healthcare for all americans. . we can do it without adding to the deficit. the president has opened a good idea about how we finance health reform. we are not open to deficit spending. health reform will be paid for and of the deficit neutral over 10-years. the president has already introduced his proposals that provide about $950 billion over the next decade to finance health reform. many of the resources come from bringing waste of the current system and prosecuting abuse and fraud. we are paying for strategies currently that do not work. we are over paying for medicines and equipment. it is time to make a better use of these hours. we know that reform can reduce costs for families and governments. it can protect choice and ensure affordable health care. as to move forward, we will be guided by simple principles. that is protect what works and fix what is broken.

we have reviewed the key features of the tri-committee draft proposal to you enter house colleagues. it is clear that you and your committee have embraced these principles. by creating a health exchange that will ensure numerous plan options, along with the public insurance options, the plan promotes choice and competition. by lowering health costs, it is providing premium credit and it makes health care affordable for all americans. by investing in prevention and wellness initiatives, it tells prevent disease and illness and allow americans to live longer and healthier lives. with a meaningful delivery systems, your policies offer lower costs and higher quality health care. under the plan proposed, americans will no longer have to worry about being denied care because of a pre-existing condition. they will have easier access to tools that can help them prevent disease and stay healthy.

investment in primary care and underserved areas will improve all americans access to care. the medicaid reforms proposed in this bill have important steps to improve the critical safety net program, making it an income based program giving reimbursement for primary care. this draft represents an historic step forward. while we are still examining all the details, i agree with the president that this proposal represents a major step toward our goal of fixing what is broken about health care and building on what works. i am eager to work with this committee and your colleagues in the house and colleagues across the aisle and the senate to deliver the reform we so desperately need. i appreciate the opportunity to engage in this discussion. i look forward to the questions. >> thank you. i want to start off with questions.

this issue of campaigning was -- a health care is part of the campaign with president obama in order to be elected. and there is any issue for which he has a clear mandate, it is to work on this very issue. he has made this is number one domestic priority. i want to underscore some of the aspects of what he hopes to accomplish and what he wants us to do in this effort. based on the president's approach, our draft sets out a comprehensive approach to reform. it addresses convention, wellness, healthcare workforce, quality of care, broadbased shared responsibility, in

dealing with the cost and coverage. there is a new exchange for people to go and get their insurance, portability in credit, improvements to medicate, substantial savings and improvements to medicare. is this what the administration is committed to? should we approach this any more compartmentalized manner? should we approach this in a comprehensive way? >> as you said, this was one of the key priorities of the then a senator obama and now president obama. he believes strongly that we cannot fix the economy without fixing health care. a comprehensive approach to a reform of this system is what is required. i think it is what the legislation addresses in many of its components. there is no question that you cannot do just one thing at a

time. in order to have the system worked and lower costs, there is no question that we cannot continue on the cost curve is that we are on right now. it is unsustainable. it will not serve anyone well. those who have health insurance now are among one or two years of not being able to afford the coverage they have. those who do not have coverage cannot access under the best medical care in the world. we need a comprehensive approach. we need to shift the system toward wellness and preventi on. the elements and yet could forward are deutsche doing just that. >> undertaking this kind of reform is pretty complicated. it is going to require an enormous amount of effort from members of congress.

some of those will say maybe we should delay or go slower or do it next year or the year after. what is the administration did you of the timetable for action and the need for action? >> i think the president feels strongly that there is an enormous urgency about this issue which has directly to do with our economic well-being as a nation and our competitiveness in a global society, that our workers are less competitive with their colleagues across the world because of the increasing costs of health care borne by individual business owners. small-business owners. there the engine of our economy. -- they are the engine of our economy and often less competitive to have a high quality workers, a talented workers, because they seek to have health care provided along with their wages and to many

small employers cannot do that any longer. our focus on prevention and wellness and need to beat dramatically increased so not only have a healthier society and lower costs, but have a society where our children are not facing the prospect which currently american children face where we are seeing the first generation who may live shorter lives than their parents based on the rise in diabetes. we have some challenges that causes to enact legislation this year. it is difficult. it is complicated. if it were easy, it probably would have been done a long time ago. >> let me ask you one last question. my time is almost out. we have businesses that pay too much.

we have government paying too much. yet small businesses that cannot afford it at all so their employees -- if you are without insurance, have to pay for your health care bill. many go without. do you think we need a shared responsibility for every sector and individuals, providers, to move forward and that everyone has to share in the cost? no particular says the somebody else will pay for me? they are all they are sharing in the cost? >> i do not think there is any question that if you build on the current system which is absolutely what the present ones to do and what the discussion draft proposes, there is a shared responsibility. over 99% of large employers provide health care coverage. a lot of small employers do. senger now. the situations where some americans opt in and some opt

out. we need more personal responsibility certainly in the life choices we make. that can help lower health costs. many parents to get involved and informed. we are in this together. it is a fundamental issue. it is the most personal issue to every american what happens to your health care. and there is no question it needs to be comprehensive and knees to end of everyone. >> thank you very much. thank you for being here. you said in your opening statement that there will be no deficit financing as a result of this health care reform package if it became law. is literally true? >> mr. chairman, i was quoting the president. he has said consistently that he will not sign a bill unless it is paid for. >> we just want to establish on the record right off the bat

that there will be no increase in the deficit as a result of a comprehensive health-care packages if it does become law. that is in plain language. >> that is what the president has stated as one of his top priorities. it will be paid for within that time period. >> let me walk through just one part of your program. it creates a new category under medicaid. 130 -- 133% of poverty, which will be 100% paid for by the federal government, no state tax. for childless adults between 18-64, this one provision the finest in the correctly, could add as many as 20 million americans to the medicaid program.

