>> good afternoon, everybody. i want to welcome you all here today. i'm peter russo, ademocratdirec personal affairs at thecato institute. this is a capitol hill briefing entitled economics of health insurance reform. the repeal and replacement of the affordable care act dominated discussions on the hill in recent weeks and lawmakers are huddling in philadelphia to recourse for the damage done to the health market in recent years. when they state they don't have a plan and i suppose i'm being cheritiable here but democrats say they don't have a political viable one. there is some truth to that as any comprehensive replacement will require support from democrats. if there is a take no prisoners approach continues they will in an act of self fulfillment prevent the plan. but to add to the mix the president promised an outline of his own further complicated the endeavor, bun that might bind and unify existing offerings. time will tell and we will see. the true libertarian position requires he no federal interpeerance and the slightest regulation at state level, prices are clear innovation and quality is high, if prices are low and entrepreneurship and kme t competition will be minimal. the economics can prove insightful and steer law makers to policies less distortion to policy answers he help with the problems of unmet medical need in insurance markets. all this aside and understand the best available course in our present circumstances, we need have a better understanding of how health insurance markets work and how they relate it health care spending and real world effects on patients' health. i have asked peter van doren to give his opinions today. he is editor of the wonderful fos fascinating quarterly journal. if you're not getting that already, come to me after and i will make sure you're on the list. he is on the housing land energy environment transportation and much else. he has taught at princeton. school of organization and management at yale and university of north carolina at chapel hill. he was been published in washington journal and new york post. been on cnn, cnbc, fox news and voice of america. a graduate of mit, earning master's degree and doctorate from yale university. we will leave time for question eats the end but for now welcome peter van doren. >> i'm an podium kind of speaker. i like to wander. but the microphone confines me to be here. so i will move around all day and c-span will be irritated. so if i look edgy, it's because i like to make believe i'm teaching my class, which i can't do with this set-up. anyway, i thault i would start with some humor. notice the first word in the outline. it's an adjective and it's modifying facts. this couple, last couple weeks, we've had some adjectives modifying facts. so i'm using a term economists use and a colleague last week asked me, why do economists always use the term stylized fact and i had no idea. so i actually looked up the origin. it comes from an article by nicholas caldore, nobel prize winner, 1957 within used he the term to use with analytic studies and regresses that economists have come to accept as true. so they are are facts not in the 2 plus 2 equals 4 sort. they are fact from analytic studies and estimates and things like that. that the economics he profession comes to accept as true. what i thought i would do today is start out by everyone, all of you from congressional offices, anyone who claims to want to do something about health care, we first have to start with the facts. the facts about expenditures. c-span, where history so you can read what i've written in the outline, which is expenditures rise predictably with age. per capita expenditures from 2012 are about 3500 for underaged 19. for 4400 between 1944 and 9500 and so on and so on. so finally, if you're over age 84, the average health expenditure on you in 2012 are $3 $32,400. that's a lot of money. first of all, average divided across the whole population is 10 grand. so guess what? what we do is basically have endless, endless, endless fights over whether everybody pays 10 grand or some people pay less and some people pay more. right? that's pretty much it. and he if some people pay less than 10 grand a year, some people have to pay more. and the parties fight over this and people fight over this but in the end we've got to pay 10 grand a year per capita. because that's what we spend. see, i'm drifting way from the mike. second important stylized fact about health care expenditures, is that they're extremely, and i mean extremely, concentrated. most people aren't sick. in fact, so -- i'm going to, if i had a -- a accumulative frequency distribution is what i want it draw. if i rank order all-americans, there is 330 million of us almost, 325 million americans, make believe we put them all in a row from the lowest health care expenditures in a given year to the highest. all right? there is a sickest american every year. we spend, i don't -- millions of dollars on that person he. and then there's someone that spends zero. not only someone, if you look at the outline data i give you, the first 50% of that accumulative frequency distribution, in other word, something on the order of 160 million americans, they don't spend anything on that health care at all, hardly. they spend $264 a year. okay? that's only 2.8% of aggregate health care