legislative proposal would be driven more by the congress and then come to the white house, but that's really flipped. and i don't think that would change so much. so i'd still think initiatives would be driven. but to the extent that congress tries to drive the agenda, they're going to face -- they know they're going to have a democratic and republican or, you know, libertarian and democrat, whatever, two people that are going to represent a pretty broad range of voters. so partisan proposals aren't going to fare very well. and so they're going to understand if we want to really get something passed, we've got to pass something that will satisfy people on both sides of the aisle. and so, you know, again, it would be futile to try to send up highly partisan proposals. ..

give the minority more of a voice and have a filibuster rule in the house. i know filibusters have a bad reputation but i tell you, having served as a minority member without a filibuster, you were sitting there watching, your spectator, and i'm not, i think filibuster have an important role in making sure the minority has a voice. >> one of the incentives should

invite is importance of bipartisan proposals. the incentive for them to work together to be this legacy. but i guess my concern is that our we assume there is such a thing as a bipartisan legacy item? if we think about the things in the news today, immigration. republicans wouldn't see that as a legacy item. for them it's a political necessity at this point but it wouldn't be, didn't have to appeal to a greater population. climate change were republicans deny it exists or is man-made which amine again means it would not be -- universal health care wouldn't be indicted because republicans it forces people to buy health care if they don't want it. so given just how polarized our parties are, are we assuming so much in assuming that there could be a legacy item that's nonpartisan? >> so, could they really find a common ground for a legacy, or the republicans you of a legacy

so different from the democratic view of a legacy that you wouldn't end up, and come and i think we would. i think there really is sufficient common ground. because republicans did campaigned on universal health care. the difference was how much should we rely on a market. mccains ideally we should have a voucher. give them the means to buy insurance and then let them go out the bite on the private market. but mccain's proposal would've been in some ways more of a universal proposal. is would've reached everybody, where as we're going to end up with 23 million americans once obama carefully implemented, 6% or so, 23 million americans without health care insurance. so yeah, i think legacy means making, solving problems whether it's the economy, whether it's health care, whether it's immigration. and so i think what happens is

both will want to solve the same kind of problems, you know, when it comes to the budget for the republicans are going to want more tax cut -- or spending cuts and the democrats going to want more tax increases. and i think you would end up with something that is about 50/50, but that would really be, both of them would want to be the pair that solve the budget gap. i look at my governor, mitch daniels, who i served under, who's a republican and he came in and, it was so important for him to change things, to shake things up. health care, he pushed for an expansion of our medicaid program with a cigarette tax increase. that sounds pretty democratic, but, you know, he wanted to leave a legacy with health care. the one thing that made a republican was that have the health savings account approach. but all the other elements,

expanding medicaid to include working adults who didn't have kids, funding with the cigarette tax, that comes out of the democratic playbook. even our new governor, mike pence, who headed the republican study group, republican members. and now founded a much more moderate, not his governor and wants to leave his legacy. so yeah, i think we would associate a lot of accomplishment if there's sufficient common ground for that happen. >> and follow-on to that point. in addition to the question which just addressed, whether legacies can really be truly bipartisan, can solutions to problems be really bipartisan can we, in fact, address climate change adequately, appropriately through some kind of solution

that some splits the difference, or do we really need to kind of go all in and one parties vision of the world or not? in other words, would a two-party presidency give us a lowest common denominator set of policies that might not actually be what it really takes to solve health care problems, or the debt crisis, or climate change or any number of other things? >> that's an interesting question. maybe once i really is right on some issues. yeah, i think as a general matter, you know, that both sides, there's truth on each side that the other side is true -- is too slow to recognize. they're sort of recognize their own and slow to recognize the other such truths. i think that's what you see, you

know, going back to share decision-making. so when you bringing people, address problems with different perspectives you tend to get better results annually them with their own to try to solve problems. because nobody's got a monopoly on the truth, and i think what we end up is, you know, one side on our current system, one side might be able to push its policies to access as we had in the 60s under democrats. the other side can come in and push its policies as happened under nixon and bush. so i think that's what would avoid is the excesses on either side. you know, coming to solutions, because i think there's times where one side has a monopoly on the truth are rare enough. i think the losses, where's alexander hamilton said about the veto power, right, the harm

of losing some good policy is much smaller than the benefit of any bad policies. what i worry about is the downside. i would like to use investment analogy. you never want to put all your eggs in one basket, even if an apple looks, year two ago, a great place to put all your money but now it's not so good. diversification always works better. i think diversification, political philosophy works well today. >> we have time for one more question. he we have one up front? >> i'm glad you used the example from europe because i'm european. i was born in a country where we had two prime ministers, one from the check mark, the country was called czechoslovakia. it doesn't exist in the. so one would have to compromise is to split the country.

this advantage which i wanted to mention, but from my point of view, from a european point of view is that the elections in the u.s. are too often, the elections are too expensive. and it may be easier solution just to give ceilings for the budget for the elections. because if a member of the congress and you want to be reelected you just need strong statements. unique quick, strong tweets. so it may be easy to compromise when you have like four years, not just two years, and in the primaries start. so my question is, would it be easier to just change the election system an in the u.s. n having to presidents of? >> yeah, good questions. one is, no, we have shared power, can the breakdown? it's very important structure, young, single executive can be

disasters, many countries in africa, eastern europe year and learn. shortcoming can break out, do. important to structure in a way that aren't incentives because you write, if you have asking options so that you can leave behind your shared role and become a dominant person, you're right, people tried to become dominant and get all the power. that's why it's critical to structure in a way it's always 50/50. the other part about our elections, they are horrible, yes. too much money, too much posturing. and i think actually this would be a better solution than the alternative because, because of the real presidency, the high stakes of the election, people, there's this tremendous incentive for the hundreds of millions or billions. that's exactly the right response when you've got so much a state.

and as long as yo you've got tht much at stake people are going to find a way to spend money. we see one reform after another to limit how much you can contribute to the candidate so you can contribute to committee. you contribute -- set up your own personal, you know, committee, and won't, just run out of your own business or home. and if we say you can't run ads because the guy who did a book and the movie, the document on hillary clinton. the money will find a way. but if you have a bipartisan presidency and you know the power is going to be shared, right, what are you going to get out of spending all that money on the elections? you can change which democrat on which republican, but if he knows austin to be a democrat and republican, or third party, whatever powers going to be shared, you just can't influence, there are going to be the swings in policy that are so important to the people that are

giving money. so i think the incentive to spend the kinds of money that is spent is considerable, and i think it's and effective way to us to get campaign finance reform. >> i want to thank you all for attending today, and i know we might not all be leading a green that to presidents are better than one as i think most of us would agree that two heads are better than one. and i'm sure all of us would agree that the one mind that we have had sharing with us, his ideas here today, and the results of his latest books, david orentlicher is a creative one, articulate one, and you've given us a tremendous amount to think about in a very provocative proposal to consider about improving the political process in the trendy. so i hope everyone will join in thanking david orentlicher for today's seminar applaud that. [applause] >> thank you all for coming.

thanks to c-span for coming, t too. >> booktv in primetime continues tonight with "london daily mail" columnist melanie those. it begins at 8 p.m. eastern time on c-span2. >> when the attorney general in california after the extradition, he indicated that he wanted the death penalty on each of the three charts. he wanted the death penalty three times. that made me realize how serious they were. and again in the guerrillas it wasn't about me. because first of all i could and he killed three times.

it was about the construction of this imaginary enemy and, you know, i was the embodiment of that enemy. >> she wasn't that interested in talking about what happened, this period. the crime, the implications being taped by the fbi. she wasn't, she wasn't that interested in talking about it. and so she's also one of these who don't us as we go to directly and i would kind of get your directly. so i figured out that there were very important people in her life, and i chipped away at the people she knew and trusted. was able to get them to write letters, ma get them involved. but can see my previous works. and slowly she came around and she agreed to meet me. >> filmmaker shola lynch on the life of the '60s activist and radical angela davis sunday at eight on c-span's q&a.

>> live now here at the american enterprise institute in washington, d.c. for a discussion on the cost of long-term health care, a type of service that provides care for people with an illness or disability who cannot care for themselves over a longer time. this morning, a panel will examine whether the government should finance long-term care or if individual should get coverage through the private marketplace. in 2010, president obama's health care law established the community living assistance services and supports act, also known as class act to do with a long-term healthy. the administration later announced that class cannot operate without large and growing deficits and the program was terminated. in january, congress created the commission on long-term care commission on long-term care, a 15 member panel charged with developing a new way to finance long-term care services. that commissions findings are due later this fall. live coverage and now from the

american enterprise institute here on c-span2. >> good morning. good morning. i'm joe and those with american enterprise institute. i want to welcome everyone here this morning to a discussion of long-term care, markets are mandates is the title i gave it. we are actually here because of an act of congress, actually to acts of congress. congress in passing the affordable care act, that's the president's health reform, included a long-term care provision called the c.l.a.s.s.

act. the c.l.a.s.s. act was fiscally unsound, at least is measured over 75 years or probably measured over a bout 15. and was put on the shelf, and then at the beginning of january, the c.l.a.s.s. act was repealed and in its place in the classic washington tradition a commission was formed, and long-term care commission, and well, let me read some things from a political article that's kind of interesting, just to set the mood here. the political mood. so, according to this article the fiscal cliff law gave the commission six months to put together recommendation for improving financing and delivery of long-term care services.

the committee made a chair or vice chair. no one knows yet to a staffing and it is not clear when it will meet. but there's a more interesting things here. the legislation, at least according to this article and i thought it was too but apparently did not completely true, the legislation also didn't provide any funding for the commission. i guess they found somebody somewhere but not a lot. and it doesn't require congress to act on the recommendations which are due in september. so that focuses the mind of the commission. however, there is one other problem with the commission according to this article. this is a quote. there's also a question about whether one member of the commission will have to be replaced. always in health secretary bruce greenstein selected by senate minority leader mitch mcconnell in february is stepping down, or stepped down, from his post amid questions about his possible role in

helping his former account -- company win a contract. it's interesting to commission to three months to be formed, to be named, hasn't met yet and quite possibly could be losing a member before it even sits down. you know, this does demonstrate the wisdom of will rogers who once said, we can certainly slow the aging process down if we had to work, if it had to work its way through congress. [laughter] okay, so there's the light humor part of this part of this presentation. the real reason we're here is that mark warshawsky, who has agreed to serve on the commission, and made -- and pick apache but he's actually public spirited citizen, has written a

really nice paper, raising issues, questions, and some facts about long-term care, what is it, who's affected by it, and how is it paid for? very useful, a very useful paper. i highly recommend it. after mark presents his report, which i might add doesn't draw conclusions at this is very important i think to emphasize. mark is a member of the commission. he's not representing the commission, can't. they haven't me met yet. antaeus early not going to give you policy recommendations that reflect the commission's views, whatever they might turn out to be. then we will have a panel. you have the bios of able to you, but a quick introduction. howard gleckman at the urban

institute. josh wiener who is rti. matt salo with the medicaid -- what is it? national association of medicaid directors. too many words for me. and -- [inaudible] [laughter] >> and then stephen moses with a long-term care center -- >> center for long-term care reform. >> thank you, see. i appreciate that. center for long-term care reform. so with that, mark, take it aw away. >> well, let's try to get this slide. okay, very good. thank you very much. i very much appreciate the opportunity to talk with you today, edited want to thank joe and those and the aei for

hosting -- joe antos for hosting and the benefit i very much looking for to the discussion, and hopefully this will be very much in the spirit in which i wrote the paper which is really, as preparation for the commission, and perhaps to help to the other commissioners to try to identify what are the issues and one other question, what don't we know, what do we know, what does that evidence seemed to indicate a direction that we should look further into come on what simply don't we know at all about this very complex, very long-term care. the financing of long-term care, the provision of long-term care services, to a lot of different types of populations, the disabled working age population, the elderly population, and so that's what i was appointed as commissioner, i decided to think about these things, and i was moved to write the paper.

