Drying out. I wonder, are you familiar with the work of james okeefe, the more entrepreneurial, lesser known young journalists . The question i get a lot, to say that he is the only investigative journalist in america is a disservice. All sorts of names being tossed around as i said, i am optimistic about journalism, optimistic that there will continue to be new ways of people as indignant and is angry as seymour hersh. Whether anyone can persist for as many years and have as many scoops in stories says seymour hersh, that i am doubtful of, certainly not that there will be tremendous investigative journalists. It is also a new world. The internet has given us all sorts of new possibilities. What is we is snowden releases his material. He would have leaked that material to a journalist. The nature of traditional journalism has been turned upsidedown. [inaudible question] maybe i am misremembering. Them the least talented he predicts that the u. S. Would be invading iran and make a really strong stand on that which did not pan out obviously. Zero number of times that the bush of lustration had very specific and was making very specific plans for an invasion. That never happened and people got it wrong. What i say in the book and a number of people told me is that when his articles kept coming out and the new yorker it was not possible for them to do an invasion. What he was really writing about was the possible invasion. He never said theyre going to invade. He says, my sources are telling me the plans, and here is with that look like theyre people out there in the someone to go to deal to get out the story. In some ways he was getting out the story did. He prevented such an invasion. [inaudible question] it is a good question, and i do not know the answer right now about a month ago he wrote an article in the london review of books. The first thing he had in writing, and he wrote about the fact that when syria had a sarin gas attack that killed 2500 people, the Obama Administration immediately blame syria. His sources are telling him that there was other evidence indicating that it was not the syrian government. There were other people in and around syria it could have been irresponsible that cherry pick intelligence and chose to ignore that. He also turned that argument down, which was shocking while wonderful article. And so has his relationship ended . I mean, like every other he has ever had to my feet to threequarters of the editors of the world and threw them off of a bridge he never gets along with anders which was certainly the case, but a very interesting kind up channel fours and a very controlling force. We will see soon enough. Any other questions . All right. Thank you all for being here. Thank you. [applause]rategy associates. He is a consultant to the policy commend as was to the Marketplace Community with great expertise in the Insurance Industry. Hes been doing this for more than 20 years now, and he was named because of his incisive and clear writing about the implementation issues in 2013. Is meant by the Washington Post as the 23rd games wonkblog pundit of the year which is actually a pretty fine distinction. He was chief operating officer of it health and Group Benefits and sure and has been active in and around the Health Policy in workplace issues in this field for a very long time. Hes a real expert and we are very, very grateful, op, vigilant to come to talk to us today. Thank you, and join me in thanking bob for coming today. [applause] its great to be here, great to be with all of you today. Ive been a real fan of tim and joke for a long time, as scholarship aei and i appreciate very much getting the invitation. I would give my perspective today. It will be a different perspective than youve heard, at least from where i come from. Just so all of you know, i work in the marketplace, and i learned long ago that my job was to figure out to satisfy customers. Number of clients out there and what they expect me to do is to figure out whats going on in the marketplace, and whats going on in federal policy and help them navigate their business through that change. If they want the conservative perspective they will go to fox news. They want the liberal perspective they will go to msnbc. As Business People they need to know whats going to happen and how its going to impact them. Ill try to bring that perspective here for you today. Ive been working and washed them one way or another either as an executive or somebody running his own business for more than 25 years. As an Insurance Industry executive it occurred to me way back that the Insurance Industry could not sustain itself if its Business Mission was to figure out who not to cover. In order for the Insurance Industry to survive economically and politically if you how to cover everybody. I also figured out pretty quickly that as an industry we couldnt do that ourselves if as a chief operating officer ive got preexisting conditions tomorrow afternoon, i wouldve had a long line down berkeley street in boston of people lined up to sign up for my coverage and i would be broke pretty quickly. I realize there is a willful government as a referee in this whole process. Jay carney said a few months ago that i had been an opponent of obamacare for 20 years. Which i guess makes me the first opponent of a bunker since it is all about five years old. I dont see myself as an opponent of obamacare. Survey not an opponent of Health Insurance reform or of Health Care Reform. Most of you know those are two Different Things. I am a critic of obamacare and i think it leads to lots of changes but i guess everybody says that todays of it doesnt make me any different. Im going to firstly when going to do a bit of do my best to tell you. The Affordable Care act has not cleared the tower to borrow a headline from one of washington, d. C. Is media outlets. It needs fixing. Particularly in its Health Plan Offerings your want to clear the sprinkler and it was launched and present of almost elected theres never been any doubt in my mind that this law will be enacted. I dont think its going to look that much like it does today 10 years from now or even five years from now. But its also clear to me were not going backward in this country. Were only going forward. Now, it does need a lot of fixing. One of the things that concerns me about the socalled 8 million enrollment is it my convinced the ardent supporters of obamacare that it doesnt need fixing. As a whole lot of difference between offering a monopoly in Health Insurance in the United States today and a small group and individual Health Markets and actually have created something that people like and want to be part of. Theres a big difference, a big distinction and i think its the most important thing to understand where we are with the Affordable Care act today. Ill tell you what i think we need to go and that they were i think the fixes need