there is a major expansion here in terms of increased reimbursement rate, covering people in many states that might be below the 133% with federal dollars. would you want to comment on that? i want to stress that even though we are having savings from medicare and medicaid, we are really improving the program significantly. >> there is a lot of the conversation with providers at least in my home state that are not fully focused on medicare, which is often a very popular program. this is on medicaid, which often under reimburses doctors and particular their primary care and family providers. enhanced reimbursement for primary-care i think is a huge step forward. frankly, having a situation where if you are an adult or a

family below 1033% of poverty, wherever you go, you would have the same benefits. . .

>> thank you very much. we are pleased that you are with us here today. the question about the prescription drug benefit reminds me -- before we passed the prescription drug benefit, most citizens did not receive that benefit. they were paying for those medicines. now we are trying to fill will hold so they don't have to pay for that. -- we are trying to fill that hole. it sounds like we don't want anyone to pay for anything.

i know that your father was involved with medicare. i was looking at some of the debate about medicare when it was adopted in 1965 and they are making some of the same arguments that you are making in your testimony. they projected that by 1990, the cost of medicare would be $9 billion. as it turned out, it was almost $200 billion. we know that there are health care needs that need to be reformed. when you talk about the fact that it will be budget neutral, we are pointed it a lot of money out of increasing efficiencies. -- we are borrowing to get a lot of money out of increasing efficiencies. this is so nebulous.

do you honestly think that we can reform the system and actually save money and provide better quality health care? >> i do and i do so not based on some hypothetical situation but by visiting health systems around the country that do just that, that has higher quality of comes, will have used the technology and the provider protocol provided to make sure that the results are better each and every time and with lower costs. i have seen this in systems around the country and i am confident that we can do it. >> i'm glad you are confident that i am of the skeptical. i hope you are right. when we're talking about being

budget neutral, that is good for the government. if this bill has a pay or play mandate on employers requiring them to provide and among the benefit. this would be 8% of wages paid. there is a mandate there for small business people to pay 8% in wages to provide a benefit defined by the commission that is established in this bill. for these small business people, if someone has a way to and they pay $500,000 a year, that is going to cost them $40,000. are you concerned about the ability of small businesses to be able to continue to be competitive and provide jobs for their employees? >> absolutely am concerned about

the competitiveness of our small business owners. i think that health care costs are one of the areas that has huge challenges for small businesses. they cannot get freight employees without offering health benefits. several things in this bill. -- they cannot get a great employees. there will be a specific small- business exemption from the pay or play and it is minor standing that the committees are still working on the language. that will occur. >> i know that there is an exemption but i know there will be some people hit by this. >> the creation of the marketplace actually gives them a cost advantage that they don't have now. >> one of the criticism that we hear about the single payer system and universal health care

coverage is that it rationalizes health care. in america, our most expensive part of health care deals with end of life care. that is a big percentage of the way that we spend money. there is nothing wrong with rationalizing health care. to really get big savings, do you think that we should be rationalizing health care? many countries do because as a way to control their costs. >> absolutely not. creation of a healthy exchange marketplace is not a single player system. that is not what the president and the chairman has the forward.

we have a plan that builds on the current system. rationing care is something that happens every day. it is done by private insurers could get between a doctor and their patient and decide which practices can be met, which procedures can be paid for, what prescriptions. i think this is an opportunity to make sure that we have more patient-centered care and we follow the articles that work. >> thank you, mr. chairman. madam secretary, i introduced legislation with then congressman rahm emanuel, and congressman chris smith from new jersey, called the independence at home act, and the bill created a medicare pilot project focused on improving the coordination of care and reducing costs for the vulnerable medicare beneficiaries, those with multiple severe chronic conditions, such as alzheimer's,