some going to share that with you today. the first place to start is looking at the aggregate data. and when i was looking for sources of both the spending on long-term care and also the sources of financing for long-term care, i was really quite surprised that there really isn't a source. you have to piece it together yourself. and different angles to do it in different ways and this is the way in which i found it most sensible to do so. the source data is from the national health expenditures account, and i basically add two numbers together. one is spent on nursing homes, and the other is on home health care. and there's a clear delineation of where the sources of funding are. so if you're to look at the latest date is 2011. the total amount that we spend on long-term care in the united states is about $225 billion, which represents about 1.5% of

gdp. that number actually is a little low, and i'll state that right off the bat because it does not include hospital affiliated nursing home expenditures. and i didn't include hospital affiliated expenditures because i wasn't able to get sources of funding for the. so this is a per se a low number. it's probably more like $300 billion, ma or thereabouts, and is probably more like 2% of gdp. but here i think at least we did get a sense of the rate of growth and also in the next like you see the source of the spending. so the rate of increase looking from year to year from the prior year to the years that are indicated here, you saw some very, very rapid increases in spending in the '70s, '80s through the '90s.

double-digit rates of growth in spending on long-term care. 14, 15%. and you also saw quite rapid rise of the share of gdp. one thing which i found quite interesting and looking at the data is the share of home health care that is represented by this data, and that shows is also a very rapid increase from about 5% of total spending to about a third of spending. and the reason why i was a little motivated by that is, when i was appointed commissioner a lot of groups have already come to me and i'm sure my fellow commission members, even before the commission meets, people are i guess you could say lobbying us. one group which represents home health care provider said that we need to spend more on home health care and that would save

us money. on the total spending. so nonetheless we do see that there has been a rapid increase and that's i think something we could look further into. the other day that i put together is the sources of, payment sources for the spendi spending. and i divided up into out of pocket, in other words, what the individual or the family spends out of their own resources. private insurance, and this is a residual in the data and it's a little unclear as to what his name. you might think that, well, that's private long-term care insurance but i think it's more than that. i think it also is any sort of medigap or any other types of health insurance that might spend some money on long-term care. but we don't know and that's another source of something which i think is worth looking into exactly what is represented by private long-term care insurance and what other sources interest and the major

government and church programs which could be medicare, medicaid and other payers, and other payers in the past, before the creation of medicare and medicaid was primarily some state and local and federal government programs, but also very significant amount was charity care, money from endowments and charitable sources of payment. as you can see that latter part, even putting aside the creation of medicare and medicaid, the source of charitable care has declined quite a bit. so it's less than 5% of sources of payments. over time, out of pocket has declined, about 20%, and i haven't looked at the numbers for overall health has been but i think that's in the ballpark i think of what we spend on health care out of pocket like 15, 20%. so it's an interesting, interesting observation that less and less is paid for out of

pocket. and more and more it is paid for particularly for medicare and medicaid. now, and so, you know, basically about a third, a third, even other sources. i think it is worth spending just a second on medicare. there's a little bit of i guess a point of controversy about whether medicare should be included here or not. because some people say, well, that's not really long-term care. it's short term care. it may be for a very same or disabled people, people who are very frail and so on but it's not truly long-term care. i find that not persuasive in two regards. number one is somebody could go into a nursing home and be there for two months and either leave because they pass away or they find some other source of care. while to muncie short-term care, that is long-term care. i don't think anyone had doubts. so i'm not persuaded by this

sort of short-ter short-term cad that giving us some people said, well, the law quote unquote said that medicare cannot cover people with permanent disabilities if they are not expected to get better. there's was a lawsuit brought on this point of the government acquiesced so it is the law that even if you don't expect to get better, medicare will pay, pay for your care. and up to the provisions of what medicare will a law -- will allow. thereto it's not a matter of short or long-term, it's a matter of medicare is paying for care for people who are permanently disabled. so this is the day to come and so there's other questions i have just looking at the data. what has caused, what caused rapid increase?

it's come down but still it's 5% growth and 2% growth economy is still very rapid growth. what has caused it? some people will say, well, it's because the population is getting older. i think that's probably not true but again, it's worth looking into. the reason why i have a doubt whether it's just because every study in the books will say that people are less likely to be disabled, that the rates of disability have gone down, particularly among the elderly. as a democratic expression that seems launching and also looking at when increases occurred in which when the 70's, '80s and '90s was not when the population was getting older but, in fact, if anything was getting younger because of the baby boom coming into the working age. so perhaps again looking at, was it the fact that the introduction of these new social interest programs, is that what caused the rapid increase in

society? the reason why i think this is relevant you might say it's just an academic interest but some people do talk about, you know, converting this whole thing into another social interest program and i think we need to be realistic in terms of what economists and actuaries call moral hazard the fact that your ensure you're more likely to spend, if you're covered for that, that's been you're more likely to use it. it's an incontrovertible fact. so i think it's worth better understand what the costs of growth are. and i think also as we look forward, going forward what is the prospect in this area, what is likely to occur. in the near term in the next three to five years, and the long-term over 20 to 30 years, even even looking into a 75 year and beyond horizon, i think it's worth considering what are the likely projection, what are the

likely spending patterns. and the reason why it's important to do this is because i think there is an aspect here of demographics as the population ages. so we just -- consider that factor as we consider this problem, as well as just the mechanics of the provision of care. and i think we need to look into that question as well in terms of is this a type of spending which economists call the subject to the bamal disease which is the notion that productivity in this area is much lower because it's care that is provided primarily by labor and israel capital involved in reviving care of long-term care nature. so does that and it would mean that costs will rise faster than other costs? and that i think plays out more,

it's a more important consideration over long greater time. so i think those are questions which the commission would be well served to look into. then there's sort of i think interesting part of spending and that's home healthy but as i mentioned the motivation for looking more carefully into that is that some people say that this is part of the solution to long-term care problem, that we need to spend more on home health care. but i think just from come and i'm not an expert in this area by any means, but my reading of, there seems to be some significant issues in terms of up coding and outright fraud in spending on home health care that really there is no care being provided. is that a significant part of the explanation for the increase? and then is this really a possibility for replacing quote unquote expensive nursing home

care? nursing home care is expensive, but the question is is it a reasonable comparison to compare home care and nursing home care in terms of, for the same type of individuals and the same type of care, which is, in fact, going to be more or less expensive? because presumably in nursing homes there are economies of scale just by the nature of congregation of people needing care in one location. you would think there would be some economies of scale. so i think that's, you know, figuring that out is, will be an important issue for the commission. and then looking at the most, the poorest and the most severely disabled, there are some experiments been tried which try to coordinate those sources of care, the home care and medical health care that's called managed medicaid. and what evidence is there that that either saves money or provides better care?

and here there are significant dollars at stake. and as i indicated looking at that line in the accounts called private insurance, what is really behind that is a private long-term care insurance or other types of insurance? and then that leads us into, as we sort of explore long-term care insurance long term care insurance and what that provides, the nature of that insurance, that leads me to my sort of next big topic, which is the interaction of public and private insurance. there are many studies and some, i would say intriguing, i'll call it informal evidence in this area, which i think again is worthy of further exploration and further, further study. the first is a study by economists geoff brown and amy finkelstein. it's actually a series of studies, and a very carefully done some relation studies using

the best techniques of public finance economics, these economists are at the top of their game so to speak in terms of this work. and they come up with a very strong conclusion. it's not empirical evidence, its theoretical evidence but they come up with a very strong conclusion and they say that the existence of medicaid crowds out the passenger a population, the purchase of private long-term care insurance. and they would say that that would occur in terms of the income distribution through the eighth and ninth decile of the income distribution. so that would say that despite the best efforts of insurance companies and marketers and so on, they're really fighting an uphill battle in terms of the private provision of resources

of long-term care because of the existence of medicaid. because medicaid is a type of public insurance and it is insurance, even though people think of it as a welfare program. nonetheless, in this instance it's clear it is insurance. there's baggage that comes along with it. it will only pay for nursing home and home health care that is medicaid associated. some providers will not take medicaid so that a limitation there. there's also, and this is a very murky area, there's a notion that you have to spend down in order to become eligible for medicaid. and stephen moses i think a few things to say about that, and i'm learning literally day by day about this. but that's the reason i bring it up is because the academic viewpoint, many people's viewpoints is that wealthy people, middle class people do not go on medicaid until they

become impoverished. so that sort of one very major point of view and thought. this was the second goal here is really not the study, it really was my own little fooling around. and that is just on the internet, googled medicaid planning. because i'm curious. when you hear about notions that all this notion, only the impoverished go to medicaid is not true. i was curious, and boy, was i surprised when i googled medicaid planning, i got thousands of it. their are a lot of lawyers and others who are offering their services telling people that they can get on medicaid. they were come on back ads so they weren't a lot of details but it does indicate where there's smoke there's fire, that maybe there is something to this that there is less spend down than one might think. and just the other day my

parents are in assisted living facility, and i'm proud to say they're spending their own money for it. and i was listening to tv with my mother, and from the sort of side of my head i heard, there was an and lo and behold, medicaid planning. so it's not just internet. it's, you know, somebody is spending a lot of resources marketing something to put an add on the television. so again i think there's something that the commission would be well served by this. there's another study which is a really fascinating result. this is an empirical study, a theoretical study done by a couple of economists at the federal reserve bank of chicago, and a colleague from university of albany. and they looked at net worth of the point of retirement and then followefollow people and found s to going to medicaid. and they came up with a really

almost startling finding. and that was that the wealthiest group, the cost -- atop decile got as much in terms of dollars from medicaid as the poorest. i mean, again, spend down works you would think it would be impossible, but nonetheless that seems to be undergo funny but it's not a peer-reviewed paper and it may be that it was revised and soviet but just looking at it, taking at it face value, it's a remarkable finding. and i think it's worthy to perhaps commission could invite the authors in and they could explain their methodology and what they feel about the reason for the finding, which they didn't really address. now, it could be that it is at the spend down doesn't occur in the way we think, or it may be, maybe people do spend down, even wealthy people and it is the case, this is another fine in the literature that wealthy people live longer than poor

people. so maybe it's that they don't have longevity coverage sufficiently it and because they live well into their 90s they in fact due to impoverished themselves. but again this is something that we need to know more about. there have been many surveys done, and they are currently being done by i mentioned jeff brown. there's also how jackson at the harvard law school is doing this survey, that is basically knowledge surveys. if there's a notion of planning, working age population as i can look at the retired population, do people have a good understanding of what the government will cover and what it won't cover, what the rules are? and sort of mixed, said building mixed evidence about the. but this is an important point because if whatever the commission recommends, you know, the question is will it be well

understood and will it be filtered up roper lake? so i think it's an important question. and then one study which will il take the pride of offer -- authorship on is innovation in long-term care insurance and it's what i call the lifecare annuity, which is a combination of long-term care insurance payments, combined with an immediate life and duty, and it's meant to solve the kabul of problems with private long-term care insurance. -- a couple of problems. one is there is extensive underwriting some people who are in poor health are likely not to be able to get coverage. and at the same time people are not well covered for longevity risk and so the notion is that if you combined the two types of insurance you are actually because of the nature of what you're hope will be the pulling

of different populations can offer the insurance at a slightly more reasonable rate, as well as all most entirely eliminating any underwriting. so that people who we need long-term care insurance can get it because they'r there in poorh would be able to buy this long care and duty. because their health is somewhat impaired they get the advantage of having a long-term care coverage, and they bring down the price of the whole product together because their longevity is lower than others in the pool. so the question is could that play a role in this problem of financing long-term care? wrong button. okay, so here are the questions which are motivated by these studies and empirical work. brown and finkelstein have a very strong result but it is a radical but is there any empirical evidence for? because if there is i think the commission might want to look

into maybe the problem isn't private long-term care insurance, which some people might want to blame. maybe the problem is the government provision of insurance crowding out the purchase of private insurance but i think everyone would agree that what we really need to do here is provide, get more and more private resources to pay for care. what is the evidence on medicaid planning? what explains, you know, this sort of smoky area? is it asset shifting? i want to know more about exactly how did the states in force the asset spend down rules, and in particular i am very curious and it's a very sort of confusing area in terms of what asset, one asset which is to be excluded is the home, but then the state can attach that from the estate of the

decedent. how do states get that money? and so i think the commission would be again well served to study that. is the problem of the wealthy get onto medicaid a lack of longevity insurance? is a significant lack of knowledge? in what way does that matter? here i haven't come we don't have time to go into the details of long-term care insurance, but there is some types of insurance called partnership policies where there's basically a sharing of risk between the state and ultimately the federal government through medicaid and private insurance to those policies work in terms of saving the government money. does it really offset the long-term care insurance that would use private resources to save medicaid money?

