eliminated the department department of homeland security requirement for tsa to issue a rule requiring both classroom and effective hands-on situational security training. yet this was done without the homeland security committee review. does vision 100 letter to the individual air carriers to develop this security training originally to be done by tsa including the element relating to appropriate responses to defend oneself. because vision 100 took away tsa's obligation to develop the basic security training rule for all carriers, it mandated that tsa develop and provide advanced voluntary self-defense training programs. when we talk about mandatory basic security training and our comments, we are generally talking about only a five to 30 minute self-defense training module developed and provided by the air carriers themselves. air carriers appear to be checking the boxes in relation to the required elements of training. without tsa establish standards,

there is a wide variance in amount of security training being allocated to self-defense. the so-called advanced training a developed by tsa in the voluntary self-defense training. this program offered by tsa has not advanced but rather an introduction to basic self-defense. it is a one-day course conducted throughout the year at various locations and focuses on hands-on self-defense training. unfortunately it is difficult for members to attend as it becomes harder for them to take time off from work on their flying days. flight attendants have been unwilling to attend training that may require them to pay for tail and meal expenses. the result has been depressed participation in the self-defense training program. flight attendants were paid or if the costs associated with attending were covered in participation could be hired -- higher. tsa is the authority to implement comprehensive and inclusive security and self-defense training for all flight attendants but has failed to do so. they should be a mandatory basic

counterterrorism training that prepares flight attendants to deal with potential threat conditions as congress has required since the enactment of asset in 2001. despite the best intentions the ideas put forward by congress have been weakened and even ignored over time. conference of counterterrorism training must be enacted by congress in order to ensure implementation of what is required since 9/11. is the uniform crewmember test by the tsa to defend the flight deck at all costs according to tsa, strategy the flight attendant as a is a target for terrorist to eliminate in order to successfully carry out an attack. the elements of which are stated that current law. basic counterterror some training for flight attendants if properly implemented by tsa would repair the flight attendants for potential threatening conditions. thank you for your attention i would be happy to answer any questions. >> i thank the gentleman and thank the panel for all the thoughtful statements in the time it took to prepare them as well as to deliver them.

the hour clocks aren't working so we are going to try to wing it and stay at five minutes. we heard in the first panel some expressed frustration as we heard a couple of statements on this panel. the express frustration expressed frustration of a lack of communication of the thread or the risks that industry folks need to be aware of that tsa has not been sharing as fully as folks would like and working on that. another thing that we have heard about though are summoned charisse stakeholders who have expressed frustration at technology development and procurement. not bringing the private sector and to help find solutions to the problems that folks are facing. i would ask and start with mr. calio, is your industry being given timely information from tsa is to the technology at

needs and foresees needing and asking for feedback as to how we can get from where we are to where we need to be? >> mr. chairman you always think of a situation like this, the type of situation where the communication improves. i would say in our view communication with tsa has improved significantly over the last couple of years and they're very collaborative with us. they act as a partner with us in many cases and share information. do we think we would like to have more input at times? sure, we do but we have been given a lot of opportunity to have that input. >> i know you mentioned in your opening statement your desire to see not only the pilots and the attendants being able to go through an expedited line but as you know the traveler. is my understanding within the next couple of weeks or so we are going to hear an announcement with regard to all those things but i think we all

agree that it is going to be a partnership between tsa and the air force to make those things work effectively and it is going to benefit everybody. how about any of the other panelists? do you feel you are all being included by the tsa when you are doing thinking sessions about what kind of technology we need and how can we procure it and get it into the field? mr. van tine? >> i think as we look at it i think one of the concerns that we have is the use of security directives and certainly we recognize the importance of using security directives and contingencies and emergencies but there is this tendency to use it to influence standing policy rather than working with industry to look at the operational impacts and the consequences of some of those directives. so we would ask that tsa and

congress looked at how we can work closer with the industry and not use that as a mechanism for creating policy. >> mr. alterman? >> i think going back to your original question whether we are being counseled that in terms of the technology we need in our instance anyway, the answer is now yes and what may have been in the past i think you know, there may have been some problems. that is not what we see concentrating on. the dhs cargo working groups we are formed within the past years, one of those working groups, subworking groups as specifically on the technology and how we get it and what needs to be done and what is the monetary research and the industry is intimately involved in that so i think the answer to your question is we are sometimes frustrated because we want to know everything and we want to know it yesterday but with respect to the technology.we have got to a point where we are involved with that process.

>> excellent and mr. witkowski? >> thank you mr. chairman. the afa has talked about several other important aviation security issues that need to be addressed. one of them is the communication device, discrete communication device in emergency situations because every second you lose any of your response is going to be putting you more at risk for a terrorist attack or could tsa be looking at this issue because it was required to be looked at it than the homeland security act almost 10 years ago and i understand that they have been looking at different types of devices that could be used for communication with the flight deck of the flight attendants. but we were never invited or included in those discussions directly affecting the flight attendant security aboard the aircraft. we did participate in a panel that looked at the federal air marshal communication system and we contributed to that quite extensively but as far as the

flight attendant issue which we understood they were discussing we were not included and we felt we should have been. >> excellent. mr. calio, this will be my last question. we all have heard about the airline stowaway and while we are frustrated by that i like to remind people that we get millions of people and the fact is we have human air because humans are running these filters that we use and i am aggravated like everybody else. when we hear about somebody getting through this system, we also are doing it right in a lot of ways. i want to talk about this particular guy for a minute. what type of technology do airlines use of the gate to verify the boarding pass presented matches that at the flight date and is the technology depend on the airline? >> yes, mr. chairman it does.

i can't speak for virgin where the air occurred -- error occurred because they are not a member of ours but i can explain some of what happened. you had a dual error and tsa air and a gate error. what happened with the gate agent when he scanned the boarding pass showed but it showed in the error and virgin error shows a scanner where the red light goes on. for the reason the gate agent did not check or they're what the what the problem was. when a gate agent scans the bar code, if it comes up red, there could be as many as a dozen or more error codes that come up which will then allow the gate agent to figure out what is wrong. i point out in this particular case the same individual who was traveling on virgin was stopped at the gate by a delta agent which is when he was arrested by the fbi. >> and this particular case this is very frustrating because there were several elements of human failure but thank you for

that. with that, i will shut up and let the ranking member and -- ask her questions. >> thank you very much for what i thought was a very instructive question. let me thank all the witnesses for their very i think constructive remarks and i would like to thank the cargo association, mr. alterman, for your support of the aviation security advisory committee and i believe that is an important issue both mr. thompson and myself in the ranking member requested tsa to establish that and we are hoping to codify that legislation in working with the chairman of this committee. the earlier questioning where we said not on our watch, at least i offer those words as we look at the transportation system throughout america. i think there a lot of points that have been made that help us move forward together. that is what i think is most

important, the public-private partnership. earlier today i had the opportunity to speak to an industry group on the issue of cargo security and our commitment there along with the secretary of transportation, government and the private sector working together. want to thank them for their policy hearings. i will always look to the rightness of some of the things that tsa does and in their pilot program, not sure if this is a lucky number. it seems like the state of alabama and the state of texas have been left out. the chairman did not ask me to mention that but i would wonder, wonder why that is the case and i would like to review. i don't see why we couldn't have more in the pilot program and maybe there would be someone

here, not the panelist of course but we could get with the tsa on that choice. i think to include additional southern cities would be very helpful and busy cities as well. but as they move forward, let you try to focus in on some of the points that have been made, in particular about issues that are of concern. the repair stations i think mr. van tine you spoke about and we have no life here so let me try to encourage her answer. is there an inconsistency in our oversight of the repair stations? would you want to or ticket like that again, please? >> again when we look at the industry we produce a large percentage of our product is going overseas to international locations and are operated on an international basis so what we are looking for is the consistency and application of those security requirements.

the tsa has reviewed that and believes that there is consistency. i believe when the administrator of pistole testified here a couple of weeks ago that he noted that. we are looking for a dad that rulemaking to be implemented and that he put in place so there is that consistency. >> and you believe you have sufficient input on the rulemaking, that it is one that is going to be constructive in oversight of those repair stations? >> yes, we do. >> and you were speaking about foreign repair stations because that has been a constant source of concern for this committee as you well realize and it is also a source of potential threat. i think we need very very strong oversight but when he consistency. is that your position? >> that is our position. >> i just heard the bell here. very quickly, first let me say

personally to mr. witkowski that i have been consistently fighting for what i think is common sense. there are two aspects to that. one, i would encourage the flight attendants have the opportunity to have the same security access or ees of access that our pilots do. i have never seen a plane take off without a pilot or sufficient flight attendants. i have been on planes when we are waiting for flight attendants. so, i know that they are not flying but they are part of the team. and i don't see why we cannot get a full understanding of that issue. so can you explain the devastation or the potential danger of an untrained flight attendant for some of the more serious incidents that might occur? >> i imagine that the flight attendants that were on the

northwest airlines december 25 flight into detroit were using their basic instincts unless you are going to tell me that they had gone through the training that i've asked for them to go through. it if they did not, say they did not. if they did not go through a high level of training. >> they didn't go go to the higher level of training. >> but they use their instincts and that training might have helped even more so tell me what would happen -- happens without that higher level of training? >> their reaction was a firefighting reaction in terms of trying to get the fire out that the tears had begun by using explosives but if there's a terrorist attack, which involves deadly force, the flight attendants will be the first to go as somewhere on 9/11. tsa had tried to make a rule saying that you could allow some items on board the aircraft like

scissors that would have less than 4.5 inches or five inches of blade but the idea was when you punch that and you are not likely to kill someone. the problem is that what they do is they slice the arteries in the neck. someone can bleed out in a matter 15 or 20 seconds away flight attendant doesn't get that basic training to react instinctively as train to block those areas where they can be killed and they can bleed out and then they will die. the terrorists will have control of the cabin because we never know what other passengers -- so you are not going to be able to control that. >> so what is your argument? was your bottom line about the enhanced training? the what is needed and enhanced training? >> what is your bottom line? how important is that? >> is critical to national security. >> how difficult do you think it

is for airlines to do so? >> is not typical. the homeland security act language which that language was just reinstated in the law, that -- tsa was going forward with that in developing a program that was enacted in 2003 on young. >> how crosley from your own gas, would it be enormously costly? him think it would be enormously costly in terms of having that kind of program and one of the recommendations we made was that we would make sure that the head of defense for the federal air marshals would ensure that was effective training perks. >> and it would be egg continuation. >> there could be recurrent training. once you get down you have to train and so that in the initial training so the flight attendants can react immediately so they have built memory from the training in order to react if they are attacked in a cab and. >> let me move quickly. let me say i am interested in

the issue of the security act and hopefully we will work with tsa to find out how that can be expanded. i have two quick questions for mr. calio and mr. altman and i apologize if the name is not correct but after 9/11 and let me just say i have an appreciation for airlines. it brings graham us together and if you go into the airports people generally are happy because they are going somewhere. and they are going to get there quickly. i don't believe any member of congress hesitated one moment after 9/11 to bailout the airlines. i understood the devastation and the crime from the airlines. they needed a large bailout from the federal government. so the idea of paying for security is what patriots do. patriot stand up for their country and there's absolutely

no other way that we can provide for security without that assessment. whether we increase it i have an open mind are going interested in not seen -- i cannot in any way except the fact that it is not the responsibility of the airlines and those of us who are passengers and we do pay it. the passenger fee is passed through to us so it doesn't impact airlines at all. but what i would like to find out is this issue of the recurrent basic training for flight attendants and the idea of this enhanced training. what would be the problem with that? >> you got it right the first time in calio. i've heard it many different ways. >> we shouldn't do that so calio. >> i would say first that the safety of our crews and passengers are always our highest priority and we won't compromise that. you know i believe we have a disagreement about whether the

enhanced training is necessary. we provide basic training and defensive techniques as part of our conference a flight attendant training. we don't believe that training with more aggressive measures woods provide benefits based on a multilayered security for seizures and russ is already in place. >> and i respect that but why not have it to use it if necessary? that is really the question that is not the answer. i think the complement of that of course is the appropriate use of it and i believe that you have a well-trained, well collected flight attendant that would have the right judgment. certainly we want to use it on a passenger that got up to the restroom at the wrong time if all they were doing was going to the restroom but i do think it is appropriate in a climate that they are living and to have that. i would like to keep an open mind and i'm going to convene a meeting of the airlines and i

hope maybe the chairman will join with me on that issue. let me finish by just asking mr. alterman -- thank you for your answer. let me ask mr. alterman, we have packages that you know that were coming in from yemen on flights that were cargo. it open their eyes. some of us had our eyes open before but it opened our eyes to the eye of the storm that cargo planes and your staff and your personnel are and. what should we do more on the cargo security side? >> thank you. i think that a lot of the answer to that question is what has been done. you are absolutely correct. it opened all of our eyes. terrorists are not dumb. terrorists are looking to exploit weaknesses and it is virtually impossible to figure out everything that they might do in the future. and so, this thread in yemen was an eye-opener for all of us. what it did immediately, it said into a motion -- motion a series

