to produce policies that will gradually and sensibly slow the growth of debt and begin to reduce it. moreover, as pete has pointed out, the simpson-bowles and domenici-rivlin plans are very similar. and that's not because we colluded. it's because the arithmetic drives in a bipartisan group using realistic projections to the same conclusion. bringing the debt under control without derailing the economy must involve a combination of three elements. entitlement reform, reducing the rate of growth of medicare and medicaid i delivering health care more efficiently and effectively, and putting social security on a firm foundation for future retirees. that part, the entitlement reform, it's a hard part for democrats but it's absolutely necessary. you can't solve this problem

without it him although entitlement reform won't help very much in the near term. second part is tax reform, that raises additional revenues from a tax code that is simpler and less of a drag on economic growth and remains at least as progressive as the one we have now. that's the part, the more revenue, that's the part that is hard for republicans, but it's absolutely necessary. we can't solve this problem without it. and thirdly, we do need reductions in the growth of defense and domestic appropriations designed to improve the efficiency and effectiveness of both sets of programs. this is hard for everybody. actually the good news is it's already happening. the budget control act of 2011 already reduced discretionary spending by about $1 trillion

over 10 years, or about the same amount that both the simpson-bowles commission and the domenici rivlin task force recommended. we have done it. we can find ways of earning both parts of the government more effectively, but we do need to defend the country and provide basic public services. and i think it's important to understand that the cuts involved in the sequester are over and above that trillion dollars that we have already done. so let me say just a few words about medicare and tax reform, because they are the two most controversial keys to fiscal responsibility going forward. pete has emphasized the importance of health care to stabilizing the federal debt, but reducing the growth of health care spending is not just essential for the federal budget. it's crucial for private sector

growth and state and local fiscal sustainability, as well as for the federal government. the growth of federal health spending must be slowed in ways that lead to more ineffective, less costly health care delivery for everyone, not a shift from the federal government to the private sector. but we've got lots of room to do that. right now, if you listen to the political campaigns, they are all on scare tactics. each side is trying to say the other side is going to get rid of medicare. nobody is going to get rid of medicare. can you imagine that? it's ridiculous. seniors are a growing and very powerful set of political forces. but we do have to make it more

effective. and although health care has become a hot button issue in the campaign, the parties are not nearly as far apart as their political rhetoric implies. both political parties recognize the importance of using medicare to lead the way to a more cost effective health system for everyone. and both recognize that the current medicare reimbursements on the fee-for-service basis provide incentives that emphasize quantity over quality of care. and if you're in medicare you know that already. both recognize that over time medicare and health spending generally cannot grow much faster than the economy itself is growing. indeed, the growth rate for medicare as called for in the affordable care act and in republican budget proposal is the same. they just get there by different paths. and just as there is no simple,

one dimensional solution for the debt problem, there is no single approach to bringing health care costs under control. the affordable care act emphasizes demonstrations and innovations aimed at discovering more cost effective ways of delivering care, and incentives for providers to deliver results. it focuses on reducing the growth of spending by putting those innovations into practice in our largest health program, namely medicare. republicans tend to emphasize competition among health plans as an avenue for adopting these same cost-effective innovations and a proven results with slowing cause. and pete and i said why not both? and with our colleagues on the task force we crafted a proposal which we believe is an effective compromise to our proposal for

medicare reform relies both on preserving and improving the efficiency of traditional medicare, and enhancing competition among private health plans. on well-regulated medicare exchanges. and finally tax reform offers a major potential for bipartisan compromise. everybody has agreed that current tax code is riddled with special provisions that inhibit growth and narrowed attacks have. broadens the base and lowering the rate and having a tax code that is more progressive than the current one. but this means reducing and eliminating deductions and exclusions and other special provisions that benefit middle-class taxpayers as well as more affluent ones. it is doable, and both commissions actually did it.

and we came to the same conclusion that the best way and perhaps the only politically feasible way to reform the tax code is blow it up and start over with a simpler, fairer system. now, we need to be honest and specific about what a new tax code would look like and who are the winners and losers. but when you do, it actually looks pretty attractive. for example, you would have lower rates. you have a simpler code. you would have, you would retain some of the most necessary provisions, but you change them. for example, a home mortgage credit would replace a deduction, and that would help many more middle income taxpayers but not give such a big subsidy to high income people who buy big homes. and it's done just too much of that. none of this would be easy.

compromise means no plan is exotic and what any one of the players wanted, but only compromise will avoid gridlock. and we cannot afford gridlock, orono action. gridlock means going over the fiscal cliff and risking another recession. it means not addressing the challenge of mounting future debt until events overtake us and we lose control of our economic destiny. we need to act now to preserve a more prosperous future and to show that our democracy actually works. thank you. [applause] >> thank you very much, alice. thank you, pete. thank you alan. thank you, erskine. we will have a few questions. mike lux is when exactly 21 minutes when the time i think for everybody to ask a question.

have more information on the table. i'm going to start with john, john kennedy did not get to ask a question, and i would rotate, built. >> thank you very much, mr. chairman, and thank all for you for your excellent work. it's been constructive to the process in an inn measurable way, in my judgment. i think we've had a structural deficit situation for at least six, maybe seven or eight years. and one of the frustration -- frustrations i've had is trying to explain the difference between a cyclical deficit and a structural deficit to people, number one. and number two, trying to instill in the general public a sense of urgency that i think this matter and situation requires. to any of you all have any suggestions about how we can, one, explaining to the american

people that we can't raise taxes enough and we can't cut enough to get out of this if we only do one or the other, number one provide a structural part? and number two, how do we engage the general public to instill what i think is a lack of a sense of urgency about what i consider the dire consequences our country is in at the moment. thank you very much, mr. chairman. >> let me go to steve, alan or erskine, and then we'll come back to pete and alice. >> erskine is the numbers guy. i do the color. [laughter] but i can tell you what i tell people. i just ask poll of which are. we don't do bs or much. let's just tell you where country is, and tell them what a trillion is. if you spend a buck a second from right now you would hit a trillion for 32500 years. we spent a billion a day, the big bang theory of the universe

happened to 13,600,000,000 years ago, and that isn't even close to a trillion and we owe 16th of those babies. and for every buck we spend, we've are 41 cents of it. and today your country borrows 3,600,000,000 bucks, and they were borrowed -- join in the massive stupidity and see how far we get with this. >> erskine, sounds like alan is the numbers man to me. >> the cyclical versus the cyclical versus the structure. that's a erskine's baby. he's good at it. >> the real problem is that we can't simply go our way out of this problem we're in today. you can literally have double-digit growth for a decade and not solve the problem. and you can't simply tax your way out of a problem because

raising taxes doesn't do a darn thing. to change the fact that health care is growing at a faster rate than gdp or the fact that the demographics of the country are changing quite rapidly. and we can't sympathetic our way out of it, and the biggest problem, we tried to do it all with just cuts alone is you end up having to make cuts so deeply to the income support programs that help the truly disadvantaged and things like ssi, food stands, workers comp. and you also have to cut those things that we given him so greatly for the future growth of the country, whether its investments in education, infrastructure, or high value added research. but none of that means that you can't make cuts in areas that people like me really want to see us make future investments in. let's take something like

education and as you know i was president of the university of north carolina for the last five years. one of the things i wanted to do above all else wants to do our part to improve k-12 education. and i've that we are not only part of the problem but we are also part of a solution. after all, we produce most of the teachers. so i turned to our step and said gosh, how can we improve the quality of teachers that we are producing? surely there are some federal programs out there that we can use to do that. they went and took a look and yes, there are. there are 82 programs to improve the quality of teacher education. do we need to are three good ones? you bet but we don't need 82. another example is we do $1.5 billion worth of annual federal scientific research. is all about high value added research? now, nor is at the other 3000 colleges and universities that

two federal scientific research. what we have to do is use the money we have more wisely. if we do that we can get more bang for our buck and i'm confident we can compete with anyone. but you can't take in a total of 2.3 trillion spend 3.6 trillion think you can do that indefinitely. it just won't work. thank you, alan. alice, to want to take a crack at that? >> i actually think that average people get this better than the politicians do. and there's some evidence on this supported by many organizations like the concord coalition and others. when you get a group of average people in a room and say, here's the problem, here are some

numbers from respected source and this is what's going to happen if we don't do anything, this is how much our dead is going to grow. and here are the possible solutions. and what do they do? they come up with a solution that looks a lot like simpson-bowles or domenici-rivlin. let's say do some of this and some of that and some of the other thing. and then you get to the question of how fast do we do it. people are perfectly able to understand that you can't have a big tax increase or a big spending cuts when the economy is weak. so they said let's do it gradually and let's do it in future. and you have to do that if you're reforming the retirement program anyway. so it isn't that complicated. it's just that politicians are stuck in this groove of its either one way or the other.

average people are not. >> thank you, alice. >> i think that in my getting around during the last two years when i took this assignment that alice is right. i think you just use very conventional and typical language. people understand the word broke. we are broke. it's a terrible thing to say. we are almost bankrupt. which every believe it, your country is bordered on bankruptcy, and you tell them why. and so i don't think, once we have the leadership at the top, that's decided we're going to take this on as a nation, i believe we can make the people understand. to be truthful i thin think thee difficult thing is the rules and procedures that congress has at its disposal can make things so

difficult that you can't get them done, get anything done, even if the majority wants them done and even if their most sensible. if you get five stubborn people in the u.s. house under an open rule, they can suck anything. and in our body, the one we were income you don't even need that many. you need two or three, with one of them either knowing the rules are having when sitting at his side, you can keep anything -- or you can make them vote on each item such that they are embarrassed to go for at the end because they don't want to be of record. so that's what we've got to find a way to get around that to help. otherwise they've got to lead themselves and i'm afraid it's not -- >> that's what you are talking about when you mentioned the procedure fast trac. >> that's exactly correct. >> i agree with you completely on that. bill gray, we've got 12 and a half more minutes so erskine an outcome we will let you go at 3:30. >> first of all let me say how glad i am to your both

presentations and i wish i could find a way to go over to the house and senate and pass them this afternoon because they are exactly what we've got to do. we got to do something on the rebel inside and we've got to do some of the strong on the spending side. .org discretionary but also entitlements. the one i'm fascinated with is the fact that both of you have included taxi from and i think that's a powerful engine, particularly when the tax reform is going to lower the rate not only for individuals but for corporations as well, and be very pro-growth. i think alice is right in pete is right. you wrote together instead of breaking it apart on individual votes. you might have a chance to pass it. i'd like to ask my friend, senator simpson, looks great in retirement, i haven't seen him in a long time, but -- and also

erskine, on the tax reform that you all have which lowers the rates which i think is great, famous alice in pete, do you have any deductions at all? and if so, what are they? >> bill, first of all, a delight to hear you. we used to work together. alice rivlin, what a joy. she's the one that first mention a whisper about doing something with the solvency of social security when she was first on board. and they said alice, you don't mean that surely. something silly coming. she's a beautiful grandmother, but let me tell you, we did what we said, at one point we said let's get rid of all of them. bill, you know what they are. there's stuff in there for oil and gas. that's bloodstream to me. you have realtors. you have insurance people. you have blue cross.

you have working for employers to give earned income tax. you have kids. i mean, come on. but we said okay, let's get to where everybody wants to go. lower the rates, broadened the base and get spinning out of the code. erskine and i said get rid of all of those and go look at them. you barf when you get into some of them. it's all put in there by the time guys, it probably only 15% of the american people use it. only 25, 27% of people in america itemize. they've never heard of that choice collections do. so we said get rid of it and give what erskine has described, 8%, zero to 70, he described it beautifully. he didn't leave anything out. they said how about municipal bond interest, what will happen to the city thinks? it's already happened to them. home mortgage interest, a million bucks, who does that help? give them a 12.5% tax credit. help the little guy.

