author of "medicare meltdown: how wall street and washington are ruining medicare and how to fix it," and josh blackman, author of "unprecedented: the constitutional challenge to obamacare." we begin with northern illinois university professor, beatrix hoffmann talking about her book, "health care for some: rights and rationing in the united states since 1930". >> in july of 1938, the roosevelt administration organized a national conference on health care reform. the great depression had been going on for nearly a decade. fdr had signed the social security act and the fair labor standards act in to law, but the

united states still had no national program for addressing the health needs of the people. the 1938 health conference was the beginning of something different. instead of inviting only doctors to speak, the conference for, for the first time, including members of labor unions, farm groups, and civil rights organizations. it included representatives, not just of the medical profession, but of the people who needed and used health care. that corm woman named florence greenberg traveled from chicago, illinois to washington to offer her testimony. greenberg was a member of the women's automobile auxiliary spending her day working in the communities around chicago's steel mills. show told the audience at the

national health conference, she had come to offer them a different picture of chicago. just steps away from the comfortable headquarter of the american medical association, was a chicago of dirt, filth, and tenements. a sick chicago, where people struggled with tecialt health conditions related to poverty and unemployment. and struggled to obtain basic medical care. greenberg told the conference of the grossly overcrowded cook county hospital, the city's only public hospital, which locals describe as a death house. a single, overcrowded private hospital served the entire african-american community of the south side. chicago's outpatient clinics were filled to bursting. greenberg spoke of people too sick to leave their home but couldn't get a doctor to visit them or couldn't afford the few

pennys for transportation to the clinic. she told the audience about child with double that -- pneumonia. on behalf of the working people of chicago, florence greenberg made the following demand: we're asking our government to take health from the list of luxury to be bought only with money and add it to the list containing inailble rights of every citizens. we don't know whether franklin roosevelt ever heard about florence greenberg's unprecedented call for health care as a right. because even though he had endorsed the conference, he choose that time to go on vacation. fdr was actually on a cruise. i guess we can't really blame

him, probably well-deserved vacation. three years earlier fd rrk refused to include medical coverage of the social security act. he didn't want to antagonize the american medical profession. he did send a message of support to the health con -- conference, not long after the outbreak of world war ii forced his attention elsewhere. five years later in the state of the union address, roosevelt spoke to the american people about the war, and especially about the kind of peace the allies plan to establish after the defeat of fashionism. he said the one supreme objective for the future can be summed up in one word, security. that mean not only physical security, which provides safety from a tax by aggressors, it means also economic security and social security.

the individual political rights upon which the united states had been built, roosevelt argued, were necessary but not sufficient to guarantee true freedom and security. fdr then announced an economic bill of rights, which is sometimes called the second bill of rights that included the right to a job and a living wage, the right to housing, education, and security in old age, and right to adequate medical care and the opportunity achieve and enjoy good health. so even though fdr missed hearing florence greenberg's speech, we hear ebbing coast of -- echoes of it in his second bill of right. the idea of social and economic rights are supplement to political rights started back when the french revolution. the idea to provide medical care was more recent. discussion of the kind of right became prominent in the 1930s

and' 40s. first of all, medical care itself was becoming more effective. it was starting to matter much more in everyone's lives. by the '40s the public knew about medical miracle like vaccination, penicillin, antiseptic surgery, treatments that could save lives and extend life. to withhold the miracles same to seem unjust. medical care, at this time, was starting to cost more than before. the average family could not afford to pay for a hospital stay or a birth of a child. medical care had not just become a matter of life and health. it was becoming something that could cause serious financial hardship. that is why medical care became a matter of economic security as

well as health security. in the u.s., demands for medical care as a social right originated in the workers' movements represented by people like florence greenberg. they national came to national prominence in fdr's proposed second bill of rights, finally, they were adopted in the united nations' universal decoration of human rights after world war ii. thanks in part to eleanor roosevelt who helped draft the declaration after her husband's death. today more than 70 countries recognize a right to health or health care in their constitution. virtually every industrialized nation has taken steps to implement these right by establishing some type of universal health coverage for their citizens. with one major exception, anybody know?

the united states of america. but it's not for lack of trying, after fdr's death, president harry truman announced a national health insurance program that would have made medical coverage for all part of the social security act, but the physicians of the american medical association attacked truman's plan as socialized medicine. that might also sound familiar. in the early cold war, the ama won that battle, and truman's proposal was defeated. other presidents, including richard nixon and bill clinton tried to pass universal health care programs, but they failed due to entrenched and vigorous opposition from not just the medical professions, but opposition from business and increasingly powerful insurance industry. health care reform in the u.s.

