installment of the President's five-year
doubling is largest year-to-year dollar increase that NIH
has ever received.
Mr. Chairman, the total HHS request for FY 2003 is $488.8
billion in outlays. This is an increase of $29.2 billion,
or 6.3 percent over the comparable FY 2002 budget. The discretionary
component of the HHS budget totals $64.0 billion in budget
authority, an increase of $2.4 billion, or 3.9 percent.
This committee has jurisdiction over much of this budget.
Allow me to the highlight several important aspects of the
HHS budget.
STRENGTHENING AMERICA'S FAMILIES
President Bush has said that American families are the
bedrock of American society and the primary source of strength
and health for both individuals and communities. Our budget
includes a number of new initiatives that support this principle
by targeting resources to strengthen our nation's families.
We look forward to working with the Committee in considering
the next phase of welfare reform and other elements of the
President's proposals to help America's low-income families
succeed.
Temporary Assistance for Needy Families
As a former governor, I can tell you that the Temporary
Assistance for Needy Families program - or TANF - has been
a truly remarkable example of a successful Federal-State
partnership. States were given tremendous flexibility to
reform their welfare programs and as a result, millions
of families have been able to end their dependency on welfare
and achieve self-sufficiency.
Since 1996, welfare dependency has plummeted. As of September
of 2001, the number of families receiving assistance, which
represents the welfare caseload, was 2,103,000 and the number
of individuals receiving assistance was 5,343,000. This
means the welfare caseload and the number of individuals
receiving cash assistance declined 52 percent and 56 percent,
respectively, since the enactment of TANF. Between January
and September of last year national caseloads actually declined
about 2 percent, and while the July to September statistics
indicate a slight increase, the figures are still well below
the previous year's caseload levels. The general trend suggests
the national caseloads are not rising but, instead, have
stabilized.
In New York City, where we are understandably most concerned
about job opportunities, they have achieved more than 53,000
job placements for welfare recipients from September through
December 2001. While the number of TANF recipients increased
briefly directly because of the tragedy on September 11,
by December there were about 15,000 fewer TANF recipients
on the rolls than there were in August. Indeed, in December
the City had its lowest number of persons on welfare since
1965.
Some other positive outcomes we have seen since the law's passage
include:
-- Employment among single mothers has
grown to unprecedented levels.
-- Child poverty rates are at their lowest level since 1978.
Overall child poverty rates declined from 20.5 percent in
1996 to 16.2 percent in 2000. The poverty rate among African
American children declined from 39.9 percent to 30.9 percent
- the lowest level on record. The poverty rate among Hispanic
children declined from 40.3 percent to 28.0 percent - the
largest four-year drop on record.
-- The rate of births to unwed mothers has not increased.
But even with this notable progress, much remains to be
done, and States still face many challenges. Last year,
I held eight listening sessions throughout the country to
discuss the state of their TANF systems and understand the
new challenges they are facing. The states overwhelmingly
support this program. While keeping the basic structure
and purpose of the program, States, administrators, recipients,
employers, and advocates have provided valuable insight
into where we could make the program even more responsive
to the needs of families.
In the near future, we plan to unveil our reauthorization
proposal to build on current successes of the program. Our
reauthorization proposal embraces the needs of families
by maintaining the program's overall funding and basic structure,
while focusing increased efforts on building stronger families
through work and job advancement and adding child well-being
as an overarching goal of TANF.
Our budget proposes $16.5 billion each year for block grants
to States and Tribes; $319 million a year to restore supplemental
grants; $2 billion over five years for a more accessible
Contingency Fund; and a $100 million a year initiative for
research, demonstration and technical assistance primarily
to promote child well-being through strengthening family
formation and healthy marriages. In addition, our proposal
will call for modification of the bonus for high performance
to reward significant achievement in promoting employment
of program participants.
