Hearing of the Senate Committe on Health, Education, Labor and Pensions - The Nomination of Governor Kathleen Sebelius to be Secretary of The Department of Health and Human Services

CHAIRED BY: SENATOR TED KENNEDY (D-MA)
WITNESS: KANSAS GOVERNOR KATHLEEN SEBELIUS (D)

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SEN. KENNEDY: (Off mike.) Senator Enzi will be here in just a moment or two, but he has asked us to go ahead. And we shall.

Our hearing today is on the confirmation of Kathleen Sebelius to serve as the next secretary of health.

Few debates in Congress touch our lives as profoundly and personally as health care. Over the past 10 months, I've seen our health care system up close. I've benefited from the best of medicine. But we have too many uninsured Americans. We have sickness care and not health care. We have too much bureaucracy and paper weight and bureaucracy. Costs are out of control. But today we have an opportunity like never before to reform our health care, and we need a secretary of health who has the vision, the skill and the knowledge to help us get there.

Governor Kathleen Sebelius has those traits and more. She was named one of the five top governors by Time Magazine. She earned that accolade by reaching across the aisle and to find solutions that worked. Her Healthy Kansas initiative put thousands of people on the road to better health.

As insurance commissioner and as governor, she has been a strong voice for the rights of patients and consumers.

When some of -- comes for -- when it comes to reforming our health-care system, we know that challenges are great. But I have the confidence that Governor Sebelius can lead the way with common-sense solutions. Although her duties as secretary may begin with health- care reform, they do not end there. Food safety, drug safety, medical research, disease prevention: All of these and more are -- urgent need for attention. She is the right person for the job, and I strongly support her nomination.

Governor, we welcome you today and thank you for your willingness to help serve in this important position.

I know now Senator Enzi is -- will be here momentarily, in just a moment or two. I'll ask -- we'll move ahead, then, with -- ah. There we are.

SEN. MICHAEL B. ENZI (R-WY) (?): Went to the wrong room. (Chuckles.)

GOV. SEBELIUS (?): (Off mike.)

SEN. KENNEDY: We are. We are.

Good to see you. We've got two arrivals here, two arrivals. We're doubly blessed this morning.

So we'll move ahead with our friend and colleague and leader Senator Enzi. We thank you very much for being here.

SEN. ENZI: Thank you, Mr. Chairman. And it's always good to have you back. And a great day for a hearing.

I'd like to begin to -- by thanking you for holding this hearing today, and I've previously said confirming the president's nominees is one of the most important constitutional duties of the Senate. And I know that the members of the committee take the advice-and-consent clause of the Constitution seriously.

What we are undertaking today is more of a review of the nominee's qualifications regarding the (substance of ?) issues if she's confirmed as the secretary of the Department of Health and Human Services.

It should not be overlooked that the Finance Committee has the primary jurisdiction over this nomination. Because of the overlap in our work and the significant role the secretary of Health and Human Services will have in the operations of the Food and Drug Administration, the Centers for Disease Control, the National Institutes of Health, the Health Committee has established a tradition of holding a hearing on this important Cabinet-level position.

I'd also like to thank Governor Sebelius for joining us today and for the opportunity to meet with her earlier. I'm hopeful that we'll have a strong working relationship, as will our staff. If confirmed, there are going to be areas where we disagree, but my hope and expectation is that we will focus on solutions and therefore can produce meaningful results for the hardworking Americans that meet the test of the 80 percent rule. People who have worked with me over time know the 80 percent rule is one of the main rules I always try to follow to get things done. In applying this rule, I try to focus on the 80 percent of the issues the Senate generally agrees -- while not fixating on the remaining 20 percent, which are divisive and can sometimes overwhelm the majority of the issues that we agree on.

One area where I hope we can agree on is health care reform. Ensuring access to affordable quality and portable health care for every American is not a Republican or a Democrat issue; it's an American issue. Our health-care system is broken, and fixing it's one area where I hope the 80 percent rule comes into play, so that common- sense reforms can be made. The American people deserve solutions.

I also hope we can agree on the process used to advance the health-care reform. An open, transparent process with a full debate's the best way to achieve a bipartisan product. I was disappointed to see the recent comments of the Senate majority leader, who suggested that he wanted to use budget reconciliation to pass health care reform. Using budget shortcuts known inside the Beltway as reconciliation shuts out members of the minority party. It'll also shut out many centrist Democrats who will want to see health-care reform based on competitive private market which is fully paid for. That's not a formula for bipartisan success.

At both the member and staff level, senators on both sides of the aisle continue to meet regularly to discuss health care reform and specifically what shape it will take. I believe that if we continue to negotiate in good faith, this product -- this process will lead to a bipartisan health reform bill that will enjoy broad partisan support both now and in the future. I hope that Governor Sebelius will join Senator Baucus, Senator Conrad and Senator Byrd in their efforts to prevent the use of reconciliation from derailing this bipartisan process.

The next secretary of Health and Human Services will undoubtedly have a critical seat at the table during these discussions. As the governor of Kansas, the nominee before us has enormous responsibilities and has put forth her own health-care reform proposals there. I know that we have a shared commitment to reducing the number of uninsured Americans, containing costs, improving quality, making health care more accessible to everyone, and increasing access to health information technology. During my initial meeting, we discussed the unique challenges that face rural and frontier states. People living in rural areas in Kansas, similar to Wyoming, face difficulties in access to primary care physicians and preventive services.

Rural and frontier areas struggle to attract and retain doctors and other health care providers.

In the 10-step health care reform bill I introduced, last year, I emphasized the importance of access, to affordable health care, for people in rural and underserved areas. I know Governor Sebelius understands the challenges in this area. And I'm looking forward to finding solutions for this common priority. We may not always agree on every issue.

I am and will remain staunchly pro-life and will continue to advocate for legislation to protect the rights of the unborn. My hope and expectation though is that we will focus on legislating solutions that will make a positive difference in people's lives.

I will have a series of questions, for the governor, when we begin the question-and-answer portion of the hearing, and will have follow-up questions for the record. Again I'd like to express my appreciation that the senator's back and for having this hearing today.

SEN. KENNEDY: Thank you. thank you very much.

I want to welcome an old friend, Senator Dole, very much. All of us are very familiar with his service to the Senate, over a long period time, as our majority leader. I thank him very much.

Always a welcome opportunity to be with Senator Roberts. We've worked together on many different issues. And I've valued the opportunity to see him and welcome him back now and to work with him as well. We'll start off with those two leaders. And then we will proceed with the remaining members. And we'll go after that to introduce our nominee.

SENATOR PAT ROBERTS (R-KS): Mr. Chairman, I might inquire if that means that I am to go first. And as opposed to Senator Dole, I always live in mortal fear of when I go first and then Senator Dole follows me. But is it your preference that I speak now? Or would you prefer to have our colleague go first?

SEN. KENNEDY: Well, that sounds -- I don't see Senator Dole shaking his head in disapproval. So we'll go ahead and --

SEN. ROBERTS: I have a lot of nice things to say about you, Bob. So I thought I'd go first, if that's all right with you.

(Cross talk, laughter.)

All right.

I'll be happy to start off.

Thank you, Mr. Chairman. It's good to have you back.

SEN. KENNEDY: Thank you.

SEN. ROBERTS: It's good to see you as chairman, sir.

It is a special day, and indeed for the state of Kansas, because we have with us today the man who is without question the favorite of Kansans, and probably the most beloved public servant, in support of our governor, Kathleen Sebelius.

Senator Bob Dole, honored to have you here. We Kansans are always mindful of the great legacy that you forged for us in the Senate. I continually strive to live up to your years of service to our state.

I would remind everybody that while it is not a topic of conversation for this hearing, that every time you pass the world War II memorial or you talk to a World War II veteran who has experienced a great, moving experience in visiting that memorial, you can thank Bob Dole. And that's the kind of man he is. And thank you, Bob, for being such a friend of our family down through the years.

Mr. Chairman, I would like to ask unanimous consent that the statement by Senator Nancy Kassebaum Baker be included at this point. Senator Baker said, "As a former chairman of this committee, it is with the highest regard that I endorse the nomination of Governor Kathleen Sebelius as secretary for the Department of Health and Human Services." So I would ask that her statement be inserted at this point.

SEN. KENNEDY: It will be included.

SEN. ROBERTS: Well, Governor Sebelius, welcome. It is a special and great opportunity for Kansas to be represented as a member -- a Kansan to be represented as a member of the president's Cabinet. And I want to thank President Obama for nominating our governor for this very important position.

The governor and I have had a special relationship. Her father- in-law, former Congressman Keith Sebelius, was my godfather in this business. I had the privilege of serving as his administrative assistant during his entire congressional career. He was a great congressman and mentor and friend.

And I have known Kathleen and her husband, Gary, throughout the years. Gary's now a judge. And we have enjoyed a very special relationship. I remember well when Gary was a student at Kansas State University and I was administrative assistant to his father. And so we had a quite unique relationship in that respect. And I would only say that I'm sorry that his good friend Rudy Berdesco (ph) could not be here with us today to share during this time. Obviously, we're not going to get into telling stories.

Governor Sebelius, I look forward to building on that relationship as we work towards improving our nation's health-care system. I think Senator Enzi pretty well summed it up in regards to the challenge, as did our chairman, Senator Kennedy. So I look forward to working with you, will have another experience as a member of the Finance Committee, where I'll have another privilege to introduce you at that particular time.

So thank you very much, Mr. Chairman.

SEN. KENNEDY: Thank you very much.

Now, Senator Roberts -- I mean, excuse me, Senator Dole.

BOB DOLE (former senator from Kansas): (Off mike.) Oh, is it -- turn that on? Yeah.

And I'm accompanied today by a good friend and a fellow Kansan. And I served with her father; I served with her father-in-law in Congress. And so there's been a long relationship. We call it bipartisanship in Kansas. And maybe the fact that we start off by a Republican introducing a Democrat will be a good omen for what we hope will be a very productive year in health care reform.

My view is that it's time to bite the bullet. And I want to commend both the chairman and Senator Enzi but primarily the chairman. We've been here a long time together and it's been high on your priority list as long as I can remember, and you got here before I did. I think Strom was here, too, but not many others.

SEN. KENNEDY: (Laughs.)

MR. DOLE: But this is a matter -- I went back and checked, and I introduced a bill, along with Senator Domenici and Senator Danforth in 1977 that pretty much picked up a lot of the pieces we're finding in different bills now. It wasn't all my idea. We had a lot of help from Democrats and Republicans. In those days, bipartisanship was, you know, pretty well accepted. And normally we could work out our differences.

But I can't think of a tougher job to step into now than the secretary of HHS. I mean, we have a little group of us, four former leaders -- Senator Mitchell, Senator Daschle, Senator Baker and myself and -- called the bipartisan panel. And we've been doing different things in energy, but now we're working on health care. And we hope to unveil our product sometime in the next couple of months.

And we've been working on it over a year and we understand just some of the difficulties that Governor Sebelius is going to have to face up to in the next several months.

And, you know, Kansas has tended to be a Republican state for the past 3(00) or 400 years -- (laughter) -- and one thing about Kathleen is that she's willing and able to work with the Republicans and Democrats to try to get something done.

And, as I said, I can't think of any more difficult challenge. It's a critical time. As Senator Kennedy alluded to, you know, where you're able to have the best care, you get the best care in America. And I've been blessed with the same opportunities when it comes to good health care over the past 30, 40 years. And so it -- there are many of us who understand from personal difficulties, their illnesses or whatever, how important affordable and accessible health care is.

And this committee's going to be very, very important, along with the Finance Committee, in making certain that we get something done.

Now, you know, I know the numbers -- if you just look at the numbers, there's really no need to talk about bipartisanship, because the Democrats have the numbers. But that -- I think that misses the point. This should be bipartisan -- nonpartisan. As Senator Mikulski knows -- and we've worked on a lot of issues together -- because it -- the American people understand that when the Ds and Rs are together, doesn't have to be some gigantic legislation, but something that's really important to a segment of the American people; that it's going to be successful, it's going to be accepted and it's going to be -- you know, it's going to do a lot of good things for a lot of good people who now can't afford good health -- quality health care. In many cases, it's not accessible.

And so I may be wrong, but I think the time has come that we need to do it and to do it this year. The president's made it a priority. I know this committee has made it a priority. I know Senator Baucus and Senator Grassley in the Finance Committee have made it a priority. And if we'll all just give and take a little, you know, we could end up with some pretty good legislation.