is pronounced impossible. then the impossible happened, and today we have the 2010 affordable care act, or obamacare, which everybody is calling it now. so does the passage of the affordable care act mean we now have a right to health care in the united states? the answer is, not really. there are some important victories for rights in the law. the biggest is the ban on insurance companies being able to exclude people from coverage because they have preexisting health conditions. the affordable care act will also expand access to health coverage by providing federal subsidizes for people who can't afford insurance on their own. but even when the law is fully implemented, if the law is fully implemented, i guess i should say. there will still be a lot of

people without health insurance. estimated to be up to 30 million remaining uninsured, and this number, this estimate, actually became higher than originally projected because of the supreme court decision last summer, which will allow states to opt out of expanding medicaid. and a lot -- although the affordable care act creates some new rights, there's still no universal right to medical care in america. with one major exception, that is the right to be seen in an emergency room, which is something we've been hearing a lot about recently. but a right to emergency care is not the same thing. it's not a substitute for a system that takes care of peoples' health and protects their economic security. so why, why is this the case? what has made the united states an outlier nation when it comes

to the right to health care? i've been studying this question for a very long time, even way back in the '90s, and i'm sorry to say, although all the historians won't be surprised to hear this, there's no single answer. my book, "health care for some: rights and rationing in the united states since 1930" tries to provide a few of the answers by analyzing the history of this country's long tradition of unequal access to health care. for the next few minutes i'm going to talk about -- and give some examples of the american activists who have challenged the american system of une qualm access in the tradition of florence greenberg. so the sub tight of -- subtitle of the book is "rights and rationing in the united states. i've already talked about rights and how americans don't really have them when it comes to health care. in political argument, you'll

often hear that the u.s. may have a lot of problems with its health system, but at least we don't ration the way europeans and canadians do. have you hear heard? you have heard this. you may have heard the argument that universal health care means a government bureaucrat will deny you life-saving treatments in order to save money for the system. we still hear some people insisting that reform will lead to death panel, and during the first presidential debate, governor romney warned of an unelected board that will deny treatments under obamacare. not only are these claims misleading at best, but they also imply that rationing or the denial of health care would be something new to our system. something extremely un-american. but i believe that the claim that the u.s. does not currently

ration health care has been counterproductive, damaging, and inaccurate. my book uses historical evidence to show that the u.s. has rationed health care as and it's done so in a long time. not in the way of the europeans and the canadians do like official waiting lists and caps on national health expenditure, but this country has allocated and denied health care in a complex and unique way that i call the american way of rationing. so what is the american way of rationing? and how can history help us understand it? in classic kl micks, it means the goods and services are distributed by price. in other words, not everybody can afford everything they could possibly want or need. supply and demand are controlled by peoples' ability to pay. rations by price or rationing by

the market certainly goes a long way to describe the u.s. health care delivery system. the government may not officially deny you health care, but many americans cannot get the care they need because they can't afford it. in the u.s. health system, until 1986, it was legal for hospitals to turn away patients simply because they could not pay. that is still true in the case of nonemergency conditions. we have a huge number of studies showing that economic barriers lead to people not being able to obtain primary and preventive care, and even lead to reduced life expectancies. so the u.s. rations health care based on the ability to pay. people without health insurance have more trouble getting care or they don't get it at automatic with severe consequences for their health. but that is not the whole story of the american way of rationing. i show in my book that the u.s. has rationed health care in many

other ways. by race, by region or location, by type of insurance coverage, by health conditions, by age, by marital or parental status, by gender, and the list actually goes on. in "catastrophic care: how american health care killed my father - and how we can fix it" game show networking president and ceo david gold hill argues that our health care system needs to be more consumer driven. he said that removing intermediary like private insurance companies, medicare, and medicaid will help make the system more efficient and affordable. he spoke at an event hosted by the manhattan institute in new york city. i am here really because of what happened to my father. it is what got me interested in health care. some of you may know the story, my dad died of an infection he

acquired in a hospital. a series of infections, actually. it was very painful, as you can imagine. it was a very difficult experience to go through. even worse for my sister, who is an emergency room physician, and watched sort of helplessly as my father's care was botched. about six weeks after my dad died, i read an article in the new yorker about hospital-inquired infections. which i knew nothing about. and read about a statistic that many you are probably familiar with. several 100,000s die every year from hospital infections. i'm sorry, let me start again. 100,000 people die every year from hospital-inquired infections. most are fairly easily preventable. not all of them. but most of them. doctors design protocol to prevent them failed to convince doctor hospitals to adopt them. i used to run a movie theater

chain, among many of the jobs i've held for short periods of time, and, you know, when someone spilled a soda on the floor, we had a rule how quickly you had to mop it up so no one slipped and fell. then you read about an industry 100,000 people chi and they can fix it but it wouldn't cost much but they don't, and i think the combination of the grief i felt for losing my father, and the sort of businessman's curiosity about how other businesses are run made me wonder why do we give the industry a pass about so much? i think all of you in this room, it's one of the great things about talking about health care have been patients or had loved ones who are patients. there are roughly 310 million people in this country who have a story about health care we should say why do we give the industry a pass? we would never accept it. we do it in health care. a lot of us say it's health care. fundamentally different.

