Hearing of the Senate Finance Committee - The Nomination of Governor Kathleen Sebelius (D-KS) to be Secretary of Health and Human Services

Hearing of the Senate Finance Committee - The Nomination of Governor Kathleen Sebelius (D-KS) to be Secretary of Health and Human Services

SUBJECT: THE NOMINATION OF GOVERNOR KATHLEEN SEBELIUS (D-KS) TO BE SECRETARY OF HEALTH AND HUMAN SERVICES

CHAIRED BY: SENATOR MAX BAUCUS (D-MT)

WITNESSES: GOVERNOR KATHLEEN SEBELIUS (D-KS); ROBERT DOLE, FORMER SENATOR (R-KS)

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SEN. BAUCUS: (Sounds gavel.) The hearing will come to order.

In his 1961 book, "The Making of the President," Theodore White wrote, and I quote, "Whether one is burdened by power or enjoys power, whether one is trapped by responsibility or made free by it, this is the essence of leadership." The secretary of Health and Human Services has a great deal of power, and the secretary of HHS has a great deal of responsibility. Governor Sebelius, you have before you a great opportunity for leadership.

HHS oversees Medicare. Medicare provides health coverage to more than 45 million Americans. It is at the heart of our compact with seniors and individuals with disabilities. HHS oversees Medicaid. Medicaid provides the health safety net for more than 55 million low- income beneficiaries. HHS oversees the recently authorized Children's Health Insurance Program. HHS oversees the Child Welfare System which serves the nation's most vulnerable children, including those in foster care. HHS oversees TANF. TANF helps the neediest families among us. And HHS ensures that our drugs and medical devices are safe and effective, that medical innovation continues to thrive and that health promotion and disease prevention remain at the center of our efforts to improve public health.

If all that were not enough, Governor Sebelius, you will undoubtedly also be involved in the upcoming effort to reform our ailing health care system, and it is high time that we answer the call to reform our health care system. America spends more on health care than any other country. We spend nearly twice as much as the next- highest-spending country. By almost any measure, America's health care system does not measure up in terms of quality or outcomes. A study published last year said the United States health system scores 65 out of a possible 100 points on 37 indicators of health outcomes, quality, access, equity and efficiency. We rank last out of 19 countries in the number of deaths that could have been prevented with medical intervention. Five years ago, we were 15th, and now we are last.

And as Jack Wennberg at Dartmouth and others have demonstrated, health spending and patient survival rates vary widely -- and irrationally -- from one geographic area to another. Our failure to reduce this variability in the health care quality and outcomes is causing us to fall further and further behind other industrialized countries.

Meanwhile, health care costs are growing dramatically. In the last eight years, average wages have increased only 20 percent, but the average cost of employer-sponsored health coverage has doubled. Health insurance premiums have tripled. Health spending has grown from 12 percent of the economy to 16 percent just in the last eight years. The cost of health care makes it harder for American companies to compete in the world, and the cost of health care makes it harder for small businesses to survive. And to top it all off, 46 million Americans do not have health coverage; another 23 million are under- insured.

And given all this, it is no wonder that nine out of 10 people believe that the health system needs to be completely rebuilt or needs fundamental change. The opportunity to bring on that fundamental change is now, and we must take advantage of that opportunity to enact it into law this year. The time for incremental change has passed. It is increasingly difficult to fix this system one step at a time. We cannot add 46 million uninsured to a broken system. We also cannot bend the growth curve -- the cost curve of health spending without covering the uninsured.

This will be hard.

You will have some rough patches ahead. But we also have a duty to try, and I'm confident that we can succeed.

Our efforts to address health-care costs, quality and coverage for all Americans will necessarily encompass improvements in Medicare. Medicare's payment systems reward the provisions of more care, not better care. We must address that.

Reform will also affect Medicaid. Medicaid plays a substantial role in American health-care spending. Medicaid pays for one out of every six dollars in health-care spending -- one of every six. Medicaid serves more beneficiaries than Medicare. Medicaid is the country's health safety net.

Strengthening this safety net should be a high priority. Expanding Medicaid will fulfill its original intent as a viable source of health care to the country's most vulnerable populations. The eligibility determination process should be streamlined. We should ensure that all who are eligible have a simple and understandable path to get needed services.

Beyond health-care reform, Congress must reauthorize the TANF program next year, and more remains to be done to improve our child welfare program.

Governor Sebelius, one of the places most in need of your leadership is Libby, Montana. As you know, Libby has suffered like few other towns, suffered more than any town that I'm aware of. Over 200 people in Libby -- and it's a very small town -- have died because of asbestos contamination, and as secretary of HHS, you will have the opportunity to help the people of Libby get the health care they need and deserve. Libby is counting on your leadership, and I hope that you will work with me to ensure there is justice for Libby.

As you know, there's a lot of work to be done. If we continue to work hard, if we continue together, I'm confident we can reach these goals.

Governor Sebelius, I want to thank you for your service to our country. You come with a great reputation as a smart, pragmatic and thoughtful leader. You are known as a dedicated public servant who can overcome partisanship and bring together personalities from all perspectives. Along with Senator Grassley and my colleagues on the committee, I look forward to working with you.

And so, Governor, there's (sic) hoping that you will not be burdened by your new powers but you will enjoy them. Here's hoping that you will not be trapped by your HHS responsibilities, that you will be made free by them. And as secretary of HHS, here's hoping that you'll make the most of your opportunity for leadership.

Senator Grassley.

SEN. CHARLES GRASSLEY (R-IA): Thank you, Senator Baucus.

And welcome, Governor Sebelius, and particularly welcome because of your willingness to serve your country.

If confirmed, you will lead over 64,000 employees with an annual budget of about 700 billion (dollars). Your department serves many vital functions to promote the health and well-being of Americans. The Center for Medicare Services provides health care to about a hundred million Americans through Medicare, Medicaid and children's health program.

Americans also rely upon the Food and Drug Administration to ensure the safety of food, drugs and -- (off mike) -- health under your direction is the principal driver of biomedical research.

In addition to being at the helm of the department, you will also be a policy leader when it comes to health issues. As a Cabinet member, you have significant role in shaping administration policy.

It is good that you will be bringing your extensive public service and, more important, your Midwest sensibility and common sense to the job. These will serve you well in difficult challenges that lie ahead of you, where sometimes common sense doesn't prevail.

You come at a time when we face many significant challenges in health care.

The first is health care reform. We all know why we need health care reform now, not later. Skyrocketing health care cost affects everyone -- governments, businesses and all households. Despite all this spending, we still have 47 million people uninsured. And despite all this spending, it is clear that we're not always getting our money's worth when it comes to care quality.

Governor Sebelius, this is for sure and indeed a serious challenges (sic) that we all face. But you also come at a time when there is a strong desire and a strong commitment to work together on reform. Doing nothing is not an option. But, of course, the devil is always in the details.

If we work together, we can reform our health care system to solve the problems of cost, quality and access, and we can do it without some processes that have been circulating lately.

First, health care reform should not be legislated through reconciliation. Everyone agrees that health care reform, because it deals with 16 percent of our economy -- it's not just an issue of health care; you're restructuring 16 percent of our economy -- must be done on a bipartisan basis. Reconciliation is, instead, a partisan exercise that's not an appropriate vehicle for real health care reform.

The next important issue is the issue of the public plan option. We can reform our health care system to achieve our goals without having a public plan option that is run by the government. We do not need a public plan where the government sets the rates it pays doctors and hospitals and decide what treatment it would cover. Instead, we need a system where if people like the coverage they have today, that they can keep it, just as the president said he would do, and where stronger rules on the health care market mean that health insurers have to cover people with preexisting medical conditions and stop charging higher premiums for people that are too sick.

The new government-run health insurance plan would result in rationing of our health care to control costs, and that would take us down the road I think that people rejected 18 years ago when the issue came up.

These are a few examples of tough issues -- not the only ones, of course. But we need to roll up our sleeves and work in a bipartisan way to find the solutions of some of the issues.

We need transparency in health care. All the stakeholders need to have adequate information to make choices in order for our health care system to work. This information includes price and quality data for patients and providers.

It also includes knowing if the manufacturer of a drug or medical device your doctor prescribes for you -- whether or not those people have been funneling money to him that might influence a decision.

So, you know, I could mention a lot of other things, but understand I look forward to hearing your thoughts on the role of transparency. Combating waste, fraud and abuse in any agency of government, particularly in health care, is a priority for me. We have much work to do in this regard, and I'd like to know if curbing waste, fraud and abuse is a priority for you, and, particularly, the experiences you've had as governor in this area.

Another area that Senator Baucus and I and other members of the committee have worked tirelessly on is the problems of the delivery of care in rural America. Since you come from a largely rural state, I'm sure that you share our commitments to ensuring that we have a viable and high-quality health-care system in America. But that's something that maybe this town doesn't understand.

And you're coming from where you do, bringing a lot of education to people in this town that don't understand what rural America's all about and the difficulty of health care in those particular areas.

Now, these are just a few of the issues that I hope that we will be facing together.

Mr. Chairman, I have a request to put two letters into the record, and I want to explain these to the governor. These letters are from a group of nine scientists at the FDA.

SEN. BAUCUS: No objection.

SEN. GRASSLEY: Okay. They are writing for a second time to President Obama today regarding their great concerns about the FDA.

