Transcripts For CSPAN Health Care Costs And Innovations 20140906

Shoulders working well again. So i can tell you, that in of itself qualifies me as a Health Care Consumer. And i learned many things during my experience. One was despite having the best hospitals and physicians in the world, the most advanced medical technology, the best medicines to treat most of the Health Issues we all face, the consumer must play an increased role in his or her own health care. As individual consumers of health care, we must engage in Healthy Behaviors across the course of our lives. We must engage in preventative practices, and we must be fully compliant with the care directives that come from our Physician Partners when we asked them for help and access care. So i would submit to you that transformation begins with our own behaviors. By the way tom a the word choice by the way, the word choice, consumer not patient is very deliberate. We must think age consumers in their own health all of the time, not just when they have a medical emergency or a Health Circumstances that causes them and drive them into the Health Care System. I think this is especially true when we think about how we will improve health at a time when more than half of americans live with some type of chronic condition like diabetes or obesity. A very daunting statistic and one that is getting worse rather than better. So looking through the consumer lens, how can we make it better gor . For starters, we must make health care easier to understand, all of health care. There is no question about it, we have a very complicated system. If we must assign blame, it extends across every entity involved and engaged in health care, including my own line of work. I believe insurers have failed consumers by not providing trans timely information about what things cost, quality outcomes or how the system really works, offering advice and guidance about how to navigate the system. Lots of people still think the 20 copay is the entire in total cost of their office visit. We are working on changing that. Understanding and navigating the complex Health Care System is certainly a real issue for the 8 million americans who enrolled under the Affordable Care act. Across the system of Blue Cross Blue Shield plans across the system and country, we have yielded countless questions about benefits, costs and the simple question, what do i do next . One of our individual Sales Managers in North Carolina tells a story about a community recent tatian she was making and a small town one evening during the aca in rome in time. The aca enrollment period. A few minutes into explaining the aca and coverage option on the exchange, at hand went up and asked this very direct and simple question. What is the deductible . She decided to scrap the formal presentation and just talk to folks about how the basics of health care worked and how it in terrelates to Health Insurance. We are trying harder to make things simpler and more understandable. We have done plenty in there is a lot left to work a lot of l work left to do. Many providers are now taking Customer Service into account when it comes to scheduling, billing and other administrative processes that do not necessarily have anything to do with the delivery of Clinical Care but everything to do with the experience that the consumer patient is having in the clinical setting. This kind of consumer friendly approach is long overdue in health care. It is going to continue, and we all must continue to lead it. Another thing healthcare consumers must have. They must have the resources to make the right decision about care, not just static information or pamphlets of the automobile but dynamic tools and information tailored just for you based on your unique health history. Where you live, where you can go and many other factors. There are Real Progress on this front. For example, we are rolling out the personal set of tools to connect customers for the information they need about their health. We want to get them access to everything they need to make an informed decision and have it right at their fingertips. We capture that under the concept of blue connect. This is not the way health care has traditionally worked. Think about what you do with your smart phone today that you did not do a year ago or five years ago. Interesting statistic, the Federal Reserve tells us 51 of smartphone users have used their phones for bank and 17 of mobile banking customers have made a deposit using their phones. So the question is, why not extend these kinds of on the go, readily available at your fingertip transactions to health care . There is no reason not to. Think about what could happen if you were at the playground if your children and i would dare say no one goes there with the top of mind trying to figure out the closest emergency room that you might need that day because your daughter will need care as a result of an injury at the soccer match. But if you have ready access to nearby Urgent Care Centers through a Health Care App on your smart phone, you would be repaired to make a wise decision. That decision may be to go to the urgent care, rather than going to an emergency room if it were not necessary where you would endure a long and costly visit. The differential is the access to the information and willingness to deploy. The goal of these kinds of resources is to get consumers the data they need to choose. The ones that offer the best value for the individual consumer. We are working with doctors and hospitals to develop meaningful measure and then coming up with data for them. Data leveraging incidents and should is an essential role we are playing to help make health care better. It is called only line of sight into where patients can go for all of their medical encounters. Physicians, hospitals and Drug Companies do not have all of this data. We do. Speaking of insurers, why should you as a Health Care Consumer place trust in us. It is a legitimate question. One that we get asked all of the time. Let me first say you do not have any intention, desire, need or plans or expectations to replace the medical professionals that you trust. That is not our job. To the contrary. We want to enable and equip you, the consumer, to get the highest quality of care at the most affordable price. You make the choice. Everyone wins. Everyone wins if there is a good Health Outcome at a reasonable cost. Where i see consumers accelerating the pace at a greater value is by leading the quality discussion and then fighting the right folks to the table to collaborate. In many instances the insurer has the positive relationships in a state or region to convene competing provider interest and to facilitate a collaborative conversation that yields Higher Quality at lower costs for the consumers of health care. I know that has how that is how and has worked in our state i imagine all of us can refer to the positive examples of the positive outcome from a positive collaboration. Achieving better Health Outcomes a better prices not only requires better Consumer Engagement but doctors, hospitals, pharmaceutical companies, and of course, health plans, to work together. I am actually encouraged by what i am seeing in our state. More often than not we are finding Common Ground in the first conversation. The debate about whether or not health care is going to change and be transformed is over. Does not start at that place anymore. It starts at a place about what is it that we can do together to move things forward. And how do those collaborative and out of those we are finding innovative ways to boost quality of care and address cost. In just a moment you will hear more about this from my colleague joe shui this joe swedish. Let me give you a couple of trends were seeing in North Carolina. A good place to start is with bundled payment. As many of you know, it represents a single fee for a given medical service. If the hospital and physician groups manage the care as a intended they are rewarded. If things go wrong, the insurer or medicare does not pay anything more. A Blue Cross Blue Shield of North Carolina we have bundled care arrangements with multiple practices for hip and knee replacements at five different hospitals and more are on the way. We know for example, patients are saving 1030 on the replacement surgery while the Patient Satisfaction scores out of that experience continued to go up. Your consumer is winning in that arrangement. Higher quality, lower cost, greater satisfaction. Then there are patient centered medical homes. Over three years ago Blue Cross Blue Shield of North Carolina entered into a collaborative joint venture with the university of North Carolina Health Care System led by a real visionary and health care. Together, beginning with a blank piece of paper, we created a model by mary care practice together called Carolina Advanced Health. It brings the entire care Team Together under one roof. Unc and blue cross are thrilled with the results so far. Two data points. Zero affordable avoidable hospital admissions, and 64 fewer Emergency Department visits then our Customer Base as a whole. That is real results. The consumer again is winning. Higher quality, lower cost and greater satisfaction. I urge you to check out Carolina Advanced Health on the web. Do you see a positive trend . What i am saying is collaboration between insurers and providers yields high quality value for consumers. I believe we can all agree zero avoidable admissions and 64 fewer trips to the emergency room is a good thing for individuals and a good and for the health care economy. Our challenge is we need to do more faster together. Now we know it is not easy to get. Doctors, hospitals and insurers to change their way. Breaking out of the mold and that rhythm is very different difficult. If it were easy, we would have artie done it in would be having a different meeting today. I am confident we will work out many of the inherent conflicts as we get deeper into the transformation of health care. The way we look at it if North Carolina is this is both our opportunity but certainly our responsibility. So we have a lot of hard work ahead of us. You will hear more in just a few minutes. After all, it took us a long time to get to where we are, so we should not fool ourselves into thinking we can sprinkle magic dust and within a couple of weeks it will be fixed. We are at the beginning of a long, revolutionary journey but we will make it other better. Let me close by borrowing a familiar quote five president kennedy. When he challenged the nation to support the effort to go to the moon, i think you will quickly recognize my edit in that famous quote. So let me begin. We choose to transform health care and do other things not because they are easy, but because they are hard. Because that goal will serve to organize and measure the best of our energies and skills. Because the challenge is one we accept. One that we are unwilling to