different from when we buy a house and expect to have a roof that works. >> and you were going to say? >> the reconciliation bill will amend the senate bill that became law. >> with my colleague field? >> i have had no more request so i will. i like to make a point before i yield. >> just take note and am glad that that mr. waxman pointed out and others have reiterated we are going to pass the senate bill. if it is deemed or whenever the word is used, there is going to be legitimate case and controversy and i would thus have hoped and again and mr. barton and made the argument initially at 10 in the morning that regular order much more

regular order certainly would have been used. i am not sure because i think this is going to be a new issue presented to the supreme court. i'm not sure that this is going to pass constitutional muster and obviously i want a conclusion but i say that it's one more reason for more regular order to have been made followed. >> mr. levin and chairwoman at slaughter, let's assume we pass a rule which is deemed and then we're going to debate reconciliation package and while we are debating this reconciliation package is the president of united states going to sign this bill that we just been to pass? if he doesn't it ain't a lot. i don't think it's a lot anyway. >> he is going to sign the senate bill. in. >> i don't know how much time we're going to have between the rural vote and the final vote on reconciliation but probably will be days. >> he will sign it and then it remains to be seen what if anything else passed by the

senate. >> i agree but my point is. when does that deemed to bill -- >> the president has to sign something for anything to become a law unless you changed that in the rule to. >> david. >> [inaudible] >> mr. diaz-balart yielded to me, here's the question i think is a very important one as people talk about the fact that nobody likes the senate bill and yet that's going to be public law, correct? we all acknowledge it's going to be public law. what guarantee do we have in light of the fact the chairman of the budget committee kent conrad said that he believed that there would be changed to come about that we are not going to end up with nothing but the senate bill and, in fact, the only guarantee we're going to emerge from based on the process before us is that the store nearly unpopular bill that

everybody hates is going to be public law. and we are going to be left with, we are going to be left with a hope that our colleagues on the other body just might be able to do what happened back in 1983 and do this without modifications but since it's only happened one time since the 1974 budget act put in place, i guess what, based on the fact the senate budget committee chairman said what he did it as going to happen. >> [inaudible] >> this is an important discussion, madam chairman. >> one at a time. we need to do this, this is obviously something we will decide when the rule is written. >> of course, i agree. >> not to spend all our time on a hypothetical here. >> but at the same time it is i think evidence that we have a

constitutional responsibility to vote on the same text and i think some progress seems well in the discussion as been made in terms of the fact that guess we will pass out the bill that was passed by the other body, that's constitutionally required. now, i think mr. dreier emphasize correctly so that as i mentioned before everything else is speculative, everything else is it? mr. waxman. >> it's up to the chair. >> it is my time, you can speak out. >> that's an interesting where they have a extra time. >> we are proud of that. >> i don't hate the senate bill, it has a lot of features and ads that were in the house bill but there are some features we want to change but we are not allowed to amend the senate bill and send it back because then the

senate would have to have 60 votes to stop a filibuster so we are required in the root reconciliation process to change the senate bill on some of the areas where i think it makes sense to change its but in the meantime we will be reconciling the law and the law will be the senate-passed bill put into law, that comes from a vote in house and then the reconciliation bill is the only way we can with a majority vote. the american people should be astounded that their senate cannot ask a majority vote if a small minority prevents it. so this will allow a majority vote in house and senate to make changes in the senate bill but not that it is so terrible that we all hated, there are things we like to change. that's what we do all the time, we change current law and the current law will be the senate bill once is voted on by the house. >> the yield to my friend.

>> i thank you and i asked my friend the would you be mindful of the fact at another point in time you voted in a manner to allow. >> yes and i know it's been done before and what i would say is that certainly and the reason why i think this is going to be an instance of first-time consideration by a new question of the supreme court is because on matters when it was done before certainly did not have the impact, certainly did not have a the impact, the interest -- >> will yield quacks' we were here when we passed the line-item veto and i can't imagine that you have for gotten that significant number of people in this country were

focused on the line item veto, it was talked about in line in your state and our state governor has a line item veto. mr. dreier voted in 1996, mr. barton and loaded for a in 1996, the leader of the republicans mr. boehner voted for in 1996 and now all of a sudden. >> when 90 percent of the american people supported it. >> you say that. >> the poll said that too. >> you all in the minority continue to say what the american people think. you don't know what all of the american people think there you certainly don't know what -- >> we read the polls. >> reclaiming my time. >> mr. diaz-balart, i would like now to go down to go too. >> reclaiming my time. >> may i?

thank you. we have four votes purses getting over at the beginning, after you have voted which you come back? >> i would just like to say to my friend mr. hastings that after that vote is when the supreme court made clear and emphasizing the importance of exactly which and that's the point i'm making today. anyways, thank you all very much. [inaudible conversations] [inaudible conversations]

[inaudible conversations] >> and the house rules committee in recess at the moment. members on their way to the house floor, a series of floor votes for votes under way. the house rules committee meeting today to consider changes to the health care reconciliation bill. this is one of two health care bills the house is considering tomorrow, one passed by the senate in december and a second reconciliation bill making changes to the federal student loan program. and today again house rules committee setting floor debate parameters.

