Transcripts For CSPAN2 Discussion Focuses On Health Care Costs And The Economy 20161011

Awaiting the start of this forum on Health Care Costs to get underway. It will start in just a moment live here on cspan2. We told you about many so of the programing on cspan2 today. Over on cspan Hillary Clinton and former Vice President al gore will be appearing at a Campaign Rally in miami. Live coverage of that getting underway at 3 00 p. M. Eastern. Then tonight we have live hourlong interviews separately with third Party President ial candidates. You will hear from libertarian gary johnson. He starts at 8 00 p. M. The green partys jill stein. She is after that at 9 00. Well take your phone calls and tweets to the candidates. 10 second warning. On behalf of the Mercatus Center at George Mason University i want to welcome you to this important discussion about the effect much rising Health Care Costs on economic mobility and economic wellbeing. My name is bill beach. Im the Vice President of policy research at mercatus on behalf of the scholars and the staff welcome to this great event. It is not unfair to our times to suggest that we live in the era of Health Care Policy. There is little else ive heard about in the past 20 years. Health care policy, seems like every time i turn around is Health Care Policy which is fine. It is fascinating issue. In fact few issues have dominated the past 25 years like this national Health Care Policy debate weve been having. That is clearly true of the past eight years. This policy debate largely hassenterred on coverage issues and that concern continues to appear in the National Health care discussion as evidenced by with is happening in the president ial contest right now. At this time the postaca world analysts are focusing anew on unintended effects from restructuring of Insurance Marketplaces, to the economic effects of rising Health Care Costs. This last topic is the subject of our program today. Half the growth in Health Care Costs affected the economic welfare of insured and uninsured americans. This increase in costs offset by the benefits of newlyextended coverage . Has the rising cost of Health Care Insurance affected the distribution of earnings in the United States . These will be the questions among many others that we will be discussing in two panels here later this morning. To get us going we are extremely pleased to have with us a person who has been commenting on health care and Economic Policy in this town for a long time and i refer of course to Robert Samuelson. A gentleman who probably doesnt need much of an introduction and encouraged me to only say one sentence about him this morning but ill say three. As all of you know Robert Samuelson writes for the Washington Postprimarily on business and Economic Issues and has been associated with the post since 1977. He began work at the newspaper in 69 as a reporter, left, came back. He has become known for inciteful, frank, and powerful commentary on economic and fiscal issues as well as general economic commentary. Robert samuelson received a bachelors degree in 67 from Harvard University and written several books. Please join me in welcoming Robert Samuelson to the podium. [applause] thank you, bill, i appreciate the short introduction, and i will just, i hope you wont hold my harvard background against me. A friend of mine, rich thomas, the former chief economics correspondent for newsweek where i worked for a number of years, coined a law which i call thomass law, which says all bad ideas start at harvard. Before i start, clear up a couple common misconceptions, although i write about economics im not an economist. Im basically a newspaper reporter who was booted upstairs to write a column. Second, although i have a famous name in economics, samuelson, i am no relation that i know of to paul samuelson, Nobel Prize Winner and one of the great leading economists of the last half of the 20th century. Im told however that he did have a son named robert j. Samuelson. If so, it is not me. Now let me get down to business. The subject of todays conference is actually quite simple, its a question, can we govern the Health Care Sector or can it govern itself . The answer is not at all clear. Governing means making choices, usually unpleasant choices f everyone agreed on everything we wouldnt need politics or legislative bodies. We could run the country with a computer because there would be no disagreements to mediate. But of course we do have disagreements and differences. Economists have devise ad convenient framework to explain how most Material Choices get made. They have divided most goods and services into two broad categories, public goods, and private goods. Private goods are regulated by the market. People vote with their, vote with their feet and their pocketbooks. If people dont like oldfashioned newspapers, prefer to get the news from tablets or smartphones or not to get their news at all, then Newspapers Circulation will decline and perhaps one day disappear. I may not necessarily like the result and indeed i dont but it is the verdict of the market. Its choices are dictated by Consumer Preferences and incomes. If you cant afford a mercedes, maybe you buy a chevrolet or a bicycle. Most choices are made this way because most goods and services are private goods, but not all. We also have public goods and services that are provided by government. Defense most obviously but also Much Research and development and various types of regulations. Regulation the environment, financial markets, work place safety and pharmaceuticals to name just a few obvious examples. How we decide how much, how little and what kind of public goods we want is by political choice. Elections and legislative action. If you think government is not spending enough on this or that public good or is overtaxing to spend too much on unneeded public foods, you can try to change the outcome by voting for a new set of public leaders this is obviously a very messy, inexact, and often contradictory process, not nearly as decisive as the marketplace but its a process. So we have two welldefined methods of making most spending choice, the private market and government. The trouble is that health care belongs to neither of these two groups. Though it shares some characteristics of both. About half of our health care is supplied by the government. More accurately, it is paid for by the government. The best examples are medicare and medicaid. In this, medical care resembles a public good. On the other hand it also resembles a private good in upper middle class families are routinely described as having access to more and better medical care than poor people. This suggests that health care is a private good. But it resembles neither in one crucial sense. There is no obvious way of limiting it. People regard medical care as a right, to be supplied to anyone who needs it, when they need it. This attitude stretches back for decades. A gallup poll in 1938 asked respondents whether government should be responsible for medical care of people who couldnt afford it . The response was 81 of the public said yes. Rights are almost by definition openended. I have a slightly different way of describing our situation. Though it may be just another label for the word right. In any case, i Call Health Care an ethical good. It is something that in the view of most people and as a moral matter must be provided for those who are sick, injured or worried that they might become so. To withhold care is immoral. Unlike private goods, unlike private goods care should not be distributed according to income or, and preference. Unlike public goods, we should not artificially put a ceiling on health care spending. People should get what they need when they need it, to survive and enjoy life. No one should be told on a operating table that the procedure has to stop because the hospital has run out of money or is about to pierce some budget ceiling or wont be reimbursed by an Insurance Company. Health care is not that sort of public good. It is as i said, an ethical good. This may seem a defensible and desirable approach for any individual but it is less defensible and desirable for the society as a whole. It has led almost inevitably to a rapid escalation in courses that arguably represents a fair amount of waste because there is no effective discipline on spending, and arguably crowds out other important private and public spending. More of total compensation is devoted to health care, squeezing wages and salaries. Other Government Programs and or taxes or deficits raised to satisfy the demands of Higher Health care spending. The original question i posed, can we govern the Health Care Sector, is even more complicated than this implies. Americans wan three things from their Health Care System. First they want universal coverage on the lines of health care as right or ethical good. People shouldnt be deprived of health care simply because they cant pay for it. They want total autonomy and patients. Doctors want to prescribe whatever treatments of drugs and therapies they think are desirable without being secondguessed by Insurance Companies or government bureaucrats. Likewise Patients Want to be able to pick doctors and hospitals of their choice. They dont want to be dictated to. Finally americans want health costs controlled. They dont want ever Rising Health spending to reduce their standard of living, especially since most health care, especially since most Health Spending goes to a very small proportion of very sick people. The top 10 of Health Spending cases account for 6 of the costs 67 of the costs, roughly 2 3. Health spending of healthy teft 50 of the population accounts for 3 of the costs. The trouble we can only have two desired outcomes at any one time. If you have universal coverage costs will certainly go higher f we get doctors and patients totally free choice, costs will almost certainly be higher because there will be no reason to withhold treatment, diagnostics or medications that might do some good. But if we with hold treatments to control costs the restrictions restricting triggering public backlash that essential care is being denied. The same again is true if we fail to provide universal coverage, despite the gains of obamacare is what weve done. Modern met sin compounded all the difficulties in twoways. Technological advances in medical care are often more expensive than the treatment they replace or the fact there were no previous treatments. And if specialization of medicine often reflect the technological gains means no one is truly in charge, often means no one is truly in charge after patients treatment because he or she suffers from multitude of ailments, has as a result, multitude of doctors. I dont mean to imply although it probably seems that i mean to up ply, and my wife is often told me that i have never seen a glass halffull, i dont mean to ply the efforts to control the Health Care System inevitably futile. There are compromises to all three goals can be made in the name of the greater good. Our medical Industrial Complex is strewn with complicated institution rules and practices that represent efforts to straddle did the systems underlying contradictions. Or the conflicts between goals can be obscured because they are complex, not obvious. Or because they only limit waste, whatever that is and dont compromise quality of care. Still the job is inherently difficult because whatever health care providers, government regulators or Insurance Company bureaucrats suggest is logically bound to threaten one of the three goals that americans passionately hold, it has been a very frustrating process, perhaps not futile but certainly difficult as i expect this mornings session will confirm. Thank you very much. [applause] thank you very much, bob. That was a great way of starting the morning. Appreciate that. Were, now im going to call to the podium my colleague, dear friend, chuck bla house, Senior Program director at mercatus, of a program, Research Program specializes in the domestic policy economic portfolio and in health care. He also has major responsibilities for a number of other issues at the foundation. I dont know what we would do without him. He frequently appears on radio and television. You probably have seen him. He is expert on baseball history and that commentary is welcome this morning. Chuck was a Public Trustee of the Social Security and medicare from 2010 to 2015 and served prior to that in several Economic Policy capacities in the george w. Bush administration. He receive ad ba from Princeton University and phd in computational quantum chemistry from the university of california at berkeley. Please welcome me in joining chuck bl ahouse to the podium. [applause] well, we are very fortunate this morning to have the opportunity to hear dr. Jason fuhrmans insights on Health Care Policy and its relationship to the economic experiences of individual americans. It is my pleasure to introduce dr. Fuhrman today to you. As many of you probably already know dr. Fuhrman serves as 28th chairman of the president s council of economic advisors. He has been with president obama since the very beginning of his administration, previously Holding Position of Principle Deputy director of the National Economic council. That is a very important and wonderful position. I can personally attest. It is held only by the most brilliant of people. Dr. Fuhrman, prior to that has held a variety of posts in Public Policy and research before coming on with president obama. He has done work at the world bank. He has been a senior fellow at Brookings Institution and center for budget and policy priorities. He had stints at act keep yaw, visiting position at nyu Wagner School of Public Policy. Dr. Fuhrmans Research Covers extremely wide range of areas including fiscal policy, tax policy, health economics, Social Security, and domestic and international macroeconomics. He is the editor of two books on Economic Policy and holds a phd in economics from Harvard University. Now some of you may already know and others might be amused to know that dr. Fuhrman is also accomplished juggler and not only in the professional and intellectual senses but also in the very literal sense of the world. This has a special meaning for me because a couple of years ago my own wife gifted me with some juggling balls along with an instructional booklet and research indicating that juggling was an Excellent Way to sharpen ones mind. You can draw your own inferences what was implied there. Virtually every day since then my morning routine, including this one as a matter of fact featured attempts to teach myself new juggling tricks. Virtually every morning resulted in very humbling failures. I think of this my own personal daily morning reminder that dr. Fuhrman is smarter than me. With that, help me welcome dr. Jason furman to address. Thank you. [applause] not going to hold myself up against a quantum chemist. Thank you, chuck, for this introduction. Thanks for organizing this discussion today. I thought i would start with something really simple, when i talk about health care often our vocabulary flips around and i want to talk about the difference between cost and spending. Cost is how much it costs to buy something, how much it costs to buy a shirt or a candy bar or a meal at a restaurant and in those contexts we rarely use, we rarely get the word wrong. Spending is how much it costs for something multiplied how much of it we do, how much spend in total on shirts or how much we spend in total on candy or and how much we spend in total on restaurants. That depends on both the price and the quantity. When it comes to health care, these two have somewhat different evaluations. As a general rule anytime we can slow the growth of costs, that is the growth of prices, in this case, the price of an aspirin or the price of a treatment for heart attack that is presumptively a good thing and something we should be happy about. When it comes to spending price times quantity its a little bit more ambiguous and in particular it depends very much on the circumstances. There is a lot of research how much we get out of our Health Spending. I think the answer to the question is, you know, it depends. It is all over the map. Some economists have talked about us being on the flat of the curve. That for each additional dollar, we spend on health care were getting an extra screening which at best doesnt do anything to diagnose a problem, and at worse, may lead us to undertake some form of costly surgery that leaves us worse off because of the side effects associated with it. And that world it is possible to reduce Health Spending by reducing the quantities without making us worse off and possibly even making us better off. But there is also substantial evidence that for example, people who dont have Health Insurance are spending too little on health care. Theyre unable to get preventative care. Theyre unable to get the type of treatment they need, and for them additional spending on health care would be a positive, not a negative. And so we have a Health Care System that in some respects is doing too little prevention, too little for the people who are uninsured, and then in other cases is providing treatments that may be wasteful, unnecessary, and in some cases harmful. So a lot of the trick is both how to improve the efficiency of health dare, the growth of prices, and then also look at spending and how to have more of the Good Health Care and less of the health care that is causing a problem. If you look at the record of the last couple years, what weve seen since the Affordable Care act was passedded in march 2010 is that Health Care Prices as measured by something called the personal consumption expenditures deflator have risen at a 1. 