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Hearing Of The House Ways And Means Committee - Health Reform In The 21st Century: A Conversation With Health And Human Services Secretary Kathleen Sebelius

Hearing Of The House Ways And Means Committee- Health Reform In The 21st Century: A Conversation With Health And Human Services Secretary Kathleen Sebelius

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REP. RANGEL: (In progress) -- will come to order. Staffs, visitors, stakeholders, please take their seats at this time. This is what, the fourth meeting that we're having on health reform and we haven't finished yet.

But this morning we will pause the hearing form to welcome the new secretary of health and human services. We are just so pleased that she has been selected to guide us through what most all of us feel is one of the most historic and meaningful measures before this Congress to make certain that all Americans have access to affordable health care.

For those of you that were fortunate enough to monitor her confirmation hearings, I am thoroughly convinced that, Republican or Democrat, that we have been so impressed of the dedication, almost all of your life to public service. And that the talents that you have acquired over those years are so very, very important to this Congress and to this committee to reach the goals that the president has established for all of us.

I want you to know, Madame Secretary, that there are really sharp differences of opinion on this committee as to how we achieve near- universal health care. But I also want you to know that Ranking Member David Camp and I have reassured each other that to our constituents, there are no Democratic beneficiaries or Republican beneficiaries, that we are just people in need of a solid health plan.

And because we try so hard to work together, I'm asking you to use your good offices, since you have a history of working with Republicans and Democrats, and coming up with legislation and programs that you and the people you work with can be proud.

You should know that next week, Congressman Camp and I are working out a caucus, just the members of this committee. So without cameras and microphones, we can come together and see what differences we have, and what differences can be worked out, so that we can give you a bipartisan bill.

So there may be a lot of good reasons why people will oppose this legislation, but it will not be because we have not attempted in good faith to work out those differences. And so I'd like to yield to the ranking member, and publicly thank him not for promising anything except an honest good attempt to see what we can do in working together.

Mr. Camp.

REP. DAVID CAMP (R-MI): Well, thank you very much, Mr. Chairman. I appreciate those comments.

And welcome to the committee, Secretary Sebelius, to the Ways and Means room. I think this is the place we'll meet often. And as much as I respect this room and what happens within its walls, I think we would both readily admit that the Leelanau Peninsula, would -- an area I represent; I know your family has come to know, is a much nicer meeting place.

But I know your time is short. So I will get straight to the point. I've read your testimony and agree with much of it. And so I ask whether we will focus on developing a plan that features policies we can agree on, lowering costs for families, businesses, and the American taxpayer, ensuring no family is bankrupted by their medical costs, choice of doctors, being able to keep your current coverage among others, or will we focus on what divides us.

And I think if it is the former --

REP. RANGEL: Yeah.

REP. CAMP: -- I think we can find a path to bipartisan health reform. If it's the latter, we may not be as successful. So I'm hoping for a success in that regard. And as we continue this conversation on health care reform, I ask that you make yourself available to this committee, its Republicans and Democrat members, and that you and the president truly be open to our ideas and working across party lines to make health care reform a reality.

And since your time with us is short, I just want to make sure members have as much time as possible to ask questions and discuss with you. And I yield back the balance of my time.

REP. RANGEL: Madame Secretary, you'd be given five minutes to present your remarks, and we are going to try to be extremely liberal in that. But I want you to know that I have been persuaded to convince Republicans and Democrats to reduce their questioning from the five minutes that we are used to, to two-and-a-half minutes.

It may not seem much to you, but I want you to know that's a big deal to us. And so we hope you'll take that in consideration when we ask you to come back when your time -- it is better doing so. At this time, I welcome you on behalf of the full committee and the Congress, and I look forward to your testimony. You may proceed.

SEC. SEBELIUS: Well, thank you, Mr. Chairman, and Ranking Member Camp, and members of the committee. As the chairman has already said, this is my first opportunity outside of the confirmation hearing process to have an opportunity to have a discussion in Congress, and my first time before a House committee, and I'm pleased to be here with the House Ways and Means Committee and members.

And I know today is just a beginning of what I hope will be a robust and frequent conversation as we move towards the goal of health reform and health coverage for all Americans. I'm pleased that Ranking Member Camp has already recognized that actually I'm one of his constituents.

I pay property taxes. I might say too many property taxes in your district, but I think it's an opening of bipartisanship demonstrated from the outset. I don't -- I'm not Chairman Rangel's constituent, I'm Representative Camp's constituent.

You know, I -- given the time shortage, Mr. Chairman, I may -- you have my printed testimony. And I'm going to just highlight a few things and then talk a little bit about a couple of the reports that I spoke about today with the nurses association, because much of what is in the testimony, this committee is well familiar with. The need to provide health coverage, particularly, because the costs of the current system are unacceptable and unsustainable for businesses, for families.

What we've seen is the situation getting worse. Cost continues to escalate and more and more Americans lack coverage. And I share the president's conviction that health care reform cannot wait and will not wait another year.

Many steps have been taken my members of this committee and others in the first hundred days to set a platform ensuring 4 million more American children, and providing resources in the recovery act for a variety of initiatives, health and wellness programs, funding the pipeline for new workforce efforts, making sure that the resources are there for implementation of health information technology, which can be an underpinning to moving the health system in a new direction.

And I share the president's belief that reform must guarantee choice of doctors and health plans, including a choice between a public and private plan option that no American should be forced to give up a doctor they trust or a health plan they like. And comprehensive reform shouldn't force any American who are satisfied with their coverage to make changes.

But covering every American access to the high-quality health care is so important. And the two reports that I'm issuing today as the new secretary of health and human services, I think, highlights some of the underlying issues that we're facing.

Today, we are releasing the National Health Care Quality Report, and the National Health Care Disparities Report. And both of these underlie troubling findings about the status quo of our health care system. The disparities report again highlights that severe and pervasive disparities in care continue to persist in this country.

Minority patients still receive proportionately poor care compared to their Caucasian neighbors. The quality report highlights that 40 percent, 4 out of 10 health care patients, don't receive recommended care. And that's an ongoing situation. And again, prevention measures are too often lacking.

Half of the obese adults and children who see a doctor are never given advice to exercise more frequently and eat a healthy diet. And most troubling is they decline inpatient safety measures identified in the quality report that have worsened every year for the past six years.

When you look at the underlying causes, patient safety is down, because the number of patients acquiring health care associated infections has gone up. Patients come to the hospital to get well, and unfortunately, too many of them are acquiring potentially fatal infections.

It has become one of the top 10 leading causes of death in the United States. And the infections are thought to cost about $20 billion, $20 billion a year, in additional health care cost. So we are challenging the health care providers to work with us on attempting to fix this problem.

Thanks to your support, the recovery act now includes $50 million to help prevent health care associated infections, and as of today, the department is prepared to begin to release those funds. Forty million dollars is aimed at states to expand their infection prevention teams and educate and collaborate with patients and hospitals to keep patients safe.

An additional $10 billion is supporting increased inspections of ambulatory surgical centers, which are all too frequently a site of these lethal infections. And we know that one particularly common and dangerous infection is the central line associated bloodstream infection, and it strikes tens of millions of American patients every year, and that number increases year in and year out.

But there is a relatively easy cure. Researchers found that the hospital checklist, protocol, if implemented uniformly, and on a daily basis, dramatically reduces these results. Medicare has been studying this in 10 states. We want to expand that protocol to all states.

So today, Mr. Chairman, as part of this effort to begin to transform the underlying system, I'm issuing a challenge to hospitals across America to commit to using the patient safety checklist in all hospitals and reduce the serious bloodstream infections in intensive care units by 75 percent over the next three years.

That's what our data tells us can happen. If the checklist is used, infections will go down. We want to include every hospital and every state. This morning I spoke to the nurses association and asked them to join in this effort, and we'll be putting this challenge out to hospital administrators across the country.

So Mr. Chairman, I know you and members of this committee share my concerns about the quality of care and the need for comprehensive health reform. And I want to thank you in advance for the hard work that's already been done to set the platform for this historic moment.

And I want to assure you that I will do everything I can to work closely with this committee and others here in the House and across the rotunda in the Senate, to make sure that we take advantage of this opportunity.

And with that, Mr. Chairman, I would stand for questions.

REP. RANGEL: Thank you, Madame Chairman -- Madame Secretary. First of all, for the most part, Democrats support the president's plan. We are anxious to have dialogue with others that have different plans. You may not hear it today, but we will be discussing these things off-camera in the backroom in trying to find out where we can publicly agree.

Having said that, and without them saying it, those who oppose the plan, it seems like one of the most controversial issues is the public plan. I know the president supports it, but I would hope that you'd be able to share with us your views on why public plan should not be fearful that the government is going to undercut them, and put the full profits in public plans out of business.

It just seems to me that if we have a public plan that this would monitor the private system, and the private system would look competitively at the public system, and at the end, the standards of all of the plans will be the best ones to attract people who have no insurance.

People who have insurance, are happy with what they've got, will not be affected. But I think we're going to have to concentrate, and I need your help on the question of why do you and the president think that a public plan is so important in providing quality care at lower competitive prices.

SEC. SEBELIUS: Well, Mr. Chairman, as you are aware, part of my background is shared with colleagues in the Senate where I -- I was an insurance commissioner for eight years in Kansas. And so I -- my charge was to regulate the insurance market. And what I'm a believer in, and certainly the president is a believer in, is that competition often is a very healthy component of any market situation.

And I think that competition helps promote innovation, it helps promote best practices, and also can help to lower cost. So in the design of a health insurance exchange, which is really what we're talking about, and what the president discussed is, a choice of a variety of options is often critical.

In many parts of the country, including in my home state of Kansas, there are lots of areas in the state where there aren't choices of private carriers for many citizens. And it's why in our design of a state employee health insurance plan, for instance, we created a side-by-side public and private option so that it helped to promote a network.