And Governor Sebelius's strength is the fact that she understands health care.

As the Kansas insurance commissioner, she's had a lot of experience, and she knows the critical issues, so she doesn't walk in as just somebody, you know, who agreed to take the job. She walks in as someone who is willing and able, and who would make the commitment and try to make it work, try to make -- bring parties together on very critical -- in very critical areas.

So you know, we spend a lot of money on health care, 2.2 trillion (dollars) per year, and it's estimated 46 million uninsured -- I'm not certain who counts 46 million, but that's a lot of people to be without insurance.

Now some of those could buy insurance. They have the means, but they don't.

Some are younger. A lot of younger people I see up the -- in the -- beyond the dais, you think, "Nothing's ever going to happen to me. I'll buy a new car." And so there are -- some people just don't think they need to buy insurance.

But there are millions, millions of people who just can't afford it. And they have children, and they have grandchildren.

And half of all personal bankruptcies are due to health care costs. People just can't afford, you know, to take care of their health care bills and avoid bankruptcy.

So I would say to this committee, and particularly Governor Sebelius, I think you have the challenge of the year when it comes to legislative achievements. And I'm not in Congress anymore, but I know a few people who are, and I know the four of us, Senator Mitchell and Senator Daschle and Senator Baker and myself, want to be helpful in any way that we can, if it means just disappearing for several months or wherever you think it'll be the most helpful, because we think it's important to pass good, sound legislation.

So I think not acting is -- it's not an option anymore. We've been patching up health care, all of us who we've all been a part of it. And I don't -- some of it's been very good and very timely, but it's not a solution.

And there are always some people left on the sidelines. There's always somebody rushed to the emergency room because they didn't have the resources to go anywhere else.

And so, you know, where do you find this person that's going to be able to come in and sit down with members and staff and agencies, and work out what I said is the number-one topic of the year?

And we can't accept the status quo. And it's going to take members of both parties -- not just one or two, but a pretty good chunk of both parties, even though, as I indicated, Democrats have plenty of -- well, they've got a big bench; they've got a lot of reserve strength. But it's one of these times -- as was the Americans With Disabilities Act, as the senator from Massachusetts recalls -- where you just have to say, okay, let's just put partisanship aside; and we don't care who gets the credit, let's get it done. And obviously, the senator from Massachusetts was a key player in that debate. And we had people you wouldn't expect from both sides of the aisle cooperate. In the final analysis, I think we had about 90-some votes; I don't recall. But it shows that things that people say can't be done can be done.

So we have before us a nominee who has the skills, who has the experience, you know, the family sort of -- I guess you've kind of grown up in politics. And as I said, I had the honor of serving with your father, and I think we even voted together on one occasion. (Laughter.) But he was a very fine guy and a man of integrity, as was Senator Roberts' boss, Congressman Sebelius, who is a great friend. And that's just the way it works sometimes.

So I would just conclude. Pat has put in the record the letter from Senator Kassebaum and I'm -- so I don't need to put it in the record again. But I would just -- just quote just one sentence, so she'll know that I did it. Kathleen and Nancy have been friends for a long time, and they've worked together on health care. They worked together on the Kennedy-Kassebaum Health Care Bill, which is one of the most recent bills. And what Nancy understands, and always understood: that "bipartisanship" is a good word, and that we shouldn't hide from it, that we ought to develop it and nurture it and let it grow.

In my time in the Senate, it always occurred to me that if I could go to Kansas and people knew that not only "X" number of Republicans were for it, but also "X" number, a good number, of Democrats supported the legislation, the constituents would find it much more acceptable, because they knew it was broad-based and you had to bring different people with different philosophies and different ideas together.

And you never get all you want. I mean, they always talk about Ronald Reagan as the -- you know, the -- well, the ideal conservative. But I remember him telling me when I was the Republican leader, "If you can get me 70 percent, take it. I'll get the rest next year, or maybe later." He never said "maybe never."

But -- so Senator Kassebaum, as the chairman knows, understands the need for working together and finding out -- as I said, I've known the family for a long time, and I know they're -- well, men and women of honesty and integrity, and willing to accept this challenge. And I look forward to working with her, and hopefully our little committee with Mitchell and Daschle, primarily, and me and Howard Baker as sort of, you know, some compasses or whatever. We want to work together.

And I know there must be 25 or 30 plans floating around out there, and so we want to make a pledge to the chairman now -- we've got a lot of resources. We've been working on this for more than two years. It's funded by foundations without an agenda, without any partisan agenda. And we have a staff that I think has done a wonderful job, and we'll be working with Governor Sebelius.

So I guess the question is, can we forge a bipartisan proposal that is accessible, available and affordable? And I think we can, with steady and strong leadership. And Governor Sebelius is ready to lead us in that direction.

Thank you. And I'd ask my entire statement be made a part of the --

SEN. KENNEDY: It will be made a part of the record.

Thank you, Senator Dole. You brought back a lot of memories in legislation, the ADA program and our other legislation that was so important in the past.

And you ran us through the history of health care. It was good to listen to your comments and to hear again the sort of history, of so much of health care, that you were a part of that continues to be really a part of our whole kind of legacy here on health care.

We will always value it. And we're always impressed by your knowledge about this legislation and other legislation. Your strong commitment on health care will be enormously valuable to all of us, as we're working on this issue.

And on our committee, other committees and the Finance Committee, we're working closely with them. And we value your knowledge and understanding and participation. It's an enormously valuable and useful effort for all of us. And we're very, very glad to have your presence here and to listen to your comments.

I will excuse Senator Dole, if he feels that he has to leave, if he wants.

MR. DOLE: Is it okay if I stay a while?

SEN. KENNEDY: Stay a while.

We're more than delighted to have him here.

MR. DOLE: (Off mike.)

SENATOR SHERROD BROWN (D-OH): Mr. Chairman.

SEN. KENNEDY: Yes.

SEN. BROWN: Mr. Chairman, I apologize for arriving late. I was at a banking markup. And I just want to take just 30 seconds to welcome Governor Sebelius. She comes from a long line of -- Senator Dole, good to see you; thank you for your comments -- comes from a long line of public servants in my home state.

Her father, as we know, was governor 30 years ago, some 30 years ago. And she was so active always in Ohio in so many good, public- spirited ways, as her family continues to be.

Her dad, after leaving the governor's office and going to Notre Dame, came back and, at the age of about 80, was elected to the school board and served two terms, in Cincinnati, dealing with so many of those problems that big-city public school systems have. And she's been a terrific governor. And I look forward to working with her, as secretary of Health and Human Services.

Thank you, Mr. Chairman, for that.

SEN. KENNEDY: Thank you very much.

Governor, we're delighted to have you here. You've had a long career, distinguished career, in a number of different areas of public policy, have been especially focused on the issues of health care, and obviously we're -- it's an area where all of us in this committee is deeply interested -- and in a variety of different -- have a long tradition of public service in your family.

So it's a very distinguished background and experience.

And it really is a special honor to have a chance to introduce you here at this time before our committee. And I'd ask you to proceed if you would.

GOV. SEBELIUS: Well, thank you very much.

Chairman Kennedy, Senator Enzi, members of the committee, I want to thank you for inviting me here today to discuss my nomination as secretary of Health and Human Services.

I want to start by recognizing two people who are not with me today.

As has already been mentioned, Senator Kassebaum, the former chair of this committee, was hoping to come. She wanted to say hello to old colleagues and be here today. She was one of the 20,000 Kansans who lost power over the weekend, with our ice storm. So that kind of rearranged her plans. I'm hopeful that she is able to participate in this hearing at least by television, which will mean her power's back on at home.

The other person I want to particularly mention is my husband, Gary Sebelius, who 34 years ago brought me from Washington to Kansas. He was the Kansan. He is a federal magistrate judge and his overly packed criminal docket on Tuesdays prevented him from rearranging that schedule. But they are here in spirit.

And I'm honored to have the two Kansans who have already spoken here with me, because not only have they been colleagues in the workplace, but they are good friends of the family. And as Sherrod Brown has already said, he has been a longtime friend of the Gilligan family. So I feel well represented by family friends here today.

I'm so honored that President Obama has asked me to fill this critical role at such an important time. The Department of Health and Human Services strives for a simple goal: protecting our nation's health and providing essential human services.

Among its many initiatives, the department supports genomics research to find cures for debilitating diseases that afflict millions of Americans and challenge their families; provides children the health care, early education and child care they need to enter school ready to learn; and protects the health and well-being of seniors through Medicare.

The department is also charged with sustaining our public-health system and promoting safe food, clean water and sanitation and healthy lifestyles.

Working in concert with scientific advances and medical breakthroughs and an ever-evolving understanding of the human condition, the department's efforts have made a difference over time. Yet, at the beginning of the 21st century, we find new and daunting challenges. Perhaps most importantly, as members have already reflected, we face a health-care system that burdens families, businesses and government budgets with skyrocketing costs. Action is not a choice, it's a necessity.

I'm excited to join the president in taking on these challenges should I be confirmed. Many of the same challenges I've addressed as governor, as insurance commissioner and as a state legislator. I'm proud to have worked for more than 20 years to improve Kansans' access to affordable, quality health care, to expand access to high-quality child care and early childhood education, to assist our seniors with Medicaid challenges and Medicare billings, to work to expand the pipeline of health-care providers, and to ensure access to vital health services in our most rural areas.

I've also been a health-care purchaser, directing the state employee health-care benefits program, as well as overseeing operation of health services in our correctional institutions, Medicaid and CHIP programs, and coordinating with local and community partners on health agencies across Kansas.

As insurance commissioner, I took the then-unprecedented step of blocking the sale of Blue Cross/Blue Shield of Kansas to a health-care holding company, Anthem of Indiana, because all the evidence before me suggested that premiums for Kansans insured by Blue Cross would have increased too much. And these efforts have yielded results. Our uninsured rate in Kansas is lower than the national average. Our health statistics are improved. And Kansas has been ranked first for health-care affordability for employers and received a five-star rating for holding down health costs.

I hope you give me the opportunity to apply my experience as governor and insurance commissioner to the challenges of advancing the health of the nation.

These challenges are significant. Health care costs are crushing families, businesses and government budgets. Since 2000 health insurance premiums have almost doubled, and an additional 9 million Americans have become uninsured.

We have by far the most expensive health system in the world. We spend 50 percent more per person than the next most costly nation. Americans spend more on health care than on housing or food. General Motors spends more on health care than they do on steel.

High and rising health costs have certainly contributed to the current economic crisis and represent the greatest threat to our long- term economic stability. Rapid projected growth in Medicare and Medicaid accounts for most of the long-term federal fiscal deficit. And at the state and local levels, policymakers are forced to choose between health care and other priorities, like public education and public safety.

American jobs are also at stake. Businesses are striving to maintain both coverage and competitiveness, and currently there's no relief in sight.

That's why I share the president's conviction that, as he says, health-care reform cannot wait, it must not wait, it will not wait another year. Inaction is not an option. The status quo is unacceptable and unsustainable.

Within days of taking office, the president signed into law the reauthorization of the Children's Health Insurance Program, a hallmark of the bipartisanship and public-private partnerships we envision for health reform. Implementing this program in partnership with the states will be one of my highest priorities.

President Obama has also worked to enact and implement the American Recovery and Reinvestment Act. This legislation includes essential policies to prevent a surge in the number of uninsured Americans and makes positive investments now that will yield health and economic dividends later.

Through health information technology, the recovery act lays the foundation for a 21st-century system to reduce medical errors, lower health-care costs and empower health consumers.

It supports vital information-gathering by investing over a billion dollars in comparative-effectiveness research to provide information on the relative strengths and weaknesses of alternative medical interventions to health providers and consumers.

The recovery act also makes an historic investment in prevention. The president's budget, submitted in February, continues the work begun in the recovery act. It dedicates $634 billion over the next decade to reforming the health-care system. Its proposals would align payment incentives with quality, promote accountability and efficiency and encourage shared responsibility. Still, the president recognizes that the reserve fund is not sufficient to fully fund comprehensive reform, and is committed to working with Congress to find additional resources to devote to health-care reform.

We appreciate the tremendous leadership of this committee to work to solve the great challenge for our nation, and hope to see action in the coming months. Should I be confirmed, health reform will be my mission, as it is the president's, along with the tremendous responsibility of running this critical department.

So I'd like to highlight a few opportunities and challenges facing the department.

The Centers for Disease Control and Prevention -- CDC -- is critical to forging a 21st-century health system that prioritizes prevention. Its mission is to create the expertise, information and tools that people and communities need to protect their health. If confirmed, I will continue the proven strategies for success as well as revitalize the CDC for its heightened role in a reformed health system.

