that are outside of traditional medical care here and only by having payments that focus on medical and support better health outc/ at@@@"rrági"@ ráb,r providers that have taken the steps to actually get better outcomes and bringing costs down at the same time. so this slide provides a bit more detail on how accountable

care can be implemented, via providers and iders payors of green to change the way that they are paying for care away from typically a fee for service approach. the accountable care providers that are working together, identify who they are. and then the payor can identify who is actually getting care from those providers. who they're accountable for, the patients that they're accountable for based on actual patterns of care. it doesn't require any active enrollment steps. you're not taking anything away from private plan beneficiaries and those providers are then responsible for -- held accountable for the overall cost of those patients, both services they deliver and other services they receive. so there's an incentive to create a virtual or a real connection between the other providers involved in delivering care. the benchmark can be calculated based on projections about future spending, enter into a contract that divides all those potential savings up. it creates the opportunity for

shared savings and then the accountable care industry has a mechanism to make ends meet while still taking steps like answering emails and using health i.t. effectively, using nurse practitioners, allied health professionals, implementing wellness programs whatever it takes for their beneficiaries to get better health outcomes and lower costs. this is part of most of the healthcare reform proposals that are being considered right now. and again, focuses on accountablity for costs across diverse practices and it's designed to be compatible with other reforms things like paying for health i.t. or care coordination, bundled payments, things that are considered part of healthcare reform can help move in this direction of getting to what we really want, accountability and payment based on better outcomes and lower costs. and this can be done through multistakeholder collaborations as well. there are a number of these going on around the country.

i'll mention those briefly in just a second. but the idea is as patrick was saying there's some things that are best to collaborate on and other areas that are best to compete on. to the extent it's possible to get multiple stakeholders to commit to the same kinds of quality measures. meaningful quality measures that providers believe in and, therefore, that patients can believe in and that payors believe can help them get better value for their spending, multistakeholder collaboration can help support these kinds of accountable care activities. and having consistent quality measures and reporting requirements can also mean more accurate performance measurement because more patients are involved because more comprehensive picture of the care being delivered by providers can be developed. and that also means at least where there can be competition so if a blue cross plan and medicare and the state are all participating in this effort, they can all implement payment reforms that would re-enforce

each other rather than pushing and pulling providers in lots of different directions so that they each have their own different kinds of quality initiatives but it all adds up to a lot of noise and confusion from the standpoint of healthcare providers. some of these can be regionally based as well and there's some good examples including from minnesota of how to make progress on these kinds of issues. we've been working with a number of these around the country. a number of these multiple stakeholder reform efforts. not by any means all of them and very important things are happening in minnesota as you already heard about in massachusetts just because they're not on that slide it doesn't mean it's not critical. just to give you an example. north carolina, if a program it started with kind of a medical home concept has been expanded to the state employees program that blue cross of north carolina is participating in. it's scoring ways to get medicare participation in this program as well the quality measures for these different populations aren't exactly the

same but the goal is to get improvements in outcomes for patients while getting reductions in overall costs of care. and these are not being implemented in radical and sudden ways. you're not kind of suddenly moving away from the fee for service payments that providers have always used and being implemented through incremental steps like providing some upfront payments for medical homes and care coordinations but with a transition intended to move payment towards paying for better results and making sure that these steps are leading to better outcomes for patients and lower overall costs of care. a number of these activities around the country. and there's a lot of discussion earlier about the importance of medicare, taking steps to participate in these efforts. while i was at cms we started a demonstration program based on this concept for primarily integrated group practices called the physician group practice demonstration where a number of physician integrated groups and an ipa participated

in a deal like this where the medicare beneficiary so they still got paid the traditional medicare fee for service payments but in addition to that they started reporting on a seat of meaningful quality performance measures for their patient population, the whole set of patients who were touched by their care including a set of preventive measures, including a set of evans based process and especially outcome and patient experience measures for the common chronic diseases that account for most medicare costs and at the same time medicare started tracking the overall spending for patients in the inthese programs and the deal was they could document improvements in a number of these dimensions of important patient quality of care and if medicare saw a slowdown in the growth trend well, they could get back some of those savings and at this point i think the latest results are that just about all of them have significantly improved quality and about half have been able to get cost spending trends down by more than 2 percentage points per year so that's pretty

significant especially adding up over time and the savings seem to be getting larger and more substantial as time goes on and more steps along these lines can be implemented and reinforced by the payment system reforms. key elements here are getting multiple stakeholders involved, having a process, a trusted process in place that brings key payors and providers and the public sector to the table, having a capacity to measure performance both in terms of quality and costs of care and that's getting easier with all the investments that are coming through health i.t. and the definition of meaningful use of health i.t. is putting a big emphasis of getting demonstrated impact on performance measures and on quality of care. having some ability to compare these benchmark trends to impact over time. so either having a controlled group or having a benchmark prediction that can be tracked against an actual performance of this accountable care collaboration.