postpone and one that we intend to win. This is our time. This is our opportunity. This is our responsibility to lead and accelerate the revolution that is health care. So let me ask all of us to come together, work together, solution together and lead together to transform our health and Health Care Delivery in our nation. I look forward to working with all of you to build a Better Future for ourselves and for future adoration generations. Thank you for the opportunity to be with you. [applause] thank you very much for those remarks. You can see why he makes a terrific chairman. Now i will take a moment and say for those people standing in the back there are very few but a few seats up front and i would invite anybody at this time who wants to make their way up and find a seat. Now it is my pleasure to introduce joe swedish, ceo of wellpoint soontobe anthem, the nations leading Health Care Benefits providers serving 37 million americans or one in nine. As ceo, he has overseen the launch of more than 1000 new tron x on Health Insurance exchanges across 14 states. And lead the development of the nations largest portfolio of valuebased contracts. With as many years and experience in health care, including 24 as ceo for major health and Hospital Systems, joe has a unique perspective combining that of an insurer with that as someone who has really run some of the best Delivery Systems in the country and he is relieved leading the transformation of health care. Joe . [applause] good afternoon. Thank you for those generous comments. It is truly great to be with you today and speaking with some really honored panelists who represent the best and brightest in terms of perspective about where our society is factoring towards with respect to Health Reform and what outlook tells us, and quite frankly, we are making some very serious bets looking at the future and executing on initiatives that we believe will make a tremendous difference in the lives of so many people in the United States. Based on, and i will go back to what maryland said, and i think it will be amazing a lot of the common language developing by the way of the panelists and what maryland communicated earlier, the issue we are struggling with in terms of affordability, cost, and access. As someone that has lived through many decades of Health Care Provisions across the country, i can tell you that we have some very serious fundamental problems in how care is delivered across those three elements that are fundamental to help judge whether we will be successful in the journey or not. It is fascinating in many ways right now because all of us together, brad did a remarkable job in terms of providing inspirational outlook in terms of what is possible. I want to reiterate the point that he made. We are part of evolutionary process of revolutionary process in terms of Health Care Reform developing and what we will be able to achieve in the years ahead. What we have witnessed is we are developing a common language in the industry no matter what sector you are in. I think those that are truly dedicated to the reform necessary are equally committed to affordability, access and the advancement of quality and safety in terms of how care is delivered. What i observed after being in my access for 30 years the moment we have arrived at today is we are witnessing the convergence of health, health care, policy financing, care delivery, government consumers of the private sector in the one Massive Initiative to move the industry forward. Indeed the challenges and complexities are daunting and exhilarating simultaneously. And what i believe that is happening at this moment is we are advancing beyond the work i was involved in and many of you have been equally involved in. I call it slogging through decades of the disconnected system in many ways that has created an many ways poor access, high cost, and therefore on affordability and finally, questionable quality and safety. With that backdrop, let me share thoughts with you about where i believe we are going as a delivery system. As nancy mentioned, i spent the bulk of my career eating integrated systems. I just moved to wellpoint a couple of months ago to take on a whole new challenge. The reason i did it is i believe there is a convergence where providers and payers are working together in partnership to change the game as we have known it for so many decades. It is the duality of perspective i would like to share with you today that i think has informed my view of not only what is coming in the years ahead but also, what we should see. Just because we believe it will be coming does not mean it is the right initiative. We need to seek new initiatives based on two fundamental characteristics. Innovation and collaboration. I will keep coming back to those two elements as themes in my remarks. So first, what i would like to do is beat to the trends, the trends that are driving the revolution in Health Care Reform. I would also like to highlight wellpoint. I will be coming back to wellpoint repeatedly because i want to give you a sense of what israel. What is happening in the many markets that we as a Payer Community or Provider Community are providing to our nation. Let me context. First, wellpoint, we serve 37 million members in our health plan. One in nine americans. In addition, this overlays on the fact that we are is the leading provider of serving an official risk space, as well as in the Government Services space. We have 4. 8 million medicaid beneficiaries part of the plan. We serve 19 states related to Medicare Programs. 14 states related to our blue portfolio. It is a very expansive footprint where we have a direct line of sight into many parts of the marketplace that are radically changing. So what are the drivers and key elements that i need to expand upon today . Those three are consumerism. Advancement in technology, and finally, provider economics. The fundamental shifts occurring in the provider ramsgate that are driving towards the improvements that i think we are all expecting. Let me first talk about consumerism. Truly it is changing the Industry Growth trajectory, and generating new Business Models that are being embedded in markets throughout the country. Think about it, it is interesting because you wonder why health care could not transform health care similar to what is happening in the retail sector. Where the consumer is demanding lower friction experience, where they want access to cost transparency so they can make educated decisions in terms of health care. Similar to what they experience with amazon. Similar to what they get out of the banking technology. Realizing the changes fundamental with respect to walmart bring a new access to health care. It is a remarkable transformation that some sales literally happening overnight. Consumers are experiencing higher cost burdens, and therefore more central to the decisionmaking based on preferences, as well as xp patients that matter. Ive really critical element for how we look at the industry today, the center of gravity has changed. The center of gravity has not embedded in the provider delivery system. It is not centered in how up a year in ages. We believe it is truly centered in the choices a consumer makes based on educated choices that they can now administer tased on the transparency of data that is available to them going into the future. It is interesting because a consumer driven enterprise weve recently changed our name and will become official later this year. We believe going to anthem, wealth recognized brand that we administer in all of the states, is key because it unifies our organization and all of our associates around the fundamental belief that we have to engage with the consumer in a very unified way that drives the transparency and information, in terms of cost, as well as the provision of services directly to them. It should it is interesting when he think about the consumer and you realize three quarters of the consumers in the United States today that are trying to access the delivery system, they want phone and email access to physicians and they want to interact through social media. Generally technologies that are not very well accessible to consumers. It is interesting mobile and social media we believe will greatly expand access for the consuming public like no other technology we have witnessed so far. Apple, samsung, google have all realized this and have made commitments to advancing digital health, which will accelerate consumer adoption of technologies, given the existing consumer decision to both be recognized as about you decisionmaker in this decision strain. On a macro level, advances in technology and analytics, and i want to underscore analytics because the data repositories available to us will be Game Changing and how we can deliver on the Transparency Initiative i mentioned a moment ago. So we are hopeful through the advanced technologies that consumers and physicians and caregivers generally can make more and better informed clinical decisions for the needs of the consumer. So let me talk a little bit about provider economics because what we have witnessed is a nontraditional and new entrants to the market place are significant, and they in fact, are redefining how care is provided and what consumers expect Going Forward. Payers and providers are taking new roles in the marketplace and is amazing to watch how the lines are now when you look at the combination of providers and payers engaging in the marketplace. We believe this has promoted a tremendous shift to provider population where what we saw in past history looked very little like what we will witness and experience going into the future. And what this means is vertical integration in terms of the alignment of providers has positioned them to function as new insurers in the marketplace. So new forms of competition available to consumers. New engagement with the variety of commands from the marketplace i think will redefine how care is provided both providers, as well as payers such as ourselves going into the future. The other element i think it is critically important to bring up because you as consumers think about payment, which is pretty much a dollars and cents transaction. What is happening is the valuebased payment methodologies that are now going into effect are extremely powerful. It is estimated by 202050 of all payment will be based on valuebased payments. Paying for value, not simply for basic services. What we have witnessed that wellpoint is fascinating. Way have been able to push that pastor is the greatest advance to the private data Provider Community where today we are ready achieved 50 of the providers now being paid on a valuebased payment methodology. That is being paid for quality service, not simply the traditional models we have been all a constant two. We have seen this has been a constant outcome for patients satisfaction. It has all improved because of the payment streams