>> as adults, we all remember when it was like to see kids picked on in the hallways or in the school yard. and i have to say with big ears and the name that i have, i wasn't immune. [laughter] >> i didn't emerge unscathed. but because of something that happens a lot, and it's something that's always been around, sometimes we've turned our blind eye to the problem. >> watch the white house bullying summit on c-span3. >> the geological survey helps

identifies the risks of earthquakes, tsunamis, wildfires and other natural disasters. agency director spoke to a house subcommittee about the proposed budget for the next fiscal year. this is just under an hour. >> good morning. the meeting will come to order. good morning, director mcnutt. i would like to thank you for being for here today and we have a lot to talk about so i'll be relatively brief not entirely but relatively brief. the 2012 budget request for the u.s. gs is one of those where i wish we could have someone from the white house come up and place a hand on the bible and raise his or her right hand and explain themselves because this is a budget that has four things by cutting $89 million and

230fde's from core science programs this budget runs counter to the president's commitment to restore science to its rightful place. second by proposing a washington monument-type cuts to programs like endocrine stream gauges, you see how i said that that the american people care about the budget shows that this administration is willing to play games with this congress by testing our resolve during these serious fiscal times third by inheriting the full funding responsibilities for lancet 9 and 10 from nasa without any of nasa's $19 billion budget and by offsetting the $48 million increase for lancet from other core science programs this budget is assigned of the untenable situation we're likely to be in two years from now when the administration sends up a budget request for lancet that is nearly 10 times the increased proposed in fy12 we might just as well name usgs the national land imaging agency. lastly, water is life.

how is the premier science agency can claim climate change is happening rapidly and having profound effects on water supplies and cutting its water budget by 10%. what does it say about our nation when it doesn't include the basic ingredients for water survival. with the united states borrowing 40 cents on every federal dollar we spend there's bipartisan agreement that we need to cut back on spending but there's a right way to go about it and there are ways that makes absolutely no sense at all. this budget is one of those problems. the administration has sent to this committee a budget for the usgs that is simply in my view unacceptable. we will -- we have a lot of work to do between now and october 1st. i look forward to our discussions today and appreciate this committee for doing its job. for now i'm happy to go to the

gentleman from idaho. >> i want to associate myself with the remarks of the distinguished chairman. i didn't find anything that you said that i would disagree with. in fact, i agree strongly with the points that you have made, mr. chairman, with regard to this budget. before i start, though, i do want to thank dr. mcnutt for her important work on the scientific response to the bp transocean deepwater horizon disaster in the gulf this year. and ms. kimball and all the staff at usgs you do a good job. i don't know what that's about. dr. mcnutt is a experience in geophysicist and experienced in physics. i hope we do have time to talk about lessons learned from that oil disaster because there is an important role for both enhanced federal regulation and enhanced

federal science. as i say, though, mr. chairman, i couldn't agree more with you that this budget is deeply troubling. it does include a large funding increase but for a new responsibility, the cost of future landsat rockets. there's an overall increase are 52 million for landsat but many of the core, reliable and necessary science programs at the usgs have been cut to make room for landsat. that doesn't make sense. so ip we can work together to figure this out and to rectify, i think, the wrong-headed decision, frankly, that the administration has made. the nation does need landsat but it also needs the research as the chairman says on water quality, on groundwater stream gauges, mineral science, mapping, biology, earth sciences all of those are cut in this request. the budget requires the loss of 230 full-time equivalent

positions. the most of any interior bureau and the second only in this whole subcommittee bill to the 1,760 reductions at the forest service which, of course, is the department of agriculture so here we are an administration that has committed itself to the advancement of science cutting 230 people in an agency that, frankly, is anything but a large bureaucracy. the scientists that are highly skilled and deeply committed. so we should not allow this reduction and loss of scientific talent. land management government activities all levels and a wide range of industrial activities all rely on the science and inventory work accomplished by the usgs. we need to support our nation's physical and biological sciences if we're going to make the right decisions so it's penny wise and pound -- let me try that again.

it's penny wise and pound foolish to cut these research and development programs. and with that, i again thank you for the chair holding the hearing, thank you, mr. chairman. >> thank you, i appreciate the comments and agree with them. dr. mcnutt, welcome today and we look forward to working with you on this budget. >> thank you very much for your statements and good morning, chairman simpson, distinguished members of the subcommittee and a happy st. patrick's day to all. >> yes. >> i'd like to begin my testimony with the passage from a forthcoming book by "washington post" reporter joel atkinbak which is entitled "a hole at the bottom of the sea:the race to kill the bp oil gusher" in the book's prologue he describes how a critical breakthrough in stopping the oil spill occurred in an obscure usgs lab. he ends the prologue as follows.

quote, in crunch time, call in the nerds as well as the cowboys. you never know when someone's fantastically esoteric expertise may be called upon to save the country. and then he dedicates the book to the horizon 11, not forgotten and to all the people everywhere who do the hard work unseen. so why am i telling you this story? well, the president's 2012 budget for the usgs is a delicate balancing act between executing the administration's top priorities while still maintaining the usgs core mission, all within an austere budget cap. so that the usgs will be able to respond no matter where, no matter how, whenever we are called upon to do our job, to

help save the nation, unseen. in the particular example from the macondo well one of the heroes in the story is a groundwater researcher because not only water flows in reservoirs. his timely work avoided $3 billion in additional oil pollution to the gulf. we have to maintain talent like that despite tough choices in our water programs. as another example, japan was just hit by a tragic and devastating 9.0 earthquake and tsunami. and shame on us if we don't learn from their misfortune. japan is the most advanced nation in terms of seismic hazard and their earthquake early warning system saved

thousands of lives. with our funding, usgs got a big leapup on our own early warning system in the advanced national seismic and funding to implement a prototype is now caught up in the uncertainty of the 2011 budget. but we continue to plan for it when our funds do become available. the president's 2012 budget doesn't include provision to begin the nation's land imaging program as you mentioned. it's a home of a landsat set of satellites. landsat over its nearly 40-year history monitoring earth from space has become the gold standard for viewing land ann planetary scale. users include educators, government at all levels, agribusiness, water managers, the commercial sector and ngos and they've downloaded more than 4 million scenes. the advent of google earth has

lowered the technology threshold to data usability for all. while nasa will still be our partner with responsibility for spacecraft, instrument integration and launch, by aligning budgetary authority with the usgs major programmic decisions will be made with the best interest of the user community in mind. landsat belongs with the usgs just like weather satellites belong with noaa. usgs is benefiting from another administration priority, america's great outdoors. funds will allow us to work with existing partners on the landscape lakes, in the invasive carp and on enchristian corruptions in ponds. these funds are helping to maintain key capabilities in mapping, gis, toxic substance hydrology, water core functions that are suffering from cuts to

our programs elsewhere in the budget. finally, in closing, thank you to this subcommittee for your support in the usgs recent realignment in our management structure. the budget you have before you reflects the new structure which aligns our management with our performance metrics, with our strategic plan, with our budget. the mission of the usgs has in no way changed and our programs are intact. whether i can be more accountable to you in the american public for the important science and sciences of services we provide natural hazards, energy, minerals, water, land use, climate change adaptation, mapping and ecosystem science. i want to thank you for the strong bipartisan and support of the usgs that you have provided and i'm very happy to answer your questions. >> thank you, let me echo what mr. moran said in his opening statement for the great work that you did during the crisis in the gulf.

there's a lot of people willing to point fingers and everything else about what went on there but there are a lot of good people working on it that did a tremendous job and we appreciate the work the usgs did in that regard. we're going to have a series of -- or some votes, i guess, about 10:15 or something like that and i understand you have a defense committee -- >> we have general petraeus at defense. >> so i'm going to turn over my time to start with so you can -- you can get your questions in. >> that's extremely contract of you, mr. chairman. i hope i acted like when i was chair. i don't know. [laughter] >> i owe you big time. [laughter] >> well, let's focus on, first of all, on the $48 million increase for the out-year landsat missions because it's coming from base programs that we feel are vital, and that is clearly on both sides of the aisle here. now, i've seen a chart that shows that the plan is for the

usgs share of landsat 9 and 10 missions to skyrocket. now, of course, that's a pun that the staff put in there deliberately. l[laughter] >> and it goes to 48 million, of course, and this new budget in fy12 but then to 159 million in fy15 and 410 million in fy14. i mean, just two years from now, 410 million to a $1 billion agency that's obviously over 40% of the entire agency. we're going to lose all of the biology and hydrology parts of the usgs or lose all the geology parts of the survey. i think you should give us is sense of if this trend continues -- if the budget goes in the way that the white house has recommended, it looks like

they're going to wipe out major roles and responsibilities that usgs has today. can you address that dr. mcnutt? >> well, we need to work on the administration on what the out-year costs are. and we would certainly not support a model in which landsat erodes the core mission. i don't think the administration supports that, nor, obviously, does this committee. we have been assured by omb that many times in conversation with them that the cuts to the usgs program even in the 2012 budget should not be associated with the growth in landsat and that's what we were told. >> yeah, that's just untrue, though. [laughter] >> fortunately, i know what -- >> would we lie?

[laughter] >> it's been known to happen. it appears that some of your highest performing programs such as toxic substances, hydrology have been slated for large reductions. what usgs and omb use quality and program criteria on which programs to produce. what we've been getting is that these are the last programs you would want to cut because they have been performing so well and efficiently. >> to the extent that we could, we did use program quality and let me give you an example. for example, the climate effects network was before the establishment of the climate science centers and the establishment of the landscape cooperatives was a

on-track to be a high performing program but then it got overtaken by events. the department of interior went a different direction in terms of how it was going to be doing data integration and providing data services in terms of programs. and so it no longer seemed that that program was the way that we about it. and that's why we offered up that program as a cut. however, the cuts that we had to offer up and usgs was asked to offer a variety of scenarios, a 3% cut, a 5% cut, a 7% cut and at one point a 9% cut. and the cuts we were asked to offer up had to go so deep in our budget is that not all of the scenarios we offered up

included simply low performing or programs that were simply no longer needed. that we just didn't have enough i'm sorry to say -- well, i'm happy to say. >> sure. well, but the world's attention has been focused on the earthquake and tsunami in japan. but i see this request has a $2 million reduction for earthquake grants. we just heard about bp horizon. that was not a lot of money usgs said but they did perform a major role. what will be the impact of that? aren't those grants very relevant to what we saw just happen on the other side of the planet? >> well, let me give you a very -- >> let me throw this in, too, because you've got a reduction for the national volcano early warning system which falls in the same kind of situation. why? >> let me give you a very specific example.

again, all of our programs had to take cuts. so there's basically no part of our portfolio that is unscathed when we have to take a 7% cut overall in our science investigations. so, unfortunately, tough choices had to be made. but as a real example of the effects of these cuts to our external grants programs in earthquake hazards, yesterday, the president of cal tech paid me a visit to talk about areas of common interest. and as he was leaving, he happened to let drop. i have to thank the usgs because, he said, the fact that i'm here in this country and the fact that i'm president of cal tech is thanks to the usgs because, he said, i came here because on the usgs on a one-year fellowship to do a

master's degree at stanford university and after that one year, i was in danger of being deported. and i was saved to complete a ph.d. here thanks to a usgs earthquake research grant that allowed me to stay and complete a ph.d. at stanford. and his earthquake research grant was to do a detailed study of strong ground motion in the marina district of san francisco just years before that area was strongly hit by a earthquake. and his analysis of the shaking in the -- that district, the marina district actually very well matched the actual damage that was done and allowed

planners in that area to prepare infrastructure in advance of that earthquake. so that's the kind of work that's done. that's the kind of person that's supported. and that's the kind of leader we have in this country now thanks to usgs earthquake -- >> that's a great story. i do think that i will mention to the ranking member of the full committee that in looking down the cities that are at highest risk for active volcanos, seattle and tacoma was at the top. mr. dix may have some interest in that. [laughter] >> the chairman mentioned, you know, water quality. you want a $9 million increase for this water smart initiative to do a census of water. but your proven water programs like the national water quality assessment program, you're cutting almost 7 million. the groundwater resources cut 2 million. i mean, it's nice to know where they are. but if you're not doing anything

about what you are aware of, then it doesn't seem to be the best use of resources. i'll conclude with that. there's a lot of stuff i would like to discuss about endocrine disrupters but i want to be contract of the chairman's generous latitude to go first. but do want to say anything about the water quality. >> if you have any other questions you want to ask, go ahead. because i know you have to go to -- >> well, thank you, mr. chairman. i'll just bring up the -- then the other issue because it does have a relationship to water quality, and that's endocrine disrupters. i know you've been working on this. we're finding out more information. we're finding out the small mouth bass that not only do we have a situation where 90% of the male small mouth bass in the potomic river right outside our door intersects. both testes and eggs and this

apparently happens in most of the country. can you share a little bit of what you're finding and in the context of the water quality programs that you operate? >> well, mr. moran, you have been a strong supporter of this program and one thing that has been really heartening to our scientists at the usgs is to the extent that you have really embraced the science of this. as i remember talking to you about this last year was how much we felt it was important to make this a national issue, not a potomic issue. and the cuts to this program, unfortunately, while we will continue with the funding to chesapeake through america's great outdoors be able to continue the work in chesapeake. but we will lose the national focus and i think i mentioned to you last year one thing we were

learning from broadening it with a national focus was that some of the drivers that we were focusing in on, that we -- we thought we knew the answer from focusing in on the chesapeake and then once we broadened it to a national focus, we realized oh, wait we're finding places that are completely far away from any human influence and still finding the same problems. this is causing us to look at more broadly at some of the drivers. now that we're losing that national focus, that is going to, i think, cause us to lose some of that ability to again look more broadly at some of the wider issues that could be causing this behavior.

and that will be a loss for science. >> thank you. the more people that learn about this, the number of fish and crush -- crustations that we have, it obviously would concern anybody when you know that, you know, a species as both -- as characteristics of both male and female, you know, reproductive sexual characteristics, it's disturbing. there's something wrong, obviously, but apparently there's no reason to believe that you can't eat them. they may be safe to eat. it's just that this water is in many cases the same water we're drinking and it may be having a similar affect although longer term in the human body. is that kind of what you're coming up with?

>> well, you know, the questions we need to ask are exactly the questions that you are asking now, is -- because this is an environmental effect in the water in the environment that these fish are spending their life cycles in, to what extent is this a human health issue? and the entire reason why the usgs is concerned about it is for exactly that reason >> well, thank you very much, dr. mcnutt. and thank you, mr. chairman. thanks very much. i really appreciate your consideration. >> again, thanks for being here today. we appreciate it. i think as our opening statements and our comments suggest, there are areas even in this climate of trying to reduce budgets, republicans and democrats agree and one of them is that the value of the usgs is one of the valuable science agencies in this government. and we have some real concerns

about the direction that is -- that the budget is heading, whether it's from omb or whoever. it causes us is great deal of concern when we're reducing the resources for water management and water science. and for them to suggest that -- and i guess what they were saying is, your budget would have taken these cuts regardless of whether landsat went over to usgs or not. i have a hard time believing that, but -- and as we put more -- and i think the usgs is probably an appropriate place for landsat to go. but when you shift it over there, you need to take the money that goes with it and shift it over there also which causes me a great deal of concern. what about -- there's been some talk, what, landsat 8 goes up in december of 2012? >> december, 2012, yes. >> when does 9 and 10 -- when are they scheduled to go up? >> if -- according to the

funding wedge that we've put together, if the funding came on schedule, it would be in the 2017 time frame. so sort of five-year launch windows assuming that the satellites are designed for a five-year lifetime mission, mission lifetime. >> designed for a five-year mission lifetime? >> right. >> is that how long they typically last or can they be extended? could you extend out or delay if you will the launching of 9 and 10 if that were necessary in order to get the budget in line? >> you know, we could -- we could look into that. right now the way that the satellites have been designed in terms of their components and things like that, they do carry fuel for a 10-year lifetime. and so that's the expendable on board which is the important

thing that's determining their lifetime. in terms of the components on board, they're designed for a five-year lifetime. we could do a study on what it would take to extend the component lifetime for a design lifetime that would be longer. of course, our experience in terms of the lifetime of these satellites has been that thanks to the good work of the people at nasa and their contractors, the experience has been that barring a launch failure or something of that sort, they have been pretty hearty spacecraft and have actually exceeded their design lives. ..

about the money being spent on climate change both within our interior budget and governmentwide and i still have the same concerns that i have had for the last couple of years about coordination of the amount of money we're spending on climate change, what we're trying to find out. if agencies are duplicating efforts and so forth and if we need a government agency, i don't know how to say it, but oversees the scope of

climate change. i'm not sure if that's the smart way to go or what but if you had a line item that was climate change money and a federal agency that then looked at who could do what and agencies like the forest service or whoever, the defense department, whoever, spends money on climate change actually applied to them with proposals someone could look and see is this already being done within the federal government? is it a duplication of what we currently have? is it a high priority as opposed to something else that some other agency is proposing? the coordination of all the money we're spending on climate change is more of a concern to me than the amount of money we're spending on studying climate change. and i'm trying to figure out if there's a better way to do it. been thinking about this since you first mentioned it and it's, it's and what i was trying to do was take out the word maybe

climb chat -- climate change, and put some other word in there for almost historical record or reference because climate change is something that's relatively new in terms of a topic in the federal government. >> right. >> and so the other word i put in there was, water. because we know that there are many federal agencies that have purviews in water and they have stakes in water that have grown up in sort of a hodgepodge way over many decades in a uncoordinated way because of the histories of those agencies and i was sort of thinking because climate

change is new, do we have an opportunity now to avoid some of the issues that we now have with water by intervening early on? and some of the issues right now with climate are that, because it is an early stage, most of the issues with climate are research. and they haven't really gotten into the real issues of applications and policy and that sort of thing. and so could there be an opportunity to say okay, if we do the research part right, and then, apportion out, the policy and management to the right agencies as they have their jobs to do, when the time comes, will that simplify things and avoid some of the issues that we've had with

water? could we do that right? and i was thinking, yeah, maybe that does make sense because we see that, for example, nsf has a huge role to play with research in climate change for the academic community but then we need, maybe we could have better federal coordination for the research that goes on. and if that could be done for federal reserve then -- research, then perhaps we could not make some of the, have some of the issues that we have with water now. >> as i said before, it is after the events of 9/11 everyone that came into my office whenever they wanted anything, whether it was a federal agency or whether it was a group outside that wanted funding for whatever program, they always tied it to the issue of homeland security because that was the key phrase at the time. now the key phrase at the time is climate change.

and i think there are agencies trying to rebuild science programs that were actually taken and given to the usgs years ago under, i think secretary babbitt did some of that and now those agencies, you know, they want their own science program. what i want is an efficient program where we know what we're doing and we're not duplicating. we're spending taxpayers dollars wisely. if there is a better way to do it, i look forward to having conversations with you about this and how we might reorganize. as i look at different agencies, i kind of thought, if there is an agency, if this were a smart idea, and i'm not saying it is because i thought of it, if this were -- >> you're very smart. i like it. >> if this were a smart idea, where would you put it? i thought of different agencies. there is talk about noaa, but noaa really deals with oceans and atmosphere, not the ground we live on more than anything else and it keeps coming back to me the

agency that seems to have the role and mission would be the usgs. but again, i wouldn't want that to displace the important work that you currently do. last question before i turn it over to mr. mccollum and we'll have votes in 10 or 15 minutes, what happens under this proposal under your budget with extreme gauges? they are very important to the west and all over the country really. >> we do have some funding reduction in that area but we are trying to absorb it all in administration and not actually taking any actual cuts to stream guages. but of course you all know it is predicated on crop traitors in many cases so we have -- >> states are having hard time with their resources. >> states are having

problems and we issues with of course, many cases where we're vulnerable elsewhere in the federal budget what happens with army corpse's budget and other -- army corps's budget and other places. we have $300,000 in reductions but we're absorbing that in administration. >> okay. >> thank you, mr. chair. good to see you and you were busy friday and i was busy friday. i was busy as a mom and you were busy as a scientist. so i want to thank you for all the work that you folks are doing and i'm just going to, i got this e-mail this morning from japan. just going to quote part of it. hard to sleep when you're thinking about the next quake that is coming and the possible nuclear meltdown is something we've all been really upset about. thank god for the american government telling us, to

get at least 80 kilometers away. he is final. he is five hours away. but, i have to tell you that the american citizens not only dialed in on what our press was saying because that press was saying what our government scientists were saying. so thank you for all the work that you did not only for americans overseas, people here who care about the, what was going on in japan but for english-speakers all over the world. thank you for your work. so if you take a second, after i ask my second, maybe kind of let us know, what your role is and i know you're going to do lessons learned from this as well but i would like to talk about water. minnesota takes its water very seriously. in fact our citizens taxed ourselves for a legacy amendment to make sure that we're doing the right thing with water.