of events whereby the transportation security administration in conjunction with the industry and i give them credit, and beginning to feel like an apologist for tsa and i don't want to do that. i will probably get fired. to their credit they worked with the industry after yemen incident to try to figure out where the vulnerabilities are, what went wrong and how do we avoid them in the future? the results of that word, imagine some of them. some of them are ongoing projects through dhs and the working groups that are ongoing in the pilot programs that have been described by mr. calio to try to identify freight in advance of the game loaded on the plane. but let me go back to what was done immediately because i think that was very important and very unusual. tsa issues a security of -- number of security -- as it began to find out more information. what they learned clearly from

that incident is that intelligence is the best way of thwarting terrorist. those packages, all of them were screened three times and guess what? they looked like renter cartridges. they were at actually thwarted by the intelligence efforts of people overseas. so one of the things we learned and we try to implement and we talked about it before it is, we need to get better intelligence sharing. we need for the government to share with itself among itself and transmitted the industry as quickly as possible but over and above that what we learned is that we need a ken to employ the risk-based system to understand that they package from yemen may not do the same as a package from dubuque iowa and we need to take different measures based on the threat both in the location and the shipper. we need to get a better trusted shipper program overseas so that

we know who we are dealing with and when we don't know who we are dealing with we need to take more intrusive and better care of our freight. >> i hate to cut you off but we have three and a half men -- minutes to get over to the floor. i would like mr. craddick to be able to answer a question before we leave. >> mr. calio, appreciate you being here today. both of the airlines pilots and federal flight officers have gone through a lot of different training in this industry. and i really think it is imperative that what you brought out in your written testimony that the aircrew flight attendants and pilots know who is on their aircraft. it is imperative, and i just echo that and i complement you one that. i have got just a couple of quick questions for you because unfortunately it will be appreciated. i am a strong promote -- opponent and i strongly agree

with that but with that said, you are proposing additional training and some of the words you use our flight attendants must know how to respond to deadly force. is imperative national security. -- this rule is written right now, sir, what i have a very big contention with its additional training is proposed which prohibits any testing that allows any crewmember to opt out if they do not wish to physically participate, is that correct sir or am i reading this wrong? >> the homeland security act that i referred to to allow a crewmember who believed that they'd couldn't take a hands-on self-defense training was allowed to opt out. that was in the homeland security act language. >> i have a real big problem with that especially going through officer training and some of the training i have gone through. if they are going to be a vital member of the team as you have proposed and making sure that they know how to use deadly

force and is imperative to national security, especially deadly force. you don't want to engage unless you know what you are doing. the big thing is and i've gone through enough physical training to understand this, as much as you need to know to give a punch or a clock, you have to know how to take one. so that was just my point and do you have something to say? >> i was going to say the way tsa began to implement that before it was taken away by vision 100 was that they were going to ensure that all the crewmembers got the training or some level of self-defense training so they could protect themselves. >> we can talk about that. i apologize. i yield back. >> i've got so many more questions and obviously we'll do. we have 54 seconds to get across the street. having said that, we are leaving the record open for 10 days.

i'm too going to supply questions to you all and i know other members will. i told the first panel all this is to support her writing of the authorizations are your answers are very important and your testimony and presence is really important. i want to thank the witnesses for their time and apologize for the delay in having to leave early. the members committee will get your questions and with that, this committee stands adjourned. [inaudible conversations]

at this house budget committee hearing today health secretary kathleen sebelius defended a provision in the 2010 health care law that gives more power to the independent advisory board. a panel that makes recommendations aimed at holding down medicare costs. under the law, those recommendations could become law unless congress overrules them. this is three hours. >> the committee will come to order. we will begin our hearing. madam secretary i know how excited you are to be here today. thank you for coming. we will begin with brief opening remarks and then i will turn it over to mr. van hollen.

thank you madam secretary and her other panel of witnesses for coming to today's hearing on the future of medicare. for years, politicians in both parties have not been honest with the american people about medicare. the facts are clear. health care costs are skyrocketing and growing 8% a year. medicare spending is on pace to double over the next decade exhausting its remaining funds. 10,000 baby boomers are retiring every day is funeral workers are left paying into the program. life expectancy was at 70 when medicare was created and today it is 79. nonpartisan experts including the congressional budget office, medicare's own trustees, repeatedly warned of the looming insolvency of this critical program. these aren't democratic facts, these are republican facts coming fairfax. rather than at answering solutions to many politicians from both parties in the past in washington have offered nothing but empty promises and false

attacks. we deserve better. our seniors deserve better. due in large part to this committee's efforts i believe that the debate is shifting to better reflect medicare's inescapable mass. president obama was exactly right when he stated yesterday quote, if you look at the numbers, medicare in particular will run out of money and we will not be able to sustain that program no matter how much taxes go up. it is not an option for us to just sit by and do nothing, it end quote. ..

with the authority to reduce medicare spending unless overturned by a super majority in congress recommended cuts dictated by the board will become law. bipartisan concerns have been raised with several aspects of the board will proponents claim the beneficiaries will be held harmless by the board's decisions how can i impose sharp cuts to providers without an adverse impact on their patients. given their unprecedented new power over medicare, to whom are

these 15 democrats accountable. there are bipartisan concerns in the rest of the question. democrats including some members of this committee have raised concerns with congress turning its responsibilities over to this board. seniors are also seeking clarity on the president's recent efforts to expand the board's power over medicare and an april speech the president called for the ipad to enforce restrictions on medicare. endowment plus .5%. the health care law is already driving medicare's reimbursement rates below the artificially low medicaid rates. according to the chief actuary richard foster the health care law will pay doctors less than half of the services cost and down to 40% in decades ahead. foster warns the cuts are dragging the providers out of business and resulting in harsh disruptions to the quality access for seniors.

remains incumbent on the administration to specify how this board will squeeze hundreds of billions of dollars of additional dollars from medicare over the next decade as the president has now proposed. i want to thank secretaries sebelius, for justifying and coming here to address these concerns. there is no question that we have differences on how to address medicare's unsustainable future. but i appreciate the commitment to clarify the debate for policymakers and for the american people. i also want to thank the second panel of health care experts who will further discuss the merits of this approach. we look forward to testifying from the director of the institute and dr. judith fettered of the urban institute. thank you for the witnesses for the contributions to this debate, and i want to thank you all for joining this conversations and i would like to yield to the ranking member mr. van hollen for any opening remarks he may have. >> thank you, mr. chairman.

i want to join chairman ron and and madame secretary to the panel and the other witnesses we are going to hear from impleader, and i want to commend you want to initiatives you have undertaken to help implement the affordable care at. one hour of rules, guidelines that you recently released to govern the exchanges which will open the door to millions more americans being able to get affordable health care in the united states of america. the other that received less attention is your recently announced initiative to improve the coordination of care for individuals who are both on medicaid and medicare called the dual eligibles, and as you pointed out, using some of the innovative approaches in the affordable care act we can within prove the quality-of-care and save money through some of the changes you are proposing their. those are important parts of the affordable care act that

together others will strengthen healthcare protections for the american people and putting provisions that have already taken into effect including making sure that insurance companies can no longer discriminate against kids with asthma, diabetes or other pre-existing conditions by denying them coverage including making sure that young people love to the age of 26 can stay on their parents' health care plans including providing tax credits to hundreds of thousands of small businesses who can now afford to provide coverage to their patients. and including beginning and ultimately closing the prescription drug doughnut hole and medicare many seniors find themselves trapped in those are some of the important improvements that have been made. so i believe the fundamental question, the underlying questions of today's hearing is what is the best way to strengthen our health care

system and specifically how do we keep the promise of medicare and meet the challenges of medicare as the chairman has said? one way, one approach is to build upon the very important reforms that were enacted in the affordable care act. the medicare trustees have found that those measures will indeed reduce the per capita cost for medicare beneficiaries going forward, the increase in the per-capita cost that will help and the curve and it will in fact extend the solvency of medicare. we need to build upon those approaches. as we've heard in testimony before this committee from the doctor and others, the affordable care act opens all sorts of new avenues to try to modernize the structure of medicare which we need to do. we need to change the incentive structure so that it rewards the quality-of-care, the value of care over the volume of care and

the quantity of care. mr. chairman, we agree significant changes need to be made to modernize the system in that way. the independent payment advisory board simply want to win the tool box for getting it done. it creates a backstop provision to ensure the continued solvency of medicare if and only if the congress chooses not to act, to take other measures to build upon the kind of changes we saw in the affordable care act. and by the way, and the ipad is specifically prohibited by law from changing medicare benefits. that prerogative is reserved to the congress. moreover, the latest projections indicate that their rate of growth in spending per beneficiary are below the target rates of growth for fiscal year

2015, 2021 set forth in the affordable care act and therefore cbo projects under the current law the ipad mechanism will not affect medicare spending during the 2011 to 2021 period. so, building on that approach is one way. what's the other approach? the other approach is the path set forth in the republican budget plan, a plan that will end the medicare guaranteed and force medicare beneficiaries into the private insurance market. that plan is a double whammy for medicare beneficiaries for the following reasons. first, the congressional budget office has determined that plan will actually drive up overall health care costs. it changes the application, the burden but it drives of the health care costs why? because providing that care in the private market is more expensive and in fact if you look at the history of the per

capita growth rates in the private market compared to per-capita growth rates in medicare, medicare is actually outperformed the private market and therefore you are saying to those seniors we are going tossed into the market where you will face higher premiums and cost. why is it a double with me? as you do that, you dramatically reduce the support for the medicare beneficiaries from the federal government dramatically, and as the cbo pointed out, by the year 2013, you essentials leaflet the burden from where it is today. today the medicare the fishery on average picks up 30% of the cost in the medicare program picks up about 70%. by 2013 under the republican plan, it's the reverse because the rising cost of care and the diminishing support from medicare. a double whammy, and i really

just want to wrap up with this point because we heard it said what the republican plan offers medicare beneficiaries is really the same as the members of congress get. the reason that is simply untrue is because members of congress by law have a certain percentage of their health care premiums supported by the federal government, by the taxpayer. in fact under what's called the fair share formula that ranges from 72 to 75% on average, the share picked up by the federal government. under the republican plan future of medicare we are going to be asking he essentially medicare beneficiaries to pick up themselves that cost and the federal government will pick up only the remainder. so he essentially the flip of the deal that members of congress give themselves, that's

unfair. we have to make choices. we said many times in the committee the government is to choose. we have lots of members on our side who are not wild about every aspect of life had even in its backstop role. but i think we are united and i believe ultimately the american people united that that is a better approach we have to fix the kinks as we go along and the idea of ending the medicare guaranteed and throwing that decision not to experts confirmed by the united states senate as a backstop, but the people on the front line will be the insurance industry. under the republican plan it's the insurance industry that fixes the benefits frankly in consultation with you guys and federal bureaucrats, and then they will set the premiums and they will choose, not the patients at the end of the day. so, that is the choice, mr. chairman, thank you for holding this hearing and i look forward to testifying. islamic madam secretary, the floor is yours.