expenditures a year. the sickest 1%, somewhere around 3 million people a year, we spend 107,000 a year on them. that accounts for almost a quarter of aggregate u.s. health expenditures. the top 5%, okay, 1%, so 15 million out of 330 million people, 15 million people, the expenditures on them, that half of health care spending right there. so figuring out what to do about how to pay for, how to struggle with, health care spending basically dehe pends on figuring out what it do with those sickest people. right?e pends on figuring out what it do with those sickest people. right? pends on figuring out what it do with those sickest people. right?pends on figuring out what it do with those sickest people. right? and everyone says, oh, i don't know what to do about that. there are claims on both side about what we have to do and i'm going through those and then i will try to argue that there are two papers that you never heard of and never read, and you should read them. i've been giving a version of this talk for 20 years. for 20 years. the first paper i'm getting ahead of the game here -- but the first paper i'm going to talk about was published in 1995. and yet, i bet you, i bet you, i bet you a lot of money, none of you in this room, or congressional staffers, have ever read that paper, even though it's your job to figure this out. so how do they manage these stylized fact? the conventional wisdom certainly posts affordable care act is that the only solution, that all of you here, who are healthy and young, you won't buy anything called health care insurance unless your employer provide it at a very subsidized rate. because you're healthy. you don't need it. okay? and then thus the -- and that leaves sick people and sick people, the mean expenditure for them somewhere between 50 and $100,000 a year. that means the premiums would have to be that average. no one would want to, and many couldn't afford to pay that. so the solution in the conventional wisdom is coercion. right? that you have to pool, all of you here, have to be forced to join a pool with all of the sick people so that in the end somehow, all of us end up paying 10 grand a year. right? somehow we have to pay 10 grand a year. the only question is how. the conventional wisdom is that we need to use force. of course, libertarians, we kind of worry. we may need forced coercion now and then but be careful. don't think of it as your first solution. so the gentle word for force is community rating. just language is everything in politics. so community rating sounds pretty benign, libertarians say, no, it's forced. both are true, they are describing the same situation. now, here's the thing that's puzzled me. which is, there is an alternative world. it did exist and he it did work and somehow everyone denies that that occurred. i was in health care conference once, a little meeting atcato, with ezekiel emmanuel. i said, have you read the pauly paper? and he said, no. and i said, then stop talking. you can't talk about the possibility of individual guaranteed renewable health insurance markets unless you've read the pauly paper. and he said, i don't have to read it. and i walked out. well, what can i do? right? all i'm trying to do today is not win you over, not to make you do anything. just to say, i think you owe yourselves to read the two papers i'm going to describe because they say that the world thatca that cato describes he, that can't exist, in fact did exist. i want to walk you through, how is that possible? the key is that the costs are very concentrated. okay? most people aren't sick. some people are. so therefore, health insurance contracts need to have pro two prices. two component.ro two prices. two component.o two prices. two component. two prices. two component. the first is the average health care costs of someone of your age, if you're normal and not sick. and the way this is defined is, all this comes from the medical expenditures panel data. and diseases are defined. cato regrets this of course, but the government does keep good data. so the data for the studies i'm describing all come from the great data kept by medicare and medicaid. and big insurers. we have data set on the history of illness on all-americans for 25 years. so we know the probability of any, for any given age group of reverting to a very sick condition for the next year and we know how long that lasts and we know how much we are going to spend on it. we know all that. so the key is, and an individual compatible guaranteed renewable health insurance world, what would induce everybody to sign up? even those of you who are only spending $264 a year? those of you who weren't interacting with the health care system at all? and the answer is, if you're young, you would have that base rate for, here's what i spend and it's like $200 a year. then we know diabetes, cancer, ms, cerebral palsy, weird autoimmune -- we know all that. we know the probabilities of that occurring in every age group. and we know the cost of treating those disease and we know how long they last. they don't last forever. the median time is four years. people either get better or they die. the good perspective is that there is an end to this high-cost condition one way or the other. and we know the probabilities and thus we can just multiply how much we spend, time the probabilities