the saddest part of this whole scenario is that the markets will call the shots eventually. they don't care about republicans or democrats or presidents. they care about their money and they will as for more money for their money, and when they do inflation will kick in and interest rates will go up and the guy who gets hurt the worst is the little guy. what hypocrisy. >> erskine? >> erskine, do you all leave any charitable -- >> in our original plan we put forth one option. we got rid of all the deductions and all the credits just to show people exactly how little you can get rates if you got rid of all of them. and the fact that none of them are free because when you start to add back one of these deductions or credits, somebody's got to pay for it. that's how we got rates to 8% up to 70,000, 14% up to 210,000, the maximum rate of 23% for

individuals and 26% for corporations in a territorial system. we did show an alternative. we said some people want to keep the earned income tax credit, some people want to keep the child tax credit, somebody, some people want to keep the employee exemption for an employer health care. some people want to keep the mortgage interest deduction. some people want to keep the charitable deduction. let's say we apples back in his credits but if you add those back, somebody does have to pay for them, and when we did that you can take rates to 12% up to $70,000, 22% up to 210,000 that a maximum rate of 28%. so that kind of shows you the fact that none of these are free and if you at any of them back, somebody has to pay for them. >> thank you. alice? >> erskine got to the preferred plan which was very similar to ours with the answer, your

question, chairman graves. we did preserve and earned income credit, a child credit, a mortgage interest credit at our lower rate. we only had to rates, 15 and 28. and we did the same thing with charitable. and basically we removed other things. but that was what god is to the solution. >> -- that was what got us to the solution. >> i'm a baptist preacher. that last one was what i wanted to hear. >> okay. i'm going, with six and a half minutes left. bill, why don't you and him both ask a question and we will shop it out and have as much time for answers as we can. let's get them both on the table since we're going to run out of time. >> alan, i won't even submit my

parking ticket for a deduction. put in the bank, i'm sorry. i don't think there's a single thing that you all have proposed that can pass the congress one by one. i really don't believe there's a single proposal from either group that can pass the congress today on a standalone basis. and i am just captured by the idea that we simply have to present this as a package. the whole caboodle. we went through it, 12, six, everyone was trying to go big, and we collapse because of some individuals. how do we get what you call accelerated regular order? how does it apply, 10? how does it apply in the house? because if we don't get this in a package i don't think we will get it.

>> well, all i can say for my standpoint is that it is being worked upon them by the best people around bipartisan. it's being shopped to people, the real kind people on the house and the senate side. i know there's enough chatter about it, and i said this is as good a occasion as any to say it's being worked on, and explained a little bit. i don't know all of the details, other than it is being worked on so that it will work. some of those who were working on it happened to be older like im and by part, at one time, used a word called reconciliation. it's found in the innards of this bill called a budget act, or just sitting around their called reconciliation. never been used, never been defined. so we used it and we defined it. one thing it does is, to be honest, it eliminates from the

united states senate the right to use filibuster on a bill that has it because the bill is a budget bill. senator robert byrd, the only thing he ever agree to that he was sorry he did was the budget act because he found that he had to agree that reconciliation made affirmative bills not subject to filibuster and subject to limited amendments with limited time. you don't have those problems in the house. you do it by rules. but in the senate they are the beginning and the end of one package. is that right? and jeff have limited time. and you can't have filibusters. so if you can do that and get these are ranged where they fit within that nomenclature and that definition, then the question is, if the leadership wants to fix the country bad enough they will help to get it started.

[inaudible] i stand on the proposition that the majority of the leaders, majority of house members, democrat and republican, and the majority of senators, democrat and republican, are just as frightened as we are about the country going bankrupt and losing the big sovereign dollar and everything. that could happen. nobody that knows about our problems could say the only thing we're going to get is a recession out of this. it could fall apart with the kind of debt we've got and the kind of owning is, people who own that did. >> with two minutes and 37 seconds. tim roemer is going to ask the final question. >> that's plenty of time. as house members we don't filibuster anyway so we don't want talking too much about these issues. we've heard from erskine and alan about all the problems in this deficit, debt. it makes you sick to your

stomach, but the good news, i'm an optimist. i like to look at this as glass is half-full. we heard a lot of good news today. in fact, erskine and alan i know you're coming across the country. it is wonderful to have you go across east to west, north to south and talk to people about this problem and get attention to it, and get people supporting efforts to balance the budget. i know you're going to wait -- wake forest university where my son goes. i hope you fire up those young people and get the next generation interested in this problem, in solving this problem. and i guess i would just and on this positive note, and ask for your comments on it. one of you said earlier that five of the six united states senators, including a liberal democrat, progressive democrat, dick durbin from illinois, as well as some i served with in the house, tom coburn, all voted for this proposal. five of six. so if we can get people running

for election to pledged to work on the deficit, sign a petition that they're going to come to washington and work together, and we can get alan and erskine going all across the country both to support for a, hopefully there will be some momentum to do something about this. what are you hearing out there, alan and erskine? and is there going to be a groundswell for this in the election? >> out and come you and erskine have the final word. this will wrap this up. >> okay, i will just take a minute. you have to clean out the real underbrush of grover norquist. this guy got these people to sign up some of the '80s when inflation was whatever, unemployment was three or 4%. everything is out of kilter now from what it was. and this guy wandering the earth in his white robes getting this commitment of people, how would you ever go to congress and signed something for you got

there and you haven't even heard the debate. 10 years later or 15, that got you ready to hang. you've got to take this guy on because if you can't, if you can't get grover norquist and shoot him over the moon, you can't do something with the aarp, and these congresspeople are enthralled to the aarp and grover, we ain't got a prayer. that's right. i've been saying that for months, and it's still there. gutsy, tough guy, this guy. he's not in it for anything but -- i think it's almost like domestic terrorism. [laughter] he is holding the congress and threatening and so on. what can he do to you? he can murder you. he can burn your house down. the only thing he can do is beat you for reelection. if that means more to you than your country, hell, you shouldn't even be in congress glaa.[applause]

>> i think erskine has dropped off. >> pete, thank you very much. alice, last word. >> i think the key really is the public demanding not just that the politicians face up to these choices, but that they do it together. the key really is bipartisanship and compromise and not anybody's going to get exactly what they want. but it's much better to solve the problem than to get exactly what you want. >> thank you all for being here. we appreciate it. thank you. [applause] >> just for the affirmation of the audience, we will have the third forum index a on september 27. it will be on taxes and growth. we'll come back here on october 1, it will be on health care and entitlements.

>> the country faces this darkness, the starkest choice for president in my memory. you see, the president and i have fundamentally different vision than governor romney and congressman ryan. and the different boundaries that that guides us. >> under the current president we are at risk of becoming a poor country. because he looks to government as the great benefactor in every life. our policy as a new model. they say quote, government is the only thing that we all belong to. i don't know about you but i've never thought of government as something that i belong to spend watch and engage with c-span as the campaigns move towards the october debates. the vice presidential candidates will debate thursday the 11th from center college in danville, kentucky. while the presidential candidates face off in three, 90

minute debates wednesday the third on domestic policy, tuesday the 16th in a town hall format and monday the 22nd on foreign policy. follow our coverage on c-span, c-span we are an online at c-span.org. >> live to the center for american progress where oregon's governor john kitzhaber will talk about efforts to reduce health care costs in his state. this is live coverage on c-span2 just getting under way. >> today for him to discuss his innovations in the medicaid program, as many of you may know cap has devoted a lot of time and effort to the issue of lowering health care costs because we see this as an issue for the federal budget but also state budgets, employers, employees and basically an issue of america's competitiveness over the long term. and so we have devoted a lot of

resources to looking at new ways for us to lower health care costs. and one of the great innovations or what stage during the two-day the governor will talk with his leadership in developing new innovations in the medicare probe and and choosing the medicaid program itself as a driver for reducing health care costs. this comes at a time when states are really struggling with rising health care costs, that is what putting pressure on medicaid budgets. and do his work is vital to the. cap about a month ago released a series that encapsulated a piece at the heart of that was innovative ideas at the state level to use power of states to drive health care costs. health care cost reductions. so we are excited to have transferred here today and now i will welcome him to the floor. -- excited to have governor

kitzhaber here today. >> thank you very much. it's i guess a statement on how far i've, or not come to actually take a compliment being referred to as a policy launch hero. thank you very much for inviting me to speak this point and i particularly want to thank neera and the center for american progress for the help they gave us last may, for the waivers from cms that were necessary to implement oregon's proposal. as you know, the fundamental problem and are health care system is this huge and growing discrepancy between the cost of care and the resources we have of able to pay for. and also the fact that we have embarrassing the poor population health statistics to show for this huge an enormous expenditure of resources. that you also know there are three strategies that both public and private payers have traditionally employed to address rising health care costs. the first is to reduce what we pay for health care, in other words, provider reimbursement.

the second is to reduce the number of people covered and then the third is to reduce covered benefit. the first two of the strategies, reducing what would pay for health care and reducing the number of people covered simply create barriers to access forcing people to delay seeking needed care and often driving them into the emergency department. and while both of these strategies allow public and private payers to reduce their exposure to medical inflation in the short term, they serve as a kind of pressure valve that allows us to avoid addressing the real underlying problem which is the cost of medical care itself. so as a result neither of these strategies is effective because the uncompensated costs that are accrued by uninsured and underinsured people are simply shifted back onto these payers to increases in their insurance premiums. so the first point i want to leave you with that and lesser efforts in health care reform address this cycle we're not going to be able to solve this problem in the long term. now, i believe that the

opportunity to break the cycle is embedded in our current fiscal crisis that was participated by the collapse of our financial institutions in september of 2008. high and a plum and tremendous revenue shortfalls at the state level. i think thomas friedman very eloquently captured the significance of this moment when he asked what if the crisis of 2008 represents something more than, more fundamental than deep recession? what if it really is telling us the whole growth model we created over the last 50 years is simply unsustainable, economically and ecologically, and the 2008 was the year we hit the wall? i think he was absolutely right. i don't think the world is ever going to look like it did before september 2008. we have crossed the divide. we are bumping up against our fiscal limits and against the limits of our natural environment. and the challenges to readjust to this new reality, not to try to go back and return to the

past which at least in the case of our health care system is not serving us very well before 2008 in any event. and that gives us the opportunity. therein lies the opportunity, the ability to adjust rather than to quite a world that no longer exists. i'm going to return to that in a moment. states following the 2008 recession work particularly hard hit because states unlike the federal government can't push their political difficult fiscal choice into a national debt. to have to operate on balanced budgets. as a consequence states face deep budget cuts that they could not afford anything from health care to public education and public safety. so in response to this very real crisis, the federal government passed the american recovery and reinvestment act in february 2009 with its $780 billion of stimulus resources that were designed to help get people back to work but also to help states with her own fiscal problems, particularly in the area of public education and health care. so those resources are a real

lifeline to states in 2009 and 2010, oregon received over a billion dollars to help with our budget and the line to show that went into public education and into the medicaid program. so while those resources how to keep the medicaid program afloat there was a distinct downside to these resources. in the first place they simply propped up the existing health care delivery system and provide absolute no incentive to change it. second they mask the impact of the great recession on state revenues, and third, they were one time revenues. when i took office in january of 2011, not only did oregon face one of the largest per capita budget that is in a faced over $2 billion hole in our medicaid budgets which would have amounted to a 40% cut to providers if we continue to cover everyone who is eligible for the program. most states faced that situation simply drop people from coverage. oregon chose a different path

because we could see little to gain and a lot to lose by simply dropping coverage, and forcing people in -- rather than financing access to blood pressure medication in the community. so instead we sought to use this crisis as an opportunity to transform the delivery system to get a lower per unit cost and increase value for the dollars we were spending. starting with the 600,000 people on the oregon medicaid program. before i describe the product of our efforts i want to use an analogy to sort of show you where we are at this point in time by comparing the development of our health care system to the development of a successful organization, let's say a business. we know that a business grows and there's an investment environment that allows for economic development growth and prosperity. and if the business, when the circumstance of the indictment, the basis of ivan begins to change, if the business doesn't

redesign its business model to reflect the new circumstances rather than the old one, in that curve climbs off and begins to drop. so general motors would be a good example of a company that i think for a long time to ignore that, continuing to build big gas guzzling cars in the face of high oil prices but a successful business when it sees the world is changing, the business environment is changing, redesigns its business while to reflect the new world not the old one and develops a new growth curve. the problem is that for a while this old curve and the new curve have to coexist, and the area in between is called by business writer charles handy as the area paradox. a lot of anxiety, and people now that what they're doing isn't working. and they know that the current system isn't quite right, but they're afraid of the unknown. so as a consequence they tend to defend the status quo, cling to the current system even though they know it's unsustainable, even though at some level they