>> thank you, mr. sherman. -- mr. chairman. chairman ryan, ranking member van hollen, members of the committee i appreciate you inviting me here today to discuss how the affordable care act is strengthening medicare for seniors today and tomorrow. my written testimony provides more detail, but i want to quickly highlight some of the steps we are taking as part of the health care law. to fill the gaps in medicare coverage, to improve care and make the program more sustainable for the future while preserving its guarantees for seniors and for people with disabilities. when medicare became law in 1965, it served as an national promised that seniors wouldn't go broke because of the hospital bill. in 2006 the medicare program added coverage for prescription drugs which makes up a growing share of beneficiaries health care cost. but we know that too many seniors still struggle to afford the medication, and that's why

the affordable care act provided relief to 4 million beneficiaries who fall year in and year out to the medicare part d doughnut hole with 2010, a onetime tax free check for $250, and some of the beneficiaries of written to me say they basically took that check and went right to the drugstore to help pay a part of their bill. and this year because of the affordable care act, the same time beneficiaries are getting a 50% discount on covered name brand drugs. by 2020, the gap closes completely. we also know that many seniors are going without a preventive care that can help actually prevent illness before it occurs. lowering costs and saving lives and in some cases, they were doing that because of expensive copayments, and that doesn't make a lot of sense. beginning this year the law allows medicare beneficiaries to

receive recommended preventive services like screenings for colon and breast cancer as well as an and you will wellness' visit without paying a co-payment or deductible. it's the right thing to do and it's the smart thing to do because it helps us capture small health problems before the turn into big ones. the law is also helping improve the quality and safety of care for people with medicare. we know that there are model hospitals across the country that have adopted this practice is to dramatically increase the quality-of-care. in fact, for every common medical error we have examples of health systems that have significantly reduced or even ease eliminated then and there's no reason why all medicare beneficiaries should and enjoy the same high quality-of-care wherever they receive it and that's why the affordable care act provides unprecedented support to help these best practices spread. in march we launched the partnership for patience and a

partnership with employers, unions, hospital leaders, physicians, nurses, pharmacists and patience and tickets to reduce harm and error in the nation's hospitals. last week we were able to announce more than 2,000 hospitals across the country have already signed and are taking steps to improve care. aimed at two very important goals, reducing printable readmissions and hospital acquired conditions. under the law we have also established the first of its kind medicare and medicaid coordination office the congressman van hollen referred to. the office is working to improve care for beneficiaries who are enrolled in both medicare and medicaid and often receive fragmented or duplicative care as a result. and through the new medicare and medicaid innovation center created by the law, we are testing a wide range of additional models for increasing the quality-of-care from

strategies for helping seniors manage their chronic conditions to new models in which hospitals and doctors who help keep their patients healthy and out of hospital can share in the cost savings they create. together the reforms are dramatically strengthening medicaid, medicare today for seniors and americans with disabilities. but we also have the responsibility to preserve the promise of medicare for future generations. and we can't do that if costs continue to rise unchecked. because doing care the right way, often costs less than doing it the wrong way, many of walls reforms are aimed at improving the care and reducing medicare costs. for example partnership for patients alone with those to pretty tangible goals will save medicare as much as $50 billion over the next ten years by reducing errors that lead to unnecessary care. but the law doesn't stop there. it contains important tools to

help stamp out waste fraud and abuse in medicare. for fiscal year 2010, our anti-fraud efforts return to the record $4 billion to taxpayers and the stools in the affordable carey telcos to build on that progress. the medicare trustees estimate that these reforms in the affordable c.a.r.e. tough extended the solvency of the trust fund until 2020 for. without these reforms the trust fund would have been insolvent just five years from now. but when it comes to medicare's future we can't take any chances and that's why the law also creates an dependent payment advisory board or ipad as a backstop, feel safe to ensure medicare remains solvent for years to come. as you know it's made up of 15 health experts including doctors and other health care professionals, and lawyers, economists and consumer representatives. members are recommended by congress and appointed by the

president and confirmed by the senate. each year the board is charged with recommending improvements to medicare. the recommendations must improve care and help control costs to be a flexible the board to recommend additional ways for medicare to reduce medical errors and crack down on we stand for of. and contrary to what some have suggested, ipab will not ration care or shift costs to seniors. in fact, the board is specifically forbidden by making any recommendations the would ration care, reduce benefits, raise premiums or raise cost sharing or alter eligibility for medicare. it leaves all final decisions in the hands of congress. if medicare spending begins to throw -- threaten the program's future, ipab will make recommendations to create the necessary savings without shifting the cost of care to seniors and those with disabilities.

but it's up to congress to decide whether to accept the recommendations or to come up with recommendations of its own to put medicare spending on a stable, sustainable path. in other words, the ipab recommendations are only implemented when excess of spending growth is not addressed and no other actions are being taken to bring spending in line. now the nonpartisan congressional budget office and the independent kidcare actuary both predicted that the ipab is unlikely to be necessary any time soon. thanks to the work we are already doing to slow down the rising costs. but we can't know about the future and that's why experts across the country including independent economists and congressional budget office believe that ipab is needed safeguarding and we agree. we believe the best way to strengthen medicare from today and tomorrow was to fill the gaps in coverage, to crack down on waste and fraud, to bring down the cost of improving care. and that's what we are working

to do given the tools and the health care law. over the last 16 months, our department is focused on working with congress and partners across the country to implement the new law quickly and effectively. and in the coming months i look forward to working with all of you to continue those efforts and to make sure that americans can take full the advantage of all that the new law has to offer. thank you again, mr. chairman and i look forward to our conversation. >> thank you. as i mentioned in my opening night quote to the president which i thought was pretty much had on with remarks about medicare. the trustees, you're chief actuary project it was bankrupting 2024 cbo tells us it is and nine years, do you agree with the president in the medicare's chief actuary that it's the traditional fee-for-service system as unsustainable and will soon feel to deliver the promise of the retirement security for seniors we all depend on? >> mr. chairman, i believe that

the fee-for-service system has incentives and all the wrong places, so we are often paying for care that actually delivers very poor health results and in fact in many cases if people are sick for stabenow hospital longer acquire more infections are readmitted more frequently the hospital makes additional money as opposed to preventive aggressive home based patient centered care which often is not only more desirable but the patient and doctor but actually lowers the cost so the affordable care act gives medicare not only the tools but the direction to actually allowing the incentives, and i think the payment strategies. >> on the premise of that we would agree that the current system is unsustainable and it has all the wrong incentives which is part of the reason why it's driving it towards bankruptcy. >> i would say the current

fee-for-service system is unsustainable. >> so here's the question we have. basically three questions, and this is basically you know how best to solve this problem. according to your chief actuary, providers are reimbursed for medicare receives about 80% of the private plan offers, and as we all know, what inevitably happens ha is a provider loses money on a medicare patient then they will overcharge the private payer to make up the difference and that is putting pressure on prices on the health care cost. under the whole flock the affordable care act this falls from 80% to 48% but 2022, and to 33% by 2015. hospitals suffer the same feat. this is the hospital or the embarrassment rate curve under the new health care law. a 67% drop in prices relative to a private plan pay over the course of the window.

so we are already paying them, providers through medicare far less than they get otherwise. in most cases we are paying them less than the act we -- the cost of the care. and so basically, three questions. do you agree cheese factory findings cutting payments to providers does have an affect on providers? because here's what he says. he is saying by the year 2015, 40% of hospitals and skilled nursing facilities and home health agencies will have negative margins in other words they will go bankrupt. so, that means they will leave the business of providing medicare services to medicaid beneficiaries. do you agree cutting payments to providers has an effect on providers? >> mr. chairman, i do believe that certainly cutting payment has an impact. but i know is that the care become medicare trends are better than the private sector

and growing at about 4.9% as opposed to the private sector growth of about 7.2% over the last ten years and i do believe medicare has the opportunity to actually change the cost trend by improving the underlining cost of delivering health care as opposed to i would suggest the house republican plan just shift the cost on to seniors and those with disabilities and not addressing the underlying cost attwell. i think improving the care and lowering cost makes a lot more sense than shifting cost. >> this is the hospital chart that shows under the affordable c.a.r.e. reimbursements to hospitals. go to chart to if you can. that's the physicians chart that shows medicare and medicaid goes down precipitously on the private plans to pay. obviously if we underpaid in its way to save more money. the question is if we keep

underpaying at this pace will they keep delivering the benefit? so, our issue here is if there are fewer providers participating in medicare because the payments are going down so far below the cost, we have to in thousand baby boomers retire in everyday. do you not agree that if we underpay them they will stop seeing beneficiaries? >> mr. chairman, the assumption is nothing changes in care and the trajectory we keep paying at the same not only rates to keep paying for the same kinds of services. so if you assume care delivery doesn't change at all and we keep paying for good care that we don't have any changes in care worker were made care or that we don't have more patient based care that we keep the churning of one out of every

five medicare patient is going in and of the hospital whether they have seen a health care provider that trend line is probably accurate. i would suggest what the affordable care act does and what we have begun to do i think pretty successfully in the early days with the innovation center and the very enthusiastic support of about health care providers across the country is to look at where the best practices are, where the hospital systems are and provider groups who have actually delivered a very high quality care well below the trend line and capture that and then reach out to others to try to accelerate the change and use the enormous payment levers of the medicare system to do just that come to drive best practices. >> we are right now looking at eight law that will pay providers 80 cents on the dollar and then 66 cents on the dollar in this decade going down to 33 cents on the dollar.

so you are saying that we would be able to sort of master mind how to pay for this care at those low rates and still provide services. this is where i don't understand it. ultimately don't you believe that there is going to be a time if you are going to dramatically underpaid a service to a provider that they would provide a beneficiary they would stop providing that service that rationing itself if you don't pay the providers anything close to what it costs to provide the surface, would they just stop providing the service? >> mr. chairman, again i would suggest that what is going to occur and is occurring across the country is a different kind of service being provided and a different strategy a down health care services, and one that actually suggests that doctors and hospitals through mechanisms like the accountable care organization actually group to

get your a radical the care delivery and share in costs savings they achieve. we have heard from very enthusiastic participants around that strategy. so i think if you capture the status quo and say you just drive that into the future and nothing ever changes this is probably an accurate charge, but i don't believe that that's sustainable. i also don't believe, mr. chairman, that just taking those cost trends and shifting the burden of cost on to seniors and those with disabilities with which the plan that has been passed by the house of representatives does addresses this settled. it just means more of the costs are going to be paid by seniors and those with this of these. it doesn't bring more doctors or change the underlying cost or deliver better care. it means fewer and fewer seniors out of their own pocket are going to be able to afford the care they need. >> bring up chart number three.

this shows you what we thought the prescription drug law was going to cost originally. actually the actuaries estimate was going to be about $700,000,000,000.10 year program. cbo, 400 billion-dollar program. it came in 41% below the cost projections, below the cbo projections which were 400 billion versus the cms $700 billion projection. so i want to ask you basically this. if you had to do it over again, because at that time there was a defeat the republicans and democrats about how to do the program, the republican view prevailed at that time and which was to have medicare certify private plans to offer drug benefits to seniors and each year they get to choose among competing plans for their benefit, and that the choice and competition according to your actuary accounts for 85% of the cost reductions or the savings

from the projection. if you have to do it all over again, would you strip the part deprograms the way that it's designed today and would you have gone with the original point of view that it should just be one program run by medicare and not one of competing plans. >> mr. chairman, i don't know that i can answer that question. i think there were a few feeble smalls but i certainly would go back and change. one was the design of the programs of the seniors who got the most prescriptions fell into coverage cat and second it wasn't paid for. as one of the reasons medicare is becoming less solvent is that we have a huge unfunded liability >> bup would you have stuck with multiple plans people can choose from or what you have sided with the position at the time of your party that we should not have that we should just have a one-size-fits-all provides the drug benefit. >> as i say, there's some fatal flaw these that have been

corrected and i do think the drug program is in a central benefit that many, many seniors rely on. i can't tell you the cost estimates of one versus many. i do think medicare still pays for drugs at a higher price than anyone on earth and as a governor who used to run a program where i negotiated for junk prices i can tell you it's still overpaying -- >> should seniors be given a choice of plans to choose from to get the drug benefit and? >> that's a great idea of medicare programs now with medicare of vintage and many have also some fee-for-service plans along with traditional medicare. what we know the was that medicare advantage from the private market strategy is still well above the fee-for-service strategy and no beneficial health results. >> i don't want to keep wasting

time on this but to agree on the idea they ought to have plans to choose from the benefit; is that correct? >> you tell me what we are looking at and what cost is possible -- >> i'm going to ask about part d. should the of a trace of plans for the drug benefit? >> as opposed to what? >> kaput to the other idea. >> if it is a choice, i mean, having drug benefits is critical and i would like to get seniors the drug benefit it the best possible cost. >> here's the point we are trying to get that. the health care law, the affordable care act in its medicare as we know it. it takes a half a trillion from medicare to spend the affordable care act and puts a cap on medicare. this is the first time we've actually capped the entitlement. now nobody is arguing against capping spending around here. the only difference is this law

empowers the ipab with the unilateral power to decide how to live underneath of the cap, and where we have an issue you mentioned affordable care organizations. there isn't a wisconsin professor that isn't willing to sign up for this. a ceo. what our concern is is if we invest all of the power in the funding decisions to the board of 15 people, whose decisions go into law don't even go through congress is that the best way to save this entitlement and restrain spending? we believe there is a better way and we believe cutting seniors the choice like we did with part de is a better way because what it does at the end of the day is it shows providers if you want to succeed, if you want to have business you have to out compete other providers for the beneficiary business. so the nucleus of the program we are trying to talk about is the patient, the beneficiary, not

the ipab command the is the difference at the end of the day. we believe because of evidence and reality that giving seniors more choices, we are more providers, doctors, hospitals, the compete against each other or the beneficiary business that works more importantly, you talk about what this would do to future seniors. we think we should give more money to low-income people to wealthy people in the future of medicare, and if we do it in a way like we are proposing, you don't have to do all of this to the current population. you don't have to have ipab start their indiscriminate price controlling in 2013. you don't have to do any of that or affect benefits for people love 55 and we can cash that generation that we inform that generation under 54. and the way in which we think we ought to do that more money for the poor, more money for the second of all income and less

for the wealthy it's an idea that used to have bipartisan support and an idea that the clinton 1999 bipartisan commission to save medicare. it's a very good and legitimate debate about the growth rates and how you grow a payment and should it be gdp or gdp - this or that, that is a very fair debate. but at the end of today where i feel we have a disagreement is we don't think we should invest all of the power and money decisions into the hands of 15 people who are not even elected verses giving seniors below ultimate decision in controlling how their health care is to be delivered. because if we just simply get 15 people view devotee to unilaterally under pay providers, and we see where this is headed what's going to dip happening is providers are going to drop medicare. it's rationing on a different word because if you say to a provider we are not cui to be

anything close to what it costs to provide the service they are not going to provide this service. >> mr. chairman, first of all ipab as you know in the statute doesn't come into effect unless the congress hasn't taken action. so congress is in the driver's seat. ipab makes recommendations of the spending trend is -- is committed to supermajority vote to that though isn't it, correct? >> if congress has not proceeded ipab. i'm suggesting is the congress is actually paying attention to the bottom line if medicare, ipab is irrelevant coming up with a good strategy suggestions, and it never triggers. that's step one. i would suggest that when i think that medicare i start with my dad who was in the congress in 1965, the energy commerce committee and helped write the law. he turned 90 in march and i can

tell you he's a happy beneficiary, relies on the services, but really doesn't have the capitol right now if he were paying 51-70% of the cost it starts at 61 to 70% of the cost that is not flexible income he would have available right now. third, the notion of moving medicare from guaranteed benefits which is what we have said it to seniors and those with disabilities, you will have a benefit package that you can rely on into the future. when you get sick you will not go bankrupt. turning that over to private insurers and an unelected group of federal employees who designed the benefit package and determine which benefits seniors will and will not get. i'm sure it keeps the progress that we've made.