and had that to the normal very low-cost premium that you would have if you add term only nonrenewable kind of health insurance. that is the renewable individual health insurance premium for you for that year. we can do this for 20-year-oldes. we can do this for 63-year-olds. it would be more expensive. but we know the transition prob bills in any given year. and for all low risk at age 18 will become high risk by age 55. and 40% will be high risk by age 64. but we know this in a very fine-grained way. so we can price all this. here is what pauly did. pauly priced everything out. and he said, in his hypothetical world, and he used real medical expenditure data, he said, in my hypothetical insurance world, my insurance premiums for every age group would look like this. then he went to health insurance companies and said, what do you charge for your guaranteed renewable individual health insurance contracts? and he found that the premiums were more or less exactly what he predicted they would be given the health claims data. so no excess profits, no gouging, no weirdness. and he published this paper and said wow. look at this. the most important paper you've never heard of. most important paper you've never read. the second paper you've never heard of and not read is by a senior fellow at cato, john cochran, economist at university of chicago and a financial economist, not a health care economist. he said, here is a weird thing. guaranteed renewbility makes consumers -- puts consumers in a bind. they have to trust that this life -- that this health insurance company they signed a contract with will really come true if they're in high cost condition for the next n years, whatever n is. and they are in a monopsony, or monopoly kind of setting that they can't choose. so cochran said what they really need is a financial derivative that once their high cost fwoez with them, it is a sack of money tied to their neck, so that insurers would stop discriminating against people with preexisting conditions. and he called this health status transition insurance. and he wrote an article in the journal political economy 1995 called time consistent health insurance. we got him finally to do a version for cato in 2009. and that paper is available for you at the outside. so, bottom line, individual need health insurance contracts did exist and did work. the claim that individual health insurance mark set incapable of existing and working is incorrect. the problem is of course that most of us are an employer provided health insurance market. this is not a random sample of society. and thus the transitions between the two kind of ways of health insurance are difficult. so in the pauly cochran world, we would end coverage, end medicare, end medicaid. we would have everyone finding their own insurance, but they would have all these little pockets of cash attached to them that would make insurers eager to find even the most sick patient because those patient would leave the insurer indifferent covering them because they would come with the present value of all the future costs because we know all that from the data. the only trick is, now in the backwards induction game. suppose people don't buy this really neat product. right? suppose lots of people don't buy individual guaranteed renewable health insurance with a cochran health transition voucher attached to it. and the truth is, i don't know what to do about that. we're back to subsidies or mandates or some combination of both. or nothing at all. those are the three choices. and i'll leave that to political decision. so that's sort of part one i want to say. so i want to disabuse you of a notion that cato world is la la land. not the movie. that cato world of people buying and selling and everyone being covered is somehow an imaginary world. it is not. very reputable people with data have shown he that it did exist and can exist. you do not have to pool everyone in the same community-ratings system with a few plans that are all regulated. you can have gazillions of different insurance plans and everyone going for whatever they want as long as everyone comes with a pile of cash associated with themselves that's sufficient to pay for them if they become sick. which actually is very rare. that's the importance to remember. i'm not saying that all the details he have been worked on and all that, but if health insurance reform takes the premise that individual contracts are not -- well, i want to put individual contracts back on the table as a possible intellectual starting point and see its removal as intellectually unwarranted. that's the message that i want to convey today. now i want to switch and end with what i call the dartmouth based efd portion of the program. for those of you who follow health care, you know that there's a line of work that says, some of the middle class notions of what i call medical through put, which look a lot like defense through put to me, are unwarranted. just like john mccain has never meant a defense bill he didn't want to raise spending on. many middle class voters, many middle class advocates believe that you can't spend enough on stuff. you can't do enough prevention. you can't do enough screening. we need to have screening for everything. for everybody. kumbaya. well, guess what? if you believe in science and you