in 2009, i was given the privilege of giving a speech to the water resources center at the university of minnesota on sustaining a clean water as a public trust. what do we do to make sure it is there are to the next generation? so the next mom or dad when they take their child to a drinking fountain isn't worried about it and people in this country know they will have access to potable water. now usgs has outstanding scientists and they played a critical role with minnesota being able to move forward what it is doing. as you heard we do have concerned about the proposed budget cuts. maybe one of the ways to do that for to take the money along with the program that they have been assigned, mr. chair, count me as an ally. but there are, there are few programs, i just want to highlight for the committee were small investments by this, the usgs made a big

impact on minnesota and these programs are now, i believe threatened by the proposed reduction. first is out of the water research institute. the head of institute of water resource this is year happens to be dr. debra swa swakhammer, heads up minnesota water resource center. the doctor publish ad water framework report and i believe other states should look at the same thing t helps give us a 25-year road map. it points out all the work we still have left to do to make sure we have an adequate, safe, drinking supply. i'm going to give you a copy of this when we're done. now, you've kind of explained why you have chosen, not you personally, but why you're faced with a tough choices that you have been making as you did across-the-board cuts but this is a great report and it kind of highlights a lot of things but here's, and

i'm goinging to quote from the report because this just kind of, to use a term, blows you out of the water. a come pressure shun of the county geological atlas survey by the minnesota geological survey should be accelerated. at a minimum, the current investigation should be doubled to allow come pressure shun by, and thinking well, doubled, two, three, years, doubled to allow come pressure shun by 10 to 12 years. to find out what is going on with our aquifers and find out what is going on with our groundwater. i was going to give this to you on friday. >> thank you. >> i will give this to you now. so what, the go, here is my question. go puts out a study saying 36 states are at risk of water shortages next 10 years. i'm not one of those states. i wanted to make sure my water is clean and drinkable but i'm not one of those states but i care about our country.

that's my job. how can states be prepared for such a crisis, if you are not able to invest in state water resource research like this? what do we need to do to make ourselves really knowledgeable about the water that we all take for granted? i think that is part of our problem. even in this country where there are limited water sources we still take it for granted. >> okay. well, congresswoman mccullum, you ask some pretty tough questions. let me start by saying i'm not sure if you know this but i'm a minnesota native. >> [inaudible]. minnesota. from, before the great sioux uprising, many, many generations in minnesota. i know how much minnesotans

love their water. they swim in it and play it in the summer. they ice skate on it and fish on it in the winter. minnesotans, actually don't take their water for granted even though it is in plentiful supply. i remember as a child how the laking -- lakes in minnesota were suffering from utrophic conditions because of all the runnoff from fertilizer on people's lawns and how the university of minnesota started some important studies how to improve water quality in the lakes and the predictions were that it was going to take generations to improve it and yet with simple steps, within years, lakes improved dramatically and people saw

that by people doing simple things they could within, within their lifetimes see their lakes improve and it made a difference. so, the lesson i took from that as a child was that never underestimate the power of people taking their actions into their own hands and understanding how their life choices can make a difference. what i think is important is the usgs as the great integrator across the country between the states that are haves like minnesota, and the have-nots like arizona and nevada. the consistently water-starved states and how we can provide the important

information through things like water smart on the, water census. the and what, i know that there's concern about water smart but we have not done a water census on water availability and use as our population is changing. people are moving from many of the water, the water, the water-available states to the water-starved states and we need to know how that's changing. and we have to know what the projections are for the future. so water smart is an important program and it is cut back on a lot of this ground water monitoring because the analogy i make is that with our stream gauges, you know

it is easy to go out if you're an average citizen to see how my water is flowing but it is not easy to go out and say how's my aquifer is doing? you can't say, oh, how is that aquifer doing without someone really knows what they're doing saying. >> my point is in inminnesota when we started saying things we said it would take us 10 to 12 years. what is the timeline for the federal government? to even be able to collect information and work in conjunction? because many states aren't doing anything. >> i know, and with the cuts in our groundwater program, instead of, having 11% of it done on schedule, it will be 2%. >> one of the things, and this is not really a question for you because i know you have to do an omb kind of says, but, when i look at, throughout the

interior budget i have some questions about where they place prioritis. land acquisition is, for the land and water conservation fund they fully funded at $900 million while they have cut some important programs in usgs for water and other things that is something that this committee, that is within our jurisdiction to look how those fund are being spent. so i'm sure we'll be looking at some of those, some of those things. do you have any other questions you'd like to ask? we're going to have a vote here in about a minute. >> just maybe. i mean, we're focused on things here internationally but international cooperation between scientists and what we're learn something sharing because you have a national role that is very, very important to all of us also have a international role as part of the international scientific community. when the bell goes off,

we'll go vote, mr. chair. >> yes. our international role this latest disaster in japan and our hazards program has worked internationally on many fronts. we have a good example is the vdap program, the volcano disaster assistance program which is credited by the state department in saving thousands of lives through early warning when volcanoes are set to erupt and cause volcanic landslides and these that will come down and destroy villages.

in the case of japan, given japan's intrinsic homegrown community which is very advanced, in a case like this, we will work hand-in-glove with the japan size mow logical community in responding to this disaster and work with them can to improve our disaster preparedness. initial things we're learning from this, amazingly enough, buildings came through, earthquake itself very well the death toll from the hundreds where the death toll toll from the

thousands. s interesting about the this century there was the kantu near tokyo. , before tokyo was the size it is today. that killed something like 140,000 people. and then there was kobe earthquake in 1995 that killed 6800 people. okay, those two earthquakes were both in the magnitude 7 range. the difference between 140,000 people and 7,000 people was earthquake engineering. the difference between the 7,000 people that kobe killed and the couple hundred that were killed by

this earthquake is the earthquake early warning system. and a 9, and a 9 earthquake. so that is what earthquake early warning can do for you. but now the tsunami i mean, you know, a 30-foot tidal wave coming in, wiping everything out in its wake. the people literally, you can't outrun it. we often talk about vertical evacuation being the prefered route for a local tsunami and, there weren't enough solid structures for people to vertally -- vertically evacuate into. they would go to the upper story of homes and entire homes would be swept out

from underneath them. some people were able to get to sturdy bridges or overpasses. if they were taller than, you know, 30 feet, that might be enough but how many bridges are taller than 30 feet? it was truly tragic so. we'll definitely be learning a lot of lessons from this. now we're, much more fortunate here because when you look at japan there are very few places in japan that aren't prone to a local tsunami. the entire east coast of japan is, is prone to this kind of disaster whereas we only have a limited part of the u.s. that will have a local tsunami hazard. the part of the alaska and the pacific part of off

oregon and washington. but that's the only part that will have a local tsunami so we're much more fortunate than japan. >> let me ask one other question. the fy-12 budget proposes to cut mineral resources program by 9.6 million or 18% with corresponding reduction of 52 ftes. give me an overview of the program and why it is important to america's economic and national security interest. >> this is a unique program in the federal government. there is no duplication here, no other program like it. the usgs provides a service to the nation by taking input from all of the mineral industries around the country, stripping off any industry pro pre proprietary information and and as semiwling -- assembling that information and rolling up into

statistics useful for the industry itself as well as the federal government on commodities, on what is useful on supply, demand, what is being mined, what is being processed, et cetera. and provides that to everyone in the public domain in a way that is extremely helpful. no one in the industry could possibly trust anyone else in the industry to do that. they wouldn't provide the data. and, our minerals experts are geologists who are trust to do this in a way because they understand, they understand the entire periodic table basically so they're able to do this in a way that is extremely valuable. >> thank you. we've got votes going on now and i'm sorry that, i mean, some of the members on both sides of the aisle had

hearings in defense this morning and some other things going on. it is a crazy time around here when we're trying to get all the hearinging? >> thank you for your time. >> appreciate you being here as you can tell. i think both republicans and democrats you have fans in congress with what the usgs does and way they do it. we want to work on the budget and try to address concerns we have and move into the 12 budget if we ever finish the 11 budget. i appreciate it. thank you. >> thank you. thank you, congresswoman for -- [inaudible] >> [inaudible] [inaudible conversations]

[inaudible conversations]

>> this week marks the one-year anniversary of health care law. former capitol hill staffers will join health care policy experts to discuss how the law has changed the health care industry. some of the legal challenges to the law and the current opposition to it. our live coverage begins shortly here at 1:00 eastern. president obama will be in chile today after spending two days in brazil. meets with the chilean president and will take questions for the first time since allied military powers began enforcing a no-fly zone over libya with jets and warships. then he will deliver a speech addressing the entire latin american community. you can see the speech live at 3:20 eastern on our companion network, c-span. tonight here on c-span2 the senate commerce committee looks at privacy of consumers on line. participants include head of federal trade commission,

officials from microsoft, intuit and the american civil liberties union . . >> it's not worth doing what you're doing if there's a cause associated with it. and it's not knowing. not everything we read every morning or something you would want to run home to talk to the family and kids about. but you do mention -- >> secretary's tom ridge, michael chertoff and janet

napolitano discuss the department of homeland security tonight at 8:00 pm eastern on c-span. >> this week marks the first anniversary of the health care law. and today the cato institute is hosting a conference on the law's impact. participants plan to discuss how the law has changed the u.s. health care system, the federal budget and the economy as well as the legal challenges to the law and whether the supreme

court will accept any of the cases. [inaudible conversations] [inaudible conversations]

[inaudible conversations] [inaudible conversations] >> and we're here at the cato institute live waiting for the rest of the panelists here as the group marks the one-year anniversary of the health care law. the cato institute is hosting a

conference about the impact of the law and we'll be hearing from former capitol hill staffers and some health care policy experts as they discuss how the law has changed the health care industry and some of the legal challenges. our coverage should begin tonight, as soon as the participants come into the room. and president obama is in chile and we'll be getting a speech from him. he'll be speaking from brazil where he's meeting with the chilean president and you can watch the president giving his speech at about 3:20 this afternoon over on our companion network, c-span. [inaudible conversations]

[inaudible conversations] [inaudible conversations] >> i'll switch. >> all right. i think we're going to get

things started here. if you'll oblige. welcome to the cato institute, a libertarian think tank founded in 1977 to promote the ideas of limited government, individual liberty, free markets and peace and, of course, today we are having a conference marking -- i think celebrating would not be the correct word. the anniversary of the enactment of the affordable care act, sometimes sometimes described as obamacare. if i could please ask you to silence your cell phones during this conference, that would be greatly appreciated. i've been told to threaten violators with this rule with a death panel but i don't believe in such things. but just consider yourself warned. we are -- well, i should first tell you my -- who i am.

i'm ramesh ponnuru, senior editor of national review. and i am pleased to introduce you to someone who is among many other things, a valued colleague of mine at national review where he's a contributor editor, david rivkin. david is a partner at baker & hostetler. he is someone who has had a lengthy career in government. he has served in the white house during two presidents terms. served in the u.s. department of justice and the department of energy. so for people keeping score, most of his time in government has been in agencies whose existence this institution approves of. he is a visiting fellow at the nixon center, a member of the advisory council at national interest magazine, co-chairman at the center of law and terrorism at the defense of democracies. he has served on the united

nations commission on human rights. and he has frequently testified before congress, for example, during the confirmation hearings for now justice sonia sotomayor. someone who watches tv or read opinions magazines or newspapers for that matter has probably seen him or read his by-line. but most relevant to today's events, david is the lead outside counsel for the florida lawsuit against obamacare, the one that has led to a district judge declaring the entirety of the law unconstitutional. and it is that effort and that topic that he is going to be talking about today followed by some questions. so let's all give a round of applause to david rivkin. [applause] >> thank you. i should have omitted the reference to the human rights commission. but i did not go to geneva very

much either. anyway, ladies and gentlemen, i wanted to thank the cato institute for inviting me to speak and for ramesh's introduction. my brief remarks will cover the substantive aspects of obamacare and the merits of our case if you will and some background on where our case and our cases stand procedurally as this litigation unfolds and, of course, we all know it's going to end up in the supreme court eventually. now, tackling the substance first the individual mandate which is situated at the very heart of obamacare violates in my view and importantly in the view of our district court the most fundamental constitutional principles. it violates centuries of case law and it's different from any law regulating in commerce since congress has enacted from the first day of our republic up to now. indeed, on the flip side of it, ladies and gentlemen, if a

mandate were to be constitutional, much of the framers in the original constitutional and the bill of rights and all the congress' legislative work hence at best is largely incoherent and at worst superfluous. plus, i was not engaging hyperbole when i was engaging the december 16th oral argument before the judge in our cross-motion moss for summary judgment and the individual mandate and the act charmingly referred to as ppaca for those of who like acronyms which is the key part of a single most constitutional piece of statutory language in our history. i also said at the time one of the most badly drafted statutes that i've ever seen but that's a different story but i'll be happy to elaborate in that during q's and a e. the obama administration bottom line they could force people to engage in it and then regulating their engagement.

under their thinking, doing nothing is an economic congress that congress can reach through the commerce clause proper and then packaged into a more comprehensive statute like obamacare. also an improper clause. this argument and some related points that are made in the process has at least five major constitutional consequences, all of which violates the fundamental constitutional principles and centuries of settled case law. to begin with, this argument eviscerates the court date core of bill sovereignty which is the heart of our architectural architecture requires necessarily any meaning that the federal government exercises only limited enumerated powers while the states in james madison's famous words possess, quote, residual sovereignty closed quote which is also a police power. an activity regulating people because they exist not because

of activities they engage to but compelling them to act is the very essence of general police power. and not only do you have police power but like a regulations of individuals of their activities, their actions cannot be avoided. nothing captures the distinction, this point, better than the fact that all one has to do -- put yourself in a position of a person who is trying to decide whether to comply given the federal statute regulating a particular activity. let's say commodity, it wheat or cannabis. i could have said weed but cannabis sounds a little more scholarly is not to engage in that activity or do nothing with regard to a commodity in issue and presto pronto you opted out of a federal regulatory war text. the statute has nothing to do with you. you can go on with your life. by contrast in the state of massachusetts requires all adults to be inoculated for smallpox there's no opting out of that particular regulatory regime.

if you're an adult and happen to be found within the borders of massachusetts, you're stuck. it applies to you. same, of course, is true with regard to such things as obligation to purchase hurricane insurance and various other things that states exercise in general police power can do to you. whatever their policy merits of those schemes. now, to justifying for acclaiming itself this police power federal government, in effect, argues that inactivity specifically in our case a failure by an individual to require a particular service again in our case qualified a particular type of medical insurance is within the scope of a commerce clause because this activity can be linked -- can be tightly linked to an discernible economic effect. indeed, the most articulate version of this argument was made in judge judith kessler's -- center district court bench in the district of columbia columbia a decision

which held the individual mandated which preceded as follows a failure to purchase insurance as a decision which is no different a decision to purchase insurance and since both the purchasing and nonpurchasing decisions, ladies and gentlemen, in the aggregate have a substantial economic footprint, they can be reached under the commerce clause. now, elegantly worded decision. quite frankly, better than some other decisions that make the same point. but the argument is still fundamentally flawed. now, leaving aside the fact that judge kessler and the administration are making some well remarkable assumptions about human nature. i don't know about you but it's a bit of a surprise to me since not every aspect of our existence is driven by well-structured decisions. but leaving that little point aside, there's a fundamental problem here because in a modern economy, every inactivity, every failure to purchase a good or service every failure to engage in a particular activity, let's

say sleeping has in the aggregate some stipulate late formidable consequences. hence, there cannot be any judicially enforce living principle found here and all the activities can be swept under the commerce clause. under this logic the federal government is capable of general police power and the general sovereignty system may be pretty much bed but may not trouble folks, but it's understandably nervous about the implications of its argument that congress can essentially regulate anything so it's come up pretty early in litigation. we'll have a full-up argument that it claims that it has a built-in limiting principle. what the government is making a plea to the court, please, please uphold the statute. nothing like this will ever happen again. why is that? i quote the argument the government has made innumerable times in their cases and in our

cases and the claim is about the health care market is unique closed quote. it's not unique, not by a long short, not with which i hope to convince you. the government essence essentially adduced three claims relating to ewe -- uniqueness. everybody participants in it sooner or later. we call it a consumptionibility argument. this is nonsense every existing market including the market for luxury goods and certainly markets for necessities of life features participation by a sufficientlily large number of folks over a sufficiently long period of time and our markets would be no more. second, the government says well, the market is unique because there's cost shifting. well, what the hell is that? well, that's the old thing about people visiting emergency rooms and have no coverage and they don't pay for services rendered and then taxpayers and other patients wind up paying for it.

now, there's some economists who disagree with that. i'll actually direct your attention to an excellent piece in the "wall street journal" the other day where several good economists argued that's actually not that much cost shifting from insured to uninsured. even if it's true the cost shifting is ubiquitous which is a fancy word saying prevalent. think about a fellow who defaults on his credit card or his mortgage, wow that's systemic risk there. or writes a bad check and declares a bankruptcy. what do you think it happens. you'll pay. indeed, the cost shifting is an inherent feature of all markets in a modern economy and probably not in a very modern economy certainly in the 20th and 19th century economy but credit ladies and gentlemen is extended to the front end to market participants where you don't pay cash in a barrel. there's a lot being unique in that. the third claim is that this market is unique because consumers -- unless they're protected by this very wise government that has come up of a

mandate can be completely wiped out because the medical care is so darn expensive. perhaps true but there's also nothing unique about this prospect. sadly, but inevitably there's several contingencies that, unfortunately, have come up about wipe you out just as well. losing a job often does. so does a catastrophic business failure that saddles its owners with ruinous financial responsibility. so does addictive gambling maybe not addictive maybe just gambling. so does the use of addictive substances? or crippling depression or debilitating disease that leaves us unable to work. now, under the government's logic the existence of those potential calamities would seem to justify have congress enact an insurance purchase requirement. aflac kind of it goes -- if you lose your job, you're sick they're going to pay for food and rent and all the necessities of life. so we can all have a comprehensive aflac to cover us. and make sure there's no cost

shifting. but you know what? you don't need to go into those other markets to demonstrate the silliness, absurdity of a government's uniqueness arguments. i would just stick with the health care market for a second. the government's definition is so broad and capacious and for all the medical goods and services, products and all the arrangements can be used to pay them. that market alone can sustain an infinite number of mandates on the government. why is that? well, the proponents of obamacare and its predecessors have often justified this exercise where we're bending the cost curve. how do you bend the cost curve? require folks to purchase healthy foods. like gym classes. why not mental wellness lessons, regular checkups. it would be very logical. even if we're dealing with the health care alone this is not a unique mandate.

the congress would be able to enact in the future. so the bottom line here is you might have discerned by now that i don't believe that there's any viable limiting principle here. the federal government can force you to enter any market and rest assured, whatever unique attributes of this marketplace, this marketplace being health care market have motivated this congress to do so in the future, future congresses would discover, some other crises and various markets would demand their intervention. by the way, before i move on, i wanted to also mention that the uniqueness of this market -- even if it's true it's constitutionally meaningless. now, overuniqueness means that a similar situation would not readily arise again. why should it matter constitution wise? the federal government in my view can no more exercise general police power once in a blue moon. they can exercise it consistently. what well, experiment of the

statute featuring the use of general police power but could be triggered once in a thousand years is it's pretty darn unconstitutional. now, yeoman recognizes this at least tacitly in defending the mandate for months and months not on a commerce clause and fortunately for us and fortunately for the constitution necessary and proper clause does not work very well either and it has several insurmountable problems. the most obvious one you don't need to be a lawyer to figure this out. they are creating their own necessity to justify the application of a clause. the primal necessity curing the cost shifting which i already mentioned but why costing shifting such a huge problem like in other areas when people get food stamps people get housing vouchers but you don't have a government mandating restaurateurs to provide free meals to people or free housing.