now and mit economist jonathan gruber, he recently spoke at the college of the holy cross in massachusetts about health care policy. professor gruber specializes in health care economics and helps run a number of the provisions in the bills being considered by congress. this is an hour and 20 minutes, we will show you this until the rules committee resumes. >> the director of the senate for religion and ethics and culture and it's my pleasure to welcome you to the library and to the last installment in our

yearlong series titled after the fall of capitalism and a just way forward. the series has explored the recent credit crisis and recession and some of its challenges and principles at work in shaping economies that are sustainable in just. our speakers have included renowned economists, bankers and scholars including jacob hacker, david health care bill, william nordhaus, you're in levine, near and shelled and sister catherine callawayç from britain. if you miss those toxic and listen to them on-line at our website: cross.edu/crec. tonight i'm really pleased to welcome jonathan gruber, the nation's leading health care economists will be introduced by his graduate mentee professor boil. before that i will not for all of you tonight as you may have noticed we are being recorded for c-span. and and for broadcasting. what that does mean is if you

ask questions tonight during the public domain so there are all there. it also means during the question and answer we will have to ask you to come to the microphone to ask the questions. at in the center. thank you for joining us. melissa. [applause] >> thank you, tom. the economic department in conjunction with the center for religion and ethics and culture is delighted to welcome professor jonathan gruber to lacrosse and were grateful that he has made time in his busy schedule to speak tonight on the topic of health care reform. it is one of the top health economists in the world professor gruber has far too many impressive credentials to list in all so i'll give you a taste of the major highlights: john is professor of economics at mit where he has worked since receiving his ph.d. from harvard in 1992. it is a recent is as did director of health care program at the national bureau of

economic research and co-editor of the journal of public economics and associate editor of the journal of health economics. use elected to the institute of medicine in 2004 in the american academy of arts and sciences in 2008. it is 2006 professor bureau was american society of economists inaugural medal for the best of economists under 40. in that same year modern healthcare magazine listed him as the 20 most powerful people in health care in the west. he has published over one hudgens 25 research articles, author of a popular undergraduate textbook entitled public finance and public policy. john was also a key architect of the massachusetts health-insurance reform and is a member of the board of the commonwealth health-insurance connector authority which implemented that reform. he was also a consultant to the clinton edwards and obama 2008 presidential campaigns and was described by the washington post as possibly the democratic party's most influential health

care expert. as his former student is me great pleasure to introduce professor jonathan gruber. [applause] >> thank you very much, melissa period she didn't list my most impressive accomplishment, wonderful graduate student including melissa we're lucky to have here under faculty. tonight i'm going to talk about health care reform. it's a pretty big topic and hard to know what people really want to hear about so whenever i talk about it i like to try to keep my talk relatively brief and hear what questions people have and what they want to hear. i am guided by the stories told in my family of the time that my sister came running into the house and found my father and said it where is mom, and he said i don't know, can i help you and my sister said it you can't and started to walk away and my father said why can't i help you and she said because i

need help with my math homework and my father is a ph.d. in finance and was taken aback year he said can i help you and she said i don't want to know that much about it. [laughter] so that is the guidepost i have for this talk, i want to not tell you more than i want to know and will try to talk more about the basic landscape of health care reform and then i'm interested to hear your questions and got. let's go to the background, where we five years ago with health care? we are caught between two different extreme views of the way forward on health care reform want you on the left was the way for it was canadian single payer type system. the system where everyone would be entitled to coverage from birth and where the government would control the global budget. ..

>> so for that reason i think we can spend a lot of time thinking about single-payer as a branch mark. we should think more about realistic reforms. but that's where we're stuck on the left. on the right on the other hand,

they said okay we have to stick with the private market. what we do is give tax credits to go buy health insurance. we got a well functioning private market, we will give people money. the problem is we don't have a well functioning private. we do for the majority of people, but for a very sizable minority we do not have a well functioning market. if you do not work for a large firm you cannot get health insurance on a fair or just to use the term, bases. if you are an individual who is not offered employer-sponsored health insurance you have to avail yourself in both states, not massachusetts but other states, of an incredibly unfair and discriminatory group market. were in mostly to give that health insurance for 10 years and been healthy, the minute you get cancer they can drop you. or they say great we're not dropping you, it's going to be $100,000 a month. totally legal in the majority of states in america. people in america, most have insurance but we don't have and insurance for insurance.

we don't have the ability to ensure that if something strikes, and we don't work for  large firm, our insurance will be there to cover us. so if you take a 60 year-old with cancer, it doesn't matter if you give them a 2000 or tax credit or 5000 or $10,000 tax credit, they can't get insurance. mathematically, infinity minus 10,000 is to infinity. you can't get insurance if you're sick in america and your in a non-group market. so that doesn't solve the problem. that's where we are stuck. between the left which a solution that worked, the right which has a solution which is more feasible but did not solve the problem. this lead to frustration that we could do health care reform. the joke i like to tell about that is the joke about the health policy expert who dies and goes to heaven. when he gets there, saint peter says you can ask god one question, and he says to god, well, my question is will there ever be universal health coverage in america? and god says yes, but not in my

lifetime. [laughter] >> so that i think sort of represents the pessimism that i think they felt about the prospects for health care reform. until a breakthrough was made, and the breakthrough happened here in our home state of massachusetts. where we really introduce off and the concept of a third way. talk about third way. we had a good way in massachusetts which was to recognize that the principle of what i go and commend universalism. what i mean by that is the incremental not in the sense of small but in the sense of building what works, building on what works. odds are, to get to universal coverage. the printable is saying we have a system that works for most people, let's fill the gaps what doesn't work. let's not rip it up and start over. let's recognize the reforms that are needed for the people that the system doesn't work. this is a concept which was pioneered by governor romney for which he deserves as much as he tried to ignite it, he deserves most of the credit. and then passed almost unanimously through the

legislature with scott brown slowed in april 2006. the way that this bill works its it relies would on what i'd like to think of as a three-legged stool. the three legs of us to our first of all, to reform insurance markets so that individuals can get insurance at fair prices regardless of their health. and massachusetts you cannot be charged more for insurance because you're sick. you cannot be denied preexisting conditions exclusions. none of that can happen. it's a reform insurance market where people can be charged different markets via h. but not by other health discrimination factors. so you fix the insurance market problem. the problem is if you do that by itself it's a disaster. let's do a little economics. why is that? think of yourself as an insurance company. what you do in most states the way you make your money is by and large my figure out how to avoid the sick eyes and ensure the healthy guys. if the sick icons, charging them a fortune or denying them. now let's say you've got a company and the government says

