economist after all. >> i think there will be health reform and one only hopes that it does something positive it's the lives of our members at risk in the system.

it's the harm. and if you're sitting in an office kind of like mind and body care for those members and know that the consequences of your behavior might be the kind of numbers that pop up in the institute of medicine report, it doesn't take long to figure out you need to do a much better job, and i think all blue cross plans for example are coming to understand this. it has been difficult for us to do much more because of the market conditions. i think medicare moving with us in this direction could have immense impact on affordability. so i think we are going to move down that road and in that direction that is consistent with the values of the american people as we do that. >> over in recent weeks as i have spoken to the leaders of health plans, hospital systems i find they are much more optimistic at the chance for

reform than people i talk to in washington. and i think probably -- and actually wall street analysts. they keep saying 40%, kind of consistent with bob. and i think the dynamic is interest in reform is enormous now. but you know, the history of health care reform has been the inability to compromise. overreaching saying i won't support unless it has this, and i see a big risk of that happening and i think that's the biggest obstacle to reform its just the dynamics of the decision makers willingness to compromise or hold out for what they think is a really critical way to do reform rights. >> when i look at the question whether we will get reform i look back at this discussion on having with the health system ceo in minnesota and the fact

that they will come to the table and they know there's waste. they want to make the change. they don't want to make the change without the payment reform happening in sync. they don't want to be at risk for this change. the payment reform has to be packaged with their changing the system. so those are the kinds of things i hope reform protects. and i think there will be reform. i obviously hope it doesn't come with a public option because i think we're showing in minnesota already that these can be done by the private sector. we have examples of it. and we're already heading down the path of reforming the system ourselves. and i don't think i have anything to add to the odds from what you all have already heard. i do think it's unclear at this point if there is going to be a major reform bill that would cover everyone or almost everyone, whether that's going to be primarily a democratic bill or one that will have some significant bipartisan elements and bipartisan support.

the difficulty with doing something that's more democratic-only is not only trying to get the democrats unified behind the bill and there's a diversity of opinions there, but also that it creates real opportunity for political criticism. as you heard there's no easy ways to get the coverage for everyone and no easy ways to pay for it. that would tend to support, i think, a bipartisan approach and talking with senator daschle and senator dole, they highlighted the value for major national policy issues like this of having leaders from both parties standing behind it. and meeting the criticism and helping get through the inevitable challenges of implementation, the inevitable difficulties of taking steps that are not always going to be easy. but it's not clear that's going to come together either. as an alternative, i certainly think these delivery system reforms, payment reforms, things like that are likely to happen. there will be significant

healthcare legislation this year. the president has staked too much on this. there's needs to be medicare reform to pay for physicians starting next year. so something major is going to happen. i'm just not sure it's going to get all the way to covering everyone but i hope we can find a good way forward, too. and i'll pick up on some of uwe's points on that. uwe's points on that. >> i would think the chance of having really universal coverage even phased in i feel i would give that even lower than 40%. i think they will sort of stick around the 1 trillion number for the tenure cost and for that you can do probably 50 to 60% of the uninsured which would certainly be a huge improvement over what we have now and i would call that a loan, significant health legislation. then there are these other things that could even be legislated outside of the coverage bill. i wonder sometimes whether you

couldn't separate and have it in one bill. but they could for the expansion of 1 trillion-dollar expansion they could use budget reconciliation alone. i think that would fly or they could even get bipartisan support for something like that. whether there will be a public plan or not i think that's very uncertain. and it's not even clear how important to everyone how important that actually is. and then the insurance market reform. they are actually far more to the drastic both senator coburn and burr have considerable reform. they want to guarantee issue and no pricing on health status. well, if you have those to you must have a mandate because if you have only the to you get new jersey, which is what we have. [laughter] we have guaranteed issue and a

cumulatively rating but not a mandate to buy insurance, and therefore only sick people in the end stayed in the pool and the healthy don't buy it. that i think will not work in fact i think that most economists would argue against it. than you might as well that is a big thing to chew off. wants the fine print is out there for people in the individual market to price their product and that structure from health status will be a brand new experience. so we will see if that comes about. but it is interesting that senator coburn had it in his bill and obama, bachus, everyone else and the house has, and i think you're bipartisan thing has that said there is at least across party lines and agreement that market as it functions is dysfunctional and needs to be reformed. and something maybe later could