believe in evidence, it's remarkable how thin the evidence is for that position. so what i want to do is my little tirade here about the annual physical, early detection and mass screening may be entirely overhyped. first as man, well if you read the "new york times," you know prostate cancer screening probably isn't a good investment. all right? prostate cancer is very rare. because we have detection regimes now, cat scans and things, we can find all sort -- they've done this, actually. they have taken random samples of people with some exhibiting health like back pain and he others he not exhibiting back pain. then do cat scans on both.e others he not exhibiting back pain. then do cat scans on both. others he not exhibiting back pain. then do cat scans on both.e not pain. then do cat scans on both. not pain. then do cat scans on both.not e. then do cat scans on both. they find more wrong with people without symptoms than they find with people with symptoms. if you tell a patient we found something, they never say, because they don't read the columns that i do, they never say oh, i don't think we should do anything. which actually should be your modal response to much of this stuff. they found a lump, found this. they found that. most of us will die from something other than whatever an image can find in us. people have cancer. much of it is of nonclinical significance. particularly prostate. it grows slowly, blah, blah, blah, blah. now, some men die of very deadly prostate cancer, and it's not pretty. but to detect those very, very rare cases through mass screening, i'll give you the numbers and the outline, for everybody positive test at least to a biopsy, there is only 2% chance of preventing death over the next ten years. so talk about false positives, right? so think of all the people who undergo tests and biopsies he and just unwarranted skend tour. a and he got worried. and for no reason. and chasing a needle in a hay stack. >> one of the most interesting columns i ever ran in a journal regulation is by a physicist who realized that searches for terroristes a mass screening for disease have a lot in common. which is people get hyped up and we believe in mass screening for terrorism and believe in mass screening for disease. and both are very unlikely to ever find anything. because terrorism is rare. and he so are bad diseasee so s. now for women. mammography. you can read as well as i can, a large canadian study found no difference in mortality or death rates from breast cancer from a 25-year study of mammography versus just manual exam. no difference. nothing. okay? so why do physicians keep pushing mammography? answer, a lot of patients demand it. it's the middle class thing to do. so we all grew up, well i'm older, i grew up with the american cancer society. a check up and check. a lot of this comes from fund-raising strategies of nonprofits. nonprofits raise money by scaring people. and you can't raise money by saying libertarianism is something you might be interested in. and no, you've got to -- losing the struggle, blah, blah, blah. they don't send me out to raise money very often. but to raise money for nonprofits is very difficult. so the american cancer society is always saying you cure cancer by having early detection. and guess who doesn't like the findings of these trials? advocate for nonprofits. because it undermines 50 years of messaging on their part. here is the real one. how about the annual physical? i asked my own doctor. i showed him this data. and i said, do you have a physical? and he said, no. or i was with him at my physical. i said, then why am i here? he said, because this is what we do. you see? these rituals, right? middle class people go in and get physicals. that's what it's all about. 14 trials. 14 clinical trials. over 22 years of routine check-ups. found no difference in death or serious illness. between experimental and control groups. 14 years. okay. finally, ovarian cancer. ugly. horrible. terrible. mass screening. half were screened. half were not. 11 to 13-year follow-up. sorry, folks, no difference. no difference. cato's human resourcis director, when i give this talk, gave it to something at cato university where our donors come and new employees are coerced. although at cato we don't -- yeah, coerce people to come to the lectures. so human resources person he is new. she came up to me after i gave this talk and she wagged her finger at me and said you have undermined 18 years of human resources messages that i've been giving. everywhere i've been. what do human resources people do? say, go get a check up. check things early. saves money. saves your life. blah, blah, blah. i said, evidence remarkably thin. one exception, actually. colonoscopies. colonoscopies matter. they really do. but only in a certain way. they reduce colorectal cancer but don't change mortality rates. you die of something else. the same age. you would have. had you had the colon cancer. colon cancer is ugly, you don't want that. but dieing is ugly. you have to talk about how do you want it die? libertarians are for freedom to choose and die the way you want. i think actually, states are enacting that. oregon, maryland maybe. d.c. is tilted in that direction. that may be the adult discussion to have. the medicaid experiment. the oregon medicaid experiment, basically