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Date:  Thursday, Feb. 6, 1997
FOR IMMEDIATE RELEASE
Contact:  HHS Press Office, (202) 690-6343

As you know, the Star Wars Trilogy is once again packing them in at movie theaters across the country. Well, the budget plan the President released this morning is an even bigger force for good because it sends us -- straight as a laser beam -- toward a balanced budget in 2002.

Overall, the President's Fiscal Year 1998 budget for HHS (www.hhs.gov/budget/#98budget) totals $376 billion in outlays -- of which $34.7 billion is discretionary.

Our Department is playing a leading role in the Administration’s plan to put our Federal budget in the black. But we are doing much more than that. Make no mistake: This is a smart budget for a new century. It makes an unprecedented commitment to lifting up the lives of our children and adolescents by addressing the issues that keep too many parents up at night. It acknowledges that we live in a time of scarce federal resources, and that government cannot do it all.

But it makes it clear that when we target our resources responsibly and innovatively, when we team up with our private and public partners, and when we act as tough, savvy managers, the federal government can help lead the way in creating a stronger and healthier nation -- a nation capable of meeting challenges both old and new.

There is no greater challenge -- no more bipartisan challenge — than preserving our Medicare and Medicaid lifelines by modernizing, reforming and strengthening them. Not many of us would drive across country in a 32 year-old car. Likewise, we can't move into the 21st century with a health insurance system that hasn’t been overhauled since 1965.

That's why to preserve Medicare, we must first modernize it.

The fact is, we know Medicare must change to fit the needs of today’s older and disabled Americans -- which is why we're expanding choices among private plans, and setting up storefront centers, like 'Your Medicare Center' in Philadelphia, where beneficiaries walk in with a problem and walk out with a solution. Modernizing Medicare means making sure government is a more prudent purchaser of health care services. That is why we are tightening reimbursement rules and moving toward new payment systems. And modernizing Medicare means reinvesting some of those savings in preventive benefits -- like mammograms, vaccines, and colon screenings. Benefits that we know save us lives.

To meet the needs of tomorrow’s beneficiaries, we also know that we have to be more cost conscious in the way we buy services. So, in this budget, we do both. We reduce Medicare spending with real savings, real reforms -- and no gimmicks. And we do it without imposing new financial burdens on older Americans and people with disabilities.

According to the independent HCFA Actuary, the projected savings in the President's plan ($100 billion over five years and $138 billion over six), combined with reforming home health care payments, will extend the solvency of the Part A Trust Fund until 2007 -- a full ten years.

Let me take a moment to explain how we’re reforming home health. There’s been a lot of confusion about this. Home health care is one of the fastest growing areas of Medicare, with a projected annual growth rate of almost 11 percent between now and 2002. To reduce these costs, we’re tightening payment rules and closing loopholes -- thereby saving $14 billion.

We’re also restructuring the home health benefit, but this step is budget neutral. It is not -- let me repeat it is not -- part of our $100 billion in savings. It is a mainstream proposal to ensure that our structure accurately reflects the original intent of the Medicare statute.

The fact is, Congress intended Part A to cover the costs of acute care in hospitals and other settings. Out-of-hospital care was supposed to be financed out of Part B. Under the President’s plan, home health services will be paid out of Part A for up to 100 days a year following a 3-day hospital stay. And Part B will pay for home health visits that exceed 100 days or are unrelated to hospitalization.

Make no mistake: These changes are sound policy and genuine reform.

Which brings me to Operation Restore Trust: Over the last two years, we have used this pilot project to crack down big time on the fraud and abuse that robs our health care system and our taxpayers. And it works. For every $1 we put into fighting health care fraud and abuse, we get back $10. How many investments can you say that about? Now, this budget builds on our success by taking Operation Restore Trust into all 50 states -- an expansion that is expected to help us save an estimated $3 billion in health care costs over the next 7 years.