About 30 states have done similar things. I know in many states, in their design of the children's health insurance plan, a public plan is a side-by-side option with private carriers. The underlying issues are what are the rules, what are the actuarial issues going into the design of a plan?

And is there a level playing field? Then, I can assure you, Mr. Chairman, and some who have voiced opposition, or at least at best skepticism about a public plan option, that the president is committed to, and I'm committed to the fact that the design needs to level the playing field.

And it's on two -- from first, a public plan option should not undercut the private market, tilt the playing field in one direction.

The private market, on the other hand, shouldn't be able to cherry- pick the least costly patients, so getting rid of some of the preexisting medical condition barriers that allow a skewed marketplace I think is important.

But having an option for individuals, having a choice for the Americans who don't currently have coverage, and having competition to drive the best practices, the best cost efficiencies, the best protocol, I think, can be very positive in the long run.

REP. RANGEL: Thank you.

Mr. Camp.

REP. CAMP: Thank you, Mr. Chairman. Many have suggested limiting the amount of health insurance that can be excluded from an employee's taxable income as a way to lower the cost to health care, help finance reform, particularly, for those at lower income levels for individuals and families.

And I'd like to hear your views on the idea of capping or repealing the tax exclusions for employer-sponsored care to help addressing equities in the health care system. And then secondly, is there any timetable for the administration to release a specific legislative proposal on health care to the Congress? And if there is, could you shed some light on that? Thank you.

SEC. SEBELIUS: Certainly, Representative Camp, I appreciate those questions. As you know, the issue of the tax exemption for benefits was discussed in a robust way during the campaign season. And the president made it very clear that he did not support an elimination or capping of the benefit package.

And I think a fundamental reason for that was the underlying fear that it could destabilize the private insurance market. And as the president has repeated over and over again, he thinks the fundamental component of moving forward is to ensure Americans who are satisfied with their coverage, whose employers are currently providing coverage that is beneficial to themselves and their families, that they won't lose that.

And with almost a 180 million Americans in the private market, eliminating the tax write-off, which was a component of encouraging employers to offer coverage in the first place, has a huge potential of destabilizing the private market and leaving more Americans uninsured. Having said that, I do know that the president understands that that conversation is underway here in Congress, but it is not part of his proposal that he made during the course of the campaign.

But he is willing to look at all serious discussions coming forward. The President Obama has made a commitment that he believes health reform has to engage the Congress in a meaningful way. I can tell you during the course of my confirmation hearings, I met with a number of senators who asked a similar question to your specific proposal question, believing that, you know, there is a plan that has been written in great detail, and eventually, will be pulled out of the door and presented.

What I can assure you is that, it does not exist and it is not part of the president's plan moving forward. What he hopes will happen and it started, I think, in his early days in office with the health care summit at the White House, a very bipartisan effort not only among members of Congress, but bringing in business leaders, and providers, and insurers, various stakeholders and will continue through this process where the senate committees are very much engaged.

The three primary health committees are clearly very engaged in this dialogue, and his charge to me, as the new secretary, is to work closely with committees as proposals are being developed around. The principle is frankly, that you primarily outlined in your opening statement.

But the specific legislative language, the framework of exactly, you know, what the benefit package ultimately looks like, what the exchange may or may not look like will be a collaborative effort, but primarily engaged in by Congress.

The president also, in his blueprint budget proposal, made a set aside of $630 billion, which he sees as a down payment for health reform, half of which are on the revenue side, half of which are on the savings side. And I think the recognition is that you can't fully cost out a plan until you know what you are paying for.

So part of the effort, going forward in conjunction with Congress, is not only crafting this specific legislation, but also crafting the specific package to provide the revenue over a 10-year period of time to pay for a health reform.

REP. RANGEL: Madame Secretary. You may not see Chairman Stark here, but we well know that he is monitoring the hearings as he recuperates on television and he has all of his staff monitoring all of us. So Pete, everything is going okay.

I yield to Mr. Levin.

REP. SANDER M. LEVIN (D-MI): Thank you very much. A special welcome. Your reference to patient safety, Madame Secretary, I think will hit a very, very warm note in Michigan which has been trying to tackle this issue and I think with some success.

Let me ask you a question, maybe Pete Stark would ask it. With your unique experience as a governor, as an insurance commissioner, why is it essential that we act this year?

SEC. SEBELIUS: Well, Representative Levin, I think it's clear that the current situation is unaffordable, unsustainable, and unacceptable. The costs of health care are crushing businesses and families. Our industries are becoming less and less competitive with their global partners and struggling under the high cost of care.

Too many families are in dire financial straits because of a health-related incident, that they did not have the insurance to provide coverage as they've seen in that system. And way too many Americans, close to 50 million, have no access to the high quality care that some of us enjoy in this country. And so they come in through the doors of emergency rooms with more serious conditions and end up with the least effective, most expensive care, because they didn't get the preventive care, they don't have a health home.

And all of us pay for that. So I think that any economic prediction that is done underlies the fact that unless we get a handle on health care costs, unless we can bend the cost curve. And one of the only ways to do that is shift the system toward prevention and wellness, make sure that all Americans have a health home, and begin to provide adequate coverage for all Americans, which provide the healthier workforce.

Students who can actually learn in school, making sure that they are ready to go as the workers of the future. And now is the time to do that. As we're fixing the economy, we have to fix health care as part of that overall economic strategy.

REP. RANGEL: Thank you. Well said, thank you.

REP. : Thank you, Mr. Chairman.

And Madame Secretary, I want to thank you for your testimony. I believe there is a great deal of potential for finding bipartisan common ground on the principles you and the president have outlined.

One of them, which I very much agree with, is that people who like their current health care should be able to keep it. We've heard testimony in this committee that creation of a new government-run health plan could result in a 120 million Americans losing their current coverage, partly due to increased cost shifting by providers that would drive up the costs of employer-based coverage.

We've also heard testimony from a health policy expert who supports creating a public option, but does not think people should be able to keep their current coverage.

Madame Secretary, are you concerned that proposals to expand government-run health care could run counter to the president's principle that if you like your current health care, you can keep it?

SEC. SEBELIUS: Representative, I think it's always a concern.

And again, it may have more to do with the overall plan design than the philosophical principles moving forward. I can assure you that those two principles, Americans keeping their health coverage, if it is satisfactory and serves them and their family well, and having a choice within an insurance exchange for a public plan option are not mutually exclusive.

It isn't either or; I know --

REP. : How do they compete, how does a private plan compete with a government plan, which can be subsidized, which perhaps could start off innocently, but be changed at any time to where a private plan could not compete? How could they ever coexist?

SEC. SEBELIUS: Well, I think, Congressman, the examples of that again are in place across the country. Thirty of the states have state employee health plans where there is a public option for state employees side-by-side with a variety of private options created largely to give those state employees in a state like mine, in Kansas, a choice.

Because much of our state only had one private provider, and we felt giving employees a choice for themselves and their families, a competitive choice was important. A number of states have constructed their SCHIP programs, the health insurance plans for children in exactly the same way where there is a side-by-side option of a private provider and a public provider.

What I can assure you is that it can be done as a level playing field. It's about the rules that are established in the beginning, and that the president and I are committed to working with members on this committee and members in Congress to make sure that the playing field is level.

And as I said, the private insurers currently have, in fact, a -- I would say, a tilted playing field in way too many areas where cherry-picking on the market is a strategy to make a profit. So that the ability to underwrite individual's medical conditions to either make insurance unaffordable or unavailable is a current private market strategy.

I think that that measure doesn't work well in a health insurance exchange any more than a measure which would give government huge advantages and huge subsidies doesn't work well. So I think if the rules are the same, so individuals who have lower income, who are not insured, have a subsidy benefit as they come into the health exchange and can choose between a public and private plan option with the same kind of rules.

I think it can work as a very important, competitive situation where it will help drive, where people will be competing, public and private will be competing, not on underlying price or an unfair government subsidies, but really on a practice and protocol on lowering overhead costs, on lowering administrative costs, and driving benefits to their incoming enrollees.

REP. RANGEL: Dr. McDermott.

REP. JIM MCDERMOTT (D-WA): Thank you, Mr. Chairman.

Welcome governor.

My subcommittee handles unemployment insurance and foster kids and welfare, TANF; we will be back talking about that next year. But I want to talk about health care at the moment. Wichita, Kansas has 90 specialists per 100,000 people, whereas Boston has 180 specialists per 100,000 people.

Everyone who has looked at these situations knows that that doesn't mean they have better health care in Boston than they do in Wichita. What it reflects is the lack of enough primary care physicians in the Boston area, which they found out when they started mass care. They couldn't provide primary care physicians for everybody who was asking for one.

I've made a proposal that we have all public medical schools be free with the requirement that the students, when they come out, would serve four years in primary care in the state. And one of the things that the Dartmouth study has shown, the Dartmouth University study has shown is that there is clearly, no connection between how many specialists you have and the quality of health care, or anything except where people want to live in terms of where they practice.

Now, if you train them in Kansas, and they move to San Francesco, you, the people of Kansas have got nothing. Washington State is part of WAMI. So we have Washington, Alaska, Montana, Idaho, and Wyoming. We train all the doctors in one medical school, but they don't necessarily go back to the rural areas.

With that kind of provision and I hope that what will come out tomorrow when the president puts out his additional provisions is a commission that looks at workforce, a permanent commission for workforce planning. The -- right now we have a graduate medical commission, but that only deals with specialists.

It does not deal with the broader issue of how you get enough private practitioners to go into the whole area of private care. And I'd like to hear your ideas having been a governor, delivered a state, where you've operated way below the national average, actually one- half. It's only two cities have less that Wichita, Sioux City, Iowa and Mesa, Arizona. So I'd like to hear how you did it.