oregon ran out of money. and then it got an infusion of money. and then rather than, social scientists intervened and said, wow, you have a lot of demand and insufficient supply. can we randomly apply people and see if it makes a difference. kate baker who has written for cato, now at harvard school of public health is part of the big team overseeing the oregon medicaid experiment and these write-ups occur every year and health journals. and i'm giving you the results of the 2013 version of the medicaid, oregon medicaid experiment. so in 2008, they didn't have funds. so there was random assignment to the new medicaid funds and some people were denied and some people weren't. and then there's complete follow-up on their health up until now. people on medicaid spent more money. okay? that's an surprise. how much did it change anything we could call medical?nan surpr. how much did it change anything we could call medical?oan surpr. how much did it change anything we could call medical?t an surp. how much did it change anything we could call medical?an surpri. how much did it change anything we could call medical?n surpris. how much did it change anything we could call medical? surprise. how much did it change anything we could call medical? no significant effect on the prevalence of hypertension, high cleft c cholesterol, ten-year cardiovascular prevent risk or medication for those conditions. increased diagnosis of diabetes. no stretch there. but no significant effect on measured blood sugar levels. now this article hyped that people felt better. in a self report. true. medicaid reduces financial anxiety. no question. i mean, can you imagine being very poor and not knowing whether you could go see a doctor. that's probably not very much fun. so being on medicaid can certainly relief anxiety, absolutely. i believe that a hundred percent. does it change anything medically? oddly enough, the story so far is no. and here eat kicker for me. what's the rational for having everyone have insurance?eat kic. what's the rational for having everyone have insurance?'eat ki. what's the rational for having everyone have insurance?seat ki. what's the rational for having everyone have insurance? eat ki. what's the rational for having everyone have insurance?teat ki. what's the rational for having everyone have insurance?hereat me. what's the rational for having everyone have insurance?at kick. what's the rational for having everyone have insurance?t kicke. what's the rational for having everyone have insurance? kicker. what's the rational for having everyone have insurance? kicker. what's the rational for having everyone have insurance? was it that the uninsured cost us all money? the uninsured swamped the er. look what medicaid found. between those who got medicaid and those who didn't. no difference in the use of er. no difference. no difference. again, i'm an evidence-based guy and i guess politics is increasingly less evidence-based. but in the end, the world does matter and these facts will come to bite you no matter what your views are. and you got to deal with them. i'll end with the real kicker. about the uninsured. you know john kran grouper, right? jonathan grouper, mit health care economist. a good researcher. i like his papers. here is the most interesting paper by grouper you've never read. he studied whether the uninsured a burden to the massachusetts taxpayers. so i probably have normal medical insurance and you probably get claims and you get two prices, right? you get something so you go in and they do something. and they say, then you get a benefits statement form and it says, charged price, $7,000. insurance discount, $6,990. net cost, $10. guess who faces those absurd prices? the uninsured. if you go in to the er or a doctor's office, those crazy list prices that you don't pay any attention to, that the one they face those. guess what? a third of the uninsured in massachusetts, let me see, sorry, 25% of uninsured pay nothing. but two third of the uninsured in massachusetts pay pomore tha the insured do under the rates that insured people get. so uninsured people were paying more than insured people under this complicated price discrimination scheme. but two physician fres from the uninsured in massachusetts were greater than if they had been insured. okay? that's a head-scratcher. so now, there's a throw away line at epd of thnd of this pap says, if i had grouper, if i had studied hospitals in massachusetts, i think i would have found the same thing. well, and this is the architect of mandatory community rating. so intellectually he said wow the uninsured is a problem, blah, blah, blah. didn't appear to be now. remember the insured rate of massachusetts is so high that it's not like states in the south or the west. so can we extrapolate this to texas? i don't know. but certainly it is an interesting paper that you ought to read. so i think i've reached the end of what i want to say. basically, i want to tease your brains. get you to read more outside of the things you read and tell your bosses that there really are thing out there and economists out there that come up with things that might help them implement less coercive health insurance reform. thank you. [ applause ] somebody wants to say, you're full of it. no. yes, sir? >> so you're an evidence-based guy. so how would