Transcripts For CSPAN2 Key Capitol Hill Hearings 20141219

Think that we would be a lot more successful by now and for us they are doing it at the local level using the county stakeholders and we are very fortunate that we have the counties support to allow us to tap into these different resources but we have to replicate that acceptability in every county and in every city if it doesnt come topdown. Typically at the end of the four runs people leave more depressed than when they came. At times we have been accused of designing before in the floor in the program to make people more worried. I dont know about everybody else, but i at least am more optimistic and hopeful and i think that we should end this on an upbeat note so please join me in thanking our speakers and i look forward to seeing you again and i can promise you that it will be less optimistic. Plus a live picture from the Brookings Institution as we bring you a discussion this morning on the military Health Care System we hear from a number of Defense Department officials as well as budget experts who will talk about their ideas for improving military health care and also whether the Affordable Care act can be used as a model for reform. First up doctor Jonathan Woodson is the assistant secretary of defense for Health Affairs. Live coverage on cspan should start in a moment. We will let you know president obama will be holding a yearend News Conference before he would his family for their annual vacation in hawaii. The conference is set for 1 30. We plan to have coverage on cspan and we will get your reaction afterwards on the phone and social media. The president hosting a conference at 1 30 eastern we will have that live on cspan. In audible conversations [inaudible conversations] in audible conversations [inaudible conversations] good morning, everyone. Welcome to brookings. Merry christmas, happy holidays. Im from the center on 21st center on 21st century security intelligence. We are privileged to have an allstar cast on the important subject of military Health Care Reform. We are going to hear from assistant secretary defense secretary defense for Health Affairs doctor Jonathan Woodson. He is responsible for the 50 billiondollar plus enterprise that takes care of almost 10 Million People. Including the dod activeduty personnel and their families, retirees and took care of 50,000 on the battlefield. And it is that is a very large player in the national Health Care System. And after weve heard from doctor woodson, we are going to assemble a panel of distinguished scholars that range from not only the military domain but also the broad health care and economic domain in the country as well and i will have the privilege of moderating the panel and introduce the participants later on but for now i would like to give doctor woodson the floor. Hes one of the countrys best vascular surgeons and as a soldier in the military himself played in the nations wars hes now a businessman park salon with a combined annual expenditure in excess of 50 billion which is now more than 10 of the base budget of the and the defense of remarkable set of responsibilities that matter how you look at it. Without further ado, the floor is yours. Please join me in welcoming. Thank you for that kind introduction. Its a privilege and honor for me to be here with such a distinguished panel and old colleagues and friends. I want to thank the Brookings Institute and Michael Hamlin for inviting me to talk about what i deal with everyday and i think its important and timely not only to the National Scene and the Defense Strategy that healthcare in general. I typically speak to the audience in the medical centric so its great for me to get feedback from an audience that has a broader perspective on National Security so im going to try to set the table a little bit here about the military Health System to tee up the discussion that will follow and both are needed down the road. So there are a lot of responsibilities in the National Security defense in the military strategies and the military strategies and to properly assess its value we need to understand that these polls particularly in the emerging Global Health and gauge meant environment. Being able to meet its missions to deploy anywhere in the globe at a moments notice its important to state this is not a pickup game and you need an organized system for the strategy that its important to realize also the most important is to be the enable of the boer fighter as exemplified by this iconic figure on this photograph we need to keep this individual will be. We need to care for the families and make sure that they dont have to worry about the family when deployed as it appeared the phrase we need to learn to skate where the puck will be when we make reforms going forward. We have opportunities for the policymakers, beneficiaries into the country at large but only in the context of understanding the roles and capabilities. Its an evil system of healthcare and medical force generation. More historically from independent medical systems which were generated decades ago when medical care was much simpler in the way we thought about medical care was less involved, costly and technological. So the Healthcare System is in a transformative period after 13 plus years of war. We have performed well that we need to position ourselves to be stronger and more relevant to the future. Its an understanding of the uncertain complex that defined the National Security seen in healthcare in america and i think many of you have heard that term. Its not immune to the requirement of these other domains. So if you accept the principle that a state where the puck will be is to design the used to design the system to get the outcomes that we want when measured against the missions and functions that we are asked to perform. So this slide really is the military system part of the fighting force into the Principal Mission is to ensure the forces are medically ready to go to the fight and its also important to understand one of the missions is to generate the medical providers to the enablers. Its a microcosm of medicine we operate 54 plus hospitals well over 300 clinics and have 150 medical personnel. We have a plan masquerading as an insurance product and thats important to understand what the deuce defined by congress and not what the let the Corporate Structure defines as a benefit in that sort of profit motive system. We are a public Health System responsible for not only prevention of disease but broad responsibility of those that can normally be seen in the state and local is and remember historically the major reasons it is important and it goes back to the core of history and why they exist. We are in medical Education System producing over 26,000 medical graduates every year in a number of medical specialties, so radiology technicians, pharmacy technicians etc. And of course the combat medic which is important to saving lives in the battlefield. Weve 217 graduate medical Education Programs in which we produce advanced capabilities and advanced nursing programs which produce versus indicate fuzzy and one of the issues getting back to the connection if anyone thought we could outsource this and produce and generate a medical force that we need. There are a bunch of senior medical students that are starting around the country looking for residency programs that do advanced training. It turns out there probably will be a thousand fewer positions to train and and american medical graduates. To generate the medical force that we need may not be there. The doctors and nurses etc. That are going to be the key enablers for folks coming in harms way. Going into the programs in the country tied on a mission this is becoming important as the expectation of american leaders and the american public. Its too rapidly closed the gap in the sciences to approve the outcomes from traumatic brain injury and other problems which is posttraumatic stress disorder but the other issues are predominant answer we must maintain this capability. These are pieces of the system totaling more than 50 billion a year. We need to Work Together in order to be available to support the National Security defense and military strategies and unraveling a piece of this without considering its effect produces a vulnerability for this country. Just last year we thought we were going to get this brief period race pipe from connecticut cities and then isis etc. Breaks out into the frames all of the issues about the mellow three Health System in terms of its need to be ready. As with for the military Health System is an important indispensable part of National Security effort but whether or not it continues in the same form relates because they are higher than ever before. Our american leaders and public expect comprehensive coordinated care for servicemen and women who are ill and the closure of gaps where the knowledge doesnt exist. Weve seen its effect on the tip to the crisis and for those of you not familiar with this visit is a seminal event not only because we brought expertise to this issue but here but heretofore, the ngos, nongovernmental organizations with Doctors Without Borders report of the military and the military medicine at extraordinary long arms length because they didnt want to be tainted by what we do so they see this catastrophe unfolding and they were the first ones who called and said you need to get the American Military here to help out and they spoke about having battalions of individuals who have special capabilities deployed in the environment so there are expectations from all the dimensions of both the leadership and society around the world with what we can do. So the Global Economic crisis many countries including allies decreased their spending on military. So they have to decrease the military medical systems. So we interface around the world and one of the common refrains is how can we command partner with you training for preparedness and the the preparedness and the deployment on the humanitarian operations and kinetic operations. Its a military medical system others can plug and play. We cannot expect it to be ready. You need to be supporting all of these integrated operations and preparations missions. From a value perspective one of the core expectations is from the combat commanders, Service Members and family we will save lives on the battlefield and by that measure, we have been successfully achieved the rate and warfare, the lowest disease and the nonbattle injury rate in the history of warfare so that if an individual is injured and brought to the hospital they probably have a 98 chance of survival. The slide on the right indicates despite the index of how severely injured individuals are it indicates that the chance of survival has declined. This has occurred as a result of many issues. Its a result of the practice of clinically contact the transform them into the combat zone with an emphasis as i noted before research and Development System which invested in issues of Research Control and body armor and as is often study of what works and that is where they are taking care of patients. This has led also to other benefits in the logistical trail of survival and the social impacts of that we now married a soldier up with the family which has a real important set of positive consequences for the environment and human dynamics. All of this is supported by increased training and competency on the field. 