be built around that so maybe it doesn't all have to be done and one chunk, but i cannot imagine that nothing would happen this year that wouldn't happen. >> great. thank you for your perspectives. let me go with the first question which is given the urgency, how quickly do you think medicare payment physicians and hospitals will be changed? it doesn't have a name but mark, i'm going to start with you because you probably know more than anyone about this question. >> there are changes taking place now and we talked to some of the demonstration programs and steps medicare is taking on their payments now that are for reporting on quality of payment coming for not just having health i.t. in your office or in your hospital but actually demonstrating that your using it to improve care. so there's steps already happening in this direction and i think the chance of legislation passing will take major further steps in this direction and medicare this year is 100%. there's a lot behind it and

medicare legislation as i said before is going to pass this year. >> great. >> add to what mark said it's changed what's happened the past two years as far as people's interest and coming together on payment reform and how important. and certainly some of the changes to fix up the existing fee-for-service system won't take very long to do. and i think -- i think the more ambitious change as market is saying there will be steps towards them, but i think it is going to be many years before we get to the point they have reached their potential and fact we had an impact on cost in the aggregate. >> there's another part to the question which is for pat. how will aamc be treated in the drive for efficient providers? the medical center's, the academic medical centers. >> the question is -- >> how well with the academic

medical centers be treated in the drive to efficient providers, how do you deal with this kind of tough question where do you have a strong brand hospital and how do you work them into an efficient network. >> in particular in our state for example the system is internationally known academic medical center, and we have had conversations with them and even a contract with them that creates a role for their participation and kind of our transformatind they've been very helpful because they have a database and an experience that is very rich and i think they have participated very effectively as we move along the road. i think that the other way we think about it is that a lot of the changes that we're talking about, a lot of the things that would be accomplished under a global payment system that you can't really accomplish under a free for system is a reach of a whole variety of hospitals in our community. and our kind of bottom line is

to arrive at a place where we pay providers on the basis of equality of the clinical outcome and that's where our payment methodologies are headed. and if you do that, then brand begins to mean much less than it does today. so it's a leveling of the playing field based on the quality of clinical outcome and we think that institutions like partners will rush to demonstrate that they do it better than other institutions and the data will reveal that and the payment will follow that. >> yeah, i would re-enforce what cleve is saying about equality but i think it's important that our partnership with academic medical centers are critical. so trying to squeeze the last dime out of an institution that's got a training burden is not what we're trying to do. as a matter of fact, the partnership is about rebalancing what we have in the system. so being able to generate more primary care into the system is an important part of the equation.

so i think there are a variety of different ways that we can build that partnership and create the right economic incentives as well. >> can i just add, nancy? >> sure. >> just this idea -- you know, healthcare systems, like medical systems, are very complex organizations. none of reduce smart enough to dictate to any of those places, you know, how they should change what they do to deliver the kind of goals that we have in mind. that is why we believe it's so important that the payment system shift to reflect -- to increase payments, to build incentives that compel multiple institutions and different types of institutions to essentially be retasked, you know, point them not at kind of the traditional quality measures but point them at the outcome measures. if you're in the payor business, one of the only things that you can really do is change incentives and change payments, the things that you reward. in this way.jñ we believe the systems that produce better quality and solve questions about primary care, for example,

what's the role of primary care? how do you value that? you value primary care or primary will be valued in the context of a delivery system that is retasked. the real role of primary care will emerge, yet the whole delivery system is changing itself to better clinical outcomes. i think that's true for i.t. as well. >> great. now a couple of questions on access. one is on the -- what -- i'm going to turn this over to you, uwe. what should we do about undocumented workers? and how does that figure into your formula going forward? >> well, actually if we had only undocumented workers, uninsured, we could probably handle that the way we've always handled the uninsured because to put in a law that says every undocumented worker has full rights, you could do it.