know it's failing to produce the outcomes it was the signed to produce. so i submit to you that that is exactly what we find yourself today in the united states, in this area paradox. in education, and economic development, in energy policy, and transportation and certainly in health care. so the challenge before us is not unlike the outdoor school. they put you up on a post 10 feet above the ground with a rope, and over here is another post and another rope and your child's is to move from one post to another. from the old business model to the new business model. the only we can do it is you've got to lean way out in 40 minutes you've got to let go of the stroke in order to grab the new one. it's human nature to cling to what is familiar. it's a leap of faith to reach for the impossible. so the opportunity here, the leadership challenge is to be able to describe that new business model in such a way that people can see it and embrace it and let go of the old one in order to embrace it and move forward. and then move from the current

paradigm, the current business model to anyone. for decades the u.s. health care system has operated on a business model that assumes that the public sector and private employers are going to unquestionably underwrite a medical inflation rate that is growing a lot faster than the cpi and that the system will continue to be financed notwithstanding the very tenuous relationship between these expenditures and positive health outcomes. so in june of last year the oregon legislature took the first step to develop a new business model for health care system by passing two significant pieces of legislation. the first one essentially acknowledged that we are in the area of paradox and set up a process to begin to design a new business model in order to transform our health care system. the business model is built around coordinated care organizations which are new local delivery entities that are formed around natural communities of care like accounting or hospital referral

area. each cco will be unique and look different in different parts of the state that all of them have to comply before central element. the first one is surface innovation, care coordination and a focus on wellness, prevention in a community-based management of chronic conditions. the second one is a connection with community-based programs, efforts to address the drivers of population health, and a governance structure that reflects this new emphasis on population health rather than simply the delivery of medical care. third is managing utilization within a risk adjusted global budget that grows at a fixed rate, and finally accountability for performance standards for access, clinical outcomes and metrics for improving population health. the legislature also passed senate bill 99 which set in motion a process to develop a state health insurance exchange, get apples to apples comparison about the quality of various health insurance plans. ..

>> i think it's worth noting here that the legislature passed this bill as well as the legislation to produce the health insurance exchange with overwhelming bipartisan majorities. senate bill 1580, for example, passed the house of representatives on a vote of 53-7. this in an election year, less than three months before the oregon primary, and in a house that was split 30-30 between democrats and republicans. think about it, 53-7 for an

insurance exchange in transforming our system. i think that feat would be unimaginable in this year's congress and probably in most of the other 48 states which is another story, and not a bad one at that. so six months ago in march i signed senate bill 1580 into law and submitted to hhs a request for a waiver that would give us the flexibility we needed to pay for health care in new and different ways and also a request for a significant infusion of up-front federal money to allow us to stabilize the delivery system once we made this transition from the old health care model to a new one. in april we began accepting the first round of applications from organizations interested in forming ccos, over a dozen applied. on may 1st i came back to washington, d.c. to negotiate the final details of our waiver and met with officials from the white house and cms and omb. i returned to oregon on may 3rd with a commitment from the federal government to invest $1.9 billion in oregon over the next phi years to -- five years to help us transform the

delivery system. now, as a part of this agreement, oregon agreed to reduce the medicaid per member, per member inflation rate trend by two percentage points by the end of the second year down to 3.5% and to lock in that rate of growth going forward. these cost savings will fully pay back that $1.9 billion investment in five years and will save the state and federal government $11 billion over the next ten years. i would just add if every state in the country adopted that same program and had that same inflation rate, we would save over the next decade $1.5 trillion. the supercommittee was supposed to save 1.2. this would actually save 1.5 by actually making people healthier and creating a more rational system. in july 5th we received the final waivers from cms that allowed us to move forward, and as of september 1st we have 15 ccos up and operating, we

three additional ccos, and we'll be covering over 90% of our population. before i go on, i want to speak to this 3.5% inflation rate that we've agreed to which may seem like a pretty daunting task. but i think it's daunting only if we continue to think in terms of the old business model. let me give you an example. we know that the most common admission diagnosis for people on medicare is congestive heart failure. nationally, about 40% of those people are readmitted within 90 days with the same diagnosis, so the hospital gets paid each time someone comes in for congestive heart failure, but there's no incentive to manage those people on a day-to-day basis once they leave the hospital. consider the hypothetical case of a 92-year-old woman with well-managed congestive heart failure living in a small air-conditioned apartment somewhere in the united states. the increase in ambient

temperature in her apartment could put enough strain to tip her over into full-blown congestive heart failure. under the current business model, we probably won't even know about her until she shows up in the emergency department. under the new care model, there'll be somebody given that this model is intentionally connected to the community and focused on health, there'll be somebody -- probably a new community health worker -- that's checking on her on a regular basis not just to make sure that her medical needs, but her nonmedical needs are being addressed. under the old business model, medicare or medicaid will pay for the ambulance and $50,000 to stabilize her in the hospital, but it won't pay for a $200 window air conditioner to stay in her house. the difference is $49,800. you multiply that hundreds of thousands of times, and you can understand why medicare is driving the national debt. but just as importantly, you can understand that by taking that $49,800 out of the health care system, you actually don't cut

benefits, you improve health and quality of life for this woman. in this case she avoids having an acute case of congestive health failure and gets to stay in her home rather than going to the hospital. so that's, essentially, what we're trying to do, to change the care model and the business model and to realign our organization and our financial incentives to focus on prevention and wellness in the community-based management of chronic conditions which is why we needed the flexibility from hhs to change the payment model to support this concept and these outcomes and why we needed that up-front investment to stabilize the current system even as we're making the transition to a different one. now, as i mentioned earlier, if this new care model meets the quality improvement standards and the cost reduction targets, we intend to move our system of transformation beyond the medicaid program to the private market and eventually to medicare because that is the only way that this kind of medicaid reform can be sustained.

and let me, let me elaborate on that. oregon finances care for 600,000 people on the oregon health plan, but also for 300,000 state employees and public school teachers. so altogether we pressure care for 900,000 people in oregon which is about one out of every four people who currently have coverage. we're a pretty big dog in the insurance market. but there's still that other 75%. so if our intent is to align purchasing power by asking qualified health plans to align with this new care model as a high-quality, low-cost option on the insurance exchange and open that up to public school teachers and public employees. so if this population, this 300,000 population of state employees and public school teachers were in a care model that grew at 3.5% a year, the savings to oregon over ten years is $5 billion. now, that's all well and good

for the state. it frees up resources that we can reinvest in children and families and education and economic development, but it also takes $5 billion out of the health care economy in the state on top of the $11 billion we're taking out in the medicaid program. so all things being equal, this loss of public funding could easily be shifted to the private sector through dramatic increases in their insurance premiums. so to avoid that, we have started conversations with the private sector because we believe it's imperative that private employers begin to take steps to align their purchasing power with that of the state and to demand the same kind of care model that grows at a lower rate of inflation. and i would argue that's also going to be easier for our partners in the delivery system because both the public sector and private sector are asking them to do exactly the same thing. in addition, it's important to recognize that the aca contemplates reducing the federal deficit through some significant reductions in

medicare. without a new operational care model and unless private purchasing is aligned with public purchasing, this could result in very real benefit reductions for senior citizens and a significant shift to the private sector. the obama administration understands that, which i think is one of the reasons they're supporting this proof of concept of what a new care model would look like. now, let me just wrap up with a few sort of general thoughts. i think we have a very narrow window in which to make an orderly transition to a new health care system before politics and economics drive us into a purely reactional posture. and i think the same thing's true of public education and energy policy and our approach to economic development. we are in the area of paradox, and it is absolutely important that we act while we still have the opportunity and the capacity to shape our own future. and as evidence, i would simply refer you back to that high-stakes game of chicken that took place in this town last august over raising the debt ceiling in order to keep the united states from defaulting on

its then-$14 trillion national debt. i think we would all agree it was not our finest hour. in the end, congress kicked the can down the road by bumping the debt ceiling up $2.1 trillion but doing almost nothing to address the real, underlying driver of the national debt which is the intersection of an aging population and a hyperinflationary medical system. i would remind you that 18, 19 months ago the first of 78 million baby boomers started to become eligible for the medicare program, and they're going to come on at about the rate of 10,000 a day for the next 20 years. these are people who are entitled at the age of 65, are going to live another 20 or 25 years, and the cost of health care is growing faster than general inflation. as president clinton said during the convention, do the math. by 2020 every medicare recipient will be taking $3 out of the system for every dollar they put in which means we're going to blow through that $2.1 trillion increase in the debt ceiling

early next year and have to go through this exercise all over again. health care reform is not just about politics. at the end of the day, it's about economics. and the economics are, the laws of economics are just as immutable as the laws of physics which means that no matter who's elected president, no matter who is in control of congress two months from the now, there is no way we're going to get our arms around the national debt without getting our arms around the cost of medicare and medicaid. and the longer we wait to do it, the hardest it's going to be to get there. you know, these programs, medicare and medicaid, and a lot of other things we depend on today and take for granted were created by the greatest generation in the last decade with the very best of intentions. they simply haven't evolved to meet the circumstances that we live in today. my father was a member of the greatest generation. he was, and these were the people i would remind you who weathered the great depression and fought the second world war. he was drafted in 1943, april 3,

1944, he got on the u.s. robert sherman in new york harbor for this perilous trip across the atlantic. a red cross worker got onboard and told him his first daughter had been born. he was in patton's army, he marred across europe to berlin, and until the day he was drafted until he got back in, he and mom wrote to each other. and it's a poignant tribute to their 63-year-old romance they kept all those letters, and in 2002 he wrote a book and gave a copy to me and my two sisters. and this is a really amazing chronicle of two ordinary people, two ordinary americans, new parents and the sacrifices they made to win the second world war. i used to call him, before he died, every year on june 6th, the anniversary of d day, and i thanked him for safing the world. that's exactly what that generation did. they came back here and created

the system of higher education, and they built the interstate system, they went to the moon, they cured smallpox, and they left us these amazing programs of the 20th century, social security, g.i. bill, medicare and medicaid. these programs and policies were the vehicles through which our parents and grandparents sought to make the world a better place for us, and in so many ways they did. because of the sacrifices and those programs, my generation, the baby boom generation, has enjoyed more promise and opportunity than any generation in the history of the nation. the problems that unwittingly, they also laid the seeds for most of the major problems that we have today, an economy utterly dependent on fossil fuel, much of it imported from some of the most politically-unstable parts of the globe, and a health care system that is literally driving a multitrillion dollar national debt. in other words, a way of life that depends on the rapacious and unsustainable consumption of resources both fiscal and natural that right by belong to

future generations. this is the unfinished business of the baby boom generation. this is what we have left to do. it seems to me that as einstein once said, you know, we can't solve today's problems by using the same level of thinking we were when we created them. but he also said that you can't use an old map to explore the world. and he's absolutely right. because every new generation is faced with a new world and a new set of problems that can't be solved by clinging to the past, but only by imagining a new world and a new set of tools with which to build it. that's our job. our job is to recognize that the responsibility to solve this problem we've come here this morning to address as well as the problems facing us in energy and economic development don't belong to somebody else. they belong to us. they belong to you and me and people in communities throughout this country. this is something we can do, and notwithstanding the gridlock here in washington, d.c. and it's something we have to do.

and if we're not willing to do it for ourselves, we should do it for our kids, those who are coming after us. a gift for the future. those who are going to inherit this dysfunctional system, this dysfunctional world we created on our watch and because of our inability to act, we're perpetuating. let me just close with the words of kim stafford who, i think, very eloquently captures the opportunity and the challenge and, i think, the responsibility of what lies ahead of us in what he calls lloyd's story. it's a true story. lloyd reynolds, the international citizen of portland, spent his last days silent, unable to write or to speak lying in a hospital bed. on his last day at home as his wife scurried to pack his suitcase for the hospital, lloyd wandered outside to the garden, and there she found him on his knees awkwardly planting flower bulbs with a spoon. lloyd, she said, you'll never see those flowers bloom. he smiled at her. they're not for me, he said, they're for you.