19 and 21yearolds doing Amazing Things because the education that they received at the center joint operations in san antonio. We are taking these from the battlefield and transferring them to the Trauma Centers around of the united gates. Weve led to trauma care now in the military taking care of the events. When the boston bombing occurred the picture on the left you see a Wounded Warrior a quadruple amputee talking to the boston bombing victim and the transfer of not only medical knowledge that motivation has been found. Weve redefined the issue. Wounded warriors are now fully engaged in life in the competitive sports. Dieting, serving. Theres a new attitude that we will make the Service Member whole model me in mind, body and spirit but in a commitment to financial stability. We have separated ourselves philosophically particularly when we had the force that was conscript they expected to separate. Nowadays we have a professional volunteer force which when they become ill or injured, their expectation is we will maintain them as long as possible to demonstrate the ability to continue to serve. So the whole issue of the dynamics of what we have to be ready for in the rehabilitation has changed. Its not automatic that they will go to the Veterans Administration and receive that care. So this issue is we will have have detailed relevant to the medical system dot for example to walk on a prosthetic device that takes 20 to 60 more energy whether its a below or above the knee single amputee and if we dont commit to the helpful for decades we will see the quality and quantity of their life diminish so they occur more diabetes its a commitment to them for decades. You can see that this is a complicated system. This wouldve on the right is an advertisement for the American Association of surgeons. Its not a military advertisement but it suggests that we do have value for the American Medical System so hopefully ive highlighted some of the values and what it brings to the nation that we are in a period of transition. Operation freedom has closed. Operation iraqi freedom ended a few years ago but theres still kinetic activities going on. In the absence of war there may be a tendency to say what do we need this complex system for. So its important to understand what is occurring in the National Security environment to understand what reforms need to be made and how we can understand the value. All of you probably know that better uncertain things are popping up all over. As this issue of school for Health Engagement becomes the new instrument of national power, sometimes we are going to be at the tip of the spear and we will have the kinetic war. There are a whole bunch of changes as well. We have more specialization, more technology, rising costs although many have moderated in recent years beneficiaries expect more choice and that baby boomers are getting older and need more care. There is an absolute shortage and theres a provider base. Theres more issues with chronic disease, dvds, obesity and more care is shifted to Outpatient Care and life relies on inpatient care. This is to develop the quadruple came in the military system that looks at Better Health care, Better Health i should say that this prevention, better care that what he do when we we do when we have established diseases and lower costs, but most importantly, addressing the issue of readiness. How do we keep it medically fit and provided medical course of providers. If we can produce Better Health at a lower cost and the readiness that is necessary, that is our value statement and thats where we have to work towards. In the program percentage in the dod baseline budget the important point is if you had projected the slide a few years ago you would have seen a steep rise in the costs of there are somethings weve been doing to reduce the cost and the competitive value in the future. Previous agencies predicted that by 2017 would be we would be in a budget of 61 billion escalating up from there. We have taken certain Management Strategies such as pharmacy reforms, outpatient prospect of Payment Systems and admittedly healthcare inflation has moderated. We still track a little bit about what the National Average is and there are no beds that it will remain as low as its been over the last few years, but at the same time of course as we have try care in the defined benefits we have tricare for life and decreased tax. We dont have the ability to raise premiums or copayments unless the congress agrees. We have the system and as a result, the beneficiary contributions shrunk from 27 down to 9. 3 . The issue is collectively we have to decide where we want this to be. We want in for the Service Members deserve a robust benefit at a lower cost because of the service but this is a collective decision we all need to make where that should be. I put a slider. Dont worry too much about the numbers. They probably are a little out of date. This is designed mainly as a graphic to show you how the budget is divided. Its divided into the area groups. The issue is if you use the principle where the money is you will see that we spend a lot in privatesector care about 70 of the dollars into patient care and the direct care system. So its important to insure that the two are optimized. We use the dollars that the direct in the system that are going to be a lot of fixed costs and direct care system is more optimally utilized. Also remember by the way this is where we generate the course to go as key enablers to go in harms way. But the key also is to focus on those tiny little box which are to the right of the screen which talk about management activities because in some sense you say youre not going to get much efficiency by reform but thats not true. The important issues to modernize the management of an enterprise focus because its the management that drives the changes and optimization in those big bubbles on the left side of the screen. Which is responsible for designing and providing common business processes and clinical processes which produce an economy of scale. Im proud to say that we, through our first year, even though Defense Health agency is not a full operating capability, projected originally and modest savings of about 80 million we have eclipsed that probably will, i know we will, it sat to under 48 million in savings. The first year is successful but its also about standing out what we call enhanced multiservice market strategy. For those of you not familiar we have a large geographic areas around the country where multiple services operate. They operate their own military Treatment Facilities and, in fact, we purchased care in the private sector. Designing Business Practices that optimize use of the military Treatment Facilities as well as provide what is needed care in the private sector is key but you can only do that if youve got a Management Strategy that is enterprise focused. We also need to define and deliver on medical capabilities manpower that is needed in 21st century which are rapidly changing. We could spend a holy talking about what this represents but its getting away from the notion which lined leadership often thinks about which if youve got a building that says hospital on it, they think thats a capability but its not. In the 21st century. We have to talk about real medical capabilities to drive the medical outcomes and want on your across the whole spectrum of issues. Part of our capability in developing new leadership. That can really operate, make decisions in this dynamic world. Fielding new capabilities like the Electronic Health record that is the least generation three or four with decision capability and can tie to other businesses that will enable leaders, commanders and clinical providers to make more decisions, correct decisions easier and reduce, make their work more efficient. We need to invest and expand our Strategic Partners and to support to identify Strategic Partners, whether or not its academic, medical centers. The federal partners like the veteranVeterans Administration d understand what we need to do with va. So between the va and us we have about 211 hospitals injuries stages. At the average cost of replacing hospital about half a billion dollars. The question is what efficiencies can we drive there and actually meet that mandate or use othe of the issues as res to Clinical Training and the like. We need to assess the balance of our medical forced to we have an active force of provided from a reserve force of providers, and we have civilian personnel. While we know that with the increased growth of specialization, we cant keep active duty entering a lot of the specials. We got to look at new ways of tapping into the reserve component. One of the things i point out to people whenever they will listen to me is that when i was an academic practice if i went to nih i could senate contract with the nih and if i wanted to do research, 40 of the time they would pay 40 of my salary to the institution. If we need individuals to serve on active duty, the question is whether not we need to redesign some of the cold war reserve policies so that we develop contracts with subspecialists and we say they are hours 40 of the time. It makes for harmony in terms of the Family Dynamics because Everybody Knows what mom or dad is doing. It makes for harmony with employers, and we get a professional force that is going to be available for us. We need to think innovatively about our work force. We need