>> thank you very much. >> senator alexander. >> thank you. welcome. we are glad you were here. the president sent a letter to senator baucus and senator kennedy saying that health care reform must not add to our deficits of the next few years. he said we should only spend a dollar we say. are we to assume that pay go should apply to the health care reform bill? >> the estimates over a 10 year time frame are a bit difficult . ongoing concerns and it's something i think the chair man shares is currently there is no scoring for instance for any

prevention and wellness strategy. i am not sure there is an expert who believes it won't save money, and yet it is small scored. so whether or not the kind of transformational health reform will actually have a dollar for dollar set off on day 1i can't tell you -- >> so paygo doesn't apply to the bill we are considering? >> senator, i think it does. i haven't seen the outlines exactly what the president is proposing. i know there was discussion of whether or not what is the year ten for instance for the health reform bill? is it ten years from today it starts or the date passes? and if it is there's lively debate about strategies whether that can be scored in out years. >> do you agree it would be a good idea to see the details of proposals and from budget office with the score might be before

making the decision about going forward in light of the president's concern about paygo? >> certainly at degette is a discussion to have. i am not sure the congressional budget office is going to score prevention although they are dead wrong assuming there will be savings and cost effectiveness related to shifting the health system to a wellness' prevention system. >> without being overly redundant the president is going to write a lecture and give a lecture about paygo shouldn't it apply to the health care reform bill which is variously estimated between 1 trillion to $2 trillion in costs the next year. let me ask you this, if it does cost between one or $2 trillion depending upon whether it is the kennedy bill or the bill being considered by the finance committee, what new taxes or savings would the administration recommend to make sure we don't add to the deficit? >> well, senator, as you probably know in the 2010 budget

the president recommended about $630 billion worth of both savings and revenue enhancements. we've also suggested after reviewing the overall medicare programs that within the medicare program we think another to to $250 billion is possible in terms of savings. there is no question that the additional and enhanced efforts on fraud and abuse will generate some additional savings, and he has had a lively discussions with members of house and senate about their ideas for funding the remainder of the program, but i think the good faith effort by the president and it's a demonstrated in this budget moving forward to come in with a substantial investment in reform moving forward and hopefully in beijing, brokers in the very discussion. >> you would agree the

investment is only the beginning of the amount of money that we might need? >> welcome 634 billion plus another 200 billion is 800 if to 2 trillion-dollar range it is a good investment. >> so it would be important to know the details of the proposal and cost of the proposal before we vote on the proposal and act on the proposal if we are to show respect to the president's desire on paygo and not adding to the deficit? >> hope we as members engage in this discussion and in the health committee and the three committees dealing in the house will engage in just those paying for health reform and will be a critical part of this dialogue of the forward. >> does the president or the at ministrations support the government run insurance plan proposed by senator kennedy and his legislation? i know the president in his letter said he wanted to see a public or government run option

as a part of the plan. >> i think the president has maintained from the outset during the course of the campaign in the letter the you received that in a health insurance exchange, marketplace where consumers would have choices and options for coverage if they want to choose new coverage that a public option is very important in many parts of the country there is not a choice of private plans. there is a dominant carrier, monopoly carrier. >> does he support or not support senator kennedy -- >> i have not seen the specific -- >> so he may want to see the costs before he makes the decision. >> you would want to ask the president. >> but you represent him and he would want to know the cost whether you support. >> i am sure we will have that dialogue. >> does that mean you would or wouldn't? >> i said i will read it, yes,

sir. >> so you would want to read and understand the cost before you decide whether to support? >> yes, i will read it. >> i want to assure my colleague from tennessee, who also is a member of the authorizing committee, right? we are going to have a walk-through with our bill starting tomorrow both republicans and democrats that the senator will have every opportunity to amend, offer, discuss these different things. i can tell you right now that we are on this public option plan that we are leaving it blank because we want to have a discussion on it and we want to have ideas that come forward and see where the votes are. i think that is the fair and honest way to do that so we are not coming out with anything, we're kind of leaving it open for discussion and then we will

see where the votes are. that is the best way to proceed and after that, whatever we decide to do, then the administration can tell us what they think. we have to do it. >> i just want to establish the principle is a good idea to read into understand the cost of the proposal before we ask to make a decision. >> i think that will happen in the next couple of months. >> senator pryor. >> thank you, mr. chairman ed thank you, madame secretary. let me start if i may with the issue of competitiveness, excuse me, comparative effectiveness research. my understanding is this research has great potential to in power patients and physicians to choose treatments that offered the most benefit however some of the attacked this initiative claiming that it could be used to ration care.