here they have forced health care providers to provide free medical care to folks who don't have insurance. and do not wish or don't want or cannot pay out of pocket. so in a sense they created its own necessity. more broadly the government fundamentally misreads the case law dealing with the necessary and proper case law of a pretty interesting cost where the con business come up and that congress can do pretty much doing in reaching an activity as long as you make it part of a larger statutory scheme. of course, that ain't so. the real teaching of rice is by the teaching of justice conceal that the congress can reach local noneconomic activity if that regulation is a necessary part of a more general regulation in intrastate commerce. you don't have to go to law school that congress wanted to eradicate market and interstate

cannabis whatever its policy merits is an entirely objectional material on the commerce clause and that effort would have been completely circumvented since cannabis -- there's no intrastate or interstate cannabis and it includes possession was not brought into the overa arching regulatory scheme. the federal government takes this as a drafting guide so any end how unlawful is unlawful if you put it in an all encompassing statute and it robs the meaning of teaching of lopus and morrison which are the court cases in which the courts and particularly for us justice kennedy has ensured that the federal government is not exercising general police powers in the bill sovereignty system is preserved. it's also pretty passing strange to me the constitution would preconcluded the imposition of

the scheme and, of course, congress can take whatever steps it wants so long it's any step they want and under this logic congress can pass all sorts of statutes very ambitious. and the protection and wellness act in 2011 it will do precious little to come about and maybe half-counterproductive regulatory provisions that are resting upon its enumerated powers, many have a huge regulatory gap and presto pronto you have the improper clause to bridge the gap. it doesn't work very well. but, look, probably the most palpable problem of a government's reliance on necessary and proper clause is an obvious one. it ain't called a necessary clause. it's called necessary and proper clause. and in this regard both the founding debates and the case law make abundantly clear but the clause has to be used in a proper fashion meaning it cannot

vitiate or violate other key constitutional principles. and this was made by chief justice marshall in the earliest and most famous necessary and proper clause case. plus, ladies and gentlemen, the most fundamental level of a necessary and proper clause does not work for the government because they argued it requires that all powers exercised by the federal government either singly or in combination of a commerce commerce alone our commerce clause is augmented by necessary and proper clause must be cabined by meaningful and judicious power. or under the necessary or proper clause involved together. now, this point about the individual mandate being improper is fully supported by the fact and if you think about it for a second it's actually a very simple point. that the arguments they have

made about how capacious is the commerce clause and necessary proper clause would literally rip out whole sections and clauses meant to be interpreted and the very same chief justice marshall in marbury and madison said any clause in the constitution is provided to be in effect. under the government's logic every single one of the power clause is in article 1 section 8 would be rendered pretty much superfluous subsumed in the clause. and you're saying you're doing it to protect congress and on and so i guess the framers weren't intelligent to figure it out and there's at least half of other dozen clauses in the prince opinion that i call presupposed continued existence of the states and those means an instrumentalities which are the creation of the sovereign and

reserve right closed quote and they pretty much become constitutional artifacts. now, the next problem the view that congress can -- of the individual mandate pretty much renders the bill of rights not particularly useful. now, why is that significant. remember, the bill of rights was drafted pretty much under the framers watch very soon after the constitution was ratified and it was meant to augment some call it the parchment barrier it was a second line of defense for individual liberty augmenting the broader and more fundamental structural protections inherit in the constitution. but still the bill of rights was meant to do meaningful things. and interestingly enough, the bill of rights has done pretty much very little to constrain exercise of the commerce power particularly if you view it as

an ability to compel individuals to act. so under the first amendment, the government cannot force you to profess your undying love with veggies or fruits but it can sure compel you to buy them. so the galman says -- some very astute individuals who carefully drafted the bill of rights who go protecting individuals on abuse of governmental power and again that power of the government like the more structural provisions just kind of missed this big problem and left it alone. another problem pretty much if the government is right it calls into question the sanity of every previous congress now some of you may not be struck by the vigorous argument but, you know, there are bound to be some intelligent folks in the legislative branch in the last 200-plus years. why am i saying that? if you look carefully what congress has done, every time congress has regulated under the commerce clause it's regulated indirectly and partially, and

that's true of the commerce clause alone and commerce clause is by a necessary and proper clause. my favorite example mandating the floodplain residents in houses and floodplains go out and purchase flood insurance. congress required flood insurance as a condition of securing and maintaining a mortgage from a federally regulated financial institutions which means what, ladies and gentlemen. a bunch of folks did not get it. especially the ones who got the house before the law was enacted. who did not get it from a federally chartered and financial institution and it ain't just that all of numerous statutes including the federal minimum wage laws, security law, child labor law -- all are tied to interstate commerce and activities none of the individual mandates. it would have been so easy so simple and direct if we just mandate this stuff. obviously those people who did those other statutes had no idea what they're doing. now, last but not least sort of

on the merit side of my discussion, if the government's arguments about the constitutionality accepted and result would fundamentally rework the relationship between the federal government and the citizens. and the nature of citizenship itself by the way. now, why is that? there are a few enumerated powers under which government actually regulates individuals. regulates them as citizens. it's distinct from regulating the activities in which they engage and they all relate to traditional common law derived duties and attributes of citizenship like jury duty, census, serving the militia, serve in the military. these powers are narrow, ladies and gentlemen, and are incapable, formidable, i don't mean to minimize them and the military is a formidable exercise of power but it doesn't easily morph into general police power. now, the government by the way has tried to use this argument to sort of say, look, how can you claim this big deal about

compulsion. there's all these powers to compel? the fact that the federal government is citing the existence of other powers -- if you think about it, as a basis for compelling individuals to engage in economic activities, really redefines our citizenship that both traditional powers that i mentioned, talk about reciprocal duties between the government and the citizens and they're really talking about citizen participation and governmental activities. now, we're talking about citizens having reciprocal duties to other citizens and citizens being forced to participate in economic activities directed at private companies. and that is, again, a fundamental and jarring redefinition of the constitutional vision of citizenship and certainly going back hundreds of years i would say the common law certainly endless actions of citizenship.

my bottom line the federal government has end up disparaging of 200 years of legislative practice and our dual sovereignty and that's why the individual mandate is unconstitutional and would be declared as such by the supreme court. now, i spent all this time to talk about the individual mandate. it's worth noting there's other challenges to -- other features of obamacare. we, for example, in our case have a commandearing claim or argue the way in which medicare and commandears resources and major supreme court cases in south carolina v.dahl and supreme court and of a substantive due process case. other cases are featured first amendment and establishment clause challenges and scholars like richard epstein have maid in arguments. there's quite a lot of other stuff there. now, very briefly, this is a quick update on the procedural of clay.

thomas moore law center case is pending at the sixth circuit to be argued may juneth 10th circuit is he fourth circuit regina's -- and it would be argued on may 10th. our case is at 11th circuit and an expedited briefing schedule has been granted. one thing worthy of note unlike the case with the fourth and the sixth circuit we've asked the 11th circuit to consider our case en banc on june 6th and i expect the court to rule on that certainly this week. so all things considered, i'm very optimistic that the timeline wise -- i already said i'm optimistic about the ultimate outcome but timeline wise the supreme court will grant certs and regina certs. one very plausible scenario would be -- have cases briefed in january/february of 2012.

oral arguments in april and the decisions issued in june. now, thank you for your attention. and i'll be more than pleased to answer any questions. >> thank you, david. i am going to pick the first questioner and that's going to be me. and my question for you is, about the state, including many of the states that have joined the lawsuits against obamacare, that are also taking grants from the department of hhs to set up the exchanges that are a critical feature of that plan. are they undermining the case? >> no, they're not. there's no waiver or acquiescence of any sort. it's entirely possible -- the decisions -- let me back up and say first the decisions to take money or not take money is

quintessentially a political decision some of our 26 states have gone one way and the others have gone the other way. it does not impede legal claims. and the flip side of that is doj at one point in time was taking the money somehow -- i'm sorry. prosecuting the claims and maintaining the statutes and constitutional prevent the government from dispensing the money which i think is a silly argument because there is nothing in the way the money is being appropriated and authorized here that conditions it upon any particular litigation outcome. there could be conditions tied to the money in terms of a state doing certain things but if a given state wants to continue complying with obamacare and receiving the money, that is appropriate in terms of both nonimpairing its ability to challenge it and the ability of the federal government to give

out the money. it's a political question -- i mean, it's probably a longer answer than you bargained for and i would say this and this is apropo of our commandearing claim and by the way our judge was very, very sympathetic to this argument even more to those who did not prevail on it. what do we have these days. we have the federal government pretty much backing claims most of the revenue in the land if you look at the ratio of the federal and tax receipts. most of the money comes from -- not from mars. not from abroad. it comes from american citizens that resides in various states. once the federal government takes the money the opportunity for state government -- i'm not saying the state don't tax and a lot of them tax too much, but their opportunity to generate additional revenue are not that high. it's a fallacy in bargain. if you don't take the federal money, billions of dollars from each state that comes to your citizens will go to another state. it's a difficult decision. i wouldn't even hold it as a

political matter. again some money that's the problem of the modern -- modern administrative state. >> thank you. we've got a limited time for questions. i'd ask you when i call on you to identify yourself, then -- and make your question in the form of a question. over here. >> thank you. i have worked a long time in health care. my question for mr. rivkin is, the fact that the law passed, if they could put aside political affiliations and the fact that this health care law has passed, do you not think that the federal government and congress wouldn't have known there would be challenges to this law, and that they would have put in place whatever -- i'm not an attorney. i'm not a constitutional attorney. put in place the legal whatever for the challenges to this law to keep it going? i don't like all of it.

>> it's a very fine question. let me -- let me tell you, i've certainly not been around this town as long as some folks but i've been here a long time. i happen to work on several large pieces of legislation in my career, in my government days. two things would be interesting for you to hear. first of all, there's enormous disdain, unfortunately, for the constitution, particularly in congress and i'm trying to be bipartisan about it. it's unfortunate but they don't care. and that's why congress routinely passes things that are -- everybody knows are unconstitutional things like later on legislative veto. there's a normal baseline and that's why there's so much laughter if you will among certain folks about tea party types studying the constitution like witchcraft. but beside that, there's a particular level of hubris and disdain that attended obamacare drafting. it was not drafted by and large by people in the executive branch.

it was a legislative mess. there was no effort to seek the view of a justice department or the white house counsel's office and i'm making those broad statements. those were not guesses. i was involved in the debate during the legislative phase and i try to engage folks in debate. they didn't care. it was arrogance and it was hubris and give me a chance early in my remarks about how badly drafted this is. i could have drafted this statute much better, and it would have been much more difficult to defend. they just didn't care. to give you an example. they make an arguments about the fact under the necessary and probable cause make strike legalistic cause. the heart of the insurance regulation would not but the insurance companies would go bankrupt if we didn't have funds from the mandate. there's no price cap. it would be politically unpopular and may sweep out of office many of the folks who did

it and second of all, if your legislative goal was to have insurance companies, think about a finding in the insurance agency and protecting the insurance -- in the ability to deliver effective health care. they couldn't care less. they were arrogant and hubrisic and they're reaping what they've sown. [inaudible] >> there's not been any legal involvement. in every administration there's a letter that is sent from congress asking for input or and you call the senior manager's letter and you say, you know, i've seen it in the clean air act american policy act american disabilities act if you do this and be aware of federalism concern, aware of appointments clause, none of that happened. it was the craziest most pathetic excuse for legislative

process that i've ever seen taking into account the pretty low baseline that it usually features. >> any more questions? back there. yes. >> susan hardwick. mr. rivkin, can you please comment on the $105 billion of self-funding provisions that have recently come to light. is there a constitutional problem with the self-funding provisions? and if so, could you explain why that might not have been part of the case? >> what do you mean by self-funding? >> what michele bachmann and steven king were talking about, about two weeks ago, where -- and i read the law myself, which is that the secretary sebelius can actually commandear resources from the treasury to prevail and spend on the obamacare legislation for the implementation, without having them appropriated by congress.

>> well, to be honest, it's a statute that keeps on giving. i did not know about this, but to the extent it's true. it's completely unconstitutional, of course, because no money shall be drawn from treasury except in consequence of appropriations. there's a similar problem in the dodd-frank that creates this consumer safety bureau in the department of treasury. and instead of requiring them to go seek and rational appropriations, that will siphon off a little money that the fed's open money makes also unconstitutional we're not supposed to have self-financing opportunities you reduce power not vertical but horizontal but not that they are pedantics and mess things up but so that no individual government entity averages up power. the power of the purse is the

most essential check in the legislature so i did not know that. it's truly power. and where you sit and stand you think congress would not pass things but diminish congress' own power but i guess it's not always true but that would be -- that would be totally unconstitutional but i'm not aware of that. go ahead. i'm sorry. usurping your prerogative. >> it delegates to you. >> not the delegation doctrine. >> thank you. >> my name is hans keathley. i have two questions for you. as you pointed out there are a number of cases headed towards the supreme court. i'm confused as to how -- what happens? does the supreme court wait until they all show up and make one judgment or what's the timing there? and the second question is, what -- what's in the argument that this -- all these hard

parts of the law aren't going to show up until 2014 anyhow and so there's no hurry? >> well, the second one first. that argument goes to the ripeness which is an aspect of standing. that argument has lost because in order for a case to be ripe, the harm that gives you standing and injury in fact does not have to happen tomorrow as long as it's sufficiently locked in and then a condition and second there's no uncertainty about it. that argument was pretty much rejected both by the courts that upheld the mandate and the courts that struck that mandate. you could be a little bit cynical and wonder some of the judges who upheld the mandate did not blow past this argument so they can reach the merits but i'm not that cynical. so that's not -- that's not a big deal. your first question is a little bit of sausage making and i'm speculating. the first case is going to come out of the gate probably in

virginia or maybe sixth circuit. august, september. the supreme court would be in recess anyway until the red mass. they will follow a cert petition. >> whoever loses would file a cert petition. the court may well sit on it for a few months to see what else is coming down which certainly makes sense for them to take both us and virginia. and i think that would happen again there are many scenarios of the time. one of the reasons we want a month which both of you who are not lawyers is precisely even if it's a little bit slower to avoid the situation where we prevail at the panel level and the government which with one hand says we want speedy resolution and the other hand kind of doesn't seem like they want a speedy resolution and then going en banc and we would not have this problem as i expect this week in in the fourth and the sixth circuit ironically whoever loses can go directly to the supreme court.

and seek cert but it's not true if you one and that's kind of a sausage-making of litigation. >> well, i think we have, unfortunately, run out of time. but i suspect that you can pepper david with further questions on his way out the door. thank you all very much for coming to this very informative talk. [applause] [inaudible conversations] [inaudible conversations]

[inaudible conversations] >> good afternoon and welcome again to the cato institute. i'm michael cannon director of our health policies studies here

at cato. you received your law lecture and today we're going to move to the debate portion of this conference on the patient protection and affordable care act. the health care law that was passed by the house of representatives one year ago today. and signed in law by president obama one year ago this coming wednesday. this panel is comprised of some distinguished experts on various aspects of the health care law. we're going to hear from them about this law's impact on health care markets, labor markets, and the federal and state government's budgets. leading us off kavita patel at the englebert system reform at the brookings institution. she's also a former director of policy for the white house office of public engagement and intergovernmental affairs. you may have seen some of her viral videos about the health care law. you may remember them from during the debate.

the legislative debate over this law. and she's also a former deputy staff director for the senate health education labor and pensions committee under then-chairman senator edward kennedy. i will be -- kavita will be talking about the -- how the provisions of the law intended to improve the quality of care and how it's delivered in the united states. i'll be following her to talk a little bit about the history and debate over the law and some of the quality and access issues. ron pollack will be following me. ron is the founding executive director of families usa, a national organization for health care consumers. families usa's mission is to provide high quality health care for everybody in the u.s. ron will be talking about the access provisions in the new health care law. and ron will be followed by douglas holtz-eakin who will be batting cleanup for us. doug is currently the president

of the american action forum and a former director of the congressional budget office. so if -- i'll turn the mic over to kavita right now. afterwards, i hope you have questions for the panelists. there will be a brief break between this panel and the next, a 15-minute break where we'll have a debate between roger and nira over the constitutionality of the health care law but for now, kavita. >> thank you. thanks so much, michael, for inviting me and it's -- it's an honor and privilege to be here and getting to talk about the affordable care act but i want to actually spend some time -- hopefully i will only take 10 minutes so we can have what i'm sure will be spirited questions and discussion afterwards but i want to actually spend time, since i know ron might speak a little bit more to the access and coverage pieces to try to break down what i think is

2800-plus pages of a lot of language that for the most part the american public hasn't even begun to process, digest and you just heard from our previous speaker a lot about the constitutionality and some of the issues going on at the state levels. you'll hear more about that. i want to talk about not only what i've seen in person with how markets are changing but probably more importantly which is what all of us who have cared about health care and i would say hopefully that's everyone in this room is considering is the impact it has between where the rubber hits the road. ply background is a primary care internal medicine physician and that's been part of where when we talk about quality, delivery system reforms and some of the actual transformations in the affordable care act, the pieces that are the most, i think, promising are those which largely were not specified to the letter of detail and having had a history working on the hill and in the administration, i can tell you that's a very good thing and we're seeing some

of the things right now vis-a-vis medical homes, patient care coordination, transitions in care coming to life by virtue of a fact that one of the things we try to do in the affordable care act was help to show that those are the promising areas for the next decades to be honest. so i'll lay out some statistics. it's not unknown to any of you that our population is aging. and as we think about -- as everybody is debating budgets, entitlements, social security, medicare and medicaid as well, how the aging population will have an impact on that. i would also add to that that as we talk about access and coverage, we're now asking for all the states to look at how to transform their medicaid systems which you've heard a little bit about. all of that i say is a very good thing and even -- even before the affordable care act came in to being, this is something that past administrations both democratic and republican have been struggling with. what the affordable care act did in many of its ten titles of

organization within the bill is help to promote innovations in not only how we spend health care dollars but doing exactly what we're seeing right now, which is kind of showing markets and labor forces writ large in health care that there is an avenue towards kind of better care -- the right care at the right time for the right patient is how we think of it but in truth, doing that is much more difficult. a couple of other statistics. i talk about kind of the swelling of our aging population. we just went through -- anyone in the health professions knows that every year we have this right of passage where medical students have to decide what kind of careers they're going to enter into. and for a long time quite honestly and we're still dealing with this trend of more and more students entering into highly lucrative specialties, it's a personal lifestyle issue. it's something where they know they can get paid within our fee for service system a lot more money for less time largely because of the incentives that

are currently in place. now, the timing is not a coincidence. but for the first time in years, we're seeing a reverse in the trend. we've seen previously and this year we matched 11% more under primary care. there is certainly a lot that led up to that. and i would say that there is a lot more work to be done. but the investment in health reform in terms of coordinating care and emphasizing that having some level of primary care is a good thing. that's something that we will hopefully see come more and more into the public vernacular. as i mentioned a lot of this debate -- a lot of our conversations in washington are still often misunderstood, misrepresented and confusing to the public but actual numbers in watching medical students kind of voting with their feet and entering nonspecialty primary care is one kind of measure of that. second thing i wanted to point out is the investment in innovation itself. so a lot of us working on the

health care law knew that there were -- there were mechanisms, bureaucratic which were preventing the centers from medicare and medicaid services rewarding things that were, quote-unquote, innovative so out of that was born and something that started to be honest in a bipartisan fashion, the center of medicare and medicaid innovation. that's $10 billion that's largely left so that we can do what had traditionally been a long process for demonstration projects, research and evaluation. so we can make sure we have flexibility to do that kind of work with actual practices. and one of the first things out the gate from that $10 billion over 10 years was to promote the primary care medical home that's done at the state level. is it states which received grants and funding to promote what they started on their own in the private settings with payers and to do that within medicare and medicaid. a population in which it's

desperately needed. in terms of quality, if any of the folks in the room have actually tried to go to any of the government websites or data sources and understand the quality of care in our country, it can be very difficult to find. much less for yourself is an individual as a patient in the system. we've known now for the last seven to eight years that the quality of care in our country has been at most on average good about half the time. if you're done who goes to vegas and tries to bet. that may be decent odds. if you're dealing with health care, that's unacceptable. so in an effort to make sure that we understand the gap why is it half the care on average. but then also to do something about it, we really need to understand what works. and that just means not just putting money into putting data into websites. that meaning actually investing in effectiveness and comparing research that looks at treatments, processes of care as well as guidelines and how our evidence is being utilized by

clinicians. so going through and thinking and streamlining and coordinating what the government does with something that all of us felt was broken and dysfunctional and that hopefully moving forward and even one year later we've already seen that now agencies within the federal government who had not spoken to each other, who historically not necessarily even traded data or had data accessible to public people are now doing that. so all of these changes, i would say, are moving us in a direction where again going back to what's important, patients, clinicians, and actual health care providers are doing -- are trying -- getting the information they need and understanding that they're working in a system that's rewarding the patient and the population as a whole and not just the fee for service system. so i'll finish kind of -- i don't want to spend -- i know we'll talk a little bit more about some of the specific provisions. i would say that in my mind in thinking forward, so we've talked about a year and kind of

what's in the bill that kind of has some potential in the future -- in looking forward i would say the key things are as i mentioned things that were not spelled out in such minutia but offer an opportunity for not only interpretation but for action and decision-making on behalf of actual health care providers. and that's accountable care organizations, medical homes, value-based purchasing, a lot of the insurance design benefits that we're hoping that we will see in medicare as well as in some of the state medicaid contracts, that's exactly where the promise of not only cost containment and bending the cost curve will come from. but that's where the true promise of how to deliver the right care at the right time and the right place will come from. so i look forward to some questions about that, i'm sure. i'm sure there will be some. and turn it over to my friend ron. thank you. [applause]

>> thank you, kavita. you know, it's remarkable -- i should say it's not remarkable that we're having this event. oftentimes after a major law is passed there will be one year retrospect. there are a number of these events that are happening around washington, d.c. right now. i think what's remarkable is the content of these events. usually the event -- people will come to these events asking questions well, have we met our goals for implementation? is this law going to deliver what it has promised? but the question on everyone's lips today i think at this event and many others around town will this law even beer here in two years? or will it be repealed? i think that -- that points to the fact that this is a remarkable law that we're talking about here. before this law even cleared congress, voters in massachusetts took what was for massachusetts the very distasteful step of electing a republican to the u.s. senate in order to try to stop this law.

