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Medicare. Consequently the MUPS helps in determining what the appropriate level of increase in payment for physician services should be.

In the past, attempts to hold down the rate of Part B spending have been in part thwarted by increases in the volume of services provided. Since the MVPS will make the medical community as a whole more conscious of this trend, we anticipate that physicians will exercise restraint in the provision of questionable or unnecessary services.

CHILDREN IN POVERTY

Question. According to Census Bureau statistics, one in five American children lives in poverty: 12.6 million children below the age of 18. Among Blacks and Hispanics, two in five children are inpoverished. Many lack health care.

Despite six years of economic expansion, why do so many children remain in poverty in the richest nation on earth?

Answer. The stubbornly high continuing incidence of children in poverty in this country has its roots in such problems as the growing number of teen mothers and single parent households, increased substance abuse, and low educational and job skills.

Although a strong economy is a necessary ingredient to fighting poverty, economic expansion has a reduced effect on individuals and their families who lack the training and job related skills to be competitive in our technologically complex marketplace. As a result, even though we have shown great success in the past twenty years in reducing poverty among other groups like the elderly and the disabled, we have had noticeably less success in raising children out of poverty.

Question. Do you think a lack of child care is a major impediment to helping children out of poverty, by keeping single parents from working?

Answer. Reflecting its concern that lack of child care might impede helping children to get out of poverty, Congress, in enacting the Family Support Act of 1988 (P.L. 100-485), provided both for child care to AFDC participants in the JOBS work and training activity, and for up to 12 months of transitional child care for AFDC recipients who leave the welfare rolls due to increased earnings. Funding for these two types of care is projected at $206 million in FY 1990, and $489 million in FY 1991; funding for both types of care is openended.

Question. What needs to be done to get children out of poverty in the United States?

Answer. Children need to receive support from both parents, and especially from an absent parent. The Family Support Act embodied a new consensus between the Congress and the Administration that the well-being of children depends not only on meeting their material needs, but also on the parents' ability to become economically self-sufficient. Selfsufficiency and family responsibility are critical to reducing the number of children in poverty in the United States. To help to get children out of poverty several fundamental needs must be met.

Basic education is one of the most important tools an individual needs to achieve independence and self sufficiency. Programs like Head Start can give poor children a boost an additional chance to overcome the educational deficits which arrently hold so many children in poverty.

Women and their children represent the overwhelming proportion of AFDC recipients; within this group the most dependent are never-married mothers who did not finish high school and who had their first child at a young age. Work and training programs like the recently enacted JOBS program can help to address the needs of this group.

A strong commitment to programs such as Child Support Enforcement help insure that parents retain the primary responsibility for the support welfare of their children.

Finally, Aid to Families with Dependent Children and related income maintenance programs are being tailored both to meet the income needs of individuals served and to help these individuals achieve economic self-sufficiency.

Question. Can we realistically expect programs of the Department of Health and Human Services to make a dent in reducing poverty?

Answer. Programs supported by the Department of Health and Human Services address several of the fundamental problems that result in poverty--illness, disability, aging, limited job skills, and parents abandoning their financial responsibility to their children. HHS programs provide services for those most in need through programs such as Aid to Families with Dependent Children (AFDC), Medicaid, child Support Enforcement, supplemental Security Income (SSI), Head Start, and the Social Services Block Grant. As a recent report by the House Select Connittee on Children, youth, and Families noted, "of the 25 percent of all children who are considered to be in poverty before receiving public transfers, 21 percent are lifted out of poverty as a result of this assistance." This represents a sizable reduction in poverty that we are quite proud of. The programs administered by the Department of Health and Human Services target a wide variety of problems which face families in poverty.

HEALTH INSURANCE

Question. What proposals do you have to extend health insurance to all workers in this country?

Answer. The problem of the uninsured is one of the major health policy issues facing our country today. The Department budgeć does not contain any specific proposals related to health coverage for uninsured workers because I am waiting for recommendations from a number of groups which are studying this issue. In his State of the Union address, the President instructed me to lead a Domestic Policy Council review of recommendations on the quality, accessibility and cost of our nation's health care system.

In June, I appointed the Quadrennial Advisory Council on Social Security. The Advisory Council is a bi-partisan group representing business, labor, health care providers, politicians and private citizens. The group will study the issue of the uninsured and will submit their report and recommendations later this year, with interim recomandations relating to the uninsured as soon as possible.