ottilie of all for looking at strategies to reduce costs and i would suggest we've never done that seriously until the affordable ^. we never had the tools and particularly the tools to look to the underlying costs, not just trimming of the top of the providers of relief reengineering the delivery of health care and a good number of health care providers i visit across the country say not only is achievable it is essential and they are on their way to doing that. >> and want to be -- i want to get up and get to mr. van hollen. i've been on the ways and means on the subcommittee. i watched us try to reengineer medicare over and over and over from republicans to democrats but it never ends up working because it's kind of a fatal -- we sit in washington and we think we can figure out how to micromanage 17% of our economy and make this all work and all

we had to be his artificial price control across the board. that is what the 1997 budget agreement did, and we have all these providers going out of business so we put the money back. i don't see how this isn't repeating itself. >> but if the congress can't figure it out, private insurers are then going to figure out how to -- >> we already have private insurance delivering the medicare benefits. they have shown that they will do it cheaper, less than we expected. we already have private insurers providing medigap, providing medicare devotee attached and part d and you contra to private insurers to be part a and so that is something we have already had experience with. what we also have experience with is if we simply underpay providers with their costs are the stop providing. that we had experience with as well and so, i would just simply say the end of the day we have a different opinion how to best achieve this. my mom is on medicare, your dad is on medicare.

the altar to organize their lives around this program as it is currently designed. let's leave that alone. our point is don't change that for them. ipab does. we are saying don't do that. but in order to cash flow the commitment before recognized their lives around which we should, we have to fix it for the next generation and we have a difference of opinion on how to do that. >> thank you mr. chairman and madame secretary. i want to pick up on a couple lines of questioning the chairman began especially as they relate to cost shifting because that is what the affordable care act addresses in many ways. when you have tens of millions of americans with no health insurance whatsoever, and they show up at the hospital as their primary care provider guess who

pays, tax payers pay and consumers pay through cost shifting. we've heard from the chairman of the fact that medicare actually gets a better deal in terms of the amount of payments to providers and that is reflected in the fact that medicare per-capita growth rates have been less than the private sector. that's because the label to use their bargaining power. when you are seeing with the affordable care act are people who had no health insurance, not a penny. that was cost shifting going on. we were all paying a big way and by creating exchange that tens of millions of americans can participate and get their preventive health care. it means they are not showing that in the hospital, it's not only good for the health of those individuals and their families, but it's good for the pocketbooks of the rest of america. because they were paying the zeros to the doctors and as you

go to the hospitals. now let's talk about another piece of cost shifting because obviously if you pay the doctors zero you're going to shift costs. if you shift costs to the way the republican plan does come in for not saving a penny to the system. you are just moving the cost on to seniors. and of the profits, 2011 analysis of the republican budget plan it says right here under the proposal most beneficiaries to receive a premium support payments would be more for their health care than if the príncipe did in traditional medicare under either of cbe's long-term scenarios. cbo estimated that in 2013 a typical 65-year-old would pay 68% of the benchmark under the proposal compared with 25% under the extended baseline scenario, and 30% are under the

alternative fiscal scenario. i would point out again to my colleagues that that is the flip of what the members of congress get in terms of support and the so-called premium support. >> what we could get through this. that's the exact let. that is cost shifting. doesn't save a penny and it actually reduces the amount of support. i want you to expand upon another point here which is as the chairman mentioned, we already have some private options, private insurance options in the medicare program. it's called medicare advantage, it's called medicare part c, and the difference in the current system and the republican budget proposes is we allow the medicare beneficiaries to choose whether they want to go into

part c or stay on the traditional medicare. the republican plan says no more choice. you are forced into the private plans. the chairman mentioned what he described the benefits of the compensation. madam secretary, could you tell us what the rate the medicare program was reimbursing the so-called more efficient medicare advantage plans compared to the traditional plans before the affordable care act? >> yes, congressman, the medicare and vintage plans were being paid about 113% of fee-for-service, and with the affordable care act direct says that over time that additional payment amounts to about $3.40 per month per beneficiary cannot the beneficiaries who have chosen the medicare advantage

plan that 25% but every beneficiary as paying for that additional amount per month every year to keep medicare advantage out that the artificially high level. so over time we are directed to reduce that overpayment and put it more along with medicare fee-for-service and we have begun that and suggest still have the anticipated very robust program but the overpayment is calculated by the congressional budget and office to yield about $140 billion over the next ten years. >> and again people can choose currently to go down that road, they are not forced to go down that road as the republican budget plan would do, but they can choose it, and as you pointed out, we were, the tax. the medicare program were subsidizing those plans at 114%

of the fee-for-service meaning not only were taxpayers paying more for individuals in that plan for medicare, but of the medicare beneficiaries for cross subsidizing those come is that correct? >> that is correct, and over the period of time also there has been a pretty careful analysis of were there additional health benefits that were attributable to the additional expenditure and the answer is no. >> under medicare part c, medicare advantage, there is a wide range of ability to experiment with co-payments and premiums and many of the tools that we are talking about, is that not the case? >> there is opportunity certainly to experiment and to be somewhat different plan strategies. there are limitations on how much the costs can be shifted on to the beneficiaries in

particular how much the plan design could be used to cherry pick a long pull the seniors or 60 years, but given the limitations yes, there's a lot of opportunity for innovative care strategies by the private market. >> now one just want to turn to medicare part b, the prescription drug plans and ask you a few questions about that because it is the case that the expenditures came in under projections if you read the medicare ek chu werries, they point out to major factors. one was the cost of prescription drugs and the overall market went down because of a competition from generics, and number two, fewer people actually chose to enroll in medicare part deviant had originally been projected which would bring down the cost, but of course, of the features of the prescription drug bill

medicare part d when it was passed in 2005 was to deny the medicare program with the ability to negotiate or more than 40 drug price. the other thing that changed that was made was people that were the so-called dual eligible, on medicaid and medicare previously medicare of course the not covered prescription drugs but the medicaid individuals had been -- we got a better reading it meaning a better deal from the prescription drug companies than when those individuals also got a prescription drugs under medicare. that's money that's lost to the medicare program, is it not? in other words, those are -- reduced drug prices for the medicare programs represent savings that can be plowed into the medicare program and extend the solvency, is that not correct? >> that is correct and in most states around the country, and

some negotiation of a drug prices, formularies and rebates are something most governors take seriously the medicaid program and that is not a free-market the medicare program operates under petraeus demint if we go to the fourth slide and have the medicare actuaries here tomorrow, but this is an interesting point that they made in their most recent report which says the average annual increase in part d per beneficiary coster expected to be greater than for part a medicare or smi part b for the period of 2011 through 2020. so part d, which as the chairman said, has this competition featured, but where the bargaining for the price of

drugs is splintered into the subgroups as opposed to being able to get a better deal for the whole group like we do under the veterans of administration but with this chart shows is part d is expected to grow more per beneficiary than part a and b. can you comment on that? >> mr. chairman, i think the trends are in part because there are definitely some more expensive but very significant drug is on the marketplace and that will continue to be part of the frame work, but i also think that there are some tools we are still missing. i know in the chairman's stead of wisconsin there is a senior care program which was negotiated and put into effect by the governor has popular with a lot of seniors and wisconsin, and still operates as a stand-alone drug plan which can be a choice for those seniors

and the cost the wisconsin seniors pay is significantly below but with the wisconsin seniors can choose from in medicare part d so we have a real-life example in the state where there is a state negotiated a plan side by side with a multiple choice plans and the costs or why would say significantly different. >> i'm going to wrap up with a couple slides as we go back. what this shows are the projected costs in 2013 and again, recognizing the fact that of the medicare program is able to negotiate better prices and bring down the cost, do you know what the average cost for a senior was for health insurance in 1965 before we passed the medicare program?

>> the average cost -- >> the average cost for health care, the distribution of cost. compared to the government or other sources. >> it's lander standing that the first number of seniors, the majority of seniors have no health insurance at all, and second, those who have insurance or some kind of coverage were often paying about 65% of their own cost and that there were some payment for the remainder. >> so some have none at all and some bearing the burden we would go back to under the republican proposal. if we could go back one more slide. this is the 2022 members, again, the double whammy. the fact that seniors will go into the private insurance market and face higher costs and get less support in 2022. even the immediately the benefit the secretary talked about with respect to closing the

prescription drug doughnut hole goes away and this is the medicare actuary showing how the affordable care at the end of the cost curve. >> thank you master chairman and madame psychiatry petraeus de mechem cost initio if you assume there are a number of seniors who are living with social security checks in the 2022, the average social security check will be a little over $21,000, and that beneficiary with the start of the congressional plan would be paying 59% of the social security checks on the health care cost. it is the official rate is about 26% of so it's a doubling what amount of their income would have to go to health care. >> i want to get to members because we are going to start the clock.

one thing we failed on the basis is to learn how to manage the thermostat in this room. tell your actuary who is coming tomorrow. >> i thought it was a strategy. >> it really isn't. >> mr. price? >> thank you, mr. chairman and welcome, madam secretary, we appreciate you joining today. many of us as you know it as a physician talk to the principles of health care being an accessibility and affordability and quality response of miss of the system, innovation and choices for patience, and many of us believe the new law actually harms every single one of these principles. there's also little trust between patients and folks out there in the federal government as it relates to health care and for a variety of reasons, former speaker pelosi on the small we

have to pass we know what's in it and the denial of care opportunity for the federal government is one of these things we now know that is in its and it ought not be surprised there's little trust out there. on will remind you, madam secretary, the original legislation says, and this still fall of the land nothing shall be construed to authorize any federal officer or employee to offer any control over the practice medicine or compensation of any officer or employee at any agency or person providing health care services. madam secretary, do you think we violated that portion of the previous medicare law that's still all of the land? >> finally did it by passing the affordable care act? >> no, having the federal law determine what compensation is provided to those caring for patients.

>> congressman, i think that the medicare from day one determined what compensation they would pay for services, medical services, so i guess i'm not quite sure what we are doing. i mean, perhaps you are suggesting that from the outset, 1966 it has been in violation -- >> that we finally for law and hence there is little trust on the patient and the independent payment advisory board can only do that by denying payment to physicians and in a recent op-ed you said seniors and taxpayers have the security of knowing the skyrocketing ipab is in place to protect medicare and future generations but in fact if we talk a the kind of recommendations ipab can make, are they able to reach different targets by increasing revenue in the independent panel of advisory board?