now being driven by valuebased payments. Let me now shift to the newest trends we think are driving the ability of market to shift. That is around Consumer Engagement, management of total cost to care and provider collaboration. In preparation for exchanges, we studied 55,000 consumers to try to teach determine what Consumer Preferences will do to drive the formation of new Exchange Models as given to us under Health Care Reform. We did our homework, and what we found is consumers truly are focused on price, access, as well as brand. These are three driving elements that i would argue are relatively new to the landscape compared to traditional. So what we have achieved is an Exchange Participation on enrollment that exceed 770,000 participants in the Exchange Environment with the largest performer in that space, and we believe we now have the ability to ring Access Affordability to new entrants for the healthcare landscape that in fact did not participate in the past. So we see technologies really driving the support of the new entrants, as well as the members that have been with us for decades and decades. Using technologies like telehealth, which we believe is a radical shift in terms of health care delivered in an immediate access through social media, mobile technologies, and we are hopeful the rapid migration will bring a better cost performance and actually, quality of service that is more relevant and timely to the consumer. Some of the other initiatives that are being played out at the moment, in terms of what wellpoint is administering in the markets is how to decant the cost of care we have all experienced historically to services that are much more efficient and effective, such as access to diagnostic studies through radiology. Just recently in Health Affairs of an article was published where we participated in a study that found we could in fact get a substantial number of consumers to shift how they access diagnostic studies by way of accessing those that are lowercost, proven quality, and at the end of the process we recognized we were able to reduce the cost of diagnostic Radiology Services such as mri by close to 20 by educating the consumer in terms of how to better access the system, how to better access it related to very high quality performers. By way of transparency of data. What i would like to do is now turned very quickly to the fact that diagnostics by the way of analytics in terms of how we provide care Going Forward is based on our data repositories that we have amassed that have accumulated about 580 million claims per year and then analyzed how care can be better provided. How we can take the analytics and give that to the Analytic Community that is based on evidencebased practices. As an example, just recently about a month ago we announced the go live both what is called the california integrated data exchange. It is a phenomenal Movement Forward where in california at the Anthem Blue Cross enterprise combined with blue shields of california, we have invested 80 million to build a clinical repository that brings new data, new information to the hands of the consumer where we have 9 million electronic patient records embedded in the system representing 25 of the california population. If that means is now and make live nation has access to a Data Repository that brings transparency and access of information to the patients regarding patients they are serving. In doing so, it brings a safer, Higher Quality advance of information that is that the disposable of all caregivers in the state. It is a phenomenal opportunity that brings the basis for medical research, Public Health advancement, improved quality through unified, integrated patient information. All built in collaboration of providers, as well as payers come in a way that will strengthen the delivery of care in california. This is a tremendous variation of cost and quality. Another great example. Cancer care quality program. This is an initiative that was built in partnership with the National Comprehensive care network where we identified guidelines that were evidencebased, which we then conveyed oncologists who it in the start Cancer Treatment patients truly based on evidencebased practices. What that means is were trying to pivot a cancer care of pathology that historically have seen a lot of variation from the incredibly high cost, ending and not necessarily the best outcome of care for cancer patients. So, in the end, we now have brought on a lot of partners who have taken on the initiative and are using the guidelines in a way that is minister k or, more timely care at a better cost. We believe this evidencebased practice approach will bring to mark at about a three percentfour percent reduction in the cost of cancer care but at a higher level of quality, given the evidencebased practices that are now made aware to the clinicians. Now, let me finally share with you the last elements of the work we are involved internationally, provider collaboration. This is an amazing opportunity that i think truly converges providers and payers in a way that you recognize we have a lot at stake together in partnership to meet the challenges to meet the Health Reform agenda given to us. Together we are advancing three key elements of provider collaboration. Valuebased payment. Which we believe we are now in excess of 50 of payments now driven towards value payments. Number two, what we call channel partnerships where we are working together in a bidirectional methodology to analyze care as provided at the bedside or in the clinic or more importantly we have built the channel partnerships so we as the divider community are equally at risk for the provision of better care and safer care, and finally, vertical integration where we work in collaboration with the Provider Community throughout the entire continuum, dealing with the care more model folks focusing on the services for the frail and elderly. We believe we have found a formula for success Going Forward, building on models that were never available before because we never had the common language that linked the provider and payer in a way that risk was shared and more accessible care and one that is focused on affordability. A key element is a. C. O. s. We have well over 100 built within our organization. 50 in the pipeline. I want to underscore these are Accountable Care enterprises where we are sharing in risk and developing the rewards and are early indicators, were seeing like kinds of achievement. I am really excited about the partnership that have built these models that radio r rooted in the belief we can improve affordability, quality and safety for all whom we serve. In closing, let me just say we are incredibly aggressively engaged in transforming the marketplace. We have a very focused effort on transparency in serving our customers. We have a very focused effort in getting cost out of the system and bringing to the marketplace a much Higher Quality service that all of our consumers can count on in terms of Getting Better care coming from health plan in partnership with the Provider Community and aligned with the reform execations given us by h. H. S. , c. M. S. And the legislative forces that believe truly we can change this nations healthcare trajectory and become a better product and service to the people that we serve. Thank you very much. [applause] extensive remarks about all the thank you joe for those extensive remarks about all the wonderful things you are doing. Now its my great pleasure to introduce roy who is a senior fellow at the Manhattan Institute and the opinion editor at forbes. He served as a healthcare advisor to myth romneys campaign. Having gone to medical school and worked at bain capital and j. P. Morgan. He is a lead conservative change agent. His proposal for comprehensive healthcare reform has drawn attention from both sides of the audience. Hes the newest Advisory Board member and somebody we should all be paying attention to. Can you come up . [applause] thank you for being here. We have half a dozen seats up here if anyone wants to come up. I promise we smell ok, i checked. Im glad to be the newest member of the Advisory Board and the least accomplished. So its an honor to be here with this group. Nancy asked me to give a summary of this plan that i and my colleagues have put out last month. And the idea behind this plan emerged really from a number of concepts, the most important being that republicans in general have not united around what to do. The republicans talk about repealing obama care but they are not united in what they would do instead. Something that ive been thinking about for a long time is what would a free market or market ontarioed Healthcare System look like . What could we do to take the system we have today and move it more in that direction . As we all know, Health Reform is hard work, very long term and you have to think about the little pieces and things you can do to gradually move the system in a better direction that would be better for everyone. So this is a chart you all know by heart im sure. But its important to start with it because you hear hype about the slowdown in the growth of medicare spending this. Is generated from data from two or three weeks ago. So if this is the socalled slowdown in healthcare spending, it still represents in terms of primary spending by the federal government almost the entirety of growth in spending of economic out put. Interest payments are also growing on the federal debt. So were not going to get to 2050 on this chart. Something is going to happen. Either were going to make massive cuts or have a financial crisis or both. It remains urgent for us to deal with this problem. Now the conservatives of course are concerned with the spending component of this problem more than anything else this. Is part of the reason why. The a. C. A. Takes the fact we spend so much on healthcare and spends more on it. To conservatives thats seen as doubling down on whats wrong with the system rather than making it better. You hear obama care is the takeover of the Healthcare System. If you change the y axis and over lay on to it what the federal government was spending on healthcare before, thats what we were spending on healthcare before the a. C. A. So the thing i try to explain if obama care is the government takeover of the Healthcare System then what is all this . Its important if we are concerned about federal spending and the growth of federal spending and the fiscal instability that is caused by the growth of spending, we have to look at the toalty of the problem and not merely the a. C. A. This is possibly the most important chart ill show you. What this chart is mapping out is per capita Government Spending on healthcare in the advanced economies, not total spending, but public spending. The perception a lot of conservatives have is if we expand coverage, were going to spend more. Thats the main reason they have been so concerned