SEC. SEBELIUS: Well, Representative, I'm not sure that that was a designed strategy to lower the number of specialists, but I can tell you, there were a number of efforts at the state level to increase the number of primary care providers, recognizing that the pipeline is very thin. And certainly, as we look at 50 million additional Americans accessing a health home, having an opportunity to have regular preventive care, the pipeline issue is very important.

Congress made a major step along with the president when he signed the recovery act with a $0.5 billion investment in workforce initiative, more nurses, more primary care docs. There is a proposal in the budget to increase the commission core again, providing health care providers in underserved areas. And one could argue that in a lot of areas, primary care is underserved.

I share your interest in figuring out how we can encourage more medical students to actually look at primary care and preventive medicine as a choice going forward, because I want to make sure that as we shift this system to a wellness system, we have the providers who are capable of making that shift.

Having said that, I think it's important that we don't undercut the specialty initiatives that are so important. If -- I mean, frankly if I need neurosurgery, I would like to know that there is a neurosurgeon, at least, in the proximate area that I can call upon. So I think there are ways to begin to shift payment incentives to more appropriately reward primary care docs without disadvantaging the specialty care.

If we begin to have payments based on outcomes. If we recognize that dollars spent on wellness pay huge dividends to lower health care costs on the other end, then I think we can have a system where more medical students -- not only more people will be coming into medical school, but more medical students will be choosing general practice and primary are and family practice, as opposed to specialty care as a way that they can be successful.

REP. RANGEL: Madame Secretary, you're going to have to help us. Because everyone --

SEC. SEBELIUS: Okay.

REP. RANGEL: -- needs to have some dialogue with you and we are doubling up notwithstanding the restrictions. So the members -- I know it's difficult to give short answers to such complex questions. But since this is really just an initial introduction, and we will be getting involved in those things, I ask you to help us out. So as I recognize the hero of the committee, Congressman Sam Johnson from Texas.

REP. SAM JOHNSON (R-TX): Thank you Mr. Chairman, I appreciate it. Welcome aboard.

You know, I think our goal is to try to get Medicare and medical insurance to every individual in America. And I know it's something that Congresswoman Schwartz has inquired about in the previous hearings.

But do you think moving health care benefits from opt-in to opt-out with the businesses might increase the take-up rate among employees, as it did for 401(k)s in the past?

SEC. SEBELIUS: Businesses moving to an opt-in strategy --

REP. JOHNSON: That's what I wonder if we should mandate that.

SEC. SEBELIUS: The sort of pay or play that all --

REP. JOHNSON: Well --

SEC. SEBELIUS: I'm not sure I understand the question, I'm sorry.

REP. JOHNSON: Well, then, the way it works is every individual that works for a company would have to take insurance, health insurance from the company. And the only way they don't is they opt- out.

SEC. SEBELIUS: I understand. Certainly, I think that there is discussion I know underway for an individual mandate for health insurance. And it was not part of the president's proposal, except for parents who had children. They would be required. But I think as the proposals are developed here in Congress that is one of the initiatives.

Should everyone have a personal responsibility, whether it's through your employer or in a private market to provide health coverage, and I think we need -- I look forward to working with Congress in figuring that out.

REP. JOHNSON: Thank you. And secondly, I have talked a number of times about physician-owned hospitals, and it seems like everybody wants to torpedo on. And you know, we've got our best docs, our best nurses, and the best medicines in those physician-owned hospitals, because they are specialty hospitals.

And I wonder what your thoughts are on that. And whether you oppose their development or not. And previously, CBO scored it differently from what HHS scored it. And I'd like to know your feelings on that.

SEC. SEBELIUS: Congressman, I think that the president and Congress have extended the moratorium on building, I mean, not on building new hospitals, but the moratorium currently in place. And it really is aimed, I think, at some troubling data about physician-owned hospitals producing numerous additional tests and additional protocol for patients that then directly benefit the owner provider.

And I think that issue is one that is very serious. As we look at costs in the future what Congressman McDermott may not know is, Wichita, Kansas, has one of the highest per capita levels of specialty hospitals of any place in the country. I know Texas has a significant numbers.

So there are certainly, some benefits to patients. But I think looking at the cost issues and certainly looking at the potential conflict issues are ones that are very serious.

REP. JOHNSON: Thank you.

Thank you, Mr. Chairman.

REP. RANGEL: Chair recognizes Mr. Lewis.

REP. JOHN LEWIS (D-GA): Thank you very much, Mr. Chairman.

Madame Secretary, thank you for being here today. I agree with you very much though that we cannot wait any longer before we pass comprehensive health care for all of our citizens. I happen to believe, as so many others, that health care in our country is a right and it's not a privilege. And that all of our citizens and every person that dwells in America should have adequate and affordable health care. I would like to know from you, is the president committed to passing health care reform this year?

SEC. SEBELIUS: Yes, sir.

REP. LEWIS: That's all I need to know. Thank you very much, Madame Secretary.

Thank you, Mr. Chairman.

REP. RANGEL: Thank you, Mr. Lewis.

REP. LEWIS: Less than two-and-a-half minutes.

REP. RANGEL: You're good. You're good.

Chair recognizes one of the rising stars of our committee, Mr. Ryan, unless you want to yield too.

REP. PAUL RYAN (R-WI): Well, no. But Mr. Brady is in front of me. So, I thought --

REP. KEVIN BRADY (R-TX): Go right ahead. Go right ahead.

REP. RYAN: He is front of me. Well -- and I wish to bet Mr. Brady is also --

REP. : That's right, I thought --

REP. : He's already risen.

REP. RANGEL: Mr. Brady is already --

REP. : He has already risen, so --

REP. RANGEL: He has already --

(Cross talk.)

REP. RYAN: He is in front of me.

REP. RANGEL: Live and well. Mr. Brady.

REP. RYAN: Mr. Brady you're -- really, you are in front of me.

REP. BRADY: You guys are -- okay, my ego has taken a huge hit this morning.

(Laughter)

Madame Secretary, thanks for coming here. You just got on the job, but have you had a chance to examine the way we reimburse physicians under Medicare. It is truly a mess. We drive good doctors, out of the system, away from our seniors, and it is embarrassing to have to have them come up here every year to beg for 1 or 1.5 percent increase in their reimbursements, when their nursing cost has gone up, technology has gone up, operations have gone up. Have you had a chance to take a look at the way we do that?

SEC. SEBELIUS: Well, Congressman, I haven't had a chance to do the global examination in the budget, but I certainly am aware of that situation having been in the state of Kansas.

REP. BRADY: I would encourage you to examine it, to weigh in on a truly sustainable fix for reimbursement. I would encourage you to take a look at, if you can administratively remove the part B drug cost from it formally; they don't belong in there, and I think it creates a false cost within that system.

And finally, please, I encourage you to take a look at one of the reasons many of us are scared about rationing of health care under a government run system is that the physician payments are prime examples of how we ration care today. Physician cost-of-living increases are determined by what the cost of providing those services are within their office.

Basically, MedPAC takes an accumulation of physician and practitioner services estimates. What that amount should be, and then, if actual services are above that, they lower the reimbursement. That's why doctors face a 21 percent cut in reimbursement.

When you take a number, ration the care, and the reimbursement from it, you get bad results.

That's an area that produces it. Madame Secretary, if you get a moment, I think that'd be an important thing for you to weigh in, I think important as we go forward.

SEC. SEBELIUS: Well, Representative, let me assure you that 21 percent cut that's looming in -- right over the horizon is totally unacceptable. And nothing could be more disruptive to the health system that underpins, you know, moving forward on health reform than losing providers.

When people talk about choice, they are not talking about choosing their insurance company; they are attached to their doctor, and their health care provider. So I share your concern. Let me assure you that the administration and I look forward to working with Congress to address, not only the current crisis that's right around the corner, but a long-term, sustainable, coverage to make sure that seniors and our most disabled population that rely on Medicaid services, keep the doctor that they want and need and keep the health services so vital.

REP. BRADY: Thank you, Madame Secretary.

Thank you, Mr. Chairman.

REP. RANGEL: The chair recognizes Chairman Richard Neal.

REP. RICHARD E. NEAL (D-MA): Thank you, Mr. Chairman.

Madame Secretary, childhood obesity, I think we all acknowledge that it's growing more common in America. And it's being diagnosed in more people at a younger age as well. Great emphasis in this plan is going to have to be placed upon the whole notion of prevention.

And would you, may be outline for us, some of the thoughts that you have about how some investments in prevention and wellness might change the entire health care system. It seems to be a recurring theme in our discussions.

SEC. SEBELIUS: Well, thank you Congressman. There are, I think, a couple of things, a couple of strategies that can work together. First of all, the expansion of the CHIP program, 4 million more American children is a piece of that puzzle. We have to do that well. We have to make sure that we drive a wellness message along with expanding coverage.

In addition, in the recovery act, the Department of Health and Human Services was given a billion dollars to focus on wellness and prevention. And that discussion is well under way with providers and experts across the country to determine what is the best possible strategy for, not only using our resources, but leveraging those resources with some private market care.

There are a number of efforts that we know are successful, working as we did in Kansas with school groups on everything from vending machines, to more PE in school, to doing a body mass index, for every child and then driving that information home to parents is an effective strategy. But I share your concern that we have the first generation of American children who may actually have shorter lifespan than their parents ever in history.

That's a pretty frightening place to be, and even if you just look at it as a workforce issue, we need every child to be healthy and acquire the skills they need to be competitive in the future. So this is an issue which isn't just a health care issue. It's a huge economic crisis looming in this country.

REP. RANGEL: The chair yields to Mr. Ryan, unless he wants to yield this time.

(Laughter)

REP. RYAN: No, I'm good now. Thank you, Chairman.

Nice to see you Madame Secretary, it's the first I'm having a chance to meet you.

The rhetoric coming from the administration sounds good, it sounds familiar. If you like what you've got, you can keep it, we are going to have more choice and more competition in health care. Those are the principles I think, most of us all agree with. But when you look at what is being advocated here, in particular, the public plan option, it just seems to me that actuarially speaking you are embracing contradictory principles.