38 states had introduced and 2 states had enacted legislation that was intended to block it before it was -- before it passed congress. in the year since obamacare has become law -- and i should mention parenthetically there's a lot of -- a lot of people don't like the term obamacare. they consider it pejorative. i use it and i don't consider it a pejorative and if it's the law is a success i think the president will thank me for it since the year obamacare has been enacted 3 additional states blocked and 2 states have amended their state constitutions in the hope of blocking this law. 28 states have filed -- filed lawsuits in federal court alleged that this -- that obamacare violates the u.s. constitution half of them within hours of the signing ceremony. individual citizens have filed another two dozen lawsuits challenging the law. many of these lawsuits are frivolous but two of them are not because two federal courts so far in these cases have declared all or part of obamacare to be unconstitutional. opposition to the law continued

heavily to sweeping republican gains in the 2010 elections. the house soon thereafter voted to repeal obamacare. 21 governors the threatened not to implement it. at least four days have frozen, returned or refuse the federal funds it offers them. and two governors have flatly refused the law. and the americans would like the law once they found out with it familiarity spread contempt. public opinion shifted against this law the moment the first draft of obamacare was introduced in congress in june of 2009. ..

>> obamacare. so why is this happening? why so much opposition? well, i think that there are a number of reasons, a lot of americans believe as we heard from our keynote speaker believe that obamacare claims the power of the congress should not have and does not have, the power to force people to purchase a private product. the idea that congress' power to regulate commerce somehow includes the power to compel congress doesn't sit well with the structure and purpose of the constitution. i think other americans see obamacare as a barrier, not an enabler, to more affordable, better health care. massachusetts passed a similar law in 2006, and can that's led to rising costs, adverse selection, modest coverage gains, questionable health effects, longer waits to see a doctor and has even opened the door to government rationing and lest anyone doubt, that is how this law purports to pay for half of the trillion dollars of new federal spending under

obamacare, is by rationing care to seniors in the medicare program. consumer protection -- the provisions in this law called consumer protections really aren't consumer protections. they're regulations that can hurt more than they can help. for example, there's a mandate that employers who provide coverage to their workers' dependents have to provide it up to the age of 26. that increases the cost and has led at least one employer, a union local in new york, to drop coverage for 6,000 dependents. a mandate that was supposed to expand coverage for dependents had the opposite effect in this case leaving those dependents without health insurance. the provisions this law that are supposed to expand coverage for pre-existing conditions are not consumer protections, they're actually price controls where the government says whether an enrollee of a given age is healthy or sick, you have to charge them the same premiums as

everyone else their age. what the government is doing is dictating that the insurance companies have to charge healthy people more than they would in a competitive marketplace so they can charge sick people less than they would in a competitive marketplace. the problem with price controls is they always fail, they always cause human misery because they don't change the market reality, they just encourage people to ignore that underlying economic reality. the worst case scenario under these supposed consumer protections is that the market will implode, and we've already seen that happen in many, in about 20 states where the, where these price controls have been applied to health insurance for children. the child-only health insurance markets have vanished in 20 states and another 14, i think, states have seen insurers leave those, leave that market. the best case scenario under these price controls is that the market erodes slowly as consumer -- as insurers compete to ignore the sick. when you have these price

controls in place and consumers have a choice of health plans, the sickest people gravitate toward the most comprehensive plans, this is, excuse me, a process called adverse selection. and those plans, as researched by some of president obama's own economic advisers shows, those plans, the most comprehensive plans disappear. in order to prevent that from happening, insurers actually compete to avoid the sick not because they're evil or greedy, but that is because what these price controls reward. if they find a way to avoid, dump or mistreat the sick, then their bottom line improves. and there are examples of this happening in places where, in markets and even health insurance exchanges such as the federal employees' health benefits program where people with high-cost medical conditions have run into this problem and where insurers are dropping benefits precisely because they know that the sickest people value those benefits and will go to another insurance company and bring down

their competitor's bottom line rather than that insurance company's bottom line. these, this, these price controls don't give sick people the security of access to care that comes with an enforceable contract, nor the freedom to purchase insurance from insurers competing for business in a free and competitive marketplace. so instead we're making these access to care less secure as well as destroying the nation's. and we've seen this happen already in north carolina. several months ago there were news reports, and the white house was touting this as the success of the law, that north carolina insurer was giving refunds to its enrollees as a result of obamacare. well, what was actually happening was they were dipping into a pot of money set aside to pay the medical bills for the sick as the result of an innovation in insurance called guaranteed renewable, and they were giving that money to largely healthy people. this law has actually raided funds that were intended for sick people to give them to

healthy people, and we call this a consumer protection. in 2014 when these price controls go market wide, those are the incentives that all sick peek in this country are going to -- sick people in this country are going to face. consumers, employers and entire states are asking the department of health & human services to waive these supposed consumer protections which raises the question whether they're consumer protections at all. these folks are begging for protection from the consumer protections. the obamacare is no more going to improve the quality of care than it is going to protect, than these consumer protections are going to protect patients. as kavita mentioned, most of the provisions that are supposed to improve of the way we deliver health care in the united states were not specified in the law. basically, what happened was we created a center for medicare and medicaid innovation where, that is going to run pilot programs, experiment with different ways of setting the prices and different financial incentives, different terms of exchange to see if providers will deliver care that's more coordinated so that doctors will

actually talk to each other about the care they're providing to a shared patient. there are other, there are other innovations, but let's just talk about this one. the problem with these pilot programs, and this approach for reforming health care, is that we have tried it, and it has never worked. medicare has been trying pilot programs for its entire existence, and either those programs fail, or if they succeed in either reducing -- improving the quality of care or reducing the cost of care, they are blocked by the, the corners of the health care industry whose income streams those innovations threaten, the high-cost providers who will see medicare revenues delivered someplace else. so under lobbying pressure, these pilot programs are eliminated. there's an article in the most recent eshoo of the journal of health affairs that polled physicians in switzerland and asked them what would it take in order for you to provide more coordinated care than what you're providing right now, to

join into sort of the accountable care organizations that are discussed in this law? and the swiss doctors said that they would want a 40% raise before they took these steps to improve their quality of care. that's the sort of resistance that you're going to see to these, to these pilot programs. as far as the cost of care, this law is not going to improve the cost of medical care or of health insurance east. the individual mandate, portions of which began taking evict on september 23rd of 2010, are already increasing the cost of health insurance for millions of americans. one insurance company reported those provisions were forcing it to increase premiums for some customers up to 30%. now, we're not going to hear about this from insurance companies anymore because hhs secretary has threatened to bankrupt companies who say it's increased by more than 2%, but you can be sure it is increasing them by more than that. the premise of this law is you

can reduce individual responsibility for health care spend, and people will make more responsible spending decisions. now, others, another reason for the backlash against this law is that many belief the law is just -- believe the law is just overkill. if you look at the pre-existing insurance plans in each state, they've attracted just 12,000 enrollees at last count or 3% of the 375,000 that were projected to enroll. that suggests since the primary motivation for this entire law was to protect people with pre-existing conditions, that suggests that it wasn't necessary to conscript 200 million americans into a compulsory health insurance scream to solve that problem -- seem to solve that problem. the projection that it will e lille p mate 800,000 jobs is striking fear in those battered by the recession, and finally many americans, i think, are taking this law personally. the president promised he would, quote, put an end to the game playing, but then made back room

deals with the drug lobby, walmart and others while senate democrats who were drafting this law used tack dollars to buy votes -- tax dollars to buy votes in support of it. they watched kathleen sebelius, the secretary of health and human services, repeatedly censure insurers who disagreed with her, they saw their tax dollars buy ads where andy griffith uses weasel words to mislead seniors about how this law will effect their coverage. they hear the president continue to say things that they know are untrue, that his own advisers in many some cases and nonpartisan observers in others have discredited like obamacare will allow americans to keep their coverage, reduce costs and reduce the deficit. first, you'll remember, first, we heard that the individual mandate was a tax. then the president told us that it was not a tax. then his justice department went into court to argue that, in fact, it is a tax. at a certain point people start to feel insulted.

so to wrap up, i don't think anyone knows -- newt gingrich predicted this law would be repealed by congress by march or april of 2013. i don't know if anyone can know that's true, but i'm struck by two things. the first is if congress doesn't repeal this law, then we'll be back here on the second anniversary of obamacare, the fifth anniversary, the tenth anniversary having conferences like this one in rooms like one in washington, d.c. and elsewhere around the country, and we'll be asking why health care is still out of control, why we don't have accountable care organizations, improving the quality of care, health information technologies, we'll be asking why, and we'll be questioning why insurers are being rewarded by obamacare's price controls for avoiding or mistreating the sick. and the second thing that i'm struck with and that i think everybody has to be struck by this is regardless of what you think about that prediction, that this law will be wiped from the books in 2013, it's striking

just how plausible that prediction is. it's certainly far more plausible than anyone thought it would be one year ago today. so with that, i will turn things over to ron, and i look forward to your questions. thank you. [applause] >> good afternoon. good afternoon. [laughter] other than that, michael, you like the affordable care act, right? is. >> there are a couple of provisions i didn't discuss. [laughter] >> michael, actually, we've been in a number of places together. the last time i was awarded with three cato institute t-shirts, and i thought i was going to wear them but only if we had an affordable care act birthday cake. that you would celebrate. but i don't see it anywhere.

[laughter] but on the fifth anniversary, maybe we'll have that. you know, you raise the question, michael, early on about will there be an affordable care act years from now. i think the answer is, yes, we will have that. you know, i was listening to david rivkin's presentation, and i was surprised we didn't have much of a discussion about a key issue that will be dealt with if david is right that the affordable care act does not have a basis in the commerce clause. i think it does and used to be a law school dean. i've argued in front of the supreme court a few times. i do think it's constitutional, but i'll leave that to the next panel. bun of the issues he -- but one of the issues he didn't can address which i presume your next group will address is even if court does find that it doesn't have a constitutional

basis in the commerce clause, what happens to the rest of the statute? and you'll hear significant debate about a so-called severability issue, and the legislation does not have a severability clause which often it does have. but the key standard is do other things survive, and the test is certain things that would not have passed but for the provision that is deemed unconstitutional, they are vulnerable to being deemed unconstitutional as well. other things are not, and there's a whole host of provisions in this lengthy piece of legislation that don't even have a color bl relationship, including some of the things i'm going to talk about. i want to focus on two sets of things.

one is we at families usa, we do celebrate the passage of the affordable care act. we actually have a bakeoff in our office. we've got five different departments, and each department is taking responsibility each day to bake a cake. and i have to get back for the first one because i'm told it's going to be delicious and very sightly. but i want to talk about two things. one is why do we celebrate the affordable care act today, those of us who do, on the first anniversary? what has been achieved in this first year? and secondly, i want to talk about something that doesn't get a lot of attention even though it's key to the legislation, and that's the access-related provisions in the statute. so what have we seen in the first 12 months? much of the conversation that

we've heard, really, are about matters that go into effect in 2014. but there are a number of things that have already gone into effect, and i think they're very significant and, by and large, very helpful. since i have a limited amount of time, i won't go into all of them, but let me pick out some of the more salient ones. in the no particular order -- in no particular order they include; young adults which turn out to be the large e age group that is -- largest age group that is likely to be uninsured now can get a certain kind of help, they can continue to stay on their parents' policy up to their 26th birthday. there are 3.4 million uninsured in this age group. i don't know what the number is who have already availed themselves of coverage, but they now can get coverage through their parents. there's a moral here, you have got to be good to your parents,

but it is something, i think, worth celebrating. secondly, with respect to seniors, some seniors have already seen the benefit of this legislation in two different respects. one is, as you know, there is this huge gap in coverage, the so-called, future mystically called doughnut hole where after seniors and people with disabilities in the medicare program have spent a certain amount of money, then they go into a no-coverage zone which is what this doughnut hole is. let me just explain what that gap is in today's dollars. once a senior or other medicare beneficiary has spent $2,840 in drugs, that's when this gap in coverage begins, and it doesn't end until they've spent $6,484, a gap of $3,644.

and with each passing year, this gap was supposed to get larger. last year people who fell in the doughnut hole received a modest $250 check to defray a part of the cost. this year anyone falling into the doughnut hole gets their brand name drugs with a 50% discount. in other words, somebody who does fall into the doughnut hole will now get an $1,822 benefit to help them afford their drugs. they also, seniors are also receiving the benefit of free preventive care so that medicare becomes more of a preventive and primary care system, not just a sicknd care system. sickness care system. i think that is very valuable. third area, small business owners. small business owners can receive a tax credit up to 35% if they have fewer than 25

workers. there are other standards for who is eligible. the number of small businesses that are eligible for this tax credit is approximately four million. i don't yet know how many people have availed themselves of it. but there are over four million who qualify for it. with respect to children, children are the first to receive the benefit of not being denied coverage due to a pre-existing condition. insurance company can't deny coverage just because somebody has asthma or diabetes. ultimately, that gets extended to adults in 2014. there's reinsurance available for early retirees between the ages of 55 and 64s which is enabling more and more companies to continue providing coverage for their early retirees. community health centers have

received a significant amount of money through the affordable care act. the community health centers were projected to provide services to 18 million people before this extra money was provided. and now, according to my friends at the national association for community health centers, they will be able to serve 29 million people this year, a very significant increase. already in effect is a prohibition on lifetime limits on insurance so if somebody has a catastrophic illness, cancer, gets into a bad accident, they are no longer subject to being bankrupted because they have to spend money totally out of pocket once they've reached the lifetime cap. insurance companies now cannot take away your coverage when you get sick. if you've been paying your

premiums all along, there have been a number of insurance companies that have rescinded policies when people got really sick. that no longer is lawful. and that's providing new protections. i mentioned that there's a prohibition on lifetime caps already moving towards increasing annual caps by 2014, there will be no annual caps as well. yet another area is we want to make sure that our premium dollars are used for our care rather than for administrative costs, marketing and advertising and profits. now there is a so-called medical loss ratio requirement that at least 80 cents out of the dollar must be spent on the provision of care if your in a -- if you're in a large plan, it's 85

cents out of the dollar. i think that improves efficiencies. and then last thing i want to point out is this law does not undertake price control. it does insure that there's greater equity many premiums -- in premiums. what i mean by greater equity, somebody isn't going to be charged more just because they've had some illness. what it does do as well is it provides money to state insurance commissions so that they can review the proposed premium increases by insurance companies in their states. and by and large we've seen some significant results from that. in california blue shield of california proposed to increase premiums up to 59% and after the insurance commission reviewed this proposal, they asked blue shield of california to go back

to the drawing board, they have now rescinded that proposed premium increase. in connecticut, similarly, the insurance commission was asked to review anthem blue cross' 20% premium increases. they thought it was unjustifiable, asked them to go back to the drawing board, and that 20% increase has been rescinded. it's going to be a lesser amount. in maine, wellpoint empire blue cross blue shield requested a 21% increase. again, they were told to go back to the drawing board, and those increases are going to be modified. anthem blue cross in california sought an increase of 39%, they were told to go back to the drawing board. they've now rescinded that increase of 39%. that is not to say that these insurance companies didn't increase premiums. they did increase premiums. but by a considerably lesser amount. and the last thing i want to

talk about is an area where i'm afraid our friends on both sides of the aisle talk too little about, and that is about expanding health care coverage. especially for those who are uninsured. republicans as a general rule have not talked about this as a goal. it clearly has not been a priority, it is not a key constituency of the republican party. i would say democrats have talked too little about it as well. because they want to focus the conversation on middle class families because that is politically a more effective thing to do. that said, there, in the last census count there were 50.7 million americans who were uninsured. tib that. -- think about that. that's one out of six people in the population. combined, this number is larger

than the combined -- underscore the word combined -- population of 25 states plus the district of columbia. obviously, i'm talking about the least populace states, but that's extraordinary. and when the census bureau numbers come out in 2010, i suspect the number will be higher just because of what happened to the economy. now, why is this occurring? well, before the affordable care act we've seen a steady erosion of employer-sponsored insurance. it's still the primary way that we provide health coverage. whether that was a wise decision or an accident, i'll leave for others to talk about. but we, that has been the predominant way by which we provide coverage. in the year 2000, 64.2% of the population had employer-sponsored insurance. in twieb it was 55.8% -- 2009 it was 55.8%.

we've seen a steady erosion. and for those people who can't get coverage that way, especially those of modest means, our safety net for so so much of the population is more hole than webbing. and our safety net -- medicaid, children's health insurance program, key safety net -- they really derive their basis of providing coverage from the 16th century elizabethan fore laws, and what i mean, in england when england set up its welfare system, it said that it's not enough simply to be poor. you have to fit a deserving category. and in 1935 when the social security act was passed, that's the system we created, and then in 1965 when medicaid was adopted, the pathway onto medicaid was by virtue of getting social welfare benefits. well, you still see the vestiges of that in terms of coverage today.

we treat kids relatively okay as a result of the confluence of the medicaid program and the children's health insurance program. but the adult populations are treated very differently. and as a result, though kids in virtually all the states are eligible for coverage if they are in a family with income less than 200% of poverty, for a family of three that's a little over $37,000, for families that have adults we have a very different situation. the median income eligibility standard in the 50 states for a three-person family is 62% of poverty or under $11,500. and in a number of states the eligibility standards for safety net coverage is shockingly low. arkansas, 3,150; alabama, 4,447

collars; pennsylvania, $3,600. and in four out of five states if you're a nonparental adult, you're ineligible for any coverage irrespective of income. so let me conclude by saying the affordable care act makes some significant progress once and for all in expanding coverage. it does so by providing some help, direct help to peep with income -- people with incomes below 400% of poverty. family of three, it's about $74,000. and as a result the congressional budget office tells us that they anticipate that about 32 million people who are, who don't have coverage today will receive it. it is possible that even more than 32 million people will get coverage depending upon how well enrollment and retention systems are established through regulations and state implementation. but i think that's a matter for which all of us should rejoice.