you go about swaying the middle class people to pass on the physicals or screening or whatever -- >> well, think of the long tail of smoking. so you're how old? >> 23. >> okay. did your parents smoke? >> yes. >> i'm 61. my parents smoked. so how long has it taken to get middle class people to smoke less? and the answer is, 50 years. so cultural -- right? changing the way people think about stuff can take a very long time. everyone, you know -- people call them think tanks. i get these annoying phone calls from journalists and people on the hill. what clever cute thing do you know about that no one else knows about that can somehow change the world? there is no such thing. right? slowly a country has to change the way it thinks. because everyone sits and looks at the evidence and says, wow, i don't think it is a great thing for my kids to smoke. i smoke but i don't want my kids to. i remember i was eight years old. 1963. my father gave me a kent. he gave me a lit cigarette. and i inhaled and i died. he said, did you learn anything? i said, this is horrible. he said, you're right. i never smoked. i didn't. that's it. now he quit too. but that -- so how can we get -- when i have conversations with liberals -- well, the passions about public policy tend to be so high that people in my view mix up what i call normative and positive modes of thinking. so most activists are normative, they know what they want and aren't into thinking about why the world is the way it is or subtle ways of making it different. they're not the best listeners in the world. you probably can't reach them. but i have faith -- i'm kind of an old new englander vermonter, who thinks in the end, there is some wisdom in the american people and will learn to figure it out. so i'm an old yankee/new england republican and that's a vanishing species. and i guess i think that in the end the faktsd acts and the evi will come to persuade the people to the kind of view i have is possible. now, the physicians preventive task force, comes up with the recommendations based on the trials that i described. when they released their reports, which say don't do ma mog racy as often. don't do prostate cancer screening unless you have history, family history, family risks. activists just go -- and what's the poor person he supposed to do, right? the average reader of the newspaper isn't that sophisticated and doesn't have the capability and probably trusts advocates and it's not clear people trust clinical trials. so i don't have a magic -- if it took 50 years to end smoke to reduce smoking is what i'm saying, it's going to take a long time he for people he to change their behavior about things they think all middle class responsible people should do. that's going to be very difficult. my own doctor said that. he said, he said i was a rare patient. he said, you ought to see -- when he says he tells his own, other patients, not to do stuff, all he gets is push back. so part of the reason we have health care is 17% of gdp is americans are a very through-put oriented society. when we got a problem, we're going to fix he it with bulldozers and knives he and stuff. and don't get in my way. and there are people on the right who believe that. they call obama's attempts to pit in evidence-based medicine, they call them death panels. that's an positive word. this has gotten to be very partisan in the whole research that i'm talking about, no one seems to look at it. it's good stuff. yes, sir? >> so i am struck by and believe the top 5% of health care users consuming 50% of the aggregate cost of the system. >> and that's been true for 50 years. it doesn't vary. >> take it as a given. number one, what thoughts do you have on managing those costs, small percentage of the population -- >> how do reduce them? >> how do reduce those costs. and number two from an insurance perspective should we look at a different kind of more comprehensive insurance policy for those unfortunate 5% who find themselves faced with those circumstances? >> i'll take the second first. the so-called risk pool solution or high risk, that's a system to be gained. economists, economists want people's cost to be transparent and then if they need subsidies, we want the subsidies to be transparent. politics wants the opposite in both those cases he. that's a problem. your bosses do not want transparent cost and don't want tran transparent prices. because they think that the support for redistribution to the needy either through charity or through the public sector would be zero. if people realize how much money we spend on certain people. and the only way to somehow cover them is to hide it. well, economics, just the instinct in me is to never hide it. and you don't want to break them off. you don't want to take this expensive top 5% and just lob them off because then suddenly everyone's incentive to worry about them and all that is gone. so economists say, no, we need to see that this is expensive which is an answer to your first question. what can we do about the $100,000 a year case that occurs over and over again? among the general magazines that i read, the new yorker i think has the best columns on health care. a surge yoon at mass general an professor at harvard alternate in writing them. one of the articles and i would have to go back and figure it out, the last few