You are embracing faulty premises that collide with one another. And what I mean when I say that is, if the public plan option will reimburse at Medicare rates as it has been advocated, as most plans that are out there already do, and as your budget is rest upon, then how do you escape the conclusion that reputable actuarial firms like the Lewin Group suggest 120 million people will lose their private health insurance and be thrust upon the pubic plan option.

Seven out of ten workers who get health care from their jobs will, in fact, lose that as they go on to the public plan option. That's the question number one; since we are short, I'll just put it on the question now.

Question number two is, where are you going to pay for all of this. And the budget carves out $646 billion. About half of it comes from provider cuts, from Medicare, MedPAC recommendations, and things like that. The other half comes from revenues. Chief among that is the limit on charitable deductions, which I think we'll have a hard time passing here, or at least in Senate finance.

You have already said that the administration is opposed to capping the exclusion, which I think that ought to be revisited. There is an issue there I think that both sides would agree needs to be addressed. But where are you going to come up with the money, number one.

Number two, looking at these plans, it's going to take you about another ($)600 billion on top of what you have already put in the budget, and that's been acknowledged by the administration as well. So we are going to have about a ($)1.2 (trillion), $1.3 trillion plan. You've already identified $646 billion; some of that which probably won't materialize.

Where is the other $600-plus billion going to come from to make this work and how do you escape the conclusion that if you have a public plan alongside the government plan, the way I see it, it's kind of like my daughter's lemonade stand competing against McDonald's. It's having the referee, the government also be a player in the same game, and actuarially speaking, it's almost impossible to make that a fair game.

SEC. SEBELIUS: Well, I get -- again --

REP. RANGEL: Unfortunately, Mr. Ryan has used up the time allotted for you to answer his question. However, I'm certain that --

REP. RYAN: Go figure.

REP. RANGEL: I am certain you will be able, in writing, to give some response to his very complicated but interesting inquiry. And the chair will now like to recognize Mr. Becerra who is not here. Mr. Doggett.

REP. LLOYD DOGGETT (D-TX): Thank you, Mr. Chairman.

Madame Secretary, thank you. Three issues to ask you to respond to at once. First, our colleague Debbie Wasserman Schultz has an excellent bill based on the experience she has had in the struggle with breast cancer that so many Americans face, that would focus on education of young women. And I hope that it can be included in any health care reform legislation as supported by the Komen Race for the Cure and a number of other groups.

Second, I applaud the bipartisan cooperation that the administration has sought to get all stakeholders at the table. But I think that some of those who have successfully blocked health care reform for decades have not changed the goal to thwarting reform, only their tactics.

And I think it is vital that any reform offer the uninsured the option of a public insurance plan and that our goal must continue to be getting access to health care for all Americans, not getting all to agree to a plan that will not provide access to all Americans.

Third, I believe that health care reform must address the soaring cost of prescription drugs. One report I saw on a particular class of drugs last year, showing an increase in one year, of 3000 percent on the cost of some of the drugs.

Those soaring costs bankrupt individual families. They can't present great problems to us and trying to have the taxpayer pay for it. And we know what to do about that. But Congress hasn't had the political will to deal with it. Could you respond?

SEC. SEBELIUS: Well, Congressman, let me assure you, I look forward to working with you and with rising star Ryan on the issues that you have outlined.

REP. RANGEL: Madame Secretary, your response, because of the length of the question will be limited to 40 seconds.

SEC. SEBELIUS: I just responded, Mr. Chairman, to both.

(Laughter)

REP. RANGEL: It's embarrassing for me as chair to do this. But the Secretary is going out of her way to make certain that the first committee that she reports to is our committee, and we graciously accept that. But rest assured, Mr. Camp and I have reason to believe the Secretary will have more time to spend with us and we appreciate that.

I guess, most of us want you to hear how bright we are, and we will then get responses, make certain that we are correct in our thinking, and if you yield back, then the chair will recognize Mr. Linder from Georgia, for two-and-a-half minutes.

REP. JOHN LINDER (R-GA): Thank you, Mr. Chairman.

Thank you for being here, Madame Secretary.

SEC. SEBELIUS: Thank you for having me.

REP. LINDER: When President Johnson gave his great society speech he said, "We know from using easily quantifiable user statistics that by 1990, Medicare will cost us $9 billion and Medicaid will cost us $1 billion." But he was wrong. It was ($)108 (billion) and ($)76 billion respectively.

Because people overuse something they think someone else is paying for. We are proposing to increase the number of consumers in health care by 17 percent. And we are increasing the number of doctors per year by one percent and the number of nurses has been flat for five years, you know, its increase, it is flat. Who is going to treat these people?

SEC. SEBELIUS: Well, Congressman, I think that is a huge issue and the looming shortage of providers particularly, nurses, but primary care docs are shortly behind the nurses, is huge. States have been trying to work on the pipeline issue for a number of years. I was pleased that in the recovery act there is a $0.5 billion on workforce issues, and I look forward to working with those of you here in Congress on a long-term strategy.

It has been suggested that we have an ongoing workforce commission. We need to focus payment; we need to shift payment to appropriate protocol. A lot of people frankly overuse the system, because it's often recommended that they have procedures that aren't necessarily the best health outcome, as our quality report issue today will indicate.

So I think they are ways to address this from a workforce system. But also to begin to shift the payment system to look at outcomes and not necessarily contacts with the health care provider.

REP. LINDER: And we're going to have bureaucrats make those decisions?

SEC. SEBELIUS: Ideally, the health providers make those decisions with informed information about best practices, which currently are in place in some parts of the country, but aren't uniformly driven throughout the system.

REP. LINDER: Okay. Thank you.

REP. RANGEL: Recognize Earl Pomeroy.

REP. EARL POMEROY (D-ND): Thank you. And Madame Secretary, I know I speak for Senator Ben Nelson and Senator Bill Nelson, both former insurance commissioners like myself and you. And it's acknowledging, at least, someone in the former insurance regulatory rank has gone on to make something of their lives. We congratulate you.

(Laughter)

The White House this week had a roundtable on rural health care in particular; and released a report called "Hard Times in the Heartland" reflecting that in rural areas you have higher rates of poverty, mortality, un-insurance and limited access to primary care providers.

As the former governor of Kansas and insurance commissioner of Kansas it'll seem -- the difficulties of keeping proximate access to care in sparsely populated areas is excruciatingly difficult. I believe, part of our rural health care system is being under- reimbursed by Medicare.

You see margins that -- you see Medicare reimbursement at half per capita rates reflecting more urban areas. That also includes much higher utilization trends in urban areas. But also, I believe underpayment for rural services. I'm wondering about your thoughts as you assume your new responsibilities relative to this unique dimension of North -- of America's health care in rural areas.

SEC. SEBELIUS: Well, Congressman, as you said you and I share a lot of background. And not only in our insurance commissioner days, but in dealing in a very rural state. So this is a huge issue, the disparities in Medicare reimbursement is a big issue. And I just want to assure you that I look forward to working with Congress to reduce those disparities, part of it is a shift toward outcome and away from geography.

So we look for a protocol that will reward outcome and begin to have the Medicare systems focus more on prevention and wellness which reduces cost. But it's an issue I take very seriously, and one I look forward to working on.

REP. RANGEL: The chair recognizes Mr. Nunes.

REP. DEVIN NUNES (R-CA): Thank you.

REP. RANGEL: Mr. Tiberi.

REP. PAT TIBERI (R-OH): Thank you, Mr. Chairman.

As the only Ohioan on this panel, Madame Secretary, I want to give a Buckeye welcome from your native state and wish you well on your job.

As Ranking Member Camp said earlier, the principles that you outline, I think we all agree on. In my district in Columbus in Central Ohio, we have a Medicare advantage plan called MediGold that is very, very popular that I have been -- have had family members actually talk to me about, the popularity of it.

Anyhow, very popular, very well-defined program in my district, and I have talked to many, many seniors that enjoy that program. MediGold's principles are very similar to what you outline in terms of the principles that you see going forward with respect to health care reform. How do you see their plan, MediGold, their Medicare advantage plan playing out with respect to your proposals and the administration's proposals on health care reform?

SEC. SEBELIUS: Well, Congressman, first of all, I appreciate the Buckeye welcome and again, I know that there are some very popular and well-run Medicare advantage plans, and there are some that, I think have not provided the additional benefits that are -- would be estimated to be provided with a 14 percent additional payment over traditional Medicare.

So I think what's important going forward is to make sure that again there is a kind of level playing field that we are paying for the benefits and the outcome.

And that the information provided to seniors, the numbers of plans, I mean there are literally dozens and dozens of Medicare advantage plans which have a very small number of enrollees which are very confusing in my experience with -- for seniors to try and identify what the best plan is.

But I think, in the situation that you've described, the health reform plan ideally will not tamper with the kind of the coverage and benefits that your family is currently enjoying.

REP. TIBERI: Thank you, I look forward to work with you. I yield back.

REP. RANGEL: Because there is such an outstanding number of Democrats, majority members waiting, I'll now try to do two of them at a time to try to level this off, and recognize Mike Thompson of California.

REP. MIKE THOMPSON (D-CA): Thank you, Mr. Chairman.

Madame Secretary, congratulations and thank you for being here. I too want to chime in on your rural experience and how important that is for someone from the district such as mine. I think a lot of our success in health care reform hinges on providers; making sure we have the number of providers necessary especially in rural areas where it's so hard to get not only primary care, but all the specialties.

I don't think we can do it unless we address that issue. And at the same time, we have to do it in a way where it's affordable to small businesses and that's something that I hear about constantly. And so I appreciate your experience in this regard, and look forward to working with you on those two areas in particular. And if you have something you want to add, fine, if not, I yield back.

SEC. SEBELIUS: Look forward to it.