what i want to talk about today is two things, one, how really it isn't fundamentally different. the way we come to think of it is. i think it's blinding us the change in health care that has occurred since the first assumptions that guide our system and many other systems became conventional wisdom. the second, unfortunately, more briefly, i think what we can do about it to going fix these problems. to me, the answer to the question of why health care in this country is so expensive, so wasteful, at the same time so often unavailable to people who need it, so unsafe, and delivers such unbelievably bad customer services we don't think of it is customer service. is really the punchline to a number ofoff-color jokes i won't tell. but the punchline is because they can.

to me it's the fundamentally important thing to understand about health care is that nobody else in any other service who are trying to get your business can get away with this. they can't. someone will take your business from them. that's not the case in health care. in health care, we built a system that has the most perverse. it's the more care of a good care. more expensive care over less expensive care. and less investment in the kind of things that tell your patient customers that you care about them. which is safety, service, handling of information, and all the other little things we see. and it's great in politics to find a villain for this. the evil drug companies or insurers, or the unions. whoever your villain is. the problem is, if you spend any time in health care, what you find are people who are often so motivated they're almost -- there are people who devoting their whole lives to the care of

others even in many of the evil institutions you find people in it and still in it because they think they are helping others. you have an interesting mix a system i regard as catastrophic in a number of ways, and people who seem to be motivated by great reasons for being there. to me, the breach between understanding those two is the incentive in the system. the economic incentives for bad outcomes are so powerful that it overwhelms the efforts of good intentioned people. and not exactly a very politically catchy phrase; right? down with the incentive is not going get anyone elected to power, but i think it's the key to understanding how the system works. in health care, we have decided we don't want to be the customer. we want to have surrogates being the customer. so private insurers are the real customers of the system, medicare, medicaid, cms and state agencies. they're the customer. in interestingly, if you step back from the sort of debate about health care and ask

yourself, how well does the profit incentive work in health care? it works perfectly. the health care providerser. fectly meet the -- providers perfectly meet the demands of the surrogates which are different from ours. i want to talk about how. let me talk about the biggest assumptions we have in health care, the biggest is actually reflected in our language. nobody, or almost nobody, -- almost nobody talks about health care prices. we all talk about health care costs. it's interesting in the political debate about health care you always hear the word cost. as if there is some independent thing going on, a certain amount of kryptonite that provides the health care. we only have so much. it's priced on another planet; right? every cost, as we know, is somebody's price. it's the price of somebody's labor, somebody's capital. in health care, i think it's winding we think there is a cost effect. if we can discover and pay as

little close to it. we have done well. a lot of health care policy is discovering the cost as if you can. in the book i talk about the cost of tom cruz. the cost of him is $20 million. he has just about as many molecules. he has much training as an actor of any of us do. none of us have any problem if you're making a movie paying $20 million. that's his cost. it's also his price. tom cruise goes to work as a janitor. he doesn't get to say my cost is $20 million. his value isn't. in health care if you listen to try how we regulate health care social security about discovering that thing, that cost independent of supply, dpland, technology, and all of the factors that set tom kruse's cost at $20 million.

there's a lot of illusions in health care, and probably the most important illusion in health care, i think is illustrated by what i would call the tale of two women. one is elizabeth warren. elizabeth warren argued, and i think in some ways correctly, that one of the issues that the financial crisis on unearthed that a lot of people applied for sub prime loans without understanding what it cost them. they were mislead. it was one of the things that congress could correct, and did try to correct. that very same principle, hiding from us the cost 77 our action is the foundation of the health care system. let me talk about a second woman who -- her name is becky. he's a 23-year-old who started work for my company. in the book, and here i'll talk about what health care is going cost becky. like most people in america,

becky thinks someone is magically paying for her health care. becky expects to be successful. she probably will be. she's extraordinarily capable sales assistant about to be promoted to saleswoman. she probably will be very successful. becky thinks she's going to get to the top 1% of health care. she also thinks she can never afford health care on her own. it's really a problem if the system is such even m season in the top 1%. who is paying for the other 99%? that's what she believes. in fact, if the cost of health care increases by exactly 0 from now until beck skies, becky will put $1.2 million to a health care system. if the cost of health care increases only at the rate the affordable care act estimates for the next ten years, in other words, if it's successful, she'll put in $1.9 million. if she has a spouse who is

