lan connection is needed most, we are there toel affordable internet to families in need and to support you later, wherever and whenever it matters most we will be there.■ >> a discussion on medicaid and medicare reform during an event hosted by the american enterprise institute, ade and policy advocates discussed several topics including the difference between defin healthcare benefits into financial contributions to health savings accounts, fraud concerns and the quality of

healthcare provided under medicare and medicaid. >> good morning, everyone and welcomeo the american enterprise institute for our event this morning. i'm tom miller the critic for health policy and occasional health policy scholar. what we are talking about today is could cashing out of medicaid and medicare coverage lower the healthcare costs and improve its quality? in other words the shorter version of this is let's make a deal. may remember you h go back that i always go back let's make a deal, one of the earlier game shows. some when and some loose both the concept that■w 60s, monty paul was the host,

one of the pioneers and game shows followed by alex drabek and others. what we are doing today is combining with let's make a new deal for kind of a different approach to major entitlements and projects. let's talk about the original let's make a deal show that was basically the contestants wanted to get the attention to get on the show. there was a lineup with wky costumes and you get chosen based upon how you show up and the idea was you started off with a deal but you could only do better or imagine you could do better or perhaps much worseo have a door number one which isl

prize and of the choice to upgrade or door number two and a door number three so they could have what is behind the curtain. the idea was you could take a risk and come out better and in some waysha we are talking about in today's program, which is if you took a few more risks with what you do you couldd do better. now the problem get what is called a song that is basically worthless and go home and have a lovely parting gif so that's the premise for today. what we have on today's program, david who i will introduce in a moment that needs no introduction but will get one ho provocative papers and the wall review and law journals david is one of the most frequently

published, frequently cited. he's very productive and pushes the envelope and has been doing thator a number of years moving towards a mor health policy so the two papers we had but i'm obligated in my job to do so, leveraging the medicaid expansion came out last fall ands coming out soon on leveraging medicare how to deliv high-quality healthcare. in case of emergenk glass to do this. breaking up the theme when the same title, each has leverage but perhaps that is what we are trying to do is use current problems or difficulties and leverage them. it reminds me of at&t show vermont abouthe late 2,000's into about 2014 i think for

aboutiv years on tnt called leverage where band t of five highly skilled operatives whobo did the various types of misdeeds but they were like robin hood, they were trying to settle the score with corporate or governmental evildoers who had taken advantage of poor citizens so there's an analogy to that for what we are leveraging today and there's other leveraging in terms of the eminence that will happen five years from now or the medicare financial disaster but at some point it might arrive so in the financial difficulties there what can we do differently about medicare and also leverages thehe book tt came out last year we've got you covered that talks about how to deal with the financial insecurity so those are the building blocks on tha front but at the core is the idea that

cash is king this is a concept that went back■ decades ago in economics. if you have cash in your pocket you are the customer and can begin to have more leverage and control. ca transactions are more transparent in terms of their prices and costs and quality produced. this has been done in marketingn the dc area going back a couple of decades you might remember the slogan an educated consumer is our best customer and a little bit of a stripped-down retail approach nevertheless value at the time. then they ran into the difficulties of the economy and had to close shop and was successful in that regard andkk

other retail sectors not as prominent in healthcare. a different way to think about this is a way to deal with another program we've had problems with, aided to providers is pretty much writ rd large in the system this would be a way to put that into the system for things and as a way to cut back on the appetite and we have to compete more vigorously to attract customers with higher prices and overall value. i did not introduce david do ri. it produces a lot of work of high quality. he is a political, he wears many hats let's put it that way. today aei but also an adjunct

scholar at aei and at cato and more of a full-time job among others is the scott ginsberg professor of healthy and low politics at georgetown university law center. he's published a number of books before starting with medicare -- overcharged a few years ago which we will talk about to some extent and also government competition when he was special counsel at the this is like trying to put a normal brain into the healthcare abnormal monstrous words, it's a frankenstein moment and as gene wilder and young frankenstein explains what he did even though it seems odd, this could work so david is going to explain how

this could work after setting the tom and thank you all for coming. i don't think i can match gene wilder. irregular co-author at the univsity of texas and the title that i gave it harkens back to some of the points tom made and this sort of broad the theme of the two started as one on medicaid and f how we might make medicaid expansion more appealing to the state if it had not by that point opted in for crafting the program somewhat differently thanen has traditionally been te case and then we subsequently

realized some of the ideas we were developing but not all of them had promise for moving medicare reform in the direction different than the traditional case. so we now have these two articles with lots of footnotes but i'm happy to share them with anybody in the audience is interested in them. one of them is posted or any can be downloaded for free and others should be there within a week. let me start by getting you to lower your expectations about these papers, me, this talk. some of the people in the room a longtime health policy analyst, working in washington on the conservative side of the divide and a somewhat memorably wrote about a prior article in 2007

that it was a surprisingly readable paper for the professor of law so you should calibrate your expectations about things law professors will write accordingly. iin also think you might want to lower your expectations about this idea, the history of health reform in the countryry as we at come and go. sometimes they get deployed, sometimes they get ignored. this is actually the graic aei sent out about this talk. chops a little bit about why you chose that he ifhe said i thought you picked . but you did not choose it. the realthcare is big business and also a very important issue. healthcare is personal to people in the way a lot of government policies are not.