thank you. [applause] >> well, thank you very much for the chance to be here today. there's, obviously, an enormous amount that has been said about the affordable care act, a lot of it by me. there's a lot more that we could discuss about it. i'm increasingly tired of hearing myself talk about it, i'll be honest about that. [laughter] but i do want to thank cato for having this event, thank michael, and i especially want to thank ca see that and ron for -- kavita and ron for joining us in the discussion. one of the things that has been forgotten in the course of the debate, the enactment, now the anniversary is that there was a time several years ago, beginning in 2009, when it was a bipartisan conclusion that america needed sensible health care reforms that would control

the growth of spending, improve the efficiency of the delivery system and expand coverage. that was, in fact, a bipartisan objective. what happened in between ended up as a highly-partisan activity and has given me just one more piece of evidence that all partisan laws end up being bad policy. it is unwise in a democracy to push through large legislation on party's votes. those laws are never infused by the best ideas of both sides. as a result, they're not as good. and they immediately become the kinds of objects for overturning that we've seen the affordable care act become among republicans. doesn't serve a country that needs a durable and functional health care system well to undertake this kind of activity, and so i expect us to be bad again many the future -- back again in the future to discuss either the demise of the affordable care act which i view

as a real possibility, or alternatives that would be built upon its shaky foundation. what are the problems with that foundation? well, michael asked me to talk a little bit about the affordable care act from the perspective of budget, labor market and economic policy, and there i think it is, indeed, a dramatically dangerous piece of legislation and at the wrong point in our history. i hope it is now well understood that the federal government's budget is on the road to hell, that there is no polite way to describe why the world's largest economy has placed itself on a trajectory that look like a third world debt crisis where we will knowingly drive ourselves to the point where we run at full employment, trillion dollar deficits, three-fourths to 80% of which are interest on previous borrowing within the next ten years.

and it is for that reason mystifying to me when the very prosperity and freedom that has built on that economy is put at risk by taking a decisive step in the wrong direction at a time when we already have such deep problems. there is no way you can pretend that the affordable care act will improve the government's fiscal or budgetary condition. it sets up two new entitlement spending programs, insurance subsidies for those in the exchanges, and the so-called class act, a long-term care insurance program, both of which the congressional budget office estimates will grow at an average of 8% per year annually as far as the eye can see. tax revenues will not grow at 8% a year annually as far as the eye can see, the economy will not grow at a rate of 8% annually as far as the eye can see. there will be no way either of those things can keep up with

these new spending demands, and the budget will deteriorate, not improve. now, you can paper that over with a variety of budgetary gimmicks and tricks over a ten-year budget window, and that has been done in the passage of this legislation. you can count on savings that will never appear in the medicare program because we haven't reformed the medicare program. its business model remains the same, its costs remain the same, it providers will need the same money, or we just won't cover the men fresh ris. and i think when congress is faced with that choice, it will cover the beneficiaries. you just simply cannot pretend that the class act will collect money inside the budget window and not pay out benefits past the budget window. you cannot leave out the annual appropriations that are necessary to set up and run the program. you cannot do all of the things that they did and somehow trick people into believing this is a good step from a budgetary point of view. and that's if you take it at face value. i think there are two enormous risks to the so-called face

value that have been underappreciated in the discussions of the cost of the affordable care act. number one is the notion that we will give to one family that makes about $59,000 $7,000 in subsidies in the exchanges because their employer doesn't offer them insurance, and we can find another identical family that makes the same money and gets nothing because their employer offers insurance. it is an unfairnd of such mass -- unfairness of such mass proportions that it won't survive in this country. and my fear is that congress, when faced with this gross inequity, is going to say, oh, my god, we have to fix this. how could this have happened? the answer is, you did it, but we've seen that movie. and they'll fix it by giving everybody the money. and it'll explode in cost. and the second big risk is that we'll end up with more people in the exchanges because employers can do arithmetic. congress may or may not, but

employers can do arithmetic, and they understand that there is so much taxpayer money on the table in those exchanges that it is entirely possible for them to drop their coverage -- particularly for anyone under 300% of the federal poverty line, it is a no-brainer to drop the coverage, pay the penalty, give the worker a raise and allow that worker to take the post-tax wage plus the subsidies and buy insurance that is just as good as what they're offering out in the exchanges and still come out ahead as an employer. we have put so much money on the table that it is a no-brainer for workers and employers to degree that the coverage should go away, and everyone should go into the exchanges. if you take the population that's eligible for that kind of bargain and assume not all of them do it, you can double the trillion dollar cost easily over the first ten years or triple it. it is not a law we can afford, and the reason is that we have

somehow disguised, tricked ourselves into pretending that you can say any insurance that costs more than 10% of your income is unaffordable when as a nation we're spending 20 cents of almost every dollar on health care. those two things can't be true. so this is a budget tower disaster of the -- budgetary disaster of the first order, and we may wan t to expand coverage, i understand that, but we have to first genuinely fix the delivery system, control the costs, a cover-first strategy was a mistake from the outset because it covers people on paper, yes, but the moment we put those 32 million people into the system and the providers get overwhelmed, there is no way congress can go back and say fix the way you do business. not a chance, we are so busy helping people that you gave us, we won't see improvements and this system will, i believe, collapse under its own budgetary weight. it's also wad economic policy.

-- bad economic policy. anyone who's thinking about expanding a business or locating one in the u.s. that their future will consist of higher taxes or higher interest rates as well and an international financial crisis precipitated by the united states. that's not a growth central, and that's the position we find ourselves in. it takes the soon-to-be one-fifth of the economy that has health care and imposes few taxes, insurer fees, medical device taxes, pharmacy fees, cadillac taxes, mandates on employers, on individuals, on providers of all sorts, on states, and those taxes, mandates and regulations are not pro-growth strategies. this is not a way to have a sector be more efficient and contribute to the economy, it is in many ways dramatic steps in the wrong direction from that point of view. so i worry a lot about this at a point when it is clear that at the most important priority in

the united states have to be growth, that when we're faced with clear choices between other social goals and growth, growth has to trump because we have too many people out of work, and we are not going to be able to employ them and generate the resources needed for both the public and the private sector without that growth. and we have an anti-growth bias in the bill. the last thing disappointing about this is it genuinely represents big missed opportunities. i think that's true both in the sense of its ultimate partisanship, but it's also true at the fundamental level. we came into this with the need to reform medicare. medicare is the problem from the budget point of view. it's also the problem from a medicine point of view. it's a fee-for-service and siloed system that pays doctors, hadn'ts, drug companies and insurance companies in different silos, and we didn't fix medicare. we needed to fix medicaid. medicaid's a terrible system.

the it's a disitservice to americans who are in it. they can't get access to providers, they show up in emergency rooms at greater rates than those who are uninsured. it's a broken system that needed reformed so that the individuals who got medicare benefits didn't get a shallow promise, they got a chance to have health care. but instead of reforming it, we expanded it on paper and missed the real problem. so i would love to have stood here on the first anniversary of a bipartisan health care bill that took care of the cost problems and enhanced the process for coverage in the united states. instead, we're celebrating the anniversary of something which represents another missed opportunity in health care reform in the united states, a dangerous step from an economic and budgetary policy point of view and something that really cannot survive. and regardless of what we call it, repeal, replace or simply throw up our hands and pray, it will not be this way in the future. thank you. [applause]

>> thank you, doug. thank you, kavita and ron, and we'll go ahead and take questions from the audience now. i'll just make a couple of requests. first, wait until the microphone gets to you after i've called on you. second, please let us know where you're from, what your name is. and, third, try to keep it a question. i understand that questions have to be teed up, but let's try to keep the commentary to a bare minimum. i see one hand up, the gentleman just one seat in from the aisle on this side. >> my name's sam wainwright from the new america foundation. i had a question for mr. holtz-eakin. i've heard the point repeated frequently that insurers are going to do the math, and they're going to see it's in their best interest to drop the coverage and dump employees into the exchanges. and my question is why aren't they doing it now when there isn't a penalty to stand in

their way, and why is the assumption that they'll do it in the future? this and does that -- and does that maybe lead to a deeper reason why employers offer coverage other than just iowa rivet me tick? -- iowa rivet me tick? >> >> there are these competing pressures. the one i described is the pure opportunity for those who are in rell livety low tax brackets and relatively low earnings to make that a financial calculation. for higher income individuals in higher tax brackets, the government has the exclusion of health insurance from taxation, so what we've got is competing federal subsidies and a law that says nondiscrimination if you offer -- you have to offer to everybody. and so the hope and the reason the cbo sort of puts relatively few in the exchanges is that, you know, the desire to take the federal subsidy for high income people will force them to not take it for the low income

workers and that, that will hold. that's the logic. and i understand the logic. we have never before tested that on the scale that we're about to test it. we know that in every company when they began doing their due diligence post-passage, they first found out that, you know, the retiree drug coverage had been changed. they all immediately booked their losses, and they had to. they then sent their hr departments back to do this and they've all come back with the same conclusion which is jeez. and the third factor which is how do you attract employees? at the moment you compete on the basis of wages, plus these tax-preferred benefits. at some point someone's going to, going to go, and it's my prediction, and then the whole industry's going to jump in because they'll be on a different level playing field, not offering that competing on the pure wage because everyone's going to get health insurance. the only question is how. so, you know, i can't say will it happen for sure? but as i said, a serious upside

risk. there's not a downside risk there, it's a huge upside risk. >> gentleman on the aisle. ron or kavita, did you have anything to add to that question? >> well, i would just say that most certainly large employers are loathe to leave the health coverage efforts that they've been providing for their workers. it's a major recruitment device. and now i think there's a tougher question for smaller businesses. smaller businesses, however, one of the benefits they're going to receive from the affordable care act is that they will be able to join these exchanges, these marketplaces. and as a result, they will be able to, in effect, pool

together with other small businesses to get a better deal because they're going to be much larger numbers of people in those pools than each small business alone can provide. so if i had to guess, i mean, we're predicting here, and we don't really know. i think there's going to be little movement on the part of large businesses in terms of moving away from health care coverage. i would think for small businesses there's going to be a very significant number of them that will join the exchanges, will gain what they, obviously, will think will be the benefit of that. whether they drop coverage altogether, i don't know. >> [inaudible] >> can you speak into the

microphone? we have to think about the people watching on c-span. >> mr. pollack, you had said maybe it was an accident in which we came about with this system, maybe from mr. cannon, mr. pollack, is this potentially dumping people off employer-sponsored rolls? is that necessarily a bad thing? >> i mean, let me just, let me answer that in different ways. if we were writing on a blank slate, i know i wouldn't, and i suspect most people wouldn't want to predicate health care coverage on your employment. it was an accident of history, and, you know, when we had wage and price freeze and this was way to get around that. and as a result employer-sponsored insurance grew rather significantly. during the debate about the affordable care act when different folks were coming up

with different ideas about how the legislation should be shaped, there was a very important political axiom. and i'm not saying this in a depracating way. but it's based on the experience that has occurred in previous failed efforts to achieve health care reform, and that is that to the extent that you are threatening people's coverage that exists right now, that's a nonstarter. never work. and that's why the president talked about, well, we're going to enable people to stay with coverage if they like it. that was not intended in any way as a lie. obviously, there's going to be a new dynamic. as the exchange just gets set up, i think you're going to see a fair number of people join the exchanges. you are going to see the small businesses join the exchanges, and people are likely to change the way they have coverage. but in terms of the dynamic of a

legislative and political process, it isn't a precipitous pulling away and requiring you to lee. and -- leave. and i think that was a very important political tenet that was one of the lessons learned in '93-'94. in '93-'94 a lot of people felt that the coverage they had was actually going to be taken away. >> and if i can just respond and build on something ron said. i would agree, i don't think that anyone who was designing a health care sector from scratch would put everyone into health insurance or 90% of the public into health insurance that was tied to employment. among the problems with our employer-sponsored health insurance system are the fact that it increases the costs of care. it increases health care spending and premiums by providing a tax preference, making people feel like they're spending their employer's money, someone else's money rather than their own. at the same time, it denies you health insurance at the moment

you mouth need it in many -- you most need it, in many cases, when you get sick and lose your job. someone said only the definitely could definitely -- devil could have defined our system. it's also important to recognize if we want to fix the problem how it came to be. this is an example of government failure. it was an accidental decision almost that the government made to create an enormous tax preference for employer-sponsored insurance, and that is how health insurance grew in this country because of that enormous distortion of the relative prices of employer-sponsored health insurance, individual market health insurance that you purchase directly from an insurance company and even health care that you purchase directly out of pocket. it was the government that distorted everyone's decisions toward employer-sponsored insurance, and now we're in this terrible fix where every, almost everybody wants to move to a system that provides more secure coverage, that stays with you

from job to job, but it's hard to -- but in order to do that, people would have to leave their employer-sponsored health insurance. you asked the question, how do we know that's necessarily a bad thing? i think the best way to figure, to judge is who's making the decision about whether the individual worker is leaving that employer-sponsored plan for another plan that they purchased directly? i think in this law for the most part, as a result of this law those decisions are going to be taken out of the hands of individuals. it's going to be policymakers and employers making those decisions for them. i think a better way is to give the individual workers the money that the employers were spending on their behalf. it's about $10,000. it's actually the workers' money because the employer takes it out of their wages, and if employer weren't providing health insurance, as doug says, the employer would have to give that to them. the labor market would force them to. let them choose whether or not to stay in their employer plan

or a plan on the individual market, and let their decision, their preferences drive that decision rather than having that decision being driven by policy through tax distortions or provisions of the tax code that distort the cost of one of those options over the other. i think there are much better ways of getting at that problem than the way we're doing it right now, and, well, that's that. do you, did you want to add anything else? >> >> i just want to say getting rid of the exclusion's politically popular. i've been there. [laughter] >> and that's part of the challenge. leveling the playing field a little less difficult. sir, we've been asking you to wait for a long time. thank you for your patience. >> thank you. my name is gordon smith, i'm a citizen that lives in the washington area. this question is largely for mr. pollack and for ms. patel. my analysis is that we've had large technical increases in

medical care. and that they've grown, the technical increases have grown faster than our ability to pay for them. and our economy just can't keep up with it. and for the quality of care that they really could provide. i'm part of an aging population. why shouldn't i work hard in my lifetime and at 79 continue to work each with health problems -- even with health problems so that i save my money and select what care i feel is needed even though i can't afford, the most i can afford and if i can't afford it, so be it, that's my problem. i'm a human being, i've worked hard, i've done my thing. now, my grandfather couldn't afford a ford car. he had to keep his hourses. but i as a grandchild didn't have to pay for them.

right now i could, i would love to have a safer car than i currently drive. but i don't have it. now, why -- >> sir, i'm sorry -- >> why should i have to pay for this health care plan and force it on my grandchildren? why shouldn't i take care of myself, maybe not get the best nursing care that's around, but at least it's affordable for me? why shouldn't i suffer the consequences? >> i'm not sure i actually fully understand your question because i presume you're getting medicare, are you not? >> [inaudible] >> you're talking about not being in the medicare program as an option? the right. right. right. >> so you're not receiving medicare right now. >> there's really not a hype -- you're throwing out a hypothetical. >> [inaudible] >> no, i understand that. i understand that, but are you

participating in the medicare program? >> medicare's for poor people. >> no. no, medicare's for people over 65 years of age, and from be what you said -- >> if you're receiving social security benefits, then you are enrolled at least in medicare part a and possibly part b. >> [inaudible] >> but i think the question was, i think the question was shouldn't you save up over the course of your lifetime and whatever you can afford in your retirement, that's the health care you get. or absent that, shouldn't the government just give you, i think you just mentioned just now a voucher or the money and let you purchase health insurance as you see fit? >> [inaudible] >> you know, when medicare was enacted in 1965, half of america's seniors did not have health care coverage. i don't think that was a good thing. and it meant that many seniors

who are, have at least statistically a far greater likelihood of needing health care than younger age cohorts, many of them could not receive significant care. i think that, i think we as a country should be proud it is now a bipartisan consensus that medicare should not be eliminated. there probably are some different things about the medicare program that are likely to be modified over the next few years, but i think we as a nation have gotten past that. we've said that -- you may not have gotten past it, and while you still get your medicare part a benefits. >> [inaudible] >> but i, i think that we as a nation have come to the conclusion that was a good thing to do, we're going to continue doing it.

i believe that the same is true for other parts of the population who simply cannot afford to get health care without some kind of safety net. and i'm glad that the affordable care act begins to create a stronger safety net under which people won't be able to fall through. >> so let me just say because i heard a different dimension of what you were asking around, you know, if you, if you, like you said, if you wanted to get a ford, then that's what you would get. if you want to get another certain kind of care. i think there's a real kind of, there are a couple of fundamental backup for a little bit for me that i think about when it get into that type of dialogue. so as a health care provider, i don't necessarily want people to get a ford because in this my mind the provision of care is something that if we've got not even the technology, if we have the knowledge to do something to prevent you from having a heart attack or to prevent you from down the road having something, i don't classify that in my mind

as, well, here's your ford option as a doctor, here's the chevy geooption and here's the souped-up version. i don't think that way, that's not how our medical system operates. so one aspect of this is i do believe if we've got the knowledge and the capacity, and we also have the technology, then we need to make sure it's not that people live to be as long as, you know, 200 years old, but that if you're in the system and you come to me for your visit maybe once even every three years even though you should be coming probably to get some other checks, maybe more frequently than that, but if you come to get your cholesterol checked and i find out you've got high cholesterol, you may be feeling fine, but i know from a medical standpoint that you actually probably need to address that. so that's why it's hard to take kind of the analogy of, well, my father bought this kind of a car because that's what he could afford. i completely understand, though, in order for our medicare system to not go bankrupt in the next

decades which it will be, then we need to think very hard about thinking through are there benefits that, perhaps, if you can't afford to put in -- can afford to put in a little more money, then that might be something you do. and that's certainly, i think, the direction -- health care reform is not going to stop with the affordable care act. there's going to be two and three and four as we try to tinker with this. and then the second part of this is how do we actually -- you don't, you know, just the example of when you turn 65, most seniors don't realize if they did that they got enrolled if part a. we need better information. so i completely understand the desire to kind of the money you you earn, the money you get you spend the way you want to, and i i think that's a fundamentally american principle. i think there are several steps, and i would say to you that there's probably an even bigger issue of is medical care just like all other kind of consumer free market type of items, or is there something else to it?

i would say from the standpoint of a clinician, it's more complicated in my mind. but i understand and hear what you're saying about wanting to do what you want with your money. >> and i think we'll have to end it there. i'm afraid the last question is going to have to go to clive. i'm not sorry you're getting the last question, i'm sorry it's the last question. [laughter] >> clive crook from the financial times. i have a question i'd be interested to hear either doug or mike or maybe both of you respond to. do you feel that universal coverage is a correct objective, and if you do, how would you approach it? >> i can -- >> go ahead. >> i can start. and my quick answer is that if your goal is to provide health care to ever-increasing quality to a number of ever-increasing people so that it's always getting better and you're always reaching out and delivering that care to more and more people so that fewer and fewer people are falling through the cracks, then, no, you don't want the

government to set universal coverage as a goal. because the moment it does that, it makes it harder to deliver on that underlying goal which is to have fewer people falling through the cracks. and you can look at what we've already talked about, the tax preference for employer-sponsored insurance. i'm sure people thought that was a wonderful idea. it's going to make health care for accessible to people by providing a tax break for it. it's caused a lot of people to lose their ininsurance precisely the moment they need it the most, when they get sick and can't work anymore. it contributed to the problem that ron was talking about that medicare was intended to solve. a lot of people in their golden years who don't have any health insurance. the medicare program, i think, is another example. one topic that we didn't get into, we've had events about this before, is that large pangs of health insurance like medicare, researchers have had a difficult time finding any health benefits. it's a very counterintuitive

point, but an economist named amy finkel steven actually looked at what the data had to say, and they could find no health improvements among seniors in the ten years after medicare was enacted. they've got some reasons why they think that was the case. i think one of the listens is medicare cause -- lessons is medicare caused health care to explode further, it caused a lot of investment in health care that provides low marginal benefits and in some cases even negative marginal benefits. so that we're actually providing, and i think everyone on this panel would agree, a lot of health care to people in this country that actually hurts them. so i think that these and other steps that the federal and state governments have taken on the road toward universal health insurance coverage have actually made it harder to the deliver on that goal of having fewer people fall through the cracks. ..

