area, our budget includes an increase of $63 million for PHS programs aimed at reducing adverse pregnancy outcomes and improving infant survival. It also fully funds the enacted Medicaid expansions for pregnant women and their children with incomes at or below 133 percent of poverty.

Death rates among minorities for heart disease, cancer, stroke, AIDS and other disorders are far greater than those of the population as a whole. Correcting the disparity in health status between minority and non-minority populations remains one of my highest priorities. To this end, we are seeking

$117 million for a new initiative to improve access to health care for low-income minorities. This will include increasing the number of minority health professionals and initiating innovative community-based approaches to recruiting minorities into health areers. We will also develop new strategies for delivering needed health services to our minority populations.

In addition, the budget includes $357 million for access to care for rural Americans. Ninety-two percent of this amount, or $327 million, will be spent on services for rural communities. This includes continuation of those activities initiated by Congress last year for disease prevention and information outreach. $30 million is earmarked for research on the special conditions impeding access to quality care in rural settings. also plan to spend $9.4 million to support ADAMHA research projects and services which specifically focus on mental health services in rural areas.

We

The future challenges of this decade demand continued advancement of our Nation's research enterprise. In fiscal year 1991, we will provide a total of $8.9 billion for biomedical and behavioral research. Our $436 million increase will strengthen the basic research and development efforts of the National Institutes of Health and the Alcohol, Drug Abuse, and Mental Health Administration.

ד'

Included in this increase is a major expansion for the Muman Genome Project. This research is expected to have a profound effect on our ability to treat the more than 3,500 diseases of known genetic origin. The project was recently ranked by researchers as the number one Federally-funded major science initiative, surpassing even the Super Collider. It must remain one of our highest priorities. We are planning an increase of $48 million over the $60 million Congress provided in fiscal year 1990.

To begin the much-needed infrastructure repair of the NIH campus, I am requesting $89 million. We can no longer continue to ignore the fundamental needs of our researchers; facilities must be well maintained and renovations must occur.

Concerning AIDS, we must work until our efforts match the threat of this disease to our society. In fiscal year 1991, we propose to spend $3.1 billion on AIDS. We are requesting $1.7 billion for HIV and AIDS-related activities of the Public Health Service. This $109 million increase will be used for continued research, education, epidemiology and investigation of drugs. In addition, there is a $780 million increase for Medicare and Medicaid services for AIDS and HIV infected

individuals.

$110 million is also included for the newly established Agency for Health Care Policy and Research. This amount includes funds for an expanded Medical Treatment Effectiveness Program. The Effectiveness program is a comprehensive effort to learn which medical procedures are most effective for specific health conditions. Effectiveness research is a long-term commitment toward improving the quality of medical care and reducing unnecessary treatments.

I am committed to ensuring the quality of service provided

to the public through the large entitlement programs administered

by this Department

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Social Security, Medicare and Medicaid.

In

fiscal year 1991, we are requesting increases for the Social Security Administration and the Health Care Financing Administration which will enable us to continue managing these programs efficiently and effectively.

In

The budget includes full funding for Social Security, Supplemental Security Income and Black Lung benefits. addition, we are requesting $4.2 billion, an increase of $330 million, for the Social Security Administration to run these programs. These funds will allow SSA to stabilize staffing at about 63,000 and continue to invest in automation, thus ensuring high quality service to our public.

Our legislative agenda includes several initiatives which will encourage the provision of health services in managed care settings. We believe managed care is the best means of assuring quality service and appropriate care for Medicare and Medicaid

beneficiaries.

We are also proposing changes to the Medicare program which will save $5.5 billion. These changes are designed to make the Medicare program a prudent purchaser of services and to assure that current inequities in physician payments are not built into the new reimbursement system to be implemented in fiscal year 1991. with these proposals, Medicare expenditures will increase by 4.6 percent between fiscal year 1990 and fiscal Without them, the inflation rate of this program would continue at more than double that rate, or at 9.9 percent.

year 1991.

You will note that in our budget, we are proposing to finance some of the services we provide through user fees. example, my request includes $510 million, an increase of

For

$312 million over the 1990 level, for survey and certification of health facilities to ensure the safety and quality of care

provided. Following the lead of the Congress in the Clinical Laboratory Improvement Amendments of 1988, we propose funding all activities, including those previously funded by Medicaid,

through user fees.

Lastly, and perhaps most importantly, our budget honors the 1983 bipartisan promise to Americans that there will be sufficient funds for social security today and in the future. Further, we propose additional protection for future beneficiaries through a plan which would end the current practice of using reserves to mask the size of our deficit. contemplate any sort of action which will ultimately endanger the economic future of our children and our grandchildren.

Let's not

Thank you very much. I will now be happy to answer any questions you have about our request.

BIOGRAPHY OF DR. LOUIS W. SULLIVAN

Louis W. Sullivan, M.D., was sworn in as secretary of health and human services March 10, 1980, by U.S. Circuit Judge A. Leon Higginbotham Jr. He was nominated by President Bush Jan 20, 1989, and confirmed by the Senate March 1, 1989.