to be, shortterm and longterm but ill tell you i dont think theres any chance we will have any fixes before at least 2017. It doesnt matter what happens in the election in 2014 whether the republicans capture the senate or not. Were not going have the environment or the votes for any kind of substantial change to the Affordable Care act. We will probably not have the political atmosphere for any substantial can change. I think this thing limps along for a number of reasons. It livelong actuary our financial and it lets along politically. I will also tell you that i think while the supporters of obamacare citing 8 million account of his days i think republicans are overconfident as well. I actually think the democrats could take this issue back by november if the republicans are not careful. So there are two very different interpretations of the socalled 8 million enrollments. The first is the enrollment estimate of the exceeded expectations by we have hardly made a dent in the number of people who are uninsured. Or the enrollment process program is working. Its on its threeyear projected cbo track and doesnt need any major fixes, or the program is still a regulatory nightmare and needs to be repealed and replaced. I expect most people are sort of in one camp or the other on this. But i would also suggest theres more commonality than that if we really think about it. Weve seen a lot of the surveys and its been at the heart of whether obamacare is, in fact, succeeding or not. The Mckinsey Survey came out first. This data was early, february. But it does include the late surge in enrollment and what they point out is that most of the people who were signing up where previously insured, that we werent really attracting the uninsured into the program. These numbers have almost certainly changed in the last two months but i will suggest that chronic problem this program has is attracting people who are not insured before. Fundamentally because the way the product, and in my context of my background these are roddick stem cells, the products are not all that attractive to people. The Rand Corporation came up with a survey that went into midmarch, came up with some of the same conclusions that we were getting more of the people moving over from the insured market that we were picking up on in church. This is a fundamentally important question. Because why did we turn the Insurance Market upside down and in such a Small Group Market if were not going to be successful in getting the people we wanted to get in first place. This is at the core and the heart of whether we can become to you on the right track or not. I will also tell you that when you look at these polls, be careful. This particular poll says that the majority of people who were gaining insurance were gaining it in the Employer Market. You heard the mercer represents a few minutes ago there didnt seem to a lot of indication from the surveys thats happening. I was with one of the largest selfinsured Insurance Companies in the United States yesterday, ensures millions of people in the selfinsured market and went to the head of marketing and i said, are you seeing any increase in the Employer Market and the number of people signing up . He said no, nothing, flat. Thats what i continue to hear all over the marketplace. This survey indicates signing of all kinds of people in the Employer Market. I dont know where they are. Im not saying that my information is better than something the Rand Corporation has put out but i will tell you we need to be very, very careful when we look at these polls. We need hard data. The most recent poll came from gallup through april 14 reflecting more of the search. The bottom line is that gallup has found that probably about one in four people who were uninsured have found insurance even medicaid or otherwise. That makes some sense to me because when you look at the enrollment numbers and put a look at the 8 Million People coming through the exchanges, you can make some comparison to hard numbers rather than just do polling. The 8 million needs to be reduced by the people who are not think how many are not paying . 17 . Its a pretty good number. As i go around talking to people as recently as yesterday, this particular carrier, hundreds of thousands of people in the exchange, more than 20 its not as bad as only 15 , and its not 20 either but its in the middle. If you adjust that 8 million by about 17 , it would be a pretty good estimate i think when its all said and done, and then you adjust for the fact that 83 of the people are subsidy eligible, you get a number that you can compare to the Kaiser Foundation estimate of 17. 2 million are subsidy eligible and what you get . Somewhere between 2530 have signed up. If youre inclined to believe in the cbo numbers that were going to get onethird, going to get onethird, 130, onethird over the next three years you can say we are on track. If youre someone who spent his grid and marketing as i have, and you look at an open enrollment that effectively lasts december, and into april, and 30 of the elves will sign up and 70 didnt, that tells me youve got a problem with the customers, that you need to worry about. So i would also, its also interesting as i talked to Insurance Agents who were signing people up, very big part of getting people signed up. As a talk to people who run call centers and Insurance Companies who are talking to the customers at the other end of the line, what theyre hearing is a lot of complaints about the product. About the offering. At the heart of the problems i think obamacare has, as economists and Health Policy experts and so forth, you can on your opinions on these things and the macroeconomics and the micro economics. I did a post on my blog not long ago, i recounted a marketing story from the 80s, about dog food, Dog Food Company went out and created this absolutely tide list doctor. Site is got involved. The manufacture people got involved. They went out and got the best consoles from all over the country and they created this new dog food. But they were not consulted a doctor. Nobody bought the dog food. They had this meeting. They brought that see the oh in and at the expense of consults in a country of why nobody is buying the doctor. Finally, some in turn back of the room raises his or her hand and says, mr. President and it may be that dogs dont like the dog food. And i think theres a problem here when you get 30 of the people walking away and 70 30 of the people signing up, 70 walking away. Random something important about obamacare. Obamacare is a monopoly. Theres not another place to buy Health Insurance. If youre a responsible person and want of Health Insurance for your family, you could have afforded it anyway, and you want to be that responsible person, theres only one place to buy it. If youre a person with preexisting additions and you can finally buy Health Insurance, theres