REMARKS BY HHS SECRETARY TOMMY G. THOMPSON
Presentation of the President's Fiscal Year 2003 Budget
For the U.S. Department of Health and Human Services

The year 2003 will be the 50th anniversary of our Department. 

As we lay out our budget plans today for fiscal year 2003, and prepare the strategic groundwork for our next half century, we should look at where we've been, what's been accomplished, how much has changed, and how much remains to be done. 

In 1953, when President Eisenhower created the Department of Health, Education, and Welfare -- whose name was later changed to our current Department of Health and Human Services -- many of the medical advances that we take for granted today were yet to be developed.  The specter of polio spread fear across our nation.  Two years later, the Salk vaccine was licensed, and a nationwide vaccination effort was undertaken. 

Today, we are within reach of worldwide eradication of polio -- an event that would have seemed impossible then. 

In 1953, the NIH got a major new facility (some things never change!).  It was the NIH Clinical Center.  Today the Center is undergoing major expansion and modernization.  And the potential for NIH research to improve our lives just keeps expanding -- particularly with the dawn of stem cell research. 

In 1953, the Department had some "offspring" who have since grown up and gone out on their own: the Social Security Administration, the Department of Education and Howard University.  And we added important new members to our family, especially Medicare and Medicaid.  Since these programs were created in 1965, they have provided trillions of dollars for health care coverage of the elderly, the disabled, and low income Americans.  Today, at age 36, it's time to modernize them and
prepare for the retirement of the Baby Boom generation. 

And finally: in 1953, the total Departmental budget -- including Social Security -- was seven billion dollars. 

The President's budget for HHS in fiscal 2003 is $489 billion, almost a quarter of all federal spending.  That's a substantial investment -- a 6.3 percent increase over 2002 to achieve many important goals.  We must choose our priorities carefully -- and the president is doing just that. 

At HHS, we're very excited about the path the fiscal year 2003 budget carves for our department and the health of our nation. 

With this budget, President Bush makes a very powerful and important statement about the health of America.  Despite the economic challenges facing the federal budget, and the necessity to increase defense and bioterrorism investments substantially, the president still puts the health security of all Americans front-and-center. 

The President recognizes that -- even during our nation's war on terrorism -- securing the safety and welfare of our nation goes beyond securing our borders and communities.  It goes to the heart and health of every American. 

With this budget, the President makes a healthy investment in a healthy America. 

There are four major components of this broad and diverse HHS budget that I would like to focus on with you this afternoon before opening up to questions: 

First, bioterrorism.  As President Bush said last week in his State of the Union message, preventing a bioterrorist attack is of paramount importance to the security of our country.  At the same time, should an attack occur, the President is committed to making sure we are prepared to handle it successfully. 

To that end, the Department of Health and Human Services is providing the medical and public health resources America needs to respond effectively to any act of bioterrorism. 

Our budget for the next fiscal year includes $4.3 billion for bioterrorism preparedness, an increase of $1.3 billion, or 45 percent, above FY 2002.  This budget supports a variety of activities to prevent, identify and respond to incidents of bioterrorism. 

The NIH will get $1.7 billion for research into new vaccines and diagnostics as well as strengthening the security of its facilities.  The FDA will see an increase for its review of vaccines and diagnostics.  And the CDC will see increases for the security of its facilities as well as upgrading its lab capacity. 

And, the Bush administration will continue its investment in strengthening the public health system -- sending more money to states and hospitals, including educating our medical personnel on how to recognize and treat diseases. 

We're getting stronger each and every day in our ability to respond to a bioterrorism attack.  This new investment shows the President is determined to make sure our response capabilities get to where they need to be at the federal, state and local levels. 

Next is health security for America.  Along with securing America against a bioterrorism attack, the President's budget strengthens the security of our individual health. This includes improving access to health care, particularly for our low-income working families and traditionally underserved populations in urban and rural areas. 

The President is taking a comprehensive approach to securing access to health care for our citizens, utilizing some of the best ideas of both Republicans and Democrats and building upon the best that the private sector and government have to offer.  Three major components of this comprehensive health care package are: 

Health Credits:  $89 billion in new tax credits would be made available for people to buy health insurance in the private sector.  We've improved this proposal to make sure people can get the benefit of these credits up-front, helping them pay their monthly premiums. 

The budget also makes a major improvement by allowing states to create purchasing pools through which families could gain access to health insurance.  The health credits could also be spent on private sector health insurance purchasing groups. 

SCHIP:  The President wants to ensure that $3.2 billion remains available to states for the effective SCHIP program.  This is money that went unspent by states and was due to be returned to the treasury.  We've created a model waiver program for states seeking innovative ways to cover its citizens with SCHIP, and the availability of this money makes SCHIP a powerful tool for providing health care to children and their parents. 

In just one year, we approved waivers and state plan amendments to extend health coverage to 1.8 million people and enhance benefits for 4.5 million people. We also eliminated the waiver backlog. 

Community Health Centers:  One of the most underrated ways we provide quality health care to the poor and underserved is through our community health centers.  They represent a great vision for the future of health care in America -- neighhorhood-based clinics where people, regardless of their income, can come to see a doctor or health professional. 

President Bush continues his commitment to doubling the capacity of our community health centers in America by including $1.5 billion for them in 2003 -- a $114 million increase for an estimated 170 new or expanded health center sites and over 800 new health care providers to practice in underserved areas. 