REP. RANGEL: Thank you so much for your cooperation. Believe me we will make up for this embarrassing moment.

Mr. Becerra.

REP. XAVIER BECERRA (D-CA): Thank you, Mr. Chairman.

And Madame Secretary, great to see you here. Thank you, we look forward to further opportunities. Without spending time on it, because we don't have time, I would like to mention that I appreciate that you've mentioned the reports that you're issuing, specially the one on disparities.

I'd love to follow-up, because as we know that there are disparities in the quality of health care dispensed to Americans.

SEC. SEBELIUS: Absolutely.

REP. BECERRA: I hope that you will take a look at your agency, your department, to make sure that there aren't disparities within your own personnel ranks when it comes to being able to meet the needs of all Americans. And you have a diverse workforce that can address those disparity issues that we have in America.

On health care, you said some interesting things, and I want to follow-up on them, and perhaps, later on, we'll have an opportunity to discuss them more fully. In response to the question about whether or not a public health insurance option could really compete this notion that there is no way the government can compete.

I appreciate that you mentioned that, today we have a track record of public health insurance options competing and competing on a playing field that's level through the 30 states that currently do that. I think it's also important to note that Medicare, which is in essence a public health insurance plan, offers 48 million seniors in America the options and the opportunity to have health care coverage.

And by the way, 95 percent of all of America's doctors participate in Medicare, and so clearly, it becomes obvious that you have quite a bit of choice within a public health insurance option in terms of doctors if 95 percent of today's doctors participate in Medicare.

And I'm wondering if it is your sense, as you said before, that a level field can be created in this health care reform, so that we can remove any doubts that any type of option that gives Americans the most choices can be constructed. So that at the end of the day what we've done is, we've left consumers with the option and the choice of what plan they will use, and not have the government or private insurance companies make the choices for consumers.

SEC. SEBELIUS: Well, Representative, I think you've just outlined and articulated very well though, the strategy of a public plan. Clearly, you could have a situation where it would be unfair and lack the competition element for private insurers.

But I can assure this committee that the president and I believe strongly that we want to stabilize the private insurance market, not undermine the private insurance market, because millions of Americans rely on their private coverage, and feel it's very satisfactory for themselves and their families.

So the rules of public plan within the health insurance exchange are to offer choice, to offer competition based on what are the best practices? How to lower costs, not with an unfair advantage, but who is doing the best job for their patients, because wellness, frankly costs less than sickness does. So keeping patients healthy is part of the competition, we're eager to have plans engage in.

REP. BECERRA: Thank you.

Thank you, Mr. Chairman.

REP. RANGEL: Mr. Davis, from Kentucky.

REP. GEOFF DAVIS (R-KY): Thank you, Mr. Chairman.

Madame Secretary, one question that I would like to ask, well, following a request. I'd like to submit for the record two questions regarding community pharmacy efforts to get detailed answers in writing that I am sure will exceed the two-and-a-half minute limit here. We'll provide those to staff.

But the question that I have and it really concerns me greatly on the national connector model. We have tremendous local solutions that are being developed. In particular, a gentleman named Chris Goddard who runs HealthPoint Community Health Center network in Northern Kentucky has developed a plan working with small business owners that will remove the majority of our uninsured or underinsured in Northern Kentucky entirely off the grid of the federal system; providing a physician home, providing a preventive dental and medical services and some acute care. Not catastrophic, but at the cost of about $50 per employee per month.

And I'd like to hear your thoughts on having solutions like that that are locally-driven, have the accountability and the network that is key for success in health care as opposed to the one-size-fits-all- plan that we've heard so much about over the last couple of months.

SEC. SEBELIUS: Congressman, let me assure you, there is no one- size-fits-all-plan. There is no national health plan that has been developed or written. And in fact the more strategies that are successful at the local and state level, the more people will have coverage that they enjoy and benefits themselves and their families. And the more provider support there will be. The effort for health reform is aimed at stabilizing just that market.

So if you've got a strategy that's working in Kentucky that is insuring previously uninsured folks, I think that not only -- will it not be disrupted, but hopefully, it will help lower the additional cost that those individuals, those Kentuckians are paying for the uninsured care that's currently coming through emergency room doors and stabilize that market.

This effort is primarily aimed at either those individuals who are paying out of their own pockets for catastrophic coverage, have no prevention care; for those 50 million Americans who have no access to health insurance at all, and for a system frankly where the costs continue to rise.

REP. DAVIS: I think in that case, Madame Secretary, it'd be well-served both for the country and I think would be illuminating.

I'd like to invite you to personally come to Northern Kentucky, to Covington, and to see creative solutions that have been developed out of that old saw (ph). The greatest source of inspiration is desperation.

SEC. SEBELIUS: I would be glad to do that, you know, Cincinnati is my hometown, birth town with my dad and sister still there, so any opportunity to visit Covington provides a trip home.

REP. DAVIS: Fantastic, Thank you.

REP. RANGEL: Chair would like to recognize, Mr. Larson and then Mr. Blumenauer.

Mr. Larson.

REP. JOHN B. LARSON (D-CT): Thank you, Mr. Chairman. And thank you, Madame Secretary --

REP. RANGEL: I would like to interrupt. The record will be open for those people that would want to submit questions to the Secretary.

Mr. Larson.

REP. LARSON: Thank you, Mr. Chairman.

Again, thank you, Madame Secretary, and thank you; with very little notice and having just been confirmed to come before a joint caucus conference of the House Democrats and House Republicans last week to address H19N1 (ph) commonly referred to -- but Mr. Etheridge won't let me say it as -- so I won't.

(Laughter)

SEC. SEBELIUS: Agreed.

REP. LARSON: And --

SEC. SEBELIUS: Mr. Etheridge, thank you.

REP. LARSON: So I want to thank you for that and I want to thank you for your -- well, I just have one question I'd like to follow-up with you on. And especially given your experience as an insurance commissioner, does -- in your estimation, does the current private health insurance market do an adequate job of providing affordable health insurance and what do we need to do to improve access and create affordable coverage?

SEC. SEBELIUS: Well, I think, Congressman, there are certainly lots of Americans who have coverage that they think is terrific and it is very good. Others, I think are really struggling with under- insurance or struggling in a situation where they've been underwritten because of a medical condition or limited, you know, where the cost is exorbitant, because they've recovered from a heart attack or have diabetes.

So I think there are the best and the worst, if you will, currently in place, and I think working on the strategy moving forward, getting rid of some of the rules which allow insurers to make health decisions instead of providers.

I know there is a lot of talk about not having bureaucrats make health decisions. But I think, it is equally important not to have private insurance companies make health decisions overruling a protocol recommended by health providers. And part of health reform is to change those underlying rules, to have major insurance reform along with this effort.

REP. LARSON: Thank you, Mr. Chairman.

REP. RANGEL: Mr. Blumenauer.

REP. EARL BLUMENAUER (D-OR): Thank you. Thank you Mr. Chairman, Madame Secretary. Coming from one of those low-cost, high quality regions in Oregon, I hope to work with you on fundamental payment reform that encourages the outcome we want.

In one specific area, end-of-life, where we're -- most of us spend most of our lifetime supply of health care dollars, and we're finding that people are too often unprepared. And Medicare doesn't even recognize a consultation with the patient and its family, and their family, to be able to deal with these complex choices that they face to help guide them through, as worthy of a specific reimbursement.

Now, I introduced some legislation to try and remedy that on a specific area, but I wonder if you see this counseling initiative, end-of-life empowerment of patients and families, as an area to be dealt within comprehensive reform. And maybe even something that we might be able to make some adjustments sooner, to give patients and families the support they need at this difficult time.

SEC. SEBELIUS: Congressman, I can assure you on a personal basis, I share your concerns. I'm not familiar with your specific legislation, but my mother spent the last 10 weeks of her life in three different hospitals and an army of health providers. And frankly the health and support needed by families to not only make, you know, medical decisions, but end-of-life decisions, is really essential, and something I take very seriously.

So I look forward to working with you on strategies moving forward, to not only lower what are often exorbitant costs that are not necessarily as patient-friendly or direct the patient outcome, but to help family members make tough decisions at an earlier point.

REP. BLUMENAUER: I appreciate that and I appreciate your emphasis. Yes, it may end up saving us money in the long run, but most important, it's giving the sort of tool so that family's needs are met, and I appreciate your words and look forward to working with you.

SEC. SEBELIUS: Thank you.

REP. BLUMENAUER: Thank you, Mr. Chairman.

REP. RANGEL: Thank you.

Mr. Reichert, you may inquire.

REP. DAVE G. REICHERT (R-WA): Thank you, Mr. Chairman. Welcome, Madame Secretary, and my background is in law enforcement so I'm really interested in fraud, waste, and abuse, and safety and you've touched on the safety issue. And I am glad to hear your proponent of the safety checklist which will save lives.

I want to try to run real quickly here two questions together. GAO has estimated that Medicare wastes $13 billion a year. It has paid out $92 million just this year in Part B providers who have deceased -- are deceased. And I want to shift real quick to interoperability so that waste, fraud, and abuse, and this shifts over to interoperability $35 billion in the stimulus package ready to go out the door.

I don't think we are ready for it. Health providers have said they don't need it yet, they don't know how to spend it yet. There aren't providers that they believe are interoperable and they can work with right now. There is no national standard, I am afraid we're going to be wasting some money here if we don't have a plan in place.

SEC. SEBELIUS: Well, let me try to, first to assure you, I very much am interested in waste, fraud, and abuse. Every dime stolen from the health care system is money we can apply to appropriate care and quality care for Americans. So that's an effort I will look forward to working with you and the committee on cracking down in any way we can.

On the interoperable standards, as you know, Dr. David Blumenthal has now been appointed. He is charged with the kind of protocol that you're suggesting. There is a committee at work right now to develop a national platform.