Governor Sebelius, I would -- I want to be sure that you're aware of these concerns from whistleblowers inside the agency. Also want to note that I am providing copies for the record that do not identify the whistleblower names. They're afraid of a retaliation, particularly in light of a former acting FDA commissioner's recent statements and the president's recent signing statement that seems to limit whistleblower protections.

Also, as has been reported already, you've addressed some tax irregularities before we began our review in the committee of your tax returns. I take these tax matters very seriously, and I'm eager for you to address those matters today so that they may be taken into consideration as your nomination moves forward.

With that, I thank you once again for your service to your state as well as, now, potentially to the country as a whole.

SEN. BAUCUS: Thank you, Senator. And I thank you very much for your statement. And I'd now like to welcome our witness. Today we'll hear from Governor Kathleen Sebelius.

Since Governor Sebelius hails from the Sunflower State, I'd like to introduce and to recognize another distinguished resident of the Sunflower State who happens to be a distinguished member of this panel, the senior senator from -- Sunflower State, someone I work with very closely and provides valuable service to his state and to the nation, Senator Roberts.

SEN. PAT ROBERTS (R-KS): Well, thank you, Mr. Chairman. And today -- and I'd like to associate myself with the remarks of Senator Grassley in reference to the need to protect the rural health-care delivery system -- our governor certainly knows that and is well acquainted with that issue -- and just say for the record that I think both the governor and I stand opposed to fraud, waste and abuse.

Basically, today is a special day for the state of Kansas, Mr. Chairman.

We have with us today one of Kansas's favorite and most beloved public servants, in support of our governor, Kathleen Sebelius, Senator Bob Dole.

Bob, it's an honor to have you here. As everybody knows, you were a former chairman of this committee, and did an outstanding job, and also the leader of the Senate. I would add, and the free world, if I might. That might be a little bit expansive. But Kansans are always mindful of the great legacy that you forged for us in this committee.

The chairman sent me a letter and indicated, which I did not know, that we had five Kansans on this committee, in this history of the committee. And of course, you lead that posse in regards to leadership and effectiveness.

So I continually strive to live up to your years of service to our state. And whenever I have an audience like this and my colleagues' attention, I hope, I also want to mention that a lot of victory flights are flown into Washington. And they are flown in to visit the World War II Memorial and also the Iwo Jima Memorial, I might add.

And it's not often that you have a senator, either sitting or retired, that has a monument to him. But I would suggest that the World War II Memorial is about the best monument to Bob Dole that I know of because without him, it would not have happened.

I have a letter here from Senator Nancy Kassebaum Baker, who was an outstanding senator and extremely popular with our people, for good reason. And I would like to submit that letter and her statement for the record at this time.

SEN. BAUCUS: Without objection.

SEN. ROBERTS: Governor Sebelius, welcome. It is a real opportunity, for Kansas, to be represented as a member of the president's Cabinet.

Governor Sebelius and I have a special relationship, in that her father-in-law was my predecessor in the House of Representatives, former Congressman Keith Sebelius. I had the privilege of serving as his administrative assistant during his entire congressional career. He was a great congressman and a great mentor and a great friend.

I've known Kathleen and her husband Gary throughout the years. We have enjoyed a good relationship. The governor said in our hearing before the Health Committee, on Tuesday, that while we do not agree on some issues, we have always been able to work together. And I look forward to building on that relationship, as we work towards improving our nation's health care system and all of the challenges that both the chairman and the ranking member have certainly outlined.

Thank you, Mr. Chairman.

SEN. BAUCUS: Thank you very much, Senator.

I might, just for the interest of the senators from Kansas and also Governor Sebelius, note that the names of the five Kansans that served in the Finance Committee, in addition to obviously Senator Roberts and Senator Dole.

Charles Curtis, who was once vice president, served on this committee. And then before him was Frank Carlson, who served in the 83rd to the 90th Congress. And before Frank Carlson --

SEN. ROBERTS: Mr. Chairman, I was the administrative assistant to Senator Frank Carlson during those days.

SEN. BAUCUS: No wonder he did so well.

SEN. ROBERTS: I'm sort of a piece of old furniture around here, it looks like.

SEN. BAUCUS: (Laughs.) I doubt anybody here was the administrative assistant to the first.

SEN. ROBERTS: No. I missed that one. (Laughter.)

SEN. BAUCUS: That was Arthur Capper, for the Sunflower State.

SEN. ROBERTS: No, but I knew Arthur Capper. (Laughter.)

(Audio break.)

SEN. BAUCUS: Okay.

SEN. ROBERTS: My wife used to work with Senator Thurmond too. So it's all a rather incestuous relationship.

SEN. BAUCUS: I'm not going to go there.

SEN. ROBERTS: All right.

SEN. BAUCUS: I'll stop there. (Laughter.)

Okay, Governor Sebelius.

Excuse me, Senator Dole. I'm sorry.

MR. DOLE: Well, I'd ask that my entire statement be made a part of the record. It's not that long. But I'm very honored to be here. I loved this committee. I thought we did a lot of good things here in a bipartisan way. And I know the numbers have changed, so the Democrats really don't need to worry much about bipartisanship.

But it was always my -- as I look back on my experience, the things that really mattered and the things that really stuck with the American people and had more credibility were the things that were done, in a bipartisan manner, not two or three or four but a dozen or so on either side.

And if this -- if any committee can do it, it's the Finance Committee. I mean, there are a lot of good pieces of legislation floating around, right, one from the gentlemen from Oregon and Utah, and they have a great program and they've been out having hearings. I'm working with Senator Mitchell and Senator Daschle and Senator Baker as four former leaders, and we'll have recommendations to make. We think some may have some validity, some may want to be discarded, and some may complement things that others are doing in the field.

But today I have this great honor to be here with my friend and fellow Kansan, and you get kind of a two-fer here. You get Ohio and Kansas. And I served in the House with her father, even voted with him once or twice. And I also -- Keith Sebelius, her father-in-law, followed me. When I came to the Senate, he came to the House. So I know the family and I know them to be just outstanding Americans.

I know Kathleen believes -- and we throw this word around so much it worries me a little. Maybe "bipartisanship" isn't the right word, but just getting along and understanding that we have to do something. It doesn't make any difference whose name is on it. We can provide names from everybody.

And just to bring in a little of that, when Hubert Humphrey died, I went to Senator Mondale and said, "Would you object if I went around with petition to rename the HHS Building the Hubert Humphrey Building?" And before the day, I had 99 signatures, Democrats and Republicans. So when you walk into the HHS Building, the Hubert Humphrey Building, you know it was initiated in a bipartisan way, and I think that's going to be a good omen for Governor Sebelius.

And as the chairman said, she's got a mountainous load to even catalogue, let alone understand. And I can't think of any committee that's going to be more important than this committee and any Cabinet office is going to have a heavier load to carry than the governor. So we think the president's made a very wise choice.

And I think perhaps we know the crucial rule this committee's going to play. We had a good hearing Tuesday with the Health Committee, good, sound questions and answers and responses.

You know, I've been around here for a while, and I think that if we can't put it together this year, we're going to miss a big opportunity, because next year you're back in an election cycle, and then when you get into the next presidential cycle, it always starts two years out. And so we're looking, what, four years down the road if we can't find the courage and the willingness to compromise.

Everybody always cites in our party -- and I thought I was pretty conservative -- Ronald Reagan as the icon of conservatism. And he used to tell me, as the Republican leader, "If you can get me 70 percent, take it; you know, I'll get the rest next year or sometime."

And so he wasn't one of those who demanded a hundred percent. And if we're all going to demand a hundred percent on your position or my position, we're not going to get anywhere. Might as well lock it up and go home and do something -- you know, have some fun.

But I think this is a year I think the American people are ready for the struggle. And I think Democrats and Republicans are. And so we hope that we can be of help.

Governor Sebelius understands bipartisanship. She works with a heavily dominated Republican legislature. And they've gotten a lot of good things done. There are some things they didn't agree on, but a lot of good things got done because of her willingness to reach across and to -- and to compromise. And I think bipartisanship in Kansas or here will stand the test of time. And that's another hallmark, getting together.

I went back and looked through all the bills that I thought were important that I was involved in, and every one that really made a big difference in people's lives had broad support. And I think that's one way we can measure the -- you know, we had people like Senator McGovern and Bob Dole and Hubert Humphrey working together. Nobody thought that would ever happen. And I even worked with Orrin Hatch, as right-wing as he is.

MR./SEN. : There you go being reasonable again, Bob. (Laughter.)

MR. DOLE: But anyway, we had a great group.

And -- trying to shorten this thing up here -- but I think the thing to remember is that Kathleen's had the experience. As insurance commissioner, she knows a lot about health care. You learn a lot about it being governor. And in the state legislature she was -- and that's what we need, somebody with the skill, somebody with the experience and somebody with the courage. I mean, if we have some namby-pamby leader at HHS we're not getting anywhere. And Kathleen is tough in the right sense of the word.

And she's never going to stop trying. It's going to be some pretty heavy climbing and heavy lifting when we get down to the nitty- gritty of this legislation. But if I know anything about the governor, she's not going to give up. And she's going to give us the leadership -- provide the leadership and get us through -- I keep saying "us" -- to get you through, you know, some of the very tough times you're going to have.

So I'll just conclude by saying that, you know, we're from different parties. We have differences. Some of them are controversial. But I agree with President Obama, who selected Governor Sebelius to take on this (determined ?) job. He determined one thing. He determined that she was well qualified and that she had the experience and that she had the courage and that she could work with people to get things done. And that's why I think he made a great choice.