it's very important that we try to get it right and there's lots of aspects in the current healthcare system that falls short of even a pretty low c- grade for the performance of the system. that's not to say all aspects of the system are awful. at its best american healthcare is exceptional after most of the career healthcare system i got to see it from the other side as many traumare patients and it's pretg well. let's not talk about the billing that followed, but nonetheless, i think you should not assume te hiccups, problems, difficulties, things we haven't thought about, unintended consequences. and by way of analogy, there's a mofrom a couple of years ago about the search for the

particle called particle fever and there is a wonderful quote from a theoretical physicist the secret to his success lies from jumping from failure to failure. there's a lot of thought and health policy as well. we jump from one idea to the next and we tend to focus on the things that haveav gone wrong. but there's certainly no shortage of things going right. the big isss on health policy are cost quality and access. i used to tell my students if you could train a chimpanzee to say those things they be health policy analysts as well but it's nonetheless, and i stopped doing that because they didn't like that. they thought of themselves is significantly more involved andf them did. but nonetheless i think that it's a useful framework for thinking about both where we are and the costs and benefits of any proposed reform whether it's

the ones that i will be talking about today or whatever the latest thing is that comes out of whatever your favorite policy shop is. let's start with cost. the american healthcare system we are number one, uniquely expensive relative to everyone else. it doesn't matter where you loo. this is a quote that i told joee perennial topic of medicare insolvency. every year the medicare trustees issue a report. the only thing thathanges is how long it is going to be. sometimes it is six years, sometimes it is 12 years. it goes up and it goes down. sometimes we see the cherry blossoms into your medicare warnings, the cherry blossoms go away but we don't do much of a date for the expiration of

the t trust fund drops below a critical level then we see some tweaks to try to see them number move up the next year but as was pointed out to me, that is so they can spend the money on some other things. i think the bigger problem which the trust fund framework secures the fundamental fiscal imbalances we promise much more than any plausible tax revenue picture and the present value of the promises we made should scare everyone in the room but because it isn't nearly as accessible, we tended not to focus on that. we accrue huge liabilities i don't think we have a realistic way to pay if you don't like quotes, there is a wonderful long-ago cartoond social security are falling past a series of windows and at every

stage someone ped her hea■; out the window and says the data shows that you during this segment. the buildin indefinitely. there'sca going to be a reckonig out of the only question is when and whether those of us in the room will be around for what about quality? i'm going to obviously start by talking about medicare because exclusively it is a federal program and it is large and popular but it has real challenges. a tom mentioned the book■e unfos care, and buys a lot ofw high-quality care but it doesn't create systematic incentives for only purchasing high-quality care. it's mostly a passive payer of bills whatever comes then they mi■ft argue about the price because they are a priceetter ad large and we decided drugs for

the moment. this is from a 20-years-old that points out there is evidence that the more medicare spends in a given state, the less the quality of the car is being delivered. that should strike you as quite disconcerting. that doesn't typically we think the way markets ought to be working. b then in efficiency, this is always the trump card, pun intended, for why we should do medicare for all. there is bragging by its proponents that medicare basically has a one to 2% overhead that compares favorably to the private market. the difficulty is, and charlie and i have explained this in other pieces, the formula by which we are calculating efficiency is fundamentallyie flawed. all we areal the overhead and comparing it to

th money you wasted ay more efficient it looks with that formula. the right way to do the calculation is to put the wasted form of care, the cost of that in the numerator and subtract from the denominator. if you do it that way, won't bore you with the math, you end up with staggeringly high s medicare overhead, not to staggeringly low numbers up to 33% and potentially significantly higher. we argue in another paper the true cost of delivering efficient ghua to 40% of its oud potentially higher when you take account of everything so the efficient program and fairness you should do the same calculus t are buying not high-quality care as well but you shouldn't assume

somehow is uniquely efficient when i think the evidence is that it's not. let me and i'll switch gears and talk about medicaid. as i said before, the project started with us thinking about the problem with of the states that decided not 1 to expand medicaid in response to the original you will expand to the affordable care act and the supreme court then said that was unduly coercive and gave the states theption pretty much immediately about half the states the year-by-year phase in of the medicaid expansion, just so everybody's on the same page medicaid prior to the affordable care act included a series of core populations everybody had. it's an income restricted

program and largely federally administered the population that wouldti be coved and basically raised the income limits for people that would bed been before and the practical significance of that is in certain of people have to qualify for medicaid government-funded programs with very low or little or no copayments but also very low payments to healthcare providersesulted in access problems for the beneficiary is. but inny to the opt in and opt out opted in and immediately end■ up relatively quickly aat benchmark followed, but starting in 2016 we basically sold for three or

that were willing to opt in the account for the expansion states are the states that opted in the holdout states and in each year you can see the state that chose to opt in andpt not year. the more significant point is we have ten holdout states and they are not small states. they are states with a sizable populationat and the result is what we viewed when we started the project as a bunchs of peope if the states could be persuaded to optn and that is what one generally thinks of as there've been some empirical studies that should make you at least a little bit conclusion that biden proves our health as opposed to their financial well-being. in any event, the geography of the states for those of you

wondering where those ten states are you can see right here a common trope in the policies or goals is to look at this map and say states that didn't opt in are doing it because they are racist because they are confede. there are some things that i for example certain states that were never part of not opted in to se were a part that have opted in. our argument in the paper is there are factors other than a race that we ought to be considering including the fiscal challenges thesendividual states are facing and political constraints that are going to make them reluctant to sign on. heavily subsidized but nevertheless open-ended commitment opting into the traditionalop program would mea.