only one place to buy it. So theres only one place to get this product. In addition to that, the government will pay a big portion of your costs. So youve got a product here that is a monopoly where somebody is paying a good share if not all of the costs for you to buy it. So you put out a product where you dont have to pay most of the cost and its the only place you can buy it and its the responsible thing to do to buy it, 70 pass on buying it. Theres a customer issue. The fundamental problem is that people are still after the subsidies expected to pay about 10 of afterta their aftertaxe for a plan with predeductibles. The average deductible is 2600. A bronze plan is 2500. Then we got the Narrow Networks. We dont understand the consequences either in the market or anywhere else of the Narrow Networks so far. There are a number of issues there. Take a look at the way the california individual Health Insurance market has rearranged itself. Where the insurance carriers with Narrow Networks have taken disproportionate marketshare and carriers with a less known networks have lost share. Clearly people in california voted with their feet towards the Narrow Networks. If you watch the covered california situation carefully you in the covered california had a hell of a time with a provider. If you want on the exchange to buy a plan, you will have an Impossible Task of figuring out who your doctor and hospital w was. But they bought Narrow Networks. Why . Because Narrow Networks will produce a price 25 cheaper, thats what. If they dont know whos in the network and its wifi cheaper, which direction do they move . The Narrow Networks are interesting from another perspective. In the Employee Benefits market for years weve been expanding, insurance covers of Large Employers, with highperformance networks. These on Narrow Networks where the Insurance Company or the Large Employer determines that the best provider is, the hives quality providers are very often the lowest cost providers. So you go find the centers for excellence for your heart procedures and so and so forth and to contract within inches to your people toward these networks are not because theyre cheaper but because he are lower cost and they are better. Thats not what we have here. What we have in these Narrow Networks in these exchanges is literally the Insurance Company mailing out a contract to all the doctors and hospitals in town with medicaid reimbursement rates, or Something Like that, with the assurance that if the doctor or hospital signs the contract they will get the exclusive business from the Insurance Company in the exchange and then see how many signed it and send it back. Thats the selection process. This business of Narrow Networks is really going to have to play itself out and you have to wonder from a Customer Satisfaction perspective where we are on this. Comments were made this morning that maybe we will evolve towards a medicaid start program. I think is an their network is basically medicaid contract i think theres a fair risk that can happen, and then the context of the conversation, if it happens its not so bad because people will have Health Insurance anyway. Wait a second. The people entering the system or new didnt have Health Insurance before, but there were some of between 10 and 12 many people in the individual market, they tend to be higher income people, selfemployed income people, intelligent, welleducated people running their own business out there. They could afford before to buy Health Insurance. They got Health Insurance was important that assets to protect. These people can only buy now from the Affordable Care act insurance monopolies but are they going to be happy with these Narrow Networks . More than that, anybody who thinks this is about the individual market under take another look. A Small Group Market is regulated in exactly the same way as the individual market is. It has to comply with all the same things and its undergoing the same changes as the individual market. What are the, 35 million or so people in small market. 10 people in the old individual market, where in the process of moving something approaching 50 Million People in this country into the obamacare regulated monopoly. If that starts sliding towards medicaid sal programs, is it a sustainable political thing to do . So again i think the core of this is for my perspective the issue is have a lot to do with the kind of program that we have really created. That they questions ill get is what will the health plans do . Conservatives were convinced health plans will go insolvent or back out of the market and thats just crazy. Thats not going to happen. The first thing to understand is this is little or no data knowing what we have today. I was talking to actuaries yesterday. Where do you think we are . I do know. Thats where we will be for some time. The first indications though are if youre only getting 2030 of the eligible group, this is not sustainable. If you believe in the cbo projections and this is on autopilot towards 70 , then take the weekend off. If you are concerned about the level of signup, this thing has got to get to about 70 market acceptance to be sustainable and it can be sustainable. The comment was made earlier today that he would are going to need high risk pools anyway that if you try to bring all the sick people into the marketplace, you cant really rationalize that in an efficient way. You got a subsidy somewhere. You do have have a subsidy and thats why the Insurance Scheme and obamacare was created, a threeyear transition pool. But if you get a good spread of risk you dont need big subsidies to bring the sick people into the pool. And employer with 1000 employees and no mandate has a good spread of risk and an efficient cross structure. You dont need, you need reinsurance pools in the short run because theyre all going to show up on day one really thick, but if you can attract people into the pool you will rationalize the costs. Every employer out there that stands on its own himself insurance with no individual mandate proves that. All individual employers also prove you dont need an individual mandate. What you need to do is attract enough people. What obamacare tries to do is coerce people with lousy products. And thats the fundamental challenge it has towards success. But having said all that, the rate increases the Insurance Companies will have will be fairly moderate going into the next you. I said in my blog there will probably be 9. 9 . It really well. Why would they be 9. 