>> nope. >> and the independent payment advisory board reyes beneficiary premiums? >> the ipab as you know is prohibited by law from cost shifting, premium increases, denying the benefits. i think there are a number of examples of ways of they could have been effective at a much earlier time and one of them we just discussed is the overpayment for medicare advantage. >> but don't you agree -- i don't get the kind of time the chair and the ranking member do. the only way that the independent payment advisory board are able to affect what the physician does for the patient is to deny payment for that provision of service, isn't that correct? >> i don't think that is at all correct, congressman. i think they could look at a lot of the underlying rising costs and recommend payment strategies that much more closely align what doctors tell me they really

want to do. so medical holmes -- >> but they are not able to institute any of that. all they can do is deny care or deny payment to the physician. >> i don't think that's the case, congressman. i would disagree medicare advantage -- >> i would urge you than to simply read the section, just read the section. and if i may, this gets to the heart of the quality of health care in this country. as a physician, i can tell you that if i am told by the federal government that i will not be paid for a service to a physician, what happens in my presentation of the options to the patient, as that physician is that i may be coerced by the federal government into not even presenting that option to the patient. so this is as pernicious as it could be in terms of the federal government getting involved in the provision of care to patients, and that's what violates the trust that is so

important between patients and physicians, and it's why we on this side of the aisle and some on the other side of the aisle feel so strongly that to have a denial of care in place in federal law is a violation of the american principles as it relates to health care. >> well, congressman, i hear what you are saying. i would suggest the republican budget proposal, which would elam and the guaranteed benefits for which -- >> you know that's not true. you know that's not true. the fact of the matter is our proposal guarantees the provision of care for seniors. it guarantees it. >> that's leave it at that. mr. schwartz? >> thank you. i think we will continue the conversation somewhat.

these are important issues to talk about, the big contrast between the future of medicare is what we are working on in the past last year which a small to have you elaborate on the work of implementing the affordable care act, and in strengthening medicare and kidding the best value for our dollars, and i want you to talk about that, but before we go there, to understand the choice being presented, a contrast with republican plans, we use to collect the rollin plan but now that the republicans of basically voted for it this is what the majority and the republicans want to do which is to and medicare as we know it. offers seniors premiums part because they get to shop in the marketplace which as you plan now, and secretary is expensive and does not have the concerns of the cost because they simply

can raise the premiums, and the more the raise the premiums to more seniors have to pay. about $6,000 a year per senior. 6,000 starting per senior per year the wind up to doubling that 2q knows what in the future. the cost shift is their mccuish to the seniors with no protections for the seniors, no guarantees on benefits and no >> they can choose between plans the have benefits they can't afford. we don't want this to happen. in contrast i went to see this to the republican colleagues who say there's a trust and medicare most americans and most seniors like the medicare and they want to see it continue and so do we. so, what i think it's particularly interesting about your testimony in this hearing is the very keen to focus for

seniors in particular about strengthening the benefits and getting a better value for the dollars that we spend and we know we can do better in delivery of care, and i love some physicians. i actually care a lot about my husband and my son and daughter-in-law and many of the physicians and hospitals are no say to me they know they can do better. i would like that flexibility at the tools and innovations to do that and the affordable care act we emphasize primary-care and what more primary-care physicians, to pay them better under medicare and medicaid. we wanted to give physicians and hospitals a flexibility and redesigning the care for seniors in the country and provide the care through their >> i wanted you to get all that up and repeat of that act as to

place it with a voucher seniors can use in the private marketplace that has had unfortunately not taken these kind of innovative actions the way they might have but might now do it in cooperation with foot predators during. could you just elaborate on the potential cost savings based on the experience with it already had and the good work that you're doing now and the innovation center with accountable care organizations patient centered medical homes with innovations with v reduction and hospital infections and reduced emissions. the opportunity i understand is in the hundreds of billions of dollars in savings. what a better way to use that dollars are to be walter reinvestment keep medicare strong. >> welcome, chris gorman, you are absolutely right and we just started down the path in addition to the innovations, and

i will talk about those in just a second, i think the new tools congress gave us and directed us to use for fraud and abuse are unprecedented and i think that can yield also some significant dollar savings. we just started the predictive modeling computer effort and i can guarantee you it's going to be very impressive in terms of results. but, the innovation center is launching some of the strategies partnership for patient as we talked about which is aimed at too simple goals to start with that many more to follow. that's about $50 billion that is a, according to the cbo, a conservative estimate if we can get more people to participate. lowering hospital infections and provincial readmissions command that not only helps people in

the medicare system but anybody that cost of hospital trustee or infections people get in the hospital what's going to help private employers -- >> reduce the rate of growth across the board. and recently -- >> mr. saltzman? >> thank you, madame secretary for being here today. i want to talk about your progress of ipab and the health care law provided 15 million in fiscal year 2012 to get ipab up and running. what progress have you made towards setting up the ipab as a functioning agency. the president is consulting with people about possible candidates for the ipab but deutsch as missing an agency before there is an order planned. as my brother in the qualifications to sitting on the

board? of the statute lease out a series of areas of expertise which the board should have to be similar to what ms. pak board members currently have, healthcare providers, consumer advocates, people experience with the finance and a key difference between the board qualifications for ipab and the board of qualifications for mid packs are no conflict of interest if they're going to be of the independent benet advisory board must be a full-time assignment and not be an active user of the system or receive payment. >> so it will be a full-time job. >> that's the way the statute -- >> any idea what salary they would be paying? >> um think it's the same as -- i know it is the equivalent of a federal salary. 160,000, i don't know.

but it is a level that is the federal judge or i don't really know. i'm sorry. i could give you that answer. >> can you elaborate on your claim that this year's house planned budget, the republican plan, i would make it so cancer patients would die sooner? with a lower the quality-of-care costs by cutting provider payments in half, to cause patients to die sooner? >> congressman, i seem to i was at a hearing when i was asked what happens if someone runs out of money in a voucher in the midst of a chemotherapy program, and i sit frankly there aren't aware of options. charity care is one common donated care is another or they just stop taking their cancer therapy and would end up -- >> let me ask this. my grand dad passed away and i seen how medicare works for him. the average couple turned 65 today pages e.p.i.c. over

$109,000 into medicare over their lifetimes, but they will receive over 343 tawes at dollars in benefits. as a 34-year-old, and many others who were not even close to the age of 65 will not get the same deal. >> i think it depends on with the congress decides to do with medicare in the future. >> could i get the same deal and if we would stick with the democratic plan and with doing nothing, could i get the same deal? >> no one suggested doing nothing, mr. congressman. i think the affordable care act also took a major step for the first time ever in entitlement reform and gave us tools at the centers for medicare and medicaid services to finally aligned payment with high-quality lower-cost care delivery and we are tracking to accelerate that. >> why don't understand is with the affordable health care plan

that was addressed? >> it addresses insurance but also the care delivery system and underlining systems in addition to insurance. >> do you believe health care costs will start declining because currently there is roughly three times the rate of inflation. >> actually have been on the decline. they are right now running at lower than inflation. we think fit if indeed the strategies are effective where you focus more on preventive care and early intervention where people are actually healthier as they get to the 60 and 70. you can dramatically improve health care cost as well as a carrot strategy aimed at delivering more patient centered care out of hospital systems, keeping people in their homes wonder which is what patients tell me they want and also with a lot of providers would like to do but right now that alignment

of the payment incentives and the care delivery are not there. >> i feel with these numbers of $109,000 covers $343,000 of benefits, americans understand this is not going to be a little over the next -- >> i would agree. everybody agrees. >> it's going to change st thank you. i yield back. >> stuff thank you mr. chairman. madam secateurs, thank you. i would like to touch on a few things because as i listen to my good friend the chairman to describe certain things, i wonder if we were talking about the same bill. flat because you're talking about a different bill than i heard him talk about. my understanding is that you testified, and i just picked up a copy of it again just in this section that the provisions are not triggered by ipab unless and until congress and does not deal with escalating costs of

medicare. is that correct? >> that is correct. >> that's the bill you're talking about. and if we fail to act stock, then they can make recommendations, and it says right here not rationing or shifting but in terms of helping in terms of delivery mechanisms, but those go into effect only if congress has the ability to overturn those provisions; is that not correct? >> that's correct. >> that's the bill you are reading. >> that's all. >> and listen to my friend from georgia talk about the what appeared to me to be fantasyland. because he was concerned medicare over the years has had some provisions about medicare reimbursement. now, my good friend is a private physicians dealing with private insurance, you've been an insurance commissioner, to the physicians just willy-nilly submit anything that they want

and insurance companies just pay every profession, a precondition, every treatment? >> rates are negotiated and benefits are very clearly spelled out to be a selective insurance co's pushback and deny claims? >> regularly. >> they do? >> yes, sir. >> i just want to get that clear because i thought that was the case. and so what we are talking about here is just simply being able to have the same sort of professions that happened in the private-sector except my friends in the republican side who just turned this all over to insurance companies to do the rationing, the denial, the approval and seniors will navigate on their own. that's the statement. you don't even have to answer that. i heard you take my good friend 's point the 375 billion of costa that represents less than what was projected was somehow a grand bargain for medicare part b.

and you started to point out something in terms of there were other ways of doing it. could you -- i don't want you to do it now. you can do the math in your head but i think it's a very serious question. could you have some of your certified smart people calculate for ross what would have been the cost and 2030 if we just gave our senior citizens the same deal of veterans get. >> we could do that. >> i suspect that it's probably quite a bit less than the $300 billion my friend is so excited about. would you think it might be less than the veterans than what was negotiated? >> i think it is substantially less, yes, sir. >> i think it would be good for us to just get those numbers because again, i am concerned that we are talking about a

fantasy world where insurance companies don't make decisions denying benefits, don't ration care, don't cut people off, that somehow because the prescription medicare drug program, and funded, just sort of launched was not as expensive as it first projected that somehow that is a triumph of free-market economics, when in fact we could produce much lower costs with systems the government has and that we have an actual experiment about the cost effectiveness of this approach with medicare advantage. i'm old enough to remember when medicare advantage was advanced because it was going to save money. it was going to be 5% less, 95% on the dollar was the projection and because the system was gained or because of inefficiencies, it has been 13%

more expensive until recently because of the changes that have been put in place to bring it under control and all the while, seniors are paying a premium. what did you say the extra cost was per month? >> $3.30 per month per beneficiary about 49 million beneficiaries. >> thank you. >> thank you mr. chairman. >> it's my understanding the secretary has to go into in minutes and then we will do is start the members who didn't have an opportunity to be at the top of the queue for the next panel. >> madam six turcotte think you for being here. i know it's not the funniest thing you do. >> but it's the warmest. >> under the affordable health care act, i think i am tested that we can't deny care, is that

correct? >> the independent payment advisory board. >> under the affordable health care act, the denial of coverage is protected by law to cannot deny coverage is that correct? i get to keep my insurance company and keep my doctor and i can't be denied coverage and things like this? >> eventually in 2014 this set up and you will be able to have an ability to come to a market without a pre-existing health conditions, yes, sir. >> one time in the market the health insurance cannot be denied me if i get sick. it can't be dropped. >> rescissions are against the law. companies dropping a beneficiary because demand a technical error or got sick you cannot have that. >> and it's done through private insurance companies through the exchange's? >> that's correct. like the republican plan for seniors, private insurance

companies can't be denied coverage and if they get sick, they get to keep it. >> i think a huge changes that the cost sharing is shifted to seniors and those with disabilities under the republican plan. there is no plan for underlining the devotee system changes. there is no fraud and abuse perceptions and i have no idea what the benefit package looks like. maybe there has been a discussion but i haven't seen but how the $8,000 voucher would purchase. >> since we can't see all that yet, it just seems a little bit disingenuous for my colleagues on the other side of the aisle and members of the administration to project of these claims since we haven't yet seen that. >> we are protecting cost and that's the office that says a senior would be paying 61% of

his order per cost starting in year one and closer to 70% by a year eight. it's the congressional budget office. >> and it shows a large high cost, don't they? the cbe shows a -- >> that's based on today's cost three islamic with the gentleman yield? we ask the cbo and they said if they can't estimate to lessen competition and its effect they did not bother trying. as the mcfate to look at medicare part b, the cost increases in medicare part b and certainly the cost increases of medicare advantage. so we have to real-life examples. islamic look at medicare part b and the savings and they didn't replicate that in their cost estimates of the plan they just ignored it. >> thank you for the clarification. madam secretary, during the testimony regarding ipab, you said that it not only in your written testimony but in comments they are prohibited from cost shifting and premium

shifting payment denial, rationing care, raising premiums, reducing benefits, changing eligibility. i think you mentioned they are going to be paid something for their work you don't really know how much, but yet you call them a backstop. if they can't do these what are they back stopping? >> let me give you two examples, congressman, about the kind of things if they had been enacted a lot sooner i think we could have saved billions of dollars. we just discussed medicare and it, the overpayment which has gone on for decades and the med pact group of advisers has recommended looking at that strategy, lowering it to the fee-for-service. that has never happened. the other thing that has recently happened is congress started down the path as well as 2,003 and recent experience with competitive bidding for the medical equipment. it started in 2003.

a jump start in 2008 it was withdrawn again. this year we've implemented one of the medicare sections we are saving 32% of the cost we were paying last year for the durable medical equipment. there is no change in the beneficiary benefits. they are getting the services they need that a third of the cost. those are two kinds of recommendations that don't fall any of the prohibited categories that could yield billions of dollars. >> thank you. i'm going to yield back -- >> thank you, mr. sherman, psychiatry sebelius, nice to see you again. thank you for your testimony. i want to pursue the line of questioning of competition and the effect of competition particularly as it relates to health care. those in the ability of competition or the potential for competition to reduce costs depend on a fully informed,

foley freed negotiation on both sides? >> usually that is what a market strategy is. >> with regard to medicare part b come on think certainly virtually everyone had the same experience i did, that my constituents for a long time are extremely confused and many still are confused about what their choices are under the prescription drug program. does that likely -- assuming that we were to enact the republican proposal that this would be an enormous problem for america's seniors to be in the position to intelligently compete with the insurance companies approach at marketing. >> welcome,, what we've done in the last two years in some of the medicare part deprograms we've also done it in medicare and a vintage is to try to

eliminate programs that actually have very little differential but just add more confusion to the marketplace to do just that. but yes, i think it is not uncomplicated. we used to run a senior medicare council program and want to make the best choices and they would find themselves in a program, the drug regimen would change in that program to find the drugs that they need have actually shifted out the programs of that is a pretty common phenomena for seniors. >> if you add benefits for hospitalization, physician, home health care medical equipment and potentially hospice and who knows what else makes it an extremely even more complicated procedure for a senior to go through, sr. and his or her family.