about the a. C. A. But the point of this chart is actually that before the a. C. A. Was enacted or at least before the spending went on line, the u. S. Was already spending more than all but two other countries in the world on a per capita basis, Government Spending on healthcare. There is a perception that conservatives have we had this free Healthcare System and then obama care came and took over. The government takeover, government has been involved in the Healthcare System since at least 1965 and as a result Government Spending on healthcare is very large. If we were to repeal obama care and replace it with whatever, you still wouldnt be addressing the problem that public spending on healthcare is so high despite the fact we have so many people uninsured in this country. We heard from marlin about the fact the a. C. Savement reducing the uninsured population. If you are going to spend 10 trillion, hopefully you are going to reduce the uninsured population. There are some other things that the a. C. A. Ought to address and was advertised to address but has not. One of those is the fact that healthcare in america is expensive, the underlying cost of healthcare is so expensive. There was a famous paper in 2004 called the price of stupid. A lot of people think the reason we spend so much is because we are fat and smoke and dont exercise. But its really that doctors and hospitals charge a lot more for services in this country therein everywhere else. We blamed Insurance Companies and fat people but its what hospitals charge that is driving the high cost of healthcare in the United States. That is not something that the a. C. A. Takes head on because there were political risks taking it head on. Hospitals are the second largest employer in most districts and a lot of people were nervous about taking on this problem. This is another problem that is related to that which is that in response to the fact that medicare and medicaid are reimbursing hospitals less and less, hospitals have been consolidating to charge private insurers more and more. Were seeing Hospital Systems take over entire states and use that power to charge higher and higher prices. And what happens . Those prices are passed on to the consumer and the taxpayer in the form of higher premiums and higher subsidies for healthcare. The light blue line is showing the number of merger transactions. It spiked up and then settled and now its spiking up again. What this red line is showing you is something thats very interesting. When there is a large merger in the country, they will measure the impact of that merger using the h. H. I. If the h. H. I. Is above 2500, the federal trade commission and department of justice consider that to be an anticompetitive merg theyre creates a near monopoly situation in a particular market. And they try to break up that merger. For example with comcast and time warner or airlines, this is what they are using to figure out which mergers to try to block or alter. In the average hospital market in the United States, since about the late 1990s, that market has been as consolidated as the types of mergers that the f. T. C. Try to break up through antitrust litigation. Which means to say the majority of hospital markets in this country should be the targets of antitrust litigation and yet they are not. Here is another important slide i think the second most important slide ill show you which is that Health Insurance is not the same thing as healthcare. We all know this but it has real life affects on people. One of the big things they do is expand coverage by expanding medicaid. A lot of physicians dont take med kead. This is sixyearold data now. The orange bars dont take medicaid patients. The dark blue is private insurance by specialty. Very few physicians reject private insurance. With medicare its a growing problem. A lot of doctors not taking medicare because reimbursement rates are not keeping one healthcare inflation. With medicaid is problem is already severe. Thats one of the reasons Medicaid Health out comes are so poor. There is a lot of debate about whether medicaid is better for health out comes really toif being uninsured. There is no debate about whether its equal to private insurance. Private insurance consistently offers higher out comes than the medicaid program. Here is another thing the a. C. A. Does. It actually makes the cost of insurance you buy on your own more expensive. If you qualify for the subsidies on the exchanges which many people do, you are cushioned from this effect to some degree. A study weve done and look t at this in every county in the United States. If you are a childless adult and you make more than 25,000 a year which, the subsidy you get is you dont get one or you qualify for a subsidy that is too small relative to the increase in the cost of insurance that is driven by the regulation. So the underlying cost of inshunes for you is higher and the net cost to you even with the subsidy is frequently higher though not for everyone. Its called the Affordable Care act but for many its making coverage less affordable, not more. Is there a better way . I would argue there is. Access to coverage is an important policy goal. The projections may be wrong about how many people sign unfor the Medicaid Expansion and the a. C. A. Exchanges over time but the c. B. O. Is projected by 2017 there will be 36 million on the exchanges. Thats a lot of people. Republicans if they are successful in winning the senate and winning the white house are going to have to contend with what to do here. If you dont have a good plan on how to deal with that, you are never going to make it to the presidency in the first place. This is a challenge. Its a good thing people have Health Insurance and that should raise the bar for proposals to offer plans that more people have Health Insurance but do so in a more fiscally sustainable way. Here is the other thing from the standpoint of public polling that is important to snand. The a. C. A. Is unpopular in polls, has been for years. Confounding a lot of experts who are convinced at once a. C. A. Was enacted it would become more popular. You have to pass the bill to find out whats in it. People have not warmed to the law but that doesnt mean that they necessarily support repeal. In this bar graph you are seeing the orange and light orange are people who support repeal. The light arch orange is repeal and replace with a republican alternative. The light blue is keep anytime place and work to improve and the dark blue is its perfect. You can see independents and the total group, there is a large plurality that supports keeping the law, not formally repealing it but making changes to it. I would argue that a center right Republican Campaign in 2016 that wants to make the Healthcare System better, you can try repeal and replace. You can litigate that fight. But an alternative that should be considered by republicans is how to reform the entire Healthcare System including the a. C. A. In a way that makes healthcare better for everyone but isnt fix exated on the question of repeal but more on the question of transforming the entire system. Lets go back to this chart. One of the things when i started studying Healthcare Systems in terms of public spending, you see charts like this all the time. This goes to show if you have single payer healthcare like canada, you can save money compared to what the u. S. Spends and thats true. What you dont often hear is that the most market oriented Healthcare Systems in the world do better on this met trick than the single payer systems do. Singapore is the bottom one and switzerlandl singapore is a small country and a different political system but its doing a lot better than europe. Why is it doing a lot better than europe . A large part of the reason is they have some consumer driven elements of their system that are powerful. Same with switzerland. In terms of public spending on healthcare which is important in terms of sustainability of your system, switzerland does quite well because they have Something Like the exchanges but for everyone. There is no public option or government run insurers. There are subsidies for low income people but not for upper middle and upper income people. And actually its not only interesting that switzerland and singapore offer us lessons of real examples of how healthcare have been implemented to great effect, but paul ryans plan to reform medicare borrows from there. Seniors could shop for the plan that they liked with some means testing and adjustment for Health Status. There is a fair amount of convergens between what paul ryan is proposing and what myth romney campaigned on and what the a. C. A. Does for the low income population. Why dont we take that model and use that to reform medicaid and medicare . We could address all these problems at once if we did that. So what i propose in this plan is effectively a four or fivestep process that has a lot of details to it because anything involving healthcare has to confront all of the mitigating circumstances that affect people and make sure you are minimally disrupting or harming people through the changes you make. The most important thing we have to do is make the exchanges, the vehicle for tax credits, allow that market to function like a true market where people can choose the Healthcare Plan they want to buy instead of buying a plan that the federal government is dictating to them they must buy. There is a number of ways you can do that. A lot of people felt in order to address the issue of preexisting conditions you have to have a mandate. That is not true. There are different ways to structure the Insurance Market that allow you to not have an individual mandate which i believe is a constitutional injury but still offer coverage to people with preexisting conditions. The main issue to deal with is young people have to pay more than they would in a true market. Young and healthier people can buy coverage thats appropriate to them and have more flexibility in benefits those plans coffer, you can drive down the cost and do so in a way that doesnt require an individual mandate. The second thing you do is medicare reform which is the simplest part of the plan. Raise the retirement age over time, gradually of medicare. Today its 65. If you increase that by four months a year, what does that do . That means the people on medicare today stay on medicare. A guy who is my age might only qualify for medicare when hes in his early 70s. When im 64 if im on an exchange based plan i stay on that plan. I can keep working if i want to and stay on a plan when im 65 or shop for coverage on my own. Its not disrupt toif people nearing retirement because they can stay on plans they are on while making the system solvent. This approach would do a lot. It would solve the fiscal crisis and the deficit that medicare is generating because it would ensure that medicare remains solvent for the population that is on medicare today. We