>> and the second mistake we make is we don't allow that kind of innovation and competition as result of insurance that would get us better insurance products, give people options to buy better things and i think take them a. we are never willing to run the experiment of having young people learn and experience what it's prudent to bite insurance products. >> and ron wanted -- >> one thing, we do not have

universal coverage. there's no such thing as a guarantee that people get care. that's a canard. what we do have is we do have an in palace of federal statute that requires anybody who is and immediate risk of life or limb, that they must be treated. that's a whole lot different than saying that we provide coverage in care for everyone. quite the contrary. you don't have a right to preventive care. you have a right for primary care. you don't even have a right to specialize get even if it's a significant health problem that you have. you do have a right if you are in immediate risk of life or limb to get care, but that's the extent of it. and i guess one last thing i would say is i think there are lots of beauties about the private sector and the private marketplace, but to try to cure, help cure societal els where there is not a profit benefit to

be achieved by that, it's not a place where we are likely to see private market cure this problem. you have 50 points 7 million people, with each year we've seen an increase in the number of people are uninsured. certainly we've had plenty of time to have the private market get this right. it has not done so. this is one of the areas where there is a need for public intervention. speaker that's going to be the last comment. i want to thank again our panelists to come to talk about these issues. we're going to have a 15 minute break. we will start again at 3:15 sharp with jan crawford, roger pilon. thank you. [inaudible conversations]

[inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] >> we will have more from this cato institute forum after the break. the next panel will be on the legal challenges to the new health care law. house republicans have been trying to repeal parts of the health care law while the effort is stalled in the senate. last week several senators came to the floor to talk about it. we will show you remarks of a couple of them while we wait for

our live coverage to continue. that will happen at 3:15 eastern. first will hear from democrat ben cardin ofth maryland. with my -- to reflect with my colleagues that we celebrate today, the one-year anniversary of the passage of the affordable care act and to reflect on how much has happened to improve health care in america since the passage of the affordable care act. and we have reason to celebrate. if you are a senior in the medicare program and you now know that you can see your doctor or your primary care doctor every year for an annual wellness exam and that wellness exam will now be covered under medicare so you have an opportunity to meet with your doctor and take charge of your own health, you have a reason to celebrate the passage of the affordable care act. if you're a senior that happens to fall within the coverage gap

under the prescription drug benefits in medicare, the so-called doughnut hole, and you've been forced at times to leave prescriptions on the calendar of the drug store because you couldn't afford to pay the cost of the prescriptions, and you now know that there is coverage in medicare if you fall within that gap. for last year seniors, 3.2 million of them, who fell within the gap, received a $250 check. this year the seniors that fall within this coverage gap will receive a 50% discount on their brand named drugs. next year their benefit will be worth as much as $2,400. and by 2020 we will close the gap entirely all as a result of the passage of the affordable care act, you have reason to celebrate that congress finally got the job done. and if you are an american

family, like many, and you celebrate your child's graduation from college only to find out that your child could no longer be covered under your health insurance policy because of the age restrictions, and now you learn that congress has changed that age to 26 so that you can keep your youngster under your family insurance program and that child now has health insurance and you're one of 1.2 million people who benefit from this provision that was in the affordable care act, you have reason to celebrate the passage of the affordable care act. madam president, if you are a smawp owner -- if you are a small business owner who can now afford to cover your employees because of the tax credit in the

affordable care act, four million institutions will be e eligible for that tax credit. soon you will be able to get competitive rates, small businesses pay 20% more for the same coverage as large companies, but congress took action last year to eliminate that disparity. if you are one of those small business owners who are now benefiting from that tax credit or who will benefit from better rates and better choice, you have reason to celebrate the passage of the affordable care act. or if you happen to be a consumer of health insurance, as almost all of us are, and you want value for your premium dollar, you now know as passage of the affordable care act the lion share of your premiums muss must go for health benefits,

reining in the insurance companies and you now know that congress has taken action to prevent the abusive practices of private insurance companies, you have reason to celebrate the passage or if you happen -- in the mountain of west virginia and fell off of a cliff and and flown to the closest emergency room to receive care, was denied coverage because he did not call ahead for preauthorization, tough a reason to celebrate the enactment of the affordable care act. yes, insurance companies denied coverage for emergency care because of requirements for preauthorization or they are denied coverage because of the ultimate diagnosis did not meet

their standard for reimbursement even though their symptoms indicated that you should seek emergency care. i started working on that issue in 1995 known as the prudent lay person standards for requiring insurance companies to reimburse their policyholders for visits to an emergency room where their symptoms indicated that they should go to the emergency room. in 1997, medicare and medicaid were changed in order to provide for the prudent layperson's standard for reimbursement. well, now, all insurance companies must comply with that standard because of the passage of the affordable care act. or if you're a parent who has a child who has asthma or have been told that the insurance company won't provide full coverage because of your child's pre-existing condition and now you can get full coverage for

your child, you, too, have a reason to celebrate the passage of the affordable care act, and if you're an adult and have been told you cannot get insurance because of pre-existing conditions such as high blood pressure or you happen to be like a couple from montgomery county, maryland, who had to get two separate insurance policies because of pre-existing conditions, paying two separate premiums and two separate deductibles, and now you know you can get one insurance plan that will cover your family, you have a reason to celebrate because that, too, was corrected by the affordable care act that was passed by congress one year ago. or if you happen to be a taxpayer who is concerned about the fiscal soundness of medicare or the budget deficit, you, too, have a reason to celebrate the enactment of the affordable care act, because the affordable care

act extended the solvency of the medicare system by 12 years, putting it on a safer basis, making it less vulnerable for our budget. and the enactment of the affordable care act reduced the federal budget deficit by over over $100 billion during the first ten years and over over $1.5 trillion during the next -- during the first 20 years. this is because, quite frankly, madam president, this bill manages illnesses much more cost-effectively, it uses health information technology more effectively, it invests in wellness and it brings down the cost. that's not what this senator is saying has. it has been established what the congressional budget office has told us will bring in savings on

our deficit. our deficit. >> on the senate floor last week. we will be back here live for more from the cato institute forum on the new health care law shortly. and tells in his republican senator john barrasso of wyoming about the first anniversary of the law. madam we will show you as much of thi. as we can into our live coverage gets underwaynt again. objection. mr. brass sew: thank you, madam president -- mr. barrasso: thank you, madam president. madam president, we are just about a year to the day from the day that the president signed into law the health care law that is going to have an impact on all of the people of this country. here we are a year later and we know a lot more about this law. people all around the country know a lot more about this law.

and i spent part of the weekend visiting the folks in buffalo, wyoming, and attending the buffalo health fair. now, a health fair is a place where people in the community get together, they get their blood tested ahead of time, very inexpensive, it's based on prevention, early detection, things that this health care law were supposed to address but again, this health care law has failed miserably. and at the health fair, i talked to people getting their blood results back, checking their cholesterol, checking their blood sugars to see if they had diabetes, checking their thyroid levels. and as these people were getting think blood tested, and many, many people, probably half of buffalo turned out to have their blood tested, they started asking me questions about the health care law and the kind of questions that, you know, any american would be concerned about. am i going to lose my freedoms? am i going to still be able to keep my doctor? will it really to get the -- truly get the cost of my care down?

and regrettably, madam president, this health care law, now a year since it's been signed, turns out it's going to be actually bad for patients, bad for providers -- the nurses and the doctors who take care of those patients -- and bad for payers, the taxpayers, the people that are going to be left footing the bill. because we know a lot more now, a year after the law has been passed, than we did when it was passed. un, people remember this -- you know, people remember this as the law that was crammed through the senate in the dead of night, written behind closed doors, all the unseemly bargains that were cut to convince senators to vote for it, getting by on the barest number of vot votes. things like the cornhusker kickback, the louisiana purchase, the sort of things that offended people all across this country. so people are upsweat this health care law -- upset with this health care law, one, in the way it was passed, despite the fact that the president promised it would be president promised it would be

>> we are leaving this to go back life to the cato institute. this next panel and a afternoon long session on the legal challenges in the new health care law. >> cato's center for constitutional -- important force in the national debate over the direction of the law and the constitution in the courts and the development of judicial philosophy. he's a publisher of the cato supreme court review which puts -- which is a valuable guy. they? the courts decide each term and the prediction of the future of the court. is also an adjunct professor at georgetown university, and before joining cato, roger held five, five senior posts. i thought, i just want to make sure that was right. five senior posts in the reagan administration including at state and justice. and was a national fellow at

stanford hoover institution. and in 1999, i like this, the bicentennial commission presented him with the benjamin franklin award for excellence in writing on the u.s. constitution. roger of course will not be sitting here writing this afternoon but i'm sure that your debating skills will also perhaps be worthy of a metal. then on the other side to debate what is obviously quite has become quite a contentious law, controversial issue, neera tanden is a chief operating officer for the center for american progress. and neera has over a decade of experience in the executive and legislative branch, as well as in campaigns at every level including the presidential level. local government and think tanks. the coo for the center for american progress, chile's strategic planning for the organization, and manages operations and oversees the health care program.

most recently she served as senior advisor for health reform at the department of health and human services. advising secretary sebelius, and she worked on the president's health reform team to pass this bill. in that role she'd develop policies around reform and work on the hill with outside groups in support of the. and before that she has worked on other levels in campaigns. she worked on of course the obama-biden presidential campaign, managing domestic policy proposals. she worked on hillary clinton's presidential campaign. she was a deputy campaign manager when it was then senator clinton running for the same in new york. so we are very privileged today to have both roger and neera to take both sides of this issue and talk about a really, what are quite titanic struggles in the courts over the future of this law. i should say i'm jan crawford, i'm the chief legal correspondent for cbs news.

i've covered the courts since 1994, and there are issues that very infrequently kind of develop and form i think and the way that this case is. it's almost like we know now that we have this kind of gathering, it is a gathering storm off the shore. and it is slowly moving toward one place. and that, of course, is one first street, the united states supreme court. as mr. rifkin said in his comment earlier in the panel, there are several challenges underway right now across the country. all of which will probably get to the supreme court at about the same time. we have legal challenges now. that will be heard by the cincinnati-based federal appeals court, the sixth circuit in june. of the arguments that will be held by the richmond-based

federal appeals court, the fourth circuit on may 10. now that there is now an effort underway to have the atlanta-based federal appeals court here on a very expedited basis by the full court challenges to that kind of gargantuan? that's the one that really is the big one where 26 states have joined forces to challenge this litigation coming out of florida. there's an effort to have those arguments heard the first week of june, with an eye. i think is a clue to all of you because you are sophisticated followers of this issue, with an eye to getting this to the supreme court in that 2011 turn. now, mr. rivkin predicted that means the court could probably be hearing arguments made of 2012 with a decision by the end of june 2012. and, of course, all this, every year most of of course controversial decisions they take the locks to decide.

and why is that significant? the timing of that i think, what will be happening in the middle of 2012? we will be smack dab in the middle of a presidential campaign, injecting i think the courts in a quite significant way, into the contentious controversial political issue so you're going to love a collision of law and politics playing out as a presidential campaign unfolds. and i think it's really impossible to overstate the magnitude of what backlash could be like. at least with seen in the political arena and we are now seeing it unfold in the legal arena heading a square to the supreme court which, as you all know, is closely divided generally with a slightly now conservative tilt but i think all bets are off in what they may do with this case. but let's see what our panelists have to say and predicted first of all, why don't we get started

since we did hear quite an extensive discussion of the issues, and quite a scathing critique of the law by the attorney who is challenging it, david rivkin. i'm going to start with you, neera, and kind of get the response to that. mr. reagan, let me give you a closing that he said are those of you also who were not able to hear his comments, you know, he doesn't really paltry punches. he said the law core constitutional pretzels of dual sovereignty. there's no limiting principle, and neera i know you've heard this before, but if congress can do this they can tell you you've got to go by broccoli and a gym membership. he said that this basically is h.r. and redefinition of the constitutional vision of u.s. citizenship. it rips out whole clauses of the united state's constitution.

so i think what he was really trying to say is, he thinks that this law is unconstitutional. [laughter] >> now, obviously these issues are complex, tenth amendment, congressional power. let's focus on those big ones. there are other issues i think that are still in play, but most of the focus where the rubber meets the road is why the congress exceeded its authority when it passed this legislation, and specifically at the end -- the individual mandate. take it away. and should we switch places? >> are you going to stand here, roger? i was just sick. -- i will just sick. >> so let me just take -- i think the issue of a gathering storm is really a great way to put it, because it was actually quite silent for a very long time. having worked on the legislation from the beginning of the

deliberations in congress through the end, what was fascinating about the debate about the coverage condition individual mandate is it really in a debate that went on for a very long time, or felt like it went on for a very long time, the debate about individual mandate did not become really engaged until really towards the end of the process. and one example of that is that we had legislation senate finance committee worked on legislation in a bipartisan basis, at the beginning of the process. it fell apart. midway through the process, but in a white paper that was put forward by senator grassley and signed on by all the republican members of the committee, the individual mandate was present as part of the legislation. and if you look at senate

finance committee markup of the legislation as late as september in, september of 2009 there wasn't actually, there was no single amendment offered to eliminate the individual mandate or any discussion of it to that extent. obviously later it became more evident issue, and has been discussed, what's fascinating about the debate that we're in right now about individual mandate is that the mandate itself had been until the discussions of the last two years, been considered a conservative idea. obviously, governor romney using individual mandate in massachusetts. and individual mandate as part of his deliberations and his offering health care reform. i remember him offering it in a debate with me and obama versus mccain's health care plan in september 2008. and obviously senator casey

offered individual mandate as a proposal as part of universal health care plans they put forward. in 1993-1984-1995. so the debate around this issue has been gathering. that is obviously a discussion point, and during the process department of justice did actually look at the individual mandate and analyze its constitutionality before it was voted upon in the senate. and it was -- >> you said doj, because her earlier speaker had said that that had not happened. no one in doj or in the white house had really review this. >> that's wrong. so people should go actually ask, ask them about that because, i mean, i received

information about -- i think it was definitely white house counsel on the constitutionality of it. and i presume, i mean, there was a fire wall between us and doj and they didn't directly ask doj but there was a direct conversation there. so, there was obvious he an analysis of this. and i think that analysis took place actually in the fall of, late fall of 2009. so the legislation had been going through the process, but it was definitely before the bill was finally voted upon. and so, i think it's interesting to make the point about a gathering storm because i just want to provide the sort of history of the issue around the mandate itself. i really got this issue from the perspective of policy, and i'm happy to defend its constitutionality. but just to go through why we

had an individual mandate in the legislation, we should step back and recognize that health care is an area in which we have a long history of a strong federal role. so there's two important pieces of legislation which directly regulate the health insurance and health insurance markets and health care overall. first of all, there is a risk which basically regulates large group insurance markets and provides requirements around insurance protection, for preexisting conditions for large group insured. that regulation of large group, large employer plan, plans at ibm and apple has been on the books for about 40 years. there's also something called in hollywood essentially grants a right to care to emergency room care for every american. it is a unique actual footprint.

in the marketplace. it is an area in which the government, the federal government has said that if you are extremely sick, if your life is in danger, emergency room have to care for you. that actually differentiates health care from other arenas because we do not, for example, have a law that says if you're in dire need of a marketplace goods like, you know, airplane travel, you have a right to airplane travel. we do say federal government has said that in this specific area we consider this somewhat different from other marketplace goods because it directly affects your existence. and as a citizen we are establishing that private actors, not just public actors, private actors, so any private hospital, private doctor, emergency rooms, have to take care of you in that situation. ..

>> another reason why we had an individual mandate in the legislation is that we wanted to in essence have regulations of

insurance, and there's bipartisan support for issues around preexisting conditions and ensuring that we end discrimination based on preexisting conditions. it's one of the most obviously popular elements of the legislation and one of the areas where there's been bipartisan support, but experts from across the range believe that you cannot actually have a system eliminating discrimination against preexisting conditions without an individual mandate because essentially unless you have a system -- unless insurers have a large enough pool of people to be in the health care system, what happens is only the sicker people come in and basically destroy the pool, raise prices for everyone, and destroy the pool, and so there had been support for an individual mandate because of

the importance to having preexisting conditions requirements and many americans have felt that it is wrong that we have preexisting conditions, that there is not a system of real protection and noninsurance markets for preexisting conditions, and so the individual mandate was part of the reasons why it was put in was to do that, and i think that is one of the reasons why, you know, that the act itself is constitutional. people feel that their argument is that it is -- the federal government has a role in creating protections, insurance protections for in the insurance market, a market it currently regulates extensively to expand on the regulation and further the regulations and provide real protections for consumers in every corner of the country against preexisting conditions. there was a need for an

individual mandate which effectuated that insurance system, and that is one the reasons why it is properly constitutional looking at the necessary proper clause as a foundation for the constitutionality of the commerce clause constitutionality of the lot itself, and so i'm happy to take on more of the individual arguments, but i thought i'd let my colleague, roger, respond and take on more as we go. >> it sounds like one of the criticisms of the law specifically the midge mandate provision is there's no limiting principle. you're suggesting, well, yes there is, and the unique role government plays in health care is unique and different. >> i would say that, you know, the thing is, you know, once the federal government decided to come in and say that when you are sick you have a right to health care. they basically created a system

where once people go to the emergency room and use health care, other people who have health insurance pay for that. now, currently, those people in the private sector pay for that as well as people pay for that through their taxpayer dollars when their hospitals are reimbursed from the federal government, but that system is cost shifting. right now, you know, if you choose not to get -- you make purchases in other markets, is opportunity really effect me ultimately. i don't end up paying for your purchasing decisions, but what differentiates health care from other arenas is the fact that federal government chose to regulate it in such a model that in these instances we require, we established a right of health

care actually, and that does create a different kind of role that differentiates it from other arenas. >> obviously why this is significant is because of course the constitution sets up this unique structure of government where congress has only limited powers and the rest are reserved for the states. one of the powers congress has is the power to regulate commerce, so this issue obviously that we're talking about now, really does congress, and in this case, does congress, if it has the power to regulate commerce in economic activity, which it clearly does and the court said it does, does it have the power to regular late economic inactivity? someone's decision not to buy health insurance and someone's decision to stay out of the marketplace. the challengers of this law strictly in florida, we heard from the lawyer today, but all

cases make the argument that no, congress can't regulate that passive economic inactivity the scream court and the superior supreme court never ruled on a case like this, and that's why people say, opponents of the law, if congress makes us buy health insurance, they can make us buy broccoli, and what neera is saying and what the government argues is this is different. this is not really a decision that people are making not to participate in the economy, to sit this out, to not spend money on health insurance because at the end of the day, that's really not a real decision. everyone is going to need health insurance, so, sure, while you may not ever need to eat broccoli, at some point in your life, you'll need health insurance. that's how they are distinguishing this case in that it's unique. i mean, that's significant. it could be well what the future of health care reform turns on. with that, roger, if you want to

talk about obviously the individual mandate is really what the heart of this case is, but i'm also curious about your thoughts on whether or not and your thought on this how you would feel if the court just said let's just cut that out. sever the individual mandate and preserve the rest of this litigation. in the panel before us, it was suggested that he would be okay with that, and maybe you can respond to that too at some point. the judges split on that in the lower courts. roger, thank you. >> well, if that's the way the court were to decide, it would be all right with me. without the individual mandate, the rest would collapse, and that's just fine by me. now, one of the reasons i wanted to speak from the podium is because i'm perhaps appropriately for a conference on health care just coming off a week of bronchitis, so i hope i

don't cough too much in the remarks and my voice holds up to the conclusion of my remarks. in any event, the legal battle over obamacare is not about health care or even health insurance. it's about freedom, about the right that each of us has to plan our own lives free from the debtenning hand of government coercion. obamacare is the most far reaching intrusion on that freedom that's come to our nation in our lifetime. because it reaches every american in the most i want mat as -- intimate aspects in our lives in the decisions we make about our health care, turning the decisions over effectively to a faceless sea of bureaucrats in washington in our states and local communities, bureaucrats

who even as we meet here today are busy making out the regulations that will determine whether we will or will not get the care that our families may want or need in the future. that's why so many constitutional challenges have been brought against this scheme which was passed not with the wide support of the american people, but by a closely divided partisan congress resorting to the infamous corn husker kick back, the louisiana purchase, and other shenanigans, and in the face of overwhelming opposition that's grown in the meantime as evidence by the elections last november, the only poll that ultimately platters -- matters in our system of government. as i turn then to that system of government and to the document for which it was authorized, the constitution, it's no accident

that we've heard so much about the constitution over the past few years because those years, those years have seen a massive growth of government at all levels and nothing perhaps other than the financial bailouts symbolized that growth clearly than this scheme that's become known as obamacare. if completed, it takes over more than one sixth of our economy. how is that possible? americans are increasingly asking that under a constitution designed for limited government. the author, james madison, wrote in federalist 45 that the powers of the new government would be few and defined. how can a monstrous scheme like obamacare rise legitimately under such a constitution? well, the answer, of course, is that it can't, but it has, and so the troubling question is how has that happened? the answer is that it's because