i think we do need to look into what are the current issues and long-term care insurance, the market has evolved, it is had some success at adding some people was itself a some problems but i think we need to look into that. there are other combination products out there. are they a part of a possible solution? totally i'm a fan of annuity. and here's one, i won't say a proposal but it's an idea, and it's the one the idea that i will put today. i have this little booklet, i don't know if you recognize, it's an aei publication and its from several years ago, i think josh is on the spend, i don't know if you remember this, from 1996. it was titled inet in long-term care, what should be the government's role? i had to get this book on amazon. it's so out of print. but anyways, it did have some interesting discussion and ideas. mark's idea was, almost as an

external, ma let's try a carveout of medicaid. somebody says i private insurance, you can't use the government will pay me a subsidy but not as much as the value of expected type of what i would get on medicaid eventually. said the government saves money but there's an incentive to buy the private insurance, and i wait eligibility for medicaid. there was some criticism of mark for this proposal. i don't know, may be was even josh's criticism which was well-founded. he said, private long-term care insurance is an annual policy. what prevents somebody going on and say that and then dropping the policy the next year? been pleading poverty and going onto medicaid anyway? so i mean, how could this be prevented? prevented? well, you know, 15 years later i have a solution to that problem, and that is the lifecare annuity because that is a one time purchase and it's meant to be a lifetime coverage.

maybe that idea could work, you know, we could try that as an experiment to see whether that would innocent people to get to these resources and not get onto people. and there's other evidence which is more in the policy and political arena. and that is i'll mention two. joe did mention the whole c.l.a.s.s. act, the clasp rogue rent and his obit of history. i think i mention two more things about why it was such a failure. but nonetheless even though i think many people recognized as it was being worked on that it would be a failure nonetheless it was included in law and want to talk all a bit about that. the reason why it was a fairly as an insurance program is that it was guaranteed issues. it didn't have to as underwriting and there were certain subsidies in the program which were meant to, you know,

basically encourage people who already disabled to buy insurance. you had to have very little attachment to the workforce, and so it was, and also the benefit was less than most private long-term care. and certainly less than the cost of care would be. it basically from 50 to $75 a day, which anyone would say would not be an adequate benefit. so it was not good insurance. so why were we even thinking about this program? the reason why it was included in the law, in my opinion, made a little cynical is that it raised quote unquote $70 billion according to the congressional budget office. and that was on the mechanics of the program were that you were getting benefits and so you paid into the policy for five years. a lot of money, was supposed to

come in before money was being paid out. and then the ten-year budget window, that was a net $70 billion according to cbo. here's my criticism, that presumes that anyone would buy the thing. $70 billion, even in our economy and even in government budgeting is a lot of money. they are document millions and millions of policies being sold. was that a reasonable assumption? basically they were assumed 6% of the working population would purchase this insurance. ibm sells, it provides long-term care insurance to its employees at cost. no subsidy. they get 5% of their workforce to by very fine insurance. which, you know, ibm does a good job as an employer of scrubbing, that it's a good, foreign policy.

what may be cbo think that, as those, ibm employees are pretty well-paid. many of the made in the '80s and 90s percentiles of the income distribution. what was cbo thinking about? is still an issue to me as to why they came up with $70 billion but that's there is what it was included in the health care legislation because $70 billion was about 7% of the financing of the health care. and it therefore kept the tax increases and health care costs that would need to finance health care -- lower than it would otherwise. you might say, why am i talk about this, its history. in washington we like to say what happened three months ago is history. this is already two years ago, ancient history. the reason why it's relevant is because cbo still scores legislation around town, and other going to be any better at

anything that the commission might come up with in terms of scoring than they were two or three years ago? i think the commission really needs to be quiet wide-eyed about that in terms of perhaps there are other sources of information on the scoring nature of that could be helpful to the commission. the other source of experience which i want to sort of introduce is the social security disability insurance program. in my bed i go through this in more detail. i don't have time to go through all the details, but i think it's the closest analogy in a current program that they would be, if there was a social interest program for long-term care. it's not a perfect fit but there's certain analogies that i think are relevant. and, therefore, i think it's worth looking into what is the experience with the ssdi program. one thing is that is going

bankrupt. where today the trustee is reported will be issued and it will be trees, lash it was 2016, maybe this year is 2015. it's going bankrupt even in washington time very soon. there is an explosion of spending on ssdi way beyond what the actuaries predicted. part of that is because i think there's strong evidence that the adjudication process, very convoluted appeals process to the admission of law judges seems to favor, there's a bias in favor of grasping the claim -- drafting the claim. that the government process that presumably would need to be put into place for any long-term care, social interest program. and then there are other regulations and so on which all lead to basically providing incentives for claiming disability in terms of making it easier for people who are above

50 to claim the incentive is to get onto disability injured as opposed to claiming early retirement benefits. and again the relevance of this is this a typical expense with government insurance programs. they always cost more than we think, that we project. it's very hard to rein in spending. when it does, rapid spending when does occur, and i think again we need to be realistic about that. so the questions are, that are unvisited from this information, what other sources of government expertise, scoring analysis in this area? you know, other ways of solving the ssdi type of problems or is it really just endemic to the top of programs? into other things which are not in evidence but i think are important for the commission to consider. that is, another failing of

classes that it really combining two different types of populations. one, the severely disabled working age population, and the other where the elderly. the retired elderly and people are clear that going to go back into the workforce. the question is, do you have the same program cover these two very disparate populations? does that make policy logical administrative since lex there may have been political reasons for doing that but doesn't make sense in any other way? and i think the commission really would be very well served by having a very serious discussion about that. and then we started off almost joking about the commission, and i'm already trying to reform it. one is, the horizon with six months. i think the clock is ticking. i mean, i think it's almost ludicrous to think that we could, even begin to a discussion on one issue as opposed to all the questions i've posed within, you know, the four months that are remaining.

so how do we get the commission the time that is needed to really discuss and study these issues? there's also a question of, how is the commission going to be run? isn't going to be run on a bipartisan basis? the way the law grades is the recommendations of the commission on a simple majority. and that is, not to be too partisan about it but nine are democrats and six republicans. maybe five. so is that the way we want to run the commission and is that the way that is the most likely for sustainable success in this area to be? i would say that no, it's not. we really want to run a consensus and i don't know if want to sort of formally say that you need 11 votes, 12 votes to have a report, or it's just a good understanding. then finally a staffer think is very important that the commission be staffed by expert

people, and that hopefully we can accomplish. so that's my paper. i very much appreciate your attention. [applause] >> thank you very much, mark. i wanted to add a little addendum to your slide on long-term care spending. that only counts spending that goes to the marketplace in dollars, right? it does not include the unknown but substantial amount of personal support that people get from their families and other people. and this, i mean, this has raised some interesting problems when you try to create a financing program. what happens to that personal support. i don't think it disappears, but you do worry about the direction that that might take. now let's turn it over to howard

gleckman. >> thank you, joe, for having this panel and for helping to raise profile of an issue which i think is too often ignored. mark talked about a lot of things. i'm going to focus really just on three. i want to toggle bit about something he doesn't mention very much in his paper from which is the perspective of caregivers. i want to talk a little bit about the state of long-term care insurance industry, and then want to talk about opportunities for managed care, something that he does allude to and i think may require a little more thought. as we go forward. i'd like to start if i can go by telling a story. i spent a lot of time visiting hospitals and nursing homes, and this is a story i heard a couple of years ago at a hospital and it's really stuck with me, because it's, frankly, it's so typical. a gentleman is 86, we'll call him mr. smith. he's got congestive heart failure which is the most common disease of the elderly.

as a result of that he has been in and out of his local hospital. they know him well. he lives at home, in an apartment. he doesn't own a. is living in an apartment with his wife who is in her mid '80s, who israel and has some cognitive issues, and she is his caregiver, his only caregiver. one morning mr. smith is taking a shower and as you might expect he falls. they taken to the emergency department where they diagnosed a hip fracture. but they also see that he's the hydrated and malnourished, and has hotspots on your skin that are probably the beginnings of decubitus ulcer's. the orthopedic surgeon looks at it because i can repair the hip, that's what orthopedic surgeons do, but he is so debilitating needs to spend a week in the hospital before he can even have the surgery. they do the surgery and the

surgery by the definition of the orthopedic surgeon is a success. the hip is repaired. unfortunately he is in hospital three more weeks recovering from his surgery. finally beginning healthy enough to send out to a skilled facility rehab. .. >> joe sort of alluded to this as well. well, it may be free in that it is not directly compensated, but there are tremendous financial, emotional and physical costs to

caregivers. and wile they're hidden and -- while they're hidden and not well understood, some of these costs may be borne by the rest of us already as taxpayers and buyers of medical insurance. there are several issues about caregivers in those costs. the first one is foregone income. typical caregiver is a 50-something daughter who's caring for a parent. a recent study found that the lost income to that woman who takes time off to care for that parent over her lifetime is $300,000. that's current income, that's money that she loses in retirement because she wasn't able to contribute to 401(k), because she wasn't able to contribute quarters for social security. but over her lifetime that will cost her a substantial amount of money and could very well prolong the cycle that we so worry about and so want to stop. this woman herself could end up

as a medicaid long-term care recipient, or at least will be more likely to as a result of this time she's taking off to care for a parent. the second issue involves the lack of skills. this is an issue that almost no one focuses on, but it's important to keep in mind that probably 80 or 85% of long-term care is provided by family members. and nearly all of it is by family members who are untrained. care giving requires some very highly specialized skills. you wouldn't know it from the $9 an hour that we pay aides, but anyone who has tried to transfer a loved one from a bed to a chair or tried to give them a bath realizes exactly how much skill that requires and what the catastrophic cost is if you don't do it right. and the cost, actually, is not only borne by the providers of care, but it's borne by the

recipients of care as well. in terms of the providers of care, it's interesting to note that the injury rate of paydays is among -- paid aides is among the highest in america. it is actually more dangerous to be a certified nursing assistant than it is to be a coal miner in the united states. those injuries are back injuries, and it's also depression. those are paid aides who have some training. there's reason to believe, although no real studies, that those family aides suffer injury at at least the same rate and probably higher. this is especially true, of course, when the caregivers are not daughters, but they're spouses. again, think about the story that i told at the beginning. you have a woman who was if her mid 80s, already debilitated. the chances of her hurting herself caring for her husband are quite high x -- and that will land her in the hospital where the system will be paying.