I couldn't agree more that having -- just shifting our paperwork on to computers doesn't save any money, and is totally ineffective unless our technology can talk to one another.

So protecting privacy on one hand and moving forward as rapidly as we can with a system that eliminates paperwork, eliminates duplication, let's health care providers not fill out dozens of forms, but focus on medical care is what the shared goal is. And that is very much underway, but dollars are not going to leave before there is a platform ready to go.

REP. REICHERT: That's good to hear and thank you.

REP. RANGEL: Thank you.

Mr. Kind and Mr. Pascrell to follow.

REP. RON KIND (D-WI): Thank you. Madame Secretary, thank you for being here and I agree with the president. I think that health care reform is one of those building blocks that we got to get done at the end of the day, if we are going to have prolonged sustainable economic growth in the country. Here are my concerns.

At the end of the day, we've got to figure out a way of how we bend the cost curve in all of this. But we also need to figure out a way to deal with the affordability of health care for small businesses, family farmers throughout the country.

With the cost curve issue, I too come from one of those low-cost, low-reimbursed, high-quality care areas of the country in Western Wisconsin, a lot of innovation taking place. That's why I'm a big believer in the importance of HIT build-out, but also comparative effectiveness studies.

As you said best practices are I think are going to show us the way for greater cost savings while improving outcomes in quality of care at the end of the day. The Economic Recovery and Investment Act add about ($)1.1 billion in there to go forward on comparative effectiveness studies.

I know you're relatively new to the position now, but I'm wondering if you gave any thought about whether that money is going to be sufficient to get us where we need to go. Or if its just a beginning of more -- of what needs to be done to find out what works, what doesn't, so we can, as Mr. Blumenauer indicated, revamp the reimbursement system, so we're rewarding quality at the end of the day as opposed to more quantity or just more consumption in the health care system.

SEC. SEBELIUS: Well, I think that the effectiveness research, comparative effectiveness research is a strategy that we know can help inform providers, empower consumers, and drive best practices. That's the goal at the end of the day; it's prohibited by law to use that research to make Medicare cost decisions.

But certainly empowering and driving best practices and highlighting what we know works is an effective strategy. And as the quality report says today, we know four of ten of Americans don't receive the care that is recommended, so that bends the cost curve and we absolutely --

REP. KIND: Yeah, on a small business front, tomorrow I am going to be introducing the bipartisan bill called the SHOP Act which establishes purchasing pool for small businesses, family farmers, with ratings reform, administrative fees, tax incentives, that Senators Durbin and Snowe have been carrying on the Senate side too.

And we think this could be a common sense piece to the overall health reform that addresses the needs in the small business community and family farmers throughout the country. So we'll look forward to supplying some more information to you and your team over there to take a closer look at the SHOP Act.

Thank you for being here.

SEC. SEBELIUS: Thank you.

REP. RANGEL: (Off mike)

REP. BILL PASCRELL JR (D-NJ): Madame Secretary.

Mr. Chairman, thank you.

Just wanted a quick question on the end-of-life. Would you consider a mandatory that all Medicare recipients must have end-of- life directives?

SEC. SEBELIUS: Congressman, it is something that I certainly would be glad to take a look at. I am not quite sure what that means in terms of individual mandate.

REP. PASCRELL: I want to continue what my good friend from Wisconsin was talking about, and that is cost. We got to get folks on the Hill, as well as the folks, our constituents, to understand that the cost of health care has to be continued, or else we cannot come up with enough money to sustain a universal health care plan.

I don't care what anybody says. There isn't enough money out there. If that's true, if you accept that premise that we can't continue to do business as we're doing, otherwise I guess we wouldn't be here, would we?

What policy options hold the greatest promise for systemically slowing the growth of health care costs, and as part b of that question, would you prefer to a pay-for-performance, a value-based purchasing system, and/or a public plan option. If you had to make a choice between -- amongst those three, what would you do?

SEC. SEBELIUS: You know my sense to this, Congressman, we'd do all of the above, that they're not --

REP. PASCRELL: So they are all possible.

SEC. SEBELIUS: Absolutely. And I think that part of what's happening in America is that we pay more than any country on earth, and our health results are poor than many, many of the countries who have coverage. So we clearly have -- we don't have to substitute quality for cost. They are not -- we're not paying for quality right now. We need to begin to pay for outcome.

REP. PASCRELL: If we don't do these things, Madame Secretary, will we have to begin to ration health care?

SEC. SEBELIUS: Well, essentially it's going on right now. Fifty million Americans have ration care. We have people who because of their gaps in their coverage are, you know cutting their pills, are not taking the protocol that's recommended.

Hospital stays are often cut short not because it's the provider's recommendation, but because the insurance plan only covers a limited stay. So we are essentially in a situation where provider's recommendations are often compromised by what dollars are available.

REP. PASCRELL: Thank you, Madame Secretary. Good luck to you.

SEC. SEBELIUS: Thank you.

REP. CHARLES W. BOUSTANY JR (R-LA): Thank you, Mr. Chairman. Welcome, Madame Secretary.

SEC. SEBELIUS: Thank you.

REP. BOUSTANY: As a heart surgeon with over 20 years experience clinically, and as somebody who has deep concerns about quality and cost in health care, I have to say that I have concerns; that I'm certainly well-aware of the problems in private insurance and in current existing government health care programs.

But I would like to ask you, if we can build up the current insurance system, private insurance system, make it truly competitive, make it truly accessible for coverage. Are you willing to entertain this or are you truly wedded to a government option.

In other words, I mean, are you -- is this an exclusionary foregone conclusion that the administration wants a government option at the expense of real bipartisanship to solve a very complex problem?

SEC. SEBELIUS: Well, Congressman, I would say that the administration is committed to working with Congress and has every hope that this will be a bipartisan effort, and hopes that all serious ideas are on the table from both sides of the aisle, not that it is an exclusionary on one side or the other.

So as we move forward, what I know from my experience is that if the public plan option is opposed, because it is seen as uncompetitive.

It is seen as the way to drive private insurers out of the market. There are plenty of examples around the country to indicate that that is not the case.

REP. BOUSTANY: But I would -- reclaiming my time, I would submit to you that some of the biggest culprits with regard to lack of emphasis on prevention, screening, early detection, are our existing programs.

SEC. SEBELIUS: Well, and I would certainly share that notion that we have to change that. One of the building blocks for health reform are the assets (ph). Frankly the program is run right now in the Department of Health and Human Services, both Medicare and Medicaid in changing our system, our underlying system, and the dollars that are already available in the public program and focusing more on prevention and wellness is a huge part of this effort.

REP. BOUSTANY: Thank you, Madame Secretary. We certainly hope you'll work with our side of the aisle on these very difficult issues. Thank you.

SEC. SEBELIUS: Thank you.

REP. BOUSTANY: I yield back, Mr. Chairman.

REP. RANGEL: Chair recognizes -- now, Mr. Crowley is not here.

Madame Schwartz from Pennsylvania. Thank you.

REP. : Shelley (Off mike)

REP. RANGEL: Oh, I am so sorry.

REP. SHELLEY BERKLEY (D-NV): That's all right. I thank you very much, Madame Secretary, for joining us today. I know there is a great deal resting on your shoulders as this is such an important issue. I believe that Congress and the administration have a once-in-a- generation opportunity to make important reforms to our country's health care system.

We've done quite a bit already with the SCHIP program and our health IT infrastructure bringing it into the 21st century, increasing COBRA benefits for those who lose their jobs. I also would like to see us increase the health care and provide health insurance to the 50 million of our fellow citizens that do not have health care.

Our health care insurance, I was very, very pleased to hear you emphasize prevention and wellness program. I've often said in these hearings that the way we deliver health care in this country is best afterwards. We spend a fortune in end-of-life care, not enough money in early detection and prevention of illness.

Also the fact that we need to educate our fellow citizens. We contribute to our own sicknesses and illnesses. If we would moderate our liquor consumption, moderate exercise, watch our diets, and stop the cigarette smoking, I think we would be much healthier and we would save billions of dollars.

I am concerned about the lack of enough health care providers that currently exist in this country, including, as we all know, we don't have enough primary care physicians. Coming from Las Vegas I could tell you we don't have enough specialties either.

There are things we can do, and I'm wondering what your opinion is on increasing the GME and better distribution of them. So some of the states in the western United States can take advantage of that program; also loan forgiveness. My own step-daughter started practicing primary care medicine in September with a $190,000 debt.

And also the SGR. I know the president's budget provided for a permanent fix, but we're hearing from the other side of the dome in the Senate that they are more willing to kick that problem -- that can down the road; that would be a disaster. What do you think? My time is up.

REP. RANGEL: I hope that you share your --

(Laughter)

REP. BERKLEY: All of the above. Thank you.

REP. RANGEL: Share your answers with all of us because those are questions that she asked that we all are concerned with.

Congresswoman Schwartz from Pennsylvania.

REP. ALLYSON Y. SCHWARTZ (D-PA): And thank you. Madame Secretary, congratulations and welcome. You have a very full plate, and I wish you well, now you are well-positioned to be successful.

There is been a lot of -- two issues I wanted to raise. One you've heard a good bit about, so I will -- and you have answered, so it's just to say that I do have a bill I am introducing tomorrow to create incentives for primary care physicians and nurses.

And I would just ask you to take a look at that; it addresses many of the issues that we have -- that you have heard today. And I would ask you to take a serious look at that. And I also know that you've been looking at market reform. And I am also working on legislation, a number of these pieces have been talked about, both by the insurance companies, the insurance federation, because many of us have been looking at them for a number of years.

One is of course as in the preexisting condition exclusions, getting to a guaranteed issue, being able to go to a community rating (ph), stopping gender discrimination, and rating as well. It's been talked about -- ending waiting periods for employers -- employees are all important and a part of it. I did want to follow-up on Mr. Johnson's reference to legislation. I am working on that he is in agreement on, which is, nice to have a bipartisan start.