you can't deny care to anybody. what am i going to do. i'm going to do one of two things. first of all going to quit or secondly, i'm going to charge a fortune because i don't know what it getting. what happens is i charge a fortune from who buys a church when it costs a fortune? only the sick. it becomes a self fulfilling prophecy. so states have tried, including massachusetts in 1996, that have tried to do this reform by itself has destroyed their non-group market. you can't do it. it doesn't work. bistate stride this. there were five of the eight most expensive states to buy health insurance in the country as a result. so that's the second leg of the stool. a requirement that everyone buy health insurance. if everyone is by health insurance then i can say fine, i know apple is going to buy so i know the price will be there. i can set the price at the average. so the mandate, it's also problem, what we call adverse selection problem.

the problem is you can't mandate people to buy health insurance without helping them out. the typical family health insurance policy in massachusetts, we passed a law 2006, was about $13,000. we couldn't tell someone earning $25,000 that they had to spend $13,000 on health insurance or pay a penalty or go to jail or whatever. that's just not just. it's not fair. so the third leg of the still has to be subsidies to make health insurance affordable. you have to subsidize low income but after middle income for it to make it affordable. the key point is you need all three legs that you can do in church without a mandate. you can have a mandate without subsidies. there's no way to make it work without all three of those pieces. that's a we have and massachusetts. there's a lot of other details i can get into wrapped around that. but that's the basic structure of our reform. that reform has been enormously successful. i'm biased. i helped implement the reform.

but the facts are pretty a reasonable. massachusetts and insurance rate is now down below 4%. compared to a national average of about 18%. we started lower. we started at about 10%, but we got our number of uninsured by about two-thirds which is a pretty impressive complement. we done so on budget, we were actually within our budget when the state in a fiscal crisis last summer, we had to cut a program, much like every program in the state had to cut. but within as ours are program goes we been on budget we does so with a fairly reasonable cost. now, so on budget. the third thing is the mandate and massachusetts, the first of its kind in the nation has been incredible you successful in the sense in lowering insurance rates but we had a new system which is brand-new. people got a new tax form. they had to attach their taxes and fill out a segment of their taxes. 90 percent of taxpayers got it right the very first year. so it was implementable.

we showed it could be done. and finally it's been popular. we've got 70% popularity. for those of you follow it, when scott brown ran his campaign, he did not campaign against massachusetts health care reform. his campaign was we got ours, we don't need to then go give it to other people. so it's been popular. it's been successful. and it really was the model for what's now being considered at the federal level. the federal level, you have house and senate plans. really the senate plan as the basis for what's going to happen if anything happens. based on the same principles, the same three-legged stool. insurance market reforms, so that in this nation, starting 2014, you will not be allowed to charge him with a different price for health insurance because of their health. an individual mandate where an individual have to buy health insurance, and substantial subsidies where individuals will be subsidize below about four times the poverty line, or about

$88,000 for a family. obese of some public support to help them buy health insurance. so that is the basic structure that's in the bill. so i've made it sound pretty good. what's the problem? why hasn't this thing passed? okay. well, the problem is that there are -- there's a several problems. there's one reasonable problem, which is that this is a major new government program. this bill would involve other president obama's latest week of the bill, about $950 billion of new federal spending on -- new federal insurance thing over the next decade. okay. that's a very big number. now to be fair, over that same period, over that next decade the u.s. will spend at least $30 trillion on health care. so this is not, this is a small single-digit% increase on what we will spend on health care over the next decade. nonetheless, it's a big number.

that's a big number. so that's a legitimate dispute to have come it is a look, we don't think that government priority should be in that direction. that's a legitimate dispute to have. that's part of the dispute. of out of the been politics. but that's sort of the main, if you're going to post this bill i think the main legitimate basis for doing so would be, that's a new it is government intervention, and this is a big deal. were not going to tell people in america they have to of health insurance. that's a major stand today. i explained i hope why we need to take that stand. but nonetheless, that's controversial and that's another principle reason to oppose the bill. i am here today there's a lot of reasons to like the bill. unabashedly i helped write the federal bill as well. i was a paid consultant to the obama administration helped develop the technical details of the bill so i county with my biases. but nonetheless, i think there's a lot to like in this bill. i think what's really striking is if you poll people, and asked them what you think of health care bill, right now you're up

to about 464, 48 against it if you explain what the bill, that goes to about 74-30 against. and pollsters say that's an unbelievable shift from providing information. it says there's a lot to like in this bill, it's just hard to understand that there's a lot of misinformation. what will the bill do? it will lower the number of uninsured in america by about 30 million people, from its projected level of about 50 million people. so is far from universal coverage. it's sort of really barely majority of the uninsured. a lot of that is because it will not cover a lot of the illegal immigrants and arrested because the mandate has some of billy for individuals to opt out. for example, if health insurance cost you more than 8 percent of your income you're not subject to the mandate. so it's a mandate but with some opt out policies. for those reasons while we cover a huge number of uninsured, this is far from universal bill.

the second thing it does, we have to be clear on this, it doesn't and it budget reducing fashion. john conyers and we're spending $950 billion. that's what we're spending but we are also raising more than that. in fact, over the next decade, this bill would raise $100 billion more than it actually spends. now i don't know if any of you watched the blair house which project for seven hours on c-span, but it was actually quite good, i thought. i me, i probably would've three people who thought it was quite good, but there was a lot of discussion of this budget deficit. let me clue of what's going on. what is true is over the first decade there's more years of spending cuts and spending. so someone will point out their some trickery going on. but there's not really trickery because what you want to focus on, especially young people, what matters is that by 2019 there's an ever increasing reduction in the deficit. so while this bill saved