years was on how camden, new jersey is dealing with its million dollar a year medicaid and medicare cases. and it was the creation of a position in the hospital of a high-cost intervention basically is the name of the position. th this is an experiment, i forget who funded it, could we take the high-cost -- so the patients pro filed an article, if my memory serves me correctly, these patient averaged a hundred days in the hospital a year. you know, just they would go home. then three days later they are back in the er. then go home. then back. and they weigh 370 pounds. and they've got, you know, everything is going wrong. what can we do anything to kind of make this cheaper for the insurance society that experiment was very insightful and provided lots of ans. i forget what they are. so i would urge you to go back and read it. then figure out what journal articles that that article was referring to. yes, sir? >> -- the insured and uninsured in massachusetts, what is the rational for that study. >> one of the yalgss for the affordable care act is that the uninsured is a burden on the rest of society. they are a net cost to us, the taxpayers. that's why we need to insure everyone and include them in the pool because they are being uninsured is being cross subsidized by the rest of us. groupers show that wasn't true in massachusetts. not only wasn't it true, it was the opposite. uninsured provided more revenue to doctors than if they had been insured. okay? because of the very high list prices. they negotiated and paid some version of that. higher, two thirds of them, paid more than they would have if they had been insured. because he knew the codes and know what reimbursement rates are for every code. then he said, oh, the uninsured are not in that burden, right? then stop whining about it. so the evidence for lots of stylized dinner party conversation, i call these -- i'm sure you have, you're policy wonks. you have dinner parties, so do i. do you ever have sentences where people say, we all know that. conversations that start, we all know that? that the sub bush annsuburban version of stylized facts. the times ends up having a kind conversation. can peter calls up every times reporter and say, have you read the grouper paper and stop saying that? no, i can't. i try but it doesn't work. so once a leak takes stylized facts are given -- like i told you, these papers are not new, right? i give a lecture every year to the robert wood johnson fellows, policy fellows. these are doctors and public health officials chosen from the united states to come to washington, to spend a year, to be in congressional offices, and see the policy process. and i wave this herring pauly paper and wave the cochran paper in front of them and say, have you ever read these he? have you ever heard of these? in ten years, not a one of them has. not a one. these are not weird journals. the journal of the political economy is the university of chicago economics department journal. okay? pauly paper is mbr, that's harvard. pauly teaches at wharton, right? this is not -- i'm not -- this is not the medical from aruba kind of journal. sorry, aruba. so the puzzle for me is intellectual, is what knowledge that intellectuals have gets into the policy process and then what knowledge kind of doesn't ever make it, even though they are good people and smart people with evidence behind those views. why can't we have a more neutral discussion of policy possibilities. community-rating and coercion is one possibility. and so are individually guaranteed renewable health insurance contracts. both, i think of equal intellectual status. yes ma'am? >> what are your thoughts on the need for tort reform? it just seems like the -- some of the overscreening is possibly linked to the risk of medical liability? >> the claim of the right is exactly that. some doctors claim it because doctors hate lawyers and lawyers hate doctors. that's basically what i found out in this. right of center doctors hate left -- well, because civil liability lawyers sue doctors, that's i understand why doctors hate lawyers. and those lawyers tend to be democratic. so this has become wrapped up -- all people are saying when they say we need liability reform, what they are saying is the footnote. read footnote. i hate lawyers. that's really what they are saying. so what's the evidence that malpractice, malpractice reform, too many judgments, are lawyers interfering with the practice of medicine. the evidence is overwhelmingly nonexistent. and to the extent that evidence exists is the opposite. where there is probably not enough suing. there is a lot of medical injury and hardly any of it actually gets ever -- appears in courts. david lineman, a professor of medicine, one of the few md, an mdjd. and he and colleagues published a lot malpractice database and i'm quoting david's work. i can give you the cites. politic politically as best i can tell the right will continue to fuss about lawyers about lawyers are democrats. that's all that's going on. it doesn't have as much to do with the defense of medicine or anything of the sort. yes, sir. >> can you say a few words about the role of individual behavior, how that comes? i'm thinking of diabetes. >> some physicians have talked to me about being held accountable for patient outcomes. in the affordable care act, there's