to modernize the tricare program, and this is not just about fees but this is about decreasing the Administrative Burden and making sure it provides a robust benefit that the beneficiaries desire to get what they deserve, at a lower costs. And then lastly again its about defining the nhs is rolled, competencies and requirements in Global Health engagement which is becoming much, much more important. So to finish off here, the mhs is clearly an important asset in the National Security military and Defense Strategy, and is a resource for the nation. But its at an inflection point. Its a value, it will be determined by how well we organized to do our missions against the cost, both financial and otherwise, that all of our leaders and stakeholders see us consuming. And remember again, the failure to do that competes with the line to train, man, and equipped with a force. What we are managing through it in the future is bright clergy for the military Health System. It will require collaboration, but it will have to present simplistic present simplistic algorithms that stakeholders might suggest that dont integrate all of the missions we are required and grated against. So im pleased to be here today and i want to thank again the organizers for having me to sort of set the table, and i look forward to the discussion but i think we might have time for one or two questions, so im happy to entertain those questions at this time. Yes. Hi. Im executive director of the support foundation, 12 year army life as well. One of the things that i think might be missing in terms of priority is really having a deep understanding of the population that we are serving after 13 years of war. One of the teams that was deployed in a fair to really understand particularly behavior healthwise what was going on. I got the sense when i was an army wife that a lot of the stuff you were doing was reactive and we couldve saved a lot of money and probably done a better job if we understood the population we were surfing. Someone during if theres a way to fit that into our strategy and our plan, having a deep understanding of the impact of how may people are still in the military who have served multiple deployments and how that affects the health of the force. So, great question. Thank you for asking it, and i think youre right but let me provide a little context. I think today as we sit here, or stand here today, we have a number of studies such as the army start study and a lot of other studies that are deeply exploring the population and getting a better understanding. Out to the heart of your question, if you go back a decade as to where we were, one of our feelings was to just accept that we are the American Medical System and the public was at terms of middle health. This gets to what i was talking about before about expectations. We just cant accept that we have a mental Health System in general and american medicine. That is just disarray, disconnected, poorly coordinated and expect that thats what will serve, servicemen and women optimally. So we play catch up. Theres a doubt about it and we are still playing catchup. What happened is the problems were recognized our national leadership, by military leadership, by the medical community that we were not producing optimal systems an optimal outcome. So there was a lot of money that was thrown at it in a crisis mentality, and a lot of programs that were established, and we are just sorting through those and putting metrics against those to decide which are effective, which are not, even as we understand better the population that we need to serve, not only know that on into the future. You are right, we had to play catchup but it was partly because of where the environment american medical and mental Health System was at. Parenthetically i would say thereve been a number of recent studies have come out from iom and other organizations evaluating our system based upon our request. It turns out that theres still some very critical elements in those studies, but when he asks the people are experts in this about, well, what do you do in your system . They say wait a minute, youve got to understand, we are going to the top what you are doing because you were ahead of what we do in the private sector mentalHealth Systems in coordination. I think we see elements of that everyday as the celebrated cases, out. Much more work to do. We did play catch up and were trying to sort some of this out. Yes. Im a general internists. I worked at fort belvoir as a civilian physician for seven years and Bethesda National Naval Hospital for five. I was one of you could see more about the va . It seems, many soldiers cant stay with the military. They have to transition to civilian life, and it seems to me the connection between the military, the active duty military and they did was terrible, symbolized by the fact we had two incompatible electronic records systems, and that apparently they have given up trying to harmonize them, Third Generation of something else. This is after billions of dollars and 10 years at least. Well, i wont get into exactly the number. I will accept wholeheartedly the spirit of your question and i will answer it in a couple of different ways. First of all we all need to appreciate again the historical context. The military Health System and the va system initially had different missions, and the whole idea was after the Second World War and the wars before now, if you got ill or injured, youre going to move on to the va. So that degree of coordination, particularly at a time when health care was simpler, more simple, it served its purpose. Fast forward to, you know, the 21st century and thats neither acceptable or desired, particularly the complexity of care. So we have committed, in fact, to harmonizing and working on that transition. And i cochaired the committee with the undersecretary of the va to work across some broad areas so information technology, clinical programs, this is operations, and again i could stand appear for hours talking about what we dealt with over the last couple of years. But i want to address your issue but these enabling systems like this Electronic Health record. First of all, i think it was a little bit naive by everyone to think that just because if we build a single system that it would talk to each other but if you go to kaiser or whatever, and you look at all the hospitals, particularly the early experience, just because they inserted a Software Program at one hospital didnt mean it talk to the other but it turned out because theres something called data standards that you have to deal with. Thats the heart of the. If i would ask everyone in this audience to hold up their cell phone up their cell phone, we would see a variety of cell phones. We would see iphones, galaxy, samsung, blackberries, et cetera, et cetera, but you all protect each other. You can all text each other, email each other, phone each other, send each of the documents, many believe those documents. Because there are data standards. Within Electronic Health records and what really was a nascent sort of Business System called an Electronic Health record, which remember was originally designed as an archiving system. If i encountered a patient i would record their history, not a computing system. What would happen is you would see in one system they would call a water bottle of water ball, in another system they would call it a goblet. And another system they would call it a classic vessel to hold fluids. You couldnt talk to each other. What am i saying . Weve got a long way now to do with the interim operability of dated, its a we, particularly last year, have made Great Strides in organizing between the va and the military Health System, this issue of data transfer, interoperability. We expect to make more strides even as we modernize our system. So complex issue, but i appreciate the spirit of your question and it needs to be solved. They are working on that. Other questions . I think were out of time, so thank you so much for listening to me this morning. [applause] thank you, dr. Woodson but i will invite the penalty, no. Thank you again very much for your remarks. [inaudible conversations] [inaudible conversations] thank you. Again, secretary, ma thank you for those remarks. I will be brief in introducing our panelists so we can get right to. Limited report about each because we really have an extraordinary panel, a lot of difference a lot of former bosses of mine by the way. I think only henry aaron hasnt worked at cbo out of this grew. Alice rivlin actually created it and i will get your in just a moment but sitting to my right is bob hale it was along with jack mayer my direct boss at cbo but he made up for that part of this grew by doing Amazing Things thereafter even though he had to supervise me fo for a wh. U. S. Comptroller of the air force in the 1990s for much of the Clinton Administration if it wasnt a just about a year, the cultural of entire department of defense. And between editors other jobs including running the National Comptroller association but i learned a great deal about Defense Strategy from bob as well. This is very probably is lead going into the Christmas Season nonot to have to be the scrooge again because hes the guy that handle sequestration and probably made him feel like in terms of his workload like the grinches dock at time trying to pull all those presents the top of the mountain but he got through it and remarkably actually i think its a huge credit to bob and to many others in the military that deity kept function is incredibly difficult period and a lot of other publishers as well. He will be putting this Current Issue and broader context in terms of military Compensation Reform and the department of defenses overall budget challenge. Carla tighe murray is a ph. D economist and university of illinois. It also worked at the pentagon but she is not at the Congressional Budget Office and she has written recent options papers and studies on Defense Health care that ive talked about the ways in which among other things some of the costs might be shifted a bit more within reason to the actual members of military and their families because i think as many, as many of you know this is a very generous system in terms of the costsharing. And i think most of us would agree with that philosophy that it should be generous, that copayments and other costs and premiums should be much lower than the National Average