germany does it and somehow they manage. so they do actually by law have full health benefit rights what's they're inside the border but it would send a signal for people to come and i don't think there's bipartisan support for that at all. [laughter] >> so i think we would just have to just leave that them -- deal with them and then pay dish money and handle it through the back door or have neighborhood health centers for them. i do believe this nation would know how to handle that if we have everyone who is legally here covered, this would not be an unmanageable problem, though. >> great.lmñ there are also several questions concerning the incentives path for your program on wellness and smoking sensation. in addition, there's a separate question but related on -- do

you do anything with children with special needs? it's kind of a little bit off to the side but if you could go for those. >> so incentives around wellness programs? >> nonsmoking? >> we look at smoking as a conferencive way as possible so we have smoking cessation programs that have been very, very effective. some of them with 45% quit rates so you're talking about significant sticking power to those programs. but when we build our programs with employers, some of those are based around a premium incentives that i mentioned earlier. so depending upon if you've got someone who's a smoker and they quit and they stick with that, there's a potential premium reduction that comes with leaving your smoking habit behind. as well as managing your numbers. so people who have a baseline set of numbers established early

in our program and manage those numbers actually have the opportunity similar to the kinds of programs you've heard from safeway and others. we have those kinds of programs in minnesota and some of our large employers have those working very, very well. dollars next to that, and a potential for premium buydown, if you think about all those things working at the same time. we have some large employers that have flat medical costs over the last three, four years. so it's really a matter of getting all of the lovers together and having them working in unison. it's not a matter of sort of one piece of this equation. it really is a lot of different things, from benefit design to delivery system, alignment and getting all of those things working in court nation. that's when i hear a lot of the

discussion, it frustrates me when i hear it getting around to feeling like a single silver bullet solution that's out there. there isn't. it is really a very comprehensive book that has to come into play. so it is around the benefits. is around a lining consumer with a provider, with the health system, all working together toward that common and. and in terms of children's hospitals, that's been a rich part of our dialogue. so the children's hospitals ceos are in our roundtable discussi discussion. they have a high concern around what does global payment mean to them, because they are obviously a selected against institution, if you will, drawing against lots of different places, and having very special payment needs. so i cannot take today we got that piece of the equation solve with the same payment reform that we are looking at other places. we are in that dialogue.

we are working that issue. it's something we're very sensitive to, and it's not something that we think we can shoehorn into just the same solution we are using other places. we understand they have a very specific need, and we're going to be sensitive to that need as we work through those discussions. but today i don't have the in game answer for your. >> great. another one, and i think, cleave, you would be a great one for this, or any of you all, as we expand coverage in this country, what's going to happen to access? >> if we spend coverage in the company without dealing with the clinical race in the system, we will continue to have an access problem. i believe that there's plenty of money in america spent on health care to pay for the kind of care that americans aspire to put. but there isn't enough money to

pay for that care and waste at the same time. >> all right. another question beige. >> can i comment on that? i just want to comment on that because i think there's some real lessons in clay christiansen's book about this and frankly i think there are real opportunities for pharmacists to do more for allied health professionals to do more, and what we were talking about in our ongoing care initiative, many physicians can handle a number more patients if they had an ongoing care capability also attached to their office. we are finding as we talk to health systems about the payment for ongoing care that lots of health systems have health professionals who want to work part-time, and they would like to be involved in some of that part-time activity in this on light-year mode. so there are ways of extending the current system. i think if we look at the current system is a how do we do everything today for more people, we've got a big problem.

we have to think about how do we change what we do today to accommodate more people. and i think that's really a core component to thinking about an innovation philosophvelocity to health care. >> but, i mean, here again we shouldn't overdo the problem. as the urban institute study shows they will be an increase of 5% in health spending. so an increase roughly a 5% of use, but not all of that disposition. could be hospital also. a lot of hospitals are empty anyhow so we have the capacity. so you are talking about physicians and possibly nurses. and there's enormous variation across the u.s. in physician population ratios and nurse. massachusetts, very richly endowed, and other much less so endowed. and i think you somehow expect over a decade, 5% gain from that

sector is it really asking for that much. and as cleve says, there's enough inefficiency, we could handle that. the primary care physician problem they have in massachusetts and elsewhere, that sort of unique to especially. it's not across the board at all. and i don't really know if we have a shortage of it. i mean, you have to choices here. either you say the american people are really stupid. we have a shortage of primary care doctors, therefore we underpay them. that a stupid. [laughter] >> or maybe you say maybe we don't. maybe somebody dreamed this up at but if we really needed them we pay to market this is a market economy in this regard, and why are we. so i'm not totally convinced that we actually have a shortage of primary care physicians. it doesn't make sense to an economist. given the way we price this.