5 . Because 10 , you get scrutinized by the federal government. If you come in again you will not scrutinized. They dont have any doubt and they dont know. I continue Health Care Trends in the Small Group Market is probably in the doubledigit range. Its probably in the seven or 8 range, individual is higher than the large market because there still is antiselection in the end of the to market before the obamacare. You so only 30 showed a. Theres something called deductible leveraging and dont ask me what that is. That will take another hour but these deductibles are so darn high that it actually boosts the trend rate. Theoretically they probably have got to be 12, 13 to 14 increases because they dont have the data to prove it and they dont want to make this any worse than it is now and theyve got the protection for three years, i expect to see moderate increases. You will see some big and little increases. What you had in this market place some people came in late july, some people came in way too low. They will get towards the middle. Anybody wants to be example of someone with a 45 increase will find anybody wants an example of someone who dropped their rates will find anybody wants an example of Insurance Company coming in and sustained them they will find. What you got is the basis of the next three years as people figure out what theyve got. And a lot of people say what are the Insurance Companies in this market . What are they upset and getting out, yada, yada. . Obamacare, the Affordable Care act is a monopoly. If youre going to participate in the small group and individual market, as it effectively the same market, folks, go look up the rules, if youre going to participate in this individual and Small Group Market, not just the individual market, if theyre going to produce the indus 59 person market, it isnt an alternative. It isnt plan b. Kerry is a general believe is going to evolve and they will be protected by the reinsurance pool for three years. Theyve got time. Carriers. One way or another this will all work its way out and i believe that, too. That doesnt mean we are in great shape but it means were not stupid. Will figure a way to manage ourselves out of the. Carriers are a lot more worried about Medicare Advantage payments right now and they are about obamacare. Obamacare aetna the other day said about it doesnt even move the needle for publicly traded company. The other thing to remember is Health Insurance plans are getting used to the government being their biggest customer. This is a picture of with health Insurance Industry looked like today. When i grew up in this industry i was an Employee Benefits business. I was in Health Business but you can imagine. Not Health Insurance business is only half of what they do. The other half is managed medicaid, managed medicare. The federal Employee Health benefit program will probably be bigger than obamacare the next three or four years. Medigap, medicare supplement, all of these products. With obamacare gets on this chart india it will probably be the smallest piece of the pie. But it is a monopoly and thats part of the market and theyve got to deal with it. What will employers to . Ive talked to a lot of employers. You should activate board of directors meeting at blue cross. It was a great cocktail party, let me tell you. There is a Movement Towards defined Contribution Health care, no questions about the. Private exchanges, these are all product terms but all product terms but becomes invasive forms, colors and varieties. One of the observations i will make about the marketplace over the last 12 months that i think is important is that obamacare really has changed things but it used to be your average blue cross, 80 20 standard option blue cross plan withstand health plan in america. Thats what we give everybody had Something Like that and thats a we consider good Health Insurance. That was standard. Whats starting to happen now is the perspective to start a more to move towards the Affordable Care act enlistee exchanges. Today, an employer saying do i need the 80 20 blue cross standard option, or do i just need to be better than whats in the exchanges . With much higher deductibles, 60 actuarial value, tracy potter most plans are 70 of the Employer Market. The new standard in Employee Benefits come you can sort of see this Reference Point growing is obamacare. You dont like what im give you . Go to the exchanges. Im getting a lot better than what the government gives you. People are really worried about the cadillac tax. Will employers will not get the cadillac tax because they are changing their plans now. When you change, and the changes youve got to make a you cant just shift costs to the worker because the cadillac tax aggregates worker and employer costs. Youve got to cut the benefits. So obamacare actually gives them permission to do that. Anybody who says that obamacare isnt having a direct impact on the Employer Market hasnt spent time in the Employer Market in the last year. Dont presume its not having an impact with the Employer Market to ask your friends were employed by fortune five from companies whats happened to the benefits of the last couple of years and whats happening next year and you will get an earful. There is an entirely different perspective. Theres a dichotomy starting to grow in the Employer Market. Between employers who have to compete for skilled workers and lawyers who dont have to compete for skilled workers. If i got a bunch of restaurant workers, i dont need to worry about providing good benefits anymore. It used to be not that long ago that the guy who swept the floor in the shop with a broom at exactly same Health Insurance as the ceo had. We all have the same health plan. That is changing very quickly. Part of it wouldve happened anyway. There was clearly a movement going on. Unmeasured blame the Affordable Care act for all this stuff but if anybody doesnt think that the Affordable Care act is part of this mosaic, they are dead wrong. Medicaid expansion from one of my favorite comments, i may be one of the biggest critics of obamacare but am also one of the biggest critics of republican governors who dont expand medicaid. Might view is put up or shut up. For years ive been hearing republicans say, give the flexibility of let me run it my way. The Medicaid Program is broken. You bet it is. We need to experiment with Different Things. You bet we do. We need to try market based principles. Go for it. The Supreme Court gave the republican governors a golden opportunity. Now, some of them have taken advantage of that in controversial was the arkansas is one of the first ones out of the box. Whether that is the ability to put people in private plans. They havent got the flexibility and plan design. But they got flexibility in moving into managed care. That is not an insignificant concession, folks. Thats pretty big. You will now have managed Care Companies manage these people rather than the government. Thats an insignificant concession and its not enough . Then theres my hero who put a plan on the table that change is not only how its delivered but how the incentives that consumers will have. I dont know if the Obama Administration is going to accept that your i really hope they do because i would love to see a competition