can merg into that kind of reform some of the bipartisan medicare reforms posed by people a whole collection of things that are common sense proposals to reform the program in ways that people appreciate. The next part is medicaid. So if we mie grate people are medicaid today for acute care insurance, the poor people who need Health Coverage, you migrate them on to the exchanges, you can offer them better access to physicians and better Quality Health out comes and to do that you say the federal government should take the full funding responsibility for that population. The way to make that a fiscally neutral swap is to have Long Term Care managed by the state. The funding levels would be prescribed in law in congressional statute but they would have the freedom run the programs the way they wanted. That would eliminate the incentives for states game the system to get more money. This way each side would have a program they were involved in and particularly for that low income acute care population they would be able to make more money and not change their insurance plan. It would eliminate churn between medicaid and employer based conches. We have to tackle this problem i mentioned early on about hospitals charging a lot more for their services than their peer groups do and need to be justified. The first thing we need to do is increase the competition in the system. We need to be more vigorous about antitrust and the way we allow people to Seek Healthcare Services in other states and other countries. And it would be nice to integrate the va system into this. Allow veterans the option of choosing exchange based coverage. If the va hospitals are as good as they think they are, they should be able to win and serve those patients more cost effectively than the traditional private market can. We can repeal the employer mandate. It has no affect on the ability of people to gain coverage and that would do a lot to eliminate the drag on hiring and employment that the mandate imposes on the private economy. We should tackle malpractice reform. And engage in a number of other procedures and the grab bag of reforms a lot of people talk about to address the high cost of healthcare in this country. Weve modeled this out. We dont have access to the band of the Budget Office but we worked with steve who is one of the leading c. B. O. Style economist in the academic world to model what would be the spending and revenue and coverage impact of this approach. We found it would reduce the deficit over three decades by 8 trillion. Thats at the federal level. There is also reduction in spending and tax revenues on the state level because of the medicaid reforms. It makes the trust fund permanently solvent and covers more people because it drives down the cost of private coverage in the individual market and employer sponsored market by 17 . If Health Coverage is less expensive more people want to buy it. This plan covers 12 million more people above and beyond what the a. C. A. Does and gets us closer to universal coverage and improves healthcare out comes for the poor by transitioning them away from the Medicare Program to private coverage where they can have high quality access to the best care we have developed in this country. With that, you can find out more about the plan by going to the Manhattan Institutes website. And i look forward to your questions. Thank you very much. [applause] thank you very much for that. Its wonderful to see different perspectives and different ideas and you can get a sense that now im introducing our longest serving Advisory Board member and some of the discussions we have in house. Its my pleasure to introduce mr. Ryan heart. Hes a prolific author, eneducator and original thinker. Hes served as advisor to the white house, the world bank, the va, h. H. S. And many others, his work reaches a large audience as hes a regular cribt or the to the New York Times. We all look guard to reading your post and blogs. With that, would you please come up . [applause] this has been a daunting panel. Weve heard a lot of innovative ideas which i think give us hope there will be progress. And it is hard and it was slow in coming. But i do believe its coming. And the very interesting proposal. One has to do studies on it to fully grasp it all but this is the most innovative and interesting proposal that ive seen come forth as an alternative to what we could do. So my talk actually you could call it a buzz kill which it is. But i want to stress the moral imperative of getting our act together in healthcare. There really is a moral dimension to this. All of us who are active in this have to mind, its not just about dollars and cents, there is a moral issue we need to deal with. So what is forward here . So if you look at the u. S. Health system, one is slower economic growth. I wont comment on that. I have a whole set of slides but not the minutes to discuss them. Tight government bummingts, we heard about that. Thats not necessary. Its because weve decided to make them tight but tight they are. High cost of u. S. Healthcare. And he did a magnificent job of under lining that. I could pull my slides. I didnt pay him either. A think that doesnt penetrate the healthcare debate at all, which i think it should, is the rising income inquality. And that is what im going to talk about. Of this, ill use only the lower portion to chat about it a little bit. This is healthcare spending versus gp growth starting in 1965. You can see that making 100 g. D. P. Grew. We are two and a half times as rich as we were in 1965. If you look at healthcare, that went 6. 8 fold. You heard mary lynn mentioned healthcare cost at a historic low. Thats not what she meant. I know what she meant. She innocent growth of healthcare spending is at a historic low. Not the average. I read that medicare is actually in real dollars actually declining a little bit but thats a quirk, that wont last. Here is a nicer way to look at this is year to year growth in per Capita Health spending inflation adjusted dollars. We had our ups and downs here. But since 2002, there has been a decline in the growth rate. The way you explain that depends on which party you belong to. Fur a democrat you would say in 2002 people anticipated that obama would be president and would pass the Affordable Care act and credit that to the Affordable Care act. Fur a republican you wont buy that story. This started long before the Affordable Care act. In fact, if truth be told, the Affordable Care act so far hasnt made that much dent into this growth. There are other forces driving it. So that all can be acknowledged. But weve been up and down before. It could come back. We really dont know. But the point i want to make is that our Health Spending is twice as high as in most other countries comparable who are older than we are and he explained that. But here we have a similar slide to his but over time the growth are dollars that are comparable that buy the same stuff in every country. Its a concept economists use. And you can see the average european. The brown line is switzerland, about 79 of what we spend. Germany is half. Some countries even less. So the question is what drives that. Firm, millman add together the employers contribution. They look at American Families of four in preferred provider plans, add the employers contribution, the employees contribution and the out of pocket spending which usually we dont count but should be counted. That is total Health Spending for a typical family average over sick and healthy and so on. If you do that, this is the data series and you can see in 2014 thats 23,000. Thats a good number to keep in mind given what ill show you next. Thats a lot of money. Now you could say and everything so far that you hear has always been to make people reduce utilization. Yesterday there was a heart warming story for anyone who likes consumer driven healthcare with high deductibles about a woman who ripped off her fingernail and because of her deductible she decided not to go see a doctor. Thats the market in action. Thats the kind of thing that warms the heart of an economist. Actually, we see the doctor less frequently than europeans, go to the hospital less frequently, eat fewer pills. Mark it was first to point that out in Health Affairs. The main reason is the one he showed you prices here are very high on average, twice as high. And thats the paper Jerry Anderson and a bunch of us in this paper which we thought was come and go. But its been cited a lot. Here is an International Survey of health plans and what they actually pay in different countries. And you can see its hard in the back to see. This is an app deck toim but the u. S. Range is this, far more expensive than the other countries. Having a baby here is two to three times as expensive, mind you of course our babies are better and maybe they should cost more. But if you seen a normal birth in switzerland, its very similar to here. This is m. R. I. Here is lipitor. So the reason we spend a lot more is the prices are high. I look at my friends in the insurance industry, that is the focus. You can cut utilization. We are pretty dainty users. You have to get at prices in the future. Look at this slide again. Keep this 23,000 in mind and look at the income distribution. You ask yourself suppose we were to say people should be in charge of paying for their own healthcare. Its a consumer good. Used to be healthcare or patient care, now called consumer. Thats what we call it. And suppose people should with their own income money buy that. How would that work . This is the money income distribution. This does not include an imputed value for medicaid benefits or medicare benefits. Its cash income. But after taxes and after welfare payments. Its just cash that you have. This median is 56,000 in 2010. 85,000 in the top quarter. 135,000. I once told my students im rich. And they were offended. Professors are not supposed to be rich. I cant write to mom about that. I thought i was rich. They said i was middle class. 200,000. I tell my students you want to be in the top fifth percentile go to goldman sacks, go to merrill lynch, you are there. Very easy. But not that many can do that. This is what you want to worry about though the people making less than the median given on average healthcare is 23,000, carve that out of the budget and you have to pay for everything else. And Median Income has fallen in the last few years for a lot of reasons. No one really to blame other than we had deleveraging and the financial crisis and were not growing as fast as we used to. The new numbers show you from the census bureau, 2012 is probably the last numbers they have. And somebody who runs a wonderful web sifmente hes sort of a geek who does this for fun and i stole his slide because its so cool. But you see the top line is the dark line, thats the top people in the top fifth percentile. See how their income has grown and the people in the bottom 20 or bottom 40 over time their income hasnt increased in real dollars at all really. Thats what this is supposed to show you. Here i plotted numbers out of that publication and you can see 13 of american households had less than 15,000 income and 17 between 15,000 and 2100. 