i do know with the customer is for coverage per person under medicaid. i just pick the number. if my number is wrong, correct me. i said $6,000 a year for insurance. that may be too high. if you cover 20 million people at $6,000 per year, that is $120 billion right there per year. how the uk for that? -- how do you pay for that? give me an example of a pay for that is $120 billion a year. >> congressman barton, the president has proposed about $660 billion in savings from the current medicare and medicaid program. this is an addition to proposing revenue enhancers' --

>> that is over a 10-year period. >> yes sir and i think your estimate is -- >> per year. >> i do not know the numbers accurately. i assume that your 20 million is within the ballpark. i just can tell you that whenever proposal comes forward, the president has insisted that it still will be paid for. >> you are a former governor. is that not correct? >> yes, sir. >> kansas? >> kansas. >> governor of kansas. this kansas have a but we have a state budget requirement? >> yes. >> when you are the government of kansas, by law, you had to submit pay-fors when you did a budget that had money.

>> we spend money within the revenues we had. >> yes. my numbers may not be the number, but they are definitely in the ballpark. if i give the president the benefit of a doubt that there are out there $600 billion over 10-years and savings, $60 billion a year, this one expansion in medicaid is still $60 billion a year short. you are the secretary of health and human services. i assume you have some interaction with the chairman rangel and chairman waxman and chairman miller. you have to have some idea how you will pay for this bill. i'm giving you the benefit. if the president says he can save $60 billion a year, say $60 billion a year. i think you need to put 60 more

billion dollars in savings on the table. you had to do it when your governor. >> that is true. this is a discussion draft. whatever bill was passed, will be paid for. we will work closely with the chairman. we were closed with the senators on the other side come up with the strategy to do just that. >> shouldn't we tell them up front? >> we do not have the cbo score for this yet. >> add these yet to put on the table where you are going to get the money. >> i've understand. >> it is not a box of chocolates. you do not know what your one to get. oh, there is $60 billion. my time has expired. i think we established a good point. i commend the present for that. it is a bad thing if the den and a shoestring with the american people where you are going to

get the money. -- is a bad thing if you do not shoot straight with the american people where you are going to get the money. i just pointed out one part of the bill. already, we are at least in my numbers $60 billion per year short. thank you, mr. chairman. >> thank you. mr. dingell? >> i thank you. welcome. my questions will evoke a yes or no answer, i hope. the tri-committee draft was released last week, does it aligned with what the president said earlier this year? >> yes. >> madam secretary, there is been a discussion about the inclusion of a public health insurance option in the reform legislation. does president obama support the inclusion of a public help

option in the reform budget? >> yes, he does. >> madam secretary, hospitals and doctors are not required to participate in the public auction. is that correct? >> yes, that is correct. >> co-payments under that for the proposal will cover that? >> i did not get that. but premiums and co-payments under the public auction will cover the cost? >> that is my understanding. >> the public auction must adhere to the same rails and regulations as all other plants? >> that is correct. >> the public option will be administered by a separate agency from the one that runs the exchange? >> that is the way the draft is

written. >> the public option will offer the same minimum benefit designed as all other plans in the exchange? >> yes, a level playing field. >> individuals and families will be permitted to apply subsidies toward both public and private plans in equal fashion? >> yes, sir. >> i apologize to you. we have a lot of business to do. madam secretary, there has been concern over the consolidation of the health insurance market and the impact it has on health insurance claims. according to the american medical association, 94% of the insurance market in the united states are now highly concentrated. this has decreased the amount of competition. this is a major problem of health concern. >> there is a monopoly and much

-- in much of the country. >> this is a serious concern. how does the public plan to address this concern? this is not yes or no. >> i appreciate that. i think what the public option within the market place does is use market principles, competition and choice, to lower costs and provide consumers a choice of plans. i think that a public auction -- option, 2/3 of might state for and instance, there would only be one choice which is not terribly effective in terms of holding costs down and does not provide consumer choice. that is why states in state

employees plan to create public options that stand side-by-side with private. but many states have done with the children's insurance program, are side-by-side options to provide choices. >> as a former governor and former commissioner, you were able to speak to this question. state insurance regulatories and ed able to do that except with regard to solvency of the insurance company. is that correct? >> they can regulate solvency and also have some cost regulation, but frequently, if there is no choice in the market, cost regulation is almost irrelevant. >> competition would be the one thing that would make this system work by having the public auction there?