Medicaid, too, needs a new look -- but not a new soul. We keep Medicaid’s historic promise of health care for our most vulnerable Americans. At the same time, the President's budget includes net Medicaid savings of $9 billion over five years. Overall we are saving $22 billion over five years.

We are able to propose less savings than last year, in part, because of the great progress we’ve already made in reducing the Medicaid baseline -- progress that couldn’t have happened without strong management, new legislation, and increased state flexibility. Progress that must continue.

Which is why we’re giving states even more flexibility with Medicaid. We’re throwing away mountains of red tape and regulations.

For example, today, over 11 million Medicaid beneficiaries are in managed care because of waivers we’ve given to states. In fact, overall, our waivers are expanding health insurance to 2.2 million Americans. We’re proud of that record.

But now it’s time to take the next step and eliminate managed care waivers. In this budget we are also reforming Disproportionate Share Hospital payments -- and creating a per-person limit on the growth rate of Federal Medicaid payments. Let me be clear: This per- capita cap is neither a block grant nor a cost-shift. It's a sensible and sensitive way to make sure that our progress in holding down costs continues -- and that the people who need Medicaid, get it.

We’re giving states new flexibility in other ways too. We are repealing the Boren Amendment, so states have more freedom to set provider payment rates. We are dropping archaic payment rules. And we are eliminating regulations that tie states’ hands on staffing and other matters.

This budget also makes a dramatic step to help our children to tackle one of our nation’s most pressing health care challenges: Today, there are more than 10 million children -- one in seven -- who go to bed every night without the security of health insurance. Most of these children are in families where parents work hard and play by the rules. As the President said in his State of the Union address, "No child should be without a doctor just because a parent is without a job." And I would add that no child should be without health insurance just because a parent has a job.

Our proposal is designed to cut the number of uninsured children by up to 5 million over the next four years. Let me outline how we’re going to do that. First, we are offering a hand up to workers between jobs, who need health insurance for their families while they get back on their feet. Our budget dedicates $1.7 billion this year to help these families get up to 6 months of health care coverage. This will help insure 700,000 children.

Second, we’re proposing $750 million a year in grants to states, so we can insure children who fall through the cracks because their families earn too much to be eligible for Medicaid, but not enough to afford private insurance.

And, third we’re taking important steps to expand Medicaid coverage to reach more children. How? By allowing states to provide a full year of continuous Medicaid coverage for the 1 million children who qualify each year. Fourth, by adding one million adolescents to Medicaid by the year 2000. And fifth, by working with states and health care providers in an extraordinary private-public partnership to help find the 3 million children who are eligible for Medicaid but not currently enrolled.

One of the President’s highest priorities this year will be to move forward on the promise of welfare reform -- changing our welfare program to a jobs program so everyone who can work has the opportunity to work.

That’s why the President earmarked $3.6 billion to create jobs in areas where they’re needed most. And it’s why we’re ensuring that Americans living with disabilities who can, and want, to return to work can now do so without losing their Medicare and Medicaid. But real welfare reform does not mean punishing people who can’t work. That’s why the HHS budget also includes $5.2 billion to restore Medicaid benefits to disabled children, and to legal immigrants who are either children or disabled adults, people who cannot be expected to work.

This budget reflects a firm, passionate commitment to families and children. If you look at the increases in our discretionary budget, what you will see is an intense focus on our children -- a focus on the early foundations they need to get the right start in life and the guidance they need as adolescents to make the right choices with their lives.

You cannot live in Washington for more than a day without noticing that people tend to disagree -- about everything. But, people do agree that the early years of a child's life are critical to success in school and beyond. And, to enrich those early years, they do agree that Head Start works. It is part of the solution. Our goal is to expand Head Start to reach more of the children who need it, but don’t now get it.

To do that, we're proposing a $324 million increase in Head Start, which will allow us to reach 36,000 more children, to continue to improve quality, and to reach more kids in their earliest, most crucial years, from 0 to 3.