100 billion over the first decade, it saves half a trillion over the next decade and in that amount continues to grow. how does it say that money? it saves them money -- it does so in several ways. first of all it reduces overpayments to the medicare program. and that's a substantial amount of the reduction in the deficit, overpayments to the medicare program. second of all, so it is literally another principle reason they might oppose this is we are cutting the medicare program to help cover these newly insured people. i think important point to remember is none of the cuts in the medicare program are actually going to jeopardize patient health. mostly, it's overpayments to insurers and two providers for services that provide now you're but nonetheless we're cutting medicare so that's part of how it is paid for. the second way to pay for is tax increases on the wealthy. the current proposal that's being bandied about is on individual about $200,000 a year

and families about $250,000 a year. to increase the medicare payroll tax they pay on the earnings and to levy that not just of our it's but a unearned income as well. and then finally, and most excitedly to economists, there's another form of financing which is a so-called cadillac tax. let's talk about that for a few is because that's my favorite bully pulpit to talk about. in the u.s. today, we have something called the tax subsidy to employer-sponsored health insurance. what that means is that when mit pays me in wages, i get taxed. but when mit pays the and health insurance i don't. okay. so true story. mit offered and orthodontia benefit on its dental benefit. this is a number of years ago. and it was going to be $30 a month. and we have the choice of taking that and getting paid less by $30. welcome i would help to my wife and to what do our kids braces

cost him and she's our kids braces cost $22 a month. than that wouldn't make sense. but if mit, so i will sign up for the benefit and i did. now, i can go crazy because my guess orthodontia coverage. he has the flashing lights on the braces and all the stuff because now it's insured. this is a microcosm of the probably have an america that people are buying health insurance with tax subsidized dollars. why is this a problem? first of all it's huge. the u.s. treasury this year, this year will lose $250 billion in tax revenues because it does not treat health insurance like wages. that's twice as much money as we need to cover. second of all, it regressive.

the richer you are and therefore the bigger tax rate, the more of a tax break you get. so richard people are benefiting more than poor people. unfortunately it's easy, so i can subscribe this view and now imagine the other side. they would say they want to tax your benefits. this guy wants to tax your benefits. that's crazy. and i will say wait a second. i'm getting rid of a tax subsidy. and it's incredibly hard to make good political case for this. going i worked very hard on the senate finance committee to start this solution. we weren't getting anywhere.

that are senator john kerry had a very clever idea. let's call it said a tax that insurance companies and not a tax on insurance plans. so we will have what we call a cadillac tax. in you and i know, economists know that the price of insurance, what it will mean about $20,000 we're taking away your tax rate. essentially instead doing the sensible thing would just take it what tax break, we're going to tax you to offset the tax break you get. it will have the same effect and the economist will like it. once again people got upset with that. they were very upset about the fact that we're going to this cadillac tax is going to raise $150 billion. this tax will raise 150 billion over the next decade. the tax the disclosure of that same type it, we will lose $3 trillion. and people got irate. it's been scaled back even further now. it doesn't start until 2018.

it raises a lot of money in the future and that's a lot of why this bill is better and better for the deficit over time. this is a rare thing in washington. and and reducing the deficit. that does not happen a lot in watching could. so the second piece is reducing the deficit. third, issue is what about cost control? now, barack obama is not a stupid man. he knew what he was running for president that quite frankly, the american public doesn't care that much about the uninsured. a lot of the uninsured don't care about the uninsured that they think they're young and healthy and don't need insurance. with the american public cares about is cost. that's what even though the bill that they're debating, is about coverage and 10 percent about cost control. all you about people talk what is cost control. how it's going to lower the cost of health care. why? because that's what they want to hear about. the majority of americans care

about health costs. what about health care costs? we think about health care costs, you need to think about two separate things. this is complicated but important that there's a level of cost and the growth rate of cost. so in other words, the lower of cost to the is about 70 percent of our national. by 2075, if we do nothing, it will be about 40 percent of our national income. that is every dollar of every dollar that is art in america, 40 cents will go to health care if we do nothing. that's a disaster. let's say i said to you i have a great plan that's going to get rid of all waste, fraud, and abuse in health care. by my estimate the most that could be 70 this of our health care bill. that's the most that could be. let's say we did it. let's say we care and to. all that means is that it's has been 40 percent of gdp in 2075, we will spend 40 percent of gdp

in 2076. it's irrelevant. it's the growth rate. the only way we're going to stop our country from becoming a latter-day roman empire and falling under its own weight is to get control of the growth rate of health care costs. the problem is we don't know how. we know some of what causes high health care costs. perhaps the greatest thing written in health care economists is an article in "the new yorker" about the mcallen, texas, and excessive medical testing. mcallen, texas. we know what the problem is. we are providers are paid enormous high. in the 1980 surgeons were like professor that they live next-door to professors but now they live on hamptons. they're like investment bankers. are providers are paid excessively. not the primary care providers but the surgeons. and we treat our patients much, much too intensively. here's the tricky thing.