As Americans focus more on prevention and leading healthier lifestyles, HHS must live up to its responsibility to protect the public from health risks. It is a core responsibility of the agency, through the FDA, to ensure that the food we eat and the medications we take are safe. Unfortunately, there's a growing concern that the FDA may no longer have the confidence of the public and of Congress. If confirmed as secretary, I will work to restore in the FDA the trust of the American people, and restore the agency as the leading science- based regulatory agency in the world.

As important as it is to protect people by regulating drugs, it's equally important that we discover new drugs and treatments that can prevent, treat and cure disease. The National Institutes of Health provide that critical support. The mission of NIH is science in pursuit of knowledge about the nature and behavior of living systems, and the application of that knowledge to extend healthy life, combat illness and ease the burden of disability. If confirmed, I'll work to strengthen NIH with leadership that focuses on the dual objectives of addressing the health care challenges of our people and maintaining America's economic edge through innovation.

Leading the Department of Health and Human Services and working with the president to reform the health system won't be easy. If it were, as the president has noted, our problems would have been solved a century ago. But the status quo cannot be sustained and is unacceptable for economic prosperity and for the health and wellness of the American people.

Previous opponents of health reform are now demanding it, putting the common interest in an affordable quality system of care for all ahead of special interests. And policymakers, like those of you in this room and men and women who serve in Congress, are reaching across party and ideological lines to accomplish this urgent task.

I hope I have the opportunity to join you, and I look forward to your questions.

SEN. KENNEDY: Thank you very much, governor. Here is the million-dollar question on the minds of all Americans. It's a simple one: How in the world are you going to get health care reform? (Chuckles.) No, we'll just move on from there. (Laughter.) I'll give you another opportunity later on in the --

GOV. SEBELIUS: (Off mike.)

SEN. KENNEDY: Okay. There we go. Just seriously, you've been on the front lines of health care. What experience have you learned from those experiences that'll help us enact health -- for health care reform?

GOV. SEBELIUS: Well, Mr. Chairman, in my service as governor and as insurance commissioner, I have learned some valuable lessons, I'd say the first of which: States can't do it alone.

A lot of states have been struggling over the last decade or more to expand health coverage to our citizens, but it's a daunting task without a federal policy in place and a federal partner. And I'm very pleased that we have an administration committed to tackling this key problem and a lot of enthusiasm both among Republicans and Democrats that we need to reform the health care system.

No question that costs are crushing. And addressing the cost system means overhauling the way we focus our health care system. Certainly, the efforts that this Congress has already made in investing in prevention is a huge step forward. I'm a believer, along with a lot of the members of this body, that prevention services, intervention at an earlier age or an earlier stage in illness is one of the ways to reduce costs.

Insuring every American helps us recapture the overpayment of Americans who are now accessing the health system through the doors of an emergency room, where they get the most expensive, least effective kind of care. We see it over and over again in Kansas. We see it in every town in America. And that is primarily caused by a failure to have a health home and a primary provider.

Certainly, reorganizing the incentives for primary care and earlier intervention and tackling the problems of chronic disease -- the assets of the agency which I've been asked to lead and which I hope I have an opportunity to do, if confirmed, can be enormously powerful in building the blocks of the health reform puzzle: making sure that the Medicaid and Medicare program work efficiently and effectively; making sure that we adequately roll out the expanded application of CHIP, the program for children's health insurance, which has been probably one of the most significant enhancements to health insurance in the last several decades; and making sure that our research and scientific capabilities are directed to the best possible care at the best possible price.

So I'm enthusiastic that the lessons learned as governor and insurance commissioner can now be taken to the national level.

SEN. KENNEDY: Let me ask you, what -- should we wait? There are many that think that we should wait on health care and health care reform, try and get the cost down of different parts, have rather a dramatic, perhaps a gradual movement towards health care reform.

What's your sense about whether we should wait or shouldn't wait, to see this reform taking place, given our current economic crisis?

GOV. SEBELIUS: Well, Senator, I think, our current economic crisis presents the inevitability that we cannot wait. I believe, as the president has articulated over and over again, that we can't fix the economy of America without fixing the health care system.

It's so intricately tied to the cost that employers are now spending and finding themselves less competitive with global partners. It's incredibly tied to the burden that American families face, with bankruptcy and health costs.

So I think the urgency is upon us. And I think the lessons from Massachusetts, your home state, a state which has an impressive attempt to expand coverage, to all in Massachusetts, gives us some important rules to keep in mind.

The folks in Massachusetts would tell you that they decided to work in incremental steps, to first tackle the opportunity to expand health care, to all citizens, and secondly to tackle the cost situation. And unfortunately they're in a situation right now where coverage has been expanded. And that's very good news, but costs continue to rise.

So I think the lesson learned is that not only must we approach health reform. But it needs to be a comprehensive effort; that unless we face the costs at the same time we are expanding coverage, we really haven't made as much progress as we can. And we won't have provided the pathway to prosperity for American workers, for American businesses and American families.

SEN. KENNEDY: Senator Enzi.

We're going to try to give a five-minute -- five-minute rule on this. But to do that, we're going to have to ask all of our colleagues to be as brief as they possibly can, in order to try and get through as many questions as we can. We thank all of our colleagues for respecting that.

Senator Enzi.

SEN. ENZI: Thank you, Mr. Chairman. And as I mentioned -- (inaudible) -- this committee does pass a lot of legislation. And one of the reasons it does that is because we work together. And one example of that is the National Service Act that was just passed last week.

Senator Mikulski did a marvelous job of pulling everybody together and holding the hearings in Senator Kennedy's absence. And Senator Hatch did a great job of working from the other side. And Senator Coburn did a marvelous job of introducing matrixes. And Senator Mikulski listened to that.

So there was an improvement in the bill, through that part of the process. But a good working relationship requires both the majority and the minority to listen and work with each other.

And in light of that, the first question I always ask is, if confirmed, will you pledge to cooperate, in this type of a working relationship, with the senators of the committee, both Democrats and Republicans, by promptly responding to any written or phone inquiries, sharing information, as soon as it becomes available, and directing your staff to do the same?

GOV. SEBELIUS: Senator, you have my commitment, if confirmed, that I will be not only a eager partner, to work with Congress, but that I understand bipartisanship. As Senators Dole and Roberts have already indicated, I am a Democrat in a state where the majority of voters are Republicans.

The vast majority of our legislature are Republicans. And yet time and time again, I have found ways to work across party lines and get things done.

I think that's what the American people expect of me as secretary. If I'm confirmed, I pledge to work in that same fashion that I bring out of Kansas.

SEN. ENZI: Thank you. And I know that you're a former legislator, so I know you have an -- a full appreciation for how debate and respect for the process does lead to bipartisan legislation.

In the interest of the bipartisan support for health reform, I hope that you'll join Senator Baucus and Senator Conrad, the chairman of the Budget Committee, to discourage members from using the budget reconciliation process to pass health-care reform, so that there's the appearance and the reality of an open process. Would you do that?

GOV. SEBELIUS: Well, Senator, I know that the president is very dedicated to having a bipartisan process for health reform. He talked extensively during the course of the campaign about the need to reform the health system, but chose a different pathway than the previous experience, which was really to lay out some principles but make it very clear that he believes strongly that this cannot be a success unless Congress is engaged and involved in the process.

I think you saw his efforts shortly after the campaign to reach out to Americans in community conversations across the country, the recent health summit where members of the House and Senate -- Republicans and Democrats -- as well as stakeholders from across the spectrum were invited to the White House. Those summits have been continued in regional meetings chaired by governors across the country. One, in fact, is taking place today in North Carolina, Senator Burr's home state.

So I think there's an absolute dedication to engaging Republicans and Democrats in this effort. I would say I think there's also a -- urgency about this effort this year to get something passed. And, at least in the preliminary discussions that I've had with members of Congress, there is an interest in not taking any tools off the table prematurely, but being very dedicated to a bipartisan process and a bipartisan bill.

SEN. ENZI: I'm afraid that, if that reconciliation winds up in the budget bill, it'll be like a declaration of war or -- hopefully not quite that drastic. But even -- you mentioned West Virginia -- Senator Byrd is (even an ?) -- an example of why that should not be the process. I think we've set up a schedule (of ?) this board of directors to meeting a tight timetable for getting something done.

And this time, with having Congress involved in the process, I'm confident that something will happen with it and in a relatively shortly period of time. But I hope that that wedge doesn't get thrown in there, because it is a major concern on one side of the aisle.

I'll move quickly to health IT. I had discussions with the Mayo Clinic and with some other clinics and then the CEO of Safeway, who has talked about the need to be able to aggregate information in health IT. And I think that some of the legislation that we've done already, the privacy is so strong that I'm not sure the individual can look at the record, let alone the doctor look at the record. And you definitely cannot aggregate so that you can figure out problems to solve in a major way.

And since my time has expired, I will submit that to you in writing, along with a number of other questions that I have here. So I'd reserve the time.

SEN. KENNEDY: Thank you very much.

Senator Mikulski, we're delighted to have you.

SEN. BARBARA MIKULSKI (D-MD): Thank you. Senator Kennedy, it's so great to see you back in the chair. I mean, we really genuinely and enthusiastically are happy to see you.

Governor Sebelius, we're happy to welcome you. And I see Senator Dole.

Just very quickly, the women of Kansas have a terrific reputation. When I first came to the Senate, there were only two women; now there are 17. But the other woman was my very good friend, Senator Nancy Kassebaum Baker. It's a treasured relationship.

And what I see are common characteristics with both you and she were, number one, a style of civility which I think will go a long way; second, competent, and yet unfailing common sense, finding that sensible center; and then also, compassion, but a desire to find, again, those pragmatic solutions. So we're happy to see another woman from Kansas.

GOV. SEBELIUS: I thought you were going to start with my gray hair and Nancy's gray hair.

SEN. MIKULSKI: No, no, no. No other woman would ever go in that direction. (Laughter.) We both value the miracles of modern chemistry. (Laughter.)

But let me go on, though, to what I see you as. I see you as the CEO of HHS, and really to bring your very extensive executive experience and executive ability to this job with 67,000 employees.

Let me go right to health reform and something that is the baseline in it, which is health IT. Whatever we want to do in health reform, health IT will help with both case management, reducing medical errors, all these good things. However, there is a great fear over interoperability. It's one I share. It's one providers, hospitals and all share.

How will you stand sentry over this process to avoid what we fear is a techno-Katrina? We're all saying that -- even the president said -- this is low-hanging fruit; oh, we can do it. But what we're concerned about is the failure of interoperability, the failure of compatibility. The failure to have clear national standards quickly could result in a fiscal and case management boondoggle.

So we want a boon and not a doggle. Tell me how you're going to do it.

GOV. SEBELIUS: Well, Senator, I think you have identified one of the linchpins of the health reform effort that has to be under way. And I'm so appreciative that Congress in the passing of the recovery act identified that expenditures for health IT was a fundamental building block for a new system of health care.

As you've just said, it doesn't matter if we just take all the paper and translate it to computers and have systems that still don't speak to one another, providers who have to replicate their forms and billing opportunities 10 and 15 and 20 times, hospitals that can't track a patient --

SEN. MIKULSKI: Governor, you're identifying the problem, but what -- how are you going to make sure we get to the solution?

GOV. SEBELIUS: Well, we have -- the department has just identified a new leader for the health IT system in David Blumenthal, who is nationally renowned and has the expertise, I think, to be the point person for this very important effort.

And the challenge is, as you said, to have standards that work. There is a broad-based stakeholder group at the table. They have a very aggressive timetable to develop interoperable standards and address the initiative to begin then to have investments available for clinics and doctors and hospitals to put the system in place. But step one is to get a platform where people talk to each other.

As governor of Kansas, we have worked on a health IT system for the last three years -- I think we actually are ahead of a lot of the country -- where we put insurers, providers, the major hospital groups and others at the table, because we knew that investments were not worthwhile unless there was a common platform.

We are going to be the first state in the country that's implemented a smart card for Medicaid patients, where they will be able to swipe a card, in services and benefits. We have a single billing system that will be in place by the end of this year.

So providers will fill out one form, and any insurance company who wants to do business in our public system in Kansas will have to abide by that one billing form.

So we -- I have some experience, as insurance commissioner and as governor, in working on this platform, and I think we have the right leader in place to move this initiative forward.