having a savings threshold above which savings is shared and then again having a quality and efficiency component as well. so these kinds of steps are being done now. they are being considered in legislation related to medicare that would give medicare, i think, a much-needed ability to get important quality and cost measures quickly for their beneficiaries so that the impact of reforms like these can be evaluated much more quickly and i think it can potentially be an important part of achieving meaningful healthcare reform. thank you all very much. [applause] >> thank you, mark, for sharing your perspective. now, it's my pleasure to introduce uwe reinhart as we turn our attention from finance top cost management to increasing access and there's really no one better to speak about this than uwe.

he's an internationally known expert and i'm sure known to you here in this room. he's well regarded for his humor but also for his keen insights and his ability -- his keen insights and his ability to communicate these very important issues around access. >> thank you very much, nancy. first of all, i want to add my thanks to bob's remarks to you. these meetings take a lot of intellectual activity. somebody has to frame it and invite the people who would present and that's only half of it and then somebody has to figure out the logistics, get everyone on line, get this lovely room, get c-span. and so on. and what is remarkable about this, if you had to purchase all of this from a regular consulting firm, you'd be

talking big, big bucks. [laughter] >> but most of that is provided sort of free or at or below cost, so the american people should sometimes thank these washington outfits that lay on these things to help inform policymakers but also through the media and the public. i also want to express my gratitude as an american citizen to the chinese government. [laughter] >> because we are beginning this -- we began this session with a buzz kill, which bob -- he's a great master of buzz kills by giving us the fiscal situation and ended by reminding us that we actually -- our government operates courtesy of foreign governments, which is very nice. and i hope the chinese will be well inclined to us.

we will behave very nicely so that they will continue to do that. but that is a very serious issue that our foreign policy is so compromised by having to have the good will of countries like china. this is a very serious issue, for example. it could explain to me why we are so passive about myanmar when we claim to be so upset -- people who oppress other peoples and it has to do with our public debt. i'm not sure you can see these slides. where do i press to make them go, nancy? it take high tech, too. this one here. okay. so i begin with a slide that i take from the medical index. you can google that yourself. and what it does is something i like that take the premium an employer pays for a family plus

the employees' contribution to that premium and add the out-of-pocket spending of the family to get sort of a total average bill of health spending for a typical american family of four averaged over i believe the database of at least 10 million families so this is a very interesting number, and that grew from, i think, i can't read it but i remember something like 8114 to something like 16,700 now. and it will be 18,000 next year at 8%. and the average compound growth rate was 8.7%. now, the trendline in massachusetts is even above that. so a rule of thumb is it doubled. health spending for an average american family tends to double every decade. so double 18,000 and you get 36,000, right? that's what we're talking about. 10 years from now is for an

average american family of four. it will cost $36,000 and this excludes the elderly. this is for nonelderly commercially insured. so that's one slide. yeah. here i have the money income distribution. i think it's 2007 data. i give a footnote you can google this yourself and it's money income so it's in a way disposable income. and the greens at the bottom are people whom we do help a lot, medicaid, food stamps, housing subsidies but the blue is the people we have never helped at all. they are making more than 20,000 but less than 55. and they are the cab drivers, the home depot workers, the waiters and waitresses. even airline stewards they don't make all that much money.

[inaudible] >> hum? >> pilots make a little bit more except for the commuter airlines. commuter airlines, i'm shocked. you get what you pay for. [laughter] >> no, i think when you realize how hard these pilots work for so little you get fatigued pilots and that's what you get at these airlines. it's a miracle so little happens it you have to admire these people for it but i was shocked that these people actually crash in lousy hotels don't really have the kind of rest that pilots for big companies have. it's scary, i think. so the blues are the ones i worry about. the lower middle class. and what is their fate? and then up there at the very top you have a little bar. to be a health policy wonk you must be in the top bar. [laughter] >> and all of us at this table are comfortably in the top bar.