And we don't get too many Cabinet officers out our way. Dan Glickman, I think, was the last. So we get free movies now and then. But -- (laughter) -- I think he was about the last Cabinet officer.

So, let's see now -- well, it's never been more important. So the $64,000 question is, can we forge a bipartisan proposal that is accessible, available and affordable?

We can with steady and determined leadership, and Governor Sebelius is ready to lead us in that direction.

And I also have the letter from Senator Kassebaum, but, since Pat's put it in the record, I'll ask that it be deleted from my statement.

SEN. BAUCUS: No objection.

MR. DOLE: Thank you.

SEN. BAUCUS: Thank you, Senator. It's always a joy seeing you and listening to you. You add so much perspective and zest and enthusiasm to public service.

I thank you, too, for that gracious effort to name the HHS building the Hubert Humphrey Building, and the way that you did it. It is -- it seems to me that if everybody who walks into that building now and who -- including, you know, our new HHS secretary -- just remembers it's -- the exuberance and the vitality and the energy, the dedication of Hubert Humphrey, if every day you walk in -- that means there's a much better chance we're all going to get our job done in a way that's -- that helps our public, helps the people in our nation. He had -- he was such a -- he had such an irrepressible, fantastic spirit and energy, Hubert Humphrey.

So thank you very much, Senator, for all that you've done. It's a privilege seeing you again.

Governor Sebelius, we'd love to hear from you now.

GOV. SEBELIUS: Thank you, Mr. Chairman. Chairman Baucus, Senator Grassley, members of the committee, thank you for inviting me here today to discuss my nomination as secretary of the Department of Health and Human Services.

I do want to start by mentioning two people who are not here today. Senator Nancy Kassebaum Baker, a good friend, a former colleague of many of yours, was hoping to be here. Senator Baker was one of the Kansans who, over the weekend, lost power. She was one of the 20,000 people stuck in an ice storm. So she decided home recovery might come as a priority, but sends her greetings to her former colleagues. And I'm pleased to have her support and her help.

I also want to recognize that my husband, Gary Sebelius, who Senator Roberts helped to raise along the way and covered up his periodic misdeeds as a college student, also unfortunately couldn't be here. Gary is a federal magistrate judge, and in -- Tuesdays and Thursdays has a busy criminal docket. So I bring greetings from him, but unfortunately he isn't here.

I do -- it makes it even more important, then, to have my good friends and colleagues Senator Roberts and Senator Dole with me. Not only have I known them both for years and worked with them, but, more importantly, they know my family, and so they're here as family friends as well.

I am so honored that President Obama has asked me to fill this critical role at such an important time. I'm also honored to have the opportunity to testify before this committee, which has a long record of meaningful involvement in the debate over health care in America and is uniquely positioned to help advance the cause of comprehensive health reform.

In particular, I want to recognize the tireless work of Chairman Baucus and Senator Grassley in recent years to lay the groundwork for health reform, from your health-reform summit last June to the series of hearings you convened in the 110th Congress to examine the components of health reform.

And because the Finance Committee's jurisdiction encompasses Medicare, Medicaid and the Children's Health Insurance Program -- the government's largest and most important health-care programs -- as well as the tax code, this committee controls many of the key levers that will help us make health care more affordable and more accessible.

And if confirmed, I look forward to partnering with you, to build on your experience as we work to enact meaningful health reform this year.

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, 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. Yet here we are, at the beginning of the 21st century, facing new and even more daunting challenges. Perhaps most importantly, we face a health 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. Many are the same challenges I've addressed as governor, as a former insurance commissioner and as a state legislator. I'm proud to have worked for more than 20 years to improve Kansas's access to affordable, high-quality health care; to expand access to high-quality child care and early childhood education; to assist seniors with Medicare challenges; to work to expand the pipeline of health-care providers; and to ensure access to vital health services in our most rural areas.

I have also been a health-care purchaser, directing the state employees' benefit program, as well as overseeing the 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 our BlueCross/BlueShield company to a health-care holding company, Anthem of Indiana, because all evidence suggested that the premiums for Kansans insured by BlueCross would have increased too much.

These efforts and others have yielded results. The 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-care costs.

I hope you give me the opportunity to apply my experience as governor and insurance commissioner to the challenges facing the advancing 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, as the chairman indicated earlier, 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 on steel.

High and rising health costs have certainly contributed to the current economic crisis and represent the greatest threat to our country's long-term economic stability.

Rapid projected growth in Medicare and Medicaid account for most of the long-term federal fiscal deficit. And at the state and local level, policymakers are forced to choose between health care and other priorities, like public safety and public education.

American jobs are also at stake. Businesses are striving to maintain both coverage and competitiveness. Currently there is no relief in sight. That where I -- 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 that we envision for health reform. Implementing this program in partnership with the states will be one of my highest priorities.

President Obama 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 -- a number of you have been leaders in that area -- the recovery act lays the foundation for a 21st-century system to reduce medical errors, lower health costs, and empower health consumers. It supports vital information by gathering information and investing over $1 billion 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 10 years to reforming the health-care system. The proposals 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 steadfast leadership of the Senate Finance Committee to work to solve this great challenge for our nation, and we 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. I would like to take a moment to highlight a few of the opportunities and challenges currently facing the department.

CMS, the Centers for Medicare and Medicaid Services, which administer Medicare, Medicaid and the Children's Health Insurance Program, will have a vital role to play in promoting health-care reform and its goals of affordability, accessibility, and quality. If confirmed, I want to work with you to ensure that all those eligible for Medicare, Medicaid, and CHIP are enrolled, and to strengthen those programs' roles -- (very short audio break) -- the Americans with the highest costs and the lowest incomes.

As we address the challenges in our health system, we can't lose sight of the families struggling with the daunting challenge of long- term care.

For more than 40 years, the Administration on Aging has played a prominent role in promoting home- and community-based long-term care services, providing a broad array of support services for seniors and their family caregivers. This agency will be a critical partner in expanding our capacity to provide community long-term care services.

The Administration of Children and Families plays a vital role in getting our children ready to learn and thrive in school, helping low- income working families struggling to make ends meet in this difficult economy and making (sic) the basic needs of vulnerable populations such as abused and neglected children, refugees and individuals with disabilities.

If confirmed, I look forward to continuing the Department's critical leadership in this area, and I will examine ways to improve our efforts through evidence-based approaches that make a difference for families and their children.

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 President Obama has said, our problems would have been solved a century ago. But the status quo cannot be sustained, and is unacceptable for both our economic prosperity and the health and wellness of the American people. Previous opponents of health reform are now demanding it, putting common interest in an affordable, quality system of care for all ahead of special interests. And policymakers, like those of you here on the Finance Committee and across the halls of 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. BAUCUS: Thank you, Governor, very, very much, for that powerful statement. I have several questions I must ask -- the same questions I ask all nominees -- before we get to the substance.

GOV. SEBELIUS: Yes.

SEN. BAUCUS: First, is there anything you're aware of in your background that might present a conflict of interest with the duties of the office to which you have been nominated?

GOV. SEBELIUS: No, Senator. There were a couple of stocks owned in my husband's portfolio which have been identified by the ethics officer, and we have committed to, if I am confirmed, divesting of those stocks.

SEN. BAUCUS: Do you know of any reason, personal or otherwise, that would in any way prevent you from fully and honorably discharging the responsibilities of the office to which you have been nominated?

GOV. SEBELIUS: No, sir.

SEN. BAUCUS: Do you agree without reservation to respond to any reasonable summons to appear and testify before any duly-constituted committee of Congress, if you are confirmed?

GOV. SEBELIUS: I do, and I look forward to it.

SEN. BAUCUS: Good. Have you read this white paper that this committee has published?

GOV. SEBELIUS: I did.

SEN. BAUCUS: Could you talk to us about that? That is, do you generally agree with all the components in it, or do you disagree with one or two? I noticed that during the campaign, President -- now- President Obama, for example, supported the mandate for children; didn't go any farther during the campaign. He's been, I think, a bit silent on that subject since.

As you know, in the white paper I call for an individual mandate, because I think all Americans have to have health insurance. There are lots of reasons why all Americans should have health insurance. One is to prevent cost shifting, which now occurs, between those who are uninsured to providers who have health insurance. It also would help make the market work by encouraging people to purchase coverage while they are still healthy, a big problem now with -- because so many people are uninsured. And also, to make prevention and wellness efforts more effective.

It seems to me more people that -- or have health insurance, the more we can address prevention and wellness efforts.

So my question to you is, will you work and can -- will the administration work with this committee as we try to find ways to find everyone -- get everyone covered with health insurance -- including a -- including, potentially, an individual mandate?

GOV. SEBELIUS: Well, Mr. Chairman, first of all, I think that the white paper that was authored by you and members of the committee is a wonderful road map to a health-reform strategy.

As you know, the president, on the campaign trail, outlined specifics of a health strategy. Many of the elements are identical to those in the white paper, and as you suggested, some are a little different. I think the president is absolutely committed to not only bipartisan strategy but the notion that he didn't write a health- reform bill. He wanted to have a dialogue and engagement with Congress. He wanted to put the pieces together. And as he has said repeatedly, every serious idea should be considered and vetted and put on the table.

So there may be variations about how best to reach the goal most effectively, most cost-effectively, most efficiently, with the best health outcomes of ensuring every American. And I think he's open to all of those proposals.

SEN. BAUCUS: But do you personally agree or not that everybody should have health insurance in this country?