SEN. MIKULSKI: Well, here's where I am. First of all, I'm an enthusiastic supporter of your nomination. I think you do bring the right stuff to the job, and I think that right stuff is exactly your personality characteristics, your know-how and your executive ability.

On this health IT, whether it's prevention, controlling costs, et cetera, I'm sure Dr. Blumenthal will do a good job, but I'm going to ask you, as -- someone who I think will be secretary, to have someone who really follows this on a day-to-day basis so we don't get lost in wonkishness and so on.

We really do have to have national standards, lessons learned from the VA. You know how to set up the process. Blumenthal knows how to do it. But there's a great sense of urgency. So then the private sector can develop the products we might use. But without national standards, we could head for a techno-Katrina.

And I do not want to do that, where we do a dollar dump and at the end of the day -- is we have a lot of micro-chips floating around and -- not really the kinds of outcomes the president wants, you want, and I believe the bipartisan effort wants.

So I'm going to ask you really to aggressively stand sentry on this, because it will be the linchpin of the technology we need to get to the policy reforms.

GOV. SEBELIUS: Well, Senator, you have my commitment, if confirmed, that I will do just as you asked -- and also, look forward to working with you and others in Congress who have worked on this critical issue for years. You have the expertise; you have thought about it for a good deal of time.

But you're absolutely right, this has to be done right. It has to be done well. It has to be a system that works not only for urban communities but, as Senator Enzi has already pointed out, our most rural areas. We can't have a system where the systems can't talk to one another.

But if it's done right, I am a believer that not only will it lower medical errors and lower costs but empower consumers and providers in a way that we have not seen and unlock the innovation for health reform in America.

SEN. MIKULSKI: Thank you, Mr. Chairman.

SEN. KENNEDY: Senator Burr.

MR. : Isakson.

SEN. KENNEDY: Isakson. Senator Isakson.

SEN. JOHNNY ISAKSON (R-GA): Thank you, Senator Kennedy. Glad to have you back in the chair.

Governor Sebelius, great to see you.

Senator Dole, it's a pleasure to see you again. We're long-time friends, and I still enjoy your wit to this day.

The first question I have -- and being from Georgia, we recently had the salmonella outbreak, which started in the plant in (Camilla ?) but then spread to closings of plants in Texas and Virginia.

Because of the pervasive nature of that recall and the number of people that passed away and were affected with salmonella, there have been some people calling for a separation of FDA and the -- into two different functions, from food on one side, drugs on the other.

Do you have a position on that proposal?

GOV. SEBELIUS: Well, Senator, I have watched with interest some of that preliminary discussion. And again, if confirmed, I intend to be very actively involved in the -- in the debate about -- I think step one is restoring FDA as a world-class regulatory agency. It was at one point the gold standard for regulatory agencies, not only with the country but in the world.

And I think there are serious issues that need to be addressed within the organization to make sure our food supply -- which, as Senator Roberts and Senator Dole can tell you, we take very seriously in Kansas -- food safety and -- safe and secure food supply and our drug supply is safe and secure.

So there is, again, new leadership who has been identified for the Food and Drug Administration. I'm hopeful that if the Senate approves their nominations rapidly, we can have that kind of enhanced leadership in place. The president has proposed in the budget a(n) almost 30 percent increase in resources.

But I think that part of the challenge at this point is that however well the Food and Drug Administration operates, we have to have a new platform for safety and security of food and drugs in this country. And it has to be a much more collaborative approach with industry. It can't just be the responsibility of government. It has to be up and down the food chain.

Too often, we're reacting to situations -- as you say, the -- you know, the salmonella outbreak. I -- today, I learned that pistachios have also been recalled. And the reaction time needs to be faster, but also we need to involve industry in making sure that we look at products as they move through the food chain and that there is some collaborative operation to make sure that those supply chains are also very involved in keeping our people safe.

So I think it's premature to discuss whether or not we divide or keep together an agency. I think step one is restoring the agency that has this responsibility to its rightful purpose, which is a safe and secure food supply.

SEN. ISAKSON: On the same subject matter but about the stress on FDA right now, in terms of workload and some of the problems that have existed, there is legislation, it was pending last year in the Senate and is pending again now, to put FDA regulation of tobacco in the FDA.

Would you support that? And if so, would that regulatory authority add too much stress on an already overly stressed department?

GOV. SEBELIUS: Senator, I support the idea that the FDA will regulate tobacco. The president has supported tobacco regulation within the FDA. And I think that there's no question, as we talk in this room about health reform. And what we know is, smoking is the number-one cause of health-related diseases. It's probably the most expensive cause of illnesses that land people in the hospital.

And for the Food and Drug Administration to actually have the authority to exercise its regulatory power and not only have enhanced and more significant warning labels, more information available to consumers, help to regulate the products that are often enticing the youngest Americans to start smoking, with whether it's flavored cigarettes or a variety of things, can only in the long-term benefit our overall health and our economy.

SEN. ISAKSON: Well, thank you very much. And I'll just make a comment, because I know my time is up.

But one other pending issue that will come under your jurisdiction, if you're confirmed, is the whole issue of biological pharmaceuticals and follow-on biologics. And we are the best inventor and discoverer of pharmaceuticals that have helped save thousands and thousands of lives. And now biologically based pharmaceuticals are growing exponentially.

So as we deal with that whole area of oversight and approval, of those biologics, let's not forget, the process that we have for chemical compounds has led us to be a country that can really invent a lot of pharmaceuticals and a lot of breakthroughs and have the incentives to recover the R&D money. Let's make sure we do the same thing with regard to biologics.

And again congratulations on your nomination.

SEN. KENNEDY: Senator Harkin.

SENATOR TOM HARKIN (D-IA): Thank you very much, Mr. Chairman.

And let me join with others in welcoming you back to take charge of our committee and health reform this year.

And welcome to Governor Sebelius, and congratulations on your nomination for this very important position.

I apologize for being here late and having to leave early, but right now I'm chairing another hearing on agriculture on the reauthorization of the child nutrition bill this year that has to do with our school lunches and school breakfasts, which Senator Dole has been such a great leader on all his lifetime, and trying to get junk food out of our schools and get more healthy and nutritious food for our kids in schools.

Now, while that may not be directly in your jurisdiction, I certainly hope that you will work closely with Secretary Vilsack and Secretary Duncan in helping us get this bill through that will get the junk food out of schools and the sugary sodas and get healthier foods in our schools for our kids. So I hope you'll be involved in that, even though it may not be directly under your jurisdiction. That's my way of saying -- that's why I have to leave a little early.

But I'm really delighted to see you here with Senator Dole, because my first question has to do with an issue that both of us have worked on for a long time -- him a lot longer than me. Senator Kennedy has also been a very -- champion of disability issues.

As you know, we passed the Americans with Disabilities Act in 1990. Shortly after that, we started a process to try to address the issue of people with severe disabilities and the fact that they are shunted into nursing homes. When I tell people this today, they don't -- they say I must be mistaken when I tell them that right now if you are a person with a severe disability and you're eligible for Title 19 under Medicaid, Medicaid must, must pay for your institutional setting in a nursing home. If you want to live in your own home or in a community setting, they don't have to pay for it. And so Medicaid forces people with disabilities into nursing homes, where they may not want to be.

And so we started shortly after that, Senator Dole and I and others, in the early '90s pushing a bill which we called the Medicaid Communities Attendant Services and Supports Act. The people in the community knew it as MiCASSA. But we could never get it through because they said it was going to cost gazillions of dollars.

Well, since that time, we've had further studies done and we know now that it doesn't cost that much. And so we now have a new bill -- we call it the Community Choice Act -- to give people with disabilities the choice. Do they want to live in a nursing home or do they want to get their services and supports in their own home or in their community, near their families, near their friends?

And so -- and then 10 years ago, 10 years ago this year, we had the Supreme Court decision in Olmstead, the Olmstead case, in which the Supreme Court said that people with disabilities have a constitutional right to live in the least restrictive environment.

That was 10 years ago, and we still haven't taken care of it. It's just hanging on us.

I would just like to ask if you would support the Community Choice Act as well as the supreme Court decision in Olmstead, as we do health-care reform to make sure that in health-care reform, that people with significant disabilities have the choice and opportunity to receive their supports and services within their own homes and communities rather than just in institutional settings.

GOV. SEBELIUS: Well, Senator, I'm not familiar with all of the provisions in the act -- the Community Choice Act. What I can tell you, though, is that Kansas has been fairly aggressive as a state in pursuing Medicaid waivers to ensure that money does follow those of our disabled citizens who want to live in a less-restrictive setting.

We have addressed the challenges -- some would say not enough, there's more work to be done, but the challenges of building a workforce, a competent workforce who is available to take care of citizens in a less-restrictive setting, particularly those with severe disabilities. We've enacted legislation that has actually closed two of the hospital settings and moved those resources into communities.

So I am very much committed to actually following the dictates of the Olmstead Act. And as we address health reform, I think it's critical to look at citizens at all ends of the spectrum, those who are very healthy and those who are very disabled, and find the best possible avenue for support and health outcomes.

I don't think there's any question that people prefer to live in less-restrictive settings, and so we have workforce challenges, we have financial challenges, but it's one that I'm very familiar with and believe in very strongly.

SEN. HARKIN: I appreciate that. But the ultimate decision ought to be with the person.

GOV. SEBELIUS: That's right.

SEN. HARKIN: The person ought to decide, not Medicaid or CMS or anybody else. If that money can flow to a person to go to an institution, it ought to flow to that person regardless of where that person wants to live. And that's really the essence of the Community Choice Act. And I hope that --

GOV. SEBELIUS: Well, I promise if I'm concerned I will definitely take a look at it and work with you to see what we can do with the Medicaid system to make that happen.

SEN. HARKIN: I appreciate that.

I'd be remiss -- no, I don't have any time left. Okay. I'll submit my other questions in writing.

GOV. SEBELIUS: I do want to, though, also, if I can, Mr. Chairman -- the senator began his comments with a very critical issue, and I think it's one that is so tied to the topic that's sort of the umbrella topic of today's hearing, which is health reform.

Certainly, addressing childhood obesity, addressing the health of our children is a critical component of this.

We are the first generation of children in America, if the statistics continue, who will shorter expected lifespans that their parents, first time ever in the country. It's a rampant crisis that we need to address.

So I, again, congratulate you for your work on school nutrition, for wellness and prevention work. But addressing the responsibility that we have to take some action outside of insuring that Americans have access to health care -- I think we need to have some personal responsibility reinstilled. People have -- individuals have a responsibility about what they eat, how they exercise, what kinds of choices they make with, particularly, tobacco. And the more we can drive through the auspices of the agency through prevention efforts, I think, the better off we're going to be in the long run.

SEN. KENNEDY: Thank you very much.

Senator McCain.

SEN. JOHN MCCAIN (R-AZ): Congratulations on your nomination, Governor. And we look forward to speedy confirmation.

And, Senator Dole, it's wonderful to see you back again. As always, we miss you every day.

Governor, I'd like to discuss with you for a moment the issue of employer-provided health insurance. As you know, the employer- provided health insurance is a result of World War II, when price and wage controls were imposed. So employers provided additional health care benefits, and those are tax free.

First of all, would you agree with me that there's a certain unfairness associated with this, in two ways? One is that the -- traditionally higher up in the food chain the individual is, the more benefits and the more likely gold-plated insurance is provided. Also, small-business people are generally unable, or certainly large numbers of them are unable, because they are small-business people, to provide health insurance policies to their employees. Would you agree with that premise?

GOV. SEBELIUS: Well, Senator, I certainly agree that in the marketplace, those who are self-employed and those who are small employers are often priced out of the market. Yes, sir.

SEN. MCCAIN: Well, do you agree with my first point or disagree?

GOV. SEBELIUS: Well, I think there are -- there's no question that employer-based health insurance is the backbone of the health insurance system we have right now. Almost --

SEN. MCCAIN: My question was, will you agree or disagree that employer-based health insurance generally is much more generous to the upper-level management in American corporations and businesses?

GOV. SEBELIUS: Well, I'm not familiar with the differentials in the health system. I know in a state employee system, in a -- you know, in a manufacturing operation, that the the workers have good benefits. And I think they don't differ from the benefits of the executives in those systems.

SEN. MCCAIN: Would you support removing the tax exclusion and substitute a tax -- a refundable tax credit of, say, $5,000 per family, so that they can go out and purchase their own health insurance of their -- policy of their choice?

GOV. SEBELIUS: Well, Senator, I support what the president has articulated, which is that --

SEN. MCCAIN: You know, we are asking for your views before this committee, Governor.