als, parkinson's and other complex debilitating diseases who also need help with two or more activities of daily living, such as dressing, feeding, et cetera. cbo has reported that 5% of medicare beneficiaries account for 43% of overall medicare spending, and cms has noted that approximately 20% of medicare beneficiaries are with five or more chronic conditions account for 66% of program spending. could you talk a little bit about how we can focus on those medicare beneficiaries with multiple chronic diseases, and how perhaps a program like that focusing on home and better coordination can help reduce the costs? >> well, we have not only the demonstration that you are responsible for, but i think a

number of projects under way looking at coordinating care, particularly for the vulnerable high-cost individuals, and certainly having an opportunity to do that in a home base, instead of a hospital based service is not only better for the patient, but may provide some enhanced cost savings. so we are eager to work with you, mr. markey, to continue to figure out better ways to not only coordinate care for individuals who suffer from various chronic diseases, and have ongoing underlying conditions, but also to make it a more patient centered system, which would lead us to more home care delivery. >> so in terms of home based programs for the beneficiary of population, do you see a shifting in that direction to make sure that, you know, that we try to reduce costs by trying

to stabilize these people at home? >> well, as you know, there is a lot of effort under way, and a lot of it has been at the state basis, and i'm hoping with health reform we can have a real collaborative partnership on rebalancing care, both -- not only trying to prevent hospitalizations before they occur, and provide care at home, but also the nursing home. a number of the patients that you're describing often end up in a nursing home setting, because they don't have access to the wrap-around services that they need. and so we would like to enhance that sort of home-based care, the care that really allows people to not only be more dependent, but also at a lower cost than in a hospital or a nursing home. >> our bill also would enable teams of primary care doctors,

mps, pharmacists, and other care providers to form an organization to contract with hhs to provide services to these chronically ill beneficiaries in their homes as part of a three-year demonstration. the organizations would be required to achieve savings of at least 5% compared to what these beneficiaries would cost, if they were served by these coordinated care organizations, if they don't, they must repay medicare. if they achieve more than 5%, they can keep 80% of these savings with 20% of the savings returned to medicare. do you think that makes any sense to have costs savings sharing as a system that we could construct in the country? >> i certainly support the notion of beginning to pay for outcomes. and not for contact. too much of the medicare system is driven right now by the

number of times a provider touches a patient, not necessarily what happens at the end of the day. so the system you described, which not only would provide for a coordinated strategy, which is really what we need to occur throughout the country, but also save money, it makes sense to provide those incentives to providers. >> great. thank you for your service. >> sure. >> thank you for being here. >> thank you, mr. markey. miss christiansen? >> thank you, mr. chairman. i guess there is some benefit, i guess, at least in this instance, to being a delegate. and not having to go to vote. welcome, madam secretary. good to see you. last week we had some very good conversations on health disparities. but i note that at least in reading your testimony, because i had to step out both in the senate and here, there was very little, if any, reference made to this very important issue that by itself, results in close

to 100,000 premature preventible deaths every year. i hope you'll work to make sure your entire department is sensitive to this critical issue, and office of minority health, and in particular the office of the national senate for minority health disparity research will be elevated that's critical to goals of eliminating health disparities. the b the bill directs that there will have to be a bridging between the health care disparities. how will the agency for health care, quality and research be involved since they have been doing national health disparate reports for the last five years?

>> as i shared with you, congresswoman, i am concerned that we make sure that we do a lot more than published yearly reports which have alarming statistics about health disparities. they're not getting any better. the gap is widening. health reform is a piece of the puzzle. i don't think there's any question. having access for everyone to have higher quality preventable care is a step in the right direction. i had a very productive meeting with stake holders representing a lot of the groups that are often underserved and i assured them that we not only wanted a one time meeting but i want an ongoing strategy. i met with our team, our center

for research and quality about how it is that we are going to actually began to close this gap. just providing reform and continuing the gap does not work. aggressively taking on not only the -- what has already been reported as effective strategies, but want the new team to be particularly particu on the issue of great concern to you and to me. >> i have another issue of great concern. that really relates to territories and your testimony is that reform is not a luxury, a necessity. and i definitely agree with that and because it's a necessity i think that certain issues like equitable coverage for all americans should not really be held hostage to costs and we discussed that a lot at the hearing yesterday. that said, i'm interested in hearing your thoughts about the treatment of the u.s. territories in the current draft. we've been working for years to remove the medicaid cap, the bill, while it does provide