so the it's megadeal metaphor tom eat eluded to earlier and i ■qwould have titled the paper tt was taken.led the earlier given the comments the idea behind this was let's think about ways in which we revise the offer other than do it our way and let's subsidize it. sometimes up to 90% depending on howw the budgetary dynamics end up workiut the long run. but nonetheless, the core)" idea was rather than saying do it our way, the proposal for medicaid was let's offer the states something that would be more appealing and addressed the governance and fiscal challenges and at the idea we came up with was essentially moving from

the defined benefit approach to the definedd contribution approach where the be able to set the amount of money that they wish spend and at the federal government would match that in the same way they match it with other locations and that is the funding sidema of it, but the production of health care side of that would be rather than waiting for bills to come in and writing the checks at the artificially low rate of the medicare programs and ■ctraditionally we would instead fund for the beneficiaries to use as they saw fit by catastrophic coverage and by paying for healthcare directly by spending determinants of health and that in some ways is consistent first of all with how we handle social security, the earned income tax credit, the child tax credit and health reimbursement accounts in

the private market. so the idea here is to give medicare, and you will see in another slide, medicare beneficiaries money instead of paying the providers we should just put money into the hsa's and the beneficiaries would be in the direct purchasing markets suddenly. and because they care about the price and, direct purchasing creates huge incentives for providers totient rather than what the third-party payers and insurers and government payers care about. so we think fraud losses which are material are going to start dropping and other forms of waste that are going to take more time to be run out of the system but when people are spending their own money, they areresumably spending on things that they value and not di like pure waste. so again it's based on the same.

we don't b and large use the federal government or for that matter the state government to provide housing for seniors to buy food for seniors and buy food stamps and housing vouchers for the moments. instead we give them money and let them spend it as they see fit on the things they value for doctors and physical therapists and hospitals but we are not going to pay for anything else. now, that's been the traditional approach, but what we have seen in the healthcare financing system over time particularly in me an expansion of the waivers that allowal stat spending money on the social determinants for the

beneficiaries. and letting the beneficiaries make their own decisions. as of the paper spells out that we think that there'sth a bunchf to this approach. a lot of the things that drive people crazy about the grant system basically fall out or are no longer necessary, so the government isn't going to be in the business of price s anymore. the challenges are well-known and we have examples of both of those things in the current systems. any need for the prior approval requirements because people are spending their own money. they are not spending the insurance companies money. the administrative headaches particularly for the providers go down because suddenly they are dealing direct with of their theircustomers rather than a fay insurance company or the federal or state government give it a

surprise bills pretty much go away. you have h to have the pricing d a traditional contact principles meaning people will be bound by the prices that they are offering. the price transparency which peter has done a lot of work on and i happy to wax poetic about the challenges suddenly becomes much moreut automatic. we don't mandate the price and retail markets. thee stated legislators get to control and that set the maximum amount we are willing to spend on medicaid rather than it being

on autopilot. the uninsured and underinsured are not left out. they benefit from the lower prices because there are many more people in the market that are price conscious consumers and as i mentioned in a prior slide, this basically bldon devn other sectors of both government programs, social security, earned income tax credits, child tax credit, but also the dramatic move over the last several decades away from the benefit retirement pensions towards the contribution there are of course disadvantages and risks and there are going to be problems anytime you spend a trillion dollars on medicaid, i'm sorry, trillion dollars on medicare. we are getting there.■q three quarters. there's no shortage of people

that are going get more than they are entitledwe tr o largest social web welfare programs in line with the third social welfare program, social security. one of the challenges to be fair is how much money per beneficiary you should be putting into the savings accounts and to what extent shouldha you risk adjusted. we think picking things that are easy to observe and hard to gain is going to be the key but reasonable people can disagree about what the right formula is for calculating that. it's think clear and a major source of concern if you give people money,omwill use ite of us who are more risk adverse

will not like. they may spend it on what we view as unnecessary services and they may spend it on social determinan of health we don't think are a good value for the money and we need to think hard about what we should do. we have some ideas in the paper about how to handle thatnd we talk about in the q-and-a but this is not and everything is going to work out finet a framework. we need toe about the ways in which the system is acceptable to gaining. i think the immediate response is going to be the way they come out the they are actual customers, but in fairness we need to think about do we want

to subsidize institutions and that. the community s health centers, academic health centers, rural, all i'm sure you will hear about from themmet thought about this it's going to be a2 disaster. we have thought about it and have ideas, but we think this is a better strategy and we should make adjustments for the things we actually think are important rather than using■g■w the medice and medicaid program. how did you put it, patients -- >> with d providers. >> i think the last point i want going to be perfect. no human institution is, but i think that it's plausible it is going to be worse than we've done already so this cartoon is