but they are extraordinarily low and at a time when dod is dealing with a budget crunch. One question is can it afford to be quite a generous . This is an issue we will be talking about as well. I mention alice rivlin, in addition to having found the Congressional Budget Office, as brookings nears its 100th anniversary in two years i would nominate her as our greatest scholar slashed Public Servant in our history. She was not only the founder director at cbo, she was the direct of the office of management and budget and the Clinton Administration she is vice chairman of the fed. After that she decided try to help d. C. Fix its finances, and then last year when are sent on Health Care Reform at a brookings needed a new director, she volunteered for that job. Im not sure to fall into is the right word but well leave it at that in the holiday spirit. And distant great deal of work on health care over her career as well. Henry aaron is the one of the greatest Health Care Economist in the country has been at this for a long time and economic studies program. Is a philly with a number of other organizations around the country and work on matters of health concluding institute of medicine to the American Academy of arts and sciences and a number of other organizations. I looked through his resume recently and realized we should probably make a previous of him in the foreig Foreign Policy prm because his masters degree was in russian studies. That may even help for some of the aspects of her healt healthe system i suppose. Finally, jack mayer, executive Vice President at booz allen hamilton. Weve been glad to have jack part of a brookings efforts over the years as well, just as bob and others have kindly help those previously. Jack runs the military health of their program at booz allen hamilton. Has had a distinguished career there on issues ranging from Energy Policy to homeland security. He was at the Congressional Budget Office. Hes a west point grad and former army officer. Bob hale is a former navy officer shouldve sued to force with a great deal of expense across all these issues. I realize i went on a little bit but that they deserve a little bit of praise and and you deserve to your some of their credentials as we approach this topic. Bob, without further ado if you could put the military Health Care Problem within broader dod budget perspective for us. Thank you and thanks to judge the. Great job of a one to many things the Health Care System needs to do. I want to talk about it more from a budgetary perspective, and the first one want to make, they been significant changes in military health care that have slowed the growth and Health Care Spending significantly. Just a few examples, five years ago the administration about the department of defense to use the scheduled to reduces calls. The use of medicare rates for small hospitals and outpatient. Dod is implemented the Defense Health agency as john said. Congress mandated a fighter to his program of making mandatory use of mail order pharmacy which is again cut costs inevitably. Some benefit reductions or increases in these i should say and tricare, about 50 increase the and indexing at least partially of those fees, and significant changes in copays for pharmaceuticals. Bottom line, three to 4 billion of savings a year which will go on perpetuity unless they need to be reversed. And has reversed the growth in Health Care Costs, theyve declined over the last three to four years in dod which has helped the department sort through some tough budget times. The budget restraint will continue. More needs to be done and so i will finish up this answer, two things, to areas where think the Department Needs to head in terms of for the changes in military health care. One, as john alluded to already, which is some changes to the fees and copays in the try to program. It needs to look at in the context of overall military compensation because its an important part of the benefits. Two years ago the joint chiefs with john woodson and many others participating lead and overall look at compensation. That suggested changes like holding Campaign Raises pay raises, which have been adapted or about the. Taking health care right now that is entirely free and posting modest copays and fees. This was proposed last favor to congress. Congress did not act on it, did not allow it to go into effect on Health Department will reason that these ripples at least in some form, and i hope that congress will go forward with them and save a couple billion dollars a year so theyre not insignificant. The other things the Department Needs to do is a tough one and thats streamline the military Treatment Facilities. Theres some significant underutilization of some of those facilities. Efforts have been made to do that, but, frankly, the military services have tended to resist in part because they are not convinced they will get the savings. Dod budgets for health care centrally, Services Feel if they agree to these changes, which are tough interview, they may not get the savings for modernization and training. One of the things dod may need to do is think about changing the way it budgets for health care, giving the money back to the services but requiring that they centrally manage, still centrally run the activities, requiring that they pay for them on a feeforservice basis. Using a structure called working Capital Funds that are pretty, and dod. Maybe that would change incentives and make it easier to streamline these facilities because some of that is going to have a have to happen. And the budget context of been some important successes but we need to recognize that. I hope to see more of that in the press, but there is more to deal with regard to changes in benefit structure which deity has proposed anything some streamlining of health care. With that i will stop. We can have some further discussion. Before we go into karl let me ask you one more question and this is a fraught question to give a short answer to but how would you describe the overall state of military compensation today . You alluded to the recent review that was done. Of a talk about potential Cost Shifting towards more for the families and the personal compassion we think about the backdrop to this whole issue . The dod has got to maintain a strong Compensation Program to attract and retain the people it needs and i think we would all probably agree a generous want to recognize the service of men and women in uniforms as been very taxing and continues to be. The department is recognize its senior military leaders have recognized the need to slow the growth in compensation costs to free up money within a constrained budget. Some of that has occurred, limits on pay raises for example, being the largest dollar amount, some changes modest in commissaries and housing allowances. I think theres more to be done, and youre right, we need to look at the health care in that context and there had been some modest changes in benefits there, probably some more needs to occur as well as part of overall compensation. Overall slowing the growth in military compensation. One more followup and then go be a segue to carla because if were going to be a big reform, because what you and dr. Woodson and others have promoted has been significant as you see, but within the spirit of existing system to a large extent i think its fair to say you can crack my premise and a second if you wish, if there were going to be bigger broader reform in any element of mr. Compensation policy, do you think it could conceivably or should conceivably be within health care were more the retirement system where you come out of these debates i know looking at all these questions in great detail . I think you need to look at all of it and i think there has been, i will call it significant reform, i dont know if it has changed the structure, certainly the military compensation. In the environment were in im not sure thats realistic but i think it needs to look at all of these elements, health care, compensation, paid itself and af the benefits, not just focus on one. Because all of them are important to the military members, but also important to the efforts to slow the growth and free up money for training. Karla, youve written about options that might save in the ballpark, as i do the math, richer studies of maybe eight to 10 billion a year once the vote of the many come with a military health care itself, not necessarily reducing overall costs but shifting the cost more towards the beneficiaries, and especially military retirees. Recent retirees who are not into the system, who were no not injd but you were in generally recently good health i think and the other jobs. Thats a complex issue and a complex group of people with a lot of challenges but im not suggesting everything he sees for them but could you explain more about your options, the logic behind them, and how much more than my save beyond what deity has been requesting in recent years the . Thank you. So when they think about these sorts of questions i think its useful to think about what the driver of Health Care Costs have been. You saw dr. Woodsons chart earlier. By my calculations been on Duty Health Care since 2000 has more than doubled in real terms. That is, its increased by 130 over and above inflation in the general economy. I think its worth spending in many a minute talk about what was driving the increase at what might be driving increase in the future. In addition i think its useful when we think about options to kind of think about the source of the relative magnitude of the source data source of options. Cms is really where you want to put your effort. So, for example, what sort of options are going to give you savings in the millions of dollars per year versus options that might give you things more into billions of dollars. So in a report we publish in january we got to the approach and we loo looked at what the drivers of military Health Care Costs have been since 2000. One thing its not, was the cost of the wars. Dod spending on contingency related medical care teach in 2000 at about 3 billion i think him and its come off since then. Thats not a 50 billion program. So that has not been definitely important work being done, definitely resources needed to be devoted to medical care of course to support the war but it was not a primary driver of the 130 , if you will. Instead, we felt that one driver has been the increase in the benefits and expansion of benefits by the Congress Since 2000. Tricare for life is one of those. It is medicare Wraparound Coverage for those retirees who are eligible for medicare, that is, over age 65. And its been a popular program. In 2014, 2. 