we don't actually go to the hospital more often. we don't see the doctor more often. it's once the medical system gets its hands on is it in treatise more incredibly more intensively. now let's be clear, you know what? it's worth it. nothing frustrates more than to hear people say we spend the most innovative way of the 32nd best health care system because look at our infant mortality rate. that's a crazy thing to say. the truth is if you are an insured with the person in america there's no place else in the world that's better get health care. don't take my word for it. let's look at what the economist would look at, supply and demand. every year about two and 50,000 people come to america to get their health care from other countries. about 12,000 people in america to get health care from other areas. we have the best health care if you're in a system. the reason with such high mortality rates is to have the worst health care if you're not

in the system. and a black child born today in washington, d.c., has less chances of seeing their first birthday every child born in jamaica. and that's what drives our high mortality rates. it's not about the best of health care. it's about the diversity and the fact that some people don't access our health care system. the problem is if we just say let's cut our spending, the problem is you're going to didn't eat into what the rich guys are getting that they are liking. that doesn't go so well. that's going to be hard politically. that's why no one has a politically feasible way right now to been the cost curve. it just doesn't exist. we can just cap cost. we can announced a more the u.s. government has been more than 70 percent of gdp on health and you would win very many elections taking that position. so what does this bill do? this bill takes what i call the spaghetti approach. it takes a bunch of ideas that might work and throws them against the wall and we will see what sticks. and basically we don't know, i

cannot guarantee you that the bill that's now being considered will be and the cost curve. i can guarantee you it will be a heck of a lot closer if it passes and if it doesn't. so for example, the cadillac tax might work. by getting people to buy less excessive, less expensive health insurance plans that might get people to use less health care. we will see. the bill also sets up a medicare advisory back. the bill has 27 radically different ways of setting up our health care system from setting up things called accountable care organizations were doctors and hospital's work together and share both a risk and return to patient treatment, the rate reimbursement that is tied to reimburse and another bad indicators. 27 pilots to try different things and see what works.

maybe none of them will but it's hard to believe none of them will. some of them probably will. and finally, the bill fix is perhaps the biggest flaw in our health care system. we spend 70 percent over nation's income on health and we have no freaking idea what works. think about that. we don't know for most of the medical stuff we do if it's better than something else you can do. we have incredible slow compared to the effect of effectiveness studies in the u.s. the bill finances and sets up center to study comparative effectiveness. i at least once we know what's in our face was ineffective, then maybe will be more willing to actually take the steps to control health care costs. once again, none of these and i promise you will control to been the cost per. i can promise you that relative to doing nothing is a lot better

to try. than just a this is alone and let a spiral out of control until we are the roman empire. so basically, that sort of for the bill is on cost control. the last thing i want to say is when evaluating a bill like this, it is very important to choose your counterfactual a problem. the counterfactual's we're going to have without this bill, the counterfactual is not a world we don't go bankrupt with health care costs. it is where we do. so this bill helps a bit, that's better than nothing. it's helped a lot that's way better than nothing. nothing. i love the public into in this bill and people want to pitch things he was to is to compare not to will happen without the bill for some counterfactual we would like to see. that's a very -- is very important to remember where we're heading without the bill which is 55 made uninsured people and health care at 40 percent of gdp. if the bill can help of either or both of those then that's what it's important that so let me stop there, and i would be happy to take your questions or comments.

[applause] >> i think you have to come to the mic. >> the cost control debate, i believe that act as a neurologist for nearly 32 years. and one of the single most important conversations we as practicing docs have is the absolute ways that takes place in the system. and how difficult it is to try to deal with what we think should happen. so i will throw these out. first is we don't have enough trade, internal medicine practitioners to take care of the impending acceleration of the elderly. we're expanding medical school classes but the medical schools are not getting the support that they need to to train these

individuals. that's one definite instance, because if you can deliver care, complex care, and you have competent people doing it, you're going to save a tremendous amount of costs. second is we do really good with episodic high level specialized care. that's fine, but in order to get to that point, you have to get through a whole maze of testing. and the testing to arrive at that is simply too much. now, you can go to any emergency room and you can see that even with the new bill, which is a great building is everybody should be covered, and when you go to the er to immediately say how much unnecessary testing is being done. how difficult it is to change the psyche of the er docs. god knows i'm trying, i can be just a practical example. we know, for example, if some as a fainting spell that cat scans of the head are unnecessary.

articles written, studies published. now, you can change the behavior because the er docs are afraid of what? anybody want to guess? they are afraid of being sued. so that unless you get somewhere, and i see all the the, say, well, defensive medicine that only a few percentage. it's not that. it's the fear of being sued, generates too much in the way of defensive medicine, and its profound. the third aspect is, you're not seeing the influence of the academic medical centers to control costs. wide? they got their big episodic -- big, large medical facilities who, in fact, they want to promulgate so they are not doing studies or teaching, you know, to control costs. when i did my training, my conductor was doctor john sullivan. god forbid he was a b.c.

graduate, but every time we ordered a test we had to account for him the reason for doing it. we no longer see that in health care. finally, is what can you do to control the drug cost when the drug companies will in fact set the cost of the medication. i treat multiple sclerosis, and what did drugs government said to me, it's really great, she said all the ms drugs now priced about the same. i said, isn't that price-fixing? you know, where's the competition for the price? only rarely do you see that, and when you do you find it successful. so we don't see that. we see the prices that with what the drug companies want, and we see an acceleration recently in the drug care costs just going up because the drug covers are fearful of what the care will change. so anyways, that's my food for thought. >> that's very useful comments, very companies. let me just like you, i can't possibly address all of that.