one of them once privatized healthcare, the other wants single payer and the other in the middle says i know, let's compromise and build it out of twigs. that is the unfortunate reality of the current system. nobody's got the all in outcome they wanted. compromises and i think the way to think about the proposal is not whether it's perfect or how it fares compared to the highly imperfect reality. the quote from an article shortly after the affordable care act and some of the distortion is realized by people that thought it was a grand idea as long as somebody else was footing the bill. of course i want people to have healthcare. i just didn't realize i would be the one that was going to pay for it personally.t people to he

healthcare, some of it we have to pay for personallyis just the situation that we are in. the sooner w face up to that and decide how much we want to spend on that versus all the other good things, the better off i think we are going to be. with that, let me stop and i think that i'm well within my time.. i reserve my time for rebuttal. >> as much time as you may consider. >> i'm going to stay seated and introduce the next speaker. a chance to recycle. peter nelson is our first discussant currently senior policy fellow at the center of the american experiment. peter does a lot of work not only on the policy but interacts with the national health policy as well. he has a broad background and one of the areas that we want to

explore is what did he let the states to do and what do they try to do and what can't they do orsible, and he has additional background as being in the previous administration's senior advis to the administrator of cms and worked with alsorts of proposals for the insurance regulation changes as well waivw the concepts are more innovative than the execution but potentially there might be some other opportunities. peter has spoken here several times before. first on how to change around and they've ten on the easy one, medicaid. there's a few slides. peter nelson, everybody. >> thank you. >> apparently they think i'm

still in the administration. when i got there today as the next place to go automatically and that is the humphrey building where hhs is headquartered. [inaudible] so, here i am at the american enterprise and so i want to start by confessing that i have a lot of rtalignment with what david just said. in fact i've been talking about the benefits of the definedbutis for years. in fact pretty much since i started. when you go back to i believe this is the first major report thatir i er wrote on the employer-based insurance and the individual market insurance, i basically explain in the reporta primer on how employment-based health benefits and the tax code

distort the healthcare market. the quote i want to leave at the beginning here is employers generally offer oneem health pln that limits the value enhancing competition among the plans and undermines the ability to know what employees the actual consumers of the product want and need in the health plan. since i wrote that, i've basically been pursuing policies that give individuals more control over their dollars, gives them more control over the health plans that they choose thand i think that is a better y to organize the market. creates better incentives that drives more competition in the healtht insurance space and the provider space. i also have a lot of alignment with david's views on the needs for this. i have some experienc■8e of what it might take to strike a deal because i was in the previous administration i started with their inlaid 20 lynx. and as tom mentioned i worked for the administrator and the

time several states were under tremendous pressure to medicaid. he outlined all the statesme afd medicaid, and those were all states that the pressure to expand medicaid and one reason they don't have pressure is they have initiative rug referendum where they knew they were going to expand medicaid and as with the states wanted to have some control, state lawmakers in particular. they don't control how the expanded medicai■gd because of course itxp has a huge impact on the state budgets. they didn't just want to leave it to the ballot boxes. and in particular, one state had an issue because they knew the ballot was coming. also, we wanted to come up with some sort of idea that was some alternative to just straight up? expanding medicaid. that stirred up quite and in july of 2018, this is the head o i woke up to one day.

the■ proposal after the furious white house debates, now i wasn't in the room during that debate, so i can't confirm or deny how serious the debate was. however, i can confirmhe helines exaggerate a little bit. my experience of the administration was usually very simple, unproductive but we usually hadct debates as everyoe should. and cms when it comes to making a deal, we want to do something basically allowing partial expansion so instead of expanding after 138% of thefeded go up to 100% and include certain other provisions that were more conservative encourage people to get back to work. that was our view. but the problem with that view is that it still leaves this 90%

match that creates in the system that kp cost going out of control and that was basically the white house was very concerned about that and the truth is it didn't do that much in that regard so we just didn't really get to the deal. ultimately at the time there was no good policy solution. and it was a really a damned if you do and damned if you don't decision. since 2018, most of the states that the critics ban as the slide showed have expanded. so therefore, we have very few conversations about medicaid expansion recently but that doesn't mean the issue is done. we still have this system thated expanded medicaid and most states and we still have the current issues in the states that haven't expanded medicaid.

so, with that lack of coverage there are some conversations expanding medicaid in the states like georgia and mississippi. without a deal for the holdout states, ultimately they are going to expand medicaid. so we really do need to come up with a up with a3? deal. so what if medicaid expansion has another opportunity to makea a deal? will things be different? i think the answer is yes. time was a big obstacle of gettinto say yes and 2018. developing the alternative of the expan■z■sion needed more ti. consideringe allowed in the affe care act, so it lets the states get out from under certain other provisions of the affordable care act. now,■i we publish guidance, new guidance in the fall of 2018

that allowed far more flexibility on this. however, we knew in the fall of 2018 that we were still a little bit lead to the game, in fact a lot of leads to the game because i fall of 2018, the legislative sessions at the state level had already been organized. the agenda had been sitcoms of the 2019 sessions were done and all of a sudden it is 2020 and it's another election year. so, guess what, the states are not going to take that on because even iff they did get something done, it would be still into the next administration as far as when they were able to finaliz approaches and get things approved. the medicaid situation was under the same sort of timeline. looking forward assuming we have a change in the administration ne year, there's far more experience from the first time around that can allow the adminiration to hit the ground running to actually get a so, what should that he look like? i can certainly see the defined