>> actually think, really what cleve and patrick were saying, really comes down to unless we reform the payment system we're not going to get the improvements in productivity and efficiency that we need. and i think at a time given more people coverage and increasing the demand for medical care, that is the ideal time to get provider cooperation. when demand on them are growing. so i think this is the opportunity. i think in primary care, i think we have, without knowing it, have so discourage entry or maintenance in primary care over the last few years that we likely do have a shortage. and it's going to take a lot of time to reverse that. i mean, we can reverse our incentives quickly, but until the supply adjusts. so i actually think expanding our effective primary care supply is going to involve a lot more delegation by the primary

care physicians to other people, some of whom today, they can get paid for if they delegate that work. so this is the task of the payment reform. >> bob, did you want to come? >> yeah, i think there's a danger here that we're getting a little too optimistic. [laughter] >> i think when we look at national averages are we as to who the voice of the woebegone states. [laughter] >> above average, you forget about vast differences that there are in this country. a quarter of the population of texas doesn't have insurance. average uninsured person in america consumes something around half of what they would consume, if they were adequately insured. that implies if you expanded

insurance coverage in a state like texas, you're going to get 12% or so increase in demand. and while we can set up here and say, well, if i can reorganize and the delivery system, and eliminate the waste that's in that system and the low value services that are provided, no big sweat. even in a place like texas. we can make it work. but there's a whole lot of it is in that sentence. and we don't know how to do any of them. and what this argues for i think is a very measured pace at which we introduce this. so the changes of that paul has talked about can have a chance to take and eat back. we really need sort of a medpac for nine years, we continually recommended that payment for primary care be boosted, those

for specialty care be reduced, and that this would then take, you know, many, many years to redress the imbalance that now exists in the relative supplies of those two food groups of physicians. and so i think we want to approach this with a good deal of caution. >> that is a buzz kill. >> bob, i don't disagree with you. it's going to be challenging for our market to move the global payments as far along as we are. so i understand that's going to be even more challenging for markets that aren't as advanced in that regard. so we're not underestimatingle challenge that's here but your cost is a good one but it underscores there isn't one answer out of legislation and one simple way to do this for the whole country. people are in different places. and we need to encourage the various models to grow so that

we can see what are the best things to be done in a variety of places. >> i know uwe -- >> this reminds me there was a study years ago when quebec introduced universal coverage overnight and they didn't phase in anything. it just went the way canadians do hockey, rough. [laughter] >> what happened there was a redistribution of physician visits from the higher incomed groups to the lower-incomed groups. that was the immediate effect of it. and, of course, we could do that here, too. in other words, whatever resources exist, we share them. that's the canadian approach. the alternative is to phase it in and tell the uninsured wait, wait, we don't want to give up anything. wait till we grow the supply. i'm not so sure you want to grow the supply, actually. because then you have to feed the supply.

so i'm not sure what is the right answer here. probably you will have to have a little bit of both. redistribution from us, the fortunate to them. but i wouldn't wait too long till the strategies work. that could take a decade. i wouldn't want to wait that long with the uninsured. >> i'd just like to offer this notion. you know, i believe that having payment reform advance quickly is really a choice. it's a choice. i mean, you know, kind of makes you think about what your responsibilities and what your job is. and clearly the elimination of clinical waste in the delivery system is -- it's almost the more benign kind of activity we could be involved in at least as payors. what you have to realize at the same time is that people die as a consequence of this wait.

and people are harmed, 5 million incidents each year of clinical harm, unnecessary c-sections and c-sections are a serious operation. it's not -- you know, it's not without its implications. i mean, there's a whole list of those things. as a matter of fact, one of the books we brought is out on the table and it's called study after study. how many studies will it take? it includes over 500 examples of overuse, underuse or misuse of care all from referee clinical journals. and the folks who did that study estimate that there's $690 to $700 billion that can be saved by getting rid of that stuff. so when i go see a hospital or a group of doctors and talk to them about what i want, why don't you get rid of that stuff in the book but that book didn't exist before last year. it didn't exist before last year. and so that book, along with the other resources we have and we

know about and the data that's available today and the information from the clinical information systems, all of these things are available to us today, and you can make a very strong and compelling case when we talk to providers when you put that stuff on the table and say to them, you know, this is just not acceptable. we're not going to pay for this anymore. and that advances the conversation in a way that's been different from the past. so i'm very optimistic that we will move quickly. i think we have some evidence that that's true. and i think we need to engage this problem at that level in those terms. and we will -- we can move much faster, i believe, than people who, you know, kind of don't pay everyday. believe that we can. >> this week saw the release of more than 150 hours of secret audio recordings from the nixon white house. from early 1973 on the agreement to end the vietnam war. >> they are not to have any advanced information, is that r?