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Washington, DC. The subcommittee met at 10 a.m., in room SD-192, Dirksen Senate Office Building, Hon. Tom Harkin (chairman) presiding.

Present: Senators Harkin, Burdick, Bumpers, Specter, and Cochran.




BUDGET REQUEST Senator HARKIN. Good morning. The Subcommittee on Labor, Health and Human Services, Education and related agencies will come to order.

I want to welcome Secretary Sullivan here this morning to review with us the fiscal year 1991 budget for his Department. The fiscal year 1991 total request for the portion of the Department which is under the jurisdiction of this subcommittee is $135,623,000,000 of which $19,546,000,000 is for discretionary programs, $116,077,000,000 is for mandatory programs for which this subcommittee has very little control. This is a total increase of $11.2 billion or 9 percent, although the discretionary programs are only increased by 3 percent.

In addition, in fiscal year 1991 the Department will spend an estimated $329 billion from the permanent trust funds, so this will bring the total annual spending in fiscal year 1991 to a total of about $464 billion representing 38 percent of the entire Federal spending.

This morning's hearing will be followed by three additional hearings to examine in greater detail the requests of various agencies in the Department of Health and Human Services.

This morning will give us an opportunity to review with the Secretary some major matters of broad policy significance.

I was pleased, Mr. Secretary, to see the Department's budget give increased emphasis and focus to health programs which affect minority populations. The minority health legislation passed by the Congress last year is all but fully funded in the Secretary's budget. I want to compliment you on the leadership that you have shown in that regard.

I do, however, continue to have concerns with the lack of full attention focused on matters of rural health care. I was particularly concerned to see the Department discontinue funding for the Rural Health Transition Grant Program which is very meaningful because a lot of these small hospitals out there, Dr. Sullivan, must change their old methods of operations if they are going to be viable entities in those communities.

Those transition grants would have helped them go from a fulltime acute care facility to a facility that may encompass a lot of other types of support activities regarding health and human services in the local community. Those transition grants were very important to those hospitals, and I am greatly disappointed that they are going unfunded.

With regard to the AIDS epidemic, the Department has once again chose not to request funding for AZT and has requested no funding for the AIDS home health care and the subacute care programs which we funded in 1990. Small amounts, but at least a beginning. With the recent FDA findings which have approved the use of AZT for those infected with HIV virus but who have not yet developed AIDS, and the FDA approval of the use of AZT for children with AIDS, we expect the demand for AZT to be greatly expanded. And if there is no funding in this program and we are up against budget crunches, then that puts us in quite a bind.

Also, the administration does not seem to have a policy or program in place to deal with the need for AZT and other AIDS drugs for that indigent population which cannot afford them.

An overarching concern is the concern we all share in bringing down the escalating costs of health care in America. I brought a couple of charts, Dr. Sullivan, to draw your attention to a couple of items.

The first chart on my left with the bar graph shows two things. On the left-hand side it ranks the per capita health care expenditures by country. The right-hand column ranks the percent by which the U.S. exceeds that country in per capita health care expenditures. So, as you can see, the United States is No. 1 in per capita expenditures at $2,051-and again, we are going back 2 years on this, so this is the most recent data that we have.

Canada, our neighbor to the north, is next highest at $1,483 yet, we exceed the expenditures of Canada by 38 percent, one-third higher. But in Canada everyone is covered, everyone. And last year Canada only had 37 malpractice suits. How many did we have in America? Tens of thousands, probably.

When I look at these charts I think the Canadians are not all that much different than we are, and then you look down at some of the other countries which we exceed and it is just incredible.

When you compare the chart on the left with the chart on the right, the chart on the right shows the growth in health care expenditures from 1965 to 1988. We use 1965 as a base year, assign it as 100. Basically what this shows is that national health care expenditures as we all know are going up three times as fast as the CPI, three times as fast, with no signs of abating whatsoever.

So, this all threatens us. It threatens to bankrupt our efforts to bring the deficit under control, bankrupt personal finances, and I want to continue to work with you, Mr. Secretary, to find ways to reduce program costs without causing serious damage to the necessary services that government provides.