>> i definitely think that there is a huge ongoing effort to educate folks about the benefits are and how to take the best that vantage of them. one of the points we haven't really touched on the but i do want to mention is just the additional cost of administration. most insurance companies in the most efficient ones run at about 11 to 13%, some as high as 25%. medicare has about 2% or less administrative costs so assuming you have x amount of dollars, a fixed contribution whatever the fixed contribution combined health benefits less is going to go pay for health services in the private market than in the public market. >> and granted the republican proposal has not been put into the legislative language we can actually look at that nobody can be turned down and be denied

service and can be denied the choice of the physician and the republican plan to those stipulations make it difficult for insurance companies than to actually lower costs? >> and insurance companies to my knowledge so they do accept some and deny some on a regular basis. they negotiate with hospitals. some are in and some are out. that's part of the strategy to put a plan together and then when you buy that insurance, you are basically buying that network, that hospital system providers. a visiting a different system than medicare currently which says to a patient you can choose any doctor mackey want if you don't like this doctor you can go to a different doctor. that is not the strategy around private insurance. >> i guess what i was trying to

get out, judging what's been said about the other side of the republican proposal is that is it likely that they could have a significant impact on overall costs to the system if they can't deny care if they can't deny any one coverage, and they can't -- they have to provide all the services medicare provides. >> welcome if you assume that insurance is about selling a product which delivers health care, pays providers and hospitals, pays doctors, you know, there is only a limited number of ways you can reduce costs. you can reduce administrative costs, you can negotiate better prices with all of the papers and providers which is reducing costs, you can a ret utter health strategies, which i think can be effected, get a healthier population i think often in the private market currently that is done by a cherry picking.

we take off your people and denying sick people, so the pool was of the year. you make money that way there's a limited number of strategies or you can shift cost and i would say both medicare and medicare proposal would pass the house on to the states. >> madam secretary, i wish we had more time to get into all of this. i have a strong difference of opinion of what we are doing but i don't need to like our interpretation of what you're doing. this is an issue we have to get into a much more detail it affects nothing more than the health security of the nation's seniors, and we have a strong difference of opinion on what to be in charge of their health care. them or this board. i wish we had more time to get into it. the members who have not yet had the opportunity to ask will the front of the line for the next

panel. with that madame secretary, i know it was a hot morning. thank you for your indulgence to believe appreciate it and hope we can do this again. >> thank you mr. chairman. [inaudible conversations] stopguard their name tags up there? jose is putting your name tags there. in our second panel consists of the former director, grace nouri turner and shoot if fader of the urban institute. because we have the votes it looks like at about 1:20, we are going to stick to the five

minute rule for the panelists. so if you could come from your opening remarks to five minutes and then we will do the questioning as i mentioned earlier, and if there are additional points the panelists want to interject they can do so during the questioning. let's start with you, mr. holtz-eakin, and then we will work our way from our right to left and you're left to right. thank you. mr. holtz-eakin? >> thank you, chairman ryan, a ranking member schwartz, members of the committee. it's always a good day to be back at the budget committee. and i had my written testimony. i want to be labor the points. the are four simple points that ought to be made. the first is that to my eye, the ipab was a error that should be reversed. the existing reimbursement problems for providers of medicare system, and as a result, the in pete access by

medicare beneficiaries. it is likely to stifle innovation. it is incentives are such that it will target the most innovative and newest therapies and that the ipab as part of the status quo for medicare is dangerous to the beneficiaries, the interest to the federal budget, and dangerous ultimately to the economy because it is part and parcel of a broken a social safety net system whose spending threatens to drive debt to levels which would harm the u.s. ability to compete and grow. ..

>> it's something we'll see again, and we know vividly from the medicaid program where reimburressments are a bit over payers where beneficiaries have a great deal of difficulty gets access, and that would be the future of medicare more and more broadly. we've seen, for example, with past episodes in cuts to the physicians under the medicare program that fully two-thirds of practices have contemplated the changes in their access for medicare beneficiaries whether they are taking patients or not so i think that's an outlook under the status quo that's dangerous for beneficiaries and dangerous for the american health care system. it is quite likely to stifle innovation. we know at a level innovation is

at the core of the united states' ability to solve pressing problems in health care, energy, education, and other policy areas given that there will be a mandate to cut spending, the most likely targets of the new therapies, the one just introduced into the market, expected to development, have not yet reached the scale, they are the newest and most innovation approaches to alzheimer's and other problems that face us. this will have a stifling effect. the ipabs attacks on return to these that you don't get a return on up vestment, and it's a random tax. you don't know when it's going to pop up and return your investment. there's terrible investives -- incentives, and as a result, it harms the future quality of care, and then it is part this focus on trying to cut provider payments and control a broken

fee-for-service system part and partial to the status quo that we have to change in a fundamental way we know these are safety programs. social security red ink, unlikely to slide to the next generation. medicare, enormous red ink, not going to be able to survive the seniors next generation. medicaid, unable to receive its services, and in the process, they will have feeding the deficit problems and the budget committee is well aware of, and we know ultimately, that's not a budgetary issue, but an economic throat of the first -- threat of the first order, the commission called it the most predictable crisis in history. the issues before us today are whether we will take a policy approach which has led to the -- us being on the precipice of a disaster or whether it fundamentally changes the

structure of the medicare program and social safety net, and i encourage this committee and congress as a whole to take the latter approach and disguard this policy error. thank you. >> within 12 seconds, great. >> thank you, mr. chairman, members of the committee, there's no question that medicare spending must be constrained if we're going to have any hope of getting overall federal spending under control, but there's a wide diversity of opinion on using the advisory board as a tool. it was designed to take difficult decisions out about medicare payment reductions, out of the hands of consumers and legislators and delegate them to the panel of 15, but the constitution gives the power of the purse to congress so the legislated representatives can be accountable to the voters in their decisions. the ipab turns this upside down. the unelected ipab members

ultimately determine spending policies to determine whether millions of seniors have access to the care they need. this challenge is the very principle of representative democracy, and the concept of the governed. this is at the center of a conflict of two world views. do we entrust doctors and parties with decisions or do we entrust the decisions to a government appoint the panel of experts in washington who have authority over hundreds of billions of dollars in medicare spending? the government approach to holding down medicare spending traditionally defaults to deep r and deeper cuts rather than implementing reforms. the legislation is true to form. perhaps during the question and answer, we can talk a little bit about some of the government's experiments so far and how they turned out. because it's written in law, reductions achieved are likely to be limited primarily to

medicare advantage and part d prescription drug program and skilled nursing facility services. if the board is forced to reduce overall medicare spending by focusing only on smaller segments, the cuts have to vary deep to achieve overall per capita spending reductions because any of the moves could have major repercussions on access to care, it seems seniors and taxpayers would be much better served if the changes were to be openly debated throughout the legislative process rather than imposed by unelected officials. even before the cuts began, medicare actuaries found large reductions in payment rates built into law would likely have serious implications for beneficiary access to care as the chairman described in his opening remarks. the president would double down on these savings by giving the

apab more authority. it's hard to justify further cuts in medicare provider payments. skip a little bit -- the repeal is the best solution to begin to get us on a chart, on a path that can move towards a 21st century health care. part d shows us the way. we have a working model that shows that private -- when private companies compete and importantly when seniors choose that you can get costs in spending down both for seniors and for taxpayers, the average monthly beneficiary premium part d coverage is $30 in 20 11, far below the $53 forecasted originally. 54% of part d enrollees are satisfied with the coverage. looking beyond ipab and looking beyond part d, chairman ryan

proposed a comprehensive plan to modernize medicare that builds on the part d model, the key is premium support in which provides seniors with a subsidy to purchase a guaranteed medicare health plan. when it begins in 202 #, seniors receive an age adjusted allocation to pick the health plan to meet their needs just as 11 million seniors already have done voluntarily through medicare advantage. premium support allows for flexible subsidies that can be adjusted and targeted to seniors based upon their age, financial well being, health status, and similar considerations. to survive, medicare must be changed, and the question is whether it's under ipab and the rationing built under the president's health care law or through the chairman ryan's plan that provides a path to stainability for medicare. it's a clear choice between this

and the top-down approach that puts a small number of independent experts in charge of decisions that will impact tens of millions of seniors and progressively limit their access to care. thank you, mr. chairman. >> thank you. dr. feder. >> now, thank you, mr. chairman and members of the committee, glad to be with you today to druse the roll -- role of ipab that serves as a guarantor in ensuring all americans quality care at low cost. as you consider the role of this, i call your attention to the fact that medicare is an e enormously successful program, more successful than private insurance in pooling risk and controlling costs. medicare has historically

achieved slower spending growth than private insurance and the aca extends its relative advantage. action taken in the affordable care agent producing an average annual growth rate of 2.8% per medicare beneficiary for the years 2010-2021, 3 percentage points lower than national health care spending. national health care spending is projected to grow two percentage points faster than gdp growth per capita and gdp growth will be a full percentage point slower. growing slower than the private sector is good, but not enough since both the public and private sector are paying too much for too many services and failing to assure first timely delivered care. that's why this goes beyond tightening payments to pursue a

strategy of payments and delivery reports and creates the ipab to ensure effective results. it includes reductions for overpriced or undesirable behavior and bonuses or rewards for good behavior. most especially through payment innovations that reward providers for coordinated integrated care officially delivered. these reforms have the potential to transform medicare by example and in partnership the nation's health care delivery system to provide better quality care at lower costs. i've been kind of amazed to hear how little confidence there is in the capacity to reform the overall system, and what the achievements of these savings cannot be assumed. that's why the ipab exists to achieve cuts in medicare spending by changing the way they pay health care providers. it serving to inform and assure

the congressional acts of medicare spending under control. we know that some proposed eliminating the ipab, but with 100 experts who wrote congressional leaders in support of ipab, i see that as sorely misguided. this enables professionals to assemble evidence and assure that the medicare program acts on the lessons that payments and delivery innovation, the affordable care act seeks to promote. i would contrast the aca's strategy to strengthen medicare with the alternative strategy not only to repeal ipab, but to eliminate medicare for future beneficiaries replacing it with the purchase of private insurance and that i call to your attention that are said taking into account all of the reductions in medicare payments

that were criticized this morning. the cbo analysis chose such an act would not slow growth, but increase costs, the cost of insurance and shift responsibility of payments to seniors. given medicare's track record relative to private insurance in delivering benefits and controlling costs, more things medicare into the private insurance markets simply makes no sense. rather than go in that direction, what we should recognize is that medicare is clearly doing its part to control costs having reduced spending for beneficiaries considerably and well below that in the private sector, but what can only go so far as you noted on its own to promote efficiencies without partnership of the private sector. this is not fundamentally a problem, but a health care system problem. this requires an all payer

partnership to assure that providers actually change their behavior, that we don't go on as we thought, rather than looking to favor some patients over others or to pick one pair against another. rather than losing ipab that supports medicare's continued and approved efficiency, i urge to extend the target to apply not just medicare, but private insurance and extend authorities to the recommendations for all if the target is breached. it's all payers promoting first timely that the -- efficiently that we need. >> i appreciate that pure statement. >> i appreciate your appreciation. >> with that, starting with mr. flores. >> i believe ipab has a flaw built into it, but before that, i want to get to questions

quickly. you started your comments talking about the insolvency of medicare and medicaid >> we know that part a of medicare is running a cash flow deficit now. parts b, c, d were never set up to be on their own footings. they plan revenues, and we have something over $280 billion to keep it alive. >> into that time frame? my understanding is that medicare is insolvent to the tune of $160 billion; is that right? >> these are games, but let me give you the sad fact. medicare grows so quickly, there's no interest rate to do a discounting exercise to cause it