GOV. SEBELIUS: I support what the president has articulated, which is that if Americans have health insurance that they like, they should be able to keep it. Dismantling the current system of employer-based coverage, to me, is not the most effective strategy, to reach full coverage for every American, since so many of our Americans currently rely on employer-based coverage.

SEN. MCCAIN: A lot of people view the -- some of the proposals by the administration as a government-run health plan that would be made available to all Americans. Do you support the creation of a government-run health insurance plan?

GOV. SEBELIUS: I don't support the notion that the government would run the health insurance plan. And I think again back to your earlier question. Starting with the platform that we have, where the vast majority of Americans with insurance have employer-based insurance, a number of people are involved in public insurance.

And then the question becomes how to close that gap, how to deal with the 15 percent of Americans who don't have coverage. And I see that as a public --

(Cross talk.)

SEN. MCCAIN: So you do not support a creation of a government- run health insurance plan.

GOV. SEBELIUS: Senator, I --

SEN. MCCAIN: These are pretty straightforward questions, Governor, I would think.

GOV. SEBELIUS: Well, if you're talking about insuring all 15 million Americans in some government-run plan, no. I'm --

(Cross talk.)

SEN. MCCAIN: I'm not asking that.

GOV. SEBELIUS: Maybe I don't understand.

SEN. MCCAIN: I'm asking if you support the creation of a government-run health insurance plan.

GOV. SEBELIUS: If the question is, do I support a public option, side-by-side with private insurers, in a health insurance exchange, yes, I do.

SEN. MCCAIN: Thank you.

I thank you very much, Mr. Chairman.

SEN. KENNEDY: Senator Murray. Senator Murray.

SENATOR PATTY MURRAY (D-WA): Well, Mr. Chairman, let me say that it's great to have you back and in charge of us. I've enjoyed seeing you here today. Thank you.

And governor, it is wonderful to see you here today. Thank you so much for being willing to take on this tremendously important job, at this time in our nation's history, when we are facing a terrific economic crisis.

And the issues that fall under your jurisdiction, should you be confirmed, are essential to our economic recovery and very complex. So thank you very much for your willingness to do this.

Health care obviously is the issue that everyone knows needs to be addressed.

And one of the, I think, parts of health care reform that I sincerely worried about is the shortage of health care providers we have today. As our baby boomers are retiring, many of them in the health professions, leaving it, and then becoming part of the generation that requires the most health care worker(s). We have a real lack of health care workers today.

I've held a number of roundtables around my state on health care, and every single one of them talk about the fact that we don't have enough doctors, nurses and health care providers. So I wanted to ask you today about how we can find and train and recruit workers into the health care field, even beginning back in middle school and high school years.

GOV. SEBELIUS: Well, I appreciate that question, Senator Murray. And I appreciate your leadership in this area because it is absolutely critical.

I think that the Congress made a major step forward with the recovery act: providing additional resources for the pipeline of health workers, expanding the health corps, looking at ways we can make sure that there are more providers particularly in our most underserved areas.

But the challenge of getting more of our young people involved in math and science at an earlier age and making sure that medical professions and other scientifically based professions are attractive to our youngest students is a -- I think an additional challenge we have across America, that we haven't -- we sort of lost that focus in our earliest learning and in our schools.

I can tell you, as a governor, it's a challenge that my colleagues and I took on as an initiative a couple of years ago, working with not only school systems but providers across the country to reinvigorate science and math curriculum to make sure that those pathways were open, because you're absolutely right -- if you don't decide until you're in high school or sometimes in college, you then have a lot of make-up work to do. We need that pathway to be built.

SEN. MURRAY: I think that a part of health care reform that we can't -- actually do health care reform can't lose sight of -- if there aren't enough doctors or nurses, the cost of health care goes up, particularly in our more rural communities. So it has -- I believe it has to be a part of health care reform.

GOV. SEBELIUS: Well, I also think part of the challenge and part of the solution may be to change the payment incentives. I mean, right now, it's not only how many health providers we have, but how few providers there in family practice and in family medicine and in preventive medicine as opposed to speciality areas.

So I think it's both the numbers overall, but it's also refocusing, hopefully, the payment incentives so that primary care becomes a much more lucrative profession, it's rewarded as the front end of the system. It strikes me that that's where we need a lot of the focus.

If we intervene earlier, if people have a health problem, if we focus on prevention and wellness, we won't need as many specialists. At the end of the day --

SEN. MURRAY: I hear about primary care, lack of primary care physicians, everywhere I go. So I appreciate that.

Let me ask you about, speaking of payments, Medicare payments to physicians. That is modified annually using a formula known as the sustainable growth rate, SGR.

That is a system of reimbursement that is based on a very outdated scale that came about from looking at cost of living and health care cost and patient utilization.

That formula is a real detriment in many of our states, including mine, because over time, we are being reimbursed because we have less utilization.

We focus on healthy outcomes rather than how many times you go to the doctor. And over time, our state reimbursement for Medicare is much lower than some other states that focus on higher utilization. And we have doctors now who are not seeing Medicare patients all across our state.

I know other states are seeing that as well. And I would like to find out, from you, how you think we ought to address the current SGR formula, so that it can more actively reflect better health care outcomes.

GOV. SEBELIUS: Well, Senator, I appreciate that question. I -- it won't come as a big surprise to you that I've heard about this issue every place I've gone. And certainly in conversations with providers, it's a huge, looming cliff.

The SGR cut that's proposed, to be enacted next year, would reduce provider rates by over 20 percent; clearly unacceptable. I mean, that's -- let me just say, if I am confirmed as secretary, that will be a top priority, to work with those of you in Congress, to address a long-term solution.

I do believe, as part of health reform, Medicare can lead by example. And part of the leadership will require a reconfiguration of the overall payment system.

SGR is part of it but only a piece of it. It's how we redirect those payments, to reward appropriate care, great outcomes, preventive care, as opposed to what we're doing now, which as you suggest is more about patient contact than patient outcome.

So I think we have a huge opportunity with the Medicare system to not only redesign and address the SGR itself, but to also redesign a whole payment system that redirects care to our senior population and the disabled population relying on Medicare services in a much more cost- effective and patient-effective manner, better health outcomes and lower costs.

SEN. MURRAY: Okay, thank you very much. My time is up. Thank you, Mr. Chairman.

SEN. KENNEDY: Senator Coburn.

SENATOR TOM COBURN (R-OK): Mr. Chairman, welcome back. It's good to see you.

Governor, thank you for being here. Congratulations on your nomination.

I want to clarify something you said earlier -- and this is your quote: "We cannot fix this economy without fixing the health care system." Are you implying that we can't recover from this recession unless we do major reform to the health care system?

GOV. SEBELIUS: Senator, I think it's so intimately tied to a lot of our economic challenges that I think reforming the health care system is -- puts us on a pathway to a sustainable long-term prosperous economy.

SEN. COBURN: But you're not saying that if we didn't do it, we wouldn't recover from this recession.

GOV. SEBELIUS: I am very hopeful that we're on a recovery mode from this recession. But as I listen to business executives, as I listen to health providers, as I listen to the families across Kansas and across America, the current rate of growth of health care costs is unsustainable.

SEN. COBURN: Yeah.

GOV. SEBELIUS: And I do think it's a -- it's a component of fixing the overall economic future for this country.

SEN. COBURN: Let me identify with some of the -- first of all, let me clarify. Senator McCain was not proposing eliminating employer-based health insurance. I hope you understood that. That was not the intent of his question.

The second point, I want to identify with Senator Mikulski. Health IT is important, but it's only important if we have interoperability. Do you have plans to disband the 501(c)(3) that's set up to do the certification now that Secretary Leavitt set up, the private board that is doing that certification and moving us towards interoperability?

GOV. SEBELIUS: Senator, I have to confess, I'm not familiar with the 501(c)(3).

SEN. COBURN: Well, it's set up -- (inaudible) --

GOV. SEBELIUS: I know there's a --

SEN. COBURN: -- public-private corporation.

GOV. SEBELIUS: Right.

SEN. COBURN: It's actually making the decisions about interoperable standards. And they've moved us from the 20 percent we had to about 60 percent, and a goal that in 2012 we'll have 100 percent interoperable standards. Is it your intention to let that continue to run, or are you going to interrupt that and do something different?

GOV. SEBELIUS: Senator, as you know, I'm not confirmed as secretary yet.

I plan to take health IT as an important challenge and a preliminary challenge. Dr. David Blumenthal has --

GOV. SEBELIUS: Senator, as you know, I'm not confirmed as secretary yet. I plan to take health IT as an important challenge and a preliminary challenge.

Dr. David Blumenthal has just been named, and --

SEN. COBURN: Well, let me ask you just to answer that, if you'll go back and look at --

GOV. SEBELIUS: I would be very happy to do that.

SEN. COBURN: And I plan on submitting several record for the question (sic). I'd like to come back for a second round. I have a meeting here in just a minute.

Would you agree that our biggest problem for access is cost?

GOV. SEBELIUS: Yes.

SEN. COBURN: All right. So if cost is the biggest problem to access, why are we wanting to raise $1.3 trillion or another $130 billion a year for government funding for increased access when we really should be working on decreasing the cost rather than increasing the expenditures?

The Obama plan has us raising -- takes us from 17 percent of our GDP to 19 percent based on the money that they're, quote, "reserving" in the Obama budget for that. If the biggest problem's cost, why aren't we working on cost rather than increasing the amount of expenditures?

GOV. SEBELIUS: Well, Senator, first of all, I'm not sure of the figure. I know that Senator Obama -- President Obama's budget lays out a $634 billion reserve fund that's entirely paid for, and he has suggested that that is not sufficient. So that's the number I'm more familiar with.

I do think that, like a lot of the experts feel, that we may have a short-term bell curve in spending increase before we can incur the long-term savings and cost savings that will come with a total shift in our health-care system. I'm one who believes that there is enormous cost benefit in fully enacted health IT. But we won't see that before we have that in place, I think.

SEN. COBURN: We won't see that till 2015 at the earliest.

GOV. SEBELIUS: Well, I -- you may --

SEN. COBURN: Let me move on to another question. The comparative effectiveness was in the stimulus package. We spent $780 million last year through NIH and AHRQ for vigorous comparative effectiveness research, long-term controlled double-blinded prospective studies, and they've had a marginal impact on practice. Not because doctors aren't willing to follow it. It's because there wasn't a clear decision made out of those long-term studies.

What makes you think that on very short-term studies that we can come and have answers that are going to be better than the long-term studies that we're funding now that we can all of a sudden decide which way to go?

GOV. SEBELIUS: Well, Doctor, you are a health-care provider so you are familiar with best practices and keeping up to date on what the strategies are that are the most effective, and also, as we talked about, knowing about the training and individualized oversight that providers have with their patients.

So I think having the best possible research -- comparative research on alternative interventions to inform not only health-care providers across the country about what works and what's the most effective strategy but health consumers -- we're talking about informing consumers and having individuals learn more about their health outcomes, take more responsibility. And it seems to me that having the research available, having the research in a transparent fashion, having the research developed across the country, is a very important piece of making sure we're getting the best possible outcomes for the people of America.

SEN. COBURN: Okay. Thank you, Mr. Chairman. I'd like to follow up in the second round, if I may.

SEN. KENNEDY: Senator Dodd.

SEN. CHRISTOPHER J. DODD (D-CT): Well, thank you, Mr. Chairman. And let me join my colleagues and welcome you to the committee once again. We missed you terribly, and -- great to have you back here with us, leading this again.

And congratulations, Governor. And we've had a chance to talk, and you're in the best possible company in Bob Dole.

So Bob, welcome back to the committee once again -- and for your leadership during your service here.

I'd like to raise, if I can -- first of all, I think we're very fortunate indeed that you're willing to do this, Governor. And your experience as insurance commissioner, governor, state representative brings a wealth of experience to this job, and obviously your knowledge of the issues is tremendously important. So we look forward to working with you.

And Mr. Chairman, I'd ask consent to have the full statement of mine included in the record, if I could, regarding the nominee.

SEN. KENNEDY: It'll be included.

SEN. DODD: Let me just focus, if I can, on children. Now, obviously, the matters we've dealt with here recently, with the SCHIP, have been tremendously helpful, although even with that there'll be a number -- a significant number of children who are still left out of the health-care system. I'm looking at a report this morning, which you may have seen, may not have seen. This is a study on "Late Preterm Births A Cause for Concern."