working but becky is the breadwinner and provides the insurance it will add another half million dollars. the two of them will put $2.5 million to the health care system. let me mention a cup of things about becky. she's entry level. the assumptions assume two important things. she never gets rich. it's not becky's idea of what is going to happen. it's statistically likely. her north carolina will grow 2 or 3% for the rest of her life or career. she never gets sick. the key element 77 the health care system is -- becky thinks that i'm paying for her insurance, i'm not. she is. one thing that every economist left and right agrees on is over time, not tomorrow, if becky walked in tomorrow and said you can have the insurance back, it wouldn't happen. health insurance comes out over what it company sates our employees. it's true for every company. it's true. you rather have them pay and not paid tomorrow.

it's coming out what they were willing to pay you. that's a big part of it. part a, we know about part a. medicare tax has gone up significantly. i pay it. she pays it. i pay it on her behalf. she pays it. right now 20 going up to 25 and 30% of the federal tax burden goes to subsidizing health care. i want to go back to that. 10 to 15% of the state goes to finance medicaid. the point when you add the money up, it's a flood of money. why does it matter? the reason it matters is our health care system is so infesht that -- inefficient that the average person could not only afford it but would save money. we're not going to do it. an enormously changes your perspective on what is happening. now with, a lot of you may be thinking that what about those who can't afford it? what about those who don't have a job? we'll spend somewhere around

$850 million on subsidizing medicare and medicaid. that's last year, we'll spend more this year. you can give 100 million americans $85,000 a year. you can give it every year of their life. you could take our current system, our current system, include everybody and have tem. we are not going to do it but we could. that's how much money we spend. the father, arguably i'm not sure he wants to be called this. the father of the system is -- the 50th anniversary of the article that kenneth wrote saying the problem with health care is totally different than everything else. the consumer doesn't know anything. the doctors know everything and can push goods. it's the argument for having an insurer or medicare or medicaid work on our behalf. be the customer for us. the problem is that article was written in 1963, before trip adviser.

a lot of asymmetry and information that ken was writing about is no longer the case. in fact, it's beyond just the fact question exchange information on the internet. it's that health care itself changed and become far more individual and less about -- got a problem with the engine, you fix it, you are done. little of health care is like that. most is. you have the three, four treatment alternative. there's a variety of odds depending on who you are. every patient is encouraged to do the research. there's a bigger problem with what he wrote. it's the bair problem. you probably know the joke about two guys being chased by a bear in a forest. one guy stops to switch his shoes. the friend said you can't outrun a bear. he said i don't need to outrun the bear. i need to outrun you. [laughter] the implication to which the ken argument has been because we are

such terrible customers of health care, insurance will be percent. we have a 50-year history of that. have they acted like us? have they been as effective of us? one of the great misconception on the consumer consumer-driven health care. walmart wasn't created because an an some guy woke up saying i know how i'm going to make my billion. nobody does that in health care. we're not the consumer. i want to come back to the point. it's the most misunderstood thing about those saying we want consumer-driven health care. we want it because consumers idiots. ken was right. we don't know anything about anything. by the way, since his article has been every industry article how dumb we are we are. how irrational and emotional. it doesn't matter. as a group having people chase

us, bend over backwards, beg us to buy their product is what causes good behavior. not that we're clever. i want to come back to that. so the issue really is we're terrible at it. we're the worst consumers imaginable. worst customers of health care. everyone else is worse. that's what we think we should have discovered. this argument used over and over again at every health care conference is nonsense. the other assumption implicit in the system there's some objective amount of health care need. if you look at medicare and medicaid, one of the ways they're unusual they say anything you need we'll pay for. now, i'm in favor of a similar policy in cable television because here is what would happen. if congress said we'll pay for all the television you need, we would convince you all you need to watch 25 hours a day. what happened in health care, we see it particularly in medicare,

when you tell an industry we'll pay for the customer needs, they expand the definition of need. the interesting thing going back to ken is when the customer has absolutely no skin in the game at the moment of purchase, he's more likely to say yes. not less likely. that concern was we have consumers are too weak. a doctor tells us to do something, we'll just do it. the system makes us more likely. the major reason that medicare and medicaid have grown so much is that. it's an entitlement. not to beneficiaries, forget that. that's the way people think of it. it was an entitlement to providers fop figure out ways to create. my mother is an extremely healthy woman -- i'm 52 she's slightly older. she's 52 plus. that's all i know. i know, she's on medicare. she's incredibly healthy. she works. there's nothing wrong with her. she sees 12 or 13 doctors a year. they leave her depressed. my mother is a breast cancer