And that is to really do what we do under 401(k) plans, which is to just change the way employees opt in and basically what I am saying is that they should be presumed to be in the health benefits package plan that their employer offers.

They can opt out, but instead of potentially failing to sign up and then never being able to sign up, even if you are employed for years, seems really unconscionable in this day and age. So we really want to make it easier.

I think, there has to be transparency and make sure the employee knows what they are doing, but I would ask you to take a look at that, and see what you think of the way to encourage those who do have available insurance covered to take it.

So I wanted to have your reaction to that and just say I look forward to working with you on all of these issues, so that we do actually get to coverage for all Americans in an affordable way for the government and for them.

SEC. SEBELIUS: Well, Congresswoman Schwartz, I look forward to working with you and I know that, kind of, auto-enrollment strategies that you're taking about are often looked at as in many cases as affective and in some cases more effective than mandate strategies. So I look forward to looking at your legislation and moving forward.

There are lots of people who have eligibility right now in a variety of programs, who for one reason or another are not enrolled, and I think we need to take that very seriously as an underpinning to cut down on the number of unemployed Americans.

REP. SCHWARTZ: Actually it is a great point. I know we saw that in CHIP. Thank you.

REP. RANGEL: Thank you.

Mr. Heller is recognized.

REP. DEAN HELLER (R-NV): Thank you, Mr. Chairman, and governor thanks for being here. I look forward to working with you. I have noticed a theme for both sides and that's talking about rural care and the concern that we have for rural care.

I represent a district that's 105,000 square miles, and if you live in Central Nevada, you need a blood test taken, in most cases that you can't find a primary care physician.

Needless to say, you obviously can't find a specialist either, so your choice is to travel 200 miles to Reno or another 200 miles the other way to Salt Lake City and I just want to emphasize my concern for that.

Veterans that need help and needs -- which is another government- run program, find similar accessibility problems in rural areas. Those that are on Medicaid and Medicare have accessibility problems in the rural areas. I guess my question for you is, how would another government-run program, like we're discussing today solve these accessibility problems.

SEC. SEBELIUS: Well, Congressman, first of all, I don't think anybody is talking about a government-run program. I think the goal is to have most Americans without health coverage and health insurance exchange run by the private market to stabilize the current private market where we see employers, frankly, dropping coverage every day because they can't sustain the cost of insuring their employees.

None of that solves the workforce issue that you are addressing. And particularly, in the underserved rural areas that are very common. There is a proposal by the president to double the commission core that will provide some incentive there; $0.5 billion in the recovery plan to help fill the pipeline for nurses and doctors.

I think there are series of strategies, frankly, using health technology.

REP. HELLER: Yeah.

SEC. SEBELIUS: And at least, it has been my experience in our state that health providers are more likely to choose and stay in an isolated and more rural area. They have access to specialists' consultation through telemedicine, if they can tap into advice and consult and support.

So I think there are underpinnings of this underway. But I again, look forward -- I don't have all of the answers of the workforce issue, but it's huge. And I think looking at incentives, looking at forgiveness of medical loans, a variety of strategies that, frankly, have been proven as successful at the state level are things we should examine at the federal level.

REP. HELLER: Look forward to working with you.

SEC. SEBELIUS: Thanks.

REP. RANGEL: Thank you. Mr. Davis of Illinois and Mr. Etheridge of North Carolina.

Mr. Davis you may inquire for -- and the time as you may have heard is two-and-a-half minutes.

REP. DANNY K. DAVIS (D-IL): Thank you very much, Mr. Chairman.

Madame Secretary, welcome.

A few minutes ago, you and Representative McDermott talked about the need and desirability of increasing primary care providers. My question is, would you see increase in community health centers and networks with built-in home visiting programs as a way of doing that and in the Recovery and Reinvestment Act there are provisions for some-hospital based physicians to receive incentives; within the act it specifically states that some will not be eligible.

Could you tell us how you would go about looking that or determining which ones would be eligible and which ones would not.

SEC. SEBELIUS: Well, Congressman, you make a great point about the community health centers. And again, recovery act had resources to double the number of health centers, and that will certainly provide a health home to millions of Americans who currently don't have that health home. There also is an expansion of the commission core for providers who work in underserved areas.

And I think what we have to look at is the series of strategies. Incentive payment is one, shifting the payment to reward outcome, and not contact with doctors is another, looking at the ways that Medicare can be an innovator in an opportunity to lead the way in terms of how the payment system can begin to incentivize additional primary care doctor.

It is something that, again, I know is a major challenge and look forward to those of you who have worked on this issue for a number of times, of having some dialogue and figuring out ways that we can use, the department's assets to move in the right direction.

REP. DAVIS: Thank you very much. And I would just like to say, I also have a great deal of interest in long-term care and the needs of people with disabilities and look forward to working with the department on those issues.

SEC. SEBELIUS: Okay.

REP. RANGEL: Bob Etheridge, North Carolina.

REP. BOB ETHERIDGE (D-NC): Thank you, Mr. Chairman.

Thank you, Madame Secretary, for being here.

I'm coming from the state that has some great hospitals and institutions. But in North Carolina, in the past two years, the uninsured has jumped 22.5 percent, the biggest increase in the nation. Nationwide, about 22 percent of adults do not have insurance. And in my home state that's now about 25 percent of adults.

An additional 9 percent are underinsured. And that's being compounded by the fact that our unemployment rate has more than doubled in the last year, making us the fourth highest in the nation, and set the stage as they -- a lot of the people who had insurance have lost it. Those who don't have it are looking for care, and so they are moving to the community health centers who are stepping in to help fill some of these gaps.

So my question is this, and this is following Congressman Davis's question. CAC's in turn are seeing their reimbursement rate stretched, because of people who were coming to them. And they are really stretched hard.

If we were to reform health care, I ask you to consider, and if you have time to comment, on how we are going to make sure that the rural areas, and really some of our low-income areas, many of them are in rural areas, have access to quality care? Because I think that is a critical piece in this whole issue.

SEC. SEBELIUS: Well, Congressman, just let me assure you it's a piece I take very seriously. And stabilizing the existing system where it's effective. And I think community health centers have been very effective in delivering care; is a piece of moving forward.

So we don't want to destabilize by other lack of resources, or over-demand any piece of this system. So figuring out strategies to make sure that the community health system continues to serve the population, as it is serving effectively right now is something I look forward to working on.

REP. ETHERIDGE: Thank you.

Thank you, Mr. Chairman. I yield back.

REP. RANGEL: Peter Roskam of Illinois.

REP. PETER ROSKAM (R-IL): Thank you, Mr. Chairman.

Madame Secretary, we've seen eight dot points that have come out of the administration. And the fifth one is really the one that folks are tending to focus on today, the public plan, and the assurance and confidence that there is not an erosion of the choice for folks. It's interesting to be -- there is two groups that are out there. There are two entities that are out there that think you are wrong, or sort of think you are wrong --

MS. SEBELIUS: I'm sure there are more than that.

REP. ROSKAM: No, no, right, but sort of wrong in the underlying premise. And you've demonstrated a certain amount of humility on, we've got to get it right, and I respect that. But it's interesting, the Lewin Group, the study that I'm sure you are familiar with, says, it's not going to happen.

And a 120 are going to -- 120 million folks are going to be out of that public -- out of a private plan. And the other is, one of my colleagues from my delegation, Representative Jan Schakowsky, let me read a quote, and I'm interested in how you reconcile these two views in this brief time that we have.

This representative, Schakowsky's quote on April 18th speaking to a group of single-payer advocates, she said, "I know many of you here today are single-payer advocates and so am I, and those of us who are pushing for a public insurance don't disagree with this goal. This is not a principled fight, this is a fight about strategy for getting there and I believe we will." In other words, this part of the plan is part of a prelude for it's ultimately a large single-payer plan. Can you debunk that, can you reconcile those?

SEC. SEBELIUS: Well, again, Congressman --

REP. RANGEL: Very difficult, Madame Secretary, for you to respond to a statement attributed to a member, but I'm certain that the question could be reframed without responding to a member and asking whether or not she believes that this is the beginning of a single payer. But I don't think it's fair, since the Congresswoman is not here, to say whether or not she ever said it.

REP. ROSKAM: Okay, that's fair enough. What -- is it a prelude?

SEC. SEBELIUS: I don't think so Congressman. Again, I would point to the fact that these strategies, competitive strategies, are effectively in place across the country. They are not a prelude to anything other than offering consumers choice and driving competition based on practice models.

So it's determined by the plan design. Can you construct an un- level playing field with a public option unfairly completing with private options; you bet. Is that the intention of the administration or the majority in Congress when they talk about it; I don't think so at all.

So it can be designed any number of ways if you have the right actuarial support, if you design a rule so there really is a level playing field that private insurers don't have the advantage of cherry-picking the market and the public plan doesn't have the advantage of undercutting the cost and driving everybody out. It can work very effectively and does work very effectively across this country.

REP. RANGEL: Ms. Sanchez from California will be followed by John Yarmuth of Kentucky.

Ms. Sanchez.

REP. LINDA T. SANCHEZ (D-CA): Thank you, Mr. Chairman.

And thank you, Madame Secretary, for being with us this morning.

I have been a strong supporter of employer-based coverage. And for those who have union jobs or college education or work for big corporations, the employer system -- based system works quite well. And people generally, according to surveys, are satisfied with their plans if they are lucky enough to have them through their employer.

But those who are not dissatisfied with the current system include not only those that don't get coverage through their workplace, but also those who lose coverage when they lose their job. And I routinely get letters from constituents. A constituent recently wrote me about the struggles that she has gone through as a cancer patient after losing her job and the health insurance that went with it.

And I know that COBRA coverage exists and for some people that's an option, but for a lot of unemployed people, they can't even afford COBRA. So they can't afford to extend their health care benefits.