to convert. it is in-- infiently -- >> more than $60 trillion? >> only a miracle -- >> we'll get to that. medicare is similar in the neighborhood of $15 $$20 trillion? five times our national debt? one of my first professors said the laws are of gravity it. the worse you violate them, the harder the impact at the end, and it's essentially what we're in right now. if you look at what has been claimed to be the benefits of ipab it says that we can cut costs to providers, but yet not ration health care. my question for secretary sebelius was going to be if question cut the budget for hhs by two-thirds, still providing

the quality response to her mission requirements, and i would assume her answer would have been no. my next question to her would have been if we were to cut the pay from the typical hhs employee by two-thirds, how many young people want to enter that profession? i'll ask whatever person. we kept the pay for doctors by two-thirds, how many people going to college make the decision to go premed and follow through all the way through their residency program and become doctors. anyone want to answer that? >> i don't know the number, but the incentives are clear. we've seen this movie before. we've within through this exercise where you can have all the medical science you want at low or no costs, and it cost enormous amounts. you say, no, no, stop that. >> same thing is in the technology area. >> it's the same mistake. >> right. >> there's going to be less investment in the industry because there's less money going

into the industry to go forward. one of the things that's caused the -- one of the claims that's been made by a government, by madam secretary was that medicare's costs have grown at a rate slower than that of the private insurance market, and i can tell you firsthand as somebody in business for 30 years before i came here that the reason for that is we began to clamp down on what government health care plans would provide, and all of those costs shifted to the private sector. does anybody disagree with that? >> no. >> yes. >> i was there. i watched. i saw premium increases go up every year, so what caused that? >> the private sector has been far less aggressive than medicare in attempting to limit health care costs. >> the government or the hmo or pp ?orks >> actually the

government did the hmo in the 70s in the reagan administration. they promoted that policy and developed -- >> let me correct you though. it came from the private sector. so i don't see how we are going to make this work? we're going to cut pay to the people that provide medical care by two-thirds, and we're going to expect them to stay in business? >> may i comment on that? >> sure. >> what i said in my testimony is there's an assumption that the medical system says the same it is there's no way to improve productivity in the system. the health care industry is the only sector in which we have not seen productivity increases, and, in fact, what the -- i see the chairman nodding. the capacity to achieve productivity in increases, by delivering health care more efficiently, getting rid of unnecessary readmissions, being a primary example is out there as a strategy that we all need to pursue, and it's being pursued by the public. the public is leading --

>> we'll let that continue because i just want to get to everybody. >> thank you. thank you, mr. chairman, and to add to what the good doctor is saying, there were and are three promising models to cut costs and improve quality. if you don't believe in that, you don't believe in reform that was passed. one is the accountable care organization. you've heard those terms, heard the discussions about that. value based purchasing programs, very few places have done that. where it's been done, it's been successful in payment bundling which is very, very critical. a lot of places don't want to do that, do that, doctor? there's a lot of serkses. section 301 and section 309 and section 30220 to section 3028 say specifically to things not scored by cbo which i believe are going to bring tremendous

amount -- look, when it comes down to it, doctor, here's where we are at. democrats want a guarantee benefit program. the other side does not. that's what it comes down to. they are entitled to their opinion. i say that with deep respect, but i want to talk about rationing, rationing. heard that term, came out the first couple weeks when we started to discuss health care reform. we want to ration. you know, that's led to the cryptic remarks about we want to push off the cliff so we don't have to pay attention to it anymore. let's talk about rationing, mr. chairman. over 50 million people in our country are uninstructinsured. there's good figures on that. 25 million are underinsured. we see that in letters i get,

the calls i get in my congressional office, i'm sure other guys and gals have the same thing. people cannot afford the care that they are deserving and need. they can't do it. rationing. as you all know, two-thirds of all personal bankruptcy are due to health problems. rationing. just because you have insurance doesn't mean you are covered. we all know that; right? you could get diagnosed with a disease, your doctor could prescribe comprehensive treatment for you, but if your insurance company says no, what do you do? talk to your congressman? you have little power against the insurance company, and that's what this is all about, doctor, don't kid yourself. just look at all the requests

that we get. am i correct, let me ask you, ms. turner, am i correct that this kind of rationing exists under private plans? >> people are making choices and decisions all the time about unlimited resources both in the financial capacity as well as the capacity of the markets to deliver. >> you can make the choice if you can afford it, if you're girveg the ability to make the choice. not everybody can make the choice unless there's options in front of you. >> but -- >> options that you fit into, and you have to worry about the person who is offering the options saying you don't qualify or you have this disease, and we're not going to cover you. isn't that rationing? >> we have -- >> isn't that rationing? >> we do not have a functioning market in our health sector. >> mr. chairman, is that rationing? >> there's choices, and the market -- >> is that rationing,

mr. chair? >> does the gentleman want to yield his time? i think let's get to the quorum. >> yeah. >> having the government deny care to seniors through providers i would count as rationing. >> okay. would you agree with that, mrs. turner? >> having the government deny care to seniors through payment policy would also be rationing, yes, sir. >> how about if insurance companies deny care and coverage to a young couple 40 years of age with three children? >> absolutely. we need to reform the system so there's more choices and own the insurance to make their own choices in a competitive market. >> thank you, thank you. there's all choices, but you need real choices. i yield back, mr. chairman. >> at least you can fire your insurance company. if you have the government

providing benefits, you can't fire the government. >> if you have someone else to take its place. >> we have to fix the problem. >> health care reform is not going to do that, mr. chairman. >> we respectfully disagree. next we have mr. muvani. >> thank you, mr. chairman. as a limited government conservative, it's hard to even know where to start to look at the health care act. i heard mrs. sebelius where she starts. she starts with her father. i start with my three 6th graders, and as i listen to the list of everything happening, all these wonderful things that happened so far, this magical $250 check go out to the seniors before the election and this 50% discount now on name brand drugs, free annual wellness check, and all i could think of

is who pays for it? that's my kids. that probably drives me here. it's interesting these three 6th graders started to read more. they read "animal farm," and it struck me in the mrs. sebelius's testimony about the ipab as a backstop or a fail safe, and i have no idea what that means. i think i know what it might mean. what i think it means is that it is a committee that is set up to do what the administration wants to do if congress will do it on their own, and all of her testimony i think was partially correct. we heard her talk about the process, about the ipab making recommendations on the growth rates, but the final decision goes to congress. what she didn't say was that

ipab makes the recommendations and unless congress approves that or came up with another way to save the same amount of money or have the same amount of impact, those recommendations would become law. in fact, if all of congress got together and unanimously, republicans and democrats said we don't want to do what this board just did, that recommendation would still become law and she also accurately said a part of what the ipab cannot do. you heard mr. psacrell talk about rationing and talking about recommendations to reduce services or deny coverage and that type of thing. here's what they do -- they can't recommend reductions in payment for services. in fact, it's one of their primary tools, and this example, while extreme, is entirely legal under the law. the ipab can come out and say as of next year, the reimbrursment rate for a knee replacement it

$1, and that saves x number of dollars. unless congress comes up with another way to save that that one dollar, that becomes the law, the reimbursement rate for knee replacements. in the event that happens and doctors stop providing knee replacements for a $, there's a reduction in services. i think it's interesting that in the bill, the law goes out of its way to make sure a reduction -- a recommendation to reduce reimbursements, reduce paiments, is not to be deemed rationing. the ipab is given the ability to lower those payments even though it has the effect of rationing coverage, and i see that mrs. feder is disagreeing with me. we talked to crs about that example, and it turns out it's absolutely right. here's what we got. we got this board in charge of innovation. i'm getting to the question.

we have this board that is going to be in charge of or could easily be in charge of up to 20% of our economy. the question is this -- can someone please, and you get the first chance, give me an example of where that has ever worked in the history of mankind? >> [inaudible] i think that we rely on independent boards which have varied records. we rely on a federal reserve to manage the banking system. we got some ups and downs with that one of late. we rely on an interstate commerce commission and a number of commissions. >> does the interstate commerce commission have the right to make law without congress' authority? >> i don't think so. the fed makes a lot of rules for the banking system so that we stay there. what i think is important here, and i do disagree with some of the aspects i think that some of what you said is not quite accurate because conk --

everybody in congress do you want like the recommendations, they can reject them. >> only if they come up with another alternative. >> no, 60 votes in the senate can reject it. >> but what -- >> can i finish -- >> sure. >> my point is that what i believe in the board does for the congress is give you a source of expertise and tee up the issues that need to be addressed, and when i think secretary sebelius gave examples of the kinds of things they could do whether they promote a patient's safety initiative, promote better payments issue more efficient payments. i think there's a tremendous good they can do in bringing expertise -- >> we have to leave it at that. ms. moore. >> thank you so much, mr. chairman. i am a little bit interested,

mr. holtz-eakin in the mere call you -- miracle. i do agree with you there's an unfunded liability, and how you might reconcile this. you stipulate health care costs in general, not just in medicare must grow more slowly which is something i've been harping on continue sly. it's not gist medicare, but the larger health care costs that must grow, but you say that the ipab is dangerous, that it stifles innovation, and, you know, so i guess your suggestion is that we shouldn't limit the cost in the growth of innovation that that would be, and, you know, we do need innovation, and this -- the ipab targets that, and many of us allege that, yes, this huge gap between the cost of innovation and all of that will be born by seniors, it's

trillions of dollars if you support, for example, the republican plan for medicare with targets to seniors. i'm asking you to respond to how you see us limiting the cost of health care and also maintaining innovation. a little bit more interested in the miracle. >> so i think fundamentally that the key defect of federal health programs, medicare and medicaid in particular, is that they don't propose any budget on those programs whatsoever. they are open ended draws on the taxpayer with little incentive for useful adoption of innovations, efficiency, and coordination care or any of the things that one recognizes in the american health care system, and so i'm -- >> so to some extent you agree with the affordable care act reforms in terms of -- >> there's no budget constraint. it says, again -- >> budget restraints, you're not

wanting to restrain innovation, but the restraint comes where? from where? >> there's vigorous debate on both sides of the committee about the house passed budget, but among the things that it does is cap the taxpayers' liability -- >> taxpayers, but not the patients. they are not taxpayers because they are retiredded. >> step one, we both know that fundamentally to be successful, health care costs -- >> thank you. you are saying trillions of dollars have to be paid for my folks who are retired. >> well -- >> i'll ask dr. feder -- we heard secretary sebelius, we heard the actuaries, the cms actuary, mr. chairman, say that finish care act -- affordable care act could generate savings, but skeptical on the political will to execute

them. is the ipab an enforcement mechanism? he stiplates we could recognize savings if they were an enforcement mechanism. >> thank you, congresswoman. what i indicated in my testimony what the ipab does is act as a backstop here to make sure that the innovations in the affordable care act that we are having them untested and underdevelopment which may have been what they were talking about. those actually take place or that the improvements, demands, accountability for improved productivity for providers which may have been what he was referring to. >> you could help him because i mischaracterized what he's saying. can you, you know, you guys are experts in health care, and i'm not. i was interested in the miracle of paying for these higher health care costs without sticking it on seniors and so he talked about needing innovation

and yet, and not stifling innovation, but slowing the growth of health care. how would you -- >> well, i'm not sure. i'm sure he can speak for himself as i heard him do, but what i believe is that the innovation that moves us away from a payment system that continues to reward forever more expensive services needs to be replaced with an accountable system that rewards providers for delivering quality care, actually pays docks better. >> and not -- >> by no means, i never have been and are not talking -- >> i just want to use the last six seconds to say i want innovation, new technologies available to seniors, but i do think there has to be some shared payment for the system and not to pass trillions of dollars of costs on to retired seniors. >> [inaudible]

>> thank you, mr. chairman. having been a nurse for over 40 years being in the health care system, i think there are a lot of things that we could do to reform health care, and we had a great chance to do that. we missed our chance. let me go back to ipab because as an elected official and also someone who believes in the constitution, i believe that this ipab is a very, very serious breach in what congress should have the authority to do so there's unprecedented power here to our unelected board, and i really believe it is misnamed because it says it's an independent payment advisory board, but it's not just advisory. it has muscle. it has strength, and where i have the concern about this is currently the law says that the independent payment advisory board kicks in with recommendations looking at medicare growth, gdp plus 1%. the president has also come out

and said he believes that we need to lower that even to a half percent. secretary sebelius was here a bit ago making a great deal of emphasis on the facts that congress has the ability to make these recommendations before the board kicks in, but let me go to why i think that's a really misinformation piece is that currently gdp is growing at somewhere between 2%-4%, and i think i'm right on that. medicare is around 7%. if there's such a low threshold of gdp plus 1%, ipab is going to kick in quickly, and when they kick in and give these colted recommendations, they are not just recommendations. from my understanding they are #, indeed, going to be law or make changes to the way we currently operate unless there's the two-thirds overrun which is a very, very high standard, and we all know how difficult it is to get two-thirds for anything

unless it's naming a post office, so i have a real problem with that in addition to the problem with transparency and how this board operates behind closed doors without public opinion, public comment, and so on. what i'd like to hear from each of the members of the panel here is do you believe that there is a constitutional problem with having a board making decisions that are going become law without them being elected efficients? >> i am not a tewingal lawyer, but i think -- constitutional lawyer, but it's at odds with conventional practice and oversight. i find it strubling in that -- troubling in that respect alone. there's the notion that somehow it's just a bunch of smart people who give ideas for payment systems reform up to the congress and let them take care it. there's is such a group. i served there.