As head of the Department of Health and Human Services, Dr. Sullivan oversees the federal agency responsible for the major health, welfare, food and drug safety, medical research and income security programs serving the American people.

Dr. Sullivan came to HHS from the Morehouse School of Medicine in Atlanta, Ga. In July 1975, Dr. Sullivan had become founding dean and director of the medical education program at Morehouse College. Since July 1, 1981, when the School of Medicine became independent from Morehouse College, he had served as its first dean and president. In April 1985, the Morehouse School of Medicine was fully accredited and on May 17, 1985, the school awarded the M.D. degree to its first 16 graduates.

Dr. Sullivan was born in Atlanta Nov. 3, 1933. He received a bachelor of science degree, magna cum laude, from Morehouse College, 1954; and earned his medical degree, cum laude, from Boston University, 1958. He did his Internship (1958-1959) and medical residency (1959-1960) at New York Hospital's Cornell Medical Center. After a pathology fellowship at Massachusetts General Hospital (1960-1961), Dr. Sullivan became a fellow in hematology at the Thorndike Research Laboratories of Harvard Medical School at the Boston City Hospital.

He was an Instructor in medicine, Harvard Medical School, 1963-1964, and an assistant professor of medicine, New Jersey College of Medicine, 1984-1986.

In 1986, he became co-director of hematology at Boston University Medical Center. From 1966 to 1975, he was, successively, assistant professor of medicine, associate professor of medicine and professor of medicine at Boston University School of Medicine. During 1972-1975, he also was co-project director and project director of the Boston Sickle Cell Center and direc tor of Hematology at Boston City Hospital.

Dr. Sullivan returned to Morehouse, his alma mater, in 1975 as professor of biology and medicine.

He is a member of the American Medical Association, the National Medical Association, Atlanta Medical Association, Medical Association of Atlanta, Medical Association of Georgia and the Georgia State Medical Association. He has been certified in Internal medicine and in hematology. His research Interests are in hematology.

Dr. Sullivan was the founding president of the Association of Minority Health Professional Schools. He is a former member of the Joint Committee on Health Policy of the Association of American Universities and the National Association of Land Grant Colleges and Universities. Professional honors received by Dr. Sullivan Include election to Alpha Omega Alpha Honor Medical Society in 1957, election to the American Society of Clinical investigation in 1970, to Phi Beta Kappa in 1974, to the Institute of Medicine (National Academy of Sciences) in 1975 and to fellowship in the American College of Physicians in 1980. From 1985 to 1987 he was vice chairman of the Commission on Health and Human Services of the Southern Regional Education Board.

He served as associate editor of Nutrition Reports International, 1969-1973; on the Editorial Board of the American Journal of Hematology, 1975-1977; and on the Editorial Board of the Journal of Medical Education, 1977-1978. He has served as consultant and adviser to numerous organizations and agencies including several in HHS' Public Health Service and for the Veterans Administration. Prior to becoming Secretary, Dr. Sullivan was a member of the National Cancer Advisory Board of the National Cancer Institute, National Institutes of Health. He is a member of the boards of Friends of the National Library of Medicine and the Boy Scouts of America. He has been a member of the Atlanta Rotary Club since 1977.

Other honors received by Dr. Sullivan Include: Boston University Alumni Award for Distinguished Public Service in 1985; Honoree of the Year of the State Committee on the Life and Health of Black Georgians in 1983; the Drum Major Award by the Southern Leadership Conference in 1982; establishment of the annual lectureship at the Morehouse School of Medicine In his honor in 1980; the Outstanding Alumnus Award from New York University's Cornell Medical Center In 1984; honoree of the Nationa! Association of Minority Medical Educators (NAMME) for outstanding contributions to the education of minorities in medicine in 1984; the first Martin Luther King Visiting Professorship at the University of Michigan in 1986; the Equitable Southeastern Regional Black Achievement Award for Education in 1986; and the Atlanta Urban League Award for Outstanding Community Leadership in 1987. He was a member of then-Vice President George Bush's official 12-member delegation to seven African countries In mid-November, 1982.

Dr. Sullivan and his wife, Ginger, have three children.

HEALTH CARE COSTS

Senator HARKIN. Thank you for a very good, comprehensive, and straightforward statement. I appreciate it very much.

If I might cover a couple of general questions before I get into specifics. Mr. Secretary, in the State of the Union Message President Bush directed you to undertake a major study of health issues in the next few months. The Pepper/Rockefeller Commission will also be reporting on its recommendations.

The congressional debate is going to intensify over issues of longterm care, coverage of the uninsured, and soaring medical costs. It is the issue of soaring medical costs that I would like to discuss right now.

Skyrocketing national health costs are expected to reach $661 billion in 1990, close to 12 percent of our gross national product, twice the proportion of 1965 and the highest proportion for any developed nation.