I'm interested if you could please share with us a little bit about how we might reform the system so that losing a job doesn't mean that you lose high quality affordable coverage even if we retain the current employer-based system. For example, how we might -- the newly unemployed access the health insurance exchange to obtain or maintain their health insurance benefits?

SEC. SEBELIUS: Well, those are great questions. I think that the Congress appropriately recognized in the recovery act that unemployed Americans can't afford COBRA. It's hard for employed folks to have COBRA coverage, because you are suddenly paying a 100 percent of the cost, 103 percent as opposed to having an employer contribution. That's really the issue.

And if you've lost your job, there is no way you are going to be able to come up with a 100 percent benefit. So the recovery act provided additional federal assistance as a stream of money so people could afford COBRA. I share your concerns about stabilizing the current system.

The opportunity, though, in a reform of the future would be, you would have a system where that individual who has lost his or her coverage through the job would first of all be able to continue coverage in an exchange program, would not lose coverage based on job loss. And I think that's one of the issues facing way too many Americans today.

REP. RANGEL: Senator Yarmuth.

REP. JOHN A. YARMUTH (D-KY): Thank you, Mr. Chairman.

Welcome, Madame Secretary.

We've heard, I think pretty much a broad acceptance of the fact that we are all trying to find a way to insure every American. Although we haven't specifically heard that from some people here, I think everybody on our side of the aisle, and certainly the president has expressed that. As far as I can tell, there are three ways of doing it.

One is to create a single payer plan. One is to create the hybrid plan that is under discussion with a public option. And the third way is to rely strictly on the private insurance industry. Mr. Ryan earlier gave an assessment as to the budgetary problems that might be inherent in developing a coverage for everybody using the public option.

Could you give an assessment of what the budgetary implications would be of trying to shove everybody into the private system without a public option? Would that be more or less affordable than doing it with the public option?

SEC. SEBELIUS: Well, I think that the current system is unsustainable in terms of cost. And what we have to look at is not only transforming the underlying payment incentives. Changing payment incentives does, I think, help encourage different kinds of behavior. So if we were in a Wellness and Prevention system, we've got to pay differently at the end of the day.

And I think both public and private plans can be effective doing that. We've got to change the underlying Medicare directive and opportunities for provider incentives and they can be a leader in this. We can shift the system around. I don't think its -- can this work in either the public or private; it's got to work in both places.

And dismantling the private market and having an entirely, you know, public option, the single-payer system I think is not something that the president supports. He supports moving forward and filling the gap, not disrupting the entire marketplace.

So we've got to stabilize the private market with a different set of rules. Hopefully that will make it more accessible to more Americans, and encourage competition moving forward.

REP. YARMUTH: Well, my question, I guess, was in relation to Mr. Ryan's statement earlier. The budgetary problems inherent in insuring everyone who is in the -- right now, every citizen, are not going to be diminished by relying --

SEC. SEBELIUS: Right.

REP. YARMUTH: -- strictly on the private sector.

SEC. SEBELIUS: I would say that's fair.

REP. YARMUTH: And thank you very much.

REP. RANGEL: (Off mike) -- has met the deadline. We have Congresswoman Brown-Waite who has been patiently waiting to inquire and then will be followed by Mr. Tanner, Mr. Higgins, and Mr. Davis of Alabama.

Congresswoman Brown-Waite.

REP. GINNY BROWN-WAITE (R-FL): Thank you very much.

Welcome, Madame Secretary. I look forward to working with you on health care reform that I think all Americans do want. I think we may differ in how it is formulated, but we look forward to working with you, and congratulations again.

Representative Anna Eshoo and I introduced a bill on additional funding for pancreatic cancer research. The bill number is HR. 745; we have 130 co-sponsors. And last year I found out, tragically, how quickly pancreatic cancer can take a life because my husband finally succumbed to it, six months after he was diagnosed.

The bill also addresses other hard-to-find cancers that have a very -- that once diagnosed, people have a very short lifespan. So it is not just about pancreatic cancer. I would certainly welcome your views on it, and your support.

We are gathering more and more co-sponsors every single day. And I would appreciate your support on that bill. I think we agree, and this is another subject, I think that we agree that we should get individuals involved, everybody who is eligible for Medicare, Medicaid, and SCHIP.

How do you propose that we enroll the 11 million Americans who are currently eligible for these programs, but are not yet enrolled in Medicare and SCHIP? I know hospitals tell me all the time that parents bring children in for care.

And when they go over the fact that they don't have insurance they -- many of them are eligible for SCHIP or Medicaid. So how do we encourage those individuals to sign up for the programs already in effect? I look forward to hearing your views on that.

SEC. SEBELIUS: Well, thank you, Congresswoman. First of all I'm --

REP. RANGEL: Madame Secretary --

SEC. SEBELIUS: -- sorry for your loss.

REP. RANGEL: -- you have 30 seconds to respond and the rest of your response, we would be glad to receive in writing.

SEC. SEBELIUS: We need to look for best practices of enrollment. It's very clear that there are strategies out there and some states have had huge success. We did pretty well in Kansas with SCHIP. Other states haven't begun to do that. So best practices, working with you on cancer initiatives is certainly something I look forward to and I'm sorry for your loss.

REP. BROWN-WAITE: Thank you very much, and I yield back my time.

REP. RANGEL: We have five members left, Madame Secretary. We recognize that you have extended your time here. So I'm going to ask Mr. Tanner, Mr. Higgins, Mr. Davis of Alabama, Mr. Van Hollen, and Mr. Meek of Florida to greet you and to share with you how grateful they are that you committed yourself to attend our committee first. And they will be submitting questions to you. And we know you will respond. But since they are here, I'm certainly -- I'm certain that they would want to greet you.

And so Mr. Tanner, say hello to the secretary.

(Laughter)

REP. JOHN S. TANNER (D-TN): Well, I understand that, Mr. Chairman. You called on probably the member who can talk as slow as anyone here.

(Laughter)

So I would just say, Madame Secretary, it's great. I've got a couple of questions about rural delivery of health care with regard to competitive bidding and durable medical equipment, and the pharmacy requirements for the surety bond, and the accreditation, but we'll talk about that later. Thank you.

SEC. SEBELIUS: Thank you.

REP. RANGEL: Mr. Higgins of New York.

REP. BRIAN HIGGINS (D-NY): Thank you, Madame Secretary.

I'm just interested in the issue of cancer treatment and cancer drug reimbursement. And my concern is that the reimbursement paradigm hasn't kept pace with the science. And I think, we are at the dawn of a cancer treatment revolution with smart drugs; Avastin for lung cancer, Herceptin for breast cancer.

And there are so many smart drugs that are in the pipeline towards discovery. And I would just hope that the administration would take a very serious look at cancer drug reimbursement within the context of health care reform.

SEC. SEBELIUS: It is a great plan.

REP. RANGEL: Mr. Alabama -- Mr. Davis of Alabama.

REP. ARTUR DAVIS (D-AL): Thank you, Madame Secretary.

And obviously I have to be brief too, but I would just invite you to personally take a look at an issue that has been affecting my state and can have significant consequences going forward. The 10-second version of it is we've been embroiled -- the state of Alabama has been embroiled in a decade-long dispute with CMS over how we finance our Medicaid system.

As a former governor you know if the issue of inter-governmental transfer, it has been a very important one. And unfortunately, unless there is a change in course in CMS' current position, unless there is a change in course Alabama would have to make dramatic cuts to it's acute care services, and potentially many of our safety net hospitals could have to literally close the doors, not cut back services, but literally close the doors.

I would urge you as the new secretary and as a former governor who knows these issues intimately to personally engage this question and to look at a resolution on behalf of my state.

REP. RANGEL: Mr. Van Hollen, Maryland.

REP. CHRIS VAN HOLLEN (D-MD): Thank you, Mr. Chairman.

Congratulations, I welcome, Madame Secretary. We all look forward to working with you and the president to get health care reform done this year. We've talked today about some of the ways we can both reduce costs and improve quality of care.

One of the areas, I think, we need to look into within the Medicare system is changing the incentives with respect to multiple chronic diseases. Right now, under Medicare, there is really no incentive to better manage those diseases.

You have people going to individual specialists. And again payment is made just on number of contacts. And there are very few incentives within the system to better manage that care to number one, to get a better health care outcome, but also to drive down in the area of cost, in an area where we have lots of payments and costs.

So it seems to me that is an area that's right for again, meeting our twin objectives of improving care and reducing costs. And I look forward to working with you in that area.

Thank you, Mr. Chairman.

SEC. SEBELIUS: Thank you.

REP. RANGEL: Mr. Meek of Florida.

REP. KENDRICK MEEK (D-FL): Thank you, Mr. Chairman.

Madame Secretary, again, congratulations and looking forward to working with you. My line of questioning was going to go along the future. And in a state like Florida, right now we are one of the very few states, especially under 2006 waiver, as it relates to Medicaid. We have a senior population. And the issue of uninsured, especially among service workers, is a very, very important issue to us. And also the utilization of community health centers.

And I look forward to talking with you and working with your department as we mover forward. Florida, as you know, we are special in many ways. And when it comes down to health care and delivery of health care for seniors and for indigents and for giving some relief to small businesses incentivizing best practices so that they don't have a mountain of health care issues is paramount. So I look forward to talking with you in the future. Thank you.

SEC. SEBELIUS: Thank you.

REP. RANGEL: Madame Secretary, I want to thank you for giving this committee the courtesy of your first congressional hearing. I want to apologize to the members for curtailing their ability to follow through in their questions.

But I want to thank you also for making yourself available to us, if not necessarily in the hearings, but when we have our Democrats and Republicans together that you would come in an informal way and try to help us out with some of the questions.

We again congratulate you for your point. And we look forward to working with you. Thank you so very, very much. And the committee stands adjourned subject to the call of the chair. Thank you so much.

SEC. SEBELIUS: Thank you, Mr. Chairman. Thank you.


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