GOV. SEBELIUS: Absolutely. And -- I absolutely agree, and I know the president is totally committed to that proposal, that every American should have health insurance.

SEN. BAUCUS: And the more we can reasonably work quickly, we could reasonably achieve that goal, the better.

GOV. SEBELIUS: Well, no question about it. And I think there -- you know, there have been those who suggest that, given the daunting challenges facing our economy, maybe we should defer health care -- discussion to a later year. I am absolutely committed, as is the president, to moving forward this year. We feel that reforming our health system an -- is -- essential part of reforming the economy.

SEN. BAUCUS: And clearly a necessary part of universal coverage would be health-insurance-market reform --

GOV. SEBELIUS: Absolutely.

SEN. BAUCUS: -- especially in the individual market. It'd also mean access to the -- so that each American who currently does not have health insurance would have access. That means some way to get some financial support for those persons who are lower income, just can't pay for health insurance.

But part of that also necessarily means health-insurance-market reform. And given your experience as insurance commissioner, would you please advise on how we achieve health-insurance-market reform?

GOV. SEBELIUS: Well, Mr. Chairman, as you know, the current process often is a bit of a cherry-picking process, with private insurers either -- discouraging coverage in one of two ways: overpricing coverage for Americans with preexisting conditions, which makes it impossible to afford, or, in some cases, of the individual market just refusing to cover many Americans who don't have other alternatives for coverage.

So I think the preexisting-condition barriers are significant for those who have a health condition. And the cost barriers are often significant, of dividing people into very small groups and then rating on a health incident. If you are a small-business owner and have someone in your business shop, a (Level) IV or V cancer survivor or a heart-attack victim, often your premiums may be priced in such a way that it's totally unaffordable.

So there are ways, I think, with eliminating preexisting conditions, with going to a much more reasonable community-rating system to share the risk -- that's what insurance is really about.

And I think that the experience I've had in the marketplace, those can be effective programs, but they need some barriers set at the outset to make sure that everyone has access to affordable, high-quality coverage.

SEN. BAUCUS: Well, I appreciate that.

We're going to have to move fairly quickly here.

MR. DOLE: Can I just say one word? I need --

SEN. BAUCUS: Absolutely.

MR. DOLE: I need to go to another meeting, but it would really be helpful if you could get her confirmed before the recess, because she can't even get into the building, and we're a little behind anyway. And this is the issue of the year.

SEN. BAUCUS: Yeah.

MR. DOLE: So if you guys can all, you know, do something. (Laughter.)

SEN. BAUCUS: You're absolutely right.

MR. DOLE: (Off mike.)

SEN. BAUCUS: And that's why we're having -- Senator, thanks for joining us very much. You're absolutely right. And that's why we're having this hearing, so we can get her confirmed this week. That's the whole purpose of all this.

But anyway, thank you very much, Governor. And also, I appreciate very much your statement that -- if I heard you correctly -- the full resources of HHS, including CMS and other relevant agencies, would be available to help this committee with technical advice and design advice on how to put some -- put this together in a -- in the best possible way.

GOV. SEBELIUS: Well, Mr. Chairman, the agency -- the department has enormous technical expertise, actuarial help, advisers, pooling help. And if confirmed, I look forward to working with you and providing that expertise as a health reform bill is developed.

SEN. BAUCUS: Thank you. Thank you very, very much.

Senator Grassley.

SEN. GRASSLEY: First of all, remember, I promised you that I wouldn't ask you any questions that you weren't informed of. So if I do ask you a question you weren't informed of, then you don't have to answer it right now.

As we discussed at our meeting, I'm fully committed to oversight. Chairman Baucus runs the committee the same way. I view oversight as my constitutional responsibility. And I think I've conducted vigorous oversight, despite whoever's in the White House. I intend to continue that in this Congress.

To do that, I need your public commitment, if you're confirmed as the new secretary -- I need your clear public commitment that I, as ranking member of the Finance Committee, will not be required to provide you with a chairman's letter for the department to respond to my letters and to provide me the department documents that I might need to do this oversight work.

And by the way, I don't have problems getting the chairman's cooperation, but I -- it's an extra step that we shouldn't have to go through. So would you, as head of HHS, be receptive to my inquiries? And will you assure me that I will not need a chairman's letter for the department to respond to my letters and requests to interview HHS employees?

GOV. SEBELIUS: Well, Senator, first of all, I very much appreciate your focus on oversight. It's critically important to the taxpayers across America. And I know it's a cause of yours and a critical cause. And if confirmed, I look forward to cooperating in that effort and within the bounds of the law provided to me. I certainly will respond.

As you know, you have already given me a binder of homework in our opportunity to visit. And I look forward to having responses to you.

SEN. GRASSLEY: Okay. In regard to the False Claims Act, the -- I have a couple questions. I was the author of that act, and you would expect me to be a defender of it. It's my hope that you'll also vigorously support False Claims and particularly one of its provisions that we call "qui tam." Would you work cooperatively with the attorney general and the Department of Justice to vigorously enforce the False Claims Act?

GOV. SEBELIUS: Absolutely, Senator. When I was insurance commissioner, we created a first-time-ever fraud squad and vigorously worked with the attorney general's office in Kansas to go after fraud and abuse. I have continued that effort as governor, with an inspector general who oversees the programs and the health spending in Kansas.

So it's something that I'm very much committed to: finding fraud and abuse, encouraging not only the whistleblower activity but, I think, an obligation of those who administer public programs, to make sure that if there is any information or evidence that they come forward and that we act on it swiftly.

SEN. GRASSLEY: Since you think or agree with me that that's a good approach and one you even used, in your administrative responsibilities in Kansas, I hope you would help us oppose efforts by industry groups, including health care industry, to weaken the False Claims Act and qui tam provisions of the False Claims Act.

GOV. SEBELIUS: Well, I certainly would. I think it's very important that the public have confidence, as we move in this new era and with the resources under the Department of Health and Human Services, that those dollars are being wisely spent and that there's a transparency about what's happening with those dollars. So I would absolutely like to work with you, if confirmed.

SEN. GRASSLEY: And qui tam relaters are very important, carrying out what qui tam has done. Let me -- I think I informed you. But let me inform everybody that that's brought in $22 billion, back to the Treasury, since it was enacted.

Would you agree to promote a close working relationship with relators and HHS, for the purpose of reducing fraud, waste and abuse in the federal health care program?

GOV. SEBELIUS: I certainly would.

SEN. GRASSLEY: Will you work cooperatively, with me, to ensure that a bill I introduced earlier this year that obviously right now you don't fully know about, but it would restore the original intent of the False Claims Act, that you would review it and comment on it, for the department, in a timely manner and with constructive input?

GOV. SEBELIUS: Certainly, Senator. If confirmed, I look forward to that. I don't know all the details of the bill. But I look forward to reviewing it and discussing it with you and the department.

SEN. GRASSLEY: This will have to be my last question.

As governor, you're familiar with the low Medicare reimbursements that come to your state and my state, in Iowa, Medicare reimbursements sometimes 30 percent below the payments that the same procedures in other parts of the country.

That is a significant disincentive to keep physicians or get physicians and have quality care. It also creates problems recruiting and retaining physicians.

As HHS secretary, would you work to reduce geographic disparities in Medicare payments and focus on rewarding physicians who provide high-quality care?

GOV. SEBELIUS: Senator, it's -- the issue of disparate Medicare reimbursement is certainly one, as you suggested earlier, that I'm familiar with in Kansas. And I know Senator Roberts has worked tirelessly on, as part of our rural health initiatives.

And it is of great concern to me; a concern that I will bring to the office of secretary.

And I think the opportunity to shift the Medicare payment system across the board to rewarding quality and rewarding outcomes is something that we have not only an opportunity but I think an obligation to do. It's one of the ways -- one of the building blocks for health reform, and something that I very much look forward to working with you to accomplish if I'm confirmed as secretary.

SEN. GRASSLEY: Thank you. Temporarily -- Mr. Bingaman's temporarily out, so Mr. Roberts is next, then.

SEN. ROBERTS: Thank you, Mr. Chairman -- or, excuse me, thank you, Mr. Ranking Member. The chairman is back.

Governor, I have three sort of rambling rose questions and the answer to all of them is yes.

More than 25 million seniors and disabled Americans receive their prescription drug coverage through Medicare Part D, as you know. And in Kansas, we have over 90 percent of our seniors that have this drug coverage, 70 percent of those seniors receiving that coverage directly from Medicare Part D, saving an average of about 1,200 bucks per year.

And it's costing less than earlier government forecasts. CBO -- sometimes I think they use a dartboard -- recently announced that Part D projected costs have dropped $520 billion over their original 10- year forecast. That's amazing.

Given this, I have serious concerns with proposals to include a public plan into Part D. I know you think that the Part D model has worked well. And I hope that we will -- we will work together to continue that coverage.

There is a gap in Part D. It's a problem for many seniors. And you mentioned that when we had our hearing in the Health Committee. And I know that Senator Enzi is very concerned about this.

But there's also a program -- patient assistance programs that many pharmaceutical companies are offering to provide free or low-cost medicines to low-income patients. But the policy to date does not allow that PAP assistance -- that's the acronym -- to count toward catastrophic coverage under Part D. Beneficiaries who receive PAP assistance for some drugs must continue to pay their plan premiums and pay for any drugs not covered by a PAP without ever getting the benefit of the catastrophic coverage.

I think that the beneficiaries should get to count that assistance toward their out-of-pocket cap in the same way we can count other charitable help. I would hope you would support making such a change if confirmed, or when you're confirmed as HHS secretary.