We maintain State flexibility, but include important changes
to improve the effectiveness of the program. We will also
expect States to engage all families they serve and help
them make progress toward their highest degree of self-sufficiency
- even those cases that may appear hard to employ. We will
eliminate the separate two-parent work participation rates
and give States more flexibility in designing productive
self-sufficiency activities while ensuring that the participation
rate requirements are meaningful. We will also ask States
to set performance goals for their TANF programs and report
on their progress toward meeting these goals.
I look forward to working with the Committee on reauthorization
of this hallmark program. I am confident that together we
will witness even greater achievements under the TANF program.
Other Programs Supporting TANF Goals
The President's budget also includes funding for several
other programs at the State and community level that work
to support the goals of TANF. The Job Opportunities for
Low-Income Individuals program (JOLI), provides grants to
non-profit organizations to create new employment and business
opportunities for TANF recipients and other low-income individuals.
Our budget provides $5.5 million to continue this valuable
program. The Individual Development Account (IDA) demonstration
program similarly seeks to increase the economic self-sufficiency
of low-income families by testing policies that promote
savings for post-secondary education, home ownership, and
micro-enterprise development. The President's budget calls
for almost $25 million to support IDAs. More broadly, the
Social Services Block Grant (SSBG) provides a flexible source
of funding for States to help families achieve or maintain
self-sufficiency and provide an array of social services
to vulnerable families. The President's budget request for
SSBG is $1.7 billion.Child Care
Child Care has played an important role in the success
of welfare reform by providing parents the support they
need to work. The President's budget recognizes this critical
link and maintains a high level of commitment to childcare.
Continuing the substantial increase in funding the Congress
has provided over the last several years, the President's
budget includes a total of $4.8 billion in childcare funding
in conjunction with our request to reauthorize the mandatory
and discretionary funding provided under the Child Care
Development Block Grant and the Child Care Entitlement.
States will also continue to have significant flexibility
under the TANF program and under the Social Services Block
Grant program to address the needs of their low-income working
families. These additional funding opportunities have substantially
increased the amount of resources dedicated to child care
needs. For example, in FY 2000 States transferred $2 billion
in TANF funds to the Child Care and Development Block Grant.
Child Support Enforcement
The Child Support Enforcement program offers another vital
connection to families' ability to achieve self-sufficiency
and financial stability. The President's budget proposes
to increase child support collections and direct more of
the support collected to families transitioning from welfare
- goals this Committee has supported vigorously. Under our
proposal, the Federal government would share in the cost
of expanded State efforts to pass through child support
collections to families receiving TANF. Pass through payments
enhance a family's potential for achieving self-sufficiency
while also creating incentives for non-custodial parents
to pay support and custodial parents to cooperate in securing
support. Similarly, States would be given the option to
adopt simplified distribution rules that ease State administration
but, more importantly, benefit families that have transitioned
from welfare by directing support otherwise retained by
the State and Federal governments to these families.
Overall collections would be increased by expanding our
successful program for denying passports to parents owing
$2,500 in past-due support, requiring States to update support
awards in TANF cases every three years, and authorizing
States to offset certain Social Security Administration
payments when they determine such action would be appropriate
to collect unpaid support. Our child support legislative
package would also impose a minimal annual processing fee
in any case where the State has been successful in collecting
support on behalf of a family that has never received assistance.
Promoting Responsible Fatherhood
Helping custodial parents, generally mothers, collect support
is an important part of our efforts to assist America's
families, but we cannot ignore the critical role fathers
play in the lives of their children and families. Our budget
includes a request for $20 million to begin an initiative
to promote responsible fatherhood by providing competitive
grants to organizations that work to strengthen the role
that fathers play in their children and families' lives.
Faith and community-based organizations and Indian tribes
will be encouraged to compete for these grants. These funds
will be used to support programs that effectively encourage
responsible fatherhood and parenting skills and to fund
programs that promote successful parenting and healthy marriages.
We appreciate the support shown by Representative Herger
in introducing the President's proposal last September and
look forward to working with the Committee on its enactment.