and the reason that is, we must be totally partial -- impartial and if you were among the blues you might have a conflict of interest. you might, for example, favor universal coverage of stuff like that. [laughter] >> i'm actually not trying to be funny. this is just all true. [laughter] >> now, the next slide -- so i'm now saying think of a family with a gross wage base of 70,000 now, gross wage base to economists mean the total debits to a payroll expense an employer makes so prior to any fringes paid by employer and employee, prior to any taxes paid by either and then, of course, the livelihood of the family comes out of that, too. so that has grown in the past decade about 3% per year. we are lucky if it would grow this past in the coming decade.

right now it's probably not growing even falling in some instances. but i am trying to be upbeat here. let us not think we are in massachusetts. let's think the trendline is only 8% per year. and based on $18,000 and then have a look what will happen to this family. so as i recall, the baseline -- the wage base of 70,000 will grow at 3% to 94,000 10 years from now. the health spending -- i think it goes to 38 something using next year's at 3% compound growth and then i get that 10 years from now, 41% of that family's wage base, that is before fringes, before anything will be set aside just for healthcare. and what is left over, the other

60%, has to pay all the fringes, taxes, schooling, housing. that's what we're looking at. this is a beautiful nchm slide on the great report from the uninsured that nancy and her staff produced. and i like it because it shows so very clearly how being uninsured is related to income levels. and so far the middle and upper middle class, there are some uninsured but it's not a big phenomenon yet. but what i'm thinking is, in this coming decade, the status of being uninsured absent health reform will creep up this income distribution very fast. and the very people who are now dickering should there be a public plan, or not should it be 1.6 trillion and those very people will be uninsured and if they get sick will be in very dire straits and i'm trying to figure out whether i should feel

sorry for them because if they don't support health reform now, i will write down that i won't be sorry for them. [laughter] >> they, however, will be very sorry. now, i do need to step aside here. how much would -- so the choice americans face in healthcare now is twofold. either we need to raise taxes to be our brothers and sisters' keepers those in the middle and the lower middle class in the coming years ahead and here i would remind you of -- if you google oecd, tax revenue, different countries you will discover we are the least taxed nation in the industrialized world. japan is with us there. but everyone else pays a lot more. so this bellyaching that we are overtaxed may convince you knot

god. we are the least taxed in that regard. [laughter] >> or the alternative is, which i believe we might very well do is ration healthcare by income class. and that can be done quite elegantly. it's not you don't get any care and you get care. this will be crude. we wouldn't do that but what we would do is reference pricing for everything. we have that already in drugs, say, you get a generic but if you want a brand name drug, pay the difference out-of-pocket. that's referenced pricing. we could do this for doctors. locus doctors we pay that. here at locus hospitals you want to have your baby we pay that fully. you want to go to some more costly one, you pay the difference out-of-pocket. you see how you could ration in a way that you never have to use the "r" word you would just do it. so that's possible. now, how much would universal coverage cost? and i think all of us are basing

our estimate on a really splendid paper in health affairs by jack hadley, john hollihan and who are the others. you probably should know them by heart. i shouldn't put you on the spot. they were a urban institute crowd, bob's employees. and this is a superb study the way they did it and everyone uses it as a benchmark and they started out saying if you took fully privately insured people in 2008 and looked at what was spent on their name, it was $3900. and if you took similar -- the same demographic makeup, similar people who were uninsured, we spent, what, something like 18, 1700 there. so about 43%. so if we argue we are not rationing healthcare in america, that is just a joke. that is rationing unless you say the whole difference was waste. you must -- we must already have

been rationing. so basically what jack hadley and colleagues do, basically say we have to top this off, you know, if we insured them they'd behave like the others, it'd be 3900 and i think in the end, because some people weren't insured the whole year, only part of the year, what they come up with, it would add about $122 billion to health spending in 2008 had we had everyone insured. that's it. and i think no one has fought with this number at all. it's the -- it's the gold standard we all use. so if you now use this and would say, okay, supposing we had full coverage in 2010, that would probably add $150 billion to national health spending, maybe. and the government would maybe pay $125 billion of that. some of it might still be coursed out of the people under a mandate. but that would grow. i had let it grow only at 5%,

which i already assumed everything president obama is dreaming of would have come to pass. in fact, probably none of it will, but i just want to be nice. so here -- that's $1.57 trillion very close to the $6 billion the cbo, $1.6 trillion -- everyone knows this number. we've all said it. bob has said it. you name it, this is the number. now, if it grows at 8, it will be $1.8 trillion so it will be somewhere between $1.5 trillion and $1.2 trillion to do the whole thing, to have real universal coverage like they have in europe. now, is that a lot of money, $1.6 trillion? and that depends how you look at this. first of all, if you divide it by 10, $1$10, $10 billion, you 160. that means you could build 160 princetons for this because our