49 have an income of less than r50,000 and you are supposed to take 23,000 out of that for healthcare. How does that compute . Here you have black households and they are the number more dire. 2 3 have an income of less than 50,000 yet their healthcare would cost the same. Same bodies, same stuff goes wrong. So, luckily for people in the higher income strata, most americans dont even know this. I should not have said this. Here is what is so cool about this. Studyl and dan did this were they asked people, what would the ideal Wealth Distribution in america before you can see the top 25 americans are generous. They like rich people and so on. This is what they estimated it actually was and this is what really is. Most people dont even know this. They do know if they cant or if theirh care deductible killed them financially. What are the options we have . Lets get rid of the waste. That is what the previous speakers were talking about. This was an institute of medicine study which really shocked me. Services, 2. 5 billion. Care,icient delivery of 130 that is what joe talked about. Costs. Ve administrative opportunities missed prevention opportunities. Fraud. What got me is if you add this up, its 30 of total Health Spending, wasted. The Affordable Care act was the it will make it much more expensive. You need all kinds of stuff you did not need before. Administrative costs in america are rising. Do. Is one thing we could there is a moral case to get rid of this waste. Personstely, one efficiency gain is another income loss. You have a lot of defenders of waste. They go on the hill and plead, please keep the waste in place. Thats a bold statement. Medicare traditional has never been allowed to be efficient. Whos to blame for whatever inefficiency there is an . Edicare congress is. There is a constituency. Need to fight that constituency, frankly. For moral reasons. Raise taxes. We could do that. We are not an overtaxed nation. We have actually cut taxes as a fraction of gdp. Most other nations tax themselves more and therefore dont have the budgetary agony that we have. We could move to a threetiered strategy. 20 years from now, this is the system we will be running. Public hospitals, public clinics for publicly insured americans. The elderly will be in that because the rest will be in the private system. It allows politicians to ration Health Care Without ever telling. God will know. You say, heres your budget. Do your best. We dont ration. If something ever happens, you have hearings and then beat up on the poor doctors. Thats a very good system for rationing. For the middle class, you will have reference pricing. Anyou are going to get replacement or a hip replacement, the insurer will give you x dollars. A list of hospitals with prices and quality numbers and say, we will pay you 30,000 for a hip replacement. You go to one that costs 50,000, you pay the 20 outofpocket your self. Properly done, this could be really good. Thatu did with caliber could work. If you dont Pay Attention to quality, you could have a pretty thats one option. The final one is you can just ignore the problem. Which, in many ways, for 40 years, we have. We are very good at that. I hope obamacare was at least an approach to cope with it. There is no point in repealing it, you but you can make this repealing it, but you can make this better, so you should. At least it was a step forward in covering the uninsured. That is my story and im speaking and im sticking to it. Thank you very much. [applause] in their folder, there is a blue card. You could go ahead and fill out your questions, catherine will be walking by and will connect collect them for you. I will go ahead and start with the first question. We have the good fortune of having steve cspan and cnbc here, so we are much we are a much larger audience. We are all interested in whats going to happen to employersponsored health care. We focused a lot on a different a lot of different things. There are different convictions for whats going to happen for employersponsored health care. Some people are saying its going away. Other people think is just moving to private exchange. Others, like walmart, recently announced that their role is growing. And,ld like to go ahead brad, since you are closest to me, i will put you on the spot first. I would like each panelist to talk a little bit more about employersponsored health. They presently struggling to figure out whether or not they that is necessary that they offer Health Insurance governor Health Insurance coverage as a benefit third they go to the method and to pick and afford it. There is a lot of stress there and i think the small Employer Market certainly in our state is going to diminish. I think the employers we are engaged with, theyre working very hard to validate that they want and need to keep Health Coverage as a moral imperative or employment proposition and that they are working hard with us and the Provider Community to figure out the constructs that will keep it in the affordability zone for them. To the extent they migrate away, there will be a step to the private exchange to see if thats going to work and take the pressure off the affordability question for them and serve the master of retention and the moral imperative. To get to the punch line, i think there is going to be a place and there will be a robust employer Health Insurance product and availability for the foreseeable future. I wouldnt be able to pretend to predict ten years down the road. Im not in that business. Ill defer to joe in that regard. Thank you. I concurr with all of his points. What were witnessing is a couple of forces in play. Number one, getting to your point about segmenting the Employer Community. Small employers have very rapidly migrated their work force to exchanges or simply walked away from coverage. We have seen small employers make a very radical fast shift to walking away from socalled moral imperative that you mentioned regarding employer sponsored coverage. Number two, looking at large scale employers, there will be a rapid shift to private exchanges. We have not seen that. We dont really hear a big demand for private Exchange Migration at the moment. But we believe there will be probably an Inflection Point around 2016, 2017 where decisions are going to have to be made based on drivers like the effect of the cadillac tax. I think the jury is still out for large scale employers regarding the use of or access to private employers. And finally, i think that there is a lot of uncertainty in how to best manage the present state of affairs. I think a lot of employers are trying to access tools like transparency tools. Other methodologies that can help them better manage the total cost of care related back to what my two colleagues have shared in terms of the rapid escalation of the total cost of care they are witnessing. Jury is out whether its going to work. Some employers have said this is moving too fast. Its too much of an exposure for us and we are on the cusp of making critical decisions about having to walk away. I would ecowhat brad and joe said about the rise of private exchanges. As the cadillac tax comes into play. Employers are trying to say how do i avoid getting hit by the cadillac tax. You want to make sure what you are spending on health inshures is fixed so you know you are not getting hit by this surprise excise tax which has huge impact on your margins as a business. Another thing we are seeing is the rise of Health Savings accounts. There was a survey of employers with more than 1,000 employees and 80 offer a Health Reimbursement or Health Savings account. 30 offer that as the only choice you have. H. S. A. Were only legalized in 2003. There was nobody with these plans. Now were at 80 . Thats been a dramatic change in the use of Health Savings accounts and more consumer driven healthcare, choosing your own plan and higher deductibles. We hear these sad stories about people ripping out their fingernails and not getting them fixed because they have a Health Savings accounts. People are using them every day and there they like them. The one challenge they have is its harder for them to get the transparency what they are paying for from hospitals and doctors. We have to address that problem. One thing conservatives are worried about is a lot of employers dumping their workers on to the exchange. That has not happened and doesnt look like it will happen because the tax break for offering employer sponsored coverage continues to be substantial december sfite cadillac tax. Economist have unique theories about employment provided insurance works. We believe employers are in the nature of pick pockets who actually take their contribution to the Health Insurance premiums out of your paycheck. So that in a way employment provided insurance is sponsored by the employer but paid for by the employees in the form of lower take home pay is the first point. However, its very popular among employers for two reasons. One, most employees dont know they are paying for that. Its the pick pocket comes and takes your wallet and buys you roses, you feel cool guy. Have you that. So thats an advantage for employers. Its a tremendous come on in the labor market. But also they offer their plorse a great advantage. Employers really run in house exchanges. Thats what they do. They check the quality of the insurer, quality of the care. They do a lot of services and i cant see employment based insurance among Larger Companies go away. Smaller companies, its actually inefficient for a small startup to have to deal with this hassle. It is cheaper and easier and better for the economy they just put them on the exchange into the private individual market. I am a little bit surprised but probably just ignorant that the proift exchanges havent taken off more, essentially make a defined contribution to an exchange and you have the certainty of what healthcare will cost you as an employer. So well see. I learned today that i was wrong. I thought they would spread faster than you indicate. But maybe you say in 2017, i may be right. You said there was an Inflection Point . Thats our sense based on what were hearing. Could it happen quicker . I think it depends on how the cost escalation material lieses. It may inflect up faster than the last couple of years. If that happens and healthcare cost becomes unpredictable and the cost infrastructure is unsustainable given the other metrix business versus to manage, you can see the shift happen. In 2018 ill come back and say i told you so. So thank you for your questions. Ill start about medical colleges. Medical colleges want the government to increase the number of medicare paid residence sis to train more