1 Million People have enrolled in tricare for life. This program essentially reduces the out of pocket costs for military retirees and their families, almost to zero. But basically medicare pays, then Medicare Part b pays and then try to fix up the remainder of those costs. So thats been a driver. And other expansion benefits as well. A second driver we felt is the financial incentive to use tricare. So that the out of pocket costs are for active duty members, for the families but also for military retirees is significantly below what other options are and four civilians compete with the private Insurance Market or through employmentbased insurance. And these financial incentives, so, for example, a military retiree can purchase care and try to prime which is a Health Maintenance Organization Type plan offered by tricare, and they can purchase that with an enrollment fee of about 550 per year for the family. And then there are copays, but as they use the system, thats below what most civilians face in the civilian market. So this creates an incentive, to incentive. Personal it encourages people to join the system and you saw that us about Health Care Costs rising dramatically, the enrollment fees for tricare were constant, basically. And so use of people joining the system. And that financial incentive is continuing so far. In addition you also see people use more Health Services. Those who are in tricare can be used about 50 more Health Care Services and people using civilian hmo plans of comparable age. So you see more people joining, and those people who joined tend to use the system more. For those reasons then we went ahead and look at what some different options might be and we looked at some on, yeah, things that have been suggested on the civilian sector. We looked at things like instituting disease management programs. These are programs where you try to coordinate care more and get more routine maintenance, prescription drugs and care so you avoid the flareups and the need to go, for people to go to Emergency Rooms for those people have chronic conditions. We looked at options like relying more on scholarships and putting medical students, training medical students through civilian universities and closing the deity operated medical school. We looked at some management related deficiencies along the line of creating a Defense Health agency, trying to eliminate some administrative duplication. Those sorts of options may be worthwhile. From a budgetary effect, the effect is relatively small. We estimated savings in the range of several tens of millions of dollars a year to maybe 150 million a year. So then you turn and you say, okay, going back now to what we thought was a primary drivers of Health Care Costs and suppose it is supposed to look at options that would change the costsharing relationship, in other words, again keeping the cost for Service Members and for the servicemembers families the same, low, but increasing the share of cost more to buy military retirees and their families. And we found that you were able to save more like billions of dollars per year compared to some of these other options were youre talking in the millions of dollars per year. So in a cbs judgment to increasing the share of cost paid for by military retirees and their families addresses both the primary drivers of Health Care Costs and pas has te potential to generate savings into billions of dollars. There are other considerations of course and they would probably come up in discussion, but thats it for now. Thank you. Thats very, very helpful. Alys cohen if i could turn to you with to be questioned for both you and henry. First of all taking all this in, how does it strike you from your rock respect and Health Care Reform debate and secondly, our expense with obamacare, the Affordable Care act, other recent develop its own despite health care front, do these offer any lessons to be new opportunities, any new choices for the department of defense . Let me start, i think dr. Woodson outlined beautifully some of the special missions of military health care, and nobody i think would want active duty military to have less than optimal care and followup. And there are some special needs for Search Capabilities that we dont know what the future is going to bring. Not as he also suggested, im struck other commonalities between the problems, the challenges we face in the civilian several system just as the military has several systems, and that he is somewhere in between. But theres this paradox that everybody faces. Increasingly effective medical care coexisting with a lot of inefficiency and lack of coordination. We talked about the Electronic Health records. Thats also true in the civilian sector. Other evidences of duplication and overuse of care. Now, on the civilian side, people are tackling this in two ways. One is to try to get more organized Competition Among health plans so consumers can make more intelligent choices, and providers are health plans can make more intelligent choices about what to offer and how to reduce their premiums and still offer good care. Thats one avenue. And the other is changing incentives, both for providers in bundled payments for all episodes of care so that if you arent using lots of different uncoordinated services you think about what does this patient really need, and also the incentive carla alluded to for patients to manage their care more, more efficiently. So theres a lot of commonality, and ive the feeling that we ought to be addressing these problems together. Because the other two challenges that i think both systems come American Life still not very healthy and the aging of the population which certainly shows up in the va system and the retiree system. But heres one thought about how we might be addressing all of these things together. Its a little radical, but she would be thinking about how the military can some of the military systems my transition their people to the aca exchanges, and especially in the sparsely populated parts of the country, where one of the problems for the Affordable Care act exchanges are, theres something odd of people who live there, military faces that problem as well. Tricare as an option for sparsely populated places. Maybe we should come together to maybe we should be thinking about whether we can give both military personnel and their families and veterans choices on the aca exchanges with the appropriate subsidies. And that would benefit everybody because it makes a bigger pool. Thank you. Just by walid in which i understand, you would consider that for military personnel who are currently being provide health care through the dod as well as perhaps some of veterans who are being provide health care through the va . And the other thought would be come and go the other way. There are underutilized military facilities that civilians could then opt to use a plan. Before going to henry let me give one quick data point and their many people in the room and know this issue much better than i, but those were generalists and we are talking primarily today about the department of Defense Military Health Program which is the 53 billion annual operation that dr. Woodson overseas. The department of Veterans Affairs we have referred to several times but its a separate organization with a separate budget. The overall Veterans Affairs budget is now about 170 billion a year, three times the military health care. Much of that is the direct payment, either in the form of disabilities, g. I. Bill, et cetera but i believe roughly half of the Veterans Affairs budget is actually the Veterans Affairs medical program, which is separate from although increasing related to an interlinked with, we hope, dod. I just wanted to make sure everybody understood that basic set of bureaucratic and budgetary facts. But now him to come over to you for your perspective on what youve been hearing and what you think we should go. What im going to say is i think in many ways going to reinforce what alex just said. How less. There are three distinct groups here who are i think related and under consideration. There are the active duty military that are the former active duty military which is to say veterans, and there are the family Members Associated with those two groups. The case for a special supply of Services System is particularly strong, it seems to me, for the active duty military. For the families of the active duty military, the case of having a dedicated supply system it seems to me very much weaker. And that suggests a possible appeal of the option that our less just mentioned, which is to help families of active duty military have fair, wellfinanced access to the general Health Care System. Now, in particular it seems to me that one should step back and perhaps look at this from the other side. We now have a Health Care System in which, if your income is less than four times the official poverty threshold, which for a family of four is now in the city of 90,000 a year, scaled down for smaller families of course, you were eligible for subsidies, refundable tax credits, and assistance with costsharing on a sliding scale that starts with an essentially complete coverage of whats called a Silver Health plan. And that is the premium that is charged for a Health Care Plan that covers 70 of the covered Health Care Services on an actuarial basis. Plans can provide that coverage in different ways. Many people also want more generous coverage, or they receive it through employersponsored plans, if you buy through a Health Exchange you can body plans that cover up to 90 of the cost of coverage, which leaves relatively small amounts of, for deductibles, there may not be any for costsharing, only for certain services. Its very generous coverage. Perhaps not as generous as tricare is now described as being, but close. So the question i have is whether it wouldnt be desirable as part of the national Health Care System, for the base level of coverage to be a general responsibility, not of the department of defense, but of the overall doctor system that is serving the rest of the population. Now, for special reasons as part of compensation, the department of defense may want to provide more generous coverage than this