additional funding to the territories does not move us in that direction at all and we're not eligible for subsidies. so to me, it makes it far less possible for men and women, american citizens, legal residents living in the territories to achieve the benefits that this bill will provide for the rest of americans. so i'd like to hear your thoughts on that. >> congressman, i would like to provide an opportunity for you to have that discussion with me and our staff and really, would like to work with you as this process -- this is a work-in-progress. it is a discussion draft and i would just like to work with you to see how we can help enhance the areas that you've identified as problematic. >> thank you. >> thank you very much, mr. sterns? >> thank you, mr. chairman.

madam secretary, just i note that you earlier said that with the donut hole that the benefit stop and the payment continues. but you understand that that's for a small amount of time until they get above a certain amount and then almost 100% of the benefits are paid for. i think you understand that. so it's not incorrect to say the benefits stop because the benefits -- >> they stop for a substantial period of time depending on how fast you budget. >> yeah. but anyway, i have two questions, madam secretary. the president has indicated that if you -- he said, quote, if you like your health care plan you can keep your health care plan. no one will take it away from you, no matter what. i have here the luen group did a bipartisan study, 120 million people, 67% of nonmedicare americans would lose their current coverage and be forced into a government-run insurance

if a government plan was included. do you have any evidence that if a government plan is offered that 120 million people will be able to keep their current insurance? >> well, congressman, it's my understanding that the study has been updated and, or at least, disputed by a number of people that those numbers were significantly higher than folks -- >> so you're answer is that you dispute this plan? >> i do. >> the next question is, then, i have here a study by the hsi network, l.l.c. june 24th, 2009. their study said that the bill we're discussing here today would cost an astounding $3.5 trillion. duties put that fact? >> sir, i'm waiting to see what the cbo score says. i don't know that -- i don't know who the group is. >> have you seen this report? >> no, i have not.

>> okay. all right. now, the president has indicated that if any bill rises from congress that's not controlling costs, that's the bill he can't support. so the first question is, you don't agree with this report. you don't know about it. they said it's going to cost $3.5 trillion. fit's not $3.5 or $3.2 or $2.8, where are you going to get the money to pay for this bill? >> again, congressman, i think that once the bill is scored and once the proposals are put forward, i'm eager to work with the committees and the house and the committees in the senate to identify the cost savings the president has proposed about a billion dollars worth of revenue enhancements and cost savings that he feels are appropriate to spend on this and other ideas that are being proposed by members of the senate and members of the house and we're

eager to work on that. >> one day is not going to approach $3.5 trillion. so one billion is just a pittians that the report shows it will cost. another question is that you really don't have any ideaed where you're going to get the money to pay for this. do you have any evidence that shows if the government spends $3.5 trillion, that it will save money? let's not take the $3.5 trillion. let's just ask you, where, if we spend all this money, where will you save it? >> sir, i think that you start from the premise that we can't afford to what we're doing. $2 trillion plus a year is being spent and americans are less healthy than they were years ago so we have to chance what currently is happening and i think there's every evidence that the combination of health technology, driving quality and beginning to pay for prevention and wellness, promoting primary

care instead of disease care is a huge cost-saver over time. it is a effective to have americans in healthier conditions. it's good for businesses. it's good for our workforce. we'll save money. >> all the things you suggested, both sides would agree on. the question is, how do we do that? how do we form the system so there's universal access? universal affordability? but at the same time we don't have a government program that will cost $3.5 trillion that's not paid for and no statistics to show it could save money there could be an alternative suggestion and i suggest, madam secretary, that you read the hsi network l.l.c. report that came out. and go back with the latest report from the luen group and i think, certainly before you come up here you should have some answer how you're going to pay for that and with that, i yield