if it's just a matter of advice, this brings nothing new to the table and represents the failure of medpac. it guarantees other successes in the bill, that's not true. let's stipulate the center for innovation do something, i'm scek kl, but let's stipulate. there's nothing they can have in rule making, implement it and produce results in a year. those are big changes in payment and delivery systems. everybody knows that can't happen in a year. ipab is structured to scwush any success from center of innovation. it's at odds with conventional practice, and unclear with the claims, and it's impulsive. >> i do think that ipab goes further than any legislation, any board in my experience in that it has not only the ability

to have the force of law, but there's no administrative or judicial review, and it's provisions go into effect unless congress reached high hurdles in overruling it, and then as we discussed earlier, having to achieve the same targets, and i think that makes an important point in that the cbo has already shown its not going to score quality improvements as really showing meaningful savings, especially in the one year time frame that the ipab has, and so it's only tools really are going to be more cuts in payments on the existing fee for service system, and we know where that goes, and we know where that leads as far as payment rates and access to physicians so i think the miracle that ms. moore was talking about earlier is part d. we know that the market place

competition consumer power gets price costs down for government programs, and that must be the way we go. >> thank you, mr. chairman. i think we need to recap. let's compare medicare for seniors under the affordable care agent and medicare for seniors under the ryan republican plan that passed as part of the republic budget. under the affordable care act, the donut hole is closed over ten years, the actual, not magical check of $250 that seniors received last year paid for actual groceryies -- this pays for actual groceries, pay

mortgage, is actual money so to suggest that somehow the $250 check is mythical or maiming call or notary public existent is false. i stood in front of numerous town hall meetings and asked how many seniors got their $250 check, and plenty hands go up. the 50% cut in name brand drugs, the gentleman wonders how it's paid for, but the entire part d prescription drug plan was never paid for by the republicans and adds $400 billion in the deficit and $7 trillion in 75 years. when it comes to who makes sure rereduce costs in medicare, who makes sure when we passed new policy that we ensured it was paid for, democrats did so and preserved and protected and extented life, and republicans jeopardized it. in addition, the affordable care

act adds screenings that used to have a co-pay before the affordable care agent passed, and now are free meaning we shift the focus from a sick care system to a wellness and prevention system and ensure that seniors stay healthy and save costs down the road because if they get screenings up front, they are less likely to get sick down the road. checkups which is what they are entitled to that now prereceiverring health rather than having them access the health care system for the first time once they are already sick which we know would increase costs. let's look at the republican plan, the ryan republican plan to end medicare as we know it, gives a voucher to seniors, and leaves them to the whims of the private insurance companies to get health insurance on their own and adds $6,000, actually more than $6,000 to the bill of

medicare beneficiaries of seniors who all in the name of making sure that we can preserve tax breaks for millionaires and billionaires. dr. feder, if i can ask you, as you know, we've had discussion this morning about the ipab and what it can and can't do. it's explicitly forbidden from recommending changes in premiums, benefits, eligibility, taxes, or other changes to result in rationing, so threw those prohibitions, they can't increase premiums or force sharing at all. they can't decide to just tell a doctor that a knee surgery is a dollar, and that that's the end of the story so accuracy is important. do you agree with the assessment that seniors could face higher out of pocket costs as a result of the republican medicare plan, and could you respond to my comparison of the two approaches

to how we prereceiver medicare and make sure we bring down costs and protect seniors. >> thank you. i do agree with your assessment, and let me give my interpretation of how that occurs. as i indicated, the voucher that is in the republican budget is set taking all the deductions in payment growth we talked about into account, all accepted by republicans in the house, and gives a budgets -- a dollar amount to the seniors to purchase private insurance which the congressional budget office says is already more expensive than the medicare plan for seniors, and it will be much more expensive in 2022 when the voucher is expected to start. what that means is we are sending seniors on their own, will be sending seniors, myers including, on our own to shop for benefits without the ability of having the government behind us to negotiate or set prices on

our behalf to determine benefits are what they ought to be. it is simply a cost shift that according to the cbo, that increases costs. >> would you say -- it sounds to me there's no debate over those facts, those -- >> i don't -- i have not seen any. >> thank you. we have to leave it there. >> thank you, mr. chairman. >> yep. >> follow b up on the -- following up on the question jeopardizing medicarings what are the projections for the actuary bankruptcies on the medicare system? >> the medicare system as a whole is bankrupt now. i mean, it simply cannot pay bills on a cash flow or projected basis. the trust fund for part a, one tiny piece is expected to be exhausted in a bit over a decade, so -- >> continuing the path we are on now, the democratic approach of insurers, the destruction of medicare as we have known it or

have ever known it? >> i couldn't agree more. the status quo is dangerous to beneficiaries, the economy, and we have to change the direction. >> we're on medicare and they feel trapped and it's hard to find doctors who take medicare patients. they are having to travel further and further. when they find the doctors, do you have any -- that's -- what's the data on this? >> the latest data in the testimony suggests two-thirds of practices are reviewing their treatment of medicare beneficiaries and some will be aggressive enough as to not take any new beneficiaries, some are contemplating it, but each time there's an episode with both the growth rate and now the affordable care act to cut provider payments, they react in a sensible fashion in that they can't afford to do it, and they don't. >> someone turning 65, giving p their insurance for medicare, trapped in the system, find is

harder and harder now to find a doctor to treat them. what's the alternative? what can they do if there's not a doctor to take the reimbursement rate or have to travel an exorbitant distance to find a doctor? >> pay out of pocket, the limit that was highlighted. >> the stinger on the subject was pointing out to the study that an average couple earning $80,000, retiring at 65 pays into the system $110,000 and takes out an average of $350,000. you don't have to be a secretary of hhs or a member of congress to know that that system is not -- cannot be sustained. it seems to me that there are two ways to address it, and those two ways are basically laid out in the approaches of the parties. one of them is price controls,

the other is competition. would you agree with that? >> i do agree with that. i believe that my worst days as a cbo director and member of the other body asked me what the right price was in bamsz, that's everything wrong president medicare system, and this can wants it. >> that's explaning why there's a shortage of doctors. there's experience with price controls that they date back in written records, and they seem to be produce very consistent results. they will in every case i've studied, they will produce a shortage of whatever it is that you are controlling the price on. you know of any exceptions to that? >> no. >> so we have a mechanism that we know will create a shortage. we're already watching it create a shortage, and we have now

blurred an independent payment advisory board whose principle tool to hold medicare costs down is to place more and more draconian reductions in the price controls that are already there meaning more and more difficult time for people to find doctors until you can't find them. >> that's my deep fear that this will accelerate what is already broke p in the medicare system and thus is something we can't afford to do. >> now, how would you describe the republicans' approach? >> the approach is quite sensible in that it -- it gives a finite amount of resources to a problem, and people when they have a finite amount of resources, use it efficiently. it allows the best package of insurance benefits at the right price to be selected by the medicare beneficiary, plus you award value which is how we've

been successful in 80% of the rest of the economy. >> generates competition. >> yeah. >> what makes ford a good car? chevrolet. >> yeah. >> the fact there's someone there competing to offer better services at a lower price. in the few seconds left, the hit on that we keep hearing is medicare advantage works that way and costs more. address that quick. >> i believe that's a very mistaken statement. medicare advantage, when it is a managed plan, is cheaper offering a better value proposition. the fee-for-service medicare plan costs a lot because fee for service is broken medicine regardless of the label attached to it. >> thank you. >> i want a chance to follow-up -- >> i apologize, it's mr. van hollen. >> glad to yield. >> thank you, mr. chairman. i thank all the witnesses, and i want to just very quickly on the medicare part c, we know from

cbo and fact the that we have been subsidizing that at 114% of medicare fee-for-service, but really i want to pursue the line of conversation of mr. mc mr. mcclintoke raisedded. you tug it's hard -- suggest it's hard to find a doctor in medicare. we heard evidence suggests it's harder to find doctors, and i think we should all agree rather than rely on that, look at the real evidence out there, and fortunately a nofn partisan group that advises the united states congress does exactly that survey. let me report their most recent findings because it's very informative on this issue. they talk about how every year they conduct a patient survey to overall access to care, and they look at the private market and

the medicare market, and i'm just quoting from their report, "resultings from our 2010 survey indicate most beneficiaries have reliable services and few reporting few or no access problems. most are able to schedule timely medical appointments and find physicians when needed, but some experienced problem when they were looking for a primary care physician. medicare beneficiaries reported similar or better access than privately insured individuals age 50-64. on a national level, this survey does not find widespread physician access problems, but certain market areas may be experiencing more access problems than others due to factors unrelated to medicare or even payment rates such as relatively rapid population growth." then, if you go on, it states,

"the patient protection affordable care agent of 2010 contains several provisions to enhance access to primary care including increasing medicare payments for primary care services provided by primary care practitioners." then, if you look at the chart, the table they have, and i just want to read what they ask, this is a survey. getting a new physician, among those trying to get an appointment with a physician or a specialist in the past 12 months, how much of a problem was it getting a doctor or specialist to treat you? medicare program, the answer being no problem, no problem finding primary physician. 2007, 70% said no problem. in 2008, 71% said no problem. in 2010, 79% said no problem. let's look at the private

insurance market, age 50-46, all the -- 50-64. no problem is declined from 8 #% saying no problem in 2007 to 69% saying no problem. now, 10% gap. in other words, sporting this nonpartisan analysis have no problem. specialists -- i think it's important to get that out because there's seniors in my district with different access, and it doesn't mean every single physician takes medicare just like not every physician are on the plan a lot of us have. depending on what you choose, but i can tell you in 1965, medicare beneficiaries couldn't find people -- 65 and up couldn't find any physician willing to take them. access to specialists, people who reported no problem with access to specialists, 85% of

medicare beneficiaries in 2007, no problem. as of 2010, 87% reporting no problem access to specialists. again, higher than in the private market ages 50-64 where 82% report no problem access to specialists. mr. chairman, i want to submit this for the record. >> [inaudible] >> i think this whole conversation requires data, and, you know, the notion that all of the sudden and in your testimony today, you know, medicare coverage is no longer guaranteeing access to care. well, it doesn't mean that every doctor signs up for medicare, but the overwhelming number of doctors do, and in private plans, there's a whole lot of doctors who don't participate in private plans, and i can assure you under the house republican plan when they are # going to be providing a much smaller allotment and you're going to be

leaving it to federal employing to have plans, but insurance companies to decide what benefits to provide, you'll have real access problems. i ask to comment on that issue. >> absolutely. i was listening and i appreciated that you read my mind and we're on the same wave length because of that evidence, and it was in your mind. the issue that i've been thinking about is what is it that you're thinking that these private health plans will be able to provide people in terms of access if you give such a limited voucher, people who can add on extra dollars make the very well off seep yours and may -- seniors may be able to get a decent plan, but you're not gip of giving them enough money to shop. anything that you even think may exist in the current medicare plan is bound to exist when you've actually given seniors fewer dollars to pay for more

expensive plan. >> thank you, thank you, mr. chairman. >> now it's -- [inaudible] >> i want to respond real quick to a statement that was made earlier, and just talking about, you know, there's nothing in in ipab to reduce costs and can't change the prices on things, and that's just not in the law. in a meeting about four weeks ago that freshmen legislators had with timothy geithner to dole with deficit reduction, we walked through section by section of many issues. one was dealing with health care. at the time, the president had not released a plan for how to reduce costs in medicare and medicaid. he made statements saying we need to bring costs down and we'll work on it. we asked the specifics of that. specifically timothy geithner stated the way to get savings in ten years in medicare and medicaid is by cutting the

reimbursement rate to doctors, hospitals, and drug companies through ipab so if this is not in the law, someone needs to inform the secretary of the treasury that that's not how we're going to get these millions and billions of dollars of savings because the president's spokesman is steps out there saying the way we're going to accomplish this is by cutting reimbursement rates to doctors, hospitals, and drug companies to gain cost savings for medicare and medicaid, so it is very difficult for me to hear one person say that's not in the law, and then the secretary of the treasury says that is the way we're going to accomplish that. i also have difficulty in processing the power given to ipab saying because there is medical innovation that has to be done in handling cost saves, we're going to give this power to this independent group and give them the authority to be able to accomplish this. this is a unique situation