Compassion Capital Fund
The President has been a leader in recognizing the important
role that charitable organizations play in delivering services
to the public, and we are proposing steps to increase Federal
support for these groups. Specifically, our budget seeks
$70 million in additional funds for the Compassion Capital
Fund, for a total of $100 million. These new funds will
be used to expand the number of public and private partnerships
engaged in this critical effort and strengthen our ability
to identify those successful models for providing social
services by charitable organizations. Our budget also includes
$1.6 million to continue the Department's Center for Faith-Based
and Community Initiatives established under the President's
Executive Order.
Promoting Safe and Stable Families
I appreciate this Committee's tremendous support for our
efforts to help American families, most recently your work
shepherding through to enactment the President's initiative
to reauthorize and expand the Promoting Safe and Stable
Families Program. The President's budget would increase
the funding level for this program to $505 million, fully
supporting the increased authorization included in the new
law. These additional funds will be used to help promote
and support adoption so that children can become part of
a safe and stable family, as well as for increased preventive
efforts to help families in crisis.
Our budget also supports the new authority for funding
the mentoring children of prisoners initiative included
in the legislation and advanced by the President in last
year's budget. The budget requests $25 million for grants
to provide a range of activities to mentor children of prisoners.
This landmark legislation also authorized a new program
to provide vouchers to youth who are aging out of foster
care so that they can obtain the education and training
they need to lead productive lives. The President's budget
includes $60 million for these vouchers, bringing the total
request for the Foster Care Independence Program to $200
million.
Child Welfare/Foster Care/Adoption
Our budget framework includes resources for a number of
additional programs targeted to protecting our most vulnerable
and at-risk children. Foster Care, Adoption Assistance,
Adoption Incentives and Child Welfare Services are designed
to enhance the capacity of families to raise children in
a nurturing, safe environment. The President's budget provides
resources to help States provide safe and appropriate care
for children who need placement outside their homes, and
to provide funds to States to assist in providing financial
and medical assistance for adopted children with special
needs who cannot be reunited with their families, and to
reward States for increasing their number of adoptions.
At the same time, the budget also supports Child Welfare
Services programs with the goal of keeping families together
when possible and in the best interest of the child.
The budget provides nearly $4.9 billion for Foster Care,
$1.6 billion for Adoption Assistance, and $43 million in
Adoption Incentive funds. In addition, the President's budget
seeks almost $300 million in funding for child welfare services
and training. Together, these funds will support improvements
in the healthy development, safety, and well being of the
children and youth in our nation.
Abstinence Education
The President's Budget proposes to reauthorize $50 million
in mandatory funding for Abstinence Education grants to
States. These resources complement Abstinence Education
grants to community-based organizations ($73 million). Both
grants will continue to support the message, through mentoring,
counseling and adult supervision, that abstinence from sexual
activity is the only sure way for teens to avoid out of
wedlock pregnancies and sexually transmitted diseases.
Repatriation
Finally, our commitment to supporting America's families
does not stop at our borders. The President's budget seeks
$1 million in funding for the Repatriation program to assist
U.S. citizens and their dependents returning from foreign
countries under extreme circumstances.
STRENGTHENING MEDICARE
The FY 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. Last year, President Bush
proposed a framework for modernizing and improving the Medicare
program that built on many of the ideas that had been developed
in this Committee and by other Members of Congress. That
framework includes the principles that:
--All seniors should have the option of
a subsidized prescription drug benefit as part of modernized
Medicare.
--Modernized Medicare should provide better coverage for
preventive care and serious illness.
--Today's beneficiaries and those approaching retirement
should have the option of keeping the traditional plan with
no changes.
--Medicare should make available better health insurance
options, like those available to all Federal employees.
--Medicare legislation should strengthen the program's long-term
financial security.
--The management of the government Medicare plan should
be strengthened to improve care for seniors.
--Medicare's regulations and administrative procedures should
be updated and streamlined, while instances of fraud and
abuse should be reduced
--Medicare should encourage high-quality health care for
all seniors.