contribution plans sitting in victims of 100%. and if that would be coordinated with va waiver possibly. defined contribution plan? i don't have nearly the experience of the waivers as i do with of the 1330 waivers but i expected that there would be a difficulty getting approved simply because it doesn't have the same automatic benefit structure. let's assume right now you could view it through thiskt lens or maybe congress would actually step in and say it's okay. i still see some policy issues that would need be addressed if we were going to go down this road. main problem is an issue

that we need to address and that is the fact the population beloe population with higher health risks and they have a higher rate of chemical dependencies and high rate of mental health issues. this fact presents two problems. first relates to the risk pool as the defined contrution of the risk pool of the individual health insurance market because the defined contribution might be used and probably would be used to buy the individual coverage, and the high risk population moves into the individual market it will increasemiums because it would increase the risk profile of the individual market.k the second issuefact these peopr conditions are likely to have less ability to manage their care. thats the lower ability to manage care will basically resolve inas the worst care for them and also it could actually

increase cost tom the state depending how things move forward if they end up delaying their care more. .. and then to provide coverage to the expansion population arkansas has done this and with the new hampshire approach then ending in 2018 they sent a letter to hhs secretary to explain why they tt by stopping it it will bring

greater stability to the marketplace which experienced upward rate pressure due to the inclusion of those receiving medicaid services this gives a picture of what was going on in new hampshire that enrollment popped up in 2016. . . . .y

you. >> this next slide is basically, it's a similar way to say the same story. but it uses a little different measure, the hierarchical condition categories and itt whe new hampshire market and i also included the arkansas market because they also were putting the medic individual market. there is a much higher percent e chronic conditions in those markets when you look at 2018 in both markets and you still have higher percentage in new hampshire and two plus conditions and 3 plus conditions. then 2019 in new hampshirelly de from their market and they're now all of a sudn below national average. the national average is the dotted line. so there's a veryen you start is population to the individual

market and it's not a good impact and so when you're looking at what we think you need to do to create a defined contribution approach, you definitely need to account for that with some mechanism. i was introduced to this issue back in 2019. and what happened is basically we create -- the state of minnesota to develop, okay, how can we do this better before. we were just a financing but really wasn't serving the patients very well. and what we was a much better approach that

actually created hospitals in tn cities to take a much more managed approach to the patient and identifying patient needs on the front end versus waiting for people to go into the emergency department. and -- and that worked immediately but then medicaid expansion happened. hmo, what they do is they are ry much coordinated with federally qualified health centers, the level one traum hospital and county social services department. they are very coordinated. they've had a lot of success in what they've been think there is a small portion of people who really need something like this within this approach but that is not the entire population of people.

what new hampshire and arkansas found was that when people were moved into individual market coverage, they had much better outcomes, you actually get to see a spealt way quicker than if you're in medicaid. evaluation reports for those programs were very good, hampshe it really had negative impact on the individual market and they had to move on. those are the two things you need to pay close attention to with this defined contribution approach w. that, i will leave it to the next speak. he has extensive experience focusing onedicaid congress staffer, executive branch

outside scholar, working on -- you think of henry waxman has hands all over the building with the medicaid program a lot of that legislation is work with them. more recently working with medicaid managed care organizations for children research on that and another lawyer to talk aboutittle different perspective, andy schneider. >> good morning. thank you, tom, thank you for i'm going to be brief, i want oh to just explaining to you that the center fordb■r children and fams wher work is nonpartisan policy and research center at the public policy at

university and -- >> i'm sorry. >> yeah. >> you're talking somebody that blind. >> there we go. all of the information that everybody needs. >> that's good, okay. our mission is basically tt children in the families have affordable high-quality healthcare cerage and that means mostlile making sure that if low-income families are eligible for medicaid or chip, the child health insurance program they are eol programs w. so you can see where this is

going, sort of defined benefit guy. defined contribution guy so we have an issue here. what i do like about paper and i will talk about medicaid expansion issue is that it recognizes there is a problem that we have these ten holdout states, they have been holding out for a while and they're leaving asv lot of people danglg in the wind uninsured. so we do need to solve for that and i appreciate the deficit of the paper and the commentator to figure out ways to make improve e those states. i don't think the proposed solution is going to work. use tom's metaphor. i think we are going if we go down this road but

let's talk about that for a second. so first of all, the population here are■ l adults and by low-income we are talking under $21,000 a year / income. okay. and many of them have -- particularlyn states where parents with feint child relatin income eligibility levels for medicaid now are below half of the poverty level so under 00 individual, so we are talking about very poor people and as -- as peter mentioned, higherqe rates of mental health problems, mental health conditions and substance use disorder among this population, so, and, of course, a lot of them have been uninsured for a long time on the

