Sebelius Defends HHS Budget Request and Obamacare

HHS Secretary Kathleen Sebelius testifies on Capitol Hill in Washington. HHS Secretary Kathleen Sebelius testifies on Capitol Hill in Washington. J. Scott Applewhite/AP

Health and Human Services Secretary Kathleen Sebelius stood by her agency’s 2014 budget request on Friday, rebutting GOP lawmakers’ criticisms of President Obama’s health care overhaul.

Sebelius defended HHS’ overall $80.1 billion budget, citing the department’s progress on curbing improper payments. The effort netted $8 in savings for every $1 invested, she said, using partnerships with the Justice Department, U.S. attorneys around the country and state attorneys general. “For three years we’ve had a very impressive track record, and we’d like to ramp it up,” he said.

But Republicans on the House Ways and Means Committee questioned the request for a hike of $4 billion, $1.5 billion of which would go toward setting up state health insurance exchanges required under the 2010 Affordable Care Act.

Sebelius argued the law has already slowed rising costs by smartly targeting the costs that drive Medicare and Medicaid spending. “In fiscal year 2012, per beneficiary Medicare spending grew by only 0.4 percent, and total per beneficiary Medicaid spending actually decreased -- by 1.9 percent,” she said.

“For the first time in a decade, overall health care costs grew more slowly than the economy. We are driving down costs while improving quality for patients by building a smarter system,” she continued. “We’ve shown we can both add benefits and cut costs.”

Pressed about delays in setting up the state-by-state online “marketplaces” designed to widen access to health care for some 40 million uninsured Americans, Sebelius said the exchanges would be operational by Oct. 1 and the enrollment open by Jan. 1.

The Critics

Rep. Kevin Brady, R-Texas, questioned that assessment, charging that the “agency seems to be in disarray” and may not meet the Oct. 1 deadline. And he said the health care law “may not be able to deliver on its well-intentioned promises because it causes local businesses to change employees from full-time to part-time” to avoid the requirement that companies with 50 or more employees provide health insurance or pay a fine.

Tax provisions of the health care law are being implemented by the Internal Revenue Service, which requested $44 million for fiscal 2014 to hire 283 full-time employees to work on the ACA.

“I hear the IRS wants 1,000 new employees,” Brady said, “But what we really need are 1,000 more doctors and nurses.”

Several Republicans supplied anecdotes dramatizing the burdens the law places on business and warning of rising premiums. Brady described a Texas manufacturer whose health coverage costs the equivalent of building two new plans and hiring 100 new workers.

Rep. Tom Price, R-Ga., said he’d heard from a car dealer who moved 166 employees from full-time down to 28 hours a week, and a Burger King franchiser who made all but five of his 900 employees part-time. “This doesn’t lead to a thriving middle class or create jobs,” Price said.

Sebelius said she had not heard the stories of businesses converting workers to part-time status to avoid offering health coverage. In Massachusetts, where health care reform is mostly implemented, “people had predicted businesses would drop out, but just the opposite has happened,” she said.

“More employers are seeing that they’re losing good employees every day to large companies because they can’t provide coverage,” she continued. The law offers small businesses a 50 percent tax subsidy, she added, and offers more choices. What’s more, the law’s restrictions on premium hikes are not fully implemented, though it succeeded last year in requiring insurers to pay back $2 billion to policyholders.

Asked about the cost of setting up exchanges, the secretary said, “We’re doing an extraordinary job allocating the $1 billion” provided under the law, noting that a $235 million is still unspent. The fact that half the states have declined to set up their own insurance exchanges does not impact her budget planning for the exchanges, Sebelius said, because “in some states, federally run exchanges are being set up as a start, but in conversations, state officials say once it’s up and running, they see themselves taking it over.”

Asked about the department’s December decision to delay a rule setting up a mechanism for small businesses to give their employees a choice of insurance plans, Sebelius said feedback from insurance companies and small businesses groups warned the option would lead to major glitches.

Democratic Praise

Democrats generally applauded Sebelius for taking on a “daunting task” and returning for a second term of the Obama adminstration. Rep. Jim McDermott, D-Wash., said that despite “three years of Republicans not negotiating and displaying unrelenting zeal to get rid of the Affordable Care Act,” it is projected to reduce the debt by $1 trillion over two decades. “Republicans believe the best way to prevent government from taxing and regulating is to create a government that can’t do anything,” he said. “We know you don’t have the resources you need.”

Ranking Member Rep. Sander Levin, D-Mich., said the “advocates of repeal who never wanted health care reform are not sure what do to now since costs are coming down. So they overstate the gloom and doom, even though we’ve faced Medicare shortages before.”

Brady replied that recent drops in the costs of health care are not due to the Affordable Care Act but to a bad economy and not enough jobs.

Rep. Charles Rangel, D-N.Y., noted that Republicans have voted to repeal, but not replace, Obamacare 39 times. In response to a series of Rangel questions, Sebelius said there are 41 million currently uninsured and eligible, and another 14 million to 15 million who’re in the market for individual coverage. “I don’t know their political persuasion,” Sebelius said. “They’re Americans. Congress passed the Affordable Care Act, and every American will benefit from its changes in the health care delivery system.“

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