Secretary SULLIVAN. I agree fully with you, Mr. Chairman, yes. The CHAIRMAN. So then it is most urgent, is it not, that something must be done-whether it be the recommendations of the Pepper Commission or the Domestic Policy Review, whatever it is, something must be done rather soon.

So the next question is, how soon will your Domestic Policy Review be completed?

Secretary SULLIVAN. The Steelman Commission's report I have requested by July of this year. The initial plan was to have that report by the end of the year, but we have sped that time-table up. And the same with our Intradepartmental Task Force headed by Constance Horner. I have also asked for that to be ready this summer, as well, in an effort to try to get these answers much more quickly.

When we receive those reports, we will be analyzing them and coordinating them, along with other data that we receive, and will be presenting those to the Domestic Policy Council of the Cabinet for review and discussion because clearly, we need to have the input of our other Cabinet offices, our Secretary of the Treasury, our Labor Secretary, who is concerned with health programs there. We would also want to look at Federal health systems, such as the Veterans' Administration, the Defense Department, et cetera. That process will take, I am sure, several months, so that hopefully this fall we would be prepared to come forward with some recommendations.

The CHAIRMAN. All right. Dr. Sullivan, there is one more thing that I am going to ask because I am very interested in Alzheimer's disease and its research. Is it my understanding that the administration has recommended a level of $150 million for Alzheimer's research?

I sit on the subcommittee that will deal with Alzheimer's research and it is my opinion that this figure is too low. Should we increase it considerably? Another $50 million is not what I would consider a considerable increase.

Would you support an increase, or let me put this another way, would you oppose any recommendation that I would make of increasing that amount to $200 million?

Secretary SULLIVAN. Well, Mr. Chairman, I would want to see that recommendation in the context of the overall budget for NIH because certainly I share the goal of improving our understanding about the cause of Alzheimer's with the goal of developing treatments or strategies, both to prevent it, if we can, as well as to treat Alzheimer's when it develops.

As I look at the overall budget of NIH, there are demands or needs that indeed there is the argument or concern for more expenditure.

What we try to do as we put together the budget for NIH with its various components and various research opportunities is try and direct funds where the opportunities seem to be most promising.

Now, the budget for Alzheimer's Disease has, over the last 2 years, increased significantly. And there is some promising research that is underway, particularly on such things as the effect of a protein nerve growth factor in its stimulation of nerve growth.

I believe that the money that is in the budget now for Alzheimer's represents our judgment of an appropriate response to the opportunities that are presently there for research.

Clearly, as we learn more about Alzheimer's and as new information comes forward, we may want-and I am sure we would expect in future years-to expand the support to follow those opportunities.

But I do believe that we are responding appropriately with the level of support.

The CHAIRMAN. Well, Dr. Sullivan, just about 5 or 6 years ago, I proposed at the same time the first amount of $10 million for Alzheimer's disease and AIDS. AIDS today is over a billion dollars. Alzheimer's is only $130 million at the present time.

We hope it will be increased, and increased significantly, before too long.

The Chair now recognizes Mr. Rinaldo.

Mr. RINALDO. Thank you, Mr. Chairman.

Dr. Sullivan, I know the Pepper Commission report just came. out, but off the top of your head, would you be able to tell this committee which proposals of the Pepper Commission you would recommend that the administration take action on as soon as possible, which ones you feel are most important?

Secretary SULLIVAN. Well, Mr. Rinaldo, I think I am really not in a position at this juncture, since the Pepper Commission issued their report on Friday, and also as I noted in my comments on Friday, the fact that the vote for the acute care issues was only 8 to 7 shows that there clearly is not yet a strong consensus for those programs.

I need to have the results of our own task force, as well as that of the Steelman Commission, and more time to analyze those recommendations before singling out any of those recommendations from the Pepper Commission as having more merit than others.

I do think that the Pepper Commission, as I stated, deserves our commendation for a very sincere effort in addressing a very tough problem.

But I want to be sure that when I go forward with recommendations to the President that they are recommendations that will stand the test of time because as I noted in my testimony, there was great commendation for the passage of the Catastrophic Health Care Program, but as we witnessed, there was a lot of unhappiness in some of our seniors about that program.

And because of that, of course, the Congress repealed that program last year. We don't want that to happen with whatever we go forward with, so I really would have to defer giving you a specific response until we have the input from those other bodies, as well as more time to analyze the Pepper Commission's recommendations.

Mr. RINALDO. Let me take it a step farther then. You know my interest in extended home health care and nursing home care. What provisions do you personally think a long-term care bill would need to have in order to win the administration's support? Secretary SULLIVAN. I am sorry, what provisions on home care?

Mr. RINALDO. No. Long-term home health care and nursing care, what provisions do you think would have to be in a piece of legislation in order to win the administration's support?

Secretary SULLIVAN. Well, again, Mr. Rinaldo, what we want to do is really develop a comprehensive set of recommendations. My concern is if we were to single out one particular area without attention to the other areas, that we might find ourselves coming forward with recommendations that would not address the overall issues.

I will give you an example of why I am reticent to try and single out at this time, early in this whole process, specific provisions. In 1983 when we enacted the Prospective Payment System, we were emphasizing shortening hospital stays, and we have been successful with that.

But in today's New York Times, there is an article showing a great concern about rising costs of health care and pointing out the tremendous growth in the number of health workers that in part has resulted from the shift from inpatient to ambulatory care and the concern as to whether or not we will be able to sustain that. So that is one of those consequences of a measure that on the one hand was very successful in controlling or slowing the rate of escalation of hospital costs, but has contributed to the growth in the number of health positions.

I think there has been a 43 percent increase in the number of health workers during the decade of the 1980s, and if we were to continue to have that rate of increase in health workers, that would contribute significantly to health cost escalation.