Silver Health care package. They may want something approaching or even surpassing platinum coverage. If thats the case, that is the responsibility of the Defense Department as an extra recruitment will benefit that is provided to attract the kinds of soldiers we want to have. If that is the case, then the Defense Department would have to consider them and i think it would be a close question, as to whether the most effective way to attract the kind of force we want to have is to spend money on a particularly generous Health Care Plan, higher cash payments, or some other form of compensation. They would have to judge what was the best way to attract the force that the Defense Department needs. But my fundamental point here is this is a nation that has embarked on achieving a degree of, close to universal, and relatively uniform access to the Health Care System. Thats a national obligation. It is not in my give a Defense Department obligation. It isnt clear to me why the basic across a tricare for nonactive duty personnel really is a Defense Department responsibility. Thank you very much. And that sets up a lot of the question, check come under you want to get out including the additional one of whether this overall system strikes you as relatively efficient or in need of fundamental reform. Above and beyond issues of who was a beneficiary, what the packages are, how generous of those packages are. Is the system itself in need of fundamental reform, and anything else youd like to address please. I appreciate the introduction as part of the best group of scholars but, unfortunately, i cant claim that mental because i come from this much more from the perspective of being a Management Consultant influenced by my experience as both a consumer and the past of military health care and as a businessman. I appreciate dr. Woodsons comment about thinking innovatively about the workforce, the exception i would take it is i think the worst force is only one component of the system. And if we are going to change the military Health System to be Something Better in the future, then we need to be thinking about the other sister and think innovatively about all parts of this. I agree with henry that he thinks are multiple populations when you think about this. You have the active duty population that ive never heard anybody who thinks you should of anything other than the best health care possible. And i think the civilian population benefits from that, certainly from history and burn centers and what we are saying now with prosthetics and traumatic brain injury. Nobody does that better than the military, and we all benefit from things like that. But the second population is the dependent population. Indeed, what i think about this from a management perspective and as a businessman, you have to be thinking about the benefits that you are willing to able to have for everyone. Not everybody in the military is able to take advantage of the benefit of having full medical care covered for dependent. Indeed, any of the people in the military are not dependent the as the military benefit program is going to be fair, then you would think that you would have a baseline that everybody is covered at one level, and then those who decide theyre going to have dependents, they are sharing in the costs with the dependent care in the future, much like what is done in any other business that we see. It is rare that a business provide Free Health Care for all of its employees and all of the dependents of its employees. And then the third population that henry talked about his bat populations that has retired from the military, and their dependents but only about 10 of the people who were in the military retire from the military. So we are not talking about huge numbers with military experience. Those people, a majority of them go on to other careers, do other things and have the opportunity to be able to enjoy health care either to the aca or through other employers. And, indeed, having a program where they can go in and get Free Health Care, and do it as often as they want, seems to be a burden that the American People shouldnt have to bear. I think of it in the studies done to have let people know that as soon as you provide a free good for people, it will be used more. I think carla referenced that with the tricare costs are so we know that. And one of the ways in the country were looking at getting Health Care Costs under control is putting more of the burden, or the cost of health care, on to individuals. People are sharing more, in the expenses of that, and, indeed, the copays and in the deductible that they have to pay. Part of what the military is doing right now is looking at how they improve the lifestyle and the way people in the military think about their own health. I think that this is important, and the programs dr. Woodson has established get at some of the education. But i think it cant be just done by the people who are responsible for health care. Because so much of what occurs in the military is influenced by the leadership. We all know that smoking is bad. We all know that it has tremendous impact on the lives of people, and it costs a lot in the military Health Care System. We all know that obesity is bad, and it drives up the cost of all Health Care Systems. And yet in the military we still subsidizes the sale of cigarettes in the Exchange System so that it is far below what some would pay if they went into a walmart or Something Like that to be able to buy it. I dont think you can keep everyone from smoking in the military but you certainly shouldnt subsidize a. I think the same thing in terms of the way the Health Habits of people. People in the military have weight standards that they have to maintain, which is a great thing in order to be able to do, but it isnt always maintained by Healthy Eating habits that window serves them. So we need a command to get involved in this in order to be able to do it in the future. Innovation in the Health System i think is an important thing. Thank you very much. We are going to go to you now. I think we will take two questions at a time because my guess is that once we get quite we will probably work with the a while appears so in the interest of getting a few of your comments on the table we will go straight to you, and to at the time. So the gentleman here in the fourth row, please. And then also here in the second row. Good morning. I guess im always concerned when i hear some of the comments through the town, appreciate your thoughts and expertise this morning, but when youre looking at the challenges that dod is facing, why theres never any comments made about the real problem with acquisition reform out of there. Theres a wellpublicized, well researched study by Government Accountability office, 500 billion in cost overruns which could really easily almost pay for the sequestration burden. Why is it never addressed here, with the focus of the panel seems to go on as i would call it the lowhanging fruit, we will go directly at the personal side of it here, ma kind of bothered me on that part. The second part of the question is the same time were reducing that, the uniform leadership has already put a letter up on the hill has been wellpublicized and articles and where the uniform leadership in particular has asked for protections on their pay and compensation come why the same time to want to reduce it by the rank and file of the military which kind of bothers me insurance of disingenuous piece therefore leadership. So kind of concern about how you would address those things are going on here either those to put the icing we have not talked about either of those two, particularly the acquisition reform. As we go to the second question let me just take ism winter to speak about military Health Care Reform so thats why were not talking about acquisition. The rest of your points and questions are serving worth addressing. Sir, over to you. Thank you for being here today. I am a war college felt at georgetown, and im a Health Services office are often given for distinguished honor of moving reserve forces to and from active duty, based on the nations needs. And i can tell you from my perspective that thats one of my most difficult challenges with the Health Care System is moving reserve is in and out of the systems. Or lack of a better word very much like a patch quote system built from the top down. Very, very difficult. Is wrote with congressional and individual complaints that they can takes a lot of our time to deal with. So i want to ask you from your different perspectives arent responsibilities if you were reform will include reconsidering how the reservists access the system . Maybe come up with a fresh point of view and build it from the individual up because we know that in the future in dod reform, the reservists has to be part of the solution. Using the reserve component is going to save us money ultimately, so if we could redesign the program where they get access to his saved them a little easier, perhaps half benefits correlate with their Social Security number, they are as they are entitled or authorized to go into active duty, Something Like that approach perhaps. Will reform eventually include a redesigned the program for reservists to access the system . Also maybe i can at the end of the given signature which is a chance if something still needs be said at that point, or maybe you want to begin but i dont know whats better for you. Heres a microphone. Thank you for that question. One thing i was trying to elude to in my comment was just that. We need to reexamine a lot of cold war policies that dont allow us to t. A. P. Into easily the rich pool of the reservist. Im a reservist, and i also was again assistant Surgeon General responsible for i would hear from reservists. I love the work. They are true patriots, dont hesitate to be called up, but hated the transition from active, from an inactive to active duty. Sort of the things i was alluding to, i use the example of buying point for ftp is to create these comprehensive packages for select groups of reservists that you could bring them on easily as it helps them and then we could manage it if its better, just to start the discussion. Thank you. Bob . Well, going to the gentlemans question about other issues and technology, as my gaza, is to focus on health care, thereve been a variety of proposals that you are probably familiar with by the department, and i cant speak