6 annual rate. Thats the slowest rate of growth of Health Care Prices since the, in over 50 years for comparable period of time and that is unambiguously good news. That the price we have to pay for you know, all the Different Things we want in health care is growing at about the same rate as overall prices, at least overall prices excluding volatile categories like oil, which something historically hadnt been the case. Historically we thought of Health Prices increasing faster than every other price. When we look at total spending, that has grown faster than prices have grown and premiums have grown faster than prices have grown because the quantity has grown. One sense we all get better treatments today than we did five, 10, 20, 30 years ago, but second of all, more people are covered. In fact million more people, 20 Million People have gotten Health Insurance since the Affordable Care act passed. Notwithstanding all of that what is really remarkable that Health Spending itself has come in come in well below was expected if you look at nonpartisan actuaries that estimate Health Spending in january 2010 before the Affordable Care act was passed they projected that this year we would be spending 3. 7 trillion on health care. Instead the latest estimate were spending about 3. 35 trillion this year. Thats nine less than what was expected. 9 . That is despite 20 Million People that have gotten Health Insurance in the wake of the Affordable Care act. So understanding the causes of the slowdown in both health costs and surprise on the downside for Health Spending, what could be done to help it continue and its economic consequences i think are really important. There will be a whole panel here that can, you know, help discuss and debate that. In terms of the causes, i think there is a variety. Originally people were dismissive and thought this was something caused by recession. As we get further and further away by the recession that explanation becomes less and less tenable and more than like something in the our Health System. I think a lot of things are going on. You see innovation in the private sector. You saw slowdown and you have seen the slowdown accelerate since 2010. I think in particular the way we reimburse in medicare has played a role. The way in which we have done Delivery System reforms, that are paying less for fragmented and often duplicative care without regard to quality. An Important Role. I think its notable that the Affordable Care act is certainly a divisive topic and theres all sorts of heated views on the question of the Affordable Care act. I certainly think its one of the most important laws that weve passed in this country in a very long time, others who disagree. A lot of the Delivery System reforms that are in it lets you design experiments about how to reimburse in medicare, for example, bundling payments for a given treatment or curable organizations that reimburse on the basis of how care is better integrated and better quality. A lot of those ideas are really bipartisan and were supported by both Political Parties and we saw a lot of those Ideas Incorporated into a reform of how we pay doctors within medicare that passed congress on a bipartisan basis last year and give us a number of these same Delivery System reform tools to use in the reimbursement of physicians that we already had in other parts of medicare. None of this happens automatically. A lot of what we have now are not a specific game plan of what we are going to do each and every year in Health Reimbursement for the rest of time, instead what we have is the ability to conduct pilots, excerpt with different ways of reimbursement and when those are successful in improving quality without hurting commodities or improving costs without quality, then can be taken advantage of and built on by the private sector and vice versa. Its not selfexecuting. And its something that will require certainly this administration but would require the next administration and after to continue to take advantage of these tolls tools to figure out and better provide care and do it in a more efficient manner. This all matters quite a lot for the economy which is the topic of todays discussion and in particular i can think of, you know, four reasons why it matters. First of all, it matters just because a large fraction of what we consume is health care, its nearly a fifth of our nations gdp and right now in a number of respects we are consuming it inefficiently due to distortions that come from Public Policy, whether its the tax system in health care or public programs. It maybe as, you know, some democrats would some more progressive would emphasize failure in the market whether due to information asymmetries or other. So no one Insurance Company has the resources and has the incentives to figure out the full set of innovations but the federal government does have that scale and can help contribute and expand the production possibility frontier in health care. If youre talking about something thats 20 of the economy, figuring out how to spend your money within 20 more wisely, basically mean that you can potentially get more for your dollar and be better off. So that would be the first economic importance inherently important. Second, it plays a very Important Role in the labor market. When health costs are low, employers dont pass all of the savings onto employees right away. It lowers the cost of compensation and it allows employers to hire more people and results in more jobs. The congress is also true that it can cost us jobs. The third economic point would be in the long run, i think, the saving i think health costs pass through from employers to employees. It may seem as the employer is paying part of the premium but theyre paying you a lower wage so really its coming out of your pocket. That helps increase the pace of growth of wages and raises Income Growth which is one of the challenges weve had as a country for many decades. And then the fourth and final way that health costs and help spending matters a lot is its a substantial and growing part of the federal budget and the federal budget, while the deficit has come down a lot over the last six years, that deficit is projected to rise again in the future and we have Going Forward spending that exceeds revenue, to the degree that youre able to bring down cost of spending, you can help better align those two and have fiscal sustainability and thats part of what the Affordable Care act did a down payment don lowering the deficit over time by trillions of dollars over the coming decades but a lot more work remains to be done both on the health side and in our judgment in a balance fashion with additional revenue to deal with budget problems as well. So i think its through no accident that health care has been a major focus of some of the brightest minds in Economic Policy and Public Policy for the last many decades. Its a really complicated issue. Its a really important issue to the overall economy, to the job market and to our fiscal situation, but i think its one where we can make progress and we can make progress really drawing on ideas from across the political spectrum to reform our Delivery System to give the private sector more of an incentive to adopt reforms and to get more goods spending, less of the wasteful and unnecessary spending and slow the growth of prices. In your next panel, youre going hear four of the brightest minds to help figure that out. Thank you. [applause] well, thank you very much, to dr. Ferman for getting the first panel off to a good start and posing very interesting questions that we will now have the opportunity to discuss. I would like to ask our four panelists to come and join me on the stage and we will get going. Well, we have a very interesting first panel for you. Its my privilege to act as moderator. I will try to be allow our brighter minds to lead the conversation. As we have talked about. We want to discuss the various ways in which National Healthcare policy influences fundamental aspects of americans, individual economic wellbeing. Each of the experts is going to start by giving brief remarks in the order of ten minutes or so and we will open it up for questions and unleash a very interesting and informative conversation. Let me first introduce our panelists, sitting directly to my left douglas akin, president of the American Action forum. He will be our first panelists. He is probably best known to most of you for having served in 20032005 as the sixth director of congressional budget office. Prior to that time, chief economist at the president s council of economic advisers where i had the pleasure of working with him and also where he had previously worked from 19891990 as senior staff economist. He has built International Reputation as scholar doing research in Economic Policy, entrepreneurship, he began his career at Colombia University in 1985, moved where he stayed from 1990 to 2001. He became the trustee professor of economics at the maxwell school, chairman of department of economics and associate director of the center for policy research. Long before that, dr. Akin came to Public School system in pennsylvania which happens to be right to my own high school where his mother taught. Our second panelists, jared, senior fellow with the center on budget and policy priorities where he has been since may 2011. He served from 2009 to 2011 as the chief economist and economic adviser to Vice President joe biden. He is well known to many of you as having served at the executive director task force on the middle class. Areas of expertise federal, state policies and income inequality and mobility and analysis of financial inhousing markets. Hes the author of books including latest book the reconnection agenda, reuniting growth and prosperity. He is a frequent onair commentator on various cable stations and hosts his own blog and holds a ph. D in social welfare from Colombia University. Our third panelist jim, a resident fellow at the American Enterprise institute where he holds the Milton Freeman chair. There he studies health care, entitlements and u. S. Budgetary policy as well as Global Trends and aging, health and retirement programs. Before coming to aei, he had many years in public service, associate director of management and budget from 20012004i had the pleasure to working with him there. He was responsible for the portfolio that covered health care, Social Security, welfare, labor and education issues. He was more recently a senior fellow at the ethics and Public Policy center. He has an ma in Public Policy from Duke University and before that a ba in government from notre dame. He specializes to a large agree in healthcare economics. Before entering his current position he served at cea as senior economist. He has a ph. D in economics also from Harvard University, before that received a ba. Previously he worked at the center on budget and policy priorities and as chief economists at cea expertise informs not only healthcare policy, of course, but every aspect of administration budgetary and Economic Policy. And with that, i would like to turn it over for remarks of our first panelists. I will remind that if the panel goes poor, i have his picture. [laughter] that is true. [laughter] its the 70s. It was a real low point for everyone. [laughter] this is clearly a really important topic and i think whats really interesting is that we have sort of two very important interrelated problems in the u. S. , one is poor Economic Growth and one is the budgetary outlook. On the Economic Growth just to remind everyone, we grew at 3. 2 a year, probably the important thing is that even with population growth the baby boomers and so forth, the company grew fast enough that gdp capita doubled roughly every 35 years. So you could imagine seeing state of living doubled. That was the American Dream, college, vacation or whatever it might be for each family. The projections now is that the economy is 2 a year, projected population growth, state of living doesnt double until roughly 70, 75 years. The American Dream is now disappearing over the horizon. Its a very pressing issue that we have to deal with. At the same time weve got a budget outlook which is really quite daunting despite improvements that have been layered into the projections. Its still true that whoever wins the 2016 with president ial will inherit budgetary outlook. The end of the second term with the deficit of a trillion dollars, well over 3 of gdp, sort of what people look at and 60 of deficit will be previous borrowing. We are heading into a debt spiral which is unacceptable for the nation and health care lies at the heart of both of these two troubling phenomena. On the growth front, its an enormous fraction of the economy. A fifth of the economy. Longterm growth is in the end driven by population demographics, how many workers do you have and more importantly, how much does each worker produce thats productivity and healthcare sectors notoriously low sector, we have a healthcare sector that is characterized by spending where we spend too much on something and too little on other things and really misuse a lot of spending as well, so that leads to a very low productivity sector and as an economist, you really want to focus over the longterm on Getting Better productivity growth. That should be a fundamental challenge to the Health Sector and one of the most important things we can do. Its also true that if you have 2 growth rate and inflation, the resources in dollar terms that are growing 4 a year. Thats roughly what revenue is projected to grow at. 4 a year. If you look across the array of federal Health Spending programs, you see growth rates that are well north of that, 5. 2, 5. 9 in medicaid, medicare. Much faster than Affordable Care act. We have federal Health Spendings that are driving in large part the increasing budget deficit and so getting both productivity and making sure that we get growth rate that is are sustainable are key challenges in the Health Sector. The final piece is that the private sector is contribute to go this as well. We have a des guys entitlement, Health Insurance from taxation, if you get a hundred dollars in cash, you pay taxes. If you get 100 in taxes, you do not. Thats been a problem and continues to be a problem and a large openended subsidy and poorly targeted. If you get a nontaxation, if youre affluent and have higher tax rate its more valuable to you. We have a large openended subsidy thats poorly targeted an doesnt hit those that need the most help and a troubling phenomena that needs to be death with. All of the entitlements or tax exclusion need to be part of fixing the productivity in the healthcare sector. I will close by pointing to medicare as probably the best single place to focus, attempts to change the Delivery System and improve outcomes at the same cost or improve the Value Proposition in the healthcare sector. Medicare pays a fraction of bills and consensus that fee for services is a bad idea and paying doctors to do more to people is very different than good outcomes. We have now decided to collectively stop doing the panel policy, we dont know where to go on the improving the payment policies. Whats interesting to me is that i think theres a consensus whether they realize theyre not across the spectrum on what the future looks like, on one side of the aisle, the future put on a budget, medicare gets too big, you have to step in and stop it from growing. You should bundle things. They have cmi bundling operation after operation, we are going to do all sorts of things in different bundles and build bundle by bundle for better care and paper quality and outcomes. Measure outcomes, be serious about it. Same is true on the other side of the aisle, they just think about it differently. The budget is you go to premium support and say this is how much you get for this senior with Health Status and income, you have a bundle called everything. You give them an insurance package and you cover everything and you have a quality metric, quality metric of starz program. Im optimistic that we can with the sort of two competing visions for exactly the same kinds of reform, we can make a lot of progress for years to come and having Health Sector with higher value and better productivity. Terrific. I will speak from the podium because i have quick slides. So this is a very different quick little talk here because i want to focus, i just want to bite off one piece of this, which is the Affordable Care act and jobs. Here if my presentation to you over the