Last -- last observation: Drug importation -- the president's budget proposal appears to support efforts to allow Americans to buy drugs from other countries. At Tuesday's hearing, you also mentioned that you supported the idea of reopening this issue. Last year, contaminated blood thinner from China caused hundreds of Americans to have allergic reactions and some deaths. The World Health Organization has noted that drug counterfeiting is now a $32 billion a year a business and growing very rapidly.

As the former chairman of the Senate Intelligence Committee, I believe that this is a serious threat. I would ask you to get an intelligence briefing pretty quickly after you are confirmed.

Before we move forward with any proposal to allow Americans to buy drugs from other countries, I think we have to demonstrate we can do so safely, without any worry about a terrorist threat. And we should demand that any drug imported into the United States mean the -- meet the same high safety and efficacy standards of our food and safety administration, including bioequivalency standards.

Do you have any comments on the three -- on the three subjects that I have mentioned?

GOV. SEBELIUS: Well, Senator, let me just say, if I am confirmed as secretary of HHS, I am committed to working closely with the members of this committee and the members of Congress on a whole variety of health issues that you've identified. There's no question that the Part D drug benefit has been enormously helpful to seniors across Kansas, seniors across this country.

We used to deal with a lot of those seniors when I was insurance commissioner, prior to Part D, and had the most heartbreaking stories day after day of people who literally were given prescriptions by their doctor, to keep them out of the hospital or cure an ailment, and absolutely could not buy both the drugs and food at the same time or couldn't pay their rent and buy the drugs or were cutting pills or filling one out of every three prescriptions.

So there's no doubt that there have been many beneficial impacts of Part D. I think as part of the overall health reform we have an opportunity to make Part D even better. As you've suggested, there's now a gap in coverage that is very difficult for many seniors, particularly those who use more medications than others. They hit the donut hole first.

There are, in many cases, confusing programs where seniors are trying desperately to sort out which program might be more beneficial for them, because the drug components change on a rapid basis. So I'd look forward to having the opportunity to take a look at that and make sure that, as we look at reform, we look at comprehensive reform. And certainly prescription -- affordable prescriptions for our senior and disabled population is critical -- component of health reform.

In terms of the drug reimportation, I share your concerns about the recent -- whether it's the heparin issue from China or other stories that have been done on manufacturing sites which clearly are not being inspected on a regular basis.

So while I support -- and the president has indicated his support, and some -- proposed some budget money to begin to look at reimportation, I think it can only be done if the inspections are accomplished and that we are satisfied that the standards are equivalent or above American standards. And that is going to take some time and some work.

The secretary has had the authority from Congress, if deemed safe, to engage in reimportation. As you know, in the past that has not occurred. And it would be my commitment that that would not occur until I was satisfied, if I am confirmed as secretary, that that safety issue is absolutely met.

So I'd look forward to working with you on that.

SEN. ROBERTS: Thank you for your answers.

Mr. Chairman, I'm going to spare the committee, since my time is up -- way over up -- my rant on competitive research, which we had a vote on in the Senate. Unfortunately, I think that was the wrong vote. I know you spoke to that.

And competitive effectiveness research, I'm for that. But I want it on the clinical side. I don't want it to be the holy grail for CMS to play Lizzie Borden with our health-care providers, and then we have to come back in and fix that, especially on the donut hole that the governor has mentioned.

But I really worry about this, and I know that you have worked very hard on it. And I hope that the -- I just asked the governor -- I think I may submit -- a question in writing would be more appropriate for this.

But you -- can you ride herd on CMS? When they come in and, like the chairman has said, reimburse people at 70 percent, and then they have to make a decision as to whether they can make it or not -- whether it's a pharmacist trying to help people with Medicare Part D or whether it's a hospital or a doctor or home health care -- any provider out there that's not being reimbursed at cost -- and yet here we have CMS coming in again, with actions -- and I worry with this competitive effectiveness research that that, again, might be the holy grail -- the wrong way, Mr. Chairman.

And I'm all for it, in regards to patient care. But I worry about that being, what, the golden ring that they will use to come in. And then doctors and home health care people, then they say, we can't afford this; I'm not going to use Medicare; I'm not going to offer my people Medicare.

Now, I said I wasn't going to go into a rant. But it's just like the oxygen tank thing about two years ago. So I'll spare you that.

SEN. BAUCUS: Thank you, Senator, for sparing us your rant. (Laughter.)

You and I share the same goals on the clinical --

SEN. ROBERTS: I'll ask you that in writing. I would hope that, you know, we could do that.

SEN. BAUCUS: We share the same goal. I'm very glad you're raising the potential complication with it. But I think in the end, I think, you'll probably agree that the basic policy is a good policy. It just has to be worked out right.

Okay, all right.

Senator Stabenow, you're next.

SENATOR DEBBIE STABENOW (D-MI): Thank you, Mr. Chairman. We very much appreciate the senator not speaking about that topic that he just spoke about. We appreciate that. (Laughter.)

Welcome. It's wonderful to see you. And I look forward to working with you in your new capacity as secretary. And I appreciate the fact we've had an opportunity to talk about a number of things: administrative fixes for the Medicare reimbursement system, for physicians, which I know you're looking at, and appreciate your really considering how to improve Medicare generic drugs.

Health IT, which Senator Snowe and Senator Enzi and I have worked on together, and how we implement that, which is so important, given the dollars in the recovery package and so on. So many different issues that we all care about around health reform.

But I'm going to take my time to talk about something we don't talk a lot about, in the context of health reform, that I believe very strongly needs to be a part of that. And that relates to mental health services. Mental illnesses are among the most expensive and disabling chronic diseases.

In fact, the World Health Organization has pronounced mental health disorders to be the leading cause of disability, in the United States, based on burden of disease. And mental illnesses often accompany and greatly increase the cost of treating other chronic diseases. So it's all connected. But when we talk about health care reform and chronic diseases, we usually don't include mental health issues.

Individuals with serious mental illnesses die, on average, 25 years earlier than the general population, due to the lack of adequate care coordination, preventative measures, and the fact that again it's often tied to diabetes and heart disease and cancer and asthma and other kinds of things. And so I think it's very important that we be including, when we talk about health care reform.

And so a couple of questions. What would you do as secretary to ensure that, in fact, mental health conditions are included in health care reform initiatives? And secondly how would you see your role in improving the integration of mental health, in primary care, for children as well as for adults?

GOV. SEBELIUS: Well, Senator, I think, you've identified a critical need. I was very proud of the work I was able to do in Kansas, as a leader, in the effort to pass legislation mandating mental health parity, so that we currently have provisions in the law, which require health insurers to provide mental health parity to the physical health insurance that is being delivered.

I'm pleased that the reauthorized CHIP bill has a mental health parity component in it. I think that's a big step forward.

And I -- there's no doubt at all that as we look at health reform, mental health coverage is a critical part of making Americans well and healthy, and early identification, ongoing treatment, access to psychotropic drugs, in addition to prescription -- other prescription drugs, are critical components.

I'm alarmed, as are many across the country, in the growing numbers of -- the growing evidence that we have a lot of undiscovered depression in children, undiscovered psychiatric trauma in children that often -- and luckily in somewhat rare cases -- is acted out in the worst possible incidents, but if found earlier, it would be very helpful.

We know we have dozens of people, (thousands ?) across the country, maybe millions in our prisons who are really the victims of mental health diseases, and that helped to trigger a criminal activity.

So I think we are paying the costs in probably the least effective, most expensive way, and making sure that mental health services are incorporated as we move forward on health reform is certainly a commitment I would love to work with you on if confirmed.

We also in the department have the agency for substance abuse and mental health treatment. And I think that's another important asset -- to make sure that not only those voices are at the table but that that agency assets are used to maximize the coverage and care for people across America.

SEN. STABENOW: Thank you very much. One other quick question, and I wonder if you might just speak in terms of FDA and NIH about how you would move us in terms of being able to ensure discovery and a market and access to safe, effective new breakthrough medications. You know, we're so close, so many areas, but we have diseases like Parkinson's and Alzheimer's and juvenile diabetes and so many other areas where we need to be moving much more quickly to be providing the resources and finding the treatments and the cures.

GOV. SEBELIUS: Well, Senator, I share your enthusiasm about the potential for cures in the near future, and the -- there's no question that we have the most innovative and technically -- technologically savvy scientists in the world right here in America.

So one of the commitments I would make to you -- that as secretary, if I am confirmed and have an opportunity to serve in this capacity, that we will lead with science; whether it's the National Institutes of Health or CDC or other entities, the FDA, that science- based, evidence-based research will be the primary goal, and unlock the creativity and ingenuity of the researchers, who currently are often curtailed in their ability to find the cures - and reach that potential.

SEN. BAUCUS: Thank you, Senator. Senator Wyden, you're next. Senator, I have to leave -- have to go to the floor to speak on a Medicare amendment. Senator Wyden, you're in charge.

SEN. RON WYDEN (D-OR): Thank you very much, Mr. Chairman.

And Governor, reformers are glad that you're coming to town. It's obvious this is the hour, this is the time. And we are going to be working with you under our chairman's leadership day in and day out to meet the president's timetable. We are going to meet that one-year timetable and end 60 years of gridlock.

Now, the history of past health-reform efforts is that they've tanked largely for two reasons. One, you can't come up with a plan to pay for it, and particularly you can't come up with a way so that people who have coverage today and are relatively satisfied don't feel that health reform is going to hurt them. So I think it is very important to show that you can make savings today out of the $2.5 trillion that's being spent. And I think you can do it in a way that addresses those two past concerns.