The improvements the President and I have proposed include not
only a subsidized drug benefit as part of modernized Medicare,
but also providing better coverage for preventive care and serious
illness. The program's lack of drug coverage is just one example
of its outdated benefits and it will have even more difficulty
giving beneficiaries modern and appropriate treatment for their
health problems in the future. We propose that preventive benefits
have zero co-insurance and be excluded from the deductible.
We must make these improvements to more effectively address
the health needs of seniors today and for the future.
Let me assure you, the President remains committed to framework
he introduced last summer, and to bringing the Medicare program
up to date by providing prescription drug coverage and other
improvements. We cannot wait: it is time to act. Recognizing
that there is no time to waste, the President's Budget also
includes a series of targeted immediate improvements to Medicare.
As you know, last year the President proposed the creation
of a new Medicare-endorsed prescription drug card program
to reduce the cost of prescription drugs for seniors. This
year, HHS will continue working to implement the drug card,
which will give beneficiaries immediate access to manufacturer
discounts on their medicines and other valuable pharmacy
services. The President is absolutely committed to providing
immediate assistance to seniors who currently have to pay
for prescription drugs.
Assistance, however, will not come only through the prescription
drug card program. The budget proposes several new initiatives
to improve Medicare's benefits and address cost. This budget
proposes additional federal assistance for comprehensive
drug coverage to low-income Medicare beneficiaries up to
150% of poverty - about $17,000 for a family of two. This
policy would eventually expand drug coverage for up to 3
million beneficiaries who currently do not have prescription
drug assistance, and it will be integrated with the Medicare
drug benefit that is offered to all seniors once that is
in place. This policy helps to establish the framework necessary
for a Medicare prescription drug benefit and is essentially
a provision that is in all of the major drug benefit proposals
to be debated before Congress. That is, the policy provides
new Federal support for comprehensive coverage of low-income
seniors up to 150 percent of poverty. And in all the proposals,
the Federal government would work with the states to provide
this coverage, just as we are proposing with this policy.
In addition, last week, I announced a model drug waiver
program-Pharmacy Plus-to allow States to reduce drug expenditures
for seniors and certain individuals with disabilities with
family incomes up to 200 percent of the federal poverty
level. This program is being done administratively. The
Illinois initiative illustrates how we can expand coverage
to Medicare beneficiaries in partnership with the federal
government. The program we approved last week will give
an estimated 368,000 low-income seniors new drug coverage.
The model application I have announced is easy to understand
and use, and the Centers for Medicare and Medicaid Services
is working with numerous States-at least 12-that have already
expressed interest in this program. Making it easier for
states to take similar steps to help their citizens who
need help the most is the goal I believe we all share.
The President's budget also includes an increase in funding
to stabilize and increase choice in Medicare+Choice program
by aligning payment rates more closely with overall Medicare
spending and paying incentives for new types of plans to
participate. Over 500,000 seniors lost coverage last year
because Medicare+Choice plans left the program. Today close
to 5 million seniors choose to receive quality health care
through the Medicare+Choice program. Because it provides
access to drug coverage and other innovative benefits, it
is an option many seniors like, and an option we must preserve.
The President's budget also proposes the addition of two
new Medigap plans to the existing 10 plans. These new plans
will include prescription drug assistance and protect seniors
from high out-of-pocket costs.
Some of these initiatives give immediate and tangible help
to seniors. But, let me make clear: these are not substitutes
for comprehensive reform and a universal drug benefit in
Medicare. They are immediate steps we want to take to improve
the program in conjunction with comprehensive reform, so
that beneficiaries will not have to wait to begin to see
benefit improvements. I want to pledge today to work with
each and every member of this Committee to fulfill our promise
of health care security for America's seniors- now and in
the future.