We have to find additional efficiencies someplace, eliminate duplication and overlap, eliminate fraud and wasteful spending. And I might venture forth in one other area. I think we need to correct programs that unnecessarily shift costs toward the Federal Government when the State and local governments might legitimately pick up a greater share of that cost, and I will go over some of those with you in a bit.

Mr. Secretary, I look forward to our discussion this morning, I look forward to working with you again this year in developing a budget that we can all support. Finally, Mr. Secretary, I call your attention to a question I will raise with the Family Support Administration concerning the growing Federal loss in the child support enforcement program and I will get into that with you during the questioning period.

So again, welcome. I congratulate you on a very good first year. I was delighted to see you appeal the first budget estimates that came down in December. I thought it was great of you to do that, and it came back better than what it was in the initial stages.

So, at this point I would like to yield to my distinguished colleague and ranking member, Senator Specter, for any opening statement he would like to make.


Senator SPECTER. Thank you, Mr. Chairman.

Mr. Secretary, I join the chairman in welcoming you here and congratulating you on a good first year.

As we look at the categories which are under the direction of your department, it is staggering, but there is so much to be done and so little to do it with. We see the costs of health care in this country in the range of $600 billion, about 12 percent of the gross national product, and the cost escalating, and we know that there are millions of Americans uninsured. It costs billions of dollars, and the President has given you the task of a proposal to try to meet those needs, and it is enormous.

We have just finished last year's budget, and Senator Harkin and I and others wrestled on the Senate floor and made adjustments and transfers, and we have obligations from some of those transfers from last year, and now we start the process again and look at an enormous number of needs.

We confront the most difficult problems of our society, the problem of drugs, which your department has a major role in, detoxification and the homeless, and the problem of lead poisoning and big improvements in Gaucher's disease, needing additional funding. There is a small increase for the National Institutes of Health, a small increase for mental health research. We have to find, somehow, somewhere, some way more moneys for these matters.

I compliment you, Mr. Secretary, on speaking out on the effort to market a new cigarette directed at blacks in America. In the context of the problem of addiction for profit, a new direction was made there, and without 1 cent in cost to the Federal Government, or the taxpayers, with a very effective jawbone, you were able to stop that kind of a program. I think that is a sign as to what can be done by effective advocacy for someone who is willing to move to the forefront and take a tough, controversial position and make it stick.

A year ago there were a lot of difficulties besetting your situation as we moved through the confirmation process, and you have come through that with real leadership. I think that you, with our help, will be up to the job of making ends meet here somehow, some way. However, as I look over the list of needs in your department and look over the available funds, it is going to be a difficult task to work our way through to a conference report, such as the one we tackled late in last year's session, and to try to make ends meet.

But this is the starting point. We are glad to see you here, and we will work with you as best we can to fulfill those obligations.

Thank you, Mr. Chairman.
Senator HARKIN. Thank you, Senator Specter.
Any other opening statements?
Senator Burdick.

Senator BURDICK. I have no opening statement. I have a series of questions when the times comes.

Senator HARKIN. Do you have an opening statement, Senator Bumpers?

Senator BUMPERS. I have no opening statement.
Senator HARKIN. Thank you.
Secretary, welcome. Please proceed with your statement.

Secretary SULLIVAN. Thank you very much, Chairman Harkin, Senator Specter, and members of the committee. It is a pleasure to appear before you this morning to discuss our Department's proposal for fiscal year 1991, and I point out that the total budget for the year that we are proposing is $464 billion, an increase of $27.5 billion over fiscal year 1990, or a 6.3-percent increase overall.


The appropriations request that this committee will consider is $136.8 billion. This is $12.3 billion over fiscal year 1990 or an increase of some 10 percent.

This budget represents not only the President's priorities, but my own as well.

As you are aware, our goals in 1990 that we set were not fully achieved, a prime example being Head Start. That proposal, that program we had proposed with the President's budget an additional $250 million for fiscal year 1990; we ended up with a congressional appropriation of $151 million, some $99 million less than we wanted. But this year we are back to ask for an even greater Head Start appropriation because of our strong commitment to this pro

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