between blue state governors and read state governors about who can make this system work. And i dont know why republicans are so afraid of that competition. They tell me because its not a perfect a block grant. Well, im sure that in 2171 in 70 votes in the United States senate and they doubled their majority in the house and Ronald Reagan is back in the white house [laughter] they can get the perfect block grant. Until then, grow up. Take the challenge and do it. Republicans and obamacare. Im an equal opportunity critic. Silly republican points. Unacquainted into detail on this because i dont have a lot of time. You can go to my blog and theres a post on selling insurance across state lines and Association Health plans in the schools and you can see the perspective indeed you. Let me give you this perspective. I spent a lot of time with insurance executives. I spent a lot of time with people. When i talk to them about something insurance across state lines and these other things, do you know what the reaction is to those republican proposals . To the one, they laugh. Im not kidding, they laughed. Its ironic that conservatives believe in using the market, makes the system more efficient, but the people who were actually the most successful to date and making the market efficient, the winners and Health Insurance business, think these proposals are silly. And the second thing i hear from them is, why dont they ever ask us . [laughter] im not lying to you here. The nixon youre sitting facetoface with an insurance executive, ask them about that. Why is it that conservatives dont consult the marketplace they believe in . I have a lot of criticism for the way the democrats hatched a bunker in the way it works, the naivety and what it reflects in the way the Insurance Markets work. Its just as bad as bad on the conservative side. Coburn is a lot smarter and it has a lot of common sense ideas and has a lot of really good ideas. I will suggest the fundament problem is it takes us back to 2013. I dont think thats realistic that we are not going backward here, folks, were going forward. Theres a republican visual reaction to bunker that makes it impossible for them to want to fix it. Part of that is political. Which republicans go to the primary in North Carolina saying he wants to fix obamacare . We can all understand that, but that is where we are headed. That is where we are headed. We are not going backward anymore. That i think opens up a chart update for democrats, even the party who wants to claim to fix obamacare. When we look at the poll and then no weve got a lot of polls to bring conclusions i think this one from the kaiser folks is the best one. The bottom line here is its as if youre republican you better tell people you want to repute and replace because thats the populist. If you look with the independent voter is and where the voters are over all when you go to the general election, they want it fixed. They dont want to go backwards and that is theres a fox thoughtful recent visit people overwhelmingly vote for the candidate that wants to repeal a bumpy rather than definitive they forgot to ask the third question. What do they want to fix it . You saw some more reports in the New York Times the last couple of days, and the same conclusion occurred. People dont like obamacare because the health and primary because the health plans are so lousy in the. The product is lousy. But they dont want to go back to the days we had before. They want it fixed. It will be the candidates in the long run i think the figure out a way to position that that will be the winners. So where do we go from here . Obamacare less along through 2016th of Insurance Programs will protected the democrats want to see it play out. The health plan reinsurance came keeps them above water. The real rates are going to need to be charged towards the end of this but thats a few years down the road. Neither side in the 2016th elections i dont think are going to have 60 votes in the senate even after the 2016th elections. In 2017 a new president and congress i think will be part of the obamacare wars and i hope well be ready to move on. I think that the first opportunity we will have to get a major course correction. Maybe not. If you bet on washington agreeing on things and doing bipartisan things, its always better to bet against it but i clearly dont see that happening before 2017 and i hope it happens afterwards. I do think the obamacare, obama and magician can get this thing on track any number of ways. They dont take my advice. Take out a pad of paper and this can be your idea and maybe you can help them out. All they really have to do is broaden the health plan. Tim jost made a good point and hes on the right track. Do we did in part d the dont know, provide benefits up front the people, Healthy People can see value which is not what were getting, please dont tell me there are wellness benefits there. 27 year old kids dont care about wellness benefits. They are well. You need some benefits the people utilize and see value. Catastrophic coverage. Go ask the people what they want. A family of four making 59,000 a year have to pay 5000 in premiums. Think about this for a second, washington, d. C. 59,000 a year. Do you think of 5000 you think of 400 the Checking Account to buy this for a 2600 deductible . Its a piece of paper for 5000. Of course, they are not buying it. Of course, the dogs or not eating it. But nobody asks them. Theres lots of opportunity here. The government is propping 6under dollars a a month in premiums subsidies for the people. They would probably be willing to pay one and 50 the amount and premium. Ive got six and 50 of premium. Give them something. What i would do is use the existing actually force the 50 so you dont get junk Health Insurance plans and then let Insurance Companies come up with plans that are more flexible. This section of the train for that mandates the benefits is this long. Theres nothing in the statute that mandates the kind of benefits the Obama Administration has mandated through regulation. If they back off on the regulations and let people, the number of moving parts, theres the premium, everythings its the premium. Its the premium, the deductibles, copays, Narrow Networks and the benefits. But the benefits are not one of the variables under obamacare. So what variables do you have left . Premiums, deductibles and trend 10. Put benefits back on the table. And do it in a transparent way. Leave the standard silver plan there. In the interest of the that offers anything else has to of a 60 actuarial floor and have to give you a piece of paper combat to give you a chart that shows you how what youre buying is different than the standard silver plan and then presume the dogs are smart enough to figure the rest out for themselves. If the obam Obama Administration could do that through regulation tomorrow morning, and they would