EXPANDING ACCESS TO HEALTHCARE
President Bush and I also are proposing to improve the health
of the American people by taking important steps to fund
health care for the uninsured and create new tax supports
to help purchase health insurance. The President is proposing
to combine new tax provisions to help more Americans purchase
health insurance with affordable expansions of federal and
state programs. Beginning in 2003, advance credits will
be available to individuals and families to directly reduce
their monthly premium payments for health insurance. We
propose to allow States, if they choose, to use pooling
arrangements to give these citizens even better options
for their premium dollars. These initiatives will go a long
way in improving the well being of our citizens and the
quality health care they receive.
The President's budget also will increase and expand the
number of Community Health Centers, which provide family
oriented preventive and primary health care to over 11 million
patients through a network of over 3,400 health sites. About
40 percent of the patients treated at health centers have
no insurance coverage, and many others have difficulty affording
the care their insurance does cover. The FY 2003 budget
will increase and expand the number of health center sites
by 1,200 and serve an additional 6.1 million patients by
2006. We propose to increase funding for these Community
Health Centers by $114 million.
PROTECTING THE NATION AGAINST BIOTERRORISM
Mr. Chairman, as you may know, the Department of Health
and Human Services is the lead federal agency in countering
bioterrorism. And while this Committee's primary jurisdiction
does not include bioterrorism, I know all Members share
my concern that we must better protect our homeland from
bioterrorism attacks. So, if the Committee would permit,
I would like to briefly touch on what this budget proposes
with respect to bioterrorism.
The President's FY 2003 budget request for bioterrorism
is $4.3 billion, an increase of $1.3 billion, or 45 percent,
$3.9 billion excluding emergency funding provided through
a supplemental appropriation, and it underscores his commitment
to providing the Department with the necessary resources
to protect the American people from any biological or chemical
attack. Our budget funds a wide variety of bioterrorism
prevention, identification, and response activities that
are administered through the Centers for Disease Control
and Prevention (CDC), the National Institutes of Health
(NIH,), the Office of the Secretary, the Substance Abuse
and Mental Health Services Administration (SAMHSA), the
Health Resources and Services Administration (HRSA) and
the Food and Drug Administration (FDA).
The President believes, as do I, that state and local preparedness
must be a primary focus of our nation's bioterrorism protection
efforts. We have requested $1.5 billion, an increase of
$406 million, for planning and physical improvements to
regional and local hospitals. Additionally, our budget provides
critical resources to state and local organizations to improve
laboratory capacity, enhance epidemiological expertise in
the identification, surveillance and containment of bioterrorism-related
diseases, improve electronic communication and distance
learning. The FY2003 budget also continues to provide $65
million in grants to states for the implementation of distribution
systems for pharmaceuticals deployed by the National Pharmaceutical
Stockpile
Our nation's hospitals, for example, must be capable of
handling the large number of patients that could result
from a mass-casualty incident, such as a bioterrorist attack.
The President's FY 2003 budget provides $591 million for
hospital preparedness and infrastructure to enhance biological
and chemical preparedness plans focused on hospital surge
capacity and support a newly expanded focus on cooperative
training between public health agencies and state and local
hospitals. Our request will upgrade the capacity of hospitals,
outpatient facilities, emergency medical services systems
and poison control centers to care for victims of bioterrorism.
IMPROVING MANAGEMENT AND PERFORMANCE OF HHS PROGRAMS
I am committed to being proactive in preparing the nation
for potential threats of bioterrorism and supporting research
that will enable Americans to live healthier and safer lives.
And, I am excited about beginning the next phase of Welfare
reform and strengthening our Medicare and Medicaid programs.
Ensuring that HHS resources are managed properly and effectively
is also a challenge I take very seriously.
For any organization to succeed, it must never stop asking
how it can do things better, and I am committed to supporting
the President=s vision for a government that is citizen-centered,
results oriented, and actively promotes innovation through
competition. HHS is committed to improving management within
the Department and has established its own vision of a unified
HHS -- One Department free of unnecessary layers, collectively
strong to serve the American people. The FY 2003 budget
supports the President's Management Agenda.
The Department will improve program performance and service
delivery to our citizens by more strategically managing
its human capital and ensuring that resources are directed
to national priorities. HHS will reduce duplication of effort
by consolidating administrative management functions and
eliminating management layers to speed decision-making.