needs for health care a higher risk for utilization so i think s the cable that you saw of the■x decline in the holdout states from 2015 to 2023 and we are moving ten remaining states and the -- one of the drivers there as was alluded to here is that is the e people decide to go to the ballot and vote whether they want healthcare coverage or not and turns out that the number of the states 7 in fact, that have gone into medicaid expansion, idaho, maine, missouri, nebraska, oklahoma, south carolina, utah and all those

state with ballot initiatives, voted for healthcare coverage of the variety. and it's not entirely surprising that they would vote that way does the deal on the table not a bad deal. if you're not into defining benefits, yes, it's not a great deal but if you're defying benefit person the notion that the federal government will pay 90% on an open-ended basis of the cost of coverage for your expansion population, you have benefit package but you have to have defined benefit package for the population, but if you take the deal now and you have haven't expanded yet, you get an additional 5 population other than expansionl

for two years it's a very good deal, and north carolina is, you know, a state where i think most people would agree that it made aifference. that's in place, there are, of course, questions being raised about whether the 90%js match is going away and nothing is goingd expansion have projected it and nobody has walked away from it and i know in the paper there ig reasonable concern of low-tax states want to go stay low tax. if allow-tax state, you don't take this up event though the federal government is saying 90% of the government, there's some liability for you, state policy maker.

so if you look at the lowest, ten states with the lowest tax burden which i think to think the paper authors for introducing me to this reading syst, total tax burden. six of them new hampshire, delaware, south carolina, north, are all expansion states, some d some of them just came in right up front like new hampshire and delaware and neither the states have walked away, they are low tax, very low.ave to ask a quesn and i'm not an expert, how bad exactly is this deal for low-tax states, in the position to protect the low tax status and still reduce the number of uninsured in the state protect their academic health centers,

share safety nettutions and federally qualified health centers, et cetera, it's just a9 question. just a question. so the -- as you can guess■m i'm incrementalist about this area generally. i do, i do think it's worth taking a closer look at the proposal on the table. i had some questions about it and then i will stop. so there's a reference in the proposal to overall cap on spending, so i didn't know how to read that and i hope this comes out in the discussion but if you're talking about a federal attack on federal contributions in the matching form to state spending on this population and these states, i think that the concerns for some

of us who like the current ]í structure of the program understanding that it can be improved, there's lots of things wrong with it and it needs to be improved but one step at a time, please. so what is that overall cap on spending and do the states who we are looking to market this proposalt there would be an overall cap on federal spending for them. and if there is, what are the implications for thef respect fe ability of thet for for healthcare inflation, i don't

know.■5gv

the idea of how do we get there proposal anywhere, congress seems to be unlikely for the reasons that you can understand right now, the -- if the state■ is going to pursue this, it would be and get this question about how this all works, it would be through the waiver process and we have a statutory standard which is likely to -- is the demonstration likely to assist in promoting the objectives of the medicaid medicate program, you know, is a defined medicaid program. and future it will be, so there's a serious question as to whether adopting a contribution

model is most of the benit program. particularly given the risk of shifting across the healthcare inflation to the states to the beneficiaries and without any clear indication that it's going to make any change in prizing behavior for people with strong monopolistic positions. i appreciate in solving the coverage gap or remaining -- thank you. feeling like matt damon is the last guest on the show, but wile we get to q&a and this is

continuing on, david lower some expectations, i can lower them even further. it's not that■ hard. think of this as friendly stress testing for the way in which ist might be advantageous marketing and then the complications of administration and they're not often at war w each other in this area. now we could say the art, the eal but i don't mean the usual way of doing the art of the deal. we are going to move beyond that although there's parallels with that in terms of how you can do that

so i think and again i think now the price is right on this one as brought down from what iy but even resale marke are working well on that front in supply.f having demand how about some slogans? you can use some help on this i. i offered a few here. some of them need to go back to focus group, perhaps, you are talking to the customer, get

more for less, that's the standard republican, tomorrow is your problem not mine. you need to find allies, that's the other components. new technology, new face on the product. telecommunications, information technology, some of the people wanted stuff that they didn't know they wanted before and didn't know it was available to them. maybe do so in transportation energy and that's the area where we have deregulation and the importance to have new winners than new losers you can count up on on this front. and, unfortunately, you to pay more to d this. front-row gain, promises of payt

necessarily arrive. that's the marketing deal. also previous work. you to have the right enemies, you have to have allies but enemies. the condition that i noticed in government called bureaucrats, birthday effect, acquired on the job is very painful i understand it. they don't have a treatment for it. companies are working on that, maybe the cash freepí cosmetic cash-base cosmetic surgery will do that. special interest, fraudulent providers, great envy. enemies but also can be your allies, it's a mix andú9 match depending on the side that you're looking for. personal responsibility, gratification, that's pretty

uphill, those are your enemies on this front if you're talking about managing your own system, of course, the systems is doing now, you have to have very simple usually caution others front, words of wisdom for every complex problem there's an answer that is clear, and wrong which can happen on occasion public policy and that is a first-party consumers can solve all, maybe they can solvee up and never surrender and offset to that, is problem is key players in the marketplace who know how to do it better. they are exactly the folks you're trying not to get around and there's problem of concentrated benefits. i'm running quickly but i can always go faster than that. there are problems in terms of