so there is cost there. and then, of course, there is the cost to the recipient of care. in this gentleman's case, you know, we'll never know, but would he have had that fall if he had an aide to help him bathe? we can't know. would he have had the bed sores or the malnutrition or the dehydration? again, we don't know. but it stands to reason that if there were aides engaged in this care or if there was a trained family member, that may not have happened. however, because it did happen, think about the cost, the financial cost to the system of what happened to this gentleman. it's, um, not an overstatement to say that it cost the system tens of thousands of dollars to kill this man, actually. a little bit more about the effect on care recipients and caregivers. a recent report by aarp was very

illuminating. it talks about the kind of care that family caregivers are providing. and interestingly enough, it is very often not the kind of care that nurses' aides provide. it's the sort of care that registered nurses provide. they're required to operate medical equipment, to change dressings, to manage medications, and, of course, in the case of someone with multiple chronic disease, you're often talking about managing 10 or 15 medications a day. this is also done with no training and, again, the consequence of this is hospitalizations, skilled nursing facility admissions and the like. so all of this, i think, very much increases costs to the system. it is real cost, and it should not be ignored by the commission or by others who are analyzing this subject. let me switch gears for a minute and talk about private long-term care insurance, provide a little context for what mark was talking about. unlike what steve moses probably

thinks, i don't hate private long-term care insurance. i think it actually provides a very useful service. however, as a policy solution, i think it's quite limited. because of its cost and because of the state of the industry at the moment. the industry is facing some severe not just demand side problems which we've known about for a long time, mark was talking a little bit about the fact that no one wants to buy, but now it faces some very serious supply side problems. you think about it, potential market for insurance is growing tremendously. but sales are collapsing. in the last ten years, sales of private long-term care insurance have fallen by two-thirds from 750,000 individual policies to about 250,000 a year. group insurance which was once thought to be the savior of the market has basically disappeared. almost no one is selling group

insurance because they're having so much trouble managing the risk. group insurance is, although it is underwritten, it is underwritten by what they call short form underwriting, and it creates serious problems. so tib this. you have -- think about this. you have an environment where people are not buying, and the response to that is the following: the industry is raising premiums not just overall, but raising premiums for women, eliminating spousal discounts. it's cutting benefits. for a long time, benefits were becoming more and more generous. now benefits, particularly inflation adjustment and the overall benefit, the daily benefit and the time during which benefits are available, are also being reduced in an effort to try to keep premiums affordable. it's interesting, mark was talking about how 50 or $75 a day in class is a bad policy. there are now companies out there that are focusing on selling exactly the same kind of

insurance because they realize people cannot afford the $150 or $200 a day policies that perhaps many people in this room would want to buy. they're tightening underwriting. as mark notes in his paper, previously probably 20% of people who wanted to buy long-term care insurance couldn't because they would not pass upside writing. those underwriting standards are now being made more strict. so what's happening is even fewer people who want to buy the insurance will be able to pie -- buy it. so what you have is a situation where you have little demand, and the response to low demand is to make the product less attractive. in fact, i think what's happening is most private long-term care insurance carriers are subsidiaries of larger life insurance companies, and for two reasons that i'll explain in a second, i think those parents would just as soon

their subsidiaries not sell very many policies right now. almost everyone who's withdrawing from the market, there are probably only about a dozen companies who are selling, a few mutual companies and, basically, that's it for now. there are two problems, two reasons why people are, why companies are leaving the market, and two perfectly good ones. one is that they're having a lot of trouble managing risk, and the other one is the low interest rate environment. the business model for long-term care insurance companies is a relatively simple one; they collect premiums over a long period of time, 20 or 30 years, invest the premiums and pay claims from those premium investments. fairly standard model. the problem is the long-term care insurance companies are required by state regulation to invest in very safe, very low-yielding securities. and the business model doesn't work. particularly doesn't work because many policies are carrying 5% inflation riders. if you earn 1% on your

investments and you have to raise benefits by 5% a year, it doesn't really work out. um, there are some options. i've been talking mostly about free-standing long-term care insurance. mark's idea about combining an annuity product is a terrific one. there are other variations of this so-called combo products that the industry is offering. i think today do have some potential -- they do have some potential, absolutely. but, again, for a relatively small market unless they can figure out a way to get prices much lower. you think about who can afford to buy an annuity. $100,000 for a decent annuity. that's more than the median financial assets of a typical 64-year-old. and i don't think any financial planner would recommend that anyone put all of their assets, you know, into an annuity. let me switch gears one more time, and that's to talk about managed care. i think this is a tremendous

opportunity, but it's one that also carries with it some great risk. um, as you think about this, people with chronic disease who by with definition are people who require long-term supports and services are the people who most need some level of care coordination, care integration, care management, whatever word you want to use. managed care became a dirty word in some circles in the 1990s, i think unfairly. and it now, i think, provides a tremendous opportunity for this population. we are seeing, you know, mark talked about this, um, as he was presenting the data about what's long-term care and what is medical care. and the data to some degree are confounded by this line. policy analysts live with this

bright line in mind. it's critical to understand that recipients of this care, this means nothing to them. the gentleman that i talked about at the beginning of the presentation, he doesn't know which is long-term care and which is medical care. he just knows that he's got heart failure, and he needs care. the system we have now has separate payers, and it is, it is the most uncoordinated, disorganized kind of care that you could possibly imagine. managed care has the potential for doing something about this. we are seeing and matt may talk about this some more, but we're seeing just a tremendous move towards managed care for the dual eligibles. by the states. they're doing this in many different ways, many different experiments. we have no idea if it's going to work. josh and rti, actually, have the contract with hhs to assess this

all, and i suppose maybe in three years we'll know what happened. but as we learn about it, i think it's very important to keep in mind some of the risks and some of the possibilities here. the risk, of course, is do people actually know how to do this? do managed care companies that have a great deal of experience working with people with higher levels of acuity, young people who may not have many physical problems, they do that pretty well. but can they do this with people with multiple chronic disease? people with cognitive issues? we don't know. we'll see. these experiments are being done with the duals. those people are eligible for both medicare and medicaid. i think there's some very interesting questions if it tons ott -- turns out that these can, in fact, reduce costs and improve outcomes. if this is also be used for the general medicare population. you might want to top that out, top that up with an additional

policy, but at least provide some measure of long-term supports and services along with your health care. and it maybe even could be sold as a commercial product. i shouldn't say this in front of joe, but on a health exchange. you know, it may be an element of a product. now, would people buy it? it would certainly cost a little more. leave it to the actuaries to tell us how much more. would people buy it? i don't know. certainly in terms of health delivery, there's a lot of potential there. so i think that there are some interesting things out there, some interesting issues that the commission can focus on. i wish mark all the best. i thank him for his service, and i hope the commission can come up with some recommendations in a few months. thank you. [applause] >> thank you, howard. now we're going to see if josh paid close attention to your presentation. josh told me that howard was

going to lay out some assumptions, and so, josh, take it away, and we'll be grading you later whether you actually met the test. >> sure i'll pass. [laughter] so thanks to mark for writing this paper and for joe and the naei for hosting this event -- and aei for hosting this event to address this very important issue which is going to be with us for a very long time, regardless of what happens to this particular commission. so i've titled my response to mark's paper, which raises a lot of questions about what we don't know about long-term care, i've titled my talk what we already know about long-term care and should tell the commission. so, um, i've been doing research and policy analysis on long-term care for over 35 years, and i'm

happy to say that over this time there's been really an explosion of research and data on long-term care. and so we, in fact, have the answers to many of the questions that mark posed. and i don't have time to go through all of them, but i wanted to focus on four major points which allude to some of the areas that mark raised. and so i think what the research literature shows is really four things. first, that long-term care expenditures are likely to increase substantially in percentage terms as a percent of gdp, but even under very conservative assumptions in terms of things it's going to be, it's going to remain a

fairly low percentage of total health care expenditures as a percentage of the economy. the second thing is, um, and this is where i paid attention to howard's points, sort of given what is happening to the private long-term care insurance market, the other part of the equation is what about the policy options to try to promote it. and i think the research is pretty conclusive that a lot of the, a lot of the incentives and other approaches to try to promote the market are not going to work. and so the bottom line that private long-term care insurance is going to account for a fairly small percentage of long-term care expenditures not only now, but in the future. the third that people with spend

down, and mark talked a lot about people who spend down, i've just completed a major piece of analysis for the scant foundation on medicaid spenddown, and the findings are very, very, very clear that the people who spend down don't have, don't start with much in the way of income and assets. they are, in fact, disproportionately lower income populations. and finally, the transfer of assets which mark talked a lot about, in fact, there's substantial research literature with representative national data that shows that it doesn't occur all that often, and the total expenditures associated with it are small. so let's start with the first point that long-term care expenditures will increase

substantially but will remain a modest portion of gdp. so this is some data from a recent study by the organization for economic cooperation and development, and on the left is the percentage of gdp in the u.s. and in other countries, and it's all around 1% of gdp. and in this study, basically, in all of those countries basically the percentage of public financing over the next 50 years increases by two to three percentage points. i put the three package points up on the, up on the slide, but in fact, in the sensitivity analyses they do it's really between 2 and 3%. now, this is kind of a rorschach test as to whether or not you're an optimist or a pessimist.

if you're a pessimist -- and i'm sure matt will be that and steve will -- you look at that, ask you say, oh, my god, doubling and tripling the percentage of the economy that we spend on long-term care? there's no possible way we can do that. but if you're an optimist, you say, well, given that the population is aging and the number of people with disabilities is likely to increase by two, threefold, this isn't so bad. and in absolute terms it's not that large. um, and that's, that's particularly the case because if you think about it or if you look at some of the data that mark was showing earlier, total health expenditures in the u.s. increased by four percentage points between 2000 and 2010. and while nobody celebrated

that, it didn't bring the end of society as we know it. so the second point is that private long-term care insurance is if big trouble and -- is in big trouble and is unlikely to play a major role in financing in the future. and so we really shouldn't be spending a lot of time trying to find ways to promote it. so this slide basically gets at the points that howard made. long-term care is really in trouble now not only on the demand side, but on the supply side. so on the demand side, one of the major issues has always been that this is a very expensive product, and studies that i've done and others have done have found that a relatively small percentage of the population can afford it. so there are a number of initiatives mostly on the tax

side to try to subsidize long-term care insurance premiums to make it cheaper on, in a net, in terms of net costs. there is, in fact, a fairly substantial research literature on the effect of these tax incentives. i've done some, david nixon at the university of hawaii, a number of studies all of which basically find that, basically, unless you have a very, very large subsidy which is going to cost a lot of money, ten you're not likely -- then you're not likely to get much impact in terms of increasing the demand for long-term care insurance. and so the other issue kind of related to that, um, is that one

of the reasons that people have tried to promote private long-term care insurance is that this notion that we provide football coverage -- financial coverage for middle class elderly people who spend down to medicaid, and then if they had the insurance, they wouldn't spend down, we'd save money for medicaid. and the people would not incur the catastrophic costs. unfortunately, the research literature tends to show that the subsidy would be more costly than the medicaid savings and that the benefits would go primarily to people who are upper income and have a lot of assets. so mark talked about, a little bit about the partnership for long-term care which is the other major approach to trying

to encourage people to purchase long-term care insurance. and under this kind of policy, people who buy a state-approved long-term care insurance policy can keep more of their assets and still qualify for medicaid. so if you buy a policy that pays $100,000 in benefits and you run through the insurance insurance, essentially, you can keep $102,000 in assets and still qualify for medicaid. and the point here is to try to provide lifetime asset protection without having to buy the very expensive long-term care insurance policy that provides lifetime coverage and which, basically, insurers have stopped selling. and so the findings of research tends to suggest that these

policies don't, in fact, encourage people to buy, um, long-term care insurance. the, we have, in fact, experienced four states who have been doing this for 20 years, and only about 3% of the elderly population in those states have private long-term care insurance. the general accountability -- government -- general -- government accountability office has done studies, finds that most people who buy these policies have much, have a lot in the way of assets, $350,000 or more, and as howard indicated, that's far more than most people have. and finally, there's a new study out by people at boston college that finds that, in fact, this will increase medicaid

expenditures, not reduce medicaid expenditures. primarily because it, the people who would buy these policies would have bought a regular private long-term care insurance policy. so you're giving them extra benefits that they wouldn't otherwise have. and so the costs are going up. so the third point is that most people who spend down have very modest amounts of income and assets. this medicaid spenddown issue is an important one, and as i said, we at rti, we at rti have, have recently done a study using the health and retirement study. and, basically, our findings are that we, that the people who spend down have generally much

less in the way of income and assets than people who do not, do not spend down. in 1996 only 15% of the spenddown population had total assets greater than the $112,000 versus 56% of people who did not spend down. so the final issue i want to address is the transfer of assets. i'm sure steve will be talking a lot about it. and there is a large, substantial research literature on this. there are six studies using nationally-representative data that address this issue and, basically, they find that uniformly they find that not very many people transfer assets, and the amount of assets that they transfer is not large. if you go, if you combine that