endowment is $10 billion. you could buy about 180 harvards, right? [laughter] >> he's on the board of harvard. we're more cost-effective. [laughter] >> then it seems, oh, my god, that's so much money, right? but if you actually relate it to health spending, by how much would that raise health spending over the decade? now, again health spending over the decade will be $40 trillion. that's already on the books now. so it's a 4% increase over what it would be what cms says. is that a big 4%? well, every year health spending has gone up 6 to 7% and we always took it with grace. 6, 7, oh, the "usa today" health spending rose only 6% last year, right? they use only for that so, therefore, the 4 doesn't blow me over.

then how about g.d.p.? it's about 1% of g.d.p. roughly 'cause the g.d.p. is now $14 trillion and in your mind everyone relates the $1.6 trillion to that $14 trillion now. but that's wrong. you have to relate it to 10 years of g.d.p. that'll be somewhere between $150 trillion to $170 trillion so we're talking about 1% of g.d.p. so looked at it that way, not the way bob did, bob is quite legitimate, that's another story but look at the point of view as the nation you could say well, it's not that big of a deal. it's not even lost g.d.p. 'cause healthcare is part of g.d.p. it's just on spending it on something else we're spending it on healthcare for people who are now uninsured. whether that's a good deal or not depends on that other thing. if that other thing is investment and really productive capital you pay a growth price for that. if it's -- if it's hamburgers or

fast food, this may actually be a good thing. this is not so easy to come down on. what you're going to do with it. what it displaces. it basically just in the short run just reallocates g.d.p. it doesn't make it fall. what could make the case and christie roemer on the council of economic advisor and her crew made that case and it would dampen growth and the story is true but it's a big if. all consumption comes at the expense of something else. and if that something else is productive investment, yeah, but if it's houses or strip malls we don't need, that's called investment but it ain't any use, you know. they are half-boarded up so you have to be even careful there. but i'm telling you, the one thing where i think you have a reduction in g.d.p. is what the

bankers did to us. imagine what g.d.p. would have been if those guys had behaved. and imagine what it would be and take the difference. i have not actually done this. have you? but it must be -- it could be $f it could be 5 trillion for all you know. it would easily add up. laughter. i don't know either. but when gdp growth was down 6% at leal were now we left a huge number of trillions of gdp on the table because of the these guys did and what really hurts on top of what they caused us in on employment of these people not working, the factory is not being built, on top of all of that we are giving them trillions to compensate them for their losses which of course comes from other use is we would have had. so relative to that i am just not blown over by the

1.6 trillion. the problem is the one that bob talked about is the government doesn't have that money. it's one thing to say the nation has the money. but how does president obama get his hand on that kind that of course brings us back to bob, that is his department. i believe we might think of a sales-tax earmarks for health care, be your brother's keeper tax or something like that. 1% would bring consumption must be 10 trillion a year so 1% would give 100 billion right now per year, so the taxable capacity is there. i wouldn't take it by adding increasing corporate income tax. i think that could hurt growth but if you did a sales tax it would not so as bob properly said it depends how you finance this thing. ideally we should be able to carve out of health care itself, and we will until long run but the next five years i am also

sure. you gave hope, you people in the middle, that maybe something can be done. [laughter] but the bus kills sit at either end. [laughter] and say hey, this will take some time. but anyway, that's the picture. we will get through this but if i were middle class i would be worried. i would be really worried about what will pass or not pass this year. thank you. [applause] >> thank you, uwe. now we will open up to questions. we have a microphone here or if he would like to turn in your yellow cards to judy and carolyn are walking through. and while we wait why don't we go down the panel and handicap the chances for health care reform? and i'm not going to put you on

the spot, while i won't put you on the spot first bob because you showed something while we were waiting. what's the smart money? you have to tell the group while talking about. >> there is a website on which economists generally but the public at large can express their opinions by buying shares of various from, you know, what economic growth and while i was sitting here and got an e-mail from a friend with the latest quote on significant health care reform and of being enacted by the end of 2009 and the price is 35% at this point, the person that sent to me because i was quoted in "the washington post" saying somewhere between one-third and 40% earlier. i won't say whether i actually said that, but the