coming home, they're for you, calls of the wild geese, they're for you. the last old trees, they're for you and your children to the seventh generation and beyond. they're all blooming into being for you. that's our challenge. create that clear vision of where we need to go, to act and to lead and to reengage in this effort not as victims of the past, not as captives of the status quo, but of proud, confident architects of a new and better future. we can do this. thank you. [applause] [inaudible conversations] >> thank you very much, governor. i think everybody here can tell why you have so many fans in the health policy world, so thank you very much for your remarks.

i'd like to introduce our two panelists, the first of whom is dr. geeta they car who is the chief technology officer at at&t for health. dr. nayyar has has a variety of business and clinical jobs in the health care world, and she has a unique perspective. she brings a business side, communications side, a health i.. the side along with her critical knowledge. and what i think will be of interest to, um, you all is that she still practices part time and also teaches part time. and i'm interested in hearing from her thoughts on the governor's speech and how we can translate some of these ideas down to the clinical level. our second panelist is somebody who is probably quite familiar to most people in our c.a.p. audience, dr. ezekiel emanuel who is a senior fellow here at c.a.p. as well as the vice provost for global initiatives at the university of pennsylvania until january 2011 he served as a special adviser

to the director of the office of management and budget as well as the national economic council, um, one of the authors of the affordable care act and an expert on payment and delivery system reforms. so welcome to both of you. and i'd actually like to start with seeing what your thoughts were about the governor's speech. >> go ahead. [laughter] >> you know, what resonated for me the most was really the talking about the new reality. talking about the new reality, talking about reaching for what's possible. um, you know, my viewpoint today is as a physician, as a believer in health i.t., and as we think about tomorrow, as we think about the future of health care, it's really hard to imagine accomplishing some of the things the governor mentioned in a paper-based system. you know, in my own practice i've seen a lot of the benefits of improved efficiencies, patient engagement, learning. i mean, there's just, there's so many benefits, i think, to technology that have yet to be explored in health care, um, and

really need to work within the framework of medicine. so we're still at that paradox, as you mentioned, but i think the future is very bright. >> zeke? >> so the oregon experiment, i think, is one of four or fife experiments around the country which are absolutely pivotal for figuring out what's going to succeed in transforming the system. and i think there are lots of elements in the oregon experiment that really bode well, that clearly learned from some of the other experiments, smaller experiments in private sector activities that have gone out there. so let me just unpack what i think is essential. the first is that you do have to have this continuity of care, and you have to put someone in charge of care. second, you have to give them payment reform to get out of the fee-for-service system so that they can transform things, they can buy air conditioners, they can use the money for transportation, they can use the money for home visits that

aren't necessarily covered. so that they have flexibility. so payment reform is critical. third, what you didn't necessarily get emphasized, but i would like to emphasize, is they have to move outside of the four walls of the health care system. the hospital and doctor's office. almost none of a patient's life occurs in the hospital and doctor's office, and yet that's where we care for patients by and large, and that's where we're focus ld. you've got to get into the community, as they say. that's why, i gather, they're called community care organizations. and the fact is that is critical where people are living and going there. similarly, i think there's probably some things which all of these plans they have, as i understand, a flexibility to design how they're going to do this on their own. the state isn't going to tell 'em how to do it. they're going to develop teams to care for patients. and figure out what the right component is among doctors and nurses and home health aides and others. and i agree that technology is

going to be critical. it's going to be critical in terms of electronic health records to get everyone on the team together, to be able to coordinate with the patient outside. but other technologies are going to be coming on line whether they're wireless markers to patients at home, using more e-mail to communicate or other mechanisms. and i think what the system that they've created in oregon is going to permit is to run 15, 16 experiments in the each of the communities, maybe not all of them are going to succeed, some of them will succeed very well, i am sure, some will have growing pains. we can't expect, you know, to bat 1000%. but you're going to learn. we're going to learn there this going forward what works, what actually is able to control congestive heart a failure in the community best, what is able to control diabetes or emphysema, the big cost drivers. and you have to give oregon

credit, they were out there in the 1990s deciding that they had to cover everyone in medicaid and tried something bold. now recognizing that we have a different system, they're trying something bold. and i think unlike many places, they're actually putting money down on this because the penalties if they don't succeed to the federal government are pretty substantial, in the hundreds of millions of dollars as you heard from the governor. the state has already got fiscal problems. so that is a pretty big bet that they can actually transform the system. and i think it's this kind of bold vision and bold experimentation and innovation that is going to chart the future for us. and as the governor said, we can't stay in the current system, exactly the right combination to go forward, we've got a lot of inklings, we've got a lot of interesting innovations, but trying them out in a whole state is, i think,

really, really novel and path-breaking, and i think oregon along with three or four other states is really blazing the future for us. >> thanks. um, and as you're talking about other states and their reform efforts, i'd actually like to take an opportunity to plug a report that c.a.p. put out today, um, in which we are taking a look at some alternatives to fee-for-service. it's not looking at state, um, experiments, but it's looking at private sector experiments both from payer-driven and, um, as well as provider-driven looking at, um, patient-centered medical homes, acos and bundled payments. and a lot of -- and i think, um, just to talk about the report for a moment more, what my colleagues and i found that was so interesting when we actually spoke with a number of organizations throughout the cub working -- country working on these, and every single thing they were telling us that they needed to do was echoed in what the governor was speaking about today in terms of care coordination and making sure they were proactive and looking

outside the four walls walls and making sure that they thought about a person's health beyond a hospital, beyond a doctor's office. so having said that, um, i'd like to kind of explore that issue a little bit more, how -- especially as clinicians, how both of you see, um, the movement from fee-for-service moving towards more of a proactive approach and engaging patients a little bit more outside the walls of what we picture now as being the health care system. >> sure. all right. [laughter] he's a gentleman. >> ladies first. >> um, you know, again, i think that there's no doubt that the existing system today is not sustainable as the governor mentioned, and as we look towards the future and think about what's sustainable, how are we actually going to be incentivized and rewarded for value versus volume, technology certainly has a place to serve in that. and i think it's as the enabler to all the things that we're talking about. so, you know, when you talk about the cfs patient that you

mentioned earlier, how do we keep that cfs patient out of the hospital and prevent them from being readmitted time and time again? so as you look to technologies, as you look to the future, we think about remote patient technologies or ways for patients to be engaged in a way that they're not. the average patient visit today is about eight minutes. you've got to discuss about four chronic diseases, a variety of treatment regimens, and half of these medications, they don't really roll off the tongue for a lot of my patients, right? so if i can give them tools that help them when they go home to digest some of the material we've talked about, to understand some of the side effects that i may have reviewed in 20 seconds or less, they're going to be better able to take care of themselves. and i as a physician am going to do a much better job of taking care of my population, and by having some of the quality metrics and some of the data available through electronic medical records and other technologies, i'm also going to know how i'm doing, and i'm

going to be held accountable to my patients out of a thousand diabetics and being able to understand better why they were in the hospital, why they weren't, what worked, what didn't, and if there are barriers that i didn't think of like an air conditioner that could have gone a long way in that eight-minute visit as opposed to just talking about medication x and y. so, again, as we think about the future, i think that i.t. is very much the enabler to that better paradigm that we're all trying to build. >> so i would echo that. you know, health i.t., all sorts of new technologies whether it's the monitor at home or to get patients increased compliance and engagement, all of those are necessary, but they're not sufficient. and they're part of multiple changes that are going to be absolutely critical for the system. and they make sense only in a system that pays differently and pays to keep patients healthy. you know, just to take one simple example, i vividly

remember we used to send patients out, you know, with a stack of -- especially patients with chronic illness like congestive heart failure, with a stack of prescriptions on this and expect them on the one hand to go get them filled, and then to take four or five pills twice a day or three times a day, you know, knowledgeably and reliably. and i can tell you, you know, no one sat back and said that's idiotic, right? and no one sat back and said is there a better way, a lot of patients, about a third of patients don't even fill the princes. and then -- prescriptions. and then many of them don't even take them right. is there a better way, can we get the medications to the house so they don't actually have to take the initiative to fill them? can we actually give them something that'll help them remember when to take the pills and what pills to take? and now we have a lot of companies developing, you know, different ways of dispensing pills and the pill jar tops so

that they alert patients, so that they alert the doctor if the pills aren't taken, or they alert the pharmacist when the pills are getting so -- low. do we know how to use them yet perfectly and optimally? no. but that's part of what these experiments are going to do. but we're not going to have these experiments without legislation and without waivers that really try them out, recognizing that it's the patients with chronic disease who are costing us a lot, where we have deficiencies in quality and where we need to really focus this care coordination model better. and i think that's going to be pivotal. and a lot of it is going to be with technology, but a lot of it's going to be people. it's going to be forming the relationships or the patient trust when someone calls up at the other end and says, you know, i notice your weight's going up because we have a wireless scale at home, and here's how i would adjust your

medication, or here's what i would do or are you eating right, are you taking that diuretic? and i think these transformations are going to be critical. and i completely agree with the governor. it's important to start somewhere, but unless we get sufficient amount of payment aid and sufficient number of payers to change whether it's medicaid with medicare, medicaid with the private system, it's going to be very hard for doctors and hospitals to completely transform their model. because if a quarter is saying this but three-quarters is paying the other way, very hard to make the move, you know? i've heard numbers between 30 and 60% need to begin talking this one direction -- in one direction for the system to really transform. we're getting to that tipping point in places like oregon and in other states, massachusetts, illinois. but we need to have more groups on the public sector and the private sector moving in lock step. and so i think the discussions that the governor's beginning to

have with the private payers, very pivotal to making this a real success. >> can i just add a little -- >> absolutely. >> you know, to ezekiel's point about going beyond the four walls of the hospital, it's really about extending care, and it's about innovation. not just the technology. technology's easy, right? it's the people part that's complicated. so getting to the root of the matter but really thinking outside the box and thinking about innovation not just from the technology stand point, but different models about how to think differently about the new paradigm is critical. >> that was one of the things that's, um, in addition to technological advances and health records that we talk about in the fee-for-service paper, the other theme i think that runs through and, um, and you can see it also from the governor's remarks, um, as well with his leadership is the importance of having strong physician leadership at each level. you know, once at state or a payer or a provider organization decides to try to start implementing these reforms, what

type of leadership can we rely on to then start getting the word out from that organization down to, you know, different providers of their, you know, caring for individuals and down to individuals in their office such as, you know, nurse practitioners and care coordinators. and -- >> so -- [laughter] >> no, i think you're absolutely right. and i'll tell you one of the things i think distinguishes this period of time from, say, the period of time after the failure of the clinton health care reform and in the '90s where we did have a moderation in health care costs which turned out not to be sustained for about five years, and then they came back with a vengeance is, i think, for the first time the health care system is really -- [audio difficulty] doctors and hospitals were mightily resistant, did not work with managed care or the government to try to figure out a new care model. everything was, you know, a

battle. today i see it when i go out and talk to people at hospitals and physicians, very, very different. >> uh-huh. >> they do recognize, as the governor said, that the system's broken. they have a lot of complaints about the fact that the care model they're asked to deliver does not match up with the business model in many cases and, you know, we are stuck in this gap. but they are very committed for reforming the system and transforming it. and, you know, some of it's because of, much of it's because of the affordable care act. they have to do different things on readmissions, they have to do different things on patient safety, there are no experiments on accountable care organizations, bundled payments that they're getting engaged with. so they're being pushed, but now they are voluntarily working hard and trying to figure out how to improve their models. and i think the attitude is very, very different. and i think the attitude, importantly, among young physicians is completely different. you know?