with my earlier findings about medicaid spenddown, part of it is you can't transfer large amounts of as is sets if you don't -- assets if you don't have large amounts of assets, and that's pretty much the issue that we have. in the study that we did, we found that, in fact, the spenddown rate among people who -- excuse me, the transfer of assets rate for people who spend down is, in fact, half the rate it is for people who do not spend down. and the best estimates in the research literature on the percentage of expenditures that are lost by people transferring assets is maybe 1% of nursing home expenditures. so finally, um, let me just conclude and go beyond what just the research literature. what i encourage the commission to do is to start with the

understanding that you can't serve twice as many people with the same financing that we have today. it's just not possible. and so you need to be thinking about additional sources of revenue. and while we may want to have private sector fishtives -- initiatives to account for a substantial portion of that, all of the available data both on the supply side and on the demand side suggests that that's not the case. so if the private sector can't step in to do it, that pretty much means that the public sector is going to have to step into the gap. and here i encourage the commission the think openly about this, and i would only note that the conservative government in the u.k. which certainly has been looking for ways to save money and has been cutting social programs in the many areas has, basically, come

to the conclusion that public sector programs need to be expanded in england and has proposed, basically, to cap out-of-pocket expenditures for long-term care in that country. so, um, as a researcher i certainly applaud mark saying that more research is needed, and i hope the commission will recommend increases in funding in that area. [laughter] but, but solving the problems of long-term care is not a -- there are lots of ways to do that. um, a lot of countries do it a lot of different ways. we're not talking about trying to find a cure for racism. or a cure for poverty. where we basically don't know

how to do that. there are lots of ways to finance long-term care that are better than the way we do now. but they will generally cost money. and finally, i just want mark and the commission to remember, um, that this isn't -- long-term care isn't about them. this is about us. this is about our growing older. this is about our parents growing older and the needs that they will have. thank you. [applause] >> thank you, josh. i can assure you, josh, that the commission will dip into its, you know, vast coffers -- [laughter] and support your research. i also suspect that you will be, you will be, also be a public, spirited citizen in volunteering to come and speak at the commission if they, if, in fact,

they do meet. [laughter] let's turn now to matt salo who will give a perspective, somewhat from the state perspective and certainly the medicaid perspective. >> all right, thanks. good morning, everybody. i guess i get to be the pessimist role here. i think i'm going to call in the realist role. so my members, the state medicaid directors and over the past 20 years i've worked for some combination either of state medicaid directors or governors. and these are pragmatic people. these are realistic people. there's a political element, of course, but there's a lot of pragmatism, and this is important. so one thing just, that i really do agree with josh on is that we are going to have to spend more. there's no question about that. this is, this is not a debate here. the question is how, how much,

who does it come from, how does it get spent, etc. commission will figure that out. but it's important to talk a little bit about, you know, why exactly i'm here, why exactly this perspective's important. and it's always good, you know, to come up on a panel and hear people talking about medicaid's role in long-term care because it isn't very well known. it's not very frequently talked about. and, you know, one of our frustrations is, you know, to the extent that people understand what medicaid is and, unfortunately, that's not very often and not very well, medicaid has an image of a welfare program, of a poverty program. and, in fact, most of the 62 million people that we cover, um, are low income. the vast majority of the people we cover -- pregnant women, kids, low income working families -- 40% of the births in this country. but that's not where the money in medicaid is. medicaid spends about $420

billion a year, and the majority of that is not for pregnant women, kids and low income working families. it's for long-term care, and it's for other types of care for people who are elderly or who have a broad spectrum of disabilities. and we didn't talk much about those other, that other spectrum of disabilities. but that's really, really important when you want, when you need to talk about, when we have to talk about the future of long-term care financing. it is not just a frail elderly issue, it is not just a spenddown issue. and, you know, josh and steven will, you know, fistfight over whether that's a problem or not. i don't care. the point is that it is bigger than just that. so medicaid's role, medicaid is and, um, you know, i think mark sort of skimmed over the fact that, well, medicare does a lot,

and it's, it is -- but it is short-term care. medicaid is the payer of long-term care in this country. and why is, why is that the case? i think that the primary reason goes back to my earlier point about pragmatism. you know, 30 years ago medicaid didn't do much in the way of long-term care. medicaid basically paid for nursing home coverage. and only for people with, you know, with no item and very, very serious disabilities. there's a lot of people in nursing homes. nobody wants to be in a nursing home, and nursing homes are very, very expensive. so, basically, since about '81, '82 with the advent of what we call waivers, you know, states have been reforming the medicaid program to say, you know what? people don't want to be in nursing homes, and we don't want to be spending $70,000 a year for people to be somewhere where

they don't want to be. and so for 30 years medicaid has been creating and financing home and community-based alternatives. to nursing homes. and there's, it takes a million different forms, you know? on the spectrum from assisted living to group homes to congregant care settings to care in the home to consumer-directed personal care attendants. and there has been an absolute explosion of that in 30 years. and i think that has been a very, very good thing for all the people who have benefited from it. in terms of their quality of life, in terms of their health care. and what we've been able to do over the past 30 years is because for most people care at the home, care in the community is going to be not just better, preferable, but cheaper than

care in this -- in an institution, we've been able to provide coverage for a lot more people. and so what we've seen is that as we have sort of deinstitutionalized for a lot of populations, we're covering lots and lots more people. again, and this is, you know, when governors, when medicaid directors see a problem, it's, well, there's a problem here, let's fix it. and in the short term, those fixes always make sense, and those are very good things for people, for the system. part of the challenge, though, is that if you step back and say, well, what have we accomplished in the past 30 years, well, we've accomplished some really important things in the system. we've rebalanced the long-term care system. but what we've also done is we have effectively created a medicaid program that people want. you know, when medicaid covered nursing home care, nobody wants

that. so if that's your option, you're going to figure out how to leverage your family, your neighbors, your church, your community to stay out if you can. if medicaid creates something that sends a personally -- a personal care aide to your home, that's great. and, you know, i think to howard's point, maybe that's a really good thing too because that relieves the burden on a family who may not be trained or paid or prepared to do this or neighbors or what have you. that may be good, these may be very, very good things. but what we've done is we have built it, and they have come. and we now have a system where there is so little awareness of the need for financing long-term care because medicaid's just doing it behind the scenes, you know? most people don't think they're ever going to need it. and those who think they do just

assume medicare will cover it. and these people are, by and large, wrong. medicaid's doing it, and i can guarantee you that medicaid cannot continue to do it at the rate we're going. i mean, josh was very sanguine about, oh, well, in 45 years the total costs of long-term care will only triple as a portion of gdp. the key point about medicaid that people neat to remember is that -- need to remember is that this is a state/federal program. and the decisions about what medicaid covers, who medicaid covers and how care is delivered is driven by state financial capacity. and state financial capacity is not going to triple in that time period. we're going to have very, very serious challenges in terms of state revenue as we move

forward. and quite frankly, having a long-term care system in this country that is essentially predicated on a welfare-based program is not what we need, is not what we deserve, is not, um, what we should have. we can do better than this. um, so i think, you know, i think it's really important, really incumbent upon the commission to try to think much bigger picture about some of these issues. now, we're really excited about the commission. we actually do have one of our current members who's going to be on the commission with mark, dr. julian harris, who's the medicaid director in the massachusetts. and when you figure out your staffing and your finances and your, you know, sort of longevity of the commission, you know, hopefully we can get a lot of really good things done here. but let me just sort of make a couple of points, and then i'll wrap up because i know people

have questions. you know, joe sort of posed some questions at the outset, sort of, you know, is this, you know, markets, or is this mandates? there are i think practically it's both. i think, you know, this cannot be a purely government solution. it certainly can't be, can't continue to be a purely medicaid solution. i think we do need the markets to play a role in this as much as possible. now, i do think that, you know, markets are markets, and markets behave according to the incentives that are built into them, and in many cases the incentives do not make sense. and, you know, you're gonna need some kind of interaction between government, between mandates and market. we're gonna have to figure out if people, if the take-up of long-term care insurance --

which i'm not saying is the answer -- but if the take-up of long-term care insurance is, what, 7% total now and it's declining from 750,000 policies a year to 250,000, um, the market's not there for this. people aren't doing it. so we're gonna have to figure something else out. and that may involve some kind of mandate. and that may be scary to people, but there's no other way to do this. now, it can be scary mandate, or it can be benever lent mandate. it's got to be something. and there's a lot of work that states are looking into in terms of, you know, what other types of resources are out there? people have looked at reverse mortgages, and i think that's got a lot of promise. people are starting to look at monetizing life insurance policies in a number of states, i think that's got a lot of promise. but there's got to be some kind of blend of these two things, because i think the pure market on its own is not going to work in this as it doesn't in most of

health care. but i also think we need to think about this in terms of, you know, the role of the personal versus the role of government. and it's kind of related. you know, there is a lot of unfunded, informal, unpaid care giving going on, and it's gonna be really hard to replace all of that with government or private funding. um, we're gonna have to do some of that because i think it's, to howard's point, it really does create a burden on the family to do this, a financial burden, etc. we can't get rid of it completely. we've got to figure out how to supplement them. we've got to keep it going as best we can. but, and here's the other thing that's really gonna be important when we think about this, it's we have to think about long-term care, as i mentioned earlier, as

not just something that may happen to you when you get to be 85 and fall in the shower. there is predictable long-term care, a social insurance model. we, hopefully, all get old and we, hopefully, get to a point where we live long enough to do that. but disability is a huge, huge component of this too. and the needs of somebody who, you know, has a traumatic brain injury in a car wreck, motorcycle accident, the needs of a child with extraordinary physical disabilities, the needs of people with intellectual or developmental disabilities are all very, very different and must be thought about very, very differently from just, you know, frail, elderly long-term care. that's got to be part of the

answer. so, um, howard -- again, one of howard's points was talking about managed care, and absolutely on point in that this has enormous potential if it's done right. um, but that is clearly the trend that we are seeing in medicaid today. and the key -- and he's also right that managed care has a lot of bad connotations for people who remember it from the mid '90s. and, you know, that's not where people want to go. that's not where we're driving this. when we talk about managed care, we're really talking about a number of different things. but the commonality is that it is not unmanaged care because that's really what we've got today.

in so much of medicaid, in so much of medicare you've got what's called fee for service. where care is delivered around that model, where payment is structured on that model. fee for service. that's where most of the health care is these days. ffs. ffs also stands for fend for self. and that's really what the old system requires of people who are trying to navigate an acute care system, preventive health, behavioral health, pharmaceutical and long-term care. to say nothing of medicaid and medicare. we live in a very fractured, fragmented, siloed system. i hesitate to call it a system because it's a lack of a system, and it's a mess. and it drives bad quality, it drives unnecessary expenditures. we can spend another couple hours talking about the medicare and medicaid dual eligibles and how much of a problem that is

with their, with the disconnect for that population in care coordination. long-term care's got to be a part of that. it's got to be, we've got to integrate, we've got to coordinate all of these various aspects, you know? the '80s -- mr. smith, the 86-year-old doesn't care if there's, you know, if he's got great benefits over here with a card -- and my time is up -- it's all got to be holisticment that's what we're driving for. and i think there's an enormous amount of promise in that. so, um, i'll stop there and say look forward to any questions you have. thank you. [applause] >> thank you, matt. you know, using the term "managed care" really puts the conversation back into the medical model. you've got to find a new term. and it's not just because of the early '90s, it's because when

you say managed care, you really are talking about critical medicine. you're not talking about the combination of medical care, social services and other supports. >> right. i think that's exactly right. i don't mean to get in front of steve here, but i think it really is at some point just semantics. but you're absolutely right that for these services, for this population there's a concern, there's a real fear that what we're going to do is medicalize what is a social services model. and that's not really the intent. that's not what we're driving for. >> right. so, and you said one other thing. so benevolent mandate, i was trying to figure out what is that anyway? and my definition would be as long as you pay for it, it's benevolent. [laughter] so, and i don't think that was really your angle. >> you're paying for it one way or the other. it's just are we going to do it thoughtfully or not thoughtfully? >> we're talking about redistribution, and so anyway, we're now going to turn to

steve, apparently. steve is the reason we're actually here. everyone mentioned steve's name. so, steve, you have pretty impressive advance billing. i hope you'll live up to it. >> we'll do our best, joe. let me say except for the climate, i'm thrilled to be here in washington d.c. [laughter] and appreciate the invitation to serve on such a distinguished panel. um, i have some slides, but all they is reference to some briefing papers that i've done on the subject of how to fix long-term care, so if i trigger your interest at all today, you can go to this overview and get a link to the six briefing papers and i think will resolve the issue. i've also published this morning on my web site, centerltc.com, an article i call "let's play long-term care jeopardy." can be what i'm referencing --

and what i'm referencing there is that i think mark warshawsky has asked all of the right questions. i pose the answers, and then i ask you readers or contestants to imagine what the questions were that the answers supply the solution to. i thought this paper was extremely valuable because i do believe that if you're going to do policy research right, you'd better get your premises right, and you'd better ask the right questions. neither of which do i think much of the peer-reviewed literature in this area does. i praise mark for asking the right questions. i think that the solution, the answer to those questions revolves around getting the premises right. and that's what i'm going to try

to explain today. here's what i think mark warshawsky's paper asks us to understand. and they're all puzzles. if people can't get government-financed long-term care without spending down their life savings into total impoverishment which is what everything in the peer-reviewed literature and in the popular media as well says, then six questions. how do affluent people qualify for medicaid long-term care, and as the chicago fed article referenced earlier says, get as many or more benefits from it than por poor people? disconnect, right? why do the national health expenditure accounts show decades of skyrocketing public long-term care costs and plummeting out-of-pocket expenditures? disconnect.