>> it is the marketplace strategy. the comet isn't -- the competition is often more effective. >> there are questions about whether the tri-committee proposal is a complex concept. it includes exchanges for public health options -- will the ministration be able to fully implement and administer this? >> your time has expired. we do want to get the answer. >> yes. >> that is it? >> i asked it that way. >> thank you, mr. dingell. gentleman from georgia. >> thank you. madam secretary, the chairman metacomet during the markup of the american recovery in reinvestment act which said at

the is unlikely you'll find millionaires like to medicaid. when the the concerns of this bill arises in the minds of many of us is whether or not we are treating low income citizens as second-class citizens by automatically enrolling them in medicaid. my question would be this, why do you believe that a family making $29,000 a year is not as able to make choices as a family making $30,000 a year and why would it be better to simply automatically enroll them with no choice and medicaid as opposed to giving them a subsidy to allow them to go into the private insurance market? >> congressmen, some of those families, a limited number, are in jobs right now where they have employer provided coverage. they certainly would not ship that coverage. a large number, particularly

single adults who are at the 100% or below the poverty line, who are making off in a very small amount of money, have no coverage at all. they are uninsured and find themselves and not in an ownership capacity. i think the committee looks at expanding medicaid to 100% -- 133%, i am sorry. many states of party done that and found it the most effective strategy to expand coverage. it is a larger market. it often provides a benefit package that is cost-effective and is often far less expensive than the private options that exist. that is what state are extending this. >> as i understand it, it will

propose that everyone under the age of 65 who is under the 133% of the federal poverty level would be enrolled in medicaid. can you give us how many people do you think that it encompasses and how many of those people currently have a private health insurance? >> i do not want to cite numbers that -- off the top of my head. i can easily return to you with those numbers. i apologize. i know there are a fairly significant number of so-called childless adults, not parents, typically because a number of states have taken steps where parents whose children are eligible for the chip program to actually provide because they found that a very effective strategy when enrolling children. i think we talking primarily about childless adults, often

below -- i think they'd make less than $6,600 a year. that is one of 33% of poverty. i can give back to you with those specific numbers. >> would you please do that? on page 73 of the bill, it provides for the automatic enrollment of individuals into the medicaid program. i want to ask you if the citizenship and identity verification requirements in the current law will still appertain into the automatic enrollment process and will you assure us that individuals who are illegally in our country are otherwise ineligible for taxpayer supported medicaid will not be enrolled under this provision of this bill while you serve as are circuit terry? >> i can assure you that states now, because of the various federal rules requiring

verification of identity, have those systems in place. they really have developed systems to verify identity, not only visiting clientele, but and rolling clientele. that will certainly be in place as we move forward. >> it would not be your intention or something that you are not allowed to have been that the automatic enrollment process would not overlook or override those current verification requirements? >> that is correct. >> thank you. i yield back my time. >> thank you, mr. deal. chairman of the subcommittee? >> thank you, mr. chairman. thank you secretary for being with us today i wanted to take my time to just ask about medicare. i think there is a certain amount of confusion, because obviously in this discussion

draft, that we can save money that would be used to pay for this plan. this is through savings in medicare and medicaid at the same time, there are major enhancements in both programs that are in the discussion draft there is a certain amount of confusion about that. if you view the combination of medicare and medicaid savings and the benefit enhancements, there is a in overall market improvement in medicare and medicaid. a one to ask questions about that. the draft proposes that you fill in the doughnut hole and the prescription drug benefits to eliminate cost sharing and to expand the eligibility and medicare subsidies for low- income enrollees. how do you view the combination

of these medicare savings proposals and the benefit enhancements as an improvement in the medicare program? >> i think that there is no question right now. there are areas where we are spending money that do not result in higher quality care or better results for patients. i think what this discussion draft its foreword is a way enhance the current program and put dollars into areas where we think there will be much better results for patients. hospital read missions is a category that is targeted toward this. one out of every five patients leaving the hospital today is readmitted with in a series of weeks. that is not good for the patient and will cost a lot of money for the system. coordinating post-release care,

actually in fighting incentives for follow-up care, is a significant improvement that will not only lower costs but actually provide a lot better care. those of the examples that the discussion draft incorporates. better quality in the long run, following what we know, our practices that are in some parts of the system but not if hearing throughout. they are not continuing to overpay for services that have not shown benefit or results. >> did you want to talk about filling the doughnut hole in this context? i know that is very much on the mind of the seniors. we do propose to do that in this discussion draft. >> that is a huge step forward. the chairman ofaarp recently endorsed the strategy that is appearing in both the house and the senate to fill the doughnut

hole. it is a huge issue. as an insurance commissioner, we used to save the situation with citizens who had no idea or not counted on the fact that their benefits would suddenly cease and their premiums would continue on. and they had not saved appropriately for it. often they were the folks who had the highest cost in prescription drugs. it was done on a huge shot, but something that forced a lot of people to stop buying their medications and to stop following the doctor's prescriptions and in and the hospital again with of the care to keep them well. this is a huge issue for seniors across the country who have benefited greatly from lower- cost drugs. when they hit the barrier, and they were in worse shape than they were in the beginning. and they are still paying premiums with no help.