put this thing back on track. All the other faults its got to any the democrats i hope you of this done. They wont listen to me but i just told you how to fix it. Theyve got to do it quick, get it over to the white house fast because new rates have to be submitted to the insurance consensus in the new rates between may 27 and june 27. Theyve got about one month but they could get this thing back on track. And, of course, the reaction you get is the 8 million. I think is a more fundamental fix to office thats fairly easy to do. I suggest my 25 years in this town that is remarkable agreement between democrats and republicans on Health Care Reform. There is remarkable agreement. Banning presenting conditions, Insurance Exchange from subsidizing low and moderate income people, using the market demand, jerry brown asian the market in california. There is agreement on doing these things. Democrats are right when they say that obamacare was built on a republican chassis. Republicans are right when you said democrats overregulate the heck out of it, and have created a lousy product to so they are both right. If you back off and see we agree on and what we can fix, and most importantly to listen to the customer, stop arguing with each other and g go listen to that found a four making 59,000 a year, they will tell you how to do this. They know how to do it. A more robust market for republicans and a solid safety net for democrats is a place that people can compromise. The more robust market i didnt explain that i didnt explain the i didnt explain that it is the same to just talk about. Giving the carriers flexibility to offer things people want to buy so we get rid of the junk policies. They are are nowhere near as many junk policies and individual market as liberals would like to think there are. Youre looking at the guy with a catholic plan to get a 60 rate increase. They increase by deductible and narrowed my networks. There was a junk out there but it wasnt that much. Better value by offering more choices consumers can spread to the tax credit for the. The government would be paying the vast majority of this if we have the flexibility. You dont need an individual mandate. Ive underwritten hundreds if not thousands of employer plans over my career and not a single one of them had a mandate. Not one. Why did it work . People wanted to buy. In the people want to buy it. The dogs wanted to buy because the dog food tasted good. It is a good product. Thats why they bought it. Give them the ability to do that. I go with no mandate, no fine, no free riders. The catch is you dont sign up during the open enrollment, your preexisting condition is banned for to use but youve got to have a no free rider. Dont dwell on the negative. Dont say bob got preconditions bacthat could i do but dont dwl on the negatives. Youve got to emphasize the positive. Which is if you give people plans they value and they can afford and they appreciate, you are going to have people not buying. They will buy. Never had an individual mandate in the Employer Market because the plans have value. The only people youre going to catch in the no free rider provision of the people deserve to get caught in the no free ride provision because youre giving people affordable Health Insurance which is the objective. Make the tax code equitable. I believe that deductibility and, for employers and the Tax Exemption for employees to exact the same thing and thats the subsidy people eligible for in the standard silver plan. I suppose republicans dont want to be a silver plan. Wevweve got to go to the rootr something, but create a standard plan that the tax credits are tied to, and whatever were willing to give people, thats the maximum we should willing to give them through the tax code. Thats equitable and that will make the system more efficient. Its a solid safety net. Because democrats can look at that and say, we are subsidizing this fellow over here, why should we be subsidizing that fellow over there with tax policy any differently . Thats equitable. Republicans should like it because it makes the market more efficient. Tort reform, dont just put caps on the dysfunction system. Reform the system. Use the additional money you get by changing the tax deductibility of Health Insurance to strengthen medicare. Medicare cuts and obamacare are not a terrible problem for medicare today. Medicare stuff was overdone. Dont ask the medicare actuary to run sustainable in the long term. Weve got to fix that. In the longterm and theres funding to do that. Implement the medicare documents to the medicare doc fix Bill Mckibben a bigger bill in terms of changing the financing of American Health care and the Affordable Care act was. The doc fix bill really creates the incentives to find move it away from feeforservice and onto systems that are accountable for the combination. Medicaid expansion to codify into law the ability so they dont also states dont have to go begging a Democratic Health and Human Services secretary or republican secretary, conflict and the leather bound to have that flexibility as long as the state to state what six and 100 and take the 100 money, fine, theyve got to prove the program is going to get a sneak people in the nitpick of want to go to 138 , give them the 138 might but they got to prove they will be able to get those people. If they can do that let them do it. Give them the ability pashtun lets put competition between democrats and republicans but stop arguing about it. Why is everybody so afraid to put Governor Cuomo against governor 10 . I think its a fantastic idea. And medicare will have to be a reform down the road. I think we need to bring back weidner write. I think 2017 we will. A platform of guaranteed medicare benefits, access to the old medicare plan, but a platform that grades and much more robust market, gives people choices and makes the market more efficient i think well get to that someday. The best hope ive got and 2017 are these two guys. I think ryan and presuming hes in ways and means, and widen, the Ranking Member on the chairman of ways and means, this is where really exciting things can do. Im one of thanks i see the liberals is they stole. Progressives progressive that began in wisconsin and its about people with new, fresh it is whether the conservatives or republicans. Paul ryan is a progressive conservative. Ron wyden is a progressive democrat. God bless them both and i think in 2017 this could be the place was really interesting things get done. So the Affordable Care act hasnt cleared the tower. It needs fixing but it was never going to be repealed and replaced. The lat late surge in april that will probably have people saying we dont need to fix it. This to me this look like watching football can come watching football game. The two teams on the field and someone fumbles. The ball is bouncing down the field and, of course, what you do in a game like