why does peer-reviewed research show that medicaid crowds out private long-term care insurance? i mean, if you've got to spend down into total impoverishment, why is it that the public is in denial about long-term carriesings and costs? -- care risks and costs? why don't programs convince people to buy long-term care insurance if the risks and costs are so huge? are people just ignorant of the enormous financial risk that they face? or stupid? how arrogant to assume that the problem is that the people are just not smart enough to understand they need this stuff. why have the long-term care insurance partnerships had so little impact? and why is private financing of

home care minimal while medicare and medicaid home care financing explodes? you would think if people are spending down into total impoverishment before they get any help from the government, they'd surely be spending it on home and community-based care because they want to spend in their home. and yet we have a very inadequate infrastructure for home and community-based care that a welfare-financed institution-based long-term care system is now trying to retrofit a home care model on. well, let me tell you what i think answers these questions. and that is that our premise that people can't get government-financed long-term care without spending down their life savings into total impoverishment is inaccurate. it isn't true.

it's factually wrong. now, i speak from immediate exposure to state medicaid programs. i've interviewed the medicaid eligibility policy specialists in dozens of states, and i've been out into the local welfare offices and talked to literally hundreds of medicaid eligibility workers, the people who actually interpret the rules, take in the applications and make the decisions about who qualifies and who doesn't. and what they tell me is that they are often extremely frustrated that they can't get poor people on to medicaid for long-term care until their finances are wiped out. but when it comes to middle class and affluent people who are accustomed to dealing with financial planners, accountants and, indeed, sometimes medicaid

planners, they come in often with three-inch-thick applications filled out by their attorney with every i dotted and every t crossed. but the big question here is not how many people are doing medicaid planning -- only one technique of which is asset transfers, not even the most important one, there are many, many others such as the reverse half a loaf and medicaid-friendly annuities and so on and so on, google-medicaid planning, and like mark you'll find many examples. bag to it it -- google it for your own state, and you will find thousands. so what's really going on here? the presumption that you have to be low income to qualify for medicaid applies if you're a poor woman or child. 75% of all medicaid recipients are in that category, but that accounts for only one-third of

the cost of medicaid. two-thirds of the cost comes from the 25% that need long-term care that are age blind and disabled. how is it that you can have large income and qualify for medicaid? if you're over the age of 65 and you have a medical level of need that qualifies you for it, it really doesn't matter much what your income level is, because most states start with your income and subtract all of the medical expenses you have that ped care doesn't pay for -- medicare doesn't pay for, foot care, eye care, dental care, residual pharmaceuticals after part d, and your long-term care costs privately paid. and that gets you down close to a poverty level, you're eligible. they told me in rhode island when i did my study there that in the entire history of the people working there, 40 years, they had never once denied medicaid long-term care eligibility based on income to,

well, today did. they did twice in 40 years. even in states that don't do the medically needy system that i just described, there are miller income diversion trusts which allow people to transfer their money into a trust temporarily, get down to the right level. but bottom line it's the same everywhere in the country. if your expenses approach your income, you're eligible. so out on long island, you can have $10,000 a month of financial, and you qualify. no problem. what about assets? what we always hear is that you can't have more than $2,000 in assets and qualify for medicaid. well, in maine it happens to be $10,000 of cash and negotiable securities, but everywhere in the country it's the same. you can also have a home and all

contiguous property up to an average -- a minimum of $536,000 in most states, but in 14 states it's $802,000. that compares to $36,000 of equity exemption of home care and all other assets in the socialized health care system in england. so the next time somebody tells you we're a dog eat dog, force them into impoverishment place, just keep that in mind. but you can also have a business including the capital and cash flow of unlimited value. most people don't understand that. you're going to have one automobile of up limited value, and because it's exempted, it isn't a transfer of asset ifs you give it away. so you can buy one mercedes, give it away, buy oot one. we call that the two-mercedes rule. you can have unlimited prepaid burial plans. and 80-90% of all people in long-term care on medicaid have sheltered between $8 and $12,000

in prepaid burial plans. this amounts to a subsidy to the funeral industry at the expense of medicaid's ability to fund quality long-term care for people in need. you can have unlimited term life insurance. now, why would a 90-year-old buy a million dollar term life policy when the premium and the benefit would be about equal? well, instantaneous self-impoverishment eligibility for medicaid, and you avoid the's candidate recovery mandate because the benefit from the life insurance policy goes directly to your heirs without passing through an's candidate. 's candidate. estate. my point here is that catastrophic spenddown for long-term care is assumed because that's what the law and the regulations seem to suggest has to go on.

but there's no empirical evidence that it actually happens. and i would suggest that if we deal with long-term care eligibility the way it actually exists and the way it is observably described in the federal legislation and regulations that govern this subject, and if maybe somebody would get their nose out of the peer-reviewed literature and go out and see how it actually works out there in those medicaid eligibility offices, we would then begin to understand the answers to some of these questions. ..

>> medicaid made nursing home carefree in 1965 for all intents and purposes, and the results are trackable. anything you make free, people are going to use more of an it has serious consequences well beyond the explosive expenditures. by making nursing home carefree, medicaid crowded out a market for both home and

community-based care privately financed, and a private long-term care insurance product that would pay for it. that's one of the main reasons that long-term care insurance markets have not achieved the goals they were already attended to and expected to achieve. the of the mainland is also federal responsibility, the fed tries interest rates down to zero and forces private carriers to raise premiums in order to do the responsible thing and make sure they will be able to pay claims some day, and the irony is medicare and social security, the major social insurance programs in this country have no prayer of being able to meet their obligations. and yet there's nothing in there trust funds, all that money has been borrowed and spent. medicaid doesn't even have a phony trust fund to pretend that

it is financially credible. and medicaid is a dominant pair of long-term care. why don't public education programs work? well, people just don't believe it when you tell them that if they don't buy long-term care insurance they will be wiped out financially. and guess what? they are right and the people trying to tell them, otherwise are wrong. that's why it doesn't work. you make medicaid what it's always been assumed to be, a means tested public assistance program, welfare, that requires serious spend down before you become eligible. and i guarantee the public educations will work. you won't even need them because people aren't stupid. they will figure this out for themselves once they see a few families wiped out by the costs of long-term care your why have a long-term care partnerships had so little impact? simple. why would i buy long-term care

insurance now to avoid a spin down liability that doesn't exist in the first place, even if it did it wouldn't hit me for 20 or 30 years after their expect me to find this policy. had some marginal affect because it's gotten the states and private industry working together and encouraging people to buy. that's the main reason. and white and private financing of long-term minimal while medicare and medicaid home care financing explodes? simple. if all the gauges nursing home care, you may be have got to be a little reluctant to go on medicaid and pull together find a way to keep mom at home. if they get you home and communities care financed by the government, you have a whole different incentive. so the idea that health care is

going to save medicaid money i think is just dead wrong for many reasons. you lose the economy of scale of institutional care. it's very hard to enforce quality. terrible quality problems in publicly financed home community based care because the public programs can't afford to pay enough to attract quality caregivers. and by funding homecare without controlling the hemorrhage and eligibility, public policy further disincentivize is personal responsibility, or long-term care planning, private insurance and all of the other potential source of private financing that could feed the system with dreadfully needed

private financial oxygen. thank you. [applause] >> thank you, stephen. thank you for the nice plug for our event and that phony trust fund, medicare trust fund. we will be talking about that monday morning. i'm not sure i completely disagree with you about that, by the way. we have to finish on time. we have about 10 minutes left. let's let the audience take a crack at his, even if there's a little time left we can have a few verbal comments appear, too. this gentleman first. >> [inaudible] >> weight. wait for the -- >> i'm with aarp. in looking at the data, what is striking is the fact that in the period covered by their data

between 75-2009, 1975, the percentage of the older population on medicaid actually declined by a third. despite the theoretical inducement that you talked about, mark, despite improvements to medicaid that matt noted, and despite the ways one could gain the system that stephen has described, we see a sharp decline actually in order people using medicaid. it seems to me that the commission should be looking at why has that happened, the big story here is not the increase in use medicaid, it's decrease. we've seen a sharp increase in the per person cost for the older population. as matt noted we've seen a huge increase in the number of younger people with disabilities as well as per person cost going up for that population. but for the older population where you are really talking about the insurable group, the group that you're concerned about in terms of spend and

we've seen a market decrease in use of medicaid. it seems to be the commission to be looking at what has caused a sharp decrease, how are those trends likely to continue, and how could we build on that? >> so, the one comment i would kind add to that is that what has we been driving medicaid expenditures is younger people with disabilities but it's not the older populations. and since many, most of younger people with disabilities don't have medicare coverage, medicaid is on the hook for the whole piece, both long-term care and acute care. it's those expenditures that are growing so rapidly as it surely not the expenditures for the older population. >> i may not be, trees about what you're saying, but i mean,

what the data showed was the medicare extending sure -- spinning it kind of. [inaudible] >> we have to consider all sources of funding. [inaudible] >> i would just say, i'm a, medicare has been successful at keeping rob tillie healthy seniors out of poverty. but that is really done nothing about the people that very, very-needs folks. we talk about the dual eligibles, people who are illegal for both medicare and medicaid. they are a small, small portion of the medicaid population. and medicare is their primary interest. they did everything medicare offers. we still spend 40% of our budget on that population. so they can be a small number of people, does it matter. very, very expensive. >> okay, karl.

>> thanks. karel with national center for assisted living. providers that have the heavy lifting the nursing and assisted living. interesting, lots of people thought that disconnect between aggregate data in what's happening in the market. about a little over a million licensors left and the shifting to post acute care, to medicare from medicaid. but there's almost a million out in assisted living that i left the market offering an alternative. the overlaps of the national population. mostly privately. so in terms of aggregate data does that show up? how does that show up? it's about a 30-$40 billion industry. but on the medicaid side the data might be also misleading because this is a living is very underplayunderplay ed except in a few states on the medicaid side. and their you will not only see home health care or personal care services as a medicaid

category, medicaid doesn't pay for the home for the housing component, the foodstuff on the energy. so the states patch and, although seldom and then they double people up in units of which is a controversial practice. so that's an area where we might see housing supplement actually reduce costs to this intermediate kind of scared level to have more of a medicaid update. if you look at a great study done by -- >> karl, we're running out of time. >> that's my jeopardy question. >> just a quick, i asked about that, the folks who put together the data. and indicated that assisted-living include the extent that there is nursing care provided. i don't know how well they do that. it's an open question. this is aggregate data indicated for all sorts of sources.

it could well be that they're missing stuff but they claim there is, there is nursing provided included in the data. >> karl knows, david frum the national survey finds that 19% people and residential care facilities are medicaid beneficiaries. so it doesn't play the kind of role that place in nursing homes but it's a significant portion. we did a study a couple years ago for cms trying to look at what account for the large decline in nursing use and one of the variables we looked at was despite a presidential care facilities. while we did find something about relationship, there was a particularly strong one, and there was a lot of noise in the data. so we really don't quite understand this residential care, nursing home interaction, but it doesn't seem be a simple and straightforward one.