survivor middle age she got through it. when you look at the medicalization of senior citizenship one could argue it's bad for seniors. i don't know how many are aware there was a study published last year that said one out of three medicare patients had surgery in the year of their death. it's completely shocking. all right, surgery for an older person has far more health costs. forget about money, health costs than anyone else. there's less chance to benefit, there's greater risk and emotional and recovery issues. one out of three in the year of the death. one out of five 90-year-old in the year of their death. everybody in health care knew how to read it. it's a system gone amuck. 40% of 75 and older are taking more than five brings drugs. some may do good. i'm not arguing whether it's good or bad. that's not what i'm talking about. what i'm talking about is as long as the system says whatever you need we will pay for, the

definition of need will expand. unfortunately, we'll expand without reference to the whole customer. the whole patient. it expands more in reference to the industry. if you look at how we've gotten to 50% of the country having a chronic condition, i think it's best understood as industrial policy rather than health care reality. next, we take a look at medicare reform. in this clip, rose mary gibson author of "medicare meltdown: how wall street and washington are ruining medicare and how to fix it" talking about the level of fraud and abuse in the medicare system. >> for total health care spending, if historical trends continue by 2082 as a country we'll be spending 99 percent of the gdp just on health care. so this is why there is urgency around medicare and health care to find some mechanism to limit how much we spend. that's the purpose of the book

"medicare meltdown: how wall street and washington are ruining medicare and how to fix it." it focuses on the business aspect of medicare. not only is medicare an entitlement for seniors, it is also big business. that's a powerful force driving the trajectory of health care and the kinds of care that patients receive. in that respect, it shines a light on aspect of medicare we don't read much about. more of the news i read now is on the bloomberg news and other business news to find out what is happening in health care. the book exams where the money comes from to pay for medicare, where it goes, who is getting it, and what they're doing with it. i believe the public has a right to the information because we are paying for it from our paychecks, for those on medicare from the premiums they pay. we look at the outside influence of the health care industry on medicare. it is, indeed, an entitle -- entitlement for seniors. it's the largest entitlement-based industry in the united states.

let talk about the size of medicare. if medicare were a country, it would be the 20th largest economy in the world. it's enormous. medicare spends $560 billion in 2011 for 50 million people. and this dollar amount is more than the size of sweden's economy and double the size of ireland's economy. just medicare as one portion of health care. so no matter whether democrats or republicans prevail in shaping medicare's future, it turn out medicare will be becoming crowded by 2030. every day 10,000 boomers sign up for medicare, and 33 more people will be on medicare by -- 2030. the number is equivalent to providing the current combined populations of austria, hong

kong, israel, and switzerland. hospitals, doctors, nurses and the entire deliver i are system are, and will be, under increasing pressure. are we ready for it? medicare pays for resident sincerity training. it pays for almost all of it. it pays the cost of your type ends, teaching position salaries and other expenses. with pressure on the federal debt, graduate medical education is under the budget microscope like many other things. your resident sincerity training is provided by $9.5 billion from medicare. $5.8 billion from medicare. it's a combination of state and federal. it's being closely scrutinized. i would like to identify where the money from medicare goes and how it's being used. second, discuss the impact of the incentive in the program and what it means for patients and physicians, meaning many of you. i would like to make the case

for limits on medicare spending to sustain this program for current and future generations. for those of you who are young people in this room, you want to count on medicare and ensure it's there for you. so, first, where does medicare's money come from? how is it being used? in 1965, medicare laid the foundation for the establishment and growth of the health care industry. and the past 50 years has seen an explosion in biomedical advances. dramatic innovation in therapy procedures. tremendous successes in the management of diseases that were once fatal. medicare also changed the u.s. economy in unprecedented ways. here is two graphs on international spending on health care from 1980 to 2007. i'll just direct your attention to the graph on the right. these are total health expenditures as a percentage of gdp for a number of developed countries, and you'll see that the united states is the black

line, is way out ahead of all the other countries. once again, this enabled enelevation and the application of wonderful health care services to millions of americans who weft -- benefited. who pays for medicare? it turn out we all pay for medicare. all of us who work pay for medicare from a 2.9 payroll tax deducted from your paycheck. if you look at the pay stub, you'll see the amount deducted every paycheck. you also pay for medicare from your federal income tax that you pay. and seniors over 65 pay premiums and copayments. this is a reader comment to the "new york times" in response to a column written by paul crewedman, the reader wrote, in my opinion, federal programs such as medicare that are supported by participates insurance premiums and not general tax revenue shouldn't be a political football in congress. while they need to be review forked the future sustainability, they have not contributed to the federal