that is to try to jump on the ball as fast as you can. Obamacare is a fumble. There are important things about it, there are need things to be fixed by the space of a fumble and its bouncing down the field. The democrats are standing there, there is one team and they are saying we dont have to jump on the ball. Weve got 8 million. Its not a fumble. The republicans are standing to come watching the ball bouncing down the field addressing we dont have to jump on the ball because we are so far ahead, we will win anyway. But look at the polls, look at the kaiser polls. People want it fixed. I think the electorate is waiting for somebody to jump on the ball and take us to the next step and i think thats where the political opportunity is. I know weve got to do that. This is not going to work the way its working right now. I also think the first real chance for reform or change, the next generation on this journey toward Health Insurance reform and hopefully Health Care Reform probably doesnt come before 2017. I think the republicans could cede the issue back to democrats. I was watching their lead to the other. Shes figured this out. I think more and more democrats will figure how to take this issue of the republicans better Pay Attention because this election is not over. We have a couple mess of questions but i think jim will moderate. Ill be happy to answer as many as i can appl. [applause] lets start over here. Good job, bob. Youve advised Health Insurance executives angela forward to 2014 as a lot of ominous stuff there. The soft catch, the political caps on the increases that you talk about, the fact that it will be re accelerating and that theres a very good likelihood that that 30 of the people that ate dog food are going to be sicker than the folks that didnt. How is it that two of the big publicly plans raised their Earnings Guidance for 2014 . How do you reconcile those earnings races with the ominous forecast . Obamacare, the Affordable Care act doesnt move the needle on Health Insurance company earnings. First of all its a tiny percentage of what they do. You saw the chart. The federal Employee Health benefit plan is more revenue than obama theres going to be over the next three years. Thats number one. Number two, youve got the three r. s, reinsurance provisions, the reinsurance provisions to me the Insurance Companies wont lose money but they will only lose a couple points on premium. Thats couple of points on premium on that small sliver of business is not a Material Impact on their bottom line. They are much more worried about medicaid. A big issue is boy, this is a terrific opportunity for Medicaid Expansion and much more what about the medicaid advantage is that its the biggest part of the profits right now. Thats one of the reasons they did so well in october and november. And somebody said the other day, blue cross of iowa and south dakota are getting back in the business. United might be going into connecticut. That means its working, right . Im not going to do what those guys were thinking. Idleness to know what those guys were thinking but ill just leave you with this. If i were back running a Health Insurance plan in the good old days and i were confronted by all this, i might just wait out on exchange is the first you, but in the sick people are ready with the other guys with a couple of different interpretations for the move as well. [inaudible] in the mid 80s to early 90s i had kaiser in Northern California and my hope for obamacare was to see something silly but it was what you talk to, the healthy options. It was very easy, very affordable, did not have a high deductible. Do you ever see a plan like that . And also quickly comment on singlepayer stay you and i share a best actor in a Health Insurance business in los angeles in the mid 80s so i no kaiser very well and have enormous respect for kaiser and what theyve always done. But yeah, i mean, what we are talking about are crafting health plans that provide real tangible benefits. That by the relatively inexpensive. It im going to pay for somebody to go to the doctor for strep throat, its got to be copays. You can have people over utilizing and not going to the doctor when they need to wait the extra day to make sure its not strep throat or go to the nurse that can give them the strep culture. So you have to have incentives for people to think about how theyre going to utilize but there are ways to create really valuable players. Part d as a good model actually. Because there is no individual mandate part d. They offered it the first year, 30 signup, probably 70 or 80 signed up the first year. Why do they signed up . And part d by the way is a catastrophic Health Insurance plan. Part d is a few benefits of front, a big donut hole, and catastrophic insurance. The people love it. That was a product that hits the mark. Unlike these products to your second question was singlepayer. I think [inaudible] well, some people question, particularly my republican friends to really mad at the insurance commissioner in cooperative obamacare. They forget obamacare is managua. What choice do they have . They really do want obamacare to work. Who has worked harder to make obama to work than the Insurance Industry . And been more cooperative and got slapped around quite a bit. By the customer, the federal government. Why did you want to make it work . Its 59 people in the market, thats a good reason. But the other reasons i think is they dont have a lot of confidence in republicans when it comes to health care policy. If obamacare blows up and fails, and its just this godawful mess that looks like new york or new jersey individual insurance pool did in 2013, its in terrible, terrible mess, and will republicans grab this thing by the hordes and deal with that . They havent had history of the. They like to sell insurance across state lines but they do not get terribly serious in the congress. U. But it is particular was a benefit required to add to the cause . Is there enough money to allow for the less merrill networks . Go back to this section of the love with the benefit requirements. Hospital doctor lab them Prescription Drug benefit for each. He did have the Prescription Drug benefit or a hospital benefit that pays 7 of the first 30 days then 100 percent. Not that you take any benefits away but that you do a different co pay and with what can be delivered with those benefits to restrict generic drugs if there are alternatives available. There is flexibility how to provide those benefits. Employers provide a 70 percent actuarial benefits but they do it efficiently for a much lower cost. There is a number of variables the way you packaged the benefit. Dont get me wrong. It is a zero sum game. You take something away when you do that. But the difference is Healthy People want Different Things than six people. Everybody wants catastrophic insurance because the healthy person is in a