as a Department Official now, but as a form one who tried to look at ways to hold down costs, ranging from looking for ways to make do with fewer civilian employees, but also affected any other activity, cutting back on contract payments and things may be contract work to look for lower prior activities, strategic sourcing, tried to gather together purpose is to make use of departments by corporate acquisition reform was certainly part of the. You will be someone with a better buying power initiatives that have been going on for a number of years. There are some fundamental constraints there in terms of the departments desire to continue to field weapons that are technically superior and rather limited amount of competition that we have, clearly the best way to hold down costs. There were a number of initiatives taken there. I think the fact were focusing on health care today shouldnt he taken to mean thats the only thing that dod is looking at. Looking at a variety of issues, including acquisition reform. Other thoughts from the panelists to any of these questions . Alice . I think there are a number of transitions that event alluded to, including the last one of what happens to reservists when they go on active duty, and thats clearly just won. The transitions between dod and va, another one. And within the civilian sector of people moving from medicaid onto the exchange is as they change their incomes or the job security. So i think the general point is weve have to figure out how to have a common set of identifie identifiers. If you move from one system to another, your record was with you and they know who you are and whats happened to you at all that. Is clearly an imperative. And if we can think about these things as a National Health system, as henry said, we may be able to make some progress, and maybe with a system that really most people in and out of their different statuses. Henry . It was expressed about the fact that higher costsharing and restricting the medical benefit would fall disproportionately on the relatively lowly paid members of the military. At least thats what i interpreted it. The Health System is a big part of the compensation of a sergeant but its not so big a part of the compensation of a colonel. So if you are raising the cost of health care, arent you disadvantaging the more lowly paid . I dont think that has to be the case at all. There are lots of ways to go about doing this. You can have an income related premium thats the essence of the way Health Reform works. You can have additional compensation in other forms that is part of the package of changes in health benefits. So the issue of what the dissipation of compensation is across different ranks is something one can decide separately from the question of how much of the cost of health care should be shouldered personally by people in the military, or their families. I think im with you on the distributional side of things, but i think its a problem that should be dealt with. Just add to that, the proposal the department did last year could have lower copays, for example, i think the fives comedy for orbital so there was an attempt to do just what you said, henry. Great concern i think the military of to take care of its more junior enlisted. Of the questions . We will take two more. To the military piece politically without the appearance of balancing the budget on the back of the deaths without at the same time addressing medicare and medicaid rising entitlement and how we look at that going forward. My name is karen with the National Military family association, and also the wife of an active duty army officer. I would like to understand more about your ideas for streamlining the military Treatment Facilities and transitioning the military beneficiaries into the aca. Having lived in some of these sparsely Populated Areas there are lack of civilian resources on these areas. And if he were to offload you were to offload military beneficiaries into the medical community, what would the plan before ensuring that military families had adequate access to Health Care Tax debate before we take these questions, and, as you are aware we have an active secretary and former controller and people who are brainstorming. Since you are hearing different ideas and i just want to underscore that point. That is something alice was driving it earlier if you wish to begin with any of those questions. There is political opposition to anything that looks like a benefit reduction to anyone and that applies to military retirees of Medicare Beneficiaries and its one of the reasons i think we are looking at these changes across the whole system at the same time. And it certainly is possible that medicare, which is at the moment having some Success Holding down costs as is the military also can survive over the longer term if it takes advantage of the payment reforms that will enable them to use the Medicare Beneficiaries to have better choices and the providers to have the incentive to use their resources more efficiently and that seems to be starting to happen. But the more we think of this as a national help resolve the problem together question i think the more we can pull the specific groups that are worried about what happens to us together in a conversation. This helps to put them into the inadequate civilian facilities, but if you have areas which both the civilians and military are concerned that there are not facilities of each kind. Its using the military facilities or it might involve putting military veterans or whoever we are talking about in the system to create a larger beneficiary and more ability to support. We need to give up other entitlement programs and think about the revenue side of government. The joint chiefs and the secretary and the department of defense decided they need to look at Compensation Programs to include healthcare because the law limits the total military spending. They will be less available for training modernization and they are very concerned that there is an adequate training right now coming off 2013 and sequestration. So that would be their answer. Im going to quote my good friend whos an American Enterprise institute who likes to say in her sweet southern drawl that we have two statement contracts without any of the women in uniform in the way that Abraham Lincoln spoke of also as they are in uniform service but the other is to make sure they are the best prepared for the fight for the living and the enemy dies. Its a better way to put it coming from her than coming from me but its a good way to underscore the tradeoff based on the current law and budgets to some extent between the different programs. Yes maam and valuable come up here. I think you have a question is that right . Are you factoring the fact that the military Health Care System can be much more efficient and lower cost than the civilian system just by using medicare hospital rates and by negotiating prices the military system is less expensive than civilian health care and it can be made much more efficient still. That questioned a second and one more of here please. The question of moving military families onto the National Healthcare system isnt being taken into consideration moving them back to the dod what is the expense of that and the time constraint . That idea is one that we are training here at the theoretical level i dont think it is an active proposal of anybody in the department at the moment to be clear. Do you want to say more about that . There has been progress on the score. They were not using medicare rate and they were allowed to do that in the congress and that has had some savings in the drug pricing schedules in the companies sued and lost and it was helpful to the department so there may be more there but i think its important that we acknowledge there has been progress. I wonder if i can draw you out on this issue of how inefficient we should think of the Health Care System. You spoke to that already with some informative illustrations and i wondered if you wanted to comment more generally how you see those institutions. One thing i was struck at is i think there are 140,000 fulltime employees in the dod Health Care System. 80,000 plus that our civilian and 60,000 paramilitary. Its a Big Organization and by some tricks it doesnt look expensive. I was just wondering if he wanted to add a word on that. By nature, the government is never going to be efficient. It isnt designed to be that way because there are things it has to do that no other Health System has to do. It has to take care of the activeduty military. Thats one of the problems we always have when we want to change any Big Organization is that the organizations try to the way that theyve done things in the past becomes very difficult to be able to do change in but always drives people to be able to come up with that change is when they need to have the money to do other things. I think bob alluded to that when he said there is only so much money that the dod is allowed to spend and so if they are going to spend more money modernizing we have to find other ways to be able to. Im very sensitive to the idea that the military goes to remote places and is deployed overseas and that there are challenges in being able to get medical care in some of those places. But holding onto places like i learned yesterday in the air force where they may be getting only ten people through a facility at a despicably in not anybodys interest. Its to be able to provide medical care because the cost of maintaining the facility is absurd in comparison to what you would want to be able to do. So when i talk about innovation and how you want to think about this im not trying to get to the most efficient way. That would become a very mechanical approach. But i think that if you are thinking about innovation, you have to start thinking about ways that you can do things better for the future and be a link to let the past go. I want to go back to the issue of inefficiency in the reference was made to the impact of the price of care and the quantity of care expenditure equals price times quantity. Simple inclusion. Its about a quarter of a century since the largest social experiment that are carried out. I that was on the impact of cost sharing and premium differences and the use of healthcare. It resulted in about 30 more use of Healthcare Services than did a normal Health Insurance plan back then. We just heard the statistic that the iqs