debt. in fact, that's a myth. here is the truth. 44% of medicare spending is paid for by federal income tax revenue. so medicare does contribute to the federal debt, because the federal government does not collect sufficient money from the taxes and other sources to pay all of its medicare bills, and has to borrow money and pays interest on that debt. so we why we -- yes, it adds to debt. it means when bills are sent to medicare the federal government doesn't have the money to pay all of it. it borrows monies from places like china. the u.s. federal get exceeds $16 trillion. that's an enormous sum of money and growing. most people think of medicare as an entitlement for seniors. and it is. medicare is also big business. health care businesses and facilities rely on medicare for $560 in annual revenue.

the amount medicare spends in a year. in 1965, there were no health care companies listed on the fortune 100 list, today there are 15 health care companies that are on the list, and are dependent on medicare and other sources of funding for their revenue. these interests have a powerful influence on the debate over the future of medicare. there is a debate, for example, over whether medicare should be privatized to move from free-for-service for private health insurance plans. already medicare is partially privatized. most people don't know that. 125% of seniors -- 25% of seniors belong to a private health insurance plan. medicare metdown i predict it will continue. health insurance companies certainly want customers, as many as they can, and certainly the 33 million new baby boomers who will be enrolling in medicare between now and 2030. let's talk about medicare

waste. the institute of medicine at the national academy of science estimated last september that 30% of all health care spending including medicare is lost to waste. that might be from administrative costs, we were talking earlier about the cost of billing. it's an enormous sum of money. unnecessary treatment, and of course, fraud and abuse. this amount of medicare waste, believe it or not, $170 billion is a size of the entire economy of new zealand. and all of us are paying for it from our paychecks, from our premiums. here is a narrative from a conscious doctor who tried to cut medicare and health care waste in the hospital. he's a dedicated peed -- pediatric neurosurgeon. he heard a talk in washington about how they should be good

stewards of health care. he took the message seriously and went back to the hospital and asked the cfo to tell him how much the supplies in the operating room cost because he never knew. so the cfo sent over a financial person and they went through all the inventory in this surgeon's o. r. they found $700,000 worth of supplies. 10% had expired and had to be thrown away. $70,000 worth thrown away. he said, i only needed $295,000 of the $700,000 worth of supplies that were needed. he was astonished. he had no clue. he said the sutures the hospital was buying i could buy them for $35,000. he encouraged the hospital to buy the less costly product. he was very eager to tell the ceo he thought he discovered a gold mine for the hospital. that this would be a way that the hospital could save lots of

money and keep that money for patient care and other things. so he sent up a meeting with the ceo and did a back of the envelope calculation about the millions of dollars the hospital could save if they could purchase supplies and equipment much more cheaply. it turns out he hit, what i call, the brick ceiling. the noncompetitive, nontransparent, quote, market, for hospital supplies and commitment. this is a $200 billion market that accounts for 8% of total health care spending. in the 1980 the market received an antikickback exsettle from congress. it started out as a costco model. they can buy volume of products and services less expensively has turned to one of the most expensive ways possible to purchase anything on the planet. repeatedly, i -- recently i asked how things were

going. i a piece of ultrasound equipment. i realized the hospital had to purchase it through the own channel and paid 100 times much what he could find on the internet for the piece of equipment. we conclude this block of health care-related policewomanning -- programming with josh blackman. "unprecedented: the constitutional challenge to obamacare". so this case is called unprecedented. i'll use it as a prop. the title actually comes from the law itself. why is the law unprecedented? there are a number of firsts. one first, never before in the 20th century has congress tried to pass a law of significance. the president made the determination he's not need any republican support to pass the law. get the votes and be done with

it. he saw later it wouldn't be the case. it was a straight party-line vote. it was also unprecedented never before had congress forced people to buy a commercial product. there was laws about making people in the militia get rifles and stuff like that. it was a unique law that forced people to do something. and never before, had the constitutional argument developed so quickly, so rapidly, with so much significance and spread all the way to the supreme court less than two years, my good friend randy is one of the key guys and ilya as well. they dedicated their lives to spreading the argument. it's remarkable to look back. actually the title for the book came from, you know, all off-hand quip i made. randy said it's unprecedented. and i made a joke saying we should have a drinking game where every time we say unprose dented we take a shot.