Today, we have almost half a million children in foster care and 100,000 of them have no chance of returning back home. That’s 100,000 children who want what all children deserve -- a home, security and love. President Clinton has issued our nation a difficult but critical challenge: By the year 2002, we must double the number of children in foster care who are adopted or permanently placed every year. To reach this goal, the budget includes $21 million for a new adoption initiative to help states remove the barriers that keep kids from finding loving permanent homes.

Too often in the past policymakers grouped children of all ages together. We’ve taken a more sophisticated approach, by tackling the unique land mines that keep many of our adolescents from making smart choices with the only lives they’ll ever have.

After years of increases, there is some indication that teenage birth rates are finally going down. But not nearly enough. Each year, 200,000 teenagers 17 and younger have children. That hurts these children. It hurts their parents. And it hurts our entire nation. That’s why, as part of the new welfare law, we are implementing a new $50 million initiative to send our children one clear and consistent message that they must abstain from sex.

There’s been a lot of talk lately about rising drug use rates among teens. But when you peel away the rhetoric and take a cold look at the hard facts, what you see is that our teenage drug problem is, for the most part, a marijuana problem. The fact is, we have too many parents who do not feel comfortable talking to their kids about marijuana and sending them clear no-use messages. And we have a generation of children who are using marijuana earlier and earlier, and are more and more likely to be armed with the dangerous misconception that it will do them no harm.

As part of the President’s overall drug strategy, our 1998 budget increases our commitment to fighting these dangerous trends by $98 million. By countering pro-use messages, especially among 9-14 year olds. By leveraging state resources. By gathering state-by-state data on substance abuse so that our nation’s Governors will know where they’re succeeding and where they’re not. And by committing an additional $30 million to expand research on drug treatment and prevention.

In the war to save our children’s health, tobacco is another battle we cannot afford to lose. Every year tobacco-related illnesses claim the lives of 400,000 Americans -- the vast majority of whom began smoking before their 18th birthday. That's why the President stood up to the special interests and proposed the boldest initiative ever to kick Joe Camel and the Marlboro Man out of our children’s lives. We made that promise to our children and their parents. And in this budget we include $34 million to implement the regulation and make that promise a reality. The fact is, when we work to cut teen smoking by half over 7 years, we are focusing on a huge public health challenge that, if successful, could save countless lives and dollars.

That is our approach in this budget -- as we move ahead to build a public health agenda for the 21st century. Parents shouldn’t have to worry that the food or juice they give their children will make them sick. They shouldn’t have to worry that their families or communities will fall victim to deadly outbreaks of infectious diseases.

But today too many do.

That’s why the President has responded by proposing a sophisticated $43 million early warning system so that we can stop food borne illnesses before they stop us.

And that’s why in our budget, we’re increasing funding by $15 million to improve training, research, and the ability of states to prevent and respond to deadly outbreaks of infectious diseases.

Another cornerstone of our public health agenda is, and always will be, medical research. To make sure that the United States remains pre-eminent in research, our Administration proposes $13.1 billion for the NIH; as well as a second year of funding for NIH’s new, cutting-edge Clinical Research Center.

Past NIH research has already led to remarkable breakthroughs in the treatment and prevention of HIV/AIDS. And now in this budget, NIH proposes to invest $1.5 billion in additional HIV/AIDS research -- including a substantial increase in funding for AIDS vaccine research, so we can use the light of science to finally reach the end of this dark tunnel. But until we do, our first priority must be prevention.

Our 1998 budget proposes $1 billion for Ryan White activities -- $40 million more than last year -- to empower those communities hardest hit to fight back.

So, when you take a step back from the numbers and the charts, what you see here is a budget that makes tough choices. That shows tough management. That cuts costs and invests in lives -- especially the lives of children and adolescents. And it closes the last door on a winning legacy of health for the 20th century -- and opens the first door to a more perfect union in the 21st.

Thank you.