And Senator Lamar Alexander and I wrote premature-birth legislation in the previous Congress to provide -- put some resources into this general area. And obviously, these studies here -- average expenditures for premature, low-birth-weight infants were more than 10 times as high as uncomplicated newborns, is one of the studies.

And this one here -- talking about babies born just a few weeks prematurely are more likely to have developmental and behavior problems later on, as well as health issues, than those who arrive closer to their due dates. Study was released on Monday from very respected sources on this subject matter.

There's been this notion for years, of course, that children are just small versions of adults. And therefore, what most of us grew up with, at a time when there were limited pharmaceutical products and so forth for children, it was just dividing aspirins in half and quarters and so forth. And we've learned over the years, as a result of legislation here, under the leadership of Senator Kennedy and others, that we need to deal -- the physiology of children, very different than adults', and we need to deal with them accordingly.

And I just wonder if you might take some time and talk a little bit about this. I think it's a tremendously important area.

I note that, I think, the deputy now of FDA is going to be a person, or at least has been nominated, with a strong background in pediatrics, that area.

And so the particular needs of children, including providing benefits, benefits for maternal care, in light of the studies of premature birth, it seems to me, ought to be an important part of the health care formulation. And I wonder if you might address that issue.

GOV. SEBELIUS: Certainly, Senator.

First of all, I think, there's no question, you have been one of the nation's leaders on children's issues, on family issues, on making sure that whether it's child care or the Family and Medical Leave Act or a whole variety of areas, we keep children as the number-one focus.

And once again you've identified a critical cost-effectiveness strategy. If we provide and if we identify women, early on in their pregnancies, and they have adequate and routine pre-natal care, the likelihood of delivering a full-term baby, at adequate birth weight, is significantly different than if a woman has no pre-natal care and shows up, in the delivery room, for a first or second visit.

That not only is a huge cost issue but, as you've identified, is a huge quality-of-life issue. Children born prematurely have all kinds of struggles: health struggles, mental health struggles, long- term health issues, not to mention just the cost of ICU care, which often is borne by Medicaid budget.

So I think that the president understands this challenge very well. Not only, as you suggest, has he nominated a deputy at FDA who is a pediatrician and comes from that background and those sensitivities; but also, in his 2010 budget outline, blueprint, there is a proposal for a nurse visiting program, a visit early on in a pregnant mother's care identifying at-risk moms, trying to follow up on them on a regular basis, getting the kind of care and assistance needed along the way. There is study after study which indicates those are very successful programs -- successful in terms of health outcomes, and very successful in terms of cost reduction. So I think the president has identified one pathway.

We in Kansas have had a Healthy Start/Healthy Kansas strategy that not only helps to follow moms, but has the visitation at the stage when the mother leaves the hospital. First-time at-risk mothers, again, we know are -- have challenges and issues that need to be dealt with, and so having health care wrapped around that very important time I think is very effective for the children and very effective for the mothers.

SEN. DODD: Well I thank you for that. And this study pointed out there's a 40-percent cost savings for every week that a delivery is delayed in getting close to due date -- 40 percent per week, which is a remarkable savings. Senator Coburn talked about cost savings, and if you can really deal with the premature birth issue in an effective way, it's not only obviously in terms of developmental issues for that child and the pressures on that family, but for those who are only impressed about the cost issues this is certainly a way to make a difference. I'd be remiss if --

GOV. SEBELIUS: As you know, Senator, overall health reform helps that.

SEN. DODD: Yes.

GOV. SEBELIUS: Because if we have access early on, if Americans have health homes, have a doctor who they are seeing on a regular basis, the likelihood of having good prenatal care throughout a pregnancy is significantly higher than the situation we have right now. So health reform really goes to the heart of that issue to make sure that all pregnant mothers would have access to high-quality care.

SEN. DODD: Yes. And the obesity issues, cessation of smoking issues, all of these other matters that can contribute -- do contribute to premature birth and low-birth-weight babies obviously have a huge impact, as well, in all of that.

And the one statistic that always just bothers me more than almost any other one we talk about when we're talking about health care, and that is that the United States has the highest infant mortality rate of any industrialized country in the world. That ought to be just a source of collective shame. I mean, the fact that this country, with all of its assets, has that statistical record is something we've got to come to terms with. And with all the -- well, anyway, the statistic speaks for itself.

And I just wanted to mention as well you're sitting next to him -- I talked with -- you mentioned child care and the Child Care and Development Block Grant. That only happened about 20-some-odd years ago because the fellow sitting next to me and the fellow sitting next to you in the majority leader's office on that day decided to work it out so we could start the Child Care and Development Block Grant. And Senator Ted Kennedy and Senator Bob Dole made all the difference in the world 25 years ago on that issue.

So I -- since you brought it up and I was the author of the bill -- but it never would've happened had it not been for these two gentlemen. So thanks.

SEN. KENNEDY: Well, I think all of us know that Senator Dodd was the leader on that issue, and we all are grateful for him as well as for the other many health-care issues. So we thank you.

SEN. DODD: Yeah --

SEN. KENNEDY: Thanks very much.

Senator Murkowski.

SEN. LISA MURKOWSKI (R-AK): Thank you, Mr. Chairman. It's nice to see you up on the dais here this morning.

And welcome, Governor. Appreciate your willingness to step into this position, incredibly important, as all have mentioned.

I want to talk a little bit about access this morning. You and I had an opportunity to chat about it when you visited with me. I had a conference call last week, brought in about a dozen primary care doctors, some mid-level providers, and I was asking them about the issue of access for Medicare beneficiaries.

And I basically said give me a couple of legislative fixes that they would suggest. And almost unanimously what these providers said that they had been hearing from their Medicare patients that they simply wished that they could opt out of Medicare and into private insurance.

After that conference call, I was on a tele-town meeting, had about 4,000 Alaskans that were speaking to the issue of access to Medicare and heard the same refrain, which I find absolutely stunning. You pay into the system your whole working life, and they're now at the point as retirees where they're saying, "I'm prepared to reject a program, forego the benefits, just so that I can have access to a medical care provider."

In Anchorage, our largest state (sic), we've got a situation where we just have providers that are no longer accepting Medicare- eligible individuals. One in 10 is taking a -- any new Medicare- eligible patients. So we've got a situation where we're talking about all the great things that we're going to be doing here in the Congress in health-care reform, but I don't have providers that are willing to take any new or existing Medicare-eligible individuals.

This is a huge issue for us, and it's not just in Alaska. It's not just in rural America. When Senator Daschle was doing his health care tour, he heard the same things when he was out in Dublin, Indiana, last December.

The MedPAC, the Medicare Payment Advisory Committee, estimates that 17 percent of all seniors nationwide had significant problems accessing primary care health care services.

So I guess my question to you this morning is -- is we clearly have very serious problems when it comes to the reimbursement issues that we have discussed, access, making sure that you have providers that will accept those that are Medicare eligible. How do we strengthen this Medicare program so that you have -- so that when you have that Medicare card, that it means that you have access to care? Because right now in the largest city in my state, having that Medicare card means nothing if they can't get in to a provider, and right now they can't. So what do we do?

GOV. SEBELIUS: Well, Senator, I appreciate your concern, and it is a huge concern and one that I share. Clearly, having a card does you little good if you can't see a doctor and can't get the care has been promised to you by that card.

So the issues of access in your state, in parts of rural America, in areas of the country where access is a problem need to be addressed, and I can assure you, if confirmed, I would love to work with you on that.

It's my understanding that in Alaska there has been a fairly recent payment adjustment, and I -- I'm hopeful that you may see some relief in the access issue based on that.

But I think addressing, as we move forward, what are the various reasons that providers are not opting to take Medicare patients -- if it isn't a payment situation, what are the other additional factors -- is something that I just can commit that I would be eager to work with you to try and resolve.

SEN. MURKOWSKI: So much of it is the payment side. It's the reimbursement side. And we hear that time and time again. And yes, you are correct, we were able to get an increase in reimbursement effective the 1st of the year.

What we're seeing, interestingly enough, is physicians are not taking on new Medicare eligible individuals. What they're doing is, as their existing patients are aging into Medicare, they are choosing to keep them on.

What we were seeing last year was folks who had gone to the same provider for 10, 15 years, they -- they're fine as long as they don't hit that magic age of 65.

But when that birthday rolls around, their doctor tells them, I'm sorry, I'm not able to see you.

We think that we may have stemmed that; that in fact, they are willing to keep their existing patients on. But we're not able to add anyone new, which is a very, very serious problem. And unfortunately we're not seeing it really get better.

So we need to be working with you on this. We need to be addressing the increased health care costs that we face, in a very rural state like Alaska, and addressing reimbursement that is a reasonable reimbursement rate.

I would extend the offer to you, to come up and see some of the challenges that we face, as well as some of the remarkable -- the remarkable achievements that we have made, in delivering health care, through telemedicine and just being smart with what we do with the dollars. But we do need some help. And we will look forward to the opportunity to be working with you.

GOV. SEBELIUS: Thank you.

SEN. KENNEDY: Just a point here. I want to say, about Senator Murkowski, it isn't just the states like Alaska. This is a problem that's all over the country. And we have about 8 to 10 individual openings for qualified people, for nursing, and for other professionals in this area. And there is a critical national need. And I'm glad you mentioned this. It's incredibly important to Alaska and to other states. Thank you for bringing this up.

(Cross talk.)

Senator Reed, excuse me.

SENATOR JACK REED (D-RI): Thank you very much, Mr. Chairman.

Welcome, Governor. And I look forward to assuming these responsibilities. Your judgment, your experience, both as an insurance commissioner and a governor, really put you superbly prepared to lead on the most important issue we face, within the country, which is health care reform and other issues you will address.

The cost of not reforming our health care system is demonstrated in many ways. And one way is the increasing burden that hospitals are bearing because of uncompensated care.

In my state, it's estimated, a 40 percent increase since 2005 in just uncompensated care, free care essentially, at our hospitals. They can't sustain this.

And if we don't respond, we're going to have a situation where our hospital community begins to implode.

So I wonder if you have any ideas along the lines specifically with respect to hospitals in terms of health care reform.

GOV. SEBELIUS: Well, Senator, I think you're absolutely right that the hospital system is being crunched -- not only the people who are coming through the doors of emergency rooms accessing care that often is uncompensated; we have people in trauma centers who end up for lengthy and very extensive periods of time that are uncompensated; and we have, as Senator Dodd just talked about a little bit, in, I would say, ICUs across this country babies who are born at precariously low birth weights who now, through the miracles of modern medicine, are able to live, but often the cost of those lengthy stays in the hospital is, if not uncompensated, undercompensated.

So the hospital is often in a situation where they are really struggling to survive. And what I know, in a state like Kansas -- and I'm sure it's true in every state in the country -- if you close the hospital, you close the town. People will not choose to live in an area where they can't have access to health care.

So clearly, providing a payment system, a reasonable payment system, under everybody who accesses hospital care will greatly reduce not only the burdens that currently are on those who have private insurance -- it's estimated about 16 cents of every dollar of private insurance coverage pays for uncompensated coverage, so those with insurance are currently bearing an additional cost -- but also reduce dramatically the strain on hospitals who deliver critical care to the insured and the uninsured.

I mean, the notion that a hospital would close because of uninsured care, therefore jeopardizing long-term coverage for those who are insured is the worst of all worlds, and I think that's the situation we find ourselves in.

SEN. REED: Let me ask you, I think, a related question. As we expand health care, as we reform health care, we need the health care professionals to do that. This raises two issues: Title 7, which is the Health Professions Act, which we've worked under the leadership of Chairman Kennedy to strengthen and to expand, and also just generally graduate medical education, the new models that we have -- practitioners, generalists rather than in some cases the overabundance of specialists.

Your thoughts on those two topics?

GOV. SEBELIUS: Well, Senator, you've pretty well articulated the situation, not only the need for the pipeline of health professionals to deliver care, but a shift in the training and the expertise of those professionals, so that we essentially grow the market of primary care family docs, of folks who are going to be on the front end of prevention and wellness and early intervention.

And that's in part a payment system. It's in part addressing some of the situation that is in the current Medicaid proposals that are pending, dealing with a change in the payment for graduate medical education.

I think we have to -- there is a step in the recovery bill addressing the workforce issues. One of the things that we found in our state -- and I'm sure it's true across the country -- is that we're not only talking about doctors but, in many cases, talking about nurses.

And the nurse profession is often delivering primary care, is on the front lines. And we can't train more nurses unless we have more nurse faculty.

