In our budget we also propose to support our new agency for health care policy and research at the level of $110 million. This includes funds for our medical effectiveness research or outcomes research that we commented on last year when we appeared before this committee.

This is an important part of our strategy to improve the quality of care given our citizens as well as to help us contain costs by knowing which treatments we give to our citizens are effective and which are not.

I am committed to ensuring the quality of services provided to the public through our large entitlement programs administered by our department: Social Security, Medicare and Medicaid.

In fiscal year 1991 we are requesting increases for the Social Security Administration and for HCFA which will enable us to continue managing these programs effectively and efficiently. For Social Security we request full funding for our supplemental security income for Social Security and for black lung benefits.

In addition, we are requesting $4.2 billion or an increase of some $330 million for our Social Security Administration to run these programs.

I am pleased to say that our budget proposes to support some 63,000 employees in previous years that Social Security number of employees has declined from 80,000 to 63,000. We have had tremendous improvements in productivity because of automation, and better management practices, but we feel that we now are at a level that we cannot and should not go below that, and our budget stabilizes the number of employees in SSA so that we can continue to provide quality services to our citizens by maintaining the necessary number of employees.

Our budget also proposes to stress managed care or health delivery for our citizens. We are proposing changes to our Medicare Program which will save some $5.5 billion from projected increases in our Medicare budget.

These changes are designed to make our 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 our proposals Medicare expenditures will increase by some 4.6 percent over fiscal year 1990. Without these restraints on our growth in spending, we would be facing a 9.9-percent rate of increase in our Medicare expenditures and such a rate is not sustainable.

Also in our budget you will note that we propose to finance some of the services by user fees. For example, we request approval for $510 million or an increase of $312 million over our 1990 budget for survey and certification of health facilities to ensure the safety and quality of care provided with our Medicare and Medicaid funds. Following the lead of the Congress in the Clinical Laboratory Amends of 1988, we propose funding all activities including those previously funded by Medicaid through user fees.

PREPARED STATEMENT

Finally, Mr. Chairman, our budget honors the 1983 bipartisan agreement on Social Security to ensure that we have a sound pro

gram, not only to provide benefits for today's citizens, but also for those of our children and our grandchildren. We urge you not to contemplate any sort of action which will ultimately endanger the economic future of our citizens today and tomorrow. That completes my statement. I will be pleased to respond to your questions. [The statement follows:]

STATEMENT OF DR. LOUIS W. SULLIVAN

Mr. Chairman and Members of the Committee, thank you for

inviting me here today to discuss the President's fiscal

year 1991 budget proposal for the Department of Health and Human Services. We are requesting $464 billion in outlays, an

increase of $27.5 billion over current year spending.

Our appropriation request for HHS programs considered by this Committee totals $136.8 billion. This is $12.3 billion over

fiscal year 1990, or an increase of almost 10 percent.

This budget reflects the President's and my own priorities for the Department. I am proud of this budget and look forward to working with the Congress for its enactment.

As you and I are aware, several of our goals for 1990 were not fully achieved, a prime example being the expansion of Head Start. This year, we are seeking an unprecedented increase of $500 million for the program, which will open new doors of opportunity to an additional 180,000 children and their parents. I want you to know that I share President Bush's enthusiasm for this expansion. In the spirit of cooperation, we must work together to get every dollar of this increase.

We were also disappointed that, last year, funds we received for the homeless, the Human Genome Project and AIDS were less than requested. In each of these areas, I am back this year asking for more, and I hope that, together, we can bring about these increases.

For fiscal year 1991, the Department's efforts to improve the health and well-being of the American people will emphasize my major goals -- helping children and strengthening families, investing in the future through enhanced biomedical research,

improving access to health care, promoting good health, fighting AIDS, combating drug abuse, prudently managing our large

entitlement programs and increasing the quality of services

provided to the public.

Let me take this chance to go over some of the highlights of By request:

For the Head Start program, we are asking for a 36 percent increase, bringing the total for Head Start to $1.9 billion. The expansion of Head Start is a key ingredient in assuring that all our children start school ready to learn, one of our national education goals. The addition of $500 million will allow 180,000 additional children to receive the learning, skills and confidence Head Start offers. I hope that Congress shares this goal and will support this critical increase. Every eligible disadvantaged 4 year old deserves the opportunity to enjoy a Head Start experience.

As part of our expanded support for families in need, we are requesting the full authorized ceiling of $1 billion for the new Job Opportunities and Basic Skills Training Program. The education, training and work activities provided under the JOBS program are essential for restoring dignity to families on AFDC and readying them for the employment opportunities this decade will bring. Our request will enable the 23 states without JOBS programs to implement them, as required, by October 1990.

To provide additional assistance for parents entering the workplace, support for JOBS and AFDC-related child care will increase by $283 million for a total of $489 million. Increased availability of child care services will allow more AFDC parents the opportunity to complete education, training and work programs successfully, and move themselves and their families permanently off welfare and out of poverty.

To bring about much needed reforms in the areas of child welfare and foster care, we are requesting a $47 million increase for Child Welfare Services. This 19 percent increase will help communities to manage increasing and more difficult caseloads. Additionally, we are proposing a 10 percent limitation on annual increases in Foster Care administrative costs. This limitation will keep these costs in check, but will not interfere with payments to foster families or training of parents and staff.

Again this year, the President and I are making good our promise to help America's homeless. We are requesting $233 million, $27 million of which was provided in fiscal year 1990. Last year, the Congress was unwilling to meet our request in this area. This year, we hope HHS health care and community service programs targeted at our homeless population will be funded at the levels of our request.

On January 24, in announcing his new National Drug Control Strategy, the President renewed his commitment toward demand reduction efforts. To address this and other HHS anti-drug abuse activities, we have included $1.7 billion in our request. This level of funding will allow increases in almost all aspects of this Department's efforts to win the war on drugs. It will also provide for new initiatives, including a $50 million community prevention grant program and a $6 million project providing nonmedical services for infants born addicted to crack. The American public is demanding much more action in preventing and treating drug abuse, and we are responding to this call for help.

As a part of this budget, our efforts for increasing access to quality health care will focus on disadvantaged pregnant women and their infants. Clearly, the fact that the United States ranks near the bottom of all industrialized Nations in infant mortality is disgraceful.

To concentrate on improvement in this