In addition, Under Secretary Homer is chairing a Department task force that is examining the problem of those lacking insurance. The task force will look very carefully at different approaches to this problem, including extending Medicaid to the uninsured, and will provide a report recommending reasonable and cost effective approaches later this year. Finally, the Pepper Commission is expected to report its recommendations on health insurance for the uninsured in March.

Once we receive the recomendations of these various distinguished groups we can begin to asses the options that are available for addressing this most pressing and very complex issue.

MEDICAID

Question. Do you favor expansion of Medicaid to cover the unemployed who are currently not eligible and without health insurance?

Answer. As part of OBRA 1989, States are mandated to extend Medicaid coverage for pregnant women and infants with family incomes up to 133% of the Federal poverty level. States must also add mandatory coverage for children ages 1 to 6 with family incomes up to 133% of the poverty level. We have not proposed an additional Medicaid eligibility expansion this year because we feel that we need to give the States some time to implement the many new Medicaid expansions that have been recently enacted. We continue to encourage States to use existing authority for optional coverage of pregnant women and infants with family incomes up to 185% of poverty.

The problem of the uninsured, however, is one the major public policy issues in health. I have been looking extensively at the question of the medically uninsured since I began my tenure at the Department. As I have mentioned, there are several groups studying the issue of how best to provide health care for the uninsured, whether through Medicaid or some other mechanism. I have specifically instructed the Advisory Council on Social Security to produce interim recommendations as soon as possible on health financing issues relating to the uninsured, with particular emphasis on Medicaid. I intend to wait for the reconmendations from these groups before I proceed with specific proposals. In his State of the Union address, the President instructed me to lead a Domestic Policy Council review of reconuendations on the quality, accessibility and cost of our nation's health care system.

POOR FINANCIAL MANAGEMENT

GAO has called for government-wide improvements in financial management systems. There are reportedly billions of dollars of differences between balances recorded in accounting systems and financial reports.

Question. What is your assessment of weaknesses in financial management of your agency?

Answer. The weaknesses in financial management at the Department of Health and Human Services can be directly attributed to the antiquated financial systems currently in place. These systems are labor-intensive, relying heavily on manual processing and report preparation. Also, they are not properly linked to one another (e.g., procurement and core accounting). These deficiencies have led directly to the reconciliation problems recently reported by GAO.

Question. What specific areas could be strengthened, and what is your plan for making improvements?

Answer. Improvement of financial management systems is a major HHS initiative. The Department is inplementing the Phoenix Project, which is aimed at strengthening HHS financial management systems by:

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continuing to improve and standardize budget and financial information systems and processes for greater operating efficiencies and control;

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consolidating financial information into an agency-wide perspective as required by OMB Circular A-127; implementing the Federal government's Standard General Ledger in HHS;

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modernizing ar automated financial management systems

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and the Federal Managers' Financial Integrity Act.

The HHS plan addresses the need for the timely implementation of actions to address these priorities as they affect automated systems, whether wholly within the Phoenix structure (e.g., the Operating Divisions' Accounting System) or interfacing with it (e.g., the personnel Payroll System).

The basic concept for the Phoenix Project derived from the Federal government's Reform '88 initiative, which sought to reduce inefficiencies in the operation of governmental administrative and financial systems, and to promote improved decision-making, accountability, and system integrity controls.

Question. Do you agree with GAO's assessment that managers need more and better training in Financial Integrity Act issues?

Answer. The Department agrees that training is a key element in implementing an effective FMFIA program. In this respect, the Chairman of the Council on Management oversight has already requested HHS' Assistant Secretary for Personnel Administration to develop a comprehensive, Departmentwide FMFIA training program. In addition, the Director of the Department's FMFIA Program has been working with the Office for Civil Rights and the Family Support Administration in a separate effort to train their staffs under the auspices of the Office of Personnel Management.

HEAHH CARE COST TRENDS

The continued rate of increase in health care spending -- for the economy as a whole and for the federal budget -- remains much higher than the general rate of inflation as measured by the consumer price index.

Question. What recommendations do you have for addressing these increases and where can federal policy make the most difference?

Answer. First, I would like to point out that Medicare and Medicaid can address only a portion of our national health care needs and costs. But, as you know, there are several studies currently under way which will be providing recommendations for more comprehensive approaches to meeting our national health care needs, especially for the uninsured and long term care. In addition to the Pepper Commission and the Steelman Advisory Council, I have directed the Undersecretary of Health and Human Services to conduct an examination of these issues. Once the results of these studies

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