So it really is a multi-pronged approach, a comprehensive approach but one that, if confirmed, I can assure you is one that I've worked on, as governor, and one that I would certainly continue to work on as secretary.

SEN. REED: Thank you very much, Governor.

Thank you.

SEN. KENNEDY: Senator Burr.

SENATOR RICHARD BURR (R-NC): Thank you, Mr. Chairman.

Governor, welcome.

And Senator Dole, before he leaves, Senator, good to have you here. As always, we're delighted you would come and spend your time, to introduce the governor.

(Cross talk.)

Governor, I think I heard, in your answer to Senator Reed, and I just wanted to recover it, but the disparity in reimbursements causes the low number of primary care docs and people to choose other specialties than that.

I think until we are willing to address reimbursements and actually reimburse primary care, in a sufficient way, you will continue to have med students that, when they get through with their visit to the bank, as they begin to borrow money for medical school, decide that a specialty gets that student loan paid off faster.

And for a primary care physician, it looks more like an amortization for a home mortgage. And I hope we can work on that. I've just got two very specific questions.

The national average monthly premium for a basic 2009 Medicare drug benefit is targeted to be $28. That's 40 percent below what we projected, for Part D, in 2003, when we created it.

Given that the program has held down cost, to beneficiaries, do you think that this competitive model should be considered, in the context of the overall health care reform that we're going through?

GOV. SEBELIUS: The way that Part D is constructed, Senator.

SEN. BURR: Correct.

GOV. SEBELIUS: First of all, I don't think there's any question that having a prescription benefit for seniors was long overdue and hugely important to the medical care of seniors, across this country, as we've shifted in the health system from longer hospital stays, which used to be the norm, 10 years ago, to often preventive drug applications. Not having that health benefit was extraordinarily difficult for many seniors in this country.

I think there are some issues about Part D which, if confirmed, I would look forward to working to help resolve, not the least of which is the design construct of the program, the so-called donut hole, which often is very difficult for seniors who have budgeted certain amounts and, as you say, have now relatively low premiums at the front end, only to hit a situation where they have no coverage for a period of time and of drug use.

And --

SEN. BURR: But under our own design. We knew there were flaws to the overall product.

GOV. SEBELIUS: Yes.

SEN. BURR: What we didn't anticipate was that the level of competition you put in Part D by design would drive down the premium of the basic Part D, and I would just encourage you that there -- I think on both sides of the aisle we were shocked at this. We continue to be shocked at it.

GOV. SEBELIUS: That's very --

SEN. BURR: And the element of competition has to be an important driver in the context of overall health-care reform.

Last question. Ryan White Care Act is up for reauthorization this year. Do you believe that it's important that Ryan White money follow HIV-infected individuals?

GOV. SEBELIUS: Well, Senator, I don't think there's any question that that money is essential. And it -- it's important, as the reauthorization discussion goes on.

And again, if confirmed, I look forward to having an opportunity to look at the comprehensive strategy, that we address patients in various parts of the country and make sure that they're -- they have access to assistance.

I think -- there's some alarming data I saw recently, that in Washington, D.C. they're now projecting that the HIV rate is over 3 percent, which is regarded as an epidemic level. So I think we've got some real challenges, whether it's parts of the country that have a smaller number of patients, that don't have as much access to help and support, or areas where we have a huge epidemic.

So the reauthorization, Senator, I think gives us an opportunity to look comprehensively at the best strategy, moving forward.

SEN. BURR: I hope you'll do that with us, because there are areas of the country that Ryan White Care Act funding does not find HIV patients, and I think that was really the nucleus of why we created this, was to make sure that the funding was there to provide the services.

I certainly look forward to your time as secretary, and urge the chair to move it as quickly as we can.

Thank the chair.

GOV. SEBELIUS: Thanks.

SEN. KENNEDY: Thank you very much. Thank you very much.

Senator Sanders, we want to thank you. You have been here the whole hearing this morning. Doesn't surprise any of us that know of your dedication and commitment to this committee, but in any event, thank you very, very much for your presence.

SEN. BERNARD SANDERS (I-VT): Thank you, Senator, and welcome back.

And Governor, we look forward to your speedy confirmation.

Let me make a brief statement and then ask you a few questions, because I think it's important to raise the issue of the role of private insurance companies in our health-care system.

I just last week introduced a single-payer national health-care program to be administered at the state level because I happen to believe that the function of private health insurance is not to provide quality cost-effective health care to individuals, but to make as much money as they possibly can in a number of very questionable ways. And I think that at a time when approximately 30 percent of every health care dollar spent through a private insurance company ends up in administration, profiteering, advertising, or whatever, that so long as we remain dependent on private insurance companies, we're never going to have quality, cost-effective health care for all Americans.

I suspect that position is a minority position here. But let me ask you a question about an issue that a number of people on both sides of the aisle have raised, and that is the issue of primary health care. I know you wrote in your statement of your concern about the lack of physicians, the lack of nurses, the fact that, as is true, some 60 million Americans today do not have a doctor of their own. They end up in the emergency room, they end up in hospitals, at a far greater cost.

When Barack Obama was a senator, he supported a very substantial increase in the number of community health centers in America so that, in fact, we would have a community health center in every underserved area in this country; supported a very significant increase in the National Health Service Corps. In fact, in the stimulus package, we doubled funding for community health centers, tripled funding for the National Health Service Corps.

Will you work with me and many members of this committee so that we continue the effort to expand the National Health Service Corps, help pay doctors' debts so we can get them out into primary care and move forward on community health centers?

GOV. SEBELIUS: Senator, absolutely. You have my commitment that, if confirmed, I would love to work with you on that initiative.

I see the -- first of all, I want to just thank you for your leadership. Community health centers have been a passion of yours and a mission of yours, and I think it's probably largely due to your tenacious efforts that that is included as a significant investment in the American Recovery Act.

Having said that, I see that -- community health centers and the National Health Service Corps -- as a key building block in health reform. I think one of the challenges that we have is to make sure that the essential components of what's in place right now, whether it be the community health center program and the service corps, who provides essential primary care, or the expanded CHIP program or the services of Medicare and Medicaid, that they are operating as effectively and efficiently as possible for taxpayer dollars, but also getting the best health outcomes possible as we look at the challenge of sort of closing the gap.

So as secretary, I would absolutely love to work with you on making sure that these are effective, efficient and expanded.

SEN. SANDERS: Thank you. As I'm sure you're aware, our chairman was the founder of that very extraordinary program.

One of the problems we're having as we expand community health centers is this whole issue of how you designate an underserved area. And it's not the best -- we need some work on that, and I would look forward to working with you to clarify what constitutes an undesignated area, because sometimes you have real desperate need, but for bureaucratic reasons, they are not designated. So there's work to be done there.

Let me ask you a question about prescription drugs. As you may know, we pay the highest prices in the world for prescription drugs. Many of our people simply can't afford them. Canada, Europe charges substantially less for the same drugs that we purchase here.

Are you supportive, will you work with us on the concept of re- importation of prescription drugs?

GOV. SEBELIUS: Senator, I'm aware that Congress has designated that the secretary can, if the system is found to be safe and secure, designate that re-importation from Canada is acceptable.

I would suggest, at least at this point, that restoring the FDA's competence and capabilities to its previously held gold standard is really step one; that having -- we recently had a situation with heparin coming out of China, we've had melamine, we've had -- which, again, showed up in pet and animal food, not in prescriptions. But there is some evidence that the current challenges are not being well met.

But I certainly am one who thinks that we need to take a look at the re-importation and make sure that there are avenues, lots of avenues, for Americans to access a lower quality -- I mean, high- quality, lower-cost prescription drugs. And I look forward to having that dialogue, if confirmed as secretary.

SEN. SANDERS: Mr. Chairman, thank you very much. Thank you.

SEN. KENNEDY: Thanks. Thanks very much.

Senator Roberts. It's -- thank you.

SEN. PAT ROBERTS (R-KS): Mr. Chairman, thank you, and thank you for your patience.

And Governor, thank you for your stamina. As Henry VIII said to one of his wives, I won't keep you long. (Laughter.)

We've had a good conversation, I would say to my chairman and members of the committee who are still here, and anyone in the audience still here interested in health care.

And the governor and I talked about something called comparative effectiveness research. And I think Dr. Coburn has already asked you a question about that, and your response was that CER, or comparative effectiveness research -- everything has to be an acronym here -- on best practices, should produce the best possible research. But I think the whole point is that I do not believe it will be the best possible research. That's done in FDA over years of time. Sometimes FDA comes under a lot of criticism because of that.

I think the possibility could very well be, in the push to control cost and cost containment that's already been mentioned by Senators Murkowski and Coburn and Burr and others, and members on the other side of the aisle, it will be used to justify what I call rationing health care -- i.e., cost containment.

You and I both know the situation in Kansas very well, with 83 critical access hospitals -- very similar to the testimony given, or the great argument or rationale being expressed by Senator Murkowski on the problem in Alaska. Senator Burr mentioned the doughnut hole in regards to Medicare Part D, and this is reflective of the problem, because I can remember talking to the president of the Kansas Pharmacists Association in a very small town in Kansas. And the provider of Medicare Part D in many of our small communities, it isn't -- it isn't Medicare. You don't dial 1-800-MEDICARE. I mean, that's sort of useless, to tell you the truth.

And then you have the Centers for Medicare and Medicaid Services, or the renowned CMS -- used to be HCFA. And I won't tell you what our providers, you know, call CMS. It wouldn't be appropriate. But all they are -- they just of sort of view them as the Lizzie Borden of, you know, H2S.

But this pharmacist was the provider and about the only provider of Medicare Part D, and that's replicated in many small communities. In that doughnut hole, we have 20 insurance companies that will provide health care during the doughnut-hole period, but it's a different kind of a thing and it's expensive. But in trying to address this to a patient who said, "I fell into the doughnut hole. What am I going to do?" -- and he said, "Well, for you, it should be this plan, and I could provide you that plan, but I can't, because I'm not being reimbursed up to cost. I only get 70 percent of the cost."

And that's why I say that -- maybe I'm a contrarian here a little bit -- I'm for health care reform. I don't know anybody that's not for health care reform. But I worry about what lurks under the banner of reform. And I want to see our current health care delivery system at least stabilized to the degree that we can at least continue what we have. And I don't see that with doctors, hospitals, pharmacists, home health care people, clinical labs, ambulance drivers. Over and over and over again, the cost containment factor comes into play. And I understand that we have to control Medicare spending, but this is not the way to do it.

And the thing that really worries me about the comparative effectiveness research -- we just had a hearing last week in the House where Director Raynard S. Kington of the National Institutes for Health testified his agency may use the money from the economic stimulus law to fund grants for comparative effectiveness research that includes comparison of the cost of the treatments involved -- not care, but cost. If we give that golden ring to CMS, Governor, I will tell you that they will run with it, and we will continue to have problems in rationing health care all throughout our health care delivery system.

Now, I got on my CMS rant. And I told you when we had our talk I wouldn't do that; I have. But could you just give a couple of words of assurance to us? I know Senator Murkowski has really said this more effectively than I have, but I'll repeat it again when we meet Thursday on the Finance Committee.

So I'll make it a little more rational then, you know, when we get to that.

But could you just give me some assurance that you know what the problem is at least currently with CMS and we can at least take steps to prevent that and not make comparative effectiveness research conclusionary research and it has to include clinical research, as well as cost?

GOV. SEBELIUS: Well, Senator, first of all, let me tell you that I hope I don't have the same fate as one of Henry VIII's former wives. (Laughter.)

I appreciate you asking that question, and we did have this discussion earlier.

I think the fundamental difference is that the current statutory authorization prevents CMS, prevents Medicare from using comparative effectiveness research as a cost decision-maker. It is prohibited by law. The Congress made that a part of the statutory authorization.

So unless that law is changed --

SEN. ROBERTS: Right.

GOV. SEBELIUS: -- and I can commit to you, if I am confirmed as secretary, I will make sure that the CMS follows the law of --

SEN. ROBERTS: We have -- and pardon the interruption, but there are several versions of the budget that actually says that CMS will have that authority. Senator Baucus, others of us want to make sure that we put language in there, and there is language that is proposed, that care will be considered just as much as cost containment. So I think it's coming, it's just how it comes.

GOV. SEBELIUS: I can't tell you that I am not concerned about ultimately -- not with comparative effectiveness research, but ultimately -- reaching a point where, in order to control costs, there is some effort to ration health care.