Now, one of them is part of health reform, and several of them are a part of your department. And I want to touch on each one. In terms of health reform, where the money is is the tax code. And I'm convinced that it is possible to completely protect middle-class folks from any tax on their health care while at the same time going out there and wringing some significant savings from some of these designer smiles and the like that are paid for with federal tax money. So that's one area where you can make significant savings now, and at the same time address those concerns of people who have coverage.

Three of them are within your department. One of them is generic drugs. And you look, for example, at the fact that Costco or Walmart charges a walk-in customer without insurance much less to fill a generic than some of these price -- Part D plans, the insurance plans, do; and you say to yourself, there's an area where Governor Sebelius can go in and make some savings now.

And I also think that prevention -- and you have already done some imaginative work as governor to look at savings in the prevention area -- we've talked about that, and cutting fraud. Those three areas -- generics, promoting prevention and cutting fraud -- are within your department, when we get you confirmed. And then this tax-code area is where the big money is in terms of health-care reform.

So, your thoughts on how you find savings now so that people don't say, "Ugh, they're going to spend a trillion bucks and not make any savings for a long time"?

GOV. SEBELIUS: Well, Senator, first of all I want to recognize your leadership and efforts in a bipartisan fashion to put together a health bill and -- has a lot of elements that I think are likely to be part of what ends up as the final bill considered by Congress.

So thank you for that leadership work and thank you for your willingness to tackle this issue in advance of getting to this historic time.

You and I had a chance to talk about the fact that it's very important to find savings. And I am a believer that that is a critical part of an agency where there's, you know, a $730 billion budget. And I'm a believer that a crisis requires us to do things in a different way and re-look at every service delivery effort.

When I was elected governor of Kansas, we had a difficult budget time. Not quite as difficult as this time, but it was very difficult. And I was faced with an enormous budget challenge, and ended up finding a way to close a billion-dollar budget gap by doing things in a different way without raising taxes. And so my approach and experience is really re-looking at every avenue and trying to identify ways that we can save money.

Your road map for generic drugs -- and, as you know, I'm a believer in competitive bids for drugs and in finding ways -- we are paying more for Medicare Part D drugs than we are for those same drugs in the Medicaid program for dual-eligible Americans. So we currently are overpaying, if you will, for some of the same -- exact same medications. I think there's some more aggressive and frankly consumer-friendly ways that we can promote more generic drug use that's often resisted down the road.

No question that prevention, I think, yields huge results. As you say, we've engaged in an effort in Kansas in our state employee plan to really have a significant focus on not only an individual health record but then financial incentives for employees who will do everything from smoking cessation programs to weight loss programs to exercise programs. And I think it's likely to pay significant dividends. We're already seeing some early evidence of that, but I think there's more to -- down the road.

And certainly, as Senator Grassley has already indicated, fraud and abuse is an enormous area. And not only is it a significant area for cost savings, but I am a believer that whether it's providers or patients or companies who are fraudulently billing, fraudulently exploiting our health care system, are really stealing from Americans who desperately need those dollars for health services. So I take that very seriously and look forward to working with you, if confirmed as secretary.

SEN. WYDEN: Governor, I think you're going to do a first-rate job. My time has expired.

I only would like to offer up that I think getting these savings and showing people that you're wringing more value out of the $2.5 trillion is the linchpin to getting public support for people in the start-up costs area for health care reform. In other words, if they just say they're going to spend more money and I don't see any savings, you lose some of your support for paying for those start-up costs for health reform.

Looking forward to working with you. Our next senator will be Senator Nelson of Florida.

SEN. BILL NELSON (D-FL): Thank you, Mr. Chairman. That has a nice ring to it.

Madame Secretary-designate, you are going to be great. And we are lucky to have you.

One of the areas that we're going to try to squeeze some money out is to allow the federal government to negotiate for the Medicare Part D drugs. Now, there are a lot of vested interests, including insurance companies and pharmaceutical companies that don't want this to occur, which was part of the reason that the bill was passed in the first place four or five years ago.

But if we did pass a law where Medicare could negotiate prices for drugs, that would be under your jurisdiction.

GOV. SEBELIUS: Yes.

SEN. NELSON: Would you manage that aggressively?

GOV. SEBELIUS: Senator, I would look forward to managing that aggressively. I currently, both in my service as insurance commissioner -- and we were able to serve in that capacity together for a number of years, and I appreciated that -- but as insurance commissioner and now as governor, I am a key member of the state employee insurance board. We have negotiated for drug prices aggressively, I would suggest, and effectively, for our state employees, who enjoy a wide choice of prescription drugs, but also at a very reduced price. We've done the same thing in our Medicaid program, negotiated effective pricing.

And recently, for the state agencies who buy prescription drugs, starting with our prison health system, we negotiated a very successful price, and then opened up that pricing to city and county governments, so jails and a community corrections center could use that same competitive bid.

So I am a believer that competitive bidding and negotiation is an effective strategy. It does not necessarily -- I mean it certainly should not limit the choices that providers have to prescribe drugs, and doesn't lead to that, but can be much more effective -- (audio break).

SEN. NELSON: (Audio break) -- we approach legislation on this, because the cry will be, well, the federal government would be unfair as a competitor to all of the drug plans because the federal government then would start having price control. But that's part of the competitive system, and I've seen it work in the Veterans Department for over two decades.

You have to be concerned about a formulary, and there will be some problems there, that if you're going to negotiate prices you have to have a certain formulary that these drugs are covered. So there are a lot of twists and turns, but the fact is that the Veterans Department, using millions of folks that are receiving those benefits, do get their drugs at a lower cost because they are in fact bulk purchases.

GOV. SEBELIUS: That's correct.

SEN. NELSON: So it seems to me common sense that we ought to be looking at bulk purchases with Medicare.

Let me identify one other little nuance that you're going to be facing. And that is, if we are successful in the reform of health care and we start to get some of these 47 million people that now do not have health care insurance, in order to get health insurance, and if we are able to get them into the system -- and of course, we know these 46 million still get health care, but often they get it at the most expensive place, which is the emergency room, at the most expensive time, which is when the sniffles have turned into pneumonia -- if we're successful in doing that in this health reform package, 46 million -- or say half of that, 23 million new people in the system -- we're going to need new doctors.

We're going to need new health-care providers, okay?

We've got great medical schools all over. Here's what happens. Give you the example of Florida. We educate a lot of doctors, but then, when it comes to having the residences -- the residencies, we don't have them, because back in the late '90s, the Medicare-sponsored residency program was frozen.

As a result, since 1998 any state that has been a growth state, like Florida, like Nevada, like Arizona, California, et cetera, have been severely penalized, because we educate the doctors and then they go have their residency in another state. And it's very typical that a doctor will stay and practice where they did their residency.

Now, that's something we've got to address. You want to comment on that?

SEN. WYDEN: Governor, as much as I agree with Senator Nelson, we're going to have a vote in a few minutes. So if you can answer quickly, and then we're going to try to get all our colleagues in.

GOV. SEBELIUS: I'd love to work with you on that if confirmed. (Laughter.)

SEN. WYDEN: Excellent. Good point, Senator Nelson.

Senator Schumer?

SEN. CHARLES E. SCHUMER (D-NY): We have just seen the advantage of having an elected official be nominated for a position rather than somebody who doesn't have the experience. Excellent answer, Governor, and I'm delighted that you're -- (laughs) -- I'm delighted that you've been nominated by the president. I think you'll be a great secretary.

I want to focus a little on the public-good aspect of health reform. I think it gets a little bit lost in the discussion: public goods such as prevention and screening for diseases that can be effectively treated or even cured, early intervention, health information technology, which, as you know, the president is very, very eager to happen.

And so what I've been grappling with -- as you may know, I'm working on the concept of a public-plan option here in the Finance Committee -- the chairman has assigned me to focus on that -- is how do we get the most cost-effective, high-quality insurance products to Americans? What ingredients are essential? And who does it best -- for-profit plans, nonprofit, Medicare, or other plans? What are the tradeoffs?

And like you and President Obama and millions of Americans, I believe we must have a federally guaranteed public-plan option. It's not going to be enough to have private plans providing health insurance. But -- and there's not a consensus on that, as the comments from my colleagues from Iowa and Utah have made clear.

But even within those of us who believe in a public plan option, there's a great deal of discussion of how it ought to be structured.

And that's what I want to explore with you. I think we can make this effective, not just a political sort of toy or weapon to be brandished by one side or the other.

And so here are some questions for you: First, do you agree that a public insurance plan option will help level the playing field and ensure that everyone has an affordable option? Will it put pressure on the for-profit and even the non-for-profits to incorporate more of these public goods?

GOV. SEBELIUS: Well, I certainly, Senator, think that a public plan, if constructed effectively and wisely, with some actuarial help and support, can be a very effective tool in providing one more choice and option to American consumers.

SEN. SCHUMER: Good.

One other reason to have a public plan -- in a lot of metropolitan areas, I think 76, one insurer has a preferred provider organization market share of greater than 50 percent. Sixty-four percent of metropolitan areas, one insurer has an HMO market share of greater than 50 percent. And a significant number of areas have single insurers with even -- with 70 or even 90 percent of the market. So isn't it true that a public insurance plan option would at least ensure that there's some degree of competition in these types of areas?