next ten minutes is a success and while i do have a few slides, i will buss through them. Next time you hear aca is a job killer, youll walk away in disgust. Its not. Theres no evidence to support that. Thats what i would like to take through you in the next couple of minutes. I wrote a longer piece on this a while ago called Something Like the aca and jobs. They are just not that into each other and my motivation there was partly driven by the fact that when we were working on thought of the aca as jobs program. In terms of job creators certainly not what was intended at the time and its not what i think has been achieved. So i want to be very clear that im not saying the aca is a jobs creator. Outside the healthcare sector if youre going to newly cover 20 Million People, thats going to mean more demand, more employment in the healthcare sector. Thats actually pretty obvious. The reason why i thought aca didnt have much of a case to for this accusation of job killer is because the employer mandate actually affects very few employers, about 30 30 of workers are on firms that have less than 50 firearm equivalents so they dont face the mandate and of the 70 that are above 50 ftes, 95 of them are offered coverage and most take it up. If you look at the percent of workers on the margin of 30 hours per week under which mandates would not be applied, its a fraction of a percent. So simply looking at the magnitudes of those effects, whose employment would be affected by the mandate, you wouldnt expect much traction there. Then you have to ask yourselves about the subsidy on the supply of the equation. Subsidies faze as income rises. On the other hand, high marginal tax rate on medicaid which would lead folks to want to work less in order to make sure they stay on medicaid, preaca, that disincentive has been very much diminished in states that have taken the increase. So, you know, long story short, its really an question. Each dot is a state and on the x axis we have obamacares penetration, increase in insurance, the increase in the share of people with insurance against employment growth. You expect greater traction from obamacare, greater penetration from obamacare was a job killer, you expect a correlation to be a negative one and, in fact, a positive one. There are a lot of things going on here. A lot of moving parts and one of the things thats happening this is a period of significant job growth and lots of people with jobs have employersponsored insurance. In one sense its baked in the cake. So let ben spieledberg who is here tonight, took out the employersponsored insurance from each dot, each state and now we are looking at insurance covered on the rightside plot that wasnt esi and there the slope is flatter but its still a positive slope and, again, i think that what youre kind of looking for here is, is there a negative correlation, so far the answer is no. Another little test of this is to ask yourself where has job growth, whats the comparison of job growth on state that is took medicare expansion and states that didnt and you can do this two ways, you can either just take each state as an environment and say what happened in, thats the left set of bars and what happened in one state versus another state. The states that took the expansion, thats the growth rate in 20142015. By the way, your choices dont matter here as long as youre started when aca came into the system. Now, you might say, well, i dont want to treat every state as a single experiment. I want to wait by individuals and so you want to say, essentially im doing this experiment in the first case by probability scholar that is we see reaching into an earned and picking out somebody. Youre saying based on whether you expanded, took the medication expansion or not, has your employment growth rate been different from state that is didnt take the expansion and the answer is no, they are the same. Thats actually person and in that case it doesnt make any difference, so for all my rhetoric there, the results are all the same. Now, where theres really incentive here as i argued earlier where you can certainly see incentives on the books is the idea that you have incentive as an employer to shift people from fulltime to part time work so that you avoid the mandate, take somebody who is at that margin around 30 hours a week, take them under 30 hours a week and therefore what we should see is an increase in involuntary part time work. Okay, we should see increase in involuntary part time work if employers are responding to incentive. Some people have given up saying, its not a job killer but moving people from fulltime to part time work, not so. What you see here is the the blue line is the actual share of involuntary part time workers and total employment and thats been falling since the expanse got underway. Well, of course, it has. So you have to ask yourself, is it falling more slowly than it were were the aca not in the picture. I built a statistical model and i measured the model up to before the aca began and then i just forecasted it forward and you see its the same. So based on a counterfactual at least in simple exercise and im not claiming its last ward but you do need a counterfactual, based on exercise the part time and voluntary shares falls like it always does in a downturn. Final point, this is an interesting but very dense slide, dont try to read the words. My friends at the case ear Family Foundation made great slides but takes ten minutes to figure out whats going on. I just want you to look at the circled part which asks employers themselves from an Employer Survey that was just completed, so this is 2016, if you look at firms that are either large firms or with 200 or more workers or all firms which is 50 or more ftes, the part i circled, the top part shows which share of those change from part time to fulltime so that their workers could be covered and, in fact, that was 10 for large firms and 70 for smaller firms. That was part time to fulltime. Exactly the opposite of predicted dynamic. And, in fact, there were a smaller share 3 and 2 that went the other way. So you could argue that they were responding to the incentive but the magnitudes there are far smaller. So in conclusion, simply no evidence that the aca is a job killer and very little evidence that its shifting any one from a fulltime to involuntary part time work. Thank you. [applause] thank you, dr. Bernstein. Glad to be here this morning for this very important event. I do think its an interesting way to frame up this question and talk about it. A lot of different aspects with the interaction with the Health Connector and the economy, interesting way to look at the problem and, of course, probably the most important way to look at it which is we dont want a Health System that in some ways makes our economic off, it should be working to improve prospects. The question is how are we doing and what are the problems and what can maybe done as remedy . Let me start by saying that the obvious point that the additional use of resources on health is not necessarily is a bad thing. If the opportunity presents itself and one has earned additional dollar and the choice has then be made to expand some portion of additional dollar on more Health Services for one self or one family, that probably more or less a good point, we would think in most circumstances. So when one looks at the United States and the United States is spending well above our peer countries in terms of use of Health Resources on use of resources on health care its often observed that we are wasting a lot of money and i will get to that in a second but thats not obvious on its face that turns out that the richer the country, the more that its spent on health care. Thats observable on all advanced economies. Theres a correlation there. One would expect the richest country to spend a little bit more on health care and so its not necessarily a bad thing. Let me just start with that. The second aspect, of course, is that we wouldnt wouldnt really question this if we knew and felt and understood that the use of resources was taking place inside a functioning marketplace to the extent that people in a free market that is working well are using Additional Resources on health, we would say, good, that means that they found resources better than alternative use and we wouldnt question it much. But, of course, for a lot of Different Reasons that we already tiptoed up to here today, theres plenty of reason to believe that the United States doesnt have a functioning marketplace for Health Services. The United States government subsidizes Health Insurance enrollment through medicare and medicaid plus as doug mentioned through the tax preference for employerpaid premiums. The vast majority of the country is in, of course, in the Affordable Care act has done it for people outside the employer setting as well, therefore the vast majority of people in the United States are enrolled in Health Insurance in large part because of a large subsidy associated with that enrollment. So the price of the insurance has been reduced substantially through governmental policy. The second thing thats going on, of course, is that the government has gotten very involved in regulating the terms of the use of services and also the prices that are paid in many different circumstances. Through the federal government, through the Medicare Program and through state governments through the medicaid program. So a large portion of the use of services by patients is governed by a regulatory structure that has put in place in some cases very arbitrary limbs on what limits on what the prices are for services. So the result is that for a a lot of Different Reasons one can look at the system of Health Service purchasing in the United States and say its not a functioning marketplace in the normal sense as Robert Samuel indicated its neither, sort of some mixture of the two but in some ways a dysfunctional mix of the two which is why many observers in the Health System come to the conclusion after looking at all of this to say, yes, we wouldnt normally object to someone spending Additional Resources on health if we thought it was a good use of money but when we look at whats going on, it seems like theres an awful lot of waste just by objective observation, that if someone was actually spending their own money for these things and they were told, you know what, if you spend that 500 on that additional utilization of Health Services its more likely to make you worse off than better off. I think most people will say, why would i spend 500 on something thats going to make me worse off than better off, but believe it or not, there are lots of study that is show resources are being spent on things that tend to push people on average towards worse Health Rather than Better Health. So its a complicated situation because of the entanglement of governmental policy on deciding something is being spent in a good way or not. Now, what are the effects of this on people . Well, obviously when Health Spending is distorted and elevated and lowvalue services are purchased by consumers or indirectly through the Insurance Plan paying for them, premiums are artificially higher than they should be. , therefore people are spending their own resources but theyre spending them nonetheless and that means that they have those less resources to spend on things that they would value more than lowvalue health care. The second thing is that we have a major distortion in our fiscal situation, that if there is this much waste going on in the Health System, then our fiscal situation is a lot worse off for not very good reasons because the United States government through four avenues, again the tax exclusion, medicare, medicaid is subsidizing people into the Health Insurance and if theres a lot of waste in that spending, its putting fiscal policy in much worse position than it needs to be and taxes higher than they need to be, deficit higher spending higher than it needs to be, people are internalizing the future doug alluded to to some degree in con sumses which destroys how the rest of the economy is operating as well. Theres lots of reasons to worry about the distortions that are associated with poor allocation of resources in the Health System. Now, often the United States debates on health care. Almost boil down to no matter where it starts, you can kind of figure out whats going on. Convention debate. You can figure out whats going on by trying to understand is the policy thats being proposed to correct or move things to a certain direction, does it poll toward the government deciding how to fix this allocation of resources to fix the problem or try to have the market function a little bit with consumers making a better decisionmaking about the use of resources . And washington and policy makers and the Health Community is divided on that question. A lot of folks believe its a hopeless cause going back to a lot of research and theoretical thinking about this. Its a hopeless cause to have a functioning marketplace and health care and by definition, the government is going to have to get involved and do the best it can to weed out lowvalue care, which is why you have the Affordable Care act and many other measures have been enacted by both parties over 40 years, lots of interventions where the government is trying to decide, is this going to be a good use of resources, should the price be higher or lower, so the government is kneedeep into this because a lot of decisionmaking has been made to say, yeah, its kind of hopeless to get into the marketplace and lets have the government regulate it and decide. On the other hand, there would be people like myself who say its true that its going to be difficult to have a functioning marketplace but we better try because the alternative is lots of misallocation rather than the marketplace itself. So if you look at what the government is doing in the Health Sector, theres not a lot of good evidence, in fact, lots of the evidence to the contrary that it gets the answer right, that it gets the prices right in medicare regulatory policy, that it gets decisionmaking about how to steer physicians and hospitals to organize themselves or trying to do to Delivery System reforms and other mechanisms. Theres not a lot of evidence that the government knows the right answer either. Its a complicated thing to deliver Health Service to a patient. So this is the no conundrum we face. I will conclude by saying, theres a famous paper on economics and many reasons why the Health System does have problems functioning in a totally free marketplace. I agree much of whats in that assessment. On the other hand, theres also lots of studies that show that people behave in the Health System kind of what you think they behave when presented with choices. They tend to like lower cost and that when theyre spending their own money theyre much more judicious with it than spending someone elses money. Some of the normal rules of a market economy do apply in the Health System and i think we would be better off trying as much as possible to move more in that direction as oppose today relying entirely on the government. Thank you. Thank you. Dr. Feeler . Thank you for having me. So i want to spend the second half circling back on the main thread that has run through jason and doug about how do we solve this sort of fundamental question of how we are getting value for our healthcare dollars. Before i do that, i want to touch an item that hasnt focused. We have focused on the love of healthcare costs but i think what we want other sort of important way in which healthcare costs impacts families economy lives is sort of risk, large catastrophic expenses and corresponding effects on financial security. So i think it came up in the opening remarks and most people in this room know its highly concentrated. About 5 will account about half of healthcare costs. In any given year, a small number of families are potentially facing extremely Large Health Care burdens. So, you know, in thinking about economic consequences, that, of course, is something that families dont have effective protection through Insurance Coverage thats going to have large economic consequences for them. Theyre either going to forego very high value consumption, medicare itself or values and services and another thing that sort of resent research empathize that in sam some cases they are going to get medical their, those things are going to be passed through collection agencies and its going to impair families access to credit in the future to buy a home and car. So this is one area where we know that policy has a very direct and effective role in ensuring that families are well protected against catastrophic costs, discussions often focus on expanding Insurance Coverage and theres a reason for that. We have good evidence that Insurance Coverage is a good way of protecting people from catastrophic expenses whether its from the creation of medicare, Health Insurance experiment, Massachusetts Health reform and we are starting to get evidence that its working in the same way as the Affordable Care act. One thing that we should be thinking