[laughter] it stuck. -- >> which is ironic, josh doesn't drink. >> i don't drink. i have water. that's about it. randy said that was one of the moments where crystallized in his mind. the idea the law, which forces people to do something, triggers something in the american populace. it wasn't about the pure constitution. not just the -- it was also about the people. the people in very social movement such as the tea party and other groups had an aver jensen to the law. it wasn't just policy grounds. saying we don't like it because we think it's going destroy our economy. we don't like it because it violates the constitution. we will protesting not too far from here with signs saying overturn the law. with signs saying we need enforce a constitution. this law, unintelligence nay engendered such a constitutional response. a backlash even. i don't think anyone anticipated. and the law also a lit mous --

litmus test where the american people are. it's the idea. the actual story of the case is fascinating. i will run through an abbreviated and make sure we have time for the distinguished panel to speak. the mandates actually are good friends at heritage protoes posed in the late '80s. ed crane former president of cato sent a letter say it's unconstitutional. it was actually an event where stewart invented the mandate didn't come. and ed crane joked we couldn't mandate him to come. the history goes back a long way. for many years the republican supported the idea of a mandate. we think saints a good free-market alternative. they said it's not free market. it's coerce. fast forward to 2009, after president obama was elected, he basically coopted hill's plan. it was her idea. made it his own. we'll have obamacare. we will have a mandate. we are to force people to buy health insurance.

why? it's not fair that the young and healthy people are free riding on the system they can wait to buy health care physical they are sick and not pay to the system. they have a law called obamacare. the problem it was unconstitutional. i'm sorry it wasn't constitutional it was unpopular. so unpopular not a single republican supported it. not one. so the president made a call that said, you know, we'll go straight 60 votes. we'll pass it through partylines. whatever happens later. it doesn't care. it's like syria. [laughter] it happens. you can sense the pattern, it's early on. you can sense a pattern. something happens. senator ted kennedy dies. he was the 60th vote in the senate. after he dies who replaced him? a republican in massachusetts, imagine. scot browne. scott browne replaced ted kennedy. with that the democrats lost the filibuster-proof majority. they don't have a majority. they send it to the house. nancy pelosi had to effectively

pass the bill through the senate. but she wanted to make some change, not just some changes, a lot of changes. but if she were to make any changes, as our separation-of-powers work, it would have to go back to the senate, but the democrats were afraid, once it goes back to the senate it will be shut down by the filibuster. the house shenanigans they went to the reconciliation process where they changed the law. they rewrote it and passed it on the straight party line vote. 30 or 40 republicans across the aisle voted -- 34 democrats voted against obamacare which was remarkingble. it was only the pro-life democrats who got the law through. the president was happy he signed the law. he had a gorgeous signing statement. this is the law of the land. it was march of 2010. as we know -- >> i was the one with the signing statement. >> he made a statement at the signing. actually, biden was there. he was grinning. he has a nice grin. >> the bfd is the joke.

>> that's right. everyone know the bfd line? the big f-ing deal. when the law was passed the president was watching it on tv, probably cnn. i'll get back to that later. the president said we passed it. and biden said it's a big f-ing deal. it was caught on a live mic. anyway. the law signs 2010. that's the end of the story; right? right? no. otherwise my book would be one chapter. one nine -- within nine minutes lawsuits were filed across the country. the first one was in florida, which -- another suit involve foul -- followed in virginia. they had electronic filing problems lead by the attorney general. we'll see what that counts for. the lawsuits were filed.

back then, if we go back to the fall of 2009, no one saw much the argument. i'm sure randy will talk about an experience at the may flower hotel. a simple conversation over what is wrong with the argument developed the constitutional ideals. the ideal was in the past, the supreme court has policy upheld the regulation of classes of tv. growing weed, growing marijuana. this was something different. congress was not regulating a class of activity. they were regulating inactivity. the decision not to have health insurance. that was never done before. okay. so these state attorneys general raise these arguments and remarkably, they worked. judge hudson in virginia and judge vincente in florida, the court gained victory for the challengers. they said never before had congress done this. it was unconstitutional. remarkable. we have federal judges saying that a law that regulates a multibillion dollar industry

does not -- does not involve commerce power. this was a stunning blow to the administration. the case went to the court of appeal. remarkably there was a split. some judges ruled in favor. and most importantly the 11th circuit ruled in the challengers in a less than think opinion that was split. congress can't do this. the case went to the supreme court. this is where it gets fun. everyone knew where it was headed. no one knew how it would be resolved. at the supreme court, there were a lot of issues to consider. i don't want to get too much to the bogging down, but to make the opinion to make sense. it was tax antijunction act. if you need to go to the bathroom, now is probably the right time. it's boring. the tax antijunction act said you can't sue -- i'm sorry you can't challenge a tax until you pay it. the reason why the law exists is people would stop paying taxes and file lawsuits. the proper procedure is if you