t you mind talking to the committee a few minutes about comparative effectiveness research and why you think the department is in a better position to the private sector to ensure this research is performed? >> welcome senator, i think that to the point you made citing detractors who are feel all of this would lead to rationing care there is a provision in the funding of the research that prohibits medicare from using comparative effectiveness research to make cost decisions. i think that is clear in full all and certainly the folks at cms intend to follow the law. we are very encouraged by the opportunity to lure from what is happening in this rapidly

evolving area of medical care and certainly what's happening to produce high-quality low-cost care in various parts of the country, and to help drive those best practices across the country so all americans have access to the care and i think the investment the congress made and comparative effectiveness research gives the opportunity to do that, to tashi and what strategies needed to better health outcomes and costs which are again and places in pockets around the country but not everywhere and i think the fear is somehow this will drive rationing of care. i suggest would raise quality-of-care in a very effective manner. >> let me ask another question, something i know is important to you being from a state like im, and that is we have a challenge and our state as well as other senators in their home states where we just don't have enough

doctors and rural america and my sense is, you know, one reason is because the of rural setting and challenges for the rural practice just isn't appealing for a lot of people coming out of medical school. but also i think there's a practical part of this and that is medicare reimbursement rates are often much lower in a state like arkansas and maybe your home state and elsewhere than they would be otherwise. >> we like to call you our kansas. [laughter] >> i understand. we get that a lot by kansas by the way. but, we do share that and so, my question for you is what is the best way to ensure people in of rural america have not access to coverage but actually access to care in their home communities?

>> i think it is a great question and one that i worked on as governor in kansas and share your concerns about the distribution of health care providers and incentive to stay in practice in a rural community and certainly continuing to examine the pay differentials of medicare as a piece of the puzzle and one that i take seriously and will make sure we continue to look at whether or not that provides incentive for all sorts of things. there are people who suggest there's also disincentives for lower-cost care to be delivered in some areas because the turnaround and get penalized with lower reimbursement rates. i think there's a lot in the investment you made in health technology can also do to enhance world practitioners by connecting with telemedicine to

specialists and consultation experts who may be hundreds or even thousands of miles away but can be very much part of their practice of an ongoing basis and certainly the investment in the expanded commission court to look at converse served areas is a help as well as the money we announced a couple days ago pushing out the door some of the recovery act money that would help a student loans and i know at least an hour or state and i am sure in arkansas the payment strategy for underserved areas has been particularly effective in having a young providers located and once they, are there they don't leave as has been our experience so i think we have got to use a whole variety of incentives, loan repayments, telemedicine, but to make sure all americans have high quality care. >> i do appreciate the president and you putting in the budget the in proved rural health care

initiative so i think that is a step in the right direction. thank you very much mr. chairman. >> senator specter. >> thank you, mr. chairman. madam secretary, thank you for taking on this difficult job leading the pitiful state of kansas. >> our home state i share with the senator. yes. >> today has been hearing secretary gates testified this morning. he is from which a call. >> yes indeed. >> went to a very distinguished grade school. i would like your attention, mr. chairman. [laughter] >> we are talking about kansas, it's important. >> he went to a very distinguished grade school called college held although he

went to the sixth grade and i went there not quite the same time, but the same school, and governors from kansas and a town not too far from russell. so much from the pleasant -- plus entries, governor pete degette [laughter] to have an nih budget of $442 million as a sharp pretreat from what the chairman used to insist on 3.5 billion a year increases. senator harkin wouldn't settle for anything less for most of the decade. i guess it isn't entirely true. occasionally he settled for 3 billion. but if you take a look at the cost of living in just meant inflation rate about 3.3%, thatn

i would urge you to take another look. we want to stay within our budget. i would appreciate it if you took another look at that. the $10 billion that was added in the stimulus package brought an enormous wave of excitement. scientists. and i think we have to maintain the growth rate. we talked about cutting down the cost health care. what better way of the cost factor than to prevent government and during the purple of time when senator harkin had

his way increasing from 12 to $30 billion on the death rate -- >> we imminent, i was a ranking member then. i was ranking member of that time. >> come to think of that he didn't have all that much to do with it. [laughter] but on a serious note we use to trade gavels with frequency but on to the serious note, the death rate from strokes went down, from heart disease, improvements on cancer, and we just have to find some way to do better, and i know that the budget calls for $260 million for cancer and $19 million research in all to some. that is a change from what we

have always done. we have endeavored not to politicize the allocations by leaving it to the scientists and one year the chairman of the appropriations committee who suffered from prostate cancer, and 150 million to prostate cancer he was unsuccessful in doing that so i would like you to take another look with a focus and i know you can't focus on all these matters and you have -- you don't have a long history like the subcommittee does as to whether you really want to initiate a policy of picking and choosing. my yellow light is on so i can only make one further comment. i want to express my thanks to you for meeting with a group on may 20 at the bayou defense

initiative from the university of the expert, upmc triet do you have any initial thoughts on the subject? i know you haven't had time to go through the details but any preliminary thinking? five received calls from upmc more than twice a day so when i thought i had to hear i thought i would ask. >> i thought the presentation was very impressive and certainly the motion we should have a facility dedicated to production of a variety of vaccine lions is also incredibly timely and something i think should be part of our preparedness arsenal. i think that the dish you we are facing right now as you well know is whether we can adequately prepare for the uncertainties that still may be confronting us in the near