about is how to make sure that families that already have coverage also have protection against catastrophic costs. You take one example. You only have to go back as far 2010, one and six workers had no limit on annual out of pocket spending, its very hard to believe sort of the fundamental purpose of insurance is to protect people against those sort of tailrisks, outcomes that that was a market outcome. There are good reasons to think that this is an area where market outcomes might not be efficient, you know, an out of pocket maximum a contract featured thats very likely to appeal sicker individuals rather than healthier ones and the pressure on that type of out of pocket maximum are likely to lead to underprovided. We also know that thinking of low probability from behavioral economics is a place where consumers often struggle and, again, if we are talking about something, the catastrophic events that are going to affect a small fraction of the population each year, it is plausible that this is the contract feature that might end up being underprovided relative to when an economist think its optimal. Sort of another example where policy has a role, the Affordable Care act require that all private insurance policies regulatory and intervention of the type talked about but target intervention where market failure require all private insurance policy policies to include out of pocket maximum, something that had previously been required for Health Savings account compliant policies and employer coverage since 2010 means theres additional 20 Million People now enrolled in policies that have out of pocket maxes. I say that just mainly to emphasize obviously cant require out of pocket maximum again but thats an important of how we think of healthcare policies and protecting people against tail outcomes and doing that is more than just expanding coverage. Switching gears, i want to agree with whats been said that the sort of most important way in which the healthcare sector affects the broader economy is by consuming resources that could be used for other purposes and, you know, as jim said, i think very well thats not necessarily a bad thing. The important thing is we are getting value for incremental dollars and the question is how we can do that. I think as jason alluded to in opening remarks, does seem like theres been hopeful indicators that theres progress and private and the public sectors growth and healthcare costs per beneficiaries have been quite slower over the last several years and the years that proceeded that and weve also seen sort of encouraging signs of quality in terms of reductions and readmission rates and condition rates and other things. But theres clearly a lot more to do. I think the interesting thing in some ways the list of sort of two items at the top of my list and i think the administrations list for further progress actually has more overlap than i think one might have thought with the list that doug went through, which is sort of top of the list is continuing the progress on payment reform in medicare. You know, i think its the sort of failings of traditional fee for Service Payment systems thats encouraging, you know, by orienting payment around offices or diagnostic tests, not surprisingly you get offices, some of which may be low value. The administration has made a decent amount of progress in deploying payment models and episode of care or Accountable Care organizations which really try to take a look at all of the care patients are receiving over the course of the year, so if you can sort of provide that overall bundle of care more efficiently, you can share in the savings and we are going to hold you accountable for the quality outcomes. As of earlier, 30 are floating through models and mostly Accountable Care organizations, thats up from virtually none, about six years ago, we still have to find ways to tackle that additional 70 . I do want to say that i think thats a strategy. I agree that medicare is a good place to start here in some respects in that its a strategy that payment reform has implications for the system as a whole and theres a few reasons for that. Now we have lots of evidence that when a patient comes in, the first thing a physician asks as private insurance payment, but they have a practice that they treat all patients. So if the medicare Payment System gets better and higher value care, if youre a private patient seeing that same doctor or that same hospital, youre going to see improvements in the type of care youre receiving as well. I think the other thing we are also getting increasing evidence of is when medicare changes its Payment System, either level of payment or structure of payment, that tends to be adopted by private payers as well. So, again, payment reform in medicare is a way to drive changes system wide and then as an economist presumably the way care is delivered. The final piece is this, is that, you know, we know sort of the broad sweep of history, a big part of what drives changes in healthcare spending is changes in medical technology and, you know, to the extent that medicare is paying in a way that in places at least encourages use of lowvalue care thats going to create incentives for the development of for medical rnd and skewed over technology. That can have a big effect on longterm trajectory. The other sort of policy piece that i think is really important is retaining the Affordable Care act on employer coverage, the cadillac tax. The fact that the federal government be it the exclusion is, you know, kicking in 30 to 40 cents at the margin for each dollar, additional dollar of healthcare spending even for the sort of highers price most Generous Health care policies has a wide range of provers effects throughout the Healthcare System from discouraging sort of private engagement in the payment Reform Efforts to increasing providers leverage in negotiations between doctors and hospitals to discouraging sort of plan designs in order to discourage utilization. So, you know, the administration feel that is the it remains a sensible way to address distortion created by the exclusion, focusing on the least efficient plans while retaining strong incentives for employers to continue to offer coverage. Theres certainly way that is the tax could be improved an the president s budget administrations idea on ways to do that. Terrific, thank you very much. What we would like to do now is open up the forum for questions. I would ask a couple of things, one we have a couple of folks around the corner with microphones, its important that if you have a question that you wait for the microphone to reach you. Also because we have some obstruction of sidelines, i may need the folks with microphones wave. I would ask for you to ask a question rather than make a statement. While im waiting for microphones to find folks, i want to invoke the moderators privileges and ask a question on my own. It was strike to go me in listening to the comments that we had a number of commentators talk about how we are through various means subsidizing people in the Health Insurance, either esi, tax exclusion or other means and problems that arise from this. We also had a couple of speakers talk about how a very high proportion of overall healthcare expenses are felt by a small percentage of individuals and families. Given those two facts, should we be focusing less as a nation on expanding the raw numbers of those with comprehensive coverage of government definition were designed and should we be focused more on limiting the catastrophic exposure of people now currently with or without insurance . And i guess, thats the first part of the question which is a yes or no question. The second part of the question, if yes, how do we go about doing that . Anyone want to take a crack . I think youre onto something there. I do think that the Public Interest really is making sure that everybody in the United States as much as possible is enrolled in an Insurance Plan that protects them against a Major Medical event where, agree some of the literature would indicate inability of consumer to understand the ramifications of such a huge event on their finances. Predicting actually it turns out that its true that, you know, 5 use 60 of resources but its a little bit harder than you might think to predict what that 5 is going to be. Its not the same 5 every year. Lot of people are at risk and get cancer. I think the policy should be directed as much as possible in that direction, also you can do that in a way where people then have more on the margin, incenti ive in the event they do have a catastrophic event. If you do have a major event we are going to have an organized way of providing care to you and system of some sort. That would be the best sort of Public Policy goal. And then, you know, below that, i think theres been an overemphasis frankly on trying to design every possible permutation of preventive care, primary care, other things where the evidence is weaker that we can no in advance that an intervention is going to definitively push people toward Better Health over time. So i think more consumerism, markdriven approach there would do some good as well. I may disagree with the view that the primary focus should be in catastrophic protection. I think its really important, i do think, you know, if we think that catastrophic policy is one that has an out out of pocket maximum of 7,000 which is sort of single policy maximum under aca, i think for many families its going to be too much out of pocket exposure both from financial security. We know economic models you write them down and people develop the buffer stock savings that that should be the sort of shock that they are able to bare and we know that many consumers dont have that as well and likely to mean that that sort of catastrophic policy is not a fit for them in terms of financials mentioned. I think we all know that moderate cost sharing could be a good tool for discouraging overutilization and decent amount of evidence that costsharing becomes more significantibiotic and accessive the sort of care isnt necessarily the lowvalue care. A lot of it its highvalue care. I think that there is a sensible role for costsharing and for making sure that we are not sort of putting an emphasis on generous coverage but to ensure catastrophic coverage is a step too far. I would agree with that and underscore that point. I think youre referencing article from 1960s which is important in this point that suggests health care is really a different beast when it comes to consumers being able to rationally shop for the best bargain and i suspect many people here, myself included have been in a situation where you have a system thats beginning to nudge you to skin in the game and consumer kind of shopping and you often felt incapable of doing so and, you know, many folks in this room are pretty educated consumers and so i think health care is different in this regard. It can be pushed too far and, in fact, one of my concerns is that the increase in high deductible plans is moving in that direction, maybe one reason why costs have been growing more slowly. But, in fact, according to the kaiser Family Foundation, Something Like 65 of the employersponsored plans with firms over 200 workers are now a high deductible plans and as matt suggested, that can have a downside. It doesnt just disincentive to finding useful health care. You need to find the edge on that approach. I guess im more sympathetic. Its easy to say health care and somehow made the mistake of saying theres just one thing out there called health care. Theres an enormous array of Health Service that is are provided that range from very acute emergencystyle care to highlyelected procedures and they shouldnt be thought of in the same way. Allowing for catastrophic backstop but i dont think jim said, a catastrophic plan, you want to make sure theres a catastrophic backslot and innovation in the private sector that gives you better choice that is people can make to cover the kinds of things that face at that point in their life cycle. That is what is private sector does than the government. The government inherently bakes into the cake, these are the choices youre going to have and the innovation is quite poor. So i think we really do have to worry a lot about catastrophic backslots and take advantage of innovation over time. Before we open it up further, i would like to pin you down on one more specific item. Weve had a couple of criticisms uttered of the tax exclusion for employersponsored insurance and reference to the cat lack tax plan. Is that our best able antedote or should we be looking at another approach Going Forward . Who gets to answer that . Whoever wants to volunteer. [laughter] so we have a cadillac tax because when campaigning to be president barack obama attacked john mccain for propose to go get rid of the exclusion. Thats the only reason we have it. A back door way to get out of the exclusion. Dont do it in the backdoor way, get rid of it. Watching someone in 15 tax bracket pay 40 in part of compensation, it doesnt add up from a tallahassee policy point of view. Scrap the cadillac tax, get serious about tapping the exclusion in some way, dont have to completely eliminate and get incentives lined up better. So i would say a few things in response to that. I think first cadillac tax is on the books. It is in law. I think one wants to be very careful object saying that we should repeal it with sort of no replacement in hand. The second thing i would say is i think the the cadillac tax is much closer to exclusion than given credit for. First of all, if you look at sort of much of the income distribution, when you take payroll and income taxes together, in fact, the marginal tax rate on labor income doesnt vary that much. The cadillac tax is going to be similar to a cap on the exclusion. I think the other thing to keep in mind is when youre thinking of the 40 rate, thats a 40 stated as a sales tax rate so you want to think about that 40 rate is more like 286 rate stated in income tax terms. The truth is what we have in the cadillac tax is sort of not that different from what we would get with the cap on the exclusion and so i think we should be cautious about saying that this alternative will be so much better when i do think that in the current environment and not current, in the current environment we lived in the past six years, that tax on the books point is really strong. I think all of us agree that the distortions need to be dealt with. The idea that theres a tax on the books that at least part of the way seems important. One of the big objections to the cadillac tax is there wasnt enough geographical variation and i would argue that you could certainly explain this better than i am and that the administrations latest version of that builds variation in a way thats helpful. Cost variation. Im not going to belabor this and the bird is not in there. It got pushed back in the drafting, delayed in implementation and i will say now you will never see the cadillac tax actually implemented. So that argument higher probability of esi cap than cadillac tax . We disagree. I cannot [laughter] we are having too much fun. We can probably go on for half an hour on this. Theres a couple of things, one is that dougs initial point is the right one. It was designed for political reasons. So what do you think that administration, the next administration to do . In order to lower these Health Care Costs for consumers . So i will jump in here for a moment so first of all i think, you know, in talking about premiums, i suspect that 25 youre referring to is marketplace premium, i think one thing thats important to keep in mind is that majority of people who have private insurance have private insurance u through an employer we just got data month ago now on sort of premium growth and employer coverage. And it was 3. 