The Department plans to reduce the number of personnel offices
from 40 to 4; centralize the public affairs and legislative
affairs functions; and consolidate construction funding,
leasing, and other facilities management activities. These
management efficiencies will result in an estimated savings
of 700 full time equivalent positions, allowing the Department
to redeploy staff and other resources to line programs.
HHS continues to be at the forefront of the Government-wide
effort to integrate budget and performance. We were one
of the first Departments to add tables to its GPRA Annual
Performance Reports that provide summary tables that associate
resource dollars and performance measures HHS-wide. Although
we work in a challenging environment where health outcomes
may not be apparent for several years, and the Federal dollar
may be just one input to complex programs, HHS is committed
to demonstrating to citizens the value they receive for
the tax dollars they pay.
By expanding our information technology and by establishing
a single corporate Information Technology Enterprise system,
HHS can build a strong foundation to re-engineer the way
we do business and can provide better government services
at reduced costs. By consolidating and modernizing existing
financial management systems our Unified Financial Management
System (UFMS) will provide a consistent, standardized system
for departmental accounting and financial management. This
"One Department" approach to financial management
and information technology emphasizes the use of resources
on an enterprise basis with a common infrastructure, thereby
reducing errors and enhancing accountability. The use of
cost accounting will aid in the evaluation of HHS program
effectiveness, and the impacts of funding level changes
on our programs.
HHS is also committed to providing the highest possible
standard of services and will use competitive sourcing as
a management tool to study the efficiency and performance
of our programs, while minimizing costs overall. The program
will be linked to performance reviews to identify those
programs and program components where outsourcing can have
the greatest impact. Further, the incorporation of performance-based
contracting will improve efficiency and performance at a
savings to the taxpayer.
GOVERNMENT PERFORMANCE AND RESULTS ACT
HHS is committed to continual improvement in the performance
and management of its programs and the Administration's
efforts to provide results-oriented, citizen-centered government.
The budget request for FY 2003 is accompanied by annual
performance plans and reports required by the Government
Performance and Results Act (GPRA). The performance measures
cover the wide range of program activities essential to
carrying out the HHS mission. Some notable FY 2001 achievements
include:
-- Reducing Erroneous Medicare Payments:
CMS has continued to reduce the payment error rate, cutting
improper payments from 7.97 percent in FY 1999 to 6.8 percent
in FY 2000 and exceeding its targets in both years. CMS,
with the assistance of the Office of the Inspector General,
is committed to further reducing the error rate to 5 percent
by FY 2002.
-- Moving Families Toward Self-sufficiency:
ACF reported that 42.9 percent of adult recipients of TANF
were employed by FY 1999. This is a primary indicator of
success in moving families toward self-sufficiency. It improves
on the FY 1998 baseline of 38.7 percent and exceeds the
target of 42 percent.
-- Families Benefiting from Child Support
Enforcement: The Child Support Enforcement program broke
new records nationwide in FY 2001 by collecting $18.9 billion,
one billion over FY 2000 levels. In one such initiative
in FY 2000, the government collected a record $1.4 billion
in overdue child support from Federal income tax refunds,
and more than 1.42 million families benefited from these
collections.
These are just a few of the dozens of impressive success
stories found in the 13 performance plans and reports. GPRA
has been and will continue to be an important part of our
effort to improve the management and performance of our
programs.
WORKING TOGETHER TO ENSURE A SAFE AND HEALTHY AMERICA
Mr. Chairman, the budget I bring before you today contains
many different elements of a single proposal; what binds
these fundamental elements together is the desire to and
to improve the lives of the American people. All of our
proposals, from building upon the successes of welfare reform,
to protecting the nation against bioterrorism; from increasing
access to healthcare, to strengthening Medicare, are put
forward with the simple goal of ensuring a safe and healthy
America. I know this is a goal we all share, and with your
support, we are committed to achieving it.
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