doctors. Other experts think doctors functioning as part of a coordinated team, there may not be a shortage because of the doctors functioning in a coordinated team. What are your thoughts . Joe, you have a lot of experience on both sides on the insurer side leading integrated teams and transforming healthcare. Do you have a thought . If i understand question its focused on the subsidies that go to training physicians, especially related to serving a broadening growing population of elderly . Thats basically what i heard. And is there a shortage or will there be a shortage . Yes if you read all the data and follow it carefully in terms of how our members access care, it is a question of access being constrained because of the lack of providers in a community. Number two, it relates back to what dr. Reinhart shared which is the inadequate number of care givers. Actually i think he pointed out the reality there are a number of providers that dont allow Medicare Beneficiaries or medicaid beneficiaries to come in their practices. I think the more challenging question, the more immediate concern is broadening the number of care givers. Its not just physicians. Its a lot of personnel, ancillary care givers i think can provide tremendous benefit to the market where we would like to see support goiven those care giffers by way of training as well as regulatory ability for those care givers that enter the marketplace. We have a where to start mega problem with the inadequacy in the numbers of care givers in terms of the growing population particularly related to the vulnerable pop lages associated with the elderly. The answer to your question is both. There is a lot more we can do to reform scope of practice laws to allow people to do what they are trained to do and allow doctors to focus on what they are specifically trained to do and that would drive down cost and expand access. There is also, i believe, although there is a debate about this. I believe there is a doctor shortage. We see it in the way of access works in the medicare and medicaid program. If you think about what the doctor shortage does, baby boomers are retiring and baby boomer physicians are retiring and not enough people are replacing them. It affects people dependant on Government Programs like medicaid and medicare. Wealthy people are going to do fine in the doctor shortage. Its low income people we have to be concerned about. In order to to fund residence si slots we have to have savings elsewhere. I expend about 10 billion a year on graduate medical education but i can do that because im saving 10 trillion a year. There is a question economists raise why the private market cant manage the residency issue without government subsidies. We economists believe that the typical resident actually adds a lot more value in terms of revenue to a hospital than they get paid. And the difference in what value added minus what they get spade actually the residents payment to the hospital for the extra cost of teaching. Thats our theory. I published that in the New York Times and i got so many hostile comments im beginning to think i may be wrong. But a lot of economists, are not convinced that you need government subsidies for residency training. Thats an issue we could debate but its only 10 billion and ill give it to you. Weve gotten a couple of questions about the role of prevention. In terms of saving money and fostering collaborations between communitybased organizations. And how we can expand their role. The role of prevention. I think this is a question i get a lot when i speak on health care. My view is that prevention is incredibly overrated as a costsaving tool. Think about it this way. If we gave mammograms to every 22yearold woman in america, we wouldnt save any money. We would spend a lot money on mammograms and 0. 2 of 22yearold american women have Breast Cancer. We would have a lot of false positives as well. Just because you deploy a test doesnt mean you save money. We all have to die of something. Yes, you can extend life. Just because we live longer doesnt mean health care suddenly becomes cheaper. If you look at the countries with the longest life expectancy, they spend the most on health care. It is heavily arguable as to whether prevention saves money. We shouldnt expect a lot on the fiscal side. We should do it because its better medicine. I would endorse that. Many years ago, kaiser did a study of screening. That didnt pay off. The argument for prevention, very good premiums. Every good insurer knows that. If you had targeted Breast Cancer for people and their history it could save money. Overall, i totally agree. Everything ive read suggests that to accept people who seem to have a vested interest in that. Maybe give you a more more life years, but i dont think it would save dollars. In our company, we pay about 12 billion a year in total claims. That is a become revered approximately 2. 5 billion of that is directly related to lifestyle choices that people make that are bad. Substance abuse, tobacco or obesity related, including diabetes. If we can cut that number in half through whatever, teaching third grade health or through some sort of initiative, that is real money that would not get passed on to reflect premiums. Lets think about that from that perspective notwithstanding the fact that we are all health care, we are going to feel better and be more productive. We will live longer and more productive lives. Inherently, there is value in a proposition. The Affordable Care act is important to bring out, the demand thats been put on the health Provider Community to focus on Population Health management. Thats a new call to arms that has never really been tapped into historically because its never been called out as a necessity with respect to why you get paid for what you do. With respect to that point, you get what you pay for. And i talked earlier about valuebased payment, the relationship we have now with the Provider Community by way of these collaborative linkages, we are doing and all in an all in engagement where we are not just paying for care or episodic care, we are also paying for the Health Status being maintained at as good a level as possible for all of our members. Now that 30 billion of our payment to provider is rooted in valuebased payment, i can assure you that we talked providers about prevention. If you dont come to begin with, you will cost providers and the Employer Community a lot less over the long haul. I think you are seeing conversions of opportunities being developed. It is embryonic. As an industry, we have not been all that historically adept at managing prevention. I think weve come upon a new day. The possibilities are there. But we have to get very aggressive about it in terms of managing exactly what has been called out as expectation. Thank you. We have another question from the audience on medical innovation. And what role they are going to play in the future. There are some controversial things going on right now with drugs. I will throw it out to the panelists. What do see about the future of medical innovation . It will depend on a thing you are talking about specifically, but in general, can you address medical innovation . I will begin. I have to hear an economist perspective on this. Its a matter of choices, i think. Some recent advances in technology, both by way of pharma and devices, really make you pause for a moment. The cost escalation that will be built into usa consumer related to your premiums is going to be significant. The research that is necessary to get to these innovations, these new technologies, is very costly. We are seeing our Specialty Drug costs as a total probably escalating 45 fold in the next 34 years. This all has to get embedded in the total cost of care that you the consumer are responsible for. Let me be clear, as a pair, we are absolutely committed to paying for the use of best practices to cure disease and promote the betterment of ones life. The question we are struggling with because i believe were in the cusp of significant cost escalators in the innovation arena, trying to figure out how to meld all that into what you are responsible for as a consumer, given that you have more exposure by way of higher deductibles, copays, higher outofpocket. It shifts to the consumer. Very difficult equation to balance going into the future. First, i think its important to know that in 2009 in the debate we had about Affordable Care act come out there were two things we didnt talk about. One was the high price of hospital and physician care. The second was medical innovation, which has done more to improve the quality of life for more americans than anything else weve done in terms of health. Ace inhibitors do more to reduce the instance of stroke and cardiovascular disease than almost anything else would do. Incredibly important that we do more to be concerned about the high cost of medical innovation today. How much it costs. I did a study for the Manhattan Institute a couple years ago. The r d costs has skyrocketed because the fda has put more requirements on Drug Companies. Particularly when they do studies for diseases that are common. If you are trying to develop a new drug for diabetes or a new drug for high Blood Pressure or high cholesterol, it costs billions of dollars to do those studies. The drug may fail or the drug may not be good enough. All that money has gone for not. On top of that, you add the fact that the Affordable Care act has taxes on Drug Companies that increase the risk for venture capitalists. The end result of all this, what you see pharmaceutical companies doing is avoiding developing new drugs for common diseases. They are developing new drugs for Rare Diseases. Why . The fda is not going to block you were drug that affects 4000 children. You will not be called in front of congress if that messes up. The Regulatory Burden is lower and the Pricing Power is much higher. You can charge 100,000 for the product and insurers pay for it because no one wants to be the bad guy saying no you cant get the drug that saves your childs life. Its driving Drug Companies to develop drugs for ultraRare Diseases. Part of it was that the Drug Companies kind of picked a low hanging fruit in the chemical area. In the 1990s. When you actually look at drug r d, which was growing all that time and new drug applications, they went in opposite directions. There was a substantial decrease in the productivity of r d that had nothing to do with the fda. Which is strict, by international standards. They ran into diminishing returns under traditional, chemically based drugs. And therefore went into biologicals where, yes, its focused on Rare Diseases and you can price. The poster boy everyone is talking about now, 1000 a pill. If i had been on the board, i would have said go to whole foods and see how they price their stuff. If they had priced it, no journalist would have picked it up. 1000 is like a thumb in your