GOV. SEBELIUS: Well, Senator, I share the president's commitment that, first of all, Americans who have coverage that they like should be able to keep it, but secondly that Americans who are looking for coverage should have some choices. And as you just said, often, when you get 60, 70 percent of the market share, you have a monopoly. And it -- it really doesn't operate in an competitive environment.

SEN. SCHUMER: And that's happened in a lot of markets, isn't that --

GOV. SEBELIUS: That's correct.

SEN. SCHUMER: Isn't that true?

GOV. SEBELIUS: That's correct.

SEN. SCHUMER: Too many -- far too many, in my opinion.

Let me ask you this -- and I want to stay within the time limit so my colleagues have chances to answer questions. Do you think that a federally guaranteed option could be a gold standard, help consumers make more informed choices about what health plans are delivering the best value and the best plan would best fit their needs? In other words, a public plan, again, by its definition, would incorporate more of these other types of public goods.

And the second question -- and then I'll let you answer and finish -- could that be achieved if the option were not an expansion of a federal program, but a new hybrid, perhaps even run by a private insurer?

GOV. SEBELIUS: Well, Senator, I know there's been a lot of discussion about hypothetical public plans, but let me give a couple of practical examples. Thirty-plus states in the country, including Kansas, has a public plan side-by-side with private market plans in our state employee program; operates very effectively. State employees choose. They have an opportunity to take a look at which is best suited to themselves and their families. And there has been no destruction of the marketplace.

In California, in the Medicaid program, there are numbers of large counties in California where a public plan operates side-by-side with private plans.

So we have examples throughout the country, very competitive, very effective strategies where the plans, public and private, compete on the basis of benefits and innovation and cost, which I think is exactly what we would want to offer the American consumers.

SEN. SCHUMER: Thanks. I mean, it seems to me that a public plan, as in the history, as you show, doesn't swallow up the private plans but more or less keeps them honest, if you will.

GOV. SEBELIUS: Well, if it's effectively constructed; if we use, you know, insurance rules that make sure you don't have adverse selection, that you don't tilt the playing field -- the president is very committed to a level playing field -- but it absolutely can happen. It exists. It has existed successfully across the country.

SEN. WYDEN: Senator Enzi.

SEN. MIKE ENZI (R-WY): Thank you, Mr. Chairman.

And I want to thank the governor for her willingness to serve in this position, the tremendous knowledge that she brings to it.

Health care, of course, is one of the primary things that both the Health Committee and the Finance Committee are talking about. And of course, there are four of us on this committee that serve on that committee as well, so I kind of look at myself and the other three as liaison between the two. And it's going to take some tremendous coordination to cover the various jurisdictions.

And as you know, there are more moving parts to this than anything else. There are more stakeholders to health care than anything else. And in fact, I can't think of anybody that's not a stakeholder in health care, or should be a stakeholder in health care. As insurance commissioner, you've got tremendous background at understanding how that market works, and that's something not very many people understand.

I was pleased to work with Senator Daschle, and I think I was one of the great promoters of his book, which I think gave one of the best histories of health care reform, and a number of great suggestions and a number of flaws in past procedures. And when he appeared before this committee, I asked him a question that I asked you the other day about whether health care ought to be in reconciliation. And he said, no, it should not be. And that's because of all of the moving parts and everything.

And so I hope that I can persuade you -- not at this moment, not even going to ask you the question again, but that that not be. And the main reason for that is that Senator Robertson and Senator Hatch and I have a great responsibility for keeping the Republicans calm during this debate -- (laughs) -- because if we get to a point where nobody's listening, we can't get it resolved.

GOV. SEBELIUS: Sure.

SEN. ENZI: And that's the feeling that I have, if it goes -- not that I have, but that I'm getting from my colleagues -- that if it goes into reconciliation, then that's an indication from the other side that they're not going to listen because they don't need to listen.

And we are going to have to listen to each other. We're not going to be able to negotiate this package in a meeting like this, in a hearing. It's going to have to be done with people taking the different parts that they have an interest in and a knowledge of and sitting down and working it out.

And yesterday we had a fascinating debate on the floor on this comparative effectiveness. But we were talking about cost- effectiveness and clinical effectiveness, and the two sides weren't listening.

And both sides resolved it to their own satisfaction. But we are going to have to come together on that issue. And the biggest thing we're going to have to do is come up with a whole nother name that doesn't have the letter C or E or R in it, in order to get past that.

And so I just hope that you will help us in that endeavor. It is possible, if things go through the regular process, that we can get things done. The national service act that was finished last week is an example of that. It was the first big review of it in 16 years. And it passed by a very significant number.

So I guess my request is that you will help us to get things through regular process and the complete process that helped me and others keep everybody calm and listening, until we get to that point. Would you agree to that?

GOV. SEBELIUS: Well, Senator, I've already learned some important lessons from you. One of them is the 80-20 rule. And we talked about that in your office and talked about it a little at the Health Committee. And I would say that it's certainly my experience of how I have acted as a public official.

I have typically been an elected official in the minority party, with significant majority members of the legislature or the voting public. And so I really very much not only believe in bipartisanship but would have never gotten elected or gotten anything done without working in a very bipartisan fashion. I share the president's commitment that health reform be a bipartisan approach. So I look forward to working with you, if confirmed.

SEN. ENZI: I appreciate that. I do think we can get it done this year. And I have a number of other questions. But I'll submit them and give up the rest of my time.

Thank you.

SEN. WYDEN: I thank my colleague.

Let's go to Senator Snowe. And I think with a little luck, we can get Senator Cantwell and Senator Carper all in before the vote.

SENATOR OLYMPIA SNOWE (R-ME): Okay, thank you. Thank you, Mr. Chairman.

And welcome, Governor Sebelius. And congratulations on your nomination. Your appointment comes at a transformational time, particularly with the reform of health care that generally comes once in a generation, if that. And so you'll be forefront at this great debate. So your experience and your background will certainly make an enormous contribution to this effort.

Getting back to the government-sponsored health plan, because I know that that is a key issue, as we go forward on health care reform, and it's reminiscent of the debate that occurred on Part D, when we were working on developing a prescription drug. And there was a fear that there would be a lack of competition, among plans, for that market.

In fact, we did create a government fallback in response to that. If an area didn't have any plans, there would be government fallbacks. So there had to be two or more plans, to offer competitive prices, before the fallback would be kicked in. And it never has.

So I think that's an indication of the number of options that were out there. In fact, many people complained there were too many options to sort through, in response to creating, you know, that single greatest initiative, since the Medicare program was created.

So in looking at the government option, aren't there better ways to attack that problem? You know, we set up standards, in our small- business health insurance plan that Senator Durbin and Lincoln and I have introduced, for small-business health insurance.

And what we do is set up standards. So that was at least, you know, one plan, a standard plan. So there weren't different rating rules. There weren't different mandated benefits and so on.

So there is a possibility of setting up certain standards for private insurers, to -- you know, to ensure and guarantee that there is one standard benefit plan that could be offered to consumers, rather than opting for a government-run plan that ultimately could end up being, you know, far more costly; it could end up taking the sickest and the private insurers take the healthiest. I mean, the list goes on. I mean, government should be the last resort, not the first, when it comes to something so monumental.

GOV. SEBELIUS: Well, Senator, I share your belief that a competitive market is often the preferable strategy, and certainly -- and that competition works far better in most instances than heavy regulation.

I do think it needs to be an option that is considered. The president clearly supported a public plan option as he outlined his thoughts about health reform strategy and, I think, is open to a variety of opportunities to discuss it.

I do think it's important to take a look at what's going on around the country, because clearly there are very successful side-by- side competitive options. As I say, most state employee health plans right now have a public option side by side with private insurers. It has not destroyed the market. It has not tilted the playing field. But that's all about the way the rules are set.

And as you say, you know, in your SHOP bill that you Senator Durbin and Senator Lincoln have worked on, you can construct standards, and it may be at the end of the day that the standards are effective enough that the competition from a public plan is not a valuable asset. But I think it's part of the conversation going forward and something that needs to be looked at.

SEN. SNOWE: Well, I appreciate that, and I hope that we can continue to have that discussion, conversation and perhaps not solidify in our positions as we go forward on this crucial debate.

On the question of drug importation, in response to my wonderful colleague from Kansas, Senator Dorgan and I have introduced repeatedly this legislation. And it's interesting to note, because we import drugs from Europe that have had parallel trading for more than 30 years without incident in New Zealand, Japan, Canada.

Now it's interesting to know -- and we provide a fee on imports, on imported drugs, so that we could address, you know, not only inspections but requiring FDA inspections, having anti-counterfeiting technology, and so ensuring all the safety standards that are crucial. Currently, FDA doesn't have those resources, frankly. I mean, they don't even inspect facilities every 10 or 12 years. And it is an appalling track record.

Our bill provides the resources and we only -- using those countries where they have -- you know, have the highest of standards, and yet we're importing drugs and -- from China, for example -- we're not inspecting the facilities. We have more than 700 drugs coming out of China and India, for example. We know what the problems are, which I think is sort of ironic -- that we're importing drugs that are manufactured in facilities that aren't inspected by FDA, and yet there's such strong resistance to our drug importation bill that said -- that allows importation from the countries that have the highest standards, and we're going to have the highest standards for safety inspection that we should replicate on the domestic market, frankly, and we provide for the funding for a total inspection of this so that allows the competition of -- for prescription medications.

So I'll urge you to look at that piece of legislation and the way we're able to construct it. And I think, frankly, it's a way of going forward.