future with of unlawful h1n1 stream and vaccination program and production costs and preparedness under way and add an additional factor to that, but you all are -- i don't think that there is any doubt about the importance of that being part of the strategy moving forward but how quickly that could be implemented by can't tell you right now. >> well, we would appreciate your informing us the earliest date you can. >> thank you, mr. chairman. >> senator, may i respond briefly to the research questions? because i just want to tell you why share both the concern we continue to invest in science and research and i have already heard enormously positive feedback about the investment from the recovery act and as you

said, the excitement of a new generation of researchers that we are recommitting to research funding. i do think putting together the 2010 budget there was a recognition that the recovery act funds really will find 2010 and some of the 2011 strategies, but working with you, senator, not only senator specter but the chairman who i know has enormous interest in this area on the future years i think will be very important to make sure we don't reach a cliff and fall off the edge of the cliff because we want to continue this research investment. >> well, madam secretary, may i suggest that the stimulus package of the 10 billion ought to not be looked at, that this extra designed to create 70,000 new jobs, and for the two year period with a specific target in the president asked for and

congress responded in an affirmative way. i perhaps as much as any asked him to vote and we were looking for that to stimulate the economy and for jobs, and i couldn't tell you line by line on all the other budget items the white believe it was not the generalization the stimulus would be used in place of future years of funding. so we would like to maintain the funding on its own. thank you. >> madame secretary i just want to say i fully concur with senator specter's views. we worked in tandem on this a long time and i can assure you when it comes to nih funding for regardless which side senator specter is on his way to be doggett and i am going to join him on this. i do -- senator specter is right we put the money in the stimulus because it was stimulus for the

two years and i am concerned about the cliff. and the baseline and what happens to that baseline funding and quite frankly if you really look at it, senator specter, from when we finished the bubbling from 2005 on till now, basically our funding has been kind of flat. i think that in real dollars we are about where we were in 2005 if i am not mistaken. so, to only put in $442 million doesn't do much getting the baseline up. >> mr. chairman? during the period the last several years you and i have made the calculation we went down 5.2 billion in real dollars as a result of not having the cost of living adjustment for several years and then this tiny

across-the-board percentage of half a percent here and pretty soon a 30 billion-dollar allocation turns out to be less than 25 billion, so we are pulling against that backdrop as well. >> so, this is not -- there are two things -- one thing we probably concur and i don't know about the second but the 442 million i think is an adequate. we will see what we can do. i don't know within our allocation what we can do. we don't have the application yet but we have a lot of demand and we will have to see what we can come up with but within the 442i am somewhat concerned that 268 million was designated for cancer for the national cancer institute and i think was it 19

for autism so over half of that for to diseases and i mentioned this to the nih director, acting director appeared that i don't know that is a good way to do things, to put all that money just in those two when there's a lot of other needs spread across the entire spectrum of research, and i just thinking perhaps we might look for a better distribution of the money than in just those two areas and let the researchers at an i.c.h. decide where the money ought to go. >> i appreciate that. >> i don't have anything else, madam secretary. >> mr. chairman, i have another question if i may. madam secretary, i have been advised that fraud and abuse are

dreaming about $60 billion a year from the health care system. this money could be going for patient care to address other problems. i co-sponsored with other senators the seniors and tax payers protection obligation act as an acronym, it's known as the stop act designed to eliminate the use of social security numbers as the medicare identifier to help curb fraudulent services. i wonder if you agree something like that is needed and in view of the fact your budget includes only 113 million for medicare safeguards do we need to look elsewhere for ways and means of helping to curb medicare waste, fraud, and abuse? >> i certainly share your concern about waste, fraud, and

abuse, senator, any dinosaur went from the program is not only from the tax payers but the delivery of health care services and i think that is why the president was eager to have the attorney general and i join together in a new initiative, sharing data rather than following what were sometimes-years-old audits to get out ahead of some of this effort to buy monitoring billing and i am not familiar specifically with the legislation you mentioned but i will certainly share those ideas with our folks and have them take a look at it because i think anything the weekend due to discourage these practices before they occur and save those resources for the delivery of health care is incredibly important. people are stealing from the system and we want to make it impossible if a lot easier and this is a strategy i would love

to take back to the cms folks. >> thank you. >> madam secretary, thank you for your appearance and leadership at the department. we look forward to following up. i will leave the record opened for any written questions that the senators who couldn't be here might want to hound and i look forward to working with you on the recovery mauney we talked about before that's going out for prevention. >> absolutely. thanks so much. >> the subcommittee will stand adjourned. [inaudible conversations]

[captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2009] >> two congressional hearings on c-span3 to tell you about. the first considers a national single payer health care system. live coverage at 10:30 a.m. eastern.

later, the senate banking committee holds a hearing of the u.s. auto industry. we will hear from representatives of the white house and the treasury department. you can watch it live at 2:30 p.m. eastern. .