we no longer live under the constitution, but rather under something called modern constitutional law, not to be confused with the constitution itself, and the theory of that transition plays a crucial role in the devastating opinion that judge roger vincent handed down two months ago in finding the obamacare unconstitutional, the suit brought against the scheme by no fewer than 26 states, two privet individuals, and the national federation of independent business that represents small businesses all across the country. i'll turn to that opinion in just a moment, but first i want to develop very briefly the point i just made, that we live today largely under something called constitutional law, not the constitution. in his open opening address for this conference, david gave us

an analyticalling the of the transition. i'm going to offer more of a historical account. to do that, however, we have to start not with the constitution, but the declaration of independence because that's where the american vision of limited government begins. in the declaration, jefferson begins by placing us in the natural law tradition, the tradition that stretches back to antiquity, running through the roman law, through the 500 year evolution of the common law, through the writings of john locke, the institution of separation -- discussion of separation of powers, all of which jefferson drew upon in drafting the declaration. it is one of limited government to secure our equal rights to life, liberty, and the pursuit of happiness. it could be stated no more simply than that. each of us has a right to pursue happiness working through life

with government there to secure that right and do the few other things we've authorized it to do, and that's the vision they took with them 11 years later when they drafted a new constitution to create a more perfect order, and we see that right from the preamble which places us back to the state of nature tradition that locke wrote in, that jefferson wrote the declaration in, and the framers invoked in the preamble when they started, "we the people" and established this constitution. in other words, all power starts with the people, they give the government certain of those powers the rest to retain. then you look at the body of the constitution itself, and you will see the strategy that madison had to once authorize, institute, and power, and then limit the government that was created through the document once ratified. he began, first of all, by dividing power between the federal and state governments,

with most power left with the states, dual sovereignty as referred to earlier. he then separated power between the three branches, each branch defined functionally for a legislature, independent judiciary, a unitary executive, provision for periodic elections to fill the offices set forth in the document, but the main restraint on overweaning government, and remember, they fought a revolution to rid themselves of overweaning government, took the form of the doctrine of enumerated powers. i focus on this because it's at the core of the argument against obamacare. the doctrine of enumerated powers can be stated no more simply than this: if you want to limit power, don't give it in the first place. you see it in the very first sentence of article i, all legislative power herein granted shall be vested in a congress by

implication, not all power was herein granted. look at section viii, and you see the 18 powers begin to congress. the power to tax, borrow, the power to regulate international congress and so forth, and culminating until 18th power, the necessary proper clause which ensures congress the means to secure ends to other powers. look at the last documentary evidence from the founding period, the 10th amendment, and you see this doctrine of enumerated powers made expressed. the powers not delegated to the united states by the constitution, nor prohibited it by the states to reserve the states protectively or the people. in other words, the constitution establishes a government of delegated e enumerates, and thus limited powers, and the 9th amendment makes that clear in the ob verse where the 10th speaks of powers, and the 9th

speaks of rights. the enumeration of constitution in certain rights shall not be construed to deny or disparage others retaped by the people. we have both enumerated and unenumerated rights. it was an afterthought. does this mean we had no rights vis-a-vis the federal government during the first two years? of course not. the reason we had rights is because the federal government had no power, and where there is no power, there is by definition a right. indeed this came up in the very rational for the 9th amendment during the ratification debates because it became clear during those debates in the states that the constitution would not be ratified unless a bill of rights were added, but there were objections, two main ob objections, the bill of rights would be unnecessary and dangerous it was said. unnecessary because why declare

there's freedom of speech, for example when no power is given with which to violate the freedom of speech. notice the doctrine of enumerated powers again. it was the center piece of the constitution. a bill of rights would be dangerous. why? because there's principle and infinite number of rights, you can't enumerate them all in a constitution, but ordinary principles of legal construction and the power to do so is construed by those enumerated are meant to be protected in counterdistinction from those who are not. that's why the 9th amendment was added. what emerges in the constitution is the same one from the declaration. it's a world where we are free, pursue happiness, by values as he works his way through life, living life entirely in the private sector with government there to secure those rights and the few other things we authorized it to do under the doctrine of enumerated powers, and we lived under that more or

less for 150 years. it wasn't perfect to be sure. there was the documents oblique recognition of slavery. the framers wrestled mightily with it. they thought it would wither away in time, it took a war. they provided federal remedies against state violations of our rights, but still, it was essentially a limited government including in the last decades and early decades of the 20th century. the great water shed, of course, comes with a progressive era. at the end of the 19th century and beginning of the 20th century from which such institutions like the one neera serves, takes its cue. the era where by there was a fundamental shift in the government. the progressives rejected division of the founders and subsequent generations. their idea was not that government was a necessary evil rather it was an engine of good

and instruments of which to solve all matter of social and economic problems. it was to be, if i may sum up the dupont ad from several years ago, better living through bigger government. they were looking to german schools of big government of government, looking to total totalitarianism with whether it secured rights, but with reference whether it provided the greatest good for the greatest number. notice the rational, not to secure rights, but provide various goods and services. of course, the only thing that stood a fort the agenda was the constitution and the willingness of the courts to enforce it, which they did for the most part during the early decades of the 20th century, but, of course, things came to a head during the new deal when the focus of the progressives now called liberals

shifted from about vism, political activism at the state level to political activism at the federal level, and during the first administration of franklin d. roosevelt after the court found one policy after another to be unconstitutional because beyond the authority of congress to enact, roosevelt, after the landslide election of 1936, unvailed his infamous court packing scheme, his threat to pack the court with six new members of his own choosing. there followed the famous switch in time. the court got the message, and began rewriting the constitution, not the way the civil war generation had done it through the article 5 procedures to amend the constitution, but rather by turning it on its head, and it did it in two main steps. in 1937, it e visuated the doctrine, the center constitution of the institution, and in 38, it gave us a theory

of judicial review. with that, the flood gates were open to the modern regulatory state. i'll focus on the commerce clause, because that's what's at issue here. in 1937, the court held effectively that congress had a power to regulate anything that affected interstate commerce. well, of course, there's nothing that does not at some level affect interstate commerce, and so now the flood gates were open to the modern regulatory state. congress, however, could not deal with all the legislation that was brought before it, and so in 1943, we had the third leg of the modern executive state when the court began to delegate to the executive branch the various legislative functions that properly belonged under article 1, sentence one of the constitution, namely, all

legislative power herein granted is invested in a congress. well, they began delegating with the decision of 1943, thusdorinn executive sate that we know and love so well today where the agency exercises executive and legislation and judicial powers under one branch contrary to the instructions from the framers. we essentially turned the constitution on its head, and that's how we got to where we are today. here's the crucial point that judge vine sent makes in outlining the history. as far as we've gone in permitting the federal government to regulate all activity that might in the aggregate have some effect in the interstate commerce, never has the supreme court taken that last step in sanctioned the

government's regulation of inactivity, never has the high court said that the commerce power reaches mere mental activity. the decision to not act, yet that precisely is what judge gladis has since done in her decision more than a month ago in another obamacare challenge saying congress under its commerce power can regulate the mental activity, her words, of deciding not to do something like buy health insurance all without a sled of supreme court precedent to guide her much less constitutional authority, which she admitted, and that is how step by step we've abandoned our constitution in favor of modern constitutional law crafted by judges often under the political pressures of the day.

well, judge vincent and before him, judge henry hudson of the eastern district of virginia, have stood their ground and their to be commended for it. they both said in their separate ways that their job is to apply the law. in this case, the law of the constitution, and as that law has been mangled over the years as far as it has been stretched, it has never been stretched this far to enable congress under its power to regulate interstate commerce to compel individuals to buy a product from a private vender. as lopez and morrieson, two cases decided in 2000, made clear there are limits on the scope of the commerce power, nor will the necessary and proper clause help because that clause is par sidic upon congress' other powers.

it affords congress the means to carry into execution those other powers or ends. it doesn't afford congress additional ends. moreover, it affords only those means that are necessary and proper, and that was the point judge vincent drove home repeatedly. a reading of the commerce clause in conjunction with the necessary and proper clause that renders congress' power effectively limitless cannot be proper he said because it vitiates the very structure and purpose of the constitution, to limit the government that was brought into being through it, and so i return to where i began. this case is about liberty. it is only incidentally about health care and health insurance because obamacare's individual mandate extinguishes the last break on limited government, the simple right to be left alone to

do nothing. it must fail, failing which constitutional government itself will be extinguished. thank you. [applause] >> thank you, roger, for that really quite detailed historical review, and as roger makes a point, neera, we had a supreme court that really beginning in 1937-42, really for 50 years assumed that congress could pass every regulation and everything affected commerce, and as roger mentioned came the 1995 decision in the lopez case where the court in a 5-4 vote struck down a lot that prohibited guns near school zones says it's got to be more than economic activity in that and the morrison case in 2000, but you argue, and the

government argues, that this case, obviously, is highly significant to commerce. it's not guns in a school zone. it's decisions on health care taken together affect the economy. everyone will have to at some point have health insurance, so do you see this supreme court -- i mean, i kind of want to look forward here because this is the case of first impression, do you see this supreme court seeing this as economic activity, this individual mandate, as this seemless look of congressional power, or do you think like roger does that this is, in fact, not the way courts can look at it. we'll ask you later, roger what you think the courts will do. >> first in terms of the supreme court, i do think there are sort of a mix of conservative elements, and there's some conflicts in conservative

thought in terms of how the supreme court will rule. i don't know how the court will rule. i find it fascinating that people discuss in detail how they think the court will rule. >> like everybody knows who wins the ncaa tournament; right? >> that's true. i find it easier to call elections than it is to call the supreme court, and i actually like to believe that they are people who transcend their political constraints though sometimes they challenge me in my theory, but i would say that, you know, there's two strains. there's a very wing with a sense of, you know, sort of limited government kind of perspectives to the court, and then there's those who have shown a degree of deference to executive and congressional action, and i think that those issues are a

little bit in conflict in this case, and see how the court rules, and i don't presume to judge how they will rule. there's obviously language ect. that points to one side, and if people were perfectly consistent with that language that shows a kind of congressional deference in these situations, then i'd say we're free and clear, but obviously lopez and other recent decisions make a distinction about using the commerce clause for only economic activity. obviously, we -- i believe and the obama administration is arguing that an area which touches such tremendous amount of economic activity is economic, so i think that's a conflict. i would like to take on a few, or just address a few things that roger referenced, and i would say that i deeply respect

that the historical view he has of the constitution, and the perspectives of the constitution, but i would say that this argument around the 1930s locke court, what i found very sort of interesting about this perspective on the exceedingly limited role the government has and how add heerpt to originalism would find that much of the modern economic state would be in regulations thereof as a matter of an economic state would be unconstitutional. i would say that we have now lived with you know, in my reckoning about 30-40 years of o

conservative supreme court. we've had nominees named from the conservative presidents. one can argue that some of them may not adhere to roger's vision, but they are conservatives, and this -- these courts for decades have chosen not to offend the lockner decision, and i think that that vision of the fusion, roger's vision of the constitution is one that is deeply, deeply in contest and has been in contest for hundreds of years. the argument about america that is at the heart of this. he can argue that progressives, and i do work for the center for american progress, have an extra

constitutional vision of the system of laws and of constitutional decision making that our view that we have a living constitution that should, to some degree, acknowledge the realities of the world we live in today, and that the reason why the constitution speaks in broader language is not as restrictive as statute is because our founders recognize that they could not determine what america would be 250-300 years from the times they lived in, so those who arguer for a broader constitutional perspective obviously limited by the text and having some strong adherence to the text, but still breathing to the degree that we recognize the facts in the way

people live is not -- is not a vision that is not respectful of liberty. we define liberty just we may have a different vision of what that liberty means. for example, i, migs, personal -- myself, personally believe it is not respectful of somebody's libberty interest that we argue we live in a world where people, a person who is stricken by cancer, they did nothing -- had nothing to do with it, they are just unlucky. they can never get insurance again. i believe it is not in that person's liberty interest to ensure because they are a victim or a whim of the market. when we live together in a country, we can make decisions that as a country is not right, and it is in the liberty

interests of each and every american to say that we can band together and say it's wrong for insurance companies to do that, and therefore, i believe it is, you know, it is in my view that the affordable care act in protections within it and protections for preexisting conditions are actually absolutely in the liberty interests of the american people and what i find disconcerning about the conservative argument around this, and not all conservatives, there's many conservatives who adhere to roger's vision of the constitution which is one strain, but there are others who argued in other contexts against judicial activism, against the judges, unelected judges making decisions about -- against those who are elected, and i find it -- i find it surprising that those -- that group of conservatives, again, i say,

roger is not among those conservatives, he's held his views consistently, but there's a string of conservatives holding on a different way in congress and chosen in this case, that deference should go out the window. >> january, could i -- jan, could i respond? >> well, just a minute. she gets to respond because you did lay out a view of the constitution she doesn't share. for those of you who don't really follow the supreme court commerce clause gurs presumption of -- one the great passions really was scaling back congressional power. he thought it had gone too far. he cared about this, federal power, vis-a-vis the states. that's when we had the low --

lopez discussion in 1995. people counted believe it. along comes lopez and changing everything, the chess board pieces are completely rearranged. that was the renquist court. and sandra day o'connor cared deeply both those issues to. who is to say how they would rule if they were there. my guess is they would strike it down. we have an entirely new supreme court. we don't know if john roberts cares about congressional power and commerce clause like his predecessor did. we don't know about justice kennedy, the swing vote, will rule or justice scalia. when you think originalism, you

think sley ya, but in the medical marijuana case and roger, i want you to respond to this too, justice scalia allowed federal power and was highly criticized by conservatives by abandoning originalism, and the conservatives said the only originalism on the court is clarence thomas who would not have allowed the federal powers. he can say he's optimistic, thinks the courts will strike it down, and maybe you're optimistic they will uphold it, but i think this is one of those where we have no idea what the supreme court is going to do, and they may well not know, but i don't know. i know you want to respond to near, but i want your thoughts on whether or not you see any clears, what you make of justice scalia's opinion in the race case. does that bind him, he goes into the necessary and proper clause in the decision, and justice

kennedy was in the majority in the race case, the medical marijuana case, so do you see clues on how the courts will approach the case? please respond to that. >> no, i don't see any clues because the roberts court has not had any enumerated powers case on all fours with lopez or morrison. we haven't had any true case to give us an insight into that. the closest perhaps we could come is the big campaign finance case which -- in which the conservatives on the court held their own, drawing a blank on it now -- let's see -- citizens united, of course. there, of course, they did stand their ground even against the popular wave that came from congress and from mccain

feingold, but to return -- i'll just respond to two of the points that neera made. first of all, she said we lived with 30-40 years of conservative supreme court, and they haven't done much to upset what she called the lockner era court. that's because the court evolved. it was initially a reaction by people like scalia to the judicial activism of the late 50s, 60s, and 70s, but that reaction was only tepid. it went after the rights activism that the conservatives sometimes rightly and sometimes wrongly saw on the war and in the courts. it did not go back to the first

prifns pls of the matter, mainly the doctrine of enumerated powers that had been lost in 37, and so when i move from the justice department to the cato institute in 1988, one of my main goals was to establish the center for constitutional studies to address this problem. in fact, even before that, any conference that cato held in 1984 on economic liberties in the judiciary which i organized even though at the time i was serving in the reagan administration and spoke at as well, we had the libertarian camp which obviously i come from represented by richard epstein and the circuit. a book came out after that on that, and it was a classic battle between the two sides, but that's an issue, i, myself was working on as early as the

mid to lit 70s when i was doing by dock rat at the university of chicago, so there's been this struggle all along, and since the early 90s when we hear at cato especially as others joined us along the way started promoting the revival of the enumerated powers, not simply the attack on liberal judicial activism, we had seen a shift, and there are many more people today calling for this fundamental return to first principles and to the idea of revivalling the -- reviving the doctrine of enumerated powers on one hand and securing rights enumerated and unenumerated on the other. this is why you haven't seen changes yet in the supreme court other than the outliers like lopez. i suggest we'll see more of this with justice thomas, the closest

we got to that, and to see that, read his concurrence in the lopez decision. now, the second point neera made that i want to address is a point that's more relevant to our discussion today, and indeed she states it and she and her colleagues in the response to judge vincent's decision speaking of, and i quote, "one of the insurance industry's most abusive practices, denying coverage to patients with preexisting conditions." abusive? that is simply an exercise of the insurance principle. you don't ensure known risks. you can't wait until your house catches on fire, and then go out and buy an insurance policy. the very idea of insurance is to protect against unknown, unforeseen risks, not risks that are man phase, -- manifest, and so the reason a

company doesn't ensure people with preexisting conditions, or if they do, charges a premium for doing so is because they are a greater risk than those who don't have those preexisting conditions, and so we are not talking here about any abuse at all unless you believe that people have a right to insurance at a rate that they think is appropriate for them as opposed to a rate that they actuary yal tables require the insurance company to charge in order to stay in business, and so the idea that you can order a company to insure at standard rates people with preexisting conditions simply underminds the insurance principle. i dare say neera wouldn't say that you should be able to go out and buy an insurance policy on your home once it catches fire, yet it's the same exact principle here.

you can't go out and buy an insurance policy once you have a preexisting condition at the standard rate. it simply underminds the insurance principle. she will say, that's precisely why we have to have the individual mandate, well that's a constitutional issue. we're no longer talking policy anymore, but the constitutional issue, and there i put forth the arguments why that will not wash not at least as long as we have a constitution nor limited government that prevents people from ordering people to order products from private venders. >> i guess what i'm arguing is it is proper for the federal government to say because so many people have demanded it and it is obviously something that is, has, again, had biseparate san support -- bipartisan support that people

who have preexisting conditioning should be able to get insurance, not at a rate set by the government, not by a percentage set, we aren't talking about, for example, president nixon's wage and hours laws, just saying they should not be substantially priced out of the market, and that is the basis of modified community rating which existed in the states, so what that means is that insurance rates go higher so they can take into account the fact that they have a pool that conditions and has people with preexisting conditions in it, but that we also believe that in a system where not everyone has health care provided by the government, for example, we don't have a single payer system, in a system where we have private insurance that we insure that those people are not subject to the vague reasons

in the market and are not allowed to have health insurance, but that they have health insurance. that is the distinction that i'm making. i'm not saying that we should regulate the price of those things. i'm just saying things that it is a legitimate act of the government to ensure that those regulations are permitted. >> all right. obviously, a stark competing views of the constitution which means stark views of the future of this law. we're going to open this up to questions for the audience, and while they are coming up with the microphone, let me get your brief response on this. a woman in the add audience, and i don't know if she's here anymore, but asked the question how can we have this law, this massive law? basically, how could congress pass it and president signed it if it's unconstitutional? department they think about these -- didn't they think about these

things? not a bad point, and then another person on the panel said partisan laws, generally which this was, of course, make that policy. the question while waiting for the microphones is here we have a law seems it's heading to the supreme court divided 5-4 with one judge the swing vote. what would that mean, i think, for the supreme court for political discourse if the future of health care came down to let's say justice kennedy, one vote, this entire legislation, comes down to one justice on the supreme court? anyway, i'll sit down, and we'll take questions from the audience now. >> do you want me to -- well, just on the issue of this, which

i think, what's unfortunate so far is that the courts have basically split on partisan lines, and i think that's kind of an unfortunate thing for those who care about seeing the courts as a political actors. we have judges who've been named by republicans basically finding against the law, and judges named by democrats against -- for the the law. some argue the issues don't have standing at this point, and some people are kind of reaching to make that decision, but i think the -- i would say one thing just to respond to something roger said earlier which is what's at stake in the decision is the individual mandate. there are nine titles to this law, eight of them do not touch on the individual mandate. i obviously believe the individual mandate is

constitutional, but in terms of -- if one were to have conservative principles of severability, you could find the individual mandate unconstitutional and still hold that most of the law will stand, and in addition to that, while ramminger views and believes the law will fall apart, and i think it will be undermind by the lack of individual mandate, even experts, you know, even strong proponents of the individual mandate believe that if you get rid of the mandate by itself, you'll lose coverage for people, some estimate as high as 10 million, but you will still have a bill that covers 20-25 million americans at the same cost. >> roger, explain what a 5-4 decision means with the conservative and majority

justice kennedy joining the conservatives. >> it may come down to one vote, but didn't the vote in congress do that also? indeed, it was passed by one party as against the other, and we have since had a referendum, and the referendum was overwhelming, and so if that's what it comes to, that's what it comes to, but i don't think we have heard the end of this. >> right. >> after all, let's be candid. there were a number of people who rose and did say this is nothing more than a trojan horse, a stocking horse for single payer because there is no way the insurance companies are going to be able to operate under the system without becoming cardinallized, and that's exactly the history of the progressive movement.