GOV. SEBELIUS: Well, I appreciate that --

SEN. WYDEN: Governor, very briefly, so we can get our colleagues in.

GOV. SEBELIUS: Yes.

SEN. WYDEN: Did you want to make a brief response to Senator Snowe?

GOV. SEBELIUS: Yes, I will. (Laughter.)

SEN. WYDEN: Good.

Governor -- Senator Carper. Also a governor.

SEN. THOMAS R. CARPER (D-DE): Welcome, welcome, welcome. We never -- our terms as governors did not overlap. I'm mindful of the work that you did as governor and very respectful of the work that you did as governor.

And I -- well, part of me wishes you were sitting on this side of the dais instead of that one. In the years to come, we're just delighted that we'll have a chance -- and I hope to work with you, and very much value you as a leader.

One of the things I'd like to focus on -- and along with some of my colleagues here -- is, how do we reduce the waste and inefficiencies in our government? The Congress passed, during the Bush -- this Bush -- last Bush administration -- something called the Improper Payments Act, which says that every year we ask all the federal agencies to promote improper -- to report -- not to promote them! -- (chuckles) -- to report improper payments. And last year we found out that about $72 billion in improper payments were made by a whole lot of federal agencies. It doesn't include Medicare Part D. Does not include much of Homeland Security. But it's a lot of improper payments. A fair amount of that was actually from Medicare and Medicaid.

And I think I mentioned to you when we had a chance to talk that about three years ago a post-audit recovery demonstration project was begun with respect to Medicare overpayments in three states: California, Texas and Florida. I think the first three -- first year of the three years, almost nothing was recovered. Second year, a little bit was recovered. Last year, I'm told, about $700 million was recovered.

We're doing that in three states. We need to do it in 47 other states. My hope is that we are going to do that, we'll -- that we'll do that. And I would urge you to make sure that that happens. The other thing I would suggest, if -- and GAO met with us not long ago, and we talked about that progress in those three states. And they said, you know, if we can do that in Medicare, maybe we can have some similar achievements in Medicaid.

And you've done some interesting things in your state with respect to waste, fraud and abuse. I think you use a smart card -- we call it a smart card -- in dealing with your -- working with your Medicaid population. I don't know how familiar you might be with that particular initiative, but if you are, and you feel like you could tell us a little bit about how it works and how it might help us at the national level, that would be great.

GOV. SEBELIUS: Well, Senator, first of all, I am absolutely committed to, as we talked to Senator Wyden and others about, aggressively working with all of you, if confirmed, on waste, fraud and abuse. I think it's an important part of finding the savings that we're going to need to transfer to health-care services.

What we've done in Kansas is really convert from a paper card, and -- which is distributed and too often could be lost or copied fraudulently or used by somebody else, into a -- more of a smart card, which is a more permanent record of -- (audio break) -- for Medicaid patients. It's an easier billing system; it brings together the technology to have, I think, more information of that patient's available for providers and for pharmacists, and, frankly, gives us -- (audio break) -- oversight into, actually, what services are being used.

So we became, I think, the first state in the country to use the nationally recognized technology to make that shift. It's just occurred in the last couple of months, but I will certainly be happy to bring that expertise to my new job, if I have the opportunity to serve.

SEN. CARPER: Thank you. When we met, we also talked about fitness and nutrition and prevention and those helpful tools in addressing our health-care costs.

I think something like a third of our young people in this country are either obese or in danger of becoming obese; something like 50 percent of their parents and grandparents are obese or in danger of becoming obese.

And I would just like to ask -- (audio break) -- I think were very faithful to that sort of thing. What do you see as a government -- government's role in promoting prevention and wellness? And what can we do to incentivize a lot more people to become healthier?

GOV. SEBELIUS: Well, Senator, again, back in my home state of Kansas, I took this effort very seriously. And we have a whole series of initiatives going on.

One we've talked about a little bit with Senator Wyden in the state employees program, with a personal health record and -- (audio break) -- which is currently brought together by Cabinet officers from everybody from the secretary of aging to our health officers and our education commissioners to look at healthy children in schools, healthy workers in a workplace, healthy seniors.

And it is a whole host of strategies of -- what's being served in the lunch counter; working with parents' groups; getting some of the fattier drinks out of vending machines or at least blocking their ability to access the vending machines during school hours; reintroducing P.E. in schools; having strategies about community health workouts. And so we have healthy community awards, healthy school awards, healthy senior awards. We have thousands of seniors involved in the Steps program, which is, again, an exercise strategy and a wellness strategy.

So I think there's a lot we can do. I was very pleased to see that -- that in the recovery act, there is a significant investment in prevention for -- a historic investment for the Department of Health and Human Services, a billion dollars focused on a national prevention effort. So we really have the opportunity to get the best strategies and hopefully have a major impact on the health of Americans by promoting personal responsibility and making sure that people understand they have a responsible way to put themselves in a better condition and it's not only lowering health costs, but it's very good for their life value.

SEN. WYDEN: Governor, you and Senator Carper are making such important points, but we've got to go to Senator Cantwell.

SENATOR MARIA CANTWELL (D-WA): Thank you, Mr. Chairman. I know a vote has started, so I will be brief.

But Governor Sebelius, again, congratulations on your nomination.

GOV. SEBELIUS: Thanks.

SEN. CANTWELL: We look forward to working with you. We hope your confirmation process goes smoothly out of here and quickly to the floor and that you can begin this work in earnest.

I wanted to cover a little bit of ground that Senator Grassley covered in regards to geographic adjustments and reimbursement rates. Your state in Kansas and my state in Washington have been very good on this, basically high-quality, low-cost delivery systems. I think Kansas is something like for -- Medicare enrollee averaged about $7,400 and for Washington State, $7,100. So we are putting the Dartmouth research on the better end of outcomes and the better end of low cost.

So what do we need to do to get the rest of the nation to adopt this plan?

GOV. SEBELIUS: Well, Senator, I definitely think that Medicare -- as we look at comprehensive health reform, Medicare can be a leader in this area. And one of the leading strategies is to really shift the payment system to providers so that we are looking at outcomes, quality of health outcomes, and not numbers of contacts, which often now drives the payment system.

Certainly, looking at the states -- and Washington State is one of them -- where the -- in fact, your positive health outcomes are often a penalty in the reimbursement strategy, the realignment of payment to quality, payment to health outcomes is certainly a strategy I'm very committed to and would love to work with you, if confirmed, on making sure that that's part of how we reform the building blocks of the health reform system.

SEN. CANTWELL: (Off mike) -- population but they're two-thirds of the Medicaid cost.

And one thing that I'm interested in is building on the utilization of home and community-based care services. We have shown again in the Northwest that by focusing on that, you can have huge cost savings in the delivery of care. I think nursing homes are something like 70 percent more than community-based care programs in cost delivery.

And so, what do you plan to do as secretary to help utilize home and community-based services as a way to provide those services, you know, before people are forced into Medicaid and into nursing homes?

GOV. SEBELIUS: Well, Senator, I share your interest and commitment to looking at a much more community-based strategy. It not only lowers the cost, but it's much better for the Medicare recipient. Most people would much prefer to be in their home with some wraparound services and some assistance than be forced actually into a nursing home setting.

So I think that we have done some good work in Kansas that I would intend to kind of bring with me, where we have shifted to a continuum of care approach and early intervention to try and make sure that we reach seniors and their families before they've exhausted all both their resources and their time and energy, and wrap care around seniors so they can live independently for much longer periods of time. And it would be those kind f strategies that I think can be very effective nationally in not only lowering costs but much better outcome for seniors.

SEN. CANTWELL: And is that something you think that we can get done this year as we discuss health-care reform? Do you think it's a priority within the ranking of issues?

GOV. SEBELIUS: You know, I do. I think that there are enormous assets in the Department of Health and Human Services which need to be the building blocks for health reform. So as we talk about ways that we begin to reform the system, we can do a lot of reforming within the Department of HHS -- driving toward quality, prevention issues, implementing health IT, rolling out the CHIP program, making sure that the building blocks of Medicare and Medicaid are as efficient and effective and have the best health outcomes possible.

All of that can be done without any legislative approach because the assets and the resources are there. So I would very much see that as part of our responsibility and, if I'm confirmed as secretary, would put it as a high priority in an agenda not just working with Congress on the legislation, but making sure that we are using the assets in the agency to really drive health reform.

SEN. CANTWELL: Well, thank you. And I thank the chair. I look forward to working with you on both of those issues. I think they are incredibly important -- (off mike) -- is not just now experiencing but going to be experiencing in the future as we see a larger baby bubble population reaching the retirement age and wanting to utilize those services.

So if we can move the rest of the nation to the efficiency that some states have had, driving down the reimbursement rate, and move people into more cost-effective long-term care scenarios, I think it will be good for the federal government taxpayer in keeping down our costs.

Thank you. I thank the chair.

SEN. WYDEN: Governor, with a vote on the floor, you get spared any windy closing statements. And let me just leave you with one thought.

In the history of this committee, it has never gotten out of the gate faster on the cause of fixing health care than under Chairman Baucus, with the support of Senator Grassley. I think that's a message to you that this committee on a bipartisan basis want to work -- wants to work with you. We want to see you get confirmed.

We want to see you get confirmed quickly. And then we want to go to work.

So we look forward to those days. And we thank you for this morning's session.

GOV. SEBELIUS: Thank you, Senator.

SEN. WYDEN: With that, the Finance Committee is adjourned.

END.

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