don't like a tax, you pay it and go to court and sue on it. it's been around for over 100 years. originally the government argued that obamacare was a tax. and because it was a tax, that would not be enforced until january of 2014, no one could sue on it yet. thattingment was -- that argument was rejected. why? the actual statute of the text said it's a penalty. it's not a tax. it's a penalty. why does it say that? who wants to raise taxes? the president ran on a platform of not raising taxes. no new taxes until you are really rich. so they framed it as a penalty. that was a deliberate move. but the unfortunate consequence of certain laws you can't pretended in court it's a tax. so in argument was rejected. but as it went to the supreme court, there was a different approach -- this is something i talk about in the book, which many of you followed the case probably don't know much about. how the general decide to frame the issue of the issue of the tax. in the past, they said listen,

this is a tax. don't worry about the fact that it's not called a tax. pretended it's a tax. but it had a slightly different argument. he was citing a case new york v. united states a federalism case he studied for other principles. there was one part of the opinion i never read before, justice o'connor's opinion she said if congress passed the law, that framed as a penalty, but it can be construed as a tax to save its constitutionality it should be done. let me say that again. it -- if a law can be viewed as a tax, even though it's not, we'll save it. the associate general's position to make the argument, among others, that ultimately persuade the chief justice. the chief justice went along with the vote saying listen, congress can't mandate inactivity. they can't force you to buy a product. okay. but what the court will say is that if there was a law that could be construed as a tax, we will do so.

that is a horrible statement that kept many people away. sleeping now? having dreams? those are nightmares. >> they are nightmares. i actually talk about it in the book, the dynamic. because when the supreme court announcing the opinion you don't know inned advance what they're going say. you don't have any media inside the court. there was a period where people thought it was one way. the first 123 minutes or so it looked like the law was going con. it looked like it was going to be struck down. the justice said wait a minute. if you save it, we will. you were pumping your first, ilya, then you went very fast. the law was saved. but there are some lingering implication to the law, i think we should discuss it. which might be more interest from a policy perspective. one is the politics of this case. the president has made no secret he likes to go after the court. if you recall the 2010 state of

the union which was after citizens united. he made statements critical to the course. they reverse unjust precedent and open the flood gate to spending. he said it with them sitting five feet away. the justice was shaking his head like not true. the president repeated this behavior in -- i'm sorry two days after the oral argument he made offhand comments where he basically said to the court that you should, quote, exercise your jurisprudence carefully. he made a very clear message what he expected them. he cited the lochner president which might be a first. i don't know if any president mentioned lochner before. in this crowd it's probably a good thing. david burstein is here. he cited the opinion. he made it clear he was not going to be happy if the court struck the law down. it might be a good or bad thing. if you recognize the climate, which was the case was decided.

it was a presidential election year. it was decided three months before the general election, and the court was rightfully concerned about what would happen. jeff rosen asked this a lot. he'll talk about it later. i think there was a concern on the court and the chief justice in particular for the court to strike the law down in election year, it would open the door for the phot attack -- president to attack the court. what is the big deal? the president talks about everything. it's significant deal what we're talking about the court's credibility. if he went so hard after the citizens united opinion -- when i might add -- [inaudible] he benefited immensely. but he attacked the court there. we can imagine what he would have said if they struck down his signature legislation. it had to weigh down on the chief justice. we won't get in to -- [inaudible] someone else will taunt that.

he was trying to have influence on the court. i think it's a bad precedent. the chief justice, ilya said he sold out. he did. he rewrote a law, he upheld the law that never passed. but i will give him some credit, because as a chief justice he has to think perspectively. he has a 30-year term ahead of him if he stays healthy. the president has three years and counting -- somewhere in the building. the president has a fairly short time left in office. we have a lot're cases coming up. the voting rights was struck down. affirmative action is coming up soon. i'm sorry the affirmative action might be a better test case. the a lot of things the court has to do. tom and randy will talk about this. what is the bank account of nfib on the constitution? well, dock docket

the law said congress can't regulate inactivity. other purchase mandate it will probably be there. i think what the court recognizes is that the federal revolution, the roberts -- the renner qis court is not over. the court said we're willing to police the bounds what the congress can and can't do. we'll watch the line. we'll make sure it's enforced. i think that, in the words of professor, shifted our constitution. the way we look at the constitution. the way we look at federalism and the right. the notion that the structure protection of our constitution are important bolster to the freedom with evidence in the the court's opinion for roberts and joint dissent. you can watch all the programs featured this past hour or many other programs on the topic of health care on our website, booktv.org. next on booktv a program

from our archives. in july of 2002, helen thomas discussed her memoir "thanks for the memories, mr. president." 2013 marks booktv's 50th anniversary which debuted on september 12th, 1998. ..