4 i believe between 3 and 4 . You know, the last five, last five years in pfizer premium are are five of the lowest of the years weve seen in that survey. I think it is important to you know be careful about where the premiums are increase and where theyre not. I think in terms of, you know, how to think about the marketplace this year, i think there are some just one time factors with premium growth this year. Temporary Reinsurance Program is phasing out. It does look like insurers set their premiums too low in the early years and adjusting to that on a one time basis and then some other one time factors as well. All of that said ink, you know, president wrote a piece probably seen in the journal of the American Medical Association earlier this year saying there are clearly things that are better in terms of how the mart place is working. Higher Financial Assistance for people in order to spofort make premiums more affordable is one important step. President has talked about introducing a public option in areas with limited competition in order to put down pressure and premium and prices so theres certainly things that can be done. But i also think its sort of important not to overstate. Make a quick amplification i think the most important contribution, the next president could make would be the public option to add the public option and very much the sense that matt just suggested. And i want to bring in one, the mention of the conversation that goes back to comments that bob hamilton made and i very much appreciate your comment an laid out things very is nicely but i think one thing that you did speak to and all left out was E International dimension and here you see i think evidence that contradicts bobs assertion that if you move towards universality you have to spend more, in fact, there are universal programs in pretty much every other advanced economy that he spends much less than we do as a share of our gdp and one reason is because they have almost some version of a public option so that would be a, my strong answer, strongly held answer to your question. So i would say three things quickly and lovingly. [laughter] forget the public option. Weve run that experiment what is called the coop they were not for profit with taxpayer backing they all fail. Only public option is infinite back solution. That is im not done. Number two, it is hard to praise the aca because insurance has low premium groaghts. Promise of the aca is we with wont touch eizi so weird and i think that Exchange Markets are just in the early stages of a death spiral and theres going to be little saving them. They have turned into glorified high risk pool and really expensive you can do one of two things. You can force people in with a tougher mandate or you can throw money at it and neither is going to happen in the next congress. Could i actually jump in on the death spiral point i think it is extremely difficult to have a death spiral the way the credits are structured if premiums rise in an area, the tax credits rise match. Which means that sort of fundamental academic level is that premiums go up, Healthy People leave. That mechanism simply cannot function in this market. So, but theres a supply problem because youre down to one choice per 20 of the population. Two choices for 60 of the population youre getting it on the supply of insurance side theyre leaving. [inaudible] in other areas where the government has become concerned that there might be market inefficiency or market anomaly like executive comp for example theyve imposed standard disclosure requirement it is in order to give visibility to Market Participants and enable everyone to see who is getting what from whom. Why has there not been more of that in the Health Care Area to create Greater Transparency and to true cost especially for planned sponsors who are the pay ers for most of this . Anyone want to take a crack . The beginning of it in a lot of small ways, it is a, you know, i think our Health System is so vast and so complex that sort of deciding on one rule thats going to apply across a lot of into a lot of it is almost impossible to do. But having said that there are individual initiatives that point in the direction youre talking about. I think one that is probably most promising is this effort towards reference face pricing interesting that basically says you know, big grouch employers get tailgate and they have, you know, a lot of planned participants and they basically say to them, with canvassed all of the providers that are in all of our various networks, and weve figured out that a a hip replacement, you know, i high value low cost, hip replacement cost you know x dollars. And therefore, all of our Insurance Plans are only going to pay x dollars. For a hip replacement and you can get it within a 30 mile radius of all of us at this particular site or these five sites, and weve organized and made sure that its available to you. However, you can get it from any of the other it is that are also from the in network and some out of network participants. But theyre all required to post their price in advance so you know if you decide to get yours done at an alternate location you pay the additional price, so this experiment has run in california for several years. And it is basic, it is driven the price down immensely, and you know in a Pretty Simple way. I think that kind of thing is very, very useful. And they should probably apply it you know across the board and frankly imagine you can do that in medicare. Right, it would be a revolution all right. But its complicated in medicare because politics are much worse. Okay. And you have political actors opposed to just, you know, employers doing it. But but i think thats the kind of thing that can have a big effect. Do we have a question over there . Good morning, thank you for all of your remark hads fascinating. My name is diane with network for Regional Health care improvement. Any comments on the consolidation of that Health Care Market and potential impacts that has on economic well being . I think this is a really important point and i have felt for a while that Genuine Health care reform is best done at the state level where states have the most direct impact on the nature of competition in these local health and deliver local Health Care Services that sort of scope of practice law significant of need and facilities things like that. And as we see the consolidation if thats accompanied with market power that just is pure price increases for the same utilization we have big problems there. Im worried about it. So we have a question over here. Thank you, hi. Start with c news for those shopping on marketplace for insurance, before the Affordable Care act you could go and shop for what you wanted, if you wanted certain coverage that would determine the cost for your policy and your deductible, et cetera, now, because the Affordable Care about says that policies have to cover these, everything that can possibly happen, for example, my son shopping. He said why do i have pediatric dentistry and maternity benefits . And how does that play a role in driving up the cost and could that play a role in decreasing the cost . Thank you. I think that goes to him. [laughter] so right i think one of the key hinge this is to keep in mind is that one of the goals of the Affordable Care account was to ensure that sort of burden of Health Care Cost for shared act equitably, and if youre going to have people only pay for the and keep part of that is making sure that people can pay coverage without even if they have preexisting condition. If you allow people to have policy based on what theyre going to use through the back door youre going to end up back in a world where the people with preexisting conditions are paying for a policy that covers the care they need and people without preexisting condition are not buying that care and so i think they sort of that structure is a key part of enabling the enabling an Insurance Market where people can get coverage and get care even if they preexisting condition. Well, i think its really important that he began the answers very important point which was equity discussion. The question is whether a shared understanding of what is equitable. Basically theres a socialization going on here of a lot of premium cost across parts of the population. And i think some of the difficulty with the aca really is with people, the electorate having a different understanding of what they think would be equitable opposed law of the pa. Not quite sure that it is equitable l that people maybe of lower means subsidizing care for people with higher means that actually can happen, and because you have people who are not going to use a Certain Service paying for a premium for people that will definitely use the service and a perhaps have, you know, comparable income. Okay. So i think theres its a question of what is equitable, and thats a subjective question. Its not a, you know, something that different people can have different points of view on. I agree with the way jim just teed that up. I think its important, however, i would add that really what youre describing is called insurance. I mean theres just no Insurance Team that works without the subsidize the sick ore people who dont burn houses down those people that do. And thats the nature of thats the the nature of insurance, and i do agree with jim that it perhaps needed to be explained better. But i will say that what youre describing should ultimately lead to an increase in cost against the historic trend, in fact, of jason and matt and others have is described this is i dont think a controversial point. In fact, cost are going a lot more slowly. So it could be that some of the efficiencies that have been described today are offsetting cost of the type you mentioned. But you know at the end of the day the trends are telling us that, in fact, were doing better in terms of holding down cost growth. We have one last question. Across the room not sure, is that it . All right well good. I think we are done. And thank you everybody, thanks for our wonderful panel. It was a great discussion, and were going to take a 15 minute break and be back at 11. Thank you. [applause] thank you, thank you very much. [silence] so it will be about a 15 minute break here on this forum on Health Care Cost, next panel will review links between Health Insurance and savings inequality and specific policy and entitle isment reforms that are designed to reduce Health Care Costs. Again that will u coming up in about 15 minute here is on cspan2. National public radio had a recent article about Employee Health benefits and it say it is in part, high detect thible health plans are the new norm. Over half of employee this is year of a Health Insurance policy with a deductible of at least a thousand dollars. Thats according to a survey of employers from the kaiser Family Foundation. It is the continuation of a multiyear trend of companies that are passing more of the cost of Employee Health care back on to workers. Overall, Health Insurance premiums for a family covered by an Employer Health plan rose by an average of 3 this year to 18,142 dollars and that employees pay an average of 5,277. Historically thats not much of an increase, but it is outpacing rate of inflation so takes a larger chunk of worker income and employer profits. For the rest of this break, ill show you a pofertion todays washington journal. Looking at the president ial campaign. First guest of the morning is tim graham with the Media Research media center director. Good morning to you. Good morning. Tell us about this center, what it is, what you do and perspective you come from. Well were founded in 1987 just almost coming up on 30 years now. We be monotort National News starting with the Television Networks also some print. You know still some newspaper analysis. But mostly focused on television news. Were recording all of the time. All of the networks, cable, broadcast, and then trying to analyze those and bring study some patterns and be able to talk to people about, you know, how much coverage there is of things how much there isnt of things. And kind of the the general tone of things. With those things in mooned then when it comes to campaign 2016, talk about what youre seeing particularly after the events of over the weekend come friday with the release of that tape about donald trump. Well first thing we do is say how many minutes is this story getting . We are asked through last evening up to 167 on abc, cbs and nbc thats an enormous story. You know, just since friday. Were then comparing that to other other clinton scandals which generally gets trended off in a slow fashion. They never take off like this. This is more equivalent to for example, the Chris Christie bridge story where youve got the accounted 88 minutes in the first 48 hours. Thats the kind of thing we do that basically say the media is going full bore on this. The media thinks this is something thats enormous. A crisis, whether or not that is true, theres certainly making had it or creating it as crisis. When if that many hins have been applied to donald trump tape how many applied to reare lease of the same time as Hillary Clinton email then . Far less. Just over ten minutes. So i mean thats what this happens all of the time. Is that democratic scandal, democratic problems are issues, the leaks, the fbi issues, the emails, they all get less attention. And the tone of this story is, obviously, different as well. So i mean i think that there is not a tone of crisis when they reports on hillary email theres a tone of hillary so embattled by people who wont let her be. This is just a different tone. Obviously, thats harder to analyze than the minute. Theres clearly been a difference here in minute and with donald trump over last two years is dominated the news in the republican primaries hes come to night the news now in the general. Question is whether thats good for him. I mean been good for him in the primaries and idea now that this is not a great for you in a general election. U would you say theres bias then against donald trump and the coverage . Theres not just bias against donald trump but news media has been very plain and they have an essay on front page of the New York Times saying this election is too important for us to be trying to be even handed. I think that coverage on networks, the coverage on television basically has that whole flavor of this man is some sort of epic threat to the country. And has to be stopped, were not seeing objectivity, and i think that matches where were seeing in public pl and media all time low especially on republican side. Because republicans look at the media and say these people you know, right now the whole talk is the whole Republican Party is going to explode and fall apart. Is that Wishful Thinking . I dont know. But the media keeps talking about it. So theyre setting the stage. You know, whatever they talk about, is what we have to talk about. Our guest is with us and until 9 00 and if you want to ask him questions about coverage and coverage of the candidates. 202278 8,000 and third [inaudible] and unit doesed 2027488003 tim graham from Research Center we have calls lined up for you it lets start with kerry. Kerry is in north carolina, kerry youre on with our guest you are donald trump supporter. Good morning, go ahead. Good morning mr. Graham. Im bias during first debate hillary mentioned that obama inherented a mass, but last i remember is that are you still there . Yeah, were on go ahead. Okay. Okay im sorry about that. That we put democrats in control in 2006. The to keep the economy from falling apart which she said barack obama inherited if thats true george w. Bush inherited the war and this is for clinton infidelity coming into play because if he would have had his mind on the country instead of hands on monica twin towers would be still standing, never would have went into afghanistan and never would have went into iraq. Hillary guest respond. I think it is interesting in a sense and that is that Congress Never gets really blamed for the economy. We have a tendency where we talk about the economy and news media it is really the president s issue. And that had is not fair no matter who president is, obviously, the economy is a very big thing. But yeah i think that a lot of times that we would argue that the news media excuses the democrats from i think this is they certainly werent going to blame the collapse in 2008 on democrats in congress, and yeah i think when it comes to 9 11, im not sure 9 11 could have been prevented. But we can easily tell you from the Media Coverage at the time that the news media clearly thought that was a bush scandal and, you know, the attacks itself. And never really wanted to investigate, you know, how did president clinton do in preventing this threat . Even the 9 11 commission to interview president clinton they werent interested an they didnt really want it on his way in any way. So i mean, the assignment of blame is one of those things that you look for in the tone of News Coverage and i would tell you i think that bill clinton has never really been blamed for being weak on terrorism. From hendersonville, nevada hi. How are you . Fine youre on with our guest, go ahead. Yeah [inaudible] let trump get away in the primaries, all of the things that he does. Trump has [inaudible] trump has hack our emails. So the media hasnt been as tough on trump as theyve been on Hillary Clinton. Thanks caller. This is again where i think minutes count. I think you could look at this and say has the news media done an adequate job of investigating trump in i would say this is still happening. You would look right now at the Washington Post and doing a whole series of things on trumps foundation and Washington Post, in fact, has done an entire book on donald trump where is the book, the Washington Post reported did on Hillary Clinton . They didnt do a book. Because theyre not interested in, you know, trying to warn the American People of Hillary Clinton. This is the sort of thing that tells you our National News papers, the newspapers people fine with the most prestige one of them is on front page saying we have to defeat donald trump from our news pages and other is writing books about donald trump and how he needs to be exposed. You know, regardless of whether you like donald trump or you dont like donald trump, and as we know theres a lot of republicans that are not