Of course, the health security of millions of seniors in our country depends on a strong and secure Medicare program.

Right now, Medicare covers only 53 percent of the average senior's annual medical expenses, and the program's benefit package has not kept pace with advances in medication and treatment. 

So, the FY 2003 budget dedicates $190 billion over 10 years for targeted improvements and comprehensive Medicare modernization, including a subsidized prescription drug benefit, better insurance protection, and better private options for all beneficiaries. 

This budget identifies two immediate steps that HHS can take to help seniors with drug coverage:  First, the Department will work to implement a Medicare-endorsed prescription drug card, which will give seniors immediate access to drug discounts as high as 25 percent; and second, the Department will use its new model drug waiver program to allow states to expand drug coverage to Medicare beneficiaries in partnership with the federal government. 

In addition to these immediate steps, this budget provides for transitional drug coverage for low-income seniors.  The federal government will provide its regular match with states up to 100 percent of poverty, and then pay for 90 percent of costs for beneficiaries between 100 and 150 percent of poverty. 

The bottom line is that we need to provide a prescription drug benefit this year.  But it would be a mistake to address prescription drugs in a vacuum.  We must make it part of a comprehensive strengthening of Medicare, securing the viability of this popular program for our Baby Boomers and future generations.  We can't put the problems facing Medicare off any longer.  Now is the time to act. 

Perhaps there's no greater investment we can make in our future health security, however, than by researching the cures to the diseases than plague our people today.  With this budget, the President meets his commitment to double the NIH budget. 

The budget would increase NIH funding by $3.7 billion -- the largest one-year increase ever for NIH.  The NIH budget will support almost 36,000 research projects with grants, an all-time record for the agency. 

Now, of course $1.5 billion of this new money is for much-needed bioterrorism research.  But there is also another $2.2 billion for other research.  Cancer-related research sees a 13 percent increase, and research for diseases such as diabetes, Alzheimer's, Parkinson's, and HIV/AIDS will see increases in the high single digits. 

President Bush and myself want to aggressively seize the opportunities that the medical and scientific advances of this decade are providing us. 

Third, there is welfare reform:  Welfare reform is a remarkable success.  It has worked beyond expectations, helping more than 5.4 million people move from shackles of AFDC to the independence of work.  In doing so, these families are climbing out of poverty and becoming self-sufficient.  In fact, 2.8 million fewer children are in poverty because of welfare reform. 

But we are not done.  There is a clear and important next step to welfare reform.  This budget boldly takes that next step, and I applaud the President for keeping us moving forward in this landmark endeavor. 

The next step requires us to work with states to help those families that have left welfare to climb the job ladder and become more secure in the workforce.  And while doing so, we must not leave behind those still on our caseloads. 

Our budget provides $16.7 billion for block grant funding and high performance bonus funding, provides supplemental grants to address historical disparities in welfare spending among states, and strengthens work participation requirements.  It also provides $100 million in broad demonstration authority focused primarily on encouraging stronger families.  In addition, we will be submitting a proposal to create a matching state grant program to strengthen families and reduce out-of-wedlock births. 

While this represents level funding for the TANF grant, in reality it provides money that states can spend on helping workers remain in the workforce.  States will be able to apply the savings gained from caseload reduction into new programs that help workers thrive in the workforce. 

We're giving states the flexibility they need to implement effective education and job training programs, as well as money to strengthen families and reduce illegitimacy.  We plan to work closely with Congress, hopefully on a bipartisan basis, to more specifically shape the next step in welfare reform. 

In doing so, however, we cannot get away from the foundation of welfare reform's success -- work.  Welfare reform must not become a college scholarship program.  Work must remain at the core of TANF, for work is the only way to climb out of poverty and become self-sufficient. 

And we must continue to make sure that work pays for families, providing the proper child care and health care programs. President Bush helps in this regard by providing another $350 million in Medicaid benefits for those in the transition from welfare to work. 

Welfare reform is the greatest social policy change in this nation in 60 years.  We must remain committed to building this program so that it is a path to work and independence for American families who need some extra help. 

Finally, I want to draw special attention to disease prevention:  Throughout this year, HHS and its agencies will aggressively take on preventing the onset of diseases such as diabetes -- a disease that clearly is preventable with a better diet and exercise. 

Americans are rightfully concerned about the growing cost of health care.  But tackling these costs must begin with each and every one of us.  If we take care of ourselves and our families, we'll visit the doctor less often, need fewer medical procedures, and require less medication.  Health care costs are something each of us can help reduce through actions within our own families. 

Prevention is also an area in which this budget provides the opportunity for some innovation and creativity. For example, the budget includes:

• $20 million in new money for a Healthy Communities Initiative -- a community-based approach to focusing on how we can live more healthily and prevent illness.  And,
  
  
• $84 million, including an increase of $10 million, to prevent health problems caused by medical errors.  This patient safety initiative will help us use new technology and research to tackle the fact that up to 98,000 American die annually because of medical errors -- the wrong prescriptions, the wrong doses or mistaken combinations of drugs. 

In conclusion, these are just four of the most prominent components of the President's budget for HHS.  It's a budget in which the President clearly makes the health of America a priority.  This budget provides greater security for the health and well-being of all Americans.  I look forward to addressing these important issues with Congress in a bipartisan and productive manner. 

###