eye. Overall, i think they will prove to be costeffective relative to what we were already doing with these patients. Its actually a bad example for the antitechnologists to pick because it does cure the disease. There are others where its more dubious. We are running out of time. As we mentioned, we have a much broader audience here. I would like to invite each of the panelists to make a closing short remark. Maybe expanding on a point youve already made by the consumers driving change or collaboration. I would like to turn it over to you and then we will go down the panel. Thank you for stimulating and bringing this group together for this important conversation. I think i will borrow from dr. Reinhardts famous paper about prices. Thats not something i addressed in my opening remarks. I want to encourage everyone to think about the role of your insurer in the context of prices. It is about the price at the end of the day. What we attempt to do as best we can on behalf of the customers who choose to pay as a premium, to become our customer pursuant to the contractual relationship, is to go into the marketplace and negotiate the best price that we can yield, combined with the best quality to make that available to the customer that is paying the premium. That is what we have traditionally done. That may be an overly simplistic way of looking at any kind of entrance, but certainly Health Insurance. That is what we try to do. We are going to continue to try to do that and leverage all of the wonderful technologies and innovations and collaborations and things we can do to help bring and take pressure off of those prices. Its very important that we continue to do that. As we go forward, we all need to be vigilant about those that have a vested interest in keeping those prices high. As these innovative tools are rolled out, whether its a contractual arrangement or a particular device that has demonstrated to bring a price down, there are those that will advocate that we passed laws to prohibit them. We are seeing those conversations fall across america as these new mechanisms are being developed. Therefore, as a consumer, all of us have to Pay Attention to that very Important Health policy side. That piece, in particular, and help all of us make the judgment of where we want those tradeoffs to be. Either advocate for those prohibitions, which will have a consequence, or advocate against them so that we can have more and greater flexibility to deliver that Consumer Value which everyone is demanding. Thank you for the opportunity to be with you. I will piggyback on that wonderful summary. What i would like to add, a couple of thoughts. I can assure you that every entity, whether its a provider or a pair, the Business Community in the legislative arena, there is a pursuit of a new Value Proposition in the health care arena. I can speak for our organization that we are very engaged with all kinds of constituents, trying to vector toward a Value Proposition that best serves our public. What is fascinating is the reality of a public that has to become very educated with respect to how to access this new, brave new world weve come upon. When a consumer cant describe what a deductible is, we have a problem. Payments methodologies that reward value. We need consumers that completely understand the system. How to access it to better their circumstances in terms of the health care they are demanding to improve their circumstances. We are very engaged in educating the public. It is a partnering responsibility. I will close by saying thats why i kept emphasizing the necessity for collaboration in a spirit we have not witnessed in this industry in at least the four decades ive been a part of it. Im hopeful that we are going to make Great Strides going to the future to improve circumstances for the consumers we are serving in this new world. Last week, i was asked to speak at the americans for prosperity defending the American Dream summit. Americans for prosperity is the big Koch Brothers outfit. They came by the busloads. Ted cruz spoke on the second day of the conference and said we will repeal every bit of obamacare and there was a standing ovation. I spoke to a subsection of that group and i gave a talk similar to the one i gave you today and i opened by asking the group, raise your hand if youre on medicare. More than half the room raised their hand. Guess what, youre on singlepayer health care. They were stunned by that. Of course, this is a group thats very passionate about wanting to repeal obamacare. The trojan horse for singlepayer medicine in america. What i would urge my conservative brethren to do is, we have to do a much better job of explaining to the public that we didnt have a market Health Care System in 2009. There were Serious Problems with access and cost in the Health Care System before 2010. If our voters believe that repealing obamacare will fundamentally solve the Health Care Problems in this country, it wont. I dont think weve done a good job of that and we have to do a better job and thats on us. One of the more encouraging remarks ive heard this morning from brad and joe is this issue of transparency. Thats been missing. The way americans look at health care is a little bit like blindfolding people and shoving them into a macys and saying go and buy a shirt efficiently and you come out with shorts that dont fit. Half a year later, you get some bill that you dont understand. Thats how its been. That is clearly not how you can run anything that wants to engage market forces. The europeans dont need Price Transparency because they negotiate a fee that applies to every provider in the state and every insurer. You would need only quality. Here, we need both price and quality. And not hospital charges. What we have to pay outofpocket in going to the hospital or that doctor. I would like to know the total price. What fraction am i paying . They have a cost estimator. You can put the doctor and the hospital and it gives you, but they are not binding prices. I would like to have binding prices. I phoned up the insurer and said, can you help me find normal delivery . The theory must have been that professors dont procreate. We do. [laughter] some of these are not as good as they should be. Make sure these things are reliable. If a patient has to pay more than your custommade or says, says, there isor a way for the patient to tell you that so you can see the variance and maybe talk to the provider and say, what are you doing . Something to really make transparency work. Then we can have more of a market. Thank you. I would like to thank all of you for joining us today. I want to give a special thank you to catherine and carolyn and Katie Mcdonald and their team. I would like to let everyone know that there will be a recording available on our website next week. These join me now in a final round of applause for our wonderful panelists. [applause] we will hear more about health care from hhs secretary sebelius are well on monday. Its be speaking live on cspan2. Both chambers of congress return on monday from their august recess. On the set an agenda, a series of confirmation votes and a vote on whether or not to take up a bill that would place a limits on campaign contributions. The house returns at 2 00 p. M. On monday. A seriesn by taking up of suspension bills. We talked recently with a congressional reporter for a closer look ahead at the coming week. Host hes the Senior Editor at cq roll call. Kevin mccarthy released a memo with the agenda on what the house is going to be working on. Your paper reported on one of those items. The headline is, House Republicans plan a vote condemning obama for Bowe Bergdahl swap. What is the aim here . Fort its a resolution blaming obama for not following the proper channel. Its a way of embarrassing the administration. Playing into this republican narrative that president obama is somehow going outside the law almost anything that he chooses. Host one of the items not on mccarthys agenda was the house planning for a vote on military strikes against isis. Your paper has an article with the headline, the house and senate laying groundwork for a war on isis. What do you think will happen there and with the upcoming related hearing with secretary of state john kerry . Guest there will be a lot of talk about isis. Youre even hearing some democrats saying the administration postures pot to the threat has been too feeble administrations response to the threat has been too feeble. There is going to be some effort made to make sure that the president has the proper Legal Authority for congress from congress. Host with the house or the senate, what can they really do in terms of any kind of strikes on isis . Powers. Here are some it ultimately does rest with the executive and i think this will toa form to coul forum critique the president. Host they are at jobs and energy bills. That would shame the senate. What are some of the details here and how might House Democrats were spawned . Respond . Guest this is a package of deals that will no way be signed into law before the midterm elections. As an effort to given republican approach to reduce energy costs. I think you will probably see pretty much partyline votes. Some democrats in the swing districts might cross over. We will see pretty much the voting patterns weve seen all year long. I fully expect the senate in democratic hands to ignore everything the house passes. Looking at aate is procedural vote on a constitutional amendment to limit campaign spending. Why is this coming up now . What do you think the possibility for passages . Guest what better to bring up a few weeks before the midterm elections than something that raises money and politics as an issue . This is an amendment opposed by a senator from new mexico proposed by senator in mexi frow mexico. It would give congress and the proponents inre controlling cant be sure limits. Its something that really resonates with people in the real america. It also runs into potential First Amendment issues. You will see republican say this whole idea tramples on free speech. It will keep up highvolume debate. Host you tweeted this week about something that could go somewhere. The stopgap spending bill. Expected in the house next week. What is the status . What are some of these must pass bills that we could see coming up . Host we think the only thing that will get passed before the midterm is this stopgap spending bill that will carry funding for the government into the new fiscal year starting october 1. Guest the question is how many extraneous issues the appropriators and the leadership are willing to allow into this. Will they deal with reauthorization of the Export Import Bank . Will they deal with the migrant crisis on the southern border . Will they make extra money to address the evil outbreak . Ebola outbreak . They have put out a wish list of anomalies. There is a strong incentive for republicans to make this a clean cr up t