big fans of donald trump. Theres no mistaking of the news media are trying to make sure he loses this election. I dont think thats a question at all. What would you then say about coverage about Hillary Clinton email server use coverage the recent emails weeks that came out. Clinton foundation theres been coverage of that. But are you say theres not equal coverage of donald trump. Theres no equal coverage and a notion of lets move on. Hes excused. Fbi didnt prosecute. So clintons always used this sort of strategy if were not indicted if were not on trial then were innocent of everything. You know, obviously, even fbi director said that mrs. Clinton was extremely careless but i think what people now are missing all of the developments that are going on right now. Networks arent really covering why did they grant so many immunity to all of hillary aids . Its what happens since comey came out and decided not to prosecute. Thats a rising story in the networks are not doing so when donald trump steps on the debate stage and said you be in jail. Most of the country has no idea what hes talking about. Because media is not talking about it. Supporter of donald trump and this is mary from north carolina. Bakersville, north carolina, hi. Hi. Youre on, go ahead. Okay, i am a christian. And im for trump, and christianity is under attack like donald said. And the constitution is under attack. And i walked up to people, and i come right out and ask them are you a trump supporter . And everybody i ask is a trump supporter. And theres very few thats not, and i asked at the doctors office. I asked the nurses. I just go right up to people and ask, and he has got support. A lot, all of the christians are voting for him, doctors, cops, everybody is voting for trump. We need to secure the borders. Hes got mindset and i believe hes going to win this race no matter what you guys think. People are coming out of the closet and voting for trump, and all they got on him is his past. Inch okay, thanks. True when it comes to trump pavement you were hearing this morning that trump voters say whatever he said in 2005 wasnt think like a president ial candidate. That works for them. Funny thing about bill clinton is and i think this is the complaint too theres lots of things that blipt didnt just say but that he did. That he was charged with Sexual Harassment that he was charged with with accused of sexual assault. These are stories that have gotten less coverage than the trump tapes have gotten in the last three days. Your recent post and taking a look at this ill read the headline that 150 minutes for trump papers, paula jones debut february of 94 when had she spoke as a press conference saying bill clinton sexually assaulted me. 16 seconds on abc other two did nothing. You know, this was story that they all decided were not going to do today. And were again through last night up to 167 minutes on this. So yeah theres a difference between an allegation of Sexual Harassment of actual if we remember paula jones story exposed himself and told her to perform a sex act. This is nothing like that. I dont approve of what he said. But its different than what clinton did, and it just shows you again i think what they always try to do with networks will say this will upset trumps religious supporters more. Clinton is supporters dont get upset somehow by what he did. From john and trenton, new jersey supporter of Hillary Clinton. Hi john, go ahead, youre on. Yes, im going to actually [inaudible] missed Tim Graham Obama has shaved half of the pennys that donald trump is saying about women. If obama had did that, if bum had said this thing about white people, would he be president . I want you to be honest. Tell me would he be president . President , would he be not in the lead . If he said half of the things donald is acceptable donald trump to get up there and say about muslims, about black people, retarded people why okay to say obama half the things would he not be indicted and republicans not want to impeach him . And be whreep didnt mean to cut you off so fast but you can respond. I think what i would say is that there are blips of tape that conservative and republicans would have wanted them to talk about that they didnt want to talk about. Starting with the whole question of reverend wright and sermon, those came very late in the primary cycle in 2008 and when they did, the media came to it in a very protective way. They came to it to try to explain away why barack obama qowld go to this mans church where he cheered on 9 11 as chickens coming home to roost. Should that have been a problem for obama . I think so. But the news media decided it was not going to be a problem. I did a whole special report on how the news media tried to say, well most americans just dont understand what is said in the black churches. Evident in his excellent panel. We encourage the contest of ideas. In fact, if you are in our culture which i invite all of you to vacation in, we have a culture of scholarly challenge. Store panels are balanced, our views differ and that is certainly the case in this particular panel. We have a divergence of views all with the same interest in mind. This panel is the role of Health Care Costs and income inequality debate which as you know has been a very prominent feature of political discourse in this country and really throughout the world where health care and income issues are prominent. We have three excellent people to give us commentary today. We will structure this panel as indeed chuck structured his. Each panelist will give about 15 minutes of presentation, a little bit on the screen so be attended to that. After which we will have an opportunity for questions and hopefully answers could sometimes there are questions without answers. Let me introduce each of the panelists now and then i will turn to them separately as we go forward. My colleague Mark Warshawsky will lead this panel. Will be the first person to speak, he is a Research Fellow where he specializes in just a number of topics gifted and a host of areas including into retirement and Health Care Policy. Hes a prolific writer with over 150 scholarly articles and several books. I met mark when he served in 20042006 as the assistant secretary for Economic Policy in the treasury, and thats we lead the fight for the pension protection act of 2006. You is a number of the Social Security Advisory Board from 20062012 and was vice chairman of the federal commission on longterm car care in 2013. He has a ba from northwestern and a ph. D from Harvard University. Judith feder is her second presenter today, a longterm acquaintance of mine and i think everybody in this room. Professor of Public Policy and from 19992008 served in the cache but i dont why i have trouble served the dean a lot of academics. [laughter] i just saw the word and i froze. Serve as a dean in what is now the school of Public Policy at georgetown university, specializes in health care and Health Insurance industry. Since 1984 has been pursued at georgetown university. She served in the clinton administration, senior fellow at the center for American Progress and now Institute Fellow at the urban institute. Dr. Feder has degrees from brandeis and Harvard University. Not a harvard man, Richard Burkhauser is the professor of Public Policy of policy analysis at cornell university. He specializes in how Public Policies affect vulnerable populations. I served with richard for many years on the Academic Advisory Panel at the Pew Charitable trust. He joined the cornells department of policy analysis and management in 1998. And 2012 he became a joint appointment as a professorial Research Fellow at the Melbourne Institute of applied economic and social research at the university of melbourne which is in australia. He divides his time between there and cornell. He has degrees from st. Vincent college, Rutgers University and a doctorate from university of chicago. And with that, mark, its all yours. Thank you. I wanted to today go over a paper that ive written, looking up the connections, and its a very intimate one between the earnings of equality and rapidly rising cost of employer provided of insurance. This is one of the measures of economic well being which are prior panel did not mention. They mentioned many others and theyre all very relevant but this is one they did not menti mention. And it is, the research that ive done and the empirical analysis i have done has shown that there is a very close connection. We have heard and read about very many studies that have looked and documented an increase in measured inequality, whether measured by earnings or income, and measured from taxpayer, from Social Security earnings record, other measures. They all have problems your some perhaps particularly the tax evade has unique characteristics everything maybe richard will discuss some of those a little more but lets just take those facts as given, that there has been an increase in lets focus on earnings. Earnings and equality. People dont just get paid earnings. They get paid benefits. They get paid compensation, which includes pensions, Retirement Benefits and most probably and most significantly Health Insurance. At the same time weve seen this increase measured inequality weve also seen the very rapid increase of the cost of health care and cost of Health Insurance. And the employer pays for the. And its been very rapid. We will discuss it in the end what more recent shows about those trends but looking at lets say last 20, 30, 40 years theres no question its been a very rapid increase. The question is is there a relationship . Just a moments thought, almost simple arithmetic would indicate that there would be a very important connection. And thats as follows, and well see this basically again and again. You are paid compensation. Your employer pays you. He pays you your earnings and your benefits. Health insurance by its nature is sort of come it doesnt matter whether you are first degree proclamation from doesnt matter whether you are rich or poor. Your employer pays the same amount whether youre a high income were going lowincome worker. By law, by the tax code within the same employer they are not allowed to discriminate between different earnings working forget to provide the same interest package, the same Health Insurance package. But as a proportion of compensation for the low earning worker that Health Insurance would be a much higher percentage of compensation and for the high income worker. Therefore, it Health Insurance costs increase, that will have a bigger impact on the low income workers than on the high income worker because the employer after all pays the marginal product for the workers, high income worker low income worker is lower product. The money has to come from somewhere. If its going into the cost of Health Insurance, its not going to go into earnings. And so, therefore, the Earnings Growth for the lowincome worker will be lower than for the high income worker. And lo and behold this is as i said simple math. But lets try to fight in the data. I looked for 19992006 using a unique data source for the bureau of labor statistics, which is superior to many other data sources in this area because its not a survey of workers which is sometimes has a lot of airs every. Its not a compilation of different data sources mashed up which is almost like assuming the result. This is consistent data that comes from surveys and employers, done by the government in a very careful way. And lo and behold look at the dated from 992006 was exactly, exactly confirmed, that the increase in inequality measured inequality of earnings was entirely due to the increase in the cost of Health Insurance. The key assumption is that it is larger than for the higher pay. Again sort of an obvious point but its sort of the key thing. Here is a chart looking at more recent data from 1999 through 2016. It shows this point without looking at different percentiles of income earners but it looks over all. Basically hear you here you see the share of earnings, station increased up to 8. 4 of all of the benefits now change. That led directly to a decline in the share of earnings, what the worker actually sees from 81 to 78 . Thats at the macro level. Lets look at it at the micro level in terms of different percentiles of workers. I looked between the 30th percentile in the 99th percentile. The top 1 . The 30th percentile represents basically around the minimum wage, fulltime worker is in that range of 30th percentile. This is looking at data from 962008 and the reason why i chose these years was because a brookings study which was on a similar subject using entirely different data look at these years and also wanted to sort of batch the that study. It just sort of reads exactly according to the simple math explanation, the simple economic explanation that ive laid out. Lets look at the bottom of this chart. The growth of earnings and compensation so that for over this period, the lower income worker, the earnings increased by 45 in the highest income worker, 52 . So thats the concern about inequality. Thats what everyone is talking about. When you look at compensation which includes the value of benefits, a particular annual Health Insurance, their compensation was pretty much at the same rate. So that there was an entire crowd out of the increase in earnings of the lowincome worker by the increased cost of Health Insurance. But for the high income worker of course that represents a much smaller percentage of his or her pay. Those are much smaller crowd out. You might say this is the end of the store but lets continue to look at other countries, and other ways of looking at the dated. Here i expand the time period of the analysis to looking from march 92 to march 2010, and i chose these years because they were similar points in the business cycle. Clearly the recession, unemployment, of the impact on earnings costly want to control for that. The easiest way doing it is looking at the same point in the business cycle. So this is just after the recession win pretty much the bottom of the recession and just coming out of a recession, about 922010. Its a longer period of time so you would expect it to be as a nice the but basically i think the story, lets look at the bottom of the panel, the Earnings Growth for the low income worker over the spirit was 60 . For the top 1 it was 78 . Looking at compensation for the lowincome worker was about 70 and for the top income worker, top percent it was 82 . Begin not entirely explained by the increase of Health Insurance because you had a longer period, theres more going on but a least half of the relative holdback of the low income worker in terms of Earnings Growth is again explained by the decline, by the rapid increase of the cost of Health Insurance provided by the employer. I did a simple regression. I wont go through the details. Its a simple regression so it controls for a couple of factors, particularly the business cycle. Its a nice result, pretty robust. Again it shows the finding that for the same increase in the cost of health care, the negative impact on the lowwage worker is negative 66. 66 annually compared to provide income worker of. 3 . So again it sort of demonstrates the point that earnings, the cost of the earnings of inequality problem is largely because of the increase in the cost of Health Insurance. So i think many, theres a debate as to how significant this policy point should be about income inequality in earnings inequality but i think we all agree theres something there. That theres something to be concerned about but then the question is how do you deal with it . Do you deal with it through redistribution policy, tax policy, other Government Policies . Or deal with it directly . Deal with the cause which is the increase in the cost of health care. And, in fact, this one, this stated goal has not been mentioned much but it was to quoteunquote bend the curve which was to control the cost of health care for everybody. That would be that he could impact on the quality issue. Here i want to make a point which is basically and disagree with some of the prior panels, particularly jason furman. If you look at Government Data from the health and Human Services department, basically Health Expenditure account, i think he had somewhat of a different story than what he presented. This is the latest data. You his health has been increased by 23 , following growth of 2. 