>> i just completed a study in maine where i found to my surprise and chagrin that while only 70% of nursing home residents of their were on medicaid. and they call it main care. main care pays only about two-thirds of the private pay rate that, in fact, 80% of all a assisted-living residence in the state of maine are on medicaid, that's much more attractive to a lot of people than nursing home care. and for assisted living, maine care pays only 50% of the private pay rates. so it has serious cost shifting going on that further encourages eligibility. >> i saw two hands out. i'm going to ask you to each ask

your question before we get any answers. so take 30 seconds for a question. doctor? >> i'm caroline, i'm a physician and also an attorney. i would ask, i would say that, to mr. moses, that the accommodations available for the medicaid rate in nursing homes are not attractive to middle-class people. and you also, josh, i think joe, made its tension between social services and medical service. i think perhaps is that quote unquote bright line dimmed or whatever you could substitute some social services for medicare services so that people didn't get to the hospital like mr. gleckman's example but if there is somebody at home keeping an eye on these people, you might never have gone to the hospital, and you should credit

that setting to medicare. so medicare covered some of the services in the end we might save money. >> so there's a state and. here's a question. >> mike thompson. my boss result of her letters to the states and asked for assistance or the as were stay flexible on the problem mr. moses pointed out. the question is, should states have flexibility to loan home equity exemption the ease the budget pressures on medicaid? thanks. >> we can discuss whatever we want right now. >> we have one minute. i will do that. i want to thank the panel, but i will say and perhaps somewhat candor, i was a little disappointed because some of what was discussed struck the as not exactly relevant to my questions. i mean, we have some evidence

here and we really need to understand it and some of what was mentioned didn't seem exactly relevant. but nontheless, i had to ask, i have two specific questions. maybe we can get a little stuff, from matt, how do the states enforce, from the estate of the decedent the recovery of the value of real estate, of housing? could you explain that? and then my other question, yeah, 15 seconds, my other question, you indicated that iras are exempt from the assets, assets been down? there could be a lot of money but i'm wondering if that is correct? >> we really out of time. we will have a separate seminar that will be probably pretty lengthy if we're really going to understand how states do things. and the easy answer is yes.

so with that i want to thank everyone. i would to thank everyone for this terrific event. please join me in -- [applause] >> [inaudible conversations]

>> [inaudible conversations] >> c-span to continues its live coverage of book expo america in new york city this afternoon with a panel discussion titled self-publishing, disrupt or defender of the book business. that's coming up at 2 p.m. eastern. then at 3:30 a look at what those new to the publishing industry think about its future. a panel of graduate students in the new york university publishing program will share their thoughts on the industry. c-span2's live coverage today from expo america gets underway at 2 p.m. eastern. >> each evening this week we have been teaching booktv in primetime o on c-span2 air tonit at eight eastern booktv's "in depth" interview with melanie phillips.

again, that's tonight 8 p.m. eastern here on c-span2. >> when you first arrive, four years ago, i'm sure never imagined that at the end of that there would be a lady behind a podium talking you with a funny accent. this accident has been the bane of my existence. 19 aei moved to new york from england and i met henry kissinger. and he said to me, don't ever worry about your accent. in america, public life you can never underestimate the bandages of complete and total incomprehensibility. [laughter] spent this weekend more stories and goodbyes for a new graduating class with commencement speeches from government officials tonight at eight eastern. fbi director robert mueller, fed chairman ben bernanke, maryland governor martin o'malley,

florida governor rick scott, attorney general eric holder and new 10 connecticut first selectman patricia. and saturday at 830, business leaders, twitter ceo, apple cofounder steve wozniak. new york stock exchange. arianna huffington. and former president bill clinton. >> what would the world be like if the southern confederacy was on the southern border of the united states of america? think for a minute of the united states from baltimore all the way down to around florida down along the gulf coast to the end of texas. that would all be, not be part of the united states. in fact, the united states would have no real access to either the atlantic or the caribbean except for a narrow path from

baltimore north as far as boston and beyond that it's not very good anyway. so all of a sudden a great coastal landscape of the no states is now down to the point we can be blockaded that everything has to be funneled through the but it does mean the united states would collapse of its own way. it means the united states window bagram anywhere near the presence in the western hemisphere in terms of dealing with british intervention, or french intervention. >> more with roger ranson this weekend as booktv and american history tv look at the history and literary life of palm springs, california. saturday at noon eastern on c-span2's booktv and sunday at five on c-span3's american history tv. >> last month of university of colorado hosted the 65th annual conference on world affairs, a weeklong forum for discussion and debate on topics

ranging from the art, beauty and science to politics, business and human rights. next, a panel from the conference that examined the effects of the internet and new technology on the human brains and on child development. it's an hour and 15 minutes. >> hello, everyone. welcome. panel 1716, this is your brain on the internet. today is monday, april 8. and it's just after 3 p.m. my nana's allen carmichael, i work with a "boulder weekly" here in town, boulder county's two independent voice. and at this point i would just ask you please to check yourself out and make sure it is turned off. really want to be sure that all cell phones are turned off at this time. thanks for coming. outbreed introducer fans and they will get under way. to my left directly is michael

chorost, he is a writer and philosopher who has written many books, and then published in lots of amazing magazines from wired to the "washington post." and influential newspaper of course. further down the road is thomas hardaway, u.s. army veteran of 31 years. he works, now works as a child and adolescent psychiatrist. and has a long tenure working with children. charles love is right down there, and he's a field professional in both geology and anthropology. he spent over 36 just practicing archaeology on easter island. and just to let you know, our fourth panelist is going to be able to make it today, so for updates of that nature you can check the website and give that sort of stuff. i think we have a great panel and to start things off i will hand it over to michael.

>> good afternoon. is the mic on? i'm not sure if i hear my voice coming out of the speakers? there we go. okay, i'm going to stand up because i know from experience when i'm too short for people in the back to see me. let me ask, can the people in the back hear me okay lex okay, i'm not sure i've heard the ad to the question. and the people in the back, can you raise your hand if you hear me clearly? good, thank you. much better. all right, so i'm going to address that question, this is your brain on the internet by first asking what that word on means. what does it mean to say that your brain is on the internet? and it means t two usages whichi will address. the first usage is basically this, basically looking at your

gadget when you're transfixed to your iphone, to your computer, to what ever other gadget you're using. there is an enormous -- about the impact of that technology on individuals and on society. there must be dozens of books now that arguing whether how we use smart phones and the internet, making us dumber, smarter, more connected, less connected. there's a book for every aspect of that. for most people, i think that's what it means to say that your brain is on the internet. that the internet is doing something to you as you are using it. but there's a second usage that is less common, which i spent the most time writing and thinking about. and that is the integration of humans and machines.

let me explain where i come from in that question. on a dual -- i'm a dual cochlear implant user. i've always had hearing loss from birth but i went to death in 2001. so deaf that i could no longer benefit from hearing aids. at that time i got a cochlear implant in my left ear. once -- what that consists of is 16 electrodes that are surgically threaded into my inner ear but they lie flat against the auditory nerves in my inner ear. there are external devices, and extra processes like this device whose job is to pick up sound waves, digitize them and send them to a radio transmitter which is in the little round thing. this is the battery that controls the system. so what i have inside my head

and outside my head connects and work together, a bit like this. so that -- stupid implant tricks. [laughter] what it's doing is sending a radio signal through my skin to the implants that are surgically embedded in my skull just underneath the skin. you can't really see it from a distance you're sitting at, not the 16 electrodes at the very end of that are crammed up inside my inner is sending sounds, information to my brain. so i wrote a book about this that came out in 2005, and the basic outcome of that book for me was that it is possible to put electronic into the human body and make that body believe that it is having a sense three

experience. and that is what happened to me. that's what a cochlear implant does. it puts my brain on an electronics and makes my brain believe that it is hearing sounds. so what i think of putting your brain on the internet, it depends on what i think on is, is a possible to put the brain inside the human body, physically in terms of the brain connects to the internet, can it connect our actual brains physically to the global internet? is this possible? is this feasible? is this desirable? what would it do to eyes? so let me just very quickly outlined some the things that it might do to us. so i spent a lot of time interested in the physical possibility of doing this. with today's technology we can do what we would call mind reading any real sense. it's still very difficult to

look at the nerve firings, the firings of neurons to a degree and saying we see these 475 iran's firing, that means that this brain is thinking about buying an apple. that kind of thing is possible to a very limited extent with technology like magnetic imaging residents. where it is possible to help a person is thinking yes or no. if they're making a decision to add something or to subtract something. it's possible to a very limited expense to reconstruct what they are actually hearing by looking at the new activity in their cortex in the back of the brain. but that's not really mind reading any real sense. that's just new activity that's something that a user is doing. but in the second book that i wrote, "world wide mind," i tried to push that further into outlined a scenario of how we

could ask to put our brain on the internet. .. to talk about doing such a thing where if descent toward apple

over the internet for implanted device which speak to the question is what is the use of that? what's the point? in 1993 when i first heard about e-mail i thought that's a faster way to send letters, which is true, but it also transforms the way that we communicate. so in this book i tried to talk about the leading edge discussion to imagine the technology like this and it's hard to do because the technology in the social context of assists i imagine things like teams working together extremely closely where if one person saw something important it would

allow them to coordinate what you can imagine today. to me in i try to imagine these kind of leading-edge technologies and what they might allow us to do. thank you. [applause] this is an opportunity in that this week has spent a talk about developmental perspective year, certainly not an electronic one.

my wife will attest to there is no rule in the house i'm not allowed to be too close to anything that has buttons and from that perspective i think i probably would not have very much to contribute. however as much as i began to the chollet of this kind of meeting or at the cwa is it brings people from various backgrounds and you wouldn't think of the things you get dropped in to as a purchase of hand, but as i started thinking about this particular issue i realize how developmentally for children and adolescents who this has a profound effect that came home to me a couple of years ago when i was on tour with the children's choir that i work with and we stayed in a dormitory.