I, frankly, as insurance commissioner, where I served for eight years, saw it on a regular basis by private insurers, who often made decisions overruling suggestions that doctors would make for their patients, that they weren't going to be covered. And a lot of what we did in the office of the Kansas Insurance Department was go to bat on behalf of those patients to make sure that the benefits that they had actually paid for were, in fact, ones that were delivered.

So I am -- I have some experience in fighting for the fact that providers should make medical decisions. That's one of the reasons that we have people who go to medical school and not come up through an administrative agency in the government or through an insurance company or any other number of ways that health care can get rationed. So I have worked in that system. I believe in that system.

I do, though, support the notion that we would do comprehensive research on what are effective strategies to get the best health outcomes for American people. We know that protocol varies dramatically, sometimes in one area of the country, certainly across the country; that very different protocols are used with very different results. And I think the more providers can have access to that information and, certainly, that consumers can have access to that information, the more likely we are to have the best possible health outcomes.

SEN. ROBERTS: I'm already over time, Mr. Chairman.

I will ask my least-costly-alternative question in reference to this when we see each other at the Finance Committee. Thank you so much, Governor.

SEN. KENNEDY: Senator Casey?

SEN. ROBERT CASEY (D-PA): Mr. Chairman, thank you very much. It's great to see you here.

And I want the chairman to know and I want the governor to know that when I left earlier, I was juggling with Senator Harkin in the Agriculture Committee, and he allowed me to be the chairman of the hearing for about 32 minutes. (Laughter.) I couldn't pass up that opportunity. My wife will never believe it. So I want you to know that that's why I was not here.

Governor, thank you very much. And I know the hour is late. I want to try to get into two areas if possible.

One is on early education and development, a topic and an area of public policy that you not only know a lot about but you have been one of the leaders, in the country, on. You've brought a great deal of achievement to your work, as governor in Kansas, on both of these or, I should say, the whole range of issues.

In terms of what we're going to do, in the federal budget, in terms of federal policy, I wanted to ask you about maybe three examples of this. One would be child care and the funding levels. Two would be Head Start. And the third one would be Early Head Start.

You and I spoke of this when you were kind enough to come by our office, to talk about your confirmation. One of the problems here is obviously not just a funding challenge but also the ability or the limitations we have, in enrolling people that are eligible.

Child care -- a huge number, as you know, a huge number of families eligible but not enrolled. Early Head Start, I think, the number is something like 3 percent of those eligible, in that important program, are in fact enrolled.

Can you just talk to us about the priority of those kinds of programs, and what we can do about funding levels, in the near-term especially?

GOV. SEBELIUS: Well, Senator, it's been a passion of mine that we focus as many resources as possible, at the earliest possible age of children, because we know that the results pay off, in terms of incredibly improved outcomes.

I was a working mother and knew personally, with our two boys, that having high-quality child care and then early education was a critical component of my being able to go to work, of my husband's being able to go to work. So I've dealt with the situation as a parent.

Twenty-some years ago, when I was elected to the legislature, it became one of the first focus areas, because we had a pipeline of child care providers, which were frankly underpaid and undertrained, and looked at ways to expand that: put together a children and families committee, put together a children's budget in Kansas and have continued those efforts.

One of the challenges, which you've just addressed, which I'm very excited to have the opportunity to work on, is a coordinated strategy with the child care providers at the table, with the leaders of Head Start and Early Head Start at the table, along with those early educators who are often under the umbrella of the Department of Education.

We did a similar strategy in Kansas, I think, having a collaborative and coordinated strategy, recognizing that parents are going to make a lot of different choices for their children. But about 85 percent of the mothers, with children under five, are in the workforce.

So most American children are in a care situation outside of their homes. And having programs particularly for the highest-risk children, for the most at-need children, which are not only safe and secure but introduce early-learning skills; we know that brain development is most robust in the first three years. If we miss those three years, there will be some children who will never catch up.

So the more focus and attention; I was very heartened to see that in the Recovery Act, there was a significant expenditure for Early Head Start, for Head Start and for the Child Care Block Grant, which is so critical to provide those services.

I think the next challenge is to make sure that we are using those strategies to rise to a level of quality, that we have some quality standards introduced, that we have more parent involvement.

One of the, I think, best features of the Head Start program from the outset was the involvement of parents engaged in their own children's well-being and their own children's education. That has been a real hallmark of the program.

But I think that an investment has been made, but we, as you wisely say, need to continue that, because we know that by the time many children reach kindergarten, they are already so far behind that they will never catch up with their peers. That's not a good strategy for that individual child, but it's really not a good strategy for this country.

SEN. CASEY: And I know -- I'm almost out of time. I'll submit another question for the record. I have an early education bill that we spoke of and will look forward to working with you on that.

I'll submit a question for the record. We're at the 30-second mark. On nurse home visitation, you and I spoke about that. You're well aware of that program.

In Pennsylvania we have about 40 counties that have that kind of a program, where a nurse is able to work with -- more than work with -- is able to counsel and help a new mother so that that new mother can have all the benefits of that kind of expertise. It's a great pathway to making sure that a young mother has a shot at having the kind of help that she needs, in addition to help from her own family.

And I look forward to talking to you more about that, but I'll in the interest of time submit it for the record. Governor, thank you very much.

GOV. SEBELIUS: Thank you.

SEN. KENNEDY: Senator, be glad to recognize you and thank you.

SEN. COBURN: I thank you for the opportunity for a second round of questions.

Governor, there is a Medicaid directive that states RU-486 is subject to the Hyde amendment restrictions. Is there any plans or can you give us assurance that that policy will be unchanged?

GOV. SEBELIUS: I'm sorry, Senator. I didn't hear the first part of your question.

SEN. COBURN: There is a Medicaid directive on the books by the previous administration as to -- regards RU-486 coming under the Hyde amendment. Can you give us an assurance that that won't be changed, or are there plans to change that?

GOV. SEBELIUS: Senator, as far as I know, there are no plans -- I certainly have had no discussions with anyone about changing that policy, but again, I am not confirmed as secretary. I haven't had those discussions, and I promise to continue to keep you informed.

SEN. COBURN: All right. Thank you.

One of the other concerns you and I talked about was the conscience protections, and the administration has announced plans to revise those and change those.

I guess the question that I would have is, can you give us -- and you may not be able to do that at this time, but will you give us forewarning on what those changes are going to be?

You know, as a pro-life obstetrician, I feel I have a constitutional right to have those protections as I practice medicine. And the idea that the administration may try or attempt to take away a constitutional right that I have by saying what I must and must not do is a practicing physician is rather offensive to me.

And what I would like is the assurance that we'll at least get a heads-up on what that's going to be prior to a unilateral announcement of that. Can we -- can you give us that assurance?

GOV. SEBELIUS: Senator, if confirmed, I would be glad to not only give you that early warning of what the plans are, but I can tell you right now that the president supports and I support a clearly defined conscience clause for providers and institutions.

He always has. I always have. It's been in place in Kansas the entire time I've been in elective office.

I know there was some concern about the regulation that was proposed or implemented at the very end of the previous administration, that it was overly broad and, frankly, overly vague. So I don't think, from the discussions that I've had, there is any intention of interfering with the underlying legal basis that you have just suggested. And I will certainly be glad to keep you informed.

SEN. COBURN: Thank you. Thank you.

One other -- I want to go back to cost for a minute. You oversee about $800 billion worth of spending through Medicare and Medicaid and SCHIP.

A conservative estimate right now is that we have upwards of $80 billion a year in both fraudulent payments and improper payments in Medicare alone, and $40 billion worth of fraud or -- fraudulent payments and improper payments in Medicaid. That comes to 20 percent of the program. I am amazed, and I think most Americans should be amazed, that we're not tackling this problem where there's 80 (billion dollars) to $120 billion worth of waste and fraud.

And instead we're figuring on a tax system to allocate, for five years, $650 billion; 1.3 trillion (dollars) is what -- if you extrapolate it out in terms of end key -- what do you plan to do to get at least the improper payment rate down to what the average of the rest of the federal government is, which is under about 3.4 percent? What are the plans? Because that's where the goal is. That's where the goal is, is getting rid of the fraud and waste and improper payments in Medicare and Medicaid.

GOV. SEBELIUS: Well, Senator, as we discussed in your office, I certainly think that a significantly more aggressive effort to go after fraud and abuse is well deserved.

I shared with you in my experience as insurance commissioner one of the things we did is put together a very aggressive fraud unit, in collaboration with the attorney general's office.

You've suggested a similar opportunity may exist with the federal government, in conjunction with the attorney general's office. But it's something I certainly take very seriously, and think you're absolutely right that any dollar we can -- first of all, the providers and companies and patients who are fraudulently billing the taxpayers not only need to be found and penalized, but those dollars need to be shifted to provide health services to all Americans. So I -- you absolutely have my commitment. I look forward to getting some of your best ideas and seeing how fast we could put them in place.

You talked a lot about having preemptive policies, instead of what we're doing right now, which is after-the-fact audits, often years down the road.

SEN. COBURN: Right.

GOV. SEBELIUS: And I could not agree more that having a few strike operations may be the most effective way to send the signal that there's a new sheriff in town. And I intend to take this very, very seriously.

SEN. COBURN: If, in fact, we could recapture -- capture that money, you wouldn't need the reserve fund in the budget. You'd have enough money for anything the president wants to do.

GOV. SEBELIUS: Well, I think there's no question that I'd be enthusiastic about that, and I can guarantee you the president would too.

SEN. COBURN: And, of course, that's the problem the American people have with us. We don't fix the problems we have. We just create new programs that ignore those. And one of the things we have to do on health care is that.

Mr. Chairman, I thank you for your indulgence. Sorry to drag on. I will have several questions for the record.

And Governor, thank you for being here and being so attentive to my questions.

GOV. SEBELIUS: Thank you.

SEN. KENNEDY: I'd just say, I think Senator Coburn emphasized a very important point. And I'd welcome the opportunity to work with him, and we could share that with the -- our colleagues and try and see what we could work out on our committee, and on our sister committee, on the Finance. But we will focus, on our committee, on that.

I think this is extraordinarily important. And I think we've come in touch with this issue time and time again, and have done far too little. And we'd welcome the opportunity to work with a -- work with him.

Let me just say it's a -- thank all of those who are here, still have remained with us.

I was especially interested in the work on the cancer efforts. We have three major efforts on the -- on the cancer prevention and research and treatment. And these are really the heart of the whole effort on this.

I don't know whether you have any kind of comments you'd like to make about each of those kind of areas. I don't want to -- they're -- they -- you could go on for a long period of time on each of those. So that really isn't what I -- at this time -- we may have opportunity later on, but is there any one of these that you think that we ought to be giving any special attention to now?

As I said, we think -- I certainly could, on any one of these, go on for some period of time. And I don't know whether it's fair to say one type, one aspect of it is more worthy than others. But maybe you could just comment about that concept and what, if anything, you think that we ought to be moving ahead with.

GOV. SEBELIUS: Well, Senator, I don't think there's, Mr. Chairman, any question that cancer is an illness that has touched every American. You are currently experiencing a battle with the disease, but I don't think there's anybody who probably is in this room who doesn't have a loved one or someone close by who hasn't been involved in a similar situation.

So I would just say as we -- I'm not as familiar as I probably should be with the individual legislative initiatives. I do know that the president has a commitment to dramatically increase cancer research, to -- he believes, as I do, that curing cancer in our lifetime is a reality that we could achieve with the proper focus as we look.

I've had some preliminary discussions with individuals within the department as they look for new heads of both of the National Institutes of Health, but the National Cancer Institute -- certainly, leadership on the research and technology end, but also on the service end.

I know, as governor, we are -- in Kansas have identified that having a National Cancer Institute designation in conjunction with the university, given the fact that there are not centers in proximate areas, so our citizens can have access to cutting-edge treatments is a priority I think not only in Kansas, but across the country.

So I just look forward, if confirmed, to working with you on this critical issue.

SEN. KENNEDY: Well, thank you very much. And you obviously have thought about this and are ready to act on it. And we certainly welcome that.

At today's hearings, we've had the opportunity to examine the challenges to our -- our new secretary will face, and they are certainly large challenge (sic). Yet we also have seen our nominee with the abilities, I believe, that -- be able to handle all these challenges.

So I strongly support Governor Sebelius as the secretary, and I look forward to working with her very closely in the months and years ahead to make a difference on the health for all of the citizens of our state -- of our country.

Thank you very much.

GOV. SEBELIUS: Thank you, Senator. Thank you, Chairman.

END.

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