let me try to get a few other things. first your point about training is absolutely right. we have a crisis in this country we need more primary care training. it really ties into openly reimbursement, which is, look, i'm not a particularly lazy guy but if i want to medical and mike joyce was to be a german colleges and work out as make twice the money, that sounds pretty good to me. and basically we have a problem with the reimbursement is it is in the country. it's a trend problem but it's not just a training problem. it's about without our reimbursement structure is set. some of these pilots will try to get at the. wouldn't fix it but try to get at that. on testing it's interesting. to issue, what is the malpractice issue. president obama has not proposal malpractice by this. the republicans say we should do caps. well, you know, if you were somebody like you about like the wife goes to the hospital and

the wrong breast gets removed and the cap is only a 202004 that, i'm not sure i think that's fair. and basically caps are not the answer. we need a much more subtle, human, more independent courts. basically, the thing about practice and what people don't know is that there's is vastly, vastly underreported malpractice in this country. only 3 percent of malpractice cases ever get rewarded. 3 percent of the promised those 3% get massively over we warned. we need to move to a system that is more just. we don't know how to to do that yet. we need a much more subtle system. it's not just malpractice. really interesting study came out at mit. a guy named joe doyle made the following stay. look at a med school, he looked at a place where patients were randomly cent to two different sets of interest. once and interns were trained at a very high level, top graduate medical program. once that not. what he found was that patients

that were treated at both sets of interns had the same outcomes. but the ones who went to the medical student who went to the less high quality middle school school got a ton more tests to get there. the good doctors say look i know what's wrong with you. at that doctors had to test them a bunch to figure that out. it's a skill and training and other things like that. finally, drug costs. huge, huge issue. yours upon we have. we're stuck in a very bad equilibrium as in economics. which is the rest of the world benefits from are overpaying from trucks. the drug companies in america are charging exorbitant prices that they take some of that money and put into ads on tv, which we hate. they take a lot of that money and put into rad development which are often quite good and useful for us. the rest of the world says gray, their infinite. we're going to pay a low price for them. and they basically be a very low price and a wee bit high prices to support the r&d. there's no real way to fix that. we can fix it by just paying

less but that would have as much r&d. clearly we should get rid of advertising on tv. i think at the end of they would history of the drug companies will regret advertising on tv. i think 10 years ago and we're regulate drug prices, because people are saying -- sentencing viagra ads, they will think that was a mistake. if we can cut the ads, and not do the r&d. for example, suggestion let's make drug industry advertising nontax deductible. you get a tax break would be doing it. to say no, you can't get a tax break. let's start going after things like that. otherwise we're in a real dilemma. i think will be hard to resolve. it's just hard. in the back.

>> i'm another physician, also practicing physician. and, you know, we just heard a lot of talks, a lot of ideas that you gave and so on. but i want to tell the audience is, health care reform is not about taxes. if you want taxes you can go to cuba. everybody has taxes. health care reform, the way i understand it, is about quality care. now, what i have witnessed through 25 years of practice is everything that's related to the government, anytime the federal government or the state government try to manipulate the system, or try to help with the system, quality care suffers.

economists don't see this. like we just heard that, you know, the way we are going to cut down from medicare some reimbursement is by, you know, the physicians are overpaid, for instance, or hospitals are overpaid. and in this line of thought, i give you an example. 80 year-old lady goes -- this happened last week -- go to surgery. we operate on his 80 year-old person. it for general anesthesia, and medicare mandates that this patient has to leave the hospital the same day. this is what you're going to get -- sorry, this is what you're going to get. you can't hear my voice? this is what you're going to get with those quote unquote

medicare reforms. and then if the government is going to start subsidizing care to for the people who cannot reach minimum wage and so on, they're going to go ahead and face even more restrictions. so why would like to tell the audience is that the problem with health care is not about money. i can reduce the 70% gdp and a half, without even spending or tax and. the problem with health care is political. it is not money. it is not economy. for instance, if we grow our economy, if we claim our industrial base, our farming, agriculture, and our economy will grow at 17% will become 15

and 14%. 17% as a proportion, because we are not doing anything else. we are shipping all our production overseas. that's why health care is growing up in proportion. if we can produce insurance reform and toward reform to the 17% gdp, according to my calculations, will be half. we will be one of the countries in the industrial countries with the least of gdp expenditure, as far as health care is concerned. >> thank you. so you can say what you want about the governor once you start talking tough about economist, my hat goes up. okay. so a couple of things about that. i think want, i disagree with much of what you said that i think one valid point you to make is the issue of does a government know best when it

comes to delivery of health care? i think there's a lot of the green but there's problems with the way government delivers health care, and that's what in this bill it is a private health insurance. this bill is largely public financing of a private health insurance expansion to cover 30 million people who gain health insurance coverage about 18 to 20 million need an of private health insurance. so that's .1. pointed to is, yeah, sure, we can improve the way the government raided health care. if you take your medicare example, that's right. medicare has problematic incentives. but this bill would fix those. once again have to look well to to what happened otherwise. this bill for example, would say that hospitals have high readmission rates would get paid less. this will become if she can't have the same day, they will be penalized. the hospital and sent to keep the patients around. so once again, you have to ask a relative today is this making

better or worse? is making it better. the third is, i'm glad you did your cat collations but there's no way you're cutting health care costs in half without sacrificing quality and access. and the important point to recognize is that we -- you, we have a system which basically is rewarding excessive care, and we tried to put in regulations like taking people out of the hospital quickly, and then they end up to strong. we have a backlash. a great example of why we're not going to cut it, is the debate over mammograms that happened during the health care debate. a panel, some of the group, came out not considering the cost of mammographic they said nothing about the costs. they said simply if you look at how many false positives of mammograms are for women in their 40s and how much distressed that causes, that mandated mammograms, given how few lives are saved from reduce cancer deaths, mammograms should not be mandated.