of healthcare under tricare, the quantity of service means that for comparable populations even larger. Now if there were evidence that the difference in the quantity of care had a big impact on healthcare than you are into the business of doing tradeoffs. Is it worth it to spend more in order to get the additional benefits . The evidence is that the impact on health is negligible. There are some differences that we are detecting back a quarter of a century ago and i suspect you would find some if you did a comparable study today. I think it is fair to ask if this is a good expenditure of funds by a cache strapped and perhaps not sufficiently trained and ready military at the present time. I would like to make one other comment to propose an inconsistency between the government and inefficiency. Ten years ago a very careful study was done of the likelihood that people would receive the care indicated for the condition they had when they would go into a hospital and see a physician. Tens of thousands of records were examined, and the results are quite startling. It didnt make a difference in the likelihood that you would get the care that was recommended. It didnt make a difference if you are rich or poor, male or female, black or white. They were almost identical percentages. There was one place that stood out for having a probability of people receiving the care that was recommended. That was the Veterans Administration. That was the one part of the Healthcare System that is Health Care System that is managed and run by the government. If delete code co it used to be something of a sinkhole that had a terrible reputation defender in the 90s the real revolution occurred in the delivery system. It was a pioneer in Electronic Health records and it was way over its previous standard in at least this one study this holy government managed Health Care Delivery system did a better job of delivering the recommended care than the rest of the Healthcare System. Now no doubt that the private sector particular places but if theres one group so i think it is the case that if they were in government or outside of the care given their heads and supported and given the flexibility to effectuate the reforms we can see efficiency in both places. Thinking a similar thing along those lines but its price times quantity and that as an analyst i found it very challenging and i havent really seen one answer about whether inhouse care is cheaper than privatesector care. Ive seen practice patterns, how long does it take before you replace the need and the military system versus a long civilian way between how much physical therapy they have to take before they put in many. That sort of thing. Hotel amenities and hospitals if you dont versus private rooms and so on and so forth. This is a very challenging the rates are fantastic when you can get them. And i do think that its not really an easy one. Thats right it reinforces the point that on the average there are a lot of improvements that can be made across the system and we need to be thinking about them in the same way changing the incentive both for the providers and beneficiaries so that we get Better Healthcare health care for less money. That we will do a final round. Thank you for your time today. Im with the military Officers Association of america. I just had a comment about the two quotes that you had the military needing to be the best. And we need to take care of the people that are in uniform today and those in service. My husband is an activeduty marine and i most certainly understand the need for the military to be best prepared. But i noticed absent in that statement is that 10 that someone mentioned the 10 who have given their life of service and sacrifice to the nation. And i wonder if the panelists could reiterate how they feel the nation has an obligation to them in terms of healthcare and to the retirees and also absent in that statement is the military families at the China Military family member. What is it in terms of providing health care i would be interested in what each panelists thought about those obligations to the retirees and military families. Im with the National Military association and im also an activeduty family member. Part of the rationale for including family members and retirees in the Health Care System is to ensure that military Healthcare Providers have a sizable diverse population to practice. So if we remove family members and retirees from the military Health System either by on of these innovative ideas requiring them to participate in the aca or by removing the financial incentives for them to be part of the military Health System of impact would that have on the military providers and with their training and preparations suffer by not having this adverse population on which to practice. When someone comes into the military to the retirement age whether it is 20 years or 30 years. Those people that are currently in the military and are going to the retirement of the meet that obligation. I dont think that that needs to be something that is perpetrated far into the future. I think that there are obviously if it is cost considerations whether you can afford to do that or not you can change what the contract is and so you end up with a situation where you grandfather the ones that are already in the military that are providing different benefit systems for those future people who are going to be coming in. This is not inconsistent at all with what you find in every other place in a result of turmoil in wisconsin when the governor changed the contract agreement with publicsector employees that had been in place for some period of time. Im not proposing doing Something Like that. Im proposing looking at what the benefit is in the future. We need to be able to balance the benefits as a part of the total package of what you need in order to be able to continue to attract the quantities and qualities, the skill set of people in order to be able to defend the country because we have a volunteer military and its not a conscript any more. It is one of economics at how to give attract the people that you have and how do you keep the numbers that you need to have in the future and its a combination of things that youre able to do and it doesnt have to be the same thing. We should distinguish what is the obligation to what kind of healthcare to the want people to have and the obligation to the activeduty military is something that has to be decided politically but its whatever obligation we have we want people to be in a system that is effective and not wasteful, duplicate event subject to problems and handoff between one facility and another. And one of the ways that people think we could get a more effective system is to have plans whether they are military or civilian competing against each other and for that you need a fairly large pool of beneficiaries. If you are thinking about the system as it holds you might want to put into play to maximize the ability to deliver good care especially in these sparsely Populated Areas to everybody and think about how you use the facilities that are in the military to do that. Thats all that i was suggesting. I think it is quite independent of what the subsidies are the various categories of the beneficiaries. Spirit in responding to this, first the details of the options that we explored are available on the website and those people that want to know, i would encourage you to look at that. I will say that for the options that we looked at, for example, the one option was to take what with the enrollment fee and the copayment of the if you took what they were in 1995 when try care was stood up and if they have kept pace had kept pace with the increase in per capita medical inflation what would they be today. So innocent taking the financial burden that was established for the retirees and for Service Members when it was stood up and keep the garden is a joy in the same adjusting for inflation and you double the enrollment fees that goes for maybe 550 a year for family coverage. And thats what you see is people do leave but not everybody leaves and people do consume fewer services but not everybody consumes so you have these behavioral effects. I dont want to give the impression that somehow people are forced out of the system when you change the financial arrangement tricare will still look financially of these options took place it would still look financially attractive to many people. I think the department of defense recognizes that have an obligation to the retirees and activeduty family members and a proposed independent of the change that. They would take tricare from being largely having no copayments and what i would describe as modest for the most junior enlisted if i were member 20 if you go outside of the military Treatment Facilities that and many other proposals so about 2 billion a year and roughly half of that comes through the deductions and be over utilizations that have been discussed already. Its only about half of it comes from the fees themselves. But i dont think there is any question that there remains a feeling its a commitment. We will take one last round of questions and then im going to invite the panel starting with bob to respond if they wish but also to add any final concluding comment if there is something we want to hear today that we havent yet. Im with the military Officers Association and im a retired navy nurse and so ive been an assistant for 30 plus years. I know weve discussed in the past the cost of readiness. There is a cost and is of the various forms. Can you comment on that . Thank you for everything youve said up there today. I am an Army Trauma Nurse and two points i was concerned about is we talk about separating military Health System and readiness. It goes to the war every day for the civilians in the area. We need to be cautious as we proceed on that road because we have to maintain our medical readiness to treat with or without a war. We deployed. The second point i would like to ask is we talked about over utilization. Has there been research into frivolous health care as in an appointment at that scene as actually frivolous usage and potentially once it is deemed as frivolous, that person would then pay a copay rate has there been a consideration to recoup some of those benefits . Its one of the hardest things to define. Thats why at least the base portion for using those in conflict. You could take it to a much mo