one of the things that just -- they were raised on technology. they use technology all the time. the idea that they would have a paper record, horrific. right? i mean, they wouldn't know what to do with it. so i think we're going to see a lot more uptake especially among -- and push on the system, especially among younger doctors for this. i would say that one other element which i do get fright frightened about and sort of increasingly flightenned about is our medical schools' training and the kind of education we've created has not kept up with these kind of dramatic changes. and i think over the next decade or so they're going to really have to transform the way they're educating students because it's going to be a new delivery system. it's going to be team-based. it's going to be outside of the hospital. it's not going to be, you know, all focus on the intensive care unit. and i think that transformation has yet to occur, and i think to be honest, a full national discussion of how we transform medical education to match the

kind of delivery system we need has yet to occur. so i would just throw that out there as the sort of next step, governor, that oregon helps sign at this times -- scientists. >> [inaudible] [laughter] >> and with that shout out to the governor, we would like to bring him back up here for some questions and answers, please. [inaudible] >> my name is andrew everily, and not only am i an oregon voter, but i voted for governor kitzhaber, and my question to the governor is that, you know, you mentioned that -- [inaudible] measures in oregon with wide bipartisan support, but you didn't get into how we do that. because it certainly is not an

inevitability even in oregon or especially in oregon. just a few years ago the legislature was locked in the partisan gridlock that got nothing done just like congress is today. and somehow in the past few years, um, you or your counterparts in the legislature were able to find a way to work together and create bipartisan support for things that seem like common sense, but in today's congress and in yesterday's oregon legislature just didn't work out. and i'm wondering if you could, perhaps, provide some insights into how you did that. >> well, i don't think it's rocket science. it's basically having a common vision and broad other thanship of that common -- ownership of that common vision. when i came in, as i said, i think the opportunity was in the magnitude of the budget deficit. there wasn't a lot of room to soft problems. we -- solve problems. we knew we were in a revenue reduction mode, so i just changed the debate to how do we take the money we have and spend it in a different way to get different results. and i ran on that, and the day i

got elected i called the speaker-elect and the leaders -- co-speakers in this case and the senate president and the budget-writing people out to the governor's house, and can i walked through sort of what i'd laid out, and i said, what do you think? where do you agree, where do you not agree? so from day one we were on the same page. we knew that health care is not a partisan issue, neither is educating children, neither is creating jobs and growing the economy. we met almost every day. i brought them into my office and, surprise, surprise, relationships actually developed. there was a trust relationship there. and they were able to demonstrate that, you know, solving these intractable problems really depends on the ability of people to, you know, create a vessel where there's trust and common cause. and, you know, i'm real proud of what we did out there. i don't think that's unique to oregon, but it requires a certain kind of leadership and a commitment to move beyond partisanship to actually solving problems that face everyday americans or oregonians.

>> there are a few people in the back. >> bob grist with the institute of social medicine and community health. the example of an air conditioner for a patient with congestive heart failure is a really nice example of secondary prevention, but i'm wondering if the state is doing anything about primary prevention. and around community health planning, around addressing the social determinants of health not just for patients who already are easily identifiable as high risk, but patients or people who are likely to develop the health problems so that we can really get a more effective delivery system. >> that's a great question, and,

obviously, childhood obesity and diabetes would be a great example of that. so there's a crosswalk between the reforms we've taken on in health care and what we're doing in the education arena. as you know, our educational system is utterly siloed. we pretend kids don't exist until they get to kindergarten, then k-12 is segmented from community colleges which is segmented from higher education. we have the oregon education essence board that creates a single alliance of budget, and we put a huge emphasis on early childhood because that's where the achievement gap occurs, that's where these huge disparities among communities of color occur, and so we have develop canned a performance-based early childhood delivery model that's organized around elementary school and catchment areas where there are something called a family resource manager that

brokers the risk and that would include nutrition and a whole host of other things. there's a crosswalk there between health care and education. two places kids always show up are at school and in the hospital. hospitals now scan for, you know, screen for pku and metabolic diseases, they don't scan for socioeconomic or relational risk factors. so we're trying to, actually, leverage our resources in the system to become -- [inaudible] the ccos are very interested in this because under the payment model, under the specified rules per member, per year, if they can reduce the inflow of kids with diabetes into that model, they're going to have a lot more resources. so you have to, basically, i think as both of our other speakers said, you've got to take the paradigm outside of the hospital because the real health benefits occur in the community. preventing chronic diseases from ever p developing. and then once we do, we need a

community-based method in order to manage them. i'll just say one other thing. this requires a fundamentally different work force. and it's very, very important because health care industry grew right through the recession. they added jobs. but a lot of those jobs were people running mris that didn't need to be run, insurance papers and duplicative administration. we want to retrain those people as well paid professionals who, essentially, their job is to actually broker health for kids and people as they move through the, through the system. >> can i say one thing? i think what you divide is a very important divide between primary prevention and secondary and tertiary prevention. the big money, as i've said over and over again s in tertiary prevention, taking people with chronic illness and preventing them from going to the hospital and a revolving loop. primary prevention absolutely critical especially, first of all, the longer you look but

also in things like vaccines which we know save money in a relatively short order. but the fact of the matter is, most primary prevention whether it's obesity, smoking cessation or exercise is best not in the hospital or doctor's office. i mean, those are public health measures which are best done in the community. and i don't want to say that those are two separate realms because as the governor points out, we're trying to bring them closer. but we should also be clear that those are not going to save a lot of money in the short term as all. and -- at all. and if you want to save money and improve quality in the five-year time horizon the governor is under, you really need to think about people who got established, chronic illness. um, it's not to say prevention isn't important. believe me, for our country it's really important. but there are two different kinds of activities and two different kinds of situations. the first, primary prevention, is not really effective by changing payment models.

you're not going to change it. i would say one last thing which is that the affordable care act did invest pretty heavily in school-based clinics, recognizing that they are very important and useful. you know, we don't have enough of them, if you want to know my honest opinion. we've got, like 100,000 schools and we have something like just over 2,000 school-based clinics. but they are very, very essential for identifying kids, shortening absence from school to make sure they can get services. so i think this is one area where, again, creativity and innovation is made possible by the affordable care act. >> [inaudible] spin to that because, you know, the fact is that only 10% of your lifetime health is the result of the medical system. 90% is, you know, genetics, lifestyle -- the biggest is lifestyle, behavior and socioeconomic issues which effect your ability to make good lifestyle choices. so zeke's absolutely right, to solve the immediate crisis, you've got to change the

paradigm for treating people with chronic illnesses. but long term for that to be sustained, you have to reduce the burden of chronic illness coming into the system. and i would argue that it has nothing to do with health care, but everything to do with health. and that's the biggest paradigm here, the objective of our system is not just financing and delivering medical care, it's to keep people healthy. and if that is the case, then you've got to invest as much in community-based systems that get at those drivers of population health and, essentially, hopefully within about two years we're going to have integrated that front-end piece which, by the way, has huge impacts in reducing the involvement in the criminal justice system as well, school failure, school dropouts. there's a big benefit for those front-end investments. >> and i think we have time for maybe two more questions, so perhaps that person over on the side who i think was waiting before. >> hi. sorry. jeff -- [inaudible] reporter with think progress. just tagging off something from emanuel just said, i was curious, a, how integral the

passage of the affordable care act actually was to moving the project in oregon forward, b, would that project be able to continue if an alternative plan from medicaid specifically that's in the republicans' house budget were to be passed into law. >> the first answer is, you know, we essentially were designing this thing independent of the affordable care act. but there's no question that there are huge similarities between a coordinated care organization and the affordable care act. if the supreme court had thrown out the affordable care act, we still would have been able to proceed with this caveat. there's a significant expansion of coverage coming under the affordable care act which i think is enormously important, and we wouldn't have been able to do that. and, of course, we're rolling a lot of people into the small group model and having both of those -- [audio difficulty] sort of a framework to move forward a lot more quickly. the alternative, essentially, whether it's the medicaid approach or the ryan medicare approach, i think it misses the target by a long sea mile.

first of all, it's a global budget. so, basically, if you have more people coming into the system because of federal policies that increase unemployment, you actually get less money per person. so you penalize people who have lost their jobs and need health care through that capped approach. the per-member per year increase gives you the same amount per person, and that grows at a fixed rate. secondly, neither of those things deal with the fundamental problem which is the delivery system. they're just unique, novel and perhaps politically palatable ways to pay for the same dysfunctional system. it doesn't matter whether you have a single-payer system, if you're paying for the same -- [inaudible] every month, you're going to get the same results. >> and last question? >> hi, my name's kate ryan, i'm with the national women's health network. we've been working on patient and consumer engagement in these different types of coordinated care models, so i'd really love

to hear a little bit more about how we're, how in oregon, for example, you're communicating with patients and consumers because, obviously, initially when they hear "payment reform," people think hmos, it makes people nervous. there's success in a lot of -- [audio difficulty] because they're really in the community and they can actually tell every beneficiary why they're not giving them a test. when people hear they're not getting a test, they can see that as a refusal of care. so i'd love to hear you talk more about how you really engage patients and consumers in a meaningful way that doesn't scare them. [laughter] >> well, a coup of things -- couple of things. the difference between the old hmos and the ccos, the hmos were designed to control cost, and they often did that with quality. the ccos is clear accountability for metrics about health outcomes. secondly, they're local organizations, so cost savings are shared within the organization.

they have to have a governance structure that includes community members and people who engage in activities to try to get the drugs to population health, and we are setting up consumer advisory committees to the governance structure. now, those are just getting set up, and we're looking for, actually, some resources from the north and south foundation to actually insure those are meaningful venues to engage consumers and community members. and i guess, finally, i would say that the, you know, the, these aren't built around patient-centered medical homes, if you will, with a whole range of providers, you know, mid level providers including community health work exercise these family resource members that i mentioned in our early childhood. their whole emphasis is, you know, you have to have culturally-appropriate people to go out into the right community, to get the right message, trusted people. but we're very well aware of that, and this won't work unless we're very successful at engaging people of different

communities in this process. >> so let me just echo, i think, a couple of things. the first is if you remember back to the 1990s, managed care, you know, it had a very simple model. we have too many beds, and we're paying doctors and hospitals too much. so you negotiate with only a few hospitals, and the other hospitals close, so beds go down, and then you cut rates to hospitals and doctors. this model, i take it, is very, very different. it's incentivizing a whole different way of caring for patients and, again, trying to keep patients healthy and to keep them out of the hospital and, you know, god willing, out of the doctor's office also. i would say the other thing, you know, if we're being honest about patient engagement, it's the watch word for everyone, and it's absolutely vital because, again, patients spend most of their time if you've got a chronic illness, you spend most of your time away from the

hospital and the doctor, and we need to get those patients invested in taking their medications, sticking to the diet, exercising, whatever else, you know, taking their breathing tests, measuring what their weight is every day and charting it and giving it back to the doctor. but we all have to be honest. we don't know the best way to engage patients. we don't know what combination of face-to-face with electronics, with family supports or visits from the home health aide works. and we're going to have to try it out. and i would bet if you look at what are soon going to be 16 different ccos, right? 16? >> 15. >> 15 sprkz ccos, you're going to see a variety of ways. and they're not all -- again, i think we need to be prepared. not every one of them's going to succeed right out of the box. they're going to have to adjust game plan halfway through, and that's a good thing, right? we can't only run experiments when they're all going to succeed, because we'll never run an experiment. right? >> this is really adaptive management, and these 15 ccos,

actually, we're meeting every six or eight weeks with the ceos of the ccos -- [laughter] around a table we had dr. berwick out last time and, essentially, the idea is to lay out what's working, what isn't working. to recognize some of these might work and if they don't, you know, you don't succeed unless you try. we can't be risk averse, and we just have to learn from the mistakes. i think if you create that culture, you have a lot greater chance of learning from these experimentations than not. >> there right. >> we talked earlier about leadership and the need for leadership. i think your question is fantastic in i don't think we actually need physician leadership or patient leadership or policy leadership, i think we need it all, right? but at the end of the day, we really need that on-the-ground, real world perspective that's driving this. and patients demanding this is also the paradigm that's shifting. patients, younger physicians, those out there in the work force, i mean, every resident i work with comes in with a smartphone and a smart tablet, and if i as an attending don't

know how to use it, i can tell you, you lose a little bit of respect, right? and same on the patient side, right? being able to show them a graph, an image, engage with them, help them understand, that's really what we're talking about. it's not the technology, it's not the policy, it's how are we engaging patients, providers and the people actually on the front lines to do this better. we don't have it all figured out, but trying some of this is really what's important and what the governor's doing. >> well, thank you all very much, um, and thank you all for joining us as well. i think it was very interesting. thank you. [applause] [inaudible conversations]