not even considering their costs. okay? now, this caused an outdoor, an absolute outdoor. in fact, and the bills there is not explicit permissions that this can happen. you can cut health care costs in half before not even want to do the stuff that the doctors say even at the cost to do. it's just not happening. so until we are willing to take on physicians, to take on the interest, and let me come to the last thing about money and politics that i didn't quite understand your comment, but it is all about money. one such as health care costs on the other side is as health care income. the reason we can't cut health care costs is because if you really going to cut a come health care providers are going to have to be poor and ensures will have to be poor. it's a fact of life. there is no magic fairy dust we can sprinkle that can cut health care costs by a fifth, third, half without seriously getting the incomes of medical

providers. and so yeah, its politics but its politics driven by money. >> my name is doctor joe dorsey. i graduated from holy cross in 1960, and i spent just about all the last 43 years like to do something about health care costs and quality in massachusetts that i was the first doctor at harvard committee health plan. for many as i was a corporate medical director at the harvard program. a lot of what you said i would buy and some of it i wouldn't. i think at the top of the list why it's so hard to control costs is in medicine we can justify doing a lot more than we can pay for. but the rush of high-tech diagnostic and therapeutic procedures, it's very hard to say no. and while the public is quite willing to talk about controlling costs in general, if you're talking about my wife, or you're talking about my mother, are you talking about my grandfather, forget it.

i have many scars on my backside from saying no. and most people are unwilling to say no. so i come out of the arab in the mid-to-late 90s when the cost curve was flattened, and it was funded largely because of decapitation of payments to managed care of organizations. unfortunately, the public did not trust organizations that would say no, particularly since outside of massachusetts in minnesota, most of those organizations were for profit and whatever savings were being attained were being walked away in the pockets of ceos. the account will health care organizations basically our capitated to managed care, but with a couple of very important improvements. the first is that decapitation payments our risk adjusted. any of our medical groups that were being capitated and get sick of it average patients got

killed, and they hated it. it is possible to risk adjusted. the second is that it is possible to develop pay-for-performance incentives to provide better quality care and making sure that there's a safety net so that people are not denied access to services that they need. in the accountability health care organizations there's a great deal emphasis on coordination and on electronic medical records. now, there are very few examples where the incentives of the health plan, the physician, and the patient are all lined. and the one example is contrived benefit area. so in my days, way back, i would have to go before the physicians group and say, juno, this is the formulary. this is the drug we want you to use anti-would say, mary came in and she's been on this blood pressure pill for 10 years and she asked me why i want to

change it. and i were to because that's what insurance company wants me to do. and we would have that discussion twice and say i cannot stand this. you go to a three tiered drug benefit, and tier one our generics and relatively inexpensive drugs, at maybe 10 bucks a month to nt or two ago are not today but preferred at 20 to 30 bucks, and in q3 are not preferred at about 50 bucks. so now mary comes in assisted you know, doctor, this drug cost me 50 bucks a month, can't you find something else that would work just as well? 95 percent of the time the answer is mary, i certainly can. so the doc is okay because he's not pushing the envelope. the insurance company loves it and the patient loves the fact that the doctor is willing to try to find less expensive approach that works. with that we had more three-tiered benefit options in the health care field that we do. right now, we have tremendous

nonalignment with the insurance company wanted to keep the cost down with the patient wanted to see costs get out of jail, but not for my mother or my grandmother, and then with docs on the receiving end of the inflated fees. thank you. >> i think that's a great comment, and i'm completely aligned. in fact, an editor and the globe in the fall pointing out that basically the left, cuba, within the frame we are in the people on the left tend to think the way to control costs is by reviewing the supply-side. and people like regulating doctor prices. and people on the right can do think is by setting up the correct consumer incentives. and they are both right. because in fact we've tried just having better consumer incentives. that didn't work. we tried supply-side medicare and that didn't work. 43 years in the late 1990s health care costs less. they didn't see the savings were managed care.

because it just meant, if employers provide their health insurance, their wages went up more than it otherwise would have but it is hard to make them see. you need to have consumers can indicate if you're going to make the supply-side reforms necessary. so both have to go hand in hand. you need to make consumers see the costs of not reform health care, as well as making providers feel the pain that's involved in reform healthy. so i completely agree on what you are saying. is a very important point. >> i. >> if you're a doctor you have to sit down. >> know, i'm not a doctor. i have a question for you. i wonder if you talk about how your plan in massachusetts, your reform has affected the plan and massachusetts. the cost of an passed up in a group markets are now employers and employees are seeing the shift in cost. somewhere if you can talk about how you think in massachusetts it is so --

[inaudible] >> that's a great question. it's a very easy into because massachusetts we did not try in any way, shape, or form to control costs. that's not what desperate our bill was purely a coverage bill. unabashedly. it did lower cost significantly in the nongroup market because as i said before this reform, only the sick body nongroup policies. the mandate brought and the healthy. from 2006 to 2000 on, the typical mantra policy went up 14%. in massachusetts it fell 40%. so did bring the cost down the nongroup market. costs in massachusetts have been higher and we just continued on that train. because the bill basically did not touch the group that he wasn't involved at all. we didn't really get much incentives for employers to give health interest. there was this notion of in the middle. will just leave the whole sector low because they're pretty happy. what is going to fix these holes

in the nongroup. and for that it's been successful. but it hasn't been about cost control. many people i call that a failure. my view is it sort like criticizing the white sox in 2007 for not winning the super bowl. we won the world series and what do you want? basically the bill was about coverage. it's just like that's why i try to temper expectations on this the. i think this bill is mostly about coverage. and has a lot more than cost control. way more than i thought we would ever see in the bill that might pass. way more. but nonetheless it still a lot of experience and new things to try. >> i actually work as an insurance consultant. but my clients i work and group market we've seen across the board from alter interest carries double-digit, 20 and 40% increase over the last year and a half and they said health care reform. and actual cost so i'm just wondering if you have any