So before we come forward with specific comments, pro or con, about specific provisions, we would like to have an opportunity to develop comprehensive recommendations concerning the entire system.

Mr. RINALDO. Let me ask you this final question. I believe you are very sincere, and in your testimony, you stated several times that you personally are committed to addressing the needs of the elderly and other vulnerable Americans.

It doesn't take the Pepper Commission report, or any other report, to tell us what some of those needs are.

Many elderly are in dire straights. I mentioned to you this morning about people in my home State of New Jersey who cannot afford the $30,000 average cost to put someone in nursing home. And yet when you take a look at the administration's budget, almost every program directly impacting on the elderly was reduced under the proposed fiscal year 1991 budget.

So in essence, the budget that the administration has proposed really fails to bear out the commitment that you personally are making in your testimony. Would you comment on that and respond to that question?

Secretary SULLIVAN. Yes, Mr. Rinaldo.

What our budget proposes is greater efficiency from our health care system, and that means such things as prudent purchasing practices. We find, for example that under our Medicare system, we pay much more for certain services than private sector organizations or even other parts of the Federal Government, such as the VA system, pay for oxygen, for example.

We find that we are paying double for anesthesia services; we are paying for the services of nurse anesthetists, and anesthesiologists who supervise them.

Also durable medical equipment we find is another area where we are experiencing excessive costs. So what our budget proposes is not reduction in benefits to the elderly, but more prudent purchasing practices that give us more return for the dollars that we spend.

Of course, we develop our budget under the rubric of the Gramm-Rudman-Hollings law where we are trying to bring our deficit under control.

So while we are trying to restrain the growth in costs, we certainly are not cutting back on any benefits to our citizens.

Mr. RINALDO. Let me just follow up with that. You mentioned costs, and I understand what you are saying, obviously. Well, then, would it naturally follow that you believe that mandating health insurance through the employer, perhaps, would be the best way to begin providing health care to the majority of Americans?

Secretary SULLIVAN. We are very concerned about the whole issue of mandates, Mr. Rinaldo. First of all, the goal of providing insurance for those 31 million of our citizens who are uninsured, is a goal that we fully share.

At the same time, we need to be sure that our strategy to address that problem doesn't cause other unintended consequences. One of the concerns about mandated programs is the effect that this would have on small businesses. This may not only impair their competitiveness, but actually could be a sufficient burden to cause some of those businesses to go under, with loss of jobs and a much greater impact.

So again, the whole issue of mandated benefits is one I think has to be looked at very carefully. And while we have not yet gotten to the place of specific recommendations, I do know that we are looking for a flexible program that would have a variety of approaches, including not only Federal participation, but that of the private sector and State and local governments, as well.

Mr. RINALDO. Okay. Thank you, Mr. Chairman.
The CHAIRMAN. Mr. Bilbray.

Mr. BILBRAY. Mr. Secretary, I would like to commend you for your recent strong statements on the smoking campaigns that were targeted at minorities and teenagers; and I think that is certainly carrying on a strong tradition of trying to rid, or at least targeting young people and these minority groups against not only the drug habit, but certainly tobacco, which is certainly another addictive. substance that they should be earmarked against. And I would like to commend you for that.

There are a couple of things I would like to make comments on. First, I appreciate your statements to the committee. I, too, am concerned that we really need to see, as soon as possible, some specific recommendations to reach out, not only to the seniors-and this is the Aging Committee-but in going around my district and speaking to people, I find that it's not just a problem for seniors. It's also a problem for the young and for the middle Americans. All Americans are suffering under rising hospital costs.

I have also found, like you have stated, that in the Catastrophic Act debacle, one of the problems we had was that the seniors, when catastrophic was passed, cheered; however, when they found out they were having to pay for it, the moans and groans began to come back to us.

When I talked to Claude Pepper after the bill was first passed, he stated to me that he was worried that the funding mechanism was never in place before we went forward with it, just as the Pepper Commission's recommendations does not put a funding recommendation in effect.

I would like, if your department would, as they propose to us what they want to do in the future, would look at the broad based health program not just based for seniors, but for all Americans. And one of the areas that maybe you could look at is one that Claude Pepper proposed when he was a Member of this Congress and before he passed away, which was to raise the cap on the Social Security; not the percentage that a person pays, but where it stops.

In other words, if a person is making $750,000 a year, he only pays Social Security on a very small portion of that $750,000, less than 10 percent.

There is a great amount of money that would be available by raising the cap on the Social Security payroll tax that could be earmarked for health care for the American citizens.

Second possibility you could look at is allowing the uninsured in this country to buy into Medicare through their employers, setting up actuarial tables like the insurance industry does, allowing them to figure out what a person at 28 years old with a family of three, what their potential for health problems are and so forth and letting them buy in and allowing, as proposed in the Pepper report, some sort of credit to the employer for paying a portion of this.

If the people are under a certain poverty level, we could have them pay very little for that percentage of insurance because we know there are people working out there in the industries and companies that are not below the official poverty line but still are not provided health insurance by their employers. Some of these people that I know are making $30-40,000 a year have no health insurance through their employers, and they have to go out to private industry to buy plans. If it's an individual plan, it's so costly and so expensive that many of them cannot buy the insurance.

That is what I would like to see the department propose, and work on with us on because I think Congress is very interested in the overall health insurance problem.

Now you have heard my philosophy. I would like to ask you a question. Basically in these areas right now you are beginning to study the different reports that are coming out. Do you, at this point, have an active committee within your department that is looking overall at these different programs, or different proposals, one that this committee or an individual Member of Congress could inquire of and get information from and talk to so that we don't reinvent the wheel?

I have my staff constantly trying to figure out what this will or will not cost and so forth. Do you have such a committee?