a shift from paying through through put to paying through outcomes. the premise is that doctors and doctors alone are responsible for outcomes, but every doctor knows that patients have a lot to do with it. i was a teacher. what if i -- i was thinking in all my years of teaching, i always knew within two weeks, three weeks, whenever i saw writing from students, i always knew who the best students were and i always knew who were the worst students were. i could add value to the worst, sometimes. i could add value to the best sometimes, but i rarely reduced the variance. if i were held to some sort of outco outcomes-based teaching norm where i got paid less if i didn't make the flunkies as good as something, whatever that is, i would be scared to death. i would make sure the flunkies didn't sign up for my class. there's a famous study called the cardiac report card study and it tells you two things. one, be careful about standards. and two, never have a standard that's a ratio. i'll tell you what i'm talking about. we do know that cardiac surgeons do better if they do more cardiac surgeons. little bitty community hospitals in upstate new york where i grew up do not very many surgeries and downstate they do a bunch every day. that's what living in the boonies is all about. new york state said we're going to issue cardiac report cards. we're going to tell everyone kind of a sunshine consumer awareness, consumer reports view of the world. tell people that your hospital sucks. here's the problem. doctors' incomes depend on this, right? what do the docs do? they stopped operating on the worst patients. they started operating on less sick patients. the mortality rates went down, medical spending went up and the sickest people didn't get operated on. don't ever use a ratio as a standard because the thinking of a legislator is they'll mess with the numerator. no, the denominator is going to change, what we call selection. there was a complicated adverse selection because doctors realized i'm not -- if i take this really terrible patient on, i might get penalized so i'm not going to do that. so i'm leery of -- yeah -- well, if you make docs accountability for patient behavior, then we're going to have very controlling docs and the patients woen't lie it and it makes everyone make sure everyone is taking their pills all the time. in the end there's something called personal responsibility and it does matter and you want to be careful with that. i agree. >> it's a good note to end on. i have one quick announcement. if you are interested in any of the papers he mentioned, there were some on the table outside. i can get more so come to me if you didn't get one. a week from today we'll change gears and host a forum entitled "everything you want to know about boarder adjustability, but were afraid to ask" thank you all for coming. appreciate it. sunday on cspan's washington journal, the results of our third survey of presidential leadership. joining us will be historians for the discussion. the survey was completed by 91 historians and ranks the presidents in ten different categories like public persuasion, crisis leadership, relations with congress and moral authority. join us live sunday morning at 8:00 a.m. eastern to see which u.s. presidents received top billing in the survey on cspan's washington journal. this weekend on american history tv on cspan 3, saturday evening at 6:00 eastern, two days after president lincoln's assassination and robert e. lee's surrounder generals met to discuss the army's future. craig simmons and john marzalec look back on the historic meeting. >> sherman took out of his pocket the telegram he had been handed and showed it to joe. so far he had shown it to no one else. it stated that two days before abraham lincoln had been assassinated in washington, d.c. johnston looked up at sherman with horror and declared it was the greatest possible calamity for the south. >> at 650 we discuss the biography of levi strauss. >> the patent was awarded after three tries with the patent office on may 20th, 1873 for an improvement in fastening pocket openings, which is boring language for basically the invention of the blue jean. sunday at noon we begin a series of five interviews with prominent african-american women. the late gwynn eiffel discusses her life. >> getting in the door was one thing, but when i got in i had to prove to them i could write and meet a deadline and be a good colleague in a newsroom and an environment where i was one of very few people of color. just getting in the door isn't enough. it's what i say about affirmative action. it's nice that the door opens, but what do you do when you walk through it. >> for a complete schedule, go to cspan.org. what are the challenges facing state budgets in 2017? budget and tax policy experts discussed economic growth, infrastructure investment, medicaid and the potential impacts of federal tax policies on state finances. this urban institute discussion is about an hour. good afternoon. welcome today to the state of the state's budgeting in the trump era session. i'm the incoming director of the urban booking tax policy center. the tax policy center is putting me to work. first thing i'd like to do today is acknowledge our online audience who are with us. i encourage all of you to share your thoughts and observations