motorcycle accident but they point Different Things on the up front. Where you get a selection . With party drug benefit you could go on to the Computer Program you putting your drugs you figure out which plan is the best of that is not antiselection i dont know. That is efficient. We can manage entire selection theres always that. I am an emergency physician you mention how only 30 percent of the dogs like the food. Only a small percentage were previously uninsured. And we dont know. The only dog food they were served. Exactly. And we are in the individual market but 70 percent of people for not previously insured tomorrow are not. But to litigate the future uninsured to make sure they still have insurance later. People who are in the market today there is no reason they libyan the market tomorrow afternoon. You want to do the gallup poll or there are rand paul you just did a poll of 29 billion and a 30 percent showed up. That is the good predictor of future performance. I with the heritage foundation. Laura trend. I want to ask about the back end. We were assured everything would be fine with obamacare then the curtain lifted and there was a lot of disasters than the mysterious back and. What are you hearing from Insurance Companies about this system was working and will we have some issues dropped . With the age 34 transactions from the fed to the Insurance Company on a moment they are generally working okay. You do still have the unacceptable error rates for high volume performance but it is and fellow single digits. It is to keep their heads above water bill is workable. With the billing system to compare the list between the Insurance Companies and the offense. There is a meeting next week between cms and the Insurance Company they focus on to talk about the issues what the back end should look like. The back end is not close to be tested yet. I am hearing of we are lucky we will have back end by september. That would be one year later it should have been tested last year and dont discount this. Insurance companies dont know what their premium is. They know the claims but they dont know the premium because they have not been able to do reconciliation. But with the Affordable Care act we send them a bill and they send us the money. [laughter] whats our the subsidies per month . 10 million . Were now into the fourth or fifth month with no backup or reconciliation. I will assure you they are good for it to. [laughter] but we have the mother of all reconciliations coming. If you live by this war youll die by the sword. I would not push that to heart. This is the last question were up against a deadline. Just a followup question Insurance Companies are paid for the benefit who was on the hook . Are they rendering care . The provider is on the hook, the Insurance Company. When the payment comes the Insurance Company cannot take them off the system for two months. If a person goes to the doctor and the consumer does not pay the premium in the second and third month the Insurance Company can suspend payments but the dodgers providing treatment. One of the practice leaders was they said we collect up front because were not sure if they are covered or not and the deductibles are so high especially for a specialist they have a 2,000 deductible . They have catastrophic insurance so there is a lot of trauma. These are the complicated moving parts. Have to say obamacare is screwed up but it clearly has to be fixed. The fact we dont have a reconciliation ultimately the Insurance Company will get their money but the providers will not necessarily. Rich barton. State Medicaid Expansion given the likelihood the administration will not hold to that 90 percent rate would that be irresponsible for governors to except anything . Here is the question i often get from my conservative friends. The federal government pays one and then it drops at 90 percent when it drops the state is on the hook for a lot of money. Dont tell me the state is not on the hook for Medicaid Expansion. My responses simple. You are telling me you dont know how to make market based reform 10 more e efficient . You cannot sweat and percent more out of the system you cannot read your program 0. 19 of the dollar analyst with hedger . Put up or shut up. [laughter] i have an opinion on that. [laughter] some of us have to believe in the market even though they say that. Some of them actually spend their life in the american i could manage any state 0. 90 on the dollar and so can most of my peers. What is risk adjustment like if you loosen up the benefits . Medicare advantage type system . What is a look like from 2017 . It goes away to out of the three years. I am corrected. Yes the risk adjustments days a health plan and lucky enough to get the sick people and some are too small but the training wheels the subsidies go way. What you have is the regulated market that is what they have with party and Medicare Advantage. The biggest customers the federal government. I re mentioned medicare vintage they still give the free gym membership. Clearly the risk adjustment formula, that is why you hear these people say the Insurance Companies are nothing more than a cherry pickers. It is the zero sum game. You can bring to a Healthy People it does not do any good but the sustainability for the Insurance Industry has the adequate spread for the Affordable Care act. You could be the best cherry picker in the world put it will not do you any good today. Remember that the next time you talk about the Insurance Company cherry pickers and how they screw it up. As the moderator i will ask my question. You were very adamant about the hatch amendment going backward before it goes forward but is it tough to enact with a transition . Yes. It is semantics that republicans have a real problem. I think they have to figure out how to get around the repeal part anytime legislation you pass to fix obamacare is repealed and replaced but the perspective has to be going forward. I have the great deal of respect for many parts of the bill is serious i wish they proposed it to thousand nine because know if you pass it he will eliminate Medicaid Expansion 30 states will have expanded this 60 senators you will eliminate the Medicaid Expansion . They replace it with a uniform credit that everybody has insurance through the system. This was proposed 2009. we talk about is going for word. But to go forward you have to do so lobotomy first. [laughter] the problem republicans have got to, they will get along with the notion they want to go backward. That will be the wrong political move to make. It could win some tea Party Primaries but that is a terrible thing with november because the vast majority wants this fixed. They dont care about the conservative and republican criticisms in the backroom problems. They want it fixed. And burr hatch coburn has a lot of good ideas. That is the last word. [applause] [inaudible conversations]