9 in 2013 period to reach 3 trillion per person. Weve seen an increase of this low in the increase in the cost of health care, very temporary, just 2013. For whatever reason i think it is not well understood but basically were back after the rapid increase in Health Care Costs. So what to do about it . Like many of the panel i think tax dollars are important considerations, and im in the school of cutting back on the payroll tax by employers but i think there needs to be strict enforcement of antitrust laws in the Health Care Sector and to think we do need more scope for consumers sensitivities to cost in the design of Health Insurance programs from both public and private. [applause] thank you very much. Outstanding. Dr. Feder. Thank you. Mark, im glad you brought back this dimension, the challenge, the relationship between health cost in inequality. We can look at big picture and focus too much on budgets or focus only on budgets, or not a small problem productivity, other issues but i think youre talking about human consequences in terms of well being and its a real problem. Weve actually known for a long time that Health Cost Growth has come is contributing to diminished income essentially beating up wages, and thats what you very nicely demonstra demonstrate. Entity our health finance, financing system is a major problem. Jason albeit a vexing problem. And social science we often call that a weaker problem. To fix that we could problem to get to the solution i want to dissect the issue a little bit more than what to looking at both by going back to the Bigger Picture of how financing that we discussed this point also making some finer distinctions in the relationship between Health Insurance and inequality, less than trying to fix the problem we actually make matters worse. I want to start by reminding us that insurance, independent of the way we choose to finance it, and those are two Different Things, is as matt fiedler reminded us this point, protection against risk. And a protection mitigates inequality if it protects people at the lower as well as the higher end of the income spectrum. The fact is that prior to enactment of the Affordable Care act the Nations Health finance system systematically excluded lowwage workers along with nonworkers, many nonworkers from that protection. And that was not an accident. It was a function of policy and market decisions made over decades. Nor was the Affordable Care act approach to addressing that problem an accident. But first lets talk about the emergence of employersponsored insurance as the core of our Health Insurance system. That approach, different from any other advanced industrial countries approach to providing Health Insurance to its citizens, emerged in the 1940s as Health Insurers discovered that by marketing to Large Employer groups they could beat the challenge of risk selection. Because Large Employers essentially constitute what we might think of as natural risk pools, that employers then in that period increased Fringe Benefits because of wage controls during world war ii. Employersponsored insurance premiums received favorable tax treatments which was codified in law in the 1950s and that exceed the cost of treasure of more than 200 billion per year. And that labor turn from looking for government to provide National Health insurance to the bargaining table to gain benefits alongside wages for their members. The dramatic growth of employer sponsored insurance into 1940s and 1950s led advocates for government sponsored National Health insurance to alter their political strategies. Laying the foundation for actually creating what became a necessity for the Affordable Care act. That has been challenged in employersponsored insurance which by the mid 50s and in the 1960s had grown dramatically. Advocates for universal Health Insurance targeted their efforts to expand insurance for the population that employersponsored insurance would not cover largely, predominantly the elderly. It was easy for them to argue with that employersponsored insurance would never reach that population and the government had to do the job. And though it wasnt at all easy to enact, medicare was born along with medicaid to cover what we might call, consider the deserving poor, people in our historic welfare categories, predominately kids, i get women and people with disabilities. The premise of which proponents sold medicare was that employersponsored insurance would cover the working population. That was working, they argued, while government would take care of people not expected to work. That was clear for the elderly, and congress added the deserving poor to all of future expansion of medicare. Advocates of government based National Health insurance, the way this was a risky strategy, because they still had their eye on getting everywhere, they figured they would overcome that risk and later extend medicare to kids and into the rest of the population. But their actions firmly entrenched employer sponsored insurance as the primary source of Health Insurance coverage for the working population, despite the fact that millions of lowwage workers never got it. And i would just remind us that twothirds of the uninsured population preAffordable Care act were in working families. Now, lowwage workers were doubly armed. They were excluded harmed. It were not getting employersponsored interest is a jobs, lowwage jobs. They were lousy jobs. And they were too rich and not in the deserving poor category for Public Protection for medicaid. And given the nature of the nongroup market plagued by the risks of adverse selection, that arrangement left everyone, not just lowwage workers, at risk if they get sick, lost a job, got divorced. We all know the litany of problems with the nongroup market. With 85 of the population insured preAffordable Care act, that risk was not terribly say, special to the majority of the population relies on employer sponsored insurance. Opponents of expanded Government Protection raised what they perceived as an even greater risk to the population. That if we expanded coverage to everybody it would disrupt the coverage that people who counted on employersponsored insurance already had and had come to count on. Hence the political strategy behind and the design of the Affordable Care act. Again, just as in the 1960s, Public Policy left the employersponsored insurance impact. What the president really meant when he said if you like your policy, Health Insurance policy, you can keep it, he was talking about employersponsored insurance. And the law built a new marketplace outside and around it, and but for the Supreme Court decision created a medicaid for a protection, not just the people we have historically treated as deserving poor, but everybody with incomes below a specific threshold your those actions fundamentally mitigates inequality, extend interest protection to lowincome people and benefiting people of all income. Not only but by providing Health Insurance but by reducing was often referred to as job loss. You dont have that much anymore. Facilitating economic mobility and ottawa now ship for people who were previously tied to the jobs to keep their Health Insurance. Its no surprise then that the aca does not mitigate employer sponsored insurance that is at the heart of our Nations Health finance system. But as you note, and the discussion and joe has indicated, the heart of the problem is installation, not interest. Just as our policy choices left millions uninsured over the course of the 1900s, it left us without a Public Policy mechanism to constrain without insurers paid providers. The fundamental driver of Health Care Costs. Only after two decades of basically being providers whatever the cost were overcharges were, just like private insurers, did medicare rein in its payment with greater, bigger and success than private payers. The aca goes further in that regard as we talked about this morning, aiming to develop new Payment Systems for use in both the public and the private sector. Cost growth has grown dramatically, yes, its got up but after several years, historically never before seen low rates of growth but its true that the jury is still out on the innovations in payments, and that cause problems that underlie the inequity about employersponsored insurance financing system remains with us. So what do we do about it . Its easy to focus on and has been much of the discussion this morning on the upside down nature from the perspective of inequality, of the tax breaks for employersponsored insurance. Lest we think this problem is easily solved, some of the eliminate it, although i noted that was not in the discussion this way. I want to remind us as we think about that of a natural risk pool that employersponsored coverage provides. What are we going to do without them . Are we going to regulate the whole market . How much . And with what impact on the role of insurance including risks, and in that way mitigating inequality . And lest we think that eliminating the tax cut for pursuing greater Price Sensitivity would solve the problem of health cost escalation, i want to remind us that cosharing in employersponsored insurance costsharing is already growing rapidly, perhaps stimulated by attacks on highcost land, given evidence that outofpocket spending leads to reduction of necessary as well as unnecessary services, it behooves us to worry about under more than over insurance. Indeed, if we are to have insurance that mitigates income inequality by protecting consumers of all incomes adequate against the risk, Cost Containment cannot compromise insurance. It has to come from focusing on how and how much public and private insurers paid providers. I had a note to remind myself to focus, the focus this plan was all on reducing unnecessary use of services, but we have just as much a problem with price of services which is a much harder problem to tackle. Paying too much for the services. So what to do to promote Health Insurance and greater equality . Politics aside, which is a like asking mrs. Lincoln, otherwise how did she enjoy the play . I would just note that if we moved to a singlepayer system supported by a progressive tax, promoting equity to risk pooling and financing and Cost Containment could be accomplished. That would be a trifecta. But thats not what im here to advocate today because ive been in politics too long. Back to our political history, and that investment we made in employersponsored insurance, i dont see that in the cards. So where am i . I am with the architects of medicare, medicaid and the Affordable Care act. We are kind of stuck with the fragmented public practice system but it has to be one that assures meaningful Insurance Protection and more equitable financing, and i would say that the path to that is to enhance the aca subsidy for low and modest income people, progressively financed, and tackling the wicked problem of Health Care Cost by better managing provider payments in the public and private sectors alike. Thank you. Thank you very much. That was terrific. Dr. Burkhauser . So, bill asked me to summarize 12 year debate about change in income inequality, how its measured in 15 minutes at a. Since im from university of chicago, im not sure i can do that. [laughter] so i think that all of you have heard of testing some of you bought his books do you do have read it. But he did look at it we looked at the works, you would see this ushaped curve. What this group says is that i share of income held by the top 1 of tax units was very hot in the 1920s. It declined throughout the period and then begin to rise again in the 1980s, and now its at the store guys, post what it was in the 1928. So what i want to say to you is that is both true and irrelevant to how resources are actually allocated to people in the United States. And just as an aside, part of the increase in the numbers are for particular third 19861980. This is one of the useful things about being alive in the 1980 1980s. How could the share of the top income increase so dramatically between just two years, 1968 1968 yeah, 19 that but where do i have it but excuse me. Very good. Okay. Coconut up at . It happens because president reagan made a deal with the Democratic Congress to dramatically lower the marginal tax rates on high income people but for the first time below the Corporate Tax rate that allow people to actually pay less in taxes on personal income down on corporate income. So what we saw was a rapid increase in the taxable marginal income of people and that explains a good deal of this change. That aside, if you now go and think about this for a second, what did piketty say is measured it with a measure taxable income which in the United States is income from wages, rents, dividends, that sort of thing. It does not take into account government taxes, we distribute income and most especially doesnt include covert transfers either in cash transfers of any kind intent answers. K12 ventures comes into play. What weve had since 191960s as a dramatic increase in the two major sources of resources for americans. That is, government transfers. That is, the old age survivors and disability system which provides cash to older people and people with disabilities. Thats increased from about 180 billion in 1966 over 700 billion. Thats real terms, 2012 terms. And in what judy just talked about the creation and expansion of medicare and medicaid which in 1966, the first year it went into play, with 20 billion is now greater than always be a that 751 billion, 2012 a still higher today. Suddenly this is captured in marketing them as measured by piketty. Okay, so ive written for papers on this which youre welcome to read im going to just assert things but if you dont believe me, read those papers. Lets look at the most common measure used by the Census Bureau in the use of survey da data. And in one of those papers i show that you can get the numbers that piketty get with the tax base data with the survey data. What the census does this look at Median Income. What you see is Median Income has increased substantially since 1967 is where we go. The shaded areas are recessions. So wha what you see is median ie going up and down through the business cycle, but fairly substantial progress at Median Income between 672007. What you see since 2007 is the Great Recession and a decline in Median Income that is only just started to turn around in the last years of data from 2015 at the census showed two weeks ago where Median Income is up substantially but still way below what it was in 2007. Okay, and so whats going on . How do you relate tax income, marketing, to whats going on with Median Income of people more broadly michigan . You can think of five measures of income. The first is marketing them. Marks work is even before marketing them. He is look at the wage income of individuals. What transport is look at is the marketing come, not only wages but income in rent and dividends to look at tax units which can be single people or families. So the first measure included dock but is marketing come of tax units at the second going to talk about is the income pretax, post in cash transfers of households. The third im going to show you is the way that most researchers do it would it take into account different numbers of people in each household. Im going to use the individual as the unit of analysis but look at house hold income but by then the people are now sold to adjust in a household to adjust a return to scale in consumption. The fourth im going to do with the europeans do and subtract taxes all that into because people cant spend tax at the thats what the government taxes away from you. Find a bushel how this changes when you click something thats not include in those numbers, and thats the market value of employer tasha im going to add interest out of medicare and medicaid. This much you as an individual gets it you have a health condition. Ensured the insurance value that protection from all of those conditions if you have access to medicare or medicaid. What im going to show is i think im going to show you if you focus solely on marketing come, then you get a very dismal picture of whats been happening in the world. The rich have been getting substantially richer your coverage of this between 1979 and 2007. I would talk about expanding the act 99 and up to 2012. The top 5 just 37. 9 . The rich are getting richer. Heres the amazing never. The bottom 20 of income distributions income fell by 33 in real terms between 19792007. The disaster. The middle of the distribution, the income only increased by 2. 