the nitty-gritty in terms of why, why not and how. how is the big problem. let's talk about why you would want to do this. we have to get published. that's number one. there are other ones after that. let's move from that. desperation, no other ways out, getting in the way of objectives, you move my cheese and i want et to be used for thl cramping item in terms of healthcare spending and use it for something else you will have difficulty. identifiable winners that you can come up getting in the way of higher objectives, temporary suspension of disbelief will work pretty well. newly appealig benefits, dress up the folks that you're going t aid and they can be particularly appealing and charming, you will get that going forward. why not, it's always been health policy disruption, inertia is the most powerful force, more

visible losers are usually the case when you make any type of changes and the windows of harm ontic convergenc for legislating or major policy undertakings are fairly raree oo oppose delay,s are wired, they are not going to change on that front. resting places we have. we like to think that we■f gavet the office, we don't have to look under the hood. we felt like we did that well enough and that kind of took care of it. bit of that distrust of letting beneficiaries have their own money to handle when are not sure to be done. we like to pretend that we have taken care of the problem even if we haven't. all right. i'm going to cut through my usual pop culture, the

spontaneous combustion, another one which is how you can be a millionaire and not pay taxes as steven martin indicated, first a million dollars, second tell the irs i forgot when they ask you to pay the taxes or help savings account which would let you be a millionaire and you could not pay taxes on it but that's another approach to it. that's how it really matters, private versus market, you know, we already got medicare advantage, we've got medicaid managed care, that's close enough for us in terms of private, without get this vigorous marketplace. the problem is pointed out before dealing with averages and throwing the money out as opposed to adjusting matching risk and reward, some are going to come up. if you really give it to those in need, why didn't i get mind and imperative always feeds the middle-class first in health care. trust is a big problem. who do you trust to handl the health care, you don't trust the

insurers, you don't trust the government, actually they do trust employers in latest polling but the problem is they don't trust ourselves and until people trust themselves of making more decisions that's the problem where the default put option is where they are going to manage and handle. long-standing issue. i'm going to -- well, i have a heck.e more to go, what the some other issues in terms of how to start which is what i had said, andy talked about that incrementally. not only incremental, you want to start small but the problem is if you start real smart it's too small so there's the sweet spot where it's large enough to have critical mass and you can't get rid of it, what happened with hsa right from the start but not so small it just goes away and you can open doors but you can't push people through them. that's what you run into

complications. the transitions openg transition of social security and medicare, it's also true of any major health policy change, the early going is great when transition hits you and then grounding on the floor and the real tea, conflict between other goods versus subsidized medicine, when the they comes we want something else as opposed to increment of medicine, we will be there. i'm going to give david a few minutes to rebut the entire panel. i think that's the easiest way to to it. we will take questions from the audience. >> yeah, first, i want to thank tom peter and andy for their helpful comments and tom for going first and last with two bites at the apple a reminding one of the perils of writing things sometimes people find earlie papers, well, how do you

square what you say here with what you said before. the title of the paper trzhat hs alluding to is fixing injustices in health care and then send a guide for the perplexed or something like that. getting the haves to come out behind i think was the other part of the title. so these are issues that i've been puzzling about in various ways for good long response for a paper, barack richmond who is now here in gw for those of you who want to learn more about that, for peter's comments i, you know, i take your points about both the pro■jumise aperif thing, i'm not sure because we are not calling for either a or, dumping sound -- adding people

to market, the lessons from that carry-over quite so directly to this is to give people money and let them spend it rather than giving them insurance and, you know, the political economy is giving them insurance, partly, i think, there's good research indicating value the coverage they receive anywhere near hundred cents on the dollar. it's a lot closer to 50 or 40 cents on the dollar and that creates obvious possibilities for making people better off by giving them something they value, money, rather than something they don't at full value, medicaid. andy started off by saying i'm a defined benefit guy so my prospects for persuading them were low to begin with, right, i'd sell short that possibility and it's quite clear he doesn't think it'll work and that's of

democracy ideas that individual states get to with these things and that's true both of the states that opted into the current program and the states that opted out of are trg to do is meet them on their own terms rather than lecture them and they should take it. we are trying to identify the factors that we think are important. now, we don't know for sure what they will think as important. so i don't view that, i don't take the view thatt' now a 10. the trend will continue

indefinitely. >> and it's not simply spite but it's politics, it's finances, it's the i didn't know i was going to be the one to pay for other people's health care that may vary among states as to how much that's an impediment to moving forward. as for, you know, 1332, and whether the courts will accept or not, i don't know. i think we will see. i don't think -- i think the goal of medicaid was to provide access to health care for poor people. i don't t defined benefit program.