back. >> thank you, mr. stearns. >> thank you, mr. chairman. madam secretary one area i've been working extensively with chairman wax man and senators rockefeller and whitehouse on is legislation that would strengthen the federal health care quality infrastructure in order to identify and track key health indicators as well as to develop and implement new science across the states. what this bill does that we introduced would tab national priorities for health care quality and specifies that pediatric health quality is one of the first. and a lot of this legislation has now been incorporated into discussion draft that we're talking about today. but the draft bill also contains a provision that requires the director of the agency for health care research and quality to work with you, as secretary, to develop quality measures for

the delivery of health care services in the united states. i think this is an important requirement but i'm worried about the implications for pediatric health care quality measures because even though discussion draft requires the measures to be designed to assess the delivery of health care services to individuals, regardless of age, the section is funded with medicare dollars. under the previous administration, hhs determined that medicare dollars could not be used for pediatric measures. i'm wondering if you can comment on this and what plans the administration has to address pediatric health care quality and what the view of the agency is going to be? >> well, congresswoman, i think that we're convinced that medicare can be a leader in improving quality of care for all americans.

certainly, the development of quality standards i think is appropriately done under that umbrella. but all americans definitely includes children and that is a huge priority of the country's moving forward so there will be a coordinated effort to make sure that the pediatric standards are very much developed in terms of quality outcome. >> do you think that can be done with the medicare dollars or is that something we're going to have to explore as we move forward to the final legislation? >> in discussions with the current leadership team they're confident that we could fulfill the mandate in the bill right now to develop standards including pediatric standards. >> i know you recognize the medical establishment and, of course, our icon who was here,

marion wright edleman. i wonder if you can talk for a minute about the administraon's view on the title vii health work force dollars that are included in the discussion draft? >> well, i think as you look toward the future of a reformed health system, workforce issues are hugely important. i think that a significant step was taken in the stimulus act, beginning to fund the pipeline of critical health care workers, doctors, mental health providers, nurse practitioners, additional nursing staff. and this discussion draft, i think, takes that to the next chapter which recognizes not only a shift in incentives for doctors to focus on primary care, but also has enhanced workforce capacity, again, with

the whole series of initiatives that would provide for more health care providers in more parts of the country. >> thank you. one last question. one of the provisions i was really pleased to have included in the discussion draft was the idea of auto enrollment at birth for children whose parents don't have insurance plans to put those babies in and 12 months continuous eligibility for children. i'm wondering if you can comment on the administration's position on that kind of auto rollment? >> i think it's been shown that the enrollment efforts vary from state to state, often, and some still require a face to face visit. others have various complicated forms. so what's been proven as best practices, i think, an easier presumptive enrollment when kids show up at the hospital.

certainly, auto enrollment at the time of birth would facilitate including children in the system and make sure they get a healthy start on life so i think that's a big step forward. >> thank you very much, mr. chairman. >> mr. boyer? >> thank you very much. madam secretary, what tief of revenue enhancers have been discussed? >> well at this point, congressman, the president has proposed a return to itemized deduction that was present in the days of ronald reagan and feel that is that would be an appropriate way to raise additional revenues. >> how much? about how much revenue would that raise? >> $340 billion is my recollection. >> what are some other ideas that are being discussed. that's the revenue enhancer that the president proposed. >> what else? >> that's the revenue enhancer

that the president has discussed. he's also proposed over $660 billion worth of savings so so we're at about just under a trillion dollars. >> and we're still lock looking for another $2 trillion? >> sir. i don't know. i have never had anybody discus a $3 trillion bill, so i'm not really prepared to talk about a $3 trillion bill. i don't think there's a score on this bill. that's my understanding. >> going to the itemized deduction could you talk about that a little bit furtherer? who would that impact? >> it would impact basically, the wealthiest americans who currently are paying a different level of tax rate on their itemized dediction than middle-income americans and it would, again, score the -- >> have you said what adjusted gross in