2 over the entire 30 year. Stagnation. The middle class stagnated. Have you heard that statement made . Lets move this across, nothing up my sleeve, and is going to shift from tax years two households. This is the measure i showed you that the census does. This changes a bit because we have been kind, in cash transfers to individual households and so that mine is a 33 changes to a positive number of still the rich are getting richer. Is slightly increases by the poor and the middle class. A little better but not all that much. Lets do household size adjusted and include pretax posttransfer income. But not Health Insurance. We will do household size adjust. This changes a little bit but not dramatically. Then we go to taxes. When you include taxes, the higher income people do better off because they share of their income that you pay tax on his decreased between 79 and 2007 for everyone but youre seeing other numbers increase. Heres the big change. This is not measured in most valuations although the cbo begin in 2012, because of some the work i did are now beginning to use these kinds of measures in their evaluation of what resources do. The bottom 25, 20 income doubles because of the tremendous importance of medicare and medicaid for those folks. It also improves the people at the upper income levels because the valley of employer provided Health Insurance. What i know what you should do some new work i have done going back, all work in this area really begins in 1979 because thats where the data is, measures of the value in kind transfers, medicare and medicaid, employer provided Health Insurance and other kinds of in kind transfers, food stamps, that kind of thing. If you hold income at the same level, so just look at trends, you get a pretty dismal picture of marketing them. This is what i talk to you about. If we valley of one in 1979, by 2007 its only gone up two percentage points. But then you see the dramatic decline so that mark income actually fell between 1997 19792012. If you take it back all the weight it is even worse that the things have been happening. Market income actually hit its peak in 1969 and has been going on a steady stand, the flat level. Whats been actually happening in terms of peoples resources is about the have been going up as the importance of in kind transfers, the redistribution of income for Market Income to people have less Market Income has offset this steady Market Income trend. And as a matter of fact, and this is important if you look at 2007 as the peak, because of government, because of the safety net which is mainly consisted of seven been through tax credits, and through in kind transfers, you see that we havent had the kind of dramatic drop better. What we have come and these are the glory days the twin 5967, we have substantial increases in Market Income, and we had even better increases in government transfers. So this is the glory period where youre having Market Income increasing and government transfers occurring. Part of that was because of the unique position that i was in in the 1960s and the 1950s, and Market Income have not increased since then. So final point. What does it look like if you actually take into account the last major for recessions in the United States . And look at what happened between 7982, which is double digit recession of the early 80s of Market Income is the value of employer valued Health Insurance fell. If you measured the Great Recession using this measure on the river second was worse. It fell by almost 10 . If you crosswalk this across as ive been before, in 1979 and 1982, we didnt have the important redistribution that went through the tax system and the value of in kind transfers and Health Insurance, medicare and medicaid, so that the government mitigated the decline but a bit but only five points 74 . If you look at what happened in the Great Recession, all of these measures that are not calculated actually dramatically reduced the decline in Market Income to almost, well, to almost nothing. So the bottom quintile its even better news. It was 25 decline between 7982, to 12 ago some 30 . We have a very weird way of treating Health Insurance, medicare and medicaid we count it as a cost the government but in our measures of it we never put it into the value of peoples access to resources. That doesnt say thats the best way we should spend our money or the if were going to give the bottom 20 resources, it should be in this way of doing, providing them lots of insurance against health issues. But what it says is these are real resources and your to take those into account. And if you dont count them, you get this strange notion that the United States somehow passed that nation and the top 1 is taking all the resources. That just isnt the case. Doing this allows us to think a bit more about do we really want to do this sort of thing . We have really done great things, but do we really want to spend all that money on the Health Sector and on providing protection for Health Insurance, if there are alternatives people would prefer more. I will stop there. Thank you very much, richard. Thank you very much, indeed. [applause] as youre preparing your questions, i want to chuck it and take the prerogative of the church ask one question. Honestly, im disappointed i didnt hear this term. This is my favorite term. Thats economic mobility. It seems these oftentimes we talk about dish vision of income. But in an economy with healthy change between the bottom and the top come with people moving up and then a top calling them. With all of the churning going on, if thats healthy, isnt that what we ought to be looking at, mobility, as opposed to any kind of static distribution . Thats my own views but we are looking that as opposed to distribution. I think im moderating a panel on distribution, right . But let me pose this question to the panel. How has rising Health Care Costs effective mobility . Any of you have a view on that . Im going to answer the first part of your point, and that is, economists, government analysts often take the easiest thing that is available to them. Tax data measures, Market Income and thats available. So they use it. To some extent its almost a subplot explanation of the data. What is unique come what i did and richard has done much more of it is its harder but it can be done to look at other measures of resources. And it comes up with a different story. This may be an explanation. Economic mobility is even harder. Thats not to say its impossible but it is very, very challenging. In terms of your second question in terms of how this affects economic mobility, there has been discussion about job loss, having Health Insurance locks you do your job. I think as judy noted, it has sort of died down a little bit. I dont know if its because people think its not as important as it was in the past. I think we have to deal with the system weve got. In that vein, job loss, i have not seen any analysis of the application of the Affordable Care act, peoples mobility in that respect but the availability of Health Insurance outside of jobs, outside your Large Employer or the ability to switch jobs, the ability to move off medicaid is altered by the Affordable Care act. I have not seen analysis budget onto the positive results. Take you back to a Bigger Picture of things. I think it is important to think about economic mobility. I think economic mobility is ultimately depends on the resources, the Human Capital that you bring to the marketplace, and i guess what i worry about is that i have shown you that we have done great things in terms of providing Health Insurance to lowincome people, but the question is at what cost are we doing this . What doug holtzeakin talked about this when was that we have structural deficits in this country that are really quite scary and we havent talked much about them. How were going to pay for all the promises we made for medicare and medicaid . What i think is a problem is that when you have these automatic increases in the budget, things that are not automatically into get crowded out. I would to if we want to do something about mobility what we need to do is to work money into education, less money into health. You need to understand how much money we are really putting into health, how much we are already mortgaging in some sense the younger generations opportunities by not only redistribute income on the current cohort of people who are alive to take care of the low income people currently health care, but the deficit that we are building on the system right now. Let me throw up on that point for a second. It as you point out, mark, health care is one of the features which is i guess the term regarding Income Growth in the bottom half of the income a whatever portion you are focusing on, would also be retarding their ability to develop their own Human Capital . Almost certainly because, i mean, so much of their compensation this sort of locked in, and its not coming in terms of earnings. Therefore they dont have the extra resources either for education or any training that they might want to pay for themselves to get a better job or to switch careers. Its limited and not growing the budget and so, therefore, it would sort of natural have a consequence. I dont think you would get any argument with anybody who is being here this morning that we spend too much as a nation on health care. Where the idea comes is, what you do about that. And what the problem lies in how you address it. And i would argue differently i believe from what rich would argue, that it is not, i argued it already, just repeat the argument. It is not to give people less Health Insurance. They need that Health Insurance. And in other countries they get that Health Insurance for a much lesser share of the public resources. So the issue is how to provide them that insurance, that protection at lower cost and that focuses i would argue largely on the way in which it lies spewed theres a vicious circle there. We are allocating too much for Health Insurance as youve argued, much of that out there, and we have speed is too much for health care. Excuse me, health care. Thats a low productivity sector. Doesnt that sort of begin in the overall growth rate in the economy . Doesnt outreboun have reboundeo the slowness in which growth which gets us back to cell economic mobility . I let the chicago and poverty economists talk about that, do what i as a harvard political scientist would tell you is that im focused on the value remember, that having access to health care, and we know that without adequate insurance there is inadequate access to healthy which is also a hell of a price debate on Human Capital. And so i believe that i would argue that that is a valuable service that americans like everybody come and i believe roger focused on making it work economically, not taking it aw away. We will open it up now for questions. If you have a question raise your hand and wait for the microphone to get to you, and identify yourself if you wish, or if you wish to use some also his name, no one is going to know, right . [laughter] so do whatever richard, did you have if you on the focuses of the way kind of loops back into Income Growth . Is that one of the reasons were seeing families merging with other families to create the affordable households as youre pointing out . I certainly think focus on individual is inappropriate because people live in households, and households do provide that kind of assurance. I guess what i would say is about there are, get back to what were talking about this ts morning. There are sort of two ways to approach this issue of whether health care is expanding, whether the price is ripping for Health Insurance are two great. One solution is more, one extreme is sort of a singlepayer approach where the government would, in fact, regulate the markets and determine the prices and allocate the resources. The other each of the individuals have more direct decisionmaking in terms of how they would use their resources to purchase these kind of products in the marketplace, and thats the more notion we subsidize individuals, let them have taxfree some amount of money and subsidize lowincome people who dont have income, and then let greater Market Forces control the prices of health care. If i might, i wanted to comment on something which judy said in terms of her history of Health Insurance and employerprovided elf insurance. I dont disagree with anything but i dont think she went far enough back. And that was the creation of Health Insurance in this country, blue cross blue shield, or actually created by doctors and hospitals. And later on because of, i will see the action of price controls and wage controls, sort of grabbed onto the employer and and then theres the question of the risk pool. Originally it was designed by the provider. I think in their self interest. And so, you know, i would agree that we need mechanisms to provide the resources for people to get their health care but it doesnt necessarily even need to be insurance. There could be other mechanisms, and i think part of the difficulty, i think this was addressed by the prior panel of having the government do it, sort of the government is by nature cannot provide custom size and innovative solutions. I think the private market is much better equipped to come up with innovations in terms of, hmos was an innovation of the private sector. No doubt are many other institutions that could be tried spewing this all morning has been devoted to the question of the relationship between the pace of economic activity, veterans, the economic of after Health Care System. I dont accept remember his name, you probably remember him from harvard, robert scott . He was very famous in the early 80s, made 80s, early 90s. The proposition that inevitably countries involved to a regime where they emphasized security more than emphasized growth. Its a classic are you see in economics and in political science. Is one of the applications that where we are in this debate right now that, that we are really debating which of two branches we want to go . Or is that a a third branch where we a Health Care System that can provide for a three, 3. 5 growth rate which most people would argue is the right kind of love of growth rate for an economically mobile society . What do each of you think about . It might be a good way to conclude this this one on a larger question like that. Im happy to take you can go first or last spent or maybe both. I dont think thats where we are. I think that we need growth, and we are, we are facing an aging of the population and a cost to some of the services were talking about the that is substantial as a nation to i believe we can handle that. Other nations are handling it. We need to do it, too. That requires growth. What is enormously hard which is what is called a wicked problem is to tackle the health care, the growth in the cost of services per capita. What we are paying for health care. And it is, i would take issue with what innovators, the private sector, and i think you wouldnt exaggerate it either, Health Insurance has not been a bastion of innovation. Its been a bastion of avoiding risk. And thats not acceptable way to go. What we need, and were struggling with it at the moment but we are beginning to address it more than weve done in the past, is which with changes in the Delivery System to make it more efficient. Let me just say what we have is a problem of scarcity of resources, and its fine to say that the pieces prices are too high. But i spent six months of my life in australia. Its much cheaper to get things done, but you have to wait for it. So if you have a hip replacement, you dont get it next week cheap, right. Yeah. So its that dimension too. Do we really want to go towards a singlepayer system where time is also one of the things thats in the mix . I just need to respond because i, as you will recall, i said thats not where im going. And i also think if you look at the measures, and this was not a general this certainly isnt a health panel, but i would tell you that if you look at the evidence in terms of quality of care including ready access to care, you will not find the United States at the top of the list. Okay. Mark, do you have a yeah. I think just, you know, i think were all agreed that, you know, 17. 5 of gdp on health care, you know, and rising is simply not, not sustainable. And it causes the, you know, budget deficit problem, it causes an inequality problem, and, you know, economic mobility issues. And so, therefore, i think it is, it is the challenge which needs to be dealt with. Well, i hope, i hope all of you have found a few things this morning to take back with you and to enliven your own thinking about this crucial question. I want to thank you all for your attendance here this morning. I want to thank chuck and the team, the Health Care Team at mercatus for putting this together, ashley adams and all of her team for facilitating this wonderful morning, and would you please join me in thanking these panelists for their remarks. [applause] [inaudible conversations] [inaudible conversations] [inaudible conversations] we have three road to the White House Events coming up later. Hillary clinton and former Vice President al gore will be appearing at a Campaign Rally in miami at 3 p. M. Eastern on cspan. Also donald trump will be speaking to supporters at a rally in panama city, florida. Coverage of that begins at 8 30 ian here on cspan2. We also have for you tonight a pair of life hourlong interviews with libertarian gary johnson at 8 p. M. And the green partys jill stein follows at 9. Well also a take your phone calls and tweets for the candidates. Watch cspans live to coverage of the third debate between Hillary Clinton and donald trump on wednesday, october 19th. Our live debate preview from the university of Nevadalas Vegas starts at 7 30 p. M. The briefing for the debate studio audience is at 8 30 p. M. Eastern, and the 90 minute debate is at 9 p. M. Eastern. Stay with us for viewer reaction including your calls, tweets and facebook postings. And watch the debate live or on demand using your desktop, phone or tablet at cspan. Org. Listen to live coverage of the debate on your phone with the free cspan radio app, download it from the app store or google play. Remarks now from Supreme Court Justice Elena kagan on the life and legacy of her friend and former colleague, justice antonin scalia. Also law Professor William kelley, a former law clerk of