thoughts on that and has been kind of target is the main reason for expanding coverage is a reason. >> i guess if i decided my kid really eight more spinach and i could get away with putting it on health care reform, i probably would do the same thing. health care costs are growing by that rate all around the nation. they are not group calls are growing faster in a hole, but basically there's just no reason, you should ask them why they say that. because there's nothing in reform that affects group rises. so i don't know why they would say that. it's true, more people sign up for insurance. so total cost of employers are going up. but per person, per insured person there's just a mechanism by which this bill should raise the cost of your health insurance so i would love to know why the story of that would be happy me. >> i met. >> part of the mandate is

emerging of the small -- >> there's been studies of that and estimate that was, and not group market was 120 the size of the small group market. so the studies suggest it raise the prices by about 2 percent to march in the nongroup market. so you're right, that is a good point. i missed that. that is to pick that part you can contribute to the reform. that's a good point to. [inaudible] >> they are getting killed. they're getting killed all of the country. and basically ensures i think are going to wish they had held rates off about six months because of health reform passes it's because of this. everybody start raising their prices, and now prices are going up on the nation. a lot of it is the underlying trend. a lot of it is young help these

aren't buying anymore because of the recession. whether sick people because prices are going up. other than that merging that's a very good point. i don't know what our reform would've done to effect a group rises. i think it's just, we've got a national problem of very rapidly rising health insurance premiums. >> i just want to ask real quick, you know, for me personally, one of the things i value most is my life. [laughter] >> radical. >> and maybe just some theoretical thoughts. you know, what is the bad thing about, if you value your life the most, why is it so scary to have the increase in costs for health care? if that's what's going to take and you need to. >> that's a really, really good

question. one of the most influential pieces ever written academic and health care was written by joe newhouse. in 1992, when he said health care costs are rising, but so what? basically what's more important than our health? who says 16 or one-third or one half of our economic is too much about health care. he posted this week that he said after all if i offered you 19 pages health care and 1950s prices, would you take it? no, it would suck. no one would take that do. basically the point is that health care is more expensive but it's also better. and that's why cost control is so hard. because it is better. so basically we had to facts which are both true, and which seem to conflict with each other. one that is if you look at the improvement in health over the last 40 years, and relative to the improvement increasing and health insurance it's been worth it. document how in fact on average health care costs have gone up by disney dollars but if you

value people's life improvement it's even larger. at the same time, there was a point i'm a huge fraction me as much as a third of our health care dollars wasted does no good for health. how are those two things consistent with their consistent because the other two-thirds is awesome. so we got two-thirds of incredible awesome and more than pay for itself, and whether that's doing nothing. basically cut out the one-third we would be great but we don't know what it is. we know a little bit and peoples in this room can help find him but nowhere near a third. who is to say wind is 40% too much, who knows? >> i was just curious, in your projections for the future, did you take into consideration personalized health care in that trend? so since we are actually -- were having comparative effectiveness happen naturally. so drugs that are coming out now are specific for markers your

people have to be typed to get certain drugs. in order to get herceptin for cancer, you have to have a test. so was an evacuation for training? and medco is saying yes, they will do this typing. partners health care is doing this typing. pretty soon, five to 10 years, we will have comparative effectiveness and it will be for personalized. so is that in the bottle? >> you know, it's not. and if it was in health care, costs would go much, much faster. is why. which is you've done some good examples of how things like that can lower health care costs but that's not what genetic testing this. genetic testing is mostly use it to test a bunch of people to find things that would have killed them or we would have known about and that we know about. there's a big article today about psa, prostate test that we do for everyone hundred been over 65 who get a prostate test,

three lives, three cancers will be caught and three the other nice have will go to incredible, expensive procedures for no good. the advances in genetics is making health care cost more, not less. it's not like computers. technology gives better and more expensive. that's why controlling cost is so hard. i'm sorry on such a downer. it's great what we are doing. i wife always a delight to know she had a hysterectomy and avoided ovarian cancer that maybe save her life, maybe didn't. but the point is we're going to find these things and will probably make us healthier. but it's going to add dollars, not subtracted dollars. [inaudible] >> don't you want to be on tv? [laughter] [inaudible] saved $30,000 because if you have that test, then you don't

get the treatment. there's an incredible savings with a lot of these tests. >> that's right, but the important point to remember is it's not -- the only people who get the test are not the ones who get the positive. if it has cost $1000 to give, we have raise cost. that's the problem. i'm not saying they are bad. i all for them. spent there's a few things i want to address. first and foremost, i personally think -- >> were supposed to be the most powerful country in the world and we don't have a. i wanted a slight difference been on some of this year to look at health care, or to my cat collisions,. [inaudible] >> i believe that is barbaric. moving forward, there was a

comment earlier by the jim with a hoodie, about the economy. and about how whether not it's about money. and so the fact the united states puts as much money in the military, we cannot be the poor but take care of the poor. it's a cliché but i'm going to use it. moving on, you address either the world health organization statistics about the estates been ranked 42nd in the world or whatever it was, countries like ireland, spain, italy, germany, scandinavian countries, canada,. [inaudible] >> and you mentioned how i believe your example for how the united states health care system is good, was 240,000 people come to unite states to get david as opposed to 12,000 leaving. you have to zoom the people that are leading a uninsured americans -- were, not necessary, i'm sorry. uninsured americans are not going to have them until it necessary to go to other places to get treatment.

so they don't have the option. the 204,000 people that come to the united states, i'm going to make the subject they're probably wealthier people. so i believe that information is a bit skewed. smack that's a great point. i will take, what saddens me probably the most about health reform is that the president cannot get up there and just say look, it is a moral imperative that we cover these people with insurance are going look ourselves in the face in the mirror every morning when we can, for less than one years growth in health care costs, cover every american with insurance? how can we not do that? and that's a losing argument. i mean, it's so disturbing to me that that's a losing argument because americans won't vote for it on that. look at the conversation today. what have we talked about what we talked about kosovo. my speech was mostly about coverage.