[inaudible conversations] >> burmese opposition leader is in the u.s. and is the featured speaker this afternoon on a discussion of u.s./myanmar relations. comments live at 12:30 eastern on c-span. the cato institute holding a daylong discussion of the supreme court's recent term. that's live this morning on c-span, and we'll have live coverage here on c-span2 of the afternoon session dealing with property rights, gps tracking and other supreme court issues. our coverage begins ant 1

eastern -- about 1 eastern. marine corps commandant general james amos speaking this afternoon about the corps' new defense strategy. hear what he has to say at 35u 30 eastern -- 5:30 eastern, c-span has live coverage. >> this weekend live from the national mall, the 12th annual national book festival. two days of author presentations and interviews, plus your phone calls, e-mails, tweets and touts. for schedule information go to booktv.org. >> former u.s. ambassador to afghanistan, ryan crocker, says afghanistan is making progress in many areas such as education and health care, but challenges remain including free and fair elections. he spoke at a carnegie endowment for international peace event focusing on the country's future. his comments are about an hour, 45 minutes. >> and it's a real pleasure to welcome you all to the endowment this afternoon to share our very

special guest, ambassador ryan crocker, who has come back to washington after another iteration in diplomatic service in afghanistan. i first encountered ryan almost a decade ago, and i don't think he even knew it. i had just finished a stint in delhi with ambassador -- [inaudible] and was getting ready to return to washington. and we decided that part of that transition that we would visit afghanistan, go to can kabul, because we were both coming to take jobs that would involve some work connected to afghanistan. and so we -- [inaudible] for two or three days, extended meetingsing with the staff there in 2003. this was the old u.s -- [inaudible] that had suffered terribly during the wars. and one day during those two days of meetings, i walked to

the ambassador's conference room. and in the ambassador's conference room was a series of photographs, photographs of all ambassadors, u.s. ambassadors who had served in the afghanistan. because they moved in so quickly, the photographs were put up but not necessarily the names of the ambassadors. so i was just looking at that gallery of heroes and trying to make sense of who i could identify and who i couldn't. and just when i was doing that, bob blackwell came up behind me and put his finger on ryan crocker's photograph and said: forget about the rest. this is the all-star. he makes it to my a-team. [laughter] and i thought that's, you know, bob being bob. but when i came back to delhi and actually decided to check ryan out, i discovered very quickly that he had a long and illustrious career as america's premier specialist in the middle

east. and if you look at the places that he's served, it's like a who's who of places that are important to american interests; lebanon, kuwait, syria, pakistan and iraq. i finally met him in person, actually, before he was going to pakistan, and we spent a half day briefing him. and everything that happened in that half day his wit, his security, his perception, his intelligence, everything comported to that description that bob blackwell had used several years ago when he first described ryan crocker to me. ryan finished in the last years of the bush administration as our ambassador to iraq, presided over the transition that was extraordinarily complex and difficult and retired from the foreign service with the highest title of career ambassador. came back to texas and worked as the dean of the bush school.

and i think at that point he was looking forward to a real transition and a life that would be his own. but fortunately for the united states, i'm not sure i'll say fortunately for him, the president called again. and in very difficult moments, president obama asked him to come back to national service which, being the patriot that he is, he did. he left the bush school and went back to afghanistan as america's ambassador in a moment when we were beginning yet another transition. and this afternoon we have been very blessed to have him come to carnegie to make this his first stop on his return from afghanistan. and he'll speak to us about what the transition in that country holds, what the prospects for

success are and why afghanistan, after all is said and done, still matters to the united states. so, ladies and gentlemen, please, join me in extending a very warm welcome to the man president bush once called america's -- [inaudible] [laughter] ambassador ryan crocker. [laughter] [applause] >> thank you. [inaudible conversations] well, thank you, ashley, i think. [laughter] ashley notes that before i went to pakistan in 2004 as ambassador, he very generously spent much of a day with me to give me some perspectives on

part of the world with which i was not very familiar. my career had lain to the west, almost exclusively in the arab world. pakistan, clearly, was a difference phenomenon. and i've always been grateful to you, ashley, for that. i'm particularly grateful for the fact that because of the depth, the range ask and the acuity -- and the acuity of your briefing, i can blame every single mistake i made in pakistan and in afghanistan on you personally. [laughter] the circumstances of the time require me to begin on a somber

note. my good friend and colleague and a friend of many be of yours along with three of his colleagues recently returned from libya to andrews after their assassination in libya. chris stevens was one of our best and our brightest. we have a lot of great foreign service officers. we have very few who are equally adept at managing the complexities of washington as they are at managing the complexities of the region. and chris was one of that, that very small tribe. like so many of us, i feel his loss very deeply and personally. it is a reminder that diplomacy

in the hard parts of the world and those parts are growing regularly, um, is not about pushing cookies and pinstripes. it's about risking your lives and the lives of those who ride with you on these missions. i was an ambassador six times; lebanon, kuwait, syria, pakistan, iraq, afghanistan. and in three of those six countries, half of them, a predecessor of mine was assassinated. so, again, i don't need to tell this audience, but your foreign

service is, has been and will continue to be very much not just on the front lines of diplomacy, but on the front lines of conflict. um, i was, it was suggested to me that i talk a bit this afternoon about the future of afghanistan and u.s. interests. ashley, of course, in his unique and inimitable way broadened that significantly, but it doesn't matter because i'm no longer in government service, so i'll just talk about whatever the hell i feel like talking about. [laughter] this will be a collection of reflections, and i do hope to insure there is ample time for questions since, as i look

around beginning in the front row and proceeding in every row back, i realize there is more expertise in this room on this subject than i could ever hope to bring to bear myself. so i am grateful for the opportunity, but i approach it with due modesty. first, let me begin with some perspective which is something that we americans are not overly brilliant at. we're all about today and tomorrow. that's the spirit that built this great country. don't bore me with the past, you know? i'm here, i'm here to make america, and if it takes longer than the day after tomorrow, i'm going to move on to something else. so we tend to lose track of how

important history is elsewhere in the world and how it shapes the present and informs the future. out in the region where i spent my career as william faulkner famously said once, hell, you know, the past isn't history, the past isn't even past. and so it is in afghanistan and the region around it. our relations with afghanistan up until 1979 were characterized by a kind of a i wouldn't say benign neglect because we were engaged. usaid from the 1950s before there was a usaid, but our interactions were limited really

not just up until the end of world war ii where our interactions throughout the broader middle east were quite limited. world war ii and the birth of israel, the cold war confrontation between the united states and the soviet union in particular put us front and center, certainly, in the iran and the arab states. that didn't really carry over to afghanistan. in spite of its poverty and some of its hardships, it was a nice assignment, not too much going on. that began to change a bit after the fall of the king in the early '70s. it changed rather significantly more with the ascendancy of the communists and, of course, it

changed dramatically with the soviet invasion of afghanistan in 1979. then we noticed. and as someone who has practiced in the foreign policy arena for decades, i just would remind you that when administrations face complex situations, they come not as single sorrows, but often in battalions. the carter administration in late 1979, of course, was also wrestling with the repercussions of the iranian revolution, the takeover of the american embassy in 1979, the mecca shootings, the sacking of our embassy in

islamabad with the loss of two americans, all of that november '79 and then, of course, in december the soviets were in afghanistan. a number of you have been there. for those of you who have have , life in the national security council or, indeed, the state department doesn't exactly play out quite like "west wing" did. [laughter] we pit together, as some of you recall -- we put together, as some of you recall, a shall we say a complex alliance. if there was a single unifying theme that brought together the anti-soviet/afghan elements, it was the notion of a jihad

against the godless invader. it was probably the single point of unity among the disparate groups. and externally, of course, we worked with particular closeness with the pakistanis but also the saudis and other gulf arabs. and, you know, you know what? it worked. in 1989, of course, the soviets had had all the pain they could stand in the afghanistan at a time when it was clear to their leadership that their problems at home were somewhat or beyond serious and approaching critical. couldn't, couldn't afford it anymore as opposition grew.

so the soviets were defeated in afghanistan, a victory for the united states in what turned out to be the closing years of the cold war. and what did we do? we said, hey, we won. let's go home. and home we went. we, of course, were not engaged with conventional forces on the ground in the afghan campaign, but we were very heavily engaged by a variety of means. that engagement stopped not just in afghanistan, but also in the region, particularly in pakistan. where in the space of a little over a year pakistan went from being, as they put it, the most allied of u.s. allies to the

most sanctioned of u.s. adversaries. that, of course, was through the administration's decision not to renew waiver requests for the presser amendment on pakistan's nuclear program which we had known all about since the mid 1970s when they were publicly announced, but we found it expedient to just say, well, we've got other more important issues. well, those issues went away, and so did the presser amendment waivers, and so did all economic and military assistance for pakistan except for some very narrowly-circumscribed areas mainly to do with narcotics control. and the rest, as they say, is history. either a predictable history as

the seven mangy hadty groups with no soviets left to fight and to serve as the unifying factor among them proceeded to engage in a, an absolutely vicious civil war that any informed observer could reasonably predict. kabul changed hands, ashley, how many times did kabul change hands? quickly. >> three. >> with enormous devastation. but it wasn't our issue. in the mid '70s, of course, a new movement saw light in the south in kandahar. the taliban and taking advantage of, again, a number of factors; international indifference, war

weariness and disgust on the part of the afghan population, pakistani support who desperately wanted to see someone bring some kind of stability to a country on its borders manage to take control. managed to take control. clearly, their ideology was not harmonious with ours, but, hey, we could live with it. we've lived with other dishardnies -- harmonies around the world. we had a series of efforts to engage them. and while these efforts were underway, increasingly inhospitable east africa for al-qaeda made a taliban-controlled afghanistan look increasingly attractive. so there relocation took place in the 1990s. east africa bombings, some

really token missile strikes subsequently that rearranged some rocks, and it was business pretty much as unusual. until 9/11. and then all of a sudden we cared. um, my modern story with afghanistan actually goes back to that day. some of you, of course, have much longer and more continue wows narratives, but -- continuous narratives, but i've got the mic, so this is my story. i was on a u.s. air shuttle, the 8 a.m. shuttle from reagan up to laguardia.

newly-appointed deputy assistant secretary of state for middle eastern affairs, and i had the portfolio of a country called iraq in august 2001. so my job was to go up and convince the chinese, the russians and the french that our way was the right way, and i figured that'd take half a day. it was while we were making our approach into laguardia that we could see smoke coming out of the first tower, and just as we landed all of our cell phones went off. we actually had cell phones in 2001, with the news that the second tower had been struck, and it was then clear this was not a misguided private aircraft or some other accident of navigation, it was an attack. i was stuck in traffic on the queensboro bridge when both

towers went down. three-and-a-half months later i was part of a small u.s. contingent raising the american flag over the opposite end of ground zero. kabul, afghanistan, the still badly shattered american embassy. following a very quick military campaign that ousted the taliban. um, i didn't spend those intervening three-and-a-half months unoccupied. i was on one of the first planes out of dulles after they reopened airports following 9/11 bound for geneva and conversations under the u.n. flag with the iranians. those of you who are deeply into

esoteria, and i would not suggest you admit who you are, just get counseling -- [laughter] may have heard of the geneva group. this had been in existence for some years. it was a forum, um, to talk about theoretical futures for afghanistan and refugee issues that brought together countries with significant political or refugee afghan populations like italy, germany, iran and the u.s. ..

selection of hamid karzai to leave afghanistan had come as the core of this consensus, a u.s. air on the understanding in which he was very influential, and for which jim dobbins, my former colleague and friend deserves enormous credit. during those pre-attack discussion's coming and you remember the war began in early october, iranian threat was what do you need to know to knock their blocks off?

you want the map? here's the map. you want to know where we think there weak points are? here coming here and here. you want to know how we think they're going to react to a campaign? you want to know how we think the northern alliance will be a? ask us. we've got the answers. we've been working with those guys for years. this was an unprecedented period since the revolution of, again, a u.s.-iranian dialogue on an issue we had a common interest and common cause. and as i said, it was our cooperation, and i don't mean to diminish or minimize that of other actors. i've already mentioned the united nations, but the entire international community rallied around the composition of the afghan. our conversations continued. less you fear that i am going to give you every week between late

2001 and the current time, be assured i just, again, setting the stage here because we so often lead to the present. without remembering there is a past except everyone but us has focus on. we actually -- to me, paris, new york we were very portable, ourselves and the iranians -- and kabul. my senior iranian interlocutor got himself posted to kabul as their chief of mission about the same time i showed up as our chief of mission. and again, we were able to talk about where al qaeda might be in iran and what they might do about that.

not without some affect. we talked about development, who could build which roads. we even got into such issues as standardizing the composition of asphalt for the roads that were to join. and we talked about how we might work together to reduce the influence of the war lords with whom each of us had respected the influence. but then came the axis of evil, the state of the union, in january, 2002. i remember fairly clearly my next encounter with my iranian colleague. those that are least pleasant stay with you the longest and with the greatest clarity. it was not a happy encounter. that was the time -- and he was gracious enough to inform me

that the iranian government chose to export goldadine back to afghanistan. we missed him at the time and we are still missing him in the kinetic sense. believe me, not in the synthetic sense. this was also the point coming in here i am in conjecture it's a great to be a free man. this is also the point where i think the iranians made a strategic decision which is can't work with those sons of bitches. told you all, can't do it. and - until that time, the

notion that well, maybe we can find common ground on certain issues and see where they go with held in the irg sea, the iranian revolutionary guard corps, that to the extent that it was there i could only see its reflections in the individuals i was talking to. it certainly was in there after january of 2002. although the talks continued, but with increasingly less result, and with increasingly less authoritative representation on the iranian side. i mention all of this to illustrate something i will come back to, which is the law of the

unintended consequences. in the international arena, and particularly in the complex parts of the world where some other arrests have chosen and have been blackmailed into serving, it's not just obvious stuff that any, anybody with a high school education if they looked at it for half an hour would have figured it out. it's the unintended consequences not of second and third order, but of the 20th and 30 of the order, that when major elections are set in motion and no action with military engagement, and sometimes diplomatic engagements , decisions to go, and then decisions over what to

do then set in motion the current forces that the most astute among us cannot begin to predict, so when these decisions are made it isn't simply a question of thinking through their implications carefully. it is asking the question how much risk am i ready to assume? how much of the unknown and the unknowable and my prepared to absorb to deal with that which has already struck me or may threaten me. you know, again, a certain degree of modesty and humility on the part of those of us who advised or make policy in terms of what we can presume to know and predict would serve the national interest.

again, i was yo-yoing about a good bit, taking some leaves of absence from my iraq responsibilities, but not all that much. i was in northern iraq in december 2001 suggesting to our kurdish friends that would be nice if they didn't start the war before we were ready and getting the call across the border saying we kind of need you to be in afghanistan a week from friday came back from afghanistan in the spring immediately went back to northern iraq. a case of badly divided attention tells us fault.

i remember my arrival in kabul just a few days after new year's, 2002. i had seen devastation before. i had never seen anything that looked like afghanistan at the beginning of that year a decade and a half ago. kabul itself, when we finally got their, looked like parts of berlin in 1945, whole city blocks obliterated. no water, no power, no services, new security forces, no nothing. and, you know, we didn't do it. taliban did a little, not a lot. soviets didn't really contribute much. it was the afghan civil war we

chose to ignore, and the incredible devastation that the allies of the anti-soviet jihad brought on their own country and citizenry when there was no longer the unified force to unite them, or the international presence and commitment but said let's look for other ways. president karzai had gotten to kabul about ten days before i had after the bomb conference in december. and he has been there ever since. and, again, as the history of afghanistan gets rewritten, revised, redacted and otherwise

colonized, i hope that attention is given to the role on the account of karzai because he is literally personified the post taliban afghanistan from that time until this, and god willing, until the 2014 election several things struck me about him. first, his incredible courage in taking on a job that was somewhere beyond impossible come as he struggled to come up with someone who might be capable of actually running a province that wouldn't plot a to at the same time or steal whatever may be left steal.

he was on an afton trying to design the new afghan flag. in addition to his courage and determination, i was also struck by something that still strikes me today. in my view, hamid karzai is a committed afghan nationalist, which i mean he thinks in national terms. he knows his face life with the passions, -- pashtuns and that it lies with all of its significant populations, be that based on sectarian, ethnic or gender identity feel they have a home and a future coming and he worked from that day to this in a five dimensional chess game to

try to maintain and foster those bonds as, again, against extraordinary odds. it is, again, a question that afghans and friends of afghanistan need to be asking themselves as we look ahead to the 2014 elections. there are not many people who think like that in afghanistan. more now certainly than there were a decade ago. but, still a minority. so, beginning in 2002, there we are. we are on the ground. international consensus behind the interim authority. so now what?

yeah, crocker, you're out there now. did not arrive in kabul with a detailed set of instructions as to what the administration wished to have accomplished in those initial months. in fact i arrived without any instructions. just go figure something out. this was, again, a regime change. if that sounds a little familiar, maybe it is. my first role when moving into the conflict for the post conflict situation is tied with the military commander. you've got the guns. you know guns can be very useful when staying alive. i couldn't find one.

we got a special forces commander that covers the northern part of afghanistan up in uzbeckistan weeks up the special forces commander who covers the south. we've got the expeditionary unit commander who's got his brigade, and guess what they were all six is. they would court and with each other and citrus certainly didn't have the requirement to coordinate anything with me or even pick up the phone to call which of course they didn't have telephones. we did not have even an approach to unify the military command in afghanistan until the than major

general buster arrived with the elements and one brigade of the mountain division in late february 2002. and even then, not everybody was reporting to him. a great british officer named john mccaul was the first commander of what is now isaf, the major general at the time coming and not finding an american counterpart, you know, you speak english. we had a successful revolt against you. there must be something in that. let's talk. and, you know, he kind of looked at all of the warlords and wishes up there and the absence of any kind of ability by the chairman to extend authority and said, you know, can't we do better than this? how bout if we sort of put a

reinforced company plus in each major population center back up by the mobile brigade that could play anywhere with heavy firepower in a matter of an hour or two. wheat was up the brigade and a little bit more, but our reach and influence and capacity to influence and maintain security goes up exponentially. so, we call for this and in record time we got very similar instructions back from our respective capitals which was basically go sit under a tree until that idiot idea passes. we have nothing else that has been a successful campaign. i will let you fast forward from

that date until the announcement of the surge of 2009. let me say one preliminary word about the insurgency and then i will fast-forward. the insurgency surprised me, not because it came or that it came when it did. but because it took longer to develop than i thought it would. i was present for operation anaconda and again you can mention that to your counselor when you see him about the geneva talks. that was our first large-scale effort to mop up the taliban and al qaeda in the mountainous

east. general haig in that to the to -- hagenbeck had advice from the wonders of etc that worked then and we all wish they didn't. lots of advice, lots of superior commanders, most of whom were not in his chain of command but that didn't slow him down. but very few forces. and what we found in anaconda is we had a much larger, much better armed and prepared and tenacious enemy than we thought we did. we also didn't have some of those useful things like tanks. not a good idea to carry out major ground operations if you don't have former, just a civilian. what do i know. we had to borrow tanks from the

project northern alliance. team 54 comegys 55 isn't much in less they are against an adversarial. so my job was to negotiate their passage through the pasture -- pashtun areas and the supporting infantry to help us on the objective anaconda and that almost didn't happen because the pashtun leader that later met an untimely death or timely depending on how you look at it, or wait too late, depending on how you look at it, refused passage and said that if they tried they would be destroyed. and it took an all-night negotiations to say that basically you come after these tanks, we are going to come after you. and if you haven't been on the business end of an f-16, you're going to have about half a

second to experience it. and they said okay. so we prevailed in anaconda kind of, sort of. by that time we had enough power up there, to make the outcome decisive, most of whom we were fighting had expelled. one moment for me back then -- again, late february, early march, 2002 -- was particularly in the early days of the campaign. the filtration moved into ways. we were taking young afghans up who were trying to cross our lines to get on the fighting side of them, to join their compatriots in the fight from the center. that's when i thought, you know, there could be trouble down the line. what do i know?

i have to go about iraq. so then, you know, hindsight is 20/20. it's always beautiful but i do remember having that concern, that as we have seen and our predecessors as western powers have seen for hundreds of years, the conflict in a given foreign country, in the eyes of our adversary hasn't even really started until we think we have gained a decisive victory. you saw in afghanistan, we saw it in iraq. the french called morocco, libya, the brits throughout the region over and over and over. we operate on different time lines. none more profound than this. our enemies capacity to wait and our capacity to think.

you go to a small country that needs help. okay, and then a lot of the background doesn't get pulled off. i just thought it might be useful to review -- you're going to kill me. in part because of what today is the new york time leaders also subjects, you know, will have seen an op-ed piece today recalling that this is the 30th anniversary of the massacres. and a note in passing that a young foreign service officer named ryan crocker was the

american diplomat who walked into the camps and discovered and reported that massacre. in the early nation of lebanon, back to my 20th and 30 of order consequences, set in motion a chain of events we could not, or they possibly have dreamed of, no one could have imagined when they crossed the line of departure in june of '82 that he would have this. at least i certainly couldn't. that invasion led to the cementing of the iranian series and strategic alliance that has persisted to this day and in jeopardy one may hope. although what may come after the regime is the subject of the lecture. it may not be good. it also led to the birth of hezbollah, which house not only

bedeviled us and the israelis, it has killed hundreds, hundreds of both americans and israelis. again, a lot of the unforeseen consequences. 30 years -- 30 years later. okay, enough of that. i promise. okay, so where are we today? okay. first, i believe, since i was out there for a lot of it and saw the consequences, the surge ordered by president obama come in addition of the 38,000 troops, had a huge positive impact on security. now as we draw down to the pre-search number come i think it is extremely important that we take the time that the general has recommended for a

carefully and methodically assessment of where we are, where the afghans are or where the adversaries are, what is the battle space look like before we make any more decisions and the merciful element here of course is that kind of assessment will carry us past november 6th. the status of the afghan national security forces. an amazing achievement in a short period of time. it's not just a little over a decade. it's really just the last three years or so that we have been engaged in a truly serious effort to build a capable, multifaceted set of security forces, both police and army,

close to the maximum strength of 352,000. and they have shown their abilities and action. you will remember the inadvertent desecration of the koran that led to widespread demonstrations by international forces could not be part of the effort to restore control of the afghans on their own. we couldn't use advisers, simply gasoline on the fire. they were not prepared for that. they were not trained for that. they were not equipped for that, and there was nothing harder to ask of an armed force than to go into action against its own population. yet, that they did.

and they did so with the given circumstances extraordinary effectiveness. they saved countless lives. they saved american lives, protecting our presence and inspiration's in a number of places around the country. and it says afghan life, while regrettable, totaled 29, that includes afghan security forces, far less than it might have been. so, we saw not a dress rehearsal. we saw the curtain goes up without a rehearsal. and a very credible performance by afghan security forces. why do i start with this? because, again if you look back at the post-soviet era, you know, his government and the symbol authority didn't come

crashing down and the soviets were through with afghanistan. did not come crashing down when the soviet advisers were withdrawn from afghan security forces. they did a very good job holding their own on their own. it all came crashing down when they stopped being paid. when the money stopped, 92. the army disseminated. they followed their ethnic or sectarian associations and the rest is history, and not a very pretty one. so, the competence, certainly by afghan standards, a committed force. but, you know, it helps to keep paying your troops and i will come back to you when i talk about u.s. interest, which i will do very quickly. you know, what else is

different? from the 90's and the beginning of 2000? welcome a tremendous amount. you've got to be able to see it. kabul is a little south asian mitropoulos. i stumble over that because it really is an intricate combination of both. the streets are packed, traffic is horrendous, schools are open, you know, we've gone from 900,000 kids in school when i got there, all of them were blaze at the beginning of 2002. over 8 million today. an enormous stride forward in the education sector. as i mentioned certainly in health as life expectancy has increased. in the transportation not every

road project has been a success. but boy, oh boy, getting in on afghanistan is easier today than it was a decade ago. a telecommunications, electricity, all almost immeasurably better than they were a little over a decade ago. lots of problems, lots of mistakes, lots of missteps. but overall, the progress has been incredible. there's an intangible in this, too. it's the attitude of people. the attitude of women. you know, you hear that through clenched teeth. nobody is ever going to jam me back in a burka. you can see it with girls who didn't experience, but you walk into a class. one had a bad day in afghanistan, which would be everyday. you can always buck yourself up

a little by visiting classis from university down to primary. and you know, asking the students with a one to do. virtually all of them had great dreams and wanted to see them fulfilled in afghanistan. there were girls that want to be doctors, engineers, fighter pilots, paratroopers, you know, there is a new spirit out there among the women and younger people, and as we look at 2014, watched that young generation, watch the females. because what you'll hear from the 20-something's is our parents and grandparents destroyed this country. we are going to build something that is entirely different. you know, good luck to them. their grandparents in many cases

are still unfortunately healthy. [laughter] so there's a lot on the positive side of the ledger that we can talk about. we talk about the challenges. and the challenges are also the devotees. one of them we touched on in selections. the good news here is everybody wants to be an art. everybody is maneuvering, maneuvering for the last year at least come as a kind of led the u.s. primaries to do some straw polls come see where the alliances are come check your adversary strengths, see what you have on them. he has that on you so it's a wash. [laughter] i have dealt with the to northern alliance is, the northern alliance and iraq, the

kurds coming and the northern alliance and afghanistan. the tajik, uzbek turkman with peculiarities as they get up there. they want to play in the center. they want to be governors. they would like to be kings but i don't think that many of them expect that at this juncture. they want to have a decisive voice is in who leads the country and where they leave it. unlike the kurds, these are the guys that took kabul. it wasn't us. yet rather than say it's all right to rule the state as

president, it's different. it is our right to live as free and equal citizens in the state and have a role in shaping the state that does take account of how we stood, where we stood, and what we did during the dark days of the 90's. you know, again, her excptions that by and large this was a key point. what will you be looking at in terms of containers? i'm not going to name names. would be meaningless at this point in the case. i think you can see structures to an extent. personalities would count usually as the date in 09. but so local elections, and i think there's a prospect. there are certainly those that see the political left vantage

and cost-cutting coalitions. again, not the 23 co something's, they are too young, the early 40's-something's. okay, and a tajik. i really need to hook up with pashtuns who have experience in things that we have and we have things in common with each other than we do with our older generations. you are not going to see the agenda based parties in the modern sense. you know, maybe in that election after this one. but beyond platitude, beyond the chicken in the pot, i still think the development has a way to go before that happens. let me say a word about the role of karzai. i want to come back to this. here are my fearless predictions, since i am utterly irresponsible i can make any prediction i want.

unless the circumstances change dramatically, i am quite confident president karzai will not seek to amend the constitution were to find some extra constitutional mechanism that would allow either for the prolongation were the reelection he said it publicly, he said it privately and a number of conversations i heard him talk of the future that he envisioned the future he envisions is a future, one in which he is actually alive. and again, sitting here, where our election losers go into opposition were equally or likely or maybe both going to the to bring into the lucrative business practices and make tons of bucks and come back another

day this is part of the claim that phrased to men and one grave, it's you or me. and yet seem knowing smiles somewhere that echoes back to the ali bhuto. he got the grave as the former prime minister of pakistan. so, losing and watching the embryonic or the on stable democracies is no joke. so, you know, president karzai, this stuff just kills me. you know, president karzai is not vladimir putin. afghanistan does not work that way. but he is going to want to see any election outcome that he literally can live with where a

successor will not have him brought up on capital charges, which could have been in the state where the rule of law is not exactly well-established. so, you know, not a king maker, but looking to see the contenders emerged with whom he can coexist very likely on the same compound for security reasons. so, the elections, again, the huge multifaceted challenge and opportunity. will be the first election of the post karzai era. something they haven't experienced since the fall of the taliban. and worthy of our common on the not only our close attention that our deep interest which is not the same as interference. but let me say just another word about hamid karzai, because

again, i got to know him immediately after we both arrived in kabul and developed high respect and at that time maintain our relationship over the years. i used to come over from pakistan when i was ambassador from 04 to 07 coming and explained to president karzai my view that the pakistanis and its leadership were not out to destroy him and afghanistan. he said yes, they are, and then we move on to a more pleasant conversation. but we've maintained a relationship. karzai as a nationalist, it takes two forms. i talked about one of them coming into this touches on another challenge, which is reconciliation. president karzai believes in

this and i believe in it. general allan who was the architect of the anwar awakening in the command is now in afghanistan. you don't kill your way out of an insurgency. at the same time, president karzai is aware you cannot have reconciliation with your adversaries. and in the process lose your allies. it cannot be on the terms that alienate the minorities because they feel their rights have been bargained away coming and you cannot do it on the terms that threaten what the women in afghanistan have achieved. i think the best indication of where the president's mind was on this is a painful process that he pursued to select a successor as the train of the high peace council after he was assassinated a year ago. a year ago and two ays, three

days. a couple of pashtuns one to the position. the president decided early on that it should be his son and he eventually prevailed. not without asking that certain western powers interfere blatantly in afghanistan's internal affairs, which i happily do. the two individuals and afghanistan's older statesman, the professor and although ethnically arab is perceived as a pashtun and the highly respected, also have arab but perceived as a pashtun, karzai

felt would threaten and frighten the non-pashtuns. now, he's a tajik council leader going to be easterly a empathetic with the taliban that want to cross over. not likely. but again, it shows what karzai's priorities are in my view, which are hang on to the solidarity, the unity that you have. don't risk going after when you don't have. we've talked about security and security forces simply to say the threats as we have seen are very much there, whether it be that coordinated attack to destroy a number of aircraft on the 15 or so than men, but they clearly knew what they were doing.

the high-profile attacks which haven't worked out well by and large as the headline grabbers after the attack on the embassy last year, and again in april, and the very troubling and green on blue attacks. i am not there, but i would put the percentage of the attackers who have some affiliation with the taliban rather higher than the percentages that i have seen. i think they are finding that a relatively easy to do in our own bedding in the u.s. military is not that great. let's face it. we have a lot prism barracks in the military facilities and people who never should have gotten them in the first place and didn't get out of boot camp hires afghanistan. i think the taliban have found a niche. obviously not the whole story.

i don't discount the personal grudge and the rest of it, but i think that we underestimate at our peril a resilient any finding a new mechanism would affect. we've talked about reconciliation. of the economy i would say that i don't think 2014 is going to be as calamitous as economic development as many think is the case, assuming a virtual complete drawdown of international forces, and a lot of the money spent on contract and has gone offshore any way. with the afghans are attempting to do through their extractive industries and elsewhere is kind

of build up with the need to do in any case and indigenous economic growth capability. unlike private sector do what it does best. not steal money. that's the government. it's great not to be an official anymore. [laughter] and generally, you know, just let the economy work. there is a significant amount to work with. internationally engagement, engagement. we had three important conferences during my tenure. actually, four. the bonn conference was a in affirmation of political support for afghanistan. the chicago summit, which was an

affirmation of international financial support for the afghan national security forces in the out years. and this is the key. no more 1992's. in the tokyo ministerial, which focused on economic support as important as the commitments of the international community were, the commitments to the afghans also were extremely important in recognizing and agreeing to take on the challenges of regulation of governance, corruption and so forth. they are not blind to these issues, and the president was very public on that. so, the international dimension going forward, very, very he. we know how the movie ran at the end of the 80's and the beginning of the 90's. we just a guess that in iraq.

general petraeus and iowa in 2007 in front of congress, you know, what the hell did we know i thought i told the story. in afghanistan we do know. the same adversaries that ran at country in the 90's want it back, and they are committed, they are resilient, they are tough, they are smart. after all, we get killed all of the slow and stupid ones. and in my judgment, the taliban come al qaeda linkage posts bin laden while there might be some taliban that have a different view it's still pretty solid. the taliban get back and stand by for al qaeda. they may be weak, but afghanistan as the field of choice in the world that yemen can never be for reasons that those of you that no yemen will understand, you will never get

homogenous whatsoever in the world better now that the desirability of having al qaeda as members. it was different in afghanistan and it could be different again. so i would conclude really long after i should have what kind of future. and afghanistan that is good enough to maintain stability in a precarious region. with security forces good enough, not to eliminate every security threat, but to be the force of the first resort and dealing with. in afghanistan with good enough governments that its people look to it for services. expect those services when they will be happy with the level of

services are we? but see the government as legitimate, both in terms of how it was chosen and far more important in what and how it delivers and how it looks after all of its citizenry that no major element of the afghan population ever again feels that an afghan government is persecuting it or worse. president karzai has stood with the uneven results because he has had the worst job in the world. i hope his successor can carry that forward. why is it important? two quick points. one is three numbers, 911. it did happen and it can happen again. if it did happen again, the most likely way that it would happen

would be from the taliban controlled afghanistan. so you know, it may cost the international community for and a half billion dollars in the year to yield on the wealthy quote afghan security force into the future. that's pretty cheap insurance given what 9/11 costs. the second reason is an argument that should designate with americans. if we decide that we are done before the afghans really do take a grip, if they start seriously slipping and backing out the counties, commanders, the various taliban are gaining, who gets them? to all those people we made all those promises to start with a

win. i was there when some of the undertakings were made back in 2002. you have women all over the government now running the companies coming you have women educating others. we as americans brought them forward to see what would happen to them. would be something that we as a nation would have a lot of trouble living with. we certainly hope so as an american. likewise, for the 20 something and early thirtysomething who want to achieve a different afghanistan and have it within their capability. yes, there is enough time for them to do so. so, for those reasons, and i can go on, we need to maintain focus and remember the past. we need to make the commitment and the investment for our

national security, and i defined national security has also encompassing very much our moral and human values. let us not lose sight. i haven't covered the region because he would have literally have given me the hook but i would be happy to talk about iran, and of course particularly pakistan. [inaudible] will cover short time is left for questions. [applause] >> we have a few minutes of questions. i want to give people a chance to ask them. if you could be specific [inaudible] can use the microphone, please.

>> it is good to see you again and listen to the conversation. i have been meeting the ambassador every time i visit islamabad, and even we had meetings then, cristina and yourself came together. you had mentioned explicitly about afghanistan. the problems in the area even the stability of afghanistan and pakistan have become interdependent in many ways. how would you shed light on this? in pakistan the mosques and civilians, there are so many killings being done in the taliban command of the same taliban, the doing the same

thing inside of afghanistan in the afghan forces and civilians. so, what was the intention? why don't they have a motive? if you can help us figure out how do you really connect the stability interdependence of the stability between pakistan and afghanistan? >> we can get out as much coverage as we can. >> ambassador u.s. senate staff thank you for that force and you mentioned the danger of ignoring the situation like we did in afghanistan and you mentioned the danger of the unintended consequences. now that you are out of the government what prescription would you give the united states and the west regarding syria?

>> you describe iran saying something you described an adversary that had a common interest with the united states. you served in pakistan with your friend that has interest in afghanistan that really don't track those of the united states. what kind of strategy would help the united states deal with this paradoxical situation? >> well again, good to see you and know that you are still fighting the good fight. it's not easy these days. there is a great variety of militants loose in the land for both countries. some of them in overt linkages with each other, some of them

not. but by and large, you know, i do think they have a presumable motive which is bringing down the established order is in both countries. it is a negative motive. i don't see much except in the case of the taliban i want to go back to the bad old days, and i don't see much of a vision for the future except everyone being dead oregon who doesn't think like them -- dead or gone who don't agree with them. since bayh departure in 2007 cut the growth and strengthening of the indigenous tech steny militancy that is as you put it at the pakistan government establishment military and the population, what this tells me,

and what i think all three governments are aware of afghanistan, pakistan and the united states is whoa, it's bad out there. it's bad for all of us. the pakistani soldiers are dying in the northwest -- sorry, still back in the old days -- and the tribal areas higher than ever before, hiding the same guys that are killing in the international forces in afghanistan. ..