i think that's a means rather than an end. i only taught administrative law once. it was unpleasant experimen■zt r my students and any time you teach something for the first time, i mentioned the trauma episode earlier and happened 3 weeks before the end of the semester, one of my students professor, i know that you hate chevron but this seems a tad as a way to getting out of teaching it because they didn't have teach the last 3 weeks of the semester which was chevron. but nonetheless, i think we won't know until we try it. that's true of all sorts of things but i think the imperfections of the current system particularly for medicaid beneficiaries who even in the states where they have expanded coverage have an insurance that basically only works at hospital emergency departments and in

patients that didn't really give them access to healthcare system which after all was a big part of the goal of the great society programs with open the doors to the health care system for people and i could go on but i won't, so thank you very much to the audience and thank you for coming to hear about medicare and medicaid and define contribution approaches. >> now it's your turn. >> identify yourself. i know that you've had an hour to prepare your op-ed. just a question would suffice. >> i'm gerald chandler, i have a question two-part question of medicate expansion.first systemd

recipients to the how much health care are they getting compared to what they should get and the second part of the question is at the definedl. >> so on the first question there's been multiple studies about access of■a medicaid beneficiaries. i think we do very well with pregnant moms. we do okay but not kids. i think if you need a some chal, we sort of heard discussion of that already. and, you know, we can go through populations and but certainly if you offer people the choice between being covered by medicare and

would be irrational to pickegule obviously, nursing homes are not covered by medicare so that would be the one area where you might prefer medicaid. in terms of what is the right amount, i don't know and neither does anybody else but i would use what we are spending now as a starting point and see what the state's willingness to fund these things are and whether the federal government is willing to sort of continue its open-ended commitment when there are lots of half of the medicare budget, medicare entirely. i think those are questions that involve not just sort you know, positive issues of facts but also values and i know i'm no good at the ladder.

>> okay. >> another question brewing? >> just quickly on that, we have a lot of disagreements here. but i don't think anybody is in and i will just say that if you're allow-income adult and you're not eligible for traditional and you're in an expansion state, you're better off. you're better off than if you're uninsured. more likely to have access and so that is point one which is general proposition and point two you have to look before you were making categorical statement about this in medicaid at each state because the way states administer the programs e trenches in the different state delivery systems, there's a huge

variation and, you know, the story in minnesota is different than the story in dc or story in -- pick another california, it's just, before you go and answer that question, you to look at so how are things going in any particular state for that population. andy mentioned previously of new hampshire and delaware doing better even though they are low-taxed states. they are doing better because they are lower taxed states. i like to see a scattered plot of poverty rate versus the quality of the medicaid program, the quality of access, the medicaid program because i think the lower the poverty rate the better your medicate program is

going to be. it's really hard for them to make decision because that will put enormous pressure on the rest of the medicaid program because they have a lot more poor people than minnesota delaware and new hampshire and i think that's a big thing. we always need to recognize it's not racism in these states, it's resources. but any further questions and seeing none, i will expand -- >> let me follow briefly. when i started working in this field, one of the first things people said about medicaid, if you've seen one medicaid program you've seen one medicaid program. there's obviously huge variation and that's going to complicate any response to how the medicaid program is doing and places pressure onrl getting good data

but i think the other point about the researc o medicaid versus being on ensured is the randomized study done in oregon gives us different results than observational studies that havee at length about that but i think it's quite clear that medicaid reduces financial distress because stops worrying about medical bills going to see the healthcare system but the evidence on positive health effects has been much more limited, positive results than the first year much less aggressive in the sec year and then we didn't follow it unfortunately long enough to whether there are morality effects, so, you i think the observational studies are much more positive, huge beneficial impacts but, you know, i do causal inference and stuff, trust randomized studies. >> part of the policemen in

healthcare politics is we wednesday to pay them for trying, not for necessarily succeedingo as long as you throw some services at it, well, we did our best. produce introduce yourself. >> trish mcdermott, your slides about the assumption that people will end up, the people generally do a good job of evaluating cost and quality and making good decisions and that they would in this context and there by lower cost and care i have to wonder whether you really believe that and tn e somebody who is serious medical condition has spent all their money?

>> yeah. on the former, you know, rational choice model is peoplee their own utility, i'm sorry? [away from microphone] >> well, if you look at behav in the real world you see that except to the extent there are a variety of impediments to doing it and that's an invitation for us to address those imped meants rather than throw up our hands, a person that can sort it out for us. in fairness, i've done work on i evaluations of doctors. that's going to be a problem, ght, but we do seem to have sorted it out in all sorts of negative markets elsewhere.

and when there are problems we take steps to address it rather than running the entire world on a defined benefitodel with all of the pathologies and he didn't like that word but i think it's half description and started in medicine and description of certain aspects or health care financing and delivery system. in terms of how do we deal with thenate cases, well, i only have two minutes, right. not even that. no, that would bottom's approach to this problem. my approach is to figure out which one of those we think we want to fix and are willing to pay to fix. >> priorities. >> i think we set priorities. we also because this is a multiyear thing can recoup in second, third and money that was not available in the first year and the paper hasabout how to ht

particular, th?"is is not let tm start proposal. this is an attempt to try to move from where we are to somewhere that has features that will be better. >> we are going wrap up in a couple of minutes. david is alluding to the problem of catastrophes, catastrophic insurance and then somewhere somehow the money does run out and the question is where the doughnut hole hidden or made more transparent but you can't pay for everything everywhere all of the time and who gets to manage along the way. i said at the start of today's program this is an ambitious to try to work through issues. it's hard to do this type of stuff, but there's always a possibility that one gleaming thought might come through and i said before starting preview, i seen pig's fly at least once and there's a

possibility they'll do it again. so thank you all for coming today and please thank our speakers. [applause]sp■aq