all these fine-sounding laws passed during the progressive era ultimately resulted in car dalizing whole industries. read how congress rewrote the constitution published in 2006, and you'll see the sorted history of that. this is one more example of it. if this survives, comes to pass, and eventually we will have a cartelized insurance industry nothing more than state capitalism, or we will have single payer like the europeans, and when that happens, you will not have the choices that you have today. i will give you just one example. we have miracle drugs available in this country because we have a relatively free market, relative to the rest of the world, in research and development. it takes about 15 years and some billion dollars to bring to market every new miracle drug,

and most of medicine today is farm pharmacology. those drugs are not available in europe because the countries there are not pay the price that is necessary to acquire those drugs, so whereas we have third generation drugs, they are still operating under second generation drugs. that's just one example of the kind of thing that lies ahead if this bill survives. >> all right, thank you, roger and neera. you had your hand up first. >> it's a pretty simple question. while members of congress have the right to exclude themselves from the exchanges and keep their own health coverage plan for which the american taxpayer already pays 70% of their health care. >> so as was passed in the bill, members of congress are in the

exchanges. they are actually in the exchanges. there's a question about their staff committees, but the members of congress themselves are actually, are actually in the exchanges themselves. that was part of the bill that passed ultimately, so the question is whether -- and there is question about some of their staffs, but they, themselves, are actually in the exchanges which i'm happy to go and find the piece of the bill itself. unless something changes and pass an amendment or something to do that, then that would be a problem. the one thing i would just -- just to respond very briefly to roger's remarks about socialism, i would say that the ironny of this whole debate is that it is around pure ri private insurance and regulations around purely private insurance. there's obviously many who supported the public option. the public option did not pass in a democratic congress, so i,

myself, think it might be hard to get to socialism considering an offer of a public option was not entertained by democrats, but, and ironically enough, if we have a system that offered and demanded everyone have single payer like medicare for all, the constitutional arguments around it would e evaporate. that's an ironny we deal with because we are obviously championed the public -- the private insurance system that was developed, but it remains true nonetheless. >> neera, socialism is a label that covers a variety of arrangements including highly regulated industries such as being proposed under obamacare. when you transfer rights from one party to another, you socialize the liberties that are at issue. you don't have to take over whole companies and put them under government control to have

socialism. socialism has many degrees, and this is one variation of that term. >> it's just -- i'm happy to note that we live in a socialist society now, and i just didn't recognize that when i -- in my every day discourse. >> well, i have for some reason recognized it. >> sir? >> i'm terence burn, i'm unaffiliated. i heard ms. tanden and ms. crawford state twice health care is different from other products giving health care a unique standing before the courts because health insurance, health insurance is a product that everyone, every single american will sooner or later need. if the constitutionality of the mandate and the affordable

health care law hangs on this principle, it will indeed fail because i can easily name several people off the top of my head who have no need and will never need health insurance. bill gates, donald trump, oprah winfrey, these people don't need insurance. they can pay for their own cure. >> just so there's not any mistake or impression here, i was characterizing what the government's argument has been in these cases for why health care is different. that is not what i said my view necessarily was. neera? >> yeah, actually, that's one of the reasons why i made a different argument than what the government argued. you know the -- [laughter] >> cocktail hour. >> okay, we have to end soon. let me state that quickly.

one of the differences between health care and other arenas is it's not simply let me say that someone needs health care or health insurance at any given time. what is different that we have a situation in which the government has mandated that people have an absolute right to care by private actors, and when one the government decided to do that, that meant that those people, those people's costs are shifted on to other people, and that is one of the challenges that we live in the health care system which is unless you have a system that brings everybody into health insurance, you don't -- you always deal with that cost shifting, and i'm happy to -- >> i think roger wanted to say something. >> the gentleman is absolutely right. there are lots of people, not necessarily the financial

resources of big gates or warren buffet, who would prefer to buy, say a very high deductible insurance policy, $10,000-$20,000 deductible and pay for their regular medical expenses from their pocket because the administrative costs of first dollar coverage are horrendous. >> suspect that, roger, what the plaintiffs, certainly the ones here in the dc case, a group are arguing that. >> absolutely, absolutely. and i mean, because, let's be honest, what we got to do is not so much health insurance. it's prepaid medical care is what it is, and this is nothing like what insurance is designed to be, but you can't buy those high detucketble policies under pomcare as -- obamacare as is plays out because they cost less and

therefore you don't have the money contributed to the pool necessary to pay the cost of all those people insured with preexisting conditions of people who don't exercise, don't eat right, smoke, and do other unhealthy things that leads them to be drains upon the public fisk. >> who's next, clyde? >> thanks. clyde kirk from financial times. i wondererred in neera tanden could take this question. whether it's tewingal to eat broccoli once a week. it was said that was a dumb law because nobody can imagine congress passing the law. . .

>> wrong, unconstitutional, i think they are perfectly good distinctions. my own view is that people who want to attack the law should actually be attacking intalla. they should say it was wrong for the federal government to require people for private

actors take care of people when they are sick. but i think this is a political discussion, and for the president, it -- maybe roger would make that case, but i don't believe 26 attorney generals would make the case, because they know the public would find it repulsive. i believe this is a different case. i would applaud those who would attack, and require people that the federal government can't take care of the sickest at the door step. >> well, then you can applaud me right now. >> i applaud roger. i made that point already, roger. >> you can because i do believe that there is no right to health care anymore than there is a right to housing, food, clothing, et cetera, expect from children and their parents, what

have you. if there were a right to goods and services, there would be an obligation to provide those. that would be intrusion on the freedom to plan and live your own life, the fundamental freedom is the freedom to be left alone. if you want to get rights to goods and services, you do that through contract. not between strangers, forced to come to the aid of others. i'm talking about the good samaritan principal, which is the welfare state small. the good samaritan, if you remember the bible, was a case that you came to the aid of someone in need because it was the right thing to do. it was voluntary. it was not because you were forced to do it. there was no virtue in forced charity. so to get back to the general point, if this law were eliminated, people would then have every right to join together to provide for the

insurance or care of those who are indigent and could not provide for themselves. the americans are a very generous people, and they would do so, but they hate forced charity. that's the first point i would make. the second point that i would make in response to the questions -- >> yes, i want to know. >> -- is very medicaid or medicare are unconstitutional. of course they are. did you expect me to say anything expect that? in fact, -- good. you have now heard me say it. but having said that, once you've created this network of dependencies, people have paid into the social security all their lives. now they are retired. you cannot then take it out from under them at this point. that's why we have to gradually work our way out of this various cluster of socialized arrangements that we have

created. and we are going to have to do it over a period of time with social security, for example, the way out is to allow younger people to have private accounts that are portable, unconnected with their jobs that they can take with them and this is the way it's done in many countries around the world. our own jose pinara, our own distinguished fellow, he instituted the chilean system, which is better than our system which is a ponzi scheme that is going broke. the answer to your question, yes, these are unconstitutional. just after the fall of the wall in eastern europe, getting into socialism is very easy. getting out of it is a slow arduous process. >> we have two yeses. >> i think we have time for one

more question. you had your hand up from the beginning. >> the questions change as the conversation goes on. but i would like to know whether -- well, i guess from mr. pilon whether attacks in lieu of a mandate would be constitutional. not desirable, but constitutional. perhaps from a stand in whether other schemes are achieving the same result of avoiding cost shifting were considered during the legislative process, perhaps a tax as much of a bugaboo as the word has been the last couple of years -- >> you are eating into your answer time. we have three minutes. >> let me bleed into the street card. which i think mr. pilon would refer.

>> okay. we have three minutes, roger. can you answer that? >> yes. first of all, every court that has considered the tax angle of obamacare has found it to be not a tax. it's a regulatory penalty. that issue, it seems to me, is not going to go anywhere. >> he had a different question, i think. >> no. you asked me whether a tax tax - whether you could tax -- sure. in other words, if you had something like the single payer under the commerce clause and you tax for the purposes. >> doesn't have to be a single payer. it could be a subsidy situation. take the first $500 from your social security tax. >> no, under current ratings, that would be constitutional. but my problem isn't with current readings with the post 37 reading.

>> we can have that conversation later. >> yes, there were absolutely other ways to do this. and one the the the -- you knowu you know, i worked in the primary, in the presidential cycle. the president had not supported an individual mandate. and the reason why he moved to support an individual mandate was he has himself articulated it was because the most effective way, most cost-effective way to bring in more people at the sort of cheapest price in some sense. and so -- and, you know, originally, for a long time, we had bipartisan support for the issue and lots of republicans. you'll notice a lot of the betters that went to the president from the republican leadership, none of them mention the issue. it wasn't an issue that any of the republican leaders had mentioned for a very long time. so that was an -- there was just strong support in the congress for it. and so i would say there -- we did look at things like

automatic enrollment. other arenas where people could opt out of having health insurance. and just quickly, the problems with those, although they could be feasible options in the future, the problems with those is that you basically -- you basically pay the same amount of money, if not more amount of money from the federal government's perspective, and you just cover fewer people. so it was less cost effective than having an individual mandate. i should make this point really clear about the individual mandate. 86% of americans have health insurance today. the individual mandate does not touch those people who already have coverage. and they are not required to really do anything as part of the individual mandate. so -- but, you know, other options were looked at. those options maybe looked at again in the future. >> all right. well, i just want to say thank you. this concludes this afternoon of

discussion. thank you for roger and neera. we are going to have a reception. there will be a reception afterwards if you want to continue the discussion. but thank you very much. [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations]

[inaudible conversations] [inaudible conversations] >> measure about health care in a -- more about health care in a couple of minutes. they look into consumer privacy, the head of the federal trade commission and officials have microsoft, intuit, and the civil liberties union at 8:30. at 10:15 eastern, actor harry shear, known for voicing several actors on "the simpson's" talked about his adopted town of new orleans. that's at 10:15 eastern time from the national press club. >> tonight on c-span, marking the 8th anniversary of the department of homeland security, tom ridge and michael chertoff

and janet napolitano. >> well, you know, people asked me do i miss being secretary. to a certain extent, i say yes, i miss working with the people that i came toes trust and respect and admire because of the hard work. it was really very intense, but an entiring time. when you are around good people, it's not work. i miss not knowing. not that everything we read every morning, michael, or janet, was something that you want to run home and talk to the family and kids about. but you do miss not knowing. >> secretaries tom ridge, michael chertoff, and janet napolitano tonight on c-span.

>> our coverage of the health care law continues with remarks from governors on capitol hill about how their states are dealing with medicaid costs. this is two hours and 20 minutes.

>> i would just note that some of the governors have been here in town a couple of days. they are anxious to get back to their home states. we know that the airport is only minutes away, because of that we are going to be very -- going to be right on in terms of the clock. so expect a fast gavel for all of our members. this month marks the one year anniversary of the president signing into law a pair of controversial health care bills that are transforming the way americans receive and pay for health care. we convene this hearing today to hear from the governors about what impact the health care law has had on their states thus far and what they believe to be the

toughest challenge that they face in complimentinginging -- n implementing the health care package. medicaid employeed 4 million americans, and the medicaid expansions could nbc the nation's medicaid role by 20 million beginning in 2014. while the president's health care reform package altered the relationship that the federal government had with the states by requiring that states drastically expand the medicaid populations, governors are concerned about the new unfunded mandates in the law and the impact on current budget state budgets. the cbo estimated these mandates and expansions will cost the states at least $60 billion. but the states themselves estimate the cost to be nearly twice as much. today i join members of the senate finance committee to release the first comprehensive analysis of what the state themselves expect to spend, and the results are sobering.

even using conservative estimates as states expect to face an additional 118 billion in costs through 2023 as a result of the laws mandate. today's governors cannot afford to continue offering the same benefits in the same way to the existing medicaid population. however, the health care law puts them between a rock and a hard place. they cannot make eligibility changes in the options programs because the health care law freezes the current programs in place for years. this hearing will be an opportunity here from three of the nation's most thoughtful governors. although as governors you are fouling road maps, i believe you can all believe that innovation and flexibility are key. i yield one minute to mr. barton. >> we thank you, mr. chairman. i welcome our governors here who right now are empty chairs, but

i'm sure they'll be here at the appropriate time. let me enter my statement into record, this is the same story just a new chapter. we've heard year after year we need more flexibility for the medicaid partners at the state level. my governor of texas sent a letter, he pointed out over the next ten years they are going to cost an additional $27 billion in state to the federal government. this is a good hearing. i look forward to listening to the three governors today in working with all of the governors of the 50 states to try to find a solution to help maintain the program and continue the benefit package, but also find a way to impact the cost curve. thank you, mr. chairman for the hearing. >> i yield the balance of my time to dr. burgess, two minutes. >> thank you, chairman. i thank the governors for being here. i do want to thank the chairman on the commitment to listen to

the states in this exercise. because it is so critical what happens at the state level. there are a handful of people that have seen the medicaid patient in their professional careers before becoming to congress. i'm one of those. so when i point out the massive flaws in the system, it's not out of a lack of compassion, but precisely the opposite. the federal government created the system to care for the poor and poorest in society. but it's now become an empty promise because often times it's a bait and switch. the countersip recall nature encourages growth and times in financial excess, and hit of maintenance of effort. those with medicaid find it unable, because medicaid pays less than comparable service. medicaid soon realizes that coverage does not equal access. we never tackled the basic

question. if we were to start fresh with a blank sheet of paper, what would it look like? would it look like it does today? few of us on this side doubt that it would. time after time, they sight the lower reimbursements, the lower reasons for limiting the participation. then we expanded the situation without improving it, we made it worse. here's the question why do we even still have medicaid in 2014? the answer is some people involved with the genesis of the law signed a year ago didn't care about how to provide the best care, or how to coordinate, or get more people to purchase innovative insurance products. they needed to keep the cbo score down, that meant lumping everybody into medicaid. thank you, i yield back. >> i recognized the distinguished gentleman from california, mr. waxman, for five minutes for an opening statement. >> thank you, mr. chairman. today we'll hear the views of several of the nation's

governors on the impact of the affordable care act and on the nation's critical safety net health program medicaid. medicaid and the aca are both partnerships between the federal and the state governments. we share the responsibility for making these programs run efficiently and serve the needs of the population that depend on them. this can and should be a productive dialogue. but in my view that does not include relitigating the affordable care act. aca is already delivering important benefits, prohibiting insurance companies from rescinding insurance when someone gets sick, requiring coverage of preventive care for no cost, allowing young adults to stay on their parents insurance up to the age of 26. three new reports we are releasing today highlight the benefits of the new law in the states represented by the three governors who will be testifying. they show, for example, that in utah, 1.8 million residents are

already receiving consumer protections against the worse abuses of the insurance companies. in mississippi, over 30,000 seniors have already saved hundreds of dollars on eye and medicare drug costs. i'd like to ask, mr. chairman, these reports which show precisely how much the affordable care act will help millions of americans be included. >> without objection. >> the affordable care act gives states a major role in the implementation. it allows great flexibility for states to run new health insurance exchanges and to continue to run their medicaid programs, the subject of today's hearing. at this time, i'd like to submit for the record a february 3rd letter for secretary sebeilus, describing the flexibility that exists in the medicaid program. without objection? >> again, without objection. >> it's no secret that states are having problems with their budgets. and that the recession is a

significant contributor. when unemployment increases, state revenue declines, and more people rely on medicaid and c.h.i.p. medicaid has enployed 6 million people during the recession. many lost other forms of insurance when they lost their jobs. medicaid is the final safety net for these families. but the program is still extremely efficient. as a matter of fact, medicaid spending growth on the permanent basis has been slower than increases in private health insurance premiums. what would be helpful is to make medicaid a program that connects for recessions and disasters with additional federal support so states are not stretched beyond their means at a time of economic success. when medicaid enrollment grows to help people lose their jobs

or in a crisis. i want to highlight other important facts. medicare covers 45 million low income children and adults. it assists nine million seniors and disability with medicaid costs, it covers 70% of nursing home residents, and 44% of people with hiv/aids. it's the nation's safety net program that helps those most severely in need. the program's benefit package responds to the needs of the population it serves, providing prenatal and delivery, speech and occupational therapy, case management, and community-based care that helps individuals with disabilities stay out of a nursing home. medicaid offering states considerable flexibility in the management and the design of the program. to be clear, there are aspects of the program we can improve. we can reduce cost for my nine million eligible beneficial --

beneficiaries, and eligible for medicare and medicaid. this group accounts for 15% of total enrollment, but 39% of total medicaid cost. here's where the aca helps the states. it establishes the federal coordinated health care office to reduce the cost and increase the quality of care for the individuals. it establishes a center for medicare and medicaid innovation with a charge to identify and develop policies to improve care and cut costs. these are the changes that we need to concentrate on, not dramatical changes. and block grants with no standard for coverage or care. it was discredited 30 years ago, and it will be discredited again. it removing the federal commitment to be a full partner. it will result in loss of

coverage for the most vulnerable, and disable adults and children, people needing nursing home care, poor children and families, and exacerbate unfair distribution of the dollars along the state. calls to cut this program under the guise of flexibility and fiscal restraint are short sided. i hope we can concentrate today on how we can work together to make the programs run better, not destroy them. thank you. >> thank you. i would now recognize the chairman of the health subcommittee for five minutes, mr. pitts. >> thank you, mr. chairman. right now states across the nation are struggling to balance their budget and reduce cost without sacrificing the quality of care. many states have already made deep cuts trying to achieve balanced budgets. under the maintenance of effort provisions in obamacare, if a state takes any action that makes eligibility for medicaid more restrictive than the standards that affect for the

states program as of march 23rd, 2010, that state could lose all federal funding. if states can't change the eligibility, governors are left with little flexibility and few choices but to cut payments to providers, or cut other parts of the state budget. for example, education and transportation in order to maintain federal medicaid spending. what does this look like from my home state of pennsylvania? on "usa today".com tom wrote, pennsylvania's medicaid program, for example, has seen steady unsustainable number of increases in the number of people it serves and the cost of our those services. it's growing at 12% a year, while the commonwealth general revenue has grown by 3%. it's a trend that will not continue, but one that will be unavoidable as soon as flexible federal rules guide policies,

end quote. may 2010, kaiser family foundation found by 2014, medicaid roles may grow by 682,880 people and cost the state $2.4 billion over the 2014-2019 time period. many of our governors, including mr. herbert and governor barbour have reached out to relief them of some of the federal mandates. responses they have received have not been encouraging. i look forward to hearing from our witnesses and learning first hand on what the impact of obamacare will be on state programs, on other state and health programs, and also interested in hearing the ideas to provide access to greater numbers of care to people while

keeping cost. i'd like to yield one minute to dr. gingrey of georgia. >> new numbers are out on the news is definitely not good. cost of increase by $460 billion in two years. state medicaid cost rose by 300% from 20 billion to $60 billion. can states reform the program or do a better job of screening out individuals who don't belong in order to deal with the crushing costs? no, they can't. obamacare forbidding them from making eligibility changing that might remove people illegally until 2014. can states afford to wait until 2014? rhode island sure can't. the city of providence just sent termination letters to every single teacher it has 2,000 and all in order to give themselves as much budgetary flexibility as

possible. 34 states has have k-12, and 30 states cut higher education due to budgetary problems. today this country is forced to stare at an inconvenient question. how can they compete in the global economy without the quality education. president obama has said we need to stick with the health reform proposal, because it lets children up to age 26 stay on the parent's policy. when the economic policies make it less likely to find a good job, they are going to need to stay on the parent's policy. i yield back. >> i yield the rest of the time to mrs. blackburn of tennessee. >> thank you, mr. chairman. our chairman mentioned the states were expected the cost to be twice what the federal government had estimated. i would like to make everyone aware, we have had a test case for obamacare. it was in the state of tennessee, it was called tenncare.

cost were not twice what was estimated, they were four times what was estimated. mr. chairman, our former governor had a great article in the "wall street journal" i'd like to submit it for the record, as well as a history ignored from lee pitt for "world" magazine. tenncare ate up 35.3% of the state budget before it was addressed. no more money for higher education or education. if you want a program that will eat up every dollar and it's too expensive to afford, this is it. i'm looking forward to talking with our governors, governor patrick, looking forward to what you have to say about a failed program in your state, massachusetts care. yield back. >> the chair will recognize for opening statement, the gentleman from new jersey, mr. pallone for five minutes. >> thank you, mr. chairman. today we meet again