what were the center cities or things like slide rules. and my kids all the way up through senior in high school did not recognize the slide rule and that seems odd to perceive that. in addition they have a cabinet on wall and was from a card catalog at the library and my seniors and juniors recognize that but i didn't ask for them i said anybody under the age of 12, tell me what that is. and all sorts of interesting answers. nobody even began to get a clue for what that was. they would say obviously it has drawers. looks like it can hold letters. is it this and that? to listen to this conversation going on was interesting. and when we told them finally what was for a that you had little cards that was eighth

linked to a book or a journal of some sort, they were absolutely amazed. you mean you made a card up for each book in the library? there was a kind of thinking that you could tell from people that have already been exposed to something that's almost real time. and it's reflected in the way that they proceed other things i hadn't really thought about before. finally -- and i asked everybody under the age of ten what was this big book? and they stared at it and they were not quite sure. it was a telephone book. [laughter] and the older ones, some of them had seen more and because they still get distributed from time to time, but the actually practically speaking at least where i am in texas and like everywhere else, they serve no practical purpose the way that they used to. and again, it was just such an anachronism or at least it was

such a -- something the was a question for these kids and i began to reflect on what it means. when i read the topic your brain on the internet, i was thinking about those old commercials where they had scrambled eggs and your brain on a cocaine or whatever it was. and i thought well maybe this is something about the toxicity of the internet and the life and certainly it brought home to me that i am sick children and adolescents and how the access information will come of this really is a different way of accessing and organizing information in different ways and when you think of the developing brain and part of the critical element of course is accessing information, and adapting to it, using it to adapt to something else and giving back kind of in a circle

getting more and more information and organizing it in your brain and then synthesizing it to go forward but emotionally, psychologically and cognitively. so when you think in terms of how one with access information i was thinking more in terms of middle school beginning to do research on a different way from where i learned. the biggest trick there would be helping them to discriminate between malays and who defines the mize to become noise. we would define noise as information you don't need. some people would say noise and others would say that's important information. so the idea has always been when we have a research project we go out and we had a list -- we have gone to the list of references which our teacher had need for us. or we tried to get those references and other articles and we would go and look for information and we would spend afternoons and mornings

discriminating and making little note cards of what isn't relevant to the understanding and what is extremely relevant and because i am a middle school where i really don't know what is relevant or not so relevant so it's hard for me, high school college and any level we would begin to think in those terms. said to me i hope that -- i'm not trying to present a discussion as a lecture much as i am throwing things out there that might assimilate a question or two that would make some interesting discussions. but one of the things i learned as i see children that are disordered who have various psychiatric disorders from personality problems to chemical disorders is the way that they again proceed the way that people are interacting with them, how they perceive information that they read and the like and how they learn in general. and the idea of being able to discriminate what's important and relevant is important

socially so they have no editing when you think of what we are doing. remember those of us that had cameras we always wish we had enough money to buy tons of film because it seemed like we never had enough film so we could take all the pictures we wanted to and the interesting things we thought. but in fact we had to do our editing up front. i have to be careful what i take a picture of the of course with infinite digital photography you took five pictures of literally everything that comes your way, and so it's easier to store but what families go and look for on the internet so to speak and of the photographs being shared there are thousands of them and nobody had edited the them and you have taken it retrospectively if you want anybody to look at them.

when they are thinking ahead of the information you are not only going to procure. then when you need to access it from where you archive it you will run into the problems i have come and that is that i am of to - when it comes to whether i have a notebook. it took so long to push the little buttons that it's not always spelled right in the like so i go back and forth and say it's going to to take too long. as you were thinking about we are at this stage right now in the 1993 of e-mail at the stage where we have so much available to us that if it is overwhelming for us in terms of accessing the internet think of what it is for the children and adolescents i have a hard time teaching them

and i can't operate it very well. i had a 4-year-old who came in at 88 d but he was very focused on his new little thing and he was playing all sorts of things and going back and forth from one to the next and i had no where to start on his little game and third. if any of you have a question from that perspective it might make a good discussion. thank you. [applause] thye >> welcome this afternoon. i want to sort this out in any number of different ways. my father always required us children to be observant, to the observant, and after that to think for god's sake.

the problem is you never knew what you were supposed to be observant about. let me give you an illustration of that. here was a man whose mother was a classics graduate from wellesley college, wrote latin and greek and she married a sheep herder in central y yemen. only in america. and she raised a son who would want to get his ph.d. from yale. he - he says professor named richard foster florent. he was the grand old man and he took his little miami graduate students and said all right. i want you to be observant. do exactly as i do. and on the table in front of him was a beaker full of a yellow felmy fluid. he said this is a class of human

urine. do i have your attention? i want you to do exactly as i do. so he reached forward and he stuck his finger in the year in -- urine and then he lifted off. these graduate students lined up and they did as they were told then he said you were not observant. i put my middle finger in the urine and click off my forefinger. some of being a servant has its payments. that is what i was taught to do. my father also said the reason that he chose the english geologist in central wyoming in the desert was because he didn't see much future in the back end of a cow. the only other profession that he had ever seen out there were geologist's looking for oil so

he didn't have much of a choice. he had to become a geologist. in my case i am the best code tayler you've ever seen. i could tell the not only my father but also william malloy and half a dozen other men that were worthy because they were really talents in their field. and i want to mention this because although i do have kind of a variable background, i taught for 40 years at the college level in rock springs wyoming, and one of the chances i got was to realize by being of the servant that a handful of wyoming in begin chipping has a certain limitation at least it does for me. there were 286 registered archaeologists back in about 1975 to do the archaeology of wyoming. and that was the year that i first went out into the pacific

curtailing on bill moly today i got out there and lo and behold, there weren't ten archaeologists for a third of the planet. now if you had a choice would you do? do archaeology in wyoming which is cold and windy and yellow and frosty and kind of harsh or would you rather be in the south pacific which is more and a breezy and green had a colorful and sensuous? i didn't see much future in a handful of flakes. that's how i got involved in the archaeology and it is on the internet, a lot of it. so, if you are desperate for entertainment, you can always google easter island charlie loved and you will have more than enough entertainment. one of the things we have done incidentally i was involved in the excavation on the island that found the first trees and

these are giant palm trees and only a geologist would find them were. they were not being observant and i am not observing this. what i'm trying to say is when you get a trench d-tn of the entire island is covered with the palm route of a giant palm from chile. you have to have mystery in the title or it won't sell. i'm sorry that i am releasing what about the documentary's of different sorts. not of course the ones being taken right now. at any rate what i want to get across. there is a propensity in american culture to see after the mystery is it is the bottom line. if you want a mystery it is and how the statute removed, we have

already done that. that is an old hat. we did that 26 years ago. we made up in naim town replica. standing up like this, not lying down. we moved it with 25 people, even 1 inch rope and we put it on a kind of bobsled thing and pulled it forward over the fence posts. we moved it 150 feet in two minutes rolling time. i thought that was pretty well solved but now they are starting to walk statues and do a few things if you see the national geographic recently, look out for the contrived part of that. they haven't done the archaeology of the roadways. 27 of my students and i went down there, not all at once, and the excavated a thousand feet of the roadway looking for clues how the move the statues along. they haven't done that yet.

they haven't done the background archaeology which is interesting. anyhow, the point i am trying to say is when you see the new documentaries on easter island they will cover it with trees when. at the end result of all of that is that they take two or three years to germinate, and another 81200 years to grow into a mature palm. when you cut one down is down for ever. easter island is as bear and as the desert of y yemen and that is why it was a mystery how the moved these colossal statutes across the island, some of them 14 miles, some of them weighed 86 tons.

whenever i get a little talk of the engineers, i challenge it. you have homework now. i want you to take a statute. you can make it five times if you want and i want you to merge it vertically. the basis of them are always perfect. in terms of being observant to be an archaeologist you have to be observant. not only that but you have to ask questions. you have to think is the point. and don't we all have to do that? everywhere and academic you should be being observant and think. that is what i've made for 40 years worth of students let alone being a field man. get them out there. when you see it in the field, then if you have a much better perspective if you will for all of what you are dealing with when it comes to research. i yield the rest of my time. [applause] thank you for all of that to be

excellent. we are going to be opening a route to a question and answer. part of the series in a moment. so if anyone wants to ask a question you can line up in a microphone at the end of the room there. it to kick off the questions and answers portion of the presentation putative you can borrow a phrase from the late great roger ebert. we tend to kind of get into our own world as we move along in our career and for me personally that's been the media business. it's been a huge factor. one of the more interesting debate that we have come in putting the long form

journalistic stories and people with their kind of augmented fault patterns that are, you know, in general less attention to detail what just kind of more a.d.d. in general with the form is there room for long stories about important topics anymore and especially with the younger generation's how we are going to get them to pay attention to say to the fed is written down in a 45 minute speech excellent. if it was in the written form are we going to get people to pay attention to this? i just wanted to get some panelists take on the idea of a long form of journalism and how it is being affected on the internet. >> this is how the internet is

transforming in the world of books as well. the question is relevant to the books professionally. you are working immediately become media and my question is what is the internet doing to this? >> i don't know if i'm the best example because i long often need the long form journalism so i need more than i ever do because i have access to things on my kindle and am i ipad. i don't know if i'm typical or not. i think one of the big issues -- well there are two big issues. first is the media landscape there are so many things competing that it's hard for anything to command national attention. when i was growing up and this is going to age me and other

people, there were 14 channels on tv. the might of the news arrived on the doorstep in the morning. so compared to today, the media was so much thinner. i personally am not really one of those people who were scared that the internet is damaging. personally i think it is alive and well. i find more books on line with my kindle than i ever did bodying paper looks because it is so easy, so fast and i actually read them so that is my take on this. i personally don't see this as hurting long form journalism. the question is that the meeting is changing. here again i see a bright future because it is so easy to distribute books that can only be in the long run for the book industry. but of course because the

meetings have changed that means the form of the fault has changed. now the thing about writing my third book, i know that that first chapter really has to grab the audience because that is the same chapter that is down loaded on the kindle and people will decide whether they want to read the book. if i change the way that i wrote the book and think about the writing process. >> i think the idea of children and adolescents again, and when you think about it we are the children and adolescents ourselves. that's where we end up as adults, perhaps we have always had a problem with looking at a long full story in terms of media but i recall as i was getting older taking a newspaper and wishing there was more information on something i was

interested to read. remember how you would do it he would start the first six paragraphs and then would say continued, or whatever it is coming and you would say good when you would read some more and unfortunately it would stop. then you would say i wish it was longer to it than you were always happy when it continued more on five or whatever. and i think when it was presented in that kind of format, perhaps that was more enticing than going on to the internet format where you in the typical -- all of us are relatively a ph.d., we have the kind of interesting -- we do as much as we can about of solving it quickly and completely and then we move on to the next thing. i think many times i see this happening with children and adolescents is their perception of a given topic tends to be a little bit more superficial. i don't know exactly why.

i'm not sure that i can explain that, and you bring that a good point to encourage and push our children and adolescents to look at things critically and to look at it in another level. i believe the internet provides that opportunity. but we as adults are helping them to develop and have to develop that critical thinking in at them and not have them go from topic to topic as you see when you do a search he will have 13 on page and i think the internet affords us the requirement to push our developing young adults to do more critical thinking and look more in depth and value somebody else that has done that for them and has written a long article. >> i certainly agree with the

comments that you have raised and after teaching for 40 years, i have developed some thoughts of my own because over the last two decades i've watched the ability of my students kind of low were down a little bit, things are not as intense. they don't know what to believe and what not to believe in part because their parents are not there to question them all night. you've gone from 40 years ago you have one parent who was employed and the other taking care of the youngsters and doing other things around the house. we have now gone to the too sharp workers and the kids are left by themselves and the end result is the find other ways to entertain themselves certainly by television, which is abysmal as far as volume concerned. i can't state it any other way. you do have some programs that

are okay but from the documentary point of view they are abysmal, too. they don't give you enough detail and you can't find it. you may be able to but what do you have to have? patients, your critical thinking skills have to be alive but that is something we are not teaching children. look at the congress, that is a grown-up version and the end result is -- i don't want to ask this out loud, a rhetorical question of how many of you think the country is on a downward spiral because we don't have a congress that does anything? they have patients all right, right up to the time they get their pay check and then they go for a little jaunt or something like that. so i am kind of discouraged and i don't wish to discourage you but it does come from child raising. i think that quite frankly have of the responsibility is on the parents to make sure their

children do it and not only that but they do what? one of the things i found over and over and over again -- of course i teach out of the country a little bit, number 1i find the ranch and farm kids to be the most responsible. that is because if you are on a farm or ranch and your mom or dad says you have to feed the cattle coming you better go do that because if you don't, it isn't going to get done. and you jeopardize the welfare of the families of the ranch kids are the most responsible. they know they've got to do it or it won't get done. but city kids, no. final kind of ways of putting it on and that is because you have so many friends. the kids do not have as many. there are fewer distractions. so that is one difference i find. the other is in their actual of devotee. those parents that have taught their kids to read out loud in

the evening. a story to read back to them. not only are they more articulate, but they also are less hesitant over any of the words and more apt to read more. we don't do that anymore. we can assign that in high school or middle school or something like that, but does it get done? that's the problem. so we have a lot of il's. i'm not going to go into any more than that. but it is a matter again of being responsible and teaching responsibility. how do you do that? [applause] >> we will now